Australia: WA developments in conflict of laws: Sakari Resources Ltd v Purvis

The recent case of Sakari Resources Ltd v Purvis [2016] WASCA 24, is a reminder of the competing legal factors for multi-jurisdictional companies when commencing court proceedings.

In this alert, Partner Nino Odorisio, Associate Kellie Clee and Solicitor Andrew Clements provide an overview of the case and highlight a number of important considerations when determining the most appropriate forum in which to commence proceedings.

The case of Sakari canvasses issues of what is the most appropriate forum to hear proceedings brought against a foreign company and where a number of the issues in dispute arose outside of Australia.

Conflict of Laws

A conflict of laws can arise from a number of legal issues which requires a preliminary determination of the appropriateness of a forum to hear the proceedings. Most commonly a conflict of laws can arise because:

  • the forum in which the proceedings are brought is asked to determine whether it can hear a matter which arose in whole or in part outside its territory or which involves persons who normally reside outside its territory;
  • the forum is asked by one of the parties to the proceedings to apply the law of another law area or country; or
  • the forum is asked to recognise and/or give effect to a decree or order pronounced by a court or tribunal sitting outside the jurisdiction of the forum or acting in accordance with the law of another law area or country.

Background of the case

Sakari Resources (Sakari) is a Singapore based resources company and the appellant in the proceedings. In 2010, Sakari entered into an employment agreement with the respondent, Mr Purvis, whereby Mr Purvis was appointed chief executive officer of the appellant. Mr Purvis is a resident of Australia.

In or about 2013, Mr Purvis' employment with Sakari was terminated. Mr Purvis commenced proceedings in the Supreme Court of Western Australia against his former employer for breach of contract in 2014 (WA Proceedings).

About 2 weeks after being served with the WA Proceedings, Sakari commenced proceedings in the High Court of Singapore relating to the matters raised in the WA Proceedings. However the matters contained within the Singapore proceedings were said to be broader and include additional parties.

Subsequently, Sakari brought an application to a Master of the Western Australian Supreme Court for an order that the WA Proceedings be permanently stayed on the basis that the WA Proceedings were vexatious or oppressive to Sakari.

The Master declined to make such an order and the Master noted that the following factors in relation to Mr Purvis were relevant to the Western Australian forum:

  • Mr Purvis resided in Western Australia;
  • his assets and bank accounts were in Western Australia and aside from a further bank account Mr Purvis had no assets in Singapore;
  • his solicitors are located in Western Australia and would be more expensive for him to litigate in Singapore; and
  • the proper law of the contract is likely to be Western Australian law.

Sakari brought an appeal against the Master's decision and in February 2016 the Court of Appeal dismissed the appeal.

On appeal, the appellant raised two main bases upon which it was contended that the continuation of the WA Proceedings would be vexatious or oppressive:

  • that Sakari would be required to participate in two separate proceedings based on the same set of facts; and
  • that Sakari would be litigating matters dealing with its corporate governance, its board of directors and its remuneration committee, away from its centre of operations and where the relevant events occurred and that this would involve disruption to Sakari including because its witnesses would be required to travel to Perth.

Considering a permanent stay of proceedings: are the proceedings in a clearly inappropriate forum?

In an application of this nature the focus will be on the inappropriateness of the forum court and not on the appropriateness or comparative appropriateness of another court. A court is not a clearly inappropriate forum merely because an alternative court may be considered more appropriate.

The Court of Appeal referred to two leading authorities on this issue, CSR v Cigna Insurance Australia Ltd [1997] HCA 33 and Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55, where the High Court considered the following factors relevant in determining a stay of proceedings:

  • where there are both local proceedings and proceedings in a foreign forum arising out of the same factual matrix, but raising different issues between the same parties or involving different parties, the local proceedings must be considered in the context of the 'controversy as a whole';
  • in instances where a party has invoked the jurisdiction of an Australian court, the proceedings will not be stayed unless it is established that the Australian court is clearly so inappropriate a forum for the determination of the dispute that it would be oppressive or vexatious for the proceedings to continue; and
  • a continuation of proceedings would be 'oppressive' to a party in instances where they would be 'seriously and unfairly burdensome, prejudicial or damaging', and would be 'vexatious' where they would be 'productive of serious and unjustified trouble and harassment to the defendant'.

In deciding whether the Western Australian forum was clearly inappropriate the Court of Appeal found that the Master erred by considering only the factors said to connect Mr Purvis' claim to Western Australia, rather than having regard to the controversy as a whole between the parties.

While the Court of Appeal disagreed with the Master's reasoning, the determination of the application to stay the proceedings ultimately fell short of establishing that the continuation of the WA Proceedings would be seriously and unfairly burdensome, prejudicial or damaging to Sakari.

Additionally, the Court of Appeal found that there would not be any significant difficulty in pursuing any issue that relies on Singaporean law in WA Proceedings, adding that the employment agreement was arguably governed by Western Australian law.

Conclusions

The decision in Sakari is a reminder of the potential conflicts that may arise where companies operate or have involvement in different jurisdictions.

The Court of Appeal confirmed that where there are proceedings arising from of the same set of facts, but raising different issues or involving different parties, the local proceedings must be considered in the context of the 'controversy as a whole'.

Notwithstanding that a company may have a strong connection to another jurisdiction, where a party has invoked the jurisdiction of an Australian court, the proceedings will not be stayed unless the Australian court is clearly so inappropriate a forum for the determination of the dispute and that it would be oppressive or vexatious for the proceedings to continue.

This is a stringent test and a stay will only be granted in a clear case. A party must be able to demonstrate that it will be seriously and unfairly burdensome, prejudicial or damaging or would be productive of serious and unjustified trouble and harassment. Mere inconvenience to the party will not be sufficient.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Kellie Clee
 
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