Supreme Court New South Wales Medium Neutral Citation: Resort Living Group Pty Limited v Strategic Advisers Group LLC [2021] NSWSC 1418 Hearing dates: 6, 24 September 2021 Date of orders: 3 November 2021 Decision date: 03 November 2021 Jurisdiction: Common Law Before: Harrison AsJ Decision: (1) The proceedings are adjourned to 16 November 2021 at 10:00am before me. (2) The plaintiff is to send by email a copy of this judgment to the first, second and third defendants and direct their attention to my orders. (3) The plaintiff is to provide an up to date affidavit setting out its claim for damages on the next hearing date. Catchwords: CIVIL PROCEDURE – Strike out defence – Want of due despatch – Discloses no defence – Strike out pleadings – No reasonable cause of action – Summary judgment CIVIL PROCEDURE – Jurisdiction – Dismissal of claim due to lack of jurisdiction – Arbitration clause – Optional arbitration Legislation Cited: Commercial Arbitration Act 2010 (Cth), ss 7, 8 Uniform Civil Procedure Rules 2005 (NSW), rr 10.3, 12.7, 13.4, and 14.28, Parts 11 and 11A, and Schedule 6 Cases Cited: Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 Colombini v De Berigny [2021] NSWSC 374 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 HIH Casualty and General Insurance Ltd (in liq) v RF Wallace (2006) 68 NSWLR 603 Inghams Enterprises Pty Ltd v Hannigan [2020] NSWCA 82 Micallef v ICI Australia Operations Pty Ltd & nor (2001) NSWCA 374 Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110 Reimers v Health Care Complaints Commission (2012) NSWCA 317 Stollznow v Calvert (1980) 2 NSWLR 749 Witten v Lombard Australia Ltd (1968) 88WN (pt 1) (NSW) 405 Texts Cited: Michael Douglas and Mhairi Stewart, "Commercial Litigation & Dispute Resolution", 15 June 2020 https://bennettandco.com.au/areas/comm-litigation/the-new-leading-case-on-why-details-matter-when-drafting-arbitration-agreements-and-other-dispute-resolution-clauses/ Accessed 1 September 2021 M Davies, AS Bell, PLG Brereton and M Douglas, Nygh Conflict of Laws In Australia (10th Edition, 2020), ch 7 at 180 Category: Procedural rulings Parties: Resort Living Group Pty (Plaintiff) Strategic Advisers Group LLC (First Defendant) Saviano Sebastian (Second Defendant) Kumar Solutions Management (Third Defendant) Representation: Plaintiff (Self Represented) First Defendant (No appearance) Second Defendant (No appearance) Third Defendant (No appearance) File Number(s): 2021/155345 Publication restriction: Nil Judgment 1. HER HONOUR: These are 3 notices of motion before this court. 1. By notice of motion filed 30 June 2021, the second defendant seeks that the court dismiss the plaintiff's statement of claim due to this Court's lack of jurisdiction. 2. By notice of motion filed 29 July 2021, the plaintiff seeks an order that the defence filed by the first and second defendants be struck out as it discloses no defence to the claim made by the plaintiff. 3. By notice of motion filed 28 July 2021, the plaintiff seeks an order that the damages in respect of the third defendant be assessed. 1. The plaintiff is Resort Living Group Pty ("Resort Living"). The first defendant is Strategic Advisers Group LLC ("Strategic Advisors"). The second defendant is Saviano Sebastian ("Mr Sebastian"). The third defendant is Kumar Solutions Management ("Kumar Solutions"). On 6 August 2021, default judgment was entered against the third defendant. 2. On 6 September 2021, the three notices of motion were listed for hearing before me. On that day neither the first or second defendant appeared via videolink. Mr David Hawkins ("Mr Hawkins") appeared by leave for Resort Living, the plaintiff. Mr Hawkins is the sole director of the plaintiff company, and has been granted leave to act for the plaintiff. The matter was adjourned to 24 September 2021 at 10:00am. The plaintiff notified the defendants of this hearing date by email. 3. On 24 September 2021, at the hearing Mr Hawkins appeared on behalf of the plaintiff. Once again there was no appearance by the first and second defendants. Background 1. At all material times the plaintiff was a company registered with the Australian Securities & Investment Commission ("ASIC") as ACN 159 788 593 and having its registered office in the State of New South Wales Australia. 2. At all material times the first defendant was a company registered with the Government of the District of Columbia in the United States of America as L00005260887, and having its registered office in Washington DC in the United States of America. 3. At all material times the second defendant was the director of the first defendant company, and managed its commercial affairs. 4. At all material times the third defendant was an associate and business partner of the first defendant company and acted as an authorised representative and fee participant of the first defendant company. 5. Between April and July 2020, the third defendant introduced the plaintiff to the first and second defendant and made representations and inducements to the effect that the first and second defendants were able to provide the plaintiff with a bank instrument described as a 'standby letter of credit', and further that the first and second defendants were able to monetise such bank instrument for cash by way of a loan from a related bank repayable after twelve months. 6. The plaintiff stated that in person, the second defendant came with credentials of being an accredited Republican Party adviser during the former administration of the United States. The plaintiff stated that the second defendant passed the requisite checks and balances that were conducted because the industry is fraught with scammers (T2.16-22). 7. A standby letter of credit is an official bank instrument which is the equivalent of money and can be traded. Depending on the issuing bank, between 40 and 50% can be obtained by way of a loan to value ratio. The cash can then be put into a trade program. In this case this would have been with Barclays of London, where, over a period of 40 weeks, the plaintiff would have earned money at a factor of an estimated 25% per month. 8. Between April and July 2020, the plaintiff engaged in communications and correspondence with the first and second defendants, and it was agreed that the parties would enter the above commercial relationship. 9. On 28 July 2020, the parties entered a written agreement described as 'Private Deed of Agreement on Delivery of Standby Letter of Credit Swift MT760 and Monetisation' (the "Deed of Agreement"). 10. In the Deed of Agreement: 1. The first defendant is described as the 'Provider'. 2. The second defendant is described as the 'Managing Director of the Provider'. 