Benson v Rational Entertainment Enterprises Ltd

The plaintiff in this matter is Mr Gary Benson.

There are now four defendants, the plaintiff having discontinued against the fifth defendant.

Each of the defendants is incorporated in the Isle of Man (the allegation in the plaintiff's statement of claim that one of them was incorporated in the British Virgin Islands being incorrect). It appears that the defendants may be related in some way, but if that is so, neither the statement of claim, nor the evidence, establishes how that may be so.

The evidence establishes that, at least since a date in 2004, the plaintiff has engaged in the pursuit of gambling in online poker games.

It appears that, at least since mid-2012, and perhaps earlier, the first and third defendants, and possibly the other two defendants, have engaged in the business of providing online facilities for other persons to engage in gambling in poker games online.

For the sake of simplicity, I will generally refer to all of the defendants collectively as “the defendants”. I will do that notwithstanding that the plaintiff has generally made allegations in this statement of claim of the form: the defendants or one or more of them in relation to particular actions and events. The statement of claim does not distinguish between the actions and responsibilities of the individual defendants.

The plaintiff filed his statement of claim on 14 November 2014.

The defendants filed a notice of motion on 13 March 2015, in which they sought an order that the statement of claim be set aside pursuant to rules 11.7 and 12.11 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”).

At the hearing that took place on 23 June 2015, the defendants were given leave to file an amended notice of motion. They added to their original claim for relief alternative claims for an order pursuant to rule 12.11(1)(g) of the UCPR that the Court has no jurisdiction over the defendants in respect of the subject matter of these proceedings; an order pursuant to rule 12.11(1)(h) of the UCPR declining to exercise jurisdiction in the proceedings; and an order that the proceedings be permanently stayed pursuant to s 67 of the Civil Procedure Act 2005 (NSW), or the Court's inherent jurisdiction.

In the broadest of outline, the plaintiff claims that, between 2004 and 29 June 2011, he had a contract with four companies which he described as the “Full Tilt Companies”, that gave him the facility to engage in online gambling in poker games. The Full Tilt Companies were licensed by the Alderney Gambling Control Commission, in the British Channel Island of Alderney, to collectively trade as “Full Tilt Poker”. Various monies were paid to the Full Tilt Companies in association with the plaintiff’s gambling endeavours, including a sum of US$285,000. On 29 June 2011, proceedings instituted in the United States District Court for the Southern District of New York were settled by a document called Stipulation and Order of Settlement Regarding PokerStars (the “settlement agreement”). A number of parties, including the first and third defendants to the present proceedings, were parties to that settlement agreement. Those parties were described in the settlement agreement as the “PokerStars Companies”. I will deal with the settlement agreement in more detail below. For the purposes of this short outline, it is sufficient to note that substantial assets that had been forfeited to the United States of America by the Full Tilt Companies were transferred to the PokerStars Companies. The plaintiff claims that the assets transferred included the funds previously held on his account by the Full Tilt Companies, which included the US$285,000. The settlement agreement contained a term that obliged the PokerStar Companies to "make available for immediate cash withdrawal… the online poker account balances of all non-US players of the Full Tilt Group, as of June 29, 2011". The plaintiff's case is that the amount previously held by the Full Tilt Group on his account, including the US$285,000, fell within this description, and was required to be paid to him by the defendants. The defendants have refused to pay the US$285,000. It appears that they accept that the rest of the amount previously held on account of the plaintiff by the Full Tilt Companies is the plaintiff's money.

It will be necessary to refer to the relevant allegations in the plaintiff's statement of claim.

The statement of claim contains a number of allegations of fact, that were intended to support claims made by the plaintiff in his claim for relief that were based upon the premise that the defendants held the US$285,000 on trust for the plaintiff. At the hearing, the plaintiff accepted that his trust claim was misconceived. Accordingly, in due course, an order will be made that the claims for relief, and the allegations of fact concerning the trust claim, will be struck out of the statement of claim.

Separately, the plaintiff conceded that his trust claim did not fall within any paragraph contained in Schedule 6 of the UCPR, so that he could not, in any event, maintain the trust claim in this Court on the basis of a statement of claim that was served on the defendants outside Australia.

The relevant remaining claims for relief in the statement of claim were:

I will refer only to the allegations in the statement of claim that are important to the resolution of the present application.

In par 13, the plaintiff alleged that, in and from about 2004, he registered, and commenced to operate from Sydney, an online poker account with Full Tilt Poker. The plaintiff did not make any specific allegation concerning the contract between himself and the relevant Full Tilt Companies, or give particulars of how that contract was made.

In pars 15 to 19, the plaintiff pleaded the circumstances in which, as at 29 June 2011, the Full Tilt Companies held US$806,744.17 in the plaintiff's account, which included the sum of US$285,000, which had been paid into the plaintiff's account.

The plaintiff's account was in the name of "OzGary". The plaintiff alleged that the US$285,000 had been deposited into that account.

