The nature of the residual discretion
78 Tiger claimed that the primary judge erred in the exercise of the residual discretion. In particular it was said that there was error by the primary judge at [39] in following the view of Beach J in Trina Solar (US) Inc v Jasmin Solar Pty Ltd [2017] FCAFC 6; (2017) 247 FCR 1 that there had to be a good, if not compelling, reason why leave should be refused if the three conditions in r 10.43(4) were satisfied. It was submitted that the correct approach was to view service out of the jurisdiction as an exceptional measure the exercise of which was to be tempered with caution.
79 In Trina Solar the existence of a residual discretion in the exercise of the power conferred by r 10.43 was confirmed. As to the nature of the residual discretion Beach J (Dowsett J agreeing) said at [117]-[118]:
Now the residual discretion to refuse leave is not at large in the sense that if the three necessary conditions for leave have been satisfied, there must be a good if not compelling reason why nevertheless leave should be refused in the face of such satisfaction.
If a stay of the proceeding would be granted or this was inevitable, then that could provide a compelling reason for the exercise of the residual discretion to refuse leave. Before his Honour, Trina US recognised as much. Trina US couched its submissions before his Honour in terms that "it would be futile to serve Trina US because the proceedings would subsequently be stayed by application of s 7(2)". But if all that could be established was that a stay might be granted or that it was reasonably arguable, but all of this below the threshold of inevitability or a strong case for a stay, then it may not be appropriate to exercise the residual discretion to refuse leave. Rather, the appropriate course may be to grant leave to serve out, and to then allow the respondent to apply for a stay of the proceeding under s 7(2) of the IA Act on proper material. It is inappropriate to be definitive on such questions given that a discretion is being exercised and each case will turn on its own circumstances. But the context of the application that his Honour was dealing with is not unimportant.
80 In effect, his Honour was observing that it was not appropriate to approach the residual discretion on the basis that a particular strength was required as to how compelling a countervailing reason had to be before it would cause the Court to decline to grant leave to serve out of the jurisdiction even though the three conditions in r 10.43 had been satisfied. Rather, all would depend upon the circumstances. Importantly, Beach J was also differentiating between an ex parte application for leave and any subsequent application by a respondent for a stay. This is evident from the next passage at [119] where his Honour refers to the fact that applications for leave to serve out are dealt with expeditiously and there is a need to avoid a mini trial at that point. It was in that context that his Honour then stated that: 'Unless a case for a stay is inevitable or strongly made out, alternatively expressed it is not reasonably arguable that no stay would be granted, the better course is to grant leave to serve out and to deal with the stay question at a later stage at the behest of the respondent'.
81 In the present case, the matter came before the primary judge at a time when an objection had been raised by a respondent who had already been served. The position arose because the anti-anti-suit injunction had been served on Tiger and it then appeared to oppose orders allowing service out of the jurisdiction. As a result, the application was considered at the later stage referred to by Beach J. His Honour did not deal directly with the test to be applied at that time. Implicit in the reasoning of his Honour is the view that the same approach of requiring a compelling reason why leave should not be granted is not the approach to be adopted if there is an application for a stay brought by the party served.
82 For Tiger it was submitted that the approach of Beach J was plainly wrong and was inconsistent with other authorities as to the approach to be adopted concerning the residual discretion. It was said that the grant of leave is an exceptional measure and the Court should be guided by such a perspective when exercising the residual discretion.
83 In Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538 at 564 (Mason, CJ, Deane, Dawson and Gaudron JJ) it was said that on an ex parte application for leave to serve out of the jurisdiction the court should not grant leave unless it was positively persuaded that it should do so and:
Plainly, it should not be so persuaded unless the plaintiff satisfies it that the case is of the relevant category and that the proceedings would not be subsequently stayed as an abuse of process on form non conveniens grounds or for some other reason. In such a case the onus should remain on the plaintiff on a subsequent application to set aside the service outside the jurisdiction. Otherwise, the ex parte order for service outside the jurisdiction, if onus of proof were to prove decisive, would confer an enduring advantage upon a plaintiff notwithstanding that the expanded evidence on a contested application to set aside service indicated that the applicant had not been entitled to that ex parte order.
84 The terms in which the requirement that the Court must be positively persuaded that there should be leave to serve both on an ex parte application for leave and on a set aside application is expressed do not suggest any requirement for circumspection on the basis that the jurisdiction is exceptional. However, at the outset of the reasons of the majority in Voth at 551, there was the following reference to the reasoning of Gleeson CJ in the Court of Appeal:
Gleeson C.J. also noted that there was a further dimension to the case arising out of the circumstance that it involved an exercise of the Supreme Court's "extended", "assumed" or "exorbitant" jurisdiction in that the respondents were given leave to serve the writ out of the jurisdiction. However, it did not become material for his Honour to explore this matter because the appellant did not contend before the Court of Appeal that there was any material difference between the test to be applied in considering his application for a stay of proceedings based upon considerations of forum non conveniens and that to be applied in considering his application directed at setting aside the grant of leave to serve out of the jurisdiction.
