Home Ice Cream Pty Ltd v McNabb Technologies LLC

GREENWOOD ACJ: 1 These proceedings are concerned with an application for final relief in the action. The respondent, having been served with the relevant papers, has elected not to appear or otherwise respond to the proceedings notwithstanding having plainly been put on notice of the proceedings. 2 These reasons should be read together with the reasons for judgment given in the earlier application: Home Ice Cream Pty Ltd v McNabb Technologies LLC [2018] FCA 1033. In those reasons, I describe aspects of the background to the proceedings and the basis upon which the Court exercised its jurisdiction to grant an anti-suit injunction pending the determination of the matter. I do not propose to repeat, in these reasons, all of the background matters addressed in those reasons. I simply propose to identify the considerations essential to the present proceedings. In making reference to legislation and cases, I will seek to describe those instruments and authorities in a way which is clear to American lawyers and an American court on the assumption that these reasons may be read by those addressees. 3 The respondent is a software developer incorporated in South Dakota in the United States of America. It operates under the trading name "TouchCR". The essential contention derived from the pleading of the material facts is that TouchCR engaged in misleading or deceptive conduct within the meaning of s 18 of Schedule 2 of legislation of the Commonwealth of Australia, the Competition and Consumer Act 2010 (Cth), that is, legislation of the Federal Parliament (the "Act"). The applicant says that it relied upon the conduct of the respondent in entering into an agreement for the supply to it of services by the respondent. The agreement is a document called the "Master Services Agreement" or "MSA". The services to be provided by the respondent involved the creation of a new platform to be used by the applicant for conducting electronic commerce. The applicant says that there were significant failures by TouchCR to provide the services it had contracted to develop and provide. The applicant says that the respondent committed breaches of the agreement amounting to a repudiation of it. Thus, the applicant seeks, in the proceeding, the remedy of rescission. It seeks restitution. It says that there has been a total failure of consideration. 4 After the commencement of these Federal Court proceedings, the respondent commenced proceedings in the Circuit Civil Court of Cook County, Illinois against the present applicant, Home Ice Cream PL. In that proceeding, TouchCR seeks declarations that Home Ice Cream PL has accepted all services under the MSA and all invoices issued to it by TouchCR. 5 It can immediately be seen from the nature of the relief claimed in the proceeding in the Illinois Court that that relief can be sought by way of cross-claim in this proceeding. The particular difficulty for the applicant in this case, Home Ice Cream PL, is that the evidence demonstrates that Home Ice Cream PL cannot bring, in the Illinois Court, a claim for relief based upon contended contraventions of the Commonwealth Act. Two things follow from that. The first is that Home Ice Cream PL has "regularly engaged" the jurisdiction of this Court so as to ventilate causes of action in respect of which this Court plainly has jurisdiction. Prima facie, Home Ice Cream PL has a right to have its proceeding heard. The second thing is that a cause of action based upon conduct shown to be misleading or deceptive conduct giving rise to a reliance loss in contravention of the Act simply cannot be litigated in the Illinois Court. 6 It also follows that there is nothing to be gained from the duplication of the legal proceedings in two different jurisdictions. The jurisdiction of the Federal Court of Australia has been properly engaged in a relevant matter and the proceedings have been served upon the respondent. The evidence demonstrates that the respondent is plainly aware of and on notice of the proceedings. It has chosen not to engage with the proceedings in this country. 7 As to the state of awareness of the proceeding by the respondent, these things should be noted. The proceeding was commenced by filing an originating application and statement of claim in this Court on 27 April 2018. Those documents were informally served the same day on the Chief Executive Officer and on another senior officer of TouchCR electronically. Responses were received described as "read receipts" by the applicant which confirmed that the electronic communications had been opened by the recipient. To the extent there was any doubt about it, reference was made to the proceeding in the only correspondence received by Home Ice Cream PL from TouchCR's lawyers on 14 May 2018. Subsequently, steps were taken to serve the proceeding, in accordance with the Court's Order of 16 May 2018, in accordance with the provisions and requirements of the Hague Convention, on 31 May 2018. 8 A defence ought to have been filed in the proceeding no later than 28 June 2018. 9 Thus, there is no doubt that TouchCR is aware of the proceeding. 10 I am willing to infer that quite apart from a failure to file a defence in the proceeding and a failure to appear by filing a notice of appearance and taking other steps to engage with the matter in this jurisdiction, the respondent has elected to, in effect, abandon this proceeding. No response has been received by Home Ice Cream PL's solicitors to any of the correspondence or email communications other than the letter sent on 14 May 2018 as already mentioned. 