3. The plaintiff is described as the 'Client'. 1. Under the Deed of Agreement, the first and second defendants agreed to provide the plaintiff with a 100% Cash Backed Standby Letter of Credit (the "Letter of Credit") from ING Bank located in Amsterdam in the Netherlands ("ING") with a face value of €50,000,000, and the plaintiff agreed to pay a deposit of €110,000 to the first and second defendants for its provision. 2. On 28 July 2020, the plaintiff paid the total deposit to the first defendant, for which the first and second defendants provided a receipt. The total cost of the deposit was equivalent to approximately $183,000 (AUD) at the time of payment. 3. Under the Deed of Agreement, the plaintiff was to receive the Letter of Credit to be issued by French Bank, Credit Mutuel Bank ("Credit Mutuel"). The first and second defendants were then to trade the Letter of Credit with ING and to make available for the benefit of the plaintiff a payment of €20,000,000 being forty per cent (40%) of the face value of the Letter of Credit, within ten banking days after the receipt and confirmation of the trade. 4. Under the Deed of Agreement, the delivery of the monetised funds of €20,000,000 was to have been received by the plaintiff on or before 15 September 2020. No moneys were received by the plaintiff by that date. 5. In late October 2020 the plaintiff received a draft of the Letter of Credit from Credit Mutuel. It apparently was a cause for concern for the plaintiff because an international bank had misspelt the word "Amsterdam" (its own location) on two occasions. 6. Time progressed, however the plaintiff still did not receive the Letter of Credit in its correct form. In December 2020, the plaintiff discovered that the Letter of Credit was only partially cash and partially gold backed. This was unacceptable to ING. So over Christmas, January and February the plaintiff allowed them time to convert it from partially cash backed to fully cash backed so that the plaintiff could get full drawdown of the facility. That did not occur. 7. On 11 March 2021, the plaintiff served the first, second and third defendants by email with a 'Notice of Default & Demand for Payment' (the "Notice") signed by Mr Hawkins. The plaintiff allowed a period of five banking days for the defendants to make good their default and pay the moneys claimed under the Notice. 8. The Notice reads: "This Notice will advise that Strategic Advisers Group LLC is now substantially in default of its obligations under the Deed of Agreement dated 28 July 2020 between Resort Living Group as the Client and Strategic Advisers Group as the Provider, pursuant to which a 100% Cash Backed Standby Letter of Credit was to be issued by ING Bank Amsterdam with a face value of Fifty Million Euros (€50,000,000.00) and then Monetised for Twenty Million Euros (€20,000,000.00) for the benefit of Resort Living Group Pty Limited. As at today's date no Standby Letter of Credit has been issued and monetised as required by our Agreement, and no firm arrangements have been accepted by Resort Living Group Pty Limited under which you will meet your financial obligations under our agreement. As a consequence of your Default, Resort Living Group has suffered financial loss as at the date of this Demand, and Resort Living Group will continue to suffer financial losses until the Demand for payment is satisfied. Resort Living Group Pty Limited now Demands payment of Three Hundred and Ninety Three Million One Hundred and Fifty Three Thousand Euros (€393,153,000.00) pursuant to the Default by Strategic Advisers Group LLC of its financial obligations and foreseeable financial consequences under the Deed of Agreement dated 28 July 2020. The Notice of Demand is made for an amount of Three Hundred and Ninety Three Million One Hundred and Fifty Three Thousand Euros (€393,153,000.00) is calculated as follows: - (a) Monetised funds of €20 Million were due and payable on/about 8 September 2020. (b) Out of the monetised funds of €20 Million and amount of €l0 Million was to have been invested in a Private Placement Program that would have delivered Trade Profits to Resort Living Group Pty Limited from 8 October 2020 for a period of forty (40) weeks. (c) Between 8 October 2020 and 8 March 2021, a period of twenty-two (22) weeks, the amount of Trade Profits lost as a consequence of the Default by Strategic Advisers Group was One Hundred and Seventeen Million Three Hundred and Nineteen Thousand Euros (€117,319,000.00). (d) In addition to the above Demand calculated to the date of this Notice, Resort Living Group Pty Limited claims a weekly financial loss of Fourteen Million Two Hundred and Thirteen Thousand Euros (€14,213,000.00) for the remainder of eighteen (18) weeks duration of the Trade Program, being a further amount of Two Hundred and Fifty Five Million Eight Hundred and Thirty Four Thousand Euros (€255,834,000.00). Calculation: Monetised Funds (a) above €20,000,000.00 Trade Profits (c) above €117,319,000.00 Trade Profits (d) above €255,834,000.00 Total €393,153,000.00 Strategic Advisers Group LLC, its directors, officer bearers and associates are formally notified that unless proper arrangements are made to pay the amount of Three Hundred and Ninety Three Million One Hundred and Fifty Three Thousand Euros (€393,153,000.00) within the next five (5) banking days, then proceedings will be commenced against the company, its directors, office bearers and associates without further notice being given." 1. On 31 May 2021, the plaintiff served the first, second and third defendants with a statement of claim, claiming €20,000,000 being the amount of the monetised funds payable under the Deed of Agreement (the "Statement of Claim"). At the time of writing this amount in euros has an exchange rate of AUDI.00/EURO.65 which converts to $30,927,914 (AUD) as well as security for costs. The amount claimed will be converted into Australian Dollars at the time when judgment was given. The first and second defendant's notice of appearance, defence and notice of motion 1. On 29 June 2021, the first and second defendants filed a notice of appearance, not a notice of conditional appearance for the purposes of disputing jurisdiction. 2. On 30 June 2021, by way of defence the first and second defendants plead that this Court lacks jurisdiction over this litigation and that the plaintiff failed to follow the proper process of service of the Statement of Claim. A copy of the defence is contained later in this judgment at [39]. 3. By notice of motion filed 30 June 2021, the second defendant seeks that the Court dismiss the plaintiff's Statement of Claim due to the Court's lack of jurisdiction. The second defendant did not file any affidavit in support of this motion. 