Supreme Court New South Wales Medium Neutral Citation: Leighton International Limited v Gavin John Hodge [2011] NSWSC 1381 Hearing dates: 22 August 2011, 25 October 2011 Decision date: 16 November 2011 Jurisdiction: Equity Division Before: Bergin CJ in Eq Decision: Application for stay refused Catchwords: [PRIVATE INTERNATIONAL LAW] - [PRACTICE & PROCEDURE] - application to stay proceedings - claims by plaintiffs of breach of employment contract/breach of duty of loyalty in respect of conduct in Kuala Lumpur, Malaysia and Indonesia - concurrent process in Malaysia by defendant for reinstatement - real issues - prospective witnesses in many different countries in the Asian region - whether a clearly inappropriate forum for plaintiffs' claims - referral of questions of foreign law to foreign court or to referee Legislation Cited: Civil Law Act 1956 (Malaysia) Contracts Act 1950 (Malaysia) Courts of Judicature Act 1964 (Malaysia) Industrial Court Rules 1967 (Malaysia) Industrial Relations Act 1967 (Malaysia) Uniform Civil Procedure Rules 2005 Cases Cited: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 Akai Pty Limited v The People's Insurance Company Limited [1996] HCA 39; (1996) 188 CLR 418 Amalan Tepat Sdn Bhd v Lee Wai Yen [1996] 2 ILR 1394 Ballard v Multiplex Ltd [2008] NSWSC 1019; (2008) 68 ACSR 208 Barry Francis Spencer/Barii Spencer Abdullah v Courts Mammoth Berhad [2009] 1 ILR 515 Fleming v Marshall [2011] NSWCA 86 General Steel Industries Inc. v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 Lo Mu Sen & Sons Sdn Bhd v Loo Yoon Nien [2005] 1 ILR 800 Md Zain Ismail v Jadi Imaging Technologies Sdn Bhd [2008] 3 ILR 457 Misran Tamam v Pembangunan Pertanian Melaka Sdn Bhd [2007] 4 ILR 553 Nixdorf Computer (M) Sdn Bhd v Tan Hong Yak [1996] 2 ILR 1236 Puttick v Tenon Limited [2008] HCA 54; (2008) 238 CLR 265 Tan Bee Huat v Tan Chong Apparels Sdn Bhd & Anor [2006] 2 ILR 1320 Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538 Category: Principal judgment Parties: Leighton International Limited (1st Plaintiff) Leighton Offshore Pte Ltd (2nd Plaintiff) Leighton Holdings Limited (3rd Plaintiff) Gavin John Hodge (Defendant) Representation: G Hatcher SC/C Ward (Plaintiffs) J C Giles (Defendant) Herbert Geer Lawyers (Plaintiffs) Bennett + Co (Defendant) File Number(s): 2011/137985 Judgment 1The first plaintiff, Leighton International Limited (known until 2007 as Leighton Asia (Southern) Limited) (International), registered in the Cayman Islands, is a wholly owned subsidiary of the third plaintiff, Leighton Holdings Limited (Holdings), a public company based in Sydney and listed on the Australian Stock Exchange. The second plaintiff, Leighton Offshore Pte Ltd (Offshore) (formerly Leighton Contractors (Singapore) Pte Ltd), registered in Singapore, is a wholly owned subsidiary of International. Although there is a dispute in relation to the identity of the employer during some of the years it is alleged that the defendant, Gavin John Hodge, was an employee of International from October 2003 until 28 April 2011 when his employment contract was terminated for alleged misconduct. 2The plaintiffs commenced these proceedings by Statement of Claim filed on 28 April 2011. It is alleged that the defendant breached his employment contract and conspired with others to harm all of the plaintiffs. 3On 23 May 2011 the defendant lodged a representation under s 20(1) of the Industrial Relations Act 1967 (Malaysia) with the Director of the Department of Industrial Relations in Kuala Lumpur, Malaysia, seeking reinstatement (the Malaysian proceedings). 4By Notice of Motion filed in these proceedings on 26 May 2011 the defendant seeks a permanent stay of these proceedings pursuant to Part 12 Rule 11 of the Uniform Civil Procedure Rules 2005 (the Rules) on the basis that this Court is a clearly inappropriate forum for the plaintiffs' claims to be ventilated. 5The Motion was heard on 22 August 2011 when Mr G Hatcher SC, leading Mr C Ward, of counsel, appeared for the plaintiffs and Mr JC Giles, of counsel, appeared for the defendant. On that date it was clear that the plaintiffs' conspiracy claim was not properly pleaded and I ordered the plaintiffs to file and serve an Amended Statement of Claim. I also ordered that without prejudice to his application for a stay, the defendant was to file and serve a draft Defence to assist in the identification of the real issues in the proceedings. The Motion was then adjourned to accommodate that process and was listed part heard on 25 October 2011 when the hearing concluded and judgment was reserved. Background 6The defendant was born in Perth. He attended secondary school and the University of Western Australia graduating in 1986 with a Bachelor of Engineering. After an initial period of employment in Western Australia in the late 1980s he left Australia for South East Asia. He was a permanent resident of Malaysia for eight years from 1993 to 1998 and from 2000 to 2002. In 1996 he married a Malaysian national and citizen with whom he has two children born in 1996 and 1998, both of whom are Malaysian citizens. He is presently estranged from his wife who lives in Perth with the children. 7From 2000 to 2002 the defendant was employed by a Malaysian company Leighton Contractors Malaysia Sdn Bhd (a wholly owned subsidiary of International's predecessor Leighton Asia (Southern) Limited), as Engineering Manager on the Manjung Power Station Project in Malaysia. During that period he and his family lived in Kuala Lumpur. At the conclusion of the Manjung Power Station Project in 2002 the defendant was transferred to Leighton Contractors (Singapore) Pte Ltd (now Offshore) as the project manager of the Pan United Cement Silo Project based in Singapore. From 2002 to 2003 the defendant and his family lived in Singapore. 8In September 2003 the defendant applied for a job based in Malaysia with Contractors as the Engineering Manager of the Kuala Lumpur to Putrajaya Highway. He commenced employment on that project in October 2003 and arranged for his family to re-locate from Singapore to Kuala Lumpur. Since October 2003 he has resided permanently in Malaysia returning to Australia on business trips and more frequently on holidays to visit his family in Perth. Contract of Employment - 2003 9The Contract of Employment dated 24 September 2003 (effective from 13 October 2003) was between "Leighton Asia (Southern) and Subsidiary Companies" and the defendant (the Contract). It provided that the "Company" (undefined) was to pay the defendant's salary made up of three components, a base salary, a Malaysian area allowance and an exchange adjustment (cl 1). It provided that his salary was to be paid (and was paid) monthly into his bank account in Malaysian Ringgit (MYR) (cl 3). 10It was noted that because the defendant was an "expatriate working in Malaysia", his salary was subject to Malaysian income tax and that his salary and allowances had been structured to recognise the "personal tax regulations applicable in Malaysia" (cl 4). It was also noted that the year of assessment in Malaysia is from 1 January to 31 December and the "Company" was obliged to deduct Schedular Tax Deductions (based on the current regulations) and remit them to the Inland Revenue Board. It was also noted that the defendant was required to lodge a tax return annually throughout his employment and obtain "Tax Clearance" before any final monies could be released to him on his "departure" from the Company (cl 4). 11The Contract also provided that the defendant would be reimbursed reasonable costs for the transfer of his personal effects from Singapore to Kuala Lumpur. It provided that in the event of "separation" from the Company there would be a reimbursement for actual costs up to MYR 5,000. However if the defendant resigned or was terminated by the Company for misconduct, he was required to refund the relocation costs in full within the first year or on a pro-rata basis within the second year (cl 5). The Contract also provided for allowances for accommodation, a motor vehicle and for the education of the defendant's children together with appropriate healthcare cover conditional upon a contribution of USD200 per adult and USD100 per child (cls 6-10). 12The Contract also provided that the defendant was entitled to join the Leighton Asia Superannuation Fund, an "accumulation fund" into which employees and the Company contributed, with provision that if the defendant left the Company, employee contributions together with interest would be payable in full and the Company's contribution together with interest was payable on a pro-rata basis in accordance with the defendant's length of service (cl 14). It was noted that in order to obtain work in Malaysia, expatriates had to obtain approval from the Construction Industry Development Board and an employment pass from the Immigration Department and that the Company would assist in obtaining those approvals and passes (cl 15). 