Federal Court of Australia

Ayers Rock SkyShip Pty Ltd v Lindstrand Technologies Limited [2022] FCA 1208

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application dated 11 July 2022 be dismissed.

2.    The respondent pay the applicants’ costs as assessed or agreed.

3.    The parties confer and send agreed or competing procedural orders for the future conduct of this proceeding by email to the associate to Justice Bromwich within 14 days or such further time as may be allowed.

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

REASONS FOR JUDGMENT

BROMWICH J:

1    This is an interlocutory application by the respondent, Lindstrand Technologies Limited, for a permanent stay of this proceeding. The application is based upon a clause in a contract to submit to the exclusive jurisdiction of the English courts, and extant proceedings commenced first in the High Court of England and Wales arising out of the same factual substratum to which that clause applies. It is also based upon this being a clearly inappropriate forum. Alternative relief sought for dismissal of the proceeding and for a temporary stay was not separately pressed because an order for dismissal has no separate life or grounds to that for the permanent stay, and a temporary stay can most likely and more flexibly be accommodated by case management if this proceeding is otherwise to continue, or if the temporary stay application is re-opened if necessary.

Parties and key events

2    Lindstrand is a private limited company incorporated in England and Wales. It is a supplier of aerostats, being lighter-than-air aircraft, which include airships and blimps. The supply in question took place in Australia.

3    The applicants are two Australian companies:

(a)    the first applicant is Ayers Rock SkyShip Pty Ltd, previously called Astrosphere Pty Ltd (ARS);

(b)    the second applicant is Uluru StarShip Holdings Pty Ltd.

ARS and Uluru are both wholly-owned subsidiaries of Sky Leisure Pty Ltd, also an Australian company.

4    The key events can be summarised to the extent presently necessary in the following short chronology:

(a)    In the period between about 2010 and 2015 (relevantly, prior to 9 September 2015), and especially in the period from mid-2014, communications took place between ARS and Lindstrand concerning a particular aerostat product. ARS and Uluru allege that aspects of what was communicated by Lindstrand constituted misleading or deceptive conduct by reason of pre-contractual representations made, as set out in more detail below.

(b)    On 9 September 2015, ARS entered into a purchase agreement with Lindstrand to sell, supply and install a “SkyFlyer Captive Helium AeroStat” (SkyFlyer) at Yulara in the Northern Territory of Australia, also known as Uluru or Ayers Rock.

(c)    On 2 December 2015, Uluru was incorporated. The director of Uluru was also the director of ARS to whom Lindstrand had made pre-contractual representations concerning the SkyFlyer that was to be supplied and installed.

(d)    On about 8 December 2015, ARS, Lindstrand and Uluru entered into a novation deed by which the rights and obligations under the purchase agreement were discharged and an agreement was created between Lindstrand and Uluru on the terms of the purchase agreement, with effect from 8 December 2015.

(e)    The supply and installation of an aerostat by Lindstrand took place in the period between September 2017 and February 2018. A number of manned flights took place on the aerostat between about 9 June 2018 and about 8 October 2018.

(f)    On 8 October 2018, the aerostat was not being operated, apparently due to wind conditions. It was moored closer to the ground and manually aligned to the wind. At approximately 5.09 pm local time, the wind changed direction. The platform did not rotate so as to continue pointing into the wind, and a cross-wind hit the aerostat, resulting in extensive damage.

(g)    By reason of the aerostat being inoperable, ARS was in breach of its operator agreement and two business leases with Voyages Indigenous Tourism Australia Pty Ltd. Voyages validly terminated those contracts, as declared in Ayers Rock SkyShip Pty Ltd v Voyages Indigenous Tourism Australia Pty Ltd [2019] NSWSC 828.

5    ARS and Uluru allege that the aerostat that was supplied did not conform to what Lindstrand had represented would be supplied before the purchase agreement was entered into. The applicants allege that two of the main differences were that the number of passengers in the supplied aerostat was only six to eight, compared to the represented number of 31 passengers for the SkyFlyer, and the mooring platform was unable to rotate automatically to enable the aerostat to face into the wind, such that this had to be done manually.

6    Lindstrand denies making any misleading or deceptive pre-contractual representations and relies upon the terms of the purchase agreement, including in particular a clause limiting liability to terms, conditions and warranties contained in the purchase agreement (cl 15), an entire agreement clause (cl 18), a governing law clause (cl 21) and, most importantly, the following disputes clause (cl 22):

Any dispute which may arise between the parties concerning this Agreement shall be determined by the English Courts and the parties hereby submit to the exclusive jurisdiction of the English Courts for such purpose.