85 The way in which this summary is expressed indicates a view that such considerations may be relevant when considering whether to set aside a grant of leave to serve out of the jurisdiction. In the result, the Court found that as New South Wales was a clearly inappropriate forum no purpose would be served in considering whether service out of the jurisdiction should be set aside.
86 In Quinlan v Safe International Försäkrings AB [2005] FCA 1362, Nicholson J considered an application under the former rule concerning service out of the jurisdiction. At [27], his Honour observed that service out of the jurisdiction should be 'approached with circumspection' and that it was an 'exceptional measure', citing Kennedy J in ICI Australia Operations Pty Ltd v Kidde-Graviner Ltd [1999] WASCA 65 at [2]. Kennedy J cited New Zealand and English authority for that proposition, including Vitkovice Horni A Hutni Tezirstvo v Korner [1951] AC 869.
87 In the United Kingdom it has long been held that a party seeking to serve out must demonstrate a good arguable case as to the claim which is said to bring the case within the particular head of power relied upon by the party seeking leave. Despite changes to the applicable rules, this remains the position: Brownlie v Four Seasons Holdings Inc [2017] UKSC 80 and Aspen Underwriting Ltd v Credit Europe Bank NV [2018] EWCA Civ 2590 at [21]. So, the test in the United Kingdom requires more than a prima facie case to be demonstrated. The requirement is expressed as something more than a prima facie case and something less than a case satisfying a balance of probabilities test. Therefore, the foundation for the observations by Kennedy J depends upon rules expressed in different terms to those now stated in r 10.43 which, as to merits, expressly requires a prima facie case to be demonstrated for all or any of the relief claimed. It is unclear whether the statement about circumspection was intended to reflect the character of some form of residual discretion to be exercised.
88 It was submitted that the same principle as that stated by Nicholson J in Quinlan v Safe International Försäkrings AB had been expressed by McKerracher J in Freehills, in the matter of New Tel Limited (in liq) [2008] FCA 762 at [24] when his Honour observed that the exercise of the discretion to allow service out of the jurisdiction 'has always been tempered with caution' citing considerations listed by Megarry J in GAF Corporation v Amchem Products Inc [1975] 1 Lloyd's Rep 601 at 604-605. The decision of Megarry J has since been doubted to some degree: Conductive Inkjet Technology Ltd v Uni-Pixel Displays Inc [2013] EWHC 2968 (Ch) at [56]-[58]. As explained below, the need for caution remains by reason of comity, but such concerns are now to be seen as encapsulated in the principles of forum non conveniens.
89 Moreover, as to the English position, in Abela v Baadarani [2013] 4 All ER 119 at [53], Lord Sumption observed that the service of the court's process out of the jurisdiction had been described in the Court of Appeal as 'exorbitant'. As to that description, Lord Sumption (other members of the Court agreeing) said:
This characterisation of the jurisdiction to allow service out is traditional, and was originally based on the notion that the service of proceedings abroad was an assertion of sovereign power over the defendant and a corresponding interference with the sovereignty of the state in which process was served. This is no longer a realistic view of the situation. The adoption in English law of the doctrine of forum non conveniens and the accession by the United Kingdom to a number of conventions regulating the international jurisdiction of national courts, means that in the overwhelming majority of cases where service out is authorised there will have been either a contractual submission to the jurisdiction of the English court or else a substantial connection between the dispute and this country. Moreover, there is now a far greater measure of practical reciprocity than there once was. Litigation between residents of different states is a routine incident of modern commercial life. A jurisdiction similar to that exercised by the English court is now exercised by the courts of many other countries. The basic principles on which the jurisdiction is exercisable by the English courts are similar to those underlying a number of international jurisdictional conventions, notably the Brussels Convention … and the Lugano Convention…The characterisation of the service of process abroad as an assertion of sovereignty may have been superficially plausible under the old form of writ (We command you …). But it is, and probably always was, in reality no more than notice of the commencement of proceedings which was necessary to enable the defendant to decide whether and if so how to respond in his own interest. It should no longer be necessary to resort to the kind of muscular presumptions against service out which are implicit in adjectives like 'exorbitant'. The decision is generally a pragmatic one in the interests of the efficient conduct of litigation in an appropriate forum.
