Alstom Limited & Ors v Sirakas [2010] NSWSC 669 (23 June 2010)

Last Updated: 24 June 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Alstom Limited & Ors v Sirakas [2010] NSWSC 669


JURISDICTION:
Equity Division
Corporations List

FILE NUMBER(S):
2009/291651

HEARING DATE(S):
16 April 2010

JUDGMENT DATE:
23 June 2010

PARTIES:
Alstom Limited (First Plaintiff)
Alstom Power Romania SRL (Second Plaintiff)
Alstom General Turbo SA (Third Plaintiff)
George Sirakas (Defendant) (aka Georgios Syrakas)

JUDGMENT OF:
Palmer J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
C.M. Harris SC (Plaintiffs)
Dr A. Bell SC (Defendant)

SOLICITORS:
Colin Biggers & Paisley (Plaintiffs)
Verekers (Defendant)


CATCHWORDS:
PRACTICE AND PROCEDURE – SUBSTITUTED SERVICE – JURISDICTION – FORUM NON CONVENIENS – whether personal service “practicable” – meaning of “practicable” – whether Court should decline to exercise jurisdiction to determine claims arising from transactions in Romania in alleged breach of service contract made in Australia.

LEGISLATION CITED:
Uniform Civil Procedure Rules 2005 (NSW) – r10, Pt 12 r11, Schedule 6, 10.14(1)

CATEGORY:
Separate question

CASES CITED:
- Conan Doyle’s Will Trusts, Re [1971] Ch 982
- Garsec Pty Ltd v His Majesty Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682
- Gilbert (decd), In re Will of (1946) 46 SR (NSW) 318
- Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWSC 270
- Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310
- Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274
- Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265
- Syndicate Mortgage Solutions Pty Ltd v El Sayed [2009] NSWSC 207
- Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538
- White v Grogan [1972] 2 NSWLR 347

TEXTS CITED:


DECISION:
Defendant’s motion to set aside substituted service and for stay dismissed.



JUDGMENT:

2009/291651 Alstom Limited & Ors v Sirakas

JUDGMENT

23 June, 2010

Introduction

1 The Plaintiffs have commenced proceedings in this Court against the Defendant, Mr Sirakas, an Australian citizen now resident in Romania. The principal causes of action, very briefly, are breach of duties of good faith and honesty arising under contracts of service and implied by law.

2 Mr Sirakas was not personally served with the Statement of Claim. Although now resident in Romania, he was temporarily in New South Wales in December 2009. On 8 December 2009, the Plaintiffs obtained an order for substituted service on Mr Sirakas directing that service be effected by leaving the Statement of Claim with the solicitor acting for him in then-current matrimonial proceedings, and by leaving a copy at a residential property in Newtown owned by Mr Sirakas. Service was effected in accordance with those orders. The Plaintiffs also obtained, ex parte, on 8 December 2009 freezing orders restraining Mr Sirakas from dealing with certain assets within the jurisdiction.

3 Pursuant to UCPR 12.11 Mr Sirakas, without entering an appearance, now seeks the following relief by Notice of Motion:

– an order that service of the Statement of Claim be set aside;

– a declaration that the Court has no jurisdiction over him in respect of the subject matter of the proceedings;

– an order declining to exercise jurisdiction in the proceedings;

– an order dismissing the proceedings;

an order staying the proceedings permanently or temporarily;

– an order discharging the freezing orders.

4 Dr A.S. Bell SC appears with Mr Scotting of Counsel for Mr Sirakas and Mr C. Harris SC appears for the Plaintiffs. I am grateful to Counsel for their thorough and helpful argument of the case.

The issues

5 The issues may be summarised thus:

– should the order for substituted service of the Statement of Claim be set aside because the Plaintiffs’ evidence in support of that application failed to show that Mr Sirakas “cannot practicably be served” personally, as required by UCPR 10.14(1)(a);

– if the order for substituted service is set aside, should the Court declare that it has no jurisdiction in respect of the subject matter of the proceedings, so that service outside the jurisdiction could not validly be authorised;

– if the order for substituted service is not set aside, should the Court decline to exercise jurisdiction on the ground that New South Wales is a clearly inappropriate forum for the resolution of the dispute;

– in view of possible criminal proceedings against Mr Sirakas in Romania, should the Court stay these proceedings permanently or temporarily;

– if the Court holds that substituted service was valid and does not decline to exercise jurisdiction or to stay the proceedings, should the freezing orders nevertheless be discharged.

