Lew Footwear Holdings Pty Ltd v Madden International Ltd [2014] VSC 320

1 Both the plaintiff, Lew Footwear Holdings Pty Ltd ("Lew Footwear"), and the defendant, Madden International Ltd ("Madden"), have applications before the court.

2 Lew Footwear is incorporated in Victoria, with its registered office in Melbourne, and only conducts business in Australia. Lew Footwear seeks orders dispensing with the Supreme Court (General Civil Procedure) Rules 2005 (Vic) regarding the requirements for serving an originating process out of Australia without order of the court. Further, Lew Footwear seeks leave to file and serve an amended writ and an amended statement of claim ("the Proposed Statement of Claim").

3 Madden is incorporated in Hong Kong. Madden has no offices or employees in Australia. Madden is a wholly owned subsidiary of Steven Madden Ltd, a company based in New York ("the Madden Holding Company"). Madden was served in Hong Kong with the writ and the statement of claim filed in this proceeding ("the Statement of Claim"). On 27 September 2013, a notice of conditional appearance was filed on behalf of Madden. Madden seeks the following relief in the alternative:

(3) An injunction restraining Lew Footwear from prosecuting the proceeding, subject to further order of the court.

4 For the reasons that follow, it is proposed that an order will be made staying the proceeding. However, any such order will not be made for 14 days from the date of delivery of this judgment. In the meantime, an order will be made granting liberty to apply. This will allow Lew Footwear, if so advised, to file and serve any further affidavit upon which it might seek to rely in light of these reasons. If liberty to apply is not acted upon in 14 days, then the proceeding shall be stayed permanently.

5 Negotiations commenced between Lew Footwear and Madden in or about mid July 2009 with the purpose of appointing Lew Footwear as a distributor. There were extensive oral and written communications before an agreement was finally reached between the parties in late 2009. I will return to some of these communications shortly.[1]

6 On or about 2 December 2009, Lew Footwear and Madden entered into 2 written agreements.

7 By a licence and distribution agreement dated 30 November 2009, Madden appointed Lew Footwear to distribute Madden's footwear, accessories and other products ("the Products") in Australia and New Zealand for a term of 5 years ("the Licence Agreement").

8 By a further agreement ("the Royalty Agreement"), Lew Footwear agreed to pay a royalty to Madden in relation to the Products sold by Lew Footwear pursuant to the Licence Agreement. The Royalty Agreement contained a formula pursuant to which the royalty was to be calculated. It is not necessary to give the details of the formula. However, it is necessary to understand a term of the Licence Agreement pursuant to which the price of the Products was to be calculated.

9 Clause 12 of the Licence Agreement ("the Pricing Term") provided that Lew Footwear was required to buy the Products directly from Madden "on an 'agreed cost' basis, (such cost to be factory cost plus reasonable cost of sampling, testing, agent and Hong Kong office fees, etc. such reasonable costs not to exceed 13%)" ("the Agreed Cost Basis"). The Pricing Term also provided, amongst other things, that Lew Footwear had the ability to examine the factory invoices upon random request, such requests not to exceed 10 percent of all orders. There was no provision for Lew Footwear to examine any other invoices relevant to the calculation of prices fixed on the Agreed Cost Basis.

10 The Pricing Term further provided that "every order shall have a purchase price which has been pre-agreed upon by both Madden and [Lew Footwear]. No order shall be deemed final until such agreement is confirmed". In other words, unless and until Lew Footwear had actually agreed with Madden on the price of the Products for any particular order, Madden could not fix the price pursuant to the Agreed Cost Basis or otherwise.

11 The Licence Agreement contained provisions concerning the choice of law and choice of forum, namely clause 22(e) and (f):

(e) Governing Law. This Agreement has been executed and delivered in, and shall be governed by and construed in accordance with the laws of the State of New York, applicable to contracts made and performed in such state and without regard to conflict of laws provisions ("the Governing Law Clause").

(f) Resolution of Disputes. [Lew Footwear] (i) consents and submits to the jurisdiction of any state or federal court of competent jurisdiction located in the Counties of New York, Queens and Nassau, State of New York, in any action or proceeding arising out of or relating in any manner to this Agreement, (ii) waives any claim that any such state or federal court is an inconvenient forum, and (iii) irrevocably agrees that any and all actions or proceedings arising out of or relating to this Agreement or the transactions contemplated herein shall be exclusively heard only in such state or federal court, provided that nothing herein shall affect Madden's right to bring an action or proceeding against [Lew Footwear] in the courts of any other jurisdiction where the purpose of such action or proceeding is to seek injunctive relief against [Lew Footwear], or collect moneys due and owing from [Lew Footwear] to Madden ("the Forum Clause").

12 In the negotiations leading up to the execution of the Licence Agreement and the Royalty Agreement, Madden repeatedly referred to its own business model, pursuant to which it had standard forms of agreement in place. Madden asserted that the business model worked everywhere else, including in the United Kingdom, Canada, China, Turkey, Dubai and Israel. As part of the negotiations, Madden contended that the business model should also work in Australia.

13 Notwithstanding the position taken by Madden, Lew Footwear was persistent in relation to some of the changes it wanted made to the Licence Agreement before it was executed. One of those amendments related to the Pricing Term. There were numerous exchanges in relation to this clause.

14 In the last written communication from Lew Footwear on this topic, on 9 October 2009, Stephen Kenmar ("Kenmar"), a director[2] and in-house counsel[3] for Lew Footwear, contended that the then existing draft prepared by Madden left Lew Footwear very vulnerable as Lew Footwear could not know what the costs referred to in the Pricing Term would be. Kenmar also contended that, as there was no formula, Lew Footwear could not ascertain how costs were to be apportioned between Lew Footwear and other licensees of Madden.

15 On 10 November 2009, in response to Lew Footwear's concerns, Madden proposed a change to the Pricing Term. This change was accepted by Lew Footwear and was incorporated into the Licence Agreement. In short, it was only in the month leading up to the execution of the Licence Agreement that the form of words the subject of the Pricing Term was agreed. There was no suggestion in any of the exchanges between the parties that Madden had put in place some form of system to ensure that the Pricing Term as finally agreed would be complied with.[4]

16 On 20 November 2009, Kenmar executed the Licence Agreement on behalf of Lew Footwear. He did this at an office in Melbourne.

17 On the same day, Kenmar sent a signed counterpart of the Licence Agreement[5] by international express post to the Madden Holding Company, addressed to the senior vice president of strategic planning and finance of the Madden Holding Company, Alan Novich ("Novich"). The Madden Holding Company was based in Long Island City, New York. Kenmar also emailed the signed counterpart to the vice president of Madden, Ian Funk ("Funk"), copied to Novich and Daniel Hammerschlag ("Hammerschlag")[6] of Lew Footwear.

18 On 2 December 2009, whilst in Melbourne, Hammerschlag received notification of Madden's acceptance of Lew Footwear's offer. This was by an email sent from Long Island City, New York, attaching the Licence Agreement. The Licence Agreement had been executed in Long Island City by the chief operating officer of Madden. Hammerschlag then sent an email inquiring whether a hard copy had been forwarded to Lew Footwear "by post or courier". On 3 December 2009, Hammerschlag was told that the document had been sent by "Fed-Ex", which duly arrived and was received by Kenmar on 4 December 2009 at his Melbourne office.

B.4 Events after execution of the Licence Agreement

19 Pursuant to the Licence Agreement, some time after December 2009, Lew Footwear placed orders with Madden from time to time. From approximately 28 April 2010, Madden commenced rendering invoices to Lew Footwear.

20 Having entered into the Licence Agreement and the Royalty Agreement, Lew Footwear took steps to establish retail stores in Australia for the purpose of selling the Products. Throughout 2010, 2011, 2012 and early 2013, Lew Footwear entered into leases for retail stores in central locations in Victoria, New South Wales, Queensland and South Australia. The Products were also supplied by Lew Footwear to David Jones Ltd. No stores were opened in New Zealand. Of the 15 stores opened by Lew Footwear, 5 of those stores have been closed, with closure dates ranging from 24 September 2012 to 27 October 2013. The remaining stores continue to operate.

21 As at late 2009, Madden had an established ordering process in relation to footwear sold internationally. Six times a year Madden holds "shoe shows" in New York, at which buyers from around the world attend. Since the Licence Agreement was entered into, representatives of Lew Footwear have attended these shows as a matter of course for the purpose of identifying Products in which they were interested. Representatives of Lew Footwear attend 3 to 4 shows each year.

22 Following each such event, Madden issues its distributors, including Lew Footwear, with itemised details in relation to the Products, together with a blank purchase order. Lew Footwear then sends an email from Australia to Madden in New York attaching a purchase order. Lew Footwear, to date, has sent between 20 to 40 orders per year.

23 The footwear sold by Madden under the Licence Agreement is, and has been, primarily manufactured in China and Mexico. No shoes are, or have been, manufactured in Australia. It is unclear on the evidence whether or not the manufacturing of the shoes occurs before or after orders are placed by Lew Footwear.

24 In any event, once the orders placed by Lew Footwear have been filled, contact is made with the freight forwarder of Lew Footwear to collect the Products and ship them to Australia. Madden has no responsibility for freighting the Products from its overseas manufacturers to Australia.

25 Upon the Products being delivered to the freight forwarder of Lew Footwear, Madden's Hong Kong office sends, by email, an invoice to Lew Footwear in Melbourne. Periodically, statements of account are sent by Madden's New York office to Lew Footwear. Payments by Lew Footwear for outstanding invoices are made by wire transfer to Madden in Hong Kong.

26 Contrary to the Pricing Term, from 15 March 2011, Madden remitted invoices with costs greater than costs calculated on the Agreed Cost Basis. For the period from 15 March 2011 to 17 January 2012, it is alleged 26 invoices contained prices calculated in excess of the Agreed Cost Basis, which invoices totalled $174,220.98. In addition to these invoices, for the periods 10 February 2012 to 31 March 2012 and 1 April 2012 to 30 June 2012, Madden has expressly acknowledged that Madden rendered invoices to Lew Footwear for amounts which were in excess of the prices allowed under the Pricing Term.

27 Although the materials of Lew Footwear do not identify precisely the amounts involved, evidence filed by Madden provided some further detail.[7] In summary, as at 13 June 2014, the total of the overpayments made by Lew Footwear for all invoices rendered was $247,702.31. This was from total sales of $9,792,293.53; representing approximately 2.53% of total sales.

28 On 10 October 2013, Madden filed a summons seeking, in effect, to bring this proceeding to an end. Before the return date of the summons, an order was made on the papers by an associate judge providing for affidavits and submissions to be filed by the parties. The submissions filed by Madden on 27 March 2014 included a reference (for the first time[8]) to the fact that the writ was not indorsed for the purpose of service outside Australia as required by r 7.02(1) of the Supreme Court Rules.

29 On 31 March 2014, Lew Footwear filed a summons. Pursuant to r 2.04 of the Supreme Court Rules, Lew Footwear sought an order from the court dispensing with the need for compliance with r 7.02(1). The summons did not seek any other substantive relief.

30 Upon the return of both summonses before an associate judge on 2 April 2014, orders were made for any further submissions to be filed and served by the parties. The orders noted in other matters that it was just, efficient and cost effective that the applications be referred to a judge of the court for hearing and determination in order to avoid unnecessary delay and appeals and to facilitate the determination of all issues, including Madden's application for an anti-suit injunction.

31 The matter came on for hearing before me on 29 April 2014. At that time, the following affidavits had been filed:

(a) Funk, sworn 30 October 2013 and 14 November 2013;

(b) Daniel Hargraves ("Hargraves"), attorney at law of Hargraves McConnell & Costigan, New York, sworn 9 October 2013.

(a) Samuel Maxwell Bond ("Bond"), solicitor for Lew Footwear, affirmed 31 March 2014 and 23 April 2014;

(b) Hammerschlag affirmed 25 November 2013 and 24 April 2014;

(c) E Leo Milonas ("Milonas"), attorney at law of Pillsbury Winthrop Shaw Pitman, New York, sworn 4 December 2013.

32 The submissions filed on behalf of Lew Footwear on 24 April 2014 asserted that the failure to include an indorsement on the writ in accordance with the Supreme Court Rules was by inadvertence. However, there was no evidence to this effect. In the absence of any evidence, Madden submitted it was inconceivable that the non-compliance was inadvertent.

33 By 29 April 2014, no attempt had been made by Lew Footwear to formulate an appropriate indorsement. It was suggested by the court that an efficient way to deal with some of the issues outstanding would be for Lew Footwear to prepare the appropriate indorsement and provide it to Madden before the matters between the parties were fully agitated.[9] This suggestion was adopted by Lew Footwear. Consequently, the matter was adjourned to a date convenient to the parties and the court, namely 10 June 2014.

34 On 29 April 2014, it was also noted that the court had been provided with an expert opinion on the law of New York State by Hargraves, which had been the subject of substantial disagreement in the affidavit of Milonas filed by Lew Footwear. I indicated that the court would be assisted if Hargraves provided a response to the Milonas affidavit.

35 Accordingly, on that date, orders were made for Lew Footwear to file and serve a proposed amended writ and proposed amended statement of claim, and for Madden to file and serve any affidavit from Hargraves in reply. The parties were also directed to file and serve updated and consolidated outlines of submissions. As a result of these orders, Hargraves swore a further affidavit on 19 May 2014, and Milonas swore an affidavit in response on 28 May 2014.

36 By the Statement of Claim, Lew Footwear referred to both the Licence Agreement and the Royalty Agreement. Claims were made for breach of the Licence Agreement. These claims were on the basis that the Pricing Term had not been complied with because invoices had been rendered with prices in excess of the Agreed Cost Basis.

37 In addition to the contractual claims, claims based on misleading or deceptive conduct[10] were made under the Trade Practices Act 1974 (Cth) and the Australian Consumer Law contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth). Those claims alleged that, in or about late November or early December 2009, Madden represented to Lew Footwear that:

(a) Madden had systems in place capable of calculating prices for Products purchased by Lew Footwear from Madden equal to an "agreed cost" basis, such cost to be factory cost plus reasonable costs of sampling, testing, agent and Hong Kong office fees etc, such reasonable costs not to exceed 13% [referred to in the Statement of Claim as the "First Representation"]; and

(b) Alternatively to (a), Madden would put systems in place capable of calculating prices for Products purchased by Lew Footwear from Madden equal to an "agreed cost" basis, such cost to be factory cost plus reasonable costs of sampling, testing, agent and Hong Kong office fees etc, such reasonable costs not to exceed 13% [referred to in the Statement of Claim as the "Second Representation"].

38 The First Representation and the Second Representation were alleged to have been made by implication. Particulars of that implication were "the fact that Madden agreed to charge for Products in accordance with the Pricing Term under the Licence Agreement and from the fact that, in order to comply with its contractual obligations, Madden needed to have a system in place capable of calculating prices for Products purchased by Lew Footwear from Madden equal to an 'agreed cost' basis ...". It was also alleged that Madden was well aware of the importance of the Pricing Term to Lew Footwear by reason of correspondence between the parties prior to the Licence Agreement being entered into. Four pieces of correspondence were identified, dated 3 September 2009, 18 September 2009, 2 October 2009 and 9 October 2009 ("the Correspondence"). Each of these was sent by Kenmar.

39 The Statement of Claim also alleged representations were made by Madden after the Licence Agreement was executed. The next representation alleged to have been made by Madden (referred to in the Statement of Claim as the "Third Representation") was put on the basis that, on each occasion Madden rendered an invoice for the Products, Madden represented to Lew Footwear that the price specified in each such invoice was equal to a price ascertained on the Agreed Cost Basis. The particulars to this allegation were based on the silence of Madden in failing to state that the invoice did not comply with the Pricing Term.

40 Finally, the Statement of Claim alleged representations were made after the overcharging had been discovered by Lew Footwear and had been accepted by Madden as having occurred. Those allegations were that, on or about 21 February 2012, Madden represented to Lew Footwear that:

(a) Madden had put systems in place capable of calculating prices for Products purchased by Lew Footwear from Madden equal to an "agreed cost" basis, such cost to be factory cost plus reasonable costs of sampling, testing, agent and Hong Kong office fees etc, such reasonable costs not to exceed 13% [referred to in the Statement of Claim as the "Fourth Representation"]; and

(b) Madden would in future render invoices to Lew Footwear for Products at an "agreed cost" basis, such cost to be factory cost plus reasonable costs of sampling, testing, agent and Hong Kong office fees etc, such reasonable costs not to exceed 13% [referred to in the Statement of Claim as the "Fifth Representation"].

41 The particulars in relation to the Fourth Representation and the Fifth Representation alleged that the representations were made by Funk on behalf of Madden, in conversations between Funk and Bruce Tarrant ("Tarrant") "on behalf of Lew Footwear". Tarrant was not employed by Lew Footwear. He was described in an affidavit filed by Lew Footwear as "an employee of Century Plaza Trading Pty Ltd (a company within the Lew group of companies)".

42 Lew Footwear pleaded reliance upon "the First Representation further and alternatively, the Second Representation in entering into the Licence Agreement and the Royalty Agreement and, thereafter, incurring expenditure and liabilities in establishing a market for the Products in Australia" (emphasis added). Lew Footwear also alleged the "First Representation, further or alternatively the Second Representation, was false and misleading" (emphasis added). These allegations did not sit comfortably with the fact that the First Representation and the Second Representation were pleaded strictly in the alternative.[11]

43 The particulars of reliance upon the First Representation and the Second Representation stated that Kenmar made it known to Madden that the pricing of the Products was critical to Lew Footwear. It was said this was done by certain means, including the Correspondence. It was also stated that "Lew Footwear would not have entered into the Licence Agreement if it had known that Madden had no systems in place or would not put systems in place capable of calculating prices for Products purchased by Lew Footwear from Madden equal to an 'agreed cost' basis ...". The particulars also refer to Lew Footwear having a belief at the time the Licence Agreement and the Royalty Agreement were entered into that Madden either had systems in place or would put them in place. No person said to hold such a belief on behalf of Lew Footwear was identified in the particulars.

44 It was also alleged that each of the Third Representation, the Fourth Representation and the Fifth Representation was false and misleading. Further, it was alleged that Lew Footwear relied upon each of these representations in continuing to incur expenditure and liabilities in establishing a market for the Products in Australia. Again, the particulars did not identify the person or persons at Lew Footwear that placed reliance upon the Third Representation, the Fourth Representation or the Fifth Representation in so acting.

45 In relation to the Second Representation and the Fifth Representation, it was pleaded that each of those representations was as to a future matter and was made without reasonable grounds. Lew Footwear stated it would rely upon s 51A of the Trade Practices Act and s 4 of the Australian Consumer Law respectively in relation to the absence of reasonable grounds.

46 Lew Footwear pleaded it had suffered loss and damage by reason of Madden's misleading and deceptive conduct. In relation to the First Representation, and further or alternatively the Second Representation, the loss claimed was by reason of Lew Footwear entering into the Licence Agreement and the Royalty Agreement. Lew Footwear claimed the expenditure and liabilities incurred in establishing a market for the Products in Australia. Further, expenditure and liabilities were claimed which were said to be incurred after the making of the Third Representation, the Fourth Representation and the Fifth Representation. The particulars of loss concluded with the following:

1. the cost incurred by Lew Footwear in establishing a market for the Products in Australia, less the revenue earned by Lew Footwear from the sale of the Products; and
2. the overpayments of royalty under the Royalty Agreement, insofar as Madden has not already paid compensation to Lew Footwear for such overpayments.

No details beyond this were provided, though further particulars of loss were promised prior to trial.