11 As a result, the applicant seeks final judgment in the proceeding. 12 Order 5.23(2) of the Federal Court Rules 2011 provides that if a respondent is in default, an application may be made to the Court for one of a number of orders including the following: … (b) if the claim against the respondent is for a debt or liquidated damages - an order giving judgment against the respondent for: (i) the debt or liquidated damages; and (ii) if appropriate, interest and costs in a sum fixed by the Court or to be taxed; or (c) if the proceeding was started by an originating application supported by a statement of claim - an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled; or (d) an order giving judgment against the respondent for damages to be assessed, or any other order; … 13 Order 5.22 provides that a party is in default if the party fails to do an act required to be done, or to do an act in the time required, by the Federal Court Rules, or the party fails to attend a hearing in the proceeding. In this case, the respondent has failed to file a notice of appearance and a defence within the time limited by the Rules. 14 One aspect of the relief claimed by the applicant is an injunction, otherwise described as an anti-suit injunction, restraining the respondent from continuing to prosecute the Illinois proceeding. In the earlier judgment, I briefly explained the principles governing the grant of an anti-suit order of this kind. The jurisdiction is enlivened as part of the Court's jurisdiction to protect its own processes in accordance with the principles discussed by the High Court of Australia in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 392 (Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ). The relief may also go in aid of an applicant's legal rights. 15 In the circumstances of this case, the proceeding in the Illinois Court was commenced promptly after the respondent was served with the Federal Court proceedings. The difficulty does not lie in the duplication of proceedings per se. The particular difficulty is that the respondent has commenced the proceedings in the Illinois Court to engage that Court's jurisdiction in relation to the particular relief sought in circumstances where, first, that proceeding was commenced after these proceedings were brought to the notice of the respondent and, second, commenced in circumstances, and in a forum where, the statutory causes of action derived from the Commonwealth legislation cannot be litigated in that Court. 16 The applicant in this Court correctly says that the Australian Court must be satisfied that it is not a clearly inappropriate forum and the question of whether Australia is a clearly inappropriate forum or not is generally determined having regard to the nature of the connection between the forum relevantly engaged by the applicant and the subject matter of the proceeding itself; whether the governing law of the proceeding will be the law of the forum or of another forum; and, taking into account the important consideration that a plaintiff or applicant who has "regularly invoked" the jurisdiction has at least a prima facie right to insist upon its exercise. These matters reflect principles derived from observations made by the six Judges of the High Court of Australia (as earlier mentioned) in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 393-4; Mason CJ, Deane, Dawson and Gaudron JJ of the High Court of Australia in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 554 and also 556-8; and Deane J of the High Court in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 245. 17 As I mentioned in the earlier reasons, the essential character of the provision of the legislation of the Commonwealth of Australia upon which the applicant relies in these proceedings is "protective". The legislation seeks to confer the benefit of enabling a party to seek a remedy under the Act for a contravention of the Act designed to address the consequences for consumers of conduct which is found to be misleading or deceptive conduct. Those statutory entitlements to a remedy in respect of conduct which contravenes the Federal Act cannot be contracted away. 18 I have taken into account further cl 6.09 of the MSA previously quoted at [16] of the earlier reasons. That clause provides that the agreement shall be construed and the legal relations between the parties determined in accordance with the laws of the State of Illinois, USA, without giving effect to any choice of law rules which may direct the application of the laws of any other jurisdiction. It further provides that any legal action shall be brought in a court of competent jurisdiction sitting in Cook County, Illinois. 19 Australian jurisprudence makes it plain that a clause of that kind is no answer to an application for an anti-suit injunction where the cause of action relied upon by, in this case, Home Ice Cream PL, cannot be litigated in the foreign court, that is, in the Illinois Court. A proceeding in an Australian court will not be stayed in favour of a foreign jurisdiction (in reliance upon an exclusive jurisdiction agreement of the kind seen in cl 6.09) where there is a legislative protective provision in the local jurisdiction which would be defeated or avoided if a stay were to be granted of the proceeding. To do so would deprive the applicant of rights and entitlements to remedial orders should the applicant make good its claim of misleading or deceptive conduct on the part of the respondent: Commonwealth Bank of Australia v White [1999] 2 VR 681 at 704-5, Byrne J; the observations and authorities cited in the earlier reasons in this proceeding [2018] FCA 1029 at [19]. 