Federal Court of Australia|1989-11-24|Before: French J

The applicant to deposit with his solicitors in Perth all certificates of shares held by him in the first respondent upon the terms that if the respondents or any of them are successful in these proceedings the said shares will be held by the applicant's solicitors as security for any unpaid costs owing to any such respondent or respondents and made available to them for that purpose in such manner and on such terms as the Court thinks fit.

There will be liberty to apply to vary the amount and terms of the security for costs.

The costs of the motion for security for costs be reserved.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The Court is concerned in this case with a motion to stay proceedings commenced by a resident of the United Kingdom against an Australian company and two of its directors. The action, brought under the Trade Practices Act 1974 and in contract, arises out of an agreement for the sale of shares owned by the applicant and various representations allegedly made by the respondents before that agreement was completed. Related proceedings have been commenced by the applicant in the Chancery Division in England and by the first respondent in the Companies Court of that Division. The respondents move for a stay of proceedings in this Court on the basis that it is not the appropriate forum for the determination of the dispute. They also seek an order for security for costs against the applicant. Questions of the principles governing such an application arise, complicated in this case by a choice of law and non-exclusive jurisdiction clause in the written agreement.

2. This application arises out of a written agreement said to have been made on 1 April 1988 for the sale of all the issued shares in an English company, Bijou Enterprises Limited ("Bijou") to Australian Industrial Investments Limited ("AII"), incorporated in Western Australia and listed on the Second Board of the Australian Stock Exchange (Perth) Limited. The applicant, Mr Frank Green, who resides in England was the vendor and says that he was at all material times the beneficial owner of the shares. He sues AII and its directors, Michele Lombardo and Michael Bibby in relation to pre-contractual and other representations said to have been made fraudulently and otherwise to constitute misleading or deceptive conduct by AII. He claims damages and a declaration that the agreement has been rescinded. Alternatively, he seeks an order under s.87(1A) of the Trade Practices Act 1974, declaring the whole of the agreement to be void. Consequential relief is claimed including an order for the re-transfer to Green of the Bijou shares.

3. According to the statement of claim Bijou owns substantial property in the City of London. The agreement, between Green, AII and Bijou, provided, inter alia, for a cash consideration of 3 million pounds sterling ("the cash element") payable seven days after the satisfaction or waiver of certain conditions precedent and in any event not later than 30 June 1988 ("the completion date"). Additional consideration in AII shares ("the share element") was to be paid to a value equal to the difference between 37 million pounds and the sum of Bijou's borrowings at completion and the 3 million pounds cash consideration. That figure was to be paid:

"(i) by the allotment and issue on the Completion

Date to the applicant of such number of 1%

Cumulative Convertible Redeemable Preference

shares of A$0.20 each in the share capital of

the first respondent ("Consideration Shares")

at a premium of A$0.20 per share credited as

fully paid (both as to their nominal value and

premium thereon as aforesaid) as would have a

nominal value (when aggregated with the share

premium as aforesaid) equal to or just

exceeding the amount by which the Share

Element exceeds pounds 24,575,000;

(ii) by the allotment and issue to the applicant on

a date no later than 14 days following but not

before the first anniversary of the Completion

Date, or such later date as the applicant

might notify in writing to the first

respondent by not less than 60 days notice

(but not being a date later than that set out

in paragraph 7(2)(iii) below), of such number

of Consideration Shares at a premium of A$0.20

per share credited as fully paid (both as to

their nominal value and the premium thereon as

aforesaid) as would have a nominal value (when

aggregated with the share premium as

aforesaid) equal to or just exceeding

pounds 12,575,000;

(iii) by the allotment and issue to the applicant,

on the Third Completion Date (as defined in

the Agreement) of such number of Consideration

Shares at a premium of A$0.20 per share

credited as fully paid (both as to their

nominal value and the premium thereon as

aforesaid) as would have a nominal value (when

aggregated with the share premium as

aforesaid) equal to or just exceeding

pounds 12,000,000;"

Pleaded as conditions precedent to the operation of the agreement are the following:

1. The obtaining by AII of all necessary approvals of

the Australia Stock Exchange (Perth) Limited and

the granting of official quotation to the ordinary

shares in the share capital of AII upon or before

the completion date on the Main Board of Australian

Stock Exchange Limited; and

2. The unconditional allotment and issue on or before

the completion date, of in the order of 42,500,000

ordinary shares of A$0.20 each in AII at a premium

of not less than 20 cents ("the Share Placement").

