Article

Prior History: Commonwealth Bank of Australia v. White, BC200003407 (Supreme Court of Victoria 2000), noted at 2001 Annual Survey 212.

Note:To recover UK£168,000 paid to Lloyd's on LCs issued on behalf of a Name/Applicant, Issuer sued Applicant for reimbursement. Applicant joined Beneficiary (Lloyd's) as a third party seeking damages for alleged false representations, negligence and statutory causes of action. Issuer also brought a claim against Beneficiary in the event that Applicant were to succeed. Applicant alleged that Issuer had paid the LC after expiration and had violated an implied term in the application that "the [Issuer] was not to pay Lloyd's if [Applicant] so directed and that the bank knew of 'clear evidence of fraud or unconscionable conduct by Lloyd's which would release the defendant from his underlying obligations to Lloyd's'."

The court was influenced by what it described as "analogous" proceedings in England styled The Society of Lloyd's v. Sir William Otho Jaffray, the outcome of which White had agreed to be binding. In those proceedings, Lloyd's had sued a number of Names for unpaid premiums. The Names counterclaimed, "raising the issue of knowledge, fraud and unconscionability against Lloyd's that relate to the knowledge issue asserted by White against [Issuer] ... ." In the course of the UK proceedings, Cresswell, J., of the Commercial Court, Queens Bench Division of the High Court of Justice in England enjoined Applicant from "pursuing in the courts of any country other than England any claim against Lloyd's arising out of or relating to his membership of Lloyd's ... ."

In a preliminary decision, Beneficiary's application for a temporary stay pending the outcome of Jaffray was granted. Subsequently, the English court in the Jaffray proceeding later extended its temporary stay to a permanent anti-suit injunction. Thereupon, Name/Applicant filed an amended statement of claim against third parties that the clause of exclusive jurisdiction to English courts be dismissed due to its "unconscionability." Encouraged by the order of a permanent stay by the Jaffray court, Lloyd's applied for a permanent stay, and alternatively, the striking of parts of the amended statement of claim against it.

The Supreme Court of Victoria, Common Law Division, Warren, J., denied a permanent stay of the present proceeding. The court indicated that its decision was influenced by a variety of factors including the grant of leave for an appeal in Jaffray, that the exclusive jurisdiction clause may not be enforceable because the court had not been shown that England had any equivalent to Australia's Trade Practices Act and Fair Trading Act. The court expressed concern that "important Australian public policy considerations … were not taken into account or at least were not given the extent of the weight and significance that would have attached in this jurisdiction."

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