FEDERAL COURT OF AUSTRALIA
KIMBERLEY METALS GROUP PTY LTD (ACN 114 123 572)
DATE OF ORDER:
THE COURT ORDERS THAT:
2. The first respondent pay the costs of the applicant, to be assessed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
SIN-TANG’S APPLICATION TO SET ASIDE OR STAY PROCEEDINGS
1 Sin-Tang Development Pte Ltd applies for service of an originating application upon it in Singapore to be set aside, the order granting leave for service to be discharged and the proceeding against it stayed. Sin-Tang contends that the relevant orders granted in favour of MOL Bulk Carriers Pte Ltd for service out of the jurisdiction are tainted by material non-disclosure and/or misrepresentation of key facts; alternatively, that no prima facie case can be demonstrated against Sin-Tang, or that the proceedings should be stayed on the basis of an arbitration clause in the relevant agreement.
2 MOL issued an originating application on 9 September 2015 against both Sin-Tang and Kimberley Metals Group Pty Ltd (ACN 114 123 572) (KMG), an Australian company. By interlocutory application filed two days later, MOL sought leave ex parte pursuant to r 10.43 of the Federal Court Rules 2011 (Cth) (FCR) to serve the originating application and statement of claim, both filed on 9 September 2015, on Sin-Tang in Singapore by engaging a solicitor admitted to practice in Singapore or that solicitor’s clerk to leave the documents at the registered address of Sin-Tang. Leave was granted on 22 September 2015.
3 MOL is an operator of bulk carriers and is headquartered in Singapore. MOL’s Australian representative, Mr Tony Pegum, operates from Perth. Sin-Tang is a corporation registered in Singapore. KMG is a developer and operator of iron ore projects. KMG is an Australian company, with a registered office in Western Australia.
4 On 28 June 2013, MOL as owner and KMG as charterer/shipper entered into a contract of affreightment for the shipment of iron ore (First Contract of Affreightment). As described more fully below, Addendum No 1 dated 5 November 2013 between MOL as owners and KMG as charterers amended the arbitration and choice of law clauses in the First Contract of Affreightment. Importantly for present purposes, the 2013 Novation Contract of Affreightment between Sin-Tang, KMG and MOL had the effect of creating the ‘Novated COA’ between MOL as owner and Sin-Tang-as charterer/shipper in place of KMG on the same terms and conditions as the First Contract of Affreightment and Addendum No 1. (Although I note that the copy of the Novation Contract of Affreightment annexed to the affidavit of Mr Jonathan Wyatt dated 10 December 2015 is undated and only executed by Sin-Tang and KMG.)
5 The statement of claim pleads that on or about 18 December 2013, MOL as owner and Sin-Tang as charterer/shipper entered into a contract of affreightment for the shipment of a minimum of four and a maximum of six iron ore cargos (Second Contract of Affreightment). The Second Contract of Affreightment included a term to the effect that KMG was to coordinate on behalf of Sin-Tang, as its agent, the various obligations and activities of Sin-Tang under or in connection with the contract of affreightment.
6 Braemar Seascope Pty Ltd was a shipbroker with its business located in Western Australia. Mr Chris Hall was employed by Braemar. Braemar acted for and on behalf of Sin-Tang in arranging contracts of affreightment with shipowners. Further, Mr David Gallagher was the chief financial officer of KMG, located in Perth, Western Australia.
7 On or about 3 March 2014, MOL claims that it, as owner and Sin-Tang as charterer/shipper, entered into a further contract of affreightment for the shipment of a minimum of 18 and a maximum of 21 iron ore cargos in the period 1 May 2014 to 30 April 2015 (Third Contract of Affreightment).
8 MOL now sues on this Third Contract of Affreightment.
9 It is asserted that the Third Contract of Affreightment consisted of an email chain, concluded by an email from Mr Hall of Braemar on behalf of Sin-Tang to Mr Pegum of MOL dated 3 March 2014 at 6.27 pm (Acceptance Email). The relevant email chain included the ‘Mainterms Recap’ under which, other than the commercial terms specified in the Mainterms Recap, which specified that the ‘A/C’ party was Sin-Tang and the terms were incorporated from the First Contract of Affreightment.
10 MOL asserts that the Third Contract of Affreightment was formed in Australia with both the sender and recipient of the Acceptance Email being located within Australia. Mr Hall’s email included an email signature for Mr Hall including the words ‘Braemar Seascope – Perth’. It included Australian contact telephone numbers. Mr Pegum on behalf of MOL was based out of MOL’s office in Beaconsfield, Western Australia.
