FEDERAL COURT OF AUSTRALIA
Directed Electronics OE Pty Ltd v Isuzu Australia Limited [2022] FCA 254
File number(s): VID 547 of 2020 Judgment of: ROFE J Date of judgment: 23 March 2022 Catchwords: PRACTICE AND PROCEDURE – abuse of process – application for dismissal or permanent stay of proceedings – where there are existing proceedings in this Court between the applicant and cross-respondents – where respondent not party to first proceedings – where both sets of proceedings arise from the same factual circumstances – extent of overlap between the proceedings – whether the applicant could or should have claimed against the respondent earlier – whether joinder of cross-respondents inevitable – potential for inconsistent judgments – oppression and prejudice – determination of application for dismissal or permanent stay stayed until liability judgment in earlier proceedings is handed down Legislation: Corporations Act 2001 (Cth)
Federal Court of Australia Act 1976 (Cth)
Federal Court Rules 2011 (Cth)
Cases cited: Aldi Stores Ltd v WSP Group Plc [2008] 1 WLR 748
ASIC v Lindberg (No 2) (2010) 26 VR 355
Johnson v Gore Wood & Co [2002] 2 AC 1
Meneses v Directed Electronics OE Pty Ltd [2019] FCAFC 190
Meneses v Directed Electronics OE Pty Ltd (No 2) [2019] FCAFC 200
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198
Solak v Registrar of Titles (2011) 33 VR 40
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507
Division: General Division Registry: Victoria National Practice Area: Intellectual Property Sub-area: Copyright and Industrial Designs Number of paragraphs: 126 Date of hearing: 14 September 2021 Counsel for the Applicant: M Wise QC with N Hickey Solicitor for the Applicant: K&L Gates Counsel for the Respondent: B Walker SC with M Hoyne and F Shand Solicitor for the Respondent: Becketts Lawyers Counsel for the First, Third, Fourth and Fifth Cross-Respondents: H Austin QC with T Warner Solicitor for the First, Third, Fourth and Fifth Cross-Respondents: Mills Oakley Counsel for the Second Cross-Respondent: M Tehan Solicitor for the Second Cross-Respondent: McCluskys Lawyers ORDERS
VID 547 of 2020 BETWEEN: DIRECTED ELECTRONICS OE PTY LTD V ISUZU AUSTRALIA
Applicant
AND: ISUZU AUSTRALIA LIMITED
Respondent
AND BETWEEN: ISUZU AUSTRALIA LIMITED
Cross-Claimant
AND: HANHWA AUS PTY LTD (and others named in the Schedule)
First Cross-Respondent
ORDER MADE BY:
ROFE J
DATE OF ORDER:
23 MARCH 2022
THE COURT ORDERS THAT:
1.The Respondent’s application for a permanent stay or dismissal of these proceedings be stayed until 28 days after judgment on liability is handed down in VID 1157 of 2017; or until the determination of any appeal from that judgment.
2.Costs be reserved.
Note: Entry of orders is dealt with…
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Details
- Case
- [2022] FCA 254
- Decision Date
CaseChat Overview and Summary
Directed Electronics OE Pty Ltd (Directed) commenced proceedings against Isuzu Australia Limited (Isuzu) in the Federal Court. Directed sought to hold Isuzu liable for various breaches of contract and tortious conduct. Isuzu filed an application to permanently stay or dismiss the proceedings on the basis of abuse of process. The key issue for the Court was whether the proceedings should be stayed as an abuse of process, considering there were existing proceedings between Directed and the Hanhwa Parties. Isuzu argued that the proceedings against it were an abuse of process because Directed could have, and should have, made the claims against it in the earlier proceedings against the Hanhwa Parties. The Court found that it was premature to determine the stay application before the liability judgment was handed down in the earlier proceeding. The overlap between the proceedings and the potential for inconsistent judgments, as well as the question of whether joinder of Isuzu was inevitable, were not able to be fully assessed until after the earlier proceeding had concluded. The Court decided to stay the stay application until 28 days after judgment on liability was handed down in the earlier proceeding, at which point the nature and extent of the abuse of process, if any, would be clearer. The Court also reserved costs.
Orders
Orders of the court
1. The Respondent’s application for a permanent stay or dismissal of these proceedings be stayed until 28 days after judgment on liability is handed down in VID 1157 of 2017; or until the determination of any appeal from that judgment.
