Commonwealth Bank of Australia v. White (No. 4)

VICTORIAN UNREPORTED JUDGMENTS
COMMONWEALTH BANK OF AUSTRALIA v WHITE (No 4)
5660 of 1997
SUPREME COURT OF VICTORIA
COMMON LAW DIVISION
BC200108204
12-14, 27, 28 June and 18 July 2001, heard
21 December 2001, delivered
CATCHWORDS: PRACTICE AND PROCEDURE - permanent stay - strike out - summary dismissal - anti-suit injunction by foreign court - comity - issue estoppel - abuse of process. The Society of Lloyd's (Third party)

JUDGES: WARREN J

JUDGMENTS: Warren J:

Background

The central facts of this matter are well rehearsed in earlier judgments: Commonwealth Bank of Australia v White (1999) 2 VR 691 (hereafter referred to as "White (No 1)"), Commonwealth Bank of Australia v White (No 2) (1999) VSC 400, unreported judgment delivered 22 October 1999 (hereafter referred to as "White (No 2)") and Commonwealth Bank of Australia v White (No 3) (2000) VSC 259, unreported judgment delivered 21 June 2000 (hereafter referred to as "White (No 3)"). In essence, the plaintiff ("the bank") sued the defendant ("White") for moneys owed pursuant to letters of credit. White was an underwriting member of the third party ("Lloyd's"). He arranged certain letters of credit with the bank as security for arrangements with Lloyd's. During 1995 and 1996 Lloyd's drew down on the letters of credit for amounts totalling 168,000 sterling.

This proceeding was affected by separate proceedings issued in England being The Society of Lloyd's v Sir William Otho Jaffray ("The Jaffray proceeding"). The defendants in that proceeding were persons who were Lloyd's names sued by Lloyd's for unpaid premiums. The defendants in the Jaffray proceeding counterclaimed for various forms of relief and alleged fraud and unconscionability. The allegations of fraud made by the defendants in the Jaffray proceeding were analogous to those made by White against Lloyd's in the present proceeding. White submitted to an agreement to be bound by the findings in the Jaffray proceeding as to the allegations of fraud against Lloyd's. The trial and the Jaffray proceeding commenced on 28 February 2000. On 11 March 2000 the Honourable Mr Justice Cresswell on the application of Lloyd's in the Jaffray proceeding granted an interim anti-suit injunction against the Jaffray defendants, including White. The orders enjoined White from pursuing in the courts of any country other than England any claim against Lloyd's arising out of or relating to his membership of Lloyd's or the undertaking of insurance business at Lloyd's.

In the present proceeding, arising from the draw down by Lloyd's on the letters of credit, the bank sued White for the moneys totalling A$ 421,119.16. White delivered a defence disputing the debt and alleging the subject letters had expired at the time of payment, payment was made without authority and knowledge on the part of the bank of fraud and unconscionable conduct by Lloyd's. White also joined Lloyd's as a third party to the proceeding alleging negligent misstatement and false representations in breach of s51A and s52 of the Trade Practices Act 1974 (Commonwealth) and s10A and s11 of the Fair Trading Act 1985 (Vic) and claiming damages and an indemnity with respect to any liability of the bank.

In White No 3 the bank applied for severance of the third party proceeding. The application was refused. In the same hearing Lloyd's applied for a stay of the third party proceeding pending the outcome of the judgment in the Jaffray proceeding. The application succeeded and I made orders staying the present proceeding until further order.

Since that time the Jaffray proceeding was decided at first instance. On 3 November 2000 Cresswell J ordered judgment in that proceeding and dismissed the counterclaim of the defendants. The interim anti-suit injunction was extended by Cresswell J on 3 November 2000 until 9 February 2001. On 2 February 2001, upon the application by Lloyd's, Cresswell J ordered a permanent anti-suit injunction against the defendants.

On 30 April 2001 White filed a second amended statement of claim against third parties. Lloyd's filed a summons seeking a permanent stay of the present proceeding, alternatively, the striking out of various parts of the amended pleadings. The application was premised largely, but not entirely, on the fact that the Jaffray proceeding was decided against the defendants, including White, and the fact of the permanent anti-suit injunction ordered by Cresswell J on 2 February 2001. It is the application by Lloyd's for a permanent stay, alternatively, the striking out of parts of the amended statement of claim against third party that is presently before the Court.

I was informed that the defendants in the Jaffray proceeding applied for permission to appeal the orders of Cresswell J in that proceeding. The application was refused at first instance by Cresswell J on 21 December 2000. A subsequent application for permission to appeal was heard by the English Court of Appeal on 8 October 2001. The court observed that permission to appeal by that court is given only where the appeal appears to have a real prospect of success or there is some other compelling reason why it should be heard. The Court of Appeal observed that the hearing before Cresswell J lasted over 60 days and that the judgment is over 600 pages in length. After considering the matter, the Master of the Rolls in the judgment of the court (at para11) stated:

"7. Permission to appeal to this court will only be given where the appeal appears to have a real prospect of success or there is some other compelling reason why the appeal should be heard: see CPR 52.3(6). It is usually possible for this court, when considering an application for permission to appeal, to decide whether there is a real prospect of success simply by considering the judgment and any evidence specifically referred to by the applicants in the light of the grounds of appeal and submissions of the applicants.

8. In this case that is not so easy. The hearing lasted over 60 days. The judgment is over 600 pages in length when one includes important appendices. Those acting for the lead names have submitted a skeleton argument in support of their application over 130 pages in length and, unusually, those acting for Lloyd's have submitted some 30 pages of written observations on this skeleton. The applicants originally lodged 55 lever-arch files in support of their application. They were instructed to reduce these to documents essential for their application. This has resulted in the documents being reduced to seven volumes. It has taken the court many hours to read the judgment and the written submissions. We have not attempted to pre-read all the seven volumes. It would be impossible to embark on the task of attempting to resolve this application on the basis of the written submission and a day, or perhaps even two days, of argument with strict time limit on submissions. None of us would be happy with such an approach.

