Federal Court of Australia

Gensco Laboratories, LLC v Care A2 Plus Pty Ltd (receiver appointed) [2023] FCA 1024

ORDERS

THE COURT NOTES THAT:

A.    The applicants have given an undertaking to the Court that they will not commence proceedings against Ms Kerry Hyland in the United States of America while Federal Court of Australia proceedings NSD 560 of 2023 are on foot against her.

THE COURT ORDERS THAT:

1.    Order 6 of the orders made on 11 August 2023, as extended by Order 2 of the orders made on 17 August 2023, is to be discharged.

2.    The interlocutory application filed by the first and third respondents on 11 August 2023 (Application), is to be dismissed.

3.    The first and third respondents are to pay the applicants’ costs of and incidental to the Application.

4.    Orders 1, 2 and 3 of these orders be stayed until 6.00 pm on Tuesday, 29 August 2023.

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

REASONS FOR JUDGMENT

HALLEY J:

A.    Introduction

1    On 11 August 2023, and without notice to the applicants, the first and third respondents (Care A2 respondents) made an ex parte interlocutory application (Interlocutory Application) to Jackman J, the Commercial and Corporations Duty Judge. The Care A2 respondents sought an order that, upon the usual undertaking for damages, the applicants be restrained from commencing or further pursuing proceedings in the State of Florida, United States of America, (Anticipated Florida Proceedings) against any of Mr Walter Bugno, Ms Kerry Hyland, Mr Stephen Loader and Mr Dominic Galati and any other director, officer or shareholder of the first respondent, Care A2 Plus Pty Ltd (receiver appointed), (Care A2).

2    Jackman J granted an interim order to that effect (anti-suit injunction), in Order 6 of the orders made on 11 August 2023 (Orders), which was to have effect until 4.00 pm on Friday, 18 August 2023, subject to the applicants being able to apply to the Court to vary or discharge it, on the giving of reasonable notice: see Orders 4 and 5 of the Orders.

3    On 14 August 2023, the applicants notified the Court that they wished to apply to discharge the anti-suit injunction. Thereafter, the Interlocutory Application was listed on 17 August 2023, for final hearing before me, as the docket judge. At the conclusion of the hearing on that day, I reserved my decision and made orders extending the anti-suit injunction until 6.00 pm on Monday, 28 August 2023.

4    The applicants oppose the granting of the anti-suit injunction sought by way of final relief in prayer 7 of the Interlocutory Application.

5    The Care A2 respondents rely on an affidavit of their solicitor, Ms McKenzie Moore, affirmed on 11 August 2023.

6    The applicants rely on an affidavit of their solicitor, Ms Suzanne Katherine Madar, affirmed on 16 August 2023.

7    For the reasons that follow, I have concluded that the anti-suit injunction should be discharged and the Interlocutory Application should be dismissed.

B.    Australian Proceedings

8    On 15 June 2023, these proceedings were commenced by the applicants, Gensco Laboratories, LLC (doing business as Gensco Pharma) (Gensco Pharma) and Gensco Nutrition LLC. (Gensco Nutrition) (together referred to as Gensco), (the Australian Proceedings).

9    Gensco supplies various health and nutrition products in the United States and around the world.

10    The respondents to the Australian Proceedings are Care A2, Ausmore Dairy Pty Ltd (Ausmore Dairy), Ms Kerry Hyland, a director of Care A2, and Mr Pablo-Omar Vasquez. In the period between August 2022 and January 2023, Mr Vasquez was the Chief Executive Officer of Ausmore Dairy.

11    There are four causes of action advanced in the Australian Proceedings.

B.1.    Breach of contract case against Care A2

12    The principal cause of action in the Australian Proceedings is directed at an alleged breach of an exclusive license agreement entered into between the first applicant, Gensco Pharma, Care A2 and purportedly a company known as Care Health and Wellness LLC (Care Health), on or about 5 November 2022 (Exclusive Licence Agreement). The genesis of the Exclusive Licence Agreement was the infant formula shortage in the United States. Care A2, an Australian manufacturer of infant formula, saw this as a business opportunity and obtained, or purported to obtain, various approvals from the United States Food and Drug Administration (FDA) to import and supply its infant formula products into the United States.

13    Under the Exclusive Licence Agreement, Care A2 granted to Gensco Pharma a perpetual, non- transferable and irrevocable licence, to make, use and sell Care A2 infant formula products, utilising the intellectual property of Care A2, in North America (Licensed IP).

14    On or about 14 November 2022, Gensco Pharma assigned its rights, title and interest in the Exclusive Licence Agreement to the second applicant, Gensco Nutrition, under cl 12 of the Exclusive Licence Agreement.

15    By way of summary, in the statement of claim filed on 19 June 2023 (SOC), Gensco alleges that Care A2 engaged in various breaches of the Exclusive Licence Agreement, including by:

(a)    making representations and warranties under cl 8 that Care Health was duly incorporated (when it did not exist), Care A2 owned all of the Licensed IP (when it did not), Care A2 would comply with applicable laws (when it failed to supply infant formula to Gensco that complied with United States laws and FDA requirements);

(b)    failing to provide Gensco with an insurance policy endorsement from Care A2’s manufacturer, as required by cl 9(b);

(c)    supplying defective products to Gensco in breach of cl 10; and

(d)    failing to comply with the advertising and marketing requirements of cl 14 and cl 15: SOC at [160]-[173].

16    Gensco alleges that by reason of the above breaches of the Exclusive Licence Agreement, Care A2 exhibited an unwillingness or inability to perform substantially the Exclusive License Agreement and accordingly, repudiated the Exclusive Licence Agreement: SOC at [174].

17    Gensco further alleges that by reason of Care A2’s breaches and repudiation of the Exclusive License Agreement, Gensco Pharma has suffered loss and damage. The heads of damage identified in the SOC at [175] include Gensco’s costs of performing the Exclusive Licence Agreement, loss of expected profits to be generated had the Exclusive License Agreement been performed by Care A2, estimated to be in excess of AU$200 million, and reputational damage.

B.2.    Misleading or deceptive conduct case against Care A2

18    Gensco also alleges that in the period between August 2022 to November 2022, Care A2 engaged in misleading or deceptive conduct by making false representations to Gensco, in particular, concerning its infant formula product and that it was compliant with FDA requirements (when it was not). It is alleged that Gensco relied on these representations to enter into the Exclusive License Agreement and had they not been made, Gensco would not have entered into the Exclusive Licence Agreement: SOC at [150]-[154].

19    Gensco seeks damages under s 236 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL), for loss and damage incurred by Care A2’s alleged misleading or deceptive conduct. The loss and damage alleged includes costs incurred by Gensco in performing the Exclusive License Agreement and reputational damage: SOC at [155].

20    In addition, Gensco alleges that the founder of Care A2, Mr Galati, made various representations, as agent for Care A2, to various Gensco investors, concerning the relationship between Care A2 and Gensco (Galati Representations). It is alleged that the making of the Galati Representations also constituted misleading or deceptive conduct and caused Gensco loss of valuable business opportunities, including the provision of lending facilities from the investor to whom the Galati Representations were made: SOC at [87], [156]-[159].

B.3.    Case against Ms Hyland

21    The case against Ms Hyland is limited to her conduct in signing the Exclusive License Agreement, purportedly on behalf of Care Health, when at all material times, that company never existed: SOC at [176]-[181]. The damages sought against Ms Hyland under s 236 of the ACL, mirror the damages sought against Care A2 for its alleged breaches of contract and its repudiation of the Exclusive License Agreement: SOC at [181].

B.4.    Case against Pablo-Omar Vasquez and Ausmore Dairy

22    The final claims in the Australian Proceedings are allegations of misleading or deceptive conduct against Mr Vasquez and alternatively, Mr Vasquez, on behalf of, or as agent for Ausmore Dairy.

23    The case against Mr Vasquez, or alternatively Ausmore Dairy, is directed at representations made by Mr Vasquez in or around February 2023, to Gensco’s investors, to the effect that (a) Ausmore Dairy was or would be the exclusive distributor of Care A2 products in North America, and (b) Care A2 intended to terminate the Exclusive License Agreement with Gensco: SOC at [134]. It is alleged that those representations were false or misleading or deceptive and caused Gensco loss and damage, including the loss of business opportunities with the investors to whom Mr Vasquez, or alternatively Ausmore Dairy, made those representations: SOC at [182]-[189].

B.5.    Current status of the Australian Proceedings

24    The Australian Proceedings have not yet been set down for hearing. A defence has been filed by the first and third respondents. I made orders on 7 July 2023 (7 July Orders) dispensing with personal service on the second and fourth respondents. On 24 August 2023, the second and fourth respondents filed a notice of address for service and a notice of acting. Each of the respondents is seeking security for their costs of defending the Australian Proceedings. The matter is listed for a further case management hearing on Friday, 13 October 2023.

C.    Anticipated Florida Proceedings

25    The background to the Anticipated Florida Proceedings may be summarised as follows.

26    On 6 June 2023, Gensco’s legal representatives in the United States, Mr Brian Briz and Mr Matthew Zimmerman of Holland & Knight LLP, arranged for letters to be sent to Mr Bugno, Mr Loader and Mr Galati (6 June 2023 letters). The letters included a demand for reimbursement and foreshadowed that Gensco would bring proceedings in Florida against Mr Bugno, Mr Loader and Mr Galati seeking damages of $3.36 million and punitive damages if the demand for reimbursement was not complied with and defective products supplied by Care A2 were not “taken off of Gensco’s hands”. Each of the letters included the following paragraph (as written):

Gensco is pursuing its claims against Care A2 and others in the appropriate forum. Gensco, however, has suffered additional damages directly caused by the misrepresentations made by you and your coconspirators, and under Florida law, you are each jointly and severally liable for such losses. Specifically, Gensco demands that you pay US$ US$ 3,360,000 to Gensco: i) to cover the amounts Gensco lost in product value with the remaining product from the second order (US$ 2,859,456.60); ii) reimburse Gensco for all costs and expenses associated with same, including but not limited to costs incurred to store and maintain the Products, as well as interest, operational and management costs, legal fees and costs incurred (totaling over USS 500,000); and iii) take back or dispose of the Defective Products. If Gensco does not receive payment in the amount USS 3,360,000 and if the Defective Products are not taken off of Gensco’s hands, Gensco will seek collection from you personally and pursue claims of fraud, fraudulent inducement and misrepresentation, conspiracy to commit fraud, and defamation.2 Gensco will also seek the imposition of punitive damages (up to four times its actual damages) for your conduct.

27    On 4 August 2023, Mr Briz emailed Piper Alderman (4 August 2023 email). Mr Briz states that Holland & Knight LLP understood at that time that Piper Alderman were the “counsel for each of all of Walter Bugno, Kerry Hyland, Steven Loader and Dominic Galati”. The subject of the email is “CONFIDENTIAL SETTLEMENT COMUNICATION – FOR SETTLEMENT PURPOSES ONLY”. Mr Briz states that certain attempts that had been made to “reach an amicable resolution to the dispute between our respective clients” but that those steps had been unsuccessful. He then stated in the email that:

…Unfortunately, Gensco’s damages grow by the day as defective product remains stuck in a warehouse in Australia and your clients have refused to take any responsibility for the injury they have caused or take any steps to mitigate the losses.

…Accordingly, we are proceeding with the process of initiating legal action against your clients in Miami-Dade County, Florida, where Gensco is located and where its injury has occurred.

28    A draft of the Complaint that Gensco Pharma intended to file in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida was attached to the email (Draft Complaint). Mr Briz also included the following reference to the pursuit of punitive damages in the 4 August 2023 email:

Please note that in addition to seeking to recover its losses (which are in the millions), Gensco intends on seeking punitive damages against each of your clients at an appropriate stage in the case. Under Florida law, punitive damages can be a multiple of up to four times damages and are separately assessed as to each defendant.

29    Mr Briz did not receive a response to the 4 August 2023 email.

30    On 10 August 2023, Piper Alderman wrote to King & Wood Mallesons (KWM), the solicitors for Gensco in the Australian Proceedings, referring to the Draft Complaint and noting that, in their view, the Draft Complaint gave rise “to a real risk that the [Anticipated Florida Proceedings] may interfere with the finality and integrity of the Court’s processes in Australia”. The letter also alleged that the Anticipated Florida Proceedings were “quite clearly an abuse of process”. The letter stated that unless Gensco confirmed that it no longer intended to commence the Anticipated Florida Proceedings, Care A2 and Ms Hyland would immediately file an application seeking an anti-suit injunction against Gensco. The letter requested a response by close of business on Friday, 11 August 2023.

31    At 9.42 am on Friday, 11 August 2023, Mr Briz sent a further email to Piper Alderman following up on the 4 August 2023 email in which he relevantly stated:

Although Gensco has already initiated an action in Australia against Care A2 Plus Pty Ltd. and various entities and individuals, Gensco intends on pursuing your clients, jointly and severally, for their independent fraudulent conduct. We understand that Kerry Hyland is a named party in the Australia action, and at this time, Gensco will not proceed against her as a named party in the Florida action, but it reserves all rights to add her or other parties as the case progresses.

We are in the process of finalizing the draft complaint and we intend on initiating the action by the close of business on Monday, August 14.

32    Upon receipt of that email, Piper Alderman (on behalf of Care A2) made an urgent application for the interim orders sought in the Interlocutory Application.

C.1.    Parties to the Anticipated Florida Proceedings

33    The parties to the Draft Complaint are Gensco Pharma (as plaintiff) and Mr Bugno, the Chairman of the Board of Care A2, Mr Loader, the Chief Executive Officer of Care A2, Ms Hyland, a director of Care A2 and Mr Galati the founder and controlling shareholder of Care A2 (together, the proposed defendants).

34    The only overlap in the identity of the proposed defendants as between the Australian Proceedings and the Draft Complaint is Ms Hyland.

35     The applicants, however, have now confirmed in an email to my Associate on Friday, 25 August 2023 that they are prepared to provide the following undertaking:

The applicants undertake to the Court that they will not commence proceedings against Ms Kerry Hyland in the United States of America while Federal Court of Australia Proceedings NSD 560/2023 are on foot as against her.

C.2.    Factual Allegations made in the Draft Complaint

36    There is a significant overlap in the factual background that underlies the Anticipated Florida Proceedings and the Australian Proceedings. The Draft Complaint at [9]-[80], like the SOC in Australian Proceedings, concerns:

(a)    the infant formula shortage in the United States in 2022 and the request by the defendants that the FDA exercise enforcement discretion with respect to Care A2’s infant formula products: Draft Complaint at [13]-[22];

(b)    the negotiations between the parties to the Draft Complaint in respect of the exclusive licensing relationship for the purposes of manufacturing, marketing, promoting, selling and distributing the Care A2 infant formula products in the United States in perpetuity: Draft Complaint at [23];

(c)    the alleged representations made by various of the proposed defendants to Gensco Pharma in the course of those negotiations: Draft Complaint at [24]-[36]. Particular focus is given to representations made by Mr Galati in a meeting on 9 September 2022 and representations made by Mr Bugno and Ms Hyland in a meeting on 25 October 2022. Those representations are said to be false, and relied upon by Gensco Pharma “as they indicated that Care A2 would be a stable and reliable business partner and that the economics of the deal and the future of the relationship would make sense”, thus causing Gensco Pharma to enter into the Exclusive License Agreement: Draft Complaint at [36]-[37]; and

(d)    the issues experienced following the entry into the Exclusive License Agreement, including allegations of non-performance of that agreement: Draft Complaint at [38]-[80].

C.3.    Counts alleged in the Draft Complaint

37    Despite that factual overlap, the claims or “counts” raised by the Draft Complaint are different to those claims made against the Care A2 respondents in the Australian Proceedings, and are made against different parties (noting again, that Care A2 is not a party to the Anticipated Florida Proceedings and Gensco’s proposed undertaking that it will not commence proceedings against Ms Hyland in the Anticipated Florida Proceedings while she remains a respondent in the Australian Proceedings). The counts raised by the Draft Complaint are as follows.

38    First, civil conspiracy is alleged as against all of the proposed defendants: Draft Complaint at [81]-[86]. It is alleged that the proposed defendants, acting in concert, agreed and intended to commit, conceal and misrepresent to Gensco Pharma material facts about Care A2’s financial stability, its ability to financially support the brand, comply with United States regulations, provide additional sizes and formulas for Gensco Pharma to distribute in the United States, and produce and distribute Care A2’s infant formula product in the United States. The complaints include the defendants’ alleged inducement of Gensco Pharma to purchase 102,998 tins of formula which did not conform with United States regulations (the unsold second purchase order). The damage Gensco Pharma is alleged to have suffered by reason of the civil conspiracy claim is “the cost of the unsold second purchase order, the cost of repalletizing, loading and unloading and storage of the formula, cost of marketing/advertising, administrative expenses, lost revenues, time lost and associated cost of money, and damage to its reputation and goodwill for being unable to fulfil orders from customers”: Draft Complaint at [86].

39    Second, fraud is alleged against all of the proposed defendants: Draft Complaint at [87]-[93]. It is alleged that Florida law imposed on the proposed defendants a duty to disclose material information to Gensco Pharma about “whether Care A2’s infant product could be distributed and sold in the U.S.”, and that they failed to comply with this duty in that they omitted, concealed, and misrepresented to Gensco Pharma material facts about Care A2’s ability to produce, market and distribute the product in the United States: Draft Complaint at [89]. The damage alleged to be suffered by reason of the fraud count mirrors those caused by the civil conspiracy count: Draft Complaint at [93].

40    Third, negligent misrepresentation is alleged against all of the proposed defendants: Draft Complaint at [94]-[99]. It is alleged that the proposed defendants “made a series of misrepresentations, and omissions that were tantamount to supplying false information, to bolster the untruths that the Second Non-Conforming Label had been approved by the FDA and that the formula could be sold in the U.S.”. The damages alleged to be suffered by reason of the negligent misrepresentation count mirrors those caused by the civil conspiracy and fraud counts: Draft Complaint at [99].

41    The final relief sought includes an award of actual and consequential damages and an award of damages for injury to Gensco Pharma’s goodwill and reputation: Draft Complaint at prayers for relief B and C. Ms Madar gives evidence, on information and belief from Mr Briz and Mr Zimmerman, that Gensco Pharma seeks damages to compensate it for loss associated with the cost of performing its obligations under the Exclusive Licence Agreement, including costs associated with orders placed. Ms Madar’s evidence is also that she is informed by Mr Briz and Mr Zimmerman that Gensco Pharma may be entitled to punitive damages (of up to four times the amount of damages sought), or $500,000 (whichever is greater), should the counts succeed. While the Draft Complaint does not articulate that punitive damages are sought, Ms Madar gives evidence that Gensco Pharma intends to seek punitive damages and that as a matter of procedure, leave to seek that relief is not sought until after the Draft Complaint has been filed.

D.    Legal principles

42    The Court’s power to grant an anti-suit injunction is not restricted to closed categories of cases but rather, is to be exercised if it is necessary to (a) protect its own processes once set in motion, or (b) restrain, according to the principles of equity, unconscionable conduct or the unconscientious exercise of legal rights: CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345; [1997] HCA 33 at 391-393 (Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ).

43    The implied power of this Court to protect its own proceedings or processes by the granting of an anti-suit injunction is “quite apart” from its power, granted in the exercise of equitable jurisdiction, to restrain unconscionable conduct or the unconscientious exercise of legal rights: CSR at 392-393; Kraft Foods Group Brands LLC v Bega Cheese Limited [2018] FCA 549 at [63] (O’Callaghan J). A critical distinction between the two powers is that, in considering the implied power, there is no question as to whether the Australian court is an appropriate forum because “it is the only court with any interest in the matter”: Kraft at [65]; CSR at 398. The implied power of the Court to protect the integrity of its processes once set in motion is the counterpart to its power to prevent its processes from being abused: CSR at 391-392.

44    One established category of case in which a Court may grant an anti-suit injunction, in the exercise of its equitable jurisdiction, is where proceedings that are launched, or threatened to be launched, in another foreign jurisdiction are, vexatious or oppressive. The mere co-existence of proceedings in different jurisdictions is not sufficient. Foreign proceedings are vexatious and oppressive only if there is nothing which can be gained by them over and above what may be gained in the local proceedings. This includes circumstances where “complete relief” is available in the local proceedings, or where foreign proceedings were commenced for the dominant purpose of preventing the continuation of the local proceedings: CSR at 393; see also TS Production LLC v Drew Pictures Pty Ltd and Another (2008) 172 FCR 433; [2008] FCAFC 194 at [53]-[55] (Gordon J, Stone J agreeing).

45    In TS Production, there was no evidence or submission that the foreign proceedings (brought in Illinois, United States) had interfered or would interfere with the Australian proceedings: at [54]. The question was whether the overlapping factual substratum of the Australian and Illinois proceedings could amount to vexation or oppression. Similar to the present case, in TS Production, different issues were involved in both proceedings, albeit that both arose out of a common substratum of facts. Gordon J held that the appellant (who was seeking the anti-suit injunction) had not established such vexation or oppression. Her Honour reasoned:

56    In my view, the appellant, in claiming an anti-suit injunction, must demonstrate a sufficient case showing that the further prosecution of the Illinois proceedings pending the hearing and determination of the proceedings in this Court would be “productive of serious and unjustified trouble and harassment” or “severely and unfairly burdensome, prejudicial or damaging”: Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 247 and CSR 189 CLR at 401.

57    In this case, the only “something more” to which the appellant could point was the inefficiency and additional cost that would be incurred if both proceedings were allowed to go ahead. The presiding judge appears to have accepted this submission (see reasons of Finkelstein J at [35]-[37]); however, I cannot. It is not enough to observe that prosecution of the two proceedings may be, even would be, burdensome. The references to “unjustified” and “unfairly” are important. When it is understood that the rights and relief in issue in the two proceedings are different, and that “something … can be gained by [the foreign proceedings] over and above what may be gained” in this Court, it is not arguable that it is either unjustified or unfair to maintain claims based on the US rights in the Illinois proceedings simultaneously with claims based on the Australian rights in the Federal Court.

46    In Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237 at [461] (Warren CJ, Osborn JA and Macaulay AJA), their Honours referred to the above observations by Gordon J in TS Production and then stated at [461]:

These passages support the view that the focus of the inquiry as to whether proceedings are vexatious or oppressive is not primarily on the additional expense and cost to the defendant, but rather on whether the bringing of a second proceeding in respect of the same controversy is unnecessary, “unjustified” or “unfair”. The authorities indicate that what is to be established in evidence is not primarily that the duplication of proceedings will lead to additional cost, expense, or harassment, but rather that there is nothing to be gained from the parallel proceeding; alternatively, that complete relief is available in a single proceeding. If there is a legitimate advantage that can be gained, the fact that the defendant will suffer additional cost and harassment is easily outweighed. The authorities show that what is required is not a straightforward balancing exercise that weighs the cost and harassment incurred by an applicant (and presumably their ability to bear that cost and harassment) against the advantage gained by the party bringing the proceeding. Rather, as follows from the majority’s reasoning in CSR, the balance is skewed heavily in favour of allowing a party to proceed when there is something substantial that may be gained in the foreign proceedings and is skewed heavily against so allowing when there is not.

(Footnotes omitted.)

E.    Submissions

E.1.    Care A2 respondents

47    The Care A2 respondents advance the following submissions in support of the final injunctive anti-suit relief that that they seek in these proceedings.

48    First, the Care A2 respondents submit that Gensco has commenced the Australian Proceedings in this country consistently with the “general rule” that a plaintiff must sue in the Court in which the defendant is subject at the time of the suit. They submit that because Gensco had already chosen Australia as the forum to resolve their dispute:

one would have thought that the most cost efficient and convenient course would be to join those persons to the Australian Proceeding, rather than commencing separate and parallel proceedings in Florida.

49    They submit that in the absence of any explanation of why Gensco has chosen to pursue the Anticipated Florida Proceedings, rather than joining the proposed defendants to the Australian Proceedings, the Court can infer that the

purpose of the Florida proceeding may be to harrass the officers and directors of Care A2 with the costs and inconvenience of defending (or appearing as witnesses in) parallel proceedings in Australia and the United States

50    The Care A2 respondents also seek to rely on the decision of this Court in Morris v McConaghy Australia Pty Ltd (No 3) [2018] FCA 606 in which Perram J accepted that the commencement of a proceeding in the Hong Kong Special Administrative Region (Hong Kong proceeding) had been to harass Mr Morris and to put him to the expense of litigating in multiple courts rather than as a result of any genuine interest in utilising the processes of the High Court of the Hong Kong Special Administrative Region.

51    Second, the Care A2 respondents submit that, with the exception of the foreshadowed claim for punitive damages, the Anticipated Florida Proceedings do not reveal any substantive relief over and above the relief presently claimed in the Australian Proceedings.

52    Third, the Care A2 respondents submit that little weight can be given to the foreshadowed claim for punitive damages. Mr Drew of counsel, who appeared for the first and third respondents, submits that the evidence that Gensco Pharma might be entitled to punitive damages in the Anticipated Florida Proceedings “is very light indeed” and “is no more than a mere assertion or an opinion that is unsupported by any reasons or any bases upon which they might reasonably be expected to be granted leave in the Florida proceeding to claim punitive damages”. He submits that the claim for punitive damages “rises no higher than conjecture at this point” and that it was only an “expression of opinion that’s unsupported by reasons, or any objective facts or even by reference to pleaded facts in the complaint”. Mr Drew also submits that:

One would have thought the person most liable for anything like punitive damages, even if it were to be an entitlement, would be the company itself that entered into the contracts and whom the officers represented. And on that basis, it might be inferred, in the absence of any evidence to the contrary, that that didn’t occur because such relief was likely not to be available or had poor prospects, or, perhaps less likely, that Gensco’s lawyers did not even originally consider it, and it has come up now in defence against this anti-suit injunction.

53    Fourth, the Care A2 respondents submit that the bringing of the Australian Proceedings with respect to this dispute may properly be seen as an election not to proceed with another claim in another jurisdiction, thus giving rise to an estoppel by conduct such that it would be unconscionable for that other claim to be pursued.

54    Fifth, the Care A2 respondents submit that the integrity of the processes of this Court are threatened because it seems likely that all, or at least some, of the proposed defendants to the Anticipated Florida Proceedings may be called as witnesses in the Australian Proceeding. They submit that this gives rise to a real risk of inconsistent findings of fact and credit as between the two proceedings and a “real and not insubstantial risk” that one or more of the parties and witnesses may not be available because of having to appear in the Anticipated Florida Proceedings.

E.2.    Gensco

55    Gensco submits that the Court would not grant the anti-suit injunction sought by the Care A2 respondents in the present case for the following principal reasons.

56    First, Gensco submits that there is no evidence that the Anticipated Florida Proceedings have interfered with, or will interfere with the Australian Proceedings. It submits that the Australian Proceedings are at a relatively early stage and any interference cannot rise above mere speculation. Any suggestion of the risk of inconsistent factual findings and credit findings is speculative. It submits that given no party has even filed any evidence in either proceeding, it cannot be assumed that all of the individuals named as defendants in the Anticipated Florida Proceedings will give evidence in both or either proceeding. In any event, it submits that the prospect of overlapping facts and witnesses has never been a sufficient condition to enliven either limb of CSR.

57    Second, Gensco submits that the overlapping factual substratum concerns could not amount to vexation and oppression because different parties and different claims are involved in the Australian Proceedings and the Anticipated Florida Proceedings. It submits that the important consideration is that the identity of the defendants and the claims made in the two proceedings are not identical. It submits that the only common defendant to the two proceedings is Ms Hyland and it has confirmed that it does not intend to pursue Ms Hyland in the Anticipated Florida Proceedings.

58    Third, contrary to the submissions made by the Care A2 respondents, the Anticipated Florida Proceedings do reveal substantive relief over and above such relief as is presently claimed in the Australian Proceedings. Gensco have confirmed that it intends to seek punitive damages in the Anticipated Florida Proceedings, which are not claimed, or available, in the Australian Proceedings.

59    Fourth, Gensco submits that the only “something more” that the Care A2 parties can identify is the co-existence of proceedings concerning the same factual substratum, which is not enough to justify the grant of an anti-suit injunction.

60    Fifth, Gensco submits that there is no evidentiary basis from which the Court could infer that the purpose of the Anticipated Florida Proceedings is to harass the officers and directors of Care A2 with the costs and inconvenience of defending, or appearing as witnesses in, parallel proceedings in the United States and Australia.

61    Sixth, Gensco submits that there can be no suggestion that the bringing of the Australian Proceedings constituted an election not to proceed with another claim in another jurisdiction, thus giving rise to an estoppel by conduct such that it would be unconscionable for that other claim to be pursued. It submits that there is no evidence that the commencement of the Australian Proceedings caused the respondents to the Australian Proceedings or the different defendants to the Anticipated Florida Proceedings to assume that no other proceedings would ever be brought in another jurisdiction. Rather it submits, that Gensco’s Florida counsel warned the different defendants of the potential of the Anticipated Florida Proceedings on 6 June 2023, before the commencement of the Australian Proceedings.

F.    Consideration

62    The “necessary to protect integrity” and “unconscionable conduct” limbs in CSR are distinct but whether either limb is enlivened often involves common or overlapping considerations. In my view, the Care A2 respondents have not established that the interim anti-suit injunction should remain in place or that any anti-suit injunction should be granted by way of final relief with respect to the Anticipated Florida Proceedings. I do not accept that the grant of an anti-suit injunction is necessary to protect the integrity of this Court and its processes or to restrain any unconscionable conduct or unconscientious exercise of legal rights by Gensco Pharma.

63    First, I do not accept that I should infer, that because the applicants commenced the Australian Proceedings in this country, that the purpose of the Anticipated Florida Proceedings is to harass the officers and directors of Care A2 with the cost and inconvenience of defending or appearing as witnesses in parallel proceedings.

64    The reliance by the Care A2 respondents on Morris is misconceived. In that case, the Court was able to draw such an inference because of, inter alia, (a) a statement in an email that “I suggest we keep pushing him to have to spend funds”, (b) the party that had commenced the Hong Kong proceeding was not domiciled in the Hong Kong Special Administrative Region, and (c) the extremely brief nature of the indorsement on the writ in the Hong Kong proceeding suggested little effort had been put into it: at [19]. There is no equivalent statement in the evidence that was adduced before me at the hearing on 17 August 2023. Gensco Pharma is domiciled in Florida and the Draft Complaint is extensively pleaded.

65    Second, I accept that there is likely to be a substantial overlap in the evidence deployed in the Australian Proceedings and the Anticipated Florida Proceeding given the common factual background to the two proceedings. Further, I accept, given the number of references to Mr Bugno, Mr Loader and Mr Galati in the SOC in the Australian Proceedings, that it is likely that each will ultimately be required to give evidence in both proceedings. I note that to some extent, the risk of conflicting credit and other findings might be expected to be reduced because the applicants have elected in the Draft Complaint for a jury trial in the Anticipated Florida Proceedings.

66    I also accept that it would have been possible, had the applicants chosen to do so, to have joined Mr Bugno, Mr Loader and Mr Galati as parties to the Australian Proceedings, and pursued at least misleading or deceptive conduct claims against each of them and sought similar relief, other than with respect to punitive damages. At the same time, it must also follow that the pursuit of different causes of actions in the Anticipated Florida Proceedings against persons likely to be witnesses in the Australian Proceedings with respect to the same factual matters is going to add materially to the cost and effort required to resolve the disputes that have arisen between the Care A2 respondents and Gensco.

