L & W DEVELOPMENTS PTY LTD v DELLA

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT CL 50143/02 FILE NUMBER(S) : LOWER COURT Gzell J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41116/02 CL 50143/02

MASON P GILES JA SANTOW JA

Thursday 5 June 2003 L & W DEVELOPMENT PTY LTD v Alain DELLA

Facts: Mr Della was engaged as managing director of L & W Development Pty Ltd to supervise completion of a development project in Miranda. Construction took many months longer than expected, and - according to the appellant - the project generated a net loss of more than $3 million.

The terms of contract as to Mr Della's remuneration are disputed. Mr Della claims he was to be paid a $50,000 annual retainer, rent on office space, and was meant to receive 10% of the profits without regard to shareholder loans. L & W Development Pty Ltd contends that Mr Della was to be paid 10% of the net profits of the project as a dividend of the shares issued to him. Given the project's loss, it claims he is to be paid nothing.

On 10 December 2001, Mr Della brought proceedings against L & W Development Pty Ltd in the Industrial Relations Commission (the IRC proceedings), claiming a sum in excess of $2.5 million. He sought an order declaring that his contract was 'varied' by virtue of its unfairness, pursuant to s 106 of the Industrial Relations Act 1996.

On 21 August 2002, L & W Development Pty Ltd commenced proceedings against Mr Della in the Equity Division of the NSW Supreme Court (the SC proceedings), seeking to hold him responsible for the project's loss and claiming almost $6 million in damages for negligence, breach of contract, and misrepresentation in breach of s42 of the Fair Trading Act 1987.

Gzell J granted a stay of the SC proceedings on condition that Mr Della expeditiously prosecute the IRC proceedings. L & W Development Pty Ltd appealed, complaining of a "justifiable sense of grievance" arising from Gzell J's failure to explain the reasoning process that led to his order for stay (Beale v Government Insurance Office (1997) 48 NSWLR 430).

HELD, per Mason P, dismissing the appeal (Giles JA and Santow JA agreeing):

(1) Gzell J should have made findings about the nature of each set of proceedings and should have addressed the appellant's complaint that the respondent had disentitled himself to a stay by reason of dilatoriness in prosecuting the IRC proceedings. [40-43]

(2) Nevertheless, the orders should be allowed to stand on the basis that a stay on the same terms is appropriate. [45-46]

(a) The principle that a party who has properly invoked the jurisdiction of a competent court has a prima facie right to insist upon its exercise and have the claim heard and determined does not apply in the present case. [47] - [49] and [58]

(i) This case is to be distinguished from those where a stay is sought on the grounds of forum non conveniens. In the latter type of case, the stay is of permanent nature: CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 at 389-91; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 243-4; Voth & Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. [48]-[51] (ii) The present case is one involving only a temporary stay of proceedings in one court to enable related proceedings in another to proceed first to determination: Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287 at 292 ; Majik Markets Pty Ltd v S & M Motor Repairs Pty Ltd (No 3) unreported, 13 October 1987 (Young J) ; The Environmental Group Ltd v Croudace unreported, 7 August 1998 (Santow J) ; Premier Sports Australia Pty Ltd v Dodds [2001] NSWSC (Palmer J) ; RSL Com v Mobile Tron [2001] NSWSC 819 (Barrett J). [51]-[53] (b) On balance of relevant factors, the requirements of justice required an exercise of discretion in favour of a stay: The Environmental Group Ltd v Croudace unreported, 7 August 1998 (Santow J). [56] - [57]

(i) The IRC proceedings were properly commenced earlier in time than the Supreme Court proceedings. (ii) The Supreme Court does not have jurisdiction to make orders under s106 of the Industrial Relations Act 1996 . If the Supreme Court proceedings were completed first, issues may remain for determination by the IRC (cf Tszyu v Fightvision Pty Ltd [2001] NSWCA 103; 104 IR 225). (iii) Issues determined in the IRC proceedings may impact upon aspects of the Supreme Court proceedings. (iv) To allow continuation of both sets of proceedings would waste legal costs and resources. The similarity between the proceedings will ensure that work already done in each will not be in vain. (v) The conditional stay as granted is not prejudicial to any party. (vi) The level of delay in the prosecution of the IRC proceedings has not been such as to disentitle the respondent to a conditional stay. *************