4. Clause 22 of the agreement which was not pleaded but exhibited to an affidavit filed by Green provided:

"22. This agreement shall be governed by and

construed in accordance with the Laws of

England and the parties hereby submit to the

non-exclusive jurisdiction of the English

Courts as regards any claim dispute or matter

arising out of or relating to this Agreement

or any of the documents to be executed

pursuant hereto and the Purchaser hereby

irrevocably appoints the Purchaser's

Solicitors to accept service of proceedings on

the Purchaser's behalf."

5. Green complains of pre-contractual representations made to him by Bibby in London between late 1987 and 1 April 1988, they being that AII was a substantial company:

1. Capable of funding the proposed development of the

properties which, on performance of the Agreement,

would be owned by Bijou as a wholly owned

subsidiary of AII, from funds raised by AII without

having to charge or encumber the properties; and

2. Capable of raising substantial sums of money,

including the 3 million pounds, without difficulty.

The representations are said to have been untrue in that AII was never capable of funding the proposed development without having to charge or encumber the properties and was never capable of raising substantial sums of money, including the sum of 3 million pounds, without difficulty. Further, it is said, in effect that they were made fraudulently or with no reasonable grounds for believing that they were true. Green says that he relied upon and was induced by them in entering into the agreement.

6. By 6 September the first of the two conditions precedent, that relating to the obtaining by AII of approvals from the Australian Stock Exchange and Main Board quotation had allegedly not been met. And, unknown to Green, neither had the condition relating to share placement. In the circumstances, he says that he was not obliged to complete the contract. That he did so was, he says, the result of further misrepresentations made to him in August and September 1988 by Lombardo and Bibby on behalf of AII. These were pleaded as follows (excluding particulars):

"13(a) On 6 September 1988,

(i) expressly, that the first respondent

would obtain all necessary approvals of

the Australian Stock Exchange (Perth)

Limited to the granting of official Main

Board quotation to the ordinary shares in

the share capital of the first respondent

("quotation") and that quotation would be

granted within a period of not more than

14 days after 6 September 1988; and

(ii) impliedly, that the Listing Committee of

the Australian Stock Exchange had

indicated that quotation would be granted

within the said period or alternatively

that it had reasonable grounds for making

the representation.

(b) During August and September 1988,

(i) expressly, that the Share Placement would

be made unconditionally for a cash

consideration and the cash so raised

would be used to:

(aa) retire liability to the first

respondent;

(bb) assist in the payment of the Cash

Element; and

(cc) provide working capital for the

first respondent; and

(ii) impliedly, that the first respondent

through its then Board of directors held

the intention to act as aforesaid.

(c) On 6 September 1988, expressly, that the Share

Placement had been made unconditionally.

7. The representation that approvals necessary for Main Board Quotation would be obtained from the Australian Stock Exchange and Quotation achieved by 20 September and that the Listing Committee had given an indication to that effect, was said to be false in that the Committee had not given any such indication and there were no reasonable grounds for so believing.

8. As to the representations relating to the proposed share placement and application of moneys raised from it, it is said that after 1 September 1988 AII, through its directors, intended, not that the placement be made unconditionally but pursuant to conditions requiring it to purchase shares in the placees. An allotment of 22,878,468 shares to Foxwell Limited and Foxwell Mining NL was allegedly conditioned on the payment by AII of a call of $1.99 on 3,200,000 ordinary shares in Foxwell Mining and the acquisition by it of the whole issued capital of Foxtech Limited. These payments were said to amount to $9,119,387. An allotment of 13,750,000 AII shares to Australian Gold Resources Ltd was allegedly conditioned upon the acquisition by AII of 500,000 fully paid ordinary shares in Bayou International Limited at a cost of $5 million. And a placement with Eromanga Hydrocarbons NL of 5,871,532 shares involved the acquisition by AII of 476,300 fully paid shares in that company, credited as fully paid by payment of forty five cents per share and 13,339,239 fifty cent contributing shares credited as paid to sixteen cents per share (total cost $2,348,613).

9. Because of these conditions, it is alleged, no money was available to retire AII's liabilities, assist in the payment of the Cash Element or for use as working capital. AII did not, it is said, disclose to Green its intention to place the shares on these conditions or that it had done so. The representation that the share placement had been made unconditionally was falsified by the fact of the conditional placement.

