FEDERAL COURT OF AUSTRALIA

Eurogold Limited v Oxus Holdings (Malta) Limited [2007] FCA 811

PRACTICE AND PROCEDURE – service out of the jurisdiction – whether federal claims a trivial or insubstantial aspect of the controversy – whether there is jurisdiction to hear and determine a common law claim ‑ whether there was material non‑disclosure in the course of the hearing of the ex parte application – whether orders giving leave to serve out of the jurisdiction should be set aside

CONFLICT OF LAWS – whether the Court is a clearly inappropriate forum

Australian Securities and Investments Commission Act 2001 (Cth) s 12DA

Trade Practices Act 1974 (Cth) ss 51AF(2)(a), 52, 82, 87

Arbitration Act 1975 (UK)

Eurogold Limited v Oxus Holdings (Malta) Limited [2006] FCA 1270

Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564

Beck v Spalla (2005) 142 FCR 555

WG & B Manufacturing Pty Ltd v Tesla Farad Pty Ltd (1999) 48 IPR 111

State of Western Australia v Vetter Trittler Pty Ltd (in liq) (Receiver and Manager Appointed) (1991) 30 FCR 102

Beck v Value Capital Ltd (No 2) [1975] 1 WLR 6

Janssen‑Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526

Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (No 2) (1993) 44 FCR 485

Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309

RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164

Arab Business Consortium International Finance and Investment Co v Banque Franco‑Tunisienne [1996] 1 Lloyd’s Rep 485

Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639

Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955

Henry v Henry (1995) 185 CLR 571

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538

Federal Court Rules O 9 r 7

EUROGOLD LIMITED (ACN 009 070 384) AND EUROGOLD HOLDINGS (BERMUDA) LIMITED v OXUS HOLDINGS (MALTA) LIMITED AND OXUS GOLD PLC

WAD 214 OF 2006

SIOPIS J

25 MAY 2007

PERTH

THE COURT ORDERS THAT:

1.                  The second respondent’s notice of motion dated 3 October 2006 is dismissed.

2.                  The second respondent is to pay the applicants’ costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     There is a gold bearing mineralisation deposit known as the Saulyak gold deposit near Dilove in the Ukraine.  Saulyak LLC, a company incorporated in the Ukraine, holds an exploration licence, an activities licence and an associated investment agreement which permits it to undertake exploration activities and trial mining in respect of the Saulyak gold deposit. The second applicant, a wholly owned subsidiary of the first applicant, holds all the issued shares in a company, Eurogold (Bermuda) Limited, which in turn, through subsidiaries, controls 99.72% of the issued shares in Saulyak LLC.  The first applicant is a publicly listed company, incorporated and carrying on business in Australia, whose shares are listed on the Australian Stock Exchange and the Alternative Investment Market (AIM), in London.

2                     On 30 April 2006, the applicants and the respondents entered into an agreement (the Sale Agreement) whereby the first respondent agreed to purchase the shares held by the second applicant in Eurogold (Bermuda) Limited – and thereby obtain control of Saulyak LLC and its rights in the Saulyak gold deposit.  Under the Sale Agreement the second respondent (Oxus Gold), guaranteed the performance of the obligations of the first respondent.  The first respondent is incorporated in Malta, and is a subsidiary of Oxus Gold, a public company, which is incorporated and carries on business in the United Kingdom.  The Sale Agreement contained a term which permitted the respondents to terminate the agreement in the event of a material adverse change in circumstances affecting the sale assets.

3                     On 28 June 2006, two days before the settlement date of the Sale Agreement, the respondents issued a notice in writing (the notice of termination) whereby they exercised a power to terminate the agreement on the grounds of a material adverse change in circumstances.  The notice of termination contained allegations which impugned the standing of the tenements held by Saulyak LLC and the quality and extent of the reserve at the Saulyak gold deposit.  Further, Oxus Gold repeated an allegation, made in the notice of termination, impugning the extent of the reserve of the Saulyak gold deposit in a statement which it published on its website.  On 11 July 2006, the first applicant made an announcement to the Australian Stock Exchange.  In that statement the first applicant referred to the allegations made by the respondents in the notice of termination and purported to refute the allegations.  By a letter dated 31 July 2006, the applicants advised the respondents that they regarded the notice of termination as repudiatory conduct which they accepted.  The applicants thereby terminated the Sale Agreement.

