FEDERAL COURT OF AUSTRALIA Perdaman Chemicals & Fertilisers v Griffin Coal Mining Company Pty Ltd [2011] FCA 1425 Citation: Perdaman Chemicals & Fertilisers v Griffin Coal Mining Company Pty Ltd [2011] FCA 1425 Parties: PERDAMAN CHEMICALS & FERTILISERS v THE GRIFFIN COAL MINING COMPANY PTY LTD (ACN 008 667 285), LANCO INFRATECH LTD, LANCO RESOURCES AUSTRALIA PTY LTD (ACN 147 835 452), LANCO RESOURCES INTERNATIONAL PTY LTD, MANOJ AGARWAL and S AMARENDRAN File number: WAD 401 of 2011 Judge: SIOPIS J Date of judgment: 25 October 2011 Catchwords: PRACTICE AND PROCEDURE - service out of the jurisdiction - proceeding pending in the Supreme Court of Western Australia which makes the same allegation against some of the parties as made in the proceeding in this Court – whether leave to serve proceeding out of the jurisdiction should, in the exercise of discretion, be refused. Legislation: Competition and Consumer Act 2010 (Cth) Sch 2 Federal Court Rules 2011 rr 10.42, 10.43 Cases cited: Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCAFC 117 Date of hearing: 25 October 2011 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 23 Counsel for the Applicant: Mr M Bennett Solicitor for the Applicant: Bennett + Co Counsel for the First, Second, Third, Fifth and Sixth Respondent: Mr BD Luscombe Solicitor for the First, Second, Third, Fifth and Sixth Respondent: Clifford Chance IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 401 of 2011 BETWEEN: PERDAMAN CHEMICALS & FERTILISERS Applicant AND: THE GRIFFIN COAL MINING COMPANY PTY LTD (ACN 008 667 285) First Respondent LANCO INFRATECH LTD Second Respondent LANCO RESOURCES AUSTRALIA PTY LTD (ACN 147 835 452) Third Respondent LANCO RESOURCES INTERNATIONAL PTY LTD Fourth Respondent MANOJ AGARWAL Fifth Respondent S AMARENDRAN Sixth Respondent JUDGE: SIOPIS J DATE OF ORDER: 25 OCTOBER 2011 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. Leave be granted to the applicant to serve on the fourth respondent the originating application filed 7 October 2011, the statement of claim, the interlocutory application for leave to serve outside of the jurisdiction and this Order, in accordance with the Supreme Court of Judicature Act (Singapore) and the Rules of Court prescribed thereunder. 2. The time fixed for the purpose of filing a notice of address for service by the fourth respondent be 21 days from the date of service of the documents referred to in Order 1. 3. Within 3 days of the fourth respondent filing and serving a notice of address for service, the applicant serve the fourth respondent with all affidavits and submissions filed in the proceedings. 4. The time limited for the fourth respondent to file and serve any application pursuant to Rule 13.1(3) of the Federal Court Rules 2011 be 7 days from the date of service of the affidavits and submissions referred to in Order 3. 5. The costs of the application be reserved. 6. The matter be adjourned to a further directions hearing at 9.30 am on 8 December 2011. 7. There be liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 401 of 2011 BETWEEN: PERDAMAN CHEMICALS & FERTILISERS Applicant AND: THE GRIFFIN COAL MINING COMPANY PTY LTD (ACN 008 667 285) First Respondent LANCO INFRATECH LTD Second Respondent LANCO RESOURCES AUSTRALIA PTY LTD (ACN 147 835 452) Third Respondent LANCO RESOURCES INTERNATIONAL PTY LTD Fourth Respondent MANOJ AGARWAL Fifth Respondent S AMARENDRAN Sixth Respondent JUDGE: SIOPIS J DATE: 25 OCTOBER 2011 PLACE: PERTH REASONS FOR JUDGMENT 1 This is an application by the applicant, Perdaman Chemicals & Fertilisers (Perdaman), for orders for leave to serve an originating application on the fourth respondent, Lanco Resources International Pty Ltd, a company whose registered office is in Singapore, out of the jurisdiction. background 2 The claim made against the fourth respondent in the originating application is that it engaged in unconscionable conduct in contravention of Sch 2 of the Competition and Consumer Act 2010 (Cth), alternatively, interfered tortiously in the contractual relations between Perdaman and the first respondent, The Griffin Coal Mining Company Pty Ltd (Griffin Coal). The fourth respondent is a related company to Griffin Coal. 3 Perdaman entered into a contract with Griffin Coal, whereby Griffin Coal agreed to supply coal to Perdaman. This contract for the supply of coal related to a proposed urea production project which Perdaman intended to undertake. Perdaman intended to use project financing to finance the construction of the urea manufacturing plant; and the coal to be supplied by Griffin Coal under the long term contract, was to be a crucial feedstock for the manufacture of the urea. 4 It was a condition precedent to the performance of the coal supply contract that the stage of "finance closure" was obtained by 28 August 2011. This did not occur. Perdaman contends in its statement of claim that the fourth respondent and other respondents, deliberately procured that financial closure did not occur. 5 One of the major contentions made by Perdaman in its claim against the fourth respondent is that the fourth respondent caused Griffin Coal to execute a negative pledge agreement at the instance of a bank, ICIC. Perdaman alleges that by reason of the fourth respondent's conduct in this regard, Griffin Coal did not complete the transfer of securities, namely, a mortgage over a mining title and a deed of charge, to Perdaman by 28 August 2011 – the date of financial closure. Perdaman goes on to contend that the fourth respondent was instrumental in procuring that, shortly after 28 August 2011, Griffin Coal issue a notice of termination of the coal supply contract. Perdaman says that the conduct of Griffin Coal and the fourth respondent was unlawful and comprised an attempt to take advantage of their own wrongdoing. 6 The originating application was filed in this Court in somewhat unusual circumstances. This is because there is already pending in the Supreme Court of Western Australia, a proceeding commenced by Perdaman in relation to this controversy. The statement of claim in this application incorporates some claims which are already the subject of the existing proceeding in the Supreme Court, and names some of the same parties who are parties to the Supreme Court proceeding. There are, however, claims made in this proceeding which are not made in the Supreme Court proceeding, and there are parties to this proceeding who are not parties to the Supreme Court proceeding. 