New South Wales Supreme Court CITATION : Van der Sluys -v- Anaconda Nickel [2000] NSWSC 719 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50040/00 HEARING DATE(S) : 3.7.2000 JUDGMENT DATE : 25 July 2000 PARTIES : Stephen Van der Sluys & Richard Maish -v- Anaconda Nickel Limited & CIBC World Markets Australia Corporate Pty Limited & CIBC Wood Gundy Securities Inc & Canadian Imperial Bank of Commerce JUDGMENT OF : Hunter J Plaintiff: R S Webb COUNSEL : First Defendant: R S Angyal Second, Third & Fourth Defendant: A McGrath Plaintiff: Kemp Strang SOLICITORS : First Defendant: Andersen Legal as agents for Huston Partners Second, Third & Fourth Defendant: Mallesons Stephen Jaques CATCHWORDS : Practice & Procedure - application to transfer proceedings on "interests of justice" ground - balance of interests and procedural benefits favouring local court. LEGISLATION CITED : Jurisdiction of Courts (Cross-vesting) Act 1987 CASES CITED : Bankinvest AG -v- Seabrook (1988) 14 NSWLR 711 Mullins Investments Pty Ltd -v- Elliott Exploration Co Pty Ltd (1990) 1 WAR 531 DECISION : Application to transfer proceedings dismissed. Applicant to pay respondents' costs. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST HUNTER J TUESDAY 25 JULY 2000 50040/00 STEPHEN VAN DER SLUYS & RICHARD MAISH -V- ANACONDA NICKEL LIMITED & CIBC WORLD MARKETS AUSTRALIA CORPORATE PTY LIMITED & CIBC WOOD GUNDY SECURITIES INC. & CANADIAN IMPERIAL BANK OF COMMERCE REASONS FOR JUDGMENT 1 This is an application by the first defendant Anaconda Nickel Limited (Anaconda) pursuant to s 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 for the transfer of these proceedings to the Supreme Court of Western Australian on the "interests of justice" ground. 2 The proceedings are brought against Anaconda, CIBC World Markets Australia Corporate Pty Limited, the second defendant (Markets), CIBC Wood Gundy Securities Inc, the third defendant (Securities), and Canadian Imperial Bank of Commerce, the fourth defendant (Commerce), (more than one of which are referred to as the CIBC corporations), as against Anaconda for the recovery of a debt allegedly owing by Anaconda to the CIBC corporations under an assignment to the plaintiffs (the assignment) and, as against the CIBC corporations, in the event that it be found that those defendants had released Anaconda from that debt, for damages for breach of warranty under the assignment or for misrepresentations by the CIBC corporations. 3 The plaintiffs have described in their summons the issues likely to arise as follows: "1. Whether upon a true construction of the agreements dated 1 April and 17 July 1996 and in the events which occurred the debt is due and owing by the First Defendant. 2. Whether the Second, Third and Fourth Defendants, or any of them expressly waived or expressly released the debt assigned to the Plaintiffs." 4 Except as outlined later in these reasons it is not open to me to be more definitive of the issues as no defences have been filed by any of the defendants. This in itself, I think, for reasons that follow, is a significant obstacle to the granting of the application at this stage. 5 It appears from the affidavit of Kenneth John Green (Green) sworn 13 June 2000 (the Green affidavit), read in support of the application, that the plaintiffs' description of the issues likely to arise is accepted by Anaconda. Paragraph 8 of the Green affidavit is as follows: "Anaconda anticipates the issues in the proceedings will largely relate to construing the First and Second Agreements in the light of the circumstances existing at the time they were entered into." 6 With that description of the issues it is difficult to comprehend that documents relevant to those issues would be so voluminous as to make it impractical or inordinately expensive for relevant documents to go to wherever witnesses and legal representatives are located for the purpose of preparing for hearing. There has been no attempt on the evidence adduced on the application to suggest otherwise. I am reasonably satisfied that the location of documents relevant to the issues is not of any particular moment. 7 The first of the agreements (the agreements) under which the alleged debt of Anaconda is said to have arisen is an agreement dated 1 April 1996 between Anaconda and Securities (the first agreement) for the latter to provide "financial advisory and related services" to Anaconda which, so far as is relevant, provided in "Section 4" for the payment of a fee of "$A300,000 for project finance assistance." It was provided that the "engagement [would] be directed, and executed, from Toronto [Canada] with support from Sydney as required." 