20 One possibility is that the foreign proceeding should continue and so too should the Australian proceeding. The difficulty with that course is that there can be no doubt that the foreign proceeding will undermine the Australian proceeding because it will seek to address contentions and consider declarations which will not take into account any aspect of the essential contentions of Home Ice Cream PL in the Federal Court proceedings. 21 In that sense, the proceedings in the Illinois Court are vexatious and oppressive because they will undermine the substantive adjudication of the rights and remedies asserted in the Australian proceeding. 22 I am satisfied that there is no doubt that Australia is not a clearly inappropriate forum for the determination of the claims in issue. 23 As to the content of the claims, the material establishes that representations as pleaded were made "into Australia" orally as well as by email. The affidavit evidence demonstrates that to be so. Thus, the obligations arising under the Australian legislation are engaged and particularly the statutory prohibition upon engaging in conduct which is misleading or deceptive conduct. The authorities which make it plain that representations made into Australia orally and by email engage obligations arising under the statute are: Bray v Hoffman-LA Roche Ltd (2002) 118 FCR 1 at [146]-[147], Federal Court of Australia, Merkel J; Australian Competition and Consumer Commission v Yellow Page Marketing BV [2010] FCA 1218 at [22], Federal Court of Australia, Gordon J; Australian Competition and Consumer Commission v Valve Corp (No 3) (2016) 337 ALR 647 at [170]-[188], Federal Court of Australia, Edelman J. Apart from these methods of communication, the Australian Act is also engaged once material is put on probative of representations having been made using the mechanism of telegraphic or telephonic services into Australia: see s 6(3) of the Act and Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2012) 266 FLR 243 at [401], Supreme Court of Victoria, Croft J. 24 It should be recognised, of course, that once the Court's jurisdiction under the Commonwealth Act is engaged, the Australian forum is the only forum in which the claims under the Australian Act can be heard and determined. 25 For the reasons already mentioned, the exclusive jurisdiction clause cannot prevent a party from litigating in the Federal Court of Australia a cause of action reliant upon protective obligations contained in the Commonwealth Act. The relief sought by Home Ice Cream PL in reliance upon the contended contraventions of the Commonwealth Act cannot be sought or obtained in the Illinois Court. These matters are made plain from the affidavit of Mr Anaya as discussed in the earlier reasons: see in particular paras 8.5, 8.6, 23 to 26, 30 and 45 of the Anaya affidavit. 26 It should be noted that in the Illinois Court proceeding, declaratory relief is sought to the effect that cls 1.03 and 2.02 of the MSA provide for an automatic acceptance of work (and the relevant invoices) if a dispute is not raised within the nominated time. Thus, it is correct to say that a question of construction arises which is perfectly capable of being determined in a cross-claim in the present proceeding. It is correct to say that the same matrix of fact will give rise to the claims and cross-claims. TouchCR could elect to bring a cross-claim for a declaration to the effect that Home Ice Cream PL is taken to have accepted the work and invoices of TouchCR. Moreover, there is an inter-relationship between whether TouchCR is entitled to a declaration in the terms sought or whether TouchCR has engaged in conduct which might amount to a repudiation of the MSA. In fact, the resolution of those two competing claims needs to occur in the one proceeding because should Home Ice Cream PL be successful in the proceeding, one remedy that might be pressed is the rescission of the MSA ab initio whereas TouchCR seeks declaratory relief which is affirmatory of the MSA and is entirely reliant upon its subsistence. 27 Accordingly, I am satisfied that the foreign proceeding is vexatious or oppressive in the technical sense in which those terms are used. 28 Accordingly, I am satisfied that the applicant is entitled to a final anti-suit injunction. 29 As to other aspects of the judgment sought by the applicant, these things should be noted. 30 Rule 5.23(2)(b) contemplates a judgment given on a liquidated claim and rule 5.23(2)(c) contemplates an order giving judgment for the relief claimed in the statement of claim to which the Court is satisfied the applicant is entitled. This includes relief which requires an exercise of discretion by the Court: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665 at [52], Federal Court of Australia, Kiefel J. The question of whether an applicant is entitled to judgment is to be determined by whether the applicant has pleaded, by its statement of claim, facts which, if made good, would give rise to the pleaded cause of action and enliven an entitlement to the claimed relief in respect of each pleaded cause of action: Macquarie Bank Ltd v Seagle (2005) 146 FCR 400 at [24], Federal Court of Australia, Conti J. Where no defence has been filed and none of the contentions on the facts have been put in issue, the allegations of fact are taken to be admitted: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2007) 161 FCR 513 at [42], Federal Court of Australia, Moore, Dowsett and Greenwood JJ. Where an order granting relief involves the exercise of a discretion, affidavit material can be put on to identify the facts relevant to the exercise of the discretion. 