BHP Petroleum Pty Ltd v Oil Basins Ltd

[1985] VR 725

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Between: BHP Petroleum Pty Ltd
And: Oil Basins Ltd

Court:

Judge: Murray J

Subject References:
PRIVATE INTERNATIONAL LAW
Service of writ out of jurisdiction
Contract affecting land 'situate within the jurisdiction'
Corporation 'ordinarily resident within the jurisdiction'
Action brought in respect of breach of contract made within jurisdiction or through agent residing within jurisdiction or which is governed by law of Victoria
Action in which injunction is sought as to anything to be done within jurisdiction
Whether case is proper for service out of the jurisdiction
PRACTICE AND PROCEDURE
Service of writ on corporation
Corporation's registered office outside jurisdiction
Service of writ on solicitors and accountants acting for corporation within jurisdiction
Whether service on 'head officer' or 'manager'
Whether service effective

Legislative References:
Rules of the Supreme Court - O. 11, r1(b), r1(c), r1(e)(i), r1(ii), r1(iii), r1(ea), r1(f), r2 and O. 9, r6

Case References:
Okura and Co Ltd v Forsbacka Jernnecks Aktiebolag - [1914] 1 KB 715
Vogel v R and A Kohnstamm Ltd - [1973] QB 133
R v Westbrook - (1847) 10 QB 178; 116 ER 69
Saskatchewan Minerals v Keyes - (1972) DLR (3d) 573
Commissioner of Taxation v Sherritt Gordon Mines Ltd - (1977) 137 CLR 612
La Bourgogne - [1899] AC 431
De Beers Consolidated Mines Ltd v Howe - [1905] 2 KB 612
North Australian Pastoral Co Ltd v Federal Commissioner of Taxation - (1946) 71 CLR 623
Mount Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society - [1938] AC 224

Hearing date: 11-15, 18-22, 25-28 February; 1, 14, 22 March 1985
Judgment date: 3 April 1985

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The defendant (OBL) was a company registered in Bermuda and not registered as a foreign company in Victoria. Its principal business was to receive as a trustee and distribute to 31 persons entitled, most of whom resided in the United States, royalties arising from Bass Strait oil production. From time to time the directors of OBL met in Bermuda and gave instructions to a firm of solicitors in Melbourne as to the disposal of the quarterly payments of royalty received from the plaintiff (BHPP). A few weeks before each royalty payment fell due a firm of accountants in Melbourne ascertained, on behalf of OBL, from BHPP what the royalty would be. The accountants then computed the allocation of the royalty to the various persons entitled and made arrangements for retaining moneys to satisfy anticipated tax liabilities. The royalty was paid into a clearing account of a bank in Melbourne. The bank was given instructions as to the payment of amounts due to certain persons and to transmit the balance to a bank in New York. Once each year the accountants submitted taxation returns and paid assessments from the retained moneys.

The royalties were payable pursuant to an agreement between two companies which had subsequently assigned their rights, which rights passed ultimately to BHPP and OBL respectively. The contract was not made in Victoria, although antecedent negotiations had taken place in Melbourne between BHPP's predecessor and the person who later formed OBL's predecessor.

The contract contained a clause providing for its interpretation in accordance with the laws of New York and another clause which provided that any disputes arising under the contract should be referred to arbitration. There was no requirement that the arbitrator should be appointed in Victoria or that the arbitration should take place in Victoria. A dispute arose between BHPP and OBL as to the basis on which royalties were being paid. OBL commenced proceedings in Texas and New York. BHPP drew the attention of OBL to the arbitration clause, claimed that the proceedings constituted a breach of the agreement and required arbitration. BHPP then issued a writ out of the Supreme Court of Victoria against OBL. A Master gave leave to BHPP to serve notice of the writ on OBL in Bermuda. Later four concurrent writs were issued and served on OBL care of, inter alia, the solicitors and accountants.

OBL moved to set aside service of the concurrent writs. BHPP resisted this application relying on RSC, O. 9, r6 which provides that a writ issued against a corporation may be served on its "head officer" or "manager".