4                     On 31 July 2006, the applicants filed an application and statement of claim, in which four causes of action are pleaded against the respondents.  Two of the causes of action allege contraventions of the Trade Practices Act 1974 (Cth) (the TPA).  The first such cause of action alleges that the statement in the notice of termination impugning the standing of the tenements was misleading or deceptive, and that the first applicant has by reason thereof suffered and is likely to suffer loss and damage, being the likelihood of an increased difficulty in raising capital, and finding other parties to join with, or assist, it in developing the Saulyak gold deposit.  It is alleged that the respondents are liable for the loss and damage because the respondents knew when they issued the notice of termination, that the first applicant would be required to repeat the allegations publicly, by way of making a public announcement to the Australian Stock Exchange.  This cause of action is referred to as the termination representation cause of action.

5                     The second TPA cause of action is founded upon the publication by Oxus Gold on its website, which is downloadable in Australia, of a statement which refers to the issue of the notice of termination, and which repeats the allegation impugning the extent of the reserve at the Saulyak gold deposit.  The applicants allege that the representations made in that statement were misleading or deceptive, and that the first applicant has suffered and is likely to suffer damage because the statement impugns the value of an important asset of the first applicant.

6                     The third cause of action is that the applicants have suffered loss and damage by reason of the respondents’ alleged repudiatory conduct in sending the notice of termination and the applicants’ acceptance of that repudiation.  The fourth cause of action arises from a dispute between the parties as to the construction of a loan agreement dated 9 June 2006, which is a related dispute.

7                     On 18 August 2006, I granted the applicants leave to serve the application and statement of claim on each of the respondents out of the jurisdiction (Eurogold Limited v Oxus Holdings (Malta) Limited [2006] FCA 1270).  Oxus Gold now applies under O 9 r 7 of the Federal Court Rules, alternatively pursuant to the implied powers of the Court, for orders that the application be set aside, or alternatively, that the orders of 18 August 2006 be discharged.  In the further alternative Oxus Gold seeks orders that the proceeding be stayed on the basis that the forum is inappropriate.

8                     Oxus Gold did not rely on affidavit evidence challenging the factual allegations made in the affidavits of Mr Peter Lynton Gunzburg in support of the applicants’ claims.

9                     Oxus Gold’s contentions were directed to the following three issues:

(1)               whether the jurisdiction of the Federal Court had been properly invoked by reason of the two federal claims founded on contraventions of the TPA, which were pleaded in the applicants’ application and statement of claim,

(2)               whether in light of the non‑disclosure of information by the applicants on the ex parte application, the Court should exercise its discretion to set aside the orders for service out of the jurisdiction,

(3)               whether this Court is clearly an inappropriate forum.

(1)       Jurisdiction not properly invoked

10                  Oxus Gold submitted that the order for service outside of the jurisdiction should be set aside on the basis that the jurisdiction of the Court had not properly been invoked, by the pleading of the claims founded on contraventions of s 52 of the TPA and there was, accordingly, no accrued jurisdiction in the Court to consider and determine the common law or State claims, which were pleaded.  This is because, so it was submitted, the allegations made by the applicants of contraventions of the TPA by the respondents are “trivial or insubstantial”.  Oxus Gold relied upon four matters in support of its contention.

11                  Firstly, Oxus Gold said that the claims based upon the TPA are misconceived because s 51AF(2)(a) provides that s 52 of the TPA “does not apply to conduct engaged in in relation to financial services”.  Oxus Gold submitted that, the conduct in question, namely, the making of the representations about the Saulyak gold deposit, in the notice of termination, which were repeated in the announcement to the Australian Stock Exchange, and on Oxus Gold’s website, was “conduct engaged in in relation to financial services”.  Oxus Gold said that if allegations of misleading or deceptive conduct are to be made in respect of that conduct, the allegations should be made by reference to contraventions of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act), and not the TPA.

12                  Secondly, Oxus Gold contended that the termination representation claim was trivial or insubstantial, because the notice of termination was sent to the applicants, and there was no plea that the applicants relied upon the terms of the impugned representations contained in the notice of termination.

13                  Thirdly, Oxus Gold said that its publication of the impugned statements on the Oxus Gold website was conduct which occurred outside Australia, and there was no plea that the statement was downloaded in Australia.

14                  Fourthly, Oxus Gold complains that there was no plea of reliance by any person upon the impugned statements and, therefore, there was no plea of causation.  It was also contended that there was no plea of actual loss and damage by the applicants – all that was pleaded was the likelihood of future difficulties for the first applicant in relation to the exploitation of the Saulyak gold deposit.