7 Among the respondents who are parties to this proceeding, but not the Supreme Court proceeding, are a number of respondents outside of the jurisdiction. Mr Bennett, counsel for Perdaman, explained that it was necessary to commence the proceeding in this Court against those parties because there was, as he put it, a "lacuna" in the Rules of the Supreme Court of Western Australia, which precluded Perdaman from serving a Supreme Court proceeding out of the jurisdiction, in respect of a cause of action founded on an alleged contravention of a Commonwealth statute. 8 I note that between the date of the filing of this application for leave to serve out of the jurisdiction, and the hearing today, notices of appearance have been filed by all the respondents who are out of the jurisdiction, other than the fourth respondent. It is for this reason that leave to serve the proceeding out of the jurisdiction, is now sought only in respect of the fourth respondent, the Singaporean company. service out of the jurisdiction 9 In order for the Court to give leave for an application to be served out of the jurisdiction, it is necessary for the Court to be satisfied of the matters which are set out in r 10.43 of the Federal Court Rules 2011. 10 First, the Court must be satisfied that the Court has jurisdiction in respect of the proposed cause of action. The federal element of this proposed cause of action is the allegation that the fourth respondent engaged in conduct in Australia in contravention of a Commonwealth statute. I am satisfied that that the Court has jurisdiction to hear and determine this claim. 11 Secondly, the Court must be satisfied that the proceeding is of a kind which falls within r 10.42 of the Federal Court Rules 2011, which prescribes the kinds of proceeding in respect of which a party may be served out of the jurisdiction. This proceeding, claiming as it does a contravention of a Commonwealth Act committed in Australia, falls within Item 12 of the list of proceedings capable of being served out of the jurisdiction. 12 Thirdly, the Court requires evidence in relation to the proposed method of service on the fourth respondent. I have the affidavit evidence of Mr Dalitso Banda on this question. Mr Banda has deposed that Perdaman intends to serve the process in accordance with the rules of court of Singapore. This will be done by serving the originating application and accompanying documents on the fourth respondent's registered office in Singapore. 13 Fourthly, the Court needs to be satisfied that there is a prima facie cause of action in respect of at least one of the causes of action made against the fourth respondent. 14 The basis upon which that question is assessed is well-known. This is that on the material before the Court, inferences are open, which if translated into findings of fact, would support the claim made. 15 The question of the involvement of the fourth respondent in the execution of the negative pledge, has been the subject of consideration in an interlocutory judgment in the Supreme Court proceeding. I have had regard to the observations made on that question, in that judgment. Also, the inference is open from the fact that the fourth respondent is the controlling company of Griffin Coal and that the impugned conduct of Griffin Coal had, and was likely to have, such serious commercial and legal consequences for the group of related companies, that the fourth respondent was aware of, and approved, Griffin Coal's conduct. This is particularly so, in the decision to give the notice of termination of the coal supply contract. 16 I find that Perdaman has demonstrated a prima facie case against the fourth respondent. 17 I now turn to the question of discretion. 18 One of the grounds on which a Court may, in the exercise of its discretion, decline to grant leave to serve a proceeding out of the jurisdiction, is that the Court is of the view that the proceeding was liable to be stayed. A proceeding may be stayed on one of several grounds, including lis alibi pendens or forum non conveniens. 19 I am conscious that there are some parties to this proceeding, particularly Griffin Coal, who would, by reason of the pending Supreme Court proceeding, face the same allegations in two different courts. 20 However, there is a prospect that, in due course, some accommodation will be made to overcome any potential vexation or oppression caused by this circumstance to those parties. Mr Bennett has foreshadowed in his submissions that, once the fourth respondent is served and becomes a party to this proceeding, Perdaman will apply to have this proceeding cross-vested into the Supreme Court. Mr Luscombe, who appears for the other parties, said that there may be a prospect that his clients may wish to make an application for the Supreme Court proceeding to be cross-vested to this Court. However, these are matters which do not adversely affect the fourth respondent, because it is not a party to the existing Supreme Court proceeding and, therefore, will not be vexed in two courts. 21 In my view, the fact that there is a need to accommodate the existence of two proceedings in two separate courts, in respect of the same claims against some of the parties to this proceeding, does not constitute a basis on which the Court would, in the exercise of its discretion, decline to give leave to serve the proceeding out of the jurisdiction on a party unaffected by that potential vexation or oppression. 22 In Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCAFC 117, the Full Court found that it was not an inevitable consequence of there being two parallel proceedings in two different courts, that one of them would have to be stayed forthwith. The Full Court took the view that it was a question which could be resolved over time. In my view, the same situation applies here in relation to those parties who are affected by the duality of the proceedings in two different courts. 23 I will, accordingly, make the orders sought by Perdaman. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate: Dated: 13 December 2011