Central Petroleum Limited v Geoscience Resource Recovery LLC

This recent decision concerns an application to have a proceeding stayed on the ground that a concurrent proceeding was underway in the United States. Justice Bowskill determined that the proceeding was one in relation to a contract – and therefore fell within r 124(1)(g)(ii) of the UCPR – and refused to grant a stay, finding that the test that Queensland was a “clearly inappropriate forum” had not been met on the facts of the case.

Bowskill J

12 October 2017

The plaintiff, Central Petroleum Limited (“Central”), was an Australian listed public company which carried on business in Queensland. [1]. The defendant, Geoscience Resource Recovery LLC (“Geoscience”), was an American company, based in Texas. [1].

In 2011, Central and Geoscience entered into an agreement, pursuant to which Geoscience agreed to assist Central in “contacting and finding a farm-in partner for Central’s petroleum tenements in Australia” (the “2011 agreement”). [1]. The 2011 agreement was governed by the laws of Western Australia. [3].

Geoscience alleged that a further agreement was made in 2012 which entitled it to a success fee (the “2012 agreement”). [2]. The alleged 2012 agreement was governed by the laws of Texas. [3]. Central denied that it had entered into the agreement. [2].

In July 2015, Geoscience commenced a proceeding in the United States District Court in Texas seeking to recover the success fee on the basis of (i) the alleged 2012 agreement, (ii) a quantum meruit claim, or (iii) damages for fraudulent misrepresentation. [4]. Central entered a “special appearance” but objected to the jurisdiction of the Texas court. [5]. In November 2016, the Texas District Court found that the court did have jurisdiction. [5]. Central appealed, and at the time of the present matter, the decision was reserved. [5].

Central commenced proceedings in the Supreme Court of Queensland, “seeking declaratory relief including to the effect that Central did not enter into, and [was] not bound by, the 2012 agreement”. [6]. Geoscience filed a conditional notice of intention to defend, challenging the jurisdiction of the Supreme Court. [7]. It sought to have Central’s claim set aside, or alternatively, an order staying the proceedings permanently or temporarily, when the outcome of the Texas proceedings would be known. [7]. It also sought, as a further alternative, to stay its application until the United States appeal court determined the question of jurisdiction. [7].

Bowskill J was ultimately “not persuaded that it was appropriate to adjourn the hearing of Geoscience’s application”. [8]. Further, her Honour found that the Supreme Court of Queensland did have jurisdiction in respect of Central’s claim and refused to grant a permanent or temporary stay. [8].

Jurisdiction

Rule 124(1)(g)(ii) of the Uniform Civil Procedure Rules 1999 permits service on a person outside of Australia of an originating process for “a proceeding relating to a contract … made by 1 or more parties carrying on business or residing in Queensland”. [11]. The issue here was whether Central’s proceeding was one “relating to a contract”. [13].

Geoscience sought to argue that the proceeding did not relate to a contract as Central’s claim was premised on the allegation that the parties did not make a contract. [23]. By contrast, Central submitted that the proceeding related to both the 2011 agreement and the alleged 2012 agreement. [24]. After examining the English authorities on the issue, Bowskill J was satisfied that Central’s claim was one relating to the agreements and therefore fell within the scope of r 124(1)(g)(ii). [31].

Stay of the proceedings

Her Honour considered whether the proceedings in Queensland should be stayed, having regard to the Texas proceedings. Her Honour stated that the “test is whether Queensland is a clearly inappropriate forum”. [34]–[35]. The onus was on Geoscience to satisfy the court that it was “so inappropriate a forum for the determination of the proceedings that their continuation would be productive of injustice, because it would be oppressive … or vexatious”. [35]. Her Honour added that the “focus is upon the inappropriateness of the local court, not the appropriateness or comparative appropriateness of the foreign court”. [35].

Her Honour accepted that the dispute had a connection with Queensland, since Central was based in Queensland and the subject matter of the dispute concerned petroleum tenements located in Queensland. [43]. Her Honour also considered that it was, “at the least, fairly arguable” that the dispute about whether the parties entered into the 2012 agreement would be governed by the laws of Queensland, notwithstanding that the putative proper law of the contract was Texas. [46]. Her Honour here referred to the decision the Full Federal Court in Trina Solar (US) Inc v Jasmin Solar Pty Ltd (2017) 247 FCR 1. [46]–[49].

Her Honour also had regard to the enforceability of any judgment against Central in the Texas proceedings. Her Honour noted that the Foreign Judgments Act 1991 (Cth), which provides for the enforcement of certain foreign judgments, does not apply to the United States and therefore the “recognition and enforcement” of such judgments is governed by common law principles. [56]. This requires, among other things, that the “foreign court must have exercised a jurisdiction that Australian courts recognise”, which in turn requires (i) “the presence or residence of the defendant in the jurisdiction of the foreign court”, or (ii) “the voluntary submission by the defendant to that jurisdiction”. [57]–[58].

Central was not served in the United States, but in Australia. [60]. As for (ii), Central argued that the only basis upon which it could be said it had submitted to the jurisdiction of the Texas court depended upon the clause as to jurisdiction in the alleged 2012 agreement. [60]. Geoscience argued that by entering, in effect, a conditional appearance, Central would be bound by any finding as to jurisdiction reached by the Texas court. [61]. Bowskill J rejected this argument, noting that it was contrary to s 11 of the Foreign Judgments Act, which provides that a foreign court is not taken to have jurisdiction merely because the judgment debtor “entered an appearance in proceedings in the court” for the purpose of “contesting the jurisdiction of the court”. [62]–[63], [77]. Accordingly, whether or not the Texas court had jurisdiction, which Australian courts would recognise, could only depend upon whether or not an Australian court found that Central entered into the alleged 2012 agreement. [78].

Having regard to all these matters, her Honour was not persuaded that Queensland was a clearly inappropriate forum for the dispute. [81]. Her Honour also declined to grant a temporary stay or adjourn the proceedings. [82]–[84].

The application was dismissed. [90].

J English