D.2 Submissions made in response to the Statement of Claim

47 In the written submissions of Madden filed before the hearing on 29 April 2014, substantial criticism was made by Madden of the form of the pleading contained in the Statement of Claim. Further, criticism was made that the affidavits filed on behalf of Lew Footwear did not include any evidence that any officer or employee of Lew Footwear had relied upon any of the alleged representations.

48 In focussing on the absence of any pleading or evidence of reliance upon the alleged representations by any person on behalf of Lew Footwear, Madden submitted the court should be sceptical of the case put. It was contended that it was not self-evident that a distributor such as Lew Footwear would make outlays and investment decisions based on an uncommunicated assumption about whether the supplier had or would have a particular accounting system. It was said that this was even more so in this case as Lew Footwear had bargained expressly for rights in the Licence Agreement to inspect the supplier's factory cost invoices, but had not sought to impose any obligation on Madden as to the kind of system that was required.

49 It was further submitted by Madden that it was not credible that Lew Footwear's investment decision to establish a market in Australia for the Products was based on a belief as to the present or future existence of an accounting system when factors such as the quality of the Products, their consumer appeal or reputation and the promised cost of the Products would be the expected basis upon which a distributor would enter into the Licence Agreement.

50 Finally, it was submitted that the scepticism the court should attend to the allegations should be heightened by the failure of Lew Footwear to complain about the absence of the assumed accounting system in the contemporaneous communications concerning the errors in pricing (which communications were tendered in evidence by Lew Footwear).

51 Indeed, in the initial letter of complaint dated 25 January 2012, Kenmar stated that Lew Footwear had been involved in importing footwear into Australia for a number of years. Kenmar stated that, as a result of another company in the Lew group of companies being a major importer of women's footwear, Lew Footwear "knows what the footwear it is acquiring from [Madden] should be costing". Furthermore, in a later email, sent by Tarrant on 21 February 2012, Tarrant said that Lew Footwear was very appreciative that Madden had "openly worked with [Lew Footwear] and given [Lew Footwear] full transparency on the commission discrepancies".

52 On 22 February 2012, Funk sent an email indicating Madden had calculated that the discrepancies totalled $231,120.11. Nothing in the evidence suggests this figure was disputed by Lew Footwear. This amount was refunded by Madden in February 2012.

53 In summary, it was contended that Lew Footwear could not establish a strong arguable case[12] due to the lack of pleading or evidence as to who at Lew Footwear relied upon the representations pleaded in the Statement of Claim.

54 Pursuant to the orders made on 29 April 2014, Lew Footwear took the opportunity not only to include an indorsement on the proposed amended writ, but also to include substantial changes to the Statement of Claim. In contrast to what had been previously pleaded, Lew Footwear no longer pleaded representations upon which it relied in the alternative. Further, what was previously pleaded as the First Representation[13] was omitted from the Proposed Statement of Claim.

55 The representations now proposed concerning the basis upon which Lew Footwear entered into the Licence Agreement are different. By the Proposed Statement of Claim, it is alleged that Madden represented to Lew Footwear that:

(a) Madden would, during the continuation of the Licence Agreement, have systems in place capable of calculating prices for Products purchased by Lew Footwear from Madden equal to an "agreed cost" basis, ... [referred to in the Proposed Statement of Claim as the "First Representation"];

(b) Madden would, during the continuation of the Licence Agreement, render invoices to Lew [Footwear] at prices for Products purchased by Lew Footwear from Madden equal to an "agreed cost" basis, ... [referred to in the Proposed Statement of Claim as the "Second Representation"].

56 In substance, the proposed First Representation encapsulates what was previously referred to as the Second Representation. Further, the proposed Second Representation is effectively a representation that Madden would comply with the Pricing Term while the Licence Agreement remained on foot. In essence, it amounts to no more than a representation that, in the future, Madden would abide by the terms of the Licence Agreement with respect to the prices charged for the Products.

57 The particulars of the proposed First Representation and the proposed Second Representation are that each of them was made by implication. The particulars go beyond the earlier particulars in the Statement of Claim, which referred to the existence of the Pricing Term and the Correspondence.[14]

58 The proposed amendments include allegations that certain representations were made not only implicitly from the parties agreeing to the Pricing Term, but also from the negotiations that were conducted before the Licence Agreement was entered into.[15] The evidence is that those persons negotiating on behalf of Lew Footwear, namely Hammerschlag and Kenmar, principally conducted the negotiations from Melbourne. Further, the particulars proposed now include reference to a revised draft of the Licence Agreement which introduced the Pricing Term, and each subsequent draft.

59 The Third Representation was also the subject of amendment. Instead of suggesting a representation based upon silence,[16] Lew Footwear alleges that the positive conduct of rendering invoices amounted to a representation that the price specified in each such invoice complied with the Pricing Term. The particulars previously provided in relation to the Third Representation were deleted. There are no new particulars proposed.

60 There was no change proposed in relation to the Fourth Representation or the Fifth Representation. (I will refer to the representations alleged in the Proposed Statement of Claim collectively as "the Representations" and to the claims made based on the Representations collectively as "the Representations Claims".)

61 The Proposed Statement of Claim alleges that Lew Footwear was induced to enter into the Licence Agreement and the Royalty Agreement "in reliance on the accuracy of each of the First Representation and the Second Representation" (emphasis added). As already noted, this was not the way the case was originally pleaded.[17]

62 The particulars of the reliance on the First Representation and the Second Representation were also amended. Such reliance is now said to include Kenmar making his requests regarding the Pricing Term in the Correspondence and executing the Licence Agreement for and on behalf of Lew Footwear in the belief that Madden would have systems in place and render invoices as alleged. The particulars also include details of Lew Footwear establishing 15 stores in reliance on the First Representation and the Second Representation. There is no suggestion that Kenmar, a director of Lew Footwear from 2 October 2009 and in-house counsel, was responsible for the decision to establish the 15 stores. No person is identified in the Proposed Statement of Claim in this regard. Given Kenmar's position, and although he executed the Licence Agreement, it seems highly unlikely that he alone would have represented the "mind" of Lew Footwear and been responsible for the commercial decisions to proceed with the execution of the Licence Agreement and to open the stores.[18] No submission to this effect was made by Lew Footwear.

63 The Proposed Statement of Claim also alleges that reliance was placed on the Third Representation, the Fourth Representation and the Fifth Representation by making payments on invoices rendered by Madden and continuing to incur expenditure and liabilities in establishing a market for the Products in Australia. Again, no person from Lew Footwear is identified as having placed such reliance upon the Third Representation, the Fourth Representation and the Fifth Representation. On the matter of reliance, reference is simply made to "Lew Footwear". It is stated further in the particulars that Lew Footwear opened an additional store in reliance on the Fourth Representation and the Fifth Representation. The person or persons involved in this decision are not identified.

64 Each of the First Representation, Second Representation and Fifth Representation pleaded in the Proposed Statement of Claim is alleged to be with respect to a future matter within the meaning of s 51A of the Trade Practices Act[19] or s 4 of the Australian Consumer Law.[20] It is pleaded that reliance would be placed upon those provisions in deeming Madden not to have reasonable grounds for the making of these Representations respectively.

65 The loss and damage claimed by Lew Footwear was also the subject of amendment. However, in substance the loss as particularised in the Statement of Claim was repeated.[21]

66 As a result of a suggestion that it was not clear in the Proposed Statement of Claim that any substantive loss had been suffered by reason of the absence of any particulars as to the amount of Lew Footwear's revenue, Lew Footwear sought to provide further particulars of the loss claimed. Lew Footwear was granted leave to amend the proposed particulars of loss during the course of argument.[22] These further particulars claim that Lew Footwear has suffered substantial trading losses as a result of the Licence Agreement and the Royalty Agreement having been entered into. A further affidavit from Hammerschlag was filed to verify the further proposed particulars of loss. The losses claimed under this head of loss, up to October 2013, are approximately $6.8 million. It is also alleged the losses are continuing.

67 Before addressing the issues for determination, there were a number of concessions made, quite properly, on behalf of Lew Footwear.

68 First, Lew Footwear accepted that, if the only issues raised in this proceeding were based on contractual claims under the Licence Agreement, then there would be no proper basis for arguing that this proceeding should not be stayed or otherwise set aside. This concession gives due recognition to the Governing Law Clause and the Forum Clause.[23]

69 Secondly, insofar as the proposed indorsement seeks to rely upon a breach of the Licence Agreement by Madden, it was accepted that it could not be established on a good arguable basis (or strongly arguable basis)[24] that the breach of the Licence Agreement occurred within Victoria.

70 Thirdly, in the event that the court ordered a stay of the proceeding based on the substantive issues before the court,[25] then Lew Footwear agreed it would not commence a fresh proceeding. Accordingly, if these circumstances were the basis of an order for a stay, and subject to any right of appeal, there would be no need for the court to consider whether an anti-suit injunction should be ordered.

F.2 Dispensation from compliance with r 7.02(1)

71 In order to fill a lacuna in the evidence concerning the non-compliance with r 7.02(1),[26] Bond affirmed a further affidavit on 2 June 2014. In this affidavit Bond "confirm[ed] that the failure to make the necessary [i]ndorsement on the writ was as a result of my inadvertence in overlooking the requirements of Order 7 and was in no way deliberate or contrived". This evidence was objected to by Madden on the basis that it was a conclusion rather than admissible evidence.

72 In order to avoid any issue about the relevant evidence being properly before the court, Lew Footwear called Bond to give evidence orally. Although Madden submitted otherwise, the evidence of Bond demonstrated that the absence of an indorsement upon the writ was inadvertent, in the sense that, at the time Bond caused the service of the originating process outside Australia, he simply did not turn his mind to the need to check the Supreme Court Rules to ascertain precisely what was required. Although Bond is a very experienced solicitor, his evidence was that he could not recall ever having to consider the requirements of the Supreme Court Rules for the purpose of serving an originating process out of Australia.

73 Without elaborating further, based on Bond's oral evidence, there can be no suggestion that there was a conscious or deliberate act on the part of Bond, or anyone else on behalf of Lew Footwear, not to include the indorsement on the writ.

74 The terms of r 2.01(1) make it plain that the failure to indorse the writ in accordance with r 7.02(1) is an irregularity and does not render the proceeding a nullity.[27] Practically speaking, there appears to be little, if anything, to be achieved by not dispensing with the requirements under r 7.02(1). Lew Footwear has indicated that, if dispensation were not ordered and the writ was set aside on this basis alone, it would simply file and serve a new writ with the appropriate indorsement.[28] As already noted, Lew Footwear has subsequently prepared an indorsement in accordance with r 7.02(1).[29]

75 Without in any way diminishing the importance of complying with the Supreme Court Rules, in the event Lew Footwear is entitled to proceed, there seems to be no utility in refraining from granting dispensation. Further, the facts pleaded are sufficiently recent that no time limitation issues would arise if Lew Footwear were required to file and serve a new writ. Madden could point to no prejudice if dispensation were ordered.

76 In the circumstances, it is plain that, if service out of Australia is not set aside or the proceeding is not stayed, then dispensation ought to be granted.

F.3 Service out of Australia - threshold issues

77 As a preliminary matter, in this judgment a person who has served an originating process out of Australia will be referred to as an, or the, "Originating Party"; and an overseas defendant who has been served with an originating process out of Australia will be referred to as an, or the, "Overseas Defendant".

Originating process may be served out of Australia without order of the Court where -

...

(f) the proceeding is one brought to enforce, rescind, dissolve, rectify, annul or otherwise affect a contract, or to recover damages or other relief in respect of the breach of a contract, and the contract -

(i) was made within Victoria;

...

(g) the proceeding is brought in respect of a breach committed within Victoria of a contract wherever made, even though that breach was preceded or accompanied by a breach out of Victoria that rendered impossible the performance of that part of the contract which ought to have been performed within Victoria;

...

(i) the proceeding is founded on a tort committed within Victoria;

(j) the proceeding is brought in respect of damage suffered wholly or partly in Victoria and caused by a tortious act or omission wherever occurring;

...

79 It is convenient for the discussion that follows to also refer to rr 7.02, 7.04 and 7.05, which provide:

7.02 (1) Originating process served on any defendant out of Australia in accordance with this Order shall, at the time of service on that defendant, contain an indorsement stating the facts and the particular paragraph of Rule 7.01 relied upon in support of such service.

(1.1) The indorsement under paragraph (1) shall be distinct from the indorsement of claim on the originating process, but any fact in support of service out of Australia which is a fact alleged by the indorsement of claim may be incorporated by specific reference in the indorsement under paragraph (1).[30]

(2) If the originating process does not contain the indorsement referred to in paragraph (1) at the time it is filed, the plaintiff, in accordance with paragraph (3), may amend the originating process to include the indorsement.

(3) The originating process shall be taken to be amended upon the filing by the plaintiff of a copy of the originating process with the indorsement included.

(4) Upon the filing of an amended copy of originating process under paragraph (3) or at any later time, the Prothonotary, on the request of the plaintiff, shall seal a sufficient number of copies of the originating process as amended for service and proof of service.

...

7.04 (1) Where no appearance is filed by a party served with originating process out of Australia, the Court may order that the plaintiff shall be at liberty to proceed if satisfied -

(a) that the subject matter of the proceeding so far as it concerns that party is within Rule 7.01; and

(b) that the originating process was duly served on that party.

(2) An application for an order under paragraph (1) shall be supported by affidavit or other evidence showing the grounds on which the application is made.

7.05 (1) The Court may make an order of the kind referred to in Rule 8.09 on application by a party served with originating process out of Australia.[31]

(2) Without limiting paragraph (1), the Court may make an order under this Rule on the ground -

(a) that service out of Australia is not authorised by these Rules; or

(b) that Victoria is not a convenient forum for the trial of the proceeding.

(3) The Court may make an order under this Rule -

(a) before an application is made under Rule 7.04; or

(b) before an order of the Court is made on such an application.

80 Under the Supreme Court General Rules of Procedure in Civil Proceedings 1985 (Vic)[32] ("the Former Rules"), the rules governing service out of the jurisdiction were fundamentally different. Service could not be effected until an Originating Party seeking to serve "a writ of summons" or "notice of writ of summons" had obtained an order of the court. Order 11 r 1 set out the subject matter of which the court needed to be satisfied before leave could be granted.

81 Before the court could make an order for service out of the jurisdiction, O 11 r 2 of the Former Rules had to be complied with, which read:

Every application for leave to serve such writ or notice on a defendant out of the jurisdiction shall be supported by affidavit or other evidence stating that in the belief of the deponent the plaintiff has a good cause of action and showing in what place or country such defendant is or probably may be found and whether such defendant is a British subject or not and the grounds upon which the application is made; and no such leave shall be granted unless it shall be made sufficiently to appear to the Court or Judge that the case is a proper one for service out of the jurisdiction under this Order.

(Emphasis added.)

82 As is readily apparent, what was required under O 11 r 2 bears no resemblance to the matters required to be the object of an "affidavit or other evidence" under r 7.04; the latter being confined to "the grounds on which the application is made" and proof of proper service of the originating process. Further, O 11 r 2 imposed a threshold of it appearing "sufficiently" that the case "was a proper one", which was required to be met before leave could be granted; no such threshold appears in the language of r 7.04 or any other rule of the Supreme Court Rules. (As to the significance of this, see paragraphs 92 to 96 below.)

83 The Former Rules provided for a defendant to be at liberty to apply to set aside the service of a writ or to discharge an order authorising service.[33] Further, if no appearance was filed in time, and no application had been made to set aside the writ, upon filing a proper affidavit of service, an Originating Party was entitled to proceed as if a foreign defendant had appeared.[34] The court also had a discretion as to whether or not to stay a proceeding upon the application of such a foreign defendant.[35]

84 Consistent with earlier English decisions,[36] which "greatly influenced" the approach under the Former Rules,[37] the court was required to exercise its jurisdiction with great care. Any doubt as to whether the discretion should have been exercised was required to be resolved in favour of the foreign defendant in question.[38] With such an approach, before leave could be granted under the Former Rules, it was held that where a defendant moved the court to stay a proceeding, or to set aside a previous order, the court had to be satisfied, on the whole of the material, that "the plaintiff" had a strongly arguable case. This required the Originating Party to prove that it had a "sufficient foundation for the alleged cause of action", together with a strong argument that the subject matter of the proceeding was within 1 or more of the paragraphs of O 11 r 1.[39]

85 Lew Footwear raised an issue as to whether or not, on an application made under r 7.05, the court must be satisfied on evidence as to all the matters set out in r 7.01. Lew Footwear contended that it is sufficient for facts as pleaded to be relied upon to the extent those facts overlap with the subject matter of r 7.01. That said, Lew Footwear submitted that the court need not decide this issue as Lew Footwear had elected to put evidence before the court. In light of the view I have formed of this evidence, it is necessary to determine the issue.

86 Further, Lew Footwear contended that, putting aside hopeless or futile cases, there is no occasion for the court to consider the merits of the claims made by an Originating Party when an application is made by an Overseas Defendant under r 7.05. In contrast, Madden submitted Lew Footwear needs to satisfy the court that Lew Footwear has a strongly arguable case both as to the merits of each cause of action and the jurisdictional facts set out in r 7.01.

87 There is a real controversy about the test to be applied in this court in determining the requirements of r 7.01 where an originating process is served out of Australia without order of the court and its service is subsequently challenged. Given this controversy, some historical analysis of the decisions made under this rule is appropriate. The relevant starting point is 2 cases that were decided in 1992.

88 The earlier case was Melban Pty Ltd v Eu Chin Nominees Pty Ltd,[40] in which it was held that a party seeking to serve out of the jurisdiction must show, according to what might be called the traditional approach, "a strong arguable case". In so deciding, Ormiston J did not refer to any authority, or any language in r 7, which supported such an approach. It is not clear from the judgment whether any competing submissions were made by counsel before his Honour handed down his decision (which was delivered on the same day the hearing was completed).

89 His Honour found that the Originating Party had failed on the evidence to establish such a case, both in relation to a contract being made in Victoria and with respect to a breach of that contract having been committed within Victoria. Although claims in tort were also made, no application was made by the defendant in time to set aside service out of Australia.[41] Accordingly, the issue of what an Originating Party was required to put before the court on such causes of action to establish the subject matter was within r 7.01(1) was not discussed.

90 In the later case, Williams v The Society of Lloyd's,[42] McDonald J also adopted the traditional approach. This was done in the context where the plaintiff accepted that he was required to establish on the evidence that service out of the jurisdiction was authorised.[43]

91 McDonald J referred to a line of authority including cases decided under the Former Rules[44] and the rules of the English courts. As already noted,[45] generally, before the current Supreme Court Rules, a party intending to serve a process out of the jurisdiction was required to obtain the leave of the court before the process was served.[46]

92 Having considered these cases, McDonald J then referred to decisions in the Supreme Court of New South Wales[47] based on amendments to the rules of that court introduced in 1988.[48] Those rules, like the Supreme Court Rules, did away with the requirement of obtaining leave to serve an originating process out of Australia. His Honour distinguished those decisions on the basis that, in circumstances where no appearance was filed after service, the rules of New South Wales had removed the necessity of the court to be "satisfied" before leave of the court to proceed could be ordered. In so doing, the following was stated:[49]

However whereas under Pt 10 r 2 of the Supreme Court Rules of New South Wales provides that a plaintiff is not able to proceed against a defendant who does not enter an appearance "except with leave of the Court", the like rule of this court requires the court to be "satisfied" that the subject matter of the proceeding is within r 7.01 before liberty to proceed may be granted.

