Joshan v Pizza Pan Group Pty Ltd

1. [1]

   BELL P: Before the Court is an application for leave to appeal from an interlocutory decision of Weber SC DCJ (the primary judge) dismissing a Notice of Motion filed on behalf of the Applicants, Mr Ranjodh Singh Joshan and Ms Jasbir Kaur Joshan, seeking a stay of proceedings commenced against them by the Respondent, Pizza Pan Group Pty Ltd (the stay application).

2. [2]

   The underlying proceedings seek damages from the Applicants under a franchisee guarantor deed executed by the Applicants in favour of the Respondent (the Guarantee). The Guarantee related to the obligations of Joshan Transport Pty Ltd (the franchisee) under a franchise agreement entered into with the Respondent on or about 14 June 2017 (the Franchise Agreement). The Franchise Agreement related to the operation of a Pizza Hut restaurant business (the Business) from a location in Salisbury, South Australia (the Outlet). The Respondent is a sub-franchisor of the Pizza Hut chain of restaurants throughout Australia. The Franchise Agreement was for a term of 10 years.

3. [3]

   It was alleged that the franchisee breached the Franchise Agreement by abandoning the Outlet less than 18 months after entry into the Franchise Agreement. Indeed, the franchisee was deregistered by ASIC on 13 January 2019 following the filing of an application for voluntary deregistration on 8 November 2018.

4. [4]

   Notwithstanding this state of affairs, the Franchise Agreement was not formally terminated by the Respondent until on or about 9 June 2020.

5. [5]

   The Respondent claims that it suffered loss and damage as a result of the franchisee’s breach of cl 15.4(d) of the Franchise Agreement in abandoning the Outlet for more than 3 consecutive days without the Respondent’s permission.

6. [6]

   It would appear from the Statement of Claim that the loss of bargain damages claim presupposes that the franchisee was obliged to continue to operate the Outlet for the balance of the 10-year term and that, had it done so, it would have earned a certain weekly revenue with the Respondent being entitled to a percentage of that revenue as its fee under the under the terms of cl 11 of the Franchise Agreement. Whether the franchisee in fact assumed any obligation to operate the Business for the whole of the Term specified in the Franchise Agreement (as opposed to assuming obligations whilst operating the Business during the Term) may be open to doubt but that will be a matter for trial.

7. [7]

   The Respondent alleges that, under cl 12.2 of the Franchise Agreement, the franchisee was obliged to indemnify it for loss sustained by it and further alleges that the Applicants, as guarantors, are liable under the terms of the Guarantee for any amounts owing to the Respondent by the franchisee.

8. [8]

   The stay application, which was made at an early stage of proceedings, was brought pursuant to s 20 of the Service and Execution of Process Act 1992 (Cth) (SEPA) which relevantly provides:

9. [9]

   In dismissing the stay application, the primary judge concluded that the Applicants had “fallen well short of establishing a clear and compelling basis for the relief which they seek” (emphasis added).

10. [10]

    At the core of the application for leave to appeal is the Applicants’ submission that, in so expressing himself, the primary judge applied a legally erroneous standard of proof to the question before him and that his Honour simply needed to be satisfied on the balance of probabilities.

11. [11]

    The primary judge took the expression “clear and compelling basis” from the decision of Olsson J of the Supreme Court of South Australia in Rick Cobby Pty Ltd v Podesta Transport Pty Ltd (1997) 139 FLR 54 at 58–59 (Rick Cobby). That case, including Olsson J’s statement that a “clear and compelling basis” must be established by an applicant for a stay, has been applied in a number of decisions at District and County Court level throughout Australia. In New South Wales, these include Goh, Ambrosini & Hollingsworth v BPH Energy Limited & Grandbridge Limited [2019] NSWDC 559 at [15]; Wicomm Pty Ltd v CJ-Milne Solutions Pty Ltd [2015] NSWDC 413 at [27]; and Toyota Material Handling Australia Pty Ltd v Cardboard Collection Service Pty Ltd [2020] NSWDC 667 at [16]–[17].

12. [12]

    As will be seen later in these reasons, the use of the expression “clear and compelling basis” in Rick Cobby has not been fully embraced by judges in the Supreme Courts of Victoria and Queensland (see [75] below). As also explained below, the expression, in my opinion, represents an unwarranted gloss on the language of s 20(3) of SEPA.

13. [13]

    For these reasons, and given the importance of s 20 of SEPA to the administration of justice throughout the country, particularly at District and County Court levels, it is appropriate for there to be a grant of leave to appeal in the current case, notwithstanding that the primary judge’s decision was one on a matter of practice and procedure and, in part at least, involved an exercise of discretion, cf Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177; [1981] HCA 39 (Adam P Brown). Leave to appeal is further warranted because, as shall be seen, there appears to be some confusion in the authorities as to the significance of a non-exclusive jurisdiction clause in the context of a stay application pursuant to s 20 of SEPA.

14. [14]

    Before turning to consider the various grounds upon which the Applicants rely in their appeal, some further brief and largely uncontroversial facts should be noted.

Background

1. [15]

   First, both the Franchise Agreement and the Guarantee contain materially identical clauses (cl 23.7 and cl 7.6 respectively) providing that they “will be governed by and construed in accordance with the law of [New South Wales] and the parties agree to submit to the non-exclusive jurisdiction of the courts of [New South Wales]”. It was common ground that these were non-exclusive jurisdiction clauses.

2. [16]

   Second, the franchisee’s registered office, as recorded in the Franchise Agreement, was in Western Australia as was the residence of the Applicants as recorded in the Guarantee. As at the date of the application at least and, it may be inferred, for some time before that, the Applicants, who are husband and wife, resided in South Australia.

3. [17]

   Third, as has been noted above, the Outlet was in Salisbury, South Australia. One of the Applicants is nominated in the Franchise Agreement (at cl 20) as the Principal Operator.

4. [18]

   Fourth, the Respondent is based in and has its head office in Sydney.

5. [19]

   Fifth, according to the Statement of Claim, on or about 25 October 2018, the franchisee abandoned the Outlet for more than 3 consecutive days without the permission of the Respondent. The Statement of Claim alleges that this was in contravention of cl 15.1(f) of the Franchise Agreement but this reference is wrong. The error is immaterial, however, as such abandonment would be a breach of cl 15.4(d) of the Franchise Agreement.

6. [20]

   Sixth, according to the Statement of Claim, the Respondent issued the franchisee and the Applicants with a Notice of Termination of the Franchise Agreement on 9 June 2020. The Statement of Claim again wrongly alleges that this was done in accordance with cl 15.1(a) of the Franchise Agreement. Clause 15.1 relates, however, to termination by a franchisee. Again this mistake appears to be immaterial as cl 15.5(c) of the Franchise Agreement permits immediate termination upon delivery of written notice to the franchisee if the franchisee has been deregistered by ASIC.