The relevant contracts of service

6 The First Plaintiff (Alstom) is incorporated under the laws of Australia. Alstom was previously known as ABB Power Plants Ltd (ABB). The Second Plaintiff (Alstom Power) is incorporated under the laws of Romania. The Third Plaintiff (Alstom General) is incorporated under the laws of France. Each of the Plaintiffs is a subsidiary of Alstom SA, which is incorporated in France.

7 Mr Sirakas, then resident in New South Wales, was originally employed by ABB under an employment contract dated 4 December 1992 (the Employment Contract). The Employment Contract was taken over by Alstom in 2003. The Employment Contract is expressed to have been made in Sydney.

8 In April 2004, Mr Sirakas agreed to go to Romania to work for Alstom Power. He entered into what was called a Detachment Agreement and a Secondment Agreement to which both Alstom and Alstom Power were also parties. These agreements were replaced by an International Mobility Agreement dated 20 October 2006 between Alstom, described as “the Employer”, Alstom Power, described as “the Host Company”, and Mr Sirakas, described as “the Employee”. The Mobility Agreement was expressed to have been made in Sydney. Its relevant terms are as follows:

“1.1 This Agreement is a temporary additional act to the Employment Contract of December 4, 1992 between the Employer and the Employee, hereinafter referred to as ‘Employment Contract’. It shall not set aside the effect and validity of the Employment Contract.

...

1.3 The Employer seconds, through this Agreement, the Employee to act as Managing Director Power Service Sector Romania, Bulgaria and Moldavia, in conformity with the secondment laws applicable in Romania.

1.4 The Host Company shall assign to the Employee the duties of Managing Director Power Service Sector Romania, Bulgaria and Moldavia.

...

2.2 The Employee undertakes to perform in the Host Country duties falling within the scope of his skills and experience that may be required in accordance with the Employer’s and the Host Company’s instructions, the Constitutive Act of the Employer, the Services Agreement, the Constitutive Act of the Host Company and the Resolutions of the Board of Directors of the Host Company.

...

3.1 The Employee shall carry out his duties as Managing Director Power Service Sector Romania, Bulgaria and Moldavia in good faith and in accordance with the laws, the Constitutive Act of the Host Company the Resolutions of the Board of Directors of the Host Company, all the internal rules and regulations of the Employer and the Host Company and the objectives to be set by the Managing Director sub-region South East Europe.

...

12.1 This Agreement shall enter into force on 1^st October 2006 and end on 30 September 2008 without any further notice from the Employer or the Company. If due to business needs of the Company, the assignment to Romania will take longer than this, this Agreement can be prolonged under the condition, that the salary will be newly calculated, taking the Cost of Living Index fully into account, no hardship allowance will be granted and the secondment related benefits will no longer be applicable.

13.1 At the end of this Agreement, the Employee will return for redeployment with the Employer as per his Employment Contract of 4^th December 1992. ...

...

15.1 The parties shall be subject to the Labour Law of the Home Country which is Australia, as regards those matters not specifically provided for in this Agreement, and to the extent that it does not contradict mandatory laws of public interest in the Host Country.

15.2 In the event of dispute the courts of Australia shall have exclusive jurisdiction.”

The first alleged breach

9 On 25 February 2008 Mr Sirakas, as Managing Director of Alstom Power, procured Alstom Power to enter into a contract for the purchase of land at Glina, near Bucharest, from United Media Management SRL (UMM) for €2,886,000. The land was required for construction of a new factory for Alstom Power.

10 The Glina land comprised four separate parcels owned by different proprietors. UMM entered into contracts to purchase the Glina land from those registered proprietors by agreements dated between 18 April 2008 and 16 October 2008. The total purchase price payable by UMM for the land was €1,875,000.

11 On the day before UMM entered into the first of the contracts for the purchase of the Glina land, Mr Sirakas entered into a loan agreement with Ms Elena Coca, who is the “administrator” or controller of UMM, whereby Mr Sirakas lent Ms Coca €135,000, interest free for four months. On the same day, SC Sirakuze Co NRL entered into a loan agreement with UMM for a loan of €50,000, interest free for four months. Mr Sirakas executed the agreement on behalf of Sirakuze and Ms Coca executed on behalf of UMM. On 18 and 21 April 2008 a total of €50,000 was paid to UMM out of the bank account of Eleda Ltd, a company incorporated in Dubai. Eleda Ltd has the same address as Eleda Trading FZE, which is also incorporated in Dubai. The sole shareholder of Eleda Trading FZE is Mr Sirakas.