4. It is now necessary to set out the relevant clauses of the Deed of Agreement. The Deed of Agreement 1. The Deed of Agreement relevantly reads: "Strategic Advisers Group Private deed of agreement of delivery of standby letter of credit swift mt760 and monteization This deed of agreement (hereinafter referred to as "agreement") is executed without prejudice or conflict of interest, duly understood and signed by both parties acting at their own accord on 28 july 2020, by and between: The Provider Company name STRATEGIC ADVISERS GROUP LLC Registered Address XXX Washington , DC 20004 … Represented by Sebastian Saviano Position Managing Director … Country of issue United States of America … Herein named as the "Party A", hereby confirm, with full legal responsibility, under penalty of perjury of law that we are ready, willing and able to deliver the following bank instrument, under the terms and conditions described below, based on good, clean, unencumbered funds of non-criminal origin; and to monetize/fund such bank instrument on behalf of "Party B" The client Company name Resort Living Group Pty Limited Registered address XXX Australia … Represented by David Charles Hawkins Designation Managing Director Herein named as the "Party B", hereby confirm, with full legal responsibility, under penalty of perjury of law, that we are ready, willing and able to remit the unnecessary fees to cover the transmission costs associated with the delivery the bank instrument, under the terms and conditions described below, with good, clean, unencumbered funds of non-criminal origin. Both parties collectively being referred to as the "parties" … Terms and conditions Whereas: 1. Party A herewith agrees to issue a 100% (one hundred percent) cash backed standby letter of credit from ING bank, located at Amsterdam, the Netherlands, with face value 50,000,000.00 2. Party A hereby confirms to make available for funding the standby letter of credit by Swift MT760 to the credit providing bank as indicated in this agreement. 3. Party B confirms that the funds are available to fulfil the deposit requirement of 110,000.00 (one hundred and ten thousand euros), for sending the standby letter of credit via Swift MT760 instrument that complies with the ICC rule 500/600 format. 4. Party A appoints escrow attorney new future solutions and associates, located at 2 Rue du Gabian, 98000 Monaco, to manage the fee payment of €110000.00 to ING Bank NV on the behalf of party a, as remitted by Party B as per invoice with reference code xxx 5. Party A warrants that the funding bank will fulfil the requirements of this agreement and is willing, ready and able to make available, to the benefit of the client, a payment in the amount of 40% of face value and commission fees of 2% of face value of the SBLC of €50,000,000.00, within 10 banking days of receipt and confirmation of Swift Mt760 SBLC from HSCB bank, located at London, United Kingdom valued for 1 year and 1 day. … 1. Under the heading 'Special Conditions' the Deed of Agreement states: "Both Party A and Party B jointly and severally covenant and undertake to insure that their respective obligations under this contract are met. Failure to perform their obligations under this contract will entitle the injured party to serve notice of termination of this agreement." (Notice of termination) 1. Under the heading 'Limit of liability' the Deed of Agreement states: "Party A agrees that all contracts pertaining to Party a's assets are for party a's account and risk. The ICC rules and regulations impose liabilities under certain circumstances on persons who act in good faith and nothing in this agreement shall constitute a waiver of limitation of any rights which Party A may have under the ICC rules and regulations. Applicable rules and regulations of the international chamber of commerce (ICC) latest publication shall govern all matters relating to the validity, interpretation or performance of this agreement. Any disputes arising from and related to this agreement shall be settled by the parties through friendly negotiations. If a dispute cannot be resolved through friendly negotiations within sixty (60) calendar days from the date the dispute arose, the relevant party may submit such dispute for arbitration in accordance with arbitration rules of the international chamber of commerce in Paris. The arbitration award shall be final and binding on the respective parties. 1. Under the heading 'Arbitration' the Deed of Agreement states: "Any controversy or claim arising out of or relating to this contract, which is not settled by the parties, shall be subject to binding arbitration. The verdict rendered by the panel of arbitrators shall be final and binding and may be enforced in any court of competent jurisdiction. In the event of a dispute, the following procedures shall apply: (a) Written notice shall be sent (by registered mail at the postal address or through e-mail with return receipt requested) by the aggrieved party to the party in default, which shall include an explicit and detailed statement of the dispute. The party being served the notice shall have 15 (fifteen) business days to respond in writing and/or to cure the default. If the parties fail to resolve the dispute within the fifteen-business day period, the matter will be submitted to arbitration as follows. (b) The parties agree that any controversy or claim arising out of or relating to this by arbitration in accordance with the rules of conciliation and arbitration of the international chamber of commerce, Philadelphia Pennsylvania per ICC document y432-a and other applicable ICC documents. Arbitration proceedings shall be directed by three arbitrators, one appointed by each party and the third subsequently appointed by the first two arbitrators. The arbitrators for any arbitration proceeding referred to herein shall be chosen as follows: 1. One shall be chosen by the party seeking arbitration; 2. One shall be chosen by the other party here to; and 3. One shall be chosen by the two arbitrators selected hereunder. (c) The arbitrators to be chosen by the parties shall be chosen within 30 (thirty) days of the service of a demand for arbitration on any of the parties. If the two arbitrators appointed above shall not agree to the appointment of the third arbitrator to be appointed as provided herein, such third arbitrator shall be appointed jointly by the other two appointed arbitrators, subject to challenge by any party only by reason of a conflict of interest. The parties agree to have the dispute arbitrated in accordance with said rules of arbitration. The arbitration proceedings shall be held in New York, USA or