9. This is an action of great importance. The court is conscious that allegations that these applicants have made against Lloyd's mirror allegations in litigation in other jurisdictions. When refusing permission to appeal, Cresswell J observed that the proceedings in those jurisdictions would be, or might be, influenced by his judgment.

....

11. After a lengthy trial, a commercial judge with great experience of Lloyd's litigation has held their attack to be without foundation. Notwithstanding this, we do not believe that justice would be done if we were to refuse this application without looking at the evidence which the applicants are anxious should be reviewed. Nor would justice be seen to be done if we adopted that course. In order to reach a properly informed decision on this application, we would need to devote a very substantial period to consideration of the evidence given below. This would come close to the hearing of the appeal.

12. In the circumstances we have concluded that the appropriate course is to grant permission to appeal, not on the ground that we are satisfied that there is a real prospect of success, but because, for the reasons that we have given, there are other compelling reasons why the appeal should be heard. We stress that this ruling should not be taken by the applicants, or by anyone else, as indicating that we have formed any view on the merits of this appeal."

The Court of Appeal granted Sir William Jaffray leave to appeal from the first instance decision of Cresswell J and the appeal was initially fixed for 11 January 2002 on an estimate of two weeks. This court was informed that the Court of Appeal had informed the parties that they would expect to be in a position to deliver judgment within two weeks of the conclusion of the hearing. Subsequently, the English Court of Appeal notified the parties that the hearing date for the appeal was re-listed in the period from 4 to 27 March 2002. The timetable laid down by the English Court of Appeal is as follows:

4th - 8th March pre-reading time for the court

11th - 15th March oral argument on behalf of the defendants

18th - 19th March oral argument by defendants

20th - 22nd March claimants' response

25th March defendants' reply

Against this background I turn then to the application presently before this court. In so doing, it is appropriate at the outset to address the second amended statement of claim against third party ("the third party notice").

The Claim Against Lloyd's

The claims made by White in the second amended statement of claim against third party (hereafter, for present purposes, referred to as "the statement of claim") are fourfold. First, allegations of misrepresentation in breach of the provisions of the Trade Practices Act and the Fair Trading Act. The representations alleged against Lloyd's by White fell into a number of categories. Essentially the representations related to matters conveyed to White either orally or in writing or to be implied from documents and conduct. Some of the representations appeared on their face to arguably fall within the province of the representations that were the subject of consideration in the Jaffray proceedings. Other representations did not. Nevertheless it can be said that all of the representations as pleaded in the statement of claim are inextricably interwoven with the claims brought under the Trade Practices Act and the Fair Trading Act. Secondly, an allegation of negligent misstatement. Essentially the claim was that on the basis of the representations already adverted to Lloyd's negligently misstated and therefore mislead White into the various transactions that he entered. Thirdly, a number of breach of disclosure requirements under the relevant companies legislation. Fourthly, a claim that it would be unconscionable for Lloyd's to rely on the exclusive jurisdiction clause. In summary, White challenged the clause basically asserting that when Lloyd's required submission to the English jurisdiction it did so knowing of potential allegations of misrepresentations and, furthermore, did so for the purpose of shielding itself from ramifications under statutes such as the Trade Practices Act, the Fair Trading Act and the companies legislation. White in the statement of claim seeks relief in the nature of damages and declarations under the relevant statutes.

The Stay Application

The first basis for the stay application of Lloyd's was the commitment of White to an exclusive jurisdiction clause. In the course of his contract with Lloyd's, White agreed to a term of the contract that the English courts would have exclusive jurisdiction to determine disputes between names, such as White and Lloyd's (see 1986 general undertaking, cl2.2). The policy required, also, that the parties be held to their bargain.

It was argued on behalf of Lloyd's that the courts recognise and policy directs that parties should be held to their bargain, including a bargain to the effect that the courts of a particular country will have exclusive jurisdiction in relation to disputes between the parties. Hence, it was said, in Australia the starting point is that the parties should observe the exclusive jurisdiction clause to which White had submitted. It was submitted, further, that while the court retains its jurisdiction and may decline to grant a stay of proceedings substantial grounds for doing so are required: see Huddart Parket Ltd v The Ship "Mill Hill" (1950) 81 CLR 502 per Dixon J at p508-p509; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 per Brennan J at p230-p231 and per Gaudron J at p259; Akai Pty Ltd v Peoples Insurance Co Ltd (1996) 188 CLR 418 per Dawson and McHugh JJ at p427-p429 (dissenting in the result but unimpaired on this point) and per Toohey, Gaudron and Gummow JJ at p444-p445. See also, in England, Donohue v Armco [2000] 1 Lloyds Rep 579 per Stuart-Smith LJ at p589 ("strong reasons"), Sedley LJ agreeing.

The USA authorities indicate an even more rigorous approach. So in Roby v Corp of Lloyd's 996 F 2d 1353 (1993) Chief Judge Meskill, speaking for the United States Court of Appeals, said (at p1360-p1361):

"It defies reason to suggest that a plaintiff may circumvent forum selection and arbitration clauses merely by stating claims under laws not recognised by the forum selected in the agreement. A plaintiff simply would have to allege violations of his country's tort law or his country's statutory law or his country's property law in order to render nugatory any forum selection clause that implicitly or explicitly required the application of the law of another jurisdiction. We refuse to allow a party's solemn promise to be defeated by artful pleading ... In the absence of other considerations, the agreement to submit to arbitration or the jurisdiction of the English Courts must be enforced even if that agreement tacitly includes the forfeiture of some claims that could have been brought in a different forum."

