In re Foreign Judgments Act [2009] FJHC 21; HBC576.2007 (29 January 2009)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC 576 OF 2007

BETWEEN:

IN THE MATTER OF FOREIGN JUDGMENTS ACT

AND:

IN THE MATTER OF A JUDGMENT OF THE SUPREME
COURT OF NEW SOUTH WALES BY HAWKER PACIFIC PTY LIMITED

Mr. P. Sharma for Applicant
Mr. T. Tuitoga for Respondent

Date of Hearing: 17th and 18th December 2008
Date of Judgment: 29th January 2009

JUDGMENT
(Setting aside of registration of foreign judgment)

Background:

[1] On 29th October 2007 Hawker Pacific Pty Limited as plaintiff obtained default judgment against Air Fiji Limited for the sum of AUD$766,020.70 inclusive of interest and costs in Supreme Court of New South Wales, Sydney Registry, Australia. On 21st December 2007, the judgment of the Court of New South Wales was registered in the High Court of Fiji pursuant to the provisions of Foreign Judgments (Reciprocal Enforcement) Act Cap 40. On 7th January 2008 the order of the High Court and Notice of Registration of Foreign Judgment were served on Air Fiji.

[2] On 22nd January 2008, Air Fiji filed a notice of motion seeking orders that the registration of the foreign judgment be set aside and stay of execution pending final determination of the application. The application was made on seven (7) grounds as follows some of which are repetitive:

"[i] That the Supreme Court of New South Wales is not deemed to be a superior court as proclaimed under section 3[1] and 9[3] of the Foreign Judgments [Reciprocal Enforcement] Act Cap 40 ["the Act"].

[ii] The judgment was registered in breach of section 3[3] of the Act.

[iii] That the Supreme Court of NSW had no jurisdiction to hear the case given that Hawker Pacific Pty Limited had not followed clause 26.2 of the Maintenance Agreement – [contrary to section 6[1][ii] of the Act].

[iv] That Air Fiji Limited was not served with a copy of the Writ filed by Hawker in the Supreme Court of New South Wales and was not given any opportunity to defend the proceedings – [contrary to section 6[1][iii] of the Act.

[v] That the judgment was obtained by fraud in that:

[a] the Writ was not served on Air Fiji Limited; and

[b] the Writ did not state that two out of the three installments required to be paid under the Maintenance Agreement had already been paid by Air Fiji Limited and the third was disputed;

[c] Hawker proceeded to file a Writ without invoking the dispute resolution mechanism under clause 26.2 of the Maintenance Agreement which it was bound to do.

[vi] That the Court did not have jurisdiction by virtue of section 6[3] [b] of the Act.

[vii] That registration of the said judgment is contrary to public policy in that:

[a] the Writ had not been served on Air Fiji Limited’

[b] the alleged debt is severely disputed [contrary to section 6[1] [v] of the Act."

[3] I had before me the following affidavits:

(a) Of Sialeni Vuetaki, Chief Executive Officer if Air Fiji sworn on 22nd January 2008.

(b) Of Belinda Gannon, Vice President – MRO Commercial of Hawker Pacific sworn on 7th March 2008.

(c) Of Jeanette Mario, training officer with Air Fiji sworn on 28th April 2008.

(d) Of Sialeni Vuetaki sworn on 28th April 2008.

(e) Of Neville Evans, Maintenance Repair & Overhaul Manager of Hawker Pacific sworn on 29th May 2008.

(f) Of Belinda Gannon sworn on 29th May 2008.

(g) Of Jope Tikoisuva, Bailiff sworn on 3rd July 2008.

(h) Of Sialeni Vuetaki sworn on 28th July 2008.

[4] I also had written submissions from the parties followed by oral submissions over two days.

[5] The application is made under Section 6 of the Act which provides that the registration of the judgment shall be set aside if the registering court is satisfied that the original court had no jurisdiction, or that the judgment debtor did not receive notice in sufficient time to enable the defendant to defend or that the judgment was obtained by fraud, or that the enforcement would be contrary to public policy in the country of registering court or that the rights are not vested in the person by whom the application for registration is made.

Issue 1 - NSW Court not a Superior Court:

[6] This ground was properly abandoned and not pursued at the hearing by the applicant.