12 Mr Sirakas procured Alstom Power to pay UMM part of the purchase price of the Glina land, €866,000, on 21 May 2008.

13 On 7 November 2008, Mr Sirakas procured Alstom Power to pay to UMM the balance of the purchase price for the Glina land, €1,720,000.

14 The difference between the price paid by Alstom power to UMM for the purchase of the Glina land and the price paid by UMM to the vendors of that land is €711,000.

15 On 24 November 2008, UMM Paid to Eleda Trading FZE an amount of €400,000 described as “commission fees as per contract” in an invoice sent to UMM.

16 The profit or commission alleged in the Statement of Claim to have been derived by Mr Sirakas, indirectly through Eleda Trading FZE, from the transaction between Alstom Power and UMM was never disclosed to, or authorised by, Alstom or Alstom Power.

17 The Statement of Claim alleges that the part played by Mr Sirakas in these transactions, and the taking of a secret commission by him, was in breach of his duties of good faith, loyalty and honesty to Alstom Power and to Alstom, both contractual and fiduciary.

The second alleged breach

18 The Statement of Claim alleges that in about the middle of 2008, Alstom General (the French company) of which Mr Sirakas was president and director, decided that it needed to acquire certain items of machinery, equipment and software known as an Excitation General System (the System). Alstom Power (the Romanian company) of which Mr Sirakas was Managing Director, had in storage a System which it did not need.

19 In September 2008, Mr Sirakas procured Alstom Power to sell the System to General Oltemia SRL for €200,000. He then procured Alstom General to purchase the same System from Exxon Development SRL for €700,000.

20 On or about 3 January 2009, Exxon paid to Mr Sirakas’ company in Dubai, Eleda Trading FZE, a commission on the sale of the System by Exxon to Alstom General in the sum of €100,000.

21 Alstom and Alstom General allege that these transactions were not disclosed to them by Mr Sirakas and constituted a secret commission taken by him, resulting in a loss to Alstom Power of the true sale price of the System. Alstom claims restitution of the secret commission, and Alstom General claims damages for fraud. Alstom relies on breaches of Mr Sirakas’ duties of good faith and loyalty, contractual and fiduciary. Alstom General relies on breach of the same duties arising under the general law by virtue of Mr Sirakas’ office.

Submissions

22 Mr Harris SC submits that this Court has jurisdiction in the proceedings because:

– Mr Sirakas was served with the Statement of Claim while within the jurisdiction pursuant to a properly obtained order for substituted service;

– even if Mr Sirakas had not been within the jurisdiction at the time of service, the Court would have had jurisdiction to order service outside Australia under UCPR 11.2(1) and Schedule 6 because:

the subject matter of the proceedings is a contract made in New South Wales, namely, the Employment Contract as extended by the International Mobility Agreement, both of which contracts were made in Sydney;

that contract is expressly governed by the law of New South Wales;

Mr Sirakas has agreed to the jurisdiction of the Court in proceedings arising under that contract.

23 Dr Bell SC submits that:

– the order for substituted service was improperly obtained because there was no sufficient evidence that the Statement of Claim could not practicably be served on Mr Sirakas personally: cf. UCPR 10.14(1)(a);

– the order for substituted service should be set aside, the consequence being that Mr Sirakas has not yet validly been served;

– as Mr Sirakas is now out of the jurisdiction, the Court would have no jurisdiction in the proceedings unless the Plaintiffs, or one of them, could bring the case within UCPR 11.2 and Schedule 6;

– any cause of action relying upon a contract made in New South Wales or governed by New South Wales law must fail because the International Mobility Agreement, by clause 12.1, expired on 30 September 2008 whereas the claims made by Alstom Power arise from the payments made by it to UMM of €1,720,200 made on 7 November 2008 and the alleged receipt of a secret commissions by Mr Sirakas from UMM on 24 November 2008 and from Exxon on 3 January 2009, after Mr Sirakas’ contract with Alstom Power and Alstom had expired;

– the Court should in any event decline jurisdiction because the evidence in support of the Plaintiffs’ case is so weak that the Court would not be satisfied that the Plaintiffs have even a prima facie case on their causes of action.

