FEDERAL COURT OF AUSTRALIA

Morris v McConaghy Australia Pty Ltd [2018] FCA 435

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave under r 10.43 of the Federal Court Rules 2011 to serve the fourth respondent, Tiger Yacht Management (a company incorporated in the Cayman Islands), in the Cayman Islands.

2.    Any further service on the fourth respondent be dispensed with.

3.    The notice of appearance filed by the fourth respondent pursuant to order 3, made on 19 October 2017, be unconditional.

4.    The fourth respondent pay the applicant’s costs of the interlocutory applications heard on 14 and 15 February 2018.

5.    The proceeding be stood over for a case management hearing on 9 March 2018 at 9.30am.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

RARES J:

1    On 19 October 2017, I gave leave to the applicant, Jonathan Morris, to serve each of the second respondent, MC2 Composites Limited, in the Cayman Islands and the third respondent, Mark Evans, in Hong Kong, in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (done at the Hague on 15 November 1965), with the originating application, concise statement and the orders that I made for service: Morris v McConaghy Australia Pty Limited [2017] FCA 1526. Mr Morris filed the documents for service with the Court for them to be conveyed to the Central Authorities in the Cayman Islands and Hong Kong, but as yet neither Mr Evans nor MC2 has been served under the Convention so far as Mr Morris is aware.

2    During the hearing on 13 October 2017, the fourth respondent, Tiger Yacht Management Limited, a company incorporated in the Cayman Islands, appeared by counsel on the return of an anti-anti suit injunction that Jagot J had granted ex parte on 29 September 2017. That injunction prohibited Tiger from prosecuting, or continuing to prosecute, its application in the Grand Court of the Cayman Islands in which Tiger sought to restrain Mr Morris and Mr Evans from commencing or continuing proceedings, other than in the Grand Court, for any relief that sought to wind up MC2, any and all other remedies available separately to each of them in his capacity as a minority shareholder of MC2 or similar shareholder remedies. Mr Evans was a submitting party in the Grand Court.

3    On 13 October 2017, Tiger through its counsel said that it would file a notice of appearance for the purposes of seeking to challenge this Court’s jurisdiction to grant the anti-anti suit injunction: see Morris [2017] FCA 1526 at [14]. I ordered Tiger to file and serve a notice of appearance in accordance with r 11.01 of the Federal Court Rules 2011, but noted that its appearance was to contest jurisdiction to seek a stay on forum non conveniens grounds in accordance with r 13.01 and, if the Court found that it had jurisdiction over Tiger and did not order any stay, that appearance would have full effect as a notice of appearance for all purposes in accordance with the Rules.

4    In substance, Mr Morris now seeks leave in accordance with the interlocutory application on which he had relied for the orders I granted in respect of Mr Evans and MC2, also to serve Tiger. Because Mr Morris effected service of the anti-anti-suit injunction, Tiger is now aware, as its appearance establishes, of this proceeding.

The issues

5    The real issue today is whether Mr Morris is able to satisfy me, pursuant to r 10.43, to exercise my discretion to order that service on Tiger, in effect, should also occur.

6    Tiger filed an interlocutory application seeking to set aside service on it of the interlocutory application in support of the anti-anti-suit injunction and an order discharging that injunction. McConaghy Australia Pty Ltd, the first respondent, has appeared today and made brief submissions about the impact on it were service on Tiger effected or confirmed for the purposes of the principal proceeding. I made orders by consent, that there be no order as to costs in respect of McConaghy Australia’s participation in the interlocutory proceedings yesterday.

7    Mr Morris and Tiger conducted the hearing of their respective applications on the basis that Mr Morris carried the onus of proof to establish that service out of the jurisdiction would, and should be, granted against Tiger and that he also carried the onus of establishing that Australia was not a clearly inappropriate forum for the proceeding. In addition, it was also common ground, to the extent it might have mattered, that in seeking to set aside service of the anti-anti suit injunction, Tiger carried the onus of showing that Australia was a clearly inappropriate forum.

8    Mr Morris and Tiger agreed that if I were to find that he ought be granted leave to serve Tiger it would follow, necessarily, that I would not set aside service of the process for and the anti-anti suit injunction itself and, conversely, if I were not to permit service out on Tiger of the originating application, the anti-anti suit injunction must be discharged.

The requirements of the Rules

9    Rule 10.42 provides that, subject to r 10.43, an originating application may be served on a person in a foreign country in a proceeding that consists of, or includes, any one or more of the kinds of proceeding mentioned in the table. Item 20 of the table provides:

Proceeding properly brought against a person who is served, or is to be served, in Australia, if the person to be served has been properly joined as a party.

10    Relevantly, in order to establish his entitlement to serve Tiger under r 10.43(2), Mr Morris has to satisfy the requirements of r 10.43(4), which provides:

(4)    For subrule (2), the party must satisfy the Court that:

(a)    the Court has jurisdiction in the proceeding; and

(b)    the proceeding is of a kind mentioned in rule 10.42; and

(c)    the party has a prima facie case for all or any of the relief claimed in the proceeding.

Background

11    I set out some of the background facts in my earlier reasons (Morris [2017] FCA 1526), but the parties subsequently added a great deal of material, some of which may have been admissible as evidence, but most of which appeared in the text of affidavits to be nothing more than inadmissible assertions, conclusions or submissions, leaving aside annexures of particular business records that may be relevant. Much of that inadmissible or problematic material involved allegation and counter-allegation that the tendering party wished to advance in support or against the party’s establishment of attempt to prove or disprove that MC2 was a Part 5.7 body for the purposes of the Corporations Act 2001 (Cth), namely, that it was a registrable body that was a foreign company and “is not registered under [Div 2 of Pt 5B.2] but carries on business in Australia” (within the meaning of para (b)(ii) of the definition of a Part 5.7 body in s 9 of that Act).

12    The reason for that was that Mr Morris, as I noted in Morris [2017] FCA 1526 at [12], seeks an order under s 583(c)(ii) of the Act for the winding up of MC2 as a Part 5.7 body on the just and equitable ground. Alternatively, Mr Morris seeks, as against Tiger and Mr Evans, orders that require them to purchase his shares in MC2 pursuant to an implied term in, or alternatively, on the proper construction of cl 11.4 of, the shareholders agreement dated 21 February 2014 between Mr Morris, Mr Evans, Tiger and MC2.

13    Mr Morris accepts that it is possible that, read literally, he may not be a person capable of requiring the other two shareholders to purchase his shareholding in MC2 because cl 11.4, on which he relies, applies in terms, only to a shareholder who ceases to be a full time employee of MC2, but who is not a party to the shareholders’ agreement. Mr Morris, of course, is a party to the shareholders agreement. However, he contends that in breach of cl 5.2, under which “the Business [defined as the business of [MC2], as described in recital B] will be vested in [Mr Morris] and [Mr Evans] as joint Managing Directors”, he has been excluded from the management of the equal partnership between him and Mr Evans, on the one hand, and Tiger, on the other, that is contemplated in the recitals of the shareholders agreement and in its operative terms. Hence, his originating application seeks relief in accordance with the principles in Ebrahimi v Westbourne Galleries Limited [1973] AC 360 at 378B-380F. There Lord Wilberforce said ([1973] AC at 380D-E; see also Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 360 [175] per Gummow, Hayne, Heydon and Kiefel JJ):

The just and equitable provision nevertheless comes to his assistance if he can point to, and prove, some special underlying obligation of his fellow member(s) in good faith, or confidence, that so long as the business continues he shall be entitled to management participation, an obligation so basic that, if broken, the conclusion must be that the association must be dissolved. And the principles on which he may do so are those worked out by the courts in partnership cases where there has been exclusion from management (see Const v. Harris (1824) Tur. & Rus. 496, 525) even where under the partnership agreement there is a power of expulsion (see Blisset v. Daniel (1853) 10 Hare 493; Lindley on Partnership, 13th ed. (1971), pp. 331, 595).

14    In the concise statement that Mr Morris filed with his originating application, he set out (what he asserts is) the background to the shareholders’ agreement and the investment agreement, also dated 21 February 2014, between McConaghy Holdings Ltd, Graham Porter (who controls Tiger) and the four parties to the shareholders’ agreement. Both the investment agreement (which related to the investment of the parties to it in MC2) and the shareholders’ agreement described MC2 as “the company”.

15    Mr Morris resigned as an employee of McConaghy Australia on 23 May 2017, effective on 2 June 2017, but he did not resign as a director of that company or any other company within the MC2 group.

16    On 8 June 2017, Mr Porter, on the letterhead of McConaghy Australia, wrote to Mr Morris complaining that he had, subsequent to his resignation as an employee of McConaghy Australia, taken up alternative employment with a company in Malaysia with which Mr Morris still seems to be connected. The letter asserted that Mr Morris had never been a managing director of McConaghy Australia and that Mr Porter did not understand that Mr Morris had ever been one of its employees either. Mr Porter wrote:

You are a director for the time being of [MC2]. It is acknowledged that you also remain for the time being a Managing Director of [MC2]. (emphasis added)

17    Mr Porter’s letter reminded Mr Morris that, cll 5.1 and 5.2 of the shareholders’ agreement provided that responsibility for the day-to-day management and supervision of MC2 and its subsidiaries was vested, but not exclusively, in Mr Morris and Mr Evans as joint managing directors. Mr Porter wrote that Mr Morris was expected to fulfil his duties and responsibilities as a managing director of MC2 and that, if he did, “you may remain eligible to be paid a Managing Director fee in accordance with previously agreed arrangements.” (emphasis added)

18    The 8 June 2017 letter stated that Mr Porter wrote it on behalf of McConaghy Australia. That statement appeared to be incongruous with the letter’s statement of expectation about Mr Morris’ duties that purported to be given on behalf of MC2.

19    Subsequently, on 19 July 2017, the day after Mr Morris filed these proceedings, Mr Porter wrote to Mr Morris in Malaysia, this time on the combined letterheads of MC2, McConaghy Australia and another subsidiary of MC2, McConaghy One Pty Limited, complaining of a visit Mr Morris had made to McConaghy Australia’s offices in which he had sought to give instructions to a member of that company’s staff not to deal with an employee of Tiger. Mr Porter wrote:

You are not a director, officer or employee of McConaghy Australia nor of McConaghy One. As you know, your directorships of such entities and of all other direct and indirect subsidiaries of MC2 were terminated June 26, 2017. You are not to interfere. (emphasis in original)

20    The letter concluded by saying that Mr Morris was a director and managing director only of MC2.

21    It is obvious that, from that correspondence, the relationship between the parties to the shareholders’ agreement had broken down and that Mr Morris’ claims for relief in the originating application in respect of that breakdown had a solid arguable foundation, provided that this Court is not a clearly inappropriate forum and has jurisdiction to grant at least some of the relief sought.

22    In the voluminous filed affidavit material, one of the directors, who is also a lately appointed managing director, of MC2, Matthew Flynn, gave evidence (that Mr Morris objected to as a conclusion) that, to his knowledge, MC2 had never had an employee.

23    In its defence in the Federal Circuit Court, that led to Mr Morris discontinuing his proceedings there and bringing his proceedings in this Court (as I explained in Morris [2017] FCA 1526 [9]-[11]), McConaghy Australia denied Mr Morris’ allegation that he was employed by it. It asserted that, at that time, he was simply a joint managing director, 25% shareholder and director of MC2. McConaghy Australia pleaded that:

    minutes of a meeting of MC2, held on 24 March 2014, recorded that Mr Morris and Mr Evans should each be paid, as Mr Morris alleged he was entitled to be paid, USD20,000 per calendar month as joint managing directors of MC2; and

    in around mid-2014, the directors of MC2 had agreed that the monthly payment for the managing directors would be reduced to USD10,000.

24    McConaghy Australia’s Federal Circuit Court defence that, first, it did not employ Mr Morris and, secondly, MC2’s directors had agreed that monthly payments initially of USD20,000 and later USD10,000 would be made to the managing directors of MC2, necessarily required that in order to resolve the disputes arising between Mr Morris and McConaghy Australia, MC2 is a proper and necessary party for Mr Morris’ claims under the Fair Work Act 2009 (Cth) and for breach of contract. Tiger accepted that both McConaghy Australia and MC2 were proper and necessary parties for the purposes of these proceedings within the meaning of item 20 in the table to r 10.42.

25    The controversy which Mr Morris wishes to agitate, in light of developments, is now wider than that the subject of the Federal Circuit Court proceeding. The boundaries of the controversy have widened to his exclusion from the management of MC2 and to the dispute between him, Mr Evans and Tiger, being the three shareholders of MC2, flowing from the breakdown in their relationships. A partial manifestation of that breakdown was, of course, the dispute concerning Mr Morris’ claim over non-payment of moneys.

26    On 18 July 2017, Mr Morris commenced these proceedings and filed a concise statement. Mr Porter’s letter of 19 July 2017 indicated that, by then, relations had broken down completely between the partners.

Tiger’s submissions

27    Tiger argued that the claims that Mr Morris made against it and, by implication, Mr Evans are discrete and severable from those made against McConaghy Australia and MC2. It argued that these should be divorced from, or treated in some way separately to, Mr Morris’ claims arising out of the breakdown in the employment or remuneration relationship. It contended that Australia is a clearly inappropriate forum in which to litigate those discrete claims, or alternatively that I should exercise what Beach J described as the “residual discretion” under r 10.43(4) to refuse Mr Morris’ leave to serve proceedings outside Australia: see Trina Solar (US) Inc v Jasmin Solar Pty Ltd (2017) 247 FCR 1 at 23 [99] and 26 [115]-[118] per Beach J with whom Dowsett J agreed generally.

28    Tiger contended that the shareholders’ agreement provided that it would be governed by and construed in accordance with the laws of the Special Administrative Region of Hong Kong in the People’s Republic of China, and each of the parties submitted to the non-exclusive jurisdiction of the courts in that jurisdiction for the purpose of legal action or proceedings arising out of, or in connection with, that agreement (cl 25).

Consideration

29    In Ho v Akai Pty Ltd (In Liq) (2006) 247 FCR 205 at 208 [10], Finn, Weinberg and Rares JJ said:

As has been observed on many occasions, the prima facie case requirement has to be met at the outset, usually on an ex parte basis, and without the advantage of discovery and other procedural aids to the making out of a case: see eg Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390. It “should not call for a substantial inquiry”: WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476; see also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. For present purposes it is sufficient to say that a prima facie case for relief is made out if, on the material before the court, inferences are open which, if translated into findings of fact, would support the relief claimed: Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110. Or, to put the matter more prosaically as Lee J did in Century Insurance Ltd (in prov liq) v New Zealand Guardian Trust Ltd [1996] FCA 376:

What the Court must determine is whether the case made out on the material presented shows that a controversy exists between the parties that warrants the use of the Court's processes to resolve it and whether causing a proposed respondent to be involved in litigation in the Court in Australia is justified.

30    The requirement of r 10.43(4)(c), that there be a prima facie case for all or any of the relief sought, will be satisfied if the applicant makes out a prima facie case, to the standard referred to above, in respect of any one of the causes of action for which relief is sought: Ho 247 FCR at 215 to 216 [45] applying Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 in respect of an analogue of r 10.43(4)(c).

31    In BY Winddown Inc v Vautin (2016) 249 FCR 262, Besanko, Middleton and Griffiths JJ refused leave to appeal from my decision (Vautin v BY Winddown Inc (No 2) [2016] FCA 1235) to grant leave to serve, outside the jurisdiction, a manufacturer of a yacht alleged to be defective. I had found that the applicant had established that the manufacturer was a person who had been properly joined as a party, under item 20 in the table to r 10.42, in proceedings against a person, being the manufacturer’s Australian distributor, who had been served in Australia. I found that it was not necessary to prove, relevantly, that the foreign manufacturer was carrying on business in Australia so as to attract a remedy under the Competition and Consumer Act 2010 (Cth), being the foundation of the liability that the applicant (Mr Vautin) wished to assert directly against it. The Full Court followed an earlier decision of the Full Court in Costa Vraca Pty Limited v Bell Regal Pty Limited [2003] FCAFC 305, saying (249 FCR at 272 [44]):

Although the previous rule, ie O 8 r 2(2)(c), spoke of “a prima facie case for the relief sought by the party in the proceeding”, and r 10.43(4)(c) speaks of the party having “a prima facie case for all or any of the relief claimed in the proceeding”, this change in terminology does not provide a sufficient basis for not continuing to apply the approach in Costa Vraca. That is primarily because, in both situations, central attention is directed to the question whether the foreign party is involved in the “matter”. It is sufficient in that context that a prima facie case for relief is made out in respect of the local party (significantly, the applicant acknowledged below that Mr Vautin had a prima facie case for relief against Eagle Yachts, as the primary judge himself had also found at [13] in his reasons for judgment on the ex parte application …). This approach to the construction of the relevant provisions of the [Rules] gives full effect to s 22 of the [Federal Court of Australia Act 1976 (Cth)]. (emphasis added)

32    There is a prima facie case that Mr Morris has been prevented effectively from acting as a managing director of MC2, contrary to what he alleges cl 5.2 of the shareholders’ agreement provided. The tone of Mr Porter’s two letters of 8 June 2017 and 19 July 2017 purport to remove Mr Morris’ entitlement or capacity to do anything in relation to managing the affairs of MC2’s subsidiary, McConaghy Australia, including, among other things, giving directions to staff about whether an employee of Tiger could attend its offices. MC2 is a proper and necessary party to the proceedings, not least because of McConaghy Australia’s defence to Mr Morris’ claim against it. These matters satisfy me that there is a prima facie case for Mr Morris to obtain relief against either MC2 or McConaghy Australia in respect of the employment claims on the present material, being a prima facie case of the kind identified as sufficient in Ho 247 FCR at 208 [10].

33    Because Mr Morris has such a prima facie case for relief against both McConaghy Australia and MC2, Tiger focused its argument on what it contended was the discrete nature of Mr Morris’ claims against it and Mr Evans. I reject that argument. I am satisfied that there are significant disputes between the shareholders of MC2 as to the operation and effect of the shareholders’ agreement and the issue as to whether the substratum of that agreement or “equal partnership” to conduct the business of MC2, as stated in its recital C, has disappeared. Having regard to s 22 of the Federal Court of Australia Act 1976 (Cth) it is appropriate, in order to avoid a multiplicity of suits concerning those matters, that Tiger and Mr Evans be joined in the one proceeding.

34    As Gibbs CJ, Stephen, Mason and Wilson JJ said in Thomson Australian Holdings Pty Limited v Trade Practices Commission (1981) 148 CLR 150 at 161, s 22:

is a “Judicature Act” provision, designed to ensure that the Court can grant relief which is appropriate to both legal and equitable claims and to avoid multiplicity of proceedings. Its effect is to enable the Court to dispose of all rights, legal and equitable, in the one action, so far as that is possible.

35    The parties agreed in cl 25 of the shareholders’ agreement that the jurisdiction of the Hong Kong courts was not exclusive. That is, none of the parties to that agreement could object to those courts exercising jurisdiction, but cl 25 did not require all proceedings involving the shareholders agreement to be brought in Hong Kong. For the purposes of the argument before me, there being no evidence to the contrary, the parties assumed that the laws of Hong Kong for relevant purposes are the same as those of Australia.

36    It seems to be common ground that, apart from having its registered office in the Cayman Islands, most of the assets and affairs of MC2 are to be found in Australia, New Zealand and the People’s Republic of China and, possibly also, Hong Kong. Thus, at least on the material before me, the relief sought under s 583(c)(ii) of the Corporations Act in respect of the winding up on the just and equitable ground, if granted, would be substantively effective.

37    While there was some force in Tiger’s argument that, as currently pleaded, it may be difficult for Mr Morris to succeed in his alternative claim for relief by way of an order for specific performance of the alleged express or implied term contained in, or conveyed by, cl 11.4 of the shareholders’ agreement, under which, he contended, Mr Evans and Tiger could be ordered to buy his shareholding at a fair price, the difficulties in that claim are not a decisive factor in the present context given that the claim to wind MC2 up as a Part 5.7 body is within the Court’s jurisdiction. Indeed, it is likely that because of the passage of time, and after all parties have been served and appear that particular dispute may evolve or disappear.

The residual discretion

38    The next question is whether the proceedings ought be stayed as against Tiger because Australia is a clearly inappropriate forum for the proceedings so far as they concern Tiger and, inferentially, Mr Evans or, alternatively, whether there is some other feature of the case that would attract the exercise of the residual discretion referred to in Trina Solar 247 FCR 1.

39    Beach J said that the residual discretion to refuse leave was not at large, in the sense that if the three necessary conditions for the grant of leave to serve outside Australia in r 10.43(4) were satisfied, there had to be a good, if not compelling, reason, why, nevertheless, leave should be refused: Trina Solar 247 FCR at 26 [117]. He said one such reason may be that a stay of the proceedings would be granted. His Honour no doubt had in mind, for example, that a stay may be granted on the ground that Australia was a clearly inappropriate forum: cf. Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 557, 564. Mason CJ, Deane, Dawson and Gaudron JJ also suggested (171 CLR at 565), somewhat optimistically in light of what the parties sought to put in evidence before me, that questions of whether Australia is a clearly inappropriate forum ought be dealt with, and should be able to proceed, expeditiously. However, here, the issue whether Australia is a clearly inappropriate forum arises directly because Tiger challenges the Court’s jurisdiction and exercise of discretion (on this ground) to grant the anti-anti suit injunction against it.

40    In my opinion, this is a matter that falls within what Lee J described in Century Insurance [1996] FCA 376 in the passage cited by Finn, Weinberg and Rares JJ in Ho 247 FCR at 208 [10], namely, one in which on the material before the Court, the controversy between the parties warrants the use of the Court’s processes to resolve it to an extent that justifies the Court causing Tiger to be involved in the litigation. As Lord Sumption JSC said in Abela v Baadarani [2013] 1 WLR 2043 at 2062 [53], of the analogous jurisdiction exercised by this Court, in a case involving alleged fraudulent misrepresentations inducing the purchase of shares in a company for USD14 million:

Litigation between residents of different states is a routine incident of modern commercial life. A jurisdiction similar to that exercised by the English Court is now exercised by the courts of many other countries. (emphasis added)

41    In Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 247-248, in a passage that Mason CJ, Deane, Dawson and Gaudron JJ said in Voth 171 CLR at 564 expressed the principles to be applied in determining whether Australia is a clearly inappropriate forum, Deane J described the power to stay proceedings as discretionary:

in the sense that its exercise involves a subjective balancing process in which the relevant factors will vary and in which both the question of the comparative weight to be given to particular factors in the circumstances of a particular case and the decision whether the power should be exercised are matters for individual judgment and, to a significant extent, matters of impression. The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him. Ordinarily, a defendant will be unable to discharge that onus unless he can identify some appropriate foreign tribunal to whose jurisdiction the defendant is amenable and which would entertain the particular proceedings at the suit of the plaintiff. Otherwise, that onus will ordinarily be discharged by a defendant who applies promptly for a stay or dismissal if he persuades the local court that, having regard to the circumstances of the particular case and the availability of the foreign tribunal, it is a clearly inappropriate forum for the determination of the dispute between the parties. The reason why that is so is that, once it is accepted that the adjectives “oppressive” and “vexatious” are not to be narrowly or rigidly construed and are to be applied in relation to the effect of the continuation of the proceedings rather than the conduct of the plaintiff in continuing them, the continuation of proceedings in a tribunal which is a clearly inappropriate forum would, in the absence of exceptional circumstances being established by the plaintiff (cf. Spiliada Maritime Corp. v. Cansulex Ltd [[1987] 1 A.C. 460 at 478]), be oppressive or vexatious to such a defendant if there is some available and appropriate tribunal in another country. (emphasis added)

42    Here, the parties or their principals are scattered between, in Mr Morris’ case at the present time Malaysia, in Mr Evans’ case Hong Kong, and in Tiger’s case, and notionally that of MC2, in the Cayman Islands. There is, in effect, no natural forum for their dispute. The dispute arose while Mr Morris was predominantly located in Australia and, allegedly while he was being, or entitled to be, paid by a local company, being McConaghy Australia, before his change of job and relocation to Malaysia. It is a serious commercial dispute involving a breakdown in what the parties expressly agreed in the shareholders agreement to be a partnership or quasi-partnership relationship for the running of their enterprise together through MC2.

43    It is clear that the deadlock among the partners, or shareholders of MC2, needs to be resolved. The employment dispute appears to be a manifestation of, and interlinked with, the wider controversy. Indeed, there is a certain bizarreness about McConaghy Australia, in its defence, pleading that it was not Mr Morris’ employer in the circumstances. On the evidence before me, McConaghy Australia used its bank accounts to pay Mr Morris and issued him with its group certificates. Those acts are ordinarily characteristic incidents of a contract of employment and reflect compliance with the requirements of Australian taxation law. Of course, it may be that, after a trial of the issues on admissible evidence, this defence will succeed to displace the present prima facie case and that it is to MC2 to which Mr Morris must look for payment.

44    I am of opinion that the pleading of this defence by McConaghy Australia necessarily must have been on instructions by those in control of it, namely, Mr Evans, Mr Porter and Mr Flynn. Each of them play central roles in the conduct of MC2 and its group’s affairs. That fact, in itself, demonstrates the way in which the shareholders’ dispute has percolated beyond merely being one involving Mr Morris’ claim for salary in the Federal Circuit Court. Indeed, Tiger correctly conceded that Mr Morris’ employment case could not be heard in another jurisdiction, no doubt because it includes a claim under the Fair Work Act for which this Court can grant relief on his statutory causes of action. A foreign court could not enforce or apply that Act in the same way as this Court and, in any event, McConaghy Australia is here and there is a prima facie case that it is liable.

45    In the circumstances it is not necessary for me to resolve whether or not MC2 is carrying on business here for the purposes of determining whether to allow the proceedings to go ahead against it. MC2 is a necessary party. It has instructed its subsidiary, McConaghy Australia, to put the identity of Mr Morris’ employer as a managing director of MC2 in issue. In that way, MC2 has made itself a necessary party by causing McConaghy Australia to allege that if anyone owes Mr Morris money it is MC2 and not McConaghy Australia. Whether Mr Morris will in the end succeed against MC2 on any of his claims outside the employment context is not necessary to decide for the purpose of considering whether Australia is a clearly inappropriate forum. That issue can be confined in a narrow compass.

46    In my opinion, there is no particular place at which many witnesses or potential witnesses such as Mr Evans, Mr Porter, and Mr Morris, will be located at any particular point of time. Having regard to the commonsense observations of Lord Sumption JSC in Abela [2013] 1 WLR at 2062 [53], and the principles identified by Deane J in Fay 165 CLR at 247-248, I am satisfied that it will not be oppressive or vexatious for these proceedings to continue here. Australia is not a clearly inappropriate forum. While the Hong Kong courts may be able to exercise jurisdiction, except under the Fair Work Act, there is no reason, relevantly, why this Court cannot or should not do so. Moreover, the Court has a duty under s 22 of the Federal Court of Australia Act to seek to avoid multiplicity of proceedings. That will be achieved by allowing these proceedings to remain on foot so that the Court can resolve the controversy between all of the parties in this one proceeding.

