JOSSON P/L & ANOR v. ENVOTEC P/L & 2 ORS [2002] NSWSC 500

Supreme Court of NSW|2002-06-05|Before: Bryson J, Josson P, Envotec P

CITATION : JOSSON P/L & ANOR v. ENVOTEC P/L & 2 ORS [2002] NSWSC 500 CURRENT JURISDICTION: EQUITY FILE NUMBER(S) : SC 3115/01 HEARING DATE(S) : 06/05/2002 JUDGMENT DATE : 5 June 2002

Josson Pty Ltd - 1st Plaintiff Raljos International Pty Ltd - 2nd Plaintiff PARTIES : Envotec Pty Ltd - 1st Defendant Rexam Australia Pty Ltd - 2nd Defendant Rexam Inc - 3rd Defendant JUDGMENT OF : Bryson J at 1

COUNSEL : C. Birch SC & M. Sneddon - Plaintiffs A.S. Bell - Defendants SOLICITORS : Burridge & Legg Solicitors - Plaintiffs Corrs Chambers Westgrath - Defendants CATCHWORDS : PRACTICE and PROCEDURE - application for leave to amend Statement of Claim under Supreme Court Rules 1970 (NSW) Part 10, r.1A - under Pt.20 r.1, plaintiffs should be allowed to redraft pleadings and raise contentions which they genuinely wish to raise provided that the case which they wish to put forward is fairly arguable and can be understood from their pleading - a Barnes v. Addy recipient liability was not arguable with no basis in fact - the facts alleged in the proposed Amended Statement of Claim could not give rise to a claim for unjust enrichment - Pt.15, r.7 of the Supreme Court Rules authorises pleading allegations of fact and raising grounds or claims in the alternative. - PRIVATE INTERNATIONAL LAW - Application to set aside service of 3rd defendant under Supreme Court Rules 1970 (NSW) PT. 11 r. 98 and Pt.10 r.6A - service of the originating process to the 3rd defendant did not come under Pt.10 r.1A - held that 3rd defendant was properly joined as a party to the proceedings under Pt.10 r.1A(1). LEGISLATION CITED : Trade Practices Act 1974 Agar v. Hyde (2000) 201 CLR 552 CASES CITED : Ramsey v. Vogler [2000] NSWCA 260 Paper Products Pty Ltd v. Tomlinson (Rockdale) Ltd (No.2) (1993) 33 FCR 485 Sydbank Seonderjylland v. Bannerton Holdings Pty Ltd (1996) 68 FCR 539 DECISION : See para 36 - allow plaintiffs to redraft Amended Statement of Claim.

19 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3115/2001 JOSSON PTY LTD & ANOR v. ENVOTEC PTY LTD & 2 ORS JUDGMENT 1 HIS HONOUR: These proceedings were commenced by Statement of Claim on 18 June 2001. There have been no other pleadings. On 6 May 2002 I heard together the plaintiffs' applications by Notices of Motion filed on 6 March 2002 for leave to amend the Statement of Claim and on 10 April 2002 for leave to read evidence from proceedings 50018 of 1997 in that application, and the third defendant's Notice of Motion filed on 18 March 2002 for orders establishing that the court does not have or should not exercise jurisdiction over the third defendant. 2 Part 20 r.2(1) of the Rules of Court gives the plaintiffs an opportunity to file an Amended Statement of Claim without leave, but correspondence between solicitors had shown that if the plaintiffs did so the defendants or some of them would apply to disallow the amendments, and the plaintiffs acted reasonably in applying for leave and precipitating the argument. Under Pt.20 r.1 amendments are allowed liberally, and if the case put forward is fairly arguable my disposition is to allow the plaintiffs to make whatever claim they think fit. 3 The third defendant Rexam Inc. gives its address in its Notice of Motion as 23401 Congress Street, Charlotte, North Carolina, United States of America. It has no business or other activities in Australia. Without entering an Appearance it has applied by Notice of Motion for an order that the court decline to exercise jurisdiction on the ground that New South Wales is an inappropriate forum for the trial of the proceedings, for an order that the originating process be set aside, and other orders to similar effect. In doing this the third defendant claims that it is proceeding under Pt.11 r.8 and does not submit to this court's jurisdiction - see subr.8(3). Part 11 r.8 and Pt.10 r.6A operate together. 4 The plaintiffs' claims arise from an Agreement for Sale and Purchase of Assets made between the plaintiffs and the first defendant on 27 August 1993, by which the plaintiffs sold the right to exploit technology which the parties called "One-Pass Technology". The technology produces metallised paper in one integrated process within a vacuum chamber. The paper produced is referred to in the Agreement as "One-Pass Product". The plaintiffs' principal claim is a claim to enforce cl.21.1 of the Agreement under which the plaintiffs were entitled to payment of a royalty of US$1,250,000 on the first sale of "One-Pass Product" by the first defendant. 