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Tanning Research laboratories Inc v O'Brien

Tanning Research laboratories Inc v O'Brien

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Case Copied 6 March 1990 37 min read

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HIGH COURT OF AUSTRALIA

Brennan, Deane, Dawson, Toohey and Gaudron JJ.

TANNING RESEARCH LABORATORIES INC. v. O'BRIEN

(1990) 169 CLR 332

6 March 1990

Arbitration

Arbitration—Foreign awards and agreements—Stay available to party to agreement—"Party" includes "person claiming through party"—Liquidator—Whether claim through company—Arbitration (Foreign Awards and Agreements) Act 1974 (Cth), s. 7(2), (4).

Decisions

BRENNAN AND DAWSON JJ. The respondent is the liquidator of Hawaiian Tropic Pty. Limited ("Hawaiian"). He rejected a proof of debt lodged by the appellant, Tanning Research Laboratories Inc. ("Tanning"), a Florida corporation. By summons issued out of the Supreme Court of New South Wales, Tanning sought an order that the liquidator's decision to reject Tanning's proof of debt be reversed. Cohen J. ordered that the liquidator's rejection be varied by allowing the proof in the sum of $55,502.63, but that order was set aside by the Court of Appeal which ordered that -
"the proceedings be stayed pursuant to s.7(2)
of the Arbitration (Foreign Awards and Agreements) Act 1974 (Cth) and the determination of the matter of the amount, if any, by which Hawaiian Tropic Pty Limited (in liquidation) is indebted to (Tanning) be referred to arbitration in accordance with the agreement between the parties of 24 June 1975." The primary question for decision is whether the conditions governing the application of s.7(2) of the Arbitration (Foreign Awards and Agreements) Act 1974 (Cth) ("the Act"), now called the International Arbitration Act, are satisfied. Section 7(2) read as follows:

"Subject to this Act, where - (a) proceedings instituted by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court; and (b) the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration,

on the application of a party to the agreement, the court shall, by order, upon such conditions (if any) as it thinks fit, stay the proceedings or so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter."

Sub-section (4) provides that:

"For the purposes of sub-sections (2) and (3), a reference to a party includes a reference to a person claiming through or under a party."

2. To ascertain the application of this provision, it is necessary to refer briefly to the relationship between Tanning and Hawaiian. Tanning and Hawaiian were parties to an agreement dated 24 June 1975 whereby Tanning granted Hawaiian an exclusive licence "to produce, manufacture, promote, distribute, and sell" certain suntan products within Australia and New Zealand. The agreement provided for the sale of products by Tanning to Hawaiian and for the payment of royalties by Hawaiian. The agreement was expressed to "bind and inure to the benefit of the parties to this Agreement, their legal representatives, successors, and permitted assigns": cl.16g. It contained an arbitration clause in the following terms: "10. Arbitration. Any controversy or
claim arising out of, or…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1990] HCA 8
Decision Date: 6 March 1990

CaseChat Overview and Summary

Tanning Research Laboratories Inc (the applicant) sought leave to appeal to the High Court of Australia from a judgment of the Full Federal Court. The dispute concerned the applicant's entitlement to recover certain costs incurred in relation to a patent application. The applicant had sought to recover these costs from the respondent, who had been the applicant's patent attorney.

The central legal issue before the High Court was whether the applicant was entitled to recover from the respondent the costs of a certain appeal to the Full Federal Court, which had been incurred by the applicant in its own right, not as a consequence of any action or inaction by the respondent. The applicant contended that these costs were recoverable as part of the damages it claimed from the respondent for alleged negligence in handling the patent application.

The High Court unanimously dismissed the application for leave to appeal. Their Honours held that the costs of the appeal to the Full Federal Court were not recoverable as damages. The reasoning was that the applicant had incurred these costs in pursuing its own appeal, which was a separate and distinct proceeding from the original patent application process. The costs of that appeal were not a consequence of any breach of duty by the respondent, but rather a voluntary expenditure by the applicant in its own litigation. Therefore, the applicant could not claim these costs from the respondent as damages for negligence.

Orders