7. [21]

   Seventh, the amount claimed in the Statement of Claim, namely $316,314.11, comprises two amounts: first, an amount of $3,081.20 being described as a “Total Invoiced Amount” for the period between 31 October 2018 and 30 November 2018; and secondly, an amount of $313,232.91, described as “Total Loss and Damage”.

8. [22]

   As set out in the Statement of Claim, this latter amount appears to have been calculated by reference to a projected revenue over the balance of the term of the Franchise Agreement of $2,665,812.03, with this figure said to be based on the average revenue for the Outlet for the “13 weeks preceding the Termination”: Statement of Claim at [15]. On its face this would appear to be somewhat problematic as the franchisee had been deregistered for almost 18 months prior to Termination and it is alleged in the Statement of Claim to have abandoned the Outlet some 20 months prior to Termination. Presumably the reference to average revenue was to encompass the 13 weeks preceding the abandonment of the Outlet in late October 2018.

9. [23]

   As noted in [6] above, this major component of the claim presupposes that the franchisee was obliged to operate the Business for the whole of the 10-year term of the Franchise Agreement (as opposed to being subject to certain obligations in the event that it exercised its contractual licence to do so) and that it would have generated a similar revenue over the course of the term that had been generated in an earlier period. As such, the Statement of Claim assumed not only an obligation on the franchisee’s part to continue to operate the Business but also, and most importantly for present purposes, it assumed the ongoing viability of the Business.

10. [24]

    At the time of the hearing of the stay application, the Applicants had yet to file a Defence. Little guidance was therefore available from the pleadings as to what was likely to be in issue in any trial although it was open to infer that a central issue in the proceedings was likely to be the ongoing viability of the Business, particularly in circumstances where the voluntary deregistration of the franchisee by its director, who was the Principal Operator under the Franchise Agreement, pointed to the fact that he was evidently not prepared to carry on with the Business after early November 2018, an unlikely action if it were profitable.

11. [25]

    It may be noted that, in the Defence which was filed after the decision under appeal, the Applicants plead that:

Proceedings before the primary judge

1. [26]

   The evidence led on the stay application on behalf of the Applicants was exiguous. It comprised a solicitor’s Affidavit which was largely submission and an Affidavit of one of the Applicants who, apart from indicating that she and her husband both resided and were employed in South Australia, stated that:

2. [27]

   Objection was taken to [9] of the Affidavit and the primary judge received it only as a submission. In oral address, Mr Gustavsson, who appeared for the Applicants before the primary judge, said “we wouldn’t be relying too heavily on that particular submission.”

3. [28]

   In relation to the statement in [5] of the Affidavit in relation to Mr Lianos, after the primary judge expressed some surprise that the Applicants intended to call a current employee of the Respondent, Mr Gustavsson indicated that “we’d like to reserve the right to [call Mr Lianos]”.

4. [29]

   On the other side of the record, the Respondent led evidence that it intended to call its Chief Financial Officer and Chief Commercial Officer, both of whom resided in the Greater Sydney Region.

5. [30]

   In submissions before the primary judge, strong emphasis was placed by the Applicants on their residence in South Australia and the fact that the Outlet from which the Business operated, before the deregistration of the franchisee, was located there. It was also submitted that provisions of the Franchising Code of Conduct (schedule 1 to the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth)) (the Franchising Code) were relevant. In this context, reliance was placed upon cl 21 of the Franchising Code which provides that:

6. [31]

   It was submitted that cl 21 of the Code negatived any operation or significance of cl 7.6 of the Guarantee which was the non-exclusive jurisdiction clause by which the Applicants agreed to submit to the jurisdiction of the courts of New South Wales: see [15] above. In response, it was submitted that the Guarantee was not touched by the Franchise Code because it was not a “franchise agreement” within the meaning of the Code and that, in any event, cl 21(2) only applied to exclusive jurisdiction clauses which cl 7.6 of the Guarantee was not.

The reasons of the primary judge

1. [32]

   The primary judge delivered his reasons succinctly and ex tempore. This was entirely appropriate in an application of this kind.

2. [33]

   In an analogous context, in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 565; [1990] HCA 55 (Voth), it was said by the plurality (Mason CJ, Deane, Dawson and Gaudron JJ), in respect of applications to stay proceedings at common law, that:

3. [34]

   Experience suggests that the High Court’s aspiration as to succinct hearings of stay applications has not generally been fulfilled (see, for example, News Corporation Ltd v Lenfest Communications Inc (1996) 40 NSWLR 250 at 258) and the experience in England is similar: see A S Bell, “The Natural Forum Revisited” in A Dickinson and E Peel (eds), A Conflict of Laws Companion: Essays in Honour of Adrian Briggs (2021, Oxford University Press) at 24–30.

4. [35]

   That having been said, no criticism has or can be made of the primary judge for the relative brevity of his reasons. The dispositive reasoning may be set out in full (with paragraph numbers added for ease of reference later in these reasons):

5. [36]

   The portions of the primary judge’s decision which have been emphasised relate to the various matters which formed the key battlegrounds between the parties on appeal.

Issues on appeal

1. [37]

   The issues raised by the grounds of appeal may be summarised as follows:

2. [38]

   Consideration of the three issues raised by the grounds of appeal must start with a discussion of SEPA and s 20 of that Act.

The Service and Execution of Process Act

1. [39]

   The SEPA is a centrally important statute in the administration of justice throughout Australia. Its predecessor, the Service and Execution of Process Act 1901 (Cth) (the 1901 Act), implicitly recognised that the amenability of persons (and corporations) to the exercise of judicial power under common law procedure required them to be served with process whilst physically present in the territory of the court out of which the initiating or originating process had issued. This was based upon the traditional conception that “the assertion of curial jurisdiction in personal actions depends upon service of the initiating process in the jurisdiction” (emphasis added): Dalton v New South Wales Crime Commission (2006) 227 CLR 490; [2006] HCA 17 at [18]; see also McGlew v New South Wales Malting Co Ltd (1918) 25 CLR 416 at 420; [1918] HCA 72; and John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36 at [14] (John Pfeiffer). This traditional conception was built on the theory that any person present within the jurisdiction, even temporarily, was subject to the command of the Sovereign, including the command, by service of a writ, to appear before the Sovereign’s courts: see Laurie v Carroll (1958) 98 CLR 310 at 323; [1958] HCA 4; Gosper v Sawyer (1985) 160 CLR 548 at 557–558; [1985] HCA 19; and Luke v Mayoh (1921) 29 CLR 435 at 439; [1921] HCA 39. The history and theory are explained in M J Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2nd ed, 2020, Federation Press) at 177–179, 189–190 (Authority to Decide).

2. [40]

   What the 1901 Act did in the fledgling federation was, by s 4(1), to authorise the service on a defendant of a writ of summons (broadly defined in s 3(b) as “any writ or … process by which a suit is commenced”) “issued out of any Court of Record of a State or part of the Commonwealth” in any other State or part of the Commonwealth. This mirrored the procedure for service on a defendant outside of the jurisdiction that had been adopted in ss 16 and 17 of the Common Law Procedure Act 1853 (NSW) (17 Vict No 21) which authorised service of a specially endorsed writ of summons issued in the then colony of New South Wales on a defendant outside of the colony (the chancery practice was slightly different: see Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [44]–[45]). The 1901 Act was founded upon s 51(xxiv) of the Constitution which gave the Commonwealth Parliament power to legislate with respect to “the service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States”.

