East Metropolitan Health Service v Sturm
[2022] WASC 316
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: EAST METROPOLITAN HEALTH SERVICE -v- STURM [2022] WASC 316
CORAM: CURTHOYS J
HEARD: 28 JULY 2022
DELIVERED : 15 SEPTEMBER 2022
FILE NO/S: CIV 1344 of 2021
BETWEEN: EAST METROPOLITAN HEALTH SERVICE
Plaintiff
AND
MARIAN JANE STURM
First Defendant
STURM WEST PTY LTD as trustee for THE CALLAHAN FAMILY TRUST
Second Defendant
ISOPOGEN PTY LTD
Third Defendant
ISOPOGEN WA LTD
Fourth Defendant
DAWN MARIE DRISCOLL
Fifth Defendant
Catchwords:
Practice and procedure - Application to stay proceedings - Dispute resolution clause in contract - Mediation - Whether proceedings should be stayed until parties to contract attend mediation - Whether clause is unenforceable for uncertainty - Whether mediation futile - Whether there is a 'dispute'
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | N Murray SC & A Smith |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | ML Bennett |
| Fourth Defendant | : | ML Bennett |
| Fifth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Clayton Utz |
| First Defendant | : | Barry Nilsson Lawyers (WA) |
| Second Defendant | : | Barry Nilsson Lawyers (WA) |
| Third Defendant | : | Bennett |
| Fourth Defendant | : | Bennett |
| Fifth Defendant | : | Moray & Agnew Lawyers |
Cases referred to in decision:
Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 99
Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188
Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, 352
Dance With Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332
Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd (1995) 36 NSWLR 709
Mineral Resources Ltd v Pilbara Minerals Ltd [2016] WASC 338
Racecourse Betting Control Board v Secretary for Air [1944] Ch 114 [126]
VDM Construction Pty Ltd v MCC Mining (Western Australia) Pty Ltd [2011] WASC 269
Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; (2005) 2 Qd R 563
CURTHOYS J:
Introduction
The third defendant, Isopogen Pty Ltd (Isopogen), and the fourth defendant, Isopogen WA Ltd (Isopogen WA), apply to stay these proceedings on the basis of a contractually agreed dispute resolution procedure between Isopogen and the plaintiff, East Metropolitan Health Service (EMHS).
On 11 January 2017, Isopogen and a facility in Royal Perth Hospital (RPH) under the management of EMHS, Cell and Tissue Therapies WA (CTTWA), entered into an agreement titled 'IP Licence Agreement' (Licence Agreement).[1]
[1] Affidavit of Paul Damien John Fry affirmed 11 May 2022, 5, attachment PDF‑1 (Fry Affidavit).
Clause 13.4 of the Licence Agreement provided:[2]
[2] Fry Affidavit, 11 - 12, attachment PDF-1 (8 - 9).
13.4 Dispute Resolution
(a)The parties must attempt to resolve any dispute or difference which arises out of or relating to this Agreement, or the breach, termination, validity or subject matter thereof, or as to any related claim in restitution or in law, in equity or pursuant to any statute ('Dispute') without delay,
(b)Any Dispute may be referred in writing in the first instance to senior representatives of the parties who must endeavour to identify a solution.
(c) If the Dispute is not resolved within 30 days, the parties to the Agreement and this Dispute expressly agree to endeavour to settle the Dispute by mediation administered by the Australian Commercial Disputes Centre ('ACDC') before having recourse to arbitration or litigation.
(d)The mediation shall be conducted in accordance with the ACDC Guidelines for Commercial Mediation which are operating at the time the matter is referred to the ACDC.
(e)The Guidelines set out the procedures to be adopted, the process of selection of the mediator and the costs involved.
(f)The terms of the Guidelines are hereby deemed incorporated into this Agreement.
(g)Nothing in this clause will prevent a party from seeking urgent interlocutory relief through the courts of appropriate jurisdiction.
(h)This clause shall survive termination or expiry of this Agreement.
On 30 April 2021, EMHS filed a writ against the defendants in these proceedings. The writ was served on the defendants on 19 April 2022.