Jurisdiction for contractual claims

24 The act of Mr Sirakas in taking a secret payment or commission for procuring a profit to UMM on the sale of the Glina land to Alstom Power, if proved at trial, would be a breach of the express terms of clause 3.1 of the International Mobility Agreement and the implied duty of fidelity arising under that agreement. It would be a fair inference that that breach had occurred in April 2008, at the latest, when Mr Sirakas and his company made interest free loans to UMM, apparently to assist it in purchasing the Glina land for on-sale to Alstom Power. Although the loss to Alstom Power arose after expiry of the International Mobility Agreement, it flowed from breach by Mr Sirakas of that agreement during its term.

25 Likewise, if it were proved at trial that the sale of the System by Alstom Power and the purchase of the same System from Exxon by Alstom General was procured by Mr Sirakas in breach of contractual and implied duties of fidelity and honesty, then it would be a fair inference that the sale of the System by Alstom Power to General Oltemia in September 2008 was the first step in the planned dishonest transaction. Alstom Power suffered loss when the System was sold at an undervalue and that loss was suffered before the International Mobility Agreement expired. The secret commission, although received in January 2009, was the fruit of the breach of duty committed by Mr Sirakas in September 2008, during the currency of the Mobility Agreement.

26 I conclude that, in so far as concerns contractual claims, the subject matter of these proceedings is the Employment Contract, as extended by the International Mobility Agreement, and that contract was made in New South Wales and is governed by New South Wales law. I find that Mr Sirakas has agreed to submit to the jurisdiction of the Court in respect of such claims.

27 If Mr Sirakas had not been in New South Wales at the time of substituted service, the Court would have had jurisdiction to order service outside Australia under UCPR 11.2(1) and Schedule 6 of proceedings founded upon the Employment Contract. The question of jurisdiction as to non-contractual claims does not arise because of my conclusion that substituted service should not be set aside, for the reasons which follow.

Whether prima facie case shown

28 Dr Bell strongly argues that the Court should not be satisfied that the Plaintiffs have demonstrated even a prima facie case in the causes of action pleaded. He says that there may be a perfectly innocent explanation for Mr Sirakas’ loans to UMM and that there is no reason to believe that the receipt by Eleda Trading FZE of a payment from UMM of €400,000 as a “commission fee” has anything to do with Alstom Power’s purchase of the Glina land from UMM. Further, Dr Bell says that there is no evidence connecting Alstom Power’s sale of the System to General Oltemia and the purchase by Alstom General from Exxon of a System exactly matching the specifications of the System sold by Alstom Power. Dr Bell protests that there is no evidence proving that Exxon’s payment to Eleda Trading FZE has anything to do with any transaction relating to the sale and purchase of the System.

29 Mr Sirakas has given no evidence in this application. He is, of course, quite entitled to take that position. Consequently, no explanation of the transactions has been put forward which gives them an innocent complexion. In saying this, I appreciate, of course, that in an application such as this the burden rests with a plaintiff to show a prima facie case, not with a defendant to show that there is none.

30 This is not the occasion to examine in detail the considerable volume of evidence which the Plaintiffs have already gathered in support of their allegations against Mr Sirakas. I may simply say that the coincidence in the timing of the transactions and the involvement of Mr Sirakas in both sides of the transactions persuade me, on the evidence so far adduced and in the absence of any explanation from Mr Sirakas, that the Plaintiffs have demonstrated a strong prima facie case in support of their allegations in the Statement of Claim.

Order for substituted service

31 On 8 December 2009, the Plaintiffs applied ex parte to Bergin CJ in Eq for orders directing substituted service of the Statement of Claim on Mr Sirakas by serving it on Mr Tim Horsley, the solicitor who was then acting for Mr Sirakas in Family Court proceedings, and by leaving a copy of the Statement of Claim on any person over the age of eighteen at a residential property owned by Mr Sirakas in Newtown. Her Honour made those orders and service was effected accordingly.

32 Her Honour was, of course, able to make an order for substituted service because Mr Sirakas happened to be within the jurisdiction at the time and was, therefore, amenable to personal service, if it could be effected: Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310, at 323-324.

