Industrial Relations Commission New South Wales Medium Neutral Citation: Maxim's Travel Pty Limited [ACN 002 906 792] v De Poortere Investments Pty Ltd [ACN 002 906 630] [2011] NSWIRComm 158 Hearing dates: 19/09/2011 Decision date: 28 November 2011 Before: Backman J Decision: (1) Notice of Motion filed by Maxim's Travel Pty Limited on 5 August 2011 is dismissed. (2) Costs of the Motion are reserved. (3) Notice of Motion filed by De Poortere Investments Pty Ltd on 7 July 2011 is set down for a directions hearing on Friday, 16 December 2011 at 9.30am. Catchwords: APPLICATION under s 106 Industrial Relations Act 1996 - proceedings discontinued with costs reserved - proceedings pending in Supreme Court of New South Wales - Notice of Motion filed by applicant to stay outstanding costs proceedings - whether issue estoppels relevant - other factors considered - Notice of Motion dismissed - costs reserved Legislation Cited: Industrial Relations Act 1996 Cases Cited: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 Tszyu v Fightvision Pty Ltd [2001] NSWCA 103; (2001) 104 IR 225 Category: Interlocutory applications Parties: Maxim's Travel Pty Limited [ACN 002 906 792] (Applicant) De Poortere Investments Pty Ltd [ACN 002 906 630] (Respondent) Representation: Mr G McGrath, SC (Applicant) Mr MJ Neil, QC with Mr TJ Dixon, of counsel (Respondent) Smith Reid (Applicant) Slater & Gordon (Respondent) File Number(s): IRC 3348 of 2006 Judgment 1Maxim's Travel Pty Limited (Maxim's) has applied for a stay of proceedings, in which only the question of costs is outstanding, pending resolution of proceedings in the Supreme Court. The respondent to the proceedings, De Poortere Investments Pty Ltd (DPI), opposes the application. Relevant background 2The proceedings were commenced by Summons for Relief under s 106 of the Industrial Relations Act 1996 (the Act), filed on 25 October 2006. 3The proceedings were set down for hearing in this Court for five days to commence on 18 April 2011. Three days before this occurred, on 15 April 2011, DPI filed a Notice of Motion seeking an order that on 18 April 2011 the Court would permanently stay, or in the alternative, dismiss Maxim's application under s 106 of the Act. The primary ground relied upon in the 15 April 2011 Motion was that the Court was without jurisdiction to grant the relief claimed because the impugned contract was not one in which a person performs work in any industry. An alternative ground pleaded was that the Court lacked jurisdiction because the allegations of unfairness in the Summons were based on no more than breach of contract. A further ground relied upon was that the s 106 application should be dismissed in the public interest to allow issues of construction of the contract to be determined in the Supreme Court proceedings. Those proceedings were commenced by DPI on 4 June 2009 in the Equity Division of the Supreme Court. On 4 September 2009, the proceedings were stayed by consent. The stay was granted subject to the following terms: Note the Second Defendant's undertaking to proceed with all due expedition in the Industrial Court proceedings number IRC 3348 of 2006. These proceedings be stayed until further order. Liberty to apply. Costs of defendants' motion reserved. These proceedings be listed for directions on 19 March 2010. 4The parties to the Supreme Court proceedings are DPI and Helene Mathurine De Poortere as first and second plaintiffs respectively and Maxim's and Christopher Anthony Goddard as first and second defendants respectively. 5DPI's 15 April 2011 Notice of Motion was served on Maxim's on 8 April 2011. On 13 April 2011, Maxim's legal representatives wrote to DPI's legal representatives advising them of a number of matters which included the following: We refer to the Respondent's Notice of Motion served on Friday 8 April 2011 after close of business. We note the lateness of the Motion in context of the facts including that the proceedings were commenced in 2006, that the issue of jurisdiction was never previously raised by you either in any response or otherwise (indeed you previously disclaimed any intention of raising it) and the fact that on 9 September 2009 you agreed on terms to a stay of the proceedings commenced by you in the Commercial List of the Supreme Court pending the outcome of these proceedings. In view of your change of stance, it seems to us that our client would be unduly prejudiced if the Industrial Relations Commission proceedings set down for hearing on 18 April 2011 proceeded, as the parties would then face the likely prospect of only part of the issues between them being adjudicated therein, and a further hearing of the proceedings in the Supreme Court being required in order to deal with a residue of unresolved matters. This situation would likely result in wasteful and unnecessary expense being suffered by both parties. We therefore suggest that the hearing dates for the Industrial Relations Commission proceedings commencing Monday, 18 April 2011 be vacated, and that the proceedings set down in the Industrial Relations Commission be stayed pending the resolution of the Supreme Court proceedings. We invite you to indicate your accord to this suggestion. As to costs, we are of the view that the circumstances referred to in the second paragraph hereof would justify a costs order against your client for the costs of the vacated hearing thrown away by reason of your client's belated action. We would suggest that the argument over those costs be reserved for another day, and that by consent orders be sought in the Industrial Commission that the costs be reserved pending resolution of the Supreme Court proceedings. 