11 KMG were also included in the email chain leading up to the Acceptance Email. The email sent by Mr Gallagher of KMG to Mr Hall on 3 March 2014 at 6.20 pm included an email signature stating an address in West Perth, Western Australia. MOL asserts that Braemar and KMG acted as agents for Sin-Tang in relation to entering into the Second Contract of Affreightment.
12 MOL says that in breach of the Third Contract of Affreightment, Sin-Tang did not nominate for shipment by MOL any iron ore cargos in the period 1 May 2014 to 30 April 2015, and MOL suffered loss and damage as a result of the breach. MOL claim against Sin-Tang for breach of the Third Contract of Affreightment, claiming that Braemar and KMG acted as agents for Sin-Tang in relation to the entry into the Third Contract of Affreightment.
13 Sin-Tang has taken the position that it is not a party to the Third Contract of Affreightment and that Sin-Tang did not appoint KMG as its agent or Braemar as its broker in relation to negotiating the Third Contract of Affreightment. There is a pleading from KMG to the contrary. KMG asserts it was the agent for Sin-Tang.
14 There is an alternative claim by MOL that if Sin-Tang is found not to have appointed Braemar and KMG as its agents in relation to negotiating the Third Contract of Affreightment, then KMG is liable for breach of contract or misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law.
15 The jurisdiction for the claim is pursuant to s 9(1) of the Admiralty Act 1988 (Cth), which confers jurisdiction on the Court in respect of proceedings commenced as actions in personam on a ‘maritime claim’. A maritime claim is either a proprietary marine claim or a general maritime claim pursuant to s 4(1) of the Admiralty Act. A maritime claim includes ‘a claim arising out of an agreement that relates to the carriage of goods or persons by a ship or to the use or hire of a ship whether by a charterparty or otherwise’: s 4(3)(f) of the Admiralty Act. The Third Contract of Affreightment was said by MOL to be an agreement relating to the carriage of goods by a ship by charterparty.
16 The initial relief sought and granted on an ex parte interlocutory basis was pursuant to Div 10.4 FCR which relevantly provides as follows:
In this Division:
convention, for a foreign country, means a convention (other than the Hague Convention), agreement, arrangement or treaty about service abroad of judicial documents to which the Crown in right of the Commonwealth or, if appropriate, in right of a State, and a foreign country are parties.
foreign country means a country other than Australia.
Hague Convention means the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965.
Subject to rule 10.43, an originating application, or an application under Part 7 of these Rules, 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 following table.
Kind of proceeding in which originating application may be served on a person outside Australia
Proceeding based on a cause of action arising in Australia
Proceeding based on a breach of a contract in Australia
Proceeding in relation to a contract that:
(a) is made in Australia; or
(b) is made on behalf of the person to be served by or through an agent who carries on business, or is resident, in Australia; or
(c) is governed by the law of the Commonwealth or of a State or Territory;
in which the applicant seeks:
(d) an order for the enforcement, rescission, dissolution, rectification or annulment of the contract; or
(e) an order otherwise affecting the contract; or
(f) an order for damages or other relief in relation to a breach of the contract
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
10.43 Application for leave to serve originating application outside Australia
(1) Service of an originating application on a person in a foreign country is effective for the purpose of a proceeding only if:
(a) the Court has given leave under subrule (2) before the application is served; or
(b) the Court confirms the service under subrule (6); or
(c) the person served waives any objection to the service by filing a notice of address for service without also making an application under rule 13.01.
17 Specifically, MOL relied upon r 10.42, item 3 FCR, pursuant to which a party may serve an originating application outside of Australia where proceedings are brought in relation to a contract made by an agent who trades or resides in Australia on behalf of a principal trading or residing out of the jurisdiction. On the basis of r 10.42, item 20 FCR, a claimant may serve any person who is outside of the jurisdiction if that person is a necessary or proper party to an action that has been brought against another party who has already been or is to be served. (There is no dispute as to the technicalities.)
18 In relation to the question of whether a prima facie case existed for service, the Court need not exercise the kind of scrutiny that would occur in the submission of a no case to answer at the conclusion of an applicant’s case at trial. Rather, it will be sufficient that there is placed before the Court material from which ‘inferences were open which, if translated into findings of fact, would support the claimed made’: Perdaman Chemicals & Fertilisers v ICICI Bank Ltd  FCA 175 (at ).
