Care A2 Plus Pty Ltd v Gensco Laboratories, LLC

Principles concerning leave to appeal 4 It was not in dispute that any appeal from the primary judge's decision, which was a discretionary decision to refuse the application for an anti-suit injunction, would involve the application of the principles in House v The King [1936] HCA 40; 55 CLR 499. 5 The general principles concerning whether to grant leave to appeal were not in issue. The discretion to grant leave is unfettered, and its exercise attracts the principles referred in Décor Corp Pty Ltd v Dart Industries Inc [1991] FCA 844; 33 FCR 397. Those principles involve two questions: first, whether, in all the circumstances, the decision from which leave to appeal is sought is attended with sufficient doubt to warrant its reconsideration by the Full Court; and secondly, whether substantial injustice would result if leave were refused, supposing the decision to be wrong. 6 The parties also accepted that a distinction is to be drawn between orders that deal merely with matters of practice and procedure, and orders that finally determine some question. By their interlocutory application before the primary judge, the Care A2 parties sought a permanent anti-suit injunction. On this application, they submitted that the orders of the primary judge had the practical effect of finally determining the substantive rights of the parties because, although the orders were interlocutory in form, they constituted a final determination of whether Gensco should be enjoined from pursuing the proceeding in Florida. 7 As Gibbs CJ, Aickin, Wilson and Brennan JJ observed in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 177, the circumstances of different cases are infinitely various. In CSR at 397, the majority stated that an interlocutory anti-suit injunction is effectively a final determination as to where the matter or some aspect of it is to be litigated. See also, Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; 244 CLR 427 at [78] (Gummow A-CJ, Hayne, Crennan and Bell JJ), concerning the finality of an application refusing a disqualification application on the ground of apprehended bias. Here, in a practical sense, the particular controversy between the parties concerning whether the commencement and continuation of the Florida proceeding should be enjoined was resolved by the orders dismissing the application for the anti-suit injunction. 8 It has been held by the Full Court that if interlocutory orders have the practical operation of finally determining the rights of the parties, a prima facie case exists for granting leave to appeal: Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; 104 FCR 564 at [43] (French J, Beaumont J and Finkelstein J agreeing). However, unless the circumstances are exceptional, a court should not grant leave if it forms a clear opinion adverse to the success of the proposed appeal: Ex parte Bucknell [1936] HCA 67; 56 CLR 221 at 225 (Latham CJ, Rich, Dixon, Evatt and McTiernan JJ). I also have regard to the fact that this application for leave to appeal raises at least one novel point, and if leave to appeal is refused, then the Court's appellate jurisdiction in relation to the primary judge's orders would be exhausted, and there would likely be no other opportunity to challenge the decision because the orders dismissing the application for the anti-suit injunction are unlikely to affect the final result in the proceeding: cf, Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; 209 CLR 478 at [8]. In a case such as the present, these factors give content to the Court's consideration of whether there are sufficient prospects of success to warrant a grant of leave to appeal.

The proposed grounds of appeal 9 The Care A2 parties seek leave to appeal by reference to the following proposed grounds - 1. ln determining whether the Florida Proceeding are [sic] vexatious or oppressive, the primary judge erred by failing to have regard to the following matters: (a) all of the claims in the Florida Proceeding (civil conspiracy, fraud and negligent misrepresentation) could be brought in the Australian Proceeding; and (b) exemplary damages are available in Australia in respect of such claims as may attract punitive damages in the Florida Proceeding; and (c) punitive damages are in the nature of a punishment and are not to be treated as a juridical advantage or something that may relevantly be gained over and above what may be gained in this Court.

Analysis 10 I have formed the view that there is sufficient merit in these grounds, when combined with the potential injustice to the Care A2 parties, to warrant a grant of leave to appeal. I will not canvas the parties' submissions at length, because the questions in issue will be the subject of full argument on appeal, and any views expressed for the purposes of the leave application have no significance to the determination of the appeal. 11 Briefly, as to 1(a), a key element of the primary judge's rejection of the application was that his Honour held that the foreshadowed claim for punitive damages in the Florida proceeding provided a compelling basis to conclude that complete relief could not be obtained in the Australian proceeding: J [69]. Therefore, the question whether the causes of action in tort against the defendants in the Florida proceeding could be brought within the Australian proceeding was relevant at least to this issue for the purposes of determining whether the Florida proceeding was vexatious or oppressive in terms of the equitable principles for the grant of relief on the ground that there could be nothing gained over the Australian proceeding: see, CSR at 393-394. The question whether the primary judge directed attention to whether all the claims in the Florida proceeding could be brought within the Australian proceeding is a matter worthy of argument. 12 Otherwise, the Care A2 parties made a formal submission that the statement by the majority in CSR at 393 that "[f]oreign proceedings are vexatious and oppressive only if there is nothing which can be gained by them over and above what may be gained in the local proceedings", was too absolute, citing Davies, Bell, Brereton and Douglas, Nygh's Conflict of Laws in Australia (10th ed, 2019) at [9.27]. There, the authors observed the seeming tension between this statement and the majority's subsequent observation at 394 that "[b]ecause the power to grant injunctions in respect of foreign proceedings which are vexatious or oppressive, in the sense described, derives from equity, it is not to be confined to the examples found in the decided cases. Rather, it is a power the limits of which are determined by the dictates of equity and good conscience". The corresponding passage in the 8th edition of Nygh's Conflict of Laws in Australia was cited by the Victorian Court of Appeal in Sunland Group Pty Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237 at [442]. The Care A2 parties should have the opportunity to put these arguments on appeal. 13 As to proposed grounds 1(b) and (c), there is support for the submission of the Care A2 parties that the availability of punitive damages in a foreign jurisdiction may not be a persuasive factor in evaluating whether there is a juridical advantage in the foreign jurisdiction if exemplary damages are available in Australia: see, Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 1) [1996] FCA 13; 64 FCR 1 at 38 (Lindgren J). Whether this stands as any legal principle, or supports the claim that there was a House v The King error affecting the judge's orders is a matter for argument on appeal. 14 The Care A2 parties also submitted that by the application of Australian choice of law rules for tort, the laws in Florida relating the assessment of damages may be applicable, thereby supporting their claim that there was nothing to be gained in the Florida proceeding over and above what may be gained in the Australian proceeding. This too is a question for argument on appeal, noting that in Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; 210 CLR 491 at [76] the question whether Australian choice of law rules pick up the law of the place of a foreign tort in relation to the assessment of damages was reserved for further consideration. 15 In the alternative, the Care A2 parties submitted that to take account of the availability of punitive damages in Florida is contrary to the fact that Australian courts will not enforce foreign penal laws, citing Schnabel v Lui [2002] NSWSC 15 at [161]-[180] (Bergin J), which was a case concerning an application to enforce a foreign judgment that was alleged to be penal in nature. On its face, that case appears to be some distance away from direct support for the submission that was advanced. But it was submitted that for these reasons the identification of whether there was any juridical advantage in the Florida proceeding was confined to legitimate juridical advantage, which excluded the prospect of punitive damages. In relation to this latter submission the Care A2 parties referred to different views expressed in some of the English cases: Smith Kline and French Laboratories v Bloch [1983] 1 WLR 730 at 738 (Lord Denning); Castanho v Brown & Root (UK) Ltd [1981] AC 557 at 577 (Lord Scarman); Société Nationale Industrielle Aérospatiale v Jak [1987] AC 871 at 899 (Lord Goff); Simon Engineering plc v Butte Mining plc [1996] 1 Lloyd's Law Rep 104 at 110 (Rix J). It is unnecessary on this leave application to say much more about this alternative submission other than to say that in view of the English authorities the submission appears to be arguable. 16 Gensco submitted that all the proposed grounds of appeal were contrary to the way the case had been argued before the primary judge. It was submitted that this was not a mere matter of raising new arguments on appeal, but went to the heart of the merits of the proposed grounds of appeal. It was submitted that the Care A2 parties could not claim that there had been House v The King errors by the primary judge in failing to have regard to matters that had not been raised before him, citing McInnes v Rheem Australia Pty Ltd [2021] NSWCA 89 at [38]-[40] (Gleeson JA, Bell P and Payne JA agreeing). In particular, it was submitted that counsel for the Care A2 parties who appeared before the primary judge had accepted that punitive damages were not available in the Australian proceeding. A review of the transcript of the hearing before the primary judge appears to provide some support for this submission. 17 In response, counsel for the Care A2 parties submitted that insofar as the proposed grounds raised questions of fact for consideration, facts that were fundamental and obvious do not need to be drawn to the attention of a court by a party claiming error on appeal, citing Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; 237 CLR 66 at [120] (Gummow A-CJ, Kirby, Hayne and Heydon JJ). Moreover, counsel for the Care A2 parties submitted that the matters the subject of the grounds of appeal raised questions of law. In my view, the question whether the Care A2 parties are precluded from relying on the claimed failure of the primary judge to take account of the three matters the subject of the proposed grounds is one that is arguable, and may be raised by the parties before the Full Court on appeal. 18 This gives rise to the separate question whether the Care A2 parties made a concession before the primary judge that punitive damages were not available in the Australian proceeding. If a concession was made, then questions arise as to whether the Care A2 parties require leave to withdraw the concession, whether leave to withdraw the concession and raise new arguments should be given, or whether the Care A2 parties are bound by the way they conducted their case at first instance: see, Masters v McCubbery [1996] 1 VR 635 at 648-649 (Winneke P), citing Adams v Chas S Watson Pty Ltd [1938] HCA 37; 60 CLR 545 at 547-548, BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] UKPCHCA 1; 180 CLR 266 at 286-287 and Water Board v Moustakas [1988] HCA 12; 180 CLR 491 at 497. For its part, Gensco relied on the considerations discussed by Allsop J in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 at [38] concerning the difficulties and injustices in allowing new arguments to be raised on appeal, and the desire that there be finality in litigation. However, Allsop J expressly preserved what was said by R D Nicholson J in Jones v Minister for Immigration and Ethnic Affairs [1995] FCA 1722; 63 FCR 32 at 47, and the cases there discussed, concerning appellate consideration of a point not run at first instance. And in CSR itself, the majority at 389 considered it appropriate to consider fully the various questions of law that were raised on appeal, whether or not they had been raised at first instance. I have formed the view that the question whether the Care A2 parties should be able to argue the appeal on a basis that differs from the way it was argued at first instance is a matter for the Full Court, and in the particular circumstances of this case, is not a reason to refuse leave to appeal. 19 As to substantial injustice, the Care A2 parties submitted, amongst other things, that the continuation of the Florida proceeding would impose a heavy burden involving time, effort and costs with respect to the same factual circumstances. It was also submitted that there was potentially the added complexity of issue estoppels and the need to avoid double recovery across judicial systems. 20 In response, Gensco submitted that the Care A2 parties had failed to identify any prejudice that they will suffer, and that they had conflated their interests with those of the individual defendants to the Florida proceeding. This submission is unrealistic. To borrow a concept from Chapter III of the Constitution, the two proceedings are part of the same matter: see Tucker v McKee [2022] FCAFC 98; 292 FCR 666 at [87]. The question of potential injustice is to be assessed on the supposition that the order dismissing the application for the anti-suit injunction was wrong. There is a likelihood that at least Care A2 would have a real practical interest in the progression of the Florida proceeding and its outcome, and that it would be vexed if the time and effort of its officer holders were diverted to defending claims involving potential personal liability in a separate proceeding in Florida. For this reason, I accept that there is a risk of substantial injustice to the Care A2 parties if the orders stand, supposing them to be wrong.

Conclusion 21 For the above reasons, leave to appeal will be given. I will hear counsel on orders. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wheelahan.