Solaise Hotel Ltd v Pacific Consultants Ltd [1988] VULawRp 16; [1980-1994] Van LR 385 (14 December 1988)

[1980-1994] Van LR 385

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU

CIVIL JURISDICTION

Civil Case No. 134 of 1988

BETWEEN:

SOLAISE HOTEL LIMITED
Plaintiff

AND:

PACIFIC CONSULTANTS LIMITED
First Defendant

AND:

STEPHENSON & TURNER (SYDNEY) PTY LIMITED
Second Defendant

AND:

COLIN MINTON
Third Defendant

Coram: Chief Justice Cooke

Counsel: Mr P Crisp for plaintiff
Mr M Pembroke for defendants

JUDGMENT

[PRACTICE AND PROCEDURE - EVIDENCE - service out of jurisdiction]

On the 14th September 1988 an ex-parte summons for an Order for service overseas and for an Order that the intended Plaintiff may have leave to serve a specially Endorsed Writ of Summon on the Second Defendant out of the Jurisdiction was made in the Supreme Court before Acting Judge Sir Gaven Donne.

In support there was an affidavit of Mr Hudson, Solicitor for the Plaintiff stating:-

1. That in his opinion the Plaintiff had a good cause of action against the Second Defendant.
2. That he was informed by the Plaintiff and verily believes that the Second Defendant is to be found at its registered office in Sydney, New South Wales, Australia.
3. That he was also informed by the Plaintiff and verily believes that the Second Defendant is of British Nationality, being incorporated under the laws of the State of New South Wales in Australia, which is a member of the Commonwealth of Nations; and,
4. That the action is brought upon the facts set out in the proposed Writs of Summon, to recover damages from Second Defendant among others in respect of contracts made, and breaches of contracts and negligence committed by the Second Defendant within the Jurisdiction of the Court.

At paragraph 16 and 17 of the Writ of Summons (specially endorsed) for service out of the Jurisdiction there appeared the following details:-

"16. Further, at all material times Minton, and Pacific Consultants represented to the Plaintiff and to the world at large that they were agents for Stephenson & Turner (Second Defendant) and Second Defendant represented to the Plaintiff and to the world at large that it was the principal of Minton and Pacific Consultants", and,
"17. By an Agreement in writing made in April 1987 between Pacific Consultants and the Second Defendant of the one part as architects and the Plaintiff of the other part as client the said Pacific Consultant and Second Defendant agreed and undertook to provide, inter alia, to the Plaintiff the services referred to in the said agreement and to exercise reasonable skill and care in the performance of such services;"

This was all the material, the learned Acting Judge who heard the application had before him and in view of the facts set out in 16 and 17 above he granted the Order, as indeed I would have done so too if the matter was referred to me on such material.

The Agreement Exhibit 1 mentioned in the said 17, was not produced to the said Acting Judge. Mr Pembroke of the New South Wales Bar, Counsel for the Second Defendant instructed by Vasaris and Company now applies to the Court under Order 12 Rule 17 to set aside the summons and Order granting leave to serve the Second Defendant out of the Jurisdiction. His submission is that the affidavit in support and the pleadings did not disclose the true facts and accordingly it was against the fundamental principal to serve against a person out of the Jurisdiction.

Mr Pembroke mentioned that the Plaintiff who owned Solaise Hotel had the Hotel badly damaged by Typhoon UMA in February 1987. To restore the Hotel, Plaintiff engaged architects in Vanuatu. That at all material times Minton, Third Defendant managed and directed the First Defendant. The Plaintiff now says there was a relationship of agency between the First and Third Defendant and Second Defendant and attempts to make Second Defendant responsible for the action of the First and Third Defendants.

Mr Pembroke mentioned there was a claim made by Mr Hannam of Tretham and Company against Solaise Hotel in Civil suit No. 176/87. The claim was for the supply and installation of windows. As a result of that claim, Plaintiff in these proceedings joined the First and Third Defendants. There was no attempt to join Second Defendants as responsible for the First and Third Defendants. Civil Case 176/87 has been stayed as a result of these proceeding.

Mr Pembroke produced to the court a sworn affidavit of George Vasaris & Company who is the Solicitor representing both the First and Third Defendants and the Second Defendant. I accepted such affidavit as Mr Vasaris in my opinion is familiar with the position of the First and Third Defendants in that he represents them.