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41116/02 CL 50143/02

MASON P GILES JA SANTOW JA

Thursday 5 June 2003 L & W DEVELOPMENT PTY LTD v Alain DELLA

1 MASON P: The Court has heard concurrently a contested application for leave to appeal and submissions as on an appeal. The matter is in my view suitable for a grant of leave. Accordingly, the moving party, L & W Development Pty Ltd, shall be referred to as the appellant. 2 The appellant challenges orders made by Gzell J in the Equity Division, Commercial List staying proceedings for damages brought by the appellant against the respondent (the SC proceedings). The SC proceedings have been stayed conditionally upon the respondent prosecuting expeditiously proceedings that he had earlier commenced against the appellant and two related parties. These proceedings (the IRC proceedings) invoke the jurisdiction of the Industrial Relations Commission to avoid or vary unfair contracts whereby a person performs work in an industry.

Facts 3 In 1997 the appellant obtained development and building approval to construct 63 strata title units on a site at Willock Avenue Miranda. By early 1998 the project was encountering problems. The appellant's chosen builder was in financial difficulties and there were disputes with the principal financier, the Bank of China. 4 In about June 1998 Alain Della, the respondent, was engaged as managing director of the appellant to supervise completion of the project. Ten percent of the appellant's shares were issued to the respondent. At that stage a new builder, Yatooma Construction Pty Ltd, had tendered to do the construction work which was expected to be completed within a year. 5 Construction took many months longer than anticipated. There were disputes with the builder, Sutherland Shire Council, the new financier (Suncorp Metway Ltd) and the Department of Fair Trading. 6 By late 1999 relations between the respondent and the principal shareholder of the appellant, Mr Peter Li had become very strained. According to Mr Li, the respondent chose not to be involved in the appellant's activities from December 2000 onwards. According to the respondent, the appellant had ceased to pay him an agreed retainer of $50,000 per annum from April 1999 onwards. 7 On 1 May 2001 the respondent was removed from his positions as director and manager of the appellant. 8 The contractual arrangements as to the respondent's remuneration are in dispute. The appellant's position, in brief, is that the respondent was to be paid 10% of the net profits of the project, to be received as a dividend on the shares that were issued to him. In the circumstances, nothing is payable because of the project's loss and the appellant's consequential inability to pay any dividend to shareholders. On top of this, the appellant blames the respondent for its losses and seeks damages accordingly. 9 According to the respondent, the agreed remuneration package was that he would be paid an annual retainer of $50,000 and that he would also receive 10% of profits, calculated on the basis that shareholders' and other loans, apart from the external bank debt, would not be brought into account (Further Amended Summons for Relief Under s106, par 6). It is also alleged that the appellant had agreed to pay the rent on office space occupied by the respondent when he was asked to become the managing director of the appellant. 10 This summary of the contractual relationships is taken from the pleadings filed in the two sets of proceedings and from Mr Li's lengthy affidavit sworn 9 October 2002 and filed in the SC proceedings. 11 The last unit was sold in April-May 2002. According to the appellant, the project generated a net loss in excess of $3 million dollars and the appellant has a deficiency of assets to liabilities in that region (see Mr Li's affidavit pars 150-153; Appellant's Reply to amended summons for relief under s106, par 16). The appellant's liabilities in these calculations include the loans owing to Mr Li or parties related to him. The respondent contends that these should be disregarded in the calculation of his entitlement to 10% of the net profit of the project.

The proceedings in the Industrial Relations Commission 12 On 10 December 2001 the respondent commenced proceedings in the Industrial Relations Commission against three parties being the appellant, Mr Li and a related company apparently controlled by Mr Li that holds shares in the appellant. 13 The proceedings are brought pursuant to s106 of the Industrial Relations Act 1996, which provides: 106 Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.

14 Section 105 defines "contract" to mean: … any contract or arrangement or any related condition or collateral arrangement, but does not include an industrial instrument.