The plaintiff pleaded what he described as "the Rational Group Take Over Full Tilt Poker" in pars 20 to 26. The plaintiff used the expression "the Rational Group" to describe the defendants.

The plaintiff alleged that, on or about 29 June 2011, the Alderney Gambling Control Commission issued suspension notices against the Full Tilt Companies. That required those companies to immediately suspend operations, and relevantly to cease to allow existing customers to withdraw funds that were held in their online poker accounts. That prevented the plaintiff from withdrawing funds from his account.

On or about 31 July 2012 (in fact 27 July 2012), the first and third defendants, among others, entered into what the plaintiff described in the statement of claim as the USA Settlement Deed.

As a consequence of that deed, the defendants took control and possession of, and participated in, the operations of Full Tilt Poker, its website, and the online poker accounts of players previously operated and held by the Full Tilt Companies, including the plaintiff's account.

On or about 9 October 2012, the fourth defendant, which was not a party to the settlement deed, was granted a licence to operate as Full Tilt Poker by the Isle of Man Gambling Commission.

From about 6 November 2012, players having online poker accounts with Full Tilt Poker were generally able to regain access to their online poker accounts.

The plaintiff made the following allegation in par 26 of his statement of claim:

The plaintiff did not plead, in any specific way, the basis upon which the defendants, or any of them (as he put it), became bound by the terms that had previously bound the Full Tilt Companies.

There was no allegation made by the plaintiff (and no evidence to this effect led by the defendants) that the plaintiff actually engaged in gambling on poker games online while Full Tilt Poker was being operated by the defendants. Accordingly, there was no allegation, or evidence, that could support a finding that, by conduct, the plaintiff had agreed to contract with the defendants on the terms that they issued (as opposed to the terms on which the plaintiff had previously contracted with the Full Tilt Companies).

I note that the statement of claim does not address the significance of the fact that the first and third defendants were the only defendants who were party to the settlement agreement, and the fourth defendant was apparently the party that continued to operate Full Tilt Poker. The position of the second defendant is not made clear in the statement of claim. Neither the plaintiff nor the defendants made anything of this in their submissions.

In par 27 of his statement of claim, the plaintiff alleged that on or about 15 November 2012, by reason of their control of the OzGary account, the defendants reduced the balance in the account from US$806,744.17 to US$521,744.17, resulting in a shortfall of US$285,000. He alleged that, despite repeated demands, the defendants have refused the plaintiff access to the sum of US$285,000, and refused to make that sum available to him for immediate withdrawal.

In par 28, the plaintiff alleged that, by letter dated 2 October 2013, from their lawyers to the plaintiff's solicitors, the defendants, among other things, "refused, in answer to written demands for the return of the US$285,000, to pay or make available to [the plaintiff] for withdrawal, the sum of US$285,000".

As a result of that refusal, the plaintiff pleaded claims alternatively in contract and quasi contract against the defendants.

There may, with respect, be some imprecision in the statement of claim as it is presently drafted. As I presently understand it, the plaintiff's quasi contract claim is based upon the circumstances in which the defendants came to possess, and have control of, the money in the plaintiff's account by reason of the execution of the settlement agreement. He claims that the settlement agreement had the effect that, in practical terms, the plaintiff's contract with the Full Tilt Companies ended (and probably technically was frustrated, although the plaintiff has not formally pleaded that). The defendants received the money that the Full Tilt Companies had previously held in an account on behalf of the plaintiff, by reason of the forfeiture agreement that they entered into with the United States. The United States then gave that asset to the first and third defendants, among other companies. The settlement agreement imposed upon the PokerStars Companies the obligation to make that money available for immediate cash withdrawal by the plaintiff (as the plaintiff claims that it was an online poker account balance of himself, as a non-US player of the Full Tilt Group). The plaintiff was not a party to the settlement agreement, so he alleges that the relevant defendant holds the US$285,000 for him as money had and received.

Alternatively, in some way that the statement of claim does not make clear (in the sense of by the provision of adequate particulars) the events following the settlement agreement had the effect that the contract that the plaintiff originally had with the Full Tilt Companies was novated in favour of the defendants. Accordingly, the plaintiff claimed, the relevant defendant is under a contractual obligation to pay to him the US$285,000.

It appears from the first recital to the settlement agreement that, on 14 April 2011, a complaint was filed in the United States District Court for the Southern District of New York seeking the forfeiture of, among other things, all assets of the PokerStars Companies. As I have noted, two of the defendants, the first and third, were included in the PokerStars Companies.

It appears from another recital that, under the terms of another agreement with the United States, the Full Tilt Companies had forfeited assets to the value of US$731,000,000 to the United States, and the effect of the settlement agreement was that this sum was going to be transferred by the United States to the PokerStars Companies, on the basis that a sum of US$547 million would be forfeited by those companies to the United States, and that within 90 days of the Closing Date (as defined) the PokerStars Companies would make the balance of US$184 million available for withdrawal by all non-US players of the Full Tilt Group.