7    It is convenient to refer to the disputes clause above, cl 22, as the exclusive jurisdiction clause.

8    On 13 April 2021, Uluru and QIC Europe Limited, the insurer of the aerostat, commenced a proceeding against Lindstrand in the High Court of England and Wales (UK Proceeding). The aspect of the UK Proceeding brought in the name of Uluru was a subrogated action by QIC. In the particulars of the claim filed in that proceeding, both the warranty clause of the purchase agreement and extract from its operating manual are reproduced, alleged defects of and damage to the aerostat are pleaded, and loss and damage is alleged to have been caused by breach of contract, and alternatively, by reason of failure to repair, replace or otherwise remedy the aerostat. The loss and damage claimed is the value of the aerostat had it complied with all the requisite contractual standards, estimated by reference to the purchase price to be £1.1 million.

9    On 3 September 2021, ARS and Uluru commenced this proceeding against Lindstrand, principally claiming damages under s 236(1) of the Australian Consumer Law in both its federal iteration in Sch 2 to the Competition and Consumer Act 2010 (Cth) and in its New South Wales iteration in Part 3 of the Fair Trading Act 1987 (NSW) (together, the ACL), and not seeking any of the relief sought in the UK Proceeding. Thus, there is a degree of commonality as to the contract events, but not as to the relief sought, nor the period in which the alleged impugned conduct took place.

10    The concise statement in this proceeding pleads contraventions of ss 18(1) and 29(1) of the ACL, relying upon the presumption in s 4(1) that any representations made with respect to a future matter without reasonable grounds were taken to be misleading. The representations relied upon are pleaded in the concise statement as follows:

[17]    Lindstrand expressly, and/or by its conduct, made representations to ARS and Uluru about the SkyFlyer product, including about its qualities, composition, approval, performance characteristics and uses or benefits. By implication, Lindstrand also represented that it had reasonable grounds for those representations; that they were the product of the exercise of reasonable skill and care; and that it was presently able to manufacture or supply the SkyFlyer product as represented. At the time of making the said representations, Lindstrand was not in a position to manufacture or supply the SkyFlyer product as represented, including because it was not the subject of a sufficiently concluded design according to which the product could be manufactured. In those circumstances, the representations made by Lindstrand about the SkyFlyer product, including about its qualities, composition, approval, performance characteristics and uses or benefits, were misleading in the absence of appropriate qualification. It was misleading of Lindstrand to represent that it was presently able to manufacture or supply the SkyFlyer product as represented and that it had reasonable grounds for those representations. It was also misleading of Lindstrand to represent that it had exercised reasonable skill and care in making relevantly unqualified representations about the SkyFlyer product.

[18]    In the circumstances described, Lindstrand did not have reasonable grounds for representing, and it was misleading of Lindstrand to represent, that the product to be supplied to ARS and Uluru would comply with the specification for that product set out in the Operating Manual and that the product would be fit for the use for which it was intended. It did not have reasonable grounds for representing, and it was misleading of Lindstrand to represent, estimated dates by which the product to be supplied to ARS and Uluru was planned to be finished and ready for shipping from Lindstrand’s premises.

[19]    While engaged in trade or commerce, Lindstrand accordingly made misleading representations to ARS and Uluru in connection with the supply or possible supply of goods and with the promotion of the supply of goods; and engaged in conduct that was misleading or deceptive or likely to mislead or deceive. But for that conduct, ARS would have agreed to purchase a different aerostat to operate on Voyage’s land or another site.

11    ARS also pleads a claim in negligence:

[20]    Further, Lindstrand assumed the responsibility of supplying an aerostat product. It was aware that the product it supplied would be used by ARS for its business venture and that ARS relied on Lindstrand in that regard. In those circumstances, ARS was relevantly vulnerable to suffering harm to its economic interests if Lindstrand failed to exercise reasonable skill and care in the design, manufacture, supply and installation of an aerostat product. Lindstrand accordingly owed a duty of care to ARS in and about those matters. The aerostat supplied by Lindstrand and used by ARS for its business venture was damaged beyond repair by reason of Lindstrand’s negligence in and about its design, manufacture, supply and installation. An important factual consequence of the damage to the aerostat is described in paragraph 14 above.