13The Contract provided that termination "for other than misconduct" would be by not less than one month's written notice by the Company and resignation by the defendant was to be by one month's written notice (cl 17). The contract also provided as follows: 20.Code of Business Conduct Leighton Asia, as a member of the Leighton Holdings Group, has adopted a Code of Business Conduct that establishes the guidelines under which all staff members are expected to conduct their business activities. As a Leighton Asia employee, you are required to: + Act with integrity; + Strive to provide satisfactory returns for our shareholders; + Support of the wellbeing of our employees; + Provide our clients with a truly professional approach to contracting; + Operate with an awareness of and concern for the effect of our work on the communities and environment within which we work. A copy of the Code of Business Conduct is prominently displayed at all sites and locations. 21. Exclusive Employment It is a condition of employment that you shall not engage in any other business of employment without the specific consent of the General Manager, while in the Company's employment. If you have an interest with any person or in any company or organisation with whom the Company has dealings, you must disclose such interest to the General Manager in writing prior to the commencement of your employment. Should you be in doubt in any way, please consult the General Manager. 22. Confidentiality During your employment with Leighton, you are not permitted to divulge any information which may be regarded as of a confidential nature including, but not limited to, information on Company business, developed processes, costs, contracts, etc. or any information which may be regarded as confidential to any company or person not directly employed by Leighton. Retention Bonus - 2006 14On 1 July 2006 the Managing Director of Leighton Asia (Southern) Limited wrote to the defendant advising that Leighton Asia (Southern) Limited and Subsidiaries had implemented a Retention Bonus plan for selected key staff members. The defendant was offered a Retention Bonus in return for his agreement to remain as an employee for a period of five years with effect from 1 July 2006. He was advised that any Retention Bonus that he would receive would be additional to and did not form part of his remuneration package or any benefit that he may be entitled to under the Contract. The Bonus offered was equal to 50% (6 months) of his base salary as at 1 July 2011 excluding bonus payments, car allowances, country/support/disability allowances and company superannuation. The payment of the Retention Bonus was conditional upon the defendant remaining in his employment as at 1 July 2011. However it would be paid if he had been made redundant prior to that date or terminated due to serious illness or injury or in the case of his death prior to that date. It provided that the Retention Bonus would be forfeited if the defendant's employment was terminated prior to 1 July 2011 for "serious misconduct" or for any reason other than redundancy or termination for serious illness, injury or death. 15That offer included the following: As this offer is only being made to selected staff members, it is imperative that you keep your participation in the Retention Bonus Plan confidential . Should you disclose your participation or any details of the Retention Bonus Plan to any person other than your immediate family, your financial advisors or relevant taxation officers, you will forfeit your entitlement to the Retention Bonus. Leighton Eclipse - 2008 16In July 2008 the defendant was appointed Project Manager of a project known as the "Leighton Eclipse Project" (the Project) for the construction of a 130 metre long pipe laying vessel known as the Leighton Eclipse (the Eclipse ). The hull of the Eclipse was constructed in a ship-building yard on Batam Island, Indonesia, an hour flight from Kuala Lumpur. While working on the Project the defendant reported to Russell Waugh, who in turn reported to two other persons. All three of the defendants' direct or indirect superiors were based in International's head office in Kuala Lumpur. The defendant was also based in Kuala Lumpur, making day trips to Batam from time to time. There were about fifty employees or contractors engaged on the Project who were supervised by the defendant. About fifteen of those employees or contractors were based in Kuala Lumpur and the balance were based on Batam Island. 17A Roll On Roll Of barge, referred to as the "RoRo" (the Barge), was being constructed at the same shipyard for an Indian company, the Adani Group (Adani) by PT Expert Engineering (PTEE). The construction of the Barge was to be managed by another company, LYE Singapore Pte Ltd (LYE). Deferred Bonus Plan - 2008 18On 3 December 2008 the defendant was notified that the "Leighton Group" had adopted a "Deferred Bonus Plan" for the year ended 30 June 2008 for selected senior executives employed by International. The defendant was offered a Deferred Bonus of USD40,000 payable on 31 July 2011. It was conditional upon him remaining employed with the "Leighton Group" as at 30 July 2011. The Deferred Bonus would be forfeited if the defendant resigned or if his employment was terminated for any reason other than redundancy, retirement or illness or injury. Internal Inquiry - 2009 19In a document entitled "Leighton Contractors (India) Pvt. Ltd Offshore Oil and Gas Division Report for the Internal Inquiry Conducted into S379 Eclipse Project" (the Report) there is an allegation that documentation was discovered from suppliers of materials for a "non-Leighton" vessel built in the same shipyard as the Eclipse hull but which contained the Leighton project manager's name on the invoice. 20The Report includes a summary of a meeting with the defendant and others on 18 February 2009 at the shipyard at Sekupang, Batam, held for the purpose of discussing circumstances surrounding why the defendant's name appeared on invoices and delivery orders for another vessel (the Barge) constructed at the same shipyard as the Eclipse . The Report records that the defendant initially denied having any knowledge of the Barge but that approximately three hours later he admitted to knowing that the materials were supplied to the Barge and that he was "helping out" or "facilitating" but had no commercial interest in the Barge. 21The Report also includes a record of a meeting with the defendant on 24 February 2009 in Kuala Lumpur in relation to his name being on invoices in which LYE is the customer. The defendant is recorded as having stated that he placed the orders for LYE and explained the relationship of a Mr Sri Kumar with Leighton in his capacity as owner of LYE with whom Leighton contracted for consulting services and for design services. The Report notes that the defendant was aware that Mr Kumar was doing some work for the Mundra Port project in India being performed by Adani. It also records that initial contact with the defendant came from Mr Kumar with a request for information about whether he knew of an available shipyard. It is also recorded that the defendant was aware that PTEE were building the Barge, but did not know for whom the Barge was being built. The Report also includes the following: In his interview, Gavin Hodge was not aware of any circumstances where PTEE where ( sic ) ordering excess materials in Leighton Purchase Order for use by PTEE in another project. GH confirmed that he had not given approval for such activity to PTEE. 22The Report includes details of a number of interviews with other people in respect of other allegations not relevant to the defendant's conduct either in Indonesia or Malaysia. Further Inquiry and Report - 2009 23In December 2009, PricewaterhouseCoopers Advisory Service Sdn Bhd retained by Leighton India and South East Asia Sdn Bhd provided its report in relation to allegations of "misconduct" in respect of persons involved in the construction of the Eclipse in Batam. This report relates to conduct of other persons and does not touch upon the defendant's conduct or any matters relating to the invoices referred to in the earlier Report. Suspension - 2011 24On 28 March 2011 the General Manager, Human Resources of Leighton International Sdn Bhd, Matthew Bouw, wrote to the defendant referring to a meeting on that day confirming that the defendant had been "suspended" following the Group's preliminary investigation into the fabrication of the Eclipse . He was advised that he would be repatriated to Perth and would be provided with serviced accommodation for the duration of his suspension at the expense of the Company. However all allowances and benefits relating to his expatriation to Malaysia were to cease to apply during the period of his suspension although his base salary (excluding his area allowance) would be paid in Australian dollars and taxed in accordance with Australian Income Tax legislation. He was also advised that he would be responsible for the provision of his private health insurance from 4 April 2011 and that he would be required to make himself available for the ongoing investigation in relation to the "Eclipse issues". 