Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Fleming v Marshall [2011] NSWCA 86
• Hearing dates: 21 February 2011
• Decision date: 08 April 2011
• Before: Spigelman CJ at [1]; Macfarlan JA at [12]; Sackville AJA at [97]

Decision

Appeal dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: PRIVATE INTERNATIONAL LAW - application for stay of proceedings on forum non conveniens basis - proceedings against New York attorneys alleging breach of retainer by failure promptly to pay to clients monies received in settlement of Pennsylvania proceedings - whether New South Wales a clearly inappropriate forum - significance of alternative forum being unavailable and of identity of the proper law of the contract of retainer - significance of place of contracting to determination of proper law of contract
• Legislation Cited: Family Provision Act 1982; Supreme Court Act 1970; Uniform Civil Procedure Rules
• Cases Cited: Amin Rasheed Corporation v Kuwait Insurance Co [1984] AC 50; Akai Pty Ltd v The People's Insurance Company Limited [1996] HCA 39; (1996) 188 CLR 418; Bonython v Commonwealth of Australia (1950) 81 CLR 486; [1951] AC 201; Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520; Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR 124; Entores Ltd v Miles Far East Corporation [1955] 2 QB 327; Garsec Pty Ltd v His Majesty The Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682; House v R [1936] HCA 40; (1936) 55 CLR 499; In the matter of United Railways of the Havana and Regla Warehouses Ltd [1960] Ch 52; John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503; McGregor v Potts [2005] NSWSC 1098; 68 NSWLR 109; Murakami v Wiryadi [2010] NSWCA 7; (2010) 268 ALR 377; Perpetual Trusteee Co Ltd v Khoshaba [2006] NSWCA 61; (2006) 14 BPR 26,639; Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265; Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491; Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93; Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538; Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531
• Texts Cited: Bowstead & Reynolds on Agency, 19th ed (2010) Sweet & Maxwell; Dicey, Morris & Collins, The Conflict of Laws, 14th ed (2006) Thomson Sweet & Maxwell; J J Spigelman "Proof of Foreign Law by Reference to the Foreign Court" (2011) 127 Law Quarterly Review 208; Nygh's Conflict of Laws in Australia, 8th ed (2010) LexisNexis Australia
• Category: Principal judgment
• Parties: Francis G Fleming (First Appellant); Marc S Moller (Second Appellant); Steven R Pounian (Third Appellant); James P Kreindler (Fourth Appellant); David C Cook (Fifth Appellant); David Beekman (Sixth Appellant); Bianca I Rodriguez (Seventh Appellant); Noah H Kushlefsky (Eighth Appellant); Robert J Spragg (Ninth Appellant); Brian J Alexander (Tenth Appellant); Justin T Green (Eleventh Appellant); Margaret Lesley Marshall (First Respondent); Kim Neil Marshall (Second Respondent)
• Representation: Counsel: P Braham SC/E Bishop (Appellants); A S Morrison SC/C Bevan (Respondents); Solicitors: Kennedys (Appellants); Turner Freeman (Respondents)
• File Number(s): CA 2010/62931

Decision under appeal

• Citation: Marshall v Fleming [2010] NSWSC 86
• Date of Decision: 2010-02-19 00:00:00
• Before: Rothman J
• File Number(s): SC 11113/2009

Judgment

1 SPIGELMAN CJ : I have had the advantage of reading the judgment of Macfarlan JA in draft. I agree with his Honour's judgment and with the orders his Honour proposes. I also agree with the supplementary observations of Sackville AJA. I wish to add some observations about one submission of the appellants.

2 Mr P Braham SC, who appeared for the appellants, submitted that, even if it were eventually to be found that the contract of retainer is governed by Australian law, an issue with respect to professional conduct of New York lawyers would arise. He contended, on that basis, this Court was a clearly inappropriate forum to determine such a matter.

3 Mr Braham SC referred to the terms of the pleadings which assert that the failure to pay the settlement amount, at the time that the solicitors for the respondent demanded payment, was in breach of "the terms of Kreindlers' retainer (both express and implied)". No particulars are provided of any relevant term of the contract. Specifically, there is no articulation of any implied term.

4 Mr Braham SC submitted that any such implied term must be based on what was proper professional practice in New York with respect to the payment of monies, in the circumstances in which the appellant firm found itself with respect to the obligation to account.

5 The professional conduct standards of a New York lawyer may very well have been at the centre of the cause of action in tort. That action has now been abandoned. It is not clear whether or not any such issue will arise in the cause of action in contract. The appellants have not sought particulars of any implied term. Accordingly, there is no basis for this Court to conclude that the respondent will allege a term that gives rise to an issue concerning the professional standards of legal practice in New York, let alone that there is any controversy between the parties about such a matter.

6 In any event, as Mr Braham SC accepted in the course of his submissions, the weight to be given to the fact that an issue of foreign law arises, when determining whether or not a stay of proceedings in New South Wales should be ordered, has been significantly attenuated by the adoption of a new procedure in this Court. The rules now permit the Court to refer such an issue for determination by the relevant foreign court, as distinct from adopting the traditional approach of choosing between conflicting expert evidence. The rules also expressly authorise the appointment of a referee for this purpose. (For the relevant background see J J Spigelman "Proof of Foreign Law by Reference to the Foreign Court" (2011) 127 Law Quarterly Review 208.)

7 Part 6 Div 9 of the Uniform Civil Procedure Rules 2005, reinforced by s125 of the Supreme Court Act 1970, makes provision for the identification of a dispute between the parties on an issue of foreign law which, with the consent of the parties, may be the subject of an order that proceedings be commenced in a foreign court in order to answer a question as to the principles of foreign law or as to their application.

8 The rules further expressly empower the Court to refer such a matter for determination by a referee, pursuant to the long established provisions for the appointment of referees. Such a referee could come from and sit in the foreign jurisdiction. Although consent of the parties is not a condition of the exercise of a power to make such a reference it has, nevertheless, long been the practice of the Court to do so only with the consent of the parties.

9 Pursuant to a Memorandum of Understanding between myself, as Chief Justice of New South Wales, and the Chief Judge of New York, a reference of a question of law from this Court to New York will be determined by three appellate judges selected by the Chief Judge to answer the question or questions referred by this Court. The New York judges would not sit as the New York Court of Appeals, but would sit as volunteer referees.

10 It is by no means clear whether the present case is one in which this mechanism for deciding such an issue would be more cost effective than the customary means of determining a question of foreign law by expert evidence. However, the determination of an issue of professional practice is one of the kinds of legal issues for which there is unlikely to be a single correct answer. Advice from three serving appellate judges of the foreign jurisdiction is much more likely to be accurate than an Australian judge choosing between contesting expert reports.

11 As this mechanism is available if sought, I would reject the submission of Mr Braham SC, that the possibility that an issue of this character may arise in the present proceedings is entitled to weight in determining whether this Court is a clearly inappropriate forum.