SIN-TANG’S APPLICATION TO SET ASIDE
19 The written submissions for Sin-Tang in support of its application to set aside the service and stay the proceedings were succinct. The submissions were further developed in oral argument, but the short position was (as I had already observed in exchanges on the ex parte application), that there was nothing in the documentation emanating from Sin-Tang which proved that KMG was an agent or proved that Sin-Tang was a party to this Third Contract of Affreightment. At least for the purpose of the initial hearing, regard was particularly had to the pattern of dealings between the parties, the copying of communications to persons who might have been representatives of Sin-Tang and the fact that discovery had not yet been given.
20 There is no doubt as to the duty of good faith on an ex parte application. Sin-Tang relies upon three matters essentially, which are said to be not disclosed. The first was an erroneous statement as to the relationship between Sin-Tang and KMG, the assertion being made that KMG was a wholly owned subsidiary of Sin-Tang. MOL now accepts that that assertion was wrong. There appears to be a corporate relationship of some sort in that Mr Du Zhenzeng is the majority shareholder of Sin-Tang Mining Pty Ltd, holding 97% of the shares. Sin-Tang Mining, in turn, holds 40% of KMG Resources Pty Ltd, which holds 100% of the shares in KMG. Mr Du Zhenzeng also, at relevant times, held 30% of the ordinary issued shares of Sin-Tang. Each of the parties, therefore, had a common ultimate shareholder of substance, but were not actually in a holding/subsidiary company relationship. Very little turns on this at this stage.
21 The second contended non-disclosure was as to the status of Mr Haidong. This was more significant. Statements made on the ex parte application were to the effect that Mr Haidong was (i) the director of Sin-Tang at the relevant times; and (ii) the representative of Sin-Tang in negotiations. The first statement was wrong and, as may be thought to be the case, was influential in the relief granted. But amongst the materials put before the Court were company extracts which, upon a detailed search, would have revealed the error that was advanced on submissions. Mr Haidong does appear to have been a director of both Sin-Tang Mining and KMG, but on the searches at least, not a director of Sin-Tang.
22 The second aspect of this statement was that Mr Haidong was the representative of Sin-Tang. This is one of the the underlying questions, as there is some indication that Mr Haidong was aware of some of the communications, albeit that communications to that effect did not necessarily emanate from Mr Haidong himself. Part of the case, although unexpressed as such, is to the effect that in light of all of the features of the subsisting relationship between the parties, particularly MOL and Sin-Tang, the failure to speak up and correct the assertion that Sin-Tang had given approval against some evidence that it was aware of the relevant assumptions suggests a continuation of the relationship for the Third Contract of Affreightment. Such silence, it is said, is consistent only with that relationship continuing. MOL relies on the instructions of Mr Hall, the shipbroker, that during his involvement in the negotiations with KMG, Sin-Tang and MOL, Mr Haidong often made the final decisions in relation to the negotiation of the contracts of affreightment. Examples of such emails are annexed to the affidavit of Mr Jonathon Wyatt sworn 10 December 2015. Mr Hall also informed the solicitors for MOL that his understanding was that Mr Haidong was a representative of Sin-Tang and its Singapore owners and was making those decisions on its behalf. Secondly, MOL says inferences should be drawn from Mr Haidong’s involvement in the Second Contract of Affreightment and subsequent dealing by Sin-Tang as principal (including direct payment of invoices by Sin-Tang). Thirdly, MOL refers to Mr Haidong’s directorship and, therefore, close relationship to Sin-Tang Mining and, fourthly, the content of the Acceptance Email, in which Mr Gallagher expressly refers to speaking to Mr Haidong for confirmation within the chain of emails.
23 Importantly, however, it was quite clear that the statement made by MOL to the effect that Mr Haidong was the representative of Sin-Tang was, by its very nature, only a statement of the conclusion formed by MOL on the available evidence. The basis for this conclusion was explained. In exchanges at the time, I indicated that I thought the support for the conclusion was not strong. It was nevertheless, in my assessment, a possibility that better evidence could emerge, particularly if there was discovery.
24 I was informed that there was dispute as to whether Sin-Tang accepted that it was a party to the contract. It inevitably followed that Sin-Tang were putting in issue the question of whether Mr Haidong was its representative. The Court could not have been and was not misled by the statement to that effect.