47    Once all the parties are here they will have obligations under Pt VB of the Act to cooperate in resolving the real issues in dispute between them as quickly, inexpensively and efficiently as possible. Indeed, I did not understand Tiger to argue that the proceeding in this jurisdiction is oppressive, per se. Rather it argued that, in substance, the claims that Mr Morris seeks to agitate against Tiger had been “tacked on” to his employment claim but, readily, could be dealt with discretely and without needing to be litigated in this Court.

48    In my opinion, a bifurcation (or worse) of the overall controversy is not consonant with what the authorities and s 22 of the Federal Court of Australia Act require. In any event, I do not consider that those other claims provide a sufficient reason to find that this is a clearly inappropriate forum or that I should exercise whatever residual discretion thereunder r 10.43(4) not to permit Tiger to be served in the Cayman Islands. As Mr Morris argued, a deal of evidence may be necessary if the parties choose to litigate whether or not MC2 was carrying on business here. However, that may arise in any event because the issue of the relationship between MC2 and McConaghy Australia may be relevant in the determination of the position Mr Morris occupied and which company owed him remuneration and in what capacity.

49    The substantial dispute between the parties appears to have been raised, or at least foreshadowed, in Mr Morris’ concise statement. That pleading and the originating application may be expanded in the future to include other causes of action, once all the parties are here, or it may be that the parties may consider engaging in mediation or another alternative dispute resolution process to arrive at a commercial and acceptable agreed resolution.

McConaghy Australia’s position

50    McConaghy Australia made a submission that, if I permitted the proceedings to continue in this Court against not just MC2, but also Mr Evans and Tiger, it would be exposed to a longer and more expensive hearing. It argued that the effect of s 570 of the Fair Work Act would be to prevent it obtaining any order for its costs were it successful, unless the conditions in s 570(2) were satisfied. McConaghy Australia argued that the case on the employment issue would take only a day, given the involvement of MC2 in that issue and the other ways in which Mr Morris’ entitlement to relief, if any, will need to be proved or contested. That is an optimistic view that I do not accept.

51    Having sought to expand the field of battle by invoking MC2’s position as the party actually or potentially liable to Mr Morris for his salary, that submission, while possibly apposite, is not a ground that I am persuaded to weigh in McConaghy Australia’s favour. It is, on the present evidence, a vehicle in the control of all of Mr Evans, Mr Porter and their allies, who are opposed to Mr Morris.

52    The fact is that, unfortunate as it is, the relationship between the parties who are presently joined in the proceedings appears to have broken down and requires, in the absence of consensual resolution, a court to finally determine the parties’ rights and make enforceable orders in respect of them.

Conclusion

53    This Court is not a clearly inappropriate Court in which to hear the controversy between all five parties and indeed I am comfortably satisfied that it is in the interests of justice and, having regard to s 22 of the Federal Court of Australia Act, that it should be heard in this Court. The anti-suit injunction that Tiger seeks in the Grand Court of the Cayman Islands would, as senior counsel for Tiger recognised, forestall that course were it allowed to proceed uninterrupted by the anti-anti-suit injunction continuing.

54    I am of opinion that Mr Morris is entitled to an order under r 10.43(4) to serve Tiger out of the jurisdiction in the Cayman Islands. It follows that I should dismiss Tiger’s application to discharge the interlocutory anti-anti-suit injunction. In the event that Mr Morris bore the onus of proving that that injunction should continue, I am also satisfied that it should.

55    For these reasons, I will order, first, that the applicant have leave under r 10.43(4) to serve Tiger in the Cayman Islands, secondly, any further service on Tiger be dispensed with, thirdly, Tiger’s notice of appearance filed pursuant to order 3, made on 19 October 2017, be unconditional, and fourthly, Tiger pay Mr Morris’ costs of the interlocutory applications heard on 14 and 15 February 2018.

Associate:

Dated:    28 March 2018

SCHEDULE OF PARTIES