The settlement agreement included the following terms:

Exhibit A to the settlement agreement listed all of the companies in the Full Tilt Group. The list includes all of the four companies that the plaintiff alleged in his statement of claim constituted the Full Tilt Group.

Exhibit B contained a description of the forfeited Full Tilt Assets. Clause 7 of that exhibit stated that those assets included:

The practical effect of the settlement agreement was, when implemented in conjunction with the prior forfeiture to which the Full Tilt Group had been a party, that the money in all bank accounts previously held by the Full Tilt Group was forfeited to the United States, and then transferred by the United States to the PokerStars companies. For the purposes of an application such as the present, it must be assumed that these facts may support proof by the plaintiff that all of the money that the Full Tilt Companies had previously held for him, including the US$285,000, was transferred by the United States to the defendants.

The plaintiff is not privy to the obligation created by clause 5 of the settlement agreement that the PokerStars Companies, within 90 days of the Asset Transfer (see clause 1) shall make available for immediate cash withdrawal… the online poker account balances of all non-US players of the Full Tilt Group.

Although the issue may not be entirely clear, it will appear from the correspondence to which reference is made below, that the issue between the parties is whether the US$285,000 falls within the description of “online poker account balances” in clause 5 of the settlement agreement.

There is some indication in the correspondence that the defendants take the position that they were not obliged by clause 5 of the settlement agreement to pay the sum of US$285,000 to the plaintiff, because it should properly be characterised in some other way than an online poker account balance.

At this stage of the proceedings, however, the defendants have not been required to file a defence, and there is scope for imprecision in the determination of what the issues would be at a hearing, if the proceedings were permitted to go forward in this jurisdiction.

In his primary affidavit, the plaintiff gave evidence of the circumstances in which he first became a customer of Full Tilt Poker. He said that he followed links to the Full Tilt Poker website. From the options available he completed a registration form that invited him to become a customer, and to download the software. He confirmed that he wished to install that software. He provided a username and password. He established the “OzGary” account, with an address, phone number and details of his birth. He said that all particulars reflected the fact that they were provided from his office located in 23 Birdwood Street, Sylvania, New South Wales. The telephone and email details were Australian, as was his place of birth. Soon after the time of establishing the account, he electronically produced his New South Wales Driver’s Licence and the Council rate notice for his Sydney home.

He said that the account was funded through NetTeller, which is an online “e-wallet” facility maintained in US dollars. All of these steps were undertaken from his office situated at 23 Birdwood Street Sylvania.

As I have mentioned, the plaintiff’s statement of claim did not provide full particulars of his contract with the Full Tilt Companies. In his primary affidavit, the plaintiff annexed a number of printouts, which the parties agreed had been obtained by a process, which all parties used, to ascertain the contents of websites as at specific past dates. The plaintiff annexed to his affidavit printouts, relevantly called “Site Terms” and “Withdrawal”. The printout headed “Withdrawal” contained a heading called “Withdrawal options”. It stated methods for players to withdraw monies from their accounts. It included the statements:

This method of withdrawal of customers’ funds from their accounts appears to relate to the use of electronic payment processors, which is a reference to electronic arrangements provided by various service providers, which enable players to transfer money from their bank accounts via the payment processors to the Full Tilt Companies, and vice versa.

The evidence showed that the plaintiff used a number of payment processors at various times in connection with his account with the Full Tilt Companies.

A method of withdrawal by cheque was also offered if the amount to be withdrawn was between $100 and $2000.

I note that the document headed “Withdrawal” contains a statement at the bottom “Other Withdrawal Options”. The customer is invited to click on three possibilities, being “Instant eChecks, Visa MasterCard, and Cash Transfer”. The evidence does not include the information that would be presented if any of these options was selected. However, it is reasonable to infer that the Full Tilt Companies permitted cash transfers. That inference is made the easier by the statement at the beginning of the document that “we believe our players should be able to withdraw funds from their accounts as easily as they can make deposits”.

The plaintiff’s primary affidavit contained evidence of a number of deposits made directly into his Commonwealth Bank of Australia foreign currency account, by senders called Envoy Services Ltd, Pocket Kings Ltd and Access Priority Ltd, which, in some unexplained way, transferred funds from the OzGary account, I infer in response to withdrawal applications by the plaintiff. The deposits occurred between 20 May 2010 and 8 June 2011, shortly before the date of the settlement agreement.

The address of the Bank given on the advices of a direct deposit issued to the plaintiff by the Bank is Premium Business Services GPO Box 2719 Sydney NSW 2001 Australia. I therefore infer that the relevant branch of the Bank was situated in this State.