other location mutually agreed in writing by the parties failure to appear without a showing of good cause, shall entitle the other party to an award. (d) The decision and award made by the arbitrators shall include the award of all costs and expenses including attorney's fees and expenses, incurred by the aggrieved party as a result of the dispute. Any such award shall be paid to the prevailing party by the unsuccessful party within thirty (30) days after the award. In the event of circumvention, either directly or indirectly, or any other dispute arising out of, or relating to this contract, the aggrieved party shall be entitled to monetary compensation equal to the maximum fee, commission, remuneration, consideration, or benefit it would have received. From such transaction, and such other damages and relief as may be deemed appropriate. The sum allowed, and relief granted shall he paid and become due and payable within the thirty (30) day period required for the payment of fees and expenses, unless otherwise specified in the arbitration decision. Settlement upon an award shall be final, and may be entered in any court of competent jurisdiction. All matters concerning arbitration and litigation of this agreement shall be conducted in English; and in all matters of interpretation and comprehension of this agreement and any documentation howsoever pertaining to it, the English language shall take precedence over all others. In the unlikely event that the parties refuse the decision of the arbitration process a further procedure will be invoked in the London courts under the jurisdiction of the laws of England and wales." 1. While there is a heading 'Assignment and termination' there is no clause under that heading which refers to termination, nor is there a clause dealing with the circumstances where the Deed of Agreement can be terminated, the Deed of Agreement does refer to a "Notice of Termination". 2. Under the heading 'Construction principles', the last paragraph reads: "The rights and remedies provided herein are cumulative. The use of any one remedy by any party shall not preclude or waive the right to use any other remedy. These rights and remedies are given in addition to any other legal rights the parties may have." The Direction Hearings 1. On 20 July 2021, the matter was listed before the Registrar and there was no appearance by any of the defendant's or any legal representative for the defendants. 2. On 3 August 2021, the matter was again listed before the Registrar and there was no appearance by any of the defendants or any legal representative for the defendants. 3. On 6 August 2021, default judgment was granted by the Registrar as against the third defendant. The defence to the Statement of Claim 1. On 29 June 2021, the first and second defendants filed a notice of appearance. Given the pleadings in their defence, the defendants should have filed a conditional appearance for the purpose of disputing jurisdiction. 2. On 30 June 2021, the first and second defendant's filed a defence to the plaintiff's Statement of Claim, pleading that this Court lacks jurisdiction over the matter and that the plaintiff failed to follow the proper process of out of jurisdiction service. There was no substantive defence plead. Pleadings and particulars 1. As the pleadings and particulars in the defence are short, I have reproduced them in full. They read: "[The] defendant alleges this Court lacks jurisdiction over this litigation. As per the contract, or the Deed of Agreement (DOA) entered into on July 28, 2020 by Plaintiff and Defendant, any legal dispute must abide by the International Chamber of Commerce (ICC) and its relevant rules and regulations as outline[d] in said DOA. Attached to this Defence, please see a copy of the July 28, 2020 DOA. It is introduced here as Exhibit A. The 'Limit of Liability' section of the DOA (see page 9 of this Defence notice) clearly states that "Applicable rules and regulations of the International Chambers of Commerce (ICC) latest publication shall govern all matters relating to the validity, interpretation or performance of this agreement." Also, "if a dispute cannot be resolved through friendly negotiations within sixty (60) calendar days from the date the dispute arose, the relevant party may submit such dispute for arbitration in accordance with arbitration rules of the international chamber of commerce in Paris." Furthermore, "in the unlikely event that the parties refuse the decision of the arbitration process a further procedure will be involved in the London courts under the jurisdiction of the laws of England and Wales." The 'Arbitration' section of the DOA (see page 10 of this Defence notice) clearly outlines in detail the requirements and procedure for the resolution of any disputes arising between the parties. The relevant jurisdiction for Plaintiff to pursue any legal complaints, as agreed in the DOA of July 28 2020, remains the International Court of Arbitration and, potentially or subsequently, a court of law in the United Kingdom. While [the] Defendant rejects [the] Plaintiff's claims and statements of fact, without prejudice, and chooses not to address any of them. This [Court] is not the venue for the defendant to do so. In addition, [the] Defendant brings to the Court's attention the fact that [the] Plaintiff failed to follow the proper process of service to serve documents/ summons overseas. [The] Plaintiff only made [the] Defendant aware of its legal filing via email. It did not do so via registered mail or any other means as per the Hague convention or any applicable bilateral agreements between Australia and the United States. Please see Appendix B (Registered Mail Copy) which only shows a correspondence letter sent by [the] Plaintiff to [the] Defendant. The registered mail did not include the May 31, 2021 statement of claim filed by [the] Plaintiff with this Court. [The] Plaintiff shall file a Motion to Dismiss with this Court." 1. Exhibited to the defence are a copy of the Deed of Agreement, which is marked Exhibit A, and a photograph of the hard copy of the Notice sent by the plaintiff on 11 March 2021, which is also marked Exhibit A. I can only presume this second exhibit was intended by the defendants to be marked Exhibit B. Jurisdiction 1. The defendants' first pleading in defence of the Statement of Claim is that this Court has no jurisdiction as the plaintiff gave away its rights to commencement of proceedings in this Court pursuant to the clauses titled 'Limit of Liability' (the "Liability Clause") and 'Arbitration' (the "Arbitration Clause") in the Deed of Agreement. The sections of those clauses the defendants' are intending to rely on are reproduced above. The defendants made no other submissions on this issue. The plaintiff's submissions 1. The plaintiff submitted that it is an Australian company, that it signed the contract in Australia, and that the funds of €110,000 were sent from Australia. The plaintiff also submitted that it appears that the first and second defendants consented to this Court's jurisdiction as they filed a notice of appearance (not a conditional appearance). 