Case: Delco Australia Pty Ltd v Equipment Enterprises Incorporated trading as Kukla Trenchers [2000] FCA 821
Outcome: cited
The cause of action in breach of fiduciary duty is based on conduct engaged in in the United States. Even though the duty pleaded depends upon conduct in Australia that does not mean that its breach by acts outside Australia give rise to a cause of action 'arising in the Commonwealth' under O 8 r 1(a). As von Doussa J observed in Delco Australia Pty Ltd v Equipment Enterprises Incorporated trading as Kukla Trenchers [2000] FCA 821 , the authorities establish that 'cause of action' within the meaning of O 8 r 1(a) does not refer to all the elements of the cause of action. It refers rather to the act on the part of the defendant which gave the plaintiff his cause for complaint. In Distillers Co (Biochemicals) v Thompson [1971] AC 458 at 467, Lord Pearson said (at 468): It is not the right approach to say that, because there was no complete tort until the damage occurred, therefore the cause of action arose wherever the damage happened to occur. The right approach is, when the tort is complete, to look back over the series of events constituting it and ask the question, where in substance did this cause of action arise? Theory no (iii) is that the cause of action arose within the jurisdiction if the act on the part of the defendant, which gives the plaintiff his cause of complaint has occurred within the jurisdiction. That is the rule laid down in Jackson v Spittal (1870) LR 5CP 542, which is an authoritative case, and the rule is inherently reasonable, as the defendant is called upon to answer for his wrong in the courts of the country where he did the wrong.' Counsel for the applicants contends that the cause of action for breach of fiduciary duty falls within O 8 r 1(ab)(ii). That is to say the proceeding, in so far as it seeks relief for breach of fiduciary duty is one which 'otherwise affects a contract'. In my respectful opinion that contention is unsustainable. While it may rightly be said that the fiduciary obligation, as pleaded, arises out of the asserted contractual relationship, the proceeding based upon breach of fiduciary duty does not of itself affect the contract. In my opinion, therefore, the cause of action for breach of fiduciary duty is not one to which O 8 r 1 applies. 77 As I concluded in the reasons published on 26 April 2006, the fact that the causes of action in misleading or deceptive conduct and breach of contract are within O 8 r 1, would be insufficient to satisfy the requirement that the rule 'applies to the proceeding' within the meaning of O 8 r 2(2)(b) for so long as the claim for breach of fiduciary duty is included. As von Doussa J said in Delco Australia [at 35]: 'In this Court r 1(n) makes express provision for a proceeding where a proceeding does not fall squarely within one of the heads enumerated in the earlier paragraphs. In my opinion r 1(n) makes it clear that an originating process to be served out of the Commonwealth must be confined to causes of action that fall wholly within one or several of the heads in r 1. An originating process that includes a claim that does not fall within one or more of the heads is not an originating process that meets the description of r 1, in that it is not one "in" any of the cases described in the rule. It is not a "proceeding to which rule 1 applies" so as to meet the requirement of r 2(2)(c)(b). A similar conclusion was expressed by Wilcox J in Tycoon Holdings Ltd v Tencor Jetco Inc (1992) 34 FCR 31 at 35.' 78 In the circumstances, because of the inclusion of the claim for breach of fiduciary duty, it is not possible to conclude that 'the proceeding' reflected in the amended application and the amended statement of claim is one to which O 8 r 1 applies. However the minute of further amended statement of claim which is proposed would omit the claim for breach of fiduciary duty and, on that basis, would transform the action into a proceeding to which O 8 r 1 applies. I am therefore prepared to make an order for service on Emerson in the United States of America of an application and statement of claim in terms of the further amended application and further amended statement of claim filed on 24 May 2006. A minute of proposed orders has been filed also to take account of that contingency. I will make orders in terms of the minute. I certify that the preceding seventy eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 26 May 2006 Counsel for the Applicant: Mr D Solomon Solicitor for the Applicant: Solomon Brothers Date of Hearing: 18 May 2006 Date of Judgment: 26 May 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/630.html