2. Costs be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
For the reasons that follow, I consider that it is premature to determine the stay application before the liability judgment is handed down in the 2017 Proceeding. Accordingly, I will make orders staying this application until 28 days after judgment is handed down in the 2017 Proceeding, at which point the nature and extent of the abuse of process, if any, will be clearer. BACKGROUNDParties Directed is an Australian automotive electronics developer and supplier. It specialises in the design, marketing and sale of in-vehicle electronic products, including in-vehicle audio visual products and associated accessories, component parts and navigation software. Directed sells to original equipment manufacturer customers in Australia and New Zealand. Mr Meneses was employed by Directed between May 2009 and November 2017. During that period, Mr Meneses was employed as Directed’s Business Development Manager, OEM Director, and later acted as its General Manager. The Hanhwa Parties include:(a)Hanhwa Aus Pty Ltd (Hanhwa AU), a company incorporated in Australia pursuant to the Corporations Act 2001 (Cth) (Corporations Act) which carried out the business of the South Korea-based Hanwha Parties as the Australian representative during the relevant period;(b)Hanhwa Hightech Co Ltd (Hanhwa Korea), a company incorporated pursuant to the laws of South Korea; (c)Leemen Co Ltd (Leemen Korea), a company incorporated pursuant to the laws of South Korea; and(d)Kichang (Ryan) Lee, who was during the relevant period the sole director of the corporate Hanhwa Parties.The Hanhwa Parties design, develop, manufacture, market and supply a range of electronic vehicle accessories. Directed and the Hanhwa Parties were previously in a relationship whereby the Hanhwa Parties were Directed’s contract manufacturer for the development of products including AV units, navigation software and other accessories. Isuzu is a company registered under the Corporations Act which is engaged in the business of importing, distributing and marketing trucks and associated components. As explained below, at various times Isuzu had relationships for the supply of components with both Directed and the Hanhwa Parties. The 2017 Proceeding includes several other respondents which are briefly noted below.The 2017 Proceeding Directed commenced the 2017 Proceeding on 25 October 2017 against various respondents, including the Hanhwa Parties and Mr Meneses. Directed made a range of allegations, with the final version of the Statement of Claim totalling some 320 odd pages. The claims in the 2017 Proceeding arise from various courses of conduct. At the heart of the 2017 Proceeding is the allegation that, while Mr Meneses was employed by Directed he diverted a substantial part of Directed’s business to Hanhwa AU. This diversion of opportunity is said to be not only from Isuzu, but from other companies including Hino, ICL, Fuso, UD Trucks and Mercedes. The 2017 Proceeding also alleges that the Hanhwa Parties paid Mr Meneses and his company OE Solutions secret commissions since the outset of his tenure at Directed, from July 2009 to November 2017.
Evidence
Evidence Before The Court
Third, although there is some common substratum of fact around certain issues, the focus of the 2020 Proceeding is very much on what Isuzu knew and what it did in light of that knowledge. The subsets of conduct the subject of the 2020 Proceeding are the SuperDAVE Conduct, the LM18i conduct, and the HAU8000 2020 Conduct, and in particular Isuzu’s knowledge of and participation in the conduct. EVIDENCE In support of its application, Izuzu relied on four affidavits of Mark Anthony Farquhar, being those sworn 22 June 2021, 30 July 2021 and 18 August 2021, and a confidential affidavit sworn on 22 June 2021. In response, Directed relied upon four affidavits of Anthony Brooke Watson made 10 August 2021, 13 August 2021, 18 August 2021 and 20 August 2021. Each side filed extensive chronologies and comparative pleadings tables. For reference, I annex Isuzu’s comparison of pleadings in the 2020 Proceeding and the 2017 Proceeding.PRINCIPLES There did not appear to be any disagreement about the applicable principles. In two relatively recent decisions, UBS AG v Tyne (2018) 265 CLR 77 (UBS AG) and Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 (Tomlinson), the High Court identified a number of important points of principle when considering whether to stay a proceeding as an abuse of process:(a)Abuse of process is insusceptible of formulation comprising closed categories. It involves a “broad, merits-based judgment which takes account of the public and private interests” and requires a consideration of all the facts of the case: UBS AG at [7] (Kiefel CJ, Bell and Keane JJ) quoting Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 (Lord Bingham of Cornhill) (Johnson);(b)The court’s power to stay a proceeding as an abuse of process is enlivened where either of two conditions are met:(i)where the use of the court’s procedures occasions unjustifiable oppression to a party; or (ii)where the use serves to bring the administration of justice into disrepute: UBS AG at [1] (Kiefel CJ, Bell and Keane JJ), [62] (Gageler J), [92] (Nettle and Edelman JJ); (c)The principles governing an abuse of process are broader and more flexible than res judicata or issue estoppel: Tomlinson at [25] (French CJ, Bell, Gageler and Keane JJ). Abuse of process is also broader and more flexible than an estoppel of the kind identified in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (Anshun estoppel): UBS AG at [62] and [68] (Gageler J);(d)To establish an abuse of process, is not necessary that the second case should involve the same parties as the first case or their privies: Tomlinson at [17] (French CJ, Bell, Gageler and Keane JJ), UBS AG at [63] (Gageler J);(e)Abuse of process may be invoked to prevent attempts to litigate a claim that should have been litigated in earlier proceedings, or which ought reasonably to have been made or raised in the earlier proceeding, as well as attempts to re-litigate a claim that has been determined: Tomlinson at [26] (French CJ, Bell, Gageler and Keane JJ); UBS AG at [39] and [41] (Kiefel CJ, Bell and Keane JJ);(f)It is not necessary to show an additional element such as collateral attack or dishonesty, although those elements may assist in demonstrating an abuse of process: UBS AG at [67] (Gageler J), quoting Johnson at 31; (g)The test of whether the claim should have been brought in earlier proceedings demonstrates the overlap between abuse of process and Anshun estoppel: Tomlinson at [25]–[26] (French CJ, Bell, Gageler and Keane JJ); UBS AG at [68]–[69] (Gageler J);(h)Not every claim that could have been brought in an earlier proceeding constitutes an abuse of process when raised in a later proceeding. However, where the claim should have been brought in the earlier proceeding it will be an abuse of process even though it may not be precluded by an estoppel: UBS AG at [43] (Kiefel CJ, Bell and Keane JJ), [110]–[111] (Nettle and Edelman JJ), [127] (Gordon J); Tomlinson at [26] (French CJ, Bell, Gageler and Keane JJ);(i)In UBS AG, Gageler J offered an alternative formulation of the test, preferring to state the relevant public interest as the timely and efficient administration of justice, rather than focussing on oppression and disrepute: [72]. Gageler J found that abuse of process was demonstrated because a party was required to respond to a proceeding which it had already gone to the cost and expense of bringing to completion (even though there had been no final determination on the merits), and the public interest in the timely and efficient resolution of claims: [75];(j)The test of what constitutes an abuse of process must be interpreted and applied in light of the overarching purpose of civil litigation — to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible: UBS AG at [6], [32], [34], [38], [45] (Kiefel CJ, Bell and Keane JJ), [107]–[108] (Nettle and Edelman JJ), [139] (Gordon J). This requires the Court to take into account factors wider than the private interests of the parties to the dispute: UBS AG at [38] (Kiefel CJ, Bell and Keane JJ). In UBS AG, the plurality found that “hiving off” the claim of one party with the view of bringing it after the determination of the first proceeding was the antithesis of the discharge of the duty imposed on parties to civil litigation: [55];(k)Relevant factors include significant delay in resolving the dispute, increased costs and the inconvenience of having to deal with the matter again after lengthy litigation: UBS AG at [33] (Kiefel CJ, Bell and Keane JJ);(l)Undue vexation does not arise solely where there has been a judgment on the merits. Vexation also arises from both significant delay and being required to deal again with claims that should have been resolved in the first proceeding: UBS AG at [46], [58] (Kiefel CJ, Bell and Keane JJ);(m)The staged conduct of what is in fact one dispute, with the attendant duplication of court resources, delay, expense and vexation, is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public money: UBS AG at [59] (Keifel CJ, Bell and Keane JJ); and (n)Even though, having regard solely to the interests of the party deciding to split the case, that may be a reasonable approach, a different determination may be reached having regard to the interests of the other party and the timely and efficient administration of justice: UBS v Tyne at [80] (Gageler J), cf [106], [120] (Nettle and Edelman JJ).
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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