Supreme Court of WA|1999-06-25|Before: Mr P

Skin-Plex Laboratories Pty Ltd v Baker [1999] WASC 81 (25 June 1999)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SKIN-PLEX LABORATORIES PTY LTD -v- BAKER [1999] WASC 81

Practice and procedure - Amendment of writ - Stay on grounds of forum non conveniens - Turns on its own facts

Broken Hill South v Commissioner of Taxation [1937] HCA 4; (1937) 56 CLR 337

Commissioner of Stamp Duties (NSW) v Millar [1932] HCA 63; (1932) 48 CLR 618

Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349

FAI General Insurance Co Ltd v Ocean Marine Mutual Protection & Indemnity Association (1997) 41 NSWLR 117

Green v Australian Industrial Investment Ltd [1989] FCA 482; (1989) 25 FCR 532

Johnson v Commissioner of Stamp Duties [1956] AC 331

Koranna Nominees Pty Ltd v Roberts, unreported; FCt SCt of WA; Library No 4289; 15 October 1981

McLaine Watson & Co Private Ltd v Bing Chen [1983] 1 NSWLR 163

Re Moage Ltd (1998) 26 ASCR 726

Port MacDonnell Professional Fisherman's Association v South Australia [1989] HCA 49; (1989) 168 CLR 340

R v Bell; ex parte Lees [1980] HCA 26; (1980) 146 CLR 141

Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460

Thompson v Commissiner of Stamp Duties [1969] 1 AC 320

Union Steamship Co of Australia Ltd v King [1988] HCA 55; (1988) 166 CLR 1

W A Dewhurst & Co v Cawrse [1960] VicRp 44; [1960] VR 278

Witted v Galbraith [1893] 1 QB 577

1 MASTER SANDERSON: This is the return of two chamber summonses. The first in time was the defendant's application for an order staying proceedings on the basis that the matter can be more conveniently dealt with in another jurisdiction. For the purposes of the application the defendant entered a conditional appearance under O 12 r 6. The second application was the plaintiff's chamber summons seeking leave to amend the writ and indorsement of claim. A minute of the amended writ and indorsement of claim was annexed to the plaintiff's chamber summons. Further, the defendant gave notice that objection would be taken to certain paragraphs of affidavits filed on behalf of the plaintiff and in response to the defendant's application. By agreement with the parties and to most expeditiously deal with the matter, I first dealt with the strike-out application then with the application for leave to amend the writ and indorsement and finally with the forum non conveniens argument. These reasons cover all three applications.

2 In opposition to the defendant's application for a stay the plaintiff filed three affidavits of Farooq Khan ("Khan") sworn, respectively, 28 January 1999, 18 March 1999 and 9 June 1999. They also filed an affidavit of Paul Francis Fletcher ("Fletcher"), sworn 18 March 1999. Objection was taken to certain paragraphs of the affidavits of Khan sworn 28 January 1999 and 18 March 1999 and to certain paragraphs of Fletcher's affidavit.

3 To put these strike-out applications in context it is necessary to say something of the plaintiff's claim against the defendant. The plaintiff pleads that, at all material times, it has manufactured in Western Australia and sold a range of skin care and cosmetic products. The defendant is a United Arab Emirates ("UAE") national. It is pleaded that in April 1993 Khan attended a trade fair in the UAE and met the defendant. The defendant represented that he was a wealthy man with wide contacts and that he would be able to market the plaintiff's products in the UAE. Based upon these representations by the defendant, the plaintiff entered into an agency agreement. It is then alleged that certain further representations were made regarding the need for wider distribution in the Middle East. It is said that by reason of these representations the plaintiff entered into an agreement with the defendant as a result of which the defendant was given distribution rights to the plaintiff's products throughout the Middle East region.

4 It is then pleaded by the plaintiff that in September 1994 the defendant made certain representations to Khan on behalf of the plaintiff dealing with the need to manufacture the plaintiff's products in Dubai. I need not go into these alleged representations in any detail, save to say that they involved representations as to the financial ability of the defendant to fund manufacturing arrangements in the UAE. The plaintiff pleads that these representations were false. However, acting on the faith of the representations, the plaintiff says it entered into a manufacturing agreement with the defendant in January 1995 which enabled the defendant to manufacture, market and sell the plaintiff's products in 12 different countries in the Middle East. The plaintiff says, as a consequence of misleading and deceptive conduct on the part of the defendant, it has suffered loss and damage. It claims under both the Fair Trading Act and the Trade Practices Act. It also claims that there was an agreement to make a one-off payment one year from the date of commissioning of the manufacturing facility. Pursuant to this agreement, the plaintiff says the defendant is indebted to it in the sum of $200,000.