33 Mr Sirakas now applies, pursuant to UCPR 12.11(1)(b), for an order setting aside the service of the Statement of Claim on the ground that the evidence adduced in the application to Bergin CJ in Eq “could not possibly establish”, according to Dr Bell, that the Statement of Claim “cannot practicably be served” on Mr Sirakas, as required by UCPR 10.14(1)(a).

34 An application for an order for substituted service of originating process is, of its very nature, made in the absence of the defendant to be served. If the defendant complains that the order should not have been made, the defendant can, without being obliged to file an appearance, apply under UCPR 12.11. The application is heard by a single judge, not by way of an appeal from the original order for substituted service.

35 The grounds upon which an order for substituted service may be set aside under UCPR 12.11(1)(b) are not defined and the power to make such an order is discretionary although, of course, the discretion is exercised in accordance with established principle: see e.g. Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWSC 270, at [140] per Hammerschlag J. The nature of the original order for substituted service being ex parte and interlocutory, a defendant applying under UCPR 12.11(1)(b) can always adduce evidence to found a submission that, as the evidence now stands, the Court should discharge its earlier order. Alternatively, the defendant may adduce no evidence and may confine himself to a submission that, on the evidence presented to the Court by the plaintiff on the ex parte application for substituted service, the Court should not have made the order. That is what Mr Sirakas has done in this case. Although he has adduced evidence in the form of affidavits from his solicitors, that evidence does not go to the question whether, on 8 December 2009, personal service of the Statement of Claim on him was practicable.

36 As I have said, an application by a defendant under UCPR 12.11(1)(b) is not an appeal from the original decision. Nevertheless, when the defendant adduces no evidence in support of such an application and the sole ground for setting aside the original order is that, on the evidence presented to the Court at the time that the original order was made, that order should not have been made, then as a matter of practicality the Court must be governed by the same considerations which apply to appeals from interlocutory orders regulating practice and procedure. If it were not so, such orders would be subject to frustration by endless applications to different Judges to exercise discretion differently on the same facts: see e.g. In re Will of Gilbert (decd) (1946) 46 SR (NSW) 318, at 323; White v Grogan [1972] 2 NSWLR 347. Thus, in such an application a defendant would have to show that the Judge who made the original order made an error of principle, or a material error of fact, or took into account irrelevant matter, or failed to take into account, or failed to give sufficient weight to, relevant matter or arrived at a result so unreasonable that one or other of such errors must have occurred: see e.g. Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45].

37 In the present case, there is no transcript of the application made to Bergin CJ in Eq on 8 December 2009 and, as is usual in ex parte applications in the Duty List, her Honour did not give reasons for the orders made. However, it is clear from the Court file what evidence was placed before her Honour. In the light of that evidence, I am far from persuaded that her Honour’s discretion miscarried in making the order which she did. To the contrary, I have no doubt, with respect, that her Honour’s decision was correct.

38 The evidence presented to the Court on 8 December 2009 showed that:

– the Plaintiffs had a strong prima facie case of fraud against Mr Sirakas in which it appeared that Mr Sirakas had gone to considerable lengths to conceal the receipt of the fruits of the fraud by establishing a bank account in Dubai in the name of a corporation with no obvious connection to him;

– the Plaintiffs had a prima facie case that the subject matter of the proceedings was a contract between one or more of the Plaintiffs made in New South Wales and governed by New South Wales law;

– Mr Sirakas, now a resident of Romania, was in New South Wales for a short time and there was no information as to when he would leave the jurisdiction;

– on 30 November 2009 and 3 December 2009 the Plaintiffs’ solicitors had endeavoured to make contact with Mr Sirakas through Mr Horsley, who was acting for him in his Family Court proceedings but although Mr Sirakas was aware of those efforts to make contact, the Plaintiffs’ solicitors had not succeeded in finding out an address at which Mr Sirakas could be served personally;

– surveillance on 3 and 4 December 2009 of a property at Newtown owned by Mr Sirakas but apparently occupied by his parents did not result in a sighting of Mr Sirakas, although it should be noted that the investigator did not knock at the door of the premises to enquire if Mr Sirakas was there.

39 The essential question for decision is: on these facts, is her Honour’s decision that personal service of the Statement of Claim was impracticable so unreasonable that her Honour must have made a reviewable error and her decision has miscarried.