2. The plaintiff further submitted the Arbitration Clause in the Deed of Agreement is not exclusive of any other means of resolution of any dispute between the parties to that agreement, and that the Deed of Agreement itself acknowledges that arbitration is but one means of resolution of any dispute. 3. In that regard the plaintiff submitted that in the Deed of Agreement under the heading 'Special Conditions' (page 6 at [3]) the parties acknowledge that the resolution of any dispute was not exclusively via arbitration but rather "...the relevant party may submit such dispute to arbitration ..." 1. The plaintiff further submitted that on page 10 at [4] of the Deed of Agreement, the true construction of the agreement is agreed between the parties, and under the heading 'Construction Principles' the parties acknowledge that any dispute regarding the Deed of Agreement was not exclusively through arbitration, but rather that: "The rights and remedies provided herein are not cumulative. The use of any one remedy by any party shall not preclude or waive the right to use any other remedy. These rights and remedies are given in addition to any other legal rights the parties may have." 1. The plaintiff submits that it was its understanding, and that of its director Mr Hawkins, when executing the Deed of Agreement, that the parties did not exclusively agree to arbitration as the sole means of dispute resolution, and that the plaintiff maintained its rights to pursue any other legal remedy in addition to arbitration. 2. The plaintiff draws support for a broad approach to dispute resolution clauses as articulated by Bell P in Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at [167] who held that: "The existence of a correct general approach to problems of this kind does not imply some legal rule outside the orthodox process of construction; nor does it deny the necessity to construe words of any particular agreement. But part of the assumed legal context is this correct general approach which is to give expression to the rational assumption of reasonable people by giving liberal width and flexibility where possible to elastic and general words of the contractual submission to arbitration, unless the words in their context should be read more narrowly." 1. In his article titled 'Commercial Litigation & Dispute Resolution' the lawyer Michael Douglas who co-authored the 10th edition of Nygh's Conflict of Laws in Australia, summarised the present approach as follows: "In short, dispute resolution clauses should be afforded liberal width'. 1. In the same article Michael Douglas goes on to write that: "The question is this: at a macro level, what sort of treatment of dispute resolution clauses is best for society? In our view, one that serves the case management objectives of efficient, cost­ effective and just dispute resolution. Bell P's reasons [in Inghams Enterprises Pty Ltd v Hannigan [2020] NSWCA 82] would give best effect to that policy." 1. The plaintiff finally submitted that arbitration has no equivalent to the power of summary judgment, so that if claims are straightforward then court proceedings are preferable, as they are in this instance, where the plaintiff is seeking to dismiss the defence of the first and second defendants by either summary judgment or for lack of due procedure. Resolution 1. In their defence the first and second defendants pleaded that the Deed of Agreement stipulates that any legal dispute must abide by the International Chamber of Commerce ("ICC") and its relevant rules and regulations. 2. I refer to sections 7 and 8 of the Commercial Arbitration Act 2010 (Cth) (the "Arbitration Act") that read: 7 Definition and form of arbitration agreement (1) An "arbitration agreement" is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) The arbitration agreement must be in writing. (4) An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means. (5) The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained in it is accessible so as to be useable for subsequent reference. (6) In this section: "data message" means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy. "electronic communication" means any communication that the parties make by means of data messages. (7) Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other. (8) The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract 8 Arbitration agreement and substantive claim before court (1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party's first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. (2) Where an action referred to in subsection (1) has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court. 1. The Deed of Agreement refers to arbitration. Under this clause it states that any controversy or claim arising out of or relating to this contract, which is not settled by the parties shall be subject to binding arbitration. It also states that written notice shall be sent by the aggrieved party to the party in default. The party being served the notice shall have fifteen business days to respond in writing and/or to cure the default. If the parties fail to resolve the dispute within the fifteen business day period, the matter will be submitted to arbitration. The Deed of Agreement then states that the rights and remedies provided therein are cumulative. The use of any one remedy by any party shall not preclude or waive the right to use any other remedy. These rights and remedies are given in addition to any other legal rights the parties may have. 2. In the text Nygh Conflict of Laws In Australia (10th Edition, 2020), ch 7 at 180 the learned authors, M Davies, AS Bell, PLG Brereton and M Douglas state that a related question that has arisen in a number of cases where the parties have specified for arbitration is whether or not, as a matter of construction, the arbitration clause was intended to be mandatory or optional, at the instance of one or both parties. Such questions obviously turn upon the proper construction of the contract in any given case, but there is nothing objectionable in principle to parties making provision for arbitration as an optional form of dispute resolution. The dispute resolution clause in Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110 provides an example. 