Home Ice Cream Pty Ltd v McNabb Technologies LLC [2018] FCA 1033

FEDERAL COURT OF AUSTRALIA

Home Ice Cream Pty Ltd v McNabb Technologies LLC [2018] FCA 1033 File number(s): QUD 293 of 2018

Judge(s): GREENWOOD ACJ

Date of judgment: 6 July 2018

Catchwords: PRIVATE INTERNATIONAL LAW – consideration of an interlocutory application for the grant of an anti-suit or anti-anti-suit injunction in relation to proceedings commenced in the Circuit Court of Cook County Illinois

Legislation: Competition and Consumer Act 2010 (Cth), s 18 of the Act and ss 237, 243 of Schedule 2

Cases cited: Allstate Life Insurance Co and Ors v Australia and New Zealand Banking Group Ltd and Ors (No 16) BC9502829 Carlyle Capital Corporation Ltd (In Liquidation) and Others v Conway and Others [2013] 2 Lloyd's Rep 179 Clarke Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 Commonwealth Bank of Australia v White [1999] 2 VR 681 CSR Ltd v Signa Insurance Australia Ltd (1997) 189 CLR 345 Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320 Herold v Seally (No 2) [2017] FCA 543 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 Sunland Waterfront (BVI) Ltd v Prudentia Investments PL [2013] VSCA 237 TS Production LLC v Drew Pictures Pty Ltd (2008) 172 FCR 433 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538

Date of hearing: 6 July 2018

Date of last submissions: 6 July 2018

Registry: Queensland

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Regulator and Consumer Protection

Category: Catchwords

Number of paragraphs: 32

Counsel for the Applicant: Mr D J Ananian-Cooper

Solicitor for the Applicant: Clifford Gouldson Lawyers

ORDERS QUD 293 of 2018

BETWEEN: HOME ICE CREAM PTY LTD ACN 009 843 690 Applicant

AND: MCNABB TECHNOLOGIES LLC Respondent

JUDGE: GREENWOOD acj DATE OF ORDER: 6 JULY 2018

THE COURT ORDERS THAT:

1. Until the conclusion of the determination of the interlocutory application filed 6 July 2018, the respondent take no steps, whether directly or indirectly, by itself or through its subsidiaries or agents, in the courts of Cook County, Illinois, United States of America or elsewhere: (a) to restrain or seek to restrain the hearing of the claims for interlocutory relief contained in therein, or any other aspect of these proceedings, whether by way of an application for an anti-suit injunction or other form of relief; or (b) to otherwise interfere with the applicant's claims for relief in these proceedings. 2. An order under r 10.44 of the Federal Court Rules 2011 that this order, the interlocutory application filed 6 July 2018, and the material read at the ex parte hearing on 6 July 2018 be served on the respondent in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. 3. An order under r 10.48 that service of the documents referred to in para 2 above be deemed to have been served upon sending a copy of the same to the lawyers for the respondent in the proceeding referred to in Order 1, by email to the address av@cb-law.com, and by facsimile to the number +1 (312) 372-7840. 4. Costs reserved. 5. Liberty to apply. 6. Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these reasons for judgment in support of the orders made today are published from Chambers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GREENWOOD ACJ: 1 This morning I heard, ex parte, an urgent interlocutory application for an anti-suit injunction or, alternatively, an interlocutory anti-anti-suit injunction, to restrain the respondent, McNabb Technologies LLC ("McNabb"), from continuing proceedings commenced by it in the Circuit Civil Court of Cook County, Illinois (the "Illinois proceedings") or from applying for anti-suit relief in those proceedings, pending the determination of the interlocutory application for the anti-suit and anti-anti-suit relief. The interlocutory injunction application was filed today, 6 July 2018. 2 I was unable to provide ex tempore reasons in support of the orders made this morning, due to another urgent matter other parties are seeking to bring before the Court. However, I said that I would provide brief reasons in support of the orders made today and these are those reasons. I also said that I would publish the reasons from Chambers. As to the orders, Order 5 provides for liberty to apply, under the orders. 3 The applicant, Home Ice Cream Pty Ltd ("HIC"), is a company incorporated in Queensland and operates a business undertaking through franchisees for the sale and home delivery of ice cream. It operates in all mainland States and Territories of Australia except Western Australia. 4 McNabb is an entity incorporated in the State of South Dakota in the United States of America. 5 HIC commenced proceedings in the Federal Court of Australia on 27 April 2018. The proceedings are supported by a statement of claim also filed on that date. It is not necessary in these reasons to identify the precise content of the causes of action asserted against McNabb in this jurisdiction. It is enough to say that fundamentally, HIC contends that McNabb, in various ways, engaged in misleading or deceptive conduct, engaging this jurisdiction, in contravention of s 18 of the Competition and Consumer Act 2010 (Cth) (the "Act"). HIC says that it relied upon the pleaded representations described as the "Work Representations", the "Quality Representations" and the "Capacity Representations", in entering into on 27 March 2017, documents described as the "Master Services Agreement" ("MSA") and the "Touch CR Implementation Statement of Work", otherwise known as the "SOW". Having regard to the contended contraventions of s 18 of the Act, the applicant seeks orders pursuant to ss 237 and 243 of Schedule 2 to the Act declaring the MSA void ab initio. It also seeks an order pursuant to those two sections that McNabb pay the applicant an amount of $448,837.59. Alternatively, it seeks an order that McNabb pay the applicant the above sum as money "had and received to its use". It seeks, in the alternative, a declaration that HIC has validly terminated the MSA and a declaration that HIC is not liable to pay McNabb any further amounts on account of a sequence of particular invoices, or any further amounts on account of liabilities that might be said to arise under the contract. It seeks damages of not less than $448,837.59 and interest and costs. 6 HIC has "regularly invoked the jurisdiction" of this Court in the sense contemplated by Mason CJ, Deane, Dawson and Gaudron JJ in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 554 in explaining the judgments of the majority in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197. 7 The procedural history is important. 8 On 27 April 2018, HIC's Australian lawyers sent unsealed copies of the originating application and statement of claim in these proceedings to Mr David Reiss and Mr Ritchie Hale, officers of the respondent. The documents were sent to those individuals by email at 2.36pm that day. Email responses from Mr Reiss suggest that the email from the Australian lawyers was "read on Friday, April 27, 2018 7:20:57". 9 An email response from Mr Hale suggests that the email to him was "read on Friday, April 27, 2018 11:18:54". 10 On 12 May 2018, HIC's Australian lawyers sent sealed copies of the originating application and statement of claim to Mr Reiss attaching a covering letter dated 12 May 2018 giving McNabb notice of the first return date for the proceeding and enclosing sealed copies of Forms 15, 16 and 17 of the Federal Court bearing the file number QUD 293/2018. That email was sent at 4.03pm. 11 An email response from Mr Reiss suggests that the earlier email was "read on Saturday, May 12, 2018 10:58:29". 