The plaintiff’s evidence also included a number of emails to the plaintiff on 24 June 2011, from a person who had the email address “wiretransfer@fulltiltpoker.com”, in which the sender explained the steps that, I infer the Full Tilt Companies were taking to respond to a request by the plaintiff to transfer $375,000 to the plaintiff’s bank account.

I find that the terms of the contract between the plaintiff and the Full Tilt Companies provided for a wide range of withdrawal options, which included an entitlement on the part of the plaintiff to require the Full Tilt Companies to pay the amount requested to be withdrawn by electronic transfer into the plaintiff’s bank account in this State.

For completeness, I should note that the defendants’ standard terms and conditions (printed out on 16 June 2015) contained a reference in clause 6 to “Deposits and withdrawal policy”. Customers were required to click on the indicated part of the web page to open this policy. Whatever the policy said, it has not been included in the evidence.

This evidence was relevant to an argument put by the defendants, that the relevant contract did not oblige or contemplate that, if the plaintiff was entitled to withdraw money from his account, the amount withdrawn would be paid to him in New South Wales.

The defendants’ solicitor swore an affidavit in which he explained that he had found the terms and conditions of contracts entered into by the Full Tilt Company, as at 8 March 2011 and 9 June 2011 by implementing the same search process as had the plaintiff. He annexed these terms and conditions to his affidavit.

Each of the two terms and conditions contained the following clause:

The plaintiff said in his evidence in reply that “no such terms and conditions were brought to my notice when I established the OzGary account with Full Tilt Poker”.

I am satisfied that, for the purposes of this application, the evidence establishes that both the printouts annexed to the plaintiff’s primary affidavits, and the two printouts annexed to the defendants’ solicitor’s affidavit, were available on the Full Tilt Companies’ website. In a manner that is common with websites, the contents of this site are set out in a manner that enables a person, who has accessed the site, to click on particular documents in order to open them. It appears that, when the plaintiff obtained the printouts that he annexed to his affidavit, he was selective in the documents that he opened. He did not select and open, and print out, the “Terms & Conditions”. The defendants’ solicitor did.

I am therefore satisfied that the contract between the plaintiff and the Full Tilt Companies included the clauses in the terms and conditions, including clause 16.

There is a question in these proceedings as to whether, after PokerStars “acquired” the Full Tilt Companies’ business, as a result of the implementation of the settlement agreement, the contract between the plaintiff and the defendants continued to be governed by the terms of the original contract with the Full Tilt Companies, or whether those terms were replaced with the defendants’ own terms.

The evidence shows that the defendants’ standard terms, as at 16 June 2015, contained a clause 14, that made the law of the Isle of Man the governing law of the contract, and gave the courts of the Isle of Man exclusive jurisdiction over any claim made against the defendants. The Full Tilt Companies’ standard terms stipulated that the law of Alderney was the proper law, and the courts of that place were given exclusive jurisdiction. This difference may be relevant to the determination of the question of whether New South Wales is an inappropriate forum for the trial of the proceedings, for the purposes of UCPR r 11.7(2)(b).

As will be seen below, in correspondence between the solicitor for the plaintiff and the Israeli lawyers for the defendants, those lawyers asserted that the Full Tilt Companies’ “associated assets were transferred to the” defendants. That would suggest that, in so far as contracts with customers were assets, what was transferred was the contract between the plaintiff and the Full Tilt Companies, on the standard terms issued by those companies.

The plaintiff tendered evidence of an investigation undertaken by his solicitor concerning the web address at the foot of the defendants’ standard terms printed out on 16 June 2015. The result of the search was that the solicitor could not find any terms and conditions that had been posted on that website prior to 11 April 2014. The plaintiff accordingly submitted that there were no standard terms issued by the defendants prior to that date. The defendants responded by submitting that this apparent result may be a consequence of confusion, and it is possible that earlier standard terms and conditions had been published at some other web address, which nonetheless related to the contract between the defendants and their customers. I regard this response to be mere speculation given the state of the evidence.

The defendants did not tender any evidence to establish that the plaintiff had utilised his contract with the defendants (for example, by playing games of poker) in a manner that would support a submission that he had elected to continue his contract, but on the standard terms and conditions issued by the defendants.

Furthermore, given the exceptional circumstances in which the Full Tilt Companies’ contracts were transferred to the defendants, I would not accept that the defendants could change the terms and conditions simply by establishing on their website a means for customers to click upon an icon and open the terms and conditions, without the defendants taking some additional step to positively warn their customers that the terms and conditions had changed.

I am not satisfied, on the evidence available at this stage of the proceedings, that the defendants’ standard terms and conditions became part of the contract between the plaintiff and the defendants.

The attempts that plaintiff made to recover the US$285,000 from the defendants led to his receiving an email from a person identified only as Israel, who apparently formed part of “Full Tilt Operations”, which was part of “Full Tilt Poker-Support”, dated 14 November 2012, which stated as follows:

Neither this email, nor any other aspect of the evidence, explains what an “affiliate” is, or what any “affiliate earnings” are, or why categorising the US$285,000 in this manner exempts the defendants from the need to pay the amount to the plaintiff. There is also no information or evidence that justifies the assertion that the US$285,000 falls within the category alleged.