12 MACFARLAN JA :

Nature of Case and Conclusion

13 This is an appeal against the dismissal of the appellants' application for a stay of proceedings. The appellants had unsuccessfully contended at first instance that New South Wales is a clearly inappropriate forum for the issues in the proceedings to be resolved.

14 The proceedings arise out of the death of Neil Marshall on 31 May 2000 following an air crash that occurred in Spencer Gulf, South Australia. The crash resulted from the failure of the aircraft's two engines. About five years prior to his death the deceased had separated from his wife, Mrs Margaret Marshall (the first respondent), and formed a relationship with Ms Linda Carruthers who was his de facto wife at the time of his death. Mrs Marshall however remained his de jure wife at that time. The second respondent, Mr Kim Marshall, is the son of the deceased and Mrs Marshall. I refer to Mrs Marshall and Mr Marshall together as "the Marshalls".

15 The Marshalls and the surviving family members of other persons killed in the air crash instructed the appellants ("Kreindlers"), a firm of attorneys practising in New York, to bring proceedings on their behalf against the manufacturers of the aircraft and its engines. The proceedings were brought in Pennsylvania where the manufacturers were resident. The proceedings were settled in 2003 but Kreindlers refused to pay to the Marshalls the share of the settlement proceeds applicable to the claim relating to Mr Marshall's death unless the Marshalls obtained in Australia a court determination that Ms Carruthers had no interest in those settlement proceeds. The Marshalls obtained such a determination from the Equity Division of this Court in 2008. Kreindlers then paid to the Marshalls the balance of their share of the settlement proceeds remaining after deduction of Kreindlers' contingency fee.

16 In 2009 the Marshalls commenced the present proceedings claiming that by imposing a condition on payment of the settlement proceeds, and by other related conduct, Kreindlers had breached their contract of retainer, breached a duty of care and a fiduciary duty owed to the Marshalls and committed the tort of conspiracy. The damages that the Marshalls claim include an amount equal to the contingency fee that Kreindlers deducted from the settlement proceeds and such costs that the Marshalls incurred in bringing the proceedings against Ms Carruthers as they were not able to recover from her.

17 For the reasons that I give below, I consider that the primary judge, Rothman J, was correct in finding that New South Wales is not a clearly inappropriate forum for resolution of the disputes between the parties and in refusing to stay the proceedings that Kreindlers sought on the forum non conveniens ground, although my reasons differ from those that his Honour gave. As I have determined that there were errors in his Honour's reasoning, I have considered afresh the appellant's application for a stay.

18 I have concluded that the factor which is of primary importance in relation to the application for a stay is that the alternative forum in which Kreindlers contend that the Marshalls should sue, or should have sued, (namely New York) is unavailable to the Marshalls because, so the parties have accepted, the Marshalls' claim is statute barred under New York law (see [45] below).

19 Although my preliminary view is that New York law is that which governed the contract of retainer upon which the Marshalls sue, in the particular circumstances of this case I do not consider that to be a significant factor in favour of Kreindlers' contention that New South Wales is a clearly inappropriate forum for resolution of the parties' disputes (see [87] - [91] below). Nor do I consider that the limited nature of Kreindlers' professional indemnity insurance cover is such a factor (see [92] - [95] below).

Factual Circumstances

20 The factual circumstances giving rise to the proceedings are fully described in the judgment at first instance ([2010] NSWSC 86). The following are particular matters that are relevant to the determination of this appeal.

21 On 5 December 2001 Mr Michael Prescott of Prescotts, barristers and solicitors practising in South Australia, wrote to Kreindlers stating that "I confirm that I act as the representative of the families of the deceased in respect of [the aircraft accident of 31 May 2000]" and that "I confirm that on behalf of the families of all of the deceased, we wish to instruct your firm to act in relation to bringing proceedings against [the aircraft and engine manufacturers]".

22 The letter contained a list of further representatives of the various deceased. In that list Mr Prescott identified himself and Turner Freeman, solicitors practising in Sydney, as representatives of the family of the late Mr Marshall.

23 By letter of 7 February 2002 Mr Prescott reported to the solicitors representing the families of the various deceased, including Turner Freeman, about a trip to the United States that he and Mr Greenwell of counsel had taken "for the purpose of further investigations into the potential claim and to try and come to arrangements with the American Attorneys Kreindler & Kreindler of New York". It appeared from the letter that his discussions with Kreindlers included negotiations as to Kreindlers' fees.

24 On 22 February 2002 this Court upheld an appeal against an order made in Ms Carruthers' favour under the now repealed Family Provision Act 1982 ([2002] NSWCA 47). The Court took the view that Ms Carruthers had not shown that she had been left by the late Mr Marshall without adequate provision for her proper maintenance. The Court noted that whilst Ms Carruthers was not a beneficiary under the will of the deceased she had received $360,000 as a result of his death from superannuation and from workers' compensation proceedings. It referred to Ms Carruthers as the de facto wife of the deceased.

25 By email of 20 March 2002 Mr Prescott advised various family representatives, including Mr Terry Goldberg of Turner Freeman, that "we have, after long negotiations, been able to arrange funding for the US claim through ILF [that is, Insolvency Litigation Fund Pty Ltd] in Sydney" and requested information to enable him to complete the form of Retainer Agreements for Kreindlers and ILF so that he could "forward them [to] you for completion".

26 That obviously occurred because the next day Mr Goldberg advised Mr Prescott that his clients would be coming in to execute the documents that day and that he had "informed Margaret Marshall she will be signing on behalf of Kim Marshall and Linda Carruthers".

27 As the Retainer Agreements are dated 21 March 2002 it can be inferred that they were executed on that day, as had been planned. The following appeared under the signature of Mrs Marshall, who was the only signatory:

"Full Name of signatory: Margaret Lesley Marshall (Executor / Personal Representative)".

28 Whilst Mr Kim Marshall did not sign the Agreement, the Marshalls' Statement of Claim in the present proceedings alleges that Mrs Marshall signed the Agreement on his behalf. There is no reason, at least at this stage of the proceedings, to doubt that that was the case.

29 In his affidavit of 9 June 2009 Mr Goldberg said that he forwarded the signed Retainer Agreements to Mr Prescott to be "on-forwarded by him" to ILF and Kreindlers, as the case may be. In his affidavit of 8 May 2009 Mr Christopher Finn, the solicitor acting for Kreindlers in the present proceedings, gave evidence on information and belief that the Kreindlers' Retainer Agreement was forwarded by Prescotts to Kreindlers on 3 May 2002 and was executed by Mr Green on behalf of Kreindlers at Kreindlers' offices in New York on 16 May 2002. Mr Goldberg said in his affidavit of 9 June 2009 that a copy of the Kreindlers' Retainer Agreement signed on behalf of Kreindlers was not, so far as he was aware, provided to either Mr Prescott or Turner Freeman before the conclusion of the subsequently commenced Pennsylvania proceedings.

30 The Kreindlers' Retainer Agreement included the following opening paragraph:

"Plaintiffs as surviving relatives and Personal Representatives of the seven passenger[s] killed in the crash of Piper Chieftain VH-MZK aircraft operated by Whyalla Airlines on May 31, 2000, hereby retain the firm of KREINDLER & KREINDLER, 100 Park Avenue, New York, New York to prosecute all claims in the United States of America arising out of the wrongful death and survival (estate) claims of plaintiffs and plaintiffs dependants" (White Book 1/119).

There was no express identification of the "Plaintiffs" to whom it referred.

31 There were two ILF Retainer Agreements, one with each of the Marshalls. By them, ILF agreed, inter alia, to pay the costs to be charged by Mr Prescott and Mr Greenwell to the Marshalls for legal services provided in connection with the aircraft crash. The Agreements expressly provided that, whilst ILF would pay the relevant invoices, Mr Prescott and Mr Greenwell would be retained by the Marshalls.

32 On 29 May 2002 proceedings were commenced in Pennsylvania by local attorneys acting on the instructions of Kreindlers against the aircraft and engine manufacturers. The Marshalls were named as plaintiffs and were said in the title to the proceedings to be suing "individually and as Executors and Personal Representatives of the Estate of Neil Marshall, Deceased". In the body of the Complaint that initiated the proceedings it was said that the Marshalls commenced the proceedings "on behalf of the Estate and surviving family members of Neil Marshall". Later it asserted that the Marshalls, "the decedent's survivors and the Estate of Neil Marshall are entitled to recover full wrongful death and survival compensatory damages, including damages for loss of the decedent's earnings, loss of support, loss of services ... ".

33 On 25 July 2002 Mr Goldberg of Turner Freeman sent an email to Mr Green of Kreindlers, with a copy to Mr Prescott, stating the following:

"I act for Margaret Marshall and Kim Marshall, and Michael Prescott acts for Ms Carruthers in the action relating to the death of Neil Marshall in the Whyalla Airlines crash.

I now understand that you would like us to provide you with more information as to the assessment of damages. I can only do that in respect of Kim and Margaret, but not Linda. Michael Prescott and I have an agreement that I will send material to you directly. By way of background, I advise that my clients and Linda have been involved as opposing parties in various actions in Court here over the estate of Neil Marshall, and their relationship is not good".

34 In an email to Mr Goldberg of 30 July 2002 Mr Green said the following:

"The action in the US [has] been, and had to be, brought by the personal representative of the decedent's estate, but [is] brought on behalf of the estate and the decedent's survivors. If the court applies US law, each dependant survivor will obtain an award for loss of support and an award will be made to the estate for the decedent's pre-death pain and suffering.

If there are no dependent survivors, an estate accumulations award will be made to the estate and will go to the estate beneficiaries. The award for pain and suffering would not be a 'personal' recovery as I understand your question".

35 On 26 August 2002 Mr Kim Marshall swore a "Declaration" for use in the Pennsylvania proceedings in opposition to a motion for dismissal of the proceedings. The Declaration included the following paragraph:

"Neil was survived by the following family members: Margaret Lesley Marshall, Kim Neil Marshall and Linda Hope Carruthers. My mother Margaret Lesley Marshall was emotionally devastated by Neil's death, I was financially and emotionally devastated by Neil's death and Linda Hope Carruthers has stated that she was financially and emotionally devastated by Neil's death".

36 Ms Carruthers also swore a Declaration in August 2002 for use for the same purpose. She described herself as the "surviving de facto wife" of Neil Marshall and said that she had been "financially and emotionally devastated" by his death.

37 After negotiation in the following year of a settlement of the Pennsylvania proceedings Mr Green sent an email dated 8 April 2003 to Mr Greenwell, with copies to Mr Goldberg and Mr Prescott amongst others, stating the following:

"... We need to make sure that all of the persons even arguably entitled under Australian law [agree] to the settlement distribution. We need releases signed in favor of the estate representatives and lawyers.

As you know, the Estate representatives have a fiduciary duty to all potential distributees. If a potential distributee is cut out of the settlement, they can sue the estate representative and the lawyers. No settlement money will be distributed until everyone is on board. If a particular distributee acts unreasonably in a given case, we will have to get court approval of the distribution".

38 In a letter of 15 April 2003 to Mr Goldberg, Mr Fleming of Kreindlers stated the following:

"Under Pennsylvania law, since Ms. Carruthers has been recognized by an Australian court as the de facto spouse, she would have a claim to the wrongful death recovery assuming that Australian law treats de facto spouses as de jure spouses in these types of actions".

39 Further correspondence ensued, culminating in the requirement of Kreindlers, to which I have earlier referred, that prior to payment of the settlement proceeds to the Marshalls they obtain in Australia a court determination that Ms Carruthers was not entitled to a share of those proceeds. In the subsequent proceedings concerning Ms Carruthers, Mr Green gave evidence that the making of this requirement reflected the practice of experienced and reasonably prudent US litigation attorneys (affidavit of 23 April 2004 at [10]).

The Judgment at First Instance

40 The primary judge referred to the test to be applied in determining whether to stay proceedings upon the forum non conveniens ground. This was established by the High Court in Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538 and affirmed by it in Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265. The relevant test is whether "having regard to the circumstances of the particular case, and the availability of an alternative foreign forum to whose jurisdiction the defendant is amenable, the local court is a clearly inappropriate forum for determination of the dispute" ( Puttick at [27]).

41 His Honour then commented as follows on various factors relied upon by the parties as relevant to the application of this test:

(a) "In terms of the residence of the plaintiffs, New South Wales is the location with the closest connection, notwithstanding that the test is not a comparative one" (Judgment [56]).

(b) New York courts would be likely to enforce a judgment obtained in New South Wales (Judgment [58]).

(c) A submission by Kreindlers that they would be prejudiced if the action continued in New South Wales because they would not have professional indemnity insurance cover in such circumstances should be rejected because the Kreindlers' "insurance policy covers the US attorneys in circumstances where the US courts are prepared to enforce the judgment of the overseas court" (Judgment [59]).

(d) Whilst expert evidence concerning the law of Pennslyvania or professional standards of attorneys practising in New York might be required to be called, there might be persons already in Australia who could give such evidence. In any event it was open to the court to permit evidence to be given by video link to avoid the need for witnesses to travel from the United States to Australia (Judgment [61] - [64]).

(e) "[T]he existence of a time limit to proceed [against Kreindlers] in New York or Pennsylvania, and the consequential inability of the plaintiffs to proceed in either one of those States, is not a factor that the Court takes into account in determining that either New York or Pennsylvania would not be an appropriate jurisdiction" (Judgment [67]).

42 His Honour then expressed views as to the law applicable to determination of the issues in the proceedings and stated his conclusions as follows:

"68 Reference has already been made to the possible arguments relating to the proper law of the contract and the lex loci delicti. In relation to the lex loci contractus , it would appear, on the material available to the Court at this time, that the contract was formed in New South Wales, although it may have been formed in South Australia. At least one part of the duty of care, assuming the validity of the allegations, was breached in New York, and another part may have been breached in New South Wales. The damage was suffered in New South Wales. The conspiracy (allegedly committed between US and Australian attorneys) occurred outside of New South Wales, namely, in either South Australia or New York. Again, the damage was suffered in New South Wales. The alleged breach of a fiduciary relationship, which allegedly required monies to be paid to the plaintiffs, was breached, at least in part, in New South Wales, where the monies were not paid.

69 In other words, there is no one cause and no one applicable law. At least arguably, the law of New York applies to none of the causes of action. On one view, the law of South Australia may predominate and apply to both the contractual cause of action and the conspiracy. It may be, although, on the evidence currently before the Court, it is unlikely, that the law of New South Wales is inapplicable to any one of the causes of action. It is impossible, at the current stage, to determine that question finally. Nor is it appropriate for the Court to determine finally the law that should be applied at trial. This is particularly so, because the facts determined by the Court will necessarily impact on the proper law to be applied.

70 Nevertheless, it cannot be said, at this stage, that the law of New South Wales will not apply to some of the pleaded causes of action and that NSW is clearly an inconvenient jurisdiction, because none of the applicable law is the law of New South Wales. Overall, none of the factors raised by the defendants on this notice of motion establish sufficient grounds for the Court to conclude that the Court is an inconvenient forum for the determination of the litigation. This is true whether each factor is taken individually, or all of them together".

43 Earlier in his judgment, after stating that the Kreindlers' Retainer Agreement as executed by Mrs Marshall was sent by Turner Freeman to Prescotts and then by Prescotts to Kreindlers, the judge had said:

"16 No further signatures were placed upon the retainer agreement, and all of the parties operated as if the retainer agreement were binding on each of them. It would seem that the drafting of the retainer agreement by the US attorneys and its supply by the agents of the US attorneys to the plaintiffs was an offer, which, no later than the date of notification of its acceptance by the plaintiffs to the South Australian attorneys (being the agents of the US attorneys), formed the contract between the US attorneys and the plaintiffs. There may be facts, which, at a final trial, may be inconsistent with that approach. It is for that reason, amongst others, that the Court determines these issues only for the purpose of the interlocutory proceedings and not on a final basis. However, on the material before the Court, at this time, the contract, being the retainer agreement between the US attorneys and the plaintiffs, was formed in Australia .

...

38 As earlier stated, the contract was complete when Turner Freeman accepted the offer made by the US attorneys. Turner Freeman accepted it either by communicating that acceptance to the South Australian attorneys or by the execution of the offer document being the draft retainer. The contract was formed in either New South Wales or South Australia. It was not formed in any State of the United States. As a consequence, the proper law of the contract is the common law of Australia: Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520 at 549, per Callinan J; Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93 at 112, per Dixon CJ and Fullagar J ...

39 The proper law of the contract is not always the place in which the contract was formed. The proper law of the contract, as has been authoritatively stated, is 'the system of law by reference to which the contract was made or that with which the transaction has its closest and most real connection': Bonython v The Commonwealth [1950] UKPCHCA 3; (1950) 81 CLR 486 at 498; [1951] AC 201 at 219, per Lord Simonds . ... The work to be performed under the contract was to be performed, predominantly, in Pennsylvania. And the State of Pennsylvania was the necessary element in the decision to instruct the US attorneys"

Issues and Submissions on Appeal

44 On the appeal, the Marshalls abandoned the tort claim made in their Statement of Claim filed in the proceedings. The tort claim need not therefore be the subject of any further consideration.

45 Furthermore senior counsel for the Marshalls conceded during the hearing of the appeal that the Marshalls' proceedings against Kreindlers would fail if New York law were found to be the proper law of the Kreindlers' Retainer Agreement. The basis of this concession was a conclusion that under New York law a three year limitation period existed for the commencement of proceedings on each of the causes of action upon which Marshalls sued and that the Australian proceedings were not, and any future New York proceedings would not be, commenced within that period. This concession was a corollary of the Marshalls' submission that one of the reasons that New South Wales was not a clearly inappropriate forum was that the Marshalls could not bring proceedings in New York because they would be statute barred. Kreindlers did not submit that a three year time bar did not apply under New York law and should therefore be taken to have implicitly accepted that the current proceedings should proceed upon the basis that such a time bar was applicable. Neither party suggested that if proceedings were commenced in New York, the New York court would apply any law other than New York law.

46 The Marshalls' concession flowed from the principle established by the High Court in John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 that rules as to the time within which proceedings may be commenced (failing which the proceedings are barred) are issues of substance and not of procedure, with the consequence that limitation issues are governed by the substantive law applicable to a cause of action in question and not by the law of the forum (at [97] - [100]; see also Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491 at [75] - [76]; Garsec Pty Ltd v His Majesty The Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682 at [142] and [166]). In light of this principle and of the accepted position as to the relevant limitation period under New York law, the Marshalls' proceedings in New South Wales will fail if New York law is held to apply to the causes of action upon which they rely.

47 The essence of Kreindlers' submissions on appeal was as follows:

(a) The primary judge erred in "failing to take into account (or give any weight to) the fact that the dispute principally concerns the professional standards of lawyers practising in New York" (Written Submissions [11]). It is inappropriate that this Court "consider and construe the rules and norms of professional conduct applying in New York, rules which exist in a professional and legal framework with which the Courts of New York are familiar ... " (Written Submissions [23]).

(b) The system of law with which the transaction had "the closest and most real connection" in accordance with Bonython v Commonwealth of Australia (1950) 81 CLR 486; [1951] AC 201 (and which was therefore the proper law of the Kreindlers' Retainer Agreement) was the law of New York. The reasons for this included that the contract was for the performance of legal services in New York and that Kreindlers, "whose performance was the principal intent and purpose of the contract, had their place of practice in New York" (Written Submissions [26]).

(c) In determining what was the proper law of the Kreindlers' Retainer Agreement, the primary judge erred in attaching importance to the place where the contract was concluded and was in any event wrong in his conclusion as to where that was. As to the latter issue, there was no basis for the finding, which was central to the primary judge's conclusion concerning the place where the contract was concluded, that Prescotts were the agents of Kreindlers rather than the agents of the Marshalls (Written Submissions [28]).

(d) It is relevant that Kreindlers were insured only for proceedings commenced against them in the United States. His Honour failed to have regard to a clause in the professional indemnity insurance policy that stated that to be the case (Written Submissions [32] and [33]).

48 The essence of the Marshalls' submissions on appeal was as follows:

(a) The proper law of the Kreindlers' Retainer Agreement was New South Wales law, as it was also of the fiduciary relationship founded on the retainer contract. No finding can be made until trial about the proper law of the claim based on conspiracy but this is not in any event the "principal cause of action" upon which the Marshalls sue (that being breach of contract) (Written Submissions [22], [23] and [36]).

(b) Contrary to Kreindlers' submission, all of Kreinders' performance of the retainer did not occur in New York. Most of it occurred through agents in other jurisdictions. For example, Kreindlers' agents Prescotts gathered evidence in South Australia and Kreindlers' agents in Pennsylvania conducted the proceedings in that State. As well, Turner Freeman did much work in Sydney communicating with other lawyers and preparing material for Kreindlers. Affidavits were checked and sworn in the United Kingdom. As a result it is not only the professional standards of New York lawyers that are relevant but also those of Pennsylvania, South Australia, New South Wales and the United Kingdom (Written Submissions [25] - [31]).

(c) Limitations upon Kreindlers' professional indemnity insurance cover are not relevant (Written Submissions [47] - [55]).

(d) The proper law of the Kreindlers' Retainer Agreement was Australian law, (the Marshalls' implicit submission being that that was because the contract was concluded in Australia). Kreindlers' belated execution of the Retainer Agreement was irrelevant because the contract had already been formed by the Marshalls' communication to Kreindlers' Adelaide agents, Prescotts, of their acceptance of Kreindlers' offer to enter into a retainer agreement in the form provided by Kreindlers or because the parties acted upon the basis that the contract was operative well before Kreindlers executed the document.

(e) Kreindlers have not appealed against the finding that Prescotts were Kreindlers' agents in Australia. In any event the finding was supported by Mr Goldberg's affidavit and the terms of the ILF Retainer Agreement (Written Submissions [78] - [80]).

(f) The Marshalls' inability to bring proceedings in the forum that Kreindlers contend is the appropriate forum (that is, New York) is "a consideration of great weight under the Voth test" (Written Submissions [115] referring to Garsec at [7], [28] and [143] - [147]).

(g) It is also relevant that it would be "practically impossible" for the Marshalls to sue Kreindlers in New York due to the difficulty of them obtaining New York attorneys willing to act (Written Submissions [118] - [120]).

49 In their Written Submissions in Reply, Kreindlers contended that their Notice of Appeal was broad enough to embrace a challenge to the finding that Prescotts were Kreindlers' agents but for abundance of caution sought leave to make an appropriate amendment to the Notice. They also identified aspects of the evidence that they submitted indicated that no such agency existed.

50 In their Supplementary Written Submissions, the Marshalls contended that Kreindlers' attempt to challenge the finding concerning Prescotts' agency amounted to Kreindlers raising a new point on appeal and that the Marshalls were prejudiced by the point not having been raised at first instance.

51 As the finding concerning Prescotts' agency assumed considerable significance in the primary judge's reasoning (see Judgment [16] quoted in [43] above) it is appropriate that I consider immediately whether procedural fairness precludes Kreindlers challenging that finding on appeal. I leave aside the Marshalls' complaint as to the ambit of the Notice of Appeal as in my view Kreindlers' Written Submissions on appeal gave the Marshalls clear notice of Kreindlers' intent to raise the point. In these circumstances the point should be regarded as sufficiently covered by the existing general ground of appeal to which Kreindlers' referred.

Prescotts' Agency - Procedural Fairness Issue

52 The foundations of the Marshalls' complaint about Kreindlers now challenging the Prescotts' agency finding are, first, that no denial of Prescotts' agency was contained in the affidavit of Mr Finn filed in support of Kreindlers' motion for a stay and, secondly, that the point was not put to Mr Goldberg in cross-examination on his affidavits.

53 There was however no reason for Mr Finn to deny in his affidavit that Prescotts were the agents of Kreindlers in relation to the execution of the Retainer Agreement as there is no evidence to suggest that such a contention had been made to Mr Finn prior to that time. In any event the affidavit evidence that he gave, on information and belief, pointed strongly against the validity of such a contention because it referred to Prescotts acting on behalf of the Marshalls in dealing with Kreindlers. For example, Mr Finn said in his affidavit that in about November 2001 Mr Prescott told Mr Green of Kreindlers that "Prescotts had obtained instructions to represent the first plaintiff [Mrs Marshall], Carruthers and the other relatives of the decedents" and that "Prescotts were instructed by the first and second plaintiffs [the Marshalls] through their own NSW lawyers, Messrs Turner Freeman" (affidavit [5(f) and (i)]).

54 The second foundation for the Marshalls' complaint is also ill-founded. The portions of Mr Goldberg's affidavit of 9 June 2009 upon which the Marshalls rely ([13] - [26]) do not contain any assertion that Prescotts acted as Kreindlers' agents. Accordingly, there was no occasion for Kreindlers to cross-examine him to suggest the contrary. Mr Goldberg's affidavit in fact provided considerable support for the view that Prescotts acted as agents for the Marshalls rather than as agents for Kreindlers. For example, in paragraphs [13], [20] and [26] Mr Goldberg referred to Prescotts and Michael Prescott acting for the Marshalls.

55 The Marshalls do not appear to have put to the primary judge the theory adopted by the primary judge (see [32] above) that Kreindlers' Retainer Agreement was concluded by means of Turner Freeman giving to Prescotts, as Kreindlers' agents, notice of the Marshalls' acceptance of Kreindlers' offer to enter into the contract of retainer. That proposition was not contained in the Marshalls' written Outline of Submissions at first instance. Whilst it is conceivable that the submission was made orally, it was not suggested on appeal that it was and a transcript of the oral submissions was not put before this Court.

56 It is true that the Marshalls referred in their written Outline of Submissions at first instance to Prescotts as Kreindlers' Australian agent ([8(a)]) but that alleged agency was not relied upon by the Marshalls in the way in which it came to be relied upon by the primary judge. The Marshalls contended in that Outline that Kreindlers submitted the form of retainer agreement "to their Australian agent, Prescotts, to procure the [Marshalls'] execution of it at Turner Freeman's office in Sydney ..." and that by signing the document at Turner Freeman's office they accepted Kreindlers' offer to contract. Accordingly, so the Marshalls submitted, the retainer agreement "thereupon came into existence in the state of New South Wales". They did not contend, as the primary judge found, that the contract came into existence when Turner Freeman communicated further with Prescotts.

57 In circumstances where, first, the two foundations of the Marshalls' complaint of procedural unfairness have not been made out (see [52] - [54] above), secondly, it should be assumed that the Marshalls did not contend that the contract was concluded in the way that his Honour found it was (see [55] - [56] above) and, thirdly, there was a wealth of evidence, including that in Mr Goldberg's affidavit, suggesting that Prescotts were the Marshalls' rather than Kreindlers' agents, Kreindlers should not in my view be precluded from contending that to have been the case.

Whether the Primary Judge Erred

The nature of this appeal

58 In Murakami v Wiryadi [2010] NSWCA 7; (2010) 268 ALR 377 this Court took the view that in the absence of any detailed argument as to why a different approach might be appropriate the Court should proceed upon the basis that a decision concerning an application for a stay on the forum non conveniens ground should be regarded as a discretionary judgment to which the principles in House v R [1936] HCA 40; (1936) 55 CLR 499 were applicable (at [32] - [35] and [166] - [167]).

59 Kreindlers submitted that such a decision is not a discretionary one in this sense but one involving "the identification and evaluation of fact" (see Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR 124 at [37] - [40]) attracting the less stringent test for appellate intervention referred to in Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 551-2. This submission was implicitly confined to that part of the decision-making process that involves the Court forming a view as to whether the forum is a clearly inappropriate forum and not to the residual step of deciding whether, in the circumstances as found, a stay should be granted. The latter step clearly involves the exercise of a discretion in the traditional sense (see Perpetual Trusteee Co Ltd v Khoshaba [2006] NSWCA 61; (2006) 14 BPR 26,639 at [34], [99] and [109]).

60 As in this case also there was only limited argument on the issue and as Kreindlers have in my view satisfied even the more stringent House v R test, it is unnecessary to choose between the two tests.

The proper law of Kreindlers' Retainer Agreement

61 The primary judge correctly treated the identification of the proper law of the contract of retainer as relevant to the question of whether New South Wales is a clearly inappropriate forum for determination of the disputes between the parties. However in determining what was the proper law of the contract (that is, that with which the transaction had "the closest and most real connection": Bonython ) his Honour in my view placed undue emphasis upon the place where it was concluded. If read on its own, paragraph [38] of the primary judgment (see [43] above) would suggest that his Honour regarded the place of contracting as determining, rather than simply being relevant to, the identity of the proper law. In particular this is suggested by the sentence in paragraph [38] " As a consequence , the proper law of the contract is the common law of Australia ... " (emphasis added) following a restatement by his Honour of his conclusion as to where the contract was formed. Neither of the passages in the two authorities to which his Honour referred at that point ( Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520 at 549 and Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93 at 112) was concerned with the identification of the proper law of the contract. Rather, the passages were concerned with the identification of the place of contracting.

62 It is true that in the following paragraph ([39] quoted in [43] above) his Honour said that "[t]he proper law of the contract is not always the place in which the contract was formed" and referred to the Bonython test and to the performance of work in Pennsylvania but, reading the two paragraphs together, it is nevertheless clear that his Honour attributed great significance to the place where the contract was formed. This was in my view erroneous.

63 In Amin Rasheed Corporation v Kuwait Insurance Co [1984] AC 50, Lord Diplock made the following observations:

"I mention, in passing, that in these days of modern methods of communication where international contracts are so frequently negotiated by telex, whether what turns out to be the final offer is accepted in the country where one telex is situated or in the country where the other telex is installed is often a mere matter of chance. In the result the lex loci contractus has lost much of the significance in determining what is the proper law of contract that it had close on 50 years ago when Lord Atkin referred to it in [ Rex v International Trustee for the Protection of Bond Holders Aktiengesellschaft [1937] AC 500 at 529]" (at 62).

64 These observations are equally applicable to the use of other electronic means of communication such as telephone, facsimile and email. Their force has increased with the passage of time and the remarkable advances in electronic methods of communication after 1984. The widespread use since then of email and facsimile transmissions in business communications has considerably reduced the significance of the lex loci contractus, at least in relation to trans-national contracts. The place of contracting has been regarded as one element in determining the proper law applicable to a contract: Akai Pty Ltd v People's Insurance Co Ltd [1996] HCA 39; 188 CLR 418 at 437 per Toohey, Gaudron and Gummow JJ. However, in general, in the case of a trans-national contract the place of contracting will only be of real significance where a trans-national contract has been concluded at a face-to-face meeting at the place of residence or business of one of the parties. The present is not such a case.

65 This change is mirrored by the emphasis now placed under European Union law on the location of the party who is to effect performance of the contract, rather than on the place where the contract was concluded. In this regard Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations creates a rebuttable presumption that where the parties have not chosen the applicable law, that law is, in effect, that of the place where the party who is to provide the principal performance of the contract resides. The European Union law immediately preceding the introduction of this provision was to similar effect (see Dicey, Morris & Collins, The Conflict of Laws , 14 th ed (2006) Thomson Sweet & Maxwell, [32R-107]).

66 The fact that the place of contracting is now, and was in 1984, as Lord Diplock put it, "often a mere matter of chance" is illustrated by the facts of the present case in which it is difficult to regard the issue of whether Prescotts were or were not Kreindlers' agent (being the issue upon which the arguments on appeal as to the place of contracting focussed) as affecting the true character of the contract of retainer in any commonsense way.

67 The error that I have identified (see [60] - [62] above) concerned a matter that assumed considerable significance in his Honour's reasoning process despite the fact that the parties' focus on the contract cause of action became considerably greater on the appeal than it had been before his Honour. As indicated earlier (see [44] above), the tort claim was abandoned on appeal and the contract claim was identified by the respondents as their principal cause of action. In view of this the basis for appellate intervention has been established.

68 It is accordingly necessary for this Court to form its own view as to whether the proceedings should be stayed on the forum non conveniens ground. In these circumstances it is unnecessary to examine the other bases upon which Kreindlers contended that the primary judge erred. However as a considerable part of the argument on the appeal related to his Honour's conclusion as to where the contract was made, I proceed to consider the challenge that was made to that conclusion.

The place where the contract was made

69 As pointed out earlier, the primary judge's conclusion as to where the contract was made was primarily based upon his finding that Prescotts were Kreindlers' agents (see [43] above). That finding was not in my view supported by the evidence.

70 In their Written Submissions on the appeal, the Marshalls sought to support the finding by reference to Mr Goldberg's affidavit and the ILF Retainer Agreement (see [48(e)] above). However, neither of these documents provide that support. In fact they point in the opposite direction (see [52] - [54] above) and the Marshalls do not suggest that there is any other evidence to support the finding.

71 An alternative basis upon which the primary judge found that the contract was formed in Australia was that it was concluded when the Retainer Agreement was signed by the Marshalls at the offices of Turner Freeman (see [38] quoted in [43] above). However this signing could not have concluded the contract because for that to have occurred it would have been necessary for the Marshalls to have communicated their acceptance to Kreindlers.

72 If Prescotts were not Kreindlers' agents, the contract was formed when Prescotts communicated the Marshalls' acceptance to Kreindlers by sending the Retainer Agreement signed by the Marshalls to Kreindlers or by otherwise informing Kreindlers of the Marshalls' acceptance. The evidence did not reveal precisely when or by what means this occurred. It is not necessary to speculate about where that communication occurred as the outcome of an enquiry about that matter would not in my view have any significant bearing upon the decision as to what was the proper law of the contract of retainer and as to whether New South Wales was a clearly inappropriate forum. Different results might follow depending upon whether the Retainer Agreement was posted or whether Kreindlers was advised of its execution by a form of instantaneous communication: Entores Ltd v Miles Far East Corporation [1955] 2 QB 327. As Lord Diplock put it in Amin Rasheed Corporation (see [63] above), the result would be a "mere matter of chance" .

Reconsideration of Stay Application

73 The following considerations in my view require the conclusion that New South Wales is not a clearly inappropriate forum for resolution of the disputes between the parties and that the motion for a stay on that ground should be dismissed.

Unavailability of alternative forum

74 Of prime importance in this regard is the fact that the alternative forum in which Kreindlers allege that the dispute should be (or at least should have been) resolved, namely New York, is not now and has not for some years been available as an alternative forum in which the Marshalls could sue Kreindlers. As indicated in [45] above, the parties accepted that under New York law (which the parties implicitly accept would be applied in any New York proceedings) a three year time bar is applicable to the causes of action upon which the Marshalls rely. That period expired in 2006 without the Marshalls having commenced proceedings in New York (or indeed in New South Wales).

75 The relevance of the unavailability to the plaintiff of the alternative forum that the defendant contends was the appropriate forum for the proceedings was considered in Garsec . That decision of this Court confirmed that whilst this factor is not conclusive as to the grant of a stay, it is a significant factor favouring the plaintiff (Spigelman CJ at [12] - [22], Hodgson JA at [31] and Campbell JA at [138] - [149]).

76 The significance of this factor may be lessened, at least where the Court's discretion comes to be exercised (see [59] above), if the plaintiff has rendered the alternative forum unavailable by failing for unexplained reasons or through carelessness to sue before the limitation period expired. That is not the case here. Although the Marshalls did not commence proceedings in or prior to 2006, that is explicable on the basis that it was not until well after 2006 that a significant part of the Marshalls' damages crystallised as a result of the completion of their proceedings against Ms Carruthers. They were of course proceedings that Kreindlers had required the Marshalls to take.

77 I should add in this context that I do not accept the submission of the Marshalls referred to in [48(g)] above concerning their alleged inability to obtain relevant New York attorneys. In my view the evidence upon which they relied to support this submission did not demonstrate that sufficient enquiries had been made to provide the foundation for the submission.

The proper law of Kreindlers' Retainer Agreement

78 Another factor relevant to the grant of a stay in the present case is the identity of the proper law of the contract of retainer upon which the Marshalls sue. As noted earlier (see [48(a)] above) the contract cause of action was described in the Marshalls' Written Submissions as their principal cause of action. They contended, correctly in my view, that the law governing the fiduciary duty that they claimed had been breached would have been that governing the contract out of which the duty arose, and that the law governing their conspiracy claim (which was treated by them in argument as very much a subsidiary claim) was difficult to identify at this stage of the proceedings.

79 It is not appropriate that at this stage of the proceedings a final determination be made as to the identity of the proper law of the contract of retainer. The application for a stay was not heard at first instance upon the basis that there would be such a determination on the application and the primary judge made it clear in his judgment that he did not make one (Judgment [69]). This course taken by the primary judge was consistent with the view expressed in Puttick (in the context of a tort claim) that a "conclusion reached on a stay application about what the proper law of a tort is will normally only be a provisional conclusion: it will be a conclusion open to alteration in the light of further evidence called at the trial" (at [36]). This observation is equally applicable to a conclusion reached on a stay application as to the proper law of the contract.

80 The inappropriateness of reaching a final conclusion on that issue on the present stay application is emphasised by the fact that a final determination that New York law was the proper law of the contract would be fatal to the Marshalls' claim. As noted in [46] above, that determination would have the consequence that the New York limitation period would be applied in the present New South Wales proceedings, leading to the result that the proceedings are statute barred. The Marshalls should have the opportunity to argue the point on a final basis and to call further evidence on the issue before a final determination is made. Nevertheless a provisional view on the issue needs to be formed for the purpose of considering the stay application.

81 The provisional view that I have formed is that the system of law with which the contract of retainer had "the closest and most real connection" (see Bonython referred to in [47(b)] above; also Akai at 434 and 437), and that was therefore the proper law of the contract, was New York law. To use the expression adopted in Akai at 437, New York was the place in which the contract had "its natural seat or centre of gravity".

82 The character of the contract of retainer strongly favours this conclusion. It was a written retainer agreement in a form prepared in New York by New York attorneys. By it, the attorneys were engaged "to prosecute all claims in the United States of America arising out of" the late Mr Marshall's death. It thus related to work to be done by the New York attorneys in the United States.

83 The Marshalls relied upon the fact that evidence was collected in Australia. That this was done through Prescotts who were not shown by the evidence to be Kreindlers' agents, or through Turner Freeman who were undoubtedly agents of the Marshalls, diminishes its significance. Moreover it was not work mandated by the Retainer Agreement. It is only the circumstances that obtained at the date of the contract's inception that are relevant for this purpose ( Nygh's Conflict of Laws in Australia , 8 th ed (2010) LexisNexis Australia at [19.30]). Whilst it may have been contemplated at the date of the contract that there would have to be some evidence collected in Australia, the Retainer Agreement did not expressly stipulate, nor by necessary implication require, that any such work would be done by Kreindlers (or indeed by the Marshalls). In these circumstances, it cannot be regarded as having any significant bearing upon the characterisation of the contract.

84 It is also not of any particular significance that the Retainer Agreement contemplated that proceedings might be brought elsewhere in the United States than in New York, as in fact occurred. Kreindlers assumed responsibility to the Marshalls for the prosecution of those proceedings and did so as attorneys practising in New York.

85 The New York character of the Retainer Agreement is emphasised by the fact that it provided for Kreindlers to receive a contingency fee of 22.22 per cent of the net recovery to be obtained in the contemplated proceedings. Whilst that form of remuneration is commonplace in the United States, a lawyer is not permitted to charge a fee of this type in Australia.

86 The circumstances to which I have referred, being ones relating to the place and nature of the business of Kreindlers, the place for performance of the contract, the identity of the party to perform the contract and the nature and subject matter of the contract, largely mirror the principal factors identified in the frequently cited passage from the judgment of Jenkins LJ in Re United Railways of the Havana and Regla Warehouses Ltd [1960] Ch 52 at 91 (see also Akai at 437) as relevant to the determination of the proper law of a contract. Regard to the remaining factors would here require reference to the place of residence of the Marshalls and the place where the Retainer Agreement was made. I have explained elsewhere why the latter is not of any particular significance in the present case (see [63] - [66] above). Likewise, I do not consider that the fact that the Marshalls were resident in New South Wales at the date of the contract is of importance. The place of their residence was merely incidental because the performance for which the contract provided was to be undertaken by Kreindlers in the United States, with Kreindlers deducting their fee from such recoveries as were made in the United States proceedings to be brought by them.

The significance of the identity of the proper law of Kreindlers' Retainer Agreement

87 I do not however consider that my provisional view that New York was the proper law of the contract of retainer provides any significant assistance to Kreindlers in their application for a stay.

88 Importantly in this regard, it is common ground between the parties that if New York law is applicable, its content in relation to the time for commencement of action will have a fatal effect on the Marshalls' proceedings (see [46] above). At least in this respect, evidence of New York law will accordingly not be required and this Court will not be required to opine on New York law.

89 It is conceivable that Kreindlers might argue that if the Court ultimately finds that New South Wales law was the proper law of the contract of retainer their obligation under Australian law to account for the settlement proceeds was impliedly qualified by the alleged practice of New York attorneys referred to in [39] above. The identification of the contractual obligations of the parties as a matter of Australian law is however a task that an Australian court is well equipped to undertake. The fact that evidence might for the purposes of Kreindlers' argument have to be given of practices obtaining in New York is not a barrier to this Court dealing with the proceedings, nor in my view a significant factor in favour of a stay. In any event, as the primary judge pointed out, the attendance of expert witnesses from New York would not necessarily be required. Use of video link facilities might obviate the need for this to occur.