5 The plaintiffs' allegations are to the following effect. The second defendant and the third defendant are bodies corporate which are related to the first defendant, as they are all subsidiaries of a common parent, Rexam PLC which is incorporated in the United Kingdom. At some time in the period March 1994 to August 1996 a machine capable of manufacturing One-Pass Product using One-Pass Technology was manufactured, and was installed in premises in Morristown, Tennessee, United States of America owned by the third defendant; and the machine manufactured One-Pass Product in August 1996. The plaintiffs contend that in July 2000 the machine, and One-Pass Product manufactured with it, were sold to Vacumet Inc, a United States corporation. The plaintiffs had information which makes it appear that the sale was effected by the third defendant, although this is not certainly known. 6 By cl.21.8 of the Agreement the first defendant was entitled to sell One-Pass Technology to any related body corporate on condition that the related body corporate was to assume the obligations of the first defendant including the obligation to pay royalty. The plaintiffs have obtained some information from several sources, not in much detail, about use of the machine and product and dealings in them. One source was allegations made on behalf of the first defendant in earlier litigation between the plaintiffs and the first defendant relating to alleged breach of another provision of the Agreement for Sale and Purchase. Another source was letters sent by Mr Frank Brown to the plaintiffs in August and November 1996; Mr Brown held office as President and other offices in the first defendant, and asserted that the first defendant was then entitled to exploit One-Pass Technology. A further source is letters written in March and April 1999 by a director of the second defendant who gave somewhat sparse information, in answer to the plaintiffs' inquiry, that the second defendant "had taken over the metallising operations and all relevant assets and obligations". However later letters written by the same officer in February 2001 and April 2001 appear to be inconsistent with some of the information so furnished. The plaintiffs also have some information in a statement furnished by a former employee of the third defendant which seems to indicate that in some way the third defendant obtained One-Pass Technology, manufactured One-Pass Product and then sold the technology, the machine and product to Vacumet Inc, which so far as is known is an unrelated company. 7 It was contended on behalf of the plaintiffs that it was unclear to them whether: (a) there had been an assignment of One-Pass Technology to either the second defendant or to the third defendant in some way in which the assignee had incurred an obligation to pay the royalty; or (b) whether there had been an assignment to one of the second or third defendants without protecting the obligation. For that reason the Amended Statement of Claim has been drafted to follow logically possible paths of the forms which the facts may have taken, there being a number of branching alternative possibilities as to the assignee and as to acceptance of the obligation to pay royalty. There are also other causes of action or grounds of suit alleging estoppels, misleading and deceptive conduct, constructive trust liability and unjust enrichment. 8 An effect of the scheme which the plaintiffs have sought to follow is that there are internal inconsistencies in the array of agreements and terms of agreements which they wish to allege, as to whether there was an assignment from the first defendant to the second defendant and a further assignment or whether there was an assignment from the first defendant to the third defendant, and also as to whether there was or was not compliance with the condition that the assignee was to assume the obligation of the first defendant to pay royalty. In a pleading formed on a classic model the plaintiffs would allege in a distinct way each of those agreements, accompanied by statements establishing that the allegations which were inconsistent with each other were made alternatively to each other. At a number of points the Proposed Amended Statement of Claim does not follow this classic model in a manner illustrated by para 15 in these terms: "15. The sale was a first sale of One-Pass Product, and if effected by the First Defendant then by virtue of cl.21.1 of the Agreement upon such sale the First Defendant became liable to pay to the First Plaintiff the royalty of US$1,250,000."