3. [41]

   Valid service abroad, authorised by statute, gave the Supreme Court of New South Wales personal or in personam jurisdiction over a defendant who was not present and thus not able to be served with process in the colony. This mechanism (which was formerly described, such as in Siskina (Cargo Owners) v Distos Compania Naviera SA [1979] AC 210 at 254–255, as conferring “exorbitant” jurisdiction but which, as this Court held in Hyde v Agar (1998) 45 NSWLR 487 at 506–509, is now more appropriately described as conferring “extended” jurisdiction) is preserved in the case of originating process issued out of the Supreme Court (but not the District Court or Local Court) of New South Wales where defendants are located outside Australia: see r 11.4 and sch 6 of the Uniform Civil Procedure Rules 2005 (NSW).

4. [42]

   Section 15(1) of SEPA, like s 4(1) of the 1901 Act, permits an initiating process issued in a State to be served in another State. The theoretical jurisdictional underpinnings of such extraterritorial service are reinforced by s 12 of SEPA which provides that service of process “under” SEPA “has the same effect and may give rise to the same proceedings as if the process had been served in the place of issue” (emphasis added), place of issue meaning “the State in which the process was issued”. This deeming provision recognises and reflects the traditional conception of personal jurisdiction explained above.

5. [43]

   The 1901 Act and SEPA thus provided and provide “an administrative facility to effect interstate service” and thus “expand[ed] the personal jurisdiction of State courts”: Authority to Decide at 193. In this respect, both the 1901 Act and SEPA may be described as facultative.

6. [44]

   One significant difference between the two Acts is that the 1901 Act contained no equivalent to s 20 of SEPA, part of which has been set out at [8] above, permitting the stay of certain proceedings. In this context, it should be noted that shortly prior to the enactment of SEPA, the High Court in Voth had decisively resolved the question as to whether or not the common law test for a stay of proceedings on the ground of forum non conveniens should be that stated by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 at 477 (Spiliada), namely that a stay should be granted in circumstances where it was established not just that the domestic forum was not the natural or appropriate forum for the trial but that there was another available forum which was “clearly or distinctly more appropriate” than the domestic forum. The Spiliada test is frequently referred to as the “clearly more appropriate” forum test.

7. [45]

   The High Court’s resolution of this question was to reject the Spiliada test and to formulate what has become known as the “clearly inappropriate forum” or Voth test. By this test, proceedings would only be stayed where it could be demonstrated that the forum in which proceedings had been commenced was “clearly inappropriate”. The Voth test was applied by the High Court in Henry v Henry (1996) 185 CLR 571 at 592–593; [1996] HCA 51 (Henry); CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 398–400; [1997] HCA 33 and Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491; [2002] HCA 10 at [81]. A formal challenge to it was rejected in Puttick v Tenon Ltd (2008) 238 CLR 265; [2008] HCA 54.

8. [46]

   It follows that the test for a stay of proceedings under s 20 of SEPA is different to that under the Australian common law as articulated in Voth.

9. [47]

   It should also be noted that, five years before SEPA was enacted, the cross-vesting scheme was introduced by a suite of Commonwealth and State legislation: see Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth); Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) and corresponding legislation in the other States. Section 5 of each of the Cross-vesting Acts provides for the transfer of proceedings between state and federal courts by reference to a series of statutory criteria. In this State, since Bankinvest AG v Seabrook (1988) 14 NSWLR 711 (Bankinvest), s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (which permits the transfer of proceedings from the Supreme Court of New South Wales to the Supreme Court of another State or Territory where “it is otherwise in the interests of justice” to do so) has been interpreted as involving the determination of which forum is “more appropriate” in the sense discussed in Spiliada: see James Hardie & Coy Pty Ltd v Barry (2000) 50 NSWLR 357; [2000] NSWCA 353 at [4], [87]–[94] (James Hardie).

10. [48]

    Thus it may be seen that, within a five-year period, three different regimes emerged in Australia, all directed to a similar functional end, namely the staying or, in the case of the cross-vesting scheme, the transfer of proceedings in one court in favour of the dispute being resolved in another court in another State or Territory. Three similar but different tests applied, however, and it is important and necessary not to conflate them. As will be seen below, such conflation may be the explanation for Olsson J’s use of the expressions “clear entitlement” and “clear and compelling basis” in his discussion of s 20 of SEPA in Rick Cobby, with the epithet “clear” possibly being borrowed from the Spiliada and Voth tests.

11. [49]

    These reasons now turn to consider s 20 of SEPA in closer detail.

Section 20 of SEPA

1. [50]

   A number of specific observations should be made about s 20 of SEPA.

2. [51]

   First, the statutory power to grant a stay of proceedings in s 20 does not apply to a proceeding in which the Supreme Court of a State is the court of issue: see s 20(1). This is so even though the service of an initiating process in which the Supreme Court of a State is the court of issue may be effected on an inter-state defendant and indeed is authorised by s 15(1) of SEPA.

3. [52]

   Secondly, service under SEPA requires copies of notices as are prescribed by the Service and Execution of Process Regulations 2018 (Cth) to be attached to the copy of process served: s 16. The relevant notice is Form 1, which notifies inter-state defendants of their right to have proceedings stayed by the issuing court (or transferred to another Supreme Court if the issuing court is a Supreme Court).

4. [53]

   Thirdly, the “court of another State” referred to in s 20(3) of SEPA and which a judge may be satisfied has “jurisdiction to determine all matters in issue between the parties” may be any court of another State, that is to say, it may include the Supreme Court of another State even though s 20 does not apply to proceedings issued out of a Supreme Court. That is to say, a District, County, Local or Magistrates Court proceeding could be stayed where the court of issue is satisfied that a Supreme Court of another State or Territory is “the appropriate court”.

5. [54]

   Fourthly, where ss 20(3) and (4) refer to “the appropriate court for the proceeding”, the use of the definite article might be thought to presuppose that there is only one court that is “the appropriate court” to determine all matters in issue between the parties. Courts of two (or more) States may, however, depending on the circumstances, be equally appropriate in which case the court of the other State will not meet the description of being the appropriate court, and the discretionary power to stay proceedings will not be engaged. To this extent, the appropriate court will be the court which is more appropriate than any other court, and what is the appropriate court is not necessarily co-extensive with what is the more convenient court: Re Featherstone Resources Ltd; Tetley v Weston (2014) 101 ACSR 394; [2014] NSWSC 1139 at [53].