6DPI's legal representatives sent a letter in reply on the same day expressed as follows: Your letter of 13 April 2011 refers to a 'change of stance' and to our motion, yet identifies as the (only) source of prejudice the fact that there may be further proceedings in the Supreme Court after the Industrial Court proceedings are concluded. Your letter does not, and cannot, identify any other prejudice as: 1. the Motion introduces no new facts. Rather it makes clear that the jurisdictional defence will rely on evidence which falls in the course of the proceedings. This is an orthodox approach; and 2. you have been aware of the Supreme Court matter since 2009 and that damages were sought based on the construction of the Share Sale Deed and Consultancy Agreement (which is the construction being propounded by the Respondent in the Industrial Court proceedings). As to the prejudice you identify, it has always been the case since 2009 that our client has sought to prosecute its case in the Supreme Court pending the outcome of the Industrial Proceedings. There is no change of stance. The Supreme Court proceedings in 50102 of 2009 were stayed following an application dated 14 July 2009 by your client based inter alia on the matters alleged at [9] of Mr Valentine's affidavit dated 24 July 2009. The proceedings were then stayed by consent as the case law clearly establishes that (consistent with [9] of Mr Valentine's affidavit of 24 July 2009), due to the nature of the Industrial Court's jurisdiction and its power to vary contracts, Supreme Court proceedings will be stayed in favour of allowing any Industrial Court proceedings to be fully determined: see for example Idameneo (No 123) v Ko Ko Swe [2003] NSWSC 384 (6 May 2003) at [11]-[12]. Accordingly, we are at a loss to understand the basis upon which you propose that the hearing ought to be vacated pending the outcome of the Supreme Court proceedings (which you applied to stay). This would similarly result in the parties having to face a second set of proceedings (that is, being the very prejudice identified in your letter at paragraph 3), unless the Industrial Court proceedings were discontinued (subject to issues of costs). Could you please clarify what it is you are now proposing as: 1. on one hand, you refer to further proceedings in the Industrial Court after the conclusion of the Supreme Court proceedings; and 2. on the other hand, you suggest vacating the current hearing dates in order to somehow avoid a multiplicity of proceedings. If you do now propose discontinuing the Industrial Court proceedings, we see no reason why, our client should not be awarded its costs, including as thrown away, (on a basis to be determined) particularly in light of your change of position from that articulated in Mr Valentine's affidavit dated 24 July 2009. 7On 18 April 2011, the first day of the hearing of the s 106 application, Maxim's moved on a Notice of Motion filed on 14 April 2011 for a stay of the proceedings pending resolution of the Supreme Court proceedings relying on the following grounds and reasons: 1. The Respondent belatedly, only in the week before trial, has taken an objection by Notice of Motion to the jurisdiction of the Court to both entertain these proceedings and grant the relief sought. 2. Such objection or notice of such objection ought to have been taken or given by the Respondent much earlier during the course of those proceedings, which were commenced in 2006. 3. In order not to be out of time in making a cross-claim arising from the same facts and circumstances that are the subject of these proceedings, the Respondent (as Plaintiff) belatedly commenced proceedings in the Commercial Division of the Supreme Court of NSW, which proceedings were then stayed by consent of the Respondent pending the hearing of these proceedings. 4. Nonetheless, the Respondent now contends that the appropriate jurisdiction for these proceedings is the Supreme Court of NSW. 5. In such circumstances, the Applicant is placed at risk of running these proceedings to finality in the trial (which is the course sought by the Respondent), with the findings as to jurisdiction being made only at the conclusion of the trial. 6. The Respondents position places the Applicant at risk of findings concerning facts or issues, which if the jurisdiction is found to be wanting in whole or in part, which may operate as estoppels in the Supreme Court proceedings. 7. As to any prejudice or costs, as the proceedings both concern the same facts and issues and as such cross-claim as will be filed in the Supreme Court proceedings will raise the issues of unfairness of the contract, the evidence in one case is more likely than not to be in substance the same as the evidence in the other case. 8. These proceedings should be stayed pending resolution of the Supreme Court proceedings or until further order as findings in the Supreme Court proceedings on facts and issues, are likely to affect the bona fides or correctness of the belated jurisdictional issue only now raised by the Respondent. 