Federal Court of Australia

Petrovsky v Southern Adelaide Local Health Network Incorporated (No 2) [2024] FCA 1141

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal be dismissed.

2.    The applicants pay the respondents’ costs of the application (excluding the costs of the interlocutory application made herein on 8 May 2024), to be assessed in default of agreement in accordance with the court’s Costs Practice Note (GPN-COSTS).

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

REASONS FOR JUDGMENT

SNADEN J:

1    By an application dated 2 May 2024, the applicants move the court for leave to appeal from an interlocutory decision of Dowling J, namely: Petrovsky v Southern Adelaide Local Health Network Inc [2024] FCA 396 (the “Primary Judgment”). For the reasons that follow, the application should (and will) be dismissed with costs.

2    The matter has an unusual procedural history. The substantive proceeding began by means of an originating application filed 14 January 2024. That application included an application for urgent interlocutory relief, by which the applicants sought to maintain their access to facilities owned or controlled by the respondents. The applicants are engaged in medical research; and had used the facilities in question for the purposes of carrying out those research activities.

3    Initially, the application for urgent injunctive relief was the subject of agreed orders, pursuant to which the applicants’ access to the premises in question was maintained pending a hearing. That hearing later transpired and was determined by means of the Primary Judgment. Dowling J resolved not to grant the interlocutory relief that the applicants had sought.

4    That occurred on 18 April 2024. The following day, the present application (or its initial incarnation) was filed; and, thereafter, the matter embarked upon a curious trajectory. It is unnecessary to trace that trajectory in any detail. It suffices to note that it is described in Petrovsky v Southern Adelaide Local Health Network Incorporated [2024] FCA 500, [3]-[13] (Snaden J). That judgment concerned an additional attempt by the applicants to secure from the court the interlocutory injunctive relief that Dowling J had decided not to grant (or, perhaps, some analogue of it). The reasons published in support of that judgment concluded by reference to the present application:

35    …the parties should confer and agree upon a timetable for the hearing of the applicants’ application for leave to appeal. It strikes me that the court should deal with that with some haste, which I am confident will be achievable.

5    Those reasons are dated 14 May 2024. Thereafter—and for some time—it appears that very little was done to progress the application for leave to appeal. The applicants do not appear to have made any—and certainly no successful—attempt to agree upon a timetable as proposed. Correspondence from the court as to their progress in that regard was ignored.

6    Ultimately (and at the court’s initiative), the matter was listed for a case management hearing. That transpired on Wednesday, 4 September 2024. The applicants there indicated their desire to postpone the hearing of the application for leave to appeal pending the determination of some other proceeding presently on foot in the South Australian Employment Tribunal. I favoured the view that the application for leave to appeal should proceed independently and listed it for hearing on 23 September 2024. Orders were made for the exchange of written outlines of submissions concerning the question of leave to appeal.

7    In the days leading up to the hearing of the application, the applicants’ solicitor wrote to my chambers indicating that they would not be able to comply with the court’s direction to file submissions and requesting that the hearing of their application be adjourned. I declined to grant that indulgence. Ultimately, written outlines were filed (albeit not strictly in accordance with the court’s directions) and the hearing transpired as scheduled. The applicants’ solicitor, Mr Vidanage, appeared on their behalf. Mr Garnaut, of counsel, appeared for the first respondent. Mr Duggan KC and Mr Wilson, of counsel, appeared on behalf of the second respondent.

8    There was no material dispute between the parties as to the principles that should guide the court in considering whether or not to grant leave to appeal from an interlocutory judgment. At issue, primarily, is whether the Primary Judgment is attended by sufficient doubt to warrant its reconsideration on appeal and whether, on the assumption that it was reached in error, substantial injustice would result in the event that leave to appeal were refused: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397, 398-399 (Sheppard, Burchett and Heerey JJ); Dimitrovski v Boland [2023] FCAFC 86, [29] (Markovic, Downes and Kennett JJ).

9    The Primary Judgment—concerning, as it did, a request for interlocutory injunctive relief—turned upon the exercise of a judicial discretion: Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238, 248 [25] (Dowsett, Foster and Yates JJ). In order that it might be thought to be the product of error amenable to correction on appeal, it will be necessary for the applicants to demonstrate that the court’s discretion miscarried; in other words, that the error in question was of a kind famously referred to in House v The King (1936) 55 CLR 499 (“House v The King”), 504-505 (Dixon, Evatt and McTiernan JJ).