8 The agreement of 17 July 1996 (the second agreement), was that between Anaconda and Securities and Commerce which provided "that the terms set out under Section 4 in the Agreement of April 1st 1996 [be] amended by inclusion of additional services and a revised fees schedule." 9 The second agreement provided for a success fee in terms upon which the principal questions of construction are likely to centre. The parties agree that central to those issues will be the construction of the following terms of the second agreement: "Following execution of the Senior Bank Loan Agreement, Infrastructure Loan Agreement (if applicable) and Subordinated Debt Agreement (if applicable), a fee of 0.5% of the Project's total debt requirements (exclusive of the U.S. Bond Products forming the total project debt as arranged by Salomon Bros.) will be due and payable to [Securities]. A fee of 0.1% of any US Bond Products arranged by Salomon Bros. will be payable to [Securities]. Half of the aggregate fee to [Securities] apportioned to each of those debt facilities will be payable at the time of the first drawdown of each facility on a pro-rated basis. The remaining half of the fee calculated after the drawdown of all debt facilities will be paid on the earlier of I) Project Commissioning, or ii) 31st March 1998. All payments received by [Securities] for the provision of advice on debt formation, as described in Section A) and B) above, will be rebated on an equal pro-rated basis against each half payment of the success fee. In the event that a decision is taken not to proceed with financing arrangements referred to herein, the receipt by [Securities] of the amount of $A450,000 and any subsequent fees billed on a monthly basis shall be deemed to be a termination fee for services. As before, Anaconda will reimburse out of pocket expenses (except salary expenses) incurred by [Markets and Securities] upon presentation. Agreed expenses shall include travel, accommodation, documentation preparation, legal expenses and other pre-approved expenses." 10 It is accepted that the phrases "Senior Bank Loan Agreement", "Infrastructure Financing Loan Agreement", "Subordinated Debt Agreement" and the "US Bond Products" are not defined in the first or second agreements. Presumably evidence will be required in order to gain an understanding of those terms. Similarly, evidence will be required to establish that the fees claimed by the plaintiffs', as assignees, were earned by the CIBC corporations and were capable of effective assignment at the date of the assignment. 11 In opposition to the motion there has been read the affidavit of the plaintiff Stephen Van der Sluys (Van der Sluys) sworn 26 June 2000 (the Van der Sluys affidavit) in which he deposes to the circumstances in which he became involved in the agreements. 12 According to his evidence it was he who introduced the CIBC corporations to Anaconda as part of a business program formulated by Van der Sluys for the CIBC corporations to "rebuild a business in Australia with particular focus on the mining industry." It was in those circumstances that he became the managing director of Markets and employed the co-plaintiff, Richard Maish (Maish). 13 According to the Van der Sluys affidavit Markets "was consequently incorporated to conduct the new business". In support of that evidence there was annexed to the Van der Sluys affidavit a company search relating to Markets which showed the incorporation dating back to 1970. Clearly his evidence of the date of incorporation is incorrect. It is more likely that Markets was chosen as the vehicle for the implementation of the business plan adopted by the CIBC corporations. 14 In the operation of Markets, Maish reported to Van der Sluys who in turn reported to Donald Lindsay (Lindsay), a senior officer within the CIBC corporations, and Gerry Straub, another senior officer within the CIBC corporations. Van der Sluys identified other officers within the CIBC corporations in relation to "dealings with Anaconda" with whom he had "frequent contact" as being Ken Richards (Richards) and Bernie Haystead. 15 According to the Van der Sluys affidavit, Van der Sluys was introduced to Anaconda's chief executive Andrew Forrest (Forrest) and the Finance director of Anaconda, Michael Masterman (Masterman), by an external director of Anaconda, Norman Coldham-Fussell, as a result of which meetings were held in Sydney with Masterman and Forrest, beginning in February 1996. 16 It was the evidence of Van der Sluys that the first agreement was negotiated by Forrest, Masterman, Lindsay and Gordon Bogden, another senior employee of Securities. Van der Sluys has deposed to the fact that he was instructed by Straub to renegotiate Sec 4 of the first agreement and that, in accordance with those instructions, in the months that followed the first agreement, he was involved in that renegotiation and the drafting of the second agreement. 