10. The representations as to Main Board Quotation and unconditional share placement are said to have been made fraudulently and with the intention on the part of AII and its directors of inducing Green to proceed to completion of the agreement. And on the strength of those representations he says he transferred the Bijou shares to AII on 6 September, received 3 million pounds from that company and was allotted the Consideration Shares mentioned in the payment condition to which reference has already been made. Green accuses AII of misleading or deceptive conduct contravening s.52 of the Trade Practices Act and says that Lombardo and Bibby were involved as accessories in that conduct within the meaning of s.75B of the Act. He says that on learning of the falsity of the representations he gave notice to AII of rescission of the agreement and by his plea tenders the sum of 3 million pounds against return of the Bijou shares and such other relief "as will restore him to the position in which he would have been had the agreement not been performed". Damages are claimed but not particularised. Particulars it is said are being compiled and will be supplied prior to trial. Alternatively, he contends that the conditions precedent to the agreement were not fulfilled and that for this reason he is entitled to rescind and to be restored to his previous position. The relief claimed includes a declaration that the agreement has been validly rescinded, alternatively, an order under s.87(1A) of the Trade Practices Act declaring the whole of the agreement to be void ab initio, an order for re-transfer of the Bijou shares and damages.

11. The present application was commenced on 3 March 1989. On 13 January Green had issued a writ out of the Chancery Division of the High Court in England seeking rescission of the agreement on the ground of fraudulent misrepresentation. And on 24 February, AII filed a petition in the Chancery Division Companies Court seeking various orders against Green in relation to the affairs of Bijou. The petition recited the share sale agreement of 1 April 1988 and its completion on 6 September. It alleged a further joint venture agreement dated 6 September between Green, AII and Bijou for the sale and/or development of properties in the Soho District of London. This venture it was said was the principal purpose for which AII had acquired shares in the company. Various terms of that agreement were then set out. The petition went on to refer to terms of the share sale agreement under which Green was to procure the appointment to the Bijou Board of an AII nominee in addition to himself and his nominee, the appointment of an AII nominee as secretary and the amendment of bank authorities to allow bank accounts to be operated on the signature of AII and one other director of the company nominated by Green. Green himself was to be appointed as managing director of Bijou until 30 June 1990. He would, for the duration of the joint venture agreement, be entitled to maintain a majority on the Board.

12. Upon the completion of the share sale agreement, according to the petition, payments in cash and AII shares were made to Green, Bibby was appointed as AII's nominee on the Bijou Board and John Denman as Bibby's alternate and company secretary. The bankers were directed that cheques would require the signatures of Denman and one of Green or Andrew Peters (his nominee).

13. The petition went on to refer to the institution of proceedings in the Chancery Division by Green in relation to the share sale agreement and alleged that Green had refused to make available to AII's accountant, copies of Bijou's books of account to enable the preparation of audited accounts for the year ended 31 December 1988 as required by listing authorities in Australia. And by a letter dated 25 January 1989 to the company's usual solicitors, Green stated that he "as from today reassumed personal control of" the company's affairs and instructed the solicitors to take their instructions from him alone. On the same date he required Denman to return everything held by him pertaining to the company. He also allegedly took steps to have himself nominated as sole signatory on the company's mandate with the Bank leading to the suspension of its overdraft facility pending resolution of the matter to the Bank's satisfaction. He is also said to have written to Denman inviting him to resign as secretary to enable the re-appointment of Mr Gordon Glass.

14. Denying Green's entitlement to rescind the share sale agreement, AII sought injunctive relief under the petition and orders for the delivery to its accountants of documentation sufficient to enable the preparation of a proper interim financial statement of Bijou's position for the year ended 31 December 1988 and for various consequential and incidental directions and orders. Interim injunctive relief has been granted to AII which, according to an affidavit sworn by Bibby, "permits the normal day to day operations and activities of Bijou Enterprises Limited to be carried out pending the hearing of the applicant's proceedings". According to Green, he has been advised by his solicitors that the AII petition will not be heard until at least March 1990 and that his own proceedings will not be tried until at least then and possibly not before March 1991.

15. In support of the respondent's motion for a stay of these proceedings, Bibby says that all negotiations and events leading to completion of the share sale agreement took place in England. Green's solicitor, John Greig, and his financial advisor, Andrew Peters, were present. They are regarded by AII and its directors as material witnesses. All relevant papers and documents are said to be in England and the injunction obtained by AII subject to Green's proceedings being heard in England.

