Federal Court of Australia
Petrovsky v Southern Adelaide Local Health Network Inc [2024] FCA 396
ORDERS
First Applicant VAXINE PTY LTD Second Applicant | ||
AND: | SOUTHERN ADELAIDE LOCAL HEALTH NETWORK INCORPORATED First Respondent FLINDERS UNIVERSITY Second Respondent | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The application for interlocutory relief is dismissed.
2. Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
DOWLING J:
Introduction
1 This is an application for urgent interlocutory orders to restrain the respondents from denying the applicants access to the Flinders Medical Centre and otherwise interfering with the applicants’ research studies, property, mice supplies and equipment.
2 The proceeding was commenced on 14 January 2024. On 16 January 2024 undertakings were given by the second respondent, Flinders University, to permit the applicants and certain persons access to parts of the FMC and for the continued supply of research animals. On 26 February 2024 that undertaking was revoked and replaced by a further undertaking given by both the University and the first respondent, the Southern Adelaide Local Health Network Incorporated, to provide the applicants and certain persons access to parts of the FMC and for the continued supply of research animals. That undertaking expires on 19 April 2024. This application was heard on 11 April 2024 and further written submissions were filed 12, 15 and 16 April 2024.
3 For the purposes of the application for interlocutory relief the applicants make the following claims. First, Dr Petrovsky the first applicant, and the second applicant, Vaxine Pty Ltd allege that there was a Joint Venture Agreement between them and the University and the SALHN. By their statement of claim the applicants allege that the Joint Venture Agreement contained terms that:
(a) Vaxine would be entitled, for its own commercial benefit, to undertake research on topics relevant to endocrinology, immunology and vaccines (defined as the Relevant Fields) and to commercialise the results of such research from premises at the FMC and at the University (defined as the Commercial Activities);
(b) The SALHN and the University would each make available to Vaxine such premises and facilities as were reasonably necessary for the conduct of the Commercial Activities;
(c) Dr Petrovsky would hold an appointment as a professor of the University and be entitled to the emoluments, facilities and other benefits usually accorded to a professor of the University;
(d) Dr Petrovsky would be entitled to devote a substantial part of his time to assisting Vaxine to pursue the Commercial Activities;
(e) Dr Petrovsky and Vaxine would co-operate with the SALHN and the University to:
(i) apply for grants for research on topics in the Relevant Fields;
(ii) undertake such research;
(iii) allow the University’s School of Medicine to take credit for such research in the sense that it could count that research as part of its own productivity for the University’s administrative and funding purposes; and
(f) Vaxine would be entitled to recover such income as it obtained from the Commercial Activities.
4 The applicants allege that the respondents have breached the terms of the Joint Venture Agreement, at (a) and (b) above, by refusing to permit the applicants to use FMC laboratory 6D305, other than on a limited basis (the Lab Exclusion). The applicants allege that the respondents have breached term (c) above by ‘withdrawing’ or ‘cancelling’ Dr Petrovsky’s academic status as a Professor of the University (the Status Non-renewal).
5 The applicants also allege that there was, implied in the Joint Venture Agreement, a term providing that the agreement was terminable by any party on reasonable notice. They allege that the Lab Exclusion was in breach of that term.
6 Second, the applicants allege, in the alternative to the Joint Venture Agreement, that there existed licence agreements between them and each of the respondents and that the Licences contained terms that:
(a) the grantor would make available to Vaxine such premises and facilities as were reasonably necessary for the conduct of the Commercial Activities;
(a) the grantor would appoint Dr Petrovsky to a position of sufficient seniority to facilitate the conduct of the Commercial Activities;
(b) in consideration of those grants, Dr Petrovsky and Vaxine would co-operate with the SALHN and the University to:
(i) apply for grants for research on topics in the Relevant Fields;
(ii) undertake such research; and
(iii) allow the University’s School of Medicine to take credit for such research in the sense that it could count that research as part of its own productivity for the University’s administrative and funding purposes.
7 The applicants allege that each of the respondents have breached the Licence terms, at (a) and (b) above, by the Lab Exclusion and the Status Non-renewal.
8 The applicants also allege that there was, implied in the Licences, a term providing that the Licences were terminable by any party on reasonable notice. They allege that the Lab Exclusion was in breach of that term requiring reasonable notice.
9 Third, the applicants allege that the respondents have, in trade and commerce, engaged in unconscionable conduct in breach of s 21 of the Australian Consumer Law, which is Schedule 2 to the Competition and Consumer Act 2010 (Cth). The applicants allege that the Status Non-renewal was ‘unconscionable and did not follow due process’.
10 The SALHN and the University have not yet filed a defence to the statement of claim. They oppose the making any interlocutory orders. They submit that there was no Joint Venture Agreement and no agreement of any kind in the terms alleged. They submit that Dr Petrovsky was employed by the SALHN, and awarded full academic status as a Professor by the University for a limited time. They say that academic status may be renewed after review by the University, and that it may be reviewed at any time and rescinded if the circumstances under which it was awarded no longer apply.
11 The SALHN and the University submit that any entitlement to reasonable notice was satisfied by the period of 16 months from the Status Non-renewal. They say that they made offers or attempts to provide alternative premises for the applicants and that none of their conduct was unconscionable.
12 For the reasons set out below the application for interlocutory relief is dismissed.
Principles
13 The applicants must demonstrate that there is a serious question to be tried that they are entitled to relief and that the balance of convenience favours the grant of an injunction: Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at [65]-[72] per Gummow and Hayne JJ (with whom Gleeson CJ and Crennan J agreed at [19]).
14 The applicants must establish that their case has a sufficient likelihood of success to justify the preservation of the status quo pending the trial. The strength of that likelihood depends upon the nature of the rights asserted and the practical consequences likely to flow from the order sought: O'Neill at [65].
