IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Brisbane CA No 10157 OF 2002 Before McPherson JA Davies JA Philippides J [St George Bank Ltd v McTaggart & Ors; [2003] QCA 59] BETWEEN AND AND AND ST GEORGE BANK LIMITED ACN 055 513 070 Plaintiff/Applicant STEPHEN JOHN McTAGGART First Respondent/First Defendant SCOTSDALE ENTERPRISES PTY LTD ACN 074 880 863 Second Defendant/Second Respondent KELMSCOTT TRUCK SALES (WA) PTY LTD ACN 075 852 096 Third Defendant/(Not a Party to the application) Judgment delivered on the 21st day of February 2003 Orders: (1) Leave to appeal granted. Appeal allowed. (2) Orders made in paras 1 and 3 of the order of the District Court of 9 October 2002 set aside. (3) Respondent first and second defendants to pay the plaintiff applicant s costs of and incidental to the application and appeal to this Court and of the application in the District Court resulting in those orders. [1] McPHERSON JA: St George Bank Limited carries on business at various locations throughout Australia but, so far as relevant here, at its office at 345 Queen Street, Brisbane. On 21 June 2002 it filed a statement of claim in proceedings no D2673 of 2002 in the District Court at Brisbane. The other parties to the action are the first defendant Stephen McTaggart, who is alleged to be the principal of the second defendant Scotsdale Enterprises Pty Ltd, and the third defendant Kelmscott
2 Truck Sales (WA) Pty Ltd, of which Noel John Best is a director and alleged personal friend of McTaggart. [2] In the statement of claim filed in those proceedings the plaintiff Bank alleges that it has been the victim of a conspiracy by the defendant to defraud, and claims damages alternatively for fraud, negligence and under s 52 of the Trade Practices Act 1974 (Cth). The Bank carries on business as lender and financier and in about October 1999 was approached with a view to financing the acquisition of a Topstart Triaxle trailer on terms that it would, in return for a payment of $108,000, acquire title to the trailer from the second defendant Scotsdale and then let it out to the third defendant Kelmscott on hire purchase in return for instalments of $22,211.05 per month. The payment was made and the hire purchase agreement was entered into, but Kelmscott defaulted in its payments. When the Bank attempted to repossess the trailer, it discovered that the trailer, or so it is alleged, did not exist. [3] The action was instituted on 21 June 2002 and the statement of claim was filed on the same day. On 28 August 2002 the first and second defendants McTaggart and Scotsdale applied for a transfer of the proceedings to the District Court of Western Australia pursuant to s 5(2)(c) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth). On 8 October 2002 those two defendants filed what is entitled a substituted process application. The substituted application omitted all reference to transfer under the Cross-vesting Act and instead sought a stay of proceedings pending transfer to the District Court of Western Australia. The application was accompanied by substituted draft orders framed to provide that the matter be stayed pending transfer to the District Court of Western Australia pursuant to s 20 of the Service and Execution of Process Act 1992 (Cth). There is no power to
3 transfer as distinct from staying proceedings under s 20 of the Act of 1992, but that defect in the application and draft orders may be no more than the result of loose expression. The application was for a stay under s 20 of the 1992 Act. On 9 October 2002 a District Court judge made an order in terms of the draft application pursuant to s 20 of that Act, and further ordered that the first and second defendants each file a notice of intention to defend and defence within 28 days. His Honour also ordered that the plaintiff pay those two defendants costs of the application. [4] The plaintiff Bank now seeks the leave of this Court under s 118 of the District Court Act of Queensland 1967 to appeal against that decision. [5] Several different grounds are advanced in support of that application and as grounds of the appeal against it. One of them is that the absence of any demonstrated defence to the action is fatal to the application for stay that was made in this case. For the purpose of considering this submission it is necessary to set out the terms, so far as material, of s 20 of the Act of 1992: 20. Stay of proceedings (1) This section does not apply in relation to a proceeding in which the Supreme Court of a State is the court of issue. (2) The person served may apply to the court of issue for an order staying the proceeding. (3) The court may order that the proceeding be stayed if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters. (4) The matters that the court is to take into account in determining whether that court of another State is the appropriate court for the proceeding include: (a) the places of residence of the parties and of the witnesses likely to be called in the proceeding; and (b) the place where the subject matter of the proceeding is situated; and (c) the financial circumstances of the parties, so far as the court is aware of them; and (d) any agreement between the parties about the court or place in which the proceeding should be instituted; and