3. The Arbitration Clause in the Deed of Agreement falls within the definition of an arbitration agreement in s 7 of the Arbitration Act. It is a clause in an agreement (s 7(2) of the Arbitration Act) in writing (s 7(3) of the Arbitration Act), recorded in the Deed of Agreement (s 7(4) of the Arbitration Act) by which the parties agree to submit to arbitration any disputes which have arisen under the Deed of Agreement (s 7(1) of the Arbitration Act). 4. I accept that the Deed of Agreement stipulates that arbitration is only one right and remedy the parties have available to them, in addition to any other legal rights the parties otherwise have. See: the Deed of Agreement at page 10 at [4]. 5. In accordance with s 8(1) of the Arbitration Act, had a party in these proceedings requested that the matter be referred to arbitration I would be bound to so refer it. There has been no such request made by either party. The first and second defendants did not specifically request that these proceedings be referred to arbitration. 6. The effect of the passage in the Deed of Agreement which refers to litigation of the matter in the London Courts should also be mentioned. It reads: "In the unlikely event that the parties refuse the decision of the arbitration process a further procedure will be invoked in the London courts under the jurisdiction of the laws of England and Wales." 1. In my view the proper way to read this passage is that a further procedure will be invoked in the London Courts, only if the parties refuse the decision of the arbitration process. There has been no such refusal in this matter as the arbitration process was not commenced. 2. For these reasons I accept that this Court has jurisdiction to hear this matter. The proper process of service 1. In their defence the first and second defendants have raised the issue of service and claim that they have not been properly served with the Statement of Claim as the "Plaintiff only made [the] Defendant aware of its legal filing via email." 2. In their pleadings and particulars the defendants refer to the registered Airmail sent on 11 March 2021 and say that it "did not include the May 31, 2021 Statement of Claim filed by the Plaintiff with this Court." 3. The defendants have not put on any evidence to support this pleading. The plaintiff's submissions 1. The plaintiff submitted that the Australian Government Attorney-General's Department outlines the options available for service of documents outside Australia and these are: 1. Hague Service Convention; 2. Bilateral treaties with other countries; 3. Diplomatic channels; and 4. Private process servers, local agents and via post. 1. The plaintiff further submitted that the Attorney-General's outline specifically allows service by registered Airmail to countries with whom Australia has sovereign relationship, and the United States of America is such a country. 2. The plaintiff submitted that service of originating process in the NSW Supreme Court may be effected in accordance with Uniform Civil Procedure Rule 2005 (NSW) ("UCPR") 10.3, and for service outside Australia UCPR Parts 11 and 11A apply. The reference to the Hague Convention that took effect on 1 November 2010, offers only an alternative method of service of judicial documents outside Australia, but it is not mandatory. 3. The plaintiff submitted that the Statement of Claim was served on the first second and third defendants by registered Airmail on 31 May 2021. To evidence this submission it has produced an affidavit of service filed on 28 July 2021 ("Aff of Service 28/07/21"), which relevantly states: 1. On 31 May 2021, a sealed copy of the Statement of Claim and a cover letter was sent by registered Airmail (Ref: RR158674247AU) to the office of the First defendant. (Aff of Service 28/07/21 at [3] and Annexure A) 2. On 31 May 2021, a sealed copy of the Statement of Claim and a cover letter was sent by registered Airmail (Ref: RR158674233AU) to the office of the Second defendant. (Aff of Service 28/07/21 at [7] (NB: it is incorrectly marked as [1] under the heading 'Service of Statement of Claim on Second Defendant) and Annexure E) 3. On 31 May 2021, a sealed copy of the Statement of Claim and a cover letter was sent by registered Airmail (Ref: RR158543581AU) to the office of the Third defendant. (Aff of Service 28/07/21 at [11] (NB: it is incorrectly marked as [1] under the heading 'Service of Statement of Claim on Third Defendant) and Annexure H) 1. The plaintiff has retained and annexed to Aff of Service 28/07/21 copies of: 1. the Customer Receipts from Australia Post: Annexures B, F, and I for the first, second and third defendants respectively; 2. the Article Lodgment International Registered Tracking Number: Annexure C; and 3. the emails to each defendant attaching the sealed Statement of Claim and cover letter: Annexures D, G, and J for the first, second and third defendants respectively. 1. The plaintiff further submitted that on 11 March 2021, it served the Notice by email and by registered Airmail on all three defendants, this was acknowledged by the first and second defendants in their defence, and having received the earlier registered Airmail sent on 11 March 2021, it is more likely that they also received the registered Airmail sent on 31 May 2021. The plaintiff referred to page 2 of the defendants' defence at [6] which states that they received the registered Airmail sent on 11 March 2021. 2. Finally the plaintiff submitted that the first and second defendants are in error by claiming in their defence that they did not receive the Statement of Claim with the registered Airmail dated 11 March 2021, as it would be impossible as the Statement of Claim was not issued until 31 May 2021, some six weeks later. Resolution 1. In their defence the first and second defendants have submitted that the plaintiff failed to follow the proper process of service of the Statement of Claim outside Australia. They allege that the plaintiff only made them aware of the legal filing via email, and not by registered Airmail, or any other means as per the Hague convention or any applicable bilateral agreements between Australia and the United States of America. The defendants are not alleging that the process of service by registered Airmail is not in accordance with the law of the place they were served, but rather that there was no service other than by email. 