16. On the question of witnesses and documents, Green says that if Greig and Peters are called as witnesses it will be as part of his case and that any expense and inconvenience involved in bringing them to Australia will be his. There will, he says, be witnesses from Australia including Lombardo and Bibby and various other persons who can depose to the circumstances of the allotment of the AII shares and the progress of AII's application for Main Board listing through the Perth Branch of the Australian Stock Exchange. He would, he said, be very surprised to find that the bulk of documentary material to the action was not in Australia as these would include AII's files and formal documents including all of those relating to the allotment and the listing application. He also contradicted Bibby's evidence as to the form of the injunction saying that he had been advised by his English solicitor that "the injunction obtained by the first respondent is subject to the hearing, in England, of those proceedings instituted in that country by the first respondent and not...subject to the hearing of those proceedings instituted by me in England".

17. In further opposition to the motion for a stay of these proceedings Mr Antony Siopis, the solicitor acting for Green, contended that a major issue in the proceedings relates to the circumstances surrounding the allotment of shares in AII pursuant to a share placement underwritten by Messrs. Hartley Poynton. At trial it is said the Court will be required to investigate and make findings on whether the allotment to certain alleged sub-underwriters was conditional upon AII agreeing to use funds obtained from the sub-underwritings to purchase shares in the sub-underwriters themselves. All three of the sub-underwriters are said to be Australian companies. The reference to the sub-underwriters I take to be a reference to Foxwell Mining NL, Australian Gold Resources Limited and Eromanga Hydrocarbons, although this was not made explicit on the affidavit. It is further pointed out that AII is an Australian company with its head office in Perth. Mr Siopis contends in his affidavit that he would expect all documents in possession of AII relating to the case to be located in Western Australia and documents held by the three sub-underwriters to be in Australia. A second major issue to which he adverts in his affidavit relates to the listing of the shares of AII on the Main Board of the Australian Associated Stock Exchange Limited. He says that AII's application was made to the Perth Branch of the Australian Stock Exchange and that it appears from documents in Green's possession that Messrs. Arthur Andersen & Co. of Perth acted on behalf of AII in advising and preparing the application for listing. On that basis he would expect the documents in relation to that application to be located in the Arthur Andersen office. The relevant Stock Exchange is located in Perth and Mr Cato, its company's manager, who has already sworn an affidavit in these proceedings, is resident in Perth. None of this evidence was controverted.

18. The respondents have moved for an order that the application be stayed. They conceded at the outset that this Court has jurisdiction founded upon the presence of the respondents in Australia. And it is clear that the jurisdiction is of right. But they relied in part upon the proposition that Green seeks in his English proceedings the same relief that he claims in the Federal Court and that AII seeks its injunctive relief on the basis that the contract of sale of the Bijou shares remains valid. Adopting what they said is the traditional test enunciated by the majority in Oceanic Sun Line Special Shipping Co. Inc. v Fay [1988] HCA 32; (1988) 165 CLR 197, the respondents submitted that:

A. There is no doubt that the English Court

provides a natural and appropriate forum.

B. The substantive law to be applied is the law

of England.

C. Considerable expense and inconvenience will be

involved if the matter is litigated in Australia.

D. If the application in the Federal Court

proceeds there will be a risk of two Superior

Courts, one English and the other Australia,

will reach different conclusions.

E. Green has commenced proceedings in England

first and has only commenced the Australian

proceedings as an after thought and there is

no evidence that the action will be heard and

determined any more quickly in Australia than

in England.

They referred also to an unreported judgment of Rogers J. in the Supreme Court of New South Wales in Entrad Limited v Blaikie (24 December 1985) where his Honour held that there should be a stay of proceedings in that court with liberty to the plaintiffs to seek a variation of the order in the event that a change of circumstances justified it. It was submitted that a similar order would be appropriate in the present case.

19. On behalf of Green it was contended that the claim for damages for contravention of s.52 of the Trade Practices Act was based upon the conduct of a trading corporation, AII, formed and carrying on business in Australia through the involvement of two of its directors, both of whom are persons ordinarily resident in this country. The other causes of action relied upon are said to fall within the Court's accrued jurisdiction. The respondents, it was submitted, bear the onus of persuading the Court that it should not exercise jurisdiction and in this regard reliance was placed upon Oceanic Sun Line (supra). Acknowledging some controversy as to which is the appropriate test in an application such as the present, counsel for Green submitted that on any view the Federal Court is the appropriate forum. It was said that the remedies provided for by the Trade Practices Act are available only in Australian courts. Western Australia is the place of residence of each of the respondents and Lombardo and Bibby will inevitably have to give evidence. Evidence will also be called, it was said, from persons who can depose to the circumstances of the allotment of the AII shares and the progress of its application for Main Board listing through the Perth Branch of the Australian Stock Exchange. These people, it was submitted, would presumably all be resident in Australia. The bulk of the documents material to the action are "very probably in Australia" as these would include AII files and formal documents and all documents relating to the allotment and application for listing. Further it was said, the case is likely to go to trial more rapidly in Australia than in England and this was based upon the time estimates set out in Green's affidavit.

