BY Winddown Inc v Vautin

Case [2016] FCAFC 168

FEDERAL COURT OF AUSTRALIA

BY Winddown, Inc v Vautin [2016] FCAFC 168

Appeal from:

Application for leave to appeal:

Vautin v BY Winddown, Inc (No 2) [2016] FCA 1235

File number: NSD 1690 of 2016
Judges: BESANKO, MIDDLETON AND GRIFFITHS JJ
Date of judgment: 7 December 2016
Catchwords: PRACTICE AND PROCEDURE – interlocutory application for leave to appeal – no sufficient doubt in correctness of primary judge’s judgment – no substantial injustice – proper construction of Federal Court Rules 2011 (Cth) concerning joinder of parties and service abroad
Held: - application dismissed.
Legislation:

Australian Consumer Law, ss 54(1), 59(1)

Competition and Consumer Act 2010 (Cth), s 5(1)(g)

Federal Court of Australia Act 1976 (Cth), s 22

Federal Court Rules 1979 (Cth), O 6 r 2, O 6 r 8(1)(b), O 8 r 1(g), O 8 r 2(2), O 8 r 2(2)(b), O 8 r 2(2)(c), O 9 r 7, O 20 r 2(1)(c)

Federal Court Rules 2011 (Cth) , Item 20, r 10.42, rr 10.43, 10.43(4)(c), 13.01

Trade Practices Act 1974 (Cth), s 52

Cases cited:

Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc. [1981] HCA 39; 148 CLR 170

Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196

Bray v Hoffmann La Roche [2002] FCA 243; 118 FCR 1

Costa Vraca v Bell Regal Pty Ltd [2003] FCA 65

Costa Vraca Pty Ltd v Bell Regal Pty Ltd [2003] FCAFC 305

Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; 33 FCR 397

Hope v Bathurst City Council [1980] HCA 16; 144 CLR 1

Luckins v Highway Motel (Carnarvon) Pty Ltd [1975] HCA 50; 133 CLR 164

Massey v Heynes & Co (1888) 21 QBD 330

Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; 223 CLR 331

R v PLV [2001] NSWCCA 282; 51 NSWLR 736

R v Young [1999] NSWCCA 166; 46 NSWLR 681

Shephard v Chiquita Brands South Pacific Limited [2004] FCAFC 76

Spiliada Maritime Corp v Cansulex [1987] AC 460

SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2; 150 FCR 214

Vautin v BY Winddown, Inc [2016] FCA 632

Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55 (1990) 171 CLR 538

Date of hearing: 5 December 2016
Registry: New South Wales
Division: General Division
National Practice Area: Admiralty and Maritime
Category: Catchwords
Number of paragraphs: 56
Counsel for the Applicant: Dr J Renwick SC with Mr J Emmett
Solicitor for the Applicant: Norton Rose Fullbright
Counsel for the First Respondent: Dr A Bell SC
Solicitor for the First Respondent: Banki Haddock Fiora
Counsel for the Second Respondent: Mr S Prince
Solicitor for the Second Respondent: JHK Legal

ORDERS

NSD 1690 of 2016
BETWEEN:

BY WINDDOWN, INC.

Applicant
AND:

WILLIAM VAUTIN

First Respondent

EAGLE YACHTS PTY LTD

Second Respondent

JUDGES:

BESANKO, MIDDLETON AND GRIFFITHS JJ

DATE OF ORDER:

5 DECEMBER 2016

THE COURT ORDERS THAT:

1.The application for leave…

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AGLC
BY Winddown Inc v Vautin [2016] FCAFC 168
Case
[2016] FCAFC 168
Decision Date

CaseChat Overview and Summary

The case of BY Winddown Inc v Vautin involved an interlocutory application for leave to appeal against a decision made by the primary judge. The applicant, BY Winddown Inc, sought to challenge the service of the proceedings on it, arguing that the court lacked jurisdiction and that service was improper. The respondent, Mr Vautin, sought to maintain the service and proceed with the substantive proceedings against BY Winddown Inc. The legal issues before the court were whether the primary judge's interpretation of the Federal Court Rules 2011 (Cth) concerning joinder of parties and service abroad was correct, and whether there was a sufficient doubt in the correctness of the primary judge's judgment to warrant an appeal. Additionally, the court needed to determine whether refusing leave to appeal would result in substantial injustice.

The court found that there was no sufficient doubt in the correctness of the primary judge's judgment, as the primary judge had properly applied the relevant provisions of the Federal Court Rules 2011 (Cth) and the Federal Court of Australia Act 1976 (Cth). The court held that the primary judge had correctly determined that Australia was not a clearly inappropriate forum for the proceedings, as required under Voth v Manildra Flour Mills Pty Ltd. Furthermore, the court held that there was no substantial injustice that would result from refusing leave to appeal, as Mr Vautin's claims against BY Winddown Inc were properly before the court. The court dismissed the application for leave to appeal and ordered the applicant to pay the costs of the first and second respondents.

