Federal Court of Australia

StoneX Financial Inc v Ambrose [2023] FCA 1568

ORDERS

THE COURT ORDERS THAT:

1.    The applicant give notice to the respondents that unless the respondents file an application to oppose the making of orders to enforce the award, the Court will make the orders at orders 5(a) to (c) below.

2.    The applicant give the notice referred to in order 1 by serving on them a copy of this order and the material relied upon by the applicant before the Court:

(a)    By registered post to 9 Andrea Avenue, Broadbeach Waters, Queensland, 4218;

(b)    By email to ‘biggra4@gmail.com’ and ‘lindawashbrook@gmail.com’; and

(c)    At such further address and in such further manner as the applicant submits is likely to bring the proceeding to the respondents’ notice.

3.    Any application by the respondents opposing the enforcement of the award be filed and served within 28 days of notice first being given to them under order 2.

4.    The originating application be listed for hearing on 31 January 2024.

5.    Upon satisfactory proof of notice having been given to the respondents, and in the absence of an application having been filed by the respondents in accordance with order 3 above, at the date listed in order 4 the Court will make orders as follows:

(a)    Pursuant to s 8(3) of the International Arbitration Act 1974 (Cth), it is declared that the applicant is entitled to enforce the award of the National Futures Association in Case No. 19-ARB-104 dated 12 May 2023 against Linda Ambrose and Graham Ambrose individually and as joint trustees of the Ambrose Superannuation Benefits Fund as if it were a judgment of this Court.

(b)    Judgment be entered in favour of the applicant against the respondents in the terms of the award, namely that the Ambrose Superannuation Benefits Fund, Linda Ambrose and Graham Ambrose are jointly and severally liable for the following award and shall pay to the applicant US$710,764.42 plus interest in the following amounts:

(i)    Compensatory damages: US$500,287.39

(ii)    Pre-award interest: US$137,79.03;

(iii)    Post-award interest accruing at a rate of US$85.67 per day from 14 April 2023 until the date the judgment is paid;

(iv)    Attorney’s fees: US$65,398.00; and

(v)    Costs and fees for filing, hearing and motion fees paid by the applicant to the National Futures Association: US$7,500.00.

(c)    The respondents pay the applicant’s costs of the proceeding.

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

REASONS FOR JUDGMENT

(delivered ex tempore, revised from transcript)

STEWART J:

1    This is the first hearing of an application for the enforcement of a foreign arbitral award as if it were a judgment or order of the Court pursuant to s 8(3) of the International Arbitration Act 1974 (Cth) (IAA). The hearing is without notice to the respondents as contemplated by r 28.44(3) of the Federal Court Rules 2011 (Cth) (FCR).

2    On the evidence before me at this ex parte stage of the two-stage proceeding and for the reasons that follow, I am satisfied that orders should be made in the form contemplated by Annexure B to the Court’s Commercial Arbitration Practice Note (CA-1) dated 21 December 2021. Those are orders that provide for service of relevant papers on the respondents, giving them notice that unless within a stipulated time period they bring an application to oppose the making of orders to enforce the arbitration award, such orders will be made on the return day. Given that there may be a contested hearing in due course about whether the award should be enforced, it is best that my reasons at this stage are briefly stated.

3    The applicant is a corporate body registered in Florida in the United States of America.

4    On or about 10 May 2016, the second respondent, Linda Ambrose, and the third respondent, Graham Ambrose, executed various documents to open a futures trading account on behalf of the first respondent, the Ambrose Superannuation Benefits Fund, with the applicant. One such document was an arbitration agreement that provides that any controversy or claim arising from the account shall be settled under the Code of Arbitration of the National Futures Association (NFA).

5    On 26 March 2019, the applicant commenced an arbitration against the respondents under the auspices of the NFA which is based in Chicago, Illinois. I infer that that is the seat of the arbitration. Although the hearing of the arbitration was set for Los Angeles, California, there was in the end no physical hearing because of the respondents’ default.

6    On 18 May 2023, the applicant obtained an award against the respondents, jointly and severally. Although it is not said so expressly, I infer from the facts stated above that the award was made in the USA. That being a country other than Australia, the result is that the award is a foreign award as defined in s 3 of the IAA. It would of course be helpful if arbitrators as a matter of course stated in their award where it is made.

7    Although the applicant has proved that the USA is a contracting state to the New York Convention (NYC) (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 330 UNTS 3, which is set out in Sch 1 to the IAA), that is unnecessary as Australia has not required that the enforceability of awards under the NYC be conditional on the country in which the award was made being a contracting state, as it could have done under Art I(3) of the NYC. In that regard, see Siemens WLL v BIC Contracting LLC [2022] FCA 1029 at [21].