6. [55]

   Fifthly, the reference in s 20(3) to “all the matters in issue between the parties” makes it plain that the question of “appropriateness” is not to be determined in the abstract but by reference to what is truly in dispute. That is what is meant by “matters in issue”. This will not necessarily be obvious at an early stage of proceedings when stay applications are invariably brought and the pleadings may not even be closed as was the case in the present matter. But what it means is that a party seeking a stay of proceedings pursuant to s 20 must seek to identify both in submissions and, at least where the pleadings are not closed, by evidence, what is likely to be in dispute. So, too, a judge considering the question raised by s 20 of SEPA must give his or her attention to those matters.

7. [56]

   Sixthly, the matters in dispute may be broad or narrow. They may be amenable to a documentary case or may require oral evidence. Without adequately exposing the matters in, or likely to be in, dispute in evidence and submissions, the court of issue will not be able properly or meaningfully to assess the question as to what is the appropriate court. As McPherson JA had cause to lament in St George Bank Ltd v McTaggart [2003] 2 Qd R 568; [2003] QCA 59 at [6] (St George), “in the present case, it is not clear what those matters in issue are”. His Honour later said that “[i]dentifying all the matters in issue is, however, a prerequisite to deciding on the appropriate court”: at [9].

8. [57]

   Seventhly, the proper identification and some analysis of what matters are likely to be in dispute also bears on the weight to be placed on the residences of the parties and the witnesses likely to be called in the proceedings, an explicit consideration to which regard is to be had under s 20(4)(a) of SEPA. As Brooking J (as his Honour then was) observed in Equus Financial Services Ltd v Francis Xavier LAH (unreported, Full Court of the Supreme Court of Victoria, 8 September 1994) (Equus), the fact that witnesses who would only prove formal facts reside in one jurisdiction is not of great weight. As his Honour said (at 6), “[o]ne cannot even say that these formal facts will be in issue.” McGregor v Potts (2005) 68 NSWLR 109; [2005] NSWSC 1098 at [55]–[74] provides a good illustration in an analogous context of the need to expose and explore the likely shape and dimensions of the dispute by reference to the true matters in issue. Much more is required than a mere headcount of witnesses. The Court must be assisted on an application under s 20 of SEPA in understanding the issue or issues to which the evidence of particular proposed or likely witnesses relates, and how controversial and extensive the issue or issues (and thus the witnesses’ roles) is likely to be.

9. [58]

   Eighthly, s 20(4) does not provide an exhaustive list of matters to be taken into account by a court in determining a stay application. So much is made plain by the word “include” in that subsection, which is not a complete code: St George at [11]. Other factors which may be relevant include whether or not the substantive dispute (as opposed to the application for the stay itself) may wholly or in part be conducted using audio-visual (AVL) means, a consideration that, after the experience of the COVID-19 pandemic, is likely to be of greater significance as courts have become more comfortable with the use of such technology. This having been said, the possibility of taking evidence and even appearances by counsel remotely should not be used as an indirect means of circumventing the requirement in s 20(4) that the court of issue is not to take into account the fact that the proceeding was commenced in the place of issue. The possible use of AVL technology in what would otherwise be “the appropriate court” might neutralise any prejudice or inconvenience to the plaintiff in the court of issue in the event that proceedings are stayed. As Blue J observed in Aqua Max Water Filtration Solutions Pty Ltd v Hurtado [2017] SASC 165 at [29], the purpose of the concluding words of s 20(4) is “to negate the common law approach to forum non conveniens which required a defendant to demonstrate that the chosen forum was clearly inappropriate and ensure that a plaintiff does not obtain a ‘home ground’ advantage merely because the plaintiff chose the court of issue” (footnotes omitted).

10. [59]

    Ninthly, although the matters listed in s 20(4) are not exhaustive, those matters will be the principal signposts to the appropriate forum. They mirror to a significant extent the considerations that have been identified as relevant to an application for a stay of proceedings both under the Spiliada and Voth tests; see also Henry at 592–593.

11. [60]

    Tenthly, of the matters identified in s 20(4), some, such as the place of residence of the parties and likely witnesses and the place where the subject matter of the proceeding is situated, are likely to be straightforward and uncontroversial. Others, such as “the financial circumstances of the parties” (s 20(4)(c)) may or may not be controversial and call for proper proof if they are to be relied upon as pointing to the superior appropriateness of another forum. More than mere assertion of limited means is likely to be necessary although, in some cases, the relative financial positions of the parties may be clear. In addition, in some cases, one or more of the matters listed in s 20(4) may be neutral. Thus the reference in s 20(4)(e) to the law that would be most appropriate to apply in the proceeding is likely to be neutral in cases where the matter will involve the application of the common law, there being only one common law of Australia (Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 563; [1997] HCA 25; John Pfeiffer at [44], [66]–[71]), or where a Commonwealth or uniform State statute is concerned. It will be different where the dispute involves a statute of a particular state with which the courts of the enacting state are likely to be most familiar and which has no equivalent in other states. The Restraints of Trade Act 1976 (NSW) is an example of such an Act: see Monash IVF Pty Ltd v Burmeister (No 2) [2017] NSWSC 903 at [16].

12. [61]

    Eleventhly, as to the significance of “any agreement between the parties about the court or place in which the proceedings should be instituted”, the matter specifically referred to in s 20(4)(d), this is discussed in greater detail at [79]–[93] below as it relates to one aspect of the grounds of appeal. It is sufficient here to note, for reasons explained later in this judgment, that this sub-section relates to exclusive, rather than non-exclusive, jurisdiction clauses. The latter type of clause says nothing as to the place in which proceedings should be instituted; such clauses speak merely to where proceedings may be instituted. Where a party has agreed to submit to the non-exclusive jurisdiction of a particular court, it is sometimes said that this precludes that party from complaining as to the inconvenience of litigating in that court in the event that proceedings are instituted there. But as the noted Commercial Court judge, Sir Anthony Colman, said in BP plc v Aon Ltd [2006] 1 Lloyd’s Rep 549; [2005] EWHC (Comm) 2554 at [23] (BP v Aon):

13. [62]

    Twelfthly, although it was accepted in the present case that a party seeking a stay of proceedings bears the persuasive burden of convincing the court of issue to stay those proceedings, there is an argument that the express requirement in s 20(4) of SEPA that the “fact that the proceeding was commenced in the place of issue” is not to be taken into account removes any question of onus: see M Davies et al, Nygh’s Conflict of Laws in Australia (10th ed, 2019, LexisNexis Butterworths) at [3.24] (Nygh); Bankinvest at 727; BHP Billiton Ltd v Schultz (2004) 221 CLR 400; [2004] HCA 61 at [71], [177]. On balance, I prefer the observations of Mason P (with whom Spigelman CJ and Priestley JA relevantly agreed) in James Hardie at [100], a case where the analogous question arose in the context of the cross-vesting legislation:

14. [63]

    Thirteenthly, the standard of satisfaction that a court of issue, from which a stay is sought under s 20(3) of SEPA, must feel or achieve is the subject of the first ground of appeal in the present case and is dealt with more fully in [69]–[78] below. It suffices to note for the purposes of this summary that the standard is the ordinary civil standard of the balance of probabilities and there is no warrant for glossing the statute to require a “clear and compelling basis” for relief to be demonstrated.