8During the course of oral submissions on the Motion, Maxim's informed the Court that it was seeking, "a stay of proceedings and they won't come back save for the question of costs, or leave to discontinue". Following a short adjournment, Maxim's then applied to the Court for leave to discontinue the proceedings, which was granted. A Notice of Discontinuance was filed by Maxim's on 21 April 2011 in the following terms: The Applicant, pursuant to the leave of the Commission granted by the Honourable Justice Backman o 18 April 2011, discontinues the proceedings with the issue of Costs having been reserved by Order of her Honour Justice Backman on 18 April 2011. 9On 23 May 2011, Maxim's filed a cross-claim in the Supreme Court proceedings, and on 1 June 2011, DPI filed a response to the cross-claim. 10On 7 July 2011, DPI filed a Notice of Motion in this Court seeking orders that Maxim's pay costs to DPI on an indemnity basis from 14 July 2009 (the date Maxim's applied to the Supreme Court to stay the proceedings), or, on an indemnity basis from 14 July 2011 until 14 April 2011, or, in the alternative, on a party-party basis. 11The 7 July 2011 Motion came before the Court on 2 August 2011. At that time, Maxim's foreshadowed an application to stay DPI's 7 July 2011 Motion. An application to this effect was made by Maxim's by way of Notice of Motion filed on 5 August 2011 and was set down for hearing on 19 September 2011. 12The 5 August 2011 Motion seeks that the costs proceedings, "or alternatively the defendant's Notice of Motion filed 7 July 2011", be stayed pending final resolution of the Supreme Court proceedings (currently stayed). The grounds and reasons are set out in the Motion as follows: 1. Proceedings No. 50102/2009 commenced against the Applicant by the Respondent and its beneficial owner Ms de Poortere (as Plaintiffs) in the Supreme Court of New South Wales, Equity Division, Commercial List on 4 June 2009 ( Commercial List Proceedings ) raise substantially the same issues as those issues which the Respondent sought to agitate in these proceedings in this Court. 2. The Commercial List Proceedings were stayed pending the resolution of these proceedings, if the Applicant were to have been successful in its claim in these proceedings the Commercial List Proceedings would have necessarily abided the result of the proceedings in this Court without need for further hearing. 3. Notwithstanding the stay of the Commercial List Proceedings (and despite not having objected to jurisdiction at any earlier time in the course of these proceedings), immediately prior to trial of these proceedings the Respondent challenged this Court's jurisdiction to determine some or all issues in the proceedings and asserted the Supreme Court was the proper jurisdiction. 4. In those premises and in order to protect against multiple proceedings and potential factual or issue estoppels, with the leave of this Court the Applicant discontinued these proceedings and brought a cross-claim in the Commercial List Proceedings seeking (by rectification of the contract that is the subject of dispute between the parties) substantially the same relief it had sought in the proceedings in this Court. 5. The issues, witnesses and evidentiary material of both parties in these proceedings in the Commercial List Proceedings are likely to be substantially same as those in the proceedings in this Court. Preparations for trial in these proceedings are likely to be utilised by the parties in the Commercial List Proceedings. Further, the principle basis upon which the Respondent appears to purport to seek costs or indemnity costs in these proceedings is alleged misconduct by the owner of the Applicant Mr Goddard (see Buchanan Affidavit, [15]-[31]); such allegations are disputed and will the subject of contest at final trial in the Commercial List Proceedings. The Applicant contends that, in the exercise of its discretion, this Court would be concerned to await the findings at final trial of the Commercial List proceedings, rather than to deal with such matters on the Respondent's motion for costs. 6. Significant costs have been wasted by the course of conduct of the Respondent and further costs are likely to be wasted in determining the issue of the costs of these proceedings in advance of the final resolution of the Commercial List Proceedings. Parties' submissions on 5 August 2011 Motion 13The applicant's submissions repeated in large measure the grounds and reasons relied upon in the 5 August 2011 Motion. In essence, the applicant contended that the factual matrix underlying both sets of proceedings was identical, and although this Court did not have before it the evidence to support the contention, it may be inferred from a comparison of the contents of the Summons under s 106 and the applicant's cross-claim filed in the Supreme Court proceedings. It was also contended that because of the "remarkable similarity" between the two documents that the same witnesses and the same documents will be received into evidence in both sets of proceedings. 14On the issue of this Court's jurisdiction, Maxim's, in written submissions, sought to emphasise what it perceived to be a contradiction between DPI's approach on the one hand in encouraging Maxim's to continue the s 106 proceedings by consenting to a stay of the Supreme Court proceedings and on the other hand asserting this Court's lack of jurisdiction at the last minute, "so as to encourage the applicant to then seek to argue its claims not in this Court but rather in the Supreme Court ... in order to avoid factual or issue estoppels". In oral submissions, Maxim's referred to "a general rule" in relation to costs following a discontinuance of proceedings, but added that costs are discretionary and there are exceptions to the general rule which have been set out in Maxim's written submissions. The exception emphasised in oral submissions concerned DPI's "tactical course", or, its conduct in these proceedings which the Court understood to be a reference to the belated jurisdictional points taken by the respondent in relation to which the circumstances, according to Maxim's, cannot be investigated by it until the Supreme Court proceedings are finally determined. The reason why the circumstances cannot be investigated at this stage is said to be because of the existence, or possible existence, of privileged or confidential matters which may bear upon the issue. 