25On 5 April 2011 the defendant's lawyers in Perth, Bennett & Co, wrote to Mr Bouw in Kuala Lumpur referring to the defendant's suspension. That letter confirmed that at the meeting with the defendant in Kuala Lumpur on 28 March 2011, Stephen Sasse was present and asked the defendant to read "legal advice" that had been provided to the Company and that Mr Sasse had advised the defendant that for the reasons set out in that advice his services were being "suspended". Bennett & Co asked for a copy of the advice and advised that the defendant was unaware of any basis upon which "Leighton" was entitled to suspend his services. The solicitors requested advice as to any basis upon which the Company claimed it was entitled to suspend the defendant and on which it asserted the defendant was not entitled to receive his "usual entitlements". The solicitors also requested advice as to the basis upon which it was suggested that from 4 April 2011 the defendant was responsible for the provision of his own private health insurance. It also requested detail of the "Leighton Eclipse issues". 26On 7 April 2011 Stephen Sasse, General Manager, Organisational Strategy, of Holdings, wrote to the defendant's solicitors advising that the matters raised in their correspondence to Mr Bouw were "matters which are regarded" by International "as commercial in confidence" and that it would "be as well if Mr Hodge was not placed in a position of breaching his duty of confidentiality" to International. Mr Sasse advised that if a decision was ultimately taken which would adversely affect the defendant's interests he would be given all necessary information and an opportunity to take advice. 27On 11 April 2011 the defendant's solicitors wrote to Mr Sasse and advised that his suggestion that the requested information was "commercial in confidence" was "misplaced". They also referred to the request that Mr Sasse had made for the defendant to attend a meeting in Sydney on 14 April 2011 and advised that the defendant was not prepared to make a lengthy trip to Sydney in circumstances where he did not have medical cover; he was not being paid his usual entitlements in respect of his employment; the matters and enquiries made in the previous letter remained outstanding; and the defendant had not been provided with an agenda or any indication of the matters to be raised at the meeting, the process to be adopted and the identity of the participants. 28On 14 April 2011 Mr Sasse wrote to the defendant's solicitors advising that International would reinstate the defendant's "usual entitlements" as requested. It was noted that the defendant did not attend the interview on 14 April 2011 and that matters on which International and its related entities required responses from the defendant would not be canvassed by way of correspondence nor through "an intermediary". Mr Sasse advised that whatever the defendant's solicitor's view was, International continued to regard the matters as confidential and expected its employees to respect their obligations to maintain that confidentiality. Mr Sasse advised that he would inform the defendant separately of a further date on which he would be required to attend to be interviewed. That letter concluded as follows: I expect that in preparation for that interview you will want to advise Mr Hodge of his obligations to his employer, in particular his duty to comply with the direction to attend the interview. I expect you will have already advised him of his duty to fully disclose all matters within his knowledge, whether concerning himself or others, relevant to his employment and his fiduciary obligations to his employer. This obviously includes the matters the subject of the investigation, but is clearly not limited to those matters. You will also want to advise Mr Hodge of the serious consequences for his employment should he again fail to attend as directed. 29On 20 April 2011 the defendant's solicitors wrote to Mr Sasse confirming that they did not consider that the direction that the defendant was suspended was either lawful or reasonable. It was noted that the basis for the suspension was said to be the Leighton Group's "preliminary investigation into the fabrication of the Leighton Eclipse" and that it was entirely reasonable and prudent for the defendant to have sought legal advice and to have appointed Bennett & Co to act for him in respect of the purported "suspension". That letter included the following: I point out that my client's employer is Leighton International Ltd (formerly Leighton Asia (Southern) Limited). In your correspondence, you refer to being authorised by Leighton Holdings Ltd, being an entity which is not our client's employer, and an entity in respect of whom our client is not at liberty to disclose information which is confidential to his employer. 30The solicitors also gave an undertaking to treat any information disclosed to them with the same confidence as would apply if the information had been disclosed to the defendant directly. 31On 21 April 2011 Mr Sasse wrote to the defendant's solicitors advising, inter alia , that in view of the confidentiality undertaking they had provided he was prepared to disclose that the defendant would be asked to "comply fully with his obligations of candour and fidelity in disclosing his knowledge in respect of, but not limited to, the following matters and matters related thereto": (i) Mr Hodge's knowledge and authorisation of and involvement in the making of commissions or secret payments by or on behalf of Leighton Contractors (Singapore) Pte Ltd (now Leighton Offshore Pte Ltd) to contractors and individuals engaged in tendering and supplying labour, materials and services for the construction of the Leighton Eclipse by PT Expert Engineering at the Batam Shipyard in Indonesia. (ii) Mr Hodge's knowledge of and involvement in the receipt by employees of Leighton Contractors (Singapore) Pte Ltd, or its related entities, of commissions and/or secret payments while those employees were engaged on the construction of the Leighton Eclipse. (iii) Mr Hodge's involvement in the construction of a roll on roll off barge (RoRo) by PT Expert Engineering at the same time as the Leighton Eclipse was being constructed at the same shipyard. (iv) Whether Mr Hodge authorised the purchase of steel and other materials by Leighton Contractors (Singapore) Pte Ltd which steel and other materials were not required for the construction of the Leighton Eclipse. (v) Whether Mr Hodge authorised and/or was aware of the diversion of steel and other materials purchased by Leighton Contractors (Singapore) Pte Ltd to be used in the construction of the RoRo. 32Mr Sasse advised that the defendant was directed to attend Holdings' offices in Sydney on 28 April 2011 at 8.00 am to be interviewed and to remain in Sydney for a further interview until advised that he was no longer required. 33On 27 April 2011 the defendant's solicitors advised that the defendant considered it appropriate that Mr Waugh be available at the proposed interview because not only was he the defendant's direct supervisor but he was also involved directly in the initial investigation that covered some of the issues about which Mr Sasse wished to interview the defendant. Mr Sasse was advised that the solicitor handling the defendant's matter was on leave and may wish to attend the interview and accordingly it was suggested that the interview take place the following week either in person or by video-conference. It was noted that the legal advice that was shown to the defendant at the initial meeting in Malaysia on 28 March 2011 and the report in relation to the previous investigation had still not been provided and a further request was made for those materials. Termination 34On 28 April 2011 Holdings wrote to the defendant noting that he had failed to comply with the "lawful direction" to attend the interview that day and noting also that he had not provided a satisfactory reason for that failure. That letter included the following: You are well aware that there are very serious matters concerning your conduct as an employee in the Leighton Group of companies which are presently under investigation. Your continuing failure to assist in these enquiries inevitably results in an irresistible inference that you have no reasonable explanation which could lead to a conclusion that your involvement in these matters was innocent. In these circumstances I must act upon the evidence that is currently available to me and accordingly advise you on behalf of Leighton International Limited that we regard your conduct as a repudiation of your obligations under your employment contract and we are prepared to accept that repudiation and treat your employment as terminated with immediate effect. Proceedings commenced 35On 28 April 2011 the plaintiffs filed the Statement of Claim and served it on the defendant in Perth at approximately 6.45 pm Perth time. 36On 29 April 2011 the plaintiffs' solicitors, Herbert Geer, wrote to the defendant's solicitors advising that the proceedings had been commenced and that the defendant had been served with the Statement of Claim the previous evening. That letter also included the following: In respect of the Proceedings, you should be aware that our client has made contact with persons and entities both in Australia and overseas, connected to the roll on roll off barge (RoRo) which was under construction at the Batam shipyard contemporaneously with the construction of our clients' Leighton Eclipse pipe laying barge at that shipyard. The purpose of that contact inter alia is to obtain access to or otherwise ensure the preservation of documentation and other materials that may become evidence in the Proceedings as they are currently pleaded and further materials in respect of matters not yet pleaded but likely to be pleaded, in due course, in the Proceedings. You will understand the importance of your client being advised of the serious consequences for him should he or anyone on his behalf seek to interfere with our clients' enquiries, or take any steps to cause the destruction, deletion or removal of documentation (electronic or otherwise) that might become evidence in the Proceedings. Mr Sasse's evidence 37Prior to and after meeting with the defendant Mr Sasse also interviewed international or related company employees who had been involved in the construction of the Eclipse including Barry McCalla, who was the Construction Superintendent for the Project. He also spoke to the marine designer and surveyor, Gurudas Banerjee of GB Marine in Singapore, who was also the designer and surveyor for the Barge. Mr Sasse said that he met with the defendant in March 2011 and outlined his concerns in relation to the conduct of the Project and the defendant's role. In particular he raised with the defendant the "apparently corrupt conduct" and the diversion of steel and other materials purchased by International to the Barge. 