Issue 2 - Non service of documents:

[7] Air Fiji alleges that the writ of summons and statement of claim issued out of New South Wales Supreme Court were not served on it. Therefore it had no idea of any court fixtures or court requirements - Sialeni Vuetaki’s first affidavit paragraph 21. Vuetaki further stated that on 29th August 2007 Hawkers solicitors had sent a draft statement of claim to Air Fiji and on 14th September had advised Air Fiji that the claim was going to be served soon.

[8] Jope Tikoisuva the bailiff states in his affidavit that he served the documents on 14th September 2007 on Air Fiji and the receipt of documents was acknowledged by one Jeanette Mario by signing on back page of the claim. He annexed a copy of signed acknowledgement by Jeanette Marion.

[9] Jeanette Mario in her affidavit dated 28th April 2008 says she "cannot recall a bailiff serving any legal documents on me on 14th September 2007" and she sought to see acknowledgment.

[10] Sialeni Vuetaki in his affidavit dated 28th July 2008 stated that Ms Mario told him that the signature on the acknowledgment is hers but the writing on it is not hers. That writing could well be the bailiff’s who would want to know the name of person served and time of service. The main thing is how Ms Mario’s signature appeared if she did not receive any documents. On the one hand the bailiff is speaking on basis of contemporary written material while Ms Mario is speaking on basis of no recollection.

[11] Mr. Sharma also submitted that the writ and statement of claim were issued on 11th September 2007, the covering letter is dated 12th September 2007 and fax dated 14th September 2007 from plaintiff’s solicitors says that statement of claim will be served soon. Mr. Sharma suggested that given the distances, it is unlikely that documents could be served by 14th September 2007. However, I must say that it is not an impossibility with courier services being available in this day and age.

[12] Mr. Sharma also submitted that there is no evidence that leave to serve out of jurisdiction was obtained from the New South Wales Supreme Court. While I would presume, without expressing a firm view, that the practice in New South Wales regarding service out of jurisdiction would be similar to ours, I presume that the court would enter default judgment only if it was satisfied that all procedural matters had been properly adhered to. It is Air Fiji which is making the allegation and it therefore should prove it. Therefore I come to the conclusion that this ground of non service fails.

Issue 3 – That the judgment was obtained without invoking dispute resolution mechanism:

[13] It is not in dispute that the subject matter of this action arises from an agreement dated 24th July 2006 – annexure C to the first affidavit of Sialeni Vuetaki.

[14] The parties in the agreement had expressly provided that the "agreement is governed by the laws of New South Wales, Australia. Subject to Clause 26, each party submits to the exclusive jurisdiction of the court’s exercising jurisdiction therein in connection with all matters concerning this agreement or its subject matter". So the governing law is that applicable in New South Wales – see Clause 32.

[15] Mr. Sharma as part of his argument submitted that the Hawker Pacific in proceeding with the action in court failed to abide by the dispute resolution process provided for in clause 26.2 of the maintenance agreement: paragraph 15-17 of his submissions.

[16] Clause 26-2 sets out various steps the parties are to take when a dispute in relation to the agreement arose. It sets out four steps in dispute resolution which are as follows:

"Any dispute between the parties in relation to, or arising out of, this Agreement, or the breach, termination, validity or subject matter thereof, or as to any claim in tort, in equity or pursuant to any domestic or international statute or law, must be resolved in the following manner (using the mechanisms in the order described below):

(a) the parties will first, in good faith negotiations, use their best efforts to resolve the dispute at the lowest appropriate organizational level within 14 days of the commencement of the dispute;

(b) a dispute between the parties which has not been resolved pursuant to sub-clause 26.2(a) must be referred to a face-to-face or telephone meeting of the Management Committee, which meeting must be held within 14 days of a notice in writing by the party seeking the meeting. The notice must summarise the nature and history of the dispute, faithfully state the position of each party and list the names of all personnel of the Provider and the Operator and/or the Aircraft Owner who are involved in the dispute;

(c) if the Management Committee is unable to resolve the dispute within 7 days of their first meeting to consider the dispute, the dispute must be referred by the Management Committee to Belinda Gannon, VP MRO Australia and to Isikeli Cakau, General Manager Engineering and Maintenance, who must meet in person or by telephone to discuss the dispute within 14 days of the matter being referred to them; and

(d) if the dispute is not resolved by the executives referred to in clause 26.2(c) within 7 days of their first meeting to discuss the dispute, the parties will have the dispute finally resolved by the means described in clause 26.3."