90 By referring to the possibility of such an argument being put by Kreindlers, I do not intend to give Kreindlers any encouragement to put it. Under Australian law an agent who has received money to which its principal is entitled is, prima facie at least, bound to account for it to the principal ( Bowstead & Reynolds on Agency , 19 th ed (2010) Sweet & Maxwell at Article 52). The agent may have a right to interplead (ibid at Article 70), as Kreindlers' effectively did in this case, but that right would at least be dependent upon the agent showing that it had notice of an arguable claim by a third party to the money to which its principal was prima facie entitled. Determining whether the claim of the third party (here Ms Carruthers), was an arguable one might involve consideration of Pennsylvanian law. The possibility of such consideration being necessary is not a significant factor on the stay application in a circumstance where (as I am assuming at this point in the analysis) Australian law is applicable to the contract under consideration. Particularly is this so where the point is not a complex one, as appears to be the case here. I note in this regard that the court proceedings concerning the possible entitlement of Ms Carruthers were concluded in the Marshalls' favour after Ms Carruthers decided, no doubt on advice, not to challenge the report of an expert in Pennsylvanian law that the Marshalls relied upon. The contents of that report, of Ms Lynn S Evans Esq, an attorney practising in Pennsylvania, do not suggest that the point is either complex or difficult.

91 That foreign law is to be applied in resolving the dispute between the parties is not of itself a reason for granting a stay ( Regie Nationale at [81]), although that matter can undoubtedly be a significant factor to be taken into account ( Voth at 566; Murakami at [150] - [151]). The possibility that in this case an aspect of foreign law might have to be considered is, for the reasons that I have given, not of any particular significance.

Kreindlers' insurance cover

92 Contrary to the conclusion reached by the primary judge (see [41(c)] above), the professional indemnity insurance cover held by Kreindlers relates only to liability of Kreindlers established in proceedings commenced in the "United States of America, its territories or possessions or Canada" (Clause III of the policy). It would accordingly not respond in relation to any liability established in the present New South Wales proceedings.

93 In McGregor v Potts [2005] NSWSC 1098; (2005) 68 NSWLR 109 Brereton J attached some significance to the fact that the defendants in New South Wales proceedings, who were veterinary surgeons practising in England, had only limited professional indemnity insurance that did not cover them in relation to any liability that might be established in those proceedings. His Honour did so however in the context of the plaintiff's claim being one in a forum that his Honour described as "convenient to [the plaintiff] but with very little connection with the dispute, and which the parties would not have contemplated as the forum in which a potential dispute might be litigated" (at [65]).

94 Whilst these comments about the forum might not be able to be made in the present case about New South Wales as a forum with quite the same strength, it can be said, at least on a preliminary basis, that New York, rather than New South Wales, is here the jurisdiction with which the transaction had its closest connection (see [80] above). Prima facie, the view of Brereton J that the existence of limited insurance is of some significance is applicable.

95 However, in the particular circumstances of this case I do not consider that this view assists Kreindlers on their stay application. If my preliminary views as to the connection of the retainer contract with New York and New York law are correct, Kreindlers will succeed in the proceedings on the basis that the claims against them are statute barred because New York law will be applied. The extent of Kreindlers' insurance cover will in those circumstances be irrelevant. If however my preliminary views are incorrect and New South Wales is the place that had the closest connection with the transaction, Kreindlers' limited insurance cover is in my view still not of significance because Kreindlers' decision not to obtain insurance cover that would operate in respect of a transaction of that character (that is, an essentially Australian transaction) could not fairly be called in aid of their resistance to the proceedings in New South Wales continuing.

Orders

96 As Kreindlers have not shown that there are any other factors that, alone or in combination, require a conclusion that New South Wales is a clearly inappropriate forum for determination of the dispute, Kreindlers' motion for a stay was properly dismissed. Their appeal should accordingly be dismissed with costs.

97 SACKVILLE AJA :

98 I agree with the orders proposed by Macfarlan JA and with his Honour's reasons. I add the following observations.

99 In Garsec Pty Ltd v His Majesty The Sultan of Brunei [2008] NSWCA 211; 250 ALR 682, Campbell JA said (at [142]):

"Since [ Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; 171 CLR 538], it has been clear that the provisions concerning limitation of action are regarded as substantive for the purpose of Australian choice of law rules. That has the effect that if action is brought in an Australian court concerning a foreign tort or a contract governed by foreign law at a time when an Australian limitation period would not have expired had an action been brought in relation to a cause of action arising here, but the limitation period under the relevant foreign law has expired, the Australian court will nonetheless apply the foreign limitation provision, and hold that the action brought in Australia is likewise statute barred. If that happens, there is no advantage in bringing the proceedings in Australia rather than in the foreign jurisdiction, because wherever they are brought they will fail."

100 A critical question in the present case is whether the proper law of the Retainer Agreement is the law of New York or of New South Wales (or perhaps South Australia). If New York law is the proper law of the Retainer Agreement, the respondents cannot succeed in their action regardless of whether it is heard in New South Wales or New York. If the proper law of the contract is New South Wales then, as Macfarlan JA has explained (at [88] - [90]) a number of issues would arise for determination in the proceedings.

101 The Supreme Court of New South Wales is as well placed as a New York court to determine the proper law of the Retainer Agreement. The issue is a relatively narrow one and is likely to depend largely on an assessment of documentary evidence or other non-contentious material. Any inconvenience occasioned to the appellants by having to litigate this issue in a New South Wales court would be modest. For these reasons, the Supreme Court of New South Wales is not a clearly inappropriate forum to decide the proper law of the Retainer Agreement.

102 If the Supreme Court of New South Wales decides that New York law is the proper law of the Retainer Agreement, that is the end of the matter. If, however, the Supreme Court decides that the proper law is that of New South Wales, the remaining issues in the proceedings will be determined by reference to New South Wales law.

103 The plurality in Voth pointed out (at 565, per Mason CJ, Deane, Dawson and Gaudron JJ) that the focus must be:

"upon the inappropriateness of the local court and not the appropriateness or comparative appropriateness of the suggested foreign forum."

This passage was recently endorsed by a plurality of the High Court in Puttick v Tenon Ltd [2008] HCA 54; 238 CLR 265, at [27], per French CJ, Gummow, Hayne and Kiefel JJ.

104 It is possible for a New South Wales court to be a clearly inappropriate forum for determination of a dispute notwithstanding that New South Wales law is the proper law for resolving the dispute. However, if New South Wales law is the proper law of the Retainer Agreement, that is a factor tending against deciding that the New South Wales Supreme Court is a clearly inappropriate forum in the present case. This reinforces the conclusion reached by Macfarlan JA that the New South Wales Supreme Court is not a clearly inappropriate forum to resolve the issues that will arise in the present case if New South Wales law is the proper law of the Retainer Agreement.

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Decision last updated: 11 April 2011