Martyn v Graham[2003] QDC 447

DISTRICT COURT OF QUEENSLAND

1. [1]
   The applicant is the executor of the estate of Mr H M Mead (“the deceased”) who died on 4 February 1996. The applicant seeks summary judgment against the respondent under r 292 of the Uniform Civil Procedure Rules on the basis that the respondent has no real prospect of successfully defending the applicant’s claim and that there is no need for a trial of the matter.

2. [2]
   The applicant has brought an action against the respondent and another defendant based on a debt that is said to have arisen as a result of a judgment entered against the respondent and others, and in favour of the applicant, by the Regional Trial Court in the Republic of the Philippines (“the Philippines proceedings”).

3. [3]
   The Philippines proceedings concerned an unpaid loan of one million and four hundred thousand Philippine Pesos (P1,400,000) made by the deceased to Trans-Australia Management Corporation (“TAMC”). The purpose of the loan was to facilitate the development of the Sundowner Hotel located in Manila and operated by TAMC. A written loan agreement was executed on 1 November 1990 by the deceased and Mr Graham (the respondent) in his capacity as president of TAMC. The specific terms of that loan agreement are not presently in issue, however it is sufficient to note that interest was payable at five percent per annum and the loan was to be repaid in monthly instalments.

4. [4]
   In March of 1996, the applicant, attempted to recall the loan from TAMC on or before 27 September 1996. On 7 May 1996 the respondent, on behalf of another apparently related company, Sundowner Development Corporation (“SDC”), acknowledged that the loan had not been repaid and that TAMC had ceased operations in 1991. On the strength of affidavit material sworn by the respondent it appears that, at that time, SDC accepted that it owed at least a “moral duty” to repay the loan on behalf of TAMC.

5. [5]
   Probate of the deceased’s last will and testament was granted to the applicant on 8 January 1997 by the Supreme Court of New South Wales. Early in the same year the applicant was successful in applying for letters of administration in the Philippines. The applicant then engaged lawyers within that jurisdiction to issue proceedings against the respondent and his wife, TAMC, SDC and Centrepoints Hotels International Holdings Inc (“CHIH”) in the Regional Trial Court in Angeles City (civil case number 9920). The defendants to the proceedings in the Philippines filed an answer and counter-claim, but were, according to the applicant, only intermittently present during the ultimate trial of the matter which occurred on various dates between 6 December 2001 and 22 August 2002. They were represented on that trial.

6. [6]
   The Regional Trial Court handed down its written judgment on 24 January 2003 (Exhibit “WRM7” to the affidavit of William Ross Martyn). It stated,

“After a thorough evaluation of the evidence presented by plaintiff and the testimony of plaintiff’s lone witness, which remained uncontroverted, the Court believes that plaintiff has satisfactorily established its cause of action and is thus, entitled to the relief prayed for in the complaint.

Defendants were not faithful in the performance of their obligation, having validly executed a loan agreement for the use and benefit of defendant Graham’s companies and for his personal benefit, they are obliged to comply with terms and conditions thereof. Defendants are obliged to pay (the quantum assessed).”

The Court ordered,

“Wherefor, in view of the foregoing, judgment is hereby rendered in favour of plaintiff and against all defendants, ordering the latter to pay the former (the quantum assessed).”

7. [7]
   After the judgment was handed down in the Philippines, the respondent returned to Brisbane and, according to an affidavit filed by the applicant, now operates another business within this jurisdiction. The applicant further attests that, as at 31May 2003, the judgment debt has not been satisfied, nor has the judgment been set aside. This is admitted by the respondent.

The current proceedings

8. [8]
   On 5 March 2003, the applicant filed an originating claim and statement of claim in the Brisbane Registry of this Court against the respondent and his wife as first and second defendants respectively. The plaintiff claims:

1. AUD70,575.90, representing the “debt pursuant to the judgment”;

2. Interest in the amount of AUD555 per month (representing 17,500 Philippine Pesos);  and

3. Costs.

9. [9]
   The applicant expressly acknowledges that he is unable to register the judgment of the Philippines proceedings for enforcement under the Foreign Judgments Act 1991 (Cth) (“Foreign Judgments Act”) because the courts of the Philippines are not currently prescribed courts for the purposes of that Act. The applicant has instead opted to frame his cause of action in terms of a common law debt, said to arise by virtue of the judgment entered against the defendants by the foreign court.