2. UCPR Parts 11 and 11A govern the service of documents outside Australia for proceedings in the Supreme Court: UCPR 11.1 Leave is not required for any service that may be effected or done under any law of the Commonwealth, the Hague Convention or UCPR Part 11.A: UCPR 11.2 Originating processes may be served outside of Australia without leave in the circumstances referred to in UCPR Schedule 6: UCPR 11.4(a). A document to be served outside Australia need not be personally served on a person so long as it is served in accordance with the law of the country in which service is effected: UCPR 11.8AC. 3. UCPR Schedule 6 relevantly reads: "An originating process may be served outside of Australia without leave in the following cases — … (b) when the claim is for the enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract which — (i) was made or entered into in Australia, or (ii) was made by or through an agent trading or residing within Australia, or (iii) was to be wholly or in part performed in Australia, or (iv) was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court" 1. The plaintiff was entitled to serve the Statement of Claim on the defendants by registered Airmail pursuant to UCPR Schedule 6. The defendants' acknowledgement that they received the Airmail sent on 11 March 2021 which was addressed to the same locations as the Airmail sent on 31 May 2021 suggests that it is more likely than not that they received the Statement of Claim. 2. In their defence, the defendant's allege that "[the] plaintiff only made [the] defendant aware of its legal filing via email" and they make reference to the registered Airmail sent on 11 March 2021 which contained the Notice but not the Statement of Claim. It is unsurprising that the defendant did not include the Statement of Claim in the Airmail sent on 11 March 2021 as it was not yet in existence. 3. Therefore I am satisfied that the plaintiff has followed the proper process of service of the Statement of Claim. Defendants' notice of motion to dismiss the Statement of Claim 1. On 30 June 2021, the defendants filed a notice of motion to dismiss the Statement of Claim. It contains only one line which reads: "[The] Defendant ask[s] the Court to issue an Order of Dismissal of Case 2021/155345 due to this Court's lack of jurisdiction." 1. I have already discussed this topic under the heading 'Jurisdiction' above. In short, there is an arbitration agreement (s 7 of the Arbitration Act), however there has been no request made to refer the matter to arbitration under s 8 of the Arbitration Act, and therefore I am not bound to do so. 2. For these reasons, I decline to dismiss the plaintiff's Statement of Claim. Plaintiff's notice of motion to strike out the defendants' defence 1. The plaintiff relies upon UCPR 12.7. Although he has not filed a notice of motion seeking this order, I will deal with it as it is another basis to strike out or dismiss the first and second defendant's defences. UCPR 12.7 reads: 12.7 Dismissal of proceedings etc for want of due despatch (1) If a plaintiff does not prosecute the proceedings with due despatch, the court may order that the proceedings be dismissed or make such other order as the court thinks fit. (2) If the defendant does not conduct the defence with due despatch, the court may strike out the defence, either in whole or in part, or make such other order as the court thinks fit. 1. The plaintiff also relies upon UCPR 13.4(1) and 14.28. They relevantly read: "13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings-- … (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. … 14.28 Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading-- (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or … (2) The court may receive evidence on the hearing of an application for an order under subrule (1)." 1. Recently in Colombini v De Berigny [2021] NSWSC 374, Ward CJ at [44] stated: "44 The principles on a summary dismissal application are well known. There is a high threshold to be satisfied. The test generally applied on applications for summary disposal of part or all of proceedings is that set out in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69 at 128-9 (General Steel). It is necessary for there be a very clear case before proceedings will be summarily dismissed (General Steel at 129; Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1 (Dey) at 91). As Dixon J (as his Honour then was) noted in Dey at 91, "once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process"." 1. UCPR 14.28 enunciates grounds, upon which a defective pleading may be struck out, whereas UCPR 13.4 focuses on the weakness of a party's case rather than defects of pleading: see Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937. Dismissal for lack of due progress 1. The plaintiff invited the Court to make an order under UCPR 12.7(2) on the basis that the first and second defendants have not conducted their defence with due despatch. The plaintiff asked that the both the defendants' defence and their motion to discontinue the matter for want of jurisdiction were struck out in full. See: Reimers v Health Care Complaints Commission (2012) NSWCA 317. 2. The plaintiff submitted that it is in the interests of justice that the defence and motion filed by the defendants should be struck out because other than filing these two documents, the first and second defendants have not participated in these proceedings, nor have they given the Court any explanation as to why they have not participated. See: Stollznow v Calvert (1980) 2 NSWLR 749 where Moffitt P adopted the passage from Witten v Lombard Australia Ltd (1968) 88WN (pt 1) (NSW) 405 at 412 "[A] balance must be struck as between the plaintiff and defendant and, in the end, "the court must decide whether or not on balance justice demands that the action should be dismissed". 1. The plaintiff submitted that on the basis that the defence and motion filed by the first and second defendants are struck out, then it follows that default judgment should be entered in favour of the plaintiff. Alternative – summary judgment for plaintiff: 1. In the alternative, the plaintiff submits that UCPR 13.4 enables the Court on the application of the plaintiff, and on evidence presented by the plaintiff, to find that the facts presented by the plaintiff are true, and that the defendants have no defence to the claim. 2. The plaintiff submitted that its pleadings and affidavit evidence establishes that all three defendants have not delivered the agreed payment to the plaintiff as per the Deed of Agreement, and further, that the plaintiff paid the required fee of €110,000 to the first defendant as required by the Deed of Agreement, and that no moneys have been paid to the plaintiff, and that no explanation for the non-payment has been provided to the plaintiff or the Court. 