67    I do not accept, however, that the Court can infer from the existence of a substantial overlap in the factual background to the Australian Proceedings and the Anticipated Florida Proceeding, that the proposed commencement of the Anticipated Florida Proceeding could relevantly be vexatious or oppressive, or the restraining of those proceedings would be necessary to protect the Court’s own proceedings and processes. The likely inefficiencies and additional costs to be incurred if the Anticipated Florida Proceedings are pursued is not sufficient to be productive of “serious and unjustified trouble and harassment” or be “severely and unfairly burdensome, prejudicial or damaging”.

68    I am not satisfied that the proposed commencement of the Anticipated Florida Proceedings is for the dominant purpose of preventing the continuation of the Australian Proceedings. Any risk of interference in the efficient conduct of the Australian Proceedings cannot rise above mere speculation. The causes of action are distinct, the proceedings are to be pursued against different defendants and there is no reason to expect that any practical difficulties in securing witnesses to give evidence could not be avoided by ensuring the two proceedings were not listed for hearing on the same dates.

69    Third, Gensco Pharma has expressly raised, in both the 6 June 2023 letters and the 4 August 2023 email, its intention to seek punitive damages against Mr Bugno, Mr Loader and Mr Galati in the Anticipated Florida Proceedings. The foreshadowed claim to be made for punitive damages in the Anticipated Florida Proceedings provides a compelling basis to conclude that there is something substantive that might be gained by Gensco from the Anticipated Florida Proceedings and that the “complete relief” that the applicants seek cannot be obtained in the Australian Proceedings.

70    The relevant issue is what is being sought by way of relief, not the precise factual or juridical basis on which a claim for relief is to be advanced or its prospects for success. Those are matters for the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida (Florida Court). Gensco has advanced evidence that establishes that Gensco Pharma intends to seek punitive damages in the Anticipated Florida Proceedings and that punitive damages can be sought in Florida. The Care A2 respondents have not suggested that the Gensco’s evidence on these matters should not be accepted.

71    In my view, the foreshadowed claim for punitive damages can readily be characterised as something that can be gained “over and above what may be gained” in this Court.

72    Fourth, the civil conspiracy, fraud and negligent misrepresentation claims to be advanced in the Anticipated Florida Proceedings against Mr Bugno, Mr Loader and Mr Galati are materially different to the misleading or deceptive conduct and breach of contract claims pursued in the Australian Proceedings against the respondents in the Australian Proceedings. The fraud claims proposed to be advanced in the Anticipated Florida Proceedings include allegations that Florida law imposed on the defendants a duty to disclose information to Gensco about “whether Care A2’s infant product could be distributed and sold in the U.S.” and that the defendants breached that duty in that they “omitted, concealed, and even affirmatively misrepresented to Gensco material facts about Care A2’s ability to produce, market and distribute the product in the U.S.”. The risk of any interference with the Australian Proceedings is significantly reduced because the Florida Court is to determine different claims against different defendants. At the same time, the pursuit of different causes of action based on civil conspiracy, fraud and negligent misrepresentation militates against any inference that the Anticipated Florida Proceedings is proposed to be commenced for the central or dominant purpose of preventing the continuation of proceedings in this Court.

73    Further, the parties to be pursued in the Anticipated Florida Proceedings are not parties to the Australian Proceedings. In that respect, I note that although Ms Hyland is named as a defendant in the Draft Complaint, the applicants have provided an undertaking to the Court that Gensco will not commence any proceedings against Ms Hyland in the United States while she remains a party to the Australian Proceedings.

74    Fifth, I do not accept that the bringing of the Australian Proceedings constituted an election not to proceed with another claim in another jurisdiction, giving rise to an estoppel by conduct such that it would be unconscionable for that other claim to be pursued: see CSR at 394. The principle upon which estoppel by conduct is founded is that the law should not permit an unjust departure by a party from an assumption of fact which they have caused another party to adopt or accept for the purpose of their legal relations: Grundt v The Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641; [1937] HCA 58 at 674-676 (Dixon J). There is no evidence that the commencement of the Australian Proceedings caused the respondents to the Australian Proceedings or the proposed defendants to the Anticipated Florida Proceedings, to assume that no other proceedings would ever be brought in another jurisdiction. To the contrary, Gensco’s Florida counsel warned the proposed defendants on 6 June 2023, prior to the commencement of the Australian Proceedings, of its intention to pursue the Anticipated Florida Proceedings if it did not receive US$3,360,000 and if the defective products supplied by Care A2 were not “taken off of Gensco’s hands”.

G.    Disposition

75    Order 6 of the orders made by Jackman J, as extended by Order 2 of the orders I made on 17 August 2023, is to be discharged and the Interlocutory Application is otherwise to be dismissed. The Care A2 respondents are to pay the costs of the applicants.

Associate:

Dated:    28 August 2023

SCHEDULE OF PARTIES