AAP Industries Pty Limited v Rehau Pte Limited [2015] NSWSC 468

Supreme Court New South Wales

Medium Neutral Citation: AAP Industries Pty Limited v Rehau Pte Limited [2015] NSWSC 468 Hearing dates: 2 April 2015 Date of orders: 10 April 2015 Decision date: 10 April 2015 Jurisdiction: Common Law Before: McCallum J Decision: Notice of motion dismissed Catchwords: PRIVATE INTERNATIONAL LAW – stay of proceedings; application for – exclusive jurisdiction clause – forum non conveniens

CONTRACT – construction – whether clause exclusive jurisdiction clause Legislation Cited: Civil Procedure Act 2005 (NSW), s 67 Uniform Civil Procedure Rules 2005 (NSW), r 12.11(1)(b) Cases Cited: Ace Insurance Limited v Moose Enterprise Pty Limited [2009] NSWSC 724 Incitec Limited v Alkimos Shipping Corporation [2004] FCA 698; 138 FCR 496 Category: Procedural and other rulings Parties: AAP Industries Pty Limited (Plaintiff/Respondent) Rehau Pte Limited (Defendant/Applicant) Representation: Counsel: M Heath (Plaintiff/Respondent) M Zammit (Defendant/Applicant)

Solicitors: W H Lawyers (Plaintiff/Respondent) Matthews Folbigg (Defendant/Applicant) File Number(s): 2014/365787 Publication restriction: None