12    The evidence indicates that the UK Proceeding has reached the point where witness statements were due to be exchanged on 15 July 2022, and expert reports by 26 August 2022, with alternative dispute resolution to take place before 9 December 2022. If the proceeding goes to trial, that will not take place before 10 March 2023. This proceeding is at an earlier stage, not having progressed beyond Lindstrand’s concise statement in response to the applicants’ concise statement, dated 25 July 2022 and lodged for filing later the same day, in part due to this stay application having been filed.

13    The applicants rely upon an independent expert opinion of Professor Ewan McKendrick QC (Hon), now KC, a distinguished British academic. The McKendrick opinion was tendered without objection or cross-examination, with each side relying upon parts of it to support their argument.

Authorities

Clearly inappropriate forum

14    In Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; 171 CLR 538, the plurality (Mason CJ, Deane, Dawson and Gaudron JJ), at 557 and 564, stated the test for a stay of Australian proceedings on forum grounds is whether it is a “clearly inappropriate forum”. This was derived from the judgment of Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; 165 CLR 197, recognising that in some situations, the “continuation of an action in the selected forum, though not amounting to vexation or oppression or an abuse of process in the strict sense, will amount to an injustice to the defendant when the bringing of the action in some other available and competent forum will not occasion an injustice to the plaintiff”: Voth at 556. The plurality in Voth, in adopting the approach of Deane J in Oceanic Sun as to the application of the test, said at 555 and 556 (footnotes omitted):

… Deane J. agreed with the caution uttered by Lord Wilberforce in The “Atlantic Star”, against construing “oppressive” and “vexatious” too rigidly in the context of dismissing or staying an action on inappropriate forum grounds. His Honour said that “‘oppressive’ should, in this context, be understood as meaning seriously and unfairly burdensome, prejudicial or damaging while ‘vexatious’ should be understood as meaning productive of serious and unjustified trouble and harassment”. His Honour also took the view that the words should be read as describing and characterizing the objective effect, on balance, of a continuation of the proceedings and a particular forum as the venue of proceedings rather than as describing the conduct of the plaintiff in selecting or persisting with that forum. …

…

… Deane J., looking to a wider range of potentially relevant factors, saw the function as involving “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”. In the result, Deane J. concluded that a defendant would discharge the onus of proof which rested on him if he established that, having regard to the circumstances of the particular case and the availability of the foreign tribunal, the local court is a clearly inappropriate forum for the determination of the dispute. The continuation of the proceedings in that forum would then be oppressive or vexatious. …

15    The rationale for the existence of the power to grant a permanent stay, and for its exercise, upon the ground of the local forum being clearly inappropriate is “an aspect of the inherent or implied power which, in the absence of some statutory provision to the same effect, every court must have to prevent its own processes being used to bring about injustice”: CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; 189 CLR 345 at 391. That said, the mere coexistence of proceedings in different countries does not constitute vexation or oppression, nor does seeking to obtain other or additional remedies, and such proceedings can only be viewed as vexatious or oppressive, even in the more limited Voth sense, if there is nothing to be gained by the additional local proceeding, in the sense of the overseas proceeding providing “complete correspondence” or “complete relief”: CSR Ltd v Cigna at 393-394.

Exclusive jurisdiction clauses

16    An exclusive jurisdiction clause, such as that in cl 22 of the purchase agreement, does not exclude or oust the jurisdiction of this Court, but may be a ground for refusing to exercise that jurisdiction, including by permanently staying a proceeding in this Court. However, a court may also exercise a discretion to refuse to enforce an exclusive jurisdiction clause in appropriate circumstances.

17    In Akai Pty Ltd v People’s Insurance Co Ltd [1996] HCA 39; 188 CLR 418, Dawson and McHugh JJ at 428, in dissent as to the result on the particular facts in that case, but not as to the relevant principles, referred to the separate judgments of Brennan J and Gaudron J in Oceanic Sun to the effect that a contractual agreement to submit to the jurisdiction of the courts of a foreign country will, in the absence of countervailing reasons, result in a stay of proceedings brought in this country to resolve disputes arising from such a contract, with “strong reasons” generally being required to exercise a residual discretion not to do so. Dawson and McHugh JJ endorsed the statement of principles as to the exercise of the discretion in the English High Court by Brandon J in The “Eleftheria” [1970] P 94 at 99 (also reported at [1969] 2 WLR 1073 at 1077; paragraph breaks inserted for ease of reading):

The principles established by the authorities can, I think, be summarised as follows:

(1)    Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the defendants apply for a stay, the English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not.