4 (e) the law that would be most appropriate to apply in the proceeding; and (f) whether a related or similar proceeding has been commenced against the person served or another person; but do not include the fact that the proceeding was commenced in the place of issue. [6] As appears from s 20(3) the power of the court to stay a proceeding is predicated on the court being satisfied that another State court having jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters. In the present case it is not clear what those matters in issue are. In support of the application for the stay under s 20 the first defendant filed an affidavit. In para 3(a) of it he asserted on behalf of himself and the second defendant that: (a) the plaintiff Bank allegedly loaned monies to the third defendant [Kelmscott]; (b) that the plaintiff alleges that the security for those loans were sales of vehicles the third defendant allegedly claimed to have made by using the first and second defendant s dealership licence ; (c) that the plaintiff alleges that the third defendant unlawfully represented to the plaintiff that the third defendant had made these sales in accordance with applicable laws ; and (d) that the first and second defendants at no time had any knowledge that the dealership licence was being used for any unlawful or improper purpose. In para 3(c) and (f) of the affidavit McTaggart says that the first and second defendants at no time engaged in any misrepresentation or fraud against the plaintiff and denied that it had any claim of any description against them. [7] Those statements in the affidavit bear little relation to the claim being made by the plaintiff. When comparison is made with the allegations in the plaintiff's statement of claim, it is clear that the assertions in para 3 of McTaggart s affidavit do not attempt to meet the claim being made. There is no reference anywhere in the
5 statement of claim to the third defendant s having used any dealership licence to perpetrate the fraud or to commit the Trade Practices contraventions alleged by the plaintiff. What is alleged by the plaintiff is that the first, second and third defendants, or one or more of them, caused to be addressed to the plaintiff at its Brisbane office an invoice for delivery to the third defendant by the second defendant at the request of the plaintiff of the trailer for a price of $108,000 (para 7); and, in para 8, that the invoice in question represented that the trailer existed; that the purchase price was $108,000; that payment by the plaintiff to a nominated bank account would be payment for the trailer; that the plaintiff would thereby obtain good title to the trailer; and that it would be delivered by the second defendant to the third defendant at their premises in Queensland. No reliance whatever is placed by the plaintiff in its statement of claim on the existence or use of dealership licences. [8] When one turns to the invoice itself, which is ex MJC 3 to an affidavit from the plaintiff s solicitor in opposition to the application to stay, it is seen to be an invoice on the letterhead of Midland Truck Sales addressed to the Bank in Brisbane for delivery to the third defendant s Brisbane premises of the trailer in question, which is identified in the invoice by description and by a registration and chassis number. On its face, the invoice purports to be from the defendant McTaggart. Searches disclose that Midland Truck Sales is the business name of the second defendant Scotsdale Enterprises Pty Ltd and that the person carrying on that business previously was the defendant McTaggart. The price is given as $108,000 and banking details refer to an account number 36087-169830. A deposit receipt (ex MJC 5) from Westpac Bank records the sum of $108,000 as having been banked to the credit of Midland Truck Sales in an account of that number on 4 November 1999. On the face of it, therefore, the money paid out by the Bank has found its
6 way into the second defendant s bank account with Westpac. From there, that sum of $108,000, less what is said to have been a commission of $4,000, was paid to the third defendant. No admission or explanation of the receipt of that money or its payment to that defendant is offered in McTaggart s affidavit. [9] On 17 September 2002 the plaintiff obtained against the third defendant in default of defence a judgment for damages to be assessed. Neither the second defendant nor the first defendant had filed a defence to the plaintiff s statement of claim by the time the subject application came before the Brisbane District Court. Because of this, the plaintiff submits that it is impossible to identify all the matters in issue between the plaintiff and those defendants as required in s 20(3) of the Act. I incline to the opinion that such an approach