15 When considering the grant of an interlocutory injunction, the issue of whether the applicants have made out a serious question and whether the balance of convenience favours the grant of an injunction are related inquiries. The question of whether there is a serious question should not be considered in isolation from the balance of convenience: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 at [67] (Dowsett, Foster and Yates JJ), citing, with approval Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2009] FCA 595; (2009) 81 IPR 339 at [15] (Sunberg J).
16 In Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 Woodward J (with whom Smithers and Sweeney JJ agreed), said at [472]:
… when it becomes necessary to consider the balance of convenience, it is, I believe, quite proper to continue to bear in mind the apparent strength of the applicants’ case; the two legs of the test need not be considered in isolation from each other. Thus an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. A more doubtful claim (which nevertheless raises “a serious question to be tried”) may still attract interlocutory relief if there is a marked balance of convenience in favour of it.
17 The assessment of the adequacy of damages as a remedy is to be considered as part of the Court’s assessment of the balance of convenience. In Samsung, the Full Court (Dowsett, Foster and Yates JJ) stated at [63]:
The interaction between the Court’s assessment of the likely harm to the plaintiff, if no injunction is granted, and its assessment of the adequacy of damages as a remedy, will always be an important factor in the Court’s determination of where the balance of convenience and justice lies. To elevate these matters into a separate and antecedent inquiry as part of a requirement in every case that the plaintiff establish “irreparable injury” is, in our judgment, to adopt too rigid an approach. These matters are best left to be considered as part of the Court’s assessment of the balance of convenience and justice even though they will inevitably fall to be considered in most cases and will almost always be important considerations to be taken into account.
the affidavit evidence
18 Between them, the parties tendered and relied upon 22 affidavits. Those affidavits and their annexures totalled 2,177 pages. The applicants tendered affidavit evidence from the following persons:
(a) Dr Nikolai Petrovsky, the first applicant (four affidavits, sworn 14 January 2024, 14 January 2024, 12 March 2024 and 2 April 2024);
(b) Mr Jayath Vidanage, the applicants’ solicitor (an affidavit sworn 15 January 2024) ;
(c) Dr Yoshikazu Honda-Okubo, scientist employed by Vaxine, (three affidavits, sworn 23 February 2024, 23 February 2024 and 26 February 2024);
(d) Professor Robert Clancy, Clinical Immunologist (an affidavit sworn 6 March 2024);
(e) Dr Peter Parry, Consultant Child and Adolescent Psychiatrist (an affidavit sworn 11 March 2024);
(f) Mr Greiciely de Oliveira, scientist employed by Vaxine (an affidavit sworn 12 March 2024);
(g) Associate Professor Dimitar Sajkov, Senior Respiratory Physician employed by the SALHN and Associate Professor at the University (an affidavit sworn 12 March 2024); and
(h) Ms Sharen Pringle, business and clinical trials manager of Vaxine (an affidavit affirmed 12 March 2024).
19 The SALHN tendered affidavit evidence from the following persons:
(a) Mr Wayne Gadd, Executive Director of Infrastructure and Digital at the SALHN (an affidavit affirmed 20 March 2024);
(b) Mr Michael Francese, Chief People Officer at the SALHN (an affidavit affirmed 20 March 2024); and
(c) Professor Andrew Bersten, Executive Director Research Strategy at the SALHN (an affidavit affirmed 20 March 2024).
20 The University tendered affidavit evidence from the following persons:
(a) Professor Jonathan Craig, Vice President and Executive Dean of the College of Medicine and Public Health at the University (an affidavit affirmed 20 March 2024);
(b) Professor Damien Keating, Director of Flinders Health and Medical Research Institute at the University (an affidavit affirmed 20 March 2024);
(c) Mr Hendryk Flaegel, Manager of the Research Ethics and Compliance at the University (an affidavit affirmed 20 March 2024);
(d) Ms Hildie Auret, Deputy General Counsel for the University (two affidavits sworn 20 March 2024 and 9 April 2024); and
(e) Ms Roxanne Collingwood, Manager of the Animal Facility at the University (an affidavit affirmed 9 April 2024).
21 The parties made submissions on the salient parts of that evidence. Save submissions and objections to evidence of without prejudice communications, there were no objections to that evidence. I have had regard to all of that affidavit material.
is there a serious question to be tried?
22 The first issue is whether there is a serious question to be tried in respect of claims made by the applicants.
Is there a serious question to be tried of a Joint Venture Agreement in the terms alleged
The documents relied upon
23 The parties relied upon a number of documents to support or refute the Joint Venture Agreement.
24 The applicants rely upon an email from Professor Patrick Phillips, Head of Medicine at the University, to Dr Petrovsky sent in March 2004 (annexure “NP-2” to the first affidavit of Dr Petrovsky) (the 2004 Phillips email). The email presents as an invitation from Professor Phillips for Dr Petrovsky to apply for the position of Director of Endocrinology. The email commences:
I am writing to you as I understand there might be a possibility that you could be interested in our Director of Endocrinology position which we advertised on Saturday due to the planned retirement of our current Director, Steve Judd.
25 The email makes no reference to Vaxine or any proposed agreement with it.
26 The email provides that:
Full academic status (which gives various privileges within the university) is awarded through Flinders University School of Medicine as part of the appointment process.
27 The email refers to the advertisement placed by the University (annexure “NP-10” to the first affidavit of Dr Petrovsky). That advertisement relevantly provides that:
Full academic status at Professor/Associate Professor level would be negotiated with Flinders University for the successful applicant.
28 The SALHN, the first respondent, relies upon:
(a) The letter of offer of employment made to Dr Petrovsky by the SALHN together with attachments (annexure “MF-1” to the affidavit of Michael Francese);
(b) The letter setting out misconduct allegations made against Dr Petrovsky (annexure “MF-7” to the affidavit of Michael Francese);
(c) A rental agreement between the University and Vaxine (annexure “WSG-2” to the affidavit of Wayne Gadd); and
(d) An intellectual property agreement between the SALHN and Vaxine (annexure “NP-5” to the first affidavit of Dr Petrovsky)
29 The letter of offer includes a covering letter, a salary and conditions document, and a position description document. The letter confirms Dr Petrovsky’s appointment as Head of Endocrinology and Diabetes within the Medicine, Cardiac and Critical Care Services Division at FMC. The letter and attachments do not make reference to Vaxine or any proposed agreement with it.
30 The letter setting out misconduct allegations is dated 23 October 2023 and is directed to allegations made against Dr Petrovsky. The letter makes no reference to any agreement with Vaxine.
31 The rental agreement is between Vaxine and the University and signed on behalf of Vaxine on 27 March 2007, approximately 3 years after Dr Petrovsky commenced his employment. The rental agreement is for the laboratory space known as laboratory 6D309 at the FMC. That space is not the subject of this application. However, the SALHN submits that if there was an existing Joint Venture Agreement obligation on the SALHN and the University to provide reasonably necessary facilities to Vaxine, then there would be no need for the rental agreement for laboratory 6D309.
32 The intellectual property agreement is between Vaxine and the SALHN and dated 24 January 2008. Recitals A to E (there is no recital B) of that agreement provide:
A. Professor Nikolai Petrovsky, whose employer is FMC, is engaged in vaccine research through his role as principal investigator on a number of vaccine projects including the NIH funded project administered by Flinders University and conducted by Vaxine Pty Ltd researchers under the direction of Professor Petrovsky.
C. Vaxine has developed and owns proprietary vaccine and adjuvant technology that is essential to the conduct of these vaccine projects.
D. Vaxine has previously entered into an agreement with FUSA and FMC which vests ownership of IP created by Vaxine employees and contractors arising from the vaccine projects with Vaxine.
E. Given the employment relationship of Professor Petrovsky with FMC, the purpose of this agreement is to similarly vest ownership of any vaccine IP to which Professor Petrovsky may contribute in conduct of these vaccine projects to Vaxine in return for payments from Vaxine to FMC.
33 The SALHN submits that if there was an existing Joint Venture Agreement term allowing for Vaxine to commercialise its research then there would be no need for the intellectual property agreement.
34 The University relies upon:
(a) The letter confirming that Dr Petrovsky was, in 2004, awarded “Full Academic Status as a Professor (Level E)” at the University (annexure “NP-4” to the first affidavit of Dr Petrovsky);
(b) A facilities and service agreement made between Vaxine and the University and signed on behalf of Vaxine on 21 February 2007 (annexure “HA-10” to the second affidavit of Hildie Auret); and
(c) The advertisement placed by the University for the position of Director of Endocrinology (annexure “NP-10” to the first affidavit of Dr Petrovsky).
35 The letter confirming Dr Petrovsky’s award as a professor in 2004 advises that:
This status is awarded from 15 September 2004 until 14 September 2007 and may be extended on the recommendation of the Executive Dean of Faculty.
36 The letter also encloses a copy of the University’s policy on Academic Status. That policy relevantly provides:
3.1 The award of academic status does not create or imply an employment relationship with the University. However a person who is awarded academic status must comply with legislation and provisions which affect the University, and with University Statutes, By-Laws, policies, rules, and guidelines.
…
3.3 Academic status will be awarded for an initial specified term up to a maximum of three years initially and may be renewed after review by the Faculty. It may be reviewed at any time and rescinded if the circumstances under which it was awarded no longer apply.
…
7.1.5 [All holders of academic status will be entitled to] have access to facilities, resources, equipment and premises at the discretion of the Head of the Faculty concerned.
37 The University submits that the 2004 Phillips email, providing that full academic status is awarded as part of the appointment process, does not provide a basis to allege that for as long as Dr Petrovsky remained in the position of Director of Endocrinology he would be awarded full academic status. Rather the University says awarding of that status is, and always was, subject to review by the University.
38 The University relies upon a facilities and service agreement made between Vaxine and the University and signed on behalf of Vaxine on 21 February 2007. By at least recitals A and D that agreement is premised on Vaxine not being entitled to the common service facilities and equipment to which Dr Petrovsky was entitled. Recitals A and D provide:
A. The University is the administering institution for a five year NIH grant and a one year NHMRC grant, the research work for which has been subcontracted to the Company under agreements between the parties dated 28 February 2006 (the “Consortium Agreement”) and 6 March 2006 (the “NHMRC Agreement”), respectively.
…
D. The FMC is a fully integrated teaching and research hospital and a range of common service facilities and equipment have been developed by the hospital and the University. The access to facilities, resources, equipment and premises of the University to which Professor Petrovsky is entitled by virtue of his academic status with the University does not entitle him, or other personnel under his supervision to access the common service facilities and equipment which have been developed by the hospital and the University, in respect of research undertaken in conjunction. with, or on behalf of, the Company [Vaxine], at no cost to the Company.
39 The University submits that if there was an existing Joint Venture Agreement obligation upon the SALHN and the University to provide reasonably necessary facilities to Vaxine then there would be no need for the facilities and services agreement.
40 The applicants also relied upon that facilities and service agreement. They submit that agreement was an ‘example’ of the relationship between the University and Vaxine consistent with the pleaded terms. However, that position is undermined by clause 13 of the agreement which provided:
13. Either party is entitled to terminate this agreement without cause by giving no less than 30 days advance notice to the other party's contact person, as specified in the Schedule, in writing, unless there is a breach of any term of this agreement by either party. In that case termination notice of 14 days, given in writing, is required.
41 Such a term is inconsistent with the pleaded term that the Joint Venture Agreement was only terminable by the giving of reasonable notice.
42 The University also relied upon the advertisement placed by the University for the position of Director of Endocrinology. The advertisement relevantly provides that: “Full academic status at Professor/Associate Professor level would be negotiated with Flinders University for the successful applicant.” The University says that is inconsistent with the pleaded term that Dr Petrovsky “would hold an appointment as professor” because it is subject to negotiation rather than an entitlement.
The representations relied upon
43 The applicants also rely upon a number of representations (pleaded at paragraph 12 of the statement of claim). The respondents submit, even accepting those representations were made, they do not make out the alleged terms of the Joint Venture Agreement.
44 The University directs attention to the representation at paragraph 12(a)(iii) of the statement of claim. That paragraph provides that Professor Phillips told Dr Petrovsky that “it would be open to him to conduct the business of Vaxine from the premises of FMC and the University.” That is the representation that appears to ground the terms of the Joint Venture Agreement at paragraphs 17(a), (b) and (d) of the statement of claim. Those terms are:
(a) Vaxine would be entitled, for its own commercial benefit, to undertake research in the Relevant Fields and to commercialise the results of such research from premises at FMC and at the University (Commercial Activities);
(b) [SALHN] and the University would each make available to Vaxine such premises and facilities as were reasonably necessary for the conduct of the Commercial Activities;
(a) Petrovsky would be entitled to devote a substantial part of his time to assisting Vaxine to pursue the Commercial Activities;
45 The University submits that the representation at 12(a)(iii) does not establish those terms, rather it only permits Dr Petrovsky to conduct the business of Vaxine at the FMC. It does not create any agreement between it and Vaxine or any contractual rights for Vaxine.
46 The respondents submit that the representations pleaded in paragraph 12 of the statement of claim make clear that the priority and interest of the University is Dr Petrovsky and the benefit his profile might bring to the University. They say that they did not represent any interest in Vaxine, save that it would be “open” to Dr Petrovsky to conduct the business of Vaxine. They say the University’s interest in Dr Petrovsky is made clear by representations as pleaded by the applicant:
(a) Phillips told Petrovsky that if Petrovsky accepted appointment to the Position:
(i) he would not have to carry a major clinical load in endocrinology and would have authority and funding to employ additional clinicians to assist him in delivering such clinical services;
(ii) Petrovsky would be expected to use his reputation as an internationally-recognised expert in the Relevant Fields to improve the reputation of the University’s School of Medicine (SOM);
…
(vi) Petrovsky would be free to choose the fields of research in which he wished to focus his attention, including vaccine research;
(vii) that he would have access to special purpose accounts held by FMC and the University to facilitate the conduct of research including by Vaxine;
(viii) Phillips would arrange for an additional amount of $50,000 to be placed into a newly created special purpose account to help Petrovsky to establish his new research operations at FMC and the University;
(b) Phillips spoke words to the effect that his key motivation in filling the FMC Endocrinology position was to strengthen the SOM, which had been weakened by the departure of many clinical academics who had helped build the reputation of the SOM.
(i) Phillips spoke words to the effect that it was Petrovsky’s academic research credentials and track record that was important to him, as distinct from Petrovsky’s clinical expertise;
(ii) Phillips said:
I can get plenty of clinicians to manage the clinical load, what I want from you is to provide academic leadership and a strong research profile.
(iv) Phillips spoke words to the effect that Petrovsky’s key task would be to advance the research profile of the SOM so that it would be able to recruit high-calibre clinical researchers like Petrovsky and reverse any previous decline.
47 I accept the submission that those representations make clear the University’s priority and interest is in Dr Petrovsky and that they do not represent an interest in Vaxine. There is no suggestion in those representations that if Dr Petrovsky’s employment was to come to an end that the University would be interested in any relationship with Vaxine.
Conclusions on the Joint Venture Agreement
48 I am not satisfied that there is a serious question to be tried that the documents, representations, and conduct relied upon by the applicants, establish the Joint Venture Agreement as pleaded.
49 With respect to the documents, the 2004 Phillips email does not refer, expressly or otherwise, to Vaxine. It makes no reference to any proposed agreement with Vaxine. The email’s reference to the awarding of “Full Academic Status” is subject to what was contained in the advertisement (to which it refers). That advertisement states that the academic status is to be “negotiated” with the University.
50 I accept the submissions of the respondents that:
(a) The 2004 letter of offer of employment from the SALHN to Dr Petrovsky was intended to create no more than an employment relationship with Dr Petrovsky. It makes no reference to Vaxine;
(b) The 2007 rental agreement for laboratory 6D309 counts against the applicant because it may not be necessary if the terms of the Joint Venture Agreement as pleaded were made out;
(c) The 2008 intellectual property agreement counts against the applicant because it may not be necessary if the terms of the Joint Venture Agreement as pleaded were made out;
(d) The 2004 letter awarding Dr Petrovsky full academic status is inconsistent with the pleaded Joint Venture Agreement because it awards that status for 3 years, and by the accompanying policy identifies that it may be “reviewed at any time and rescinded if the circumstances under which it was awarded no longer apply”; and
(e) The 2007 facilities and service agreement counts against the applicant because it is premised on Vaxine not having the entitlements alleged by the Joint Venture Agreement and may not be necessary if the terms of the Joint Venture Agreement as pleaded were made out. Insofar as the applicant relies upon that agreement it is directly inconsistent with the pleaded Joint Venture Agreement where it provides for termination on the giving of “30 days advance notice”.
51 I am not satisfied that there is a serious question to be tried that the representations relied upon by the applicants, together with the documents or alone, establish the Joint Venture Agreement as pleaded. The representation at paragraph 12(a)(iii) of the statement of claim goes no further than representing to Dr Petrovsky that “it would be open to him to conduct the business of Vaxine from the premises of FMC and the University.” It does not purport to make, or set out the terms of, a joint venture agreement between SALHN, the University, Dr Petrovsky and Vaxine.
52 At a more fundamental level, I am not satisfied for the purposes of a serious question to be tried, that the words and conduct of all of the parties would be reasonably understood to convey the making of the Joint Venture Agreement as pleaded. I am not satisfied that there was a clear offer by the respondents to make such an agreement, or a clear acceptance by the applicants of such an offer. I am not satisfied that the applicants have established, for the purposes of a serious question to be tried, the intention of all of the alleged parties to the Joint Venture Agreement to create legal relations. I am not persuaded that there exists a serious question to be tried that there was a Joint Venture Agreement in the terms pleaded.
53 In circumstances where I am not satisfied that there is a serious question to be tried that there was a Joint Venture Agreement in the terms pleaded, I do not propose to separately deal with each term pleaded. However, the words and conduct of the parties makes clear that there was an employment relationship between the SALHN and Dr Petrovsky, and that the University’s priority and interest was the presence of Dr Petrovsky in order to enhance its reputation. The evidence does not suggest that the four parties intended that there would be an ongoing relationship between the respondents and Vaxine if Dr Petrovsky’s employment came to an end.
Is there a serious question to be tried of Licence agreements in the terms alleged?
54 The applicants plead, in the alternative to the Joint Venture Agreement, Licence agreements with each of the respondents. The Licences are said to arise from the same matters that gave rise to the Joint Venture Agreement; relevantly the 2004 Phillips email and the representations made by Professor Phillips and pleaded at paragraph 12 of the statement of claim.
55 The Licence is said to have four relevant terms. Those are:
22. In the alternative to the matters pleaded at paragraphs 17 – 19(b), in the premises of the matters set out in paragraphs 1- 16, Vaxine was, on and from the Appointment Date, granted a licence by each of [the SALHN] and the University (Licences) on terms (in each case) that:
(a) the grantor would make available to Vaxine such premises and facilities as were reasonably necessary for the conduct of the Commercial Activities;
(b) the grantor would appoint Petrovsky to a position of sufficient seniority to facilitate the conduct of the Commercial Activities;
(c) in consideration of those grants, Petrovsky and Vaxine would co-operate with [the SALHN] and the University to:
(i) apply for grants for research on topics in the Relevant Fields;
(ii) undertake such research; and
(iii) allow the SOM [University’s School of Medicine] to take credit for such research in the sense that it could count that research as part of its own productivity for the University’s administrative and funding purposes.
23. There was implied in each of the licences as a matter of law, alternatively ad hoc, a term to the effect that it was terminable by any party at will on reasonable notice (Licence Termination Term).
56 I am not satisfied that there is a serious question to be tried that the documents and representations establish those terms in any licence. I am not satisfied that those terms are established from the documents or representations for the same reasons set out above in relation to the alleged Joint Venture Agreement.
57 However, the second respondent accepted in oral submissions that some licence was given by the University to the applicants. It submits that that licence was either: (a) terminable at will; or (b) dependant on Dr Petrovsky remaining in employment with the SALHN.
58 My assessment of the words and conduct of all of the parties reasonably understood is that the University was eager to have Dr Petrovsky so as to enhance the standing of the University. So much is consistent with the applicants’ pleaded case on the representations of Professor Phillips. In that context it communicated that it was “open to him to conduct the business of Vaxine from the premises of FMC and the University”: see statement of claim at [12(a)(iii)], emphasis added. Nothing from the words and conduct of the parties suggest that they intended to give Vaxine an ongoing licence to occupy and utilise the FMC and University in the absence of Dr Petrovsky. I am satisfied that any licence was dependant on Dr Petrovsky remaining in employment with the SALHN. In those circumstances it is not necessary for me to determine whether it was also terminable at will.
59 I am not persuaded that there exists a serious question to be tried that there was a licence in the terms pleaded.
Unconscionable conduct
60 Section 21 of the ACL relevantly provides that a person must not, in trade or commerce, in connection with the supply or acquisition of goods or services engage in conduct that is, in all the circumstances, unconscionable. Section 22 of the ACL sets out matters that the Court may have regard to for the purpose of determining whether a person contravened s 21 in respect of the supply or acquisition of goods and services. Those matters include the requirements of any applicable industry code and the requirements of any other industry code (ss 22(1)(g)(h), (2)(g)(h)).
61 The respondents accept, for the purposes of the application for interlocutory relief, that there was the supply or acquisition of goods or services in trade or commerce.
62 In AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd [2023] FCA 1022 Beach J set out at [3493]-[3530] some of the legal principles applicable to ss 21 and 22 of the ACL. Second amongst those principles is the need for the identification of the facts said to constitute the unconscionable conduct.
63 From the submissions filed by the applicants it was not clear whether the claim of unconscionable conduct formed one of the bases for the interlocutory orders sought. At the hearing I raised that matter directly with counsel for the applicants. I was directed to paragraphs 23 to 25 of the applicants’ written submissions. Paragraph 23 of the applicants’ written submissions dated 2 April 2024 relevantly provides:
The removal of his professorship infers inappropriate personal conduct or inadequacy as an academic. The Second Respondent’s conduct was unconscionable and did not follow due process.
64 I understand that submission in paragraph 23 to confine the allegation of unconscionable conduct, for the purposes of the interlocutory orders sought, to the Status Non-renewal. The relevant chronology of events surrounding that Status Non-renewal are as follows.
65 On 20 April 2022, Dr Petrovsky received an email from Professor Jayanthi Jayakaran, the Dean of People and Resources at the College of Medicine and Public Health at the University advising him that his academic status was due to expire on 30 June 2022 and that his application for renewal was due on 2 May 2022.
66 On 7 June 2022, Dr Petrovsky sought Professor Gleadle’s support for his application for renewal of his academic status. Professor Gleadle referred Dr Petrovsky to Professor Eastwood as the appropriate person to support Dr Petrovsky’s application. On 17 June 2022, Professor Eastwood emailed Dr Petrovsky advising that he was unable to support Dr Petrovsky’s “renewal application for full academic status as a sponsor”. The emails suggest that Dr Petrovsky had attached an application form in his communications with Professors Gleadle and Eastwood. However, that application form is not in evidence. It is not clear whether that application form was ever formally submitted.
67 On 29 August 2022, Dr Petrovsky received a letter, via his solicitors, from David Lim, General Counsel and Secretary of the University, advising him: that he had four weeks to submit an application for the renewal of his academic status; that his application would then be considered by the College Academic Status Committee; and, after their recommendation his application would be referred to the Professorial (Non-Employee) Appointment Committee to make a final decision.
68 On 28 September 2022, Dr Petrovsky submitted his application for renewal of his academic status.
69 On 7 October 2022, Dr Petrovsky’s academic status renewal was considered by an ad-hoc, special meeting of the Academic Status Committee of the University. That meeting dealt only with Dr Petrovsky’s application. Dr Petrovsky spoke to that Committee in support of his application. The Academic Status Committee voted unanimously against the renewal of Dr Petrovsky’s academic status.
70 On 17 November 2022, Dr Petrovsky’s academic status renewal was considered at a meeting of the Professorial (Non-Employee) Appointment Committee. The Professorial (Non-Employee) Appointment Committee did not support the renewal of Dr Petrovsky’s academic status.
71 On 28 November 2022, Dr Petrovsky was informed that his academic status would not be renewed.
72 Professor Jonathan Craig, Vice President and Executive Dean of the College of Medicine & Public Health at the University, provided evidence that Dr Petrovsky’s application was afforded more opportunities to be heard than any other application. Professor Craig’s evidence was that:
(a) Dr Petrovsky was afforded additional time to submit his application;
(b) Dr Petrovsky was permitted to make oral submissions to the Academic Status Committee; and
(c) Despite the Academic Status Committee not recommending renewal, Dr Petrovsky’s application was also considered by the Professorial (Non-employee) Appointments Committee.
73 Professor Craig further said that Dr Petrovsky’s renewal application was part of a larger process of renewal at the University which included that:
(a) In April 2022, 641 individuals including Dr Petrovsky were invited to apply to have their academic status renewed;
(b) 33 of those individuals held the title of Professor; and
(c) 480 individuals did not have their status renewed (due to several reasons including non-submission of renewal application, rejection of application, no sponsorship, or no longer required by the status holder), including 20 holding the title of Professor.
74 Having identified those facts, the task is to assess whether the conduct in all the circumstances is to be characterised as unconscionable. That involves an evaluative judgment in which the factors in s 22(1) must be considered and synthesised together (see Mercedes-Benz at [3500]).
75 In Mercedes-Benz at [3507] Beach J stated:
Now Gageler J said in Kobelt [Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1] at [92] that the ultimate question may require considering whether the conduct is “so far outside societal norms of accepted commercial behaviour that it warrants condemnation”, but that is no licence to embark on a voyage of discovery of social and community standards. Rather that is the ultimate judgment.
76 I accept the submissions of the University, based in part on the correspondence and policy provided to Dr Petrovsky in 2004 when his academic status was awarded, that it had the entitlement to review its award of academic status. I accept that it undertook such a review in 2022 in respect of 641 academics. I am not satisfied that there is a serious question to be tried that the University’s conduct in undertaking that review, or the process of that review, was in contravention of s 21 of the ACL. I am not satisfied the conduct identified above was so far outside societal norms of accepted behaviour that it warrants condemnation.
77 I have taken into account the limited evidence of earlier reviews and that at least some of the University’s reasons for the Status Non-renewal may have been present during those earlier reviews. Nevertheless, I am not satisfied that there is a serious question to be tried that the University’s conduct in the Status Non-renewal was unconscionable.
78 As I set out above, from the submissions filed by the applicants it was not clear whether the claim of unconscionable conduct formed one of the bases for the interlocutory orders sought. When I raised that matter at the hearing with counsel for the applicants, I was directed to paragraphs 23 to 25 of the applicants’ written submissions. I deal with those matters above. However, counsel for the applicant also said:
I think it’s open for the court to find that there is a basis for making the allegation in the sense that the giving of short notice in all of the circumstances is unconscionable.
79 That submission was not explained in oral or written submissions. Insofar as it alleges unfair conduct, such conduct does not of itself amount to unconscionable conduct (see Mercedes-Benz at [3512]). Insofar as it alleges hardship suffered by the applicants, the establishment of such hardship does not of itself establish unconscionable conduct (see Mercedes-Benz at [3512]). Without more explanation, I am not satisfied that there is a serious question to be tried that any failure to provide reasonable notice, assuming there was one, constitutes unconscionable conduct.
Conclusions on serious questions to be tried
80 For the reasons set out above, I am not satisfied that there is a serious question to be tried in respect of the Joint Venture Agreement as pleaded, the Licences as pleaded, and the allegation of unconscionable conduct made in the application for interlocutory relief.
Balance of convenience
81 Having determined that there is no serious question to be tried it is not necessary to assess the balance of convenience. However, for completeness I deal with the submissions of the parties on balance of convenience.
The inconvenience to the applicants
82 The applicants submit that the balance is in their favour because if the interlocutory orders sought by them are not made, they will suffer the loss of “decades of clinical research”. That loss is made up of three discrete categories of research progress:
(a) loss of research samples;
(b) loss of Genetically Modified Organism mice; and
(c) cessation of extant clinical trials and research.
83 The applicants further submit they will suffer the following prejudice if the interlocutory orders are not made:
(a) damage to the applicants’ reputation;
(b) financial loss to Vaxine’s business;
(c) interference with extant contracts with other institutions; and
(d) damage to the public interest and third parties.
Loss of research samples
84 The applicants submit that if the interlocutory orders are not made their research samples, medicines and vaccines will be destroyed. This was said to include “destruction of the extensive library of medical research including clinical trial samples” (paragraph 217 of the third affidavit of Dr Petrovsky).
85 The respondents submit that they will not destroy any research samples. On the 15 April 2024, both the respondents gave undertakings in the following terms:
1. The … Respondent … undertakes that it will permit:
(a) the Applicants to store existing research and vaccine samples (Stored Samples) in premises controlled by the Respondent, the precise locations to be determined by the Respondent acting reasonably;
(b) the Applicants’ representatives to attend as necessary to check and maintain storage vessels (e.g. liquid nitrogen dewars, ultracold freezers, freezers, fridges) and move Stored Samples; and
(c) the Second Applicant from 20 April 2024 until 5pm Friday 3 May 2024 to continue to occupy facilities controlled by the Respondent within the Flinders Medical Centre solely to:
i. monitor and prepare its tissue culture stocks for preserving and storing in liquid nitrogen;
ii. take the required steps to vacate the Flinders Medical Centre;
2. For the purpose of clause 1, Stored Samples includes human trial samples, human blood samples, blood and tissues from animal studies, DNA samples, antibodies and research reagents, viruses and cell lines used in research, vaccine and adjuvant supplies, materials needed for manufacturing vaccines.
3. The undertaking is subject to:
(a) access being subject to compliance with all laws, policies, procedures, protocols, terms and conditions of the Respondent in respect to its premises;
(b) the Applicants each undertaking that:
i. they will be responsible for providing and maintaining the storage vessels, including any repairs or replacements required;
ii. the Respondent (and its agents, employees and affiliates) will not be liable for any loss suffered by either of the Applicants in respect of the Stored Samples, other than in the case of wilful misconduct.
(c) the Respondent having liberty to apply to the Court on reasonable notice to have the undertaking revoked or varied.
4. The undertaking will cease once final orders are made in these proceedings in relation to the Applicants’ claims against the Respondent.
86 After the provision of the undertakings above the applicants filed further submissions, without the leave of the Court, addressing those undertakings. They submitted, without any further evidence, that there remains a risk of loss or deterioration. I have considered those matters.
87 I accept the respondents’ submission that the undertaking given by them reduces any prejudice suffered by the applicants. The undertaking reduces the risk that samples will deteriorate or be destroyed or lost.
Loss of GMO mice
88 The applicants submit that if the interlocutory orders are not made there may be an “irreparable loss” of “GMO lines”. Those lines were explained as lines of breeding of genetically modified animals. The applicants submit that animals that are currently alive will “be wasted along with those involved in past experiments and breeding” (paragraph 29 of the second affidavit of Dr Petrovsky).
89 The University responded that the applicants are currently researching with four different colonies of genetically modified mice. The University submit that each of the four categories could be transported to a new location or re-ordered if required. I accept the respondents’ submission that the ability to transport and re-order new GMO mice reduces the prejudice suffered by the applicants.
Cessation of extant clinical trials and research
90 The applicants submit that if the interlocutory orders are not made the following clinical trials and research will cease:
(a) TGA-approved cancer vaccine human clinical trial;
(b) TGA-approved next-generation COVID-19 and influenza vaccine human trial;
(c) Advanced development and testing of the Applicants' updated COVID-19 vaccine;
(d) Advanced development and testing of the Applicants' Japanese encephalitis vaccine; and
(e) NIH-funded animal research into a tuberculosis vaccine, new vaccine adjuvants, influenza vaccines for newborn babies, and pandemic influenza vaccines.
91 The applicants’ proposed interlocutory orders (amended and filed 2 April 2024) provides that the continuation of studies will “not include work relating to research on the JEV (Japanese Encephalitis Virus)”. In those circumstances, I discount that matter from the list above.
92 The applicants submit that if the injunction is not granted most of the research “cannot be recreated or continued on the same terms” (paragraph 230 of the third affidavit of Dr Petrovsky).
93 The University submits that the only evidence of these trials, relates to the TGA-approved cancer vaccine human clinical trial. The University submits this trial is not being conducted in the respondents’ facilities. No reply was made to that submission, save that Associate Professor Sajkov gave evidence that samples from the trial are stored at the FMC. The University further submits that research can be suspended or paused without major inconvenience.
94 The evidence before the court makes it difficult to assess the actual effect on extant clinical trials. I accept the evidence of the University that it is possible to suspend or pause research without major inconvenience. However, in the present circumstances I accept that there would be an effect on those trials. On the evidence, it is not possible to state with precision the level of that effect.
Reputation, financial loss, extant contracts and third parties
95 The applicants submit that if the injunction is not granted, the reputation of Dr Petrovsky would be impacted because he would be unable to complete extant research. The University complains that there is insufficient evidence on the effect on the reputation of Dr Petrovsky for the Court to weigh this consideration. I accept that there may be some impact on Dr Petrovsky’s reputation, however I do not weigh that consideration heavily given the state of the evidence and the speculation required.