Later (at p1362-p1363) His Honour said:

"In The Bremen, the [Supreme] Court explained that American parochialism would hinder the expansion of American business and trade, and more generally, interfere with the smooth functioning and growth of global commerce ... Forum selection and choice of law clauses eliminate uncertainty in international commerce and ensure that the parties are not unexpectedly subjected to hostile forums and laws. Moreover, international comity dictates that American courts enforce those sorts of clauses out of respect for the integrity and competence of foreign tribunals. ... This presumption of validity may be overcome, however, by a clear showing that the clauses are 'unreasonable under the circumstances' ... The Supreme Court has construed this exception narrowly: forum selection and choice of law clauses are 'unreasonable' (1) If their incorporation into the agreement was the result of fraud or overreaching ...; (2) If the complaining party 'will for all practical purposes be deprived of his day in court' due to the grave inconvenience or unfairness of the selected forum ...; (3) If the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy ...; or (4) If the clauses contravene a strong public policy of the forum state ... "

See also Riley v Kingsley Underwriting Agencies Ltd 969 F 2d 253 (1992), Bonny v Society of Lloyd's 3 F 3d 156 (1993), Shell v RW Sturge Ltd 55 F 3d 1227 (1995), Allen v Lloyd's of London 94 F 3d 923 (1996), Haynsworth v Corp of Lloyd's 121 F 3d 956 (1997), Richards v Lloyd's of London 135 F 3d 1289 (1998) (en banc), Lipcon v Underwriters at Lloyd's 148 F 3d 1285 (1998), Stamm v Barclays Bank 153 F 3d 30 (1998).

In White (No 1) Justice Byrne of this Court refused to hold the parties to the exclusive jurisdiction clause. Byrne J did so on two grounds. First, the learned judge held that the clause conferring exclusive jurisdiction on the English Courts and the fact that the proper law of the contracts was English law imposed an onus on White to show strong cause why the discretion should not be exercised to stay the proceedings. It was held that White discharged that onus as it was undesirable that an exclusive jurisdiction clause could potentially circumvent statutory protection for investors and against misleading or deceptive conduct such as that provided in s52 of the Trade Practices Act 1974. It was further held that one of the issues in the case was the impropriety of Lloyd's in introducing an exclusive jurisdiction agreement into its contractual relationship with White in any event. Byrne J after considering the appropriate principles where an exclusive jurisdiction clause operates said (at 704):

"Counter veiling considerations include the non-availability in the selected forum of the relief sought in this Court based on misleading and deceptive conduct and on breaches of the company's legislation. It is undesirable that parties should, by entering into an exclusive jurisdiction agreement, be able to circumvent a legislative scheme established by parliament to protect investors purchasing interests or prescribed interests. Put more positively, the statutes creating these standards of commercial behaviour for persons doing business in this jurisdiction do not exempt foreign corporations. Moreover, the policy behind them would not be served if exemption might be achieved by inserting stipulations as to foreign law or forums. Furthermore, in this proceeding, the very validity of the exclusive jurisdiction agreement is in issue on the basis of Lloyd's alleged improper conduct. If Mr White's challenge to it is successful, the agreement as a ground for a stay disappears."

The learned judge in his reasons then referred to the various relevant authorities in the United States with respect to exclusive jurisdiction agreements and observed then (at 704-705):

"These cases apply the principle that an exclusive jurisdiction agreement will be given effect to, absent evidence clearly showing that the agreement is unreasonable or that it has been procured by fraud or overreaching. While these decisions are not binding on me, they represent a strong tide of judicial opinion which I do not ignore. There is much to be said for consistency in approach between their common law system and ours.

That said, it is a hard thing to turn away a litigant who has properly invoked the jurisdiction of this Court, particularly where the consequence of this must be that the litigant is precluded from enforcing rights which he enjoys as a person engaging in commerce in Victoria by virtue of legislation in force in this jurisdiction. Moreover, an issue which Mr White would litigate here is Lloyd's impropriety in introducing the exclusive jurisdiction agreement. I conclude that good reason has been shown not to hold Mr White to the exclusive jurisdiction agreement."

In so finding, Byrne J did not follow the earlier judgment of Justice McDonald of this Court in Williams v Society of Lloyd's (1994) 1 VR 274. The facts in Williams were very similar to those in the present proceeding and White (No 1). On an application to set aside service McDonald J permanently stayed the proceeding and, also, set aside service on Lloyd's on the basis that the plaintiff, Williams, had not made out a strong arguable case. The learned judge turned to consider the application of the relevant exclusive jurisdiction clause with respect to a claim for misleading and deceptive conduct under the Trade Practices Act. It was observed (at 321):

"Although the discretion rests with the court to not grant a stay notwithstanding the existence of an 'exclusive jurisdiction' clause, care should be taken not to reduce the agreement reached to nought on the ground that to permit reliance on the same would be to the juridical disadvantage of the plaintiff.

In the circumstances of this case and having regard to the plaintiff's pleadings and the evidence advanced by the plaintiff, this submission to my mind is more theoretical than real. If the plaintiff establishes at trial the allegations made by him that he was induced to enter agreements ... in consequence of the misrepresentations alleged ... he will be entitled at common law to the relief sought without need to rely on the provisions of s82 and s87 of the Trade Practices Act."

In White (No 1) Byrne J considered the analogy between misleading and deceptive conduct under the statutes and a tort. The learned judge observed (at 697-698):

"The conduct proscribed by s52 of the Trade Practices Act and s11 of the Fair Trading Act bears many of the hallmarks of a tort. It is a wrong in the sense that it is conduct which commercial community morality rejects; its very description, deceptive and misleading conduct, has pejorative overtones. It is a wrong for which an available remedy, perhaps the most common remedy, is damages. The social policy underlying these statutes is that of enforcing commercial morality. The jurisdiction to provide a remedy is entrusted to common law courts as well as the Federal Court. The statutes do not interfere with the mere common law procedures. Indeed, claims based on this conduct are frequently made side by side with more traditional common law claims."

Byrne J proceeded to consider academic discussion of the topic and various authorities (Brown v Jam Factory Pty Ltd (1981) 35 ALR 79, 86; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, 6 and a comparative analysis of the Rules of Court concluded that a claim in tort may arise under statute as well as at common law. Byrne J observed that in so concluding he differed from the conclusion of McDonald J in Williams. In the latter case (at 311-312) McDonald J considered the same authorities as did Byrne J in White (No 1) (see Brown v Jam Factory, Gates v City Mutual Life; and, also, Mr Figgins v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23, 59 and Philip Morris Ltd v Ainley & Incorporated Nominal Defendant (1975) VR 345, 348-349. Ultimately, McDonald J concluded (at 312) that the remedy provided by s82 of the Act for breaches arising under s52 is a statutory remedy and did not constitute a "tortious" act or omission in considering the application to set aside service under the Rules of Court.