Then a consequential allegation in para.16 also makes allegations about the sale "… if effected by the First Defendant …". 9 The complaints made by the defendants about the pleading include a complaint that, at each point where this occurs, the document is embarrassing as it is not distinctly alleged that an agreement was made. Although it does not appear to me that there is any large difficulty in understanding the substance of what is alleged or in answering it, for clarity the pleading should allege in a distinct form each of the various alternative possible agreements upon which the plaintiffs wish to rely. 10 Counsel for the defendants made many observations adverse to the pleading. My approach to the application for leave to amend is guided by Pt20 r1, so that the application should not be tested by considering whether the pleading could be improved on or put in a form which was more elegant or closer to classic models, but that the plaintiffs should be allowed to raise contentions which they genuinely wish to raise, provided that the case which they wish to put forward is fairly arguable and can be understood from their pleading. 11 An observation was made by the defendants' counsel that "In para.14 of the proposed Amended Statement of Claim, a sale is alleged to have been to a corporation described as Vacumet Inc. The vendor is not identified in the pleading however in response to a request that the Plaintiffs identify the vendor, the Plaintiffs' solicitor stated that ' to the best of the Plaintiffs' knowledge, the Third Defendant was the vendor '…".

In my view for clarity and to avoid embarrassment para.14 should be redrafted in a form which the plaintiffs find suitable, which could for example be separate paragraphs alleging successively sales to Vacumet by the first defendant, the second defendant and the third defendant; or as the plaintiffs wish to frame their case. 12 A similar adverse observation was made by defendants' counsel on paras.15 and 16 and their references to allegations made about the sale "if effected by the first defendant". These observations should be met by setting out fully and separately each of the alternative allegations intended to be made. Observations to similar effect were made about later paragraphs 17, 18, 19 and 20 to 23 and should in my view be met by a similar redrafting exercise. In relation to paragraphs 20 to 23 defendants' counsel observed on the complete absence of particularity as to the sale or assignment referred to. The pleading should obtain all necessary particulars, so these paragraphs should contain greater particularity, subject to the limit that the plaintiffs can only give as much particularity as the information available to them and the proposed means of proving their case admit of; if a plaintiff sets about proving that an agreement was made by inference from circumstances rather than by proving the actual events and communications which constituted the agreement, the plaintiff may be in a position to give very little particularity yet still have a case worthy of adjudication. Again the adverse observations can be met by redrafting. So too can observations by defendants' counsel to the effect that it did not appear whether the allegations by the plaintiffs that certain sales or assignments were effected were allegations that they were effected in conformity with cl.21.8 of the Agreement, or without conforming to that clause. Although the number of alternative forms of allegations may perhaps be significantly magnified to meet this observation, the best course in my view is that the plaintiffs should carry out a redraft so as to meet the observation in each of the numerous cases in which it was made. 13 Paragraphs 32 to 43 of the Proposed Amended Statement of Claim allege a number of communications, facts and circumstances which are alleged to give rise to estoppels binding the defendants to various propositions of fact in favour of the plaintiffs. Observations made against these paragraphs were to the effect that there was no apparent utility in making declarations establishing the estoppels, and that they were said in the claims for relief to establish the position as at July 2000 whereas they had been made at various earlier times. It was also said that there was internal inconsistency and a lack of proper particularity. These are observations of kinds which will have to be considered when the proceedings go to trial and the plaintiffs seek to establish the estoppels, which is often a difficult and technical exercise. However the attack made by defendants' counsel was in my view an attempt to debate the merits of these allegations and did not go so far as to establish that they are unarguable or that the plaintiffs should not be given leave to amend to enable the plaintiffs to bring them forward. I make no prediction about whether they will succeed. 14 The plaintiffs' counsel made a number of observations adverse to allegations in paras 45 to 58 in support of claims under the Trade Practices Act 1974. It was said that some of these claims incorporate "… the vice of the hypothetical", that there is no allegation of misleading or deceptive conduct and that insofar as facts supporting claims under the Trade Practices Act 1974 are said to be established by the claims that there are estoppels, they are infected by the same vices as earlier alleged. In my view there is room for some redrafting of these paragraphs to overcome the criticism which defendants' counsel referred to as "the vice of the hypothetical" by spelling out all alternative positions relied on and by enunciating fully and clearly the allegation of misleading or deceptive conduct. 