Nilepac Pty Limited v Amstelside BV [2020] NSWSC 57

Supreme Court New South Wales

Medium Neutral Citation: Nilepac Pty Limited v Amstelside BV [2020] NSWSC 57 Hearing dates: 7 February 2020 Date of orders: 07 February 2020 Decision date: 07 February 2020 Jurisdiction: Equity - Applications List Before: Parker J Decision: See [32] Catchwords: CIVIL PROCEDURE – jurisdiction –inappropriate forum – termination of contract on grounds of "fairness and reasonableness" under the Dutch Civil Code Legislation Cited: Burgerlijk Wetboek [Civil Code] (Netherlands) ("Dutch Civil Law"), Art 6:248 Uniform Civil Procedure Rules 2005 (NSW), r.11.6, r.42.1, Sch 6, Sch 6(c) Cases Cited: McGregor v Potts (2005) 68 NSWLR 109 Puttick v Tenon Limited (2008) 238 CLR 265 Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 Category: Procedural and other rulings Parties: Nilepac Pty Limited (Plaintiff/Respondent) Amstelside BV Company Number 34300820 (Defendant/Applicant) Representation: Counsel: HK Insall SC (Plaintiff/Respondent) A Smith (Defendant/Applicant)

Solicitors: Hugh & Associates Lawyers (Plaintiff/Respondent) Arnold Block Leibler (Defendant/Applicant) File Number(s): 2019/178545 Publication restriction: Nil

Judgment - ex tempore Revised and reissued 18 February 2020 1. This is an application under the Uniform Civil Procedure Rules 2005 (NSW), r 11.6 by a foreign defendant to have the proceedings against it dismissed for lack of jurisdiction or alternatively stayed on the ground that this Court is an inappropriate forum for the resolution of the claim against it. The defendant's notice of motion included a further alternative application for security for costs in the event that the proceedings continue against it in this Court, but it was agreed in the course of the hearing before me that this application should be held over to be dealt with after the application to dismiss or stay the proceedings had been determined, and should the proceedings continue in this Court, the defendant had filed a defence. 2. The defendant, Amstelside BV is a company incorporated in the Netherlands with its corporate seat in Amsterdam. It is the developer of a hotel in Amsterdam known as "QO Amsterdam Hotel" which is described in the evidence as a "state of the art luxury hotel with a focus on environmental sustainability". The operation of the hotel is actually managed by another Dutch company. 3. The plaintiff, Nilepac Pty Limited, is an Australian company. Currently the sole shareholder of the company and its sole director is Mrs Lauren Capelin. Her husband Mr Scott Capelin was formerly a director. 4. Nilepac has developed a business of designing and constructing what are known as "fitness studios" which appear to be up-market gyms. This has involved developing a brand (using the word "Embody") and associated image, get-up and customer relationship management software. It appears that Mr Capelin is largely responsible for this activity. 5. In 2017 when the QO Amsterdam Hotel was still under development and had not yet opened its doors, Amstelside was looking for assistance with establishing a suitable fitness studio at the hotel. Nilepac was one of the parties under consideration. 6. In March 2017 Mr Capelin gave a presentation on behalf of Nilepac and Nilepac was soon after selected by Amstelside as the party to undertake the establishment of the fitness studio. It was apparently contemplated that Mr Capelin would relocate to Amsterdam to do this. 7. A written agreement was prepared and signed by Amstelside in February 2018. The contract provided that Nilepac would provide a design for the fitness centre of the hotel; would prepare specifications; and would licence their intellectual property for the purposes of the venture. The agreement also provided that Nilepac would provide ongoing management services and supervision. 8. Under the agreement, Nilepac was to be paid "the agreed and budgeted cost" of its interior design services which were estimated at $35,000. Amstelside was also to pay €120,000 for working capital for the studio, to be repaid yearly in three yearly instalments starting one year after the commencement date of the agreement. Amstelside was also to make monthly payments of €20,000 until the hotel was opened and thereafter to pay an annual licence fee calculated by reference to the operating profit of the studio. 9. Amstelside has paid $25,000 towards the cost of the design of the studio. Amstelside also paid monthly fees of €20,000 from February to July 2018. For reasons which are not fully explained in the evidence those payments then ceased. At that stage the hotel had still not been opened and apparently its opening had been delayed by other factors. 10. In January 2019 articles were published in the Australian media linking Mr Capelin with fraudulent conduct. Amstelside claims this caused it reputational damage. Lawyers acting for Amstelside wrote to Nilepac on 4 March 2019 purporting to terminate the agreement. Further correspondence ensued. 11. On 7 June the Statement of Claim in the proceedings was filed on Nilepac's behalf. The Statement of Claim was served on Amstelside and a conditional appearance was entered. No defence has been filed. The notice of motion before me was filed on 2 September. 12. Nilepac's principal claim is in contract. Nilepac claims first that it has not been paid the full cost of the interior design service which it supplied. It claims that full cost of those services was $85,000 and accordingly $60,000 remains outstanding. Second, Nilepac claims payment of €20,000 per month on and from August 2018. The Statement of Claim further alleges failure to pay the €120,000 working capital, but as the agreement provided that this was to be repaid it is difficult to see how it could be a source of loss. 13. The Statement of Claim seeks a declaration that the agreement has not been terminated or rescinded and it remains in force. However, under the terms of the agreement it could be terminated on six months' notice and it is therefore difficult to see how Nilepac can maintain any claim once six months had expired from the point Amstelside purported to terminate. 14. Counsel for Nilepac accepted that if the proceedings were to remain in New South Wales the claims would probably fall within the jurisdictional limits of the District Court. 15. As I have mentioned no defence has been filed for Amstelside. Amstelside has foreshadowed justifying its termination on the ground that the unfavourable publicity involving Mr Capelin entitled it to do so. 16. Amstelside does not rely on any express terms of the contract but the contract provides that it is governed by Dutch law and Amstelside relies upon certain provisions of the Burgerlijk Wetboek [Civil Code] (Netherlands) ("Dutch Civil Code"). Article 6:248 provides: 1. An agreement not only has the legal effects which parties have agreed upon, but also those which, to the nature of the agreement, arise from law, usage (common practice) or the standards of reasonableness and fairness. 2. A rule, to be observed by parties as a result of their agreement, is not applicable insofar this, given the circumstances would be unacceptable to standards of reasonableness and fairness. 1. According to Amstelside's foreshadowed contention the requirement of "reasonableness and fairness" required, in the present context, that Amstelside be able to terminate the contract in the event of reputational damage being caused to it by association with Nilepac. Amstelside emphasises under the Dutch Civil Code the concept of "reasonableness and fairness" is not limited to the express provisions of the contract.