5 The plaintiff raises a further claim. It is alleged by the plaintiff that a company styled BRL was incorporated in the UAE to put into effect the manufacturing agreement. The plaintiff says that by this agreement it was entitled to 30 per cent of the issued capital of BRL. The plaintiff says that despite this agreement it is not recorded as a 30 per cent shareholder of BRL and that the change in shareholding which was effected by way of transfer deed on which Khan's signature was forged. The plaintiff claims that, as a consequence of the defendant's fraudulent conduct, it has suffered loss and damage and it claims both in tort and under the Trade Practices Act.

6 This is but a brief summary of the plaintiff's claim against the defendant. It is largely drawn from the statement of claim which is in turn annexed to the proposed amended writ of summons and indorsement. However, it is consistent with what is contained in the various affidavits filed on behalf of the plaintiff in opposition to the defendant's application.

7 Turning then to the objections to the affidavits, objection is raised to par 16 and par 17 of Khan's affidavit of 28 January 1999. These paragraphs read as follows:

"16. I believe that the only person who logically could have, or had the means or motive to forge my signature, is the defendant. Further thereto, he is a signatory to the Transfer Deed and the Memorandum Amendment both in his personal capacity and on behalf of Ahmad as the legal guardian thereof.

17. I further believe that for the reasons outlined below, the defendant had the motive to forge my signature on the Transfer Deed as no settlement of the dispute between the plaintiff, the defendant and myself regarding the Licence Agreement, the Shareholders Agreement and the Technical Assistance Agreement had been reached and the defendant was desirous of obtaining control of my shares in BRL and accordingly absolute control of that company."

8 The defendant seeks to have these two paragraphs struck out under O 37 r 7 because they are scandalous, irrelevant or otherwise oppressive. It is further submitted that the paragraphs are speculative. It is to be remembered that the paragraphs in question are concerned with the plaintiff's allegation that the defendant's conduct was fraudulent. Intent is an essential element in a claim based on fraud. Khan is offering his personal view and what he has to say are statements of fact. Remembering that this is an interlocutory application and that an affidavit may therefore contain statements of information or belief, provided that the grounds of that information and belief are provided I can see nothing objectionable in these paragraphs: see O 37 r 6(2). The paragraph should stand.

"McFarlaine proposed a form of settlement for all of the outstanding matters relating to the aforesaid agreements and other related agreements which I advised was not acceptable. One part of such overall settlement related to my shareholding in BRL which McFarlaine advised the Defendant required to be transferred to him."

10 (Paragraph 18 of the affidavit establishes McFarlaine as an employee of the defendant.) The objection taken to this paragraph is that it discloses the substance of "without prejudice" communications. There is no doubt that the rule against disclosure of "without prejudice" discussions is of wide scope. Perhaps the most recent decision dealing with the question is Unilever plc v The Procter & Gamble Co [1999] 2 All ER 691. In this decision Laddie J undertook a wide-ranging review of the English cases dealing with this question. His Honour concluded at 699:

"It seems to me that the rule against the subsequent use of without prejudice discussions is wide enough to cover all statements made by each party touching upon the strength or weakness of its own and its opponent's case and any valuation, for whatever reason, it places on its or its opponent's rights. These are issues which go to the heart of any attempt to compromise litigation. Parties should be free to discuss them without fear of their words coming back to haunt them in court proceedings."

11 Counsel for the plaintiff did not disagree with the overall principle in relation to "without prejudice" negotiations. However, he submitted that in a case where those negotiations form part of the chain of misleading and deceptive conduct no privilege can attach by virtue of the use of the tag "without prejudice". Counsel relied on the decision of Hill J in Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd (1990) 27 FCR 86. In that case his Honour concluded that, if in the course of without prejudice negotiations, a party to those negotiations engages in conduct which is misleading or deceptive or likely to mislead or deceive contrary to s 52 of the Trade Practices Act and as a result the other party to the negotiations relies on the conduct and suffers loss, proof of the negotiations is not rendered impossible by the "without prejudice" rule. His Honour based this conclusion upon the view that the subject matter being discussed in the negotiations was no longer the matter in dispute before the court. The plaintiff says, in this case, that the settlement negotiations were carried out by the plaintiff on the basis that the issue of the transfer of the shares in BRL was a negotiable issue. If settlement had been reached and the shares purportedly transferred pursuant to that settlement then the fraud would not have been uncovered. The plaintiff alleges that the use by the defendant of the share transfer as part of the negotiations was itself misleading and deceptive conduct and gives rise to a separate cause of action.