15 Paragraphs 59 to 72 of the Proposed Amended Statement of Claim are headed "Breach of constructive trust and Barnes v. Addy recipient liability of the second and third defendants". Paragraphs 59 to 62 allege to the effect that the second defendant acquired One-Pass Technology from the first defendant with knowledge of breach of the first defendant's obligations relating to payment of a royalty and the manner in which an assignment would be effected; and it is alleged that as a consequence the second defendant held One-Pass Technology on constructive trust for the plaintiff. Paragraphs 63 to 72 at greater length make generally similar allegations, against the third defendant incorporating a series of alternatives, built on a contention that the second defendant held One-Pass Technology on a constructive trust for the plaintiffs. Defendants' counsel said that these paragraphs claim without any clarity or basis an entitlement to equitable relief, and do not make clear the nature of the trust, the constructive trust and the breach of trust referred to, or identify the trust property or show how it obtained the character of trust property. These observations are correct. No facts are alleged which could arguably have constituted the second defendant as trustee, of a constructive trust or any trust, of One-Pass Technology for the plaintiffs; it is not alleged that the first defendant was itself a trustee or otherwise a fiduciary for the plaintiffs, and no reasons are alleged or grounds shown why breaches by the first defendant of contractual obligations to the plaintiffs would constitute either the first defendant or a person dealing with it a trustee or fiduciary for the plaintiffs. There is no arguable basis on which a person dealing with another person who is not shown to have been a trustee or fiduciary could incur Barnes v. Addy recipient liability. In my view the allegations made in paras.59 to 72 are not fairly arguable and should not be included in an Amended Statement of Claim. 16 Paragraph 73 is headed "Unjust Enrichment of Second and Third Defendants." Paragraphs 73 opens: "If it be the case that the Second or Third Defendants acquired One-Pass Technology from the First Defendant without consenting to be bound by the Agreement … then upon such receipt the Second or Third Defendants became unjustly enriched …".

Defendants' counsel said of this paragraph: "Paragraph 73 purports to plead, in a completely rolled up and conclusory fashion, an apparent claim of 'unjust enrichment'. No material facts supporting the elements of any cause of action that may give rise to some restitutionary obligation are pleaded." 17 In my view these observations are correct. The law of unjust enrichment, if it is to develop in Australia (a matter which cannot now be confidently predicted), is in a very early stage of development, and the facts alleged cannot be related to any known category of unjust enrichment which has been discussed or acted on in Australian case law. It is important that all material facts put forward as giving rise to a claim for unjust enrichment should be pleaded in a clear and detailed way. Otherwise there will not be procedural justice in considering what the parties contend and how the court should decide. The terms of the debate on new law should be clearly known. Far from being clear and detailed, para.73 alleges next to nothing of the claim put forward, and proceeds almost immediately to a supposed legal conclusion. On the basis of the allegations in para.73 there could not in my view be a fair trial of the proceedings or the achievement of procedural justice, as the defendants (and also the court) could not be in a position to know clearly, to understand, in the case of the defendants to meet and in the case of the court to adjudicate upon what in substance was alleged. In my view an amendment in these terms should not be allowed. 18 Defendants' counsel contended to the effect that it was inappropriate for the plaintiffs to make alternative allegations if they did not know which of the three defendants they ought to be suing, if any, and that the appropriate remedy was an application for Preliminary Discovery under Pt.3 of the Rules of Court. Although this contention was put at length, it can be dealt with shortly; the plaintiffs could obtain no useful remedies under Pt.3, which relates only to identification of the person concerned in a claim, and is not a vehicle for preliminary discovery of any wider range of information. 19 Pleading allegations of fact and raising grounds or claims in the alternative is authorised by the Rules of Court: see Pt.15 r.7. The plaintiffs proved by evidence the basis on which they have made and wish to make their allegations, and their evidence shows that they have a reasonable basis for putting forward their allegations, notwithstanding that they are also in need of interlocutory remedies such as discovery and inspection of defendants' documents, and interrogatories, as well as pleadings by the defendants which will show which of the matters claimed are disputed and which are admitted. Over objection I admitted evidence of the basis of facts as known on which the plaintiffs propose to make their allegations; such evidence was relevant to establish that the allegations are of substance and raise matters truly in issue and that amendments to raise them should be allowed. The evidence also shows the reasons why the plaintiffs can be expected to make many alternative and, at least on their face, inconsistent allegations. As defendants' counsel made observations to the effect that verification would be difficult or perhaps not possible where there were many alternative allegations, I should say that I regard the basis on which the plaintiffs propose to make the allegations as sufficiently established by the evidence which has been read on this application, so that there is no need for the court to require the Amended Statement of Claim when settled to be verified. The objects of the rule requiring verification include obtaining some assurance that allegations have been properly considered and are put forward with sincerity, and that that has been established in other ways. I propose to dispense with further verification. 