In reaching this decision, the court considered the principles guiding the exercise of the discretion to grant leave to appeal, which were well settled in case law. The court found that the applicant had not demonstrated that there was a sufficient doubt in the correctness of the primary judge's judgment to warrant an appeal. The court also held that it was bound by the decision in Voth and that only the High Court could determine whether that decision remains good law. Consequently, the interlocutory application was dismissed and the applicant ordered to pay the costs of the first and second respondents.

Orders

Orders of the court

1. The application for leave to appeal dated 30 September 2016 be dismissed.

2. The applicant pay the costs of the first and second respondents, as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the following reasons, the application for leave to appeal was dismissed with costs. Background matters and the primary judge’s reasons summarised The background facts which are relevant to this interlocutory application were not in dispute. In October 2011, Mr Vautin purchased a yacht from Eagle Yachts. Mr Vautin resided in Australia and Eagle Yachts was carrying on a business buying and selling yachts in Australia. Eagle Yachts was the exclusive dealer in Australia appointed by BY Winddown (formerly known as Bertram Yacht, Inc but, for convenience, will hereinafter be referred to as BY Winddown). Mr Vautin paid a contract price of USD 3 million in cash and USD 75,000 for shipping costs together with a trade-in Bertram 630 motor yacht valued at AUD 1.2 million. The purchased yacht, named the “Revive”, was delivered in early 2012. By separate contract, Eagle Yachts purchased the yacht from BY Winddown, who was its manufacturer. BY Winddown is incorporated in Delaware, USA, and its principal place of business is Florida. In the substantive proceedings which were commenced by way of an originating application dated 18 April 2016, Mr Vautin seeks damages from BY Winddown for failure to comply with guarantees in ss 54(1) and 59(1) of the Australian Consumer Law. Mr Vautin also seeks declaratory relief and damages from Eagle Yachts, essentially on the basis that there are defects in Revive which mean that it was not of acceptable quality when supplied and that it was manufactured defectively. These allegations are denied by Eagle Yachts. On 11 May 2016, following an ex parte application, the primary judge made orders under r 10.43(4) of the 2011FCRs granting leave to Mr Vautin to serve the originating application on BY Winddown overseas (see Vautin v BY Winddown, Inc [2016] FCA 632). By an interlocutory application filed on 15 August 2016, BY Winddown sought to set aside the service of the proceedings on it. Alternatively, it sought a stay of the proceedings. The primary judge noted at [5] that, for the purposes of hearing and determining BY Winddown’s interlocutory application, a deal of further evidence had become available than was the case when leave was granted to serve outside the jurisdiction and that the parties had raised different arguments to those advanced by Mr Vautin in the earlier ex parte application. Before summarising the primary judge’s reasons for dismissing the interlocutory application, it is desirable to set out the relevant provisions of both the 2011FCRs and the Federal Court of Australia Act 1976 (Cth) (the FCA Act):10.42 When originating application may be served outside AustraliaSubject to rule 10.43, an originating application, or an application under Part 7 of these Rules, may be served on a person in a foreign country in a proceeding that consists of, or includes, any one or more of the kinds of proceeding mentioned in the following table.ItemKind of proceeding in which originating application may be served on a person outside Australia…20Proceeding properly brought against a person who is served, or is to be served, in Australia, if the person to be served has been properly joined as a party…10.43 Application for leave to serve originating application outside Australia(1)Service of an originating application on a person in a foreign country is effective for the purpose of a proceeding only if:(a)the Court has given leave under subrule (2) before the application is served; or…(2)A party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with a convention, the Hague Convention or the law of the foreign country.… (4) For subrule (2), the party must satisfy the Court that:(a) the Court has jurisdiction in the proceeding; and(b) the proceeding is of a kind mentioned in rule 10.42; and(c)the party has a prima facie case for all or any of the relief claimed in the proceeding.Note 1:The law of a foreign country may permit service through the diplomatic channel or service by a private agent—see Division 10.5.Note 2:Rules 10.63 to 10.68 deal with service of local judicial documents in a country, other than Australia, that is a party to the Hague Convention.Note 3:The Court may give permission under subrule (4) on conditions—see rule 1.33.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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. Conclusion For all these reasons, the interlocutory application was dismissed and the applicant ordered to pay the costs of the first and second respondents.

Ratio Decidendi

Legal Principle Established

As noted above, the primary judge was bound by Voth and he applied that decision in concluding that Australia was not a clearly inappropriate forum. Consideration and disposition of the interlocutory application 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.” … 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. 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. 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:190The 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. 191It 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.