Whirlpool (Australia) Pty Ltd v Castel Electronics Pty Ltd

Background 9 As I have said, Whirlpool and Castel are parties to the DSA under which Whirlpool appointed Castel as its non-exclusive authorised distributor of Whirlpool whitegoods products in Australia. 10 The negotiations for the DSA took place in Victoria and Castel's obligations under the DSA were to be performed in Victoria. 11 Both Castel and Whirlpool have their respective registered office addresses in Victoria. 12 Under the DSA the parties have selected the law of Victoria as the law of their contract (see clause 26). There is also an arbitration clause in the DSA (clause 25), but the parties have eschewed any reliance on it. 13 As distributor under the DSA, Castel was obliged to purchase products from Whirlpool and to promote the sale of the products including engaging in advertising and promotional activities in the relevant territory. 14 Castel was also obliged to provide services to consumers and retailers for the products sold in the relevant territory by itself and also products previously sold by Whirlpool. 15 Earlier this year, various disputes arose between the parties. 16 In consequence of such disputes and in an endeavour to resolve them, the parties met on various occasions prior to 18 April 2015. The differences were not resolved. 17 By letter dated 18 April 2015 Castel gave notice to Whirlpool of Whirlpool's alleged repudiation of the DSA and Castel's alleged entitlement to accept that repudiation and terminate. 18 On 29 April 2015 Whirlpool in turn served a notice on Castel advising that if Castel did not pay certain moneys alleged to be due within 30 days, Whirlpool would serve notice of termination of the DSA. 19 During May and June 2015 the parties apparently met again to discuss their various disputes in an endeavour to resolve their differences. 20 Apparently in June 2015 Mr Kwong instructed Castel's lawyers to prepare court documents in case the various disputes could not be resolved by negotiation. However, according to the evidence before me, the completion of this task did not take place until Castel had finalised its accounts which apparently occurred at the end of July 2015. 21 On 29 July 2015, Whirlpool's solicitors (Herbert Smith Freehills), purportedly pursuant to s 4 of the Civil Dispute Resolution Act 2011 (Cth) (the CDR Act), sought to ascertain Castel's legal representatives for the purposes of taking apparently genuine steps to resolve the dispute set out and identified in a proposed statement of claim for proceedings to be instituted in the Federal Court. 22 On 31 July 2015 Herbert Smith Freehills provided Castel's former solicitors with a draft of the statement of claim, which document they were informed on 3 August 2015 had been provided to Castel itself. On 3 August 2015 Herbert Smith Freehills provided the draft statement of claim to Castel directly, and invited representatives of Castel to meet with representatives of Whirlpool to explore the possibility of the various disputes being resolved. 23 In the period 3 August to 10 August 2015, communications took place as to the date and time of a meeting between the parties. On 12 August 2015, representatives of the parties met to discuss their various differences. 24 Unbeknown to Whirlpool at the time, on 5 August 2015 Castel had commenced a proceeding in the Supreme Court of Victoria with an Indorsement of Claim. But Castel did not serve this originating process until the conclusion of the meeting between the parties on 12 August 2015.

Injunction Application - analysis 25 Whirlpool has asserted two bases in support of its injunction application, namely: (a) First, to protect the processes of and steps required by prospective litigants in Federal Court proceedings as set out in the CDR Act; (b) Second, the usual basis under which an anti-suit injunction is sought. 26 It is convenient to deal first with the CDR Act framework. 27 Section 3 provides as follows: The object of this Act is to ensure that, as far as possible, people take genuine steps to resolve disputes before certain civil proceedings are instituted. 28 Section 6 provides as follows: (1) An applicant who institutes civil proceedings in an eligible court must file a genuine steps statement at the time of filing the application. (2) A genuine steps statement filed under subsection (1) must specify: (a) the steps that have been taken to try to resolve the issues in dispute between the applicant and the respondent in the proceedings; or (b) the reasons why no such steps were taken, which may relate to, but are not limited to the following: (i) the urgency of the proceedings; (ii) whether, and the extent to which, the safety or security of any person or property would have been compromised by taking such steps. (3) A genuine steps statement need not be filed under subsection (1) in relation to proceedings that are wholly excluded proceedings. (4) A genuine steps statement must be filed under subsection (1) in relation to proceedings that are in part excluded proceedings, but the statement need not relate to the parts of the proceedings that are excluded proceedings. 29 Section 5 contains a definition of eligible court: eligible court means the following: (a) the Federal Court of Australia; (b) the Federal Circuit Court of Australia. 