12 On 16 May 2018 at 12.23am, one of HIC's solicitors, Mr Ben Gouldson, received an email from McNabb's attorneys in the United States, Collins Bargione & Vuckovich (Mr Adrian Vuckovich), attaching a letter dated 14 May 2018 which said this: We represent McNabb Technologies, LLC. Enclosed is a lawsuit which we filed in the Circuit Court of Cook County, Illinois, the agreed venue for all legal disputes. Home Ice Cream should not proceed against McNabb in a legal action in any other court system. To do so would violate the parties' agreement and I believe would render any decision from an improper filing as void. Please contact me with questions. Thank you. 13 In the Illinois proceedings, McNabb says this at paras 6 and 7 of its "Complaint for Declaratory Judgment and Other Relief": 6. Pursuant to the parties' Agreement, any legal dispute between the parties was to be "brought in a court of competent jurisdiction sitting in Cook County, Illinois". See Exhibit 1, Section 6.09. That same contractual provision states that the Agreement will be construed according to the laws of the State of Illinois. See Exhibit 1, Section 6.09. 7. At no time has the Agreement been modified to change the venue provision. At no time has McNabb waived the venue provision. 14 In the Illinois proceeding, McNabb seeks "a declaratory judgment as follows": (1) declaring that [HIC] has accepted all services provided by McNabb because it has not objected in writing to services as deficient or as not being performed; (2) declaring that [HIC] has accepted the invoices sent by McNabb to [HIC] because [HIC] has failed to object to the invoices within the due date for the various invoices; (3) for any and such other relief to which [McNabb] may be entitled. 15 On 16 May 2018, HIC sought and obtained orders for the service of the originating application and statement of claim outside the jurisdiction pursuant to r 10.43 of the Federal Court Rules 2011. Mr Simon Playford, the solicitor with the carriage of the proceeding for HIC, says, in his affidavit sworn 5 July 2018, that on 31 May 2018, process servers in the United States of America confirmed that the respondent was served with the documents pursuant to the orders of 16 May 2018 in accordance with the methods of service required within the State of South Dakota and otherwise complying with the international domestic requirements for personal service within the State of South Dakota thus complying with Article 5 of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague, 15 November 1965) (the "Convention"). On 8 June 2018, Mr Playford received an electronic copy of the "Certificate Attestation" confirming service in accordance with Articles 5 and 6 of the Convention. 16 The matter referred to by Mr Vuckovich in his letter dated 14 May 2018 (at [12] of these reasons) and the subject of the pleading at paras 6 and 7 of the Complaint, is the consideration that cl 6.09 of the MSA provides as follows: 6.09 CHOICE OF LAW. THS 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. Any legal action, including any injunctive or other equitable relief, shall be brought in a court of competent jurisdiction sitting in Cook County, Illinois. 17 Although the MSA contains this clause in the terms set out, the causes of action relied upon by HIC and the remedies it seeks, have a statutory foundation in Commonwealth law. The causes of action and remedies derive from the Act. 18 The provisions of the Act upon which HIC relies both as to the pleaded causes of action and the remedies it seeks, are protective provisions. The object of the Act is to "enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection". The statutory prohibition upon engaging in misleading or deceptive conduct are the expression of that object. 19 The causes of action HIC seeks to litigate and the remedies it seeks, derived from prosecuting those causes of action, are not available to it in the State of Illinois. An exclusive jurisdiction clause in an agreement nominating a foreign jurisdiction does not, as a matter of principle, prevail over statutory protective provisions of a valid law of the Commonwealth of Australia. The only court which is capable of determining the questions which HIC seeks to litigate (other than the High Court of Australia in exercising its appellate jurisdiction) is the Federal Court of Australia or a court invested with the judicial power of the Commonwealth under legislation enacted in reliance upon s 77(iii) of Ch III of the Constitution. The causes of action HIC seeks to prosecute and the relief it seeks, derived from making good those causes of action, cannot be obtained from the Circuit Civil Court of Cook County Illinois. Moreover, a choice of law clause in the terms as quoted at [16] of these reasons cannot operate in such a way as to deprive HIC of the rights it seeks to agitate under the Commonwealth Act and nor can such a clause operate as a mechanism for contracting out of any liability arising on the part of McNabb on the footing (if made good) that McNabb engaged in conduct in contravention of the prohibition contained in s 18 of the Act. As to these matters, see Commonwealth Bank of Australia v White [1999] 2 VR 681 at 704-705; Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320 at [18]; Clarke Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 at 371 (Sheppard J; Jackson J agreeing at 375); and, as to the role of an exclusive jurisdiction clause, Carlyle Capital Corporation Ltd (In Liquidation) and Others v Conway and Others [2013] 2 Lloyd's Rep 179. 20 In these proceedings, HIC also relies upon expert evidence from Mr William J Anaya, an attorney licensed to practice law in the State of Illinois and Indiana to the effect that: "An Illinois Court is not likely to apply or decide any claim under the Australian [Act] likely finding instead that the parties had agreed, in the MSA, to exclude the law of any other jurisdiction. Relief under the Australian [Act] will be decided, if at all, in an Australian court of competent jurisdiction" (para 8.5, Mr Anaya's affidavit of 30 June 2018). 