"Unfair contract" is there defined to mean: … a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument.

15 The Supreme Court does not have jurisdiction to make orders under s106. 16 To the extent that the Commission acts within its jurisdiction, its orders avoiding or varying contracts have the capacity to affect the rights of parties seeking to litigate related claims in the Supreme Court. The Commission considers the law as to the scope of s106 to be well settled; and that merely because a contract or arrangement might be characterised as "commercial" is not a basis upon which to conclude it cannot be challenged under s106 (Mitchforce Pty Ltd v Starkey (2002) 117 IR 122 at 135). Commission decisions are protected from challenge in this Court to a substantial degree, by s179 of the Industrial Relations Act. 17 The Mitchforce decision and the scope of this privative clause are under challenge in proceedings in this Court in which judgment stands reserved. However, no party to the current proceedings put in issue the correctness of the propositions summarised in the preceding paragraph. In any event, the facts in Mitchforce are removed from the present case, because there could be no doubt that the contract between the present parties is one whereby the respondent performed work in an industry. 18 In the summons in the IRC proceedings, the respondent claims to be owed approximately $1 million according to his version of the agreed remuneration arrangements. As Mr Mannix, his solicitor, deposed in an affidavit of 30 October 2002: The [respondent's] case in the IRC proceedings is that he worked full time in the capacity of project manager for the Miranda Project and only received $50,000 income, provided office space at his expense for the Miranda Project, lent money to the plaintiff all on the expectation or pursuant to an oral arrangement that he would receive 10% of the gross profit enjoyed by the plaintiff on the Miranda Project less bank debt with any shareholders' loans being treated as equity for the purposes of calculating the defendant's 10% fee. The defendant says that on this basis with the completion of the Miranda Project in about December 2001 he is entitled, subject to final accounting, to the sum of approximately $1m.

19 However, the total sum claimed by the respondent in the IRC proceedings is in excess of $2.5 million. This is based upon his contract as project manager being varied pursuant to s106, inter alia by providing for a retainer fee of $300,000 per annum, a 10% "success fee", redundancy and termination payments, payment of rent and other payments. The respondent pleads that his contract was unfair, harsh and unconscionable and contrary to the public interest both in its operation and in its terms because: (a) it permitted the Respondents to obtain the benefit of services of the Applicant without paying the Applicant sufficient remuneration or reasonable remuneration; (b) it failed to require the Respondents to give to the Applicants reasonable notice of termination or reasonable payment for redundancy; (c) it gave to the Respondents a wide discretion as to how it would treat the applicant in terms of remuneration, repayment of loans and reimbursement of expenses; (d) it permitted the Respondents to take control of the Project after the Applicant had brought the Project to the point of almost being successfully concluded, without regard to the applicant's interests; (e) it permitted the Respondents to control in effect the amount of Success Fee paid to the Applicant by failing to honour the spirit of the oral arrangement reached between the parties; (f) it permitted the Respondents to introduce the shareholders' loans and other loans to the accounts of the company which were not bona fide and which have the effect of reducing the Applicant's Success Fee unfairly.

20 The Commission's jurisdiction to entertain the respondent's claim in the IRC proceedings is unaffected by the amendments effected by ss108A and 108B of the Industrial Relations Act, which commenced after the IRC proceedings were initiated. 21 Various steps were taken in the IRC proceedings in the ensuing months. These included joinder of issue through the filing of a Reply and Response to Reply, the filing of affidavits in support of the summons and the service of notices to produce. There was also conciliation presided over by Marks J between May and July 2002, but settlement did not ensue. 22 On 20 September 2002 the appellant filed a motion in the Commission seeking a stay of the IRC proceedings pending the determination of the SC proceedings. That motion was returnable on 25 September 2002, but it has not been prosecuted to date. 23 The appellant filed a cross claim in the Commission following the staying of the Supreme Court proceedings by the order under appeal. It seeks orders under s106 declaring void the contract or arrangement between the parties made in about June 1998; or alternatively any term thereof imposing an obligation to remunerate the respondent. In a detailed pleading the appellant also repeats the various complaints against the respondent as to misrepresentation and negligent performance of his contractual duties already raised in the Supreme Court proceedings (see below). The Commission's jurisdiction to entertain such a cross claim is not immediately apparent. However, what is clear is that this cross claim was filed in response to the stay ordered by Gzell J. I do not regard this document to be material to the issues arising in the appeal, even if this Court comes to determine the application afresh as on an appeal by way of rehearing.

