A Nelson & Co Ltd v Martin & Pleasance Pty Ltd (Stay Application)

• Jurisdiction: Australia Federal only
• Judgment Date: 05 July 2021
• Neutral Citation: [2021] FCA 754
• Court: Federal Court
• Date: 05 July 2021

Federal Court of Australia

A Nelson & Co Ltd v Martin & Pleasance Pty Ltd (Stay Application) [2021] FCA 754

File number:	NSD 154 of 2021
Judgment of:	PERRAM J
Date of judgment:	5 July 2021
Catchwords:	PRIVATE INTERNATIONAL LAW – application for permanent stay of claim for breach of contract and temporary stay of claim for damages for intellectual property infringements – where intellectual property infringements admitted – where exclusive jurisdiction clause in distribution agreement between First Applicant and First Respondent requires disputes to occur in England – whether ‘strong reasons’ adduced against grant of stay – whether fragmentation of proceedings a strong reason – whether Applicants the authors of any fragmentation
Legislation:	Foreign Judgments Act 1991 (Cth) s 3
Cases cited:	A Nelson & Co Ltd v Martin & Pleasance Pty Ltd [2021] FCA 228 Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd [2019] NSWCA 61; 99 NSWLR 419 Blair v Curran (1939) 62 CLR 464 Cassegrain v Gerard Cassegrain & Co Pty Ltd [2013] NSWCA 454; 305 ALR 648 Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWCA 196 Gujarat NRE Coke Limited v Coeclerici Asia (Pte) Ltd [2013] FCAFC 109; 304 ALR 468 Huddart Parker Ltd v Ship ‘Mill Hill’ (1950) 81 CLR 502 Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698; 138 FCR 496 Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 839 Martin & Pleasance Pty Ltd v A Nelson & Co Ltd [2021] FCAFC 80 The Eleftheria [1970] P 94
Division:	General Division
Registry:	New South Wales
National Practice Area:	Intellectual Property
Sub-area:	Trade Marks
Number of paragraphs:	32
Date of hearing:	1 July 2021
Counsel for the Applicants:	Mr N Murray SC with Ms A Campbell
Solicitor for the Applicants:	Gilbert + Tobin
Counsel for the Respondents:	Mr P W Flynn SC with Mr S G Frauenfelder
Solicitor for the Respondents:	Corrs Chambers Westgarth

ORDERS

		NSD 154 of 2021
BETWEEN:	A NELSON & CO LTD First Applicant ; BACH FLOWER REMEDIES LIMITED Second Applicant
AND:	MARTIN & PLEASANCE PTY LTD ACN 006 935 888 First Respondent ; ALOE VERA INDUSTRIES PTY LTD ACN 063 710 832 Second Respondent ; MARTIN & PLEASANCE WHOLESALE PTY LTD Third Respondent

order made by:	PERRAM J
DATE OF ORDER:	5 July 2021

THE COURT ORDERS THAT:

1. The parties bring in short minutes of order giving effect to these reasons within 7 days.

2. The matter be listed for a case management hearing at 9.30 am on 20 July 2021.

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

REASONS FOR JUDGMENT

PERRAM J:

Introduction

1. The First Applicant (‘Nelsons’) sues the First Respondent (‘M&P’) for breach of contract. Nelsons and its subsidiary, the Second Applicant (‘BFR’), also sue the three Respondents for infringing, in various ways, their intellectual property in the word ‘RESCUE’ (another product named ‘BACH’ is also involved but it adds nothing to the present debate and further reference to it may be omitted). The Respondents now seek a stay of the Applicants’ proceeding on the basis of an exclusive jurisdiction clause contained in a distribution agreement between Nelsons and M&P. The exclusive jurisdiction clause is cl 32 which is in these terms:

GOVERNING LAW AND JURISDICTION

This Agreement is subject to English law and the parties irrevocably agree that any disputes will be subject to the exclusive jurisdiction of the English courts and that either party will be entitled to enforce any such judgment in any such jurisdiction as appropriate.

2. The issue which divides the parties emerges from the fact that Nelsons’ breach of contract case is subject to cl 32 whilst the intellectual property allegations made by it and BFR are not. The Respondents have conceded their liability to Nelsons and BFR on the intellectual property allegations but the question of damages remains to be determined. The Respondents contend that Nelsons’ contractual claim should be stayed and pursued before the English courts. Such a course would result in a fragmented proceeding in which the English courts determined the contractual dispute (including contractual damages) and this Court would determine the Applicants’ entitlement to damages for breach of their intellectual property rights.

3. The law of exclusive jurisdiction clauses requires cl 32 to be enforced unless the Applicants show strong reasons why it should not be. However, the same law also shows that where the grant of a stay would result in the fragmentation of proceedings into more than one jurisdiction this can but does not necessarily provide a strong reason not to stay the local proceeding. In my view, for the reasons which follow, a strong reason is shown by the Applicants in this case and the stay application should be refused.

The Intellectual Property Case

4. Nelsons manufactures complimentary medicines based on the system of plant and flower-based essences developed by the late Dr Edward Bach. It distributes these products under the name ‘RESCUE’ which are sleep remedies. In Australia, its subsidiary BFR is the registered proprietor of three trade marks featuring the word ‘RESCUE’. The RESCUE products were distributed in Australia by M&P under the distribution agreement until 31 December 2020 when it expired under its own terms. Late last year M&P together with its wholly-owned subsidiary (the Third Respondent, ‘M&P Wholesale’) and another closely related entity (the Second Respondent, ‘Aloe Vera’) began to develop its own flower-based sleep remedy under the name ‘RESTQ’ which was launched in early 2021. On 2 March 2021 Nelsons and BFR commenced this proceeding against M&P, Aloe Vera and M&P Wholesale. They allege trade mark infringement, passing off and misleading or deceptive conduct. They successfully obtained an interlocutory injunction from this Court restraining the Respondents from using RESTQ pending trial: A Nelson & Co Ltd v Martin & Pleasance Pty Ltd [2021] FCA 228. An appeal by the Respondents to the Full Court was dismissed: Martin & Pleasance Pty Ltd v A Nelson & Co Ltd [2021] FCAFC 80.

5. The Respondents submitted that the practical effect of the interlocutory injunction was to force them to abandon the launch of RESTQ and rebrand. On 25 May 2021, the day before the present application was originally to be heard, the Respondents indicated to the Court that they no longer contested the right of the Applicants to relief for intellectual property infringement. What remains to be determined in this part of the case is (a) whether the Respondents’ infringement of the trade marks was flagrant therefore entitling the Applicants to additional damages and (b) the quantum of compensatory damages and additional damages if awarded.

The Contractual Dispute

6. Under the distribution agreement M&P was to distribute Nelsons’ RESCUE sleep remedy products in Australia. The distribution agreement had a number of provisions which are relevant to the parties’ dispute, four of which bear mentioning:

1. M&P would pay Nelsons’ invoices within 80 days: cl 7;

2. M&P would act as Nelsons’ fiduciary and hold the registrations for the RESCUE products for Nelsons with any applicable regulator on trust for Nelsons and would not assign, transfer, sublicense, modify, cancel or vary them: cl...