20 The third defendant's Notice of Motion seeks a number of orders, principally in claim 4 an order that the originating process be set aside, in claim 2 a declaration that service on the third defendant is not authorised by the Rules of Court, and other claims for orders establishing that there is no jurisdiction or to like effects. Pt.10 of the Rules of Court deals with service outside the State and Pt.10 r.1A deals with cases for service of originating process. Subrule 1A(1) provides, with exceptions not now relevant, "… originating process may be served outside Australia in the following cases - "and sets out 24 cases lettered (a) to (x) including the following. (a) where the proceedings are founded on a cause of action arising in the State; (c) where the subject matter of the proceedings is a contract and the contract - (i) is made in the State; (ii) is made on behalf of the person to be served by or through an agent carrying on business or residing in the State; (iii) is governed by the law of the State; or (iv) is one a breach of which was committed in the State; (i) where the proceedings are properly brought against a person served or to be served in the State and the person to be served outside the State is properly joined as a party to the proceedings; (q) where the proceedings are for the execution of trusts which are governed by the law of the State, or are for relief which might be granted in proceedings for the execution of such trusts; 21 The rules authorising the third defendant to make the application are Pt.11 r.8 and Pt.10 r.6A in these terms: Pt 11 r 8(1) The Court may, on application made by a defendant to any originating process on notice of motion filed within the time fixed by subrule (2), by order - (a) set aside the originating process; (b) set aside the service of the originating process on the defendant; (c) declare that the originating process has not been duly served on the defendant; (d) discharge any order giving leave to serve the originating process outside the State or confirming service of the originating process outside the State; (e) discharge any order extending the validity for service of the originating process; (f) protect or release - (i) property seized, or threatened with seizure, in the proceedings; or (ii) property subject to an order restraining its disposition or disposal or in relation to which such an order is sought; (g) declare that the Court has no jurisdiction over the defendant in respect of the subject matter of the proceedings; (h) decline in its discretion to exercise its jurisdiction in the proceedings; (j) grant such other relief as it thinks appropriate.

(2) Notice of a motion under subrule (1) - (a) may be filed without entering an appearance; (b) shall bear a note "The defendant's address for service is" and state the address; (c) shall be filed within the time limited for entering an appearance. (3) The making of an application under subrule (1) shall not be treated as a voluntary submission to the jurisdiction of the Court. Pt 10 r 6A (1) The Court may make an order of a kind referred to in Part 11 rule 8 (which relates to setting aside etc originating process) on application by a person on whom an originating process is served outside Australia. (2) Without limiting subrule (1), the Court may make an order under this rule on the ground - (a) that the service of the originating process is not authorised by these rules; or (b) that this Court is an inappropriate forum for the trial of the proceedings. 22 The operation of these and related rules was considered in the judgment of Gaudron, McHugh, Gummow and Hayne JJ in High Court of Australia in Agar v. Hyde (2000) 201 CLR 552 at p568 para 36 and following. When dealing with the operation of Pt.10 r.1A their Honours said at p573-574: In deciding whether Pt 10, r 1A applied, and thus permitted service outside Australia of the originating process in these two actions, attention must be directed to the way in which the claims made by the respondents are framed. The paragraphs speak of 'proceedings [which] are founded on' a specified matter such as a cause of action arising in the State or a tort committed in the State. That focuses attention upon the nature of the claim which is made. That is, is the claim a claim in which the plaintiff alleges that he has a cause of action which, according to those allegations , is a cause of action arising in the State? The inquiry just described neither requires nor permits an assessment of the strength (in the sense of the likelihood of success) of the plaintiff's claim. The Court of Appeal was wrong to make such an assessment in deciding whether the Rules permitted service out. In so far as the contrary was held in Bank of America v Bank of New York [1995] ATPR 41-390 it should be overruled. The application of these paragraphs of r 1A depends on the nature of the allegations which the plaintiff makes, not on whether those allegations will be made good at trial. Once a claim is seen to be of the requisite kind, the proceeding falls within the relevant paragraph or paragraphs of Pt 10, r 1A, service outside Australia is permitted, and