The Supreme Court proceedings 24 On 21 August 2002 the appellant commenced proceedings against the respondent in the Equity Division, Commercial List. Damages are claimed for misrepresentation in breach of s42 of the Fair Trading Act 1987, negligence and breach of contract. The misrepresentations were allegedly made between April and July 1998. They relate to the respondent's professed expertise and competence and to the estimated time and cost of completing the project. The contract and tort claims cover similar ground in that each asserts negligence in the performance of the respondent's obligations under his retainer. Damages of almost $6 million are claimed in relation to construction delays, increases in the cost of completing building work and poor management of the building project. 25 At the first directions hearing a timetable was set for filing the appellant's evidence by 26 September 2002. 26 At a directions hearing before McClellan J on 4 October 2002 the respondent signalled his intention to move for a stay of the SC proceedings. Directions were given in relation to this application, which eventually came on for hearing before Gzell J on 8 November 2002. 27 In the meantime the appellant continued to prepare its evidence in the SC proceedings. It filed an affidavit from its accountant, Mr Harris, on 26 September 2002 and a lengthy affidavit by Mr Li on 10 October 2002.

Motion for stay of the Supreme Court proceedings 28 Mr Wheelhouse represented the plaintiff (the present appellant) and Mr Dubler represented the defendant (the present respondent). 29 The principal relief sought in the defendant's motion was that: These proceedings be stayed until after the determination of proceedings No.IRC 8168 of 2001 before the Industrial Relations Commission of New South Wales.

30 The sparseness of his Honour's reasons, about which the appellant complains, make it necessary to set out the transcript of the proceedings. This shows the issues that were fought although it does not appear to be a complete record of counsel's submissions. The transcript states: HIS HONOUR: The application is what? DUBLER: There are and have been since December 2001 Industrial Relations Commission proceedings involving similar but not completely identical parties, but it is common ground the factual matrix is identical, and more recently, on 21 August 2002, the Supreme Court proceedings have been commenced. By motion filed 11 October 2002 we seek a stay of these proceedings to allow the Industrial Relations Commission proceedings to proceed to finality. HIS HONOUR: What is the nature of the application being made in the Industrial Relations Commission? DUBLER: The relief sought is orders for avoidance and/or variation of the contract or arrangement between the applicant and the respondents and payment of a sum of money. In this Court the plaintiff relies on three causes of action: (1) alleged misleading and deceptive conduct; (2) breach of contract; (3) tort, which is negligence in and about performing work for the plaintiff. (On inquiry from his Honour as to the basis for opposition to the motion, Mr Wheelhouse stated there was no coincidence in jurisdiction in relation to the dispute between this Court and the Industrial Relations Commission. He stated in the Industrial Relations Commission the defendant here, applicant there, invokes the jurisdiction under section 106 of the Industrial Relations Act. Mr Wheelhouse stated he relied on the implied terms in the contract to ground a claim in negligence. Mr Wheelhouse further stated that by Monday the plaintiff will have filed all its evidence in chief, indicating it was unlikely that the Industrial Relations Commission proceedings would commence within the next twelve months, or towards the end of next year.) HIS HONOUR: If I were minded to grant your motion, would your client give an undertaking to take all necessary steps to ensure that the matter is brought before the Commission as expeditiously as possible? DUBLER: Yes, we would seek the first available directions date. HIS HONOUR: I grant leave to file in court two affidavits of Tania Schiff, sworn 23 October 2002 and 8 November 2002. EXHIBIT #A - COPY LETTER OF 4 APRIL 2001 FROM JOHN WALSH & PARTNERS, LAWYERS, TO THE PLAINTIFF AND COPY OF FAX FROM ERNST & YOUNG TO JOHN WALSH & PARTNERS DATED 10 APRIL 2001 TENDERED, ADMITTED WITHOUT OBJECTION. (Mr Wheelhouse took his Honour to the originating summons in the Industrial Relations Commission, exhibit A to the affidavit of Tania Schiff sworn 23 October 2002.) AFFIDAVIT OF JOHN JOSEPH MANNIX FILED 30 OCTOBER 2002 READ AFFIDAVIT OF THE DEFENDANT FILED 31 OCTOBER 2002 READ WHEELHOUSE: Mr Della's affidavit raises factual matters which I am not in a position to confirm today. I would object to paragraphs 2 to 6 on the grounds of relevance. HIS HONOUR: I reject the tender of paragraphs 2 to 6 on the basis they are irrelevant to the application before me. I will take account of the obvious circumstance there is a wastefulness in two lots of proceedings that anybody would wish to avoid, and there may be circumstances in which a plaintiff, because of his peculiar circumstances, may find it even more onerous. What is the utility of the first application before the Industrial Relations Commission to set aside the contract? If you set aside the contract, what remuneration is your client entitled to? DUBLER: None, and the Commission orders what it considers to be fair compensation. Its utility is to enliven the jurisdiction to give a payment. FOR JUDGMENT SEE SEPARATE TRANSCRIPT. DUBLER: Costs should follow the event. HIS HONOUR: I will make an order that the plaintiff pay the defendant's costs of the motion. (His Honour indicated he would take a short adjournment to enable the parties to prepare short minutes.) SHORT ADJOURNMENT (Both counsel provided his Honour with a copy of short minutes. Discussion re objections to short minutes.) HIS HONOUR: Order as per short minutes of order initialled by me, dated by me and placed with the papers.