15                  The question of the jurisdiction of this Court to consider and determine a justiciable controversy which contains both state and federal aspects, was considered by the Full Court in the case of Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 (Johnson Tiles).  In Johnson Tiles, the Full Court dealt with an application which pleaded a claim alleging misleading or deceptive conduct under the TPA, as well as a common law claim in negligence.

16                  The Full Court held that the cause of action based on misleading or deceptive conduct under the TPA was untenable, and declined, in effect, to permit the applicant to pursue the TPA claim.  The Full Court then considered the question of the jurisdiction of the Court to determine the common law claim based on negligence.  At 596, at [83], French J (with whom Beaumont and Finklestein JJ agreed) observed:

The matter in respect of which jurisdiction is defined embodies the entire controversy which parties bring for determination by the Court ‑ Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 512 (Mason J).  The content of the controversy depends upon what the parties have done, their relationships and the laws attaching rights or liabilities to their conduct and relationships.  It is not ascertained merely by reference to the proceedings which are instituted but may be illuminated by their conduct and by the pleadings in which issues and controversy are defined and claims for relief set out.  As the majority judgment in Fencott v Muller (1983) 152 CLR 570 observed (at 608):

         But in the end it is a matter of impression and of practical judgment whether a non‑federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.

17                  At 597, at [84], French J observed:

The judgment to be made in assessing the scope of the accrued jurisdiction extends to the relationship between the federal and non‑federal claims said to fall within it.  Further, the federal claim must be a substantial aspect of the controversy if that controversy is to attract federal judicial power.  As the majority said in Fencott v Muller at 609:

         A federal claim which is a trivial or insubstantial aspect of the controversy must, of course, itself be resolved in federal jurisdiction, but it would be neither appropriate nor convenient in such a case to translate to federal jurisdiction the determination of the substantial aspects of the controversy from the jurisdiction to which they are subject in order to determine the trivial or insubstantial federal aspect.  Again, impression and practical judgment must determine whether it is appropriate and convenient that the whole controversy be determined by the exercise of federal judicial power.

It is to be noted that the characterisation “trivial or insubstantial” is not an absolute attribute of the federal claim or a description of its strength or weakness but rather a description of its relationship to the controversy in respect of which jurisdiction is invoked.

18                  More recently, the Full Court in Beck v Spalla (2005) 142 FCR 555 at 560 has expressed the principles in the following terms:

It is well established that when the Federal Court has jurisdiction to determine a federal matter, it has authority to determine the whole controversy and not merely that part of it which attracted federal jurisdiction:  Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 472.  It is equally well accepted that if the federal question is decided adversely, is struck out, or is found not necessary to be decided the matter does not cease to be in the jurisdiction of the Court:  Burgundy Royale Investments Pty Ltd v Westpac Banking Corp (1987) 18 FCR 212; Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 and Moorgate at 476 (see generally, the article by Allsop J, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23 Australian Bar Review 29 at p 41 ff).

19                  Accordingly, the central question is whether the federal claim is a trivial or insubstantial aspect of the controversy.  The question is not to be assessed by reference to the strength or weakness of the federal claim as pleaded or whether it is liable to be struck out.  It is recognised that even if a federal claim is liable to be struck out, this does not mean that the Court has no jurisdiction to consider a remaining common law claim.  The inquiry is a wider inquiry.  The content of the controversy is to be assessed by reference to “what the parties have done, their relationships and the laws attaching rights or liabilities to their conduct and relationships”.  Whether the conduct underlying the federal claim is a trivial or insubstantial part of the whole controversy is a “matter of impression and practical judgment”.

20                  In this case, the two public companies have become embroiled in a dispute about whether there were reasonable grounds for making statements – which have become public ‑ impugning the standing and quality of the Saulyak gold deposit and the legal effect of the statements.  The quelling of the controversy involves the resolution of, amongst other issues, the question of whether the respondents are, on the grounds referred to in the notice of termination, entitled to terminate the Sale Agreement, and whether the respondents are liable for the damage allegedly suffered and likely to be suffered by the first applicant by reason of the statements in the notice of termination having been made public.  The making of the statements and whether those statements were based on reasonable grounds, or are misleading or deceptive, goes to the core of the controversy between the parties.  In my view, the federal claims cannot, therefore, be said to be a “trivial or insubstantial aspect of the controversy”.  It follows that I do not accept that it is inappropriate for the Court to exercise jurisdiction in respect of the resolution of the common law claims.