prima facie the plaintiff should have leave to proceed. Often enough, the statement of claim will reveal all that it is necessary to know to assess whether a plaintiff's claim is of the requisite kind. But that may not always be so. For example, the place of making of a contract, or the place of breach of a contract, may not appear from the pleading and some evidence may be required to establish that a relevant paragraph of Pt 10, r 1A (in the examples given, pars (c)(i) and (iii)) is engaged. And where, as here, a plaintiff relies on Pt 10, r 1A(1)(i), which provides for service outside the State on a person who is properly joined as a party to proceedings ' properly brought against a person served or to be served in the State', other considerations may arise in deciding both whether the joinder is proper and whether the action is 'properly brought'. 23 Their Honours went on to deal among other things with applications for leave to proceed; there is no such application before me. The judgment then continued at p575 para 55. On an application to set aside service, or to have the Court decline to exercise jurisdiction, attention might be directed to any of a number of features of the proceeding, the claims made in it, or the parties to it, in aid of the proposition that the Court should not exercise jurisdiction. Part 10, r 6A is cast in general terms and it would be wrong to attempt some exhaustive description of the grounds upon which the rule might be invoked. Nevertheless, it may be expected that three common bases for doing so are first, that the claims made are not claims of a kind which are described in Pt 10, r 1A (Pt 10, r 6A(2)(a)), secondly, that the Court is an inappropriate forum for the trial of the proceeding (Pt 10, r 6A(2)(b)) and thirdly, that the claims made have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claims. Whether the Rules prescribe a different test for determining questions of inappropriate forum from that developed at common law ( Voth v. Manildra Flour Mills Pty Ltd (1990) 171 CLR 538) is a question which we need not stay to consider. In these cases, it is necessary to deal only with the last of the bases we have mentioned. It was on this that the appellants chiefly relied. Insufficient Prospects. If service was authorised by the Rules, and has been properly effected, the Court's authority to determine the issues that are raised by the proceeding has been regularly invoked. If the Court is not persuaded that it is an inappropriate forum for trial of the proceedings, it will have reached that conclusion having given due weight to the considerations of comity and restraint which we mentioned earlier. Only then do the prospects of success of a claim made in originating process served outside Australia fall for consideration. 24 After considering the test for summary disposal their Honours said, at p576 para.60: For these reasons, the same test should be applied in deciding whether originating process served outside Australia makes claims which have such poor prospects of success that the proceeding should not go to trial as is applied in an application for summary judgment by a defendant served locally. 25 Submissions on behalf of the third defendant were principally directed to contending that service of the originating process is not authorised by the Rules of Court, that is, that these proceedings do not fall within any of the cases in Pt.10 r.1A. 26 In the Agreement for Sale and Purchase of Assets the address of the first plaintiff, which was the vendor, was given as its registered office in Kings Park, New South Wales, and a recital stated that it carried on business from premises at Kings Park, New South Wales. The governing law of the agreement was the law of New South Wales and the parties to the agreement submitted to the jurisdiction of the courts of New South Wales. Clause 25 established an address and a manner of delivery of notices for the first plaintiff at an address at Kirribilli New South Wales. In the circumstances the obligation under s.21.1 of the purchaser to pay a royalty to the first plaintiff as vendor should be understood to be an obligation to make payment in New South Wales, and a claim for debt in respect of the royalty, and a claim for damages in respect to failure to pay the royalty are causes of action arising in New South Wales. The proceedings against the first defendant are proceedings directly for the enforcement of a cause of action arising in New South Wales. In my opinion claims against other defendants related to not paying the royalty are also founded on causes of action arising in New South Wales. However I do not think this conclusion is altogether clear in relation to the claims made against the third defendant. 27 In my view it is altogether clear that the claims against the third defendant in the Statement of Claim up to and including para 43 fall within Case (c) as the subject matter of the proceedings is a contract made in this State and the subject matter falls within each of the four subclauses in Case (c). It was submitted to the effect that Case (c) relates only to a claim to enforce a contract against a party to it. I do not uphold this: I see no difficulty in the view that a contract may be the subject matter of proceedings even though the proceedings do not relate to its direct enforcement. The claims of misleading and deceptive conduct made against the third defendant in paragraph 54 to 58 incorporating paragraph 41 allege misleading and deceptive conduct by letters sent to the plaintiffs and the plaintiffs' solicitors and it should be understood (although the pleading should have been explicit on this subject) that the letters were sent to and received at addresses within New South Wales. It is authoritatively established that for jurisdictional purposes misleading and deceptive conduct being written or telephone communication occurs at the place of receipt of communication: see Ramsey v. Vogler [2000] NSWCA 260 and cases there cited: Paper Products Pty Ltd v. Tomlinson (Rockdale) Ltd (No. 2) (1993) 44 FCR 485 and Sydbank Seonderjylland v. Bannerton Holdings Pty Ltd (1996) 68 FCR 539. 