On 1 August 2013, the plaintiff’s solicitor wrote a letter addressed to “Operations Manager Rational Group Douglas Bay Complex” at an address in the Isle of Man. The business name “Rational Group Douglas Bay Complex” was not identified in the evidence, but I infer that it was a business associated with the defendants, because of the inclusion of the words “Rational Group” in its name.

The plaintiff’s solicitor’s letter is a response to the 14 November 2012 email. It contained the statement:

I find that this letter had the effect, for the purposes of the present proceedings, of a demand that the defendants repay the US$285,000 to the plaintiff, and, as it was written by his solicitors in this State, it was by implication a demand that the payment be made in this State.

The solicitor asked Full Tilt Poker to review its decision, and set out at some length the plaintiff’s version of the facts concerning the sum of US$285,000. I will not set out the detail of the submissions made by the plaintiff’s solicitor. That is largely because I do not adequately understand the submission, and it was not explained in the evidence. It suggests that players held what was called “a real money account”, which was also known as the player’s “online poker account”. The real money account was maintained in US dollars. Funds in this account were available for immediate withdrawal at any, time using any of the many withdrawal options provided by Full Tilt Poker; it could be played with on the real money poker tables; and it could be transferred to another player or players via a player-to-player transfer. There were also apparently accounts known as “affiliate accounts” where “affiliate earnings were credited by [Full Tilt Poker] and accumulated by the affiliate”. The solicitor asserted that there was a mechanism whereby an affiliate could request to have affiliate earnings paid to them, in which case the amount in the affiliate account could be transferred to the real money on-line poker account.

It will be sufficient to note (as my present understanding of the submissions made by the plaintiff’s solicitor in their letter does not enable me to go further) that the essential claim of the plaintiff is that the US$285,000 was paid into the OzGary account (being a real money account) from another player via a player-to-player transfer, and did not come from an affiliate account.

It appears from this letter (although the evidence does not disclose in detail) that the plaintiff tried to satisfy his claim against the relevant defendant by involving the Isle of Man Gambling Supervision Commission. It appears that the Commission may initially have formed the view that the defendants’ position was correct, but the solicitor asserted that the Commission had moderated its view, and suggested that the plaintiff ask Full Tilt Poker to review the position. That was the purpose of the letter. The letter concluded:

The plaintiff’s solicitor’s letter generated a response from Hertzog Fox & Niemen, which from its letterhead is an extremely large firm of lawyers who practice in Tel Aviv, Israel. After referring to the plaintiff’s solicitor’s 1 August 2013 letter, the letter states: “Our client, the Rational Group, has instructed us to respond to your letter”. The letter refers to the demand made by the solicitor that the defendants should pay him a total amount of US$285,000.

The letter states that the Full Tilt brand and associated assets were transferred to the Rational Group following an agreement between their client and the US Department of Justice, under the settlement agreement.

The lawyers asserted that the plaintiff’s claim was groundless for a number of reasons: being in summary, first; that the plaintiff was not a party to the settlement agreement; secondly, that the settlement agreement explicitly provided that the Rational Group “shall not assume any liability of the Full Tilt Group… other than those explicitly provided”; and thirdly, that section 5 of the settlement agreement only required their client to “make available for immediate withdrawal… the online poker account balances of all non-US players of the Full Tilt Group as of June 29, 2011…”

The following explanation was given for the clients’ position:

The lawyers asserted that their clients were not required to pay the debt claimed by the plaintiff.

On 4 March 2014, the Isle of Man Gambling Supervision Commission advised the plaintiff’s solicitor by email that it regarded the dispute between the parties to the present proceedings as being outside its role as the gambling regulator, because of the “jurisdictional and technical complexity” of the issue.

It is now necessary to determine whether the plaintiff has established that his claims against the defendants fall within one of the heads of extraterritorial jurisdiction in Schedule 6.

The plaintiff relies upon pars (b) and (c), which provide:

In each case it is necessary for the plaintiff to establish to the requisite degree of satisfaction of the Court that the proceedings are founded on a breach of contract in this State, or the subject-matter of the proceedings is a contract in respect of which a breach was committed in this State.

As par (b) makes clear, if a breach of the contract occurs in this State, it is immaterial whether or not the breach was preceded or accompanied by a breach of the same contract in any other jurisdiction.

These paragraphs apply to quasi-contractual obligations as much as they do to contracts: Schweitzer v Kronen Verwaltungs GmbH [1998] VSC 190: and see Nygh’s Conflict of Laws in Australia (9 Ed) at [3.7].

The plaintiff accepted that he has the burden of proving that one of the paragraphs in Schedule 6 is satisfied: see Kim Michael Productions Pty Ltd v Tropical Islands Management Ltd [2010] NSWSC 269 at [27].

