Siemens WLL v BIC Contracting LLC

(1) There were extant and pending foreign bankruptcy proceedings against the judgment debtor, BICC, so that any payment by LMENA under the garnishee order would confer a preference on Siemens and put LMENA at risk of a claim from the bankruptcy trustee notwithstanding having paid under the garnishee order;

(2) Various third parties had an interest in the garnished debts which would be interfered with or prejudiced by the garnishee order continuing;

(3) LMENA faced the risk of having to make a payment of the garnished debts twice, in particular in response to any claim made by LMENA's contractual counterparties other than BICC; and

(4) There was a risk of other commercial harm to LMENA and related entities.

1. It is particularly in relation to issue (1) that LMENA's submissions made reference to the evidence upon UAE law, although UAE law was also potentially relevant to other issues.
2. Siemens's submissions, which were filed on 4 December 2023, responded to each of the points advanced by LMENA. The submissions referred to the UAE law evidence at some length in relation to issues (1) and (3).
3. LMENA filed reply submissions on 8 December 2023. Those submissions referred to the evidence on UAE law in respect of what was said to be extant and pending foreign bankruptcy proceedings against BICC and the risk of double payment. They also raised, for the first time although not as fully or clearly as later developed orally, the argument on which it was ultimately successful. That was that because the agreements under which the garnished debt arose were governed by English law and London arbitration clauses, the location of the debt was England and, in any event, not Australia. It was said, which was ultimately accepted, that for those reasons the debt was beyond the reach of this Court's garnishee jurisdiction. That was a legal argument that did not depend in any way on the evidence on UAE law. This can be referred to as the "situs" argument.
4. The hearing, which included examination of each side's expert on UAE law, took place on 13 and 14 December 2023.
5. LMENA developed, and gave primacy to, its situs argument in oral submissions. Siemens did not accept the validity of the argument. It firmly resisted it, citing extensive authority. After the hearing, with leave, Siemens filed a brief note dealing further with the argument, to which LMENA then replied.
6. The result of Siemens's resistance to the situs argument was that LMENA persisted with its other arguments in the alternative, including those relying on UAE law. In particular, LMENA pressed contentions with regard to existing bankruptcy and other proceedings against BICC in the UAE and the risk that it might have to pay twice, both of which drew on the evidence on UAE law.
7. Ultimately, as mentioned, the principal ground on which LMENA succeeded was that the situs of the debt was not in Australia. I also concluded that I would in any event have set aside the garnishee order as an exercise of discretion on the basis that there was a real or substantial risk that the garnishee and other third parties would face commercial harm if I did not do so (J [86]). I did not find in favour of LMENA on its contention that the debt had been assigned to the Emirates National Bank of Dubai (J [90]), although the risk of that would have weighed in favour of the exercise of the discretion to set aside the garnishee order (J [91]), or that bankruptcy proceedings against BICC in Dubai were more than speculative (J [92]).
8. It is to be observed with reference to the four principal contentions advanced by LMENA in its original written submissions (identified at [12] above), that I would ultimately have upheld three of them. That is to say, I was satisfied that three of the four reasons advanced in support of a conclusion that the garnishee order was inappropriate were established.
9. Turning now to Siemens's contentions in favour of a variation of the costs order (see [5]-[7] above), in relation to the first of those contentions it is to be observed that Siemens did not take a position early in the proceeding that UAE law was irrelevant. Although it initially queried the relevance of UAE law, to which it may not have felt that it got an adequate response, it thereafter fully engaged in issues of UAE law including the briefing of expert witnesses and successfully applying for a rescheduling of the trial to enable the finalisation of its evidence. At the trial, Siemens argued the questions of UAE law, and UAE law was relevant to the discretionary basis on which I would have set aside the garnishee order.
10. With regard to Siemens's second contention, LMENA did not accept any contention by Siemens that UAE law was irrelevant. As mentioned, both parties adduced, cross-examined on, and made submissions on UAE law.
11. With regard to Siemens's third contention, it is true that LMENA's principal focus in submissions at trial was the situs argument. However, the evidence and written submissions on UAE law were still relied on. In the end, I found the evidence on UAE law, for the most part, unhelpful. Neither party was, however, to know that in advance, and both parties pressed their UAE law-based submissions.
12. Whilst I understand the frustration that Siemens may feel having had its garnishee order set aside on the basis of a legal argument raised only late in the piece, with the result that the considerable time and energy spent by the parties on UAE law was technically wasted, I do not see that to be a basis to vary the costs order. Given Siemens's stance on the situs argument which, as mentioned, included filing a note days after the trial, LMENA had little option but to continue to press its alternative arguments that relied to one degree or another on UAE law. Given the relatively unsettled position in Australian law on the legal point underlying the situs argument, as reflected in my reasons for judgment, I am neither critical of Siemens for resisting the argument nor of LMENA for not relying only on that argument and dropping all the others - it would have been particularly gutsy to have done that.
13. As the above survey of how the case progressed and what points were argued demonstrates, it is apparent that the questions of UAE law were not discrete to particular grounds of challenge. They were relevant, at least potentially so, in one way or another to several of the grounds. Moreover, they were particularly relevant to the discretionary grounds that I would have upheld.
14. In the circumstances, I am satisfied that the usual rule that the costs follow the event should apply. That is the costs order that will best do justice between the parties.
15. I will therefore order that Siemens's application to vary the costs order made on 22 December 2023 be dismissed with costs.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.