38Mr Sasse claims that all purchase order documentation regarding the Eclipse project has been transferred from Malaysia to Sydney to facilitate the investigation from Sydney. He also gave evidence that there are many other documents that have been transferred to Sydney, including some from the marine surveyor, some from other parts of the Project and some from the shipyard in Batam, Indonesia. Mr Sasse said that there may be "residual documents" in Kuala Lumpur as well as India because the general manager of Offshore is now based in India. He said that he has requested that documents in the general manager's possession relating to the Project be sent to Sydney. His evidence was that electronic records in relation to the Eclipse whether held on laptops or on hard drives or by other means are now available in Sydney. 39Another person who is of some relevance in the dispute is Alan Fenwick who has now been re-employed by the Leighton Group and is working with the Eclipse in Iraq. Mr McCalla has also been re-employed and is in Iraq. Although Mr Waugh is based in India he travels to Australia regularly. The plaintiffs have retained forensic accountants, Concorde Corporation, that has based its investigation in Sydney. 40Mr Sasse claimed that the defendant has travelled regularly to Perth from Kuala Lumpur on average every two months for about a week and for longer periods at Christmas. He claimed that the defendant owns property in Perth and his estranged wife has been granted permanent residency in Australia. The defendant's two children hold Australian Passports and attend school in Perth. Mr Sasse said that the defendant regularly remits money from Malaysia to Perth. He is unaware whether the defendant has been granted permanent residency by Malaysia. Statement of Claim 41The original Statement of Claim pleaded a breach of clauses 20 and 21 of the Contract. It was alleged that in breach of clause 21 the defendant engaged in project management activities in relation to the Barge at the Batam Shipyard, project management activities which were neither for, nor on behalf of, International or any of its related corporate entities. It alleged also that this amounted to a failure to adhere to the Code of Business Conduct and was thus a breach of clause 20 of the Contract. However additional particulars were provided in respect of the breach of clause 20 in respect of conduct "without integrity" and without regard to the provision of satisfactory returns to the shareholders including that the defendant utilised the property of International and Offshore for purposes other than purposes which benefited International or its related corporate entities; that he utilised property of Offshore to benefit one or more third parties to the detriment of all of the plaintiffs; and that in December 2008 he ordered in the name of Offshore, then known as Leighton Contractors (Singapore) Pte Ltd, steel plates at a value of at least AUD520,384 used in the construction of the Barge and not for the purposes of International or any of its related corporate entities. 42It was also alleged that the defendant breached his duty of fidelity and good faith owed to International. There is a further claim in respect of an alleged implied term that the defendant would not utilise the property of International or its related corporate entities, including Offshore, for any purposes other than purposes that benefited International or its related corporate entities. There is a further alternative claim that the defendant breached his fiduciary duties to International and Offshore under which he was obliged not to profit from his position of trust and not bring his own interests into conflict with his obligations as a fiduciary. The particulars to each of these claims referred to the ordering of the steel plates in Offshore's name for the construction of the Barge. 43There was also a claim that the defendant wrongfully authorised payment by Offshore for the steel plates and that he wrongfully obtained a personal financial benefit from the breaches of fidelity and good faith, the implied term and the fiduciary duty. The plaintiffs also claimed that by this conduct the defendant had repudiated his obligations and therefore ceased to be eligible to receive any remuneration from International for the period commencing May 2008 or such later time to be determined. It is also alleged that between May 2008 and at least January 2009 the defendant repatriated funds, including the profits obtained by him as a result of his wrongful conduct, to Australia. 44There was also a conspiracy claim. It was alleged that between May 2008 and January 2009 the defendant conspired with one or more third parties to deny all of the plaintiffs the benefit of their name, their corporate reputation, their intellectual property including unregistered trademarks and/or contracts which would, but for the defendant's wrongful conduct, have been contracts with or for the benefit of one or more of the plaintiffs. The particulars to that conspiracy claim were as follows: (i) The Defendant conspired with one or more third parties to deal in the name of the First and/or Second and/or Third Plaintiffs in circumstances in which the Plaintiffs were not aware of the Defendant's activities and in which the Plaintiffs' property, name and corporate reputations were used for purposes unrelated to the activities of the Plaintiffs. (ii) The Defendant utilised the property of the First Plaintiff and its related corporate entities including the Second Plaintiff for purposes other than purposes which benefited the First Plaintiff or its related corporate entities thereby diminishing the returns available to the Third plaintiff as the sole shareholder of the shares in the First Plaintiff. (iii) In the period May 2008 to January 2009 the Defendant engaged in project management activities in the name of the First, Second or Third Plaintiffs in relation to construction of a Roll On Roll Off vessel (the "RoRo") at the Batam Shipyard in Indonesia; (iv) The project management activities were neither for, nor on behalf of, the First to Third Plaintiffs or any of their related corporate entities; (v) The Defendant utilised property of the Second Plaintiff to benefit one or more third parties to the detriment of the First, Second and/or Third Plaintiffs. (vi) On or about December 2008 the Defendant ordered, in the name of the Second Plaintiff then known as Leighton Contractors (Singapore) Pte Ltd, steel plates as set out in Annexure "A" to this Statement of Claim (the "Steel Plates") to the value of at least AUD520,384 used in the construction of the RoRo and not for the purposes of the First to Third Plaintiffs or any of their related corporate entities. 45It was then claimed that by reason of the "wrongful conduct" of the defendant the first, second and third plaintiffs had suffered loss and damage particularised as AUD520,384 and such further damages to be quantified following an account of profits. 46There was no claim that the defendant's purpose and intention was to injure the plaintiffs. Amended Statement of Claim 47The plaintiffs' Amended Statement of Claim of 16 September 2011 increases the damages claim from $520,328 to $5,646,520.55. There is a new claim for damage to reputation and loss of a chance of a contract with the Adani Group. The breach of contract claim has been amended to include a claim that the defendant provided project management activities in relation to the Barge at the Batam Shipyard in Indonesia. It is alleged that in providing those activities, the defendant represented to one or more third parties that he was acting as an employee of or as an agent of "Leighton", using a "Leighton company email address" and attending meetings in relation to the construction of the Barge at which he represented to the attendees at the meeting that the Barge was being project managed by "Leightons". 