15DPI submitted that Maxim's application to stay the costs proceedings was misconceived on a number of bases. First, there are two parties to the present proceedings. There are four parties to the Supreme Court proceedings. Each side has a right to produce such evidence as it considers fit on behalf of each party, and to rely on different aspects of that evidence, or follow different lines of enquiry in those proceedings. Secondly, the issues in this Court and in the Supreme Court are not the same. The s 106 application relied upon alleged unfairness of an impugned contract which is the consultancy agreement. The issues in the Supreme Court are the construction of a share sale agreement to which the consultancy agreement is a schedule and a claim for rectification brought by Maxim's and Mr Goddard. On the assumption that there will be areas of commonality, DPI submits that the appropriate and just course is that there should be an order for costs made by this Court in its favour. Thirdly, following on from the second point, if, at the conclusion of the Supreme Court proceedings DPI should obtain a costs order in its favour, the assessor in those proceedings could have regard to such common costs, if any, that had been involved in both proceedings. 16In addition, DPI submitted that Maxim's conduct in the proceedings on 18 April 2011 was such that DPI was entitled to expect that Maxim's accepted that costs would be determined by the Court in the usual manner. This is because during those proceedings, counsel for both parties sought to reserve costs with no suggestion of any stay of the issue. 17On the issue of privileged or confidential matters (the existence of which Maxim's asserts it is precluded from investigating until after the Supreme Court proceedings are determined), DPI submitted that any material filed in those proceedings which is the subject of privilege or implied undertakings, may require argument on the question of privilege and/or application for release of any implied undertakings. This is a matter for Maxim's which may be dealt with if the occasion arises in this Court at any time. It is in no way dependant upon the conclusion of the Supreme Court proceedings. If, on the other hand, as appears to be suggested by Maxim's, any confidential material may disclose matters going to an adverse course of conduct engaged in by DPI, such as it seeking to take some advantage, or concealing material or information, those are serious allegations which the interests of justice require be ventilated as soon as possible. DPI denies any such allegations and if there is an issue about them, the matter should be brought forward, and dealt with by this Court. 18As for the jurisdictional issue, DPI submitted first that the reason advanced by Maxim's for discontinuing the proceedings (which was to avoid factual and issue estoppels) was without merit because such estoppels will always have been potentially likely if the Supreme Court proceedings were heard subsequently to the s 106 proceedings. Secondly, DPI emphasised that Maxim's, in bringing its application under s 106 of the Act, must have thought it had jurisdiction. The opposing party is entitled to bring a jurisdictional argument. It has done so not as a preliminary point to be argued but as an issue to be heard during the hearing of the substantive proceedings. Faced with the late notification of the challenge to jurisdiction, Maxim's could have sought an adjournment if it needed more evidence. No such adjournment in those terms was sought. Consideration 19For reasons which will be developed below, the Court is of the view that Maxim's application to stay the costs proceedings must fail. 20It appeared to be common ground, not surprisingly, that not all the issues to be determined in both sets of proceedings are (or will be) the same. Maxim's, however, relies upon an identical factual matrix underpinning both sets of proceedings in support of its submission that the Supreme Court proceedings should be heard before the costs application. Assuming this to be the case (and there is no evidence upon which the proposition may be based), I do not see that this argument is particularly persuasive. Maxim's maintains that it discontinued the proceedings to avoid potential factual and issue estoppels. Issue estoppels would have arisen if the proceedings had not been discontinued. This would have occurred at least in the way described by Mason P (as he then was) in Tszyu v Fightvision Pty Ltd [2001] NSWCA 103; (2001) 104 IR 225 at [59] where his Honour said: [59] The contract formed upon the due exercise of the option in 1995 was the basis upon which the issue of breach was addressed and concluded in the contract proceedings and the yardstick against which damages were calculated (see especially 47 NSWLR at 491-6, 497). Conversely, the award of damages was the enforcement of a secondary obligation necessarily based upon the primary obligation of the contractual terms cf Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 848-9). For that contract now to be declared void or varied in its terms (an essential precursor to relief pursuant to s106(5) whether against Fightvision or those standing behind it) would be to contradict the very basis upon which the judgment stands, together with issues necessarily decided by that judgment. Cf also Caird v Moss (1886) 33 Ch D 22. Viewed in this way, the continued prosecution of the industrial proceedings would run smack into the principles of issue estoppel and for that reason their continuation was properly held to be an abuse of process. 