Mr Vasaris stated:-

1. I am the Solicitor for the First, Second and Third Defendants.
2. I am informed by Richard Mainwaring, a Director of the Second Defendant, and verily believe, that the facts and matters referred to in the following paragraphs are true.
3. The First Defendant is incorporated in Vanuatu and carries on business as architects in Vanuatu.
4. The Second Defendant is incorporated in New South Wales and carries on business in New South Wales as architects and interior designers.
5. The Second Defendant is not registered as a foreign corporation or recognised in any other jurisdiction other than New South Wales.
6. The Second Defendant does not carry on business outside Australia.
7. The First Defendant and the Second Defendant have no legal or corporate relationship. The Second Defendant does not hold any shares in the First Defendant legally or beneficially. The Second Defendant does not control the affairs of the First Defendant.
8. The Second Defendant has no financial interest in the First Defendant and does not share in the profits which the First Defendant may earn.
9. The ultimate beneficial shareholder of the First Defendant is Stephenson & Turner Hong Kong Limited ("Hong Kong").
10. The Second Defendant has no legal or corporate relationship with Hong Kong. The Second Defendant does not hold any shares in Hong Kong legally or beneficially. The Second Defendant does not control the affairs of Hong Kong.
11. The Second Defendant has no financial interest in Hong Kong and does not share in profits which Hong Kong may earn.
12. The Second Defendant:

• (a) is not, and never has been, incorporated in Vanuatu.
• (b) is not, and never has been, recognised as a foreign corporation in Vanuatu.
• (c) is not, and never has been, licensed to carry on business in Vanuatu.
• (d) does not, and never has, carried on business in Vanuatu.

13. Annexed hereto and marked "A" is a true copy of the annual Return of the First Defendant as filed with the Vanuatu Registrar and Receiver General on the 20th day of July 1987, in respect of the financial year ended 30th June 1986. Annexed hereto and marked "B" is a true copy of the financial statements of the First Defendant in respect of the financial year ended 30th June 1987. Annexed hereto and marked "C" is a true copy of a Form 4 as filed with the Vanuatu Registrar and Receiver General on the 13th day of May 1987.
14. The Second Defendant does not hold itself out, or represent to persons in Vanuatu, that it carries on business in Vanuatu.
15. The Second Defendant did not cause the First Defendant to be incorporated and set up in Vanuatu.
16. Hong Kong was responsible for effecting the incorporation of, and setting up, the First Defendant in Vanuatu.
17. The Second Defendant had no participation in, or control over, nor intervened in, the entry into the subject contract by the First Defendant with the Plaintiff at or prior to the time it was made.
18. The only relationship between the First Defendant and the Second Defendant is, and always has been, a professional relationship whereby architectural and administrative assistance, on an ad hoc basis, is provided, for a fee, by one to the other.
19. No such architectural or administrative assistance of any sort whatsoever was provided by the Second Defendant to the First Defendant in relation to the subject matter of these proceedings.
20. The Second Defendant has no record whatsoever in its financial books and records of any payment received by it in relation to any aspect of the subject matter of these proceedings.
21. The Second Defendant had no involvement in the preparation of any plans, or the provision of any costing advice, to the Plaintiff in relation to the subject matter of these proceedings. Further, the Second Defendant has done no work whatsoever of any kind in relation to the subject matter of these proceedings.
22. The Second Defendant did not, and never has, appointed the First Defendant as its agent to enter into the subject contract on its behalf, or any other contract for architectural services.

Six pages of Plans were produced to me which did not refer to the Second Defendant and is marked Exhibit 2. Again the Third Party notice issued in Case 176/87 between Trevor Hannam Plaintiff and Solaise Hotel Ltd, did not join the Second Defendant.

Further a letter dated the 2nd December 1987 from the Plaintiff to the Royal Australian Institute of Architects Exhibit 4 was produced and showed that the Plaintiff referred to contract with First Defendant and was in dispute with First Defendant and that a claim is made because Plaintiff considered First Defendant to be negligent. Mr Pembroke submitted that this Exhibit was important as the Plaintiff did not suggest any legal or contractual relation between Plaintiff and Second Defendant, but it did seem to suggest some agency between First and Second Defendants.

Mr Pembroke submitted and indeed I am well aware of the fact particularly with accounting firms such as Cooper and Lybrand, Moore Stephens and Peat Marwick and Company, who have a firm in all the big cities of the world but accept no responsibility for the firms with the same name throughout the world. They certainly help each other but have no contractual rights between them.

Finally Mr Pembroke referred me to well known cases such as, The Hagen Case (1908) Probate Division in the Court of Appeal Page 189 Farwell J. at page 201 refers to the custom required in exercising the discretionary power of giving leave to serve notice of a Writ on a foreigner out of the Jurisdiction.