There were attempts made to settle the differences. These attempts are explained in the first affidavit of Belinda Gannon at paragraph 13. Annexure F to her affidavit is an E-mail from Neville Evans to Sialeni Vuetaki dated 1st June 2007 seeking a meeting the following week on a Thursday or Friday. Annexure G is another E-mail from Neville Evans dated 8th June 2007 thanking Mr. Vuetaki for taking time out to meet him and another representative from Hawker Pacific namely John Tilley.

[17] A number of E-mails followed from Hawker Pacific reminding Air Fiji of payment due. An E-mail dated 2nd August 2007 (annexure L to Belinda Gannon’s affidavit) from Paul Bisson to Mr. Vuetaki reminded him of outstanding debt of $858,352.94 and seeking resolution of the matter without going through legal action.

[18] There was response to above E-mail stating that the Manager Engineering of Air Fiji was questioning some of the invoices. It suggested that John Tilley and not Air Fiji was responsible for payment of those invoices since Air Fiji had not authorized the work.

[19] Hawker Pacific then sought payment for undisputed invoices and sought list of items in dispute.

[20] The parties were unable to settle the dispute despite a meeting between Neville Evans representing Hawker Pacific, John Tilley representing Acena Nominees and Sialeni Vuetaki of Air Fiji. There was therefore, a serious informal inter-party attempt to settle the dispute. Nothing more could be done. Clause 26 does not require reference of dispute to a mediator or an arbitrator before a party could litigate. There is no such pre-condition here.

[21] Mr. Tuitoga submitted that the only basis which the court could grant stay of proceedings was if there was abuse of process. That, however, is a matter of discretion for the court and the onus would be on Air Fiji to show abuse of process. In any event it is a matter which ought properly to be argued before the New South Wales Court which is the agreed forum.

Issue 4 – That the judgment was obtained by fraud:

[22] Any judgment whether it be domestic or of foreign court can at any time be challenged upon the ground that it was obtained by a fraud upon the court. A domestic judgment, however, can only be challenged on this ground if the facts upon which the allegations of fraud are based were not before the court and those facts were not known to the party seeking to challenge the judgment until after the hearing of original proceedings.

[23] English decisions support the proposition that the defence of fraud may be raised in enforcement proceedings, even though fraud was already adjudicated upon by the foreign court: Vadala v. Lowes – [1890] UKLawRpKQB 61; (1890) 25 QBD 310, where at page 318 Lindley LJ stated "if the fraud upon the foreign court consists in the fact that the plaintiff has induced that Court by fraud to come to the wrong conclusion, you can re-open the whole case even although you will have in this Court to go into the very facts which were investigated and which were in issue in the foreign court".

[24] In Syal v. Heyward – (1948) 2 KB 433 the English Court of Appeal went a step further. There the plaintiff an Indian moneylender had obtained judgment in the Court in India. The claim was that the defendants had borrowed 20,000.00 rupees from him and executed a promissory note to that effect. In November 1947 the judgment was registered in England. The defendants applied for registration of the judgment to be set aside on the ground that the judgment was obtained by fraud. In support of that application they filed an affidavit alleging that the amount they borrowed was not 20,000 rupees but only 10,800 rupees, the rest being composed of commission and interest.

[25] In Syal it was held that even though the defendants were aware of the fact that the claim made against them in foreign proceedings was false and did not defend the action abroad, they could raise the question of fraud in the enforcement proceedings in England. Therefore there was no need for new evidence being discovered after foreign judgment was entered.

[26] New Zealand courts have followed the principles as laid down in Vadala and Syal. The New Zealand Court of Appeal in Svirskis v. Gibson – (1977) 2 NZLR 4 held, and I rely on the head note, as follows:

(a) Where an action is brought on a foreign judgment the defence may be raised that the judgment was obtained by fraud of the plaintiff even though it may involve re-trying on the evidence questions already adjudicated upon by the foreign court.

(b) that the registration shall be set aside if the court is satisfied that the judgment was obtained by fraud and it was not necessary or essential condition of jurisdiction that new evidence be discovered.

(c) in considering whether to exercise the discretion the court must have regard to all the circumstances of the case such as whether the defendant is merely seeking a re-trial of the same evidence as that adjudicated upon by the foreign court and whether the defendant deliberately refrained from appearing in the foreign court but it is not necessary that the court should be satisfied that a prima facie case of fraud has been established as held in Syal.

[27] Australia it appears has also accepted the reasoning in Syal: see Norman v. Norman – (1968) 12 FLR 39, 47.

