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In the decision of First Property Pte Ltd v Nyunt [2019] NSWSC 249, the Supreme Court of New South Wales confirmed established principles with respect to applications to set aside registration of foreign judgments in Australia. In Nyunt, the Court refused to set aside an order registering a judgment from the High Court of the Republic of Singapore (High Court of Singapore) that was registered under the Foreign Judgments Act 1992 (Cth) (FJA).

Background

Michael Nyunt, a national of Myanmar and a citizen of Australia made an application to set aside the registration of the foreign judgment in the Supreme Court of New South Wales. Mr Nyunt and First Property Pte Ltd (First Property) were parties to a joint venture agreement entered into 1996 (Joint Venture Agreement) whereby First Property agreed to advance funds secured by a convertible debenture. First Property contended that its investment of funds in the amount of USD$7.6M was exhausted by 1998. Mr Nyunt then entered into a loan agreement to borrow a further USD$850,000 from First Property (Loan Agreement). The Joint Venture Agreement contained a jurisdiction clause where the parties agreed to submit to the non-exclusive jurisdiction of Singapore courts.

There was a dispute between Mr Nyunt and First Property as to whether funds were, in fact, advanced by First Property. First Property also claimed that Mr Nyunt misappropriated assets of the joint venture. In 2015, First Property obtained default judgment in High Court of Singapore for alleged debts owed under the Loan Agreement. Separately, the High Court of Singapore also gave judgment for damages to be assessed for breach of fiduciary duties. The judgment of the High Court of Singapore was registered as a judgment in the Supreme Court of New South Wales. Mr Nyunt then filed an application to set aside the order registering the judgment which was refused by Justice McCallum

Application to set aside registration of foreign judgment

Mr Nyunt advanced numerous grounds in his application to set aside registration of the Singapore judgment. These grounds included the following:

  • The High Court of Singapore had no jurisdiction because Mr Nyunt did not voluntarily submit to the jurisdiction;
  • Mr Nyunt did not have sufficient notice of the proceedings in the High Court of Singapore to enable him to defend the proceedings;
  • The judgments of the High Court of Singapore were obtained by fraud in that First Property never advanced funds to Mr Nyunt under the Joint Venture Agreement or the Loan Agreement; and
  • The registration of the judgment was an abuse of process because the courts of Myanmar were still in the process of determining the dispute when First Property sought to litigate the matter in Singapore.

Did the Singapore High Court have jurisdiction?

Under FJA, courts must set aside the registration of a foreign judgment if it is satisfied that the original court had no jurisdiction. Mr Nyunt made the following arguments with respect to jurisdiction:

  • He did not voluntarily submit to the jurisdiction of the High Court of Singapore;
  • He was not a party to the debenture – it was only executed by him in his capacity of director of another company, Town and City;
  • The non-exclusive jurisdiction clause in the Joint Venture Agreement submitting to the jurisdiction of Singapore did not apply because the funds were not advanced under the Joint Venture Agreement but instead under the debenture.

The Court found that the High Court of Singapore had jurisdiction. The Court noted that that Joint Venture Agreement contemplated the issue of the debenture in the future. In finding that Mr Nyunt agreed to submit to Singaporean jurisdiction when he entered into the Joint Venture Agreement, Justice McCallum relied on established authority such as Global Partners Fund Ltd v Babcock and Brown Ltd [2010] NSWCA; 79 ASCR 383, which stated that jurisdiction clauses should be construed widely. In this instance, the proper construction of the jurisdiction clause in the Joint Venture Agreement included provision for Mr Nyunt’s agreement to submit to the courts of Singapore in respect of his dealings with First Property. Accordingly, her Honour found that the High Court of Singapore had jurisdiction as Mr Nyunt was a party to the Joint Venture Agreement.

Did Mr Nyunt receive sufficient notice of the Singapore proceedings?

Section 7(2)(a)(v) of the FJA provides that the court must set aside registration of the foreign judgment if it is satisfied that the judgment debtor did not receive sufficient notice to appear or defend the proceedings. Mr Nyunt argued that the judgment registered in the Supreme Court of New South Wales should be set aside on the basis that he did not receive notice of the proceedings in Singapore. However, Mr Nyunt received actual notice of the proceedings in Singapore as he was served personally. Instead of defending the claim or entering an appearance, Mr Nyunt deliberately chose to commence separate litigation in Myanmar. Subsequently, First Property did not serve its evidence on Mr Nyunt and contended that its reason for doing so was because Mr Nyunt was not participating in the proceedings. First Property’s solicitors later notified Mr Nyunt that it obtained default judgment on the liquidated part of the claim and also notified Mr Nyunt of the hearing of the unliquidated part of the claim. First Property later obtained judgment on the unliquidated part of the claim.