93 Having set out the terms of r 7.04(1), his Honour continued:[50]

That such requirement has been retained by virtue of r 7.04(1) of the rules of this court leads to the conclusion in my view that the propositions for which Carroll v Laurie and Dewhurst[51] stand have not been overtaken by changes for the purpose of the rules of this court. Also of significance is the difference between r 8.09 of this court and Pt 11 r 8 of the Rules of the Supreme Court of New South Wales. Under the latter ... there is a very wide discretion vested in the court of that State by virtue of the provisions of that rule which is not given to this court by virtue of the provisions of r 8.09 of this court.

94 Pausing here, reference was not made in the judgment to matters that previously needed to be the subject of evidence under the Former Rules before service out could occur, including a belief that the Originating Party had a good cause of action and the grounds upon which the application is made. Further, no reference was made to the removal of the threshold under the Former Rules; namely, no leave could be granted unless it had been "made sufficiently to appear" to the court that the case was a "proper" case for service out.[52]

95 Furthermore, McDonald J did not refer in this analysis to the fact that the New South Wales Rules (as amended in 1988) not only removed the reference to the court being "satisfied", but also ceased to impose a requirement of "anything being made to appear to the court".[53]

96 Moreover, and perhaps most significantly, no comparison was made between the subject matter in respect of which the court needed to be satisfied under r 7.04 (concerned with non-appearance) and with what the court needed to be satisfied under the old New South Wales rule (concerned with leave to serve out). The old rule, Pt 10 r 1, had 2 matters of which the court needed to be satisfied; namely, "that the proceedings are proceedings to which r 1 applies; and that the applicant has a prima facie case for the relief which he seeks" (emphasis added).[54] The latter requirement is nowhere to be found in r 7 of the Supreme Court Rules.

97 As to the differences between r 8.09 of the Supreme Court Rules[55] and Pt 11 r 8, I struggle to see any significance in the fact that the New South Wales rule provides for the court to be able to grant relief beyond setting aside the writ or staying the proceeding (such as ordering declaratory relief). It appears to me to be an entirely neutral factor. If I were required to express a different view, I would suggest that the more expanded form of relief might support an argument that the threshold in New South Wales would be raised by the existence of such further powers. In any event, I cannot see the difference as a basis for contending that the more confined terms of r 8.09 suggest an Originating Party in Victoria bears a higher burden in meeting the requirements of r 7.04 or resisting an application under r 7.05.

98 Returning to the judgment of McDonald J, his Honour then expressly approved "the test enunciated" in Carroll v Laurie,[56] WA Dewhurst & Co Pty Ltd v Cawrse[57] and Melban Pty Ltd v Eu Chin Nominees Pty Ltd.[58] McDonald J continued as follows:[59]

It is for the plaintiff to establish on consideration of all the admissible material that there is a strong argument for the opinion that the conditions provided by r 7.01 or such of them as may be relied upon have been satisfied. If such was not the case then a different standard and test would be applicable when leave to proceed was sought pursuant to r 7.04. For the same reasons it is not appropriate in such an application as the present, where the same or similar issues will by necessity be conclusively decided at trial as are under consideration in this application, to postpone the determination of the sufficiency of the satisfaction of the requirements of r 7.01 to the trial of the proceeding.

On these applications it is for the plaintiff to persuade the court that in respect of each cause of action on which [she, he or it] relies ... there is a strong arguable case that service out of the jurisdiction of that claim is justifiable under one or other of the sub-rules of r 7.01 as is relied on. If at the end of the day the plaintiff has been successful in discharging the onus in respect of some of the claims made, but not others, it is for [her, him or it] to elect whether [she, he or it] will proceed only with those claims ... or have the whole proceedings stayed on the basis that the statement of claim contains a cause or causes of action in respect of which the defendants could not be served out of the jurisdiction. Such claims cannot be tacked on to the claims which the plaintiff is justified in serving out of the jurisdiction.

(Citations omitted, emphasis added.)

99 There is no controversy that an Originating Party must establish that each cause of action is within r 7.01 before it may proceed with each claim that has been challenged by an Overseas Defendant.[60]

100 In Commonwealth Bank of Australia v White,[61] Byrne J referred to the passage in paragraph 98 above in accepting that the Originating Party must establish a strong arguable case that service out of the jurisdiction wa[62]justified.62 But there was no argument on this issue. The parties proceeded on the agreed basis that this was the threshold to be met before the court's discretion could be exercised. His Honou[63]then said:63

I, therefore, accept this as the basis of my task, without expressing any view whether in an application made under r 7.05 the onus lies on the serving party to show that the requirements of r 7.01(1) have been met and not on the applicant to demonstrate the contrary.

101 His Honour suggested there was a difficulty in identifying what it was that the Originating Party must establish. Having referred to the competing submissions of the parties,[64] and some English authorities, his Honour then referred to the "most helpful analysis" of the Court of Appeal of New South Wales in Hyde v Agar.[65] In that case, it was stated that the "good arguable case" test should be adopted "provided it is understood that the test is to be applied to establishing the jurisdictional nexus".[66] Having referred to this with approval, Byrne J then addressed the matter of the court's discretion:[67]

This done, the court must then exercise its discretion, whether to permit the serving party to proceed under r 7.04 or whether to set aside service or stay the proceeding under r 7.05. With respect to the function of the court in this discretionary phase, their Honours [in Hyde v Agar] said this: "... it is unlikely that questions of the merits of the case will play much role in the exercise of the ultimate discretion". ... It follows from this that, if I am satisfied to the required degree that a circumstance in r 7.01(1) has been made out, I might permit the proceeding to go forward unless there is good reason not to. Such a reason might be that the proceeding is futile.

(Citations omitted.)

102 The manner in which the case was presented to Byrne J did not require his Honour to consider whether, and the extent to which, evidence was required to enable the court to be satisfied of the requirements of r 7.01. This is because substantial evidence was filed in that case. However, on the question of the discretion, again by reference to Hyde v Agar,[68] his Honour said:[69]

... the strength of the evidence needed to establish the existence of the cause of action or, in the circumstance presently under consideration, the tort, "should not be regarded as much, if anything, more than is required to survive a strike out application in accordance with the well known principles applicable in this court". Under ... the New South Wales rules, evidence is admissible on a strike out application. The cases referred to in Ritchie's Supreme Court Procedure - New South Wales, however, show that evidence has a very restricted role in such an application, usually to demonstrate the uncontrovertible falsity of a pleaded allegation.

His Honour then went on to consider the evidence before him, but only on the assumed basis that, contrary to his apparent approval of Hyde v Agar, he was incorrect in following the approach of the Court of Appeal in New South Wales.[70]

103 On appeal to the High Court, the decision of the Court of Appeal in Hyde v Agar was overturned.[71] The decision was based on the High Court determining that sport administrators responsible for the rules of rugby union did not owe a duty of care of the kind alleged.[72] However, there were also comments made in relation to the New South Wales rules concerning service out of the jurisdiction.

104 The plurality judgment, delivered by Gaudron, McHugh, Gummow and Hayne JJ, commenced the discussion on service out of the jurisdiction by dispelling the notion that, in modern times at least, the exercise of the court's jurisdiction based on rules providing for service out of the jurisdiction could be considered as exorbitant. In this regard, their Honours stated:[73]

It is, however, important to notice that rules of court, or local statutes, providing for service outside the jurisdiction are now commonplace - at least in jurisdictions whose legal systems have been formed or influenced by common law traditions. Further ... contemporary developments in communications and transport make the degree of "inconvenience and annoyance" to which a foreign defendant would be put, if brought into the courts of this jurisdiction, "of a qualitatively different order to that which existed in 1885".[74]

(Citations omitted.)

The considerations of comity and restraint, to which reference has so often been made in cases concerning service out of the jurisdiction, will often be of greatest relevance in considering questions of forum non conveniens. The starting point for the present inquiry, however, must be the terms of the Rules, not any general considerations of the kind just mentioned.

(Citation omitted, emphasis added.)

106 Mindful that the starting point is the terms of the Supreme Court Rules and also of the fact that the High Court was considering the New South Wales Supreme Court Rules as they stood in 2000,[76] there are some observations made by the plurality that are of assistance. As may be seen, some aspects of the approach adopted by their Honours stand in stark contrast to that encapsulated in the authorities referred to by McDonald J in Williams v The Society of Lloyd's.[77]

107 In point form, the relevant observations are:[78]

(1) Attention must be directed to the way in which the claims made are framed. When the relevant paragraphs of the rules speak in terms of a proceeding "founded on"[79] a specified matter, then the focus of attention is 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?"[80] (Original emphasis.)

(2) The inquiry referred to in (1) above "neither requires nor permits an assessment of the strength (in the sense of the likelihood of success) of the plaintiff's claim".[81] (Emphasis added.)

(3) The application of the provisions concerning service out of the jurisdiction depends on the nature of the allegations which the Originating Party 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 [the rule], service outside Australia is permitted, and prima facie the plaintiff should have leave to proceed."[82]

(4) If the statement of claim does not contain allegations necessary to know whether or not the claim is of the requisite kind, it may be that some evidence is required to establish that a relevant paragraph is engaged.[83]

(5) Different issues arise on the hearing of an application for leave to proceed[84] from those that arise on the hearing of applications to set aside service or to decline to exercise jurisdiction.[85]

(6) On an application for leave to proceed, if the originating process makes a claim of the requisite kind, the process may be served outside Australia. On proof of service of the process, the court's jurisdiction is, prima facie, properly invoked over the party who has been served. In the absence of some countervailing consideration, leave to proceed should then be given.[86]

(7) The rule pursuant to which an Overseas Defendant may challenge service out of the jurisdiction is in general terms and it would be wrong to attempt some exhaustive description of the grounds upon which the rule might be invoked. Nevertheless, 3 common bases for invoking the rule are first, the claims are not of the requisite kind, secondly, the court is an inappropriate forum for the trial of the proceeding, and thirdly, the claims made have insufficient prospects of success to warrant putting an Overseas Defendant to the time, expense and trouble of defending the claims.[87]

(8) The position of an Overseas Defendant should be subject to the same test as a defendant served within the jurisdiction when determining whether or not the prospects of the claims made are such that the proceeding should not go to trial; namely, the test applied in an application for summary judgment by a defendant served locally.[88]

108 Lew Footwear submitted this court was now bound to follow the approach set out in the preceding paragraph. Madden submitted that the Supreme Court Rules are materially different to the New South Wales Supreme Court Rules and, therefore, the plurality judgment in Agar v Hyde was distinguishable. Madden further submitted that the approach of the plurality was contrary to a decision of the Court of Appeal of this court,[89] which I was bound to follow.

109 There have been a number of cases decided in Victoria concerning service out of Australia under the Supreme Court Rules since Agar v Hyde.[90] No Victorian authority was referred to by Lew Footwear as having applied the approach in the plurality judgment.

110 However, in Puccini Festival Australia Pty Ltd v Nippon Express (Australia) Pty Ltd,[91] Cavanough J strongly suggested, albeit in obiter dicta and without the benefit of argument, that the observations of the plurality had changed the test to be applied in Victoria. His Honour stated:[92]

Unless there is a relevant distinction between r 7.01 and the corresponding provisions of the Supreme Court Rules 1970 (NSW) which were considered by the High Court in Agar v Hyde (and at present I cannot see any), the observations of Gaudron, McHugh, Gummow and Hayne JJ[93] of Agar, would seem to establish that, on an application to set aside service out of the jurisdiction, it is for the plaintiff to show, merely, that according to the allegations made, the plaintiff's proceeding answers one or other of the descriptions in r 7.01(1)(a)-(n); and then it is for the defendant to show (if the defendant be so advised) that there is a high degree of certainty that the plaintiff's claim (as a whole) will fail. With respect, I doubt whether [Schib Packaging Srl v Emrich Industries Pty Ltd[94]] and the earlier cases referred to in Schib ... can be reconciled with the observations to which I have referred. Agar is not referred to in Schib. In Eagle v Delta Haze Corporation,[95] a single judge of this court cited the judgment of Gleeson CJ in Agar[96] in support of the proposition that the question is whether there is a good or strong arguable case that the jurisdictional nexus exists. However, with respect, it seems to me that the view of Gleeson CJ (like that of Callinan J in Agar) was a minority view.

(Original emphasis.)

111 Notwithstanding this view, because of a concession made by counsel on behalf of the plaintiff in that case, Cavanough J proceeded to apply the traditional test in determining that, on the facts as presented, the writ ought not be set aside.

112 The decision of the Court of Appeal in Schib Packaging Srl v Emrich Industries Pty Ltd[97] was a case not only in which the decision of Agar v Hyde[98] was not referred to, but also where there was no argument as to the applicable test. The plaintiff (being the respondent on the application for leave to appeal) conceded that the onus was on it to establish a "strongly arguable case ... that the relevant conditions of r 7.01 have been satisfied".[99] This concession was accepted by the court.[100] In doing so, reference was made by the Court of Appeal to the earlier single judge decisions of Williams v The Society of Lloyd's[101] and WA Dewhurst & Co Pty Ltd v Cawrse,[102] but there was no consideration by the court of the words of the rule in question, or how it was that such a threshold needed to be met notwithstanding the Supreme Court Rules, in terms, impose no such requirement.

113 The most recent case addressing this issue is Castel Electronics Pty Ltd v TCL Airconditioner (Zhongshan) Co Ltd.[103] Under the heading "Agar v Hyde: Has the law changed?" consideration was given to the plurality judgment and any impact it may have had on the proper construction of r 7.01. Like the case before me, it was argued that the plaintiff was only required to show the allegations were within r 7.01; and that there was no need for evidence to be led to demonstrate this or to show that there was a strongly arguable case on the merits, for establishing jurisdictional nexus.[104]

114 After referring to earlier authorities, Davies J concluded that an Originating Party was still required to show a strongly arguable case, albeit confined to establishing the jurisdictional facts. Her Honour said as follows:[105]

I am not persuaded that the plurality view [in Agar v Hyde] of the NSW Rules has application to r 7.01. In my view, the [Supreme Court Rules] are materially distinguishable because of the retention of the requirement for the court, in an application for leave to proceed under r 7.04, "to be (sic) satisfied" that the subject matter of the proceeding is within r 7.01. Accordingly, it follows that I am not persuaded that WA Dewhurst & Co Pty Ltd v Cawrse, which was applied in Williams v The Society of Lloyd's and more recently in Schib, is no longer good law in Victoria. Those cases establish that the onus is on a plaintiff to show a strong arguable case as to the existence of the jurisdictional facts supporting service of a claim outside of Australia. That onus is not satisfied merely by showing that the claims made in the originating process are of a kind referred to in r 7.01.

(Emphasis added.)

115 Further, her Honour stated that, by referring in Eagle v Delta Haze Corporation[106] to the judgment of Gleeson CJ in Agar v Hyde,[107] it was implicit that Mandie J did not consider the approach of the plurality in Agar v Hyde applied to r 7.01(1) of the Supreme Court Rules.[108]

F.3.3.5 Binding authority - a strongly arguable case

116 In light of the above, the initial question to determine is whether there is binding Victorian authority on a primary judge of this court in relation to the correct approach when an application is made by an Overseas Defendant under r 7.05. In my view, there is.

117 The duty of a lower court is to give effect to the decision of its immediately higher court.[109] If it appears to a judge that there is an inconsistency between the immediately higher court and an even more superior court, it must be assumed that the immediately higher court correctly distinguished the decision of the superior court (unless, perhaps, it is beyond argument that there is a direct conflict[110]). As the High Court decision in Agar v Hyde[111] is concerned with rules of court other than the Supreme Court Rules, the assumption that the Court of Appeal distinguished that decision is readily made.

118 Thus, notwithstanding the absence in Schib Packaging Srl v Emrich Industries Pty Ltd[112] of any reference to Agar v Hyde,[113] and also the fact that the matter was not argued in full before the Court of Appeal, in my opinion I am bound by the conclusion stated,[114] namely that an Originating Party is required to establish "a strongly arguable case" to successfully resist an application under r 7.05. Further, the decision makes it clear the "strongly arguable case" approach is confined to establishing the existence of the subject matter in r 7.01(1).[115]

119 It follows that, contrary to Madden's submission, an Originating Party is not required, as a matter of course, to make out a strongly arguable case as to the merits of each cause of action.[116] That said, because the subject matter in some of the paragraphs of r 7.01(1) overlaps with, or goes beyond, the elements of the cause of action in question, in some cases an Originating Party would need to establish a strongly arguable case on the merits in order to satisfy the court the relevant cause of action comes within the subject matter of the relevant paragraph or paragraphs of r 7.01(1).

120 Nevertheless, having reached this conclusion, the approach I ought to adopt to the issues at hand is instructed by the observations of Moffitt P in Proctor v Jetway Aviation Pty Ltd.[117] These were to the effect that, if there is uncertainty in the mind of a judge, and it is not practicable to refer the matter to the Court of Appeal, it is open to the judge to draw attention to matters of doubt and the possible need for review of the earlier binding decision.

F.3.3.6 Assuming the absence of a binding authority of the Court of Appeal

121 Accordingly, in case I am incorrect in my opinion as to the status of Schib Packaging Srl v Emrich Industries Pty Ltd,[118] and also because it is possible this matter may be the subject of an application for leave to appeal, it is appropriate I also construe the relevant provisions independent of the statement by the Court of Appeal as to the applicable test.

122 In these circumstances, my primary focus must be upon the language of r 7.01,[119] read in the context of the Supreme Court Rules as a whole. Further, particular focus needs to be placed upon the decision of Davies J.[120] Given the judgment was delivered after specifically considering the plurality judgment in Agar v Hyde, I ought follow her Honour's approach, unless I form the view that her approach was clearly wrong.[121]

123 It is clear, as Davies J pointed out in Castel Electronics Pty Ltd v TCL Airconditioner (Zhongshan) Co Ltd,[122] that there is a difference between the Supreme Court Rules and the relevant rule in the New South Wales Rules.[123] The requirement under the New South Wales Rules for a plaintiff to obtain leave of the court[124] is not identical with a plaintiff's[125] obligations in Victoria under r 7.04. However, the question remains whether the requirement for the court to be "satisfied", before the court may exercise its discretion under r 7.04, carries with it a need for the Originating Party to put evidence before the court to establish a strongly arguable case in opposing an application under r 7.05.[126]

124 As recognised by the plurality judgment in Agar v Hyde,[127] issues which may arise in obtaining a judgment in default of appearance are quite separate and distinct from the questions that arise when an Overseas Defendant makes an application under r 7.05. In a proceeding with pleadings, the general approach is that a plaintiff may obtain judgment in default of an appearance without any consideration of the merits of the case.[128]

125 By reference to the language of the Supreme Court Rules, the following points are made concerning rr 7.01 and 7.05:

(1) With the introduction of r 7, there was a complete change in the approach to be taken by the court for service out of Australia, when compared with the Former Rules. Generally speaking,[129] r 7 no longer requires the involvement of the court before service out of Australia may properly occur.

(2) Rule 7.01(1) is permissive, and provides that if the subject matter of a proceeding answers the description of any of the paragraphs, then service may be effected. There is no other condition imposed beyond the subject matter of the proceeding falling within any of the paragraphs of r 7.01(1).

(3) The plurality judgment in Agar v Hyde[130] makes it plain that, on the threshold issue of whether the subject matter is within a paragraph or paragraphs of r 7.01(1), the requirement of being satisfied does not impose a regime more onerous than the specific requirements set out in r 7.01.

(4) The indorsement for the purposes of rr 7.01 and 7.02(1) is not to be confused with the indorsement on a writ.[131] As is recognised by r 7.02(1.1), the indorsement on a writ may be incorporated into an indorsement prepared for the purposes of complying with r 7.02(1), but otherwise is not "an indorsement stating the facts and the particular paragraph of Rule 7.01 relied upon in support of such service".