Before me, Mr A J Myers QC who appeared with Mr P J Jopling QC and Dr I J Hardingham QC for Lloyd's urged that I follow the approach of McDonald J in Williams in preference to the approach of Byrne J in White (No 1) and thereby hold White to the exclusive jurisdiction clause in his agreement with Lloyd's. It was urged on behalf of Lloyd's that two significant events had occurred, in any event, since the judgment of Byrne J in White (No 1). First, the granting of the permanent anti-suit injunction against White by Cresswell J in the Jaffray proceeding on 2 February 2001. Secondly, the fact of the delivery of judgment by Cresswell J in the Jaffray proceeding where White and others were unsuccessful on 3 November 2000.

It was further submitted on behalf of Lloyd's that there were, in any event, reasons why the judgment of McDonald J in Williams is to be preferred to that of Byrne J in White (No 1). There were a number of factors relied upon. First, that there is nothing in either the relevant companies legislation or the Trade Practices Act expressly prohibiting Lloyd's and White from entering into an exclusive jurisdiction clause so as to pre-empt civil recovery as between themselves by agreement. Indeed, it was argued that in so far as s68 of the Trade Practices Act contains an anti-waiver provision its scope is limited and confined to Division 2 of PtV of the Act and does not extend to Division 1 of PtV wherein s52 is contained. It was urged that the statutory regime thereby indicated that the policy of the Act does not apply so as to prevent effect being given to exclusive jurisdiction clauses such as in the present case. Secondly, it was urged that this Court should not reduce the exclusive jurisdiction clause in the agreement between White and Lloyd's to nought on the basis that not to do so would provide White with a juridical disadvantage. Reference in that respect was of course made to the observations of McDonald J in Williams, supra, 321. In this respect it was submitted on behalf of Lloyd's that like relief to that sought by White in the present proceeding was available to and sought by him in the Jaffray proceeding. It was further submitted that both proceedings arose out of the same sub-stratum of facts. Lastly, a submission was made that I not follow Byrne J in White (No 1) because the learned judge failed to acknowledge the rationale of the exclusive jurisdictions clause and the role it plays in furthering the good governance of the Lloyd's market. It was said there was no Australian legislative proscription against such clauses.

It was submitted that, in any event, the challenge made by White to the validity of the exclusive jurisdiction clause should be ignored because it is erroneous to conclude that an exclusive jurisdiction clause should not be enforced because its validity is called in question by the party who seeks to act in contravention of it: see FAI v Ocean Marine Mutual (1997) 41 NSWLR 559, 563-567. It was said, also, that an issue estoppel arises as between White and Lloyd's on the issue of the validity of the exclusive jurisdiction clause given the findings of Cresswell J in the reasons for judgment to the effect that the relevant clause in the agreement is valid: see Blair v Curran (1939) 62 CLR 464, 531-533.

In White (No 3) for the purposes of the interim stay application of Lloyd's I considered it appropriate that the fact that a foreign court had granted an anti-suit injunction restraining White from further prosecuting his claim in this forum was a factor to be weighed in the exercise of the discretion in granting the interim stay. I considered the relevant authorities, in particular, the observations of the High Court in CSR Ltd v Signa Insurance Aust Ltd (1997) 189 CLR 345, 372, 392, 395-396 together with other authorities (see White (No 3) para44-para49. In particular, I cited the observations of the Supreme Court of the United States in Hilton v Guyot (1895) 159 US 113, 163-164 as considered by the High Court in Signa (at 395):

"'Comity', in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws."

I proceeded to conclude in White (No 3) (at para49) that in applying the principles in Hilton v Guyot to the present case it was appropriate "on the basis of duty, convenience and in recognition of citizens' rights under the law" to recognise the judicial act of the English Court in the Jaffray proceeding of granting the anti-suit injunction. However, in the same judgment (at para50) I observed that Lloyd's in the application for the interim stay urged that the fact that White agreed to an exclusive jurisdiction clause and the fact that the law of the foreign jurisdiction, namely England, constituted the proper law of the contract between White and Lloyd's together were factors to weigh in favour of granting the stay. I observed that there were separate issues that would be canvassed in the Jaffray proceeding as distinct from the claims made by White in the present proceeding and I cited the "obvious examples" of the breaches of the Trade Practices Act and the Fair Trading Act. Hence, in White (No 3) (at para50) in reliance upon Byrne J in White (No 1) I considered that there were separate issues, namely, the Trade Practices Act and Fair Trading Act claims, that could not be determined under English law. I observed, further, that if this was the only factor relied upon in support of the interim stay application I would decline to make the orders sought. Ultimately, I considered that there were other compelling factors such that it was unnecessary for me to determine whether to exercise my discretion on the basis urged by Lloyd's.

On the present permanent stay application it was argued further on behalf of Lloyd's that this Court is not faced with the task of making a qualitative assessment of the judgment in the Jaffray proceeding. It was urged that this Court should have confidence in an English court as in another Australian court to determine the issues between White and Lloyd's. Of course, such argument does not countenance the special nature of the Trade Practices Act and the Fair Trading Act in this jurisdiction and the development of legal principles and learning with respect to misleading and deceptive conduct and appropriate remedies. I was not taken to any English statute that bore resemblance to the trade practices and fair trading legislation in this jurisdiction. That is not to say, with the utmost respect, that an English court could not deal with such a claim. Rather, the observation relates to the extent of knowledge and expertise that has developed in this jurisdiction (and other Australian jurisdictions) with respect to this discrete area of the law.

An additional attack was made on the decision in White (No 1) based upon the fact that it was an interlocutory judgment. The submission on behalf of Lloyd's was that there is no applicable presumption of the prima facie correctness of the judgment in White (No 1) because it was an interlocutory decision and, also, fresh facts had been established. Reliance was placed upon the judgment of the Victorian Court of Appeal in D A Christie Pty Ltd v Baker (1996) 2 VR 582. In essence, the judgment of the Court of Appeal in Christie stands as authority for the proposition that an interlocutory decision is not binding in that it creates no issue estoppel between the parties and, therefore, subject to any abuse of the processes of the court, an interlocutory decision may be re-visited. So far as fresh facts were concerned, it was urged on behalf of Lloyd's that there were four matters: (1) concessions were made by White and the other names in the Jaffray proceeding as to the generic manner in which they put their case; (2) on a number of instances White had confirmed that he would be bound by findings of fact and law in the Jaffray proceeding; (3) no appeal had been instituted against the granting of the anti-suit injunction by Cresswell J on 2 February 2001; (4) the acceptance by White of the validity of the exclusive jurisdiction clause in his agreement with Lloyd's.