10    Something should be said about the Primary Judgment and the grounds upon which the applicants hope to press their appeal if leave is granted. As has been noted, the substantive matter concerns the termination of a long-standing relationship between the applicants and the respondents, the immediate effect of which was to require that the applicants vacate the premises from which they had undertaken their medical research activities. In dismissing the second interlocutory injunction application (above, [4]), I described the background as follows (at [15]-[17]):

15    …It appears to be beyond controversy that the first applicant, together with the second (which is a corporate entity that he controls), have undertaken medical research activities at premises controlled by the respondents since 2004. To that end, the first applicant was endowed with the status of Professor at Flinders University, and the second applicant and the first respondent entered into a lease agreement (which, although not entirely clear, appears to pertain to premises other than those to which the court’s attention is now fixed).

16    The respondents have sought to bring to an end the relationship that they have with the applicants. Amongst other things, the applicants submit that they may only do so upon proper (which is to say reasonable) notice. They maintain that they are contractually entitled to such notice, either pursuant to a joint venture agreement that they allege is in place as between them and the respondents; or, alternatively, pursuant to a licence that they have been afforded. They contend that their exclusion from the respondents’ premises is to be effected in contravention of that entitlement to reasonable notice. Before Dowling J, other contentions were advanced but it is not necessary now to outline them.

17    The respondents maintain that the first applicant was an employee of the first respondent and was awarded the status of Professor only for a limited time. They deny that they were party to any agreement with the applicants (or either of them) pursuant to which they laboured under any obligation to afford reasonable notice as alleged.

11    It was not controversial before Dowling J that the first applicant, Dr Petrovsky, together with the second applicant (which is a corporate entity that he controls) undertook the medical research activities in question. To facilitate that endeavour (or otherwise in connection with it), the second respondent had conferred upon Dr Petrovsky the status of Professor, which entitled him to access various premises and facilities. That status subsisted until March 2023 (at the latest), from which point it was not renewed.

12    In his reasons for judgment, Dowling J was concerned to address the two considerations upon which the applicants’ entitlement to interlocutory injunctive relief primarily rested: namely, whether there existed a prima facie case for the relief that they claimed and whether the balance of convenience favoured their getting it. His Honour concluded, albeit on the necessarily-untested evidence then before him, that there was no prima facie case underpinning the applicants’ contention that they had been improperly denied reasonable notice. Again, it is convenient to replicate the summary that I offered in May 2024 of his Honour’s judgment:

18    In his reasons for judgment, Dowling J comprehensively addressed the submissions just summarised. As might be expected, his Honour did so for the purposes of assessing whether the applicants’ claim for interlocutory injunctive relief was premised upon a prima facie entitlement. For reasons that I needn’t replicate, his Honour:

(1)    was not satisfied that there was “…a serious question to be tried that the documents, representations and conduct relied upon by the applicants [were apt to] establish the Joint Venture Agreement as pleaded” ([Primary Judgment], [48]);

(2)    was of the view that “…there was an employment relationship between [the first respondent] and [the first applicant]” and that “[t]he evidence does not suggest that the four parties intended that there would be an ongoing relationship between the respondents and [the second applicant] if [the first applicant’s] employment came to an end” ([Primary Judgment], [53]);

(3)    concluded that any licence that the applicants had to use the respondents’ premises was “dependant on [the first applicant] remaining in employment with [the first respondent]” ([Primary Judgment], [58]);

(4)    was “…not persuaded that there exists a serious question to be tried that there was a licence in the terms pleaded” ([Primary Judgment], [59]).

19    Dowling J went on to find that there was “no serious question to be tried” in respect of the alleged joint venture agreement or licence (or, more specifically, the applicants’ entitlement under either to reasonable notice of their termination). So concluding, his Honour took the view that it was not necessary that he should assess whether the balance of convenience favoured the granting of interlocutory relief. Nonetheless, his Honour did so, concluding that it “favour[ed] the applicant[s] but not significantly” ([Primary Judgment], [109]).

13    In assessing where the balance of convenience lay, his Honour addressed the nature of the losses that the applicants said that they would sustain in the event that no injunctive relief were granted. Of significance to the present application, his Honour observed (Primary Judgment, [96]):

96    The applicants submit that if the interlocutory relief is not granted, there will be significant financial loss suffered by [the second applicant]. The applicants submit that “it will be possible to cap and calculate [the second applicant’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.

