NAB v Idoport

Supreme Court of NSW|2002-07-10|Before: Francis J, Barrett J, Mr J, Einstein J

CITATION : NAB v Idoport [2002] NSWSC 623 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3541/02 HEARING DATE(S) : 10/07/02 JUDGMENT DATE : 10 July 2002

National Australia Bank Limited - First Plaintiff National Markets Group Limited - Second Plaintiff National Australia Financial Management Limited - Third Plaintiff Australian Market Automated Quotation (AUSMAQ) System Limited - Fourth Plaintiff MLC Limited - Fifth Plaintiff MLC Holdings Limited - Sixth Plaintiff Your Prosperity Limited - Seventh Plaintiff National Wealth Management Holdings Limited - Eighth Plaintiff National Online Trading Limited - Ninth Plaintiff Glenn L L Barnes - Tenth Plaintiff PARTIES : Francis J Cicutto - Eleventh Plaintiff David M Krasnostein - Twelfth Plaintiff Kevin F Courtney - Thirteenth Plaintiff Russell A McKimm - Fourteenth Plaintiff Donald Robert Argus - Fifteenth Plaintiff Richard McKinnon - Sixteenth Plaintiff Simon Moore - Seventeenth Plaintiff Idoport Pty Limited - First Defendant Negubo Pty Ltd - Second Defendant Investors Buying Service (IBS) Pty Limited - Third Defendant John Malcolm Maconochie - Fourth Defendant JUDGMENT OF : Barrett J

8 - IN THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION

3541/02 - NATIONAL AUSTRALIA BANK LIMITED & ORS v IDOPORT PTY LTD & ORS

1 The present plaintiffs (which I shall, for convenience, call "the NAB parties") were defendants in complex litigation initiated by the present defendants ("the Idoport parties") as plaintiffs which occupied the attention of Einstein J almost continuously for more than a year up to 29 January 2002. Three separate proceedings were before his Honour, being 50113/98, 50026/99 and 3991/00, all in this Division. In each, he made orders on 29 January 2002 dismissing the claims with costs and barring the Idoport parties, or those of them who were parties to the particular proceeding, from bringing any fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by them in the particular proceeding until costs in that proceeding were paid in full. The costs have not been paid in full. 2 It is against that background that the NAB parties have today made application ex parte for certain relief the terms of which I will shall come to but which may be generally described as anti-suit injunctions and anti-anti-suit injunctions. There is sought, in each category, an order directed to all the Idoport parties and a separate order directed only to the fourth defendant who is apparently assumed to be able to control the others. 3 The apprehension which has caused the NAB parties to make this application as a matter of urgency arises from receipt, by the first plaintiff, by courier on 1 July 2002, of a letter from a law firm in California named Lieff Cabraser Heimann and Bernstein. Because of the possibility that the letter might be inadmissible by reason of s.131 of the Evidence Act 1995, the NAB parties have not, on the present application, sought to tender it, but the affidavit of Mr Lovell, the solicitor for the NAB parties, sworn today identifies the salient features of that letter. 4 The California firm identifies itself as: "a member of the team in connection with the long running dispute with the National Australia Bank Limited and others arising out of the consulting agreement and the AUSMAQ service."