20. Reference was made to clause 22 of the share sale agreement which require it to be "governed by and construed in accordance with the laws of England" and provides that the parties "submit to the non-exclusive jurisdiction of the English courts as regards any claim dispute or matter arising out of or relating to" the agreement. That it was said, does not mean that this Court should not embark on a case involving the construction of the agreement and reference was made to Contractors Limited v MTE Control Gear Limited (1964) SASR 47; Dunbee v Gilman & Co. (Australia) Pty Ltd (1968) 70 SR(NSW) 219; Evans Marshall & Co. Ltd v Bertola SA (1973) 1 WLR 349; Lewis Construction Co. Pty Ltd v M. Tichauer Societe Anonyne [1966] VicRp 45; (1966) VR 341. The fact that Green first issued proceedings in England was said to be no bar to this Court embarking on these proceedings. It was submitted that a defendant who seeks to stay an action in one jurisdiction on the ground that another action in relation to the same subject matter has been commenced against him in another jurisdiction must show that the action which he seeks to stay is oppressive or vexatious - Witten v Lombard Australia Limited (1968) 14 FLR 322. If the second action however seeks to secure for the plaintiff a legitimate juridical advantage, then it cannot be described as vexatious or oppressive.

21. The decision of the High Court in Oceanic Sun Line Special Shipping Co. Inc v Fay (supra) was notable for its rejection of the liberal approach enunciated in Spiliada Maritime Corporation v Consulex Limited (1987) 1 AC 460 to the question whether and in what circumstances a court should decline to exercise jurisdiction which could be exercised by a foreign court. In the latter decision the basic principle of the law of England and Scotland as enunciated by Lord Goff, with whom the other Law Lords agreed was set out at p 476:

"...a stay will only be granted on the ground of

forum non conveniens where the court is satisfied

that there is some other available forum, having

competent jurisdiction, which is the appropriate

forum for the trial of the action, i.e. in which

the case may be tried more suitably for the interests

of all the parties and the ends of justice."

22. The detailed history of the development of English law from a more restrictive approach, based on the need to demonstrate vexation, oppression or abuse of process, as set out by Scott LJ in St. Pierre v South American Stores (Gath and Chaves) Limited (1936) 1 KB 382 at 398 through The Atlantic Star (1974) AC 436 and MacShannon v Rockware Glass Limited (1978) AC 795 to Spiliada, has been too comprehensively reviewed elsewhere to bear detailed repetition here - see Oceanic Sun Line (supra); Freckmann v Pengendar Timur Sdn Bhd (1989) WAR 62 and Voth v Manildra Flour Mills Pty Ltd (1989) 15 NSWLR 513.

23. The adherence of the majority in Oceanic Sun Line to the older approach reflected in Maritime Insurance Co. Ltd v Geelong Harbor Trust Commissioners [1908] HCA 37; (1908) 6 CLR 194 and Cope Allman (Australia) Ltd v Celemajer (1968) 11 FLR 488, has not been free of controversy - see generally Starke - The High Court and the Doctrine of Forum Non Conveniens (1988) 62 ALJ 671; Pryles - Judicial Darkness on the Oceanic Sun (1988) 62 ALJ 774 and various notes in the Law Quarterly Review - Reynolds - Forum Non Conveniens in Australia (1989) 105 LQR 40; Briggs - Forum Non Conveniens in Australia (1989) 105 LQR 200; Collins - The High Court of Australia and Forum Non Conveniens: A Further Comment (1989) 105 LQR 364. Nor is it easy of application. Indeed at the conclusion of the reasons for judgment of the minority (Wilson and Toohey JJ) their Honours observed:

"Since preparing these reasons for judgment we have

had the opportunity of reading the reasons prepared

by the other members of the court. It is apparent

that the decision of the court, while resolving the

immediate dispute between the parties, does not

yield a precise and authoritative statement of the

principles that should be applied in dealing with

an application to stay proceedings. That statement

must await another day." (p 25)

It is useful briefly to review the way in which the members of the majority expressed their conclusion in that case.

24. The formulation adopted by Scott LJ in St. Pierre v South American Stores (supra) had rejected the proposition that a mere balance of convenience would justify an English Court in declining jurisdiction in favour of a foreign court. In order to justify a stay it was said the defendant must satisfy the court of two propositions:

1. That the continuance of the action would work an

injustice because it would be oppressive or

vexatious to the defendant or would be an abuse of

the process of the Court in some other way.