30 Section 4 provides: (1A) For the purposes of this Act, a person takes genuine steps to resolve a dispute if the steps taken by the person in relation to the dispute constitute a sincere and genuine attempt to resolve the dispute, having regard to the person's circumstances and the nature and circumstances of the dispute. (1) Examples of steps that could be taken by a person as part of taking genuine steps to resolve a dispute with another person, include the following: (a) notifying the other person of the issues that are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute; (b) responding appropriately to any such notification; (c) providing relevant information and documents to the other person to enable the other person to understand the issues involved and how the dispute might be resolved; (d) considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution process; (e) if such a process is agreed to: (i) agreeing on a particular person to facilitate the process; and (ii) attending the process; (f) if such a process is conducted but does not result in resolution of the dispute - considering a different process; (g) attempting to negotiate with the other person, with a view to resolving some or all the issues in dispute, or authorising a representative to do so. (2) Subsection (1) does not limit the steps that may constitute taking genuine steps to resolve a dispute. 31 It is apparent that prior to the institution of proceedings in the Federal Court, parties are expected to take genuine steps to resolve their dispute as contemplated by the relevant provisions of the CDR Act. If they do not, costs sanctions may be imposed after issue. 32 In the present case, what occurred was that on 31 July 2015, Whirlpool gave notice effectively that it was triggering such a process under the CDR Act and that, consequent thereon, it anticipated bringing Federal Court proceedings if the parties could not resolve their differences. 33 Under the umbrella of that process (at least Whirlpool proceeded on that assumption), the parties agreed to meet. Ultimately they met on 12 August 2015. At the conclusion of that meeting, with an unsuccessful resolution, Castel tabled a copy of the originating process that it had issued in the Supreme Court on 5 August 2015. That this proceeding had been issued was unknown to Whirlpool. It then issued the present proceeding on 13 August 2015. 34 As to such conduct on the part of Castel: (a) It did not say after 31 July 2015 that it was intending such a course; (b) It did not say frankly to Whirlpool that it was reserving its rights to bring Supreme Court proceedings; (c) It did not indicate its objection to participating in the process triggered by Whirlpool on 31 July 2015; (d) It did not prior to 12 August 2015 say that it had issued Supreme Court proceedings. 35 In my view there was a lack of transparency on the part of Castel. 36 Moreover, its objective tactical conduct in my view undermined or had the capacity to undermine the processes of the CDR Act, which was a process preliminary to bringing proceedings in this Court. In my view I have inherent jurisdiction and power to protect such processes, which I view as an ancillary and necessary process to the Court's own processes. One means of doing so is to grant the injunction sought by Whirlpool. 37 Castel has sought to make various arguments against the grant of such an injunction. 38 First, it says that Whirlpool was on notice since June 2015 that Castel might bring proceedings. That might be so, but it was not said where or when; moreover its reference to proceedings may have embraced arbitration. 39 Second, it says that steps that the parties took prior to July 2015 in order to try and resolve their disputes constituted "genuine steps" under the CDR Act. That might be so, but that does not deny the points made in [34] above and Castel's lack of transparency after 31 July 2015. 40 Third, it said that in any event, the CDR Act did not restrain it from bringing the Supreme Court proceeding. All true, but it should have been transparent about its behaviour. If it had, the Federal Court proceeding may have been issued first. 41 Fourth, it said that it had issued its proceeding first in the Supreme Court. That is true. But if it had been transparent, the reverse may have been the case. 42 Fifth, I asked Castel what prejudice it would face if compelled to litigate its claims in the Federal Court. None was advanced. As I have said, what is involved is a federal matter. Moreover, Castel has only filed an Indorsement of Claim in the Supreme Court. Generally, nothing of substance was advanced to indicate that the Supreme Court was a better forum or that Castel would suffer any detriment by litigating all of its claims in the Federal Court; the assertion made in [50] of Castel's written submissions is misconceived and shows a lack of appreciation of the scope of the concession that all of the disputes are part of a federal matter. 43 Sixth, Castel asserted that there was evidence before the Court suggesting that it had taken detailed steps prior to 31 July 2015 to commence Supreme Court proceedings beginning in early June 2015. There was some evidence of this. But two points should be made. First, it seems that the steps taken have been exaggerated. After three months, it has only produced the modest product of an Indorsement of Claim. Second, in any event, this point does not address the lack of transparency referred to above. 