takes too narrow a view of s 20(3). What must be demonstrated before a stay can be ordered under s 20(3) is that another State court with jurisdiction to determine all the matters in issue is the appropriate court to determine those matters. It is not necessary on this occasion to decide whether, as was suggested by Ormiston J in Equus Financial Services Ltd v Lah [1994] BC 94 05876 (No 962/93; Victorian Appeal Division, 8 September 1994, unreported), the meaning of that expression is more appropriate court. Identifying all the matters in issue is, however, a prerequisite to deciding on the appropriate court; but the matters in issue are, I consider, capable of being identified without the necessity of a formal pleading by way of defence, provided the affidavit or other material demonstrates what those issues are. [10] In Valkama v Jamieson (1994) 11 SR (WA) 246, 250, his Honour Judge Blaxell in the District Court of Western Australia said of the expression appropriate court in s 20 of the Act that, in his view, it is the one with which the
7 action has the most real and substantial connection, and which can therefore be regarded as the natural forum. The test propounded there has been adopted in subsequent District Court decisions including at least one in Queensland. I do not think that what his Honour said calls for reconsideration in the light of the recent decision of the High Court in Regie National des Usines Renault SA v Zhang (2002) 76 ALJR 551, with which it is not inconsistent, and which was concerned with a different and, indeed, converse criterion of clearly inappropriate forum. [11] Here the question whether another State court is the appropriate court to determine all the matters in issue between the parties fell to be decided in the context of s 20(4). It lists a series of factors to be taken into account, which are not expressed to be exhaustive but to include what follows in paras (a) to (f) of s 20(4), but specifically not to include the fact that the proceeding was commenced in the place of issue. In view of the presence of the word include, I do not consider it would be correct to regard the provisions of s 20(4) as a complete code of the factors to be considered in deciding an application under s 20(3) to stay proceedings. What is clear from s 20(4) is, however, that the fact that proceeding D 2673 of 2002 has been instituted in the District Court of Queensland at Brisbane is to be disregarded. [12] Section 20(4)(f) includes, among the matters to be taken into account, whether a related or similar proceeding has been commenced against the person served or another person. No such proceeding has been commenced against the first two defendants whether in Queensland, Western Australia or elsewhere. The fact that the proceeding was also brought against Kelmscott as third defendant may, however, bring it within the scope of s 20(4)(f). No doubt the fact that there were
8 similar proceedings against the third defendant would militate against an order staying the proceeding against the first two defendants. But, as I have said, on 17 September 2002 the plaintiff obtained interlocutory judgment with damages to be assessed against the third defendant. In the light of that event, I am unable to regard the proceedings against the third defendant as now having much or any influence in deciding the question under s 20(3) in the present case. All the matters in issue between the plaintiff and the other two defendants parties remain, and would, in the ordinary course of things, be determined at the trial of those proceedings between them without reference to the damages assessment that will take place separately against the third defendant. The claims against the various defendants are really distinct actions which, for convenience, are capable of being joined in a single proceeding. In deciding whether or not a stay should be granted, the order for assessment of damages is, as I see it, relevant only, if at all, to the extent that the plaintiff might be put to proof of damages on two different occasions and in different jurisdictions. That is a consideration which operates against ordering a stay of the proceedings against the first and second defendants; but not one that appears to be of very great moment. [13] As regards para (e) of s 20(4), there is no discernible difference between the law of Queensland and that of Western Australia that is applicable to the matters in issue between the parties. There is, in terms of s 20(4)(d), no agreement about the court in which the proceedings were to be instituted. This leaves for consideration only the matters specified in paras (a), (b) and (c). With respect to (a) the first and second defendants are resident in Western Australia and the plaintiff, as a corporation, is presumably resident in both jurisdictions. As regards the witnesses likely to be called in the proceedings, it seems clear that McTaggart will be one of