(5) Rule 7.05 gives the court a discretion[132] concerning the making of orders to set aside the originating process or stay the proceeding. There is nothing in the language of this rule (or r 8.09) which requires the party resisting such an application to bear the onus of establishing a strongly arguable case.

126 In light of observations in earlier cases[133] about the terms of r 7.04 being relevant to the proper construction of rr 7.01 and 7.05, the following further points are made:

(1) The use of the word "satisfied" in r 7.04 does not, of itself, necessarily impose a high threshold that must be met. The level of satisfaction required depends on the context in which "satisfied" is used.[134] The term has "various shades of meaning".[135] As was stated by Dixon J in Briginshaw v Briginshaw,[136] "the nature of the issue necessarily affects the process by which reasonable satisfaction is attained".

(2) The nature of the issue, when an application is made under r 7.04, is whether a plaintiff should be entitled to proceed when an Overseas Defendant has failed to file an appearance (conditional or otherwise) after being served with an originating process. When a defendant is served within Australia and fails to file an appearance, it is a relatively straightforward process for a plaintiff to obtain judgment in default of appearance.[137]

(3) Rule 7.04, confined as it is to circumstances where no appearance is filed by an Overseas Defendant, imposes a requirement that an application "be supported by affidavit or other evidence" before a plaintiff be at liberty to proceed. The 2 matters of which the court must be "satisfied" before an order may be made are:

(a) the subject matter of the proceeding is within r 7.01; and

On the face of the rule, there is nothing else of which the court must be satisfied (which is markedly different to O 11 r 2 of the Former Rules[138]).

(4) The affidavit or other evidence must show "the grounds on which the application is made". This requires no more than identifying the basis on which the application is made. An affidavit or other evidence referring to such grounds meets the description of what is required under r 7.04(2).

(5) Beyond identification of the grounds, it would be wrong to seek to state what an affidavit must contain in order for the court to be satisfied that the subject matter of the proceeding is within r 7.01. Each case must depend upon its own facts. In some cases a court will be more readily satisfied than in others.

(6) If the requirements under r 7.04 are relevant to the approach to be taken when an application is made by an Overseas Defendant under r 7.05 (about which there must be some doubt[139]), the requirement to satisfy the court imposes no additional burden beyond what would ordinarily be required on an uncontested interlocutory application.

127 Absent some binding authority to the contrary, I could see no proper basis for superimposing on the language of rr 7.01 and 7.05 any further requirement or threshold. The rule indicates that the subject matter must be within a paragraph or paragraphs of r 7.01(1). Once that is established, the discretion of the court is enlivened. Of course, that discretion must be exercised judicially, taking into account all relevant considerations. But beyond that, the language of the rule does not permit the court to engage in any assessment of the merits of the dispute.[140]

128 In short, on the face of the rule, the merits of a claim are not to be taken into account. If this construction were accepted, an Originating Party ought to be able to prosecute its case if the court is satisfied that the subject matter of each claim is within r 7.01 (putting aside forum issues or where a case might be futile or have no real prospects of success,[141] which would be a basis to have the court exercise its discretion against the Originating Party).

129 Such a conclusion is supported by the plurality judgment in Agar v Hyde,[142] which makes it plain that there is no principle upon which a court could properly impose some higher threshold. On the contrary, the points referred to above[143] make it plain that the rules must be given their natural and ordinary meaning, without reference to general considerations concerning comity and restraint.

130 Absent the decision of the Court of Appeal in Schib Packaging Srl v Emrich Industries Pty Ltd,[144] I would have considered myself bound to reject the traditional approach. Given the state of the authorities at first instance in Victoria, the language of the rule itself and the clear directive from the plurality judgment in Agar v Hyde[145] as to how courts of this century ought to approach the proper construction and operation of provisions such as r 7, the traditional approach does not readily appear to be applicable.

131 As will already be apparent,[146] in reaching this conclusion, I do not agree with the process of reasoning of McDonald J in contrasting the Supreme Court Rules with the New South Wales Supreme Court Rules to arrive at the construction that his Honour did. In short, comparing "satisfied" under r 7.04 with the same term in the old New South Wales rule for seeking leave to serve out as a ground for maintaining the test of a strongly arguable case was, based on the plurality judgment in Agar v Hyde, a flawed approach.[147]

132 It also follows that, if I did not consider myself bound by Schib Packaging Srl v Emrich Industries Pty Ltd,[148] I would have seen no proper basis for following WA Dewhurst & Co Pty Ltd v Cawrse.[149] It is a decision of over 50 years ago, when the courts took a fundamentally different approach to service out of the jurisdiction, including service out of Australia. This different approach was reflected not only in the rules of court at that time, but also in the statements of principle as to the approach to be taken in relation to service out. In present times, in my respectful opinion, such previous statements of principle are not appropriate to impose a threshold beyond what is contained in the language of the Supreme Court Rules.

133 In these circumstances, regrettably, I am compelled to the view that the decision of Davies J in Castel Electronics Pty Ltd v TCL Airconditioner (Zhongshan) Co Ltd[150] was wrong insofar as her Honour suggested the New South Wales Rules were "materially" different to the Supreme Court Rules concerning an application under r 7.05.

134 Also, I find it difficult to accept that it was implicit from the judgment in Eagle v Delta Haze Corporation[151] that the approach of the plurality in Agar v Hyde[152] was considered inapplicable to r 7.01(1). This is because Mandie J in that case referred to a passage in the plurality judgment with approval,[153] in which passage reference was made to the relevant rules of the New South Wales Supreme Court Rules. Further, in addition to the reference to Gleeson CJ in Agar v Hyde, Mandie J referred with approval to the earlier decisions of this court[154] without seeking to make any material distinction between the Supreme Court Rules and the New South Wales Rules.

135 In summary, if I had been at liberty to do so, I would have found the correct approach for the court to take, when an application is made by an Overseas Defendant to set aside the originating process or stay the proceeding, is as follows:

(1) The court must determine whether the subject matter of the proceeding is within r 7.01(1).

(2) The question as to the subject matter of the proceeding, ordinarily, is to be answered by reference to the allegations made in the originating process, plus any evidence beyond the pleaded allegations to the extent that the pleading does not contain allegations necessary to establish the claim is of a requisite kind to satisfy a paragraph or paragraphs of r 7.01(1).[155] (It is possible that the Originating Party must also produce an affidavit or other evidence showing the grounds on which the application is made.[156])

(3) The court may consider further evidence beyond that referred to in (2) above, directed towards whether the facts as alleged or the additional facts put forward by way of evidence are plainly incorrect.[157]

(4) Save for the circumstances in (3), for the purpose of determining whether or not r 7.01(1) has been complied with, the court should not consider the merits of the claims.[158] If a party demonstrates the subject matter is within the paragraph or paragraphs of r 7.01(1) relied upon, then, prima facie, the party is entitled to proceed with its claims.[159]

(5) Each cause of action must be considered individually, and only those causes of action consisting of subject matter within r 7.01(1) may be continued.[160]

(6) If it has been determined that the claims are of the requisite kind, the court may then, before exercising its discretion, consider whether this court is an inappropriate forum and, where appropriate, consider whether the claims made are futile or have insufficient prospects of success to warrant putting the Overseas Defendant to the time, expense and trouble of defending the claims.[161] The test to be applied is the same as the test applicable in an application for summary judgment.[162]

136 Having determined what must be established by Lew Footwear, and on what basis, I now turn to consider each of the paragraphs in r 7.01(1) relied upon. For the reasons stated, I will approach this exercise adopting the test as stated in Schib Packaging Srl v Emrich Industries Pty Ltd.[163] In case this matter is to go further, I will also briefly express my conclusions based on the approach set out in paragraph 135 above.

F.3.4 Rule 7.01(1)(f)(i): "the contract was made within Victoria"

137 Notwithstanding the concession of Lew Footwear concerning the contractual claims (see paragraph 68 above), it is still necessary to consider whether or not the conditions of r 7.01(1)(f)(i) have been met. In the event that Lew Footwear has met the requirements applying to its other claims, it may be relevant to the overall disposition of the matter to ascertain whether or not the contract was made [164]Victoria.164

138 Before turning to the facts of this case, it is convenient to identify what lies at the heart of determining where a contract was made. Generally speaking, a contract is not created unless and until the acceptance by the offeree of an offer is actually communicated to the offeror. However, in 1818, a rule of contract law was identified which has become known as the postal acceptance rule.[165] In Henthorn v Fraser,[166] the rule was described in the following manner:

Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.

Accordingly, if the postal acceptance rule is applicable, the contract is made in the location from which the acceptance is posted.

139 Lew Footwear relied upon the following passage in Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd.[167]

The general rule is that a contract is not completed until acceptance of an offer is actually communicated to the offeror, and a finding that a contract is completed by the posting of a letter of acceptance cannot be justified unless it is to be inferred that the offeror contemplated and intended that his offer might be accepted by the doing of that act.

Lew Footwear submitted that no such inference was available to be drawn.

140 I was also referred to a more recent decision of Wardle v Agricultural and Rural Finance Pty Ltd.[168] In that case, Campbell JA, with whom Barrett JA and Sackville AJA agreed,[169] doubted the future existence of the rule in light of the passage referred to in the preceding paragraph. His Honour then considered the rationale of the postal acceptance rule by reference to a number of cases and articles.[170] Having done so, his Honour stated:[171]

There is widespread acceptance among commentators that it is hard to find an explanation for the postal acceptance rule, other than the pragmatic necessity of having a rule of some sort, and that rule being no worse than any alternative. The relevance of this for the present case is that if no more satisfactory explanation for the postal acceptance rule is available than that a rule of some sort is needed to enable there to be certainty about when and how a contract may be formed by people communicating at a distance, that does not provide a very promising basis for arguing that there is a general rule of law whereby, if the parties envisaged that the post will be used, posting a document has the same effect as handing it to the intended recipient.

(Citations omitted.)

141 In Victoria, the postal acceptance rule is still recognised and may be applied in determining when and where a contract was made. In Schib Packaging Srl v Emrich Industries Pty Ltd,[172] a general proposition was stated, namely:[173]

When a contractual offer (or counter offer) has been accepted by non-instantaneous means of communication, the postal acceptance rule applies and the contract is made at the place of acceptance. ... [W]hen a contractual offer (or counter offer) has been accepted by instantaneous means of communication, as in this case where the parties corresponded by facsimile, the postal acceptance rule does not apply and the contract is made at the place where the acceptance is received by the offeror.

(Citations omitted.)

142 The postal acceptance rule has been applied not only to acceptance sent by post, but also to acceptance of an offer by other non-instantaneous means, including telegrams[174] and cables.[175] However, it has been held not to apply in circumstances where a letter was not properly posted, but was rather handed to a postman for him to post.[176]

143 The means by which the Licence Agreement was executed by the parties is set out in section B.3 above.[177] Lew Footwear was first informed of the execution by email, which was then confirmed by the receipt of the original document 2 days later.

144 Lew Footwear submitted that the contract was not made until Madden's acceptance had been communicated to Lew Footwear in Victoria. In contrast, Madden contended that the parties intended that the formation of the Licence Agreement would occur upon the physical execution of the document in New York, alternatively when it was sent from New York.

145 Madden relied on the contents of the Governing Law Clause in support of its submission. At the time the Licence Agreement was executed by Kenmar in Melbourne and then forwarded to Madden for execution in New York, the parties had been extensively involved in negotiating the written terms of the Licence Agreement. There can be no doubt that, by providing a signed document for execution by Madden in New York, Lew Footwear had agreed to be bound by the terms of the Governing Law Clause.[178]

146 Further, in the covering letter dated 20 November 2009, under which the Licence Agreement was sent (it matters not whether there was 1 copy or 2[179]), Kenmar stated that he would be grateful if Novich would attend to Madden "executing and dating" the enclosed document(s) and then return 1 copy of the Licence Agreement to Kenmar. The letter also thanked Novich for bringing the matter to a successful conclusion.

147 Madden's submission was based on the fact that the Governing Law Clause provided that the Licence Agreement "has been executed and delivered[180] in ... the State of New York"; the execution clause of the Licence Agreement stated that "the parties have executed this Agreement as of November 30 2009"; the dating of the document was done by Madden in New York; and the Licence Agreement had been forwarded under cover of a letter in the terms of the letter dated 20 November 2009.

148 Particular emphasis was placed by Madden on the fact that the Licence Agreement was to be dated by Madden in New York. But no authority was referred to by Madden to suggest that the fact that the Licence Agreement needed to be dated upon execution by the offeree carried with it an implication that the contract would be made upon being so executed.[181]

149 In my view, there is nothing in the contents of the Licence Agreement, or the covering letter, to suggest that the parties had contemplated or intended that the offer made by Lew Footwear would be accepted upon the Licence Agreement being posted to Lew Footwear. Further, the mere fact that the date needed to be inserted does not give rise to an inference that the parties intended to depart from the general rule. The request to insert the date is entirely consistent with Lew Footwear requiring Madden to stipulate the date from which the 5 year term was to commence. This date need not coincide with the date on which the contract was made.[182]

150 Madden made the further submission that, despite the general rule, "acceptance by posting may be justified where it can be inferred that the offeror contemplated and intended that his offer might be so accepted". Reliance was placed upon the passage in Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (referred to in paragraph 139 above). However, the answer to this submission is found in a passage in Wardle v Agricultural and Rural Finance Pty Ltd, where Campbell&#16[183]A stated:183

That statement [by Dixon CJ and Fullagar J in Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd] requires something more precise than a contemplation that the postal services might be used as a medium of communication. For it to be "inferred that the offeror contemplated and intended that his offer might be accepted" by the posting of an acceptance there would need to be a basis in the terms or circumstances in which the parties were communicating from which such an intention could be inferred. The required inference is that it is the posting itself which is the acceptance, not just that the post might be the means by which an acceptance is communicated.

(Emphasis added.)

151 Further, and in any event, on the facts it is not clear that any relevant posting occurred upon which any proper reliance can be placed on the postal acceptance rule. The email sent on 2 December 2009 (being an instantaneous communication,[184] which communicated the acceptance of the offer) makes no suggestion, either expressly or impliedly, that the Licence Agreement had been or was to be posted. Further, as noted above,[185] in response to this notification by email, Lew Footwear responded by asking whether Madden could confirm that it was sending Lew Footwear "a hard copy of the fully executed [Licence Agreement] ... by post or courier". The final email indicates that post was not used, but rather a private courier was retained.

152 No authority was referred to which suggested the postal acceptance rule applied to a contract that was couriered rather than posted. Madden submitted the postal acceptance rule is not confined to the post and ought to be implemented within the confines of "any means of acceptance of a different kind from that in current transmission".

153 Given no authority was referred to to support this submission, I can see no proper basis for applying the postal acceptance rule generally to any form or means of non-instantaneous acceptance. All sorts of issues and potential uncertainties would be likely to arise if an offeree could rely upon providing a document to a "courier" as the act of acceptance. In this case, a dependable courier was used. In other instances, far less reliable means of conveying a document might be used. In short, it would be unsatisfactory to extend a rule seeking to create some certainty to far less certain modes of transporting an acceptance.

154 Of course, if the parties to a contract agreed the use of a courier was the required means of acceptance, then that may be a different matter. However, the act of acceptance in these circumstances would not be imputed by the operation of an arbitrary rule.

155 In summary, it appears that there is no evidence of any posting of the Licence Agreement before acceptance was communicated in Victoria by means of the email sent on 2 December 2009. Not only was there no express requirement that acceptance be by post (or courier, if it be relevant), there is nothing to indicate that that is in fact what Lew Footwear or Madden implicitly intended. In these circumstances, the general rule[186] is applicable and acceptance did not occur until Madden's acceptance of the offer of Lew Footwear was actually communicated to Lew Footwear in Victoria.

156 Accordingly, the evidence establishes on a strongly arguable basis that the subject matter of this cause of action is within r 7.01(1)(f)(i) by reason that the Licence Agreement was made in Victoria. It follows that, on either test, Lew Footwear has established the subject matter is within the paragraph.

F.3.5 Rule 7.01(1)(g): "a breach committed within Victoria of a contract wherever made"

157 As already noted,[187] it was conceded that, whatever the court determined was the relevant test, Lew Footwear could not make a case that any breach of the Licence Agreement was committed within Victoria. In circumstances where the operations of Madden, and those acting on behalf of Madden, were entirely outside Australia, there can be no doubt that this concession was correctly made.

F.3.6 Rule 7.01(1)(i): "proceeding founded on a tort committed within Victoria"

158 Based on the plurality judgment in Agar v Hyde,[188] it is plain that a rule directing the enquiry as to whether or not a proceeding is "founded on" a specified matter directs the court to focus its attention upon the nature of the claim made. That, in turn, is answered by considering the allegations made in the pleaded case. This approach applies regardless of whether the traditional approach is adopted, or some lesser test. But before considering the nature of the claim, there are issues of construction that must be settled.

159 On the facts of this case, a principal issue to be determined is whether or not each of the Representations Claims made under the Trade Practices Act or the Australian Consumer Law is a tort for the purposes of this provision.

160 In this regard, there are 2 earlier conflicting decisions of single judges of the trial division of this court. In Williams v The Society of Lloyd's,[189] McDonald J held that damage suffered by reason of a contravention of the Trade Practices Act caused by misleading or deceptive conduct was not caused by a "tortious act or omission" as that term is used in r 7.01(1)(j). However, in Commonwealth Bank of Australia v White,[190] Byrne J held that a claim for misleading or deceptive conduct was a tort within the meaning of r 7.01(1)(i). In so finding, Byrne J expressly acknowledged his decision was in conflict with McDonald J.[191]

161 Before discussing the basis of these decisions, reference should be made to the fact that there have been various attempts over time to define the meaning of "tort" or "tortious". Without being exhaustive, the following definitions are of some assistance:

(1) "Tortious liability arises from the breach of a duty primarily fixed by the law: such duty is towards persons generally and its breach is redressible by an action for unliquidated damages."[192]

(2) "I doubt whether the whole law of tort could not be comprised in the golden maxim to do unto your neighbour as you would that [she/he] should do unto you."[193]

(3) "[A tort is] the breach of legal duty which affects the interests of an individual to a degree which the law regards as sufficient to allow that individual to complain on his or her own account rather than as the representative of society as a whole."[194]

162 Many commentators and judges have observed the difficulty in providing a precise definition of "tort". This might be explained by the following observation:[195]

It is perhaps unkind to call tort the dustbin of the law of obligations, but it is certainly the great residuary category. No one theory explains the whole of the law.

163 Writing extrajudicially, French CJ has made some observations on the meaning of "tort". Those observations include:[196]

Clerk and Lindsell classify torts as "civil wrongs", that is to say a breach of a legal duty which affects the interests of an individual to a degree which the law regards as sufficient to allow that individual to complain on his or her own account rather than a representative of society as a whole. The breach of duty must be understood by consideration of policies and values underlying the recognition of the primary duty in question. The learned authors observed:[197]

"Rather than providing ready-made definitional answers to questions concerning the scope of the law of civil wrong, this approach provides a basis for understanding the nature of tortious liability and its relationship with other areas of law".

...

While distinctions may be drawn between tort and other areas of the common law and equity, there does not appear to be any aspect of the accepted understanding of tort which logically excludes statutory liabilities and statutory redefinitions. It seems sensible, therefore, to include in the concept of torts at least some subset of civil wrongs created by statute and remediable by actions for damages. In so doing, of course, it is necessary to bear in mind the distinct historical evolution of the common law torts which will not necessarily inform or bear upon the purpose and scope of statutory torts and their remedies. The boundaries of definition are not easy to articulate**.**

(Emphasis added.)