21No issue estoppels arise in relation to the discontinuance of the substantive proceedings under s 106 because there has been no adjudication on the merits. With regard to the outstanding matter of costs, estoppels may or may not arise. If they were to arise, it would not preclude this Court from dealing with an application for costs (in the absence of any good reason to do otherwise) following the discontinuance of the proceedings with the issue of costs being the sole surviving issue. 22An order for costs following on from a discontinuance of proceedings by the applicant is governed by the default provisions in Rule 42.19 of the Uniform Civil Procedure Rules 2005 (UCPR) (for the application of the those Rules to this Court see s 18A of the Civil Procedure Regulation 2005). Rule 42.19 provides, relevantly: (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1. (2) Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued. ... 23The Rule was considered in Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32. Hodgson JA at [53] and [54] of the judgment commented: [53] It has been said that UCPR 42.19 does not give rise to a presumption that costs will be ordered against the discontinuing party: Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497; Foukkare v Angreb Pty Limited [2006] NSWCA 335 at [65]. [54] However, like UCPR 42.20, UCPR 42.19 states what the order for costs is to be unless there is a discretionary decision to order otherwise: Australiawide Airlines Limited v Aspirion Pty Limited [2006] NSWCA 365 at [53]. This means there is an onus on the discontinuing party to make an application in respect of costs if it does not propose to pay the costs of the other parties: Foukkare at [65]. In my opinion, it also means that there must be "some sound positive ground or good reason for departing from the ordinary course": Australiawide Airlines at [54]. 24As DPI submitted in its written submissions, the onus is on Maxim's as the discontinuing party to make its own application for costs if it does not propose to pay DPI's costs. 25Returning to the issues between the parties under consideration, the Court agrees with DPI's submission that when Maxim's filed its Summons for Relief it must have done so on the basis of a belief that the Court had jurisdiction to hear and determine the application. Whether DPI adopted some "tactical course" with regard to its belated challenge to the Court's jurisdiction is a matter which may be explored, if it becomes relevant, on the costs application. This is the basis upon which the Court understands the issue may be raised on the costs application. 26Also relevant to the Court's consideration is that while the only remaining issue for determination in these proceedings is costs, the Supreme Court proceedings, which are currently stayed, are in the early stages. The hearing dates have yet to be set down. The proceedings in this Court were commenced first in time. In addition, as earlier noted, there are two additional parties to the Supreme Court proceedings and there is no guarantee that the witnesses and the evidence to be relied upon on a costs application heard in this Court would be duplicated in the Supreme Court proceedings. Any commonality may be dealt with by an assessor at the conclusion of the Supreme Court proceedings by disallowing any common costs as have been allowed and recovered in these proceedings. 27The factors in favour of proceeding with DPI's costs application, and dismissing Maxim's 5 August 2011 Motion, far outweigh any countervailing factors, if indeed there are any, or any that have been properly identified so that the Court is in a position to give such factors due consideration. Maxim's had originally intended that the s 106 proceedings, including any issues as to costs, should be heard before the Supreme Court proceedings. It abandoned that intention only when DPI signalled its intention to challenge this Court's jurisdiction. Maxim's has failed to advance any good reason why this one event, which caused it to adopt a contrary position, should persuade the Court on balance to stay the outstanding matter of costs. 28Accordingly, the Court makes the following orders: (1) Notice of Motion filed by Maxim's Travel Pty Limited on 5 August 2011 is dismissed. (2) Costs of the Motion are reserved. (3) Notice of Motion filed by De Poortere Investments Pty Ltd on 7 July 2011 is set down for a directions hearing on Friday, 16 December 2011 at 9.30am. Amendments 30 November 2011 - Added following legal representative: "with Mr TJ Dixon, of counsel" Amended paragraphs: Coversheet, counsel 07 December 2011 - "Thursday" should read "Friday" Amended paragraphs: 28(3) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 December 2011