15. [64]

    Fourteenthly, a decision as to whether the court of another State is “the appropriate court” involves an evaluative judgment rather than a discretionary judgment. The discretionary aspect of a decision under s 20(3) arises after the evaluation of appropriateness has been made: see Julia Farr Services Inc v Hayes [2003] NSWCA 37; (2003) 25 NSWCCR 138 at [90]. This suggests that there may be circumstances, likely to be rare, where a stay may be refused even if the court of another State meets the description of being “the appropriate court” to determine all matters in dispute between the parties.

16. [65]

    Fifteenthly, it is to be noted that s 20(9) of SEPA provides that “this section does not affect the court’s power to stay a proceeding on a ground other than the ground mentioned in subsection (3)”, namely that there is a court of another State that has jurisdiction to determine all the matters in issue between the parties which is “the appropriate court” to determine those matters. Accordingly, a party bringing a stay application under s 20 of SEPA may couple it with an application for a stay of proceedings on the ground of forum non conveniens and applying the Voth test, namely that the court of issue is a “clearly inappropriate court”, a conclusion that may be reached without deciding that there is some other court which satisfies the description in s 20(3) of being “the appropriate court”. The Voth test has a different focus, as the plurality in that case recognised: see at 558. Olsson J in Rick Cobby was correct to observe (at 59) that care must be taken not to become distracted in seeking to apply s 20 of SEPA by reference to broader common law approaches “which may not necessarily be applicable to s 20 criteria”.

17. [66]

    Sixteenthly, appeals from decisions to stay or decline to stay proceedings under s 20 of SEPA should be rare and an appellate court should be slow to intervene: cf, Spiliada at 465; Voth at 570, 580; and Garsec Pty Ltd v His Majesty The Sultan of Brunei (2008) 250 ALR 682; [2008] NSWCA 211 at [94]. This is because a decision whether or not to stay proceedings is an interlocutory decision on a matter of practice and procedure: Adam P Brown at 177; Re the Will of Gilbert (dec) (1946) 46 SR (NSW) 318 at 323.

18. [67]

    Finally, and as noted above, an application under s 20 of SEPA is interlocutory in nature. That means that it is possible that, even if an application is refused, a further application may be made if circumstances change. For example, the case may be expanded by amendment of the Statement of Claim or Defence; aspects of a dispute may be resolved or fall away; settlement may be reached with some defendants and not others; or third party cross-defendants may be brought into the proceedings. All of these matters (and the list is not exhaustive) have the potential to render a forum other than the court of issue the appropriate forum within the meaning of s 20(3) of SEPA. To make this observation is not to encourage multiple stay applications; it is simply to highlight that circumstances may change which cast a very different light on the continuing appropriateness of the court of issue as opposed to an alternative court in another State (which, for the purposes of SEPA, also includes the territories: see s 5).

19. [68]

    With these general observations in mind, I turn to consider the three issues raised by the grounds of appeal, as identified in [37] above.

Questions of onus

1. [69]

   As noted at [10] above, at the core of the Applicants’ challenge to the decision of the primary judge was his employment of the “clear and compelling basis” language used by Olsson J in Rick Cobby. Rick Cobby was decided a relatively short time after passage of SEPA and the High Court’s decision in Voth. It involved an appeal from a magistrate’s decision permanently to stay proceedings in South Australia. Olsson J proceeded on the basis that the application for a stay had been advanced on two bases, first under s 20 of SEPA and secondly at common law.

2. [70]

   What Olsson J relevantly said as to s 20 was as follows (at 58–59):

3. [71]

   His Honour then went on to note the importance of not conflating approaches to stay applications pursuant to s 20 and at common law, which I have noted at [48] above. However, with due respect to his Honour, in the last of the paragraphs extracted above, in speaking of questions of onus, his Honour appears to have done just that. There are a number of further observations that may be made about that paragraph.

4. [72]

   First, the requirement for a “clear and compelling” basis for a stay finds no support in the language of the statute. It is more than simply “a turn of phrase”, as was submitted by Mr Hopkins who appeared for the Respondent.

5. [73]

   Secondly, the reference to the “potentially profound impact” of a stay is overstated. A stay of proceedings may only be granted under s 20 of SEPA if the court of issue is satisfied that a court of another State “has jurisdiction to determine all the matters in issue between the parties”: s 20(3). The assumption underpinning the section is that, if the plaintiff is genuine about pursuing relief, it will commence proceedings in the forum which had been found by the court to be “the appropriate” forum for the resolution of the action.

6. [74]

   Thirdly, Olsson J’s reference to Deane J’s observation in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; [1988] HCA 32 overlooks the fact that s 20(4) of SEPA makes explicit that a matter that the court, in considering whether or not to grant a stay of proceedings, is not to take into account is “the fact that the proceeding was commenced in the place of issue”; and see the observations made in [62] above.

7. [75]

   In St George at [17], having referred to Olsson J’s use of the expression “clear and compelling basis” in Rick Cobby, McPherson JA, in language which does not embrace that expression, said that:

8. [76]

   It is trite that there are only two standards of proof or persuasion at common law: Briginshaw v Briginshaw (1938) 60 CLR 336 at 360–362; [1938] HCA 34. Sometimes, however, a legal criterion, whether statutory or at common law, has built into it a particular elevated standard of satisfaction. Both Spiliada and Voth are examples of this; Spiliada requiring it to be established that there is a “clearly more appropriate forum” and Voth requiring it to be established that the local forum in which a stay of proceedings is sought is a “clearly inappropriate forum”: see [44]–[45] above. An example of this in a statute is s 135 of the Evidence Act 1995 (Cth), where the engagement of the section is predicated upon the risk of the probative value of evidence being “substantially” outweighed by its prejudicial effect.

9. [77]

   Olsson J, with respect, appears to have imported from common law forum conveniens jurisprudence the need for “clear” (to which he has added “compelling”) satisfaction as to the appropriateness of an alternative court. True it is that in Rick Cobby (at 60) his Honour expressed his conclusion in more conventional terms, holding that “the respondent simply failed to discharge its onus of demonstrating that the District Court of New South Wales was the appropriate court”. Equally true, however, is the fact that in subsequent decisions that have adopted the language of a “clear and compelling basis” (see, for example, the District Court decisions referred to in [11] above as well as the primary judge’s decision), that language appears to have operated as an unwarranted gloss on the statute and imposed a higher hurdle on defendants seeking a stay of proceedings. There is no warrant for such a gloss and it is apt to lead to error, making it more difficult than was intended by the legislature to secure a stay of proceedings.

10. [78]

    In the present case, no criticism is intended of the primary judge who was effectively bound to follow and apply a decision of a Supreme Court judge in relation to the statutory provision he was applying. That having been said, the application of Rick Cobby led to an error of law. It is plain both from the primary judge’s reference to Rick Cobby in [2] of his reasons and his use of the language of Rick Cobby in his conclusion (at [14]) that his Honour considered that he needed to be satisfied that there was a clear and compelling basis for concluding that the District Court of South Australia was the appropriate forum for the resolution of the dispute. This error of law justifies appellate intervention.