90 It is to be noted that there is a difference between the English and Australian law concerning forum non conveniens. The test in the United Kingdom focuses upon a consideration of the 'more appropriate forum': Spiliada Maritime Corporation v Cansulex Ltd [1986] 3 All ER 843. Whereas, Voth establishes the clearly inappropriate forum test as the test to be applied in Australia. It was submitted that the decision in Abela may be distinguished on that basis. However, the significance of Abela is that it marks a departure in England from any view that the jurisdiction to serve out of the jurisdiction is exorbitant and is to be exercised with circumspection. So, past English decisions which have rested upon that view must now be considered in that context.
91 In Voth it was also noted by the majority that the procedure whereby leave is required as a condition precedent to service outside of the jurisdiction is of diminishing importance because a requirement for leave is no longer uniformly required in Australia. The High Court in that case was concerned with the approach to be adopted when seeking leave, where required. Even so, the majority observed at 564 that both on an application for leave and an application to set aside on inappropriate forum grounds the principles to be applied as to forum were those stated by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197 at 247-248. Those principles were not expressed in terms that required circumspection of any kind. They were summarised by Deane J in the following way:
In the light of the foregoing and at the cost of some repetition, it is possible to identify in summary form what I see as the modern content of the 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. Ordinarily, a defendant will be unable to discharge that onus unless he can identify some appropriate foreign tribunal to whose jurisdiction the defendant is amenable and which would entertain the particular proceedings at the suit of the plaintiff. Otherwise, that onus will ordinarily be discharged by a defendant who applies promptly for a stay or dismissal if he persuades the local court that, having regard to the circumstances of the particular case and the availability of the foreign tribunal, it is a clearly inappropriate forum for the determination of the dispute between the parties. The reason why that is so is that, once it is accepted that the adjectives "oppressive" and "vexatious" are not to be narrowly or rigidly construed and are to be applied in relation to the effect of the continuation of the proceedings rather than the conduct of the plaintiff in continuing them, the continuation of proceedings in a tribunal which is a clearly inappropriate forum would, in the absence of exceptional circumstances being established by the plaintiff (cf. Spiliada Maritime Corp. v. Cansulex Ltd. [1987] 1 AC 460, at p.478), be oppressive or vexatious to such a defendant if there is some available and appropriate tribunal in another country.
92 Further, in reaching that view, Deane J considered the role that the desire for judicial comity has played. It is comity that has been advanced as the reason for circumspection (or caution) in the exercise of the power to allow service out of the jurisdiction. His Honour found that arguments advanced by reference to comity did not justify a broader forum non conveniens discretion than that encapsulated by the clearly inappropriate forum test. The latter formulation was found to be consistent with the principle that access to the courts is a right, not a matter to be regulated by an ample discretion. This reasoning pathway is against some form of circumspection at least in considering whether Australia is an inappropriate forum.
93 When the plurality summarised the relevant principles in Henry v Henry [1996] HCA 51; (1996) 185 CLR 571 at 587 (Dawson, Gaudron, McHugh and Gummow JJ), there was no suggestion that circumspection was required to be applied. The approach required was summarised as follows:
In Voth, this Court adopted for Australia the test propounded by Deane J in Oceanic Sun, namely, 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". It was also held in Voth that, in determining whether the local court is a clearly inappropriate forum, "the discussion by Lord Goff in Spiliada of relevant 'connecting factors' and 'a legitimate personal or juridical advantage' provides valuable assistance". In this last regard, Lord Goff of Chieveley expressed the view that legitimate personal or juridical advantage is a relevant but not decisive consideration, the fundamental question being "where the case may be tried 'suitably for the interests of all the parties and for the ends of justice'".
(citations omitted)
94 Then, in Agar v Hyde, Gaudron, McHugh, Gummow and Hayne JJ summarised the nature of the power to authorise service out of the jurisdiction under the heading 'Service out of the jurisdiction - an exorbitant jurisdiction?' as follows at [42]-[43]:
In Amin Rasheed Corpn v Kuwait Insurance, Lord Diplock said that jurisdiction exercised by an English court over a foreign corporation which has no place of business in England, as a result of granting leave under the relevant rule of court to serve out of the jurisdiction:
"is an exorbitant jurisdiction, ie, it is one which, under general English conflict rules, an English court would not recognise as possessed by any foreign court in the absence of some treaty providing for such recognition. Comity thus dictates that the judicial discretion to grant leave under this paragraph [of the rules] should be exercised with circumspection in cases where there exists an alternative forum, viz the courts of the foreign country where the proposed defendant does carry on business, and whose jurisdiction would be recognised under English conflict rules."