(2)    The discretion should be exercised by granting a stay unless strong cause for not doing so is shown.

(3)    The burden of proving such strong cause is on the plaintiffs.

(4)    In exercising its discretion the court should take into account all the circumstances of the particular case.

(5)    In particular, but without prejudice to (4), the following matters, where they arise, may properly be regarded:-

18    In Carnival plc v Karpik (The Ruby Princess) [2022] FCAFC 149, Derrington J, with whom Allsop CJ agreed on this issue, Rares J dissenting, reproduced the above principles from The “Eleftheria” at [374] and applied them in granting the stay sought from and refused by the primary judge (noting that an application for special leave to appeal has been filed from the Full Court’s decision). The facts and circumstances of that class action case are so different that the application of the principles in the Full Court’s consideration of that case does not greatly assist in the present case. In particular, it was found by the primary judge, and relied upon by the Full Court, that the ACL claims in that case would be heard and determined in a proceeding brought in the United States. I am satisfied that the McKendrick opinion establishes that this is not so for the UK Proceeding. This conclusion gives particular weight to a further aspect of Akai.

19    In Akai at 445, Toohey, Gaudron and Gummow JJ observed the following in relation to policy considerations applying to denying a stay that would deprive a party of a legitimate juridical advantage (omitting footnotes):

Akai responds to the application for the stay of the proceeding in New South Wales by asserting that s 54 of the Act confers upon it a legitimate juridical advantage in any forum in which the Act will be applied as part of the lex causae and that the Supreme Court of New South Wales is such a court. It would then be for People’s Insurance to show that in truth enjoyment by Akai of a legitimate juridical advantage is not confined to the New South Wales court and that, in particular, s 54 would be applied as part of the lex causae in the English courts. That task People's Insurance did not attempt. Accordingly, the matter is to be approached on the footing that (i) the English courts would apply as the lex causae the proper law, namely that of England, chosen in the first sentence of cl 9, and (ii) this would not include as a component any relevant provisions of the Act.

In Huddart Parker Ltd v The Ship “Mill Hill” Dixon J referred with approval to English authority which indicated that, where there was a special contract of this nature between the parties, a foreign jurisdiction clause, the courts begin with a firm disposition in favour of maintaining that bargain unless strong reasons be adduced against a stay, it being the policy of the law that the parties who have made a contract should be kept to it.

A stay may be refused where the foreign jurisdiction clause offends the public policy of the forum whether evinced by statute or declared by judicial decision. …

20    The Full Court (Middleton, Jagot and Moshinsky JJ) in Epic Games Inc v Apple Inc [2021] FCAFC 122; 286 FCR 105 observed in the last part of [82]:

The better view of the majority judgment in Akai at 445 is that if the party resisting the stay application on the basis of an exclusive forum clause establishes that there are aspects of Australian law that would not apply in the foreign court, the non-application of which involves depriving that party of a legitimate juridical advantage, that may comprise strong reasons not to grant a stay unless the party seeking the stay proves to the contrary.

21    The applicants develop the theme of the remedies under the ACL only being available in this Court, and not in the UK Proceeding, by relying upon three single judge decisions of this Court in which findings have been made concerning an exclusive jurisdiction clause.

22    In Hume Computers Pty Ltd ACN 003 154 827 v Exact International BV [2006] FCA 1440, Jacobson J, in the course of deciding an application for leave to serve outside the jurisdiction, and a motion for a stay of the proceeding, considered an exclusive jurisdiction clause in a distribution agreement in the following terms: “This Agreement shall be governed by the laws of The Netherlands and any and all disputes concerning the validity, interpretation or performance hereof shall be submitted to the competent courts of The Hague.” His Honour:

(a)    at [9], held that this was not the same as a clause containing the words “concerning the agreement”, finding that the clause was expressly limited to the validity, interpretation or performance of the agreement, and if the parties have chosen restricted language to describe the disputes which are to be submitted to the jurisdiction of a foreign court, then they will be held to it, citing the Full Court decision in Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1 per Emmett J at 23 (with whom Branson J agreed, Beaumont J agreeing as to the result);

(b)    at [12], held that this means that the clause had no application to disputes about misrepresentations said to have been made prior to the entry into the agreement;

(c)    at [14], held that while the proceeding was also founded on breach of contract, many of the representations pleaded were as to future matters;

(d)    at [18]-[23], held that even considering the clause upon the alternative basis that it did extend to pre-contractual representations, was not satisfied that the precursor to the ACL, being the corresponding provisions in ss 52 and 51A of the Trade Practices Act 1974 (Cth) would be applied by the foreign court in the Netherlands, finding this was a strong reason for refusing a stay;

(e)    at [22], cited Quinlan v Safe International Forsakrings AB [2005] FCA 1362 at [49], where Nicholson J found that an important factor which should overcome a pre-disposition in favour of a stay is whether a protective Australian statute would be avoided by forcing the plaintiff to sue in the courts of the nominated jurisdiction;

(f)    at [26], held that as the only forum able to deal with all the causes of action was this Court, that was a further reason to decline the stay.