40 “Impracticable” does not mean “impossible”: see e.g. Re Conan Doyle’s Will Trusts [1971] Ch 982, at 994; nor does it mean “inconvenient”: see e.g. Syndicate Mortgage Solutions Pty Ltd v El-Sayed [2009] NSWSC 207. Whether personal service is “impracticable” must be decided according to the particular circumstances of the case at the time that the application for substituted service is made and must have regard to:

– the requirement to do justice to a plaintiff who has demonstrated a prima facie case which may be defeated or frustrated if personal service of the originating process upon the defendant is insisted upon; and

– the requirement to do justice to a defendant who is entitled to receive proper and efficacious notice of proceedings commenced against him or her.

41 One factor, out of an infinite variety of possible factors which may affect the question whether personal service is practicable is whether the evidence in support of an application for substituted service satisfies the Court there is a real possibility – not a remote or fanciful possibility – that an attempt at personal service of originating process will result in the defeat or frustration of the plaintiff’s proceedings. Just as freezing orders are often made ex parte for fear that a forewarned dishonest defendant will remove assets before the Court’s orders fasten upon them, so also may substituted service be ordered if there is a real possibility that the defendant, forewarned by an attempt at personal service, will take measures to ensure that further attempts are unsuccessful. Another factor may be that the time taken in effecting personal service may result in a delay which will completely frustrate the plaintiff’s proceedings: see e.g. Re Conan Doyle’s Will Trusts (supra).

42 In all cases, the practicality or impracticality of personal service will be coloured by the degree to which the Court can be assured that substituted services will efficaciously bring the proceedings to the proper notice of the defendant. The more likely it is that substituted service will not be efficacious, the more difficult it will be to persuade the Court to dispense with personal service.

43 As I have said, in view of the evidence presented to Bergin CJ in Eq and summarised at [38], I am far from persuaded that her Honour’s discretion miscarried in making the orders sought. The evidence as to Mr Sirakas’ activities in the questioned transactions strongly suggested a real possibility that, if he was forewarned of attempts to serve him personally, he would quickly leave the jurisdiction to avoid service, as he obviously had means to do.

44 Dr Bell forcefully argues that the Court should find that personal service was practicable because the investigator who carried out surveillance on Mr Sirakas’ property at Newtown could easily have knocked at the door, served Mr Sirakas personally if he had answered the door and, if he did not, the investigator could then have enquired of the occupants where Mr Sirakas could be found. I do not accept that submission.

45 It must be borne in mind that Mr Sirakas has not given evidence that he was, in fact, living at the Newtown property in December 2009. He has not given evidence as to where he was living at the time. For the reasons I have given, I am of the view that the Plaintiffs could reasonably have believed that, if the investigator had knocked at the door of the Newtown property, not chanced to find Mr Sirakas there and had made an enquiry as to his whereabouts, Mr Sirakas would have been forewarned of the Plaintiffs’ attempt to serve him and would have left the country immediately. On the other hand, the Plaintiffs could reasonably have believed that surveillance of the property might ascertain whether Mr Sirakas was in the habit of coming to and from the property at certain times so that successful personal service could be planned in advance.

46 To the extent that they may be relied upon, Mr Sirakas’ actions after substituted service confirm the impression that he would have evaded personal service if forewarned.

47 Mr Horsley obviously informed Mr Sirakas that he had received the Statement of Claim by way of substituted service. Mr Horsley was at pains to insist to the Plaintiffs’ solicitors that he had no instructions to accept such service. It is a fair inference that he took that position on instructions. Further, the Plaintiffs’ solicitor, Mr Harkin, having read in the Law List that Mr Sirakas’ matrimonial proceedings were listed in the Family Court on 22 December 2009, attended at the Court that day and approached Mr Sirakas in the street outside. When Mr Harkin identified himself and attempted to find out whether Mr Sirakas had engaged lawyers to act in these proceedings, Mr Sirakas did not respond and hurried away. These are not the actions of a man willing to face his accusers.

48 In the result, therefore, I decline to set aside the orders for substituted service. The consequence is that, because Mr Sirakas was within the jurisdiction at the time when the orders were made and at the time when substituted service was effected, this Court is properly seized of jurisdiction in the proceedings.

Whether permanent or temporary stay

49 Dr Bell submits that if the Court holds that it has jurisdiction over Mr Sirakas, it should nevertheless decline to exercise jurisdiction on the ground that New South Wales is a clearly inappropriate forum for the resolution of the dispute.

