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Cite as: August 2015 89 (8) LIJ, p.53

Service out of Victoria and in a foreign country – application to set aside service
Madden International Limited v Lew Footwear Holdings Pty Ltd [2015] VSCA 90 (unreported, 8 May 2015, S APCI 2014 0148, Mandie, Beach JJA and Dixon AJA).

This was an application for leave to appeal an order of a judge of the Court refusing the setting aside of a writ under r 8.09 of ch 1 of the Supreme Court (General Civil Procedure) Rules 2005 (the Rules).

The applicant (Madden) had supplied footwear and other products to the respondents (Lew Footwear) under a written licence agreement. The applicant was incorporated in Hong Kong. It had no offices or employees in Australia. It was sued for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). The writ was served on Madden in Hong Kong. Madden filed a conditional appearance and sought to set aside the writ.

Lew Footwear’s claim, as set out in a proposed statement of claim, fell within r 7.01(1)(i) and (j) of the Rules. At issue before the trial judge and the Court of Appeal was Madden’s contention that Lew Footwear had failed to establish a strongly arguable case that it had relied upon the representations. It filed a number of affidavits in relation to this question, as did Lew Footwear.

Mandie JA, with whom the other members of the Court agreed, said (at [16]):

“In my opinion, an appeal by Madden does not have a real prospect of success. Looking at the judge’s reasons as a whole and in particular those passages set out above, I consider that it was well open to the judge to conclude that Lew Footwear’s misleading and deceptive conduct claim was strongly arguable and that Madden does not have a real prospect of establishing that the judge erred in that conclusion. It is strongly arguable that the First and Second Representations were necessarily implied from, and inherent in, the nature of the Pricing Term. Contrary to Madden’s submissions, I think that there is clear evidence of reliance. It is strongly arguable, having regard to the beliefs of the Lew Footwear officers which were deposed to, that Lew Footwear would not have entered the Licence Agreement but for its belief that the nature of the Pricing Term was such that Madden had in place, or would put in place, the necessary systems to ascertain the cost of the products (the factory cost plus reasonable costs of sampling, testing etc) as defined in the Licence Agreement. The judge rightly considered in his first judgment that what was missing was ‘evidence duly establishing reliance’ but, in his second judgment, that this was cured by the further affidavits filed.” [Endnotes omitted].

His Honour then went on to consider the decision of the High Court in Agar v Hyde (2000) 201 CLR 552, a decision based upon the New South Wales Rules. In Agar, a plurality of the High Court (Gaudron, McHugh, Gummow and Hayne JJ, said commencing at 565:

“attention must be directed to the way in which the claims made by [the plaintiffs] are framed. The paragraphs speak of ‘proceedings [which] are founded on’ a specified matter such as a cause of action arising in the State or a tort committed in the State. That focuses attention on the nature of the claim that is made. That is, is the claim a claim in which the plaintiff alleges that he has a cause of action which, according to those allegations, is a cause of action arising in the State?

“The inquiry just described neither requires nor permits an assessment of the strength (in the sense of the likelihood of success) of the plaintiff’s claim. The Court of Appeal was wrong to make such an assessment in deciding whether the Rules permitted service out . . . The application of these paragraphs . . . depends on the nature of the allegations that the plaintiff makes, not on whether those allegations will be made good at trial. Once a claim falls within the relevant paragraph or paragraphs . . . service outside Australia is permitted, and prima facie the plaintiff should have leave to proceed.”

The trial judge had felt constrained to follow authority within the Victorian Court of Appeal, namely, Schib Packaging Srl v Emrich Industries Pty Ltd (2005) 12 VR 268, which appears to assume that the “strongly arguable” test continues to be applicable in relation to the Victorian Rules even though they are not really different to the New South Wales Rules. The trial judge had said (at [24] of the Court of Appeal judgment):

“In summary, if I had been at liberty to do so, I would have found the correct approach for the court to take, when an application is made by an Overseas Defendant to set aside the originating process or stay the proceeding, is as follows:

(1) The court must determine whether the subject matter of the proceeding is within r 7.01(1).

(2) The question as to the subject matter of the proceeding, ordinarily, is to be answered by reference to the allegations made in the originating process, plus any evidence beyond the pleaded allegations to the extent that the pleading does not contain allegations necessary to establish the claim is of a requisite kind to satisfy a paragraph or paragraphs of r 7.01(1). (It is possible that the Originating Party must also produce an affidavit or other evidence showing the grounds on which the application is made.)

(3) The court may consider further evidence beyond that referred to in (2) above, directed towards whether the facts as alleged or the additional facts put forward by way of evidence are plainly incorrect.

(4) Save for the circumstances in (3), for the purpose of determining whether or not r 7.01(1) has been complied with, the court should not consider the merits of the claims. If a party demonstrates the subject matter is within the paragraph or paragraphs of r 7.01(1) relied upon, then, prima facie, the party is entitled to proceed with its claims.

(5) Each cause of action must be considered individually, and only those causes of action consisting of subject matter within r 7.01(1) may be continued.

(6) If it has been determined that the claims are of the requisite kind, the court may then, before exercising its discretion, consider whether this court is an inappropriate forum and, where appropriate, consider whether the claims made are futile or have insufficient prospects of success to warrant putting the Overseas Defendant to the time, expense and trouble of defending the claims. The test to be applied is the same as the test applicable in an application for summary judgment.” [Endnote omitted]

Mandie JA agreed with the trial judge’s comments.

Ultimately, the High Court may need to pronounce on the Victorian Rules.

The application for leave to appeal was dismissed.

Snapshot

Where an overseas defendant challenges Victorian jurisdiction:

  • the Court must determine whether the subject matter of the proceeding is within the relevant sub-paragraph of r 7.01 relied upon;
  • that question, ordinarily, is to be answered by reference only to the allegations made in the originating process and not by reference to evidence and normally the Court should not consider the merits of the plaintiff’s claim; and
  • the Court may consider whether Victoria is an inappropriate forum and the test to be applied is the same as the test applicable for summary judgment.
  • courts & parliamentcourts & parliament Judgments
    Professor Greg Reinhardt is executive director of the Australasian Institute of Judicial Administration and a member of the Faculty of Law at Monash University, ph 9600 1311, email Gregory.Reinhardt@monash.edu. The numbers in square brackets in the text refer to the paragraph numbers in the judgment. The full version of this judgment can be found at www.austlii.edu.au.

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