23    It should be noted additionally that in Hi-Fert Pty Ltd, Beaumont J found that it was not necessary to decide whether the exclusive jurisdiction clause in terms applied to non-contract claims under the predecessor to s 18 of the ACL, being s 52 of the Trade Practices Act, because, as Wilson J (albeit in dissent on the question of this Court having jurisdiction over common law claims once exercising federal jurisdiction under the Trade Practices Act) had noted in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7; 148 CLR 457 at 543:

It will be observed that the jurisdiction which the Federal Court derives from this Act is wholly statutory. Parts IV and V create the duties and obligations, and Pt VI is an exhaustive enumeration of the remedies that are available in the event of a contravention of any of the provisions of those Parts. The Act provides a code which neither requires nor permits resorts to any other law in the determination of the rights, duties and liabilities which it creates.

24    In Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320, Middleton J refused an application for a stay until the determination of an English proceeding. The proceeding before his Honour alleged a contravention of s 18 of the ACL. His Honour found:

(a)    at [16], that the ACL claims were not and could not be within the English proceeding;

(b)    at [17], that many substantive issues and matters for factual determination may well be covered in both proceedings, and that determinations in the English proceedings may be relevant to assist in the determination of the proceeding in this Court, but the plea as to misleading or deceptive conduct was wider than the English proceeding;

(c)    at [19], even if, contrary to an earlier finding, there was an exclusive jurisdiction clause, the application for a stay should not succeed, citing Hume Computers, and also finding that the inability to bring the ACL claims in the English court was an overwhelmingly powerful reason for not allowing the stay.

25    In Home Ice Cream Pty Ltd v McNabb Technologies LLC (No. 2) [2018] FCA 1093, Greenwood ACJ had already granted an anti-suit injunction for a proceeding commenced in the United States after the proceeding had been commenced in this Court. There was an operative exclusive jurisdiction clause in favour of the United States court, which had the effect of prohibiting reliance upon the ACL, with conduct in Australia potentially unable to be litigated there due to the ambit of the local statute addressing consumer fraud and deceptive business practices. His Honour held at [19]:

… A proceeding in an Australian court will not be stayed in favour of a foreign jurisdiction (in reliance upon an exclusive jurisdiction agreement of the kind seen in cl 6.09) where there is a legislative protective provision in the local jurisdiction which would be defeated or avoided if a stay were to be granted of the proceeding. To do so would deprive the applicant of rights and entitlements to remedial orders should the applicant make good its claim of misleading or deceptive conduct on the part of the respondent: Commonwealth Bank of Australia v White [1999] 2 VR 681 at 704-5, Byrne J …

26    The conclusions reached in Faxtech and Home Ice Cream were relied upon by the successful appellant in Epic Games Inc v Apple Inc, a predominantly competition law case, in relation to the assessment of “strong reasons” required by Akai for not giving effect to an exclusive jurisdiction clause in the context of the otherwise mandatory application of provisions of Pt IV of the Competition and Consumer Act 2010 (Cth) (CCA), and s 21 of the ACL in Schedule 2 to the CCA (equally applicable to ss 18 and 29 of the ACL).

27    In Epic Games Inc v Apple Inc, Epic Games Inc had commenced a proceeding for injunctive relief in the USA in relation to enforcement of a licence agreement, and later the same year, a proceeding in this Court alleging Apple Inc had contravened competition provisions of the CCA (and, of lesser weight in that case, s 21 of the ACL). The Full Court set aside a stay of the Federal Court proceedings, giving primacy to the mandatory Australian laws, while also upholding the primary judge’s conclusion that the proceeding in this Court was not in a clearly inappropriate forum. The three errors on the part of the primary judge identified by the Full Court were:

(a)    failing to make a cumulative assessment of the strong reasons advanced by considering himself precluded by the exclusive jurisdiction clause from having regard to the CCA provisions not applying in an arbitration in the USA;

(b)    failing to recognise the juridical disadvantages of the proceeding in the US court, a factor flowing higher than inconvenience and flowing into substantive rights; and

(c)    failing to give weight to the fact that the interests being sought to be enforced in this Court went beyond the parties to the proceeding.

