FEDERAL COURT OF AUSTRALIA

Watson v Kriticos (Joinder and Service Applications) [2020] FCA 1019

ORDERS

THE COURT ORDERS THAT:

1.    Leave be granted to the Applicant to join Whitewater West Industries Ltd as the Second Respondent to the proceeding with effect from 6 December 2019.

2.    The Applicant’s interlocutory application for leave to serve out of the jurisdiction be dismissed.

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

REASONS FOR JUDGMENT

PERRAM J:

1    There are two applications before the Court both of which relate to the Further Amended Originating Application. The first concerns the joinder to the proceeding of Whitewater West Industries Ltd (‘Whitewater’) as the Second Respondent. Whitewater is a company incorporated under the laws of British Columbia and has its registered office in Richmond, British Columbia. The second application is for leave to serve the Originating Process on Whitewater.

2    The current proceeding was commenced on 14 June 2019 by the filing of an originating process. An amended originating application was filed on 21 June 2019. The respondent to it was named as Mr Stephen Con Kriticos. I will refer to Mr Kriticos as the First Respondent throughout these reasons. On 6 December 2019, a further amended originating process was filed. This document purported to add Whitewater as the Second Respondent. It was filed pursuant to Order 1 made on 3 December 2019 which granted the Applicant leave to file ‘the Further Amended Originating Application…in the form sent to the Respondent on 1 October 2019.’ No order had been made joining Whitewater as a respondent under r 9.05 of the Federal Court Rules 2011 (Cth) (‘FCR’) at that time.

3    A party may be joined to a proceeding under FCR r 9.05(1)(b)(iii) where the joinder is necessary ‘to enable determination of a related dispute and, as result, avoid multiplicity of proceedings’. The Applicant’s case is quite complex but in simplified terms is as follows. The Applicant is a patent attorney. The First Respondent is a consultant in relation to product design and development. The First Respondent developed an invention known as the Surf Machine Invention and retained the Applicant to prepare and lodge various patent applications in respect of that invention. Over several years the Applicant alleges he did work for the First Respondent in the pursuit of the registration of patents relating to the Surf Machine Invention. He alleges that he reached an agreement with the First Respondent in 2013 that in return for the waiver of some of his fees he would be entitled, amongst other things, to a 12.5% share in the ownership of the relevant patents. The Applicant now alleges that in breach of that agreement the First Respondent has assigned the patents to Whitewater. The Applicant alleges that Whitewater has refused to acknowledge his 12.5% interest in the patents. A number of claims against the First Respondent also arise out of these facts including various misrepresentations, breaches of contract, breaches of trust, breaches of fiduciary duty and claims for debt. In addition, the Applicant makes related allegations of a similar nature about a number of other inventions and patents.

4    It is appropriate that Whitewater should be joined to this dispute. So far as the title to the patents is presently in Whitewater’s name the Applicant seeks relief that would require it to record his 12.5% share. I am satisfied therefore that the joinder is appropriate under FCR r 9.05(1)(b)(iii). Since this order should have been sought and made on 3 December 2019 when leave was granted to file the Further Amended Originating Application I will order that Whitewater be joined to the proceeding as the Second Respondent as and from the date of the filing of that process, 6 December 2019.

5    Turning next to the question of service, it appears that Whitewater does not conduct business in Australia and I take it to be resident in British Columbia. The Applicant therefore requires the leave of the Court to serve it out of the jurisdiction. He seeks leave to do so under the 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 10 February 1969) and the laws of Canada pursuant to FCR r 10.43(2). Accordingly, he must demonstrate that the Court has jurisdiction with respect to the claim against the Second Respondent, that the proceeding is of a kind referred to in FCR r 10.42 and that he has a prima facie case for all or any of the relief sought in the proceeding (cf against the Second Respondent): FCR r 10.43(4)(a), (b), (c).

6    I am satisfied that the Court has jurisdiction in relation to the claims against the Second Respondent. It is clear that the Court has jurisdiction in relation to the Applicant’s claims against the First Respondent. That claim includes claims for misrepresentation under the Australian Consumer Law and under the Patents Act 1990 (Cth) which are both within federal jurisdiction. The balance of his claims at general law arise out of the same substratum of facts and are within the Court’s accrued jurisdiction. The claims against the Second Respondent do not arise under any federal enactment but I am satisfied that they too arise out of the same substratum of fact as the claims against the First Respondent and are also therefore within the Court’s accrued jurisdiction.

7    The proceeding against the Second Respondent is of a kind referred to in FCR r 10.42. Specifically, the Applicant seeks relief to enforce the trust he claims against the Second Respondent being a trust governed by the law of New South Wales which is a kind of proceeding mentioned in item 7 of the table in FCR r 10.42.

8    On the present application the evidence consisted of two affidavits of the Applicant’s solicitor. At §11 of his first affidavit he said that there was ‘a prima facie case for all or any of the relief claimed in the proceeding for the reasons identified in the [Second Further Amended Statement of Claim]’. The requirement of the rule is that the applicant for leave should demonstrate that they have ‘a prima facie case for all or any of the relief claimed in the proceeding’: FCR r 10.43(4)(c).

9    This rule does not require the applicant for leave to show that they have a prima facie case for relief against the party who they seek to serve and it suffices to show that there is a prima facie case for any of the relief claimed against another party already before the Court: BY Windown, Inc v Vautin [2016] FCAFC 168; 249 FCR 262 at [39] - [52] (applying the Court’s earlier decision in Costa Vraca Pty Ltd v Bell Regal Pty Ltd [2003] FCAFC 305 in relation to the former rules of court).

10    But the prima facie requirement does require the party seeking leave to put material before the Court from which inferences are open which, if translated into findings of fact, would support the relief claimed: Ho v Akai Pty Limted (in liquidation) [2006] FCAFC 159; 247 FCR 205 at [10]. I do not accept that §11 meets this standard. Although counsel summarises the pleadings in his written submissions, this did not solve the problem either. In order to satisfy the requirement of the rules there will need to be some material from which it can be inferred that the Applicant has a case for some relief against the First Respondent. Since the claim against the Second Respondent concerns a trust said to bind the First Respondent, proof of a prima facie case in relation to that trust might be worthwhile point to start.

11    Consequently, I refuse the application for leave to serve out of the jurisdiction. The only orders I will make are that the Applicant have leave to join Whitewater West Industries Ltd as the Second Respondent with effect from 6 December 2019 and that the interlocutory application otherwise be dismissed.

Associate:

Dated:    17 July 2020