25 Thirdly, Sin-Tang also points to the fact that a solicitor’s letter recording that Sin-Tang did not submit to the jurisdiction of the Australian courts was not put into evidence. There was no relevant non-disclosure in this regard. It was clear that Sin-Tang did not so submit. There was a statement to that effect in MOL’s genuine steps statement, and the Court was also informed both orally and by other correspondence annexed to affidavits that at that stage Sin-Tang denied that it was a party to the contract.
26 I am quite unable to conclude that any of these errors and/or omissions where they may be fairly so described, separately or collectively, were intended to mislead the Court. There were sworn explanations to the contrary and as to the accidental nature of the errors. I accept the explanations.
Is there a prima facie case?
27 As to the prima facie case, I should reiterate that the approach I have taken to establishing a prima facie case is the same as that recently summarised by Edelman J in Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd  FCA 1453 (at -), where his Honour said:
50 The test for a prima facie case is well established. As McKerracher J explained in Perdaman Chemicals and Fertilisers Pty Ltd v ICICI Bank Ltd  FCA 175 , it is satisfied if, on the material before the Court, inferences are open which, if translated into findings of fact, would support the relief claimed: see also Western Australia v Vetter Trittler Pty Ltd (in liq) (1993) 30 FCR 102, 110 (French J); Ho v Akai Pty Ltd (in liquidation)  FCAFC 159; (2006) 24 ACLC 1,526, 1,529  (the Court).
51 It is also well accepted that a consideration of whether there is a prima facie case “should not call for a substantial inquiry”: Ho v Akai Pty Ltd (in liquidation)  FCAFC 159; (2006) 24 ACLC 1,526, 1,529  (the Court); WSGAL Pty Ltd v Trade Practices Commission  FCA 510; (1992) 39 FCR 472, 476 (Beaumont J); Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd  FCA 1224; (1996) 68 FCR 539, 549 (the Court).
52 The necessary inferences which would support the relief claimed will be found to be open more regularly than in circumstances such as a no-case application at the conclusion of proceedings because the applicant will not have had the advantage of discovery and other procedural aids: Bray v F Hoffman-La Roche Ltd  FCAFC 153; (2003) 130 FCR 317, 340  (Carr J); Perdaman Chemicals and Fertilisers Pty Ltd v ICICI Bank Ltd  FCA 175  (McKerracher J).
53 A vast amount of affidavit material was filed by Jasmin to prove that it had a prima facie case. This material included affidavits from:
(1) Mr Fitzpatrick, the solicitor for Jasmin, who filed four affidavits concerning communication between his firm and the solicitors acting for the respondents.
(2) Dr Starr, who filed two affidavits concerning matters including Jasmin’s business model as well as Jasmin’s business relationship with Trina US and the matters underlying the alleged breaches by Jasmin.
(3) Mr Parkins, who filed an affidavit concerning Jasmin’s business model, Jasmin’s relationship with Trina US and the matters underlying the alleged breaches by Jasmin.
28 The facts as presently advanced fall well short of proof of the case, but considering the relationship, including previous ongoing assurances and representations, the character of the contractual dealings and the apparent silence of Mr Haidong and Sin-Tang at the pertinent times about any changes, there are inferences open to suggest the relationship continued for the Third Contract of Affreightment. Of course, there is also evidence of a significant change (i.e. deterioration) in relevant market conditions.
29 Against this, most of the denials now from Sin-Tang are bare in their form, constituting little more than assertion at a time when a more fulsome response, were it available, could nip any inference in the bud.
30 MOL stressed at some length that, to consider the nature and character of the relationship between the parties in the proceedings, it was worth considering as background some basic principles concerning the operation of sales contracts expressed in commonly recognised nomenclature. I should say that this has not at this stage played a large part in my reasoning.
31 The nature of the former relationship was not put in issue, at least for the purposes of the application. Matters on which MOL rely are these:
(a) the contracts concerned were contracts which adopted on their face the expressions free on board (FOB) and cost and freight (CFR);
(b) it is necessary to consider the contractual documents so as to determine if anything in them would displace the normal incidents of those expressions. There is a strong inference that the incidents are consistent with the designation in the absence of express provisions that show that the parties have intended otherwise;
(c) the two basic features of a FOB term are:
(i) the seller pays the costs and takes the responsibility of putting goods ‘free on board’, in other words, baring full liability for the cost and safety of the goods until the goods are on board the vessel; and
(ii) that upon that being accomplished, delivery is complete and the risk of loss in goods is transferred to the buyer.