14    As rules of court require, the present application was accompanied by a draft notice of appeal, which the applicants hope to file in the event that they are granted leave to do so. That notice articulates three grounds of appeal, namely:

1.    The learned trial judge erred in concluding that the [applicants] had failed to demonstrate a serious question to be tried on the basis that the facts pleaded at paragraphs 1 – 16 of the statement of claim and proven by the [applicants] did not provide a sufficient basis prima facie for concluding that:

a.    a contract of the kind pleaded in paragraphs 17 and 18 of the statement of claim was formed between the parties;

b.    in the alternative, a contract of the kind pleaded in paragraphs 22, 23 and 24 of the statement of claim was formed.

2.    The learned trial judge erred in concluding that the balance of convenience favours the [a]pplicants but not significantly.

3.    The learned trial judge erred in finding that on the evidence and submissions before Him, that damages would be an adequate remedy in the circumstances.

15    The grounds that the applicants hope to press on appeal all charge the learned primary judge with having erred by favouring particular conclusions (specifically, that they had not established prima facie entitlements to the relief claimed, that the balance of convenience favoured them only slightly and that, at least in one sense, damages would be an adequate remedy for the loss that they might suffer in the event that interlocutory injunctive relief were refused). Conspicuously absent from the challenges that the applicants hope to press is any suggestion that the primary judge’s discretion miscarried.

16    The written outline of submissions that the applicants filed ahead of the hearing were similarly silent on that issue. Indeed, save that they made clear that the applicants take issue with his Honour’s conclusion that they had failed to establish a prima facie case that they were entitled to notice pursuant to a joint venture and/or licence agreement (or agreements), the written submissions did not speak directly to the proposed grounds of appeal.

17    That is a matter of some significance. It is not apparent how the applicants maintain that the Primary Judgment was a product of error in either of the ways that are the subject of proposed appeal grounds 2 and 3. It appears that they wish to submit, on appeal, that the primary judge ought to have concluded that the balance of convenience was more significantly in favour of granting the relief that they had claimed; and that his Honour was wrong to conclude that damages would be adequate to compensate for the financial losses that would befall the second applicant (see above, [14]). As things transpire, I needn’t dwell on that difficulty because, in the absence of any discretionary error attending his Honour’s conclusion on the applicants’ prima facie entitlement to relief, the remainder of the proposed appeal is redundant.

18    I turn, then, to proposed appeal ground 1. The applicants submit that his Honour was wrong to conclude that there was no prima facie case in favour of the relief that they sought. Again, the error alleged is not framed by reference to any miscarriage of discretion; instead, the applicants simply submit that his Honour ought to have found that there was a prima facie case on either or both of the bases that were pressed before him (that is to say, on the existence of a joint venture agreement or a licence (or licences), in each case containing terms entitling the applicants to reasonable notice of termination).

19    At the hearing of the application for leave to appeal, Mr Vidanage made some attempt to pitch the error that is alleged at a House v The King level. Specifically, it was said that the primary judge had reached his conclusion as to the existence of an entitlement to reasonable notice without any consideration of the parties’ conduct during their almost 20-year association; and with no apparent consideration of the nature of medical research and the difficulties that must inhere in the summary (or abrupt) termination of research collaborations. Although not stated in terms, I have understood the submission to be that his Honour’s discretion miscarried because those were considerations of which his Honour was obliged to take account in determining whether or not to grant injunctive relief.

20    Respectfully, the applicants’ submission is unpersuasive. Before the primary judge, it was put that the entitlement to reasonable notice of termination arose by implication as an incident of contracts—either a joint venture agreement or an agreement (or agreements) conferring a licence. It was not (and still has not been) explained how the existence of that term might have been conditioned by conduct engaged in after the formation of whatever contract was to be relied upon.

21    Moreover, it is not apparent how the parties’ activities or conduct—viewed (as it must be given the generality of the submission) as a whole, rather than by reference to specific aspects—might suffice to overcome the matters that led the primary judge to find that there was no prima facie case that such a reasonable notice term existed. It is unnecessary that I should retrace those matters in any more detail than is offered by the summary of the Primary Judgment that appears above; it suffices to note that, in coming to that view, his Honour had occasion to consider a raft of historic and documentary evidence, on the strength of which the conclusions that he reached were unmistakeably open (and, if I might say with respect, equally as correct).