31 The affidavits of the appellant's solicitor, Ms Schiff set out chronologies of the respective proceedings and raised matters of concern about the progress of the IRC proceedings. It was common ground that the two sets of proceedings arose out of the same factual matrix (see Mr Mannix's affidavit, par 12; Ms Schiff's first affidavit, par 4). 32 Gzell J gave the following reasons for judgment: 1. I have decided I should in the circumstances grant a stay. It seems to me, notwithstanding that the application in the Supreme Court does not rely upon the terms of the contract between the parties, other than an implied term as to non-negligent performance of duties, that, the Industrial Relations Commission has exclusive jurisdiction under s106 to vary or to set aside the terms of a contract and there is no guarantee that the nature of the contract will naturally arise as a matter to be adjudicated in the Supreme Court, either by way of defence or counterclaim. 2. In those circumstances it seems to me to be appropriate that the proceedings in the Industrial Relations Commission should proceed and that the proceedings in this Court be stayed until the outcome of that litigation. 3. I will grant the stay sought in the notice of motion upon the defendant giving suitable undertakings to expedite the proceedings in the Commission, along the lines announced by counsel for the defendant in the proceedings before me. 4. I direct the parties to confer in an endeavour to agree upon short minutes of order which will include such undertakings. If the parties are unable to agree upon the nature of those undertakings, I will adjudicate upon them.

33 There were two sets of formal orders, each apparently made on 8 November 2002. 34 The first set of orders were: The Court: 1. Notes: The undertaking of the Defendant that he will diligently prosecute proceedings 8168 of 2001 issued in the Industrial Relations Commissioner ("the IRC Proceedings") and he will: (a) use his best endeavours strictly to comply with the timetables and directions set by the Court in the IRC proceedings, (b) within seven days list the IRC proceedings for directions, and (c) within seven days file a motion seeking orders for expedition of the IRC proceedings. 2. Orders: (a) That in the event that the Defendant defaults in compliance with any timetable or direction set by the Court in the IRC proceedings and does not cure the default within two business days the plaintiff be at liberty to apply to the Court to vacate the order made by this Court on 8.11.2002 staying these proceedings, (b) that in the event that the Defendant breaches either undertaking 1(a) or 1(c) above the plaintiff be at the liberty to apply to the court to vacate the order made by this Court on 8.11.2002 staying these proceedings. 3. Grants: Liberty to apply to either party on two days notice in writing.