Farwell stated:

"That as the application is made ex-parte, full and fair disclosure is necessary, as in all ex-parte application, and a failure to make such full and fair disclosure would justify the Court in discharging the Order even although the party might afterwards be in a position to made another application".

Again in the case of George Monro Ltd v American Cyanamid and Chemical Corporation [1944] 1 KBD 432 at page 441 Duparoq L.J. stated when referring to jurisdiction in respect of service abroad. He says:-

"When exercising that jurisdiction it should always be remembered that an application under the rule should never be granted without full knowledge and careful consideration of all the relevant circumstances."

He agrees with the observations of Farwell J. in the Hagen case.

Again in the case of G.A.F. Corporation v Anchem Productions Inc. (1975) 1 Lloyds Law Reports 601, Mr Justice Megarry at page 604 and 605 sets out five points which the authorities establish:

1. There is an overriding consideration that it is a very serious question whether a foreigner ought to be subject to the inconvenience of having to come to this country in order to defend his rights: the Court ought therefore to be exceedingly careful before allowing a Writ to be served out of the jurisdiction.
2. The onus lies on the plaintiff to satisfy two requirements, namely, that the case falls within at least one of the limbs of 0.11 of 1, (Our Order 11 R. 3), and further that the case is otherwise a proper one for service out of the jurisdiction.
3. In deciding whether a case falls within one of the limbs of r.1, the Court considers the substance of the matter and not merely whether the case technically falls within the letter of the limb in question. The case must be clearly within both the letter of the rule and the spirit.
4. If on the construction of any of the paragraphs of 0.11, r.1, there is any doubt, it ought to be resolved in favour of the foreigner, Lord Tucker citing The Hagan casestated "that it may be that the benefit of the doubt has to be given only on matters of construction, but I should have thought that it would be consonant not only with the general approach of the Courts to 0.11, but also with the burden of proof for the foreigner to be given the benefit of the doubt generally."
5. Even if it is established that the case falls within the rule, it is still a matter of discretion for the Courts, whether leave should be given.

Another head which could be added under discretion is whether the Plaintiff, in support of his ex-parte application to serve a Writ out of the jurisdiction made the full and fair disclosure that ex-parte applications require. Failure by the plaintiff to make such disclosure will of itself justify the Court in discharging the Order though the Plaintiff may thereafter make another application (The Hagen Case).

There is then the Australian Case of:

"Sheldon Pallent Manufacturing Co. Pty Ltd v New Zealand Forest Products Ltd [1975] 1 NSWLR 141".

Page 141 Cantor Q.C. Master states:

"When the original ex-parte Order was made the terms of the agreement was not before the Court."

Also in this case Counsel for the Plaintiff did not produce to the Acting Judge Exhibit I, the agreement made between Solaise Hotel Ltd and Pacific Consultancy.

Mr Voss counsel before the master submitted that there has been no full and fair disclosure on the ex-parte application, and that there was a lack of frankness in the material which was placed before the court. In that case the court made an Order discharging the Order of the Court giving leave to serve the originating process outside the State of New South Wales.

For the Plaintiff Mr Crisp who is a counsel of the Victorian bar appeared instructed by Mr Hudson of Hudson & Company in his reply contended that the Court has a discretion to grant and will not go into the merits of the case. He further submitted that the affidavit filed by the Second Defendant was not sworn by a Director of the firm but on information and belief of Mr Vasaris. I have already stated that Mr Vasaris who appears for all defendants would have been aware of the details and further he stated that he was informed by Richard Mainwaring a Director of the Second Defendant. I accept such affidavit for the reason heretofore explained.

Mr Crisp tendered Exhibit 5 which is an affidavit of the Plaintiff. The Affidavit contains hearsay evidence which I am not prepared to accept. Affidavits by the parties referred to in the said affidavit could have been produced and may have been accepted.

Exhibit 5 (1) tendered showed the names of new directors of the First Defendant effective from 1st May 1987 whereas the agreement Exhibit I was made on the 8^th April 1987.

Exhibit 5(2) showed the Directors of Second Defendants, one of whom was a Director of First Defendant Company which is not unusual but not proof that agency existed between the First and Third Defendant and the Second Defendant. Exhibit 5(3) and 5(4) were produced to show relationship between First and Third Defendant and Second Defendant.

The other Exhibits tendered were not accepted by the Court as being not relevant to the matter before the Court.