48There is a new claim that after the defendant contracted to engage in the project management activities, he engaged PTEE in Batam Indonesia to construct the Eclipse on behalf of the plaintiffs. It is alleged that the defendant did not follow the plaintiffs' tendering procedures in ensuring that any contracting party had the financial strength to ensure its capacity to comply with its obligations under the proposed contract. It is also alleged that the defendant placed himself in a position where there was an obvious conflict between his interests in the project management activities and his obligations as an employee. 49There is a more particular allegation that the defendant authorised the purchase of at least 469.06 tonnes of steel by the plaintiffs knowing that the steel was not for use in the construction of the Eclipse but rather for the construction of the Barge. There are also claims that the defendant caused or allowed to be entered in the accounts and records of International and Offshore, property in the form of 469.06 tonnes of steel that was not actually available to them. It is alleged that the defendant did not declare his project management activities with PTEE and that he engaged in negotiations with PTEE in respect of work done on the Eclipse to the detriment of International and Offshore. It is alleged that without any justification he authorised uplift payments to the benefit of PTEE in respect of the steel where no uplift payments were properly payable to PTEE. 50It is also alleged that during the construction of the Eclipse the defendant authorised additional loadings for PTEE for High Tensile Steel in excess of standard commercial rates. It is alleged that by intermingling steel purchases for the Barge and those for the Eclipse the defendant prevented the plaintiffs from reconciling the appropriate costs involved in the purchase of that steel. 51The plaintiffs rectified the defect in the conspiracy claim as originally pleaded by alleging that the defendant's sole and/or predominant purpose and that of the third parties was to injure the plaintiffs. The particulars include the claim that the purpose was to deny all of the plaintiffs the ability to obtain remuneration in respect of the project management activities and the ability to establish a business relationship with the Adani Group. 52There is an additional claim that the defendant conspired unlawfully with one or more third parties to deny all the plaintiffs the benefits of their name, their corporate reputation, their intellectual property and the contracts that would, but for the unlawful conduct of the defendant, have been contracts with or for the benefit of all the plaintiffs. The unlawfulness is the defendant's conduct that was allegedly in breach of his obligations under clauses 20 and 21 of the Contract. Draft Defence 53The draft Defence was filed and served without prejudice to the defendant's application. The defendant admits that prior to 2005 he was employed by International pursuant to the Contract. The defendant denies that he was employed by International after 2005. It is alleged that the Contract was terminated in 2005 and the defendant became an employee of Leighton Contractors (Malaysia) Sdn Bhd (LCM) and/or Leighton India and South East Asia Sdn Bhd (LISEA) both of which were incorporated in and pursuant to the laws of Malaysia. 54The defendant denies that he breached his Contract with LCM and/or LISEA and denies he breached any duties that he may have owed to his employers. He admits that he assisted LYE to order outfitting materials in relation to the Barge and that such assistance was not inconsistent with the terms of his employment with LCM and/or LISEA. 55The defendant claims that there was a procurement process in relation to the selection of PTEE to construct the Eclipse and that this was approved by International, Offshore, LCM and/or LISEA. It is alleged that this process was undertaken in Malaysia and in addition to the defendant involved numerous officers of International and/or Offshore including Mr Waugh, Mr Fulvio Paggiaro and Mr Bob Wildermuth. It is alleged that pre-selection included approaching approximately 21 Shipyards, from which a short list was created including PTEE who were invited to submit offers for the construction of the Eclipse . It is alleged that PTEE's offer was accepted and a contract was entered into between International and/or Offshore in terms consistent with the standard sub-contract agreement of those companies. 56It is alleged that Offshore entered into a sub-contract on the basis that it was aware of PTEE's financial situation and that this made it difficult for PTEE to obtain steel as it was not in a position to pay for steel orders up-front. It is alleged that it was an express term of the sub-contract that Offshore, on behalf of PTEE, would order and pay for steel materials required for the construction of the Eclipse. It is also alleged that it was an express term that Offshore would deduct the cost of purchasing such steel materials from amounts paid to PTEE by way of progress claims. 57The draft Defence includes a claim that there was a Steel Requisition process and a Sub-Contract Payment Process in respect of the orders for steel for the construction of the Eclipse . In the main these involved transactions in Batam and Kuala Lumpur. 58It is alleged that without the knowledge or authorisation of the defendant PTEE transferred a quantity of steel, which was not able to be utilised in the Eclipse (by reason of a non-compliant delivery) to other projects in the Batam shipyard. It is also alleged that the defendant only became aware of such transfer after delivery and that the full value was subsequently deducted from progress claims made by PTEE. 59In respect of the conspiracy claim the defendant admits that he assisted LYE to order outfitting materials in connection with the construction of the Barge. It is alleged that such assistance was limited to the defendant placing an order for steel materials on behalf of LYE, which were paid for in full by LYE. It is also alleged that this conduct was in accordance with his employment conditions. Otherwise the conspiracy claims are denied. The Malaysian Proceedings and Jurisdiction 60The plaintiffs relied upon the evidence of Lim Heng Seng (Mr Lim) who was admitted as an Advocate and Solicitor of the High Court of Malaysia in 1988. Mr Lim is a partner with the law firm Lee Hishammuddin Allen & Gledhill practising in the Kuala Lumpur office of that firm. Mr Lim has over 35 years experience as a lawyer in Malaysia, in the Judicial and Legal Service of Malaysia and at the Malaysian Bar. Mr Lim gave evidence in relation to the status of the Malaysian proceedings. 61The Industrial Court in Malaysia is established by the Industrial Relations Act 1965 (Malaysia) (the Act) that provides for the resolution and settlement of industrial disputes involving negotiations and conciliation by the Director General of Industrial Relations (the DG). When negotiations and conciliation steps fail there is a report and reference to the Minister of Human Resources (the Minister) who will decide if the matter should be referred to the Industrial Court. The statutory system represents the Malaysian legislative authority's prescription of the tri-partite mode of industrial dispute resolution processing as the preferred alternative to disruptive industrial action. The duty of the DG is not only to notify the Minister of a failure to settle a matter by conciliation but also to make a report to the Minister. It is on the basis of this report that the Minister's discretion is exercised as to whether to refer the dispute to the Industrial Court. 62The determination of the dispute and the handing down of an Award by the Industrial Court is intended to be final. However, section 33A of the Act introduces a mechanism for the reference of questions of law that arise in the course of the proceedings before the Industrial Court to the High Court. Judicial review has effectively displaced the virtually obsolete section 33A of the Act. The High Court's power to enquire into the legality and rationality of decisions of the Minister and of the Industrial Court has played a significant part in the shaping of the form and content of industrial law and jurisprudence and also administrative law in Malaysia. 63The defendant's representation under section 20 of the Act was filed on 23 May 2011 claiming that his dismissal by International was without just cause or excuse. That section provides for resolution of a dispute arising out of the cessation of an employment relationship. It relates to individual disputes between an employee and the employer and not a collective dispute between workmen represented by a union and an employer. In determining the dispute, the Industrial Court is to act in accordance with equity, good conscience and the substantial merits of the case without regard to technicalities and legal norms. The practical effect is that while a civil court may determine that there is a lawful dismissal in accordance with the terms of a contract of employment, the Industrial Court may nevertheless determine that such dismissal was without just cause or excuse. 