31 For the reasons indicated earlier, I am satisfied that TouchCR is on notice of the proceedings both directly and by its lawyers in the United States. There has been at least one response by letter sent by email. There have been no other responses to the many communications. I am satisfied that TouchCR has elected to turn its back on these proceedings and not take any part in them. It has chosen to take that course. It has done so notwithstanding notice of the application for an anti-suit injunction and the service of both the transcript and the earlier judgment. The solicitors for the applicant served material on TouchCR's lawyers by email on 6 July 2018 and by facsimile on 9 July 2018. The transcript of the hearing of 6 July 2018 was served on TouchCR's lawyers by email on 10 July 2018 and by facsimile on 13 July 2018. The return of the "read receipt" for the service of the transcript occurred on 10 July 2018. 32 Accordingly, I am satisfied that it is appropriate to exercise the discretion to enter judgment should the other elements of an entitlement to a remedy be made out. TouchCR has been on notice of the proceedings for two months. 33 As to the substance of the claims, the applicant says that it relies on its liquidated claim for damages under the Commonwealth Act as well as its claim for relief in setting aside the MSA. The applicant asserts that it is entitled to relief, as claimed in the pleading, pursuant to ss 236 and 243 of Schedule 2 of the Commonwealth Act for an order that the whole of the agreement in writing dated 27 March 2017 made between Home Ice Cream PL and TouchCR is void ab initio and that the respondent pay to Home Ice Cream PL an amount in the sum of $448,837.59 plus interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of $22,281.23. The interest is calculated at 5.5% per annum or a daily rate of 0.0151% to the date of judgment, 23 July 2018. 34 It is not necessary to recite in these reasons all of the elements of the factual pleading. I have had regard to all of the affidavits relied upon by the applicant in support of the application of which there are many. I am satisfied that the pleaded claims are made out and that the discretion ought to be exercised in entering judgment as sought. For the sake of completeness, I simply list the affidavit material relied upon by the applicant and it is this: (1) Affidavit of Benjamin James Gouldson filed 16 May 2018; (2) Affidavit of Beth Joy French filed 16 May 2018; (3) Affidavit of William J Anaya filed 6 July 2018; (4) Affidavit of Simon Bailey Playford filed 6 July 2018; (5) Affidavit of Simon Bailey Playford filed 6 July 2018; (6) Affidavit of Simon Bailey Playford filed 6 July 2018; (7) Affidavit of Simon Bailey Playford filed 13 July 2018; (8) Affidavit of Simon Bailey Playford filed 13 July 2018; (9) Affidavit of Simon Bailey Playford filed 20 July 2018; (10) Affidavit of Beth Joy French filed 21 July 2018; (11) Affidavit of Simon Bailey Playford filed 23 July 2018. 35 Accordingly, I make the following orders: (1) The applicant have leave to amend the originating application and statement of claim in the form marked Exhibit A filed today. (2) Service of the interlocutory application filed 16 July 2018 be deemed to have been effected, nunc pro tunc, by the sending of the application to av@cb-law.com on 20 July 2018. (3) Pursuant to r 5.23 of the Federal Court Rules 2011, judgment be given for the applicant. (4) The respondent be permanently restrained from prosecuting or continuing with the proceedings in the proceeding bearing the number 2018-CH-06186 in the Circuit Civil Court of Cook County, Illinois, United States of America, or from commencing proceedings seeking relief arising out of substantially the same facts or circumstances the subject of this proceeding, in any other court. (5) Pursuant to ss 236 and 243 of Schedule 2 of the Competition and Consumer Act 2010 (Cth), the whole of the agreement in writing dated 27 March 2017 made between the applicant and the respondent is void ab initio. (6) The respondent pay to the applicant the sum of $448,837.59, plus interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the sum of $22,281.23. (7) Pursuant to r 10.44 of the Federal Court Rules 2011, a copy of this Order be served on the respondent in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. (8) Pursuant to r 10.48 of the Federal Court Rules 2011, service of the documents referred to in para 7 above be deemed to have been served upon the sending of a copy to the lawyers for the respondent in the proceeding referred to in Order 4, by email to the address av@cb-law.com, and by fax to the number +1 (312) 372-7840. (9) The respondent pay the applicant's costs of and incidental to the proceeding. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Acting Chief Justice Greenwood.