50 Dr Bell says that this case simply has nothing to do with Australia. He emphasises that:

– the claim by Alstom, the Australian company, which is Mr Sirakas’ direct employer, is colourable because Alstom has not suffered any loss;

– the other claims are by European companies, one Romanian and the other French;

– the claims are against a man who has lived in Romania for seven years and arise from transactions conducted in Romania;

– all of the documents and witnesses involved in the proceedings will be in Romania;

– Alstom Power has filed a complaint with the Romanian police which is still to be investigated and which could lead to criminal proceedings being commenced against Mr Sirakas;

– if criminal proceedings are brought against Mr Sirakas in Romania, there is provision under Romanian law for compensation to be ordered if the charges are proved;

– it would be vexatious and oppressive to compel Mr Sirakas to conduct criminal proceedings in Romania and civil proceedings in New South Wales at the same time in respect of the same factual circumstances.

51 Dr Bell relies particularly on the following passage from the judgment of Campbell JA in Garsec Pty Ltd v His Majesty Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682, at [141]:

“If the subject-matter of a dispute had a tenuous connection with Australia such that an Australian court would have jurisdiction concerning it, but all the witnesses and documents were in another country and the transaction was governed by the law of that other country it would be easy to reach a conclusion that the Australian court was a clearly inappropriate forum, regardless of whether there was another place that could hear the dispute.”

52 I am unable to accept the proposition that, as matters presently stand, this Court is a clearly inappropriate forum having regard to all of the circumstances and, in particular, to the suggested availability of an alternative foreign forum to which Mr Sirakas is amenable: Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538; Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265 at [27]- [29]. My reasons are as follows:

– the principal causes of action pleaded – breach of contract, breach of tortious duty and breach of equitable duty – arise from a contract of employment (being the Employment Contract as amplified by the International Mobility Agreement) which was made in New South Wales;

– the parties to the Employment Contract expressly stipulated in clause 15.2 of the Mobility Agreement that the Courts of Australia should have exclusive jurisdiction in the event of a dispute;

– while the exclusive jurisdiction clause is not in itself determinative of the issue, it is significant as evidencing an acknowledgement by the parties that, even though the dispute might arise from events occurring in Romania, they conducted their relationship on the basis that the balance of convenience favoured the dispute being resolved in this jurisdiction;

– the parties expressly contracted in clause 15.1 of the International Mobility Agreement that the parties would be subject to the “Labour Law” (an undefined term) of Australia to the extent that that law did not “contradict mandatory laws of public interest” in Romania – no such conflict has been shown;

– proceedings, whether criminal or civil, have not yet commenced against Mr Sirakas in Romania – at this stage, the Court does not know whether any such proceedings will ever eventuate;

– as Mr Sirakas has not indicated what, if any, defence he makes to the allegations in these proceedings, it is not known what the issues will be and what evidence, documentary and from witnesses, will be required, so that it is not known what, if any, inconvenience would be suffered by any party if the proceedings continued in this Court;

– Mr Sirakas has assets in this jurisdiction which would be amenable to a judgment whereas it appears that he has a financial interest in assets in Dubai which may not easily be amenable to a judgment of a Romanian court.

53 In my opinion, as matters presently stand, Mr Sirakas has not demonstrated that this Court is a clearly inappropriate forum for the proceedings, nor has he demonstrated that to allow the proceedings to continue here would be vexatious and oppressive in the light of possible – not current – criminal proceedings in Romania.

54 For these reasons I decline to grant a stay of these proceedings, whether permanent or temporary. If circumstances in Romania change and criminal proceedings are commenced against Mr Sirakas, he will be entitled to apply again for a stay of these proceedings in the light of those changed circumstances. That will be an entirely fresh application, on new evidence.

Freezing orders

55 In the light of the facts as they are presently known and in view of the prima facie case of serious dishonesty made out against Mr Sirakas, I am satisfied that there is a real risk that Mr Sirakas will attempt to place his assets in New South Wales beyond the reach of a judgment unless the freezing orders obtained ex parte are continued. Mr Sirakas has not given any evidence of hardship which he might suffer if the freezing orders are continued.

56 The freezing orders made by Bergin CJ in Eq on 8 December 2009 and continued on 16 December 2009 until further order, will not be discharged.

Orders

57 Mr Sirakas’ Notice of Motion filed on 21 January 2010 is dismissed. I will hear the parties as to costs.

– oOo –

LAST UPDATED:
23 June 2010