35 The second set of orders were: THE COURT ORDERS that: 1. Until further notice, these proceedings are stayed. 2. The Plaintiff to pay the Defendant's costs of the Motion dated 10.10.2002.

The orders and the reasons supporting them 36 I cannot accept the appellant's submission that the orders made by Gzell J were tantamount to a permanent stay of the SC proceedings. 37 The orders effected a temporary, conditional stay of the SC proceedings. It is clear that Gzell J was providing a regime that suspended further prosecution of the SC proceedings conditionally upon the expeditious prosecution of the IRC proceedings. It is equally clear that the orders contemplate recommencement of the SC proceedings upon completion of the IRC proceedings and subject to such matters as have been determined by the final orders made in the IRC proceedings. The temporary, interlocutory nature of the orders and the liberty to apply expressly reserved would allow the appellant to return to the Supreme Court if there were any material change in circumstances. 38 The significance of this characterisation of the orders will appear when I turn to the substantive issue in the appeal. 39 It is convenient at this stage to address the appellant's complaint as to Gzell J's exposure of reasons. The appellant cited Beale v Government Insurance Office (1997) 48 NSWLR 430 and submitted that it has a justifiable sense of grievance because it does not know the essential reasoning process which led to the orders. 40 The appellant submits that his Honour should have made findings about the nature of the respective IRC and SC proceedings and should have addressed the appellant's complaint that the respondent had disentitled himself to a stay by reason of dilatoriness in prosecuting the IRC proceedings. 41 I would uphold the appeal on this ground alone. It is true that there were no contested issues of primary fact. It is also likely that his Honour dealt with a number of pressing matters in a crowded list. Nevertheless, the losing party was, in my view, entitled to a fuller exposure of the weighing process necessarily involved in a case of this nature according to the legal principles referred to below. 42 I suspect that the word "not" should have been inserted before the words "naturally arise" in the vital second sentence of his Honour's reasons for judgment. The omission is probably a slip of expression or transcription, but it adds to my sense of disquiet. Assuming the insertion of "not", the point being made by his Honour was that it was on the cards that the Commission could reformulate the contract in a way that affected the rights of the parties in the SC proceedings. If it happened, it would affect the outcome of the SC proceedings, including if there were a cross-claim whereby any damages would be offset by allowance for remuneration properly due. 43 But, in light of the principles discussed below, this alone would not require the staying of the SC proceedings if for reasons such as delay in the IRC proceedings it was proper to allow them to proceed. Several factors needed to be weighed and this required their identification. Without this, the appellant could not really know why the respondent's motion was granted, leaving the appellant with a justifiable sense of grievance and in the dark as regards bases for appellate accountability. 44 Mr Wheelhouse also informed us that he specifically invoked before Gzell J the argument (repeated in this Court) that the principles dealing with power to stay for forum non conveniens applied in the present case. This argument is not recognised or refuted in the reasons for judgment. 45 In the result, the orders cannot stand unless this Court is positively satisfied that a stay on identical terms is appropriate. 46 For reasons which follow, I would dismiss the appeal. I am satisfied that a stay on the same terms is appropriate. In so concluding, I have addressed the substantive issue raised in the appeal and have had regard to the evidence before the primary judge as well as some new evidence placed before this Court. My reasons follow.