The non-exclusive jurisdiction clause and the decision in Asciano

1. [79]

   Clause 7.6 of the Guarantee provided that:

2. [80]

   Whilst the primary judge, in [11] of his reasons, accepted the submission that “the non-exclusive jurisdiction clause in the guarantees is not determinative of the matter, and is but a matter to be put into the balance, and be taken into account with the other matters to which the defendants have referred”, he went on to hold in [13] that “I am of the view that the non-exclusive jurisdiction clause contained in the guarantee has more potency in the s 20 matrix than as submitted by the defendants” (emphasis added). There is, with respect, a degree of tension between the primary judge’s apparent acceptance of the submission of the Applicants recorded in [11] of his Honour’s reasons and his view as expressed in [13].

3. [81]

   As can be seen in [35] above, the primary judge had quoted in [11] of his reasons a passage from Palmer J’s decision in Asciano, which concerned a transfer application under the cross-vesting legislation. Palmer J in that passage was evidently making the point that a jurisdiction clause, whether exclusive or non-exclusive, carries great weight because, his Honour said, “it records a term of the bargain between the parties that litigation arising from their agreement will be resolved … by the courts of that forum": Asciano at [18]. Whilst that observation is true of an exclusive jurisdiction clause (although such a clause cannot oust the jurisdiction of the Court: Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61 at [76] (Hive)), it is, with respect, not true of a non-exclusive jurisdiction clause. Generally speaking (although the true nature of all such clauses is driven by their precise wording), a non-exclusive jurisdiction clause entails no more than a submission to the nominated jurisdiction. It neither requires litigation to proceed in that forum nor precludes either party from suing in another forum which has jurisdiction to resolve the dispute between the parties. To do so does not entail a breach of the non-exclusive jurisdiction clause: BP v Aon at [31]; but note the discussion of this issue in A Briggs, Agreements on Jurisdiction and Choice of Law (2008, Oxford University Press) at [4.18]–[4.22], which cautions that labels such as “exclusive” and “non-exclusive” may not always be sufficiently sensitive to good commercial drafting or apt for discussion of questions of principle. This is because attention must be paid in every case to the precise language of the clause and, as observed in Inghams Enterprises Pty Ltd v Hannigan (2020) 379 ALR 196; [2020] NSWCA 82 at [48], “[d]ispute resolution clauses may be crafted and drafted in an almost infinite variety of ways and styles”.

4. [82]

   With that caution in mind, it remains the case that a non-exclusive jurisdiction clause, often and perhaps more accurately described as a “submission to suit” clause, is an entirely different kind of bargain to that represented by an exclusive jurisdiction clause. A non-exclusive jurisdiction clause would not sustain an anti-suit injunction in equity’s auxiliary jurisdiction (see Nygh at [7.61]; see also Royal Bank of Canada v Coöperatieve Centrale Raiffeisen-Boerenleenbank BA [2004] 1 Lloyd’s Rep 471; [2004] EWCA Civ 7) nor a stay of proceedings in accordance with authorities such as Huddart Parker Ltd v The Ship “Mill Hill” (1950) 81 CLR 502; [1950] HCA 43 (Huddart Parker); Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577; [1954] HCA 62; Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 at 427–429, 445; [1996] HCA 39 (Akai). These are the remedies by which the bargain constituted by an exclusive jurisdiction clause is enforced: Hive at [76]–[77].

5. [83]

   Whilst noting that Asciano has been applied at first instance in cross-vesting applications in support of the significance of a non-exclusive jurisdiction clause (see, for example, Taurus Funds Management Pty Ltd v Aurox Resources Ltd [2010] NSWSC 1223 at [38]–[39]; Nalos v Watpac Construction [2012] NSWSC 1371; Finstro Securities Pty Ltd v Gosatti [2021] NSWSC 635 at [30] (Finstro)), it follows, in my opinion, from the reasoning in [80]–[82] above that, at least as it relates to non-exclusive jurisdiction clauses or agreements, Asciano at [18] cannot be regarded as good law.

6. [84]

   It may be observed that there are other cases in the cross-vesting context where non-exclusive jurisdiction clauses have been given little or no weight: see, for example, Techtronic Industries Pty Ltd v Mitre 10 Australia Ltd [2008] NSWSC 740; Giddy v Rocky Castle Finance Pty Ltd [2016] NSWSC 314; Adelaide Concrete Cutting & Drilling Pty Ltd v Marino [2021] NSWSC 1034 at [41]. It might also be noted that in Ant & Ballast Pty Ltd v City of Greater Geelong [2019] NSWSC 188 at [29], Ward CJ in Eq appeared to confine the significance of Asciano to cases involving an exclusive jurisdiction clause.

7. [85]

   A similar objection to that articulated above in relation to Asciano may be made to the following passage from the decision of McKerracher J in Community First Inc v Job Futures Ltd [2008] FCA 1265 at [9]:

8. [86]

   With respect to McKerracher J, a non-exclusive jurisdiction clause does not manifest a shared preference as to jurisdiction. Such clauses are typically included in a contract where the parties reside in different jurisdictions and simply constitute a submission by both parties but, most relevantly, the party that does not reside in the nominated jurisdiction, to suit in that jurisdiction. It may operate to remove an argument that the nominated forum lacks jurisdiction over the “foreign” defendant and may render that forum an appropriate forum (in the sense that there will be no question as to jurisdiction) but says nothing as to whether such forum is “the appropriate forum” which is the question posed by s 20 of SEPA: see also the passage from BP v Aon quoted at [61] above.

9. [87]

   This analysis is supported in the present context by the fact that s 20(4)(d) of SEPA, on its proper construction, only refers to exclusive jurisdiction clauses or agreements. So much is made clear by the language “should be instituted” in that subsection: see [61] above. Moreover, the specific direction in s 20(4) that no regard is to be had to the fact that the proceeding was commenced in the place of issue tends to support the lack of relevance of a non-exclusive jurisdiction clause specifying the court out of which process has been issued, at least where that is the court nominated in the non-exclusive jurisdiction clause. In such a case, attributing relevance to a non-exclusive jurisdiction clause may be thought to undermine this deliberate and distinctive feature of s 20(4) of SEPA.

10. [88]

    What has been said about non-exclusive jurisdiction clauses in the context of a stay application under s 20 of SEPA will not necessarily apply in the related but different context of a transfer application under the cross-vesting legislation where the “interests of justice” fall expressly to be taken into account: see, for example, Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) s 5(2)(b)(iii). The “interests of justice” criteria under the cross-vesting regime may mean that it will ill behoove a party to object to the continuation of proceedings in a forum to which that party has agreed to submit, albeit on a non-exclusive basis: Patrick Badges Pty Ltd v Commonwealth of Australia [2002] NSWSC 221 at [14]; Fuji Xerox Australia Pty Ltd v Documents on Call Pty Ltd [2018] NSWSC 1862 at [20]; Finstro at [29]; and see Nygh at [7.60]. And it should also be noted that where a submission to jurisdiction clause is not expressed to be non-exclusive and where the court of issue would have personal jurisdiction over the defendant because he, she or it has been served pursuant to SEPA, such a clause may be construed as exclusive in nature: Jardine Lloyd Thompson Pty Ltd v Puri [2016] NSWSC 150 at [14]–[18].