Lindstrand’s argument for a permanent stay

28    Lindstrand describes the UK proceeding and this proceeding as two fragmentations of the one litigation, with the former claiming damages for the cost of the aerostat and the latter claiming damages for all costs other than the costs of the aerostat. It relies upon the pleading in both proceedings that:

(a)    the purchase agreement contained an express written warranty that the aerostat would comply with the specifications set out in the operating manual;

(b)    on or about 8 December 2018, ARS, Lindstand and Uluru entered into the Novation Deed;

(c)    on 8 October 2018, the aerostat was damaged;

(d)    the aerostat was defective:

(i)    because it did not comply with the specifications set out in the operating manual;

(ii)    because of it not being fit for the use for which it was intended; and

(iii)    because of it not being the product of the exercise of reasonable skill and care.

29    Lindstrand therefore contends that this is clearly not the appropriate forum for hearing the applicants’ pre-contractual claims, asserting that if the contract claim in the UK Proceeding fails, the pre-contractual claims must also fail due to the factual context and contest being substantially the same, whereas success on the contract claim does not necessarily mean success on the pre-contractual claims, whether under English law, or under the ACL. I am not satisfied that failure on the contract claim necessarily means that the ACL claim must fail, nor that success on the contract claim may not be fatal to the defence of the ACL claim, because it will likely depend upon the basis for either conclusion being reached.

30    In answer to the applicants’ reliance on the ACL, Lindstrand:

(a)    relies upon the exclusive jurisdiction clause, arguing that this claim falls within the description of being a “dispute which may arise between the parties concerning” the purchase agreement, pointing to the reliance of the applicants on their particulars of loss and damage as being costs and expenses incurred and wasted by reason of entering into the agreement to purchase the aerostat in reliance on representations made by Lindstrand; and

(b)    asserts that the applicants have not established that there are “strong reasons” why that clause should not be enforced, relying upon the 2 September 2022 decision in Carnival plc v Karpik (The Ruby Princess) [2022] FCAFC 149, especially at [374] per Derrington J, Allsop CJ agreeing.

31    In relation to the claim in negligence, Lindstrand submits that it is unclear how it is alleged that a novel duty of care was owed to avoid economic loss in circumstances where there was a contract and novation deed and it in any event relies upon the fact that such a claim can be brought in the High Court of England and Wales, noting that this submission does not address the test of a clearly inappropriate forum, so in substance turns on the exclusive jurisdiction clause.

32    In answer to the “strong grounds” or “strong reasons” relied upon by the applicants to support discretionary refusal to enforce the exclusive jurisdiction clause, leading to that basis for refusing the grant of a permanent stay of this proceeding, Lindstrand submits:

(1)    the applicants have not established that Australian law concerning misleading or deceptive conduct could not be adequately applied by the High Court of England and Wales, with the evidence rising no higher than a real and significant risk that such claims would not be heard and determined by an English court – I have already indicated that I accept the McKendrick opinion as proving the contrary;

(2)    while the ability of a foreign court to apply Australian law to a dispute as a factor to be considered in determining whether there are “strong grounds” or “strong reasons”, the weight to be given to it will depend upon the centrality of Australian law to the real issue in dispute: The Ruby Princess at [382];

(3)    the claims under ss 18 and 29 of the ACL are not pivotal to these proceedings, but rather are no more than a “repackaged” claim of the breach of contract claims made in the UK proceeding, pointing to the following similarities in the language deployed in relation to the alleged breach of contract in the UK proceeding and the alleged misrepresentations in this proceeding:

33    Lindstrand asserts that there is nothing unique or special about the prohibition on misleading or deceptive conduct provided by the ACL, submitting that similar tort actions are well recognised in the United Kingdom and such claims would not be novel to the English courts, citing The Ruby Princess at [386] and the McKendrick opinion at [47] and [54]. It is submitted this hardly provides the necessary strong reasons for this court to exercise its discretion to refuse to enforce the exclusive jurisdiction clause which all the parties to this proceeding agreed to be bound by in the circumstances. Lindstrand submits that the ACL claims advanced by the applicants do not weigh in favour of the existence of strong grounds not to enforce the exclusive jurisdiction clause: see The Ruby Princess at [37] per Alsop CJ and at [387] per Derrington J.