In the ordinary course most if not all of the submissions made on behalf of Lloyd's would bear much attraction. This is especially so in light of the findings and observations of a very senior and extremely experienced judge of this Court being McDonald J in Williams v Lloyd's. The difficulty from my perspective arises in relation to the events that transpired in the courts after the judgment of Byrne J in White (No 1). These matters warrant detailed consideration because of the unusual consequences that flow therefrom.

After the judgment in White (No 1) was handed down by Byrne J, Lloyd's applied for leave to appeal to the Victorian Court of Appeal. On 3 September 1999 Ormiston JA heard the application together with Chernov JA. The Court dismissed the application for leave to appeal. Ormiston JA delivered the reasons of the Court in the following terms:

"Having had regard to the careful arguments put on each side, we have ultimately come to the conclusion that the matters raised essentially are matters of practice and procedure. So, although there may have been incidental matters about which we might not have agreed with the learned trial judge, we do not believe that substantial injustice will be done to the application if leave were refused. Consequently, the application is refused with costs."

I note that Mr P J Jopling QC appeared with Dr I J Hardingham QC for the applicant, Lloyd's, before the Victorian Court of Appeal. I was provided with a copy of the written submissions presented to the Court. It does not appear that a transcript or argument was taken or, alternatively, was available. I observe that in the course of the written submissions senior counsel for Lloyd's squarely raised the different approaches adopted on the exclusive jurisdiction clause by McDonald J in Williams and Byrne J in White (No 1). Indeed, a catalogue of criticisms was levied in the submissions at the judgment in White (No 1). Notwithstanding the presentation of the written submissions and doubtlessly accompanying oral argument the Victorian Court of Appeal refused the application.

Thereafter, Lloyd's applied for special leave to appeal to the High Court of Australia. The application was heard on 11 February 2000 and refused by majority. The special leave questions stated in the summary of argument of the applicant, Lloyd's, to the High Court were concerned with the exclusive jurisdiction clause, the convenience of the forum and the efficacy of the service by White on Lloyd's. In particular, for present purposes, the first special leave question stated by Lloyd's to arise on the application for special leave to appeal was described in part in the following terms:

"1. Whether, in circumstances where the applicant A [Lloyd's], as the statutory regulator of an international insurance market in London, has obtained the agreement of all underwriters in that market, including the Respondent [White], that all disputes be subject to English law and the jurisdiction of English Courts, that agreement may thereafter be circumvented by:

(a) pleading in Australia a cause of action under the Trade Practices Act 1974 (or a State counterpart thereof such as the Fair Trading Act 1986 (Vic)); compare Akai Pty Ltd v People's Insurance Co (1996) 188 CLR 418 at 447-449;

(b) pleading in Australia a cause of action based on an alleged breach of the prescribed interest provisions of corporations legislation; compare American authorities, as exemplified by Roby v Corp of Lloyd's 996 F 2d 1353 (1993) and Haynsworth v Lloyd's of London 121 F 3d 956 (1997), which generally favour the enforcement of the exclusive jurisdiction clause in the circumstances."

Mr A J Myers QC appeared with Mr P J Jopling QC and Dr I J Hardingham QC for Lloyd's before the High Court. The application for special leave to appeal was heard before McHugh, Kirby and Callinan JJ. After hearing argument the application was dismissed with costs. McHugh J delivered the following reasons of the majority:

"The reasons which I am about to give are those of Justice Kirby and myself. Many issues have been raised in this application, but in the end its essential character as recognised by the Court of Appeal of Victoria is an attempt to involve appellate courts in a review of an interlocutory order made by a judge in a matter concerning practice and procedure in the Supreme Court of Victoria - see Contender 1 Ltd v LEP International Pty Ltd (1988) 63 ALJR 26, HC.

The Court accepts that the decision in the present case is an important one for the parties. It also accepts that, as in many such orders, there was much to be said for the course which each side urged upon the primary judge. However, once he had made his decision in favour of the course urged by the respondent, the applicant faced an extremely difficult task to secure the intervention of the Court of Appeal. Established authority in this country severely restrains such intervention, for reasons often stated. See, for example, House v The King (1936) 55 CLR 499. In so far as the applicant seeks the intervention of this Court, it has the additional burden of showing that the case is one for the grant of special leave, a burden not made easier by the fact that a number of issues which the applicant seeks to ventilate have recently been considered by this Court in Akai Pty Ltd v People's Insurance Co (1996) 188 CLR 418, CSR v Signa Insurance Australia Ltd (1997) 189 CLR 345 and Henry v Henry (1996) 185 CLR 571. The primary judge applied the correct principles and took into account the various objections to this exercise of jurisdiction, including those in relation to the service of process. No proper basis is made out for this Court to become involved. For these reasons, Justice Kirby and I are not persuaded that this Court should grant leave and the application is dismissed."

In the hearing before me much was made on both sides of questions asked and comments made by members of the High Court during the course of argument on the application for special leave to appeal. In my view, no reliance should properly be placed on the transcript of argument as the reasons of the majority of the High Court stand as those expressed by McHugh J as already set out.