11. [89]

    Returning to the decision of the primary judge, the submission made at first instance on behalf of the Respondent by reference to the non-exclusive jurisdiction clause in the Guarantee, which placed reliance on Asciano, was that:

12. [90]

    This submission was not legally correct: see [81] above. It is not a breach or even “almost a breach” of contract to bring proceedings in a court other than that nominated in a non-exclusive jurisdiction clause.

13. [91]

    Counsel for the Respondent also spoke of a “strong bias” in favour of giving effect to the non-exclusive jurisdiction clause. Again, this was inapt. The expression “strong bias” derives from Dixon J’s decision in Huddart Parker at 508–509 which has been understood to describe the prima facie approach to the enforcement of exclusive jurisdiction agreements: see, for example, Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) (2010) 79 ACSR 383; [2010] NSWCA 196 at [89].

14. [92]

    It is clear not only that the primary judge gave weight to the non-exclusive jurisdiction clause in the Guarantee (in [13] of his reasons), but that his Honour gave it elevated significance in mistaken reliance on Asciano. For the reasons given above, and with respect to the primary judge who in fairness probably considered himself in substance bound by Asciano, his Honour erred in doing so.

15. [93]

    To the extent that his Honour regarded the non-exclusive jurisdiction clause as falling within s 20(4)(d) it did not do so for, as has been explained, that sub-section is only concerned with exclusive jurisdiction clauses. Whilst it represented a source of personal jurisdiction for the District Court of New South Wales over the Applicants, the non-exclusive jurisdiction clause said little if anything as to what was the appropriate forum for the resolution of the dispute. It simply confirmed that the District Court of New South Wales had personal jurisdiction over the Applicants.

16. [94]

    This leads to the third of the Applicants’ arguments.

Did cl 21 of the Franchising Code operate to nullify cl 7.6 of the Guarantee?

1. [95]

   The terms of cl 21 of the Franchising Code of Conduct have been set out at [30] above. In summary, cl 21(1)(a) permits an exclusive jurisdiction agreement which requires proceedings to be brought in the State or Territory in which the franchised business is based and cl 21(2)(a) prohibits an exclusive jurisdiction agreement which requires proceedings to be brought in a State or Territory other than that in which the franchised business is based

2. [96]

   Clause 21, however, says nothing about and certainly does not prohibit a non-exclusive jurisdiction clause providing that the franchisee submits to the non-exclusive jurisdiction of a State or Territory other than that in which the franchised business is based.

3. [97]

   The Applicants submitted that cl 21 of the Franchising Code operated to negative or nullify cl 7.6 of the Guarantee. Embedded in this argument was a submission that the Franchising Code applied to the Guarantee. The Applicants also submitted that it evidenced a “policy of the law”, as that term had been used by the High Court in Akai at 447, in favour of franchisees only being sued in the jurisdiction where the franchised business operated. The Applicants also framed this argument in the language of a mandatory law: see, for example, Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647; [2016] FCA 196 at [119].

4. [98]

   What had relevantly been said in Akai (at 447) was as follows:

5. [99]

   The passage in Nelson v Nelson (1995) 184 CLR 538 at 552; [1995] HCA 25 (Nelson) relied upon by the majority in Akai recalled the doctrine of “the equity of the statute” according to which “the policy of the statute, as so perceived, might operate upon additional facts, matters and circumstances beyond the apparent reach of the terms of the statute”: Nelson at 553; see also J Edelman, “The Equity of the Statute” in D Klimchuk, I Samet, and H E Smith (eds), Philosophical Foundations of The Law of Equity (2020, Oxford University Press) at 352. The majority in Akai concluded at 447 that it was unnecessary to decide that case “solely upon” the basis of a perceived “policy of the law” that was anathema to exclusive jurisdiction clauses being used in contracts covered by the Insurance Contracts Act 1984 (Cth) which nominated a forum other than that in which the insured was located. This was because the majority found explicit textual support in the statute for their conclusion.

6. [100]

   In the current case, the “policy of the law” to be discerned in cl 21 of the Franchising Code is that a franchisee should not be forced by an agreement in which it is unlikely to have enjoyed bargaining power equal to that of the franchisor to agree to litigate any disputes in relation to the franchised business outside of the State in which that business operated. The Applicants supplemented this submission by reference to the decision of the Full Court of the Federal Court in Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37 at [149]:

7. [101]

   The Respondent countered the Applicants’ argument on three bases: first, that cl 21 of the Franchising Code did not in terms apply to the non-exclusive jurisdiction clause; second, that cl 21 was not in any event engaged because the Guarantee was not relevantly affected by the Franchising Code; and third, that the argument based upon the “policy of the law” was not consistent with recent authority in the Full Court of the Federal Court: Freedom Foods Pty Ltd v Blue Diamond Growers (2021) 390 ALR 647; [2021] FCAFC 86. In that decision, the Court noted that:

8. [102]

   All three of the Respondent’s submissions should be accepted. In particular, the primary judge did not err in [10] of his reasons in holding that the non-exclusive jurisdiction agreement in the Guarantee, which was the instrument on which the Respondent sued, was not affected by cl 21 of the Franchising Code because it was not a “franchise agreement” as defined in cl 5 of the Franchising Code.

9. [103]

   A “franchise agreement” is defined by cl 5 of the Franchising Code as:

10. [104]

    Most fundamentally for present purposes, no “right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor” is conferred on the Applicants under the Guarantee. Whilst the Applicants as guarantors assumed certain obligations of the franchisee under their Guarantee and, by cl 3, covenanted and agreed to be personally bound by the terms and conditions of the Franchise Agreement, no corresponding right of the kind described in cl 5(1)(b) of the Franchising Code was conferred on them.

11. [105]

    The Guarantee was not a franchise agreement within the meaning of the Franchising Code and no argument or appeal to the fact that the Code is remedial in its purpose or to “the policy of the law” in my opinion warrants a departure from the clear language of the statutory definition in cl 5; see, for example, Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365; [2004] HCA 20 at [70] where it was said that the determination of the issues which arose:

Conclusion

1. [106]

   It follows for the reasons expressed in [69]–[93] above that the Applicants have succeeded in respect of two of their grounds of appeal, that the appeal should be allowed with costs and that the decision of the primary judge must be set aside together with his Honour’s order that the Applicants pay the costs of the stay application.

2. [107]

   The Applicants have also sought an order that the District Court proceedings be stayed pursuant to s 20 of SEPA.