10. [10]
    The respondent filed his defence on 15 April 2003. In that defence the respondent pleads that the foreign judgment relied on by the applicant also concerned a number of other entities (including TAMC, SDC and CHIH) who are not defendants before this Court. The respondent further asserts that the applicant has not pleaded a proper cause of action because the foreign judgment is not capable of registration pursuant to the Foreign Judgments Act and therefore the judgment remains unenforceable within Australia.

11. [11]
    The applicant filed a reply in this Court on 9 May 2003. That document essentially states that the applicant had never purported to rely on the provisions of the Foreign Judgments Act but is instead claiming relief at common law.

12. [12]
    On 5 June 2003 the applicant brought the current application for summary judgment or, in the alternative, directions as to the further conduct of the claim. On 15 July 2003 the respondent filed notice that he was to act in person. The application came before me on the following day for hearing.

The issues

13. [13]
    The application principally concerns whether or not the applicant is entitled to bring an action at common law in respect of an unsatisfied foreign judgment debt made in personam for a sum of money. If the applicant is successful in establishing that he can maintain this cause of action, then the Court must consider whether it is appropriate for summary judgment to be entered against the respondent.

Right to bring the action in Queensland

14. [14]
    Generally speaking, a person who obtains in their favour a foreign money judgment made in personam (“foreign judgment creditor”) has a number of options for enforcing the accruing judgment debt within Australia. Firstly, a foreign judgment creditor could, provided they were able to, register the judgment for enforcement under s 6 of the Foreign Judgments Act. That Act affords a number of procedural advantages to a foreign judgment creditor and for this reason it is generally preferred as the primary method of enforcing foreign judgments. The difficulty with the legislation is that its machinery is limited to recognising decisions on the basis of a reciprocity of treatment by a foreign power. Only a certain number of courts are currently prescribed for the purposes of the Act and, consequently, the Act has only a very limited scope of operation. The Act does not, as the applicant readily concedes, apply in relation to the present action.

15. [15]
    Throughout the conduct of this matter and during the hearing of the application, the respondent has maintained that the applicant was unable to enforce the judgment within Australia because he was unable to register it under the Foreign Judgments Act. This argument is misconceived. The Act does not in any way impair the ability of a plaintiff to bring a common law action for the debt unless the judgment is registrable under the Act in the first place:  s 10. Indeed s 10, and particularly s 11, of the Act contemplate that an unregistrable judgment might be subject to separate forms of recovery.

16. [16]
    It is well established that a foreign judgment creditor is entitled to bring an action at common law for a foreign judgment debt: Hong Kong & Macao Glass Co v Gritton (1886) 12 VLR 128;  Emanuel v Symon [1908] 1 KB 302 at 309 per Buckley LJ;  Malaysia-Singapore Airlines Ltd v Parker (1972) 3 SASR 300 at 302-4 per Bray CJ;  White v Verkouille [1989] 2 Qd R 191 at 194 per McPherson J. This is the case even though the foreign judgment, by itself, creates no right of enforcement within Australia:  Perry v Zissis [1977] 1 Lloyd’s Rep 607 at 613 per Roskill LJ.

17. [17]
    The basis of the common law rule, particularly in the United Kingdom, has traditionally been described as the “theory of obligation”. This concept was explained most famously by Parke B in Williams v Jones (1845) 13 M&W 628 at 633;  153 ER 262 at 265:

“Where a court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, a legal obligation arises to pay that sum, on which an action of debt to enforce the judgment may be obtained. It is in this way that judgments of foreign and colonial courts are supported and enforced.”

18. [18]
    Although legislatures have, at times, codified certain aspects of this rule (such as is contained in the Foreign Judgments Act), the common law has always retained the ability to recognise and enforce foreign judgments. See further:  Bates D, “Recognition and enforcement of foreign judgments in personam in Queensland” (1993) 23 Queensland Law Society Journal 167 and Tadmore N, “Recognition of foreign in personam money judgments in Australia” (1995) 2 Deakin Law Review 129.

19. [19]
    The other options for enforcing a foreign judgment debt are not presently relevant.

20. [20]
    I am satisfied that the applicant has a proper cause of action. He is entitled to maintain an action at common law for the debt and the provisions of the Foreign Judgment Act are of no bar to him.

Preconditions to the action

21. [21]
    Before a foreign judgment creditor can be allowed to succeed upon an action for a debt at common law, a number of conditions must first be satisfied. Those conditions are comprehensively explained by Professors Nygh and Davies in Chapter 9 of their work “Conflict of Laws in Australia” (7^th Ed).