I accept the following statement of principle concerning the identification of the place of breach, where the breach consists of non-feasance, in Nygh at [3.70] (citations omitted):

As I understand it, the parties in essence accepted this principle. The plaintiff relied in particular on the decision of Ipp J (as his Honour then was) in Coates v Charles Porter & Sons Pty Ltd (1990) 2 ACSR 733 at 735. The defendants relied primarily on Kim Michael Productions v Tropical Islands Management Ltd at [29]. The plaintiff placed more emphasis on the importance of the debtor seeking out the creditor in the creditor’s place of residence than did the defendants.

In principle, the issue of where a breach of contract by omission occurs must depend upon where the contract required the act of performance to occur, and that must depend upon the proper construction of the contract. If the contract does not expressly identify the place of performance, where the obligation is to pay money to a creditor, the traditional view that the debtor must pay the creditor in the creditor’s place of residence will carry significant weight. However, the issue remains one of construction, and the proposition that the creditor is entitled to be paid in the creditor’s place of residence must give way if all of the circumstances relevant to the proper construction of the contract point to a different conclusion.

Schweitzer v Kronen Verwaltungs GmbH at [39]-[43] is authority for the proposition that the failure to perform a quasi-contractual obligation requiring the payment of money occurs, when the payment is not made, at the place of residence or business of the person to whom the debt is due. See also Coates v Charles Porter & Sons Pty Ltd at 735.

In cases where the obligation that the plaintiff seeks to enforce is quasi-contractual, there will not, of cause, be a contract that will provide for a particular place for performance. It is likely that, by default, there will need to be a rule that determines where a quasi-contractual obligation is required to be performed.

It is necessary to address the question of the degree of satisfaction that the Court must form that the plaintiff has established the grounds in Schedule 6 upon which he relies, before the Court will reject the defendants’ application under UCPR rules 11.7 and 12.11. That question arises because the issue of whether the Court can, and should, exercise jurisdiction in this matter must be decided on the basis of the allegations in the statement of claim, and the preliminary and incomplete evidence that is available to the parties at this stage of the proceedings.

In Ritchie’s Uniform Civil Procedure NSW at [11.7.5] the following answer is given to this question:

Earlier, at [11.4.10] the learned editors say the following, in relation to the case where the plaintiff is required to seek the Court’s leave to proceed under UCPR r 11.4:

Ritchie’s thus states that before the decision of the High Court in Agar v Hyde, the plaintiff on an application such as that which is now before the Court was required to establish that there was a “good arguable case” that the relevant ground in Schedule 6 had been established, but following the decision of the plurality in that case, it is now only necessary for the plaintiff to establish that his or her claim that the ground has been made out would survive an application for summary judgment by the defendant, if that were the issue on an application for summary judgment.

If that is a correct reading of the position adopted by the learned authors, then I must respectfully disagree. In my opinion, the High Court has not relevantly changed the law as stated by the New South Wales Court of Appeal in Hyde v Agar, and I am bound to apply that decision.

It is necessary to distinguish between an application made by a defendant under UCPR rules 11.7(2)(a) and 12.11 for an order setting aside an originating process (or other order available under rule 12.11) on the ground that the service of the originating process was not authorised by the rules, and an order setting aside an originating process on the ground that the plaintiff’s claim has insufficient prospects of success to warrant the Court allowing the claim to proceed to hearing.

In Agar v Hyde, the plurality (Gaudron, McHugh, Gummow and Hayne JJ) said (citations omitted):

The plurality thus held that the strength of the plaintiff’s case for the relief claimed is not a factor that is relevant to the question whether the relevant paragraph in Schedule 6 has been established. Their Honours continued:

Significantly, their Honours held that, on the facts of the case before them, it was “clear” that at least one of the heads of extraterritorial jurisdiction was satisfied. The plurality then considered the relationship between applications for leave to proceed required to be made by the plaintiff, and applications to set aside the originating process made by the defendant:

The first of the three common bases identified by their Honours equates to the enquiry raised by UCPR rule 11.7(2)(a); and the second to that raised by rule 11.7(2)(b). The third concerns the question whether one of the orders permitted by rule 12.11(1) should be made because the plaintiff’s claim has insufficient prospects of success. As their Honours made clear in the last sentence of the extract set out immediately above, they were only concerned with this third basis. As noted above, they had already decided that the first basis was clearly satisfied, and it was unnecessary to consider the second basis. The following part of their Honours’ reasons was not concerned with the strength of the case required to satisfy the Court as to the first basis:

The conclusion of their Honours at [60] does not relate to the degree of satisfaction that is required before the Court will accept that one of the grounds in Schedule 6 has been established.

That is consistent with the following observation by Gleeson CJ:

The Chief Justice therefore accepted that the Court of Appeal had made no error in the test it applied to determine whether the relevant grounds in the equivalent of Schedule 6 had been established.