32 Duties beyond that point are commonly specified in the contract. In Lorenzon et al, Sassoon: CIF and FOB Contracts (5th ed, Sweet & Maxwell, 2012) (at [9-020]), FOB contracts are classified in three categories:
(1) where the buyer arranges and nominates the ship itself, being referred to as a ‘bare FOB’;
(2) where the seller makes the shipping arrangements as agent of the buyer – ‘classic FOB’ (consistent with the general position that for a sale to be on FOB terms, all services connected with the provision of the vessel and/or prepayment of freight or insurance, must be on account and risk of the buyer, and if undertaken by the seller, it will be as agent for the buyer); and
(3) where the seller makes shipping arrangements in its own name, prepaying the freight to recoup itself by invoicing the buyer – commonly known as ‘FOB with additional carriage services’, this being described as borderline to CFR.
33 The CFR contract is a variant of the well-known ‘cost, insurance and freight’ contract (CIF) with the difference being that insurance is arranged by the buyer, not the seller. One of the normal incidents of a CIF or variant contract is that it contains the core obligation for the seller as principal to procure the contract of affreightment under which the goods will be delivered to the destination contemplated by the contract.
34 This explanation is thought by MOL to be significant in understanding the relationship between the parties that had developed over the period of time when the Third Contract of Affreightment was agreed. By that time there was, as shown on the affidavit evidence: the First Contract of Affreightment of 28 June 2013, Addendum No 1 entered into on 5 November 2013, the Novation Contract of Affreightment which is a document executed, amongst others, by Sin-Tang, and the Second Contract of Affreightment dated 18 December 2013.
35 Clause 3.2 of the Novation Contract of Affreightment records:
For the purposes of construing the terms of the Novated [Contract of Affreightment] each reference in the Novated [Contract of Affreightment] to KMG shall be read as a reference to Sin-Tang. After the Novation Date, KMG will continue to co-ordinate on behalf of Sin-Tang (as Sin-Tang’s agent) the various obligations and activities of Sin-Tang under or in connection with the Novated [Contract of Affreightment] provided however that Sin-Tang will itself directly make all payments due from time to time under the Novated [Contract of Affreightment]. Sin-Tang authorises KMG to act on the basis of arrangements, communications, elections, notices and the like given by KMG in connection with the Novated [Contract of Affreightment] as though the same were made or given by Sin-Tang.
36 I pause to observe that this clause quite clearly, in my view, relates only to the Novation Contract of Affreightment, not to any subsequent agreement. However, MOL argues that the important aspect of the clause is that it establishes an express agency between KMG and Sin-Tang. Such a clause is consistent with the sales contract made between KMG and Sin-Tang, being on - what has been characterised by Sassoon: CIF and FOB Contracts as - ‘classic FOB’ terms. MOL stresses that it was within only a few weeks that the Second Contract of Affreightment was entered into by email exchange leading to a ‘recap’, a common means of contracting.
37 The Second Contract of Affreightment nominated MOL as owner and Sin-Tang as charterer/shipper. The relationship is consistent, MOL says, with the novation agreement that had been entered into just before the date of the Second Contract of Affreightment. It was entered into in a period when Sin-Tang was a principal under the First Contract of Affreightment (and would be so for another six weeks (unless the maximum nominations were reached prior to that date)) pursuant to the Novation Contract of Affreightment.
38 Is this enough? It will be recalled that MOL contends that the Second Contract of Affreightment came into existence as a result of a number of email exchanges in the period 11-18 December 2013, including an email from Mr Hall to Mr Pegum of 11 December 2013 referring to an invitation to offer for a contract of affreightment for the period 15 January 2014 to 30 April 2014. That email refers to the ‘A/C party’ as ‘Kimberley Metals Group Pty Ltd or Nominee’. Immediately below that is stated: ‘Nominee Sin Tang Development Group Pte Ltd’. Mr Pegum responded on the same day confirming that rates will be offered shortly. He also recorded: ‘I understood Sin-Tang will be the charterer but KMG will act as their scheduling and vessel vetting arm (as per the novation agreement). Is this your understanding going forward?’