64Mr Lim gave evidence that once the decision is made by the Minister to refer the case to the Industrial Court, the process is governed by the Industrial Court Rules 1967 (Malaysia). That process essentially begins with the filing of forms by parties seeking to be represented in the proceedings by a legal practitioner. Once the case is brought before the Industrial Court, the claimant (the employee) will file a Statement of Case. Thereafter, the employer will file its Statement in Reply and the claimant may subsequently file a Rejoinder. Before the hearing, the Chairman of the Industrial Court may call upon the parties to file an agreed bundle of documents relating to the case and an agreed statement of facts. Witness statements may also be directed. The trial process follows the adversarial system where the Industrial Court Chairman, the adjudicator, hears the cases presented by both parties. Other than in constructive dismissal cases, the employer - upon whom the burden is cast to establish just cause - begins the case by calling witnesses. Witnesses are examined, cross-examined and re-examined. After both parties have presented their cases, submissions are made orally and/or in writing. At the end of the trial and after hearing and/or reading the submissions of the respective parties, the Industrial Court Chairman will hand down the Award. 65The Award of the Industrial Court is subject to judicial review in proceedings filed in the High Court. An appeal from the decision of the High Court will lie to the Court of Appeal. Leave to the "apex court", the Federal Court, is required. This is subject to stringent requirements set out in the Courts of Judicature Act 1964 (Malaysia). 66The time for steps to be taken from the lodging of a representation or complaint at the office of the DG to the completion of the matter referred to the Industrial Court depends upon the facts of each case, the availability of witnesses and documentary evidence brought in to the Industrial Court. Mr Lim's evidence was that if the matter is contested, it is likely to take from "two to three years for the matter to be disposed of by the Industrial Court". If the Award is challenged by way of judicial review proceedings, the time taken for the disposal of such proceedings by the High Court has now been considerably shortened to between six months to one year. The time for the disposal of Appeals to the Court of Appeal is less predictable. 67Mr Lim addressed the question of whether the Malaysian proceedings would lead to any issue estoppel. He expressed the opinion that there is no significant jurisprudence developed in this area and referred to only two cases Lo Mu Sen & Sons Sdn Bhd v Loo Yoon Nien [2005] 1 ILR 800 and Nixdorf Computer (M) Sdn Bhd v Tan Hong Yak [1996] 2 ILR 1236. However Mr Lim referred to a series of cases in which applications to stay proceedings before the Industrial Court of Malaysia had been made where there were collateral actions pending in the High Court of Malaysia. Mr Lim said that the ground on which these applications were made was that the same set of issues of facts and law were to be determined by both the Industrial Court and the High Court. It was held that it was in the interests of the due administration of justice that the High Court suit for breaches of contract and claims for contractual remedies and declaratory relief should take precedence and be allowed to go forward before the Industrial Court proceeds to hear the claim for unjust dismissal. 68In those cases the Industrial Court referred to the avoidance of inconsistent findings and the fact that the Industrial Court was an inferior court that should await the decision of the High Court: Tan Bee Huat v Tan Chong Apparels Sdn Bhd & Anor [2006] 2 ILR 1320; Amalan Tepat Sdn Bhd v Lee Wai Yen [1996] 2 ILR 1394; Md Zain Ismail v Jadi Imaging Technologies Sdn Bhd [2008] 3 ILR 457; Barry Francis Spencer/Barii Spencer Abdullah v Courts Mammoth Berhad [2009] 1 ILR 515. Mr Lim referred to another case in which the Industrial Court refused to stay the proceedings before it pending proceedings in the High Court. An appeal to the High Court was dismissed on the basis that although the facts in the two proceedings were the same the issues before the two courts were different. The High Court found that the issue before the Industrial Court was whether there was just cause to dismiss the employee whereas the case before the High Court was for breaches of contract in which the applicant was seeking contractual remedies and declaratory relief: Misran Tamam v Pembangunan Pertanian Melaka Sdn Bhd [2007] 4 ILR 553. It will obviously depend upon the facts of the particular case but it is difficult to see that the issues would be different where the employer relies upon the same breaches to show just cause as it does to seek a contractual remedy for breaches of contract. 69Pang Hee Min (Mr Pang) is the Human Resources Manager of Leighton International Sdn Bhd (LISB). On 11 July 2011 Mr Pang with another officer of LISB attended a conciliation meeting at the Industrial Relations Department of Malaysia in Kuala Lumpur. Mr Pang claimed that the employer named and asserted by the defendant in his representation to the Industrial Relations Department is LISB. Mr Pang claimed that this assertion is incorrect because the defendant was employed by International. 70Mr Pang informed the Industrial Relations Officer at the conciliation meeting that based on the Contract, International and not LISB was the defendant's employer up to his employment ending on 28 April 2011. He also informed the Officer that International is a foreign entity registered in the Cayman Islands and in the circumstances the representation made by the defendant to the Industrial Relations Department against LISB was misconceived. 71The Industrial Relations Officer explained to Mr Pang that in the event that the employer is International, which is a foreign entity, the Industrial Relations Department has no jurisdiction over the matter. The Officer advised Mr Pang that there would not be any further conciliation as there had been no offers to resolve the representation. The Officer also advised that following an unsuccessful conciliation a report would be prepared and referred to the Minister for his consideration and decision. Nothing further has yet been heard from the Industrial Relations Department in respect of the defendant's representation. 72The defendant claimed that at the conclusion of the conciliation meeting at the Department of Industrial Relations the Officer asked him to provide further information supporting his contention that his employer was a Malaysian entity. The defendant refutes the assertions that his employer is International and claims that his employer was the Malaysian registered entity Leighton India and South East Asia Sdn Bhd (formerly known as Leighton SEA Sdn Bhd). In this regard he referred to letters dated 14 December 2009 and 4 January 2010 in which that company confirmed that the defendant was employed by it as the Strategic Development Manager. 73The defendant relied upon the evidence of Anand Ponnudurai (Mr Ponnudurai) an Advocate and Solicitor admitted to practice in the High Court of Malaysia in 1991. Since his admission he has practised predominately in the area of civil litigation and employment law in particular in Malaysia. He is a partner in the firm Bodipalar Ponnudurai de Silva (BPD) being a partnership that he formed in 2001. BPD is assisting the defendant in the Malaysian proceedings. Mr Ponnudurai said that in most cases if the matter is not resolved at conciliation the Minister will refer the matter to the Industrial Court for an Award. 74Mr Ponnudurai has read the original Statement of Claim in these proceedings and gave the following evidence: (1) There is no reason that he could think of that civil proceedings could not have been commenced in the High Court of Malaysia against the defendant; (2) Malaysia is a common law jurisdiction having its historical origins in English law and practice; (3) The High Court of Malaysia has jurisdiction in both common law and equitable claims, including jurisdiction in respect of the causes of action outlined in the Statement of Claim; (4) Court proceedings are commenced by writ with the action proceeding on pleadings, with a requirement that the parties give discovery of documents, with the ability to issue subpoenas and other interlocutory processes, followed by an adversarial trial presided over by a Judge, with opening submission from Counsel, the reception of oral and documentary evidence and closing submissions. In complex cases Judges typically reserve their decisions, delivering written reasons for their decision; (5) Given the seriousness of the allegations made against the defendant, the Court would likely require the plaintiffs to prove their case to the civil standard of proof but with appropriate cogent evidence; (6) A party has a right of appeal from the final judgment of a single Judge of the High Court to a three-member bench of the Court of Appeal. Whilst an appeal lies as of right, the appellant bears the onus of establishing that the decision of the Trial Judge is erroneous, either in fact or as a matter of law; (8) An appeal from the Court of Appeal lies to the Federal Court of Malaysia comprising three Judges; and (9) The general rule, to which there are exceptions, is that costs follow the event, usually on a party/party basis in accordance with applicable cost scales. 