Mr Crisp referred to many cases some of which bear no relation to the matter now before the Court. He referred to Wenlock v Maloney and others [1965] 2 All ER 871 where an application was made under O.18 and 19 and under the inherent jurisdiction of the Court, to strike out the Writ, and Statement of Claim and replies and to the application to stay or dismiss the action on the grounds that the pleading disclosed no reasonable cause of action and were vexatious and an abuse of process. That ten affidavits were filed on this application, five on each side. After a hearing which took more than two full days, and at which there was no oral evidence or cross examination, the master delivered a twenty two page judgment and struck out the Plaintiffs pleadings. On appeal it was held that the appeal must be allowed because the course taken by the master amounted to a trial of the case in Chambers, without discovery, oral evidence or cross-examination, and so was neither authorised by the rules nor a proper exercise of the inherent jurisdiction of the Court.

It cannot be said, in the matter before me, that such took place hence the case has no application. With respect to Mr Crisp, I am afraid I cannot see how the case of Vogel v R. and A. Koknstamm Ltd [1973] 1 QB 133 helps his case. The Defendants, a company registered in England sold through K, leather skins to the Plaintiff, a leather merchant in Israel. The Defendants had no office of their own in Israel. All the material correspondence was conducted with them in England and their connection with the State of Israel was limited to their dealings through K, who was their representative and sought customers for them and buyers, but who had no authority to conclude any contracts on their behalf. The Plaintiff started proceedings for breach of contract against the Defendants in Israel. When process was served on the Defendant by leave of the Israel Court, the Defendants wrote to the Court in Israel that they did not admit the Court's jurisdiction to entertain the dispute and that their letter was not to be taken as any appearance in the proceedings. The Court in Israel gave judgment for the Plaintiff who sought to enforce it in England. On the question whether the Defendant at the time of action in Israel were resident in Israel and if not whether they had submitted to the jurisdiction of the Court, it was held, dismissing the Plaintiff's claim:

1. That as K's activities did not amount to a carrying on of business for the Defendants in Israel, the Defendants were not resident in Israel and therefore the Court of Israel had no jurisdiction over them.
2. That to be effective a submission to the jurisdiction of a foreign Court, in matters of contract must be express and not implied, there had been no such submission by the Defendants to the Court of Israel, whose judgment was accordingly arrived at without jurisdiction and was not enforceable by the Plaintiff and the common law of England.

In the case before me there was no evidence of agency and in my opinion the Plaintiff knew such to be the case. The agreement Exhibit I, the letter to the Royal Australian Institute of Architects and the third party notice in Civil Case 176 of 1987, never once suggested that the Second Defendant was implicated in any way whatsoever.

Mr Crisp referred me also to the cases of Mr Hagen Lawrence v Lord Norreps and others House of Lords 1890 page 210 , Hobbock & Sons Ltd v Williamson Heywood and Clark Ltd [1898] UKLawRpKQB 176; [1899] 1 QB 86, Williams & Humbert v W. & H. Trade Marks [1986] 1 All ER 130 and Brimson v Rocla Concrete Pipes Ltd. [1982] 2 NSWLR 927.

All those cases really relate to striking out of pleadings which is not the case before me. Here we are only concerned with one Defendant. In this case the Plaintiff applies by way of ex-parte application that the intended Plaintiff may have leave to serve a specially endorsed Writ of Summons herein on the Second Defendant out of the jurisdiction at its registered office in Sydney, New South Wales, Australia, or elsewhere in Australia. All that was produced to the Acting Judge was the ex-parte summons, an affidavit of Mr Hudson and the pleadings. The essential document the agreement between the First Defendant and the Plaintiff was not produced.

From the many cases referred to in the body of this judgment, I can do no better than quote the words of Megarry J. in the G.A.F. v Anchem Case Lloyd Law Reports 606:

"In view of the seriousness of forcing a foreigner to litigate in this jurisdiction it is in my judgment of great importance that leave to issue and serve a Writ out of the jurisdiction should not be given on the basis of a formal or perfunctory affidavit and that the established standards of full and fair disclosure should in no way be eroded."

I therefore hold that the Acting Judge's Order should be discharged by reason of the Plaintiff's failure to make proper disclosure. The summons therefore succeeds. I also hold that the Statement of Claim discloses no action against the Second Defendant and it is hereby struck out.

I accordingly set aside the Acting Judges Order, the Writ and the service of the notice thereof, together with any subsequent proceedings. I order the Plaintiff to pay the Second Defendant's costs of this application.

14 December 1988

FREDERICK G COOKE
CHIEF JUSTICE