22. [22]
    The first condition which must be satisfied before a foreign money judgment can be enforced as a debt due at common law is that the foreign forum must be exercising a jurisdiction that the enforcing jurisdiction (in this case Australia) recognises in a private international law sense (“international jurisdiction”): Emanuel v Symon [1908] 1 KB 302 per Buckley LJ at 309;  Vogel v R & A Kohnstamm Ltd [1971] 2 All ER 1428 at 1435. It is not relevant whether the foreign forum exercised jurisdiction validly under their own law, but rather it typically only needs to be shown that the defendants to the foreign proceedings were present or resident in the jurisdiction or that they voluntarily submitted themselves to that jurisdiction, for example by virtue of a contractual provision. The plaintiff bears the onus of establishing that the foreign court exercised proper international jurisdiction:  R v McLeod (1890) 11 LR(NSW) 218 at 221 per Windeyer J.

23. [23]
    In this case the defendants participated in the proceedings in the Philippines and their involvement can be said to have gone beyond merely noting an objection to the court exercising its jurisdiction. The defendants filed an answer and counter-claim to the allegations made against them, were represented at the trial and were at times present during the conduct of the trial. There is no evidence before me or even evidence that has been foreshadowed that would suggest that the court in the Philippines did not have proper international jurisdiction.

24. [24]
    The second condition that must be met is that the foreign judgment must be final and conclusive of the controversy between the parties, or in other words, the decision must be res judicata:  see Nouvion v Freeman (1889) 15 Appeal Cases 1 at 9 per Lord Herschell. In this case there has been no suggestion that the decision made in the Philippines is not binding on the parties. I am satisfied that this is not an issue in the present case.

25. [25]
    The third condition to recovery at common law for a judgment debt made in personam is that the debt must be made for a fixed amount or must be readily calculable. That is not an issue in the present matter.

26. [26]
    The final condition is that the action to enforce the judgment debt must be made against the same parties and in the same interests as was litigated in the foreign jurisdiction: Blohn v Desser [1962] 2 QB 116. In this Court only Mr and Mrs Graham are named as defendants. This application is brought against Mr Graham alone. The judgment handed down in the Philippines was made against a number of other entities who are not currently before this Court. This matter was explicitly raised by the respondent in his filed defence.

27. [27]
    The relevant passages of the decision of the Regional Trial Court are quoted in para [6] above.

28. [28]
    The defendants to the Philippine action were Kenneth John Graham, Lydia Graham, Trans-Australia Management Corp, Sundowner Development Corp and Centrepoints Hotel International Holdings Inc.

29. [29]
    In my view there is a real question as to the meaning of the foreign judgment and whether the defendants are jointly and severally liable. After oral argument I invited the parties to make written submissions or provide further evidence on this aspect. The final of those submissions was received on 11 September 2003.

30. [30]
    It is submitted by the solicitors on behalf of the applicant that the Philippines judgment is against Mr Graham personally and that it is irrelevant that other persons/entities may be sued on the judgment. It is submitted that there is not authority for the proposition that all judgment debtors under a foreign judgment must be pursued by the creditor in Australia, save possibly for the situation where the liability is joint rather than joint and several. It is submitted that the respondent’s liability is joint and several. It is submitted that there is a presumption under Australian law that the law of the Philippines is the same as the law of Australia unless the contrary is proved. It is submitted that if the judgment of the Regional Trial Court was given by an Australian court, the judgment against the defendants would create a joint and several liability and any one or more of the debtors could be pursued to enforce the judgment. It is further submitted that there is no suggestion in the Philippines decision that the court intended the debtors to be jointly liable rather than jointly and severally liable and, in the absence of proof to the contrary, the applicant is entitled to the benefit of the presumption.

31. [31]
    The respondent submits that the Philippines judgment does not establish that all the named defendants in those proceedings were jointly and severally, or indeed severally, liable for the debt. It is submitted that there was no intention on the part of the court in the foreign proceedings to find the defendants jointly and severally liable.

An application for summary judgment

32. [32]
    This is an application for summary judgment by the applicant. The issues are whether, in the circumstances, the respondent has no real prospect of successfully defending the claim and whether there is no need for a trial of the claim (UCPR r 292).

33. [33]
    Rule 292 UCPR provides,

1. “(1)
   A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.

2. (2)
   If the court is satisfied that –

1. (a)
   the defendant has no real prospect of successfully defending all or part of the plaintiff’s claim;  and

2. (b)
   there is no need for a trial of the claim or the part of the claim;

the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.”