28 I turn to Case (i). Joinder of Parties is dealt with by Pt 8 r 2 in these terms: Pt 8 r 2 Two or more persons may be joined as plaintiffs or defendants in any proceedings - (a) where - (i) if separate proceedings were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and (ii) all rights to relief claimed in the proceedings (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or (b) where the Court gives leave so to do. 29 It is in my view clear that the proceedings are properly brought against the first defendant which has been served in New South Wales and has appeared. It appears from observations in Agar v. Hyde which I have set out that the question whether a person to be served outside the State is properly joined is a question which may be affected by evidence of the facts. In my view there is a real association between the claims made against the first defendant, and against the second defendant, and the claims made against the third defendant, notwithstanding that they are made in the alternative, and notwithstanding that the possibility can be observed that it may ultimately be determined that the first or the second defendant or both had no liability but the third defendant does. Upon the terms of the plaintiffs' claim in the Proposed Amended Statement of Claim, it appears to me that common questions of fact would arise, and common questions law may arise, and that all rights to relief arise out of the same series of transactions. 30 Defendants' counsel pointed out that, in a case where there are many alternatives, it is possible that the Court may decide that the first defendant or the second defendant are not liable under any claim, leaving the third defendant subjected to the court's jurisdiction here although it was originally joined on the basis that it was properly joined with others. I see this possibility, which indeed is fairly obvious, and I am of the view that Case (i) is to be satisfied at the time of initiation of the proceedings notwithstanding the evident possibility that some of the persons who were properly joined may be found not to be liable. My conclusion is that service on the third defendant is within Case (i). 31 Case (q) was relied on but having regard to earlier rulings the proceedings should not be regarded as proceedings for the execution of a trust. 32 The claim of the third defendant for an order setting aside service on it of the Statement of Claim was also based in part on what was said to be the embarrassing nature of the pleading. Insofar as an amendment should be allowed, I would not uphold this part of the third defendant's contentions. 33 Submissions in reply by the defendant included submissions that the third defendant was not in a position, while avoiding submitting to the jurisdiction, to join with the other defendants in attacking the form of the pleading and opposing the application to amend. As discretionary considerations are involved in a decision whether the court should hear the claim against the third defendant, attacks on the plaintiffs' pleadings and proposed amendment raised considerations relevant to the third defendant's Notice of Motion; it might seem to the court that it was not appropriate to require a defendant to participate in litigation before it if the claims against that defendant were not fairly arguable, or not clearly expressed so as to be embarrassing, or put forward in a pleading which was in some other way defective. I was referred to observations of Burchett J in Trade Practices Commission v. Gillette Company [1993] 45 FCR 366 at 382 to a different effect, but with respect I do not agree with them. Further, I do not agree with his Honour's observation that "If they were properly raised, that would involve a submission to the jurisdiction." In my opinion if such arguments are raised in the course of an application made under Pt.11 r.8 there is no submission to the jurisdiction. It appears to me that the views expressed by Burchett J are not consistent with the approach taken in Agar v. Hyde, in which it appears to have been accepted that if a claim is not arguable service should be set aside. I make the implication that a person objecting to jurisdiction and asking for service to be set aside may contend that the claim was not arguable. 34 The submissions to the effect that this court is a clearly inappropriate forum were not based on any suggested difficulties or inconveniences of participating in proceedings here, but on the submissions generally relating to what was said to be inadequacy in the pleadings, with which I have dealt. In my view it has not been established that this court is a clearly inappropriate forum. 35 In my view I should give to the plaintiffs an opportunity to produce a Further Proposed Amended Statement of Claim, redrafted in accordance with the views I have expressed. I cannot dispose finally of the motions except on consideration of the Amended Statement of Claim in a form ultimately to be allowed. Accordingly I propose to publish these reasons

to the parties, and to fix a suitable time within which the plaintiffs may produce a further amendment and renew their application for leave to amend.

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