3. In the defence filed by the first and second defendants, there is no explanation as to why the moneys due and payable to the plaintiff have not been paid, there is no rebuttal of the plaintiff having paid a fee to the first defendant of €110,000 and the defendants are silent on any liability for their non-performance of their obligations under the Deed of Agreement. 4. All that the first and second defendants say in answer to the plaintiff's claim is that this Court has no jurisdiction to hear the claim, and thereafter no evidence has been provided, and neither the first or second defendant have taken any part in these proceedings. 5. The plaintiff filed evidence and addressed the Court as to its claim and the basis of the Court's jurisdiction and submitted that by taking the above approach the defendants have abandoned any presumption in their favour that they may have a proper defence and answer to the plaintiff's claim, or that there might be a reason for their non-payment. 6. The plaintiff has also provided affidavit evidence as to its claim as required under this rule, and the agreement under which the plaintiff claims moneys due and payable, and this evidence has not been challenged by any of the defendants. 7. The plaintiff referred to Micallef v ICI Australia Operations Pty Ltd & nor (2001) NSWCA 374 and submitted that in circumstances where the first and second defendants have done no more than file a defence and notice of motion and thereafter taken no part in these proceedings, if this Court were to exercise its discretionary power on a matter of practice and procedure, then such a decision could only be overturned in five limited circumstances when demonstrated that this Court: 1. made an error of legal principle; 2. made a material error of fact; 3. took into account some irrelevant matter; 4. failed to take into account or gave insufficient weight to some relevant matter; or 5. arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning. 1. The above was also discussed and applied in Stollznow v Calvert (1980) 2 NSWLR 749. Resolution 1. I will refer to the plaintiff's submissions, first as to summary judgment and secondly as to lack of due despatch. I accept that as the first and second defendants have filed a defence (although denying jurisdiction) they have been served with the Statement of Claim. 2. So far as summary judgment is concerned, the plaintiff has not served a notice of termination as required in a clause under the heading "Special conditions" which states "…failure to perform the obligations under this contract will entitle the injured party to serve a notice of termination of this agreement." However, as stated earlier, while there is a heading in the Deed of Agreement which reads 'Assignment and termination', there is no termination clause. 3. The plaintiff deposes in its affidavit of 29 July 2021 (Plaintiff Aff 29/7/21) at [26] and [27] as follows: "[26] The plaintiff says that at page (6) of the copy of the Deed of Agreement under the heading 'Special Conditions' is the recital at point six (6) that if the respective obligations imposed on either party are not met, then the 'injured party' is able to serve termination of the agreement. [27] The Plaintiff served a Termination Notice and Demand for Payment on the First, Second and Third Defendants on 11 March 2021, but the Defendants made no repayment of moneys due and payable to the Plaintiff as required by that Notice. In the Termination Notice the Plaintiff advised the Defendants that failure to make payment would result in proceedings being commenced against the Defendants. The Defendants did not respond to this notice." 1. I accept that on 11 March 2021 the plaintiff served a 'notice of default and demand for payment', however this is not a notice of termination. In law a notice of termination is different to a notice of default and demand for payment. 2. Pursuant to the Deed of Agreement the plaintiff was required to serve a notice of termination in order to terminate the contract. This has not been done, so I cannot say that the first and second defendant's cause is hopeless. Hence the plaintiff is not entitled to summary judgment against them. 3. Regarding due despatch, other than the filing of the defence and notice of motion none of the three defendants have filed any material in these proceedings. Furthermore none of the three defendants, nor anyone representing them has participated in these proceedings despite them being listed on four separate occasions. 4. There has also been no response from either the first or second defendants to the notification directed by this Court after the last hearing and sent to the defendants by email on 6 September 2021 by the plaintiff. 5. By its delayed conduct under the Deed of Agreement in delivery of the promised funds to the plaintiff, and by seemingly seeking to delay these proceedings by playing no part or making any appearance, the first and second defendants have demonstrated scant disregard for the interests of the plaintiff and this Court. 6. However, I accept that there must be a balance struck between the plaintiff and first and second defendants and, in the end, the Court must decide whether or not on balance justice demands that the first and second defendants should be dismissed. 7. While the first and second defendants have not appeared at the hearings on 6 September 2021 and 24 September 2021 despite being notified of their occurrence, to achieve justice, and in order to afford the defendants procedural fairness, it is my view that they should be given one last chance to argue their defences in court. 8. In order to give them the chance to do so, the plaintiff is to send a copy of this judgment to the first and second defendants and if they do not appear and litigate their defence, save exceptional circumstances, I will strike out their defence and enter judgment against them. I will also assess damages against the third defendant on this date. The plaintiff is to provide an up to date affidavit setting out its claim for damages in advance of the next hearing date. Result 1. The proceedings are adjourned to 16 November 2021 before me at 10:00am. The plaintiff is to send by email a copy of this judgment to the first, second and third defendants and direct their attention to my orders. The plaintiff is to provide an up to date affidavit setting out its claim for damages on the next hearing date. The Court orders: 1. The proceedings are adjourned to 16 November 2021 at 10:00am before me. 2. The plaintiff is to send by email a copy of this judgment to the first, second and third defendants and direct their attention to my orders. 3. The plaintiff is to provide an up to date affidavit setting out its claim for damages on the next hearing date. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 November 2021