Telstra Corp Ltd v First Netcom Pty Ltd [2000] FCA 689

FEDERAL COURT OF AUSTRALIA

Telstra Corporation Ltd v First Netcom Pty Ltd [2000] FCA 689 TELSTRA CORPORATION LIMITED v FIRST NETCOM PTY LIMITED NG 483 OF 1997 EINFELD J 4 MAY 2000 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 483 OF 1997

BETWEEN: TELSTRA CORPORATION LIMITED

Applicant

AND: FIRST NETCOM PTY LIMITED

Respondent

JUDGE: EINFELD J

DATE: 4 MAY 2000

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 By motion filed on 24 March 2000 the respondent, whom I shall call First Netcom, sought leave to appeal from the interlocutory judgment I delivered on 17 March. 2 The judgment had for relevant purposes two quite distinct elements. It ordered first the provision of security in respect of undertaking as to damages given by First Netcom on 26 June 1997 for the making of an injunction which was subsequently discharged. In short terms, the reason for that order was that the circumstances energising a claim for damages by Telstra had occurred and Telstra had supplied satisfactory evidence in the proceedings which led up to the judgment of 17 March, of having suffered substantial damage as a consequence of the imposition of the injunction at the time. 3 I did not at that stage impose the sanction of a stay of any part of the proceedings pending the supply of that security for two reasons. One was that the parties had not expressly argued the question of a stay in the course of the proceedings. The second reason, which was the principal one, was that there seemed to me to be some doubt as to whether a stay of the cross claim, which was the only effective practical sanction that could have been added, was in the best interests of Telstra as the party in whose favour it would have been intended to operate. 4 As I explained this view at previous proceedings, it is not necessary to detail it now. It will suffice to say that in the nature of these proceedings, giving Telstra the right to present its claim and putting the cross claim off to another time or to another proceeding, might not serve the interests of justice even from Telstra's own narrow point of view, quite apart from the public interest. 5 The second aspect of the judgment of 17 March was an order for the provision of further security for Telstra's costs on the cross claim. I also did not pronounce the usual sanction of a stay of proceedings of the cross claim pending the provision of that $50,000 because I thought it appropriate to hear the parties first before doing so. Effectively what I had been asked to do in those proceedings was to resolve the issues of principle raised rather than make final orders. 6 It is not now disputed that a stay of the cross-claim pending the provision of the further security for costs is appropriate, although First Netcom has sought some delays up to today in the adding of a self executing stay, on the basis that it hoped to provide the $50,000 within a reasonable time. On that matter it has today tendered an affidavit from Mark Andrew Brady, a principal solicitor in the office of its solicitors, as a discretionary ground for refusing the stay sought in respect of the security for costs. He relates quite an extraordinary conversation which for various reasons I will not now read out, but the consequence of which, it is argued, was that Telstra accidentally caused an extra difficulty to First Netcom in supplying the additional security for costs. As a consequence First Netcom has been unable to supply that security. 7 As to the security for the undertaking as to damages, I accept that the basis upon which I granted this security is an appropriate subject for an appeal. Whether such an order is available or appropriate is, I think, not settled in legal terms so far as the authorities go. I explained in the judgment of 17 March why I thought it should be granted in this case and there is no reason to add any more now except to say that this in quite a different category to the usual application for security for costs or even security for damages in that a prima facie entitlement to damages has arisen and there was ample evidence to suggest that substantial damage had been caused. Accordingly, it is not in the same category as a case where liability for damages has not yet been proved and no actual evidence has been presented, other than particulars or pleadings, of damage actually suffered. 8 On the other hand, as I put to the parties on a previous occasion, it seemed to me that if the appropriateness of that order went to the Full Court by leave, it may have an unsatisfactory result if only because without a sanction, the order, even if wrong, was causing no difficulty to any of the parties or to the litigation. There would thus be at least some chance that the Full Court might decide not to entertain the appeal because it was entirely theoretical. At the same time it must be said that there is not much point in the Court making an order without providing a sanction for its compliance. 9 Having at my request considered the matter carefully, Telstra has now asked for the sanction to be added so that pending the supply of the security, the cross claim is stayed. I can think of no other sanction that could be imposed that would have any relevance to the proceedings and I propose to make the order sought. Consequent upon that order, I will grant leave to First Netcom to appeal the 17 March judgment granting security for the undertaking as to damages. 10 So far as concerns the security for costs, it is, as I said, agreed that the ordinary sanction that would flow from such an order would be a stay of the cross claim. For my part, I cannot see any matter in the affidavit of Mr Brady which would cause me as a discretionary matter to deny that ordinary result of the order made in this case. Even if the optimum result had been obtained from the matters contained in the affidavit, First Netcom would still have had to supply a significant sum of money to meet the costs security order. It has produced no evidence that it was, is or would have been in a position to supply even that smaller sum towards the security ordered. In the circumstances, I propose to accede to Telstra's request for a stay of the cross claim pending the provision of the security for costs.