By Dispute Resolution Partner, Tom Griffith, and Senior Associate, Lisa Farrand
The New South Wales Supreme Court has recently decided that an Australian company that simultaneously brought a breach of contract claim in New South Wales and Germany against a Cayman Islands company, a German company and a UK company, should have the New South Wales action stayed on the basis that New South Wales was a clearly inappropriate forum for the resolution of the dispute. Dispute Resolution Partner, Tom Griffith, and Senior Associate, Lisa Farrand explain the decision.
The facts of this case are redolent of a university choice of law exam question. The plaintiff was Kim Michael Productions Pty Ltd (KMP), a business operating in the entertainment industry and the defendants were TI Cayman, TI Germany and Tanjong UK, one of whose businesses is the operation of a tropical islands themed resort (the Resort) in Germany near Berlin.
KMP's claim related to production costs alleged to have been incurred in developing a proposed show to be performed at the Resort. One of KMP's allegations was that it was a term of the alleged contract that the funds payable to it for producing the show would be paid into a New South Wales bank account. On the defendants' forum challenge, KMP successfully argued that the defendants' failure to pay the funds constituted a breach of the contract that occurred in New South Wales, and that therefore the New South Wales Supreme Court had jurisdiction to hear and determine the dispute. On that basis, it was held that KMP could serve the defendants that were located outside of Australia in compliance with the relevant rules of court of the New South Wales Supreme Court.
The Court (Justice Howie) observed that the contractual term that required payment into a New South Wales bank account constituted only a tenuous connection with New South Wales, and that this was relevant to the determination of the second aspect of the defendants' forum challenge – namely that New South Wales was a "clearly inappropriate forum".
On the same day that the proceedings were filed in the New South Wales Supreme Court, KMP brought proceedings in Germany against the same parties and involving the same subject matter. Justice Howie identified that the relevant test was whether the local proceedings were "productive of serious and unjustified trouble and harassment" or were "seriously and unfairly burdensome, prejudicial or damaging".
In concluding that the test was satisfied, Justice Howie took into consideration the following factors:
- the parallel proceedings in Germany
- the proper law of the alleged contract was that of Germany
- matters of convenience such as the location of documents and witnesses, and
- the tenuous connection with New South Wales constituted by the late asserted failure to pay an interim invoice into a New South Wales bank account.
Justice Howie noted that the conduct relied upon in support of the repudiation (which was the central claim in the proceedings) occurred almost entirely outside of New South Wales with persons who were and still are outside New South Wales, as a result of the contract that entirely occurred outside the state, where the contract was operating under foreign law and concerned the plaintiff performing its contractual obligations outside the state.
Justice Howie concluded that the proceedings were prima facie vexatious because of the proceedings already under way in Germany. More than that, Justice Howie stated that he was "thoroughly convinced" that the local proceedings were "productive of serious and unjustified trouble and harassment" or were "seriously and unfairly burdensome, prejudicial or damaging" and that accordingly, New South Wales was a clearly inappropriate forum for the determination of the dispute.
Piper Alderman Partner, Tom Griffith acted for the defendants in these proceedings.
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