On 12 May 2022, Isopogen and Isopogen WA (the Isopogen parties) issued a chamber summons seeking for the writ to be struck out.
By amended chamber summons filed 23 June 2022 the Isopogen parties applied to stay these proceedings on the basis that EMHS failed to comply with cl 13.4 of the Licence Agreement.
On 14 July 2022, EMHS filed a chamber summons seeking to file an amended writ and indorsement of claim in the form annexed to the summons (Amended Writ). The Isopogen parties indicated that if the stay application was to fall away, the application to amend would not be opposed.[3]
[3] ts 3 (28/7/2022).
These reasons concern whether the court should grant the application for a stay of these proceedings. The parties agreed that I should rely on the Amended Writ for the purpose of this application.[4]
[4] ts 3 (28/7/2022).
For the reasons that follow, the stay application should be dismissed.
Background
EMHS is a statutory authority established under the Health Services Act 2016 (WA) and responsible for the oversight of hospitals and delivery of health services within the east metropolitan area including RPH. RPH has been under the management of EMHS since 1 July 2016.
CTTWA is a clinical service facility within RPH.
Isopogen claims it is the owner of the intellectual property rights to a unique process for manufacturing mesenchymal stromal cells (MSCs) invented by the first defendant, Dr Marian Sturm (the Invention). Dr Sturm is a former employee of EMHS.
Isopogen WA is a public unlisted company incorporated in June 2020 for the purpose of commercialising the Invention.
Pursuant to the Licence Agreement, Isopogen agreed to licence to CCTWA all intellectual property rights in the Invention.
In addition to agreeing to the dispute resolution procedure in cl 13.4:
(1)Isopogen granted CTTWA a three‑year royalty‑free non‑exclusive licence to develop, manufacture, export, use and supply the product of the Invention to certain clinical trials and patients approved under the special cases scheme managed by the Therapeutic Goods Administration: cl 2 and cl 3;[5]
(2)CTTWA acknowledged Isopogen owns the intellectual property rights in the Invention which is identified in the Licence Agreement by reference to 'International Patent Application No. PCT/AU2014/001031': cl 6;[6]
(3)CTTWA promised not to 'attempt to seek any interest in or challenge the validity or ownership of the Intellectual Property Rights … nor assist any other person to do so': cl 6.3;[7]
(4)CTTWA indemnified Isopogen and its directors, officers and employees 'against any claim, action, damage, loss, liability, cost, charge, expense, outgoing or payment' which the indemnified parties suffer, incur or are liable for 'arising out of or claimed in relation to … a breach by CTTWA of a representation or warranty or obligation' of the Licence Agreement or 'any Products not being manufactured in accordance with the requirements' of the Licence Agreement: cl 10.1;[8] and
(5)the parties agreed cl 6, cl 10 and cl 13.4 survived the expiry of the Licence Agreement: cl 12.[9]
[5] Fry Affidavit, 7, attachment PDF-1 (4).
[6] Fry Affidavit, 8, attachment PDF-1 (5).
[7] Fry Affidavit, 8, attachment PDF-1 (5).
[8] Fry Affidavit, 9, attachment PDF-1 (6).
[9] Fry Affidavit, 10, attachment PDF-1 (7).
On 8 January 2020, EMHS and Isopogen entered into an agreement with Isopogen titled 'Deed of Variation Licence Agreement' extending the licence granted under cl 3 of the Licence Agreement for a further 16 months (Deed of Variation).
EMHS' claim against the defendants
EMHS claims against Dr Sturm for breach of her employment agreement and fiduciary duties by wilfully and dishonestly diverting the ownership of and opportunity to exploit the intellectual property rights in the Invention.[10]
[10] Writ of summons filed 30 April 2021 [3] (Writ); Chamber summons filed 14 July 2022, annexure A (Amended Writ [3]).