75Mr Lim raised a number of issues in relation to a tort being committed out of the Malaysian jurisdiction in Indonesia or elsewhere and whether the Malaysian Court would have jurisdiction. Mr Lim did not express an opinion as to whether it would have jurisdiction. Mr Lim also raised the question, without answering it, of what the proper law is that the Malaysian Court would apply if the tort was committed in Indonesia or elsewhere. 76He also expressed the view that the law governing contracts generally in Malaysia is the Contracts Act 1950 that was revised in 1974. English law relating to contracts is still applicable in Malaysia under s 3 and 5 of the Civil Law Act 1956 only if the Contracts Act is not exhaustive in relation to the particular issue. 77There was no cross-examinations of any of these witnesses. The evidence establishes that there is an issue as to the identity of the defendant's employer in the Malaysian proceedings. If that employer is not a Malaysian registered company, there will probably be no further industrial proceedings in Malaysia. However if it is established that the employer is a Malaysian company, the parties must await the exercise of the Minister's discretion as to whether the matter is referred to the Industrial Court of Malaysia. It appears that there is a reasonable likelihood that there will be a referral of the matter to the Industrial Court. If that occurs then it may be that the plaintiffs, or one of them, may have standing to bring an application for a stay pending the outcome of these proceedings or, if proceedings were commenced by the plaintiffs in the High Court of Malaysia, pending the outcome of those proceedings. It is not clear whether the Malaysian Court has jurisdiction in respect of a tort of conspiracy committed in Indonesia. Consideration 78The order sought by the defendant in the Notice of Motion filed on 26 May 2011 is that the proceedings be permanently stayed pursuant to Part 12 Rule 11 of the Rules. Rule 11 sets out various orders that may be made "in any proceedings" including an order that the Court declines to exercise jurisdiction in the proceedings (Rule 11(1)(h)). There is no express provision for the granting of a stay, however there is provision for the Court to make an order "granting such relief as the court thinks appropriate" (Rule 11(1)(i)). 79The defendant bases his application on two grounds: (1) that this Court is a clearly inappropriate forum for the proceedings; and (2) the plaintiffs' claims have no prospects of success. There was clearly force in the defendant's second ground in relation to the conspiracy claim prior to leave being granted to re-plead on 22 August 2011. The plaintiffs have rectified the defect in their pleading and Mr Giles limited the argument on the second ground to the contract claim brought by Holdings on the basis that it impermissibly seeks "reflective loss" and therefore it has no prospects of success. It is appropriate to deal firstly with the second ground on which the defendant relies. No prospects of success 80The defendant accepted that the test to be applied in consideration of the second ground is the test expounded in General Steel Industries Inc. v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 130 per Barwick CJ and that there must be a "high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way": Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 at 575 [57], per Gaudron, McHugh, Gummow and Hayne JJ. 81The defendant submitted that the only basis upon which Holdings makes a claim for damages is that the defendant used Offshore's property and thereby caused loss to Holdings. It is submitted that there are two fatal problems with that claim. The first is that the contract in respect of which breach is alleged is that between the defendant and International. The alleged breach of fiduciary duty is of a duty allegedly owed by the defendant to International and/or Offshore. The defendant submitted the loss to Holdings is irrelevant to those claims. 82The defendant also submitted that the plaintiffs' claim that Holdings, as the parent of International and Offshore, suffered loss by reason of their loss is irrecoverable "reflective" loss. In this regard the defendant relied upon Ballard v Multiplex Ltd [2008] NSWSC 1019; (2008) 68 ACSR 208 in which McDougall J referred to the relevant authorities and principles at 216-219 [32]-[48] in support of the proposition that the shareholders in a company could not recover damages merely because the company had suffered damage and cannot recover damages which are merely a reflection of the loss suffered by the company. The shareholders must suffer a separate and distinct loss. 83In the present case the plaintiffs allege that the defendant's breach of the Contract included conduct relating to the use not only of his employer's property but also, it would appear, intellectual property owned by Holdings. It is not at all clear whether it is alleged that Holdings suffered its own loss by reason of the defendant's alleged conduct in breach of his Contract with the other plaintiffs. It is alleged that in breach of clause 20 of the Contract the defendant utilised the intellectual property of all of the plaintiffs for his own benefits and/or of one or more third parties and not for the purposes of all the plaintiffs, including Holdings. It is also alleged that by reason of engaging in the project management activities the defendant placed himself in the position of conflict of interest and his conduct as pleaded was to the detriment of the plaintiffs, including Holdings (paragraphs 13 (f) and (h); 14 (h) and (k); 17 (f) of the Amended Statement of Claim). 84One of the terms in clause 20 of the Contract includes the requirement that the defendant was to "strive to provide satisfactory returns for our shareholders". The pleaded breaches of clause 20 include an allegation that the defendant's utilisation of the property of International and its related entities, including Offshore, for purposes other than purposes which benefited International or its related corporate entities diminished "the returns available" to Holdings as the sole shareholder of the shares in International. It appears that the consequence of any such breach is that shareholders were not provided with "satisfactory returns". This claim is far from clear. There is no privity of contract pleaded between Holdings and the defendant. It is not clear whether Holdings would have a cause of action against International in respect of diminished returns. The contractual cause of action for failing to "strive" (whatever that might mean) to provide satisfactory returns to shareholders is between International and the defendant. It may be argued (although it is not at this stage) that by reason of the incorporation of the Code of Conduct into the Contract the defendant became obliged to Holdings to conduct himself so that satisfactory returns were made, but such an argument would appear to have some difficulties. 85It is also not at all clear from the Amended Statement of Claim that Holdings is seeking damages in respect of the contract claim. However to the extent that Holdings may be seeking such damages, if its claim is only for reflective loss and it has no separate and distinct cause of action against the defendant, subject to the possibility of an argument in relation to the Code of Conduct referred to above, it would seem that the defendant would have reasonable prospects of having that part of the plaintiffs' claim struck out. It is however not necessary to decide that issue finally on this application because Holdings has a properly pleaded conspiracy case against the defendant. 