17 According to Van der Sluys, most of the negotiations leading up to the execution of the agreements occurred in Sydney where Anaconda "maintained an office and at a time when the "key management representatives [of Anaconda] were substantially present in Sydney [and that the] vast majority of meetings were held at Sydney." It was also the evidence of Van der Sluys that "discussions [were held] with prospective financiers who were in the vast majority of cases based in Sydney [and all] of whom had their specialist project functions based in Sydney or Melbourne in respect of this project". 18 The second agreement was executed on behalf of Markets by Van der Sluys while Richards and Forrest executed it on behalf of the CIBC corporations in Toronto. According to Van der Sluys, Markets negotiated the second agreement in Sydney. 19 As to performance of the second agreement by Markets and Commerce, Van der Sluys estimated that "approximately 40% would have been conducted in Sydney, as much as 30% in Melbourne at the offices of Fluor Daniel, 10% at offices at West Perth and 20% in North America". Particulars of that work included the following: "17 Mr Richards and Mr Haystead travelled to Sydney frequently to work with Mr Maish and I in Sydney. There was no need to travel frequently to Perth a this stage. There was no project in Western Australia as it was effectively in the planning stage prior to construction. Most of the project development took place within the offices of Fluor Daniel in Melbourne. Mr Maish, Mr Haystead and Mr Richards (who had travelled from Canada to Australia) frequently spent substantial amounts of time in the offices at Fluor Daniel in Melbourne. Mr Masterman and Mr Forrest and various other members of the Anaconda management team also spent a substantial part of their time in Melbourne. 18 In the Sydney office of the Second Defendant after the Second Agreement was signed Mr Maish and I commenced to discuss the potential debt financing with various banks. We also commenced to conduct research on emerging markets and in particular US high yield market. That activity was not limited to work on bank sourced finance. At that time Glencore had also provided an interim banking facility to Anaconda. That Company was based in Switzerland with its Australian head office in Sydney. Mr O'Keefe, the Managing Director of Glencore Australia who resides in Sydney was also on the Board of the First Defendant at that time." 20 In a further affidavit by Green of 3 July 2000, (Green's second affidavit), much of this description of the negotiation of the second agreement and of performance by the CIBC corporations is challenged by Green, from whose affidavit it is clear that there was significant activity at the negotiation stage in Western Australia. 21 It is not necessary to carry out any quantitative evaluation of this evidence in so far as it identifies where the contract is formed in that there is no issue as to the proper law of the contract and, save for one matter referred to later in these reasons, there is no jurisdiction question raised. The only relevance of this material, in my view, is to give some indication of the identity of prospective witnesses and their present location, and of the extent and location of documents relevant to the likely issues as they are presently known. 22 As to the latter of those matters I have not found the material particularly instructive, other than to say that there is little or nothing in that evidence to dissuade me from the view that the documentary evidence on formation and performance relevant to the claimed entitlement to a success fee and related entitlements, should not involve an exceptional quantity of documents by the standards encountered in numerous proceedings in this List. 23 I think the reality is that there will be documents located in Sydney, possibly Melbourne, North America and Western Australia relating to the formation and performance of the agreements: with no particular concentration of documents in any place, save for the following evidence of Van der Sluys: "Mr Maish and I have inspected documents of the [CIBC corporations] specifically related to the First and Second Agreements and the Anaconda Nickel work which are located at the offices of Mallesons Stephen Jaques at Sydney. To the best of my knowledge, information and belief, the documents of each of the [CIBC corporations] in respect of the First Agreement and Second Agreement are located at those offices at Sydney." 