12 It is extremely difficult to resolve questions such as this on an interlocutory application. The difficulty is compounded by the fact that once the affidavit material is on the Court file the contents of the without prejudice negotiations are disclosed and cannot, in reality, be recalled. Nonetheless, it seems to me that based upon the way the plaintiff has framed its case it is proper that the evidence should be admitted. It is to be noted that the defendant does not deal with the plaintiff's allegation in relation to the without prejudice negotiations. However, this omission is based upon the defendant not accepting that the evidence is admissible: see par 4 and par 5 of the affidavit of the defendant affirmed 20 May 1999. In this regard, no criticism can be made of the defendant's position. Nonetheless, it seems to me on the material available, par 19 ought be allowed stand.

13 Objection is taken to par 20 of Khan's affidavit. That paragraph is in the following terms:

"At that time, I believe BRL was a valuable company as it had received permission from the relevant authorities in Dubai, United Arab Emirates to set-up [sic] a pharmaceutical manufacturing facility in Dubai. The governmental procedures required to obtain such approvals were long and involved and my understanding was that BRL was the only company that had received such approval. My further understanding was that BRL would accordingly enjoy either a monopoly manufacturing status in Dubai or would at the very least enjoy a significant commercial time advantage over other companies wishing to setup [sic] a similar pharmaceutical manufacturing facility."

14 Objection is taken to all the words after "my understanding". It is said that the contents of the paragraph after these words are statements of information and belief which do not disclose the sources and grounds of that information and belief contrary to O 37 r 6(2). The plaintiff conceded that the point was well made and filed the supplementary affidavit of Khan, sworn 9 June 1999. In my view, that affidavit provides the sources of Khan's information and the basis for his belief. While it would have been preferable that all this material be contained in the one affidavit, any failings in the January affidavit have been cured by the June affidavit and par 20 should stand.

15 The same complaint was raised in relation to par 21 and for the same reasons that paragraph should stand. Objection was taken to the first sentence of par 22 and to par 25 - 36 inclusive. Each of these objections was based on a claim that they disclosed the substance of "without prejudice" communications. For the reasons which I gave in relation to par 19, in my view all of these paragraphs should stand. On that basis, then, I am of the view that all paragraphs of Khan's affidavit of 28 January 1999 are admissible.

16 Turning then to Khan's affidavit of 18 March, objection is taken to par 6.3 - 6.7 inclusive. I can illustrate the nature of the objection raised by the defendant by reference to par 6.3. It reads as follows:

"Clause 7 of the Licence Agreement was inserted at the request of Defendant as the Defendant through McFarlaine had advised at the beginning of our negotiations that he wished to register the agreement with various authorities in the Emirate of Dubai including the Dubai Chamber of Commerce and Industry."

17 The defendant claims that this and subsequent paragraphs are inadmissible extrinsic evidence of written agreements. To put this paragraph in context, it is dealing with a clause in the licence agreement to the effect that the law to be applied to the agreement is the law of the Emirate of Dubai and that the parties submit to the jurisdiction of the Dubai courts. It is the plaintiff's position that the licensing agreement did not intend that the Dubai courts should have exclusive jurisdiction in relation to disputes. The plaintiff therefore says that the evidence of the factual metrics is admissible to put the clause in context.

18 The plaintiff relies, in particular, in what was said by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 352 - 353:

"There may perhaps be one situation in which evidence of the actual intention of the parties should be allowed to prevail over their presumed intention. If it transpires that the parties have refused to include in the contract a provision which would give effect to the presumed intention of the persons in their position it may be proper to receive evidence of that refusal. After all, the court is interpreting the contract which the parties have made and in that exercise the court takes into account what reasonable men in that situation would have intended to convey by the words chosen. But is it right to carry that exercise to the point of placing on the words of the contract a meaning which the parties united in rejecting? It is possible that evidence of mutual intention, if amounting to concurrence, is receivable so as to negative an inference sought to be drawn from surrounding circumstances."