44 Finally, I should add that it is important for the Court to protect its processes and the processes under the CDR Act. It is quite undesirable for one party to transparently invoke such processes under the CDR Act and to hold off on instituting Federal Court proceedings to allow those processes to occur, thereby allowing another party with a complete lack of transparency to take advantage of the first party's conduct by launching proceedings elsewhere. Of course, there is nothing under the CDR Act preventing the other party from doing so. But if they are to do so, they should be frank about it rather than to allow the other party to proceed on a mistaken assumption. 45 I will grant an injunction against Castel on the first basis. 46 Alternatively, I would grant an injunction on the usual basis for an anti-suit injunction in any event. 47 In relation to the relevant principles, it is appropriate to note what was said in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 391 to 392: The counterpart of a court's power to prevent its processes being abused is its power to protect the integrity of those processes once set in motion. And in some cases, it is that counterpart power of protection that authorises the grant of anti-suit injunctions. Thus, for example, if "an estate is being administered ... or a petition in bankruptcy has been presented ... or winding up proceedings have been commenced ... an injunction [may be] granted to restrain a person from seeking, by foreign proceedings, to obtain the sole benefit of certain foreign assets". Similarly, as Gummow J pointed out in National Mutual Holdings Ply Ltd v Sentry Corporation, a court may grant an injunction to restrain a person from commencing or continuing foreign proceedings if they, the foreign proceedings, interfere with or have a tendency to interfere with proceedings pending in that court. The inherent power to grant anti-suit injunctions is not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes. Quite apart from the inherent power of a court to protect its own processes, a court may, in the exercise of the power deriving from the Chancery Court, make orders in restraint of unconscionable conduct or the unconscientious exercise of legal rights. If the bringing of legal proceedings involves unconscionable conduct or the unconscientious exercise of a legal right, an injunction may be granted by a court in the exercise of its equitable jurisdiction in restraint of those proceedings no matter where they are brought. (citations omitted) 48 In my opinion such an injunction that I propose to grant is necessary to protect the processes under the CDR Act and ultimately the Court's processes. Alternatively, in my view, Castel has taken unconscientious advantage of its lack of transparency. 49 It is also appropriate to record what was said at 394: It may be that some of the older cases concerned with vexation and oppression, in the sense in which those terms are understood in equity, are properly to be understood as grounded in principles of estoppel. Whether or not that is so, the equitable power to grant injunctions in restraint of litigation exists to serve equity and good conscience. It is not a power which involves a determination that proceedings instituted in a foreign court are vexatious or oppressive in the sense that they are an abuse of that court's processes or, even, in the sense that they should be stayed by the foreign court on forum non conveniens grounds. 50 I agree with Castel that the power to grant injunctions in restraint of legal proceedings is to be exercised with caution and I have proceeded accordingly; see Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) (2010) 267 ALR 46 at [20] to [22] per Logan J. 51 I also agree with Castel that something more than just the existence of duplicate or parallel proceedings must be shown; see TS Production LLC v Drew Pictures Pty Ltd (2008) 172 FCR 433 at [56] and [57] per Gordon J. 52 In my opinion, the something more that has been shown is Castel's lack of transparency and the unconscientious advantage that it has sought to gain thereby. In any event, the scenario in TS Production LLC is not the present case. Moreover, the categories of anti-suit injunctions are not closed in any event. 53 In summary, I would grant Whirlpool's application. 54 It also follows from what I have said earlier that I would dismiss Castel's application for a cross-vesting order or a stay of this proceeding. 55 One can agree with Castel's exposition of the principles relevant to making a cross-vesting order (see for example BHP Billiton Ltd v Schultz (2004) 221 CLR 400). But having granted an anti-suit injunction, it makes little sense to cross-vest the proceeding to another court where the other proceeding in the other court cannot continue because of the injunction I have granted. Further, I am not satisfied that s 5(4)(b)(i) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) is established. Finally, in any event, the condition of the "interests of justice" in its two dimensions in s 5(4) has not been met. 56 As for my refusal of the stay sought by Castel, that follows from my decision to grant Whirlpool's application, although I accept that in theory the jurisprudential foundation for granting an anti-suit injunction is not co-extensive with that dealing with whether a proceeding should be stayed.

Conclusion 57 Whirlpool's application will be granted. Castel's application will be dismissed. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.