34    In relation to the UK Proceeding and this proceeding, Lindstrand relies upon the principle from Voth, especially at 558, that a court may stay proceedings instituted before it where it established that the domestic forum is clearly inappropriate. Lindstrand submits that the problem that arises in this case is that the identical issue or the same controversy is sought to be litigated in different countries such that the continuation of one or the other should be seen to be vexatious or oppressive, citing Wang v Zhao [2012] NSWSC 706 at [22] and [24] per Ward J, as the President of the Court of Appeal then was. In terms of making good the proposition that the local forum is clearly inappropriate, Lindstrand relies upon the factors identified in Wang v Zhao at [27]:

The relevant factors to be taken into account when considering whether the local forum is a clearly inappropriate forum are summarised in Nygh’s Conflict of Laws in Australia (8th ed) as being:

(a)    Any significant connection between the forum selected and the subject matter of the action and/or the parties, such as the domiciles of the parties, their places of business and the place where the relevant transaction occurred or the subject matter of the suit is situated, and other factors affecting convenience or expense, such as the availability of witnesses.

(b)    Any legitimate and substantial juridical advantage to the plaintiff, such as greater recovery, more favourable limitation period, better ancillary procedures, or assets within the jurisdiction against which any judgment can be enforced.

(c)    Whether the law of the forum will supply the substantive law to be applied in the resolution of the subject case or whether the matter is governed by foreign law.

35    Lindstrand submits that the Australian proceedings are prima facie an abuse of process because the same controversy is to be litigated in both UK Proceeding and in this proceeding. It submits that there is no evidence that any of the factors identified in Wang at [27] reproduced above weigh in favour of the same controversy being litigated in both forums.

The applicants’ argument against a permanent stay

36    The applicants’ arguments against a permanent stay are:

(a) it is not open for them to rely on the ACL in an English court in the circumstances of this case, relying upon the McKendrick opinion:

(i)    at [52]-[60], concluding that it cannot be said that English law has any provision equivalent in effect to, or corresponding in effect with, the various provisions of s 4 the ACL concerning representations with respect to any future matter; and

(ii)    at [61]-[81], concluding that irrespective of whether the claim as to pre-contractual representations presently brought under the ACL is characterised as being contractual or non-contractual in nature, the applicable law that would be applied would be the law of England and Wales, not the ACL;

(b) only Uluru is in terms bound by the exclusive jurisdiction clause and it has not been shown that it applies to its claim under the ACL in these proceedings;

(c) even if the exclusive jurisdiction clause did apply to Uluru’s claim under the ACL, the fact that an English court would not entertain that claim supplies the requisite strong cause for not permanently staying its ACL claim in this proceeding;

(d) in the circumstances and notwithstanding the pendency of the UK Proceeding, this Court is otherwise not a clearly inappropriate forum for the claims under the ACL or the claim in negligence made by ARS.

37    The applicants contend that the only common ground between the UK Proceeding and this proceeding is by way of contextual facts, with the former being purely focused on the terms of the purchase agreement and the conduct alleged to constitute breaches of both express and implied terms. This proceeding, by contrast, has a focus on the pre-contractual representations made by Lindstrand, especially in the period from about mid-2014. The core of their case is set out at [17]-[19] of the concise statement, reproduced above at [10], being that that impugned conduct was misleading at the time it took place from about mid-2014, concluding not just before the purchase agreement was entered into, but before any breach of the contract was possible in early 2018, creating a temporal gap of well over three years.

38    The substance of the applicants’ case is that:

(a)    Lindstrand was not in a position to manufacture the SkyFlyer product as represented because there was no sufficiently concluded design at the time that the representations were made;

(b)    Lindstrand’s conduct caused agreements to be entered into with Voyages, giving it the right to operate a business of providing rides in the aerostat until 30 September 2021, with a five year option after that;

(c)    ARS suffered both wasted costs and loss of provides associated with that business under those agreements or later agreements;

(d)    had Lindstrand’s conduct not occurred, a different aerostat or passenger conveyance would have been purchased and the losses avoided;

(e)    Uluru also claims for wasted costs, excluding those sought in the UK Proceeding.

39    Upon the basis of the above, the applicants contend that there are no overlapping claims between the UK proceeding and this proceeding including the fact that ARS is not a party to and has no claim in the UK proceeding. Although Uluru is formally a party to the UK Proceeding, in substance it is a nominal party because that proceeding is conducted by QIC in the exercise of its rights of subrogation. The applicants contend that in any event they claim different losses in the two proceedings for different unlawful conduct at a different time. The alleged unlawful conduct of Lindstrand in issue in the UK Proceeding occurred from 21 February 2018, whereas the alleged misleading conduct in issue in this proceeding occurred before September 2015.