19 It is clear from the affidavit of Khan that what he is attempting to establish is that the parties, while agreeing that the Dubai courts should have jurisdiction in relation to the licence agreement, were not agreeing that it should have sole jurisdiction. There is clearly a dispute on that question. But to my mind that does not prevent the plaintiff introducing this evidence and seeking to rely upon it. In the circumstances then, I would allow par 6.3 through to par 6.7 to stand.

20 The defendant raised objections to a large number of subsequent paragraphs of Khan's affidavit of March. All of these objections relied upon one of the grounds that I have dealt with already. For instance, the objection to par 7.5.1, par 7.5.2 and par 7.5.3 were on the basis of a failure to disclose the sources and grounds of information and belief. That defect has been cured by Khan's affidavit of June. The objection to par 23 is based upon alleged disclosure of "without prejudice" communications. For reasons I have already given, I am satisfied that such evidence is admissible. Without then dealing with each and every objection raised to particular paragraphs, I am satisfied that the whole of Khan's affidavit of March is admissible.

21 Finally, there is the affidavit of Fletcher. Objection is taken to par 4 through to par 9, inclusive, on the basis that these paragraphs disclose the substance of "without prejudice" communications. What is being dealt with in these paragraphs is precisely the material that was dealt with in Khan's first affidavit. In my view, these paragraphs are admissible. An objection is raised to par 10 on the basis of a failure to provide the sources of grounds of information and belief. In my view that objection is unfounded. Fletcher is giving evidence about his understanding of the position. He is not making a perjoratitive statement about what Khan has or has not done. It is problematical what weight should be attached to par 10, but that is a different issue. To my mind the paragraph is admissible.

22 During the hearing of the application I dealt with the objections to the affidavits and indicated to the parties that I would allow all paragraphs of all three affidavits to which objection was taken to stand. That is the basis upon which the application proceeded. I indicated to the parties I would provide written reasons for my conclusion, and these are those reasons.

23 Turning then to the plaintiff's application to amend the writ of summons and the indorsement of claim, what the plaintiff seeks to do is add Khan as a plaintiff in his own right and to add as a defendant Ahmad Yaqoob Yousuf Baker ("Ahmad") as a second defendant. Ahmad is a minor and is the son of the present defendant. As I have mentioned above, Khan is a director and shareholder of the plaintiff.

24 This application is brought under O 18 r 4. Under O 21 r 1(1) the plaintiff would be able to amend its indorsement without leave. However, the only point of amending the indorsement is to deal with the addition of Khan as a plaintiff and the addition of Ahmad as a defendant. Given the provisions of O 21 r 1(3), this means that the question at issue is really the joinder of parties and that is to be dealt with under O 18. Order 18 r 4(1)(b) provides for a joinder of parties when all rights to relief claimed in the action are in respect of or arise out of the same transaction or series of transactions. Insofar as Ahmad is concerned, this must be read in conjunction with O 10 r 1(h) which allows for service out of the jurisdiction on any party who is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction. It is to be noted that Khan consents to be added as a plaintiff to the action in accordance with the provisions of O 18 r 6(2).

25 Insofar as Khan is concerned, the plaintiff says that he holds shares in BRL on a bare trust for the plaintiff. Khan claims that on 7 July 1998 he became aware of a cause of action relating to the fraudulent transfer of his holding in BRL to Ahmad. The plaintiff says that, as a bare trustee for the plaintiff, Khan is properly a party to the action. Further, the plaintiff says that as Ahmad is in possession of the shares in BRL pursuant to the fraudulent transfer, he too is a necessary and proper party to the action. The plaintiff accepts that it will be necessary for him to obtain leave to serve notice of the writ out of the jurisdiction on Ahmad should leave to amend be granted. An application for leave to serve notice does not form part of these proceedings.

26 The defendant's position is that if leave would not be obtained to serve Ahmad out of the jurisdiction then he ought not be made a party to the proceedings. Rather, it is suggested that a separate writ ought be issued against Ahmad preventing the plaintiff "piggy backing" on the writ served in the jurisdiction on the defendant. With respect, that seems to me to overlook the provisions of O 10 r 1(h). If this was an action which was commenced against parties resident within the jurisdiction, there would be no doubt that Ahmad would be properly a defendant to the proceedings. After all, the plaintiff is seeking to recover from him shares which he holds and to which he, presumably, claims to be entitled. Any decision in the action could affect his interests. He is necessarily a party to the proceedings and if he was not joined when the writ was first issued he would almost certainly be joined either under O 18 r 4 or O 18 r 6(1). In my view there is no requirement that the plaintiff issue separate proceedings against Ahmad. Amendment of the writ in the manner proposed by the plaintiff is perfectly proper and should be permitted.