22    I am not persuaded that there is any credible suggestion that his Honour’s discretion in the present matter miscarried. On the contrary, his Honour’s consideration of the evidence and the conclusions that he drew from it about the existence or otherwise of a prima facie basis or prima facie bases for relief were orthodox. The applicants’ complaint, in reality, distils to little more than that his Honour reached the wrong conclusions. Respectfully, I would not agree; but, more to the point, that falls short of establishing any House v The King error.

23    Something should be said about a further basis upon which Mr Vidanage sought to impugn the Primary Judgment. The court was told (and it was not in contest that) Dr Petrovsky has sought to challenge the termination of his employment by the first respondent in the South Australian Employment Tribunal. He maintains that he was unfairly dismissed from his position. Mr Vidanage contended that, that being so, the primary judge ought to have concluded that the privileges afforded to Dr Petrovsky by reason of that employment (including his ability to access premises and facilities) could or should have been maintained.

24    Intending no disrespect, the articulation of the contention just summarised was anything but clear. As I understood it, it proceeded on the footing that, as an employee of the first respondent, Dr Petrovsky had certain access entitlements. Assuming that to be so, it is not apparent how that ought to have factored into the reasoning of the primary judge. This court has no unfair dismissal jurisdiction. Moreover, it was not in dispute before his Honour that Dr Petrovsky’s employment had terminated. Whether it had terminated fairly is not an arena into which his Honour could properly have ventured; nor is it apparent that he was asked to. I confess that I am unable to see how the proceeding that has played (or is playing) out in the South Australian Employment Tribunal has any bearing on the current matter. I am not persuaded that it has any present relevance at all.

25    It follows that I do not accept that there is a sufficient prospect that the Primary Judgment is attended by error such as to warrant its reconsideration on appeal. That is sufficient to dispose (which is to say, to warrant the dismissal) of the present application.

26    Nonetheless, something might be said of the second consideration upon which applications for leave to appeal typically turn: namely, whether (assuming it to have been wrongly decided) substantial injustice might result in the event that leave to appeal from the Primary Judgment were refused.

27    The respondents sought to impress upon the court the lack of urgency with which the applicants have prosecuted their application. If substantial injustice would attend the denial of leave to appeal (as the applicants maintain), the respondents suggest that the application ought to have been pursued with greater alacrity.

28    There may or may not be something in that. In the five months that have elapsed since the Primary Judgment, transitional arrangements as to the applicants’ work have been put in place and the applicants have explored options to undertake their medical research endeavours elsewhere. Perhaps it is the case that the injustice that might have sprung from the Primary Judgment (assuming it to have been wrongly decided) has already been realised; and that the marginal detriment to the applicants that the denial of leave to appeal will occasion is not what it might otherwise have been.

29    Regardless, I would accept that, by its nature, the application before the primary judge was one by which the applicants sought to avoid the visitation of detriment. As with his Honour’s conclusion about the balance of convenience, it might be accepted (assuming, momentarily, that the Primary Judgment was wrongly decided) that the applicants would stand to suffer at least some injustice if leave to appeal were refused. Had there been any (or sufficient) doubt about the correctness of the Primary Judgment, it might be that a different conclusion about leave to appeal would have been appropriate.

30    The applicants also sought to impress upon the court the public interest in their having leave to challenge the Primary Judgment and the significance of it to ongoing medical research in Australia. There is no need to address those submissions. I do not accept that the Primary Judgment would have any realistic prospect of being interfered with on appeal if leave were granted and that, alone, is basis enough not to grant the application.

31    The application for leave to appeal should be dismissed and there is no reason not to make the usual order as to costs. To be clear, the costs that I will grant shall concern the costs of the application for leave to appeal. Those costs will include the costs of the case management hearing of 4 September 2024 (which was specific to the present application and necessary on account of the applicants’ failure to respond to the court’s inquiries). The order that I shall make will not impact upon any other costs orders made in this (or the associated) matter to date. On that note, I am conscious that the second respondent wishes to be heard as to its costs associated with the applicants’ repeated attempt of 8 May 2024 to secure interlocutory injunctive relief. That is a separate issue with which the court shall separately deal.

Associate:

Dated:    1 October 2024