The firm says that it specialises in complex litigation against the most powerful companies in the world and in commercial solutions that occur after many years of disputation at very substantial cost to all involved. It goes on to give examples of matters in which it has acted and invites attention to further instances available on its website. 5 The letter continues: "As you will see, we litigate or are team members in cases that most large American firms would consider either too risky or beyond their financial or legal resources. I mention this because our firm has sufficient resources to ensure that the merits of the AUSMAQ case are eventually litigated to judgment in Australia, in the UK or the US, should that be necessary. Going forward, cost issues that prompted dismissal of the action will no longer pose a barrier and our attention will be only on the merits of the litigation." 6 I should say that the reference to the "consulting agreement", the "AUSMAQ service" and the "AUSMAQ case" are sufficient to make it clear that the letter is referring to the general subject matter of the proceedings that were before Einstein J and in which the orders of 29 January 2002 were made. 7 The NAB parties regard the parts of the letter to which I have referred as indicative of the California firm's having received instructions from some or all of the Idoport parties. The letter of course does not say that in explicit terms, but such an inference may be justified by the reference to the lawyers being "a member of the team in connection with the long running dispute with the National Australia Bank and others arising out of the consulting agreement and the AUSMAQ service." It will be seen that continuing membership of "the team" is asserted. 8 The NAB parties also see the parts of the letter I have mentioned as indicating a clear possibility of the California firm's initiating and prosecuting proceedings (or causing them to be initiated and prosecuted) in Australia, in the United Kingdom or in the United States or perhaps in more than one of those countries, being proceedings involving an issue or issues involved in the proceedings heard in this court in which the orders of 29 January 2002 were made. 9 In my judgment, the letter from the California firm is capable of being interpreted as conveying the messages the NAB parties derive from it. There is a cogent basis for their apprehension, by reference to the letter, that the Idoport parties or some of them may, with the assistance of the California firm, institute new proceedings which, in whole or in part, seek to litigate the same issues as were the subject of the earlier proceedings in this Court. For them to do so, it is said, would entail inconsistency with the orders made by this court on 29 January 2002. 10 I turn now to another aspect of the evidence given by Mr Lovell, namely, the general nature and territorial features of the subject matter of the earlier proceedings. 11 The claims of the Idoport parties in the earlier proceedings were based on alleged breach of contract, alleged misrepresentation actionable at common law and by statute, alleged breach of fiduciary duty and alleged procuring or knowing involvement on the part of individuals in some of the foregoing. I do not attempt here to give a detailed recitation of the causes of action, merely to outline their general nature. 12 As for territorial factors, it is the evidence of Mr Lovell that all corporate parties to the earlier proceedings are incorporated in an Australian State or Territory and each has its head office and administrative centre in Australia - although some do have operations in other countries; that all natural person parties are Australian residents; that relevant contracts were made in Australia, that relevant written contracts are expressed to be governed by the law of Victoria and contain a clause by which the parties submit to the non-exclusive jurisdiction of the courts of that State; that all acts and omissions relevant to the causes of action pleaded occurred in Australia and that, with the exception of some experts, all witnesses are based in Australia. 13 There is thus, on the evidence, ample ground for a finding that the causes of action have, in a territorial sense, a clear and logical connection with one or more Australian jurisdictions and no obvious connection with any jurisdiction outside Australia. 14 The basis on which an Australian court will, by injunction, restrain a party from proceeding in a foreign court was seen by Brennan CJ in CSR Limited v Cigna Insurance Australia Ltd (1996) 189 CLR 345 as being simply the avoidance of injustice, this being a formulation taken from the speech of Lord Scarman in Castanho v Brown & Root [1981] AC 557. Caution is however necessary because such an injunction represents, indirectly, an interference with the process of the foreign court in that it forbids resort to the jurisdiction of that court although, of course, the operation of the order is only upon the litigant in personam. 15 Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ, in their joint judgment in CSR v Cigna, referred to the court's jurisdiction to protect the integrity of its processes once set in motion. Although most commonly exercised by the grant of Mareva relief, that jurisdiction also extends to restraint of the initiation or continuation of foreign proceedings which interfere with or have a tendency to interfere with proceedings pending in the court: National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209. Its appropriateness to protect the integrity of orders the court has already made must follow. 16 It is pertinent to quote the following passage from the majority judgment in CSRv Cigna (omitting footnotes): "The inherent power to grant anti-suit injunctions is not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes. Quite apart from the inherent power of a court to protect its own processes, a court may, in the exercise of the power deriving from the Chancery Court, make orders in restraint of unconscionable conduct or the unconscientious exercise of legal rights. If the bringing of legal proceedings involves unconscionable conduct or the unconscientious exercise of a legal right, an injunction may be granted by a court in the exercise of its equitable jurisdiction in restraint of those proceedings no matter where they are brought." 17 I refer also to the three factors relevant to the exercise of the jurisdiction identified by Lord Hobhouse of Woodborough in Turner v Grovits [2002] 1 WLR 107: "(a) The applicant is a party to existing legal proceedings in this country; (b) The defendants have in bad faith commenced and propose to prosecute proceedings against the applicant in another jurisdiction for the purpose of frustrating or obstructing the proceedings in this country. (c) The court considers that it is necessary in order to protect the legitimate interest of the applicant in the English proceedings to grant the applicant a restraining order against the defendants."

18 In a context such as the present, where orders are already in place, the jurisdiction may be regarded as extending to shield the efficacy and operation of the court's orders from unconscientious resort to proceedings elsewhere by way of attempt to evade their effect. 19 In the present case, it is sought to invoke this jurisdiction not only in a direct way by restraining, by anti-suit injunction, resort to another court to prosecute claims corresponding with those involved in the earlier proceedings but also, in a less direct and more immediate way, by restraining any application to another court for an order restraining or purporting to restrain the NAB parties from proceeding with the claims for anti-suit relief in the present summons and notice of motion. This is the aspect of the claim involving an anti-anti-suit injunction, as it was described by Lindgren J in Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 16) (unreported, FCA, 22 September 1995). His Honour there referred to a number of United States cases in which such injunctions had been granted. He also had before him evidence relevant to the particular matter he was considering that such an order might be made suddenly by a New York court. 20 The NAB parties have, in my judgment, shown that there is a serious question to be tried as to whether actions of the Idoport parties are in progress or in contemplation, particularly in some other country, which would or could be inconsistent with the orders made by this court on 29 January 2002 and, accordingly, whether action to subvert those orders and which might amount to contempt of this court is in train or is planned. 21 As to the balance of convenience, insofar as it can be judged at this point, there is nothing to suggest that the Idoport parties will be prejudiced by a short period of restraint, at least insofar as legitimate conduct, consistent with the orders of 29 January 2002, is concerned. I emphasise, in that connection, that the orders now sought are framed in a way which does not seek to preclude the assertion of new causes of action or the seeking of different remedies. They are tailored to ensure only that there is no encroachment upon the territory specifically marked out by the orders of 29 January 2002. 22 The case is an appropriate one for the grant of injunctive relief on an interim basis for a short time. 23 As to the fact that no service has been effected on the Idoport parties and that orders have been sought without their knowledge, I would say two things. First, and as I have already mentioned, the orders sought, if granted, in the first instance for a short time only, will not interfere with legitimate conduct consistent with the orders of 29 January 2002. The second point is that notice to the Idoport parties might lead to immediate steps to approach another court for orders which would cut across this court's maintaining the status quo for a short time until the Idoport parties can appear here to deal with the application for continuation of injunctive relief that the NAB parties will presumably pursue. There is also, of course, the additional point that an undertaking as to damages will be in place. 24 I should only say in conclusion that the orders sought are framed in such a way as not to preclude continuation of several appeals pending in the Court of Appeal at the suit of the Idoport parties, including appeals from the orders of 29 January 2002. I should also mention those orders have not been stayed. 25 I make order 1 and order 2 in the form of order that has been handed up and which I initial and date. I also initial and date the form of summons and notice of motion referred to therein. 26 Upon the plaintiffs, by their counsel, giving to the court to the usual undertaking as to damages, I make orders 3 and 4. I also make orders 5, 6 and 7, so that there will be leave for short service and the proceedings will come back before me at 2 o'clock on Friday, 12 July 2002. **********

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