Eastland Technology Australia Ltd v Ritract Ltd - [2005] WASC 213

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EASTLAND TECHNOLOGY AUSTRALIA LTD -v- RITRACT LTD [2005] WASC 213

CORAM: MASTER NEWNES

HEARD: 16 SEPTEMBER 2005

DELIVERED : 23 SEPTEMBER 2005

FILE NO/S: CIV 2203 of 2004

BETWEEN: EASTLAND TECHNOLOGY AUSTRALIA LTD (ACN 059 479 391)
Plaintiff
AND
RITRACT LTD (ACN 106 353 253)
Defendant

Catchwords:

Practice and procedure - Action an abuse of process - Attempt to assert rights found in earlier proceedings no longer to exist - Pending application for special leave to appeal against decision in earlier proceedings - Whether this action should be stayed pending outcome of special leave application or dismissed - Turns on own facts

Legislation:

Nil

Result:

Action stayed

Category: B

Representation:

Counsel:

Plaintiff: Mr H J Paiker
Defendant: Mr S J Lemonis

Solicitors:

Plaintiff: Paiker & Overmeire
Defendant: Fairweather & Lemonis

Case(s) referred to in judgment(s):

Arthur J S Hall & Co (A Firm) v Simons [2002] 1 AC 615
Culture International Pty Ltd v Scoles (1991) 32 FCR 275
Djaigween v Douglas (1994) 48 FCR 535
Eastland Technology Australia Limited v Ritract Limited [2005] WASC 125
Hunter v Chief Constable of West Midlands Police [1982] AC 529
McKechnie v Campbell (1996) 17 WAR 62
Rogers v The Queen (1994) 181 CLR 251
Tiufino v Warland (2000) 50 NSWLR 104
Walton v Gardiner (1993) 177 CLR 378

Case(s) also cited:

Nil

MASTER NEWNES: This is an application by the defendant for orders that the plaintiff's claim be dismissed as an abuse of process and that the plaintiff pay the defendant's costs of the action.
The background to this application is set out in detail in Eastland Technology Australia Limited v Ritract Limited [2005] WASC 125 and I will not repeat it. Suffice it to say that, in 1999, the plaintiff was granted an exclusive licence in respect of certain patents by Messrs Whisson and Prestidge. Subsequently, a dispute arose between those parties and Messrs Whisson and Prestidge gave notice of termination of the exclusive licence agreement. The plaintiff commenced proceedings against Messrs Whisson and Prestidge and the latter, in turn, counter-claimed for a declaration that they had validly terminated the exclusive licence agreement.
On 14 June 2002, after trial, Templeman J dismissed the plaintiff's claim and granted the declaration sought by Messrs Whisson and Prestidge. The plaintiff appealed against the judgment of Templeman J.
On 15 September 2004, the plaintiff commenced this action against the defendant contending that, in or about 2004, the defendant had infringed the plaintiff's rights in the patents under the exclusive licence agreement.
On 14 June 2005, on the defendant's application, I ordered that the action be stayed pending the decision of the Court of Appeal: Eastland Technology Australia Limited v Ritract Limited (supra). I so ordered on the ground that, in light of the finding of Templeman J that the exclusive licence agreement had been terminated by Messrs Whisson and Prestidge in 2000, the plaintiff's claim in this action was an abuse of process.
On 4 August 2005, the Court of Appeal dismissed the plaintiff's appeal against the judgment of Templeman J. The plaintiff has now applied to the High Court for special leave to appeal against the decision of the Court of Appeal. I was told by the plaintiff's counsel that the best estimate the plaintiff has been able to obtain from the High Court registry is that the application is likely to be heard in December of this year.
On the hearing of this application, counsel for the plaintiff accepted that if the application for special leave was refused, this action must be dismissed. Counsel argued, however, that pending the outcome of the special leave application the proper course was simply to stay this action.
Counsel for the defendant submitted that this action should be dismissed now. If the application for special leave was granted and the High Court subsequently upheld the appeal on grounds which enabled the plaintiff to pursue proceedings against the defendant in the nature of this action, the plaintiff could commence fresh proceedings. As matters stood, this action was an abuse of process and must be dismissed. Counsel submitted that no question of discretion arose. In that connection, counsel referred to the decision of Owen J in McKechnie v Campbell (1996) 17 WAR 62, where, on an application by the plaintiff to strike out the defendant's defence, Owen J, having referred to the speech of Lord Diplock in Hunter v Chief Constable of West Midlands Police [1982] AC 529 at 536, said:
"I think this dicta is important for a number of reasons. It reinforces the view that it is a grave step to strike out proceedings as an abuse of process. None the less, if the factual and legal basis is made out the court has a duty, not a discretion, to intervene."
Counsel noted that I had found in Eastland Technology Australia Limited v Ritract (supra) that this action was an abuse of process. This action had been stayed on that basis pending the outcome of the then imminent hearing of the appeal in the Court of Appeal. The plaintiff's appeal now having been dismissed, it was submitted that the Court was under a duty to dismiss this action.
It was submitted on behalf of the defendant that there could be no prejudice to the plaintiff if this action were dismissed, beyond the filing fee required to commence any fresh action that might be brought in light of a successful appeal to the High Court in the original proceedings. Moreover, the Court could waive that further fee. No limitation issue would arise within that time.
On the other hand, it was submitted, the defendant was prejudiced by the continued existence of this action. In that respect, the defendant relied on an affidavit sworn on 14 September 2005 by the defendant's solicitor, Mr Lemonis, and based on his instructions from directors of the defendant. In that affidavit, Mr Lemonis deposes to the fact that the defendant is a public company listed on the Australian Stock Exchange. The defendant's primary business is the development and manufacture of retractable needle devices based on the intellectual property which is the subject of the patents in issue in the original proceedings. The defendant has produced a device known as the Needlesleeve device which has been internationally recognised as an important advance in helping to prevent needlestick injuries in healthcare workers.
Mr Lemonis says that the existence of this action adversely affects the willingness of potential investors to commit further funds to the commercialisation of the technology and affects the ability of the defendant to secure manufacturing and distribution partners for the technology. He says the ability of the defendant to raise funds by way of capital-raising is prejudiced while this action remains on foot, and this action has resulted in adverse comments being made in investment chat sites on the Internet.
Mr Lemonis also says that the field of medical devices generally, and injection devices in particular, is rapidly evolving, and delays in bringing the defendant's products to the market could prejudice the commercial competitive advantage which the defendant currently has.
In the course of argument, counsel for the defendant acknowledged that the existence of the present action did not present any legal barrier to the defendant pursuing the commercialisation of the technology or taking any other steps in relation to it. There was no legal restraint on the defendant. Counsel also conceded that even if this action were dismissed at this stage, any prospective investor or distributor would have to be informed by the defendant of the possibility that, if the plaintiff's appeal to the High Court were upheld, the plaintiff may commence a fresh action to the same effect as this action.
In those circumstances it was not clear to me how any substantial prejudice would be caused to the defendant by this action being stayed, rather than dismissed, pending the outcome of the application for special leave and, if granted, of the appeal. It was also relevant in that respect that counsel for the plaintiff acknowledged that if the application for special leave, or, if granted, the appeal, were refused it is difficult to see how the plaintiff could resist an application to dismiss this action.
The plaintiff, on the other hand, claimed that it would suffer prejudice if the action was dismissed at this point. In an affidavit sworn on 15 September 2005, the plaintiff's solicitor, Mr Paiker, says he has been informed by the plaintiff that if the intellectual property the subject matter of the patents is exploited and utilised in the manner proposed by the defendant, the plaintiff's rights and interests in the exclusive licence and the patents would suffer irreparable damage if it were subsequently found that the exclusive licence agreement had not been terminated. Mr Paiker says he has been informed that it would be costly and difficult to enforce the plaintiff's rights by legal action once the patents were exploited and commercialised, and it would also be extremely difficult to quantify any loss and damage the plaintiff would have suffered.