OBL also moved to set aside the order for service of notice of the writ outside the jurisdiction. In support of the order BHPP relied on RSC, O. 11, r1(b), r1(c), r1(e)(i), r1(ii) and r1(iii), r1(ea) and r1(f). OBL also sought to rely on O. 11, r2 which provides that no order should be made under O. 11, r1 "unless it shall be made sufficiently to appear to the Court or Judge that the case is a proper one for service out of the jurisdiction".

Held

(1)

The critical test for determining whether service of the writs was valid is, in the light of OBL's business, to examine what was done in Melbourne with a view to answering the question whether OBL was merely employing solicitors and accountants to carry out certain work for reward or whether, in fact, the work carried out by the solicitors and accountants formed a material part of OBL's business as a trustee. The work carried out by the solicitors and accountants constituted the business of OBL, and accordingly OBL was present in Victoria for the purposes of O. 9, r6.

(2)

Service of the writs on the solicitors and the accountants constituted service on a "head officer" or "manager" for the purposes of O. 9, r6. Service of the writs on the solicitors and the accountants was, therefore, valid service of the writ on OBL Rudd v John Griffiths Cycle Co Ltd (1897) 23 VLR 350, referred to.

(3)

Service out of the jurisdiction was not supported by O. 11, r1(b) because the words "situate within the jurisdiction" have a territorial connotation. The royalty agreement did not affect land situate within the jurisdiction. Further, it was doubtful whether the royalty agreement affected land or hereditaments in the relevant way. The rights conferred upon BHPP by the licences to produce oil were rights sui generis and should not be construed by reference to the law relating to rent charges and profits a prendre.

(4)

Service out of the jurisdiction was supported by O. 11, r1(c) because OBL was ordinarily resident within the jurisdiction in the sense that its only active business was carried on in Melbourne through the solicitors and the accountants.

(5)

Service out of the jurisdiction was not supported by O. 11, r1(e)(i) because the company, which entered into the original agreement and to whose rights OBL ultimately succeeded, was not, to the knowledge of the negotiators, in existence at the time at which negotiations were conducted in Melbourne, and could not, therefore, have been a party to an agreement entered into there. Nor could service be supported by O. 11, r1(e)(ii) since the person who conducted the negotiations in Melbourne which preceded the making of the agreement could not have acted as the agent of the then non-existent company which later entered into the agreement and to whose rights OBL ultimately succeeded. Further, service could not be based upon O. 11, r1(e)(iii) because the agreement provided that it should be interpreted and applied in accordance with the laws of the State of New York. There was no basis for the Court overriding the express choice of law of the parties even though the contract had no connection with New York and had a great deal of connection with Victoria.

(6)

Service out of the jurisdiction was not supported by O. 11, r1(ea) because the action was not in respect of a breach of contract committed within the jurisdiction: the breach was committed in Texas and New York when legal proceedings were commenced. The correspondence within Victoria concerning the appointment of an arbitrator did not lead to a breach of the agreement.

(7)

Service out of the jurisdiction was not supported by O. 11, r1(f) because the agreement did not provide for the place at which the arbitration was to occur and there was therefore no basis for the making of an injunction requiring anything to be done within the jurisdiction.

(8)

This was a proper case for service outside the jurisdiction. No injustice would be done to OBL by permitting this course. BHPP was entitled to bring the action when faced with an attempt by OBL, in breach of the agreement, to litigate in New York and Texas. Victoria was the most convenient forum for determination of the dispute. The Atlantic Star [1974] AC 436, referred to.

MOTIONS

The defendant gave notice of motion to set aside an order made by Master Barker pursuant to which the plaintiff had been given leave to serve notice of a writ, issued out of the Supreme Court of Victoria, on the defendant at its registered address in Bermuda. The defendant also gave notice of motion to set aside the service within the jurisdiction of certain concurrent writs. The facts are stated in the judgment.

SP Charles QC, KM Hayne QC and RA Finkelstein, for the plaintiff.

JD Merralls QC and JG Santamaria, for the defendant.