Callinan J considered the issue at [106] to [109]:

It therefore appears that Gleeson CJ accepted the approach adopted by the Court of Appeal. The plurality did not deal with the necessary degree of satisfaction concerning what they described as the first basis. Callinan J adopted the “strong argument for the opinion” test.

As the plurality disapproved Bank of America v Bank of New York [1994] NSWCA 17; [1995] ATPR 41-390, it will be appropriate to make the following observations about that decision, which concerned an application for leave to appeal from a decision by Rolfe J. One of the respondents had been served with an originating process issued by the Supreme Court of New South Wales out of the jurisdiction, and the other had been served within the jurisdiction. The claimants sought leave to proceed against the first respondent under Supreme Court Rules Pt 10 rule 2, and the first respondent sought an order that the proceedings against it be stayed, because there was no nexus between the proceedings and this State, as required by rule 1A. The second respondent claimed that the proceedings against it should be stayed on forum non conveniens grounds, even though it had been served with process within the State.

Meagher JA (with whom Powell JA agreed) summarised the grounds upon which Rolfe J found in favour of the respondents, and stayed the proceedings, as follows:

Rolfe J decided both that the claimants had not established the necessary nexus between the proceedings and the State, and that there was no prima facie case demonstrated by the claimants against the first respondents on the merits. Meagher JA agreed with Rolfe J on all points, which included his Honour’s reliance upon the fact that the claimants had not established a prima facie case. Kirby P noted that, before the primary judge, the claimants “repeatedly asserted that they could establish “a prima facie case” and “a prima facie entitlement to relief””.

Meagher JA recorded that the claimants had argued that, because of the change to the relevant provisions of the Supreme Court Rules that had recently occurred, it was not necessary for the claimants to establish a prima facie case that one of the grounds for the exercise of extraterritorial jurisdiction in rule 1A had been established. His Honour said on that subject:

Meagher JA therefore started by raising the question of the degree of satisfaction that the Court must form as to whether one of the grounds for the exercise of extraterritorial jurisdiction has been satisfied, and, with respect, he then found that it was unnecessary to answer that question because the claimants could not demonstrate the existence of a relevant cause of action on any conceivable basis.

Noting that the Court of Appeal was dealing with an application for leave to appeal, it appears from the reasons for judgment the Court may have accepted that the strength of the plaintiff’s claim for final relief was relevant to the question of whether the equivalent of UCPR rule 11.7 applied.

The High Court in Agar v Hyde reversed the decision of the Court of Appeal; it did not decide that the reasoning of the Court of Appeal, concerning the level of satisfaction required to prove that one of the grounds equivalent to those in Schedule 6 had been satisfied, should not be upheld. In the joint judgment, the Court of Appeal said at 503-506:

The Court of Appeal thus stated that the “good arguable case” test applied to the issue of whether the relevant grounds in, what is now, Schedule 6 have been established. Their Honours continued:

The Court of Appeal drew attention to the fact that under the “old” rules, there was an express requirement that the applicant for leave to proceed demonstrate that he or she had a prima facie case for the substantive relief sought in the proceedings. Their Honours continued:

In the first of the extracts set out above, it appears that the Court of Appeal adopted the "good arguable case" test as the test to be applied to determine whether the relevant ground in Schedule 6 has been made out. There may be a question as to whether the Court of Appeal suggested, in the last sentence extracted immediately above, that it is sufficient if the plaintiff establishes that there is a serious issue to be tried in determining whether the ground of jurisdiction in Schedule 6 is satisfied. I do not interpret the judgment as having this effect. I am aided in coming to this conclusion by the observations made by Callinan J in Agar v Hyde, which I have set out above. Those observations also suggest, flowing from Vitkovice, that the appropriate test is the “good arguable case” test.

It will now be necessary to consider whether the plaintiff has established a good arguable case that the defendants breached their contract with him in this State, by failing to comply with his demand that they repay him US$285,000, and whether their failure to pay that sum constituted a breach in this State of a quasi-contractual obligation that they owed to the plaintiff, on the basis of money had and received.

In my view, the plaintiff has established, on the basis of the matters alleged in his statement of claim, and the evidence that is before the Court at this stage of the proceedings, a good arguable case that the defendants have breached their contract by failing to pay to him in this State the amount of US$285,000. I have found, above, that it is most probably the case that the terms of the contract between the plaintiff and the defendants allowed the plaintiff to choose his method of withdrawal, and that included permitting him to require the defendants to pay the money in his account that he wished to withdraw by electronic transfer, into an account nominated by the plaintiff. Although the plaintiff’s solicitor’s letter of 1 August 2013 did not nominate payment details, it did demand payment of the sum in question. The defendants, by their lawyers, refused to make the payment, before the plaintiff gave account details to permit the electronic transfer to occur. It is not necessary for me to decide the issue finally, but in my view, the evidence is sufficiently strong to establish a good arguable case that the plaintiff elected to require the defendants to pay him the relevant amount in this State.