21 Mr Anaya also says that HIC may have a claim against McNabb in accordance with the Illinois Fraud and Deceptive Business Practices Act but the relief provided by the Illinois Statute "is not similar to, or [a] duplicate of, the relief provided under the Australian [Act]". 22 Mr Anaya also says that the choice of law provision in the MSA has the effect of prohibiting the application of the laws of any other jurisdiction including the Australian Act. Mr Anaya says that based on the information available to him and with reference to the statement of claim, there is a risk that a claim might not be available to HIC in Illinois under the Illinois Consumer Fraud and Deceptive Business Practices Act of 2012, 815 ILCS 505 (West 2012) "because many of the alleged Acts [were] concluded in Australia" and thus an Illinois court may determine that an Australian court is better suited to determine a claim under the Australian Act. 23 There is no doubt that the Court has jurisdiction to grant an anti-suit or anti-anti-suit injunction: Allstate Life Insurance Co and Ors v Australia and New Zealand Banking Group Ltd and Ors (No 16) BC9502829 (unreported, 22 September 1995), Lindgren J at 2, and the authorities cited there. 24 The general principles in relation to the grant of an anti-suit injunction and the factors to be taken into account in considering whether a stay of a proceeding ought to occur are the principles set out in CSR Ltd v Signa Insurance Australia Ltd (1997) 189 CLR 345 ("CSR v Signa"). See also a recent discussion of the principles derived from CSR v Signa in Herold v Seally (No 2) [2017] FCA 543 at [33] to [43] ("Herold v Seally (No 2)"). 25 I generally agree with the discussion at those paragraphs in Herold v Seally (No 2). As to the question of the mere co-existence of different proceedings and the notion of that which is vexatious or oppressive, see TS Production LLC v Drew Pictures Pty Ltd (2008) 172 FCR 433, particularly 448 at [56] and [57], Gordon J, Stone J agreeing at [40]; Sunland Waterfront (BVI) Ltd v Prudentia Investments PL [2013] VSCA 237 at [459] to [461], Warren CJ, Osborn JA and Macaulay AJA. 26 I also note that in the context of anti-anti-suit injunctions, HIC relies upon the observations contained in Nygh's Conflict of Laws in Australia (9th Ed, 2014 at [9.17]) to this effect: These are injunctions which order a party not to seek anti-suit relief in another forum in relation to proceedings in the issuing forum. They are typically sought when it is apprehended that a defendant to local proceedings may approach a foreign court to which the plaintiff in the local proceedings is also amenable and ask that court to restrain that party from continuing its local proceedings. Such an order was sought and made ex parte in Qantas Airways Ltd v Rolls Royce plc [2010] FCA 1481 at [4]-[9]. A similar order was upheld by the Guernsey Court of Appeal in Carlyle Capital Corporation Ltd v Conway [2013] 2 Lloyd's Rep 179. Both cases are significant as the anti-anti-suit injunctions were granted notwithstanding that the proceedings had been commenced in other than the forum nominated as having exclusive jurisdiction in the parties' contractual arrangements. In both cases, the moving parties sought to take advantage of what they contended to be mandatory laws of the forum that would not necessarily be applied or given effect to in the event that litigation proceeded in the contractually nominated forum. 27 In these proceedings, HIC says that it has a well-founded fear that McNabb might well seek to obtain an anti-anti-suit injunction in a court in Cook County Illinois. It relies predominantly upon the speed with which McNabb commenced the Illinois proceedings in the Circuit Court of Cook County Illinois to seek to foreclose by negative declaratory judgment the competency of the proceeding in Australia based upon the choice of law clause in the MSA. No mention is made in the Circuit Court of Cook County proceedings of the Australian proceedings. HIC seeks the present interlocutory order pending determination of its interlocutory application of 6 July 2018. It thus seeks the interlocutory order as interim protection in aid of its pending interlocutory application. 28 It is sufficient for the Court to be satisfied that there is an arguable question as to whether relief might be granted on the interlocutory application of 6 July 2018. A substantive examination of the principles is to be left to the hearing of the application itself. 29 I am satisfied that there is otherwise a prima facie case made out on the basis of the affidavits which have been filed and upon which HIC relies. 30 I am also satisfied, having regard to the speed with which McNabb commenced the Illinois proceedings on being sent copies of the unfiled originating application and statement of claim, and the fundamental contention it asserts as to cl 6.09 of the MSA as determinative of HIC's entitlement to commence and maintain proceedings in Australia, that there is a proper basis for a well-founded fear or apprehension that McNabb might well make an application before the Circuit Court of Cook County, Illinois, or before other courts in the State of Illinois, for an anti-suit injunction or anti-anti-suit injunction seeking to restrain HIC from further prosecuting its proceeding in Australia. 31 I also note that the Illinois proceeding is listed before that court for a Case Management Conference on 11 September 2018. It follows that the making of the present order for an anti-anti-suit injunction will not disrupt the proceeding in the State of Illinois. It is due to come before the Court on that date and there is no reason to believe that the interlocutory application before this Court of 6 July 2018 will not be dealt with finally well before that date. 32 Accordingly, I am satisfied that it is proper and appropriate to make the present orders and I do so. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Acting Chief Justice Greenwood.

Associate: Dated: 6 July 2018