9 them; he is resident in Western Australia. On the other hand, the witnesses in support of the plaintiff s case are resident in Queensland. As the plaintiff s solicitor records in his affidavit, the transaction giving rise to the subject proceedings was handled through its Brisbane office. The agreement between the plaintiff and the third defendant was negotiated by a financial broking company operating out of Brisbane called Northern City Finance. A Mr Mark Saggers of that company may be expected to give evidence about his dealings with Noel John Best, who through the third defendant carried on business both at Rocklea in Brisbane and in Western Australia. Saggers would, one might think, certainly be a necessary witness for the plaintiff, and it is a reasonable inference that he lives in Brisbane. In addition, to prove its damages, the plaintiff will need to produce documentary material, and perhaps witnesses to prove them, from Brisbane and not Western Australia. [14] On balance, there will be more for the plaintiff to prove in the action, and more local witnesses will be needed to prove its case, than, so far as one can judge, for the first and second defendants to prove in their defence. That conclusion is based in part on the defendants failure to be specific about what they are, and what they are not, admitting, as well as on the very general form of the denials that appear in McTaggart s affidavit. They are, in my opinion, a factor properly to be taken into account along with the matter referred to in s 20(4)(c), which is the financial circumstances of the parties, so far as the court is aware of them. As to that, McTaggart in his affidavit says (para 9) only that he estimates his travelling costs to Queensland to be $2,500 to $3,500 and (para 10) that he has no cash reserves that would allow him to travel to Queensland at this point of time, whereas in para 10 he points out that the plaintiff is a large publicly listed company with the resources to engage solicitors in Western Australia.
10 [15] The weight that that particular matter might otherwise attract in the overall exercise of the discretion under s 20(3) has, to my mind, to be considered in the context of the further statement in para 13 of McTaggart s affidavit that he believes that the first, second and third defendants are all based in Western Australia and the transactions which form the basis of the plaintiff s claim all occurred in Western Australia. The first part of this proposition is only partly true. The third defendant as well as the plaintiff carries, or also carried, on business in Brisbane, and, inferentially from what Mr Saggers has to say, had done so for some time before October 1999. The second part of the proposition is plainly incorrect. The transactions and representations forming the basis of the plaintiff's claim all took place in Queensland and not Western Australia. Cf ACN 080 988 807 Pty Ltd v Kneipp [2002] SADC 165, at 5-6. [16] If in s 20(4)(b) the expression subject matter of the proceeding refers to the cause of action, Queensland is the place where it is situated. What Mr McTaggart says about the matters referred to in para 13, and earlier in para 3(b) and 3(d), of his affidavit is incomprehensible without further elucidation from him, which he has not condescended to provide. There is nothing at all to show what the arrangement, if any, was between the first and second defendants and the third defendant or Best concerning the use of McTaggart s dealership licences, or the relevance of that arrangement if it existed. The first and second defendants have failed to explain how the third defendant came to be using a form of invoice emanating from the first or second defendants or to be using their dealership licence in Western Australia, or to demonstrate its relevance, if any, to Queensland. Nor have they explained what happened to the $108,000 paid to the credit of his Westpac account, or why and how it, or most of it, came to be paid out of that account to the third defendant. If
11 they intended to base their defence on these matters, they have failed to demonstrate their relevance. [17] In Rick Cobby Pty Ltd v Podesta Transport Pty Ltd (1997) 139 FLR 54, 58, Olsson J said that the applicant for a stay must demonstrate a clear and compelling basis for the relief sought. It is enough here to say that, on their application under s 20(3) of the Act, the first and second defendants were bound to discharge the onus of satisfying the court on the balance of probabilities that the proceedings ought to be stayed, leaving it to the District Court in Western Australia as the appropriate court to determine all the matters in issue between them and the plaintiff. In this they succeeded before the District Court judge who heard the matter in the court of issue, which is the District Court of Queensland. His Honour s determination of that question involved the exercise of a discretionary judgment which on general principles would not readily be disturbed on appeal unless some clear error in its exercise was demonstrated. The problem is, however, that his Honour gave no reasons for his decision and