EMHS alleges that the Invention was developed by Dr Sturm and two other scientists as employees in the course of their employment with CTTWA[11] and that the intellectual property rights in the Invention therefore belonged to EMHS.[12]
[11] Writ [1(f)(i)]; Amended Writ [1(f)(i)].
[12] Writ [2]; Amended Writ [2].
EHMS alleges that from November 2014 to May 2015, in breach of her contractual and fiduciary obligations to CTTWA, Dr Sturm appropriated those rights when she arranged for the lodgement of a patent application in respect of the Invention in her name, nominating herself as the sole inventor,[13] and then assigned the patent application to Isopogen, of which she was the sole shareholder.[14]
[13] Writ [1(f)(iv)]; Amended Writ [1(f)(iv)].
[14] Writ [1(m)(i)A.]; Amended Writ [1(m)(i)A.].
EMHS alleges that Dr Sturm was assisted in this course by the fifth defendant, Dr Marie Driscoll, a business development consultant engaged by EMHS,[15] to assist in commercialising the Invention for EMHS' benefit.
[15] Writ [1(c)]; Amended Writ [1(c)].
EMHS alleges that Dr Driscoll breached her own contractual and fiduciary duties to EMHS and knowingly assisted in Dr Sturm's breaches.[16]
[16] Writ [6]; Amended Writ [6].
After the alleged assignment in May 2015, Dr Sturm is pleaded to have transferred her shares in Isopogen to the second defendant, Sturm West Pty Ltd, the corporate trustee of her family trust, The Callahan Family Trust (Sturm West).[17] EMHS makes derivative claims against Sturm West on that basis.
[17] Writ [1(m)B.]; Amended Writ [1(m)B.].
EMHS claims against Isopogen, seeking among other remedies, a proprietary remedy in respect of the assigned intellectual property rights and the rectification of the Register of Patents pursuant to s 192 of the Patents Act 1990 (Cth) to record EMHS as the owner of the patent.[18] EMHS also claims against Isopogen WA, which among other things, is alleged to have acquired all of the shares in Isopogen that were once owned by Dr Sturm and which it is alleged should have been held on trust for EMHS.[19]
[18] Writ [8]; Amended Writ [8].
[19] Writ [9] - [10]; Amended Writ [9] - [10].
Evidence
The following affidavits were read into evidence:
(1)Affidavit of Paul Damien John Fry affirmed 11 May 2022 filed by the Isopogen parties in support of the stay application; and
(2) Affidavit of Scott Philip Crabb sworn 14 July 2022 filed by EMHS in opposition to the application.
Issues
The Isopogen parties seek to stay these proceedings until cl 13.4 of the Licence Agreement is complied with, that is, until the parties to the Licence Agreement have attended mediation.
Paul Fry, a director of Isopogen, deposes in his affidavit that the directors of Isopogen and EMHS have not attempted to resolve the dispute relating to the ownership of the Invention by mediation administered by the Australian Commercial Disputes Centre (now known as the Australian Disputes Centre) as required by cl 13.4 of the Licence Agreement.
EMHS submitted that relief should be denied for at least the following reasons:
(1)clause 13.4 of the Licence Agreement is unenforceable for uncertainty;
(2)in any event, the dispute contemplated by the writ is not one that falls within cl 13.4;
(3)a mandatory mediation at this stage of proceedings would be futile; and
(4)Isopogen WA is not a party to the Licence Agreement and no attempt has been made to explain the basis upon which it has standing to seek relief in the amended chamber summons.[20]
[20] Plaintiff's submissions filed 14 July 2022 [2] (Plaintiff's Submissions).
I will consider these contentions further below. It is helpful to first set out the principles applicable to an application of this nature.
Legal principles
The court has an inherent jurisdiction to stay proceedings where the parties have by contract agreed that their dispute shall be determined by means other than curial adjudication.[21]
[21] Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; (2005) 2 Qd R 563 [19]; Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188 [36]; Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, 352 (Lord Mustill).
The basis for the power has been said to be a 'wider general principle ... that the court makes people abide by their contracts and ... will restrain a plaintiff from bringing an action which he is doing in breach of his agreement with the defendant that any dispute between them shall be otherwise determined'.[22]
[22] Racecourse Betting Control Board v Secretary for Air [1944] Ch 114 [126] (MacKinnon LJ).