2. That the granting of a stay would not cause an

injustice to the plaintiff.

Brennan J. in Oceanic Sun Line noted, at p 235, the introduction in The Atlantic Star (supra) of a calculus of competing advantage and disadvantage in determining whether questioned proceedings would be vexatious or oppressive or an abuse of process. Once the inquiry became a balancing exercise it was impossible, his Honour observed, to maintain the formulation of Scott LJ as the guiding principle. And after referring to the evolution of the new judicial policy through MacShannon to Spiliada as "an ineluctable course of decision" he held that the true principle was as Lord Simon of Glaisdale had said in dissent in The Atlantic Star:

"... a plaintiff who founds jurisdiction will not be

denied a hearing unless he is misusing the forensic

process so as to perpetrate injustice."

"The formulation by Scott LJ is, and should remain,

the law of this country and "oppressive" and

"vexatious" should be understood according to their

ordinary meaning." (at pp 239-240)

25. Deane J., after referring to Maritime Insurance Co. Limited (supra), considered the sense of the words "vexatious and oppressive" in the older formulation and observed at p 243 that they emphasised that the traditional process did not involve mere determination of the balance of convenience for resolution of competing claims of two appropriate jurisdictions:

"The starting point...in accordance with traditional

principle must be the prima facie right of a

plaintiff to insist upon the exercise of competent

jurisdiction which he has regularly invoked. That

prima facie right of a plaintiff is not to be

lightly displaced or denied."

His Honour did however, perceive the involvement of a weighing process in the traditional formulation albeit it would not have been seen that way in the nineteenth century cases and at p 247 set out in summary form what he regarded as the modern content of traditional principles governing the power of a Court in this country to order that proceedings which have been regularly instituted within jurisdiction, should be dismissed or stayed on inappropriate forum grounds:

"That power is a discretionary one in the sense that

its exercise involves a subjective balancing

process in which the relevant factors will vary and

in which both the question of the comparative

weight to be given to particular factors in the

circumstances of a particular case and the decision

whether the power should be exercised are matters

for individual judgment and, to a significant

extent, matters of impression. The power should

only be exercised in a clear case and the onus lies

upon the defendant to satisfy the local court in

which the particular proceedings have been

instituted that it is so inappropriate a forum for

their determination that their continuation would

be oppressive and vexatious to him."

The term "oppressive" in the St. Pierre formulation meant seriously and unfairly burdensome, prejudicial and damaging. "Vexatious" should be understood as productive of serious and unjustified trouble and harrassment. The reference to a balancing process in his Honour's exposition arguably reflects a point at which he diverged from the approach of Brennan J., who saw such an exercise as inconsistent with the St. Pierre formulation.

26. Gaudron J. expressed her preference in favour of the test enunciated by Deane J. which she described as consonant with established principles and giving to the St. Pierre approach an operation attuned to modern circumstances. However, her Honour's acceptance of that principle was subject to the qualification that proceedings for a stay should not require, or in every case provide, an opportunity for determination of the question of applicable law. The selected forum should not be seen as inappropriate if it is fairly arguable that its substantive law is applicable in the determination of the rights and liabilities of the parties.

27. As to the conclusions to be drawn from the judgments of the majority in Oceanic Sun Line, Malcolm CJ (Wallace and Brinsden JJ agreeing) held in Freckmann v Pengendar Timur Sdn Bhd (supra) that although their Honours had rejected the Spiliada approach, they were not agreed on the test to be applied. Gleeson CJ in Voth v Manildra Flour Mills Pty Ltd (supra) saw the majority in Oceanic Sun Line as declining to follow Spiliada and reasserting what had long been the law in this country. His Honour however accepted that they expressed themselves "in somewhat different terms" when it came to applying the traditional principle to modern conditions. Kirby P. (at 534) saw a binding rule reflected in the dictum of Deane J. that the test will be satisfied "if the defendant establishes that there is an available and appropriate tribunal in some other country and that the local court is a clearly inappropriate forum in all the circumstances". McHugh JA considered that their Honours had at least decided that the doctrine of forum non conveniens as expounded in Spiliada is not part of the law of Australia and that this itself is a proposition of law binding on courts lower in the judicial hierarchy. And Spiliada being excluded, the governing authority was Maritime Insurance Co. Ltd (supra). In Anglo-Australian Foods Ltd v Planta (unrep Fed Ct 3/11/88, Lee J.) Lee J. suggested that the essence of the judgment is that a proceeding regularly invoked provides a prima facie right to have the proceeding continue in that forum. Otherwise, his Honour observed, it is difficult to extract a ratio decidendi other than a conclusion that the Spiliada doctrine is not to be applied as part of the Australian common law.