8    The terms of the award are that the respondents are jointly and severally liable for the sum of US$710,764.42 comprising the following amounts:

(1)    Compensatory damages:     US$500,287.39

(2)    Pre-award interest:     US$137,79.03

(3)    Attorney’s fees:     US$65,398.00

(4)    Costs and fees of the NFA:     US$7,500.00.

9    The award also provides for post-award interest accruing at the rate of US$85.67 per day from 14 April 2023 until the date the award is paid.

10    On the evidence, the award remains wholly unsatisfied.

11    No application has been made by the respondents to challenge the award at the arbitral seat.

12    There are two evidentiary preconditions or requirements for the enforcement of a foreign award under s 9 of the IAA. Each of those is met in this case. First, with reference to s 9(1)(a), the applicant has produced to the Court a duly certified copy of the award. It is certified by an officer of the NFA and apparently signed by each of the three arbitral panel members.

13    Secondly, with reference to s 9(1)(b), the applicant has produced a duly certified copy of the arbitration agreement in that, Mr Ryan, the applicant’s senior legal counsel, has deposed to the existence of the agreement and has produced a true copy.

14    Those preliminary conditions to recognition and enforcement being met, the Court must enforce the foreign award, unless there is evidence of any of the circumstances mentioned as a ground for refusal to enforce the award in ss 8(5) and (7) of the IAA. At this stage, there does not appear to be any such ground for refusing to enforce the award.

15    Insofar as the requirements of the FCR are concerned, first, the applicant has stated on affidavit the extent to which the award has not been complied with as at the date of the application: r 28.44(2)(b)(i).

16    Secondly, r 28.44(2)(b)(ii) requires that the originating application be accompanied by an affidavit stating “the usual or last-known place of residence or business of the respondents”. In that regard, Mr Ryan’s affidavit states that the last known place of residence of the respondents is a physical address in Broadbeach Waters, Queensland. There is, however, no elaboration as to how Mr Ryan has that knowledge.

17    Mr Chesterman KC, who appears for the applicant, quite properly stated that the applicant has knowledge that the property at that address was, apparently, sold by the respondents in 2019. Although the second and third respondents may still live there, it is not known whether that is the case. The ordinary inference would be that after someone has sold a residential property, they no longer live there. There is no evidence before me at this stage of further inquiries undertaken by the applicant as to the current addresses of the respondents. Service at the address at Broadbeach Waters is therefore an infirm basis on which to give notice to the respondents.

18    The contemplated orders also provide for notice to the respondents at an email address. I infer from the evidence before me, in particular, correspondence from the NFA that has been tendered, that when the respondents’ US lawyer withdrew from representing them in the arbitral proceeding, he gave that email address to the NFA as being their address.

19    Although the NFA sent at least two emails to that address, it apparently received no response. I infer that since it sent more than one email to that address, it did not receive any form of bounce-back or non-delivery receipt from that address such as to indicate to it that that address was no longer, at least, operative. Of course, it is not known whether the respondents actually check or access that email address. Mr Chesterman has drawn to my attention a further email address for the respondents, which appears in their application for an account with the applicant back in May 2016. It is also not known whether that is or remains a valid email address for the respondents. It is appropriate that that address be included in the orders as an address at which notice should be given to the respondents.

20    In the circumstances, on the evidence presently before me, I am not satisfied that notice to the respondents at the proposed addresses, physical and email, will probably come to the respondents’ attention. However, there is now the opportunity for the applicant to undertake further inquiries and also, depending on the outcome of those inquiries, give notice to the respondents by additional means, and then to satisfy the Court on the next occasion that notice of the proceeding is likely to have come to the respondents’ attention. I have accommodated for that in the orders.

21    I should say more in relation to notice. It was not necessary for the applicant to serve its application for enforcement on the respondents for the purpose of the first, preliminary, hearing. That is because r 28.44(3) of the FCR provides that an application to enforce a foreign award under s 8(3) of the IAA “may be made without notice to any person”. The apparent purpose of that rule is to facilitate an expeditious two-stage process for the enforcement of arbitral awards in appropriate cases. If the Court is satisfied on a preliminary basis that an application to enforce a foreign award meets the statutory requirements, on the next occasion the Court may enforce the award without requiring formal service of the application provided that notice has been given to the award debtor: see para [2] of Annexure B to Commercial Arbitration Practice Note.

22    Orders concerning notice to the respondents in this context are in a sense similar to orders for substituted service under r 10.24 of the FCR. The Court may exercise its discretion to make an order for substituted service if it can be reasonably satisfied that the method of substituted service will bring the documents to the attention of the party to be served: see DHI22 v Qatar Airways Group Q.C.S.C. [2023] FCA 616 per Halley J at [23] and the authorities there cited. Rule 28.44(3) is no licence to proceed to final judgment on an arbitral award without satisfying the Court that notice of the proceeding is at least likely to have come to the respondents’ attention.

Associate:

Dated:    7 December 2023