39 Mr Hall responded to Mr Pegum on 12 December 2013 saying: ‘Correct Sintang [sic] will be the Charterers. But of course the Market place [sic] only know KMG hence putting it out as a nominee’.
40 There were also email exchanges between Mr Hall and Mr Haidong (who is described in the emails as ‘HD’) on 16 and 17 December 2013. What is recorded is the ‘firm offer’ from MOL, which refers to the ‘A/C party’ being ‘Sin-Tang Development Group Pte Ltd guaranteed by Kimberley Metals Group Pty Ltd’. MOL says that subject to the typographical error in the name of Sin-Tang, the reference to the relationship between the parties to the effect that Sin-Tang is the account party and KMG is the guarantor, is consistent with the novation agreement just entered into.
41 In the email chain of 16-17 December 2013, Mr Hall forwarded MOL’s offer for the first quarter of 2014 to Mr Haidong. Subsequently, Mr Hall countered MOL’s offer with terms including that the reference to KMG ‘guaranteeing’ Sin-Tang be deleted.
42 There were email exchanges on 18 December 2013 recording the ‘Recap’. The Recap also refers to Sin-Tang (again, misspelt) as charterer and MOL as owner. KMG is no longer referred to as being the guarantor, which MOL says indicates that at that point MOL had not insisted on the continuation of a guarantee.
43 The Second Contract of Affreightment also contained an additional clause to this effect:
KMG to co-ordinate on behalf of Sin-Tang (as Sin-Tang’s agent) the various obligations and activities of Sin-Tang under or in connection with the [contract of affreightment] provided however that Sin-Tang will itself directly make all payments due from time to time under the [contract of affreightment]. Sin-Tang authorises KMG to act on the basis of arrangements, communications, elections, notices and the like given by KMG in connection with the [contract of affreightment] as though the same were made or given by Sin-Tang.
44 Mr Lee Keat Peoy (Mr David Lee), on behalf of Sin-Tang, has provided an affidavit refuting any agency of KMG and denying that Sin-Tang was a party to the contract in question. MOL points to the fact that there is no evidence from Mr Lee explaining any ‘dramatic shift’ in the commercial position of Sin-Tang between the relatively close dates of the novation and the Recap leading to the Second Contract of Affreightment. That Second Contract of Affreightment related to a shipment period commencing on 15 January 2014 and concluding on 30 April 2014. It suggested, MOL contends, that the parties anticipated that the maximum number of nominations under the First Contract of Affreightment would be reached prior to 31 January 2014. There was a different rate with this Contract nominating a freight rate for North China of USD14.25 MT (with a half rate for cargo in excess of $52,500 MT). The rate was a substantial increase on the First Contract of Affreightment.
45 Of course, Sin-Tang may have known nothing about this clause or, more importantly, its substance, but purely on the face of matters, the contrary position is, at least, a realistic possibility. The additional clause is in the same terms as the relevant part of cl 3.2 of the Novation Contract of Affreightment and, again, consistent with the Second Contract of Affreightment between MOL and Sin-Tang being on ‘classic FOB terms’.
46 MOL says that at the time of the Third Contract of Affreightment Sin-Tang and KMG were still consistently dealing with each other on the same basis of sales FOB.
47 The email chain said to culminate in the Third Contract of Affreightment shows that on 26 February 2014, Mr Hall from Braemar, sent an email to various persons described as ‘HD/Chris CC Gags – Janette’ and should be inferred, MOL says, that the email was primarily between Mr Hall as sender and Mr Haidong as recipient but was copied to Mr Gallaher and to Ms Anderson. It included:
(a) a ‘firm offer’ from MOL; and
(b) a proposed counteroffer to be sent to MOL.
48 In the email, Mr Hall sought permission for the sending of the counter-offer. In the original ‘firm offer’ the ‘A/C’ (a reference to the account party) is described as ‘Sin-Tang Development Group Pte Ltd’. The terms of the counter-offer were silent as to who was the account party. MOL suggests this is because there is no proposed change to the account party and the only reasonable reading of the counter-offer is that it was limited to recording only matters that were the proposed changes in commercial terms from the preceding offer that had been made.
49 The top of the email appears to record an email from Mr Haidong which says ‘Please go ahead’ (emphasis added). MOL says this should be taken as an instruction from him to Mr Hall to make the counter-offer to MOL in the terms recorded. Further, as he is said to have previously represented Sin-Tang, there is no explanation as to any change in circumstances.