86It is appropriate to consider the first ground of the defendant's claim for a stay on the basis of the clearly inappropriate forum argument and note that the defendant may in due course seek an order to strike out any claim made by Holdings in the contract case. Clearly inappropriate forum 87It must be recognized that the plaintiffs have "regularly" invoked the jurisdiction of the Court and they therefore have a prima facie right to insist upon its exercise: Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538 at 554 per Mason CJ, Deane, Dawson and Gaudron JJ; Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265 at 281 [43] per Heydon and Crennan JJ. The test to be applied in considering this ground is whether this Court is a clearly inappropriate forum and not whether there is some comparatively appropriate forum: Voth v Manildra Flour Mills Pty Ltd at 559 per Mason CJ, Deane, Dawson and Gaudron JJ. The rationale for the exercise of the power to stay the proceedings is the avoidance of injustice between the parties. However the discretion to grant a stay is to be exercised "with great care" or "extreme caution": Voth v Manildra Flour Mills Pty Ltd at 554 per Mason CJ, Deane, Dawson and Gaudron JJ; Putttick v Tenon Ltd at 281 [43] per Heydon and Crennan JJ. 88The test focuses on the advantages and disadvantages for the continuation of the proceedings in this Court rather than on the need to make a comparative judgment between two forums. However the availability of relief in the foreign forum is a relevant factor in deciding whether this Court is a clearly inappropriate forum: Voth v Manildra Flour Mills Pty Ltd at 558 per Mason CJ, Deane, Dawson and Gaudron JJ. 89The main parties to these proceedings, International and Offshore, and the defendant, reside and, in the case of the plaintiffs, conduct business in Malaysia. International is registered in the Cayman Islands. Offshore is registered in Singapore. The events the subject of the proceedings occurred in Malaysia and Indonesia and it is probable that Malaysian and/or Indonesian law will apply. All witnesses (except for perhaps one witness) to the subject events are located in Malaysia, Indonesia, India, Iraq and Singapore. No witnesses reside in New South Wales although Mr Sasse, who lives in Sydney and who investigated the matter after the event, may be a witness. Documents relevant to the proceedings are, or were originally, located in Malaysia and no doubt in Indonesia. The defendant has commenced the Malaysian proceedings relating to his contract of employment that will raise many of the same factual issues as those in the proceedings. Non-parties, for instance the Shipyards in at least Malaysia and Indonesia, the Adani Group in India and LYE in Singapore, are likely have documents directly relevant to these proceedings. 90The Contract between International and its Subsidiaries and the defendant does not have a proper law clause. The defendant submitted that irrespective of which entity in the Leighton Group of companies is properly described as the defendant's employer (which is in dispute), the defendant's employment has its closest and most real connection with Malaysia and in the absence of evidence to the contrary that Malaysian choice of law rules are the same as Australian rules, the proper law of the Contract is the law of Malaysia: Akai Pty Limited v The People's Insurance Company Limited [1996] HCA 39; (1996) 188 CLR 418. 91The defendant submitted that the plaintiffs have not shown they would suffer any, or certainly not significant, disadvantage by litigating in Malaysia whereas the defendant claims he would suffer significant financial difficulty if the litigation occurs in New South Wales. It was also submitted that there is no actual connection between New South Wales and the causes of action pleaded by the plaintiffs, other than those concerning the alleged loss suffered by Holdings. 92The plaintiffs submitted that this Court is not a clearly inappropriate forum. It was submitted that a connection does exist between the plaintiffs and New South Wales as Holdings is listed on the Australian Stock Exchange and is based in Sydney and is the holding company of International, the defendant's employer. There is a connection now that the plaintiffs have rectified the deficiency in their pleading of the conspiracy case. 93The plaintiffs submitted that it is more convenient to all parties that the dispute be litigated in this Court rather than any other court because many key documents that were located overseas are now in Sydney and access to those would be granted to the defendant in Sydney. The documents are only in Sydney because Mr Sasse caused them to be sent to Sydney. It is obvious that documents in hard copy and stored electronically would also be in the other countries to which reference is made above. I am not satisfied that it would be "more convenient" than any other place, for instance Singapore or Malaysia. It may be equally convenient although that has not been established on the evidence. 94The plaintiffs also submitted that many important witnesses are in disparate overseas locations and those still employed by the plaintiffs could be gainfully employed in Sydney during the trial. The fact that the plaintiffs may be able to offset the cost of bringing witnesses to Australia by requiring them to work in their offices whilst they await the giving of their evidence does not seem to me to be an appropriate matter to bring into account in deciding the justice of the application. However if it were to be suggested that costs as between the plaintiffs and the defendant may be offset by utilisation of staff in the plaintiffs' offices that may be a different matter. 95It was submitted that the defendant's residence in Malaysia is of no legal significance as he is an Australian citizen and the terms of the Contract establish that he was employed as an Australian expatriate working in Malaysia. There is relevance in the defendant's residence in Malaysia. It means that if he has to conduct the litigation and defend himself in Australia in respect of issues and facts that are to be established concerning events in Malaysia and Indonesia, the costs may be greater than if the litigation were conducted in Malaysia. 96For example, the draft Defence deals with the plaintiffs' claim that the defendant misconducted himself in relation to the awarding of the contract to PTEE to construct the Eclipse . The defendant will claim that there were numerous tenders that went out to many shipyards in the Malaysia/Indonesia region. Although this may be able to be proved by documentation, it will be relevant for the defendant and/or his lawyers to be in a position to prove that his conduct was consistent with his obligations to International and/or Offshore and to that end to obtain evidence from that region. The fact that the defendant and/or his lawyers will have to travel from Australia to the region to do that will probably incur greater costs than if the defendant and his lawyers are based in Malaysia. 97The plaintiffs submitted that the issues raised in these proceedings could not be tried together with the defendant's Malaysian proceeding as those proceedings are administrative in nature, have no overlap with these proceedings, and, if there was any factual overlap, the Malaysian proceedings would be likely to be stayed pending curial determination of the factual matters at issue between the parties in this litigation. The evidence in respect of the Malaysian proceedings establishes that it is probable that the Minister will refer the matter to the Industrial Court. However the time it will take for the final resolution of the dispute in the Industrial Court is probably about two to three years. It is appropriate to balance this against the increased costs that the defendant may incur in having to litigate in Australia. 98It was also submitted that neither party has yet pleaded issues of foreign law and that in any event, the possibility of Malaysian and/or Indonesian law applying is not a reason to permanently stay the proceedings. I agree with that submission and note the observations of the former Chief Justice, Spigelman CJ, in Fleming v Marshall [2011] NSWCA 86 in relation to this Court's capacity to refer an issue of foreign law to a relevant foreign court for determination. I also note the former Chief Justice's observations in relation to the express power for the Court to refer such a matter for determination by a Referee: at [6]-[7]. The evidence establishes that it is not clear that the Malaysian courts would have jurisdiction to hear a conspiracy claim to which the law of Indonesia may apply. There has been no suggestion that proceedings should be commenced in Indonesia. 99The considerations of convenience and cost are to be taken into account in seeking to avoid injustice between the parties, but it is very important to return to the focus of the test to be applied in this instance - whether this forum is clearly inappropriate. It is true that witnesses are resident in many different countries as referred to above. Wherever the matter is litigated there will be inconvenience to those persons and cost to the parties. However the plaintiffs have commenced these proceedings regularly and although it may be more convenient to the defendant not to have to litigate in Sydney, I am not satisfied that it would cause an injustice to him. Indeed the capacity to have the matter heard promptly, utilising the Court's capacity to take evidence electronically from overseas by way of video link in the new technology courtrooms will enhance the prospects of a saving in costs and time. The gathering of evidence for both parties will require attendance at various parts of the South East Asian region. However this must be seen in the light of technological development bringing with it a capacity for face-to-face communication without the need for personal attendance. The claims relate to commercial transactions and alleged contractual breaches. The alleged conspiracy to harm the commercial operations of the plaintiffs, including a publicly listed Australian corporation, is an exquisitely appropriate claim to resolve in the Commercial List of this Court. 100I am not satisfied that this Court is a clearly inappropriate forum for these proceedings. 101The defendant's Notice of Motion is dismissed. If the parties are unable to agree on a costs order I will hear argument when the matter is listed for case management on 18 November 2011. *************** 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: 16 November 2011