24 In the Green affidavit it was evidenced as follows: "...all of Anaconda's documentation in relation to the proposed transactions the subject of the CIBC Agreements is located primarily in Western Australia either at the Perth Head Office, at a commercial document storage firm, or at [Green's] office". 25 That tells me very little about the extent of the documentation; about the meaning of "primarily", and says nothing about the extent and location of other documents of other parties. 26 In relation to possible witnesses, Van der Sluys has identified five persons who were senior officers in the CIBC corporations, all resident in North America: seven persons who were officers of Anaconda, two of whom are resident in Perth, namely Masterman and Forrest, the other five being resident variously in Queensland and New South Wales. The plaintiffs are resident in Sydney. 27 In Green's second affidavit this evidence is put in issue in so far as it is said that five of those Anaconda officers, namely the ones not resident in Perth, had no, or little, involvement in the negotiations for the agreements. 28 It is clear from Green's second affidavit that the principal witnesses for Anaconda will be Forrest and Masterman. Forrest is the deputy chairman and chief executive of Anaconda. Masterman is the chief financial officer of Anaconda. 29 It is clear from the evidence that wherever the proceedings are held there will be a degree of inconvenience to one or other of the parties. The Green affidavit evidences the fact that Anaconda is a very large mining corporation located in Western Australia, whose operations demand the substantial involvement of both Masterman and Forrest. Apart from that, the Green affidavit states only in general terms the consequence of these proceedings being maintained as follows: "Anaconda will incur substantial expense and inconvenience to its operations if such persons who are responsible for the day to day operations of the Company are required to prepare Anaconda's defence and attend the Court in New South Wales." 30 That material was elaborated upon in submissions on behalf of Anaconda as follows: "12 Given that Mr Forrest and Mr Masterman are two of Anaconda's principal operating officers responsible for its very substantial day-to-day operations, it will cause Anaconda expense and inconvenience to those operations if Mr Forrest and Mr Masterman are forced to prepare the company's defence for a hearing in Sydney. To do so inevitably will require their extended presence in Sydney to instruct solicitors and counsel, to produce documents for discoveyr (sic) and to inspect documents discovered by other parties. Likewise, attending a hearing in Sydney will involve an extended absence from the company's operations." 31 I accept that any proceedings involving the attention of Masterman and Forrest will create significant inconvenience. For reasons later addressed I doubt very much if that inconvenience will be significantly different wherever the proceedings are conducted. 32 The prejudice to the plaintiffs of a transfer of the proceedings is deposed to in the Van der Sluys affidavit as follows: "23. Subsequent to leaving CIBC Mr Maish and I formed a financial advisory business. That business is known as Warrama Consulting Pty Limited. Warrama conducts its business at Suite K, Level 13, 67 Albert Avenue, Chatswoood. Warrama was formed in September 1998. That company undertakes project finance and corporate advisory work. Warrama's business provides the income of myself and Mr Maish and its other employees, being one full time professional employee and two part-time office assistants. Given that Warrama does not have significant staffing, Mr Maish and I would be placed in a very difficult position if called away from our Sydney office. If called away from Sydney for the purposes of preparation of these proceedings for hearing, Warrama would not be able to fulfil its commitments to clients who have retained Warrama's services under specific service agreements, with the staff employed by it without the presence of myself and Mr Maish." 33 I have no doubt that significant prejudice would be occasioned to the plaintiff's in conducting a hearing in Perth. 34 It is my view that neither party has given sufficient weight to the fact that preparation for hearing in this matter may take place wherever the principals are located: with documents, so far as is necessary, travelling to the witnesses, rather than witnesses being required to go to the documents, wherever they may be. 35 Further, I am satisfied that neither party has paid sufficient weight to the availability to the Court of procedures for the taking of evidence which both minimise the time required for attendance to give oral evidence and which avoid, in appropriate cases attendance in Court: for example, by recourse to the taking of evidence in chief in statement form and by recourse to the taking of evidence by video link. 36 I do not regard this case as one in which cross examination by video link of any of the witnesses would be unduly hampered by the need to refer to documents during the course of cross examination. As a matter of course, statements of evidence in chief will be required to be served prior to hearing. The preparation of those statements in my view, may be conveniently conducted wherever the witnesses are presently located. 