[28] It is obvious that this latitude given to the defence of fraud conflicts with the principle that a foreign judgment is conclusive as to merits. Canada has taken a narrower approach and has taken the view that a foreign judgment can only be refused enforcement in circumstances which would entitle the forum to set aside a domestic judgment, that is, where the fraud was unknown to the party alleging fraud at the time of the original trial: McDougall v. Accidental Syndicate Ltd – (1912) 4 DLR 727 Manolopoutos v. Pnaife – (1930) 2 DLR 169.

Issue 5 - That the enforcement of the judgment would be contrary to public policy:

[29] The notice of motion gave two reasons for the above proposition. Firstly, that the writ had not been served on Air Fiji. This I have already dealt with. Secondly, that the alleged debt is severely disputed.

[30] The relationship between the parties is governed by Maintenance Agreement being annexure C to the affidavit of Sialeni Vuetaki. Under this agreement, Hawker Pacific agreed to undertake inspections and perform repairs in accordance with Aircraft Work Scope: paragraph 5.1 of the agreement. Clause 15 deals with payment terms and invoicing. Under this clause Air Fiji was responsible for all items in work scope listed in Schedule 1 and 2 of the Contract except items number 7 and 8 and any additional service requests arising from this check.

[31] Acena Nominees (Owner) was responsible for costs of items 7 and 8 in Schedule 2.

[32] Additional survey and Quote (ASR) was to be completed by Hawker Pacific and invoiced on re-delivery of the aircraft and payable within 14 days of the receipt of invoice by the Air Fiji (Operator) and/or Aircraft owner.

[33] Hawker Pacific claimed a total of $758,352.84 under the agreement from Air Fiji. Air Fiji says that the total amount payable by it under clause 15.1 of the agreement was $344,459.00: paragraph 10. This is the total shown in clause 15.1. Air Fiji says that Hawker Pacific has not provided adequate documentation to show it has done certain work. It also submitted that the aircraft was released from Hawker to Acena the owner so Air Fiji had no opportunity to see if work had been done.

[34] It also says that it supplied spare parts to Hawker for which no credit had been given. This it says was not disclosed to the Australian Court. Hawker Pacific states that spare parts was a deal between Acena and Air Fiji and Air Fiji sent these parts to reduce the debt of Acena. Hawker’s position is that there was no documentation regarding parts and Hawker could not use parts in absence of documents as it could pose risk to traveling public. The purpose of documentation it says is to ensure that the spare part conforms to manufacturers requirements. These parts therefore remain unused.

[35] There is also dispute about payment of $445,000.00 by Acena to Hawker Pacific – paragraph 15 of Sialeni Vuetaki’s first affidavit. The response by Hawker Pacific is contained in paragraph 11 of the first affidavit of Belinda Gannon. She deposed that the sum of $405,000.00 being total of invoices 30480026674 ($175,000.00), 3040026686 ($70,000.00) and 30480026687 ($160,000.00) was initially issued by Hawker Pacific to Acena as at that time the Maintenance Agreement was not in place. As Acena was a company located in Australia, this sum attracted 10% Goods and Services Tax. Acena paid $445,000.00 but this was applied to discharge payment of obligations of Acena to Hawker Pacific. This payment was not for discharge of any obligation Air Fiji had to Hawker Pacific.

Should I set aside registration?

[36] One factor stands out in these proceedings and that is the parties had chosen New South Wales laws as the applicable law and submitted to its exclusive jurisdiction. On the basis of affidavits filed and arguments advanced I am satisfied that the writ had been served on Air Fiji and it either elected not to defend or may have overlooked entering appearance in New South Wales Court.

[37] It would be unwise of this court to impose Fiji’s jurisdiction, a different jurisdiction, onto the parties in trying to determine substantive issues. In none of the cases I referred to earlier in my judgment had the parties agreed in writing to a particular jurisdiction. Those cases therefore can be distinguished in that respect. The ends of justice can best be served if I stay enforcement of the judgment for a temporary period in which time Air Fiji can make an application to set aside the NSW judgment in the New South Wales Court.

Orders:

[38] Accordingly, I do not set aside registration but stay the enforcement until 15th March 2009 thereby giving an opportunity to Air Fiji to make the necessary application to set aside default judgment in NSW Court. Once that application is made, Air Fiji is at liberty to apply for extension of stay in the event the application is not determined by 15th March 2009 by the New South Wales Court.

[39] I make no orders as to costs at this stage.

[Jiten Singh]
JUDGE

At Suva
29th January 2009