SFP Events Pty Ltd v Little Swamp II, Inc & Anor

This decision concerned whether a proceeding should be stayed and referred to arbitration. The parties are in dispute as to whether any contract was formed between them. If there is a contract in existence, it contains an arbitration agreement. The applicant in this proceeding sought declarations to the effect that the purported contract never came into existence. The respondent sought a stay so that the matter could be referred to arbitration. The Court held that the matter should be stayed, noting that a dispute about whether an arbitration agreement was formed does not prevent referral to arbitration under s 7 of the International Arbitration Act 1974 (Cth).

Treston J

21 June 2024

The applicant, SFP, is an event management company. [5]. In September 2023, Mr Anderson, the director of SFP was organising a musical festival which was to take place in Mackay in March 2024. [5]. The first respondent, Little Swamp, is the commercial entity used by the former lead singer of Creedance Clearwater Revival, John Fogerty. [3]. The second respondent, CAA, is Mr Fogerty’s talent agent. [3]. Both Little Swamp and CAA operate from the United States. [4]. Between September and December 2023, SFP entered into negotiations with CAA for Mr Fogerty to perform at the festival. [5].

On 11 January 2024, while negotiations were ongoing, SFP agreed to pay $700,000 USD to CAA as a deposit which was to be held by CAA until after the performance. [14]–[17]. On 17 January 2024, CAA sent an email to Mr Anderson stating “please follow the link below to view the documents memorializing the terms of our agreement …”. [22]. The linked agreement contained an arbitration clause, which had not been previously discussed between the parties. [23]. On 29 January 2024, CAA sent a “final agreement” to Mr Anderson for signing. [26]. The following day Mr Anderson provided a signed copy. [28]. Two weeks later, Mr Anderson sought a copy of the agreement signed on behalf of Mr Fogerty’s team. [30]–[32]. By 23 February 2024, Mr Anderson had still not received a copy signed by Mr Fogerty’s team. [36]. Solicitors for SFP wrote to CAA contending that SFP had made an offer to CAA by providing a signed copy of the contract, and purporting to withdraw that offer. [37].

In this proceeding, SFP seeks a declaration that the offer was validly withdrawn and that it is entitled to the return of the $700,000 deposit. [53]. The respondents contend that a valid contract was formed, and sought to have the proceeding stayed on one of three grounds.

First, the respondents contended that the proceeding should be stayed under s 7 of the International Arbitration Act 1974 (Cth) (“IAA”). Under that provision, where a dispute between parties to an arbitration agreement is pending before court and the dispute is capable of settlement by arbitration in pursuance of the arbitration agreement, the court shall order a stay. [59]. The arbitral tribunal has power to rule on its own jurisdiction in accordance with the doctrine of competence-competence, set out in s 16 of the IAA. [70]. It would usurp the role of the arbitrator for the court to consider, on the merits, whether a valid arbitration agreement exists between the parties. [70]–[72]. The Court should instead take an approach that is similar to determining whether there is a prima facie arbitration agreement. [71].

The Court rejected SFP’s submission that the court should hear the parties’ dispute as to whether the parties were bound by an arbitration agreement. [74]–[75]. To answer that question it would be necessary to determine the entire dispute between the parties as to whether a contract was formed. [75]–[76]. Accordingly, the Court determined that a stay should be ordered under s 7 IAA. [78].

SFP contended that if there was an arbitration agreement it was only between SFP and Little Swamp, such that the dispute could continue as against CAA. [85]. Under s 7(4) IAA, a party to an arbitration agreement includes a party “claiming through or under a party”. [84]. For that test to be satisfied an essential element of the cause of action or defence must have been vested in or exercisable by the party before the person claiming through or under the party can rely on the cause of action or defence. [86]. A part of the dispute related to the amounts held in trust by CAA. [89]. On that basis, the Court was satisfied that CAA was a party to the arbitration agreement within the meaning of s 7(4). [89].

Second, the respondents contended that a stay should be ordered under r 127(2)(b) UCPR or in the court’s inherent jurisdiction. The Court accepted this contention on the basis that it was an inappropriate forum. [106]. That was, in particular, because if there was a contract it would be governed by Californian law, the respondents are both in California as are the trust funds, and the proceedings in Queensland would need to be reconstituted by claim and statement of claim in any event. [106].

Third, the respondents sought orders setting aside service outside Australia. Under r 125 UCPR, service can be made outside Australia without leave in certain circumstances. [117]. SFP relied on r 125(b) to contend that leave was not necessary. Under that provision, no leave is needed if the claim is for “enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract that … was to be wholly or in part performed in Australia…” [117]. The respondents contended that that rule did not apply because SFP was seeking declarations that there was no contract. [118]. The Court rejected that argument, because it would “disrupt the consistent interpretation and application” of the rule if it were limited to circumstances where the existence of the contract was not in dispute. [126]. In respect of CAA, service was also permitted without leave because CAA was a necessary or proper party under r 125(h)(i) UCPR. [129].

L Inglis