In addition to his arguments that the registration of the judgment should be set aside because he did not receive notice of the proceedings, Mr Nyunt also contended that First Property’s failure to obey a procedural order and provide its evidence in the Singapore proceedings offends the “expectation of fairness and natural justice of Australian law”.

According to Justice McCallum, s 7(2)(a)(v) required a judgment to be set aside where the judgment debtor did not receive notice of the proceedings in sufficient time, but it did not import a requirement that the judgment debtor be informed of every procedural step. Her Honour was of the view that Mr Nyunt made a choice not to defend the Singapore proceedings concerning the liquidated claim, and also had sufficient notice of the assessment of the unliquidated portion of the claim. In the circumstances, her Honour was not satisfied that the registration of the foreign judgment should be set aside on notice grounds.

Was there fraud in obtaining the judgment in the foreign court?

Mr Nyunt also relied upon the argument that the judgment in the High Court of Singapore was obtained by fraud. Section 7(2)(a)(vi) of the FJA provides that the court must set the registration of the judgment aside if it is satisfied that the judgment was obtained by fraud.

Mr Nyunt claimed that First Property relied on fraudulent evidence in the Singapore proceedings because no funds were advanced from First Property to Mr Nyunt or Town and City, a company associated with Mr Nyunt. Later, Mr Nyunt made a different allegation in relation to fraud. In a further affidavit, Mr Nyunt agreed that there were funds received but these funds were his own monies and were merely being “repatriated” to Myanmar through accounts held in Singapore. In essence, Mr Nyunt’s fraud allegations centred around the characterisation of the payments.

While there are differing authorities on setting aside a registration of foreign judgment on the grounds of fraud, Justice McCallum followed the approach of the Court of Appeal in Quarter Enterprises v Allardyce Lumber Company Ltd (2014) 84 NSWLR 40 which preferred the approach that in order to set aside a foreign judgment on the ground of fraud, it is necessary to rely on evidence not reasonably discoverable at the time of the original hearing. The Court found that Mr Nyunt’s fraud argument was not based on newly discovered evidence not reasonably discoverable at the time of the original hearing. Mr Nyunt was aware that when he received the statement of claim in the Singapore proceedings, First Property alleged that it had advanced monies to Town and City. Mr Nyunt had the opportunity to challenge the characterisation of those payments at the time but did not do so. Accordingly, the Court refused to set aside the registration of the foreign judgment on the basis of fraud.

Abuse of Process

Mr Nyunt also sought to set aside the registration on the basis that the enforcement of the judgment would be contrary to public policy. Mr Nyunt contended that the proceedings commenced in Singapore was an abuse of process for the following reasons:

  • The matter was being litigated in the courts of Myanmar; and
  • First Property had chosen Myanmar as the appropriate forum as the Singapore proceedings commenced after many years of litigation between the parties in Myanmar.

According to the Court, Mr Nyunt’s argument assumes that enforcement of a foreign judgment by this Court would be contrary to Australian public policy just because the foreign judgment was an abuse of process of the foreign country (i.e. Singapore). Justice McCallum was also of the view Mr Nyunt’s argument advanced a further untested assumption that a foreign country would share the same notions as Australian courts as to what constituted an abuse of process.

The Court found that the registration of the foreign judgment in this instance was not an abuse of process. In doing so, Justice McCallum stated that the public policy ground for refusal of enforcement should be narrowly confined. First Property submitted that setting aside a judgment on public policy grounds concerned cases of moral and ethical policy, procedural fairness and illegality of a fundamental nature.  The Court agreed and found that Mr Nyunt’s submissions on public policy grounds did not engage with any of those propositions.

In finding that the registration of a foreign judgment was not an abuse of process, the Court also stated that Mr Nyunt’s arguments invited the Court to embark on a merits review of procedure and laws of the courts of Singapore and Myanmar. In the Court’s view, merits review of the law of foreign jurisdictions would frustrate the purposes of the FJA and undermine reciprocity between countries afforded by the FJA.

Practical implications

The FJA sets out numerous grounds in which registration of a foreign judgment may be set aside. As this case and others before have demonstrated, courts are generally reluctant to set aside foreign judgments that have been registered in Australia in accordance with the FJA and at common law. In this instance, the Court’s liberal construction of jurisdiction clauses as well as its narrow approach to setting aside registration on fraud and public policy grounds illustrate the importance that Australian courts place on reciprocity. The globalisation of commercial transactions and the recent conclusion of the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters by the Hague Conference on Private International Law illustrate that there is a growing importance for the existence of an effective regime for enforcement for foreign judgments.

This article was written by Jia Lee, Senior Associate – Litigation and Dispute Resolution. 