27 Accordingly, I will make orders in terms of par 1, par 2 and par 3 of the plaintiff's chamber summons. Paragraph 4 deals with the time in which the first defendant is to file a defence and I will hear the parties in this regard.

28 I turn, then, to the now first defendant's application for a stay of these proceedings. In short, the first defendant says that the proceedings ought be conducted in Dubai. The principles to be applied in an application such as this were dealt with by the High Court in Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538. The court adopted the test propounded by Deane J in Oceanic Sun Line Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197. The court held that a stay should be granted if the Local Court is a clearly inappropriate forum, which will be the case if continuation of the proceedings in that court would be oppressive, in the sense of "seriously and unfairly burdensome, prejudicial or damaging" or vexatious in the sense of "productive of serious and unjustified trouble and harassment". An order for a stay of proceedings regularly instituted within the jurisdiction should only be made in a clear case and the onus lies on 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: see Deane J in Ocean Sun Lion Shipping Co Inc at 247 - 248.

29 An order that proceedings be stayed is a discretionary one that involves a subjective balancing process in which the relevant factors will vary and in which both questions of 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. For instance, where the subject matter of the dispute has little to do with the forum selected and will involve great expense and inconvenience in contesting the action in that forum, then a stay may be granted even though the plaintiff may be seeking to obtain some legitimate advantage.

30 In Voth the majority provided guidance as to how applications of this sort should be approached. They said (at 565):

" ... in the ordinary case, counsel should be able to furnish the primary judge with any necessary assistance by a short, written (preferably agreed) summary identification of relevant connecting factors and by oral submissions measured in minutes rather than hours. There may well be circumstances in which the primary judge may conclude that it is desirable to give detailed reasons balancing the particular weight to be given to the presence or absence of particular connecting factors and explaining why the local forum is or is not a clearly inappropriate one. Ordinarily, however, it will be unnecessary for the primary judge to do more than briefly indicate that, having examined the material in evidence and having taken account of the competing written and oral submissions, he or she is of the view that the proceedings should or should not be stayed on forum non conveniens (ie 'clearly inappropriate forum') grounds."

31 In my view, there is nothing in this case which takes it out of the ordinary and I therefore will, in line with the direction of the High Court, keep these reasons short and simple. In doing so I should say that I have read all of the affidavits filed in support of and in opposition to the application, I have considered the written submissions of both parties and I have taken into account the oral submissions of both counsel.

32 In my view, this is not a case where Western Australia is clearly an inappropriate forum. The now second plaintiff is resident in Western Australia as is the plaintiff. There will be some difficulty with witnesses, but this seems to me to be evenly balanced. Furthermore, there is evidence to suggest that if the second plaintiff was to travel to Dubai there is at least a possibility of his arrest. Although the governing law of the licensing agreement is the law of the Emirate of Dubai, this is a matter on which both parties can lead evidence in proceedings in this country. It would appear that in this jurisdiction the Trade Practices Act or the Fair Trading Act may be available to the plaintiff, whereas the remedies under these Acts would not be available in Dubai. While the position is not ideal, that is probably the case no matter which jurisdiction is chosen.

33 In the circumstances then, it is appropriate that I dismiss the first defendant's summons. Under O 12 r 6(2), upon the defendant's application being dismissed, his appearance becomes unconditional unless the court otherwise orders. No argument was addressed to this question. I will give the parties the opportunity to be heard when these reasons are delivered.

34 The issues raised by this application are precisely the same as those raised in the action of Renmuir Holdings Ltd v Baker, CIV 2347 of 1997. Perhaps the one difference is that Renmuir is not an Australian registered company and is not registered in this jurisdiction. However, the matters raised by the Renmuir action are almost identical to the matters raised in these proceedings. Apart from anything else, that renders this jurisdiction convenient for the disposal of all issues between the parties. I do not propose to deliver separate reasons in relation to the application on the Renmuir action. Rather, I will direct that a copy of these reasons be placed on that file and I will deal with the summons to discontinue or for a stay on that file in accordance with these reasons.

Skin-Plex Laboratories Pty Ltd v Baker [1999] WASC 81

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Judgment (62 paragraphs)

Skin-Plex Laboratories Pty Ltd v Baker [1999] WASC 81 (25 June 1999)

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Cases Cited (12)