The plaintiff’s quasi-contractual claim appears to arise out of the obligation imposed upon the defendants by clause 5 of the settlement agreement, that they “shall make available for immediate cash withdrawal… the online poker account balances of all non-US players of the Full Tilt Group”. There may be scope for argument about the meaning of the expression “make available for immediate cash withdrawal”. The words themselves only expressly require the defendants to permit the relevant players to withdraw their online poker account balances. They say nothing about the mechanism whereby the monies to be withdrawn are to be paid to the players. Plainly, withdrawal is only one side of the transaction, as payment into some account of the players will be necessary before the transaction is completed.

In my view, there is at least a strong argument that the expression “make available for immediate cash withdrawal” carries with it the implication that the defendants will implement any proper request by the players as to how the relevant monies are to be transferred to the players’ accounts. If that construction of the expression is correct, then the plaintiff’s solicitors’ letter of 1 August 2013 would operate as a request that the plaintiff be paid the sum of US$285,000 in this State, for the reasons given above.

Additionally, the plaintiff has a good arguable case that he is entitled to be paid the amount that he claims to be quasi contractually owed by the defendants in this State, by operation of the general principle of law that I have considered above, that in cases where one party has a quasi-contractual obligation to pay money to another, that obligation must be performed in the place of residence of that other.

Accordingly, I find that the plaintiff has established, to the requisite degree of satisfaction, that the alternative claims that he makes against the defendants in his statement of claim satisfy the requirements of pars (b) and (c) of Schedule 6.

The defendants therefore fail on their motion in so far as they rely upon UCPR r 11.7(2)(a).

The next question is whether the defendants have established, for the purposes of UCPR r 11.7(2)(b), that this Court is an inappropriate forum for the trial of these proceedings.

As I understand the parties’ submissions, they all accepted that the appropriate test that should be applied by the Court to determine whether this Court is an inappropriate forum was as stated by Garling J in Barach v University of New South Wales [2011] NSWSC 431, as follows:

The available evidence establishes the following propositions relevant to the question whether this Court is an inappropriate forum:

It is necessary to have particular regard to the fact, as I have found above, that the evidence that is before the Court at this stage of the proceedings justifies a finding that the contract between the plaintiff and the defendants probably contains a term under which the plaintiff has submitted to the exclusive jurisdiction of the courts of Alderney. As Brennan J (as his Honour then was) said in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 231: “Before a court can refuse to enforce a contractual stipulation in order to allow a plaintiff a right to sue which he has bargained away the court must have substantial grounds prevailing over what Dixon J in The “Mill Hill” [Huddart Parker Ltd v Ship Mill Hill (1950) 81 CLR 502]at 509 called ‘a strong bias in favour of maintaining the special bargain’”.

I accept the statement of principle made by Giles CJ Comm D (as his Honour then was) in FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559 at 569:

Beazley J (as her Honour then was) applied the same principles in Leigh-Mardon Pty Ltd v PRC Inc (1993) 44 FCR 88 at 95. After setting out the same extract from The Eleftheria [1970] P 94 as Giles CJ Comm Div, her Honour added:

The present is an exceptional case, in which the effect of the settlement agreement, produced as a result of the application of the law of the United States that was sought to be enforced by the United States Justice Department, has been to sever the connection between the plaintiff and the Full Tilt Companies, and by a process of apparent forfeiture and transfer to create a contractual relationship between the plaintiff and the defendants (or at least arguably so for the purposes of the present application). There is now no real connection at all between any of the parties to these proceedings, or the circumstances of the case, and Alderney, save for the appearance that the contract is governed by the law of Alderney. This final circumstance may still have been significant to the issue of whether the Court should hold the plaintiff to the exclusive jurisdiction clause, if the defendants had established that there were significant differences between the law of Alderney and the law of this State, and substantial inconvenience would have arisen if the law of Alderney had to be proved in these proceedings. The defendants did not seek to do so. I have therefore placed little weight on the apparent presence in the contract of the exclusive jurisdiction clause in determining whether this Court is an inappropriate forum for the trial of the proceedings.

On the basis of these considerations, I could not find that this Court is an inappropriate forum, let alone a clearly inappropriate forum. It is a positively appropriate forum for the plaintiff to pursue his claim against the defendants. It may not be an entirely appropriate forum from the perspective of the defendants, but I do not see that there is any other forum that clearly is more appropriate than this Court, as there appear to be a number of alternatives – Alderney, the Isle of Man and the United States being the principal ones – which may possibly be more appropriate in some ways, but in no case to such a degree that this Court would be inappropriate. The evidence does not establish that any significant or unfair imposition will be put upon the defendants, if they are required to defend the plaintiff’s claim in this Court.

In these circumstances I make the following orders: