Consideration and disposition of the interlocutory application
26 The principles guiding the exercise of the discretion whether or not to grant leave to appeal are well settled. They are generally regarded as being reflected in the Full Court's decision in Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; 33 FCR 397 at 398, where the Court approved the following two-step test:
The first test, which relates to the prospects of the proposed appeal, is "whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court". The second "is whether substantial injustice would result if leave were refused, supposing the decision to be wrong." …
27 For the following reasons, we do not consider that there is sufficient doubt in the primary judge's reasoning in respect of issue one to warrant leave being granted.
28 At the heart of the applicant's case for leave to appeal are its claims that the primary judge was led into error in construing and applying the current provisions in the 2011 FCRs by reference to the approach in Costa Vraca and also that the Full Court's decision there is plainly wrong. Dr Renwick SC (who appeared with Mr Emmett for the applicant) acknowledged that grounds 2 and 3 of the draft notice of appeal only arose if ground 1 was determined in the applicant's favour.
29 BY Winddown did not contest that it would carry the onus of persuading another Full Court that Costa Vraca was plainly wrong and that it would be insufficient merely to demonstrate that reasonable minds might differ on the question of the proper construction of the previous rule in that case (namely O 8 r 2(2) of the Federal Court Rules 1979 (Cth), which is in substantially similar terms to r 10.43(4)(c) of the 2011 FCRs). The following passage from the judgment of Allsop J (as his Honour then was) in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2; 150 FCR 214 at [190] and [191] describes the relevant approach to be taken where a party seeks to have the Full Court overturn an earlier Full Court decision:
190 The proper approach enunciated in Chamberlain and Transurban is that, normally, a previous Full Court decision will be followed unless the later Full Court is convinced or persuaded of the error in the previous decision which would be perpetuated in doing otherwise. If it is a question upon which minds simply differ, both views being open, it would mean that the later Court would not be convinced of the earlier Court's error. Beyond these considerations, it is undesirable to formulate exhaustive criteria as to when a later Full Court should or should not depart from an earlier Full Court decision. It will depend upon the nature of the controversy, the strength of the arguments and the particular circumstances, including the degree to which the later court is persuaded of the error of the earlier court.
191 It is clear from Chamberlain and Transurban that the question is not whether the error is obvious or patent, that is whether the error appears obvious or plain to see on the face of the judgment. Rather, the use of words such as 'plainly' or 'clearly' as qualifying the word 'wrong' (see Transurban at [29]) is merely another way of expressing what both Chamberlain and Transurban convey: the need for being convinced or persuaded of the earlier Full Court's error.
30 A relevant consideration in the particular circumstances here, as pointed out by Dr Bell SC who appeared for Mr Vautin, is the fact that, since Costa Vraca was decided, the Federal Court Rules were revised and reissued in 2011 without any material or substantive amendment to the earlier rule which was considered in Costa Vraca to correct any perceived error in the decision. Accordingly, the following observations of Hill and Marshall JJ (with whom Sackville J agreed) in Shephard v Chiquita Brands South Pacific Limited [2004] FCAFC 76 are engaged:
19 The learned authors of Pearce and Geddes Statutory Interpretation in Australia, Butterworths, Australia, 2001 note at 3.39 that:
"… the courts adopt the general approach that whenever any legislation is re-enacted after being judicially interpreted, the legislature is to be assumed to have approved that interpretation."
20 Thus, when the interpretation is one that accords with the natural meaning of the words used it is clear that the interpretation adopted in the previous decision should be followed. That is the present case.
31 This approach is further reinforced in the particular circumstances here where the Explanatory Statement to the 2011 FCRs expressly stated at page 11 that, with some exceptions which are not relevant, Pt 10 "adopts, simplifies and streamlines the process and procedures which operated under the former Rules and does not substantially alter existing practice". We understand the reference at the end of that passage to the words "existing practice" as synonymous with "the existing position".
32 There is another matter which is relevant to the issue whether or not there should be a grant of leave to appeal. It concerns the fact that the primary judge's decision to dismiss BY Winddown's interlocutory application is properly characterised as a matter of practice and procedure. It is well established that, in such a case, particular caution needs to be exercised by an appellate court in reviewing a decision pertaining to practice and procedure (see, for example, Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc. [1981] HCA 39; 148 CLR 170 at 177 per Gibbs CJ, Aickin, Wilson and Brennan JJ).
33 As noted above, the previous rule which was considered in Costa Vraca was O 8 r 2(2), which, together with the relevant part of O 8 r 2(1) were in the following terms:
2 Leave to serve outside jurisdiction
(1) Service outside the Commonwealth of originating process is not valid under this Order unless:
(a) the service is in accordance with the prior leave of the Court given under subrule (2);
(b) the Court confirms the service under subrule (4); or
…
(2) The Court may, by order, give leave to serve originating process outside the Commonwealth in accordance with Division 2 or 3 of this Order or, subject to subrule (2B), on such terms and conditions as it considers appropriate, if the Court is satisfied that:
(a) the Court has jurisdiction in the proceeding; and
(b) rule 1 applies to the proceeding; and
(c) the party seeking leave has a prima facie case for the relief sought by the party in the proceeding.
…
34 Costa Vraca involved facts which are not materially different from those here. Eight applicants commenced proceedings in the Federal Court seeking damages for the financial loss which they claimed to have suffered as a consequence of their tomato crops having been affected by bacterial canker. They claimed that the source of the bacterial canker was tomato seeds produced in Israel by the second and third respondents (the Israeli seed producers), who supplied the seeds to two other respondents who were exclusive distributors of the seeds in Australia. The Israeli seed producers were served with the originating process pursuant to leave granted under O 8 r 2(2) of the then Federal Court Rules after an ex parte hearing. The Israeli seed producers then applied under the then O 9 r 7 to set aside service of the originating process on the basis that the requirements of O 8 r 2(2) had not been satisfied. Alternatively, the Israeli seed producers sought a stay of the proceedings under O 20 r 2(1)(c) of the then Federal Court Rules.
35 Both these motions were dismissed and the Israeli seed producers sought leave to appeal from those dismissals.
36 In dismissing the Israeli seed producers' motions, the primary judge in the Costa Vraca litigation (in Costa Vraca v Bell Regal Pty Ltd [2003] FCA 65) was satisfied that the applicants had a prima facie case for damages in respect of the claims against the Israeli seed producers under s 52 of the then Trade Practices Act 1974 (Cth) and in negligence. His Honour was also satisfied of the other requirements of O 8 r 2(2). In reaching these findings, the primary judge acknowledged that the prima facie case against the Israeli seed producers was not one "which strictly conforms to the cases pleaded by the applicants".
37 On the application for leave to appeal, the Full Court in Costa Vraca observed at [10] that the primary judge had entirely constructed the prima facie breach of s 52, which had not been pleaded, and that this should not have occurred.
38 The Israeli seed producers also sought to impugn the primary judge's finding that there was a prima facie case against them in negligence.
39 The Full Court said that it was unnecessary to resolve those matters once attention was given to O 8 r 1(g), which provided that there could be service abroad of an originating process where the proceeding is properly brought against the person served in the Commonwealth and the person to be served outside the Commonwealth is properly joined as a party to the proceedings. After discussing a long line of authorities which dealt with similar provisions, the Full Court stated at [17] that the proper approach was to ask whether a local respondent had properly been joined, then determine whether the proposed foreign party would have been a proper party to the proceeding if it had been within the jurisdiction. In answering the second of those questions, the Full Court said that it was relevant to have regard to the rules of Court concerning joinder of parties (namely O 6 rr 2 and 8(1)(b)). In addition, in recognition of the fact that the Israeli seed producers were foreign, the Full Court stated at [19] that it was also necessary to satisfy the additional requirements that the Court has jurisdiction in relation to the proceedings against the local party (O 8 r 2(2)(b)) and that the party seeking leave has a prima facie case for the relief sought by the party in the proceeding (O 8 r 2(2)(c)). In substance, that is the approach which was applied by the primary judge in the proceeding here.
40 In Costa Vraca, the Full Court commented at [21] that it was "quite clear" that the claims against the Israeli seed producers and the claims against the local supplier of the seeds arose from "a common substratum of fact". Their Honours said at [21]:
… Where damage is said to have been suffered as a result of the use of defective goods, the joinder of the manufacturer of the goods to a claim made by a purchaser against the local distributor is a routine application of the principle that all parties involved in a controversy should be before the Court in order that the controversy may be determined having regard to all relevant rights and interests (see s 22 Federal Court of Australia Act 1976 (Cth)). A local party in the position of the [Israeli seed producers] would plainly be properly joined or properly added pursuant to the rules of Court to which we have referred. The fact that the manufacturer (or in this case the supplier to the local distributor) is overseas does not change the nature of the rights and interests which are involved in determining that controversy.
41 Their Honours then concluded at [23]:
This analysis makes clear that the application of O 8 r 2(2)(c) is not to be approached by considering only the Federal claim against the overseas party by reference only to conduct of the overseas party in Australia. The question is whether there is a prima facie case that the foreign party is involved in the "matter" which is the controversy to be determined. The finding that there was a prima facie case that the bacterial canker had been caused by the Daniela seed is sufficient to involve the suppliers of that seed in the same "matter" or "matters" in the sense just discussed as the parties which have been served within the jurisdiction.
42 For the following reasons, we consider that the applicant has failed to demonstrate that there is sufficient doubt in the correctness of the primary judge's construction and application of the relevant provisions of the 2011 FCRs or that the approach in Costa Vraca, which his Honour applied, is plainly wrong.
43 First, the Full Court's construction of the previous rules is consistent with the text of those provisions, when viewed in their context and with particular reference to the overarching principle in s 22 of the FCA Act. The central focus of the Full Court's approach there was to view the construction and application of o 8 r 2(2)(c) with the objective of determining whether there was a prima facie case that the foreign party was involved in the "matter" which gave rise to the controversy which had to be determined in the proceedings. This approach was consistent with s 22 of the FCA Act.
44 The same approach applies to the construction and application of relevant provisions of the 2011 FCRs. Although the previous rule, i.e. o 8 r 2(2)(c), spoke of "a prima facie case for the relief sought by the party in the proceeding", and r 10.43(4)(c) speaks of the party having "a prima facie case for all or any of the relief claimed in the proceeding", this change in terminology does not provide a sufficient basis for not continuing to apply the approach in Costa Vraca. That is primarily because, in both situations, central attention is directed to the question whether the foreign party is involved in the "matter". It is sufficient in that context that a prima facie case for relief is made out in respect of the local party (significantly, the applicant acknowledged below that Mr Vautin had a prima facie case for relief against Eagle Yachts, as the primary judge himself had also found at [13] in his reasons for judgment on the ex parte application (see [10] above)). This approach to the construction of the relevant provisions of the 2011 FCRs gives full effect to s 22 of the FCA Act.
45 Secondly, the construction advanced by the applicant requires that additional words be read into the text of r 10.43(4)(c), namely that the provision be read as though it said at the end "a proceeding against the person to be served". No sufficient basis has been demonstrated to justify rewriting the text of the rule in this way and a Court should be very slow to do so (see R v Young [1999] NSWCCA 166; 46 NSWLR 681 at [11]-[16] per Spigelman CJ and R v PLV [2001] NSWCCA 282; 51 NSWLR 736 at [80]-[89] per Spigelman CJ).
46 Moreover, the following two matters are inconsistent with the applicant's construction:
(a) the definition of "proceeding" in s 4 of the FCA Act is not confined to relief sought in the proceeding against the foreign entity; and
(b) r 10.43(4) uses the definite article "the proceeding" in all three subparagraphs. The single proceeding here is that which is the subject of Mr Vautin's originating application and statement of claim, in which he seeks relief against both Eagle Yachts and BY Winddown. Having regard to the use of the phrase in r 10.43(4)(c) of "a prima facie case for all or any of the relief claimed in the proceeding", it is sufficient for that requirement to be satisfied that there is a prima facie case for any of the relief claimed, including against the local party.
47 Thirdly, the concept of comity, which the applicant contended was relevant to the task of construction, has limited relevance in construing subordinate legislation in the form of rules of Court. As Gummow and Hayne JJ observed in Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; 223 CLR 331 at [90], comity is "either meaningless or misleading" and "a matter for sovereigns not for judges required to decide a case according to the rights of the parties".
48 Fourthly, and in any event, the issue of comity should be approached on the understanding that considerations of comity have evidently been taken into account in determining the items which have been included in the table in r 10.42. Furthermore, to the extent that comity has any further relevance, it can be raised in an application to set aside service under r 13.01 of the 2011 FCRs and in the context of any contention that Australia is a clearly inappropriate forum within the meaning of Voth.
49 Fifthly, the applicant contended that a construction of the relevant rule which had the effect that there was no need to establish a prima facie case against the proposed foreign party (as opposed to a local party) was inconsistent with a passage in the leading text, Nygh's Conflict of Laws in Australia, 9th edition (M Davies, A S Bell, P L G Brereton eds) at [3.88]. The relevant passage is as follows (footnotes omitted):
3.88 Before a foreigner is joined as a party to a local action, the court must take special care. As Speight J said in Pratt v Rural Aviation (1963) Ltd:
There is an obligation upon the Court before an order is made to scrutinise the cause of action as to its bona fides and the chances of success both as to the propriety of suing the local defendant and the degree of involvement of the intended foreign defendant.
This means that the plaintiff must have a bona fide action against both defendant parties. The plaintiff is not entitled to sue someone within the jurisdiction who clearly is not liable for the injury suffered by the plaintiff merely in order to bring an absent party, who may be liable, into the jurisdiction, but if there is an arguable cause of action, the fact that the decision to sue the local defendant is predominantly due to a desire to reach a better funded foreign defendant is no objection. Proceedings are properly brought against the local defendant so long as they are not doomed to failure and the claim is genuine, in the sense that it is brought with the intention that it be prosecuted to finality, whether or not the defendant might be unable to satisfy any ultimate judgment. If the foreign party has a good defence in law to the action, it is not a 'proper party'. The liability of the parties need not be joint; it is enough if they arise out of the same transaction or series of transactions.
(Original emphasis).
50 As Dr Bell SC pointed out, the applicant's reliance upon this passage is misplaced. The passage does not deal with the prima facie case requirement. Rather, it concerns the need for there to be bona fide proceedings on foot and not merely contrived proceedings being used as a "jurisdictional hook". For completeness, and incidentally, we should state that we have some doubts concerning the correctness of the penultimate sentence in that passage, but nothing turns on that here.
51 Sixthly, we do not consider that the proper construction of the relevant rules is affected by the approach which might be taken to the rules concerning service outside the jurisdiction of a cross-claim or a third party notice. The rules concerning those matters arise in a different context.
52 For all these reasons, we are not persuaded that there is an arguable case that the construction adopted by the primary judge, which was strongly informed by the approach in Costa Vraca has sufficient doubt to warrant a grant of leave to appeal. Nor are we persuaded, even on an arguable basis, that Costa Vraca is plainly wrong. On the contrary, we are satisfied that the Full Court's decision is plainly correct and the primary judge did not err in following it in construing and applying the relevant provisions of the current 2011 FCRs.
53 In the light of these findings, the applicant's claims regarding substantial injustice do not arise.
54 In these circumstances, it is unnecessary to consider whether there is sufficient doubt in the primary judge's findings relating to the requirements of "carrying on business", which was the second issue determined by the primary judge. It was common ground that the question whether or not BY Winddown carried on business in Australia only arose at this stage of the proceeding if the Court considered that there was sufficient doubt in the primary judge's application of Costa Vraca to warrant a grant of leave.
55 Finally, for the reasons we have mentioned, the primary judge was bound to apply Voth and only the High Court can determine whether or not that decision remains good law.