50 There is then some further correspondence in relation to the negotiated terms and on 3 March 2014, Mr Hall sent an email to Messrs Gallagher and Haidong which appears to have included in it the form of the terms which had been offered by MOL with four differences to MOL’s counteroffer. The first was a change to the freight rates which had been negotiated. The second was the deletion of the terms previously recorded as ‘Subject to Charterer’s Reconfirmation Declarable 24 hours after fixing Mainterms’. The third difference was the request from the owners in these terms: ‘Owners would prefer Charterers to declare subjects by 1700 hrs Perth 3rd March 2014 can this be achieved?’. The fourth was a change to the demurrage rate with Mr Hall enquiring as to whether that was acceptable.
51 Mr Gallagher responded to Mr Hall on 3 March 2014 saying:
Thanks for the follow up on the [Contract of Affreightment].
I have just spoken with HD and confirmed that KMG accept the negotiated terms and thank MOL for their review of terms.
We accept and look forward to a fruitful relationship with Tony and Tabuchi San
52 MOL stresses that this communication makes clear that Mr Haidong was the decision-maker and that the terms were being accepted by Sin-Tang as the account party under the Third Contract of Affreightment.
53 There is, however as I have pointed out, no suggestion that this communication was copied to Mr Haidong. There was no communication from Mr Haidong confirming its content, although the ‘please go ahead’ statement in Mr Haidong’s email of 26 February 2014 may suggest support for the terms.
54 The difficulty for MOL, to which I alluded at the first ex parte hearing, was that there is otherwise no indication in the email or other paper trails of any direct involvement or confirmation by Mr Haidong or anyone directly from Sin-Tang in the execution of the Third Contract of Affreightment. In essence, MOL’s case is that it should be assumed that nothing changed in terms of KMG representing Sin-Tang and being authorised to do so.
55 The 3 March 2014 email from Mr Gallagher to Mr Hall was on-sent by Mr Hall to Mr Pegum a few minutes later referring to Sin-Tang/KMG’s agreement to lift subjects (the so-called Acceptance Email). MOL says that by referring to Sin-Tang, Mr Hall suggests authorisation from it. Of course, there is no confirmation to that effect from Sin-Tang itself.
56 MOL also relies on the fact that KMG has filed a defence in the proceedings denying that it is a party to the Third Contract of Affreightment, suggesting that Sin-Tang is the contracting party. It is not surprising that KMG would take this position and does not add greatly to the weight of matters which might be relied upon by MOL in order to establish a prima facie case against Sin-Tang.
57 There are other indications of agency, MOL says. Specifically, the negotiations themselves were not consistent with KMG entering into the Third Contract of Affreightment as principal with the objective of incurring the expense of freight and seeking recoupment from Sin-Tang.
58 I can place only limited reliance upon the conclusory assertion of Mr Lee in his affidavit in response, when he says that Sin-Tang never had a relevant relationship with KMG, Mr Haidong or Braemar, as it appears clear on the documentation, having regard to the Novation Contract of Affreightment, Second Contract of Affreightment, and Third Contract of Affreightment that there was such a relationship. The assertions are also inconsistent with the agency created in KMG as seller as a result of the existence of contemporaneous FOB sale contracts. While I place little reliance upon it, the assertions are also inconsistent with the position KMG has taken in its defence.
59 Very little documentation has been produced by Sin-Tang. That might be consistent with an assertion, if it were made by Mr Lee, that for the purposes of the Third Contract of Affreightment, there is no relevant documentation which would disprove the connection, representation or agency, but it is equally possible on discovery, having regard to the history of relationships between the parties and the legal content of those relationships that further documentation would throw light on the question of whether representation by KMG did continue, as both KMG and MOL assert.
60 Accordingly, but for one important matter, there is a prima facie case.
STAY OF PROCEEDINGS – ARBITRATION CLAUSE
61 The one qualification to that observation is the argument advanced for Sin-Tang that, logically, as between MOL and Sin-Tang, that, even if MOL establishes that Sin-Tang is a party to the agreement, Sin-Tang is entitled to have the benefit of the arbitration clause in the Third Contract of Affreightment.