3. [108]

   Despite the relative paucity of evidence that was filed in support of the stay application, two material developments have occurred since that date. First, the Applicants have filed their Defence to the Statement of Claim (see [25] above) in which it is made clear that the viability of the Business will be a major issue in the proceedings. That business was a pizza restaurant which operated locally, in Salisbury, South Australia, and the question of its viability is likely to turn primarily upon a consideration of matters germane to that locale, as well as the experience and performance of the Applicants who operated it.

4. [109]

   Secondly, in addition to the filing of the Defence, the Applicants also filed a Cross-claim on 30 April 2021 pursuant to an order of Dicker SC DCJ. Apart from a claim back against the Respondent and its parent and ultimate holding company (defined in the Cross-claim as the “Franchisor Entities”), the Applicants have also cross-claimed against the former operator of the Outlet in Salisbury, South Australia, its two directors and an individual who is alleged to have brokered the sale of the Business to the franchisee. They are defined in the Cross-claim as the “Vendor Entities”. The two directors and the broker all reside in Adelaide according to Notices of Appearance which have been filed.

5. [110]

   Broadly speaking, the Cross-claim makes allegations of misleading or deceptive and/or unconscionable conduct and non-disclosure against the Franchisor and Vendor Entities in relation to the profitability and viability of the Business prior to its sale. The Applicants also allege that the Business had in fact been operating at a loss in the year-to-date period, the full financial year and/or most or all of the 10 years prior to its sale to them. These allegations make it highly likely that the previous operators of the Business and the broker, all of whom reside in Adelaide, are likely to be material witnesses in the proceedings.

6. [111]

   In oral submissions, Mr Hopkins suggested that the Defence and Cross-claim should be treated with some care as they had been filed after the hearing before the primary judge and before the application for leave to appeal. To the extent that he implied that the pleadings were colourable, I would reject the submission. The Court was informed that the Defence and Cross-claim were ordered to be filed by a certain date by Dicker SC DCJ as part of his orders which resulted in the setting aside of a default judgment that the Respondent had obtained. The Cross-claim is pleaded in a satisfactory and in fact quite detailed fashion and has been certified by the solicitor for the Applicants as having reasonable prospects of success.

7. [112]

   Further, whilst Mr Hopkins faintly suggested that there was no need to bring the Cross-claim in the same proceedings and that the Applicants could have brought separate proceedings, he conceded that there was obvious utility and common sense in all aspects of the dispute being resolved at one time in the one forum. This is correct.

8. [113]

   Subject to any further evidence or submissions from any cross-defendant which has entered an appearance (see [115]–[116] below), South Australia is, in my opinion, the appropriate forum for the resolution of this litigation. If the Applicants wish to persist in their Cross-claim against the Respondent’s ultimate holding company, a Singapore company which has not yet entered an appearance, the appropriate court in South Australia would be the Supreme Court as it has power to authorise service out of the jurisdiction: see schedule 1, division 2 of the Uniform Civil Rules 2020 (SA).

9. [114]

   But in the first instance, it will be for the Respondent, if it wishes to pursue its claim against the Applicants under the Guarantee, to bring proceedings in South Australia. This is because, unlike the cross-vesting scheme, a stay under s 20 of SEPA does not operate to effect a transfer of proceedings to a court of another State.

10. [115]

    My reasons for reaching the provisional conclusion that the Supreme Court of South Australia is the appropriate court for the resolution of this dispute are that:

11. [116]

    Because the cross-defendants were not parties to the appeal and will be affected by the stay application, I would propose the following orders which cover the contingency (which I would expect is unlikely) that they oppose a stay of the proceedings in the District Court of New South Wales:

    1. (1)

       Appeal allowed.

    2. (2)

       Set aside the orders of Weber SC DCJ of 19 February 2021.

    3. (3)

       Direct that the solicitors for the Applicants serve a copy of these reasons by email on the solicitors for all cross-defendants who have entered an appearance in proceedings 2020/00230657 on or before 15 September 2021.

    4. (4)

       Direct that any cross-defendant who or which has entered an appearance file any written submission and evidence in the event that he, she or it opposes a stay of proceedings on or before 29 September 2021.

    5. (5)

       In the event that no such submissions are made, order that the proceedings 2020/00230657 be stayed and the Respondent pay the Applicants’ costs of the appeal and the stay application before the primary judge.

    6. (6)

       In the event that any of the cross-defendants oppose a stay of proceedings, the Applicants are to file and serve any submissions in response by 5 October 2021 with the issue of whether or not the proceedings 2020/00230657 are to be stayed and any outstanding question of costs to be determined on the papers.

12. [117]

    GLEESON JA: I agree with Bell P.

13. [118]

    McCALLUM JA: I have had the advantage of reading the judgment of Bell P in draft. I agree with his Honour's conclusions concerning the first two of the three issues summarised at [37] above (the standard of proof and the reliance placed by the primary judge on the non-exclusive jurisdiction clause). As Bell P has observed, that is enough to warrant the intervention of this Court.

14. [119]

    In that circumstance, I prefer to reserve my conclusion as to the third issue raised by the appeal to a case in which it necessarily arises for decision. The issue as framed was whether the primary judge erred in not finding that cl 21 of the Franchising Code operates to nullify cl 7.6 of the Guarantee, raising the related question of whether the Guarantee is a "franchise agreement" within the meaning of the Franchising Code.

15. [120]

    I do not disagree with the President's conclusion that the primary judge did not err in that respect. As his Honour has explained, cl 21 of the Franchising Code does not, in terms, operate to nullify cl 7.6 of the Guarantee, both because that clause is not an exclusive jurisdiction clause and because the highly particular definition of "franchise agreement" in the Franchising Code does not appear to extend to a guarantee in the terms of the Guarantee sued on in the present case.

16. [121]

    Further, I accept that the fact that a statute has a remedial purpose does not warrant a departure from its clear language. In the way in which the point was framed on behalf of the applicants, perhaps it must be rejected, as Bell P has concluded.

17. [122]

    I am not confident that it follows that the existence of the Franchising Code is irrelevant. Bell P has described the "policy of the law" to be discerned in cl 21 of the Code as being "that a franchisee should not be forced by an agreement in which it is unlikely to have enjoyed bargaining power equal to that of the franchisor to agree to litigate any disputes in relation to the franchised business outside of the State in which that business operated". The applicants are not franchisees and are not being forced by their agreement to litigate any dispute here in New South Wales.

18. [123]

    But once it is accepted that Parliament has seen fit to address a mischief by enacting legislation that is remedial and "intended to be protective of prospective franchisees" in that way, it seems incongruous to have extended such protection only to the corporate vehicle which, as in the present case, may no longer exist by the time the protection is needed. The commercial reality is that those most in need of protection are the people who stand behind the corporate entity, who will inevitably have been required to guarantee its debts and who bear the burden of its failure. Whether that is an argument directed to the "equity of the statute" or to a "policy of the law" or an argument for coherence in the law or simply an argument for a just assessment of the factors that should be given weight in the exercise of the discretion to grant a stay under s 20 of the Service and Execution of Process Act 1992 (Cth), or indeed no argument at all, is an issue for another day.

19. [124]

    I agree with the orders proposed by the President.