Principles governing the stay sought in these proceedings 47 The appellant's primary submission is that Gzell J failed to give proper weight to the fundamental principle that a party who has regularly invoked the jurisdiction of a competent court has a prima facie right to insist upon its exercise and to have the claim heard and determined. Only if it is oppressive, vexatious or an abuse of process should proceedings be stayed. Alternatively, this Court is urged to apply this principle in its independent assessment of the issues. 48 The appellant cites Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 243-4 where he said that: … the traditional process of determining such an application for the dismissal or stay of an action is not a mere balancing or convenience or inconvenience or the resolution of competing claims of different jurisdictions neither of which could be said to be clearly inappropriate: cf per Gibbs J., Cope Allmann (Australia) Ltd v Celermajer [(1968) 11 FLR 488 at 492]. The starting point of the determination of such an application in accordance with traditional principle must be the prima facie right of a plaintiff to insist upon the exercise of competent jurisdiction which he has regularly invoked. That prima facie right of a plaintiff is not to be lightly displaced or denied. As Sir Gorell Barnes pointed out in his judgment in Logan v Bank of Scotland (No 2) [[1906] 1 KB 141 at 150]: In my opinion, however, the jurisdiction of the Court to stay proceedings on the ground of vexation should be exercised with great care; indeed, I find that Cotton LJ in McHenry v Lewis [(1882) 22 Ch D] at 406, said: 'In the first place, it is a jurisdiction which one ought to exercise with extreme caution. Stopping in the middle of a suit a plaintiff from going on, when he has a right of action as against the defendant, is a jurisdiction which has to be exercised with very considerable caution.' Not only is the jurisdiction one which should be exercised "with great care" or "extreme caution". It has, as has been indicated, traditionally been seen as a jurisdiction which is only available to be exercised on inappropriate forum grounds where the court whose jurisdiction has been invoked by the plaintiff is so inappropriate for their determination that a continuance of the proceedings in it would be productive of the injustice of oppression and vexation of the defendant.

See also Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. 49 Reliance upon the passage in Fay is, in my view, misconceived because Deane J was addressing the power to stay proceedings on grounds of forum non conveniens. The context and the last sentence of the passage just quoted make this quite plain. 50 The scope of this power under Australian law is expounded by the High Court in CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 at 389-91. It is a power to preclude the abuse of process that would stem from the prosecution of litigation in a clearly inappropriate forum. 51 What distinguishes such proceedings from the present is the permanent nature of a stay of proceedings on forum non conveniens grounds. This distinction is recognised in a footnote to the opening sentence of the passage in CSR Limited cited above: The question whether a dispute as to legal rights should be litigated in the courts of one country or those of another is one that permits of resolution, if resolution is possible, by one court staying its proceedings in favour of the other or by it granting an anti-suit injunction restraining a person amenable to its jurisdiction from commencing or continuing proceedings in that country (98).

Footnote (98) reads: Steps short of a permanent stay or anti-suit injunction may be appropriate in a particular case. In Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287 at 292, the Federal Court stood the Australian action out of the list pending the determination in a New Zealand action of concurrent issues on the footing that, even if both parties did not accept the New Zealand findings, the Federal Court might give directions which reduced the scope of evidentiary issues remaining in the Australian proceeding.

52 In Sterling Pharmaceuticals, Lockhart J said (at 290-1): The court has a general power to control its own proceedings, and that power extends to enable it to order a temporary stay of proceedings in various circumstances including the case where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first…. The court is a superior court of record and obviously may control its own proceedings including, where appropriate, the exercise of a power to grant a stay…. In my opinion relevant considerations to be taken into account in the present case include the following: • Which proceeding was commenced first. • Whether the termination of one proceeding is likely to have a material effect on the other. • The public interest. • The undesirability of two courts competing to see which of them determines common facts first. • Consideration of circumstances relating to witnesses. • Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted. • The undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues. • How far advanced the proceedings are in each court. • The law should strive against permitting multiplicity of proceedings in relation to similar issues. • Generally balancing the advantages and disadvantages to each party.