62 MOL contends that Sin-Tang, in doing so, is maintaining a ‘schizophrenic approach’ to the case. In other words, Sin-Tang cannot argue on the one hand that it is not a party to the Third Contract of Affreightment, and on the other hand say that, if it is, it is entitled to rely upon the arbitration clause. More specifically, on this topic, MOL’s argument is that the application for a stay is made under r 28.43 FCR which provides as follows:
28.43 Application for stay of arbitration
(1) A party to an arbitration agreement who wants an order under section 7 of the International Arbitration Act to stay the whole or part of a proceeding must file an originating application, in accordance with Form 51.
(2) The originating application must be accompanied by:
(a) a copy of the arbitration agreement; and
(b) an affidavit stating the material facts on which the claim for relief is based.
63 That Rule requires any person seeking an order under s 7 of the International Arbitration Act 1974 (Cth) to stay proceedings to file an originating application in accordance with Form 51. That application must be accompanied by the arbitration agreement and an affidavit stating the material facts on which the claim is based.
64 There is no such application before the Court.
65 MOL argues that without filing an application, any party seeking the exercise of the Court’s power to stay must accept that it is a party to the arbitration agreement before it can enforce its terms by seeking the stay. This is said to be entirely consistent with recognition that the relevant onus to establish the existence of the arbitration agreement rests on the party seeking the stay. Sin-Tang cannot, MOL argues, take advantage of the so-called doctrine of separability (the arbitration agreement is to be treated as a ‘distinct agreement’ from the balance of the contract) because the basis of its challenge to its liability under the balance of the Third Contract of Affreightment (that the agent who purported to buy as principal has no authority to conclude any agreement on its behalf), necessarily also applies to the arbitration agreement. MOL says that these are two quite inconsistent positions. I am not yet persuaded this is necessarily so.
66 Sin-Tang also appear to rely upon an ‘inherent power; in the Court to stay the proceeding. It says ‘having regard to all the material before the Court as a whole’ the proceeding ought to be stayed, relying upon Lightsource Technologies Australia Pty Ltd v Pointsec Mobile Technologies AB (2011) 250 FLR 63 (at ). However, this is an authority directed towards stay of proceedings to prevent an abuse of process. It is difficult to see that if the Court is satisfied that there is a prima facie case against Sin-Tang, that there could be an abuse of process given the following matters:
(a) the proceedings are plainly pursued for a monetary remedy, a regular outcome sought in the institution of proceedings;
(b) the proceedings bear a relevant relationship with the forum, the contract having been, arguably, made and breached in Perth;
(c) Sin-Tang does not (at least at this stage) seek to engage the statutory jurisdiction to enforce and thereby embrace the arbitration clause in the contract;
(d) there are no other proceedings on foot in which the issues before the Court are being litigated;
(e) the state of the record is that there are two parties that have potential liability under the Second Contract of Affreightment;
(f) Sin-Tang and KMG have had a sequential series of dealing with MOL up to and including, in the case of KMG, the Second Contract of Affreightment and potentially in the case of Sin-Tang, the Second Contract of Affreightment. It is certainly difficult to see that neither party could have any relationship with the contract;
(g) it would be preferable for matters to be litigated between the parties in the one proceeding to avoid the risk of inconsistent findings on similar subject matters;
(h) the forum is plainly appropriate for KMG, a Western Australian company; and
(i) Sin-Tang has not put forward any factual case to support a finding that this Court is a ‘clearly inappropriate’ forum (see CMA CGM SA v Ship 'Chou Shan' (2014) 224 FCR 384).
67 A similar question arose in Jasmin and, like Edelman J (at ), I am disinclined in this matter, in the absence of an application and full submissions, to stay the proceedings on the basis of the arbitration claim, even though I recognise there is power in a clear case to do so: see also Jasmin (at - and -).
68 At this stage, there is no application to stay the proceedings on the basis of the arbitration clause. In my view, such an application should be brought if it is sought to enforce the arbitration clause. It is not sufficient that it simply might be brought. Of course, if the application is brought, the position may be entirely different, having regard to the relevant authorities on the topic, including probably primarily Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45.
FORUM NON CONVENIENS
69 Sin-Tang’s application and brief written submissions did not rely on an argument as to forum non conveniens except to the extent that the possibility of a stay application might be so described. For the factual reasons above in relation to a stay of the proceedings or the absence of abuse of process and the analysis in Jasmin (at  et seq), had the argument been raised, I would have concluded that the proper law is the law of the forum.
70 As MOL has established a prima facie case, I would not set aside the service orders. Further, in the absence of a formal application, I will not stay the proceedings at this stage. The application will be dismissed with costs.