It was contended that the dismissal of this action would therefore cause the plaintiff irreparable prejudice, which could not properly be remedied by an award of damage.
I must say I find that difficult to follow. It was accepted on both sides that the existence or otherwise of this action did not affect the legal ability of the defendant to pursue the commercialisation and exploitation of the intellectual property. I do not, therefore, see how the defendant's proposed activities would adversely affect the plaintiff's position if this action were dismissed, but not if it were stayed.
On the material before me, it does not appear that either party would suffer substantial prejudice whether this action were dismissed or stayed.
I do not, however, accept the defendant's submission that once it is established that proceedings are an abuse of process, the Court has a duty to dismiss those proceedings.
The term "abuse of process" describes a variety of circumstances. In Walton v Gardiner (1993) 177 CLR 378, the concept was defined in broad terms in the joint judgment of Mason CJ, Deane and Dawson J (at 392‑393) as follows:
"The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail. Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them. Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v Chief Constable of the West Midlands Police as 'the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people'."
In Rogers v The Queen (1994) 181 CLR 251, Mason CJ said (at 255):
"The concept of abuse of process is not confined to cases in which the purpose of the moving party is to achieve some foreign or ulterior object, in that it is not that party's genuine purpose to obtain the relief sought in the second proceedings. The circumstances in which abuse of process may arise are extremely varied and it would be unwise to limit those circumstances to fixed categories. Likewise, it would be a mistake to treat the discussion in judgments of particular circumstances as necessarily confining the concept of abuse of process."
As the New South Wales Court of Appeal observed in Tiufino v Warland (2000) 50 NSWLR 104, it has long been established that proceedings which seek to relitigate some question which technically is not covered by an issue estoppel may be stayed or dismissed as an abuse of process. In Arthur J S Hall & Co (A Firm) v Simons [2002] 1 AC 615 at 701, Lord Hoffman said that there is "a general public interest in the same issue not being litigated over again".
In such circumstances, the public interest considerations which underlie the power of courts to stay or dismiss proceedings as an abuse of process include the waste of finite judicial resources and the necessity of maintaining confidence in and respect for the processes of the Court: see Culture International Pty Ltd v Scoles (1991) 32 FCR 275; Djaigween v Douglas (1994) 48 FCR 535.
It is, in my view, plain that where an abuse of process is found the question of whether the proceedings concerned should be dismissed or stayed is to be determined according to the circumstances of the case. I do not consider that anything said in Hunter v Chief Constable of West Midlands Police (supra) or McKechnie v Campbell (supra) is to the contrary.
In Hunter v the Chief Constable of West Midlands Police, the House of Lords found that the civil proceedings in question were a "collateral attack" upon the plaintiffs' criminal convictions, with the dominant purpose of the civil action being, not to recover damages, but to challenge the foundation of their convictions; that is, the abuse of process lay in the fact that the proceedings were brought for the purpose of a collateral attack on the final decision of a court of competent jurisdiction. Lord Diplock said (at 536):
"My Lords, this is a case about abuse of the process of the High Court. It concerns the inherent power which any court of justice has to prevent misuse of its procedures in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right‑thinking people. The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the Court has a duty (I disavow the word discretion) to exercise this salutary power".
As I have mentioned, that passage was cited with approval by Owen J in McKechnie v Campbell. Like Lord Diplock in Hunter, Owen J regarded the circumstances in McKechnie v Campbell as unique. That case concerned defamation proceedings brought by the then Director of Public Prosecutions in respect of statements made by the defendant in the course of radio interviews. The plaintiff applied to strike out the defendant's defence of justification as an abuse of process. Owen J found that the dominant purpose of the defendant in provoking the commencement of a defamation action and raising the defence was not to prosecute the matter to a conclusion within the defamation proceedings themselves, but to use the proceedings as a means of obtaining some advantage for which they were not designed or some collateral advantage beyond what the law offered, namely a Royal Commission or public inquiry into the conviction of a third party, Mr Garvey. The purpose was to mount a collateral attack on final decisions which had been made by criminal and civil courts in previous proceedings involving Mr Garvey. Owen J struck out the defence and refused leave to replead.
The circumstances of those cases are far removed from this case. While it is clear that where an abuse of process occurs the Court has a duty to intervene, I do not consider anything said in those cases suggests that the intervention is confined to the dismissal of the proceedings concerned. As the cases to which I have earlier referred make clear, where an abuse of process occurs the proceedings may be stayed or dismissed. The appropriate course will depend on the circumstances. Where the abuse of process might subsequently be cured or overcome, I do not consider that the inevitable result of a finding that the proceedings are an abuse of process is that they must be dismissed. Where, as here, success on appeal by the plaintiff would remove the abuse, such a course is not required by the public interest considerations which underlie the Court's power to intervene.
On the material before me, in practical terms little turns on whether, pending the outcome of the proceedings in the High Court, this action is stayed or dismissed, except, in the case of dismissal, for the filing fees concerned in commencing any fresh action and the time that it would take for any fresh action to reach the same, albeit early, stage that this action has reached. It was not suggested that any relevant limitation period was likely to expire before the outcome of the proceedings in the High Court would be known.
It seems to me that in the circumstances it would be premature to dismiss this action while appellate proceedings are on foot and that the proper course, therefore, is to stay this action until the appellate process has reached its end. There appears to be no real prejudice to the defendant in that course. If the application for special leave, or any appeal, to the High Court is refused, the application to dismiss this action can be brought on again. If, on the other hand, the application for special leave is granted and the subsequent appeal is successful, an application might be brought for the stay to be lifted and for this action to be permitted to continue from the point it has now reached. Those are matters that can only properly be considered when the ultimate position is known and must therefore be left for another day.
I would stay this action until further order, with liberty to the parties to apply. I will hear the parties on costs.