164 Another preliminary matter to note is that the language of r 7.01(1)(i) is relevantly identical to the language found in the Former Rules, namely under O 11 r 1(eb). This earlier rule was introduced on 7 October 1959. According to Williams, Supreme Court Victoria Practice,[198] prior to the introduction of this rule service out of the jurisdiction in the case of a tort committed within the jurisdiction was dealt with under O 11 r 1(e), which was the equivalent of what is now r 7.01(1)(f).[199] Obviously, then, the language used was introduced at a time when the relevant causes of action under the Trade Practices Act and the Australian Consumer Law were not known to the law.

165 Returning to the Victorian authorities, the conclusion of McDonald J in Williams v The Society of Lloyd's[200] that a claim under s 52 of the Trade Practices Act for damages was not a claim in relation to a tortious act or omission placed reliance[201] upon what was stated by Menhennitt J in Philip Morris Ltd v Ainley.[202] In that case, after referring to earlier authorities and certain discussions concerning the meaning of a "tort", Menhennitt J said:[203]

The effect of the foregoing appears to me to be that an action of tort is one in which the remedy is a common law cause of action although the right being enforced in the action may be a right created by either the common law or statute.

166 After quoting this passage and then referring to the definition of "tort" of Sir Percy Winfield,[204] McDonald J continued:[205]

The remedy provided by s 82 of the Trade Practices Act for breaches of s 52 of that Act although it rests in damages is a statutory remedy. Applying the reasoning of Menhennitt J, I am of the view that a breach of the provisions of that section do (sic) not constitute a "tortious" act or omission.

(Emphasis added.)

167 In Philip Morris Ltd v Ainley,[206] Menhennitt J made a number of other observations in addition to that set out above. His Honour stated that the fact that the right being enforced is a creature of statute did not, of itself, mean that the action was not in tort.[207] Further, his Honour commented that the cause of action under the Workers Compensation Act 1958 (Vic) seeking an indemnity for compensation previously paid with respect to a worker had "none of the elements of a common law cause of action in the definitions" of tort to which he had referred. In particular, he noted that it was not a common law action for unliquidated damages.[208] Finally, his Honour expressed the view that the provision in question expressly provided a statutory cause of action and, by implication, proceeded on the assumption that no common law cause of action would otherwise be available.[209]

168 In short, the cause of action considered in Philip Morris Ltd v Ainley is clearly distinguishable from a claim made under s 52 of the Trade Practices Act (or s 18 of the Australian Consumer Law). With respect, the approach of McDonald J in applying the reasoning of Menhennitt J to the question of the proper construction of r 7.01(1)(j) was a somewhat limited analysis of the issues in question.

169 Before referring to the other Victorian authority, which was decided some 7 years later, there were some relevant intervening opinions expressed. In 1993, an article was published (in 2 parts) which, amongst other things, was specifically directed to the question of whether or not a claim under s 52 of the Trade Practices Act was a tort.[210] The learned author, JC Campbell QC,[211] concluded part I of the article with the following:[212]

The paradigmatic case for the existence of a tort of breach of statutory duty is where the legislature has established a statutory standard, but said nothing about whether breach of it is to result in a private right of action. It is then that an elaborate process of construction and seeking to ascertain the legislative intention needs to be gone through. ... But, when the reason for the existence of the tort is the intention of Parliament, why ought it not also exist when Parliament has directed its mind to the question, and has expressly stated that a breach of a statutory standard will result in damages being available? It is this situation which there is with s 52 of the [Trade Practices Act].

170 In part II of the article, reference is made to a number of cases which are instructive on the issue.[213] I do not propose to go through them individually. The cases referred to demonstrate, relevantly:

(2) It is not necessary for a statutory cause of action to be analogous to a pre-existing common law cause of action in tort for it to be properly characterised or classified as a tort.

(3) A cause of action may be characterised or classified as a tort even though a claim involves a nominal defendant who has not committed a wrong.

(4) Not every statute which creates a liability to pay an amount of damages creates a tort.

171 The last of the cases considered in the article is Philip Morris Ltd v Ainley.[214] Having referred to the relevant passage where Menhennitt J sets out his conclusion,[215] the learned author stated as follows:[216]

The right arising under ss 52 and 82 of the [Trade Practices Act] can be distinguished from the right arising under s 62(1)(b) of the Workers Compensation Act. When his Honour says that it is a requirement of a tort that the remedy be "a common law cause of action", he cannot be referring to the sense of the expression that means the facts that give rise to the entitlement to a remedy. His recognition that actions on the case are common law actions despite their being authorised by the Statute of Westminster II suggests that where a remedy of a type analogous to existing remedies is created by Parliament, and is enforceable in the ordinary courts rather than in a specialist tribunal, that is a common law cause of action. In that sense, the right to damages for breach of s 52 is a common law cause of action.

(Citations omitted.)

172 In 1998, the Full Court of the Federal Court, in Bialkower v Acohs Pty Ltd,[217] held that s 87 of the Trade Practices Act conferred no power on a court to order contribution. In so doing, the court expressly referred to the article of JC Campbell QC[218] before stating that they were "inclined to the view" that the cause of action was not a tort.[219] However, it was unnecessary for their Honours to decide the matter.

173 The following year, Commonwealth Bank of Australia v White[220] was decided. Byrne J suggested that the Campbell article presented a compelling argument in support of the conclusion that claims made under s 52 of the Trade Practices Act should be treated for procedural purposes as torts.[221]

174 In a detailed consideration of whether a cause of action under s 52 of the Trade Practices Act is a tort for the purposes of r 7.01(1)(i) and (j), Byrne J referred to the earlier decisions of Philip Morris Ltd v Ainley[222] and Williams v The Society of Lloyd's.[223] In addition, his Honour referred to Brown v Jam Factory Pty Ltd,[224] a case referred to by McDonald J in Williams v The Society of Lloyd's.[225] Further, unlike McDonald J, Byrne J noted[226] that in that case the claim for misleading or deceptive conduct was referred to by the court as a tort. By 1992 (when McDonald J gave his decision), this was not a lone observation.[227]

175 Having considered various definitions and cases, Byrne J continued:[228]

There is nothing in the history of r 7.01(1) to suggest that the word "tort" should be given a meaning limited to one group of the traditional common law causes of action.

In support of this contention, his Honour then engaged in an analysis of the rules of this court and the rules of court in England since the Supreme Court of Judicature Act 1873 (Eng). Of particular significance in this analysis was the fact that a predecessor to r 7.01(1), namely O 11,[229] enabled the court to permit service out of the jurisdiction "whenever any act or thing ... for which damages are sought to be recovered, was ... done ... within the jurisdiction".[230]

176 His Honour then noted that the history showed:[231]

... that the word "tort" in the present context has been in the English rules since 1922 and in Victoria since 1928, but that a qualified entitlement had existed for half a century, in this jurisdiction at least, to serve a foreigner abroad where there was a local cause of action of whatever kind.

177 His Honour stated his conclusion that a cause of action under s 52 of the Trade Practices Act was a tort, in the following terms:[232]

In my opinion, the answer to the question presently under consideration is to be found by considering the words of r 7.01(1)(i) as part of a regulation concerning civil procedure which is addressed to legal practitioners. The juxtaposition of paras (f), (g) and (h) with paras (i) and (j) suggests that the distinction is between contract claims on the one hand and tort claims on the other. With [a] solitary exception[233] ... no mention is made of the juridical bases of the rights to be enforced, whether it be a common law obligation or one created by statute. Accepting, as I do, that a claim in tort may arise under statute as well as at common law, there is no reason in verbiage or policy to exclude one and not the other from the list of r 7.01(1) proceedings. I conclude that the wrong of misleading and deceptive conduct is a tort within the meaning of para (i) of r 7.01(1).

Of course, independent of the reasoning in this passage, claims made under the Trade Practices Act or the Australian Consumer Law may be served on an Overseas Defendant, if the conditions of r 7.01(1)(f) are met, when the relief pleaded seeks to "enforce, rescind ... or otherwise affect a contract ... in respect of the breach of a contract".[234]

178 Madden contended that the reasoning of Byrne J was flawed for a number of reasons. First, it submitted that Byrne J incorrectly assumed that the policy of the statute was about enforcing commercial morality. Madden contended the cause of action was not based on such a policy because intention was not an element of a cause of action under the statutory provisions. Secondly, it was submitted that because remedies were available for contravention of the statutory proscription beyond damages, such as proscriptive injunctions and declarations, the causes of action were statutory. This was put on the basis that these further remedies were never available to a common law jury. Thirdly, reference was made to pronouncements of the High Court to the effect that s 82 of the Trade Practices Act is not "to be confined by analogy either with actions in contract or in tort".[235] Overarching these submissions, Madden also submitted that the court was required to construe the "meaning of the word 'tort' when selected by the requisite quorum of Supreme Court justices in formulating Rule 7".

179 Byrne J, as part of his reasoning,[236] suggested that the conduct proscribed by s 52 was a wrong and that misleading or deceptive conduct was "conduct which commercial community morality rejects". His Honour also suggested that the language used had "pejorative overtones" and that there was a social policy underlying the legislation of enforcing commercial morality. In my view, Byrne J was plainly correct.

180 The fact that intention is not an element of a cause of action under s 52 of the Trade Practices Act does not detract from Byrne J's observations. Whether or not misleading or deceptive conduct is intentional, the conduct is proscribed and is a wrong that must not be engaged in, in trade or commerce, when dealing with other members of the community. The fact that this unacceptable conduct may be engaged in without intention is, with respect, not to the point. Many common law causes of action in tort do not require intention of the wrongdoer to be established.[237]

181 Byrne J observed that for misleading or deceptive conduct, "perhaps the most common remedy, is damages".[238] This statement was not challenged by Madden and accords with general experience. The mere fact that other remedies may be available as a matter of the court's discretion ought not alter the proper characterisation of the cause of action as a tort. Indeed, injunctive and declaratory relief might also be ordered by the court in relation to causes of action founded in tort.[239] That this is so does not alter the nature of the underlying cause of action. It would be somewhat peculiar if the fact that there are even more expansive remedies available under s 87 of the Trade Practices Act (and s 237 of the Australian Consumer Law) would have the consequence that a cause of action that would otherwise be characterised as a tort would cease to be so characterised.

182 Finally, the fact that damages under s 82 of the Trade Practices Act (and s 236 of the Australian Consumer Law) cannot be confined by principles applicable to damages awarded in causes of action in contract or tort does not change the nature of the cause of action; namely, a claim for an award of compensation for a wrong committed in contravention of a statutory norm[240] created to operate throughout the commercial community.

183 That the rule is a judge made rule does not alter any of the above analysis. The absence of the usual extrinsic material which accompanies an Act of Parliament does not affect the fact that the Supreme Court Rules should be interpreted in accordance with the usual principles of statutory construction. For completeness, I refer to the fact that r 1.02 of the Supreme Court Rules as originally passed provided that the Rules were subject to ratification, validation and approval by the Parliament.[241]

184 Since 1999, there have been numerous cases that have touched on the issue of whether this statutory cause of action is a tort, however there has been little authority in which the question has arisen for actual determination.

185 In Commonwealth Bank of Australia v White (No 4),[242] Warren J, in declining to order a stay of the proceeding, expressly considered the approach taken by Byrne J.[243] However, given that the application before her Honour was in the same proceeding, her Honour considered that:[244]

[I]n the circumstances of this case the matter was determined by Byrne J in the first ruling and that stands undisturbed by the Victorian Court of Appeal and the High Court of Australia. In the exercise of the discretion, therefore, I consider it inappropriate and undesirable to grant the stay sought by Lloyd's.

Her Honour simply refrained from interfering with the discretion previously exercised by Byrne J in the same proceeding. Thus, her Honour's decision, like that of the Court of Appeal and the High Court in that case,[245] is of limited assistance in determining the issue as a matter of principle.

186 In Hampic Pty Ltd v Adams,[246] Mason P and Davies AJA stated "the better view" was that s 52 of the Trade Practices Act does not create a liability in tort.[247]

187 In Burke v LFOT Pty Ltd,[248] both Heerey J[249] and Lehane J[250] stated that a claim for damages caused by contravention of s 52 of the Trade Practices Act was entirely statutory and not an action in tort. Both justices referred to Bialkower v Acohs Pty Ltd.[251] However, this case was also concerned with contribution and apportionment and the views expressed were obiter dicta.

188 In Borch v Answer Products Inc,[252] Holmes J referred to the conclusion of Byrne J with apparent approval, but her Honour declined to decide the issue.[253]

189 In Bartley v Myers,[254] the Full Court of the Supreme Court of South Australia considered whether or not damages claimed under the Fair Trading Act 1987 (SA) ought to be reduced for contributory negligence. In rejecting that proposition, the court found that the equivalent provision to s 52 of the Trade Practices Act,[255] did not create a liability in tort.[256]

190 In Jonstan v Nicholson,[257] Hulme J was required to determine whether a claim under s 52 of the Trade Practices Act and/or s 42 of the Fair Trading Act 1987 (NSW) should be regarded as a "tort" when determining whether the person engaged in the conduct was a "tortfeasor" for the purposes of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Having set out historical matters not dissimilar to what is referred to above,[258] and referring to a number of other authorities, his Honour continued:[259]

Whether a breach of s 52 constitutes a tort has been the subject of consideration on a number of occasions. For example, in Australia and New Zealand Banking Group Ltd v Turnbull,[260] Sheppard J said that an action for breach of s 52 was entirely statutory and not a tort. In an article "Contribution, Contributory Negligence and Section 52 of the Trade Practices Act"[261] Mr JC Campbell QC, (now Campbell J) argues that an action for breach of s 52 is a tort. In Dorrough v Bank of Melbourne Ltd[262] Cooper J, influenced by that article, said that there was a substantial argument that an action for breach of s 52 was a tort. In Bialkower v Acohs Pty Ltd,[263] the full Federal Court said that it preferred the views of Sheppard J to those of (sic) advanced by Campbell J but that it was unnecessary for the matter to be decided. Citing Bialkower v Acohs Pty Ltd,[264] in Burke v LFOT Pty Ltd,[265] Lehane J took the same view. In fact, as the other judgments in that case make clear, no party had suggested that s 5 of the Law Reform (Miscellaneous Provisions) Act applied.

191 Having referred to the position of Byrne J in Commonwealth Bank of Australia v White,[266] Hulme J continued with a number of observations in support of the argument that the cause of action ought to be characterised or classified as a tort:[267]

Having regard to the approach to be seen in Martin v Western District of the Australasian Coal and Shale Employees' Federation Workers Industrial Union of Australia (Mining Department)[268] and Whittaker v Rozelle Wood Products Ltd[269] and its endorsement by Dixon CJ in O'Connor v S P Bray Ltd,[270] there can be little doubt that the statutory obligation in s 52 not to "engage in conduct that is misleading or deceptive or likely to mislead or deceive" is one which, absent s 82 and the other sections of the Act providing for remedies, would be regarded as one the breach of which gives rise to a cause of action and amounts to a tort. ... The obvious purpose of the provision clearly embraces the protection of those who would be likely to suffer in consequence of such conduct - conduct which, it might be observed, if accompanied by other features such as knowledge of the misleading nature of the conduct or, in some cases negligence, is liable to amount to a tort at common law.

192 His Honour then asked the question whether the existence of s 82 and other sections providing remedies under the Trade Practices Act changed the position. In rejecting this suggestion, his Honour suggested that the presence of an express statement of a right to damages in s 82(1) should not remove the cause of action based on the contravention from the concept of tort as to do so would "draw a distinction which is both fine and of no obvious practicable use".[271]

193 In Lawson Hill Estate Pty Ltd v Tovegold Pty Ltd,[272] Wilcox J referred to the issue in terms of it being "doubtful" that a contravention of the equivalent of s 52 of the Trade Practices Act was a tort.[273] Expressing the position in terms of doubt suggests that his Honour did not consider the position had been conclusively decided by the Federal Court.

194 Somewhat serendipitously, Campbell JA had occasion to consider the authorities on this issue in ACQ Pty Ltd v Cook.[274] In that case, his Honour stated that the balance of authorities[275] supported the view that an action for damages conferred by s 82 of the Trade Practices Act is not an action in tort. However, it seems his Honour was far from convinced. He stated this view had been expressed in some of the cases "notwithstanding that it expressly confers a remedy for a breach of a standard of action that the Trade Practices Act itself requires to be adhered to".[276] Campbell JA also referred to the fact that, until 2004, an action for damages conferred by s 82 of the Trade Practices Act was not a claim in which damages could be reduced if the applicant's conduct had contributed to the loss or damage.[277] The case was not concerned with the Trade Practices Act. His Honour's comments were obiter dicta.

195 There are other judgments of single judges in which views have been expressed on the issue.[278] However, it appears there is no authority that binds this court.

196 Given the state of the authorities, the preferred approach is to adopt the meaning of "tort" in r 7.01(1)(i) given by Byrne J in Commonwealth Bank of Australia v White.[279] It is the most recent considered decision of this court on the issue. There is no proper basis upon which I could form the view that Byrne J was plainly wrong.[280] Indeed, his Honour is but 1 of many eminent judges that have also expressed the view that claims made for misleading or deceptive conduct in trade or commerce fit within the meaning of "tort". The fact that the causes of action are entirely statutory is not inconsistent with this conclusion.

197 Accordingly, I find that, upon the enactment of the Trade Practices Act in 1974, together with the enactment of the Fair Trading Act 1985 (Vic),[281] the Parliament of the Commonwealth, and the Parliament of Victoria, introduced legislation which proscribed certain conduct throughout the commercial community. For the reasons set out above, there is no logical or jurisprudential reason why the fact that the remedy of damages is included in the statutes themselves, and that such a remedy is not confined in the same manner as other common law causes of action, ought to alter the proper characterisation or classification of the causes of action as torts. These observations equally apply to claims for misleading or deceptive conduct under the Australian Consumer Law.[282]

198 Having determined that a claim for misleading or deceptive conduct in trade or commerce is a tort, the next issue is whether the tort as alleged was committed within Victoria. The answer to this question is straightforward.

199 The question is answered by determining the place where the substance of the act or omission occurred.[283] In relation to a misrepresentation, the tort is committed in the place where the communication is received and acted upon.[284]

200 It is not necessary to consider the Representations separately in order to determine this question. Whether each of the Representations as alleged was express or implied, the person or persons alleged to have relied upon the Representations (whoever they might be[285]) were necessarily based in Melbourne. Further, the conduct said to have occurred in reliance of each of the Representations occurred, at least in part, in Melbourne.[286] The authorities make it plain that in those circumstances, the communication having been received and acted upon in Melbourne, the alleged tort, if committed, was committed in Victoria.

F.3.6.4 Is it strongly arguable a tort was committed?

201 Based on the allegations in the Proposed Statement of Claim, for the reasons set out above, Lew Footwear has established that the subject matter of the Representations Claims, being causes of action based on misleading or deceptive conduct in trade or commerce, are within r 7.01(1)(i) by reason that they are founded on torts committed within Victoria. Although Madden would be entitled to further particulars concerning allegations of reliance on each of the Representations, the causes of action as pleaded satisfy r 7.01(1)(i). Accordingly, if I were not bound by Schib Packaging Srl v Emrich Industries Pty Ltd,[287] I would have found in favour of Lew Footwear on this issue. However, given the test of a strongly arguable case, it is necessary to consider both the pleadings and the evidence.

202 To summarise the points made above,[288] first, Lew Footwear pleaded a representation which it said was a basis upon which it entered into the Licence Agreement, upon which it now no longer relies.[289] No explanation has been given as to why this representation was deleted.[290]

203 Secondly, the First and Second Representations upon which Lew Footwear now says it relied are alleged to have been relied upon by the in-house counsel, Kenmar. Although Kenmar as a director executed the Licence Agreement on behalf of Lew Footwear, there is no pleading suggesting that Kenmar alone (as distinct from Lew Footwear) was responsible for the commercial decisions to enter into the Licence Agreement and to open stores, which events are said to give rise to the loss claimed.[291]

204 Thirdly, in relation to the Third Representation as now pleaded, the Fourth Representation and the Fifth Representation, there is no material fact or particular pleaded identifying any person from Lew Footwear that placed any relevant reliance upon Madden in engaging in the conduct alleged to give rise to the loss.

205 Fourthly, the state of the pleading is not enhanced by any evidence led on behalf of Lew Footwear. It is significant that Lew Footwear chose (understandably given the uncertainty as to the state of the law) to lead evidence in addition to relying upon the Proposed Statement of Claim. However, the evidence put forward provides no basis for properly linking the impugned conduct the subject of the Representations and the loss claimed.

206 More specifically, it is of some moment that Hammerschlag has affirmed 3 affidavits in opposition to Madden's application. Those affidavits confirm his direct involvement in the negotiations preceding the Licence Agreement. However, Hammerschlag gives no evidence of any reliance by him on the First Representation or the Second Representation. Perhaps more significantly, although Hammerschlag gives evidence on information and belief, based on instructions from Kenmar, as to Kenmar's involvement in the negotiations, he gives no evidence of Kenmar placing any reliance on the First Representation or the Second Representation.

207 In response to the criticisms concerning reliance, Lew Footwear submitted that reliance ought to be imputed from the circumstances leading up to the execution of the Licence Agreement. In short, although Lew Footwear accepted that reliance was a necessary element of the cause of action founded on each of the Representations Claims,[292] it submitted there was no requirement for any evidence to be led to show Lew Footwear relied upon the Representations.

208 In support of this submission, Lew Footwear relied upon the majority decision in MWH Australia Pty Ltd v Wynton Stone Australia Pty Ltd (in liq).[293] That case concerned an express acknowledgement in a deed of novation by a party to the deed who was being released and discharged from its obligations under an earlier contract. The acknowledgement by that party was to the effect that the services required to be performed by it under the prior contract, before the date of the deed, had been performed in accordance with its terms.

209 At trial, the appellant did not lead any evidence as to reliance upon the acknowledgement in entering into the deed. Buchanan and Nettle JJA found the trial judge was wrong in deciding that the absence of any such evidence meant the appellant failed to prove it relied on the acknowledgement. Their Honours held that the court was entitled to look at the acknowledgement in light of the surrounding circumstances and conclude that the acknowledgement was a "material representation calculated to induce MWH to enter into the deed and make the payment".[294] Their Honours also stated that common sense dictated the conclusion that the acknowledgement played at least some part in inducing the appellant to enter into the deed and make the payment and that the court was entitled to draw this fair inference.[295]

210 As was stated in Lord Buddha Pty Ltd (in liq) v Harper,[296] the reasoning in Gould v Vaggelas[297] provides a practical guide to the way in which inferences can and should be drawn in relation to reliance. The following passages from that case are relevant:[298]

Where a plaintiff shows that a defendant has made false statements to him intending thereby to induce him to enter into a contract and those statements are of such a nature as would be likely to provide such inducement and the plaintiff did in fact enter into that contract and thereby suffered damage and nothing more appears, common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract. However, it is open to the defendant to obstruct the drawing of that natural inference of fact by showing that there were other relevant circumstances.

(Emphasis added.)

An inference of inducement may be drawn when a party enters into a contract after a material representation has been made to him, but it is no more than an inference of fact and it is settled law that such an inference may be rebutted by the facts of the case ... The relevant question for the tribunal of fact to answer on all the evidence is whether the misrepresentation alone, or with or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss.

(Emphasis added.)

212 In my view, the circumstances in MWH Australia Pty Ltd v Wynton Stone Australia Pty Ltd (in liq)[300] are far removed from the facts alleged in the Proposed Statement of Claim.

213 In stark contrast to an express acknowledgement contained in a deed, each of the First Representation and the Second Representation is alleged to be implied and is not alleged to be the subject of any discussion. Further, there is not an obvious causal link between these alleged Representations and an investment decision to become a distributor of the Products. Put succinctly, there is not a strongly arguable case that the existence of systems of the type alleged would have been likely to provide a real inducement (whether on their own or with other inducements) in circumstances where:

(1) Lew Footwear had the ability to bargain expressly for what it required in the Pricing Term and made no suggestion of any requirement for a system.[301]

(2) Pursuant to the Pricing Term as agreed, Lew Footwear had the ability to negotiate the specific price in relation to each of the Products ordered.[302]

(3) Lew Footwear itself knew what the Products ought to be costing independent of any systems that Madden might have had in place.[303]

(4) There are other factors, such as the marketability of the Products and expected profitability of future sales by Lew Footwear, which, as a matter of common sense, would be likely to have been the real inducements to enter into the Licence Agreement.[304] It is these types of factors that might properly be the subject of inferences if representations were alleged to have been made on such matters.

Further, I am fortified in these views by the fact that, when Lew Footwear discovered the overpricing, no complaint was made about any failure of Madden to have the allegedly represented systems in place. On the contrary, appreciation was expressed by Lew Footwear for the openness and transparency afforded by Madden.[305]

214 Lew Footwear submitted that all that needs to be pleaded on the subject of reliance is the existence of the pre-contractual representation and the fact that the Licence Agreement was entered into. It was contended that the entry into the contract was a significant matter, from which reliance ought to be inferred. This submission overstates the proposition to be derived from Gould v Vaggelas.[306] The court is still required to consider the alleged representation itself before drawing any inference as to the reason or reasons the representee entered into the contract. Based on the evidence before the court, together with the absence of any pleaded particular or evidence of actual reliance by a person or persons responsible for the commercial decisions involved, the inference Lew Footwear invites the court to draw is not sensibly open, much less strongly arguable.[307]

215 Moreover, it cannot be ignored that, as already stated, Lew Footwear, when faced with strenuous criticism of the absence of any evidence of reliance in the written submissions of Madden dated 15 April 2014, has filed 2 further affidavits from Hammerschlag that have remained silent on the issue of reliance.[308]

216 With each of the Third Representation, the Fourth Representation and the Fifth Representation, no person is identified as having relied on the relevant Representation or engaged in the conduct said to be in reliance upon the Representation. In particular, the person or persons responsible for the decision of opening a further store after the Third Representation, Fourth Representation and Fifth Representation were alleged to have been made is or are not identified. For the reasons set out in paragraph 213 above, there is not an obvious causal link between any of the Third Representation, the Fourth Representation or the Fifth Representation and the opening of a further store.

217 Further, with respect to the Fourth Representation and the Fifth Representation, those Representations were made to an employee of a company within the Lew group of companies other than Lew Footwear.[309] There is no evidence of the Representations being communicated to Lew Footwear itself, or of the employee in question, Tarrant, having any involvement with the decisions said to have been made in reliance upon the Fourth Representation and the Fifth Representation.

218 In summary, on an evidentiary basis, Lew Footwear has failed to establish it is strongly arguable a tort has been committed in relation to any of the Representations.

F.3.7 Rule 7.01(1)(j): "proceeding is brought in respect of damage suffered wholly or partly in Victoria and caused by a tortious act or omission wherever occurring"

219 For the reasons stated in paragraph 158 above, the necessary enquiry concerning the subject matter of the cause of action may, in an appropriate case, be answered substantially by reference to the pleadings.

220 Rule 7.01(1)(j) is concerned with a proceeding "brought in respect of" the identified subject matter. Although the language used is different, in this context there is no material distinction between the words "founded on" in r 7.01(1)(i) and the words "brought in respect of" in r 7.01(1)(j). In short, on the traditional approach, or some lesser test, ordinarily, the court is required to consider the pleaded allegations in order to ascertain whether the cause of action is "brought in respect of" the subject matter specified.

221 The conclusions I have reached in determining whether or not the Representations Claims made by Lew Footwear consist of subject matter that is within r 7.01(1)(i) determine the matters relating to the "tortious act or omission" to be considered under r 7.01(1)(j). For the same reasons that a claim for misleading or deceptive conduct in trade or commerce is a tort, the Representations Claims must be characterised or classified as being brought in respect of damage "caused by a tortious act or omission".

222 The next question is whether the damage suffered was either wholly or partly in Victoria.

223 As noted above,[310] Lew Footwear principally conducts its business out of Melbourne and does not conduct any business outside Australia. Some of the 15 stores are located in Victoria. In these circumstances, there can be no doubt that any damage suffered has been suffered "wholly or partly in Victoria".[311]

224 Accordingly, if the alternate approach as set out in paragraph 135 above were considered to be the correct approach, I would have found in favour of Lew Footwear by determining that the Representations Claims were within r 7.01(1)(j). However, for the reasons stated in paragraphs 202 to 218 above, I cannot be satisfied that there is a strongly arguable case regarding any of the Representations Claims. Accordingly, Lew Footwear has failed to establish this condition has been met for the purposes of service out of Australia.

F.4 Exercise of the court's discretion: the issue of reliance

225 Based upon the application of the "strongly arguable case" test, there is no occasion for the court to exercise its discretion. Save for the condition in r 7.01(1)(f)(i), on the traditional test Lew Footwear has failed to satisfy the court that the subject matter of the Proposed Statement of Claim is within any relevant paragraph of r 7.01(1). As already noted,[312] Lew Footwear has conceded that if it were only successful in establishing jurisdiction in relation to the contract claim, then it must follow that this court is not an appropriate forum in light of the Governing Law Clause and the Forum Clause.[313]

226 But if, contrary to what is set out above, the approach in paragraph 135 were correct and, as a result, Lew Footwear had established that the subject matter of each cause of action fell within r 7.01(1), it would have had a prima facie entitlement to proceed with its claims. Notwithstanding this position, the court would still have been required to exercise its discretion based on all the relevant matters as to whether or not the proceeding ought t[314]e stayed.314

227 In my opinion, if I had been required to consider the exercise of the court's discretion, it would have been inappropriate to exercise any discretion in favour of Lew Footwear when issues relating to reliance are an obvious and fundamental potential difficulty with its case. For the reasons stated,[315] there is a gap in the evidence of Lew Footwear on the issue of reliance. Unless Lew Footwear addresses this difficulty, its case would properly be considered hopeless or futile, or would have insufficient prospects of success to warrant putting an Overseas Defendant to the time, expense and trouble of defending the claims. In these circumstances, it would have been remiss of the court to allow the proceeding to go forward without having the issue addressed presently.

228 In further response to the criticisms made by Madden in relation to reliance and causation, Lew Footwear submitted that an application under r 7.05 was not the occasion to consider such matters. Lew Footwear contended it was a matter for further particulars of the Proposed Statement of Claim, or a matter to be properly considered on any summary judgment application that Madden might decide to bring. I do not accept this submission given the manner in which this application has unfolded.

229 To elaborate, the position adopted by Lew Footwear was to seek to put the relevant evidence before the court in order to show r 7.01(1) has been satisfied. In my opinion, because of the gap in the reliance evidence, it would have been contrary to the overarching obligations in the Civil Procedure Act 2010 (Vic)[316] to allow the matter to proceed without requiring Lew Footwear to place further evidence before the court on this issue of narrow compass.

230 Accordingly, even if the court had adopted the approach more favourable to Lew Footwear,[317] unless Lew Footwear was able to put the further necessary evidence before the court, I would have ordered a stay. This approach would ensure that Madden was not put to unnecessary cost and expense in appearing in this jurisdiction and taking interlocutory steps when there is a real issue on the material before the court as to whether or not, on a prima facie basis, it has a case to answer.

F.5 Exercise of the court's discretion: the Governing Law Clause and the Forum Clause

231 In light of the conclusion I have reached on the issues concerning service out of the jurisdiction and reliance, it is not strictly necessary to consider the further basis upon which Madden seeks a stay. However, given that the stay is not definite at this time, and also given the uncertainty arising from the conflicting authorities on the issues relating to service out of Australia, I intend to briefly state reasons as to why a stay would not have been granted on the basis of forum. Put simply, in the circumstances, had I been of the opinion that the requirements of r 7.01(1) had been met in relation to the Representations Claims, I would not have considered this court to be clearly an inappropriate forum.[318]

232 Key principles applicable to considering clauses such as the Governing Law Clause and the Forum Clause in this context may be shortly stated:

(1) The contractual obligation imposed by an exclusive foreign jurisdiction clause does not operate to exclude the jurisdiction of this court, but it may constitute a ground for the court to refuse to exercise its jurisdiction.[319]

(2) Where a contract contains an exclusive foreign jurisdiction clause, "the courts begin with a firm disposition in favour of maintaining that bargain unless strong reasons be adduced against a stay, it being the policy of the law that the parties who have made a contract should be kept to it".[320]

(3) A stay may be refused where the exclusive foreign jurisdiction clause offends the public policy of the forum evinced by statute or judicial decision.[321]

233 A material matter relied upon by Lew Footwear in submitting a stay was inappropriate was the ability of Lew Footwear to make claims under Australian legislation that might be jeopardised if Lew Footwear was required to make its claims in a court of New York State. Speaking generally, it has been accepted that if a plaintiff makes a claim based on misleading or deceptive conduct in trade or commerce pursuant to the Trade Practices Act or the Australian Consumer Law, then that may give rise to public policy considerations which may override an otherwise binding exclusive foreign jurisdiction clause.[322] If it were otherwise, foreign corporations could place themselves outside the protection provided by this fundamental and important legislation which governs commercial interaction throughout Australia.

234 As was stated by Byrne J in Commonwealth Bank of Australia v White, in the context of discussing misleading and deceptive conduct and breaches of companies legislation:[323]

It is undesirable that parties should, by entering into an exclusive jurisdiction agreement, be able to circumvent a legislative scheme established by Parliament to protect investors purchasing interests or prescribed interests. Put more positively, the statutes creating these standards of commercial behaviour for persons doing business in this jurisdiction do not exempt foreign corporations. Moreover, the policy behind them would not be served if exemption might be achieved by inserting stipulations as to foreign law or forum.

235 Ordinarily[324] then, if an overseas corporation were to engage in conduct that was misleading or deceptive or likely to mislead or deceive in trade or commerce, and a plaintiff could establish that such conduct was committed within Victoria or caused damage suffered wholly or partly in Victoria, then it would be expected that an exclusive foreign jurisdiction clause would not be a proper basis for staying the proceeding. An obvious possible exception to this general proposition would be where there was a law in the competing foreign jurisdiction which substantially reflected the Australian or Victorian law which might otherwise be excluded.

236 A substantial body of expert evidence was led by each party as to the laws of New York State, and the similarities and differences with the laws of Australia and Victoria. Without descending to the detail,[325] based on the evidence, it is plain there is a "real risk" that if the claims of Lew Footwear were heard in the State of New York,[326] the Representations Claims for damages or other relief under the Trade Practices Act or the Australian Consumer Law may be shut out without a determination on the merits.[327] Both experts agree there is no equivalent law in New York State to the laws upon which Lew Footwear relies in this proceeding, created by the Trade Practices Act, and continued in the Australian Consumer Law.

237 The fact that there is a real risk that some claims may not be able to be made in New York is only 1 factor to consider in determining whether or not the court ought to exercise its discretion to stay the proceeding commenced in breach of the Governing Law Clause and the Forum Clause.

238 Subject always to the particular circumstances of the case, the following is a useful non-exhaustive checklist of matters that need to be considered:[328]

(1) In which country the evidence on the issues or facts is situated or more readily available.

(2) The relative convenience and expense of a trial as between the local forum and the foreign courts.

(3) Whether the foreign law applies, and if so, whether it differs from the law of the forum in any material respects.

(4) With which country the parties are connected and how closely.

(5) Whether the defendants genuinely desire a trial in the foreign country, or are seeking only procedural advantage.

239 Dealing briefly with each of the matters listed:

(1) The evidence appears to be located in Australia, Hong Kong and New York. The state of the evidence before the court does not allow the court to form a view with any real precision. That said, it is clear all evidence of Lew Footwear is located in Australia, principally in Victoria.

(2) I expect the inconvenience and expense of a trial would be less if conducted in Australia. Many of the key witnesses will be in Australia. Much of what is relied upon by Lew Footwear, both on the contractual claims and on the Representations Claims, is based on documentation, together with events which occurred in Australia. Although there is likely to be evidence from witnesses in New York and possibly Hong Kong, such evidence could be expected to be of narrow compass. No submission was made on behalf of Madden that if the court were otherwise minded not to stay the proceeding, particular inconvenience would be caused in conducting the proceeding in this court.

(3) The foreign law of New York State may readily be applied in this jurisdiction in relation to the contractual issues. The parties have already obtained extensive expert evidence. As to the Representations Claims, I refer to what is set out above.[329]

(4) Lew Footwear is closely connected with Australia only. Madden is principally connected with Hong Kong, but also, including through the Madden Holding Company, has connections with New York. The facts do not suggest that there is a much closer connection with New York than with Melbourne.

(5) Although there was no evidence on this point, I expect that Madden has little genuine desire for a trial in New York (or anywhere else). That said, I give little weight to this factor given no substantive submission was made in this regard.

240 By reason of the factors listed above, I cannot draw the conclusion that this court is a clearly inappropriate forum. On the contrary, given the potential difficulties that Lew Footwear would face in prosecuting the Representations Claims in New York State (assuming it were otherwise entitled to proceed in this court), then it would be inappropriate to grant a stay.

241 In the circumstances, if, contrary to my findings, Lew Footwear had been able to satisfy r 7.01(1), then I would have found Lew Footwear ought to be entitled to bring its claims in this court notwithstanding the Governing Law Clause and the Forum Clause. However, I wish to make some observations in relation to the Second Representation in this regard.

242 As already noted,[330] the Second Representation really amounts to no more than an allegation that Madden would comply with its relevant contractual obligations in the future. Such a representation might be properly pleaded in many, if not most, proceedings for breach of executory contracts.[331] If the Second Representation had been the sole basis upon which a cause of action was pleaded under the Trade Practices Act, then it is likely I would have reached a different conclusion in the exercise of the discretion given the existence of the Governing Law Clause and the Forum Clause. Each case must be considered on its own facts, but allegations such as those comprising the cause of action based on the Second Representation need to be considered carefully. Otherwise, it might be that any foreign exclusive jurisdiction clause could be circumvented on an executory contract by simply pleading that the foreign corporation implicitly represented at the time of entering into the contract that it would abide by its terms.

243 In summary, if Lew Footwear had established that r 7.01(1) has been satisfied and that the court's discretion otherwise ought to have been exercised in its favour, then I would have held that the claims based on the First Representation, the Third Representation, the Fourth Representation and the Fifth Representation ought to have been able to be made in this court. Further, given that service out of the jurisdiction had also properly occurred in relation to the contract claim,[332] it would have been convenient and appropriate for all claims to have continued in this proceeding.[333]

244 In light of the conclusion that, based on the evidence presently before the court, a stay ought to be ordered, it is not appropriate to consider whether or not an injunction ought to be granted. This is particularly so given Lew Footwear stated that, in the event the court were to order a stay on a substantive basis, then it would not seek to commence a new proceeding.[334] In short, there is presently no threat of a proceeding which could properly be the subject of an injunction.

245 The reasons set out above demonstrate that if Lew Footwear had led evidence duly establishing reliance in relation to each of the Representations, then it is likely it would have satisfied the court as to the conditions of r 7.01(1). In these circumstances, it is abundantly clear that it is not appropriate to set aside the writ. In my view, the appropriate course is to propose an order to stay the proceeding.

246 Given the uncertainty in relation to the state of the authorities, and that there may be evidence available which could establish a strongly arguable case in this regard, it is appropriate, and consistent with the Civil Procedure Act, to allow Lew Footwear a short period of time in which to put further evidence before the court, if so advised. However, if Lew Footwear is unable to do this promptly, then the proceeding ought to be stayed permanently.

247 Subject to any submissions the parties may wish to make on the issue of timing, I propose to grant liberty to apply for 14 days. If Lew Footwear files and serves further affidavit evidence within that time, the court may consider that further evidence, together with the existing evidence before the court, in determining whether r 7.01(1) has been satisfied and the court's discretion ought to be exercised against granting a stay. If no such affidavit evidence is filed and served within 14 days, then an order will be made to the effect that the proceeding will be stayed permanently. If those further steps are taken by Lew Footwear, then the matter will need to be reconsidered promptly.

248 Lew Footwear has failed to establish a strongly arguable case in relation to the Representations Claims. In those circumstances, it must follow, based on existing authority, that it cannot satisfy the relevant paragraphs of r 7.01(1). Accordingly, for the reasons set out above, it is proposed the proceeding will be stayed. It also follows that no orders will be made in relation to the applications made by Lew Footwear.

249 Accordingly, unless Lew Footwear files and serves further affidavit evidence on the issues of reliance, and subject to any submission any party may wish to make on the question of costs, it is intended that the court will make the following orders in 14 days from today's date:

2. The plaintiff pay the defendant's costs, including the reserved costs.

[1] See pars 12-15 below.

[2] Kenmar had only recently become a director, being appointed on 2 October 2009.

[3] This, and other correspondence sent by Kenmar, was on letterhead stating Kenmar was a solicitor for "Century Plaza Group of Companies". In his initial response to the draft licence agreement proffered by Madden, Kenmar described himself as "corporate counsel for the Lew Group".

[4] Cf par 37(a) below.

[5] The contemporaneous email and letter sent on 20 November 2009 both suggest that 2 copies of the Licence Agreement as signed by Kenmar were sent. The affidavit evidence of Lew Footwear, sworn on information and belief, states that only 1 copy was sent. It is not necessary, or desirable, to seek to make any determination on this interlocutory application as to this apparent discrepancy.

[6] According to the historical company extract for Lew Footwear, Hammerschlag was not appointed a director until 10 February 2010. However, his affidavit sworn 25 November 2013 makes it clear he was acting on behalf of Lew Footwear from in or about July 2009, with the capacity to negotiate on Lew Footwear's behalf.

[7] A further affidavit of Funk was filed and served in response to Lew Footwear's application, made during the course of argument, to amend the particulars of loss: see par 66 below.

[8] Before 27 March 2014, Madden had made no issue of the absence of an indorsement in any submission or correspondence.

[9] See r 7.02(2) in par 79 below.

[10] Trade Practices Act, s 52; Australian Consumer Law, s 18. (The Statement of Claim actually referred to s 19 of the Australian Consumer Law, but this was plainly a typographical error.)

[11] See par 37(b) above.

[12] See pars 87-136 below.

[13] See par 37(a) above.

[14] See par 38 above.

[15] Reliance on the negotiations went beyond simply establishing the importance of the Pricing Term, as previously particularised in the Statement of Claim.

[16] See par 39 above.

[17] See pars 37, 42, 46 and 54 above.

[18] The Licence Agreement included a term requiring Lew Footwear to open a total of 11 stores from 2010 to 2014.

[19] The First Representation and the Second Representation concern allegations under the Trade Practices Act.

[20] The Fifth Representation concerns allegations under the Australian Consumer Law.

[21] See par 46 above.

[22] This was not formal leave to amend the pleading, as the Proposed Statement of Claim is yet to be filed.

[23] See par 11 above.

[24] See pars 87-136 below.

[25] That is, not solely based upon the absence of an indorsement of the writ.

[26] See par 32 above.

[27] See also Transfield Philippines Inc v Pacific Hydro Ltd [2006] VSC 175, [49] (Hollingworth J); Schib Packaging Srl v Emrich Industries Pty Ltd [2005] VSCA 236; (2005) 12 VR 268, 275 [22] (Charles JA, with whom Ashley JA agreed).

[28] See r 7.02(3) and (4): par 79 below.

[29] See also observations in Rowe v Grünenthal [2011] VSC 657, [57] (Beach J).

[30] This paragraph was introduced by statutory regulation 27 of 2007, Supreme Court (Chapter I Amendment No 8) Rules 2007 (Vic), r 4 and came into operation on 1 May 2007.

[31] Rule 8.09 provides that the court may exercise its jurisdiction to, amongst other things, set aside a writ or originating motion or its service, or stay a proceeding on an application made by a defendant.

[32] The Former Rules were made on 3 April 1984. They were simply a re-enactment of Chapter 1 as it previously stood under the General Rules of Procedure in Civil Proceedings 1957 (Vic), which re-enactment was necessitated by reason of the Subordinate Legislation (Review and Revocation) Act 1984 (Vic).

[34] Order 13 r 11, subject to exceptions not presently relevant. In this context, the term "foreign defendant" is used rather than "Overseas Defendant" as the Former Rules were concerned with service out of the jurisdiction, rather than out of Australia.

[35] In BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VicRp 71; [1985] VR 725, 753.6 (Murray J), the discretion was referred to as being a discretion "either under O 11 or under the general jurisdiction of the Court".

[36] See, for example, Vitkovice Horni A Hutni Tezirstvo v Korner [1951] AC 869, 889.5 (Lord Tucker); The Hagen [1908] P 189, 201.7 (Farwell LJ); Société Générale de Paris v Dreyfus Brothers (1885) 29 Ch D 239, 242.9-243.2 (Pearson J). But, more recently, see Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 450H-457A (Lord Goff, with whom the other law lords agreed).

[37] WA Dewhurst & Co Pty Ltd v Cawrse [1960] VicRp 44; [1960] VR 278, 281.6 (Dean J).

[38] See, for example, Buttigeig v Universal Terminal & Stevedoring Corporation [1972] VicRp 72; [1972] VR 626, 630.2 (Crockett J); Kroch v Rossell et Compagnie Societe des Personnes a Responsibilite Limitee [1937] 1 All ER 725, 730H-731B (Scott LJ), citing Société Générale de Paris v Dreyfus Brothers (1885) 29 Ch D 239, 242-243 and Johnson v Taylor Brothers & Co Ltd [1920] AC 144, 160-161.

[39] See, for example, Hartwell Trent (Australia) Pty Ltd v Tefal Societe Anonyme [1968] VicRp 1; [1968] VR 3, 10.3 (Pape J, referring with approval to Chemische Fabrik Vormals Sandoz v Badische Anilin Und Soda Fabriks (1904) 90 LT 733, 735 (Lord Davey)); WA Dewhurst & Co Pty Ltd v Cawrse [1960] VicRp 44; [1960] VR 278, 281.4-282.2 (Dean J); Carroll v Laurie [1959] VicRp 47; [1959] VR 275, 277.5-278.2 (Dean J).

[40] Unreported, Supreme Court of Victoria, Ormiston J, 16 March 1992.

[41] An application belatedly made out of time was not entertained by the court: see at 8.3.

[42] [1994] VicRp 19; [1994] 1 VR 274. (Although reported in 1994, it was decided on 19 November 1992.)

[44] See a reference to O 11 at 284.8-285.2.

[45] At par 80 above.

[46] An exception to this general statement was, in cases such as WA Dewhurst & Co Pty Ltd v Cawrse [1960] VicRp 44; [1960] VR 278, where the originating process was served out of Victoria, but within Australia, pursuant to the provisions of the Service and Execution of Process Act 1901 (Cth), s 11.

[47] Pendal Nominees Pty Ltd v M & A Investments Pty Ltd (1989) 18 NSWLR 383 (Rogers CJ, Comm D); Esanda Finance Corporation Ltd v Wordplex Information Systems Ltd (1990) 19 NSWLR 146 (Giles J).

[48] Supreme Court Rules 1970 (NSW). For a relevant history of these rules, see: Pendal Nominees Pty Ltd v M & A Investments Pty Ltd (1989) 18 NSWLR 383, 386G-388E (Rogers CJ Comm D).

[49] [1994] VicRp 19; [1994] 1 VR 274, 291.4.

[51] See fn 39 above.

[52] See, for example, Carroll v Laurie [1959] VicRp 47; [1959] VR 275, 277.8-278.2 (Dean J); Vitkovice Horni a Hutni Tezirstvo v Korner [1951] AC 869, 883.4 (Lord Radcliffe); Hemelryck v William Lyall Shipbuilding Co Ltd [1921] 1 AC 698, 701.2 (Privy Council). See pars 81-82 above.

[53] See Esanda Finance Corporation Ltd v Wordplex Information Systems Ltd (1990) 19 NSWLR 146, 154D (Giles J), referred to by McDonald J at [1994] VicRp 19; [1994] 1 VR 274, 290.5.

[54] The relevant rule is set out at Hyde v Agar (1998) 45 NSWLR 487, 504D.

[55] See fn 31 above.

[56] [1959] VicRp 47; [1959] VR 275, 277.5 (Dean J).

[57] [1960] VicRp 44; [1960] VR 278, 281.10 (Dean J).

[58] Unreported, Supreme Court of Victoria, Ormiston J, 16 March 1992.

[59] [1994] VicRp 19; [1994] 1 VR 274, 291.7-292.3.

[60] See also Commonwealth Bank of Australia v White [1999] VSC 262; [1999] 2 VR 681, 693-694 [41] (Byrne J).

[61] [1999] VSC 262; [1999] 2 VR 681.

[64] The defendant White, who as the Originating Party, submitted the strong arguable case need only be established in relation to the existence of the jurisdictional facts, whereas Lloyd's contended the test must be satisfied as to the validity of each claim itself.

[65] (1998) 45 NSWLR 487 (Spigelman CJ, Mason P and Stein JA).

[67] Commonwealth Bank of Australia v White [1999] VSC 262; [1999] 2 VR 681, 693 [39].

[68] (1998) 45 NSWLR 487, 507.

[69] [1999] VSC 262; [1999] 2 VR 681, 700-701 [68].

[70] At 701 [69]. For completeness, I note that the decision of Byrne J was the subject of an application to the Court of Appeal for leave to appeal, which was refused (3 September 1999, Ormiston and Chernov JJA), and an application for special leave, which was also refused (11 February 2000, McHugh and Kirby JJ, Callinan J dissenting). In Commonwealth Bank of Australia v White (No 4) [2001] VSC 511, Warren J stated that she had been provided with a copy of the written submissions presented to the Court of Appeal on the application for leave to appeal. Her Honour continued (at [30]):

It does not appear that a transcript or argument was taken or, alternatively, was available. I observe that in the course of the written submissions senior counsel for Lloyd's squarely raised the different approaches adopted on the exclusive jurisdiction clause by McDonald J in Williams and Byrne J in White (No 1). Indeed, a catalogue of criticisms was levied in the submissions at the judgment in White (No 1). Notwithstanding the presentation of the written submissions and doubtlessly accompanying oral argument the Victorian Court of Appeal refused the application.

In the High Court, the reasons of the majority stated that "the primary judge applied the correct principles": [2000] HCATrans 37,15.7.

[71] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552.

[72] At 560 [9] (Gleeson CJ), 584 [92] (Gaudron, McHugh, Gummow and Hayne JJ), 600-601 [125]-[128] (Callinan J).

[74] The reference to 1885 was a reference to Société Générale de Paris v Dreyfus Brothers (1885) 29 Ch D 239, 243-244 (Pearson J): see fn 36 above.

[76] The New South Wales Supreme Court Rules 1970, Part 10, relevantly provided:

1A(1) Subject to rule 2 and rule 2A, originating process may be served outside Australia in the following cases:

(a) where the proceedings are founded on a cause of action arising in the State,

(d) where the proceedings are founded on a tort committed in the State,

(e) 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,

(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,

2(1) Where an originating process is served on the defendant outside Australia and the defendant does not enter an appearance within the time limited for appearance, the plaintiff shall not proceed against that defendant except with the leave of the Court.

(2) A motion for leave under subrule (1) may be made without serving notice of the motion on the defendant.

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.

And Part 11 relevantly provided:

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:

(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,

(i) grant such other relief as it thinks appropriate.

[77] [1994] VicRp 19; [1994] 1 VR 274, 286.1-291.7, including Vitkovice Horni a Hutni Tezirstvo v Korner [1951] AC 869; Carroll v Laurie [1959] VicRp 47; [1959] VR 275; WA Dewhurst & Co Pty Ltd v Cawrse [1960] VicRp 44; [1960] VR 278; Deer Park Engineering Pty Ltd v Townsville Harbour Board [1975] VicRp 31; (1974) 5 ALR 131. See also fn 36 above.

[78] Cf [2000] HCA 41; (2000) 201 CLR 552, 559 [8] (Gleeson CJ), 590 [108]-[109], 601-602 [131] (Callinan J).

[79] See r 7.01(1)(i), at par 78 above. See also r 7.01(1)(h).

[80] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, 573 [50].

[84] See fn 76 above, r 2(1).

[89] See par 112 below.

[90] [2000] HCA 41; (2000) 201 CLR 552. The first of these decisions appears to be Fujitsu Australia Ltd v Dewar Electronics Pty Ltd [2001] VSC 222 (Gillard J), in which the approach of McDonald J in Williams v The Society of Lloyd's [1994] VicRp 19; [1994] 1 VR 274 was followed, but without any reference to Agar v Hyde: see at [47].

[91] [2007] VSC 288; (2007) 17 VR 36.

[93] At 570-576 [42]-[61], and especially at 573 [50] and 576 [60].

[94] [2005] VSCA 236; (2005) 12 VR 268.

[95] [2000] VSC 513, [10] (Mandie J).

[96] [2000] HCA 41; (2000) 201 CLR 552, 559 [8].

[97] [2005] VSCA 236; (2005) 12 VR 268.

[98] [2000] HCA 41; (2000) 201 CLR 552.

[99] The case was concerned with the County Court Civil Procedure Rules 2008 (Vic); there is no material difference in the terms of the relevant rules.

[100] [2005] VSCA 236; (2005) 12 VR 268, 271 [10], 274 [18] (Charles JA, with whom Ashley JA agreed).

[101] [1994] VicRp 19; [1994] 1 VR 274, 291 (McDonald J). See par 98 above.

[102] [1960] VicRp 44; [1960] VR 278 (Dean J).

[103] [2013] VSC 92 (Davies J).

[104] Castel Electronics Pty Ltd v TCL Airconditioner (Zhongshan) Co Ltd [2013] VSC 92, [6]-[7], [13].

[106] [2000] VSC 513.

[107] [2000] HCA 41; (2000) 201 CLR 552, 559 [8].

[109] Attorney-General for the United Kingdom v Heinemann Publishers Australia Pty Ltd (1987) 10 NSWLR 86, 189B (McHugh JA); Miliangos v George Frank (Textiles) Ltd [1976] AC 443, 478E (Lord Simon (dissenting)). See also Herzfeld, Prince and Tully, Interpretation and use of legal sources, the laws of Australia (2013) 633.1 [25.4.210].

[110] See comments of Gummow, Heydon and Bell JJ, in refusing special leave to appeal in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604, 605 [3], where it was stated that primary judges are required to apply High Court decisions "notwithstanding what may appear to have been said by intermediate appellate courts". As to the status of this decision, see Herzfeld, Prince and Tully, Interpretation and use of legal sources, the laws of Australia (2013) 633.8 [25.4.210].

[111] [2000] HCA 41; (2000) 201 CLR 552.

[112] [2005] VSCA 236; (2005) 12 VR 268.

[113] [2000] HCA 41; (2000) 201 CLR 552.

[114] This is no occasion to consider whether the decision was per incuriam: see, for example, Miliangos v George Frank (Textiles) Ltd [1976] AC 443, 477G (Lord Simon, dissenting). That would be a matter for the Court of Appeal to consider, not a single judge: Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166, 177D (Moffitt P). See also Herzfeld, Prince and Tully, Interpretation and use of legal sources, the laws of Australia (2013) 631.3 [25.4.200].

[115] [2005] VSCA 236; (2005) 12 VR 268, 271 [10].

[116] See also par 114 above.

[117] [1984] 1 NSWLR 166, 177E.

[118] [2005] VSCA 236; (2005) 12 VR 268. It is possible the position adopted by the Court of Appeal could be viewed as simply assuming a proposition for the purpose of disposing of the application for leave, in which case it may not bind lower courts: Muldoon v Church of England Children's Homes Burwood [2011] NSWCA 46; (2011) 80 NSWLR 282, 289-290 [38]-[41] (Campbell JA), 294 [65] (Young JA), (Macfarlan JA agreeing with both); CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1, 8-12 [5]-[15], esp 11 [13] (Gleeson CJ, Gummow and Heydon JJ, Callinan J agreeing). See also Herzfeld, Prince and Tully, Interpretation and use of legal sources, the laws of Australia (2013) 634.8-635.4 [25.4.220].

[119] See par 105 above.

[120] See par 114 above.

[121] Engebretson v Bartlett [2007] VSC 163; (2007) 16 VR 417, 429 [63] (Bell J); La Macchia v Minister for Primary Industries and Energy (1992) 110 ALR 201, 204.5 (Burchett J). See also Herzfeld, Price and Tully, Interpretation and use of legal sources, the laws of Australia (2013) 624.5 [25.4.160].

[122] [2013] VSC 92.

[123] But see par 133 below.

[124] See par 107(5) and (6) above. See also fn 76 above.

[125] Rule 7.04 refers specifically to "the plaintiff".

[126] Williams v The Society of Lloyd's [1994] VicRp 19; [1994] 1 VR 274, 291.7; see par 98 above.

[127] See par 107(5) and (6) above, albeit referring to leave to proceed rather than the steps prescribed in r 7.04.

[128] See Supreme Court Rules, r 21.01 (for a proceeding commenced by writ); cf r 45.03 (for a proceeding commenced by originating motion).

[130] [2000] HCA 41; (2000) 201 CLR 552.

[132] See par 107(7) above.

[133] See pars 92-93, 98, 114 and 123 above; cf 107(5) above and fn 156 below.

[134] See, for example, observations made in considering "satisfy itself, so far as it reasonably can" which was said to equate with "reasonable satisfaction" in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 350.3 (Rich J), 362.2 (Dixon J). See also FTZK v Minister for Immigration and Border Protection [2014] HCA 26; (2014) 88 ALJR 754, 759-760 [12] (French CJ and Gageler J); Forster v Hunter New England Area Health Service [2010] NSWCA 106; (2010) 77 NSWLR 495, 501 [23] (Macfarlan JA, with whom McColl JA and Sackville AJA agreed); Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449, 449.10-450.5 (Mason CJ, Brennan, Deane and Gaudron JJ).

[135] Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611, 615 [2] (Gummow ACJ and Kiefel J, dissenting).

[136] [1938] HCA 34; (1938) 60 CLR 336, 363.3.

[138] See par 81 above. Also contrast Pt 10 r 1 of the old New South Wales Rules: par 96 and fn 54 above.

[139] See par 107(5) above.

[140] See par 107(2) above.

[141] Civil Procedure Act 2010 (Vic), ss 63, 64.

[142] [2000] HCA 41; (2000) 201 CLR 552.

[143] See pars 105 and 107 above.

[144] [2005] VSCA 236; (2005) 12 VR 268.

[146] See pars 90-97 above.

[147] Of course, McDonald J did not have the benefit of the plurality judgment at the time he delivered his judgment.

[148] [2005] VSCA 236; (2005) 12 VR 268.

[149] [1960] VicRp 44; [1960] VR 278 (Dean J).

[150] [2013] VSC 92.

[151] [2000] VSC 513.

[152] [2000] HCA 41; (2000) 201 CLR 552.

[153] [2000] VSC 513, [9].

[155] See par 107(4) above. So there is no misunderstanding, the pleading should not introduce allegations beyond those matters required to be pleaded in accordance with the Supreme Court Rules namely, those matters set out in r 13.

[156] See par 126(3)-(6) above. This possibility arises from the suggestion that the requirements under r 7.04 should also be met when there is an application from an Overseas Defendant under r 7.05: see pars 92-93, 114 above; but also see par 107(5) above.

[157] Commonwealth Bank of Australia v White [1999] VSC 262; [1999] 2 VR 681, 700-701 [68] (Byrne J). See par 102 above.

[158] See par 107(2) above.

[159] See par 107(3) above.

[160] See pars 98-99 above.

[161] See par 107(7) above.

[162] See par 107(8) above.

[163] [2005] VSCA 236; (2005) 12 VR 268. See pars 112 and 118 above.

[164] See pars 98-99 above.

[165] Adams v Lindsell [1818] EWHC J59; (1818) 1 B & Ald 681 [106 ER 250].

[166] [1892] 2 Ch 27, 33.7 (Lord Herschell).

[167] [1957] HCA 10; (1957) 98 CLR 93, 111.8 (Dixon CJ and Fullagar J).

[168] [2012] NSWCA 107.

[169] At [370] (Barrett JA), [375]-[376] (Sackville AJA).

[172] [2005] VSCA 236; (2005) 12 VR 268.

[173] At 271 [11] (Charles JA, with whom Ashley JA agreed).

[174] Cowan v O'Connor (1888) 20 QBD 640, 642.3 (Manisty J), 642.7 (Hawkins J).

[175] Lewis Construction Co Pty Ltd v M Tichauer Societe Anonyme [1966] VicRp 45; [1966] VR 341, 345.8 (Hudson J).

[176] In re London and Northern Bank. Ex parte Jones [1900] 1 Ch 220, 224.2 (Cozens-Hardy J).

[177] See pars 16-18 above.

[178] See par 11 above.

[179] See fn 5 above.

[180] No submission was made by Madden that the use of the term "delivered" in this clause was relevant to the question of where the contract was made. In my view, this was the correct approach. The concept of "delivery" is a common law requirement for the formal execution of a deed: see, for example, Interchase Corporation Ltd (in liq) v Commissioner of Stamp Duties Queensland (1993) 27 ATR 154, 155.9-156.3 (Davies JA, Ambrose and White JJ); Ex parte Ryrie [1983] 2 Qd R 194, 197F, 200B (McPherson J); Xenos v Wickham (1867) LR 2 HL 296, 312.4 (Blackburn J), 323.3 (Lord Cranworth). A deed is very different to a contract, and the concept of "delivery" is not connected to "acceptance" in contract law: Vincent v Premo Enterprises Ltd [1969] 2 QB 609, 619D (Lord Denning MR, with whom Winn and Fenton Atkinson LJJ agreed).

[181] Cf Tooth v Fleming (1859) Legge 1152, 1156.5 (Stephen CJ), where the date of the contract was determined by the date of acceptance by post.

[182] The Licence Agreement provided that it would commence "on the date hereof". It is not unusual for commercial contracts to specify a commencement date which precedes the actual date on which the contract is made.

[183] [2012] NSWCA 107, [135].

[184] As set out in par 141 above, a facsimile has been held to be an "instantaneous" communication; as has a telex: Entores Ld v Miles Far East Corporation [1955] EWCA Civ 3; [1955] 2 QB 327, 332.5, 333.9-334.1 (Denning LJ), 335.6 (Birkett LJ), 337.7 (Parker LJ). In effect, it has been held that such communications, although not completely instantaneous, do not come within the postal acceptance rule.

[185] At par 18 above.

[186] See pars 138, 139 and 141 above.

[187] At par 69 above.

[188] [2000] HCA 41; (2000) 201 CLR 552, 573 [50]-[51]. See par 107(1)-(2) above.

[189] [1994] VicRp 19; [1994] 1 VR 274.

[190] [1999] VSC 262; [1999] 2 VR 681.

[192] Winfield, The Province of the Law of Tort (1931) 32.5, referred to recently by French CJ in "Torts in Commercial Law: Promiscuous Entanglement or Blessed Union?" in Degeling, Edelman and Goudkamp (eds), Torts in Commercial Law (2011) 17, 24.2.

[193] Lord Atkin, "Law as an Educational Subject" (1932) Journal of the Society of Public Teachers of Law 27, 30.7.

[194] Birks, "The Concept of a Civil Wrong" in Owen (ed), Philosophical Foundations of Tort Law (1995) 29, 51.4.

[195] Rogers_,_ Winfield & Jolowicz on Tort (18th ed, 2010) 4 [1-2].

[196] French CJ "Torts in Commercial Law: Promiscuous Entanglement or Blessed Union?" in Degeling, Edelman and Goudkamp (eds), Torts in Commercial Law (2011) 17, 24.5-25.2.

[197] Jones and Dugdale, Clerk and Lindsell on Torts (20th ed, 2010) 2 [1.02].

[198] (Looseleaf, service 73, March 1986), vol 1, 1148.1 [11.1.16].

[199] See par 78 above.

[200] [1994] VicRp 19; [1994] 1 VR 274.

[202] [1975] VicRp 32; [1975] VR 345.

[203] At 349.2, relying on a definition of tort contained in Salmond on Torts (16th ed) 12, and a passage from Halsbury (3rd ed) vol 37, 111.

[204] Winfield, The Province of the Law of Tort (1931) 32.5. See par 161(1) above.

[206] [1975] VicRp 32; [1975] VR 345.

[207] At 349.4. See also Chadwick v Bridge [1951] HCA 11; (1951) 83 CLR 314; Koop v Bebb [1951] HCA 77; (1951) 84 CLR 629, both cases having been referred to by Menhennitt J at 348.3.

[210] JC Campbell QC "Contribution, Contributory Negligence and Section 52 of the Trade Practices Act - Part I" (1993) 67 Australian Law Journal 87; Part II (1993) 67 Australian Law Journal 177.

[211] On 14 December 2012, Campbell JA retired as a member of the Court of Appeal of New South Wales, having originally been appointed to the trial division on 26 October 2001.

[212] (1993) 67 Australian Law Journal 87, 108.2.

[213] (1993) 67 Australian Law Journal 177, 177.5-184.3.

[214] [1975] VicRp 32; [1975] VR 345. See par 165 above.

[216] (1993) 67 Australian Law Journal 177, 185.7. The article then went on to discuss issues relating to contribution, which are not relevant to the issues at hand.

[217] (1998) 83 FCR 1 (Beaumont, Hill and Sundberg JJ).

[218] See at 9E, 11E. Reference was also made to Dorrough v Bank of Melbourne Ltd (1995) ATPR (Digest) 46-152, 53,185 (Cooper J), which accepted the reasoning in the article in finding the statutory cause of action was a tort and, in so doing, rejected the earlier decision of Australia and New Zealand Banking Group Ltd v Turnbull and Partners Ltd [1991] FCA 618; (1991) 33 FCR 265 (Sheppard J) in which it was held the cause of action was not a tort. Dorrough v Bank of Melbourne Ltd was followed in Austotel Management Pty Ltd v Jamieson (1996) ATPR 41,568 (Burchett J).

[220] [1999] VSC 262; [1999] 2 VR 681.

[221] At 698 [60]. The judgment of Byrne J makes no reference to Bialkower v Acohs Pty Ltd (1998) 83 FCR 1.

[222] [1975] VicRp 32; [1975] VR 345.

[223] [1994] VicRp 19; [1994] 1 VR 274.

[224] [1981] FCA 35; (1981) 35 ALR 79, 86.7 (Fox J).

[225] [1994] VicRp 19; [1994] 1 VR 274, 311.7.

[226] [1999] VSC 262; [1999] 2 VR 681, 698 [61].

[227] In considering a stay application of a proceeding in England between Australian litigants, Browne-Wilkinson V-C referred to a claim under s 52 of the Trade Practices Act as a "statutory tort": Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65, 72j.

[229] See pars 80-84 above.

[233] The exception is r 7.01(1)(n), being a proceeding brought under the Civil Aviation (Carriers' Liability) Act 1959 (Cth). Also see r 7.06(b) which allows an originating motion to be served out of Australia in a proceeding brought under any Act, but only by order of the court.

[234] Williams v The Society of Lloyd's [1994] VicRp 19; [1994] 1 VR 274, 310.4, 313.4, 316.6 (McDonald J).

[235] See, for example, Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 503-504 [17] (Gaudron J, reflecting the views of the other members of the court; 512 [40]-[41], McHugh, Hayne and Callinan JJ; 528-529 [99]-[103], Gummow J; 545-546 [145]-[146], Kirby J).

[236] [1999] VSC 262; [1999] 2 VR 681, 697-698 [60].

[237] See, for example, Winfield, "The History of Negligence in the Law of Torts" (1926) 42 Law Quarterly Review, 184, esp at 184.6. This article addressed the issue of whether, in 1926, negligence could be considered an independent tort.

[238] At 697 [60]. Section 82 of the Trade Practices Act and s 236 of the Australian Consumer Law are headed "Actions for damages". The provisions speak in terms of suffering "loss or damage"; as to which see, for example, Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 533-534 [114] (Gummow J), 547 [149] (Kirby J).

[239] See, for example, Madden v Coy [1944] VicLawRp 20; [1944] VLR 88; Batcheller v Tunbridge Wells Gas Company (1901) 84 LT 765.

[240] See also Brown v Jam Factory Pty Ltd [1981] FCA 35; (1981) 35 ALR 79, 86.4 (Fox J).

[241] The Supreme Court Rules were conditionally made on 18 March 1986 and came into operation on 1 January 1987 by force of r 1.02 and the Supreme Court (Rules of Procedure) Act 1986 (Vic), s 4(1). The parliamentary debates contain nothing which might assist with the issues at hand.

[242] [2001] VSC 511.

[245] See fn 70 above.

[246] [1999] NSWCA 455; (2000) ATPR 41-737, 40,553 [61].

[247] Referring, with approval, to Bialkower v Acohs Pty Ltd [2009] FCA 1573; (1998) 183 FCR 1; (Giles JA agreeing).

[248] [2000] FCA 1155; (2000) 178 ALR 161.

[251] (1998) 83 FCR 1.

[252] [2000] QSC 379.

[254] [2002] SASC 24; (2002) 83 SASR 183.

[255] Fair Trading Act 1987 (SA), s 56.

[256] [2002] SASC 24; (2002) 83 SASR 183, 209 [211] (Lander J, with whom Prior J agreed), 228 [329] (Wicks J).

[257] [2003] NSWSC 500; (2003) 58 NSWLR 223.

[260] [1991] FCA 618; (1991) 33 FCR 265, 277.4.

[261] (1993) 67 Australian Law Journal 87.

[262] (1995) ATPR (Digest) 46-152, 53,185.

[263] (1998) 83 FCR 1, 11E.

[264] (1998) 83 FCR 1.

[265] [2000] FCA 1155; (2000) 178 ALR 161, 189 [131].

[266] [1999] VSC 262; [1999] 2 VR 681, 697-698 [60].

[267] [2003] NSWSC 500; (2003) 58 NSWLR 223, 232 [75].

[268] [1934] NSWStRp 57; (1934) 34 SR (NSW) 593, 596.

[269] [1936] NSWStRp 13; (1936) 36 SR (NSW) 204.

[270] [1937] HCA 18; (1937) 56 CLR 464.

[271] At 233 [78]. See also 236 [91].

[272] (2004) 214 ALR 478.

[274] [2008] NSWCA 161; (2008) 72 NSWLR 318 (with whom Beazley and Giles JJA agreed).

[275] Referring to Bialkower v Acohs Pty Ltd (1998) 83 FCR 1, 11; Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 503 [17], 510 [38], 512 [40]; Hampic Pty Ltd v Adams [1999] NSWCA 455; (2000) ATPR 41-737, 40,553 [61].

[276] [2008] NSWCA 161; (2008) 72 NSWLR 318, 354 [174].

[277] Referring to I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109.

[278] See, for example, Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd (No 6) [2009] FCA 1465, [19] (Tracey J).

[279] The approach by Byrne J has been followed in other Australian jurisdictions with similar rules on service out of Australia: Centrebet Pty Ltd v Baasland [2012] NTSC 100; (2012) 272 FLR 69, 77-78 [25.5 and 25.6] (Master Luppino); Mallon & Co Lawyers Pty Ltd v Gam [2012] WASC 376, [6]-[15] (Master Sanderson).

[280] See fn 121 above.

[281] This Act was the subject of second reading speeches in the Legislative Assembly on 28 May 1985 and the Legislative Council on 16 October 1985. The relevant parts of the Act came into operation on 1 April 1986.

[282] The Australian Consumer Law, relevantly, came into operation on 1 January 2011.

[283] Commonwealth Bank v White [1999] VSC 262; [1999] 2 VR 681, 700 [67] and the cases there cited.

[284] Ibid, citing Diamond v Bank of London and Montreal Ltd [1979] QB 333, 346A (Lord Denning MR), 349C (Stephenson LJ), 350H (Shaw LJ, agreeing with both). See also ABN Amro Bank NV v Bathurst Regional Council [2014] FCAFC 65, [739] (Jacobson, Gilmour and Gordon JJ); Bray v F Hoffman-La Roche Ltd [2002] FCA 243; (2002) 118 FCR 1, 45-46 [145]-[147] (Merkel J).

[285] See pars 40-44, 55-59, 61-63 above and 202-218 below.

[286] See pars 62-63 above.

[287] [2005] VSCA 236; (2005) 12 VR 268.

[288] At pars 54-66 above.

[289] See par 54 above.

[290] There is an obvious tactical advantage in deleting the original First Representation, as it did not relate to a future matter. However, this does not entirely explain its deletion given it was pleaded as a complete alternative basis for the Licence Agreement being executed by Lew Footwear.

[291] Lew Footwear submitted that, but for Kenmar's execution of the Licence Agreement on behalf of Lew Footwear, none of the events which gave rise to the loss would have occurred. This oversimplifies the issues at hand: see March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506, 509.3-510.10, 515.5-517.2 (Mason CJ, with whom Toohey and Gaudron JJ agreed), 530.5-534.4 (McHugh J).

[292] Lew Footwear also accepted that the fact that there was a reversal in the onus of proof for "future matters", by operation of s 51A of the Trade Practices Act and s 4 of the Australian Consumer Law, did not relieve Lew Footwear of the burden of establishing reliance: T47.26.

[293] [2010] VSCA 245; (2010) 31 VR 575, 599-603 [96]-[106] (Buchanan and Nettle JJA, Warren CJ dissenting). An application for special leave to appeal was refused: [2011] HCATrans 146 (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[296] [2013] VSCA 101, [129] (Vickery AJA, with whom Weinberg and Tate JJA agreed). See also at [148]-[150], referring to Ricochet Pty Ltd v Equity Trustees Executors and Agency Company Ltd [1993] FCA 99; (1993) 41 FCR 229, 233.7-234.5 (Lockhart, Gummow and French JJ).

[297] (1985) 157 CLR 215.

[300] [2010] VSCA 245; (2010) 31 VR 575.

[301] This position is to be contrasted with the facts in Unisys Australia Ltd v RACV Insurance Pty Ltd [2004] VSCA 81 (Phillips JA, with whom Ormiston and Batt JJA agreed), where a system was an integral part of what had been bargained for in contracting for a new computer-based system of administration.

[302] See par 10 above.

[303] See par 51 above. There is some force in Madden's submission that it is not immediately apparent as to why a particular system would need to be in place given the Agreed Cost Basis would be expected to involve a relatively straightforward accounting exercise. However, the relevant evidence is not before the court. There is no evidence as to what was actually involved in complying with the Agreed Cost Basis. Also there was no evidence of Madden's accounting systems (or even any evidence of where such accounting systems are maintained). Given Lew Footwear's reliance on s 51A of the Trade Practices Act and s 4 of the Australian Consumer Law, and the fact there is no basis to form any meaningful view on this interlocutory application, there is no need to consider this matter further.

[304] See also par 49 above.

[305] See pars 50-51 above.

[306] (1985) 157 CLR 215.

[307] The conclusion does not make any comment on the probative value of any evidence which might be led by Lew Footwear in the future.

[308] See par 206 above.

[309] See par 41 above.

[310] At pars 2, 16, 18, 20, 25, 58, 145 and 200 above.

[311] Cf Williams v The Society of Lloyd's [1994] VicRp 19; [1994] 1 VR 274, 312.7 (McDonald J).

[312] At par 68 above.

[313] See also par 232 below.

[314] This statement is made, mindful of what is set out in pars 107(2) and 135(4) above.

[315] See pars 202-218 above.

[316] Civil Procedure Act, ss 7, 8.

[317] See par 135 above.

[318] See par 107(7) above. See also Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538, 564.8-566.4 (Mason CJ, Deane, Dawson and Gaudron JJ).

[319] Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418, 444.10-445.1 (Toohey, Gaudron and Gummow JJ), citing Compagnie Des Messageries Maritimes v Wilson [1954] HCA 62; (1954) 94 CLR 577, 586.5-587.10, 589.2; Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197, 224.3 (Brennan J), 259.3 (Gaudron J).

[320] Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418, 445.5, citing Huddart Parker Ltd v The Ship "Mill Hill" [1950] HCA 43; (1950) 81 CLR 502, 508.8-509.3 (Dixon J).

[322] See, for example, Commonwealth Bank of Australia v White [1999] VSC 262; [1999] 2 VR 681, 704 [89] (Byrne J), referred to with approval in Commonwealth Bank of Australia v White (No 4) [2001] VSC 511, [40] (Warren J) and Quinlan v Safe International Försäkrings AB [2005] FCA 1362; (2006) 14 ANZ Ins Cas 61-693, 75,358 [49(f)] (Nicholson J).

[323] [1999] VSC 262; [1999] 2 VR 681, 704 [89].

[324] I preface the sentence with "Ordinarily" as each case must depend on its own facts.

[325] Senior counsel for Lew Footwear submitted that "99 percent" of all the expert evidence had probably become irrelevant on this application concerning service out of Australia. I am inclined to agree that most of it was ultimately of limited assistance in relation to the issues before the court. Neither expert expressed any opinions on the causes of action in the Proposed Statement of Claim beyond those already pleaded in the Statement of Claim. For completeness, however, I note that the expert evidence of Hargraves led by Madden was not independent evidence. Hargraves was a partner in a law firm that had been retained to act in relation to this proceeding. In contrast, Milonas was truly independent, and also highly qualified and experienced.

[326] That is, in any of the 3 counties of New York State specified in the Forum Clause: see par 11 above.

[327] See, for example, Reinsurance Australia Corporation Ltd v HIH Casualty and General Insurance (in liq) [2003] FCA 56; (2003) 254 ALR 29, 62-63 [320]-[321] (Jacobson J).

[328] World Firefighters Games Brisbane v World Firefighters Games Western Australia Incorporated [2001] QSC 164; (2001) 161 FLR 355, 359 [13] (Philippides J), referring to The Eleftheria [1970] P 94, 99-100 (Brandon J).

[329] At pars 233-236 above.

[330] See pars 55(b) and 56 above.

[331] Cf Futuretronics International Pty Ltd v Gadzhis [1992] VicRp 63; [1992] 2 VR 217, 239.8, 240.7-241.3 (Ormiston J).

[332] See pars 137-156 above (subject to the court granting dispensation for non-compliance with r 7.02(1)).

[333] Accordingly, it is unnecessary to consider further submissions made by Lew Footwear as to the exclusivity of the jurisdiction of particular Australian courts to determine issues arising under the Trade Practices Act or the Australian Consumer Law.

[334] See par 70 above.