40    The applicants point out that they do not allege in this proceeding that the aerostat delivered by Lindstrand in 2018 did not comply with the specifications in the operating manual or that it was unfit for its intended use but rather that it was misleading of Lindstrand to make unqualified representations before September 2015 that its product would comply with the specifications set out in the operating manual and would be fit for the use which was intended. The substantial difference, according to the applicants, is that the product represented was not at that time the subject of a sufficiently concluded design to support the representations that were made by Lindstrand, which has nothing to do with the condition of the product delivered some years later.

41    Similarly, the applicants’ case in this proceeding is not that the aerostat delivered was not the product of the exercise of reasonable skill and care, but rather that the representations made by Lindstrand some years earlier were not the product of the exercise of reasonable skill and care. That is said to be different from the allegation made in the UK Proceeding that Lindstrand failed to supply and install the aerostat with reasonable care and skill. The applicants therefore contend that Lindstrand's characterisation of its ACL claims as a repackaging of its claims in the UK proceeding is incorrect.

42    The applicants contend that Lindstrand cannot make good its claim that this is clearly an inappropriate forum because:

(a)    its ACL claims can only be advanced in this forum, based on the clear evidence to that effect in the McKendrick opinion, and such a legitimate personal or juridical advantage in a forum weighs in favour of it being appropriate, citing Voth at 564-565, because the ACL gives the applicants better prospects of success than the more restrictive scope for litigating misrepresentations as to the future under English law, as identified in some detail in the McKendrick opinion; and

(b)    it is not oppressive for this proceeding to continue in the sense of being seriously and unfairly burdensome, prejudicial or damaging, or vexatious, citing Henry v Henry [1996] HCA 51; 185 CLR 571 at 587.

Consideration

43    The legal principles and competing considerations are set out in some detail above. What remains is the evaluative conclusion to be reached on the facts, circumstances and law.

Clearly inappropriate forum

44    I am not satisfied that Lindstrand has established that this Court is a clearly inappropriate forum. That is so at least for the reason that I am satisfied upon the basis of the McKendrick opinion that the ACL claims in this proceeding cannot be brought in England, and that the pre-contractual conduct remedies there, especially in relation to representations as to the future, are not as beneficial. There is no basis relevant to the forum choice for impugning the decision to commence this proceeding so as to advance ACL claims that cannot be brought in England, let alone in the limited subrogated contractual case comprising the UK Proceeding.

Exclusive jurisdiction clause

45    I am satisfied that the exclusive jurisdiction clause is cast in broad enough terms to capture pre-contractual representations that led to the entry into the purchase agreement, and most likely the novation deed. To that extent, I accept and prefer the arguments advanced by Lindstrand. However, the live question is not whether that clause applies, but whether there are strong reasons for exercising the jurisdiction not to enforce it by not staying this proceeding by reason of the absence of a clearly superior remedy under the ACL, especially in relation to representations as to the future. That reason for not granting a stay must be balanced against the starting point of giving effect to the contractual bargain, and the degree of likely factual overlap between the two proceedings.

46    The practical reality is that if the applicants are not able to maintain this proceeding, they will not be able to advance their ACL claims at all, either in the UK Proceeding, or in fresh proceedings that most likely would be required to be commenced. That means that the mandatory legislative provisions in the ACL are set at nought, and the norm of conduct in commercial and consumer arrangements that has been in place for close to 50 years, at least at the federal level, has no application, the law of England being in my view a poor substitute for the ACL causes of action for the reasons developed in some detail in the McKendrick opinion.

47    Given that I am satisfied that there are aspects of Australian law that would not apply in the UK, the non-application of such laws clearly involves depriving ARS of a legitimate juridical advantage. I ultimately conclude that the most powerful consideration in refusing the permanent stay sought by Lindstrand is the public policy in not allowing a lower standard of behaviour to be permitted in Australia for a foreign supplier of goods and services than would be possible for a domestic supplier. It follows that I am satisfied that ARS has established there is a “strong reason” for not granting a stay of proceedings. I therefore refuse the permanent stay sought by Lindstrand.

Conclusion

48    The interlocutory application must be dismissed with costs.

Associate:

Dated:    14 October 2022