Against this background there is difficulty in acceding to the Lloyd's application to permanently stay the proceeding. Byrne J decided the proceeding should not be stayed in White (No 1) for the reasons stated. An inherent part of those reasons was the fact of the claims made that arise only under the Australian and Victorian jurisdiction, namely, the Trade Practices Act and the Fair Trading Act. The very self same issue was clearly and fully ventilated before the Victorian Court of Appeal and it in turn did not consider it necessary or appropriate to interfere with the reasons and orders of Byrne J in White (No 1). Again, the same issue was clearly and fully ventilated before the High Court. The majority of the High Court in its reasons determined that it was unnecessary and inappropriate to intervene. Whilst Lloyd's has argued before me that the judgment in White (No 1) did not create an issue estoppel it nevertheless gave rise to a significant determination on practice and procedure. If I was to accede to the application for a permanent stay by Lloyd's I would in effect set aside the reasons for judgment of Byrne J, in disregard of the approach taken by the Court of Appeal and the High Court, and thereafter substitute a different state of affairs. Hence, whilst it might be said that the judgment in White (No 1) did not create an issue estoppel because it was a decision concerned with practice and procedure it nevertheless created an important factor in the exercise of the discretion as to whether or not to permanently stay the proceeding. I am mindful of the observations of McDonald J in Williams v Lloyd's. However, I consider that in the circumstances of this case the matter was determined by Byrne J in the first ruling and that stands undisturbed by the Victorian Court of Appeal and the High Court of Australia. In the exercise of the discretion, therefore, I consider it inappropriate and undesirable to grant the stay sought by Lloyd's.

Submissions were made for Lloyd's to the effect that the judgment in White (No 1) did not create an issue estoppel against Lloyd's. Reliance was placed on the majority judgment of the Victorian Court of Appeal in Christie v Baker (1996) 2 VR 582. Essentially, the argument for Lloyd's traversed the pathway of Hall v Nominal Defendant (1966) 117 CLR 423, 429 and Carr v Finance Corp of Australia Ltd (No 1) (1981) 147 CLR 246. These authorities relate to the proposition that successive applications may be made to set aside a default judgment. Christie v Baker was concerned with successive applications for an extension of time under s23A of the Limitation of Actions Act 1958 before different judges. Each of the judgments of the Court of Appeal (constituted by Brooking, Hayne and Charles JJA) considered Hall and Carr. Ultimately, the majority, Hayne and Charles JJ, held the proper approach was to consider whether subsequent or successive interlocutory applications constituted an abuse of process. In Christie the majority held that it was. In so doing the majority adverted to Williams v Spautz (1992) 174 CLR 509. Hayne JA observed (at 602):

"The prospect of there being successive applications under s23A suggests not only the possibility that there may be conflicting decisions given with the inevitable harm that follows from that but also that a respondent to such an application may be vexed by successive applications until the applicant either produces sufficient material to warrant the grant of an extension of time or tires of the task. It is not fanciful to conclude that the making of successive applications may well engender a belief in a respondent that the applicant had, in effect, hawked the application from judge to judge until a judge had been found who was willing to accede to the applicant's argument. The vice of such a result is apparent."

The learned judge continued (at 603):

"In my opinion, the apparent tension between the conclusion that Hall's case and Carr's case mean that a second application may be made and the conclusion that in many cases so to permit a second application may lead to unacceptable consequences in the administration of justice is to be resolved by the application of principles governing the regulation of abuse of process. However, before turning to the consideration of those principles, it is well to recall that the doctrines of preclusion which now are called res judicata and issue estoppel are themselves founded in considerations of the need for an end to litigation."

It seems to me in the circumstances of this matter, particularly the circumstances that have occurred since the judgment in White (No 1), that the defendant in the present proceeding, White, is entitled to the benefit of the policy described by Hayne JA in Christie (again at 603) as being one of "finality of judicial determinations and against a person being vexed twice in the courts for the same matter".

There is an additional factor. In the course of argument Lloyd's relied upon the fact that there had been a change in the prevailing circumstances in any event since the judgment of Byrne J in White (No 1). Reliance was placed upon the fact of the judgment of Cresswell J on 3 November 2000. Of course, there has been a further development. The English Court of Appeal has acceded to the application for leave to appeal and that matter will be heard in March 2002. It seems to me, therefore, that in addition to the judgment of Byrne J in White (No 1) whereby the application for the stay was refused there is an additional circumstance that weighs in favour of the position of White. The question can be asked, if it transpired that the defendants in the Jaffray proceeding succeeded in their appeal before the English Court of Appeal the present proceeding may have been unnecessarily stayed. I am mindful of the indication given to the parties by the English Court of Appeal that not only will the appeal be heard during the month of March 2002 but that the parties can anticipate an expeditious judgment. It seems to me, therefore, that in the further exercise of the discretion it is desirable that I not grant a permanent stay of the present proceeding because of the risk, albeit large or small does not matter, that the defendants in the Jaffray proceeding may succeed in any event.

There are further factors that weigh in the exercise of the discretion. In particular, the issue arises as to comity. It appears that the essential basis of the decision to grant the anti-suit injunction by Cresswell J was the exclusive jurisdiction clause in favour of England contained in the agreement between White and Lloyd's. Nevertheless, Byrne J in White (No 1) held that good reason had not been shown by Lloyd's to hold White to the exclusive jurisdiction clause for the purposes of the present proceeding. It follows on this analysis, therefore, that there is a contradiction between the decision of the English Court as made by Cresswell J in the Jaffray proceeding and the decision of this Court as made by Byrne J in White (No 1). If compelled it seems appropriate that this Court should prefer its own decision to that of a foreign court in the circumstances.

There is another factor. The English jurisdiction does not apply trade practices law as known in this jurisdiction by way of the Trade Practices Act and the Fair Trading Act. There may be commensurate statutory provisions but as already observed I was not taken to any. Certainly I was not taken to any English counterpart of s52 of the Trade Practices Act or s11 of the Fair Trading Act. In my view, it can be reasonably assumed, therefore, that important Australian public policy considerations that underpinned the reasoning of Byrne J in White (No 1) were not taken into account or at least were not given the extent of the weight and significance that would have attached in this jurisdiction. There are authorities that dictate that in such circumstances comity does not require a court to stay its own proceeding on the ground that a foreign court has enjoined one of the plaintiffs from continuing: see Laker Airways Ltd v Pan American World Airways (1983) 559 F Supp 1124, 1134; Laker Airways Ltd v Sabena (1984) 731 F 2d 909, 933-934, 937-938; Air Bus Industries GIE v Patel (1999) 1 AC 119, 136; Laker Airways Ltd v Pan American (1983) 577 F Supp 348.

