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ANZ v Marks: banking and finance – cross border enforcement and guarantees

Background

In December 2007, Australia and New Zealand Banking Group Limited, through a Singapore branch (“ANZ”) advanced to Telesto Investments Limited (“Telesto”) $AUD15,000,000 under a facility agreement of which a large portion was to be used to fund the construction of a dwelling on the Gold Coast. A mortgage was secured over the land and guarantees signed by Mrs Marks and her husband, Mr Tyne.

On 8 September 2011, ANZ commenced proceedings against Telesto, Marks and Tyne in respect of $AUD11,747,558.58 of the loan as a result of default under the terms of the facility agreement and the guarantees (“First Singapore Proceedings”).

On 19 September 2011, ANZ commenced proceedings against Marks in the Queensland Supreme Court seeking recovery of possession of the land as mortgagee on the basis that Telesto was in default under the facility and Marks in default under the guarantee (“the Land Proceedings”).

Marks was served with the Land Proceedings prior to being served with the First Singapore Proceedings.

Over the course of 2012, Marks sought to challenge the default judgment against her in the First Singapore Proceedings and its registration in Queensland. After having both the First Singapore Judgment and its registration set aside, ANZ obtained a further judgment in the First Singapore Proceedings reducing the judgment debt to $11,102,778.56 and had its application to register the judgment upheld on 22 March 2013.

Marks then made an application to have that subsequent registration set aside. At the core of her rejection of the registration was Mark’s assertion that she had not submitted to the jurisdiction of any court in Singapore.

Reciprocal enforcement of judgments

The Foreign Judgments Act 1991 (Cth) (“the FJA”) provides the regime for the reciprocal enforcement of judgments in foreign countries on the basis of reciprocity of treatment.

Judgment creditors under foreign judgments to which Part 2 of the FJA applies can apply to have the foreign judgments registered in an Australian court in certain circumstances, upon which, the foreign judgment has the same force and effect as if it had been originally given in the Australian court and entered on the date of registration.

An order for registration of foreign judgments under the FJA necessarily provide a period for application for set aside of the registration. Such an application will be granted if the court can be satisfied of any one matter prescribed by section 7(2)(a) of the FJA, namely:

  • that the judgment is not, or has ceased to be, a judgment to which this Part applies; or
  • that the judgment was registered for an amount greater than the amount payable under it at the date of registration; or
  • that the judgment was registered in contravention of this Act; or
  • that the courts of the country of the original court had no jurisdiction in the circumstances of the case; or
  • that the judgment debtor, being the defendant in the proceedings in the original court, did not (whether or not process had been duly served on the judgment debtor in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable the judgment debtor to defend the proceedings and did not appear; or
  • that the judgment was obtained by fraud; or
  • that the judgment has been reversed on appeal or otherwise set aside in the courts of the country of the original court; or
  • that the rights under the judgment are not vested in the person by whom the application for registration was made; or
  • that the judgment has been discharged; or
  • that the judgment has been wholly satisfied; or
  • that the enforcement of the judgment, not being a judgment under which an amount of money is payable in respect of New Zealand tax, would be contrary to public policy
The jurisdiction granted by the guarantee

Clause 22 of the Guarantee provided:

“This Guarantee is governed by, and shall be construed in accordance with, the laws of Singapore. The Guarantor irrevocably submits to the non-exclusive jurisdiction of the courts of Singapore or of any other court as the Bank may elect, waives and objections on the ground of venue or forum non conveniens or any similar grounds and consents to service of process by mail or in any other manner permitted by the relevant law.”

Marks submitted that the High Court at Singapore had no jurisdiction over her, according to the private international law of Queensland, because on the proper construction of clause 22 of the guarantee, she was deemed to have submitted to any jurisdiction ANZ might elect in lieu of Singapore and that ANZ had made an irrevocable election to bring proceedings in Queensland when it served her with the Land Proceedings before serving her with the First Singapore Proceedings.

Challenge to jurisdiction based on subject matter

Marks also argued that ANZ’s issuing of claims in both Singapore and Queensland fostered the possibility of inconsistent curial determinations and was denied by the plain wording of clause 22.

Further, she argued that the First Singapore Proceedings and the Land Proceedings involved the same controversy, being the existence and quantum of the debt claimed by ANZ. Because ANZ had to prove this issue in the Land Proceedings, according to Marks, ANZ was committing an abuse of process by pursuing the claim in Singapore.

It was found that the proper characterisation of the two proceedings was that the first was a debt claim, and whilst the existence of the debt was a fact to be proven in the Land Proceedings, the subject matter of those proceedings was actually the recovery of immovable property provided for by the Land Title Act 1994 (Qld), a subject that, pursuant to section 7(4)(a) of the FTA, the Singapore Court would not have had jurisdiction to determine.

There was not, therefore, any inconsistency or possible abuse of process.

Marks’ own conduct

In defending the application to set aside the Registration, ANZ relied on section 7(3)(a)(i) and (ii) of the FJA in support of the jurisdiction of the High Court of Singapore:

(3)  For the purposes of subparagraph (2)(a)(iv) and subject to subsection (4), the courts of the country of the original court are taken to have had jurisdiction:

(a) in the case of a judgment given in an action in personam:

(i) if the judgment debtor voluntarily submitted to the jurisdiction of the original court; or

(ii) if the judgment debtor was plaintiff in, or counter-claimed in, the proceedings in the original court …

The Court determined that Marks’ contest of ANZ’s claim in the First Singapore Proceedings by her appearance, defence and counter-claim enlivened the application of section 7(3)(a)(i) of the FTA, as did the proper construction of clause 22 of the Guarantee enlivened application of section 7(3)(a)(ii).

The Queensland Supreme Court found, therefore, that the Registration stood. Marks’ application was unsuccessful.

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