21                  Oxus Gold relied upon WG & B Manufacturing Pty Ltd v Tesla Farad Pty Ltd (1999) 48 IPR 111 (WG & B Manufacturing).  In that case, the applicant alleged that the four respondents had engaged in misleading or deceptive conduct in contravention of s 52 of the TPA, and that the remaining respondents had aided and abetted that contravention.  The non‑federal claims were somewhat imprecisely pleaded but were founded primarily on a breach of the duty of fidelity arising under contracts of employment, and on a breach of a commercial contract providing for the right to develop a brushless motor.  The respondents in that case submitted that the statement of claim disclosed no reasonable cause of action so far as the federal claims were concerned, and that the federal claims were not made bona fide.

22                  Finklestein J rejected the contention that the federal claims were not genuine, in the sense that they were colourable and only made for the purpose of fabricating jurisdiction.  However, he found that the federal claims were “ ‘trivial or insubstantial’ in the sense explained by the High Court in Fencott v Muller”.  The federal claims were made only by way of bald assertion in the statement of claim, and Finklestein J did not give detailed reasons for his conclusion.  However, it is clear that Finklestein J did not suggest the principles to be applied in determining that issue were other than as set out at [16] to [18] above.  WG & B Manufacturing is simply an illustration that the determination of whether a federal claim is a trivial or insubstantial aspect of the controversy is a matter of impression and practical judgment.

23                  There was also some debate as to whether Oxus Gold had actually put in issue whether the applicants’ conduct in making the federal claims was “colourable” in the sense that they were raised in bad faith.  It is not necessary to determine whether or not that issue was properly raised because, for the reason set out above, it cannot, in my view, be said that the making of the federal claims was colourable.  Both of the federal claims address the loss and damage suffered and likely to be suffered by the first applicant, a public company, from the publication to the investing public of statements impugning an important asset of the first applicant.

24                  Further, it does not follow from Oxus Gold’s submissions, referred to at [11] to [14] above, that the applicants have failed to demonstrate a prima facie case, in the sense referred to in State of Western Australia v Vetter Trittler Pty Ltd (in liq) (Receiver and Manager Appointed) (1991) 30 FCR 102, in respect of the two claims for misleading or deceptive conduct currently made by reference to contraventions of s 52 of the TPA.

25                  As to the first submission, it is unnecessary for me to determine whether the applicants are precluded by s 51AF(2)(a) from relying upon s 52 of the TPA in support of their claims.  This is because the same underlying facts would be relied upon in support of any claim that may be available to the applicants under s 12DA of the ASIC Act.  The applicants have said that they intend to amend to plead that they rely in the alternative on contraventions by the respondents of s 12DA of the ASIC Act.  Such an amendment would not result in claims of a substantially different nature being made to those in respect of which leave to serve out of the jurisdiction was granted (Beck v Value Capital Ltd (No 2) [1975] 1 WLR 6 at 15).

26                  As to the second submission, it is said that there was no plea that the applicants relied upon the relevant representation in the notice of termination.  However, the case made by the applicants is that the statements contained in the notice of termination have been made public and it is the impact of those statements on the investing public which have had, and are likely to have a deleterious effect upon the business of the first applicant.  It is not necessary for the party suffering, or likely to suffer the loss and damage, also to be the party relying upon the statements (Janssen‑Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526).

27                  As to the third submission, there are authorities which support the proposition that the publication of a misleading statement on the Oxus Gold website which is based in the United Kingdom, and which is downloadable in Australia, is capable of comprising conduct in Australia.  (See, for example, Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (No 2) (1993) 44 FCR 485; Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309).  Further, the unchallenged evidence of Mr Gunzburg is that he was able to download the statement in Australia.

28                  As to the fourth submission, the applicants have pleaded that the first applicant has suffered and is likely to suffer loss and damage by reason of the denigration by the respondents of the Saulyak gold deposit.  Mr Gunzburg has deposed that the statements have had a deleterious effect on the perception of the company in the market with the attendant potential to impact negatively on the applicants’ ability to exploit the Saulyak gold deposit.  Mr Gunzburg said that the asset has gained a “damaged goods” reputation in the market place.  There has been no challenge to the evidence of Mr Gunzburg on this issue.  Loss and damage to the standing, or reputation of a business is compensable under s 82 and s 87 of the TPA without the need to quantify the precise loss and damage (RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164).