Considerations of comity, and consequent restraint, have informed many of the reported decisions about service out of the jurisdiction. It is, however, important to notice that rules of court, or local statutes, providing for service outside the jurisdiction are now commonplace - at least in jurisdictions whose legal systems have been formed or influenced by common law traditions. Further, as the Court of Appeal rightly noted in its reasons in these matters, contemporary developments in communications and transport make the degree of "inconvenience and annoyance", to which a foreign defendant would be put, if brought into the courts of this jurisdiction, "of a qualitatively different order to that which existed in 1885".
The considerations of comity and restraint, to which reference has so often been made in cases concerning service out of the jurisdiction, will often be of greatest relevance in considering questions of forum non conveniens. The starting point for the present inquiry, however, must be the terms of the Rules, not any general considerations of the kind just mentioned.
(citations omitted)
Otherwise, it is to be noted that Agar v Hyde concerned a rule expressed in very different terms to r 10.43.
95 Having regard to the above passage, two matters emerge. First, the significance of the description 'exorbitant jurisdiction' must be placed in a modern context. Second, considerations of comity and constraint have their greatest significance in evaluating the question of forum non conveniens. Given that those principles, as consistently expressed by the High Court, do not require separate regard to the exorbitant character of the jurisdiction, this must mean that the concerns behind such observations are incorporated in the principles to be applied when considering whether service should be set aside on such grounds (or not granted on a leave application because of the likelihood that service may be set aside on such grounds).
96 Indeed, it is difficult to see how, as a matter of coherent principle, there could be a proper consideration of the principles as to whether the Court was an inappropriate forum leading to a conclusion that there could be service out of the jurisdiction and then a further consideration by reference to a residual discretion that resulted in the opposite conclusion based upon circumspection informed by matters of comity or a view that the jurisdiction was exorbitant.
97 In Agar v Hyde, Gaudron, McHugh, Gummow and Hayne JJ went on to consider the differences between an application for leave and an application to set aside: at [53]-[55]. To some extent those observations reflect the terms of the rule there under consideration. However, the analysis lends support for the approach described by Beach J in Trina Solar. In particular, the view is expressed that if on a leave application the necessary conditions are satisfied then, in the absence of some countervailing consideration, leave to proceed should be given. It is when an application is brought to set aside that there is to be consideration whether the Court is an inappropriate forum and whether 'the claims have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claims': Agar v Hyde at [55].
98 Tiger also relied upon statements by Wilcox J in BEST Australia Ltd v Aquagas Marketing Pty Ltd (1988) 83 ALR 217 at 222-223. However, that case too stated the test by reference to English authority as to the appropriate forum.
99 None of the above matters demonstrates error in the reasoning by Beach J in Trina Solar. On the contrary, the statement of principle in that case reflects the current state of the law which is to the effect that concerns about comity are now addressed principally in the law as to forum non conveniens. Further, generally they are matters to be addressed upon any application for a stay.
100 Drawing these matters together, the following points may be made concerning the residual discretion exercised by the primary judge in this case:
(1) it is necessary to pay close attention to the terms of the Rules as to service out of the jurisdiction when considering the relevance of past decisions;
(2) in this Court, leave is required by the Rules before there can be service of an application on a respondent out of Australia;
(3) the requirement for leave does not invite a mini trial;
(4) if the three conditions expressed in r 10.43 are met, then there remains a residual discretion;
(5) the residual discretion may only be exercised for good reason;
(6) if, at the time of considering whether to grant leave, a stay of the proceeding would be granted or this was seen to be inevitable, then that could provide a compelling reason for the exercise of the residual discretion to refuse leave;
(7) to the extent that the making of orders to allow service out of the jurisdiction is seen to be exorbitant, and therefore a matter requiring circumspection or restraint or caution by reason of comity, provision is made as to those matters mainly by the principles concerning forum non conveniens;
(8) save where it appears inevitable at the time that leave is sought that a stay would be granted on forum non conveniens grounds, the issue of the appropriate forum is a matter that should be left for any application by the respondent;
(9) at both the leave stage and upon an application to set aside service (or for a stay) the onus is upon the party seeking leave to serve and have the matter proceed in the home jurisdiction; and
(10) as the onus remains on the party seeking to have the matter proceed in the home jurisdiction when there is a set aside application, it is important to recognise that if a set aside application is brought then it is for the applicant to provide sufficient detail as to the nature of the claim to enable the Court to evaluate whether the home jurisdiction is an inappropriate forum. If there is a failure by the applicant to do so then service should be set aside. It is not for the respondent to place those facts before the Court. It may choose to put evidence on in support of the set aside application, but need not do so.
101 In deciding whether Australia is a clearly inappropriate forum, the Court has regard to the whole of the claim the subject of the application: McGregor v Potts [2005] NSWSC 1098; (2005) 68 NSWLR 109 at [51].
102 Further, 'a court is not an inappropriate forum merely because another is more appropriate': Regie National des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491 at [24] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).