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Principles in setting aside registration of foreign judgments in Australia

04 September 2019 Gavin Lower e: gavin.lower@mk.com.au d: 03 9208 9891 m: 0414 796 726

In the decision of First Property Pte Ltd v Nyunt [2019] NSWSC 249, the Supreme Court of New South Wales confirmed established principles with respect to applications to set aside registration of foreign judgments in Australia. In Nyunt, the Court refused to set aside an order registering a judgment from the High Court of the Republic of Singapore (High Court of Singapore) that was registered under the Foreign Judgments Act 1992 (Cth) (FJA).

Background

Michael Nyunt, a national of Myanmar and a citizen of Australia made an application to set aside the registration of the foreign judgment in the Supreme Court of New South Wales. Mr Nyunt and First Property Pte Ltd (First Property) were parties to a joint venture agreement entered into 1996 (Joint Venture Agreement) whereby First Property agreed to advance funds secured by a convertible debenture. First Property contended that its investment of funds in the amount of USD$7.6M was exhausted by 1998. Mr Nyunt then entered into a loan agreement to borrow a further USD$850,000 from First Property (Loan Agreement). The Joint Venture Agreement contained a jurisdiction clause where the parties agreed to submit to the non-exclusive jurisdiction of Singapore courts.

There was a dispute between Mr Nyunt and First Property as to whether funds were, in fact, advanced by First Property. First Property also claimed that Mr Nyunt misappropriated assets of the joint venture. In 2015, First Property obtained default judgment in High Court of Singapore for alleged debts owed under the Loan Agreement. Separately, the High Court of Singapore also gave judgment for damages to be assessed for breach of fiduciary duties. The judgment of the High Court of Singapore was registered as a judgment in the Supreme Court of New South Wales. Mr Nyunt then filed an application to set aside the order registering the judgment which was refused by Justice McCallum

Application to set aside registration of foreign judgment

Mr Nyunt advanced numerous grounds in his application to set aside registration of the Singapore judgment. These grounds included the following:

  • The High Court of Singapore had no jurisdiction because Mr Nyunt did not voluntarily submit to the jurisdiction;
  • Mr Nyunt did not have sufficient notice of the proceedings in the High Court of Singapore to enable him to defend the proceedings;
  • The judgments of the High Court of Singapore were obtained by fraud in that First Property never advanced funds to Mr Nyunt under the Joint Venture Agreement or the Loan Agreement; and
  • The registration of the judgment was an abuse of process because the courts of Myanmar were still in the process of determining the dispute when First Property sought to litigate the matter in Singapore.

Did the Singapore High Court have jurisdiction?

Under FJA, courts must set aside the registration of a foreign judgment if it is satisfied that the original court had no jurisdiction. Mr Nyunt made the following arguments with respect to jurisdiction:

  • He did not voluntarily submit to the jurisdiction of the High Court of Singapore;
  • He was not a party to the debenture – it was only executed by him in his capacity of director of another company, Town and City;
  • The non-exclusive jurisdiction clause in the Joint Venture Agreement submitting to the jurisdiction of Singapore did not apply because the funds were not advanced under the Joint Venture Agreement but instead under the debenture.

The Court found that the High Court of Singapore had jurisdiction. The Court noted that that Joint Venture Agreement contemplated the issue of the debenture in the future. In finding that Mr Nyunt agreed to submit to Singaporean jurisdiction when he entered into the Joint Venture Agreement, Justice McCallum relied on established authority such as Global Partners Fund Ltd v Babcock and Brown Ltd [2010] NSWCA; 79 ASCR 383, which stated that jurisdiction clauses should be construed widely. In this instance, the proper construction of the jurisdiction clause in the Joint Venture Agreement included provision for Mr Nyunt’s agreement to submit to the courts of Singapore in respect of his dealings with First Property. Accordingly, her Honour found that the High Court of Singapore had jurisdiction as Mr Nyunt was a party to the Joint Venture Agreement.

Did Mr Nyunt receive sufficient notice of the Singapore proceedings?

Section 7(2)(a)(v) of the FJA provides that the court must set aside registration of the foreign judgment if it is satisfied that the judgment debtor did not receive sufficient notice to appear or defend the proceedings. Mr Nyunt argued that the judgment registered in the Supreme Court of New South Wales should be set aside on the basis that he did not receive notice of the proceedings in Singapore. However, Mr Nyunt received actual notice of the proceedings in Singapore as he was served personally. Instead of defending the claim or entering an appearance, Mr Nyunt deliberately chose to commence separate litigation in Myanmar. Subsequently, First Property did not serve its evidence on Mr Nyunt and contended that its reason for doing so was because Mr Nyunt was not participating in the proceedings. First Property’s solicitors later notified Mr Nyunt that it obtained default judgment on the liquidated part of the claim and also notified Mr Nyunt of the hearing of the unliquidated part of the claim. First Property later obtained judgment on the unliquidated part of the claim.