The nature of the discretion was discussed by Chesterman J in Zeke Services Pty Ltd v Traffic Technologies Ltd:[23]
The discretion whether or not to grant the stay is obviously wide. The starting point for a consideration of its exercise is that the parties should be held to their bargain to resolve their dispute in the agreed manner. This factor was emphasised by the House of Lords in Channel Tunnel, by the High Court in Dobbs and Huddart Parker Ltd v The Ship Mill Hill and Her Cargo (1950) 81 CLR 502 (an arbitration case) and by Gillard J in Badgin. However, a stay will not be granted if it would be unjust to deprive the plaintiff of the right to have his claim determined judicially or, to put it slightly differently, if the justice of the case is against staying the proceeding. The party opposing the stay must persuade the court that there is good ground for the exercise of the discretion to allow the action to proceed and so preclude the contractual mode of dispute resolution. The onus is a heavy one. The court should not lightly conclude that the agreed mechanism is inappropriate.
Ordinarily I would think that that onus can be discharged only by showing that, in the particular case, the dispute is not amenable to resolution by the mechanism the parties have chosen. This consideration includes the procedure, if any, for which the parties have contracted, and the qualification of the expert or referee to embark upon the determination of the dispute. The parties are presumed not to have intended that their dispute should be resolved by someone not qualified for the task, or in some inappropriate manner. This presumption, based on legal theory, removes any violence to the agreement which refusing the stay would otherwise have done.
[23] Zeke Services Pty Ltd v Traffic Technologies Ltd [21] - [22].
Accordingly, the onus is on the party opposing the stay to satisfy the court that the dispute in the circumstances of the case is not amenable to resolution by the mechanism provided by contract. The onus is a heavy one to discharge.
Some examples of where a stay may be refused include where:[24]
a. it would result in a multiplicity of proceedings;
b. the dispute is inapt for determination by an expert because it does not involve the application of his special knowledge to his own observations or the area of dispute is outside of the expert’s field of expertise; or
c. the agreed procedures are inadequate for determination of the dispute that has arisen.
[24] Dance With Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332 [54] as cited with approval in Mineral Resources Ltd v Pilbara Minerals Ltd [2016] WASC 338 [56].
In VDM Construction Pty Ltd v MCC Mining (Western Australia) Pty Ltd,[25] Kenneth Martin J characterised a particular clause in an agreement as 'akin to a Scott v Avery conditional prerequisite to curial jurisdiction, applicable to mediation instead of arbitration'. His Honour said that '[w]hen applicable, a need for prior compliance with the mediation clause would mean that a court almost invariably would grant a stay of civil litigation commenced in violation of the requirement to submit a notified dispute to a mediation process'. It should be noted that his Honour, in the circumstances of that case, did not order a stay.[26]
Is cl 13.4 unenforceable?
[25] VDM Construction Pty Ltd v MCC Mining (Western Australia) Pty Ltd [2011] WASC 269 [33].
[26] VDM Construction Pty Ltd v MCC Mining (Western Australia) Pty Ltd [47].
EMHS submits that the court's discretion to grant a stay has not been enlivened because cl 13.4 of the Licence Agreement is unenforceable for uncertainty.
The purported uncertainty is said to arise because the Australian Disputes Centre Guidelines for Commercial Mediation effective 1 March 2019 (ADC Guidelines) which are incorporated into cl 13.4 do not provide sufficient certainty of the process that the parties are required to follow to meet the requirements of the clause.[27]
[27] Plaintiff's Submissions [16].
Clause 4(a) of the ADC Guidelines relevantly provides:[28]
(a) Within fourteen (14) days of appointment, the parties and mediator will sign a Mediation Agreement. A draft Mediation Agreement will be provided to the parties after the matter is registered with ADC. The Mediation Agreement shall be incorporated into and form part of these Guidelines.
[28] Affidavit of Scott Philip Crabb filed 14 July 2022, 25, attachment SPC-7 (4) (Crab Affidavit).
The Isopogen parties submitted that the degree of certainty required by a dispute resolution procedure was discussed by Einstein J in Aiton Australia Pty Ltd v Transfield Pty Ltd:[29]
[T]he focus ought properly to be on the process provided by the dispute resolution procedure. Provided that no stage of the dispute mechanism is itself an 'agreement to agree' and therefore void for uncertainty, there is no reason why, in principle, an agreement to attempt to negotiate a dispute may not itself constitute a stage on the process.
…
This is not to suggest that the process need be overly structured. Certainly, if specificity beyond essential certainty were required, the dispute resolution procedure may be counter-productive as it may begin to look much like litigation itself.
[29] Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 996 [59], [62].
In Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd,[30] Giles J considered the certainty of the following clause of the Australian Commercial Disputes Centre guidelines in force at the time:[31]
16.2(i)If a dispute arises out of or relates to this agreement or the breach, termination or subject matter hereof, the parties agree to first endeavour to settle the dispute by mediation administered by the Australian Commercial Disputes Centre (ACDC).
[30] Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd (1995) 36 NSWLR 709.
[31] Elizabeth Bay (711).
Giles J held that even on the assumption that the guidelines were incorporated by reference into the mediation clauses contained in the agreements between the parties, there were compelling reasons to decline to stay the proceedings. His Honour said:[32]
At first sight the guidelines did not take up ACDC's form of mediation agreement, since although par 6 of the guidelines spoke of terms which 'are' consistent with the guidelines it did not otherwise identify that form and the form was not wholly consistent with the guidelines. In par 6 and elsewhere the guidelines contemplated some kind of agreement, but its terms were left to be settled. If this be so, then by the incorporation of the guidelines the parties had agreed (inter alia) to sign mediation agreements the terms of which were not settled beyond the necessity that they be consistent with the guidelines. The agreements to mediate were open-ended, indeed unworkable because the process to which the parties had committed themselves would come to an early stop when, prior to the mediation, it was asked what the parties had to sign and the question could not be answered.
No doubt it would be possible to prepare an agreement consistent with the guidelines, but there would be an infinite combination of provisions which would not be inconsistent with the guidelines, and for this reason alone the agreement of the parties fell down for lack of certainty in the process which they should follow in their mediation. The deficiency was not overcome by regard to other provisions in the guidelines, because the guidelines themselves called for signature of a mediation agreement as to what was clearly an important step in the process.
…
In my opinion, to adjourn or stay the proceedings so that Elizabeth Bay would be required to sign an unknown agreement as an important step in the process of mediation … would require of Elizabeth Bay conduct of unacceptable uncertainty.
[32] Elizabeth Bay (715 - 716).
The Isopogen parties submitted that the mediation process described in the current ADC Guidelines is sufficiently certain for the following reasons: [33]
(1)the ADC Guidelines are comprehensive, providing for: the notification of parties to the dispute (cl 1); the selection of a mediator (cl 2); the neutrality of the mediator (cl 3); the date, time and place of the mediation (cl 5); the authority of the mediator (cl 6); the representation and attendance of parties (cl 7); separate sessions (cl 8); confidentiality (cl 9); the termination of the mediation (cl 10); enforcement of any settlement agreement (cl 11); and fees (cl 13);[34]
(2)under the ADC guidelines all the parties must do is sign a mediation agreement (cl 4(a)). A draft of the mediation agreement is prepared by the ADC; and
(3)the comprehensive nature of the ADC Guidelines means that all that remains for the parties to agree in the mediation agreement is to enter into a contractual relationship with the ADC and the mediator.
[33] Third and fourth defendants' reply submissions filed 23 June 2022 [31] (Third and Fourth Defendants' Reply Submissions).
[34] Crabb Affidavit, 24 - 29, attachment SPC-2 (3 - 8).
The Isopogen parties further submitted that given the certainty with which the mediation process is described in the ADC Guidelines, it would be overly formalistic to construe the mere requirement to sign a mediation agreement as 'an agreement to agree'. They characterise the signing of the mediation agreement as a step that the parties intended to give effect to their agreement to participate in a mediation administered by the ADC.[35]
[35] Third and Fourth Defendants' Reply Submissions [32].
However, by cl 4(a) of the ADC Guidelines, the parties do not agree to sign a mediation agreement but to be provided with a 'draft Mediation Agreement'. A 'draft' requires further agreement to its terms before it can be an agreement. It indicates that the terms of the agreement are unresolved.
It is difficult to see the reference to a 'draft' agreement as anything other than 'an agreement to agree' and thus uncertain.[36]
[36] See Aiton [59].
To stay the proceedings so that EMHS would be required to sign an unknown agreement as an important step in the process of mediation would require of EMHS conduct of unacceptable uncertainty.[37]
[37] See Elizabeth Bay (716).
I accordingly find cl 4(a) uncertain and consequently cl 13.4 of the Licence Agreement incapable of enforcement for uncertainty. This finding alone is sufficient for the court to refuse the stay.
The Isopogen parties submitted that as a model litigant, the court should assume EMHS will not take an obstructionist approach to conduct required for the fulfilment of a contractually agreed process.[38]
[38] Third and Fourth Defendants' Reply Submissions [33].
A party does not take an obstructionist approach where there is no contractually agreed process, that is, where a clause is uncertain. Being a model litigant does not require that a model litigant forgo a substantive point which is available. What it does require is that it does not take points which are not substantive.
The parties could have agreed the terms on which mediation would proceed in the event of dispute. Such a requirement is reasonable. A mediation agreement could have been annexed to the ADC Guidelines. Regrettably, such steps were not taken.
Would mandatory mediation be futile?
EMHS further contends that the court should not exercise its discretion to stay these proceedings because, having regard to the discussions that have already taken place between the parties, a mediation at this stage of proceedings would be futile.
EMHS submitted that since the writ was filed in April 2021, EMHS and the Isopogen parties have engaged in protracted without prejudice discussions in an attempt to resolve the dispute.[39]
[39] Plaintiff's Submissions [33].
The affidavit of Scott Crabb sets out the negotiations that occurred between EMHS and the Isopogen parties.[40]
[40] Crabb Affidavit [8] - [9].
It will be a rare case where a dispute resolution clause is stayed by reason of futility.
'Without prejudice' correspondence gives little indication as to whether a mediation will be successful.
The whole point of mediation is to bring a neutral third party into the process. Any number of seemingly unresolvable disputes have been resolved at mediation.
Anyone familiar with the late Maurice Spillane's ability to resolve the unresolvable at mediation would never regard any mediation as futile.
I am not persuaded that mediation in this matter would be futile.
Is there a 'Dispute' for the purposes of cl 13.4?
EMHS contends that even if the court were to decide that cl 13.4 was sufficiently certain to be enforceable, it does not apply here because the dispute described in the Amended Writ does not fall within the definition of 'Dispute' in cl 13.4(a).
'Dispute' is defined in cl 13.4(a) as 'any dispute or difference which arises out of or relating to the [Licence Agreement], or the breach, termination, validity or subject matter thereof, or as to any related claim in restitution or in law, in equity or pursuant to any statute'.
EMHS submitted that the Licence Agreement does not form the basis for any of the causes of action or relief stated in the Amended Writ and that the Amended Writ makes no reference to the Licence Agreement.[41]
[41] Plaintiff's Submissions [26].