28. Whether or not a clear ratio can be extracted from the judgment of the majority there is a highest common factor identifiable in the passage from the judgment of Deane J. that requires the defendant to satisfy the court that the local forum is so inappropriate that the continuation of the proceedings would be vexatious or oppressive in the sense of seriously and unfairly burdensome and giving rise to serious and unjustified trouble and harrassment.

29. Clause 22 of the share sale contract provides that it is to be governed by the laws of England, but that of itself does not prevent this Court from exercising jurisdiction - Contractors Ltd v MTE Control Gear Ltd (supra) at 49 (Travers J.); Dunbee Ltd v Gilman & Co. (supra) at 225 (Jacobs J.A.). Nor does the agreement to submit to the jurisdiction of the English Courts, although such a clause may be a powerful factor in favour of the grant of a stay The Fehmarn (1958) 1 WLR 159, The L.F. Eleftheria (1970) p 94; Sheldon Pallet Manufacturing Co. Pty Ltd v New Zealand Forest Products Ltd (1975) NSWLR 141. Where there is an exclusive jurisdiction clause embodied in a contract, the exercise of a discretion to refuse to give effect to that clause may require justification of a different order from that needed in a case where the plaintiff has simply chosen to sue in one forum rather than another - Oceanic Sun Line (supra) at 231. The relevant clause of the share sale agreement, not being an exclusive jurisdiction clause, will not give rise to as high a threshold of persuasion against a stay as in the case of an exclusive jurisdiction clause - Evans Marshall & Co. Ltd v Bertola SA (1973) 1 WLR 349. And where an applicant bona fide claims relief under the Trade Practices Act 1974 in relation to misleading or deceptive conduct said to have induced entry into the contract, then the foreign tribunal clause will be given considerably less weight. For such a claim calls into question the basis upon which the contract was formed and in any event, invokes a statutory jurisdiction and remedies from which there is no contractual escape.

30. In the present case the representations said to constitute contravention by AII of s.52 of the Trade Practices Act were made in England. The Act has application to extra-territorial conduct and that application is governed by s.5 which provides in the relevant parts:

"(1) Parts IV and V extend to the engaging in

conduct outside Australia by bodies corporate

incorporated or carrying on business within

Australia or by Australian citizens or persons

ordinarily resident within Australia.

.

.

.

(3) Where a claim under section 82 is made in a

proceeding, a person is not entitled to rely at a

hearing in respect of that proceeding on conduct to

which a provision of this Act extends by virtue of

sub-section (1) or (2) of this section except with

the consent in writing of the Minister.

(4) A person other than the Minister or the

Commission is not entitled to make an application

to the Court for an order under sub-section 87(1)

or (1A) in a proceeding in respect of conduct to

which a provision of this Act extends by virtue of

sub-section (1) or (2) of this section except with

the consent in writing of the Minister.

(5) The Minister shall give a consent under

sub-section (3) or (4) in respect of a proceeding

unless, in the opinion of the Minister -

(a) the law of the country in which the conduct

concerned was engaged in required or

specifically authorised the engaging in of the

conduct; and

(b) it is not in the national interest that the

consent be given."

There is no basis for any suggestion that the law of England specifically authorised the conduct complained of and it is difficult to conceive of any national interest that would be affected by the granting of the relevant consent. The Court was informed on the hearing of the motion that ministerial consent had been sought and would in all probability be forthcoming. The applicants claim damages under s.82 of the Act and that claim is not precluded by sub-s.5(3) except "at a hearing". But the Court cannot entertain the application in so far as it seeks relief under s.87(1A) without the consent of the Minister.

31. In Wells v John R. Lewis (International) Pty Ltd (1975) 25 FLR 194, there is a statement in the judgment of the Full Court of the Australian Industrial Court that s.5, as it then stood, is to be interpreted "as speaking with respect to conduct engaged in out of Australia which may reduce competition in the Australian market or mislead Australian consumers". Although there have been amendments to s.5 since that time, including the requirement for ministerial consent, they do not affect the force of that observation. However it was made obiter and in so far as the reference to Australian consumers is derived from the "CONSUMER PROTECTION" heading to Pt.V of the Act, it has been overtaken by the observations of Stephen J. in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd [1978] HCA 11; (1978) 140 CLR 216 at 225 (with whom Jacobs and Murphy JJ agreed on this point) that the unambiguous words of s.52 should not be given some unnaturally confined meaning because of the heading to Pt. V. And those sentiments were echoed by the Full Federal Court in Bevanere v Lubidineuse [1985] FCA 134; (1985) 59 ALR 334 at 341.