Judgment 1. HER HONOUR: In these proceedings, AAP Industries Pty Limited claims damages for the alleged repudiation of a series of supply agreements under which it agreed to manufacture and sell brass plumbing components to Rehau Pte Limited, a company registered in Singapore. The proceedings were commenced by statement of claim filed on 12 December 2014. The originating process was served outside the State of New South Wales. 2. On 17 February 2015, Rehau filed a notice of appearance together with a notice of motion seeking an order that the service of the statement of claim on it be set aside and that the proceedings be permanently stayed. This judgment determines that application. 3. AAP is a manufacturer and supplier of valves and fittings. Its main office, factory and warehouse are situated in Kirrawee in the State of New South Wales. On 29 September 1999, AAP entered into a written Supply Agreement with Rehau. The Supply Agreement provided for AAP to manufacture, and for Rehau to purchase, nine brass plumbing products. After entering into the written Supply Agreement, additional brass articles were ordered by Rehau and manufactured by AAP. There was a total of 16 articles manufactured by AAP for Rehau pursuant to the Supply Agreement and the subsequent requests. 4. The basis for the relief sought by Rehau in the present application is the contention that those arrangements gave rise to a contractual relationship which included exclusive jurisdiction clauses forming part of the agreement or agreements sued upon. The relief sought is an order pursuant to r 12.11(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW) setting aside the service of the statement of claim on the ground that this Court is an inappropriate forum. Alternatively, Rehau seeks a stay pursuant to s 67 of the Civil Procedure Act 2005 (NSW). That alternative application is also based on the contention that this Court is an inappropriate forum. 5. In order to determine the correctness of the contention that the agreement or agreements sued on include exclusive jurisdiction clauses, it is necessary to explain the way in which AAP pleads its case. AAP pleads that the relevant agreements were the September 1999 Supply Agreement, which is a written agreement, and subsequent agreements for the supply of the additional products reached as a result of an exchange of correspondence. 6. Rehau says that the September 1999 Supply Agreement incorporated conditions of purchase containing an additional clause which informs the proper construction of that agreement. It does not accept that the subsequent agreements were entered into in the manner pleaded. 7. The relevant clause in the written Supply Agreement is cl XIII, which provides: "The agreed place of jurisdiction, irrespective of the amount in dispute, is Singapore." 1. The additional clause relied upon by Rehau contained in the conditions of purchase is the construction clause, numbered 18, as follows: "This contract shall be construed in accordance with and governed in every respect by the laws of Singapore, and all disputes arising out of or in connection with this agreement shall be brought in the courts of Singapore." 1. Rehau submitted that the conditions of purchase clause constituted both a choice of jurisdiction clause and a choice of law clause. 2. The threshold issue is how, if at all, those clauses sit together. Rehau submitted that the conditions of purchase clearly form part of the Supply Agreement. It may be accepted that that is the position that appears at first glance. Page 1 of the Supply Agreement (page 11 of exhibit A) states: "Rehau's conditions of purchase supplement and form an essential part of this Supply Agreement." 1. However, as submitted on behalf of AAP, it is necessary to consider the operation of the two documents on that premise. 2. Mr Zammit, who appears for AAP, noted that the construction clause makes reference, in terms, to "this contract." He submitted that, on a complete reading of the whole of the Supply Agreement and the conditions of purchase, it may be seen that the reference to "this contract" must be to any individual purchase, which would be governed governed in each individual case by the conditions of purchase. He submitted that it makes no sense to import those conditions into the Supply Agreement, noting they are "just standard terms" more readily applicable to individual purchase orders. In my view, there is force in that submission. 3. It is necessary in that context to have regard to the content of the Supply Agreement, which governs a range of matters, plainly calculated to ensure ongoing availability of the items supplied by AAP to Rehau. The Supply Agreement governs matters such as the quality of the products to be manufactured by AAP; the requirement that such products meet Rehau's specifications and instructions; a requirement for AAP to "make available and keep ready for consignment" sufficient product capacity, as specified in the technical delivery specifications; a requirement for AAP to ensure that it meets all delivery deadlines; fixed prices for a period of one year and a provision that the Supply Agreement was to come into force with immediate effect for a term of one year with provision for extension of the contract for further periods each of one year in the absence of three months' notice of termination. By contrast, the conditions of purchase are, as submitted by Mr Zammit, in the nature of standard terms apt to govern individual purchases. 4. On the strength of those considerations, set out at greater length in Mr Zammit's written submissions, which I have considered, I have concluded that cl 18 of the conditions of purchase cannot comfortably sit alongside the jurisdiction clause in the Supply Agreement and is not part of that agreement. 5. The next issue is to consider whether cl XIII of the Supply Agreement, standing alone, is an exclusive jurisdiction clause. The principles to be applied in determining whether a clause is an exclusive jurisdiction clause were summarised by Brereton J in Ace Insurance Limited v Moose Enterprise Pty Limited [2009] NSWSC 724. Mr Zammit, in his written submissions, analysed the content of the clause in issue in the present case by reference to those principles. 6. In my view, having regard to the matters raised in the written submissions, cl XIII is not to be construed as a promise not to sue in a foreign jurisdiction. As noted by Mr Zammit, the clause does not use the word "exclusive." Mr Zammit submitted that when that clause is compared with Rehau's conditions of purchase, which includes a wider jurisdiction clause, it may be concluded that the omission of the word "exclusion" or "exclusive" was as a result of an informed choice. 7. Secondly, Mr Zammit submitted, and I accept, that Singapore could not be said to be the natural forum for this contract, having regard to the number of factors connecting the contract with New South Wales. 8. Thirdly, the clause does not use words of exclusivity such as "any" disputes or the mandatory form of the verb to be, "shall." 9. For the reasons set out in Mr Zammit's submissions, I have concluded that cl XIII is not an exclusive jurisdiction clause. It follows, in accordance with the way in which the argument in the present case was developed, that this Court is not an inappropriate forum and on that basis I would decline the relief sought. 10. In case I am wrong in either of those conclusions, it is appropriate to consider AAP's alternative submissions. The first was a submission that, even if cl XIII is an exclusive jurisdiction clause, it does not in its scope cover the dispute in the present case. 11. Mr Zammit focused in particular on the inclusion of the phrase "irrespective of the amount in dispute." He submitted that the inclusion of those words in the clause, properly construed, suggest it was intended to apply to an existing dispute concerning the amount to be paid by Rehau to AAP in respect of a specific purchase order placed with AAP and that it was not intended to extend to govern a dispute of the kind pleaded in the statement of claim. In my view, there is force in that contention. Had it been necessary for me to determine this issue, I would have acceded to that submission. 12. Secondly, AAP submitted, in the alternative, that if the clause were held to be an exclusive jurisdiction clause, the Court should exercise its discretion to refuse to stay the proceedings. Mr Zammit acknowledged the significance to be placed on the existence of an agreement between parties as to the jurisdiction in which any dispute would be determined. As explained by Allsop J (as his Honour then was) in Incitec Limited v Alkimos Shipping Corporation [2004] FCA 698; 138 FCR 496 at [42], the discretion not to grant a stay of proceedings brought in defiance of an exclusive jurisdiction clause requires substantial grounds. Mr Zammit noted, however, that in the same judgment at [62], his Honour regarded the prospect of duplicated litigation in different jurisdictions as a persuasive consideration which might overcome the force of that factor. 13. In the present case, Mr Zammit noted that the way in which AAP's case is pleaded is to rely, in addition to the Supply Agreement, on subsequent agreements entered into by correspondence. He submitted that the dispute, to the extent to which it relates to products agreed to be supplied pursuant to those agreements, would not be governed by the jurisdiction clause. 14. In my view, the interests raised by that submission are finely balanced. Mr Heath submitted that the prospect of duplicated litigation would be a weak factor. In particular, he noted a measure of tension between AAP's reliance upon the submission that those subsequent agreements do not include any exclusive jurisdiction clause and the proposition that the same agreements enjoy the benefit of the annual renewal clause which itself derives from the written Supply Agreement. 15. On balance, I do not think I would have declined the relief sought if the present dispute had fallen to be determined only according to that discretionary factor. Had I been persuaded cl XIII were an exclusive jurisdiction clause, that would, I think, have been a compelling consideration in favour of granting a stay. For the reasons already stated, however, I am not persuaded cl XIII is an exclusive jurisdiction clause and accordingly I am not persuaded that it is appropriate to grant the relief sought by Rehau. 16. I order Rehau to pay AAP's costs of and incidental to the determination of the notice of motion. 17. I stand the matter over to 27 April 2015 before the Registrar.