EMHS further submitted that the Amended Writ describes a complex and wide-ranging dispute against five defendants, only one of which (Isopogen) is a party to the Licence Agreement and against whom the claims in the Amended Writ are derivative only.[42] It would therefore be unlikely, EMHS asserts, that the parties intended for cl 13.4 to cover a dispute involving persons and entities not bound by the dispute resolution clause. To suppose otherwise attributes to EMHS and Isopogen an intention that:
(a)there would be no assurance that all the relevant parties to the dispute would attend the contemplated mediation, which would likely impact upon the utility of it;
(b)there would be a risk that litigation against those persons not bound by the dispute resolution clause would be delayed or interrupted while the mediation took place; and
(c)alternatively, to avoid such delay or interruption, that two separate proceedings might need to be commenced, one against those persons or entities not parties to the dispute resolution clause, and the other commenced later against the counter‑party to the mediation agreement in the event that mediation was unsuccessful. This course would bring risks of inefficiency, wasted costs and inconsistent findings.[43]
[42] Plaintiff's Submissions [27].
[43] Plaintiff's Submissions [28].
The Isopogen parties submitted that by cl 6 of the Licence Agreement, CTTWA (and EMHS by the Deed of Variation) acknowledged Isopogen as the owner of the property rights in the Invention and covenanted not to challenge Isopogen's ownership of the Invention. The Isopogen parties contend that there is plainly a 'Dispute' that enlivens cl 13.4 of the Licence Agreement because EMHS disputes Isopogen's ownership of the Invention.[44]
[44] Third and Fourth Defendants' Reply Submissions [11].
I agree with the Isopogen parties' submissions that there is a dispute between EMHS and Isopogen. Clause 13.4(a) is expressed in wide terms. Clause 13.4 can only cover the parties to the Licence Agreement. The fact that there is no reference to the Licence Agreement in the Amended Writ is neither here nor there. The facts still evidence a 'dispute' between the parties within cl 13.4(a). In any event, it is almost inevitable that at some point EMHS will amend the writ to seek relief in relation to the Licence Agreement by seeking that it be rescinded. It is not immediately apparent to me how an acknowledgement in the Licence Agreement that Isopogen is the owner of the Invention can stand with an allegation that Dr Sturm registered the Invention dishonestly. If Dr Sturm did register Invention dishonestly then it seems inevitable that EMHS would claim ownership of the Invention.
The Isopogen parties submitted that cl 13.4(c) distinguishes between the parties to the Licence Agreement and the parties to the 'Dispute' which implies difference. The parties to the Licence Agreement must have therefore intended that the parties to the 'Dispute' not be co‑extensive with the parties to the Licence Agreement.[45]
[45] Third and Fourth Defendants' Reply Submissions [13].
The other defendants are not parties to the Licence Agreement and cannot be bound by cl 13.4. Even if there is a distinction it carries no contractual force since it cannot bind non-parties.
Is the nature of the dispute amenable to mediation?
EMHS submitted that even if the court is satisfied that cl 13.4 applies to the present dispute, the nature of the dispute described in the Amended Writ means that it is not amenable to the dispute resolution process described in the clause.[46]
[46] Plaintiff's Submissions [31].
But for the fact that there are other parties to the writ, the dispute would be amenable to mediation given it is fundamentally a commercial dispute in which Isopogen holds property EMHS seeks to obtain by these proceedings.
However, the reality is that there are four other defendants.[47]
[47] Amended Writ, 3 - 4.
Even if cl 13.4 is sufficiently certain, the following matters are relevant to the exercise of the court's discretion:
(a)to proceed with a mediation between EMHS and Isopogen risks a fragmentation of proceedings and could result in at least two sets of proceedings;
(b)the other four defendants are not parties to the Licence Agreement and therefore not bound by cl 13.4;
(c)clause 13.4 is inadequate for the determination of the dispute that has arisen in the sense that it does not cover all potential parties; and
(d)mediation is available in the Supreme Court and all parties to the action would be bound by any agreement reached at mediation.
I find that in the particular circumstances of this case that a stay is inappropriate. The Isopogen parties' application is dismissed.
I have deliberately not dealt with EMHS' contention that the application should fail on account of Isopogen WA not having standing to seek relief. The contention is without merit.
Costs should follow the event.
Orders
I accordingly make the following orders:
(1)Application dismissed.
(2)The third and fourth defendants are to pay the plaintiff's costs of the application to be taxed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SB
Associate to the Honourable Justice Curthoys
15 SEPTEMBER 2022
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