(2)       Should the orders be set aside because of non‑disclosure

29                  The next issue was whether the Court should exercise its discretion to set aside the orders permitting service out of the jurisdiction on the grounds of a material non‑disclosure by the applicants in the ex parte application made before me.

30                  In the case of Arab Business Consortium International Finance and Investment Co v Banque Franco‑Tunisienne [1996] 1 Lloyd’s Rep 485, the applicant applied for leave to serve proceedings out of the jurisdiction to enforce an arbitration award under the international convention to which the Arbitration Act 1975 (UK) gives effect.  The respondent, Banque Franco‑Tunisienne, applied to have the leave to serve the proceedings out of the jurisdiction set aside, on the grounds that there had been a serious non‑disclosure of relevant material during the course of the ex parte application for leave to serve out of the jurisdiction.  At the hearing of the ex parte application, the applicant had referred to an order of a Tunisian court giving leave to enforce the award, but had not disclosed that the order had been reversed on appeal.  Waller J at 489 said:

[S]ince the application is made ex parte, there is an obligation of disclosure.  That obligation is to bring to the attention of the Court any matter, which, if the other party were represented, that party would wish the Court to be aware of in the context of exercising its discretion.

31                  Waller J at 490 observed that the form of the ex parte application was relevant.  He referred with approval to the following observation by Hobhouse J (as he then was) in The Jay Bola [1992] 2 Lloyd’s Rep 62 at 67:

There is a duty of disclosure on all ex parte applications but the extent of the duty and the gravity of any lack of frankness will depend in any given case on the character of the application.  At one end of the scale there are Anton Piller orders and Mareva injunctions where the consequences of the order may be unpredictable and irremediable and very possibly most serious for the proposed defendant:  there the very fullest disclosure must be made so as to ensure as far as possible that no injustice is done to the defendant.  At the other end of the scale are minor procedural applications where there may be no risk at all of prejudice, or at least none that cannot be fully made good by an order in costs.  Where the application is, as in the present instance, one of a character which would not prejudice the relevant party’s position…and would not cause them any loss or inconvenience that would not fully be made good by an order in costs, the duty of disclosure does not have such an extreme extent.

32                  Waller J at 490 went on to observe:

There is clearly a distinction to be drawn between deliberate non‑disclosure designed to deceive the Court and persuade it to grant an ex parte order where it otherwise would not; and innocent non‑disclosure where disclosure would in fact have made no difference to the order that the Court would have made.  Obviously, if a non‑disclosure has been of a serious kind and deliberate, the Court would wish to ensure that any advantage gained by the non‑disclosure should not be retained.

33                  Waller J found that there had been a non‑disclosure and that it had been deliberate but he said that he did not believe that there was dishonesty in the sense of a deliberate attempt to keep back a matter which it was appreciated might make a difference to the Court’s exercise of its discretion.  Waller J went on to find that in the context of the other evidence he did not believe that the disclosure would have affected his mind, or the mind of any other judge, in relation to the granting of leave.  In determining whether the orders should be set aside, Waller J went on to say at 491‑492:

It is important to emphasize the duty of disclosure.  That duty, as appears from the passage in the judgment of Mr. Justice Hobhouse as I have already quoted, applies on any ex parte application.  The Judge who has to deal with an ex parte application is dependant on points which should be drawn to his attention being so drawn clearly.  There should be no thought in the mind of those preparing affidavits that provided that somewhere in the exhibits or in the affidavit a point of materiality can be discerned, that is good enough.  Some of the submissions of Mr. Burton, Q.C. for ABCI, seemed to me to be so suggesting.  As part of the need to emphasize the duty it may be necessary to set aside orders to penalise those guilty, but in my view in this case the punishment that would in fact be inflicted on ABCI would be out of proportion to the offence.

34                  In Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639, Gillard AJA (with whom Ormiston and Buchanan JJA agreed) observed at 648, at [28]:

Modern cases have recognised that the court does have a discretion whether or not to set aside an order where there has been a failure to disclose material facts.

35                  Gillard AJA went on to observe at 650, at [33]:

In my opinion a court does have a discretion to not set aside an order despite a material non‑disclosure or misrepresentation of law or fact.  Setting aside does not follow as a matter of course.  Relevant to the discretion is whether the material non‑disclosure was serious or otherwise the importance or weight that should be attached to the omitted fact in the decision making process and also any hardship if the order was set aside.  The approach is different if the plaintiff has acted culpably in the sense that the omission to disclose relevant matters was done deliberately to mislead the court.  The most likely result in those circumstances would be that the order would be vacated.

36                  The non‑disclosure relied upon by Oxus Gold relates to the TPA claim arising from the republication by the first applicant of the misleading statement in an announcement to the Australian Stock Exchange.  The first applicant made an initial announcement to the Australian Stock Exchange about the notice of termination on 3 July 2006 and on 11 July 2006 it made a second announcement.  The TPA claim is founded on the content of the second announcement.  Mr Gunzburg’s affidavit exhibited the second of the Australian Stock Exchange announcements, but not the first.  It is the failure by the applicants to disclose to the Court the announcement of 3 July 2006, which is impugned.

37                  As I understand the submissions of counsel for Oxus Gold, the failure by the applicants to disclose the announcement to the Australian Stock Exchange of 3 July 2006 at the ex parte application was material, because it would have affected the decision which I made, that the applicants had demonstrated a prima facie case in respect of this claim under the TPA.

38                  Counsel for the applicants submitted that the first announcement was not disclosed because it was not material to the claim that it sought to make.  There was no intention to mislead the Court.

39                  In my view, there is nothing to suggest that the non‑disclosure was intended to mislead the Court.  I accept the submission of counsel for the applicants that the first announcement was not material to the claim made.  The first announcement was to the effect that the notice of termination had been served, but the parties were seeking to resolve their differences.  It contained a specific reference to one of the grounds relied upon by the respondents in the notice of termination.  The second announcement, on the other hand, advised that the parties were unable to resolve their differences, went on to state in greater detail the allegations made by the respondents in the notice of termination, and then sought to refute the allegations.

40                  The first statement was a statement in the nature of a provisional statement, made pending discussions attempting to resolve the difficulties between the parties.  The second statement was made after it became apparent the differences could not be resolved.  Because of the potentially adverse consequences to the first applicant, from the failure of the parties to resolve their differences, it is understandable that the first applicant would be more expansive in the second statement, and that it would attempt to refute the allegations in that statement.  I also note that the announcement of 11 July 2006 does refer in the opening paragraph to the fact that there had been a previous announcement of 3 July 2006.  There is nothing in the first announcement regarding the allegations in the notice of termination, which is not in the second announcement.  I am unable to conclude that the disclosure of the first announcement would have made a difference to the view to which I came, or to which any other judge would have come.

41                  Oxus Gold relied upon the case of Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 in support of its submission.  In that case Allsop J was, on an ex parte application, presented with a claim by the applicants in that case alleging fraud by the respondents, and an account of the underlying facts which suggested a fraudulent failure by the respondents to deliver a cargo.  His Honour made world‑wide orders freezing the assets of the respondents.  At the contested hearing, Allsop J set aside the freezing orders on the basis that there had been inadequate disclosure of the true facts which had been known to the applicants at the time of the ex parte application.  In my view, this case is distinguishable because of the difference in the nature of the non‑disclosure, and the serious import of the orders obtained.  The non‑disclosure in that case went to the very heart of the case presented in support of the serious allegation of fraud made at the hearing of the ex parte application.  Further, the non‑disclosure led to the making of orders of an extensive and intrusive import.

42                  Oxus Gold also criticised the applicants for not giving effect to their counsel’s statement made at the ex parte hearing, that if an application was made to set aside the orders for service out of the jurisdiction, the applicants would produce to the Court a better translation of the report of the Board of Geological State Inspection, than was in evidence before the Court at the hearing of the ex parte application.  However, I accept the submission of counsel for the applicants that because Oxus Gold advised in advance of the contested hearing that it did not intend to challenge at that hearing, the factual allegations made by Mr Gunzburg in his affidavit, it became unnecessary for the applicants to produce a better translation of the report.

43                  Accordingly, in my view, it is not appropriate to set aside the orders for the service out of the jurisdiction, on the grounds of non‑disclosure.

(3)       Clearly inappropriate forum

44                  The next issue was whether the orders should be set aside, or alternatively whether the proceedings should be stayed, on the basis that this Court is clearly an inappropriate forum.

45                  In Henry v Henry (1995) 185 CLR 571 at 587, Dawson, Gaudron, McHugh and Gummow JJ observed:

In Voth, this Court adopted for Australia the test propounded by Deane J in Oceanic Sun, namely, that a stay should be granted if the local court is a clearly inappropriate forum, which will be the case if continuation of the proceedings in that court would be oppressive, in the sense of “seriously and unfairly burdensome, prejudicial or damaging”, or, vexatious, in the sense of “productive of serious and unjustified trouble and harassment”.  It was also held in Voth that, in determining whether the local court is a clearly inappropriate forum, “the discussion by Lord Goff in Spiliada of relevant ‘connecting factors’ and ‘a legitimate personal or juridical advantage’ provides valuable assistance”.  In this last regard, Lord Goff of Chieveley expressed the view that legitimate personal or juridical advantage is a relevant but not decisive consideration, the fundamental question being “where the case may be tried ‘suitably for the interests of all the parties and for the ends of justice’ ”.  (References omitted.)

46                  Further, in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 566 (Voth) Mason CJ, Deane, Dawson and Gaudron JJ observed that:

In deciding whether it has been established that the chosen forum is clearly inappropriate, the extent to which the law of the forum is applicable in resolving the rights and liabilities of the parties is a material consideration.  In this respect Gaudron J stated in Oceanic Sun…that the selected forum should not be seen as an inappropriate forum if it is fairly arguable that the substantive law of the forum is applicable in the determination of the rights and liabilities of the parties.  We agree with Gaudron J that the substantive law of the forum is a very significant factor in the exercise of the court’s discretion, but the court should not focus upon that factor to the exclusion of all others.

47                  In Voth, the two competing jurisdictions were the State of Missouri in the United States of America and New South Wales in Australia.  In determining whether New South Wales was a “clearly inappropriate forum” the High Court engaged in a comparison of the connecting factors to Missouri and New South Wales.

48                  The factors relied upon by the applicants in support of the contention that this Court is not clearly an inappropriate forum are that:

(a)               the first applicant is incorporated in Australia, carries on business in Australia and that its shares are listed on the Australian Stock Exchange;

(b)               the Sale Agreement contains a clause prescribing the law of Western Australia as the governing law, and a clause whereby the parties submit to the non‑exclusive jurisdiction of the courts of Western Australia;

(c)               there is a juridical advantage to the applicants proceeding in this Court because Oxus Gold has a 42% shareholding in the first applicant, and the applicants could levy execution in Australia on Oxus Gold’s shareholding in Eurogold; and

(d)               the claims of allegedly misleading or deceptive conduct are based on breaches of a Commonwealth statute, being either the TPA or the ASIC Act.

49                  Oxus Gold contended that the High Court of England and Wales was an alternative available forum which would apply the substantive law to be applied for the resolution of this case.

50                  Oxus Gold submitted that there were a number of other factors that militated in favour of concluding that this Court was clearly an inappropriate forum.  Firstly, it was said that the property to be transferred under the Sale Agreement, being shares in Eurogold (Bermuda), was property that was not located within Australia.  In my view, this consideration carries no weight.  There was no evidence that there was any practical significance for the conduct of this litigation arising from the fact that the shares to be transferred are in a subsidiary company incorporated in Bermuda.  The insignificance of this factor is further evidenced by the fact that the parties themselves chose to submit to the non‑exclusive jurisdiction of the Western Australian courts, and chose the law of Western Australia to be the law governing the agreement pursuant to which the shares in question were to be transferred.

51                  Next it was said that the Saulyak gold deposit, which is the underlying asset, is located in the Ukraine.  For the reasons referred to in [50] above, no weight is to be given to this factor in itself.  However, matters of practical significance do flow from that factor.  This is because the allegations made by the respondents in the notice of termination relate directly to the exploration activities carried out in respect of the Saulyak gold deposit and the properties and features of that gold deposit.  They also concern the dealings with the local Ukrainian authorities in relation to the issue of reports and licences about the Saulyak gold deposit.  Accordingly, evidence will need to be given at the trial about these matters, and documents will have to be discovered, inspected and produced at the trial.  Therefore, the residence of the witnesses and the location of the documents relating to these issues are relevant considerations, with which I will deal below.

52                  It was also said that Oxus Gold is incorporated in the United Kingdom and conducts its business there.  This is a relevant factor and some weight must be accorded to this factor, particularly in light of the fact that Oxus Gold proposes, as an alternative forum, the High Court of England and Wales.  However, this factor must be weighed against the factor that the first applicant is a corporation which is incorporated and carries on business in Australia.

53                  Another factor relied upon by Oxus Gold was that each of the subsidiaries, namely, the first respondent and the second applicant are incorporated in Malta and Bermuda respectively.  There was no evidence, nor any suggestion, that these factors gave rise to any practical consequences to the conduct of the litigation in this forum.  I give no weight to this consideration in determining whether this Court is clearly an inappropriate forum.

54                  It is also submitted that the first applicant’s shares are also listed on the AIM in the United Kingdom and that it conducts business in the United Kingdom.  It was not suggested that this factor gives rise to any practical or juridical advantage to the respondents, which would only be available to them should the litigation be conducted in the United Kingdom.  I place very little weight on this factor.

55                  Mr Trew, an officer of Oxus Gold, in his affidavit of 2 October 2006, has referred to the names of a number of persons who he says may be required to give evidence.  Some of those persons reside in South Africa and the majority of them reside either in the United Kingdom or in states of the former Union of Soviet Socialist Republics.  Ms Allison on behalf of the applicants, has also identified persons she describes as “likely witnesses”, and 14 of those are resident in Western Australia.

56                  It was submitted by the applicants that the weight to be accorded to the question of the inconvenience arising from the residence of the respondents’ witnesses must be tempered by the fact that the proceeding is at a very early stage and the questions in issue have not been formally defined by the pleadings.  Whilst it is the case that the questions in issue have not been formally defined by the pleadings, it is plain, on the evidence, that the question of the nature and properties of the Saulyak gold deposit, dealings with the Ukrainian authorities, and progress made in exploring the Saulyak gold deposit are central to the controversy; and that there will be a need to adduce evidence at the trial going to those issues.  It is very likely, therefore, that a number of witnesses at the trial will be from countries other than Australia, and that others will be from Western Australia.  The consequence is that it is very likely that witnesses will be required to travel, regardless of whether the litigation is conducted in this Court or in the High Court of England and Wales.

57                  It is accepted that relevant documents are located in the United Kingdom, Australia and the Ukraine.  However, regardless of where the litigation is conducted, it will be necessary to transfer documents to the offices of the legal representatives of the parties at that location.

58                  It is also true that there would be some inconvenience associated with the respondents having to instruct and send documents to lawyers in Australia, and also with potential witnesses of the respondents having to consult with lawyers in Australia before the trial.  However, the same would be true, mutatis mutandis, in respect of the applicants conducting litigation in the High Court of England and Wales.

59                  In assessing the factors referred to above, it is clear that it will be burdensome for the respondents if the litigation is to be conducted in this Court, and burdensome for the applicants if it is to be conducted in the High Court of England and Wales.  However, the question that I must determine is whether it is “seriously and unfairly burdensome, prejudicial or damaging” on, or “productive of serious and unjustified trouble and harassment” to, the respondents if they were required to conduct this litigation in this Court.

60                  In making that determination, I take into account the fact that Oxus Gold is a company which is incorporated and carries on business in the United Kingdom, and also the inconvenience and burden relating to witnesses, documents and instructing lawyers referred to above, which will arise if the respondents are required to litigate this controversy in this Court.  However, I weigh against those factors the fact that this litigation relates to matters connected with the Sale Agreement, and the respondents agreed to submit to the non‑exclusive jurisdiction of the Western Australian courts, and also that the law of Western Australia would govern the Sale Agreement.  I also take into account the fact that the controversy involves claims by the applicants of contraventions by the respondents of a Commonwealth statute.

61                  When these matters are weighed against the matters weighed in favour of the respondents, I am unable to conclude that this Court is a clearly inappropriate forum in which to litigate matters arising in relation to the Sale Agreement.  This is because although, as I have already recognised, there are factors which make it burdensome for the respondents to litigate in Australia, it cannot be said that such burden is seriously unfair, prejudicial or damaging, or “productive of serious and unjustified trouble and harassment” in light of the fact that the same factors would make it burdensome for the applicants to litigate in the United Kingdom, and the respondents entered into an agreement, which chose the law of Western Australia as its governing law, and which specifically contemplated that in the event of a dispute about the agreement, they may become respondents to proceedings in Australia.

62                  Accordingly, I decline to set aside the orders for service out of the jurisdiction, or to stay the proceedings.

63                  Oxus Gold’s notice of motion is dismissed.

Associate:

Dated:         25 May 2007