chinadotcom corporation v Hugh MORROW & Ors [2001] NSWCA 82

New South Wales Court of Appeal

CITATION : chinadotcom corporation v Hugh MORROW & Ors [2001] NSWCA 82 FILE NUMBER(S) : CA 40195/01 HEARING DATE(S) : 2 April 2001 JUDGMENT DATE : 5 April 2001

PARTIES : chinadotcom corporation v Hugh MORROW & Ors JUDGMENT OF : Mason P at 1; Handley JA at 1; Heydon JA at 1

LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT ED 1690/01 FILE NUMBER(S) : LOWER COURT Barrett J JUDICIAL OFFICER :

Claim: R B S Macfarlan QC COUNSEL : 1-4 Opp: B W Walker SC/ TD Castle 5 Opp: R Shankland (Sol) Claim: Allen Allen & Hemsley SOLICITORS : 1-4 Opp: Atanaskovic Hartnell 5 Opp: Clayton Utz 6 Opp: Gilbert & Tobin CATCHWORDS : Stay of proceedings - agreement to refer disputes to Australian Commercial Disputes Centre "for dispute resolution" - whether void for uncertainty - discretionary grounds for refusing stay - Supreme Court Act, s110K - leave refused (ND) DECISION : See pars 7 and 8

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40195/01 MASON P HANDLEY JA HEYDON JA

Thursday 5 April 2001 chinadotcom corporation v Hugh MORROW & ORS

JUDGMENT 1 THE COURT: There is at least an arguable case that cl 13.16(d) of the Stock Purchase Agreement was not void for uncertainty because the relevant obligation would be satisfied merely by referring an unresolved dispute to the Australian Commercial Disputes Centre (ACDC) "for dispute resolution". This would bring the parties to the door of ACDC there to be presented with a smorgasboard of alternative dispute resolution options with the parties' choice being limited only by the requirement that they involve "negotiation" as envisaged by cl 13.16(a). 2 But such a finding would not lead inevitably to the relief which the claimant seeks, namely the stay of the substantive proceedings instituted in the Equity Division unless and until the dispute is referred for dispute resolution to ACDC and (presumably) thereafter for a further 2 months. Absent a finding that the plaintiffs' continued prosecution of the proceedings would amount to an abuse of process, the enforcement of the negative stipulation in cl 13.16 by injunction or stay order lies in the discretion of the court. Clause 13.16 is not a Scott v Avery provision which makes resort to ADR a precondition to the causes of action asserted in the proceedings. 3 The parties agree that, if this Court entertains the appeal and finds error in the construction of cl 13.16 or the exercise of the discretion conferred by s110K of the Supreme Court Act, then the relevant judicial discretion or discretions should be exercised afresh by this Court. We are firmly of the view that both a stay and a referral for mediation or neutral evaluation were properly refused by Barrett J. Accordingly, the proper course is to refuse leave to appeal thereby allowing the proceedings in the court below to move to their culmination as soon as practicable. The uncertain financial situation of the sixth opponent and the interest of all parties in resolving their present differences concerning their ongoing contract are additional factors which we take into account. There is of course no inhibition upon the parties submitting voluntarily to a mutually agreed species of ADR. 4 We are not persuaded that the learned judge erred in the exercise of his discretion under s110K. Contrary to the claimant's submissions, the judge's reasons do not imply that the Court should never refer proceedings for mediation or neutral evaluation if one of the parties withholds consent. Rather, he made a finding that was well open on the material before him to the effect that the forced referral of this particular dispute to mediation or neutral evaluation was unlikely to be productive. 5 This finding (with which we agree) may also be applied a fortiori to the exercise of any discretion that would flow if we were to uphold the claimant's submission concerning cl 13.16(d). That particular subclause is very open-ended and contains the capacity to generate further disputes during the two-month embargo on legal proceedings imposed by subclause (e). 6 The evidence shows that this was and is a case in which expedition is vital. The claimant was slow in seeking a stay. There is a significant risk that any delay in prosecuting the serious issues raised in the statement of claim could frustrate the effective performance of the Agreement as a whole. Whatever its true effect, cl 13.16 was designed to aid performance, not to impede it. 7 The claimant should pay the costs of the first to fourth opponents. The fifth opponents, who supported the claimant, should pay their own costs of the proceedings in this Court. The sixth opponent was either not served or did not appear. 8 Summons dismissed.