it is therefore difficult to tell what it was that led him to reach the conclusion that he did. [18] Before this Court the plaintiff submitted that the judge s omission to give reasons was a fundamental defect which invalidated the exercise of the discretion to order a stay. The omission was more serious in this case because under s 20(6) the court may determine an application for an order under the section without a hearing unless a party objects. No party here did so. As a result they lost the benefit of hearing even the interlocutory remarks which are ordinarily made by a judge in the course of argument that may indicate the direction in which he was tending and his reasons for doing so. In these circumstances, in a matter in which there was a direct
12 contest between the parties about the appropriate court to determine all matters in issue, it seems to me that, even if it was not legally incumbent upon the judge to give reasons, it would certainly have been desirable for him to have done so. Without such reasons, if one of the parties later challenges the decision in a contested case like this, there is no means of knowing the grounds on which the decision proceeded, or whether the discretion was correctly exercised or not. [19] In the present case, I am satisfied that the judge must have exercised his discretion incorrectly. The plaintiff's claim and the matters which were alleged to constitute its cause of action were clearly set out in its statement of claim. Instead of pleading to it by way of defence, the first and second defendants elected, as they were entitled to do, to propound a defence in the affidavit sworn by McTaggart. In doing so, however, they failed to specify what their answers were to several of the critical allegations in the plaintiff s statement of claim, but instead referred to events or transactions taking place in Western Australia which on their face appear to have no relevance to the claim made by the plaintiff. It is difficult to avoid the conclusion that the learned judge attached weight to those matters without appreciating that, without further elucidation, they were, on the material before him, not shown to be among the matters that needed to be determined in the proceedings brought by the plaintiff in Queensland. Without knowing what those events or transactions were, or indeed, what all the matters in issue between the parties were or will be, it was not open to him to conclude that the District Court in Western Australia was the appropriate court to determine those matters. [20] The result is, in my opinion, that the discretion conferred by s 20(3) miscarried, and that this Court must now exercise it again. Applying the test adopted by Judge
13 Blaxell in Valkama v Jamieson (1994) 11 SR (WA) 246, 250, the question is whether the District Court of Queensland or of Western Australia is the one with which the action has the most real and substantial connection, and which can therefore be regarded as the natural forum. As to that, I entertain no doubt that the Queensland court is the appropriate court. It was this State in which the alleged fraud, negligence or Trade Practices contravention was perpetrated. The representations were made and were acted upon here; money was paid over and the loss was sustained here. The third defendant, as well as the plaintiff carried on business here. The first and second defendants in Western Australia may themselves have been victims of some form of deception in Western Australia on the part of the third defendant; but, if so, they have not explained what it was, or provided the court with sufficient material to know what, if any, real or substantial connection the matters in issue have with Western Australia. [21] This being so, I am not prepared to say that the financial circumstances of the parties should be allowed decisive weight. Indeed, on that subject McTaggart has given no more detail than that he has no cash reserves that would allow him to travel to Queensland at this point of time. It does not preclude him from instructing solicitors in his own State to provide a statement from which a defence could be prepared on behalf of the first and second defendants in answer to the plaintiff s statement of claim in the Queensland proceedings, or that would demonstrate that the District Court in Western Australia was the appropriate court in terms of s 20(3) of the Act. [22] The issues raised in this application about the meaning and effect of s 20(3) and its operation are, in my opinion, sufficiently important to justify granting leave
14 to appeal against the decision and order made on 9 October 2002. I would grant leave to appeal, allow the appeal against that decision and set aside the orders made in paras 1 and 3 of that order. The respondent first and second defendants should pay the plaintiff applicant s costs of and incidental to the application and appeal to this Court and of the application in the District Court which resulted in those orders. [23] DAVIES JA: I agree. [24] PHILIPPIDES J: I agree.