34. [34]
    In Bernstrom v National Australia Bank Ltd [2003] 1 Qd R 469, the Court of Appeal considered r 292 and 293 UCPR. Jones J (with whom Cullinane J agreed) said:

“[36] This new rule results, not only in a change of terms, but also reflects a change in the philosophy from that embodied in the former rules and in the propositions identified in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87. Wilson J considered this new rule in Foodco Management Pty Ltd & Diaz Keinert Pty Ltd v Gomai Travel Pty Ltd [2001] QSC 291 and found guidance in the approach taken by the Court of Appeal in the United Kingdom in Swain v Hillman [2001] 1 All ER 91. The latter case considered an equivalent rule of the United Kingdom, namely R24.4 of the Civil Procedure Rules. That rule is couched in terms which are almost identical with r 293(2) of the UCPR. The UK Court of Appeal also made reference, in the same case, to R3.4 which provides for the court to strike out a statement of case if it appears that it discloses ‘no reasonable grounds for bringing or defending a claim’. That latter rule has its equivalent in the UCPR r 171.

[37] In Swain Lord Woolf said concerning the relevant rules:

“… The Court now has a very salutary power, both to be exercised in a claimant’s favour or, where appropriate, in a defendant’s favour. It enables the Court to dispose summarily of both claims or defences which have no real prospect of being successful. The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success or … may direct the Court for the need to see whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success.”

Of the rationale for those rules, his Lordship said:

“It is important that a judge in appropriate cases should make use of the powers contained in Part 24. In doing so he or she gives effect to the overriding objectives contained in Part 1. It saves expense;  it achieves expedition;  it avoids the Courts’ resources being used up on cases where this serves no purpose, and I would add, generally, that it is in the interests of justice. If a claimant has a case which is bound to fail, then it is in the claimant’s interest to know as soon as possible that that is the position. Likewise, if a claim is bound to succeed,  a claimant should know that as soon as possible.”

[38] This statement by Lord Woolf is clearly consonant with the philosophy of the UCPR as set out in r 5. It is this philosophy which underpins the change in approach reflected in the new rules. These remarks apply with equal force to both rules 292 and 293 of the UCPR.

[39] It is of assistance to note that even more recently, in Alexander v Arts Council of Wales [2001] 1 WLR 1840 the Court of Appeal (UK) examined the limits of the application of CPR 24.4. That case raised the question of whether summary judgment could be entered in a defamation case where there were issues fit to be placed before a jury. CPR 24.4 specifically states that “The court may give summary judgment … in any type of proceedings.”  However there remains a qualification imposed by the recognition of the respective functions of the judge and the jury, in particular, of the making by the judge of an evaluative decision on an issue which should be left to the jury. The power to enter summary judgment exists where the judge concludes that the evidence, taken at its highest, is such that a properly directed jury could not possibly reach the necessary factual conclusion. This case recognised the more liberal approach to the determination of summary judgment applications identified in Swain’s case.

[40] In my view, the reasoning of the Court of Appeal (UK) in Swain should be adopted as setting the proper test for applications pursuant to rules 292 and 293 of the UCPR.”

35. [35]
    In Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259, Holmes J (with whom Davies JA and Mullins J agreed) said at p. 264:

“[7]Rule 293(2) of the Uniform Civil Procedure Rules 1999 enables summary judgment to be given for the defendant if the court is satisfied that the plaintiff has ‘no real prospect of succeeding’ on its claim, and that there is no need for the trial of the claim. That level of satisfaction may not require the meeting of as high a test as that posited by Barwick CJ in General Steel (1964) 112 CLR 125:  ‘That the case for the plaintiff is so clearly untenable that it cannot possibly succeed’. The more appropriate enquiry is in terms of the rule itself:  that is, whether there exists a real, as opposed to a fanciful, prospect of success. However, it remains, without doubt, the case that:

‘Great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case.’”

It is obvious that those comments apply equally to r. 292.

36. [36]
    I am of the view that from the wording of the Philippines judgment, there is a real question as to whether the defendants are severally liable. The wording is ambiguous. The applicant was given the opportunity to address the issue but chose to rely on a presumption that the domestic law should be applied. Where the application is for summary judgment in accordance with the principles quoted above, I am of the view that the meaning of the judgment under the law of the Philippines should have been established by the applicant. There is thus an important issue to be resolved.

37. [37]
    I am thus not satisfied that the respondent has no real prospect of successfully defending the claim. The application is refused. I will hear the parties as to costs.