In addition to his arguments that the registration of the judgment should be set aside because he did not receive notice of the proceedings, Mr Nyunt also contended that First Property’s failure to obey a procedural order and provide its evidence in the Singapore proceedings offends the “expectation of fairness and natural justice of Australian law”.

According to Justice McCallum, s 7(2)(a)(v) required a judgment to be set aside where the judgment debtor did not receive notice of the proceedings in sufficient time, but it did not import a requirement that the judgment debtor be informed of every procedural step. Her Honour was of the view that Mr Nyunt made a choice not to defend the Singapore proceedings concerning the liquidated claim, and also had sufficient notice of the assessment of the unliquidated portion of the claim. In the circumstances, her Honour was not satisfied that the registration of the foreign judgment should be set aside on notice grounds.

Was there fraud in obtaining the judgment in the foreign court?

Mr Nyunt also relied upon the argument that the judgment in the High Court of Singapore was obtained by fraud. Section 7(2)(a)(vi) of the FJA provides that the court must set the registration of the judgment aside if it is satisfied that the judgment was obtained by fraud.

Mr Nyunt claimed that First Property relied on fraudulent evidence in the Singapore proceedings because no funds were advanced from First Property to Mr Nyunt or Town and City, a company associated with Mr Nyunt. Later, Mr Nyunt made a different allegation in relation to fraud. In a further affidavit, Mr Nyunt agreed that there were funds received but these funds were his own monies and were merely being “repatriated” to Myanmar through accounts held in Singapore. In essence, Mr Nyunt’s fraud allegations centred around the characterisation of the payments.

While there are differing authorities on setting aside a registration of foreign judgment on the grounds of fraud, Justice McCallum followed the approach of the Court of Appeal in Quarter Enterprises v Allardyce Lumber Company Ltd (2014) 84 NSWLR 40 which preferred the approach that in order to set aside a foreign judgment on the ground of fraud, it is necessary to rely on evidence not reasonably discoverable at the time of the original hearing. The Court found that Mr Nyunt’s fraud argument was not based on newly discovered evidence not reasonably discoverable at the time of the original hearing. Mr Nyunt was aware that when he received the statement of claim in the Singapore proceedings, First Property alleged that it had advanced monies to Town and City. Mr Nyunt had the opportunity to challenge the characterisation of those payments at the time but did not do so. Accordingly, the Court refused to set aside the registration of the foreign judgment on the basis of fraud.

Abuse of Process

Mr Nyunt also sought to set aside the registration on the basis that the enforcement of the judgment would be contrary to public policy. Mr Nyunt contended that the proceedings commenced in Singapore was an abuse of process for the following reasons:

  • The matter was being litigated in the courts of Myanmar; and
  • First Property had chosen Myanmar as the appropriate forum as the Singapore proceedings commenced after many years of litigation between the parties in Myanmar.

According to the Court, Mr Nyunt’s argument assumes that enforcement of a foreign judgment by this Court would be contrary to Australian public policy just because the foreign judgment was an abuse of process of the foreign country (i.e. Singapore). Justice McCallum was also of the view Mr Nyunt’s argument advanced a further untested assumption that a foreign country would share the same notions as Australian courts as to what constituted an abuse of process.

The Court found that the registration of the foreign judgment in this instance was not an abuse of process. In doing so, Justice McCallum stated that the public policy ground for refusal of enforcement should be narrowly confined. First Property submitted that setting aside a judgment on public policy grounds concerned cases of moral and ethical policy, procedural fairness and illegality of a fundamental nature.  The Court agreed and found that Mr Nyunt’s submissions on public policy grounds did not engage with any of those propositions.

In finding that the registration of a foreign judgment was not an abuse of process, the Court also stated that Mr Nyunt’s arguments invited the Court to embark on a merits review of procedure and laws of the courts of Singapore and Myanmar. In the Court’s view, merits review of the law of foreign jurisdictions would frustrate the purposes of the FJA and undermine reciprocity between countries afforded by the FJA.

Practical implications

The FJA sets out numerous grounds in which registration of a foreign judgment may be set aside. As this case and others before have demonstrated, courts are generally reluctant to set aside foreign judgments that have been registered in Australia in accordance with the FJA and at common law. In this instance, the Court’s liberal construction of jurisdiction clauses as well as its narrow approach to setting aside registration on fraud and public policy grounds illustrate the importance that Australian courts place on reciprocity. The globalisation of commercial transactions and the recent conclusion of the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters by the Hague Conference on Private International Law illustrate that there is a growing importance for the existence of an effective regime for enforcement for foreign judgments.

This article was written by Jia Lee, Senior Associate – Litigation and Dispute Resolution.