53 Several decisions in the Equity Division have recognised this distinction in a context similar to the present, where a defendant to commercial contract proceedings in the Equity Division has applied to the Industrial Relations Commission pursuant to s106 of the Act seeking to have the underlying contract avoided or varied. These cases include Majik Markets Pty Ltd v S & M Motor Repairs Pty Ltd (No 3) unreported, 13 October 1987 (Young J); The Environmental Group Ltd v Croudace unreported, 7 August 1998 (Santow J); Premier Sports Australia Pty Ltd v Dodds [2001] NSWSC 707 (Palmer J); RSL Com v Mobile Tron [2001] NSWSC 819 (Barrett J) and Rexam Australia Pty Ltd v Optimum Metallising Pty Ltd [2002] NSWSC 916 (Einstein J). These decisions correctly recognise the distinction between a stay based on forum non conveniens and a temporary stay of proceedings in one court to enable related proceedings in another to proceed first to determination (see esp RSL Com at 14; Rexam Australia Pty Ltd at 21-22). 54 In The Environmental Group Ltd, Santow J cited and applied the decision of Lockhart J in Sterling Pharmaceuticals Pty Ltd. His Honour then analysed the nature of the Supreme Court proceedings which he had jurisdiction to determine and of the related proceedings in the Industrial Relations Commission which he did not have jurisdiction to determine. He stated his conclusion in terms which are equally applicable to the present situation: Several things are therefore clear. First, neither the Supreme Court nor the IRC can deal with all matters in dispute between the parties. Second, if all are to be litigated it would be inevitable there will be two sets of proceedings. Thus while 'the law should strive against permitting multiplicity of proceedings in relation to similar issues', here a multiplicity of proceedings may prove unavoidable. It is true it could be said that hearing one set of proceedings before the other makes it less likely the second set will ever be litigated. But that begs the question which proceedings should be heard first and either party may claim first right to be heard.

55 Santow J then examined relevant factors that bore on the granting of a stay and their relative weight in the final balance. These included: • The impact of the Supreme Court and IRC proceedings on each other. • The relative progress of each proceedings. • Conduct of the parties with respect to the relative progress of each proceedings. • The fact that the Supreme Court proceedings were commenced first in time. • Not all parties to the Supreme Court proceedings were parties to the IRC proceedings. • Possible jurisdictional problems in relation to the IRC proceedings and how they bore on the stay application. • Financial disadvantage.

(Cf also the useful checklist offered by Einstein J in Rexam at [21].) 56 Santow J recognised that the defendants bore the onus of satisfying him that the requirements of justice required an exercise of discretion in favour of a stay. He held that they had satisfied this onus, stating that: The factor which weighs heaviest in that result is the potential impact of the IRC proceedings on the Supreme Court proceedings. The contentions of the Defendants, if upheld in the Industrial Relations Commission, will, it is true, not resolve all the issues between the parties - but neither would the Supreme Court proceedings if heard first. However the IRC proceedings have the potential to result in avoidance or variation of two of the agreements the subject of the Supreme Court proceedings … with consequential fundamental effect on those latter proceedings …. If the IRC proceedings are heard first, it will not impact adversely upon the capacity of the Supreme Court to deal with the issues still remaining. Indeed it will then be clear whether the three agreements are or are not avoided or varied.

57 In my view these principles are directly applicable to the present case and they amply support the orders under appeal. I say this for the following reasons:

• The IRC proceedings in the present case were commenced eight months earlier than the SC proceedings, in a genuine invocation of the Commission's jurisdiction. I am not persuaded that the dispute between the parties is "quintessentially commercial", as the appellant contends (citing Rexam at [24]). It would appear to fall squarely within the scope of s106, at least in part.

• The Supreme Court lacks jurisdiction to grant the relief sought by the present respondent in the IRC proceedings.

• Significant steps have been taken in the IRC proceedings which are apparently ready to be set down for hearing with a trial expected in late 2003.

• If the Commission avoids or varies the contract, or even just the remuneration aspects of it, this would impact upon any damages recoverable in the SC proceedings. Other aspects of the SC proceedings may also be affected by issues determined or orders made in the IRC proceedings.

• Work done to date in relation to the two sets of proceedings will not be wasted, because it is common ground that the issues in the two sets of proceedings are similar. Affidavits and statements prepared for one proceeding can therefore be used in relation to issues remaining to be determined in the other. Since each party appears to have done everything required of it in its preferred venue, it can be seen that there should be no delay in proceeding to trial in the Commission as soon as a date can be fixed, and no delay in proceeding to trial in the Supreme Court on issues outstanding when the IRC proceedings are completed.

• To allow both proceedings to press on pell mell risks wasteful duplication of judicial resources and inconsistent judicial determinations.

• There has not been such level of delay in the prosecution of the