It follows that the stay application is refused.

The Striking Out Application - Summary Dismissal

In the alternative pursuant to O23 of the Rules of the Supreme Court, Lloyd's applied for the striking out of the trade practices claims and the negligence claims; alternatively, it sought summary judgment with respect to those claims.

The two categories of claims were based upon certain representations having been made by Lloyd's through one Donner of Donner Underwriting Agencies Ltd ("DUAL") through a brochure known as the 1980 Lloyd's brochure and through a set of reports and accounts for a six year report being the annual global reports and accounts at 31 December 1984 to 31 December 1990 and also reliance by White on those representations. It was submitted on behalf of Lloyd's that if White is precluded following the judgment in the Jaffray proceeding from contending that the representations as pleaded were made or cannot establish that the representations were made or is precluded, again following the judgment in the Jaffray proceeding, from contending that he relied on those representations then his claims based on a breach of the Trade Practices Act and in negligence must fail. Essentially, the argument advanced on behalf of Lloyd's was based upon the doctrine of issue estoppel: see Blair v Curran, supra, 531-533; Brewer v Brewer (1953) 88 CLR 1, 14-16; Port of Melbourne Authority v Anshun (1981) 147 CLR 589, 602; Trawl Industries v Effem Foods (1992) 36 FCR 406, 423. Of course, for an issue estoppel to arise it is not sufficient that the issue in the second proceeding is very similar to an issue in the first or earlier proceeding. It must be possible to assert without doubt that the issues are identical: see New Brunswick Railway Co v British and Fremch Trust Corp Ltd (1939) AC 1, 20; Ramsay v Pigram (1968) 118 CLR 271, 276; Co-ownership Land Development Pty Ltd v Queensland Estates Pty Ltd (1973) 47 ALJR 519, 522.

I observe that the representations upon which White relies in the second amended statement of claim are different from those that were the subject of the judgment in the Jaffray proceeding. Furthermore, three representations previously pleaded by White that were the same as those in Jaffray have been removed from the amended pleadings. In any event, there are significant differences of substance between the representations in the Jaffray proceeding and the representations made by White in the present proceeding. For example, in the Jaffray proceeding the representations appeared to be concerned with matters of "trust" and "confidence" in Lloyd's whereas by contrast in the present proceeding the representations by White are not so concerned. Rather, the representations are directed to establishing misleading and deceptive conduct. Furthermore, I observe that the representations made by White in the present proceeding are generally couched in more specific terms. There are other differences also. For example, in the present proceeding some of the representations are concerned with matters as to whether figures provided by Lloyd's or on behalf of Lloyd's gave a "fair and reliable picture". Such issue did not seem to arise in the representations as pleaded in the Jaffray proceeding. There are additional differences especially with respect to misleading and deceptive conduct. On balance I am satisfied that there are differences between the representations relied upon in the Jaffray proceeding and those relied upon by the defendant in the present proceeding. In my view, it cannot be said that the representations are identical or even nearly identical. In my view, therefore, it follows that no issue estoppel can arise.

Furthermore, an interesting and novel issue appears to arise in the present proceeding, namely, as to whether Lloyd's will in fact be able to rely upon Anshun to give rise to an estoppel on the basis that White failed to raise a matter in a foreign proceeding. The matter was contemplated but not determined by Mr Justice Ashley in Talacko v Talacko (1999) VSC 81 at [48] - [52]. Ultimately, the learned judge considered that if the doctrine of Anshun estoppel is capable of application in relation to foreign proceedings it would be correct to be very cautious before concluding that it was unreasonable for a plaintiff not to have raised a particular basis of claim in the earlier, foreign, proceeding. Of course in the Jaffray proceeding the defendants were deliberately confined to the threshold fraud issue concerning a defined period known as the "relevant period". Hence, the representations pleaded and relied upon by the defendants in the Jaffray proceeding were for the purposes of a fraud claim. Jaffray was essentially a class action, thus, the allegations needed to be drawn in such a way as to cover the field of the defendants. Furthermore, the representations relied upon by White in the present proceeding have been formulated for the purposes of a different cause of action and one that could not have been raised in the Jaffray proceeding for two reasons. Firstly, because of the class action nature of the Jaffray proceeding. Secondly, because of the unavailability of causes of action under the Trade Practices Act and the Fair Trading Act in the English jurisdiction. For the purposes of the present application I could not be satisfied, therefore, that it would be appropriate to find that an Anshun-type estoppel arises.

As a matter of fundamental principle, an application for strike out or summary dismissal on the grounds that it does not disclose a cause of action will not be granted unless the claim is so obviously untenable that it cannot possibly succeed: Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91. These principles apply where the basis of the application for strike out or summary determination is issue estoppel or estoppel of the kind described in Anshun: see Co-ownership Land Development Pty Ltd v Queensland Estates Pty Ltd (1973) 47 ALJR 519, 521-522; Triantafillidis v National Australia Bank Ltd (1995) V Conv R 54-536, 66, 366, 66, 371 (CA).

A special difficulty arises for Lloyd's in its application to strike out or achieve summary judgment with respect to the representations in any event. White will apparently allege at trial that the representations can be implied from various documents. During the course of argument I was shown a sample of the documents that might be the subject of consideration at trial. It seems to me having had that opportunity that it is at least arguable that the representations can be implied from the documents that are relied upon, in particular, the global reports and accounts. I am satisfied that the question of whether the representations can be made out is a matter appropriate for trial and should not be the subject of the draconian relief pursued by Lloyd's.

The next matter relied upon by Lloyd's in support of its strike out application was an allegation of abuse of process. In essence it was submitted on behalf of Lloyd's that White had submitted to the jurisdiction of the English Court. It followed that it would be unfair and indeed constitute an abuse of process to allow White to re-run and re-ventilate the issues and evidence already heard in the English Court in the Jaffray proceeding. The argument on behalf of Lloyd's emphasised the observations of the High Court in Walton v Gardiner, supra, in particular, the following observation of the Court (at 393):

"Proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reasons that it is sought to litigate anew a case which has already been disposed of by earlier proceedings."