32. The Trade Practices claim apart, this is an action brought against a company, formed and operating in Australia and directors who are resident in this country. There will be significant material witnesses to be called from within Australia and there is good reason to believe that some, although not necessarily the bulk of the relevant documents will be found here. To the extent that witnesses will need to be brought from England, the evidence suggests that the expense and inconvenience of doing so will fall largely upon the applicant. The fact that the proper law of the contract is that of England has not been shown to involve any question of law materially different to the common law in this country in relation to contracts. Nor is there any suggestion that English statute law is applicable. And even if there were some rules of English law applicable which were not reflected in the law of Australia, the divergence between the underlying principles of the two legal systems is not so great as to cause this Court any real difficulty.

33. Having regard to these matters, it cannot be said that the continuance of the proceedings in this Court would be vexatious or oppressive. Nor does the non-exclusive jurisdiction clause in the share sale agreement alter the position in that regard. And the Trade Practices Act claim invoking as it does a more broadly based cause of action than those available at common law, is a powerful factor in favour of the identification of this Court as an appropriate forum. So far as the time of hearing is concerned, trial dates are available from the last week in March 1990 which was approximately the earliest date by which, on Green's advice, he could expect to go to trial in England.

34. For all the preceding reasons, I am not satisfied that it has been shown that the Federal Court is an inappropriate forum and the motion for stay of the proceedings will be dismissed.

35. The respondents also seek an order that the applicant provide security for costs on the basis that he is ordinarily resident outside Australia. Reliance is placed on O.28 r.3 which provides in the relevant parts:

"3(1) Where, in any proceeding, it appears to the

Court on the application of a respondent -

(a) that an applicant is ordinarily resident

outside Australia;

.

.

.

the Court may order that applicant to give such

security as the Court thinks fit for the costs of

the respondent of and incidental to the proceeding."

36. The evidence offered in support of this motion is that Green is ordinarily resident outside Australia, that his company, prior to completion of the share sale contract, had liabilities of $3.2 million which the respondents agreed to assume and that he told Bibby on a number of occasions that he is in financial difficulty and has spent the money paid to him in September 1988. His main operating business known as the Mercury Group, was having liquidity problems and owes Bijou 550,000 pounds which it is evidently unable to pay. Green did not deny these statements but in his affidavit of 20 March said that the shares which he presently holds allotted to him by AII under the agreement are still of substantial value and even if ascribed a value of one cent, would be worth $347,626.40. He has indicated that he is prepared to make the relevant share certificates available to his solicitors with instructions to hold them in safe keeping and to make them available to the respondents in so far as that they be necessary, by way of security for any unpaid costs. And while contending that the shares are not presently tradeable, counsel for the respondent accepted that if his clients were successful they would have a real and substantial value.

37. Counsel for the respondents offered no evidence on the likely question of costs but suggested that the Court could confidently expect they would not be less than $50,000. And this estimate was not contested by counsel for the applicant.

38. In the circumstances I am of the view that as an initial step the requirement for security may be satisfied by the lodgment of the share certificates with the applicant's solicitors on terms offered by the applicant. The respondent will, however, be at liberty to seek further and better security if circumstances change.

Re Frank Dennis Victor Green v Australian Industrial Investment Limited; Michele Lombardo and Michael Andrew Bibby [1989] FCA 482; 90 ALR 500 25 FCR 532 (24 November 1989)

Oceanic Sun Line Special Shipping Co. Inc. v Fay [1988] HCA 32; (1988) 165 CLR 197

Maritime Insurance Co. Ltd v Geelong Harbor Trust Commissioners [1908] HCA 37; (1908) 6 CLR 194

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd [1978] HCA 11; (1978) 140 CLR 216

Bevanere v Lubidineuse [1985] FCA 134; (1985) 59 ALR 334

Re Frank Dennis Victor Green v Australian Industrial Investment Limited; Michele Lombardo and Michael Andrew Bibby [1989] FCA 482; 90 ALR 500 25 FCR 532

At a glance

Court

Decision date

Before

Source

Judgment (65 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (15)

Re Frank Dennis Victor Green v Australian Industrial Investment Limited; Michele Lombardo and Michael Andrew Bibby [1989] FCA 482; 90 ALR 500 25 FCR 532 (24 November 1989)