96 The applicants submit that if the interlocutory relief is not granted, there will be significant financial loss suffered by Vaxine. The applicants submit that “it will be possible to cap and calculate [Vaxine’s] losses within a short time of a successful relocation to the USA with some degree of accuracy”. As set out in the principles above, as part of the Court’s assessment of the balance of convenience, the Court should consider whether in all material respects, damages would be an adequate remedy (see Samsung at [61] – [63]). I am satisfied, on the evidence and submissions before me, that damages would be an adequate remedy in respect of that loss.
97 The applicants submit that a failure to make the interlocutory orders will mean that the applicants will be in breach of a number of commercial contracts. There is limited detail about these contracts in evidence. The applicants submit that if the injunction is not granted, the “undertaking and completion” of a number of contracts would be affected including; “National Institute’s of Health vaccine contracts”, “tuberculosis vaccine research subcontract with University of Sydney”, a “commercial partnership with Cinnagen” and a “collaboration agreement with Panjab University”. I accept that there may be an effect on those contracts, however, in the absence of detailed evidence of that effect I am unable to give this significant weight in the balancing exercise.
98 The applicants submit that if the interlocutory relief is not granted, there will be significant damage to the public interest because of the damage to the research of the applicants. Again, given the general nature of this evidence it is difficult to assess the weight of this consideration. I give it some weight, but given the state of the evidence not significant weight. The applicants further submit that if the interlocutory orders are not made it is likely that the employees of the second respondent will be retrenched. The extent of that likelihood is not explained. However, I accept that such prejudice to third parties ought to be considered and give it some weight in favour of the applicants in the consideration of the balance of convenience (see Ocean Dynamics Charter Pty Ltd v Hamilton Island Enterprises Limited [2015] FCA 460, Edelman J at [66]).
The inconvenience to the University
99 The University submit they will suffer the following five categories of inconvenience:
(a) The University will have to continue to facilitate the applicants’ use of their facilities without receiving adequate benefit for doing so;
(b) Other researchers of the University may have their research affected by the applicants’ use of the facilities;
(c) The University will be exposed to risk associated with the research of the applicants on their premises;
(d) The University will lose the opportunity to use the facilities utilised by Vaxine in more useful ways for the University; and
(e) The interlocutory orders if granted would necessitate the interaction between staff of the University and the applicants in circumstances where their relationship has irretrievably broken down and there has been a loss of mutual trust.
100 The University says that the applicants do not pay for the use of the University’s facilities, other than a fee for the use of the Animal Facility. It says the costs incurred from the applicants’ use of the Animal Facility exceeds the fee paid. Whilst the University did not quantify the financial loss to be suffered by it by the applicants’ continued access, I accept that the applicants’ continued use involves some inconvenience to the University. I also accept that there is some financial component to that inconvenience.
101 The University submits that other researchers may have their research affected if the interlocutory orders are made. It says that is so because the orders give the applicants largely “unfettered access” to laboratory 6D305. There is no detailed evidence about the effect on the research of others. I give this matter little weight but some weight in the balance.
102 The University submits that the interlocutory orders will require it to continue to carry risks associated with the Applicants’ research. Again, there is little evidence of that risk, how it might materialise or how it has materialised in the past. I give this matter little weight but some weight in the balance.
103 The University says it will also suffer the lost opportunity to use the laboratory space more profitably. The applicants’ reply that there will be more room at the FMC as a result of a planned move to a new premises which would minimise any prejudice to the respondents. I accept that the lost opportunity to otherwise use the laboratory is an inconvenience to the University.
104 Both the University and the SALHN submit that if the interlocutory orders are made their employees will be required to deal with Dr Petrovsky and employees of Vaxine, in circumstances where there has been a loss of mutual trust, and the relationship would be a “hostile” one. The University says that the hostility would affect the productivity and morale of its staff. The applicants say that “the current interim arrangements have continued to co-exist satisfactorily without the need for Court supervision.” I accept that this is a potential inconvenience but absent any particular evidence about such interactions I do not give it significant weight in the balance.
The inconvenience to the SALHN
105 The SALHN concedes that their inconvenience would be relatively low. It submits that if the injunction was granted in the terms sought by the applicants, its prejudice or balance factors arise within four categories:
(a) The interaction between staff of the SALHN and the applicants in circumstances where their relationship has irretrievably broken down and there has been a loss of mutual trust;
(b) Forcing the SALHN and its staff to take extraordinary steps to ensure compliance;
(c) The applicants have delayed in seeking interlocutory relief; and
(d) Damages are an adequate remedy for what is claimed by the Applicants.
106 I have dealt with the interaction of the SALHN’s staff with the applicants above when dealing with the University’s inconvenience. For the same reasons, I give that matter some weight but not significant weight.
107 I accept that the SALHN would be required to take steps to ensure compliance with the orders but note that the evidence does not reveal any material incidents or need for the Court’s intervention during the time interim orders have been in place. I give that matter little weight but some weight.
108 Whilst I accept that there was some delay by the applicants, the evidence also reveals that the parties were in negotiation so as to resolve the issues surrounding the continued use and departure from laboratory 6D305. When those negotiations broke down proceedings were issued, interim undertakings were given, and the matter timetabled for this interlocutory hearing. I give that matter little weight in all of the circumstances.
Conclusions on balance of convenience
109 In circumstances where I have found that there is no serious question to be tried on the claims made in support of the interlocutory orders, it is not necessary to determine the balance of convenience. However, for completeness, on the evidence before me I find that the balance favours the applicant but not significantly. Had I found that there was a serious question to be tried, but a weak one, I would have also declined the application for interlocutory relief.
disposition
110 For the reasons set out above the application for interlocutory relief is dismissed. Costs are reserved.
I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Dowling. |
Associate:
