Vautin v BY Winddown, Inc (No 2)

Case [2016] FCA 1235

FEDERAL COURT OF AUSTRALIA

Vautin v BY Winddown, Inc (No 2)

[2016] FCA 1235

File number NSD 546 of 2016
Judge: RARES J
Date of judgment: 16 September 2016
Catchwords:

PRACTICE AND PROCEDURE – service of process – leave to serve outside jurisdiction – Federal Court Rules 2011 – where item 20 of r 10.42 provides proceeding properly brought against one person served or to be served in Australia, another person may be served out of jurisdiction if that person is properly joined as party – whether another person can be served out of Australia if properly joined as party to proceedings – whether requirement for prima facie case for granting leave to serve originating process out of jurisdiction under r 10.43(4)(c) satisfied if established against only party served or be served in Australia – Costa Vraca Pty Ltd v Bell Regal Pty Ltd [2003] FCAFC 305 applied

CONSUMER LAW – meaning of “carry on business in Australia” in s 5(1)(g) of the Competition and Consumer Act 2010 (Cth) – whether foreign manufacturer “carries on business in Australia” by reason of exclusive dealer agreement with Australian party – where exclusive dealer agreement required dealers to market yachts using foreign manufacturer’s materials, to furnish retail consumers with foreign manufacturer’s limited warranty wherever in the world goods purchased and to provide service facilities to any person having benefit of limited warranty

PRACTICE AND PROCEDURE – stay of proceedings – whether Australia clearly inappropriate forum – whether exclusive jurisdiction clause in limited warranty between foreign manufacturer and Australian purchaser of yacht who bought her from manufacturer’s dealer – where equivalent remedy available under foreign law – where possibility of duplicated proceedings – whether proceedings should be stayed 

Legislation:

Competition and Consumer Act 2010 (Cth) s 5

Australian Consumer Law ss 54, 67, 271, 272, 276

Federal Court Rules 2011 rr 10.42, 10.43

Federal Court of Australia Act 1976 (Cth) ss 22, 32

Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.  Opened for signature 15 November 1965.  658 UNTS 163 (entered into force 1 November 2010)
Cases cited:

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

Australian Competition and Consumer Commission v Yazaki Corporation (No. 2) (2015) 332 ALR 396

BDT Holdings Pty Ltd v Piscopo (No 2) [2009] FCA 1126

Bray v F. Hoffmann-La Roche Limited (2003) 130 FCR 317

City Finance Co Limited v Matthew Harvey & Co Limited (1915) 21 CLR 55

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

Hope v Bathurst City Council (1980) 144 CLR 1

Incitec Limited v Alkimos Shipping Corporation (2004) 138 FCR 496

Lehman Brothers Australia Ltd (In Liq) v Lehman Brothers Special Financing Inc [2015] FCA 779

Luckins v Highway Motel (Carnarvon) Pty Limited (1975) 133 CLR 164

Massey v Heynes & Co (1888) 21 QBD 330

Owners of “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404

Re Wakim;  Ex parte McNally (1999) 198…

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Details
AGLC
Vautin v BY Winddown, Inc (No 2) [2016] FCA 1235
Case
[2016] FCA 1235
Decision Date

CaseChat Overview and Summary

The case of Vautin v BY Winddown, Inc (No 2) involved Bertram, an Italian boat builder, and Eagle Yachts, its exclusive dealer in Australia. Bertram sought to have the proceedings against it stayed on the grounds that it was not subject to the jurisdiction of the Australian courts. The dispute centred around whether Bertram carried on business in Australia under the Competition and Consumer Act 2010 (Cth) due to its exclusive dealer agreement with Eagle Yachts. The agreement required Eagle Yachts to market Bertram's yachts using its materials, provide a limited warranty to retail consumers, and offer service facilities in Australia for Bertram's products.

The court was required to determine if Bertram's actions under the exclusive dealer agreement constituted carrying on business in Australia and whether the Australian courts had jurisdiction over Bertram. Additionally, the court had to consider whether the proceedings should be stayed due to the presence of an exclusive jurisdiction clause in the limited warranty and the availability of equivalent remedies under foreign law. The court also needed to assess whether Australia was a clearly inappropriate forum and whether there was a possibility of duplicated proceedings.

The court rejected Bertram's argument that the discretionary power under r 10.43 of the Federal Court Rules 2011 required a prima facie case against all parties, including those to be served outside the jurisdiction. The court held that the power was activated if the applicant satisfied the court of the jurisdiction, the nature of the proceeding, and the existence of a prima facie case for the relief claimed. The court found that Bertram's activities under the exclusive dealer agreement with Eagle Yachts constituted carrying on business in Australia, thereby granting the Australian courts jurisdiction over the matter. Consequently, the court dismissed Bertram's interlocutory application for a stay of proceedings, ordering that Eagle Yachts pay the costs of the interlocutory hearing.

Orders

Orders of the court

1. The interlocutory application, filed on 15 August 2016, be dismissed.

2. The first respondent pay the applicant’s costs of the interlocutory hearing.

3. The second respondent’s costs of the interlocutory hearing be its costs in the cause.

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

Background

Background to the litigation

I should also note that, for completeness, Bertram made a formal submission that the decision of the High Court in Voth v Manildra Flour Mills Pty Limited (1990) 171 CLR 538 was wrongly decided. Clearly enough, that argument was not pursued before me and I need not say anything more about it as I am bound by the decision.Background Bertram is part of a group of companies owned by an Italian boat builder known as the Ferretti Group that apparently has subsidiaries in a large number of countries throughout the world. The evidence that has become available for the purposes of this hearing includes the text of the dealer agreement entered into between Bertram and Eagle Yachts for the period 2005 to 2008, Bertram’s sales and service manuals for the years 2007 and 2009, and Bertram’s sales guides for the years 2011 and 2012. Relevantly, the parties accepted, for the purposes of the argument as to jurisdiction, that Bertram had appointed Eagle Yachts as its exclusive dealer in Australia in 2005. The dealer agreement conferred on Eagle Yacht the exclusive right to “sell, service and promote” Bertram’s products in Australia (cll 1 and 3). Bertram’s products were pleasure yachts manufactured by it in the United States and sold by Bertram ex-works to Eagle Yachts for resale within Australia, together with parts and accessories (cl 2). Eagle Yachts’ responsibilities included that it would develop, to Bertram’s satisfaction, as Bertram in its sole and absolute discretion determined, sales of Bertram’s products in Australia and, in doing so, Eagle Yachts would make use to the greatest extent reasonable, of its own resources and of Bertram’s, advertising, sales promotion and merchandising material (cl 4.1). In the initial phases of the dealer agreement, Eagle Yachts had to sell a minimum of four boats in the year to 31 August 2006 and five in the succeeding year in order to comply with its obligations. Eagle Yachts had to provide a service facility within Australia that was equipped to provide service to owners of Bertram products (cl 4.2). Eagle Yachts had to identify itself clearly as a Bertram dealer in a way that Bertram had approved in advance (cl 4.3). In addition, Eagle Yachts had to provide high quality and timely warranty service on all Bertram products, without regard to the dealership from which that product had been purchased and “to make all claims in accordance with Bertram’s warranty service policies, as set forth in” its relevant manuals and memoranda (cl 4.9). This meant that Eagle Yachts had to service Bertram yachts, which were ocean-going vessels that had been purchased overseas but arrived in Australia and required warranty service, for the purposes of Bertram’s overall conduct of its business. Clause 5 excluded the relationship of agency between Bertram and Eagle Yachts. Bertram had to furnish, through Eagle Yachts, to first-use purchasers of each product (i.e. retail consumers), Bertram’s written limited warranty in effect at the time of the delivery of the product to Eagle Yachts (cl 6.4). Bertram would also establish and publish suggested retail prices for its products (cl 6.1). When Eagle Yachts purchased a yacht, it would buy it from Bertram on an ex-works basis so that property and risk would pass at Bertram’s factory door in Florida in the United States (cl 6.5).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For these reasons, I refuse to grant a stay.Conclusion Bertram’s interlocutory application must be dismissed with costs. Eagle Yachts’ costs of that interlocutory application should be its costs in the cause.

Ratio Decidendi

Legal Principle Established

It argued that Courts approach claims to exercise jurisdiction over foreigners with circumspection and that a construction of r 10.43(4)(c) that promoted such circumspection was consistent with its argument. It submitted that a number of judges, including myself, had expressed views in the course of granting or confirming orders for the service of foreigners out of the jurisdiction to similar effect: for example, what Carr J said in Bray v F. Hoffmann-La Roche Limited (2003) 130 FCR 317 at 333 [55] and what I had said in a passage I quoted from an earlier decision of my own (Lehman Brothers Australia Ltd (In Liq) v Lehman Brothers Special Financing Inc [2015] FCA 779 at [32]-[34]), in granting leave to serve out of the jurisdiction in Vautin [2016] FCA 632 at [16].Consideration – item 20 I reject Bertram’s argument. In my opinion, the discretionary power conferred on the Court under r 10.43 to order service out of the jurisdiction is enlivened if the party applying has satisfied the Court of each of the three matters for which r 10.43(4) provides: namely that the Court has jurisdiction in the proceeding, that the proceeding is of a kind mentioned in r 10.42, and the party has a prima facie case for all or any of the relief claimed in the proceeding. Here, it is not disputed that the proceeding falls squarely within the words of item 20 of the table in r 10.42 and, accordingly, r 10.43(4)(b) is satisfied. Importantly, s 22 of the Federal Court of Australia Act gives the Court power to grant all remedies to which any of the parties may be entitled in respect of a claim properly brought forward by that party, so far as possible, in order to avoid multiplicity of proceedings. In Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161 Gibbs CJ, Stephen, Mason and Wilson JJ said that this power is:… designed to ensure that the Court can grant relief which is appropriate to both legal and equitable claims and to avoid multiplicity of proceedings. Its effect is to enable the Court to dispose of all rights, legal and equitable, in the one action, so far as that is possible ... It is evident that item 20 in the table to r 10.42 is based on s 22 and the importance of resolving controversies in a way, where possible, that binds all the parties to the particular controversy. The word “proceeding” in r 10.43(4)(c) is defined in s 4 of the Act as meaning “a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding and also includes an appeal”. It is quite inappropriate to construe provisions conferring jurisdiction or granting powers to a Court by making implications or imposing limitations which are not found in the express words: Owners of “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. Carr J said in Bray at 130 FCR at 333 [55] that the primary judge in that case had not erred in holding that it was sufficient for the purposes of the analogue of r 10.43(4)(c) that he could be satisfied that the applicant had a prima facie case for relief on the basis of any of the causes of action relied upon by the applicant against each of the foreign respondents in that case. However, his Honour was deciding the case on the basis of the arguments then raised. As I read Branson J’s reasons, particularly in discussing the discretion under that analogue rule in Bray 130 FCR at 356-357 [186]-[190], her Honour did not express a similar limitation: i.e. that there had to be a prima facie case against each of the foreign respondents.