Emphasis was placed upon the fact that in the Jaffray proceeding vast amounts of documents had been considered by the court that in turn would necessitate transfer to this jurisdiction if White was allowed to proceed with his claim. Furthermore, emphasis was placed on the fact that many witnesses for Lloyd's would be required to travel to Australia some of whom are now elderly. Weighing these matters up it seems to me that there is enough made out by White that the proceeding in this jurisdiction is or is potentially of sufficient difference or variance from the proceeding in the English Court such that he is entitled to have his day in court. It may be that there is duplicated cost even inconvenience. Nevertheless, it is a common occurrence in this jurisdiction that courts will accommodate proceedings by way of electronic trials and evidence by video link. Indeed, it can be readily contemplated that sittings could be held in other jurisdictions if warranted. Ultimately, these are matters of a practical nature that would be determined by the trial judge in due course. They do not of themselves in the present matter constitute an abuse of process and certainly not a matter that would warrant summary dismissal being ordered against White.

Lloyd's submitted, also, that the claims for damages arising as a consequence of any failure to comply with the prescribed interest provisions of the company's legislation should be struck out; alternatively, Lloyd's sought summary judgment with respect to those claims. It was submitted for Lloyd's that a breach of the relevant laws dealing with "interests" and "prescribed interests" does not give rise to an action in tort.

Again this issue was contemplated by Byrne J in White (No 1) (at 699-700):

"Finally, there remains the alleged wrong constituted by the breaches of the companies legislation. In para32 and para41 Mr White alleges that by reason of the breaches he has been made liable to the bank and has otherwise suffered loss and damage. In his prayer for relief, para E, he seeks simply declarations that the agreements and undertakings are void or unenforceable for breach of the companies legislation and in para B a general claim for damages. Counsel for Lloyd's did not for a moment accept that these breaches amounted to torts. They submitted that, on a proper analysis of the cause of action, the relief available to Mr White was a declaration that the transactions entered into by him as a consequence of the breaches were void and unenforceable: Hurst v Vestcorp Ltd (1988) 12 NSWLR 394; O'Brien v Melbank Corp Ltd (1991) 7 ACSR 19; 10 ACLC 197 (Victorian Full Court); Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 (Full Federal Court). As a consequence, Mr White might seek monetary relief in the form of restitution to the extent that Lloyd's had been unjustly enriched as a result of the void contract, in accordance with the principles expounded by the High Court in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 and David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. So much was not, I think, challenged by counsel for Mr White. Lloyd's argument moved from this position to the conclusion that the availability of restitution as the appropriate relief for the wronged investor shows that the breach of statute which gave rise to it is not a tort: Fleming, The Law of Torts, 9th ed, (1998), p5. I am not at all confident that this conclusion necessarily follows. In Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 at 479-480 the English Court of Appeal was prepared to accept the possibility that a claim may be founded on a tort irrespective of the relief or remedy sought, whether this be damages at common law or some equitable relief. In any event, the relief sought in this case is not restitution but damages. The validity of service in respect of the claim presently under consideration must be determined on its terms as pleaded, not on some other basis: Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc at 436.

What is put on behalf of Mr White is that Lloyd's breaches of the companies legislation constitute the tort of breach of statutory duty for which the remedy is damages. Such a cause of action arises "where a statute which imposes an obligation for the protection or benefit of a particular class of persons is, upon its proper construction, intended to provide a ground of civil liability when the breach of the obligation causes injury or damage of a kind against which the statute was designed to afford protection": Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 424 per Brennan CJ, Dawson and Toohey JJ. and at 458 per McHugh and Gummow JJ; Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 404-405. On that basis, I must determine whether the cause of action is a tort. I think it is. It is customarily dealt with in the standard texts on tort: Halsbury's Law of England, 4th ed, vol 45, para1279; Fleming, The Law of Torts, 9th ed, (1998), p207; Winfield and Jolowicz on Tort, 14th ed, (1994), p191. See, too, Buckley, "Liability in Tort for Breach of Statutory Duty" (1984) 100 LQR 204. It satisfies the definition of Professor Winfield which I have quoted in [58]. It is a cause of action whose role is to provide compensation to a person who has suffered loss by a wrongful act of another."

It seems then that there are two issues. First, whether an action for damages for breach of the relevant corporations provisions amounts to a claim in tort. Secondly, whether a claim for damages arises out of a breach of the relevant provisions in the absence of any express provision conferring a right to damages. It is the latter question that is the significant issue for present purposes. On behalf of Lloyd's it was submitted that Byrne J confused these two issues in his reasons as recited above.

Again I form the view that the position of White as pleaded in the amended pleading is at least arguable. It follows, therefore, that it is inappropriate to strike out the relevant parts of the proceeding, alternatively, order summary judgment.

The remaining matter to be considered is the component of the application by Lloyd's to strike out the challenge by White to the exclusive jurisdiction clause. It was argued on behalf of Lloyd's that the clause is the subject of an issue estoppel as a consequence of the findings of Cresswell J in Society of Lloyd's v White. To some extent this claim is connected with the trade practices claim. For the reasons already stated it is at least arguable that such a clause contravened the provisions of the Trade Practices Act. Furthermore, and more immediately, in the event that the defendants in the Jaffray proceeding were successful in all or part of their appeal pending before the English Court of Appeal it may be even further arguable that the challenge to the exclusive jurisdiction clause in the present proceeding would be entirely open. As a matter of discretion I do not consider it appropriate at this point to strike that component of the pleading out. It follows, further, that I would not be disposed to grant summary judgment with respect to such pleadings.

ORDER:

In summary, therefore, I am not satisfied that the proceeding should be stayed or that any component of the statement of claim ought be struck out or be the subject of orders for summary dismissal. Orders will be made accordingly.

Counsel for the plaintiff: Mr C R Thomson (solicitor)
Solicitors for the plaintiff: G S Ray
Counsel for the defendant: Mr M K Moshinsky
Solicitors for the defendant: Foster Hart
Counsel for the third party: Mr A J Myers QC, Mr P Jopling QC and Dr I Hardingham QC
Solicitors for the third party: Freehills