37 The position of the CIBC corporations was expressed in the following terms in submissions of counsel on their behalf: " C. CIBC's POSITION ON THE MOTION 5. CIBC are not in a position to support or oppose the Motion due to the lack of particulars of the basis on which the claim against CIBC has been brought. There are few (if any) factors connecting the claim made by the plaintiffs against CIBC to Western Australia on the basis of what CIBC knows at the present time. 6. So far as CIBC are concerned, the relevant factors to be taken into account on the Motion in the exercise of the Court's discretion to determine whether it is in the interests of justice to transfer the proceedings are as follows: · CIBC are respectively incorporated in Australia, Canada and Canada; · CIBC's registered offices are in Sydney, Toronto and Toronto (annexures "A" and "C" to the affidavit of Stephen van der Sluys sworn 26 June 2000); · The Deed of Assignment is governed by the laws of New South Wales and the parties to it have submitted to the non-exclusive jurisdiction of the courts of New South Wales (clause 9.4 to the Deed of Assignment at exhibit "SVDS1" to the affidavit of Stephen van der Sluys sworn 26 June 2000); · At the present time, neither the plaintiffs or Anaconda are able to particularise the agreement alleged to have been reached between CIBC and Anaconda that the debt was not capable of being assigned, save that it is allegedly an agreement between Anaconda and CIBC (paragraph 26 of the Summons; letter dated 25 May 2000 from Mallesons to Kemp Strang; letter dated 14 June 2000 from Kemp Strang to Mallesons; letter dated 27 June 2000 from Mallesons to Anderson Legal; letter dated 29 June 2000 from Mallesons to Anderson Legal). The individuals involved in the creation of that alleged agreement, the documents (if any) relevant to the alleged agreement and the governing law of the alleged agreement have not been identified. The factors connecting the alleged agreement to a particular jurisdiction cannot therefore be identified; · In light of the uncertainty as to the basis of the claim against CIBC, CIBC are not in a position to determine if they will be bringing any cross claims in the proceedings at the present time." 38 Apart from anything else those submissions underscore the obstacle to the granting of this application presented by the failure to have a precise definition of issues and of the extent and the nature of documents likely to be involved in the hearing of this matter. 39 Earlier in these reasons I observed that no jurisdiction issue was raised save as to one matter (which is addressed in the following reasons.) 40 Concurrently with the execution of the first agreement Anaconda entered into an agreement with Securities indemnifying Securities as follows: "1. Anaconda hereby agrees to indemnify and save Securities] its affiliates and respective directors, officers, employees and agents (collectively, the "Indemnified Parties" and individually, an "Indemnified Party") harmless from and against any and all losses, claims actions, suits, proceedings, damages, liabilities, costs or expenses of whatsoever nature or kind, including any investigation expenses incurred by the Indemnified Party, (individually, a "Claim") to which an Indemnified Party may become subject by reason of the performance of professional services rendered to you hereunder…" 41 The indemnity agreement contained the following jurisdiction clause: "This agreement is made pursuant to and shall be construed in accordance with the laws of Western Australia and the laws of Australia applicable therein. You and we hereby submit to the exclusive jurisdiction of the courts of Western Australia." 42 It was submitted on behalf of the applicant in relation to that indemnity and agreement as follows: "15 The indemnity agreement (exhibit KG 2 to Mr Green's affidavit) grants an indemnity from Anaconda to the third defendant [Securities] and its affiliates under certain circumstances. If any cross claim is to be made by the third defendant under this agreement, it will have to be brought in Western Australia, because cl 4 of the indemnity agreement contains a submission to the exclusive jurisdiction of the courts of that State. Anaconda Nickel does not know whether the third defendant intends to cross claim under the indemnity agreement." 43 Of that submission it may be observed that it underlines the difficulty confronting the application by reason of the absence of a definition of issues likely to arise in these proceedings. More importantly, however, I think it is highly unlikely on the material before me that the issues could give rise to a claim under the indemnity agreement by Securities against Anaconda. The only causes of action brought against the CIBC corporations arise out of any action taken by the CIBC corporations which could have operated to extinguish the alleged debt, the subject of the assignment. 44 It was further argued on behalf of Anaconda that the jurisdiction clause in the indemnity agreement evidenced a contemplation by the parties to the first agreement that the laws of Western Australia would apply to that agreement, and that the courts of that State would have jurisdiction in matters arising under the agreements. That may be so, but in the context of this application, I regard such a factor as being of little moment, particularly when viewed beside the provision in the assignment, as follows: "This deed is governed by the law in force in New South Wales and each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of New South Wales." 45 That clause I think carries some weight, at least in so far as the proceedings involve action by the plaintiffs against the CIBC corporations. 46 I am satisfied that there is no justification "in the interest of justice" to transfer these proceedings to the Supreme Court of Western Australia. 47 I note that there has been no evidence adduced nor submissions presented directed to procedures available to commercial matters in the Supreme Court of Western Australia, nor as to the likely time for hearing of any transferred proceedings. However, I think the special procedures available in this Court for the hearing of commercial matters and for the supervision of steps preparatory to hearing afford the parties with the opportunity of having a comparatively speedy and commercially effective resolution of their disputes. 48 Further, if I am wrong about the manner in which I think the preparation for hearing and the hearing of this matter may proceed, it is probable that, witnesses other than Forrest or Masterman, from outside the jurisdiction will be involved. I think the likelihood is that New South Wales provides a venue which balances the needs of all parties having regard to the location of those witnesses. 49 Although evidence has been adduced of the major operation conducted by Anaconda in Western Australia, that, as I have indicated in these reasons, has limited relevance. The operations themselves are not the subject matter of the agreements. That subject matter is the proper construction of the agreements and the performance of the CIBC corporations under the agreements so far as it is relevant to the determination of the question of whether any success fee was earned in terms of the second agreement. Essentially, the subject matter relates to the negotiations for and obtaining of any relevant financial facilities for Anaconda. 50 The parties have not cited any particular authority to guide the exercise of discretion in this matter. However, I think that it is common ground that I am bound by the decision in Bankinvest AG -v- Seabrook (1988) 14 NSWLR 711, to the extent that Anaconda bears no onus on this application: that no weight should be given to the choice of this forum by the plaintiffs, and that in determining what is "in the interests of justice" there is no place for the application of the "clearly inappropriate" test of the forum non conveniens cases. 51 I think there is some irony in adopting that approach in that it does not appear to have been that adopted in the Supreme Court of Western Australia in Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd (1990) 1 WAR 531 which treated the applicant as being required to discharge an onus and in expressing the view that the "evidence adduced on the application was insufficient to displace the plaintiff (sic) prima facie right to require [the Supreme Court of Western Australia] to exercise the jurisdiction which it has" (at 539). In a case such as this, where the interests of justice do not result in any strong pull in any one direction, the forum of choice may have some role to play as representing the status quo, consistently with the approach adopted in Bankinvest. 52 The application is refused and the applicant is to pay the respondent's costs of the motion. ******************** Last Modified: 09/26/2000 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.