Mineral Commodities Ltd v Promet Engineers Africa

REASONS FOR JUDGMENT 1 This is an application for leave to serve the application on the first, third and fourth respondents in South Africa pursuant to O 8 r 3 of the Federal Court Rules (the Rules). 2 The applicant claims in its statement of claim that the first respondent (Promet Africa) engaged in misleading or deceptive conduct in respect of representations that it made to the applicant. It is alleged Promet Africa, the third respondent (Mr Ford) and the fourth respondent (Mr Bennett) made representations to the applicant for the purposes of inducing the applicant to engage Promet Africa to design, manufacture, supply, install, erect and commission a processing and retreatment plant to be used by Kariba Kono (SL) Limited (Kariba), a subsidiary of the applicant, for the treatment of tailings in the Republic of Sierra Leone. 3 In short, it is alleged that the representations were to the effect that the processing plant was or would be capable of reaching the contractual specifications, that Promet Africa would be able to design and manufacture and commission a plant which was fit for the purpose of efficiently recovering diamonds from the tailings dump in question, that Promet Africa would commit sufficient technological engineering and management expertise and resources to the project and that it had carried out necessary preliminary investigations and inquiries, and sufficiently informed itself of all matters relevant to the design of the plant. 4 Mr Ford was at the material time a director of Promet Africa, and Mr Bennett was the managing director of Promet Africa. It is alleged that the representations, express and implied, arise from statements made in the course of discussions, and in correspondence, during the negotiations that occurred between the parties in the period January 2006 to June 2006. Mr Barras, who has sworn an affidavit in support of this application, participated in those negotiations as a representative of the applicant. He relies specifically on a letter dated 24 January 2006 signed by Mr Bennett, which was received in Western Australia, letters and emails to the applicant signed by Mr Ford, which originated in South Africa but were received in Western Australia and a letter dated 6 June 2006 to the applicant which was signed and personally delivered by Mr Ford on that day to those present in the office of Mr Caruso, the managing director of the applicant, at Welshpool in Western Australia. Mr Barras deposes that the contract was made in the applicant's office at Welshpool on 6 June 2006. 5 The applicant pleads that it relied upon the representations in making the contract whereby it engaged Promet Africa to design, install and commission the plant. The applicant has pleaded that it was an express term of the contract that the plant would be capable of: (a) processing 80 tonnes of material in the tailings dump each hour; and (b) recovering 100% of 8 millimetre tracer test particles with a density of 3.53 from the dump material processed by the plant. 6 It also pleaded that there were implied terms in the contract that Promet Africa would exercise reasonable care and skill in designing, installing, erecting and commissioning the plant; and that it would design a plant that was technically viable in accordance with sound engineering practice and capable of effectively recovering diamonds from the tailings dump in question. 7 The applicant pleads further that the plant is unsuitable for the treatment of the tailings dump material. Mr Barras deposes that the design drawings for the plant required a pan underflow screen of 4.4 metres by 2.4 metres to be supplied and installed. However, the pan underflow screen that was actually supplied and installed by Promet Africa is only 1.2 metres by 2.4 metres. Mr Barras deposes further that Mr Ford was expressly warned by Mr van Rensberg, the commissioning engineer, that the effect of the reduction in the size of the pan underflow screen would be that the plant would not be able to achieve anything like the required throughput of 80 tonnes per hour. Further, Mr Barras deposed that the commissioning engineer had said that the Promet Africa plant was not suitable for the treatment of the dump material. 8 In its statement of claim, the applicant claims that Promet Africa engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the TPA) because the representations were false or made without reasonable grounds, and that Mr Ford and Mr Bennett were persons involved in the contraventions for the purposes of s 75B of the TPA. The applicant also claims that Promet Africa has breached the contract. 9 The applicant alleges that by reason of Promet Africa's contravention of the TPA and its breach of contract, it has suffered loss and damage, being rectification and repair costs, holding costs and the financial consequences of deferred revenue, and the diminution in the value of its shareholding in Kariba. Mr Barras confirms this in his affidavit. 10 For the Court to grant the relief which the applicant seeks, it must be satisfied that: (a) the Court has jurisdiction in the proceeding, (b) the proceeding is of a kind mentioned in O 8 r 2 of the Rules, and (c) the applicant has a prima facie case for the relief claimed in the proceeding. 11 In my view, the Court has jurisdiction to hear and determine the claims pleaded in the statement of claim because one of the claims made is that there has been a contravention by Promet Africa of the TPA. The other claim, namely for breach of contract, forms part of the same controversy and is, therefore, within the Court's accrued jurisdiction. 12 Further, I am of the view that the proceeding is of a kind referred to in O 8 r 2 of the Rules. The applicant relies on a number of letters and emails as giving rise to the representations pleaded, which were received and relied upon in Australia. Further, Promet Africa's letter of 6 June 2006 was personally delivered by Mr Ford whilst he was present in Australia, and relied upon by Mr Caruso in Australia. The claim for contravention of the TPA is supported by Item 11 of O 8 r 2, which refers to breaches of a Commonwealth statute committed in Australia. (See Ramsey v Vogler [2000] NSWCA 260 at [36]‑[45].) 13 The claim for breach of contract is supported by Item 3(a) of O 8 r 2 which concerns a proceeding in relation to breach of a contract made in Australia. On the evidence, the contract was made on 6 June 2006 in the applicant's offices in Welshpool. 14 It is sufficient to satisfy the requirements of a prima facie case that a prima facie case is made out on one, but not necessarily all of the causes of action relied upon (Bray v F Hoffman‑La Roche Ltd (2003) 130 FCR 317). 15 In the case of State of Western Australia v Vetter Trittler Pty Ltd (In liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 at 110 (Vetter Trittler) French J stated that the requirement to demonstrate a prima facie case will be satisfied if on the evidence inferences are open, which if translated into findings of fact would support the relief claimed. 16 In my view, the evidence of Mr Barras referred to at [4] above as to the pre‑contractual dealings between Mr Ford and Mr Bennett on behalf of Promet Africa on the one hand, and the applicant on the other, and at [7] above as to the defects in the plant, satisfies the standard referred to in Vetter Trittler in relation to both the TPA claim and the claim for breach of contract against Promet Africa. 17 However, in my view, the applicant has not established a prima facie case in relation to the alleged personal liability of Mr Ford and Mr Bennett under s 75B of the TPA. The applicant has not pleaded, nor adduced evidence, that Mr Ford and Mr Bennett had personal knowledge of the misleading or deceptive nature of the representations relied upon (Yorke v Lucas (1985) 158 CLR 661). I am not prepared, therefore, to give leave for the application to be served upon Mr Ford and Mr Bennett. 18 Finally, the Court may in the exercise of its discretion withhold leave to serve out of the jurisdiction. One of the grounds on which the Court may exercise this discretion is if this Court would be a "clearly inappropriate forum" for the hearing and determination of the proceeding. 19 The applicant refers to certain matters which it says could be raised by the respondents in favour of an argument that this Court was a "clearly inappropriate forum". These are: (a) Mr Ford and Mr Bennett are resident in South Africa and Promet Africa conducts its business there; (b) the payments under the contract were to be made in South African Rand; and the design of the plant and the prefabrication was undertaken in South Africa; and (c) Mr Ford and Mr Bennett, Promet Africa's other witnesses, and its documents and records are located in South Africa and, therefore, it would be necessary if the proceeding was conducted in this Court, for Promet Africa's witnesses to travel to Australia for the trial, and for documents and records to be relocated to Australia and for Australian lawyers to be instructed. 20 I would not refuse leave to serve this application on Promet Africa in South Africa, in the exercise of my discretion, for the following reasons. 21 First, the applicant is incorporated in Australia, carries on business in Australia and its shares are listed on the Australian Stock Exchange. Very little weight is attached to the fact that the three relevant respondents are resident and have their business base in South Africa because Promet Africa carries on business internationally, and it was Promet Africa's solicitation of business from the applicant in Australia which led to the making of the contract. 22 Secondly, the claims of misleading or deceptive conduct are based on breaches of a Commonwealth statute. In this regard, the applicant has relied upon the affidavit of Susan Beth Hayes, a South African lawyer, who deposes that there is no South African legislation which contains similar provisions to s 52 of the TPA and which would afford similar relief to that claimed by the applicant. Further, Ms Hayes deposes that the applicant would not, in respect of the claim pleaded, be able to obtain the relief which is available under the TPA, at common law in South Africa. Accordingly, on the evidence, the applicant would be deprived of a juridical advantage if the applicant was required to proceed in South Africa. 23 Thirdly, the contract was made in Western Australia. The fact that the contract provides for payment in South African Rand, and that the design and prefabrication was carried out in South Africa are factors to be taken into account in determining which law is the proper law of the contract. I note that there is a dispute on this issue. However, even if it was to transpire that the proper law of the contract was South African law, this factor would not outweigh the other factors already referred to so as to result in the denial of relief on discretionary "forum non conveniens" grounds. 24 Fourthly, as to the question of the location of the witnesses and the documents and the instruction of lawyers, this in my view, is a neutral consideration. This is because the applicant would suffer inconvenience of a similar nature, if the proceeding was to be conducted in South Africa. 25 There is annexed to Mr Barras' affidavit a memorandum from the Attorney‑General's Department which states that a private agent can be used to serve Australian court process in South Africa. 26 Accordingly, I would be prepared to give leave to serve an amended application, which removes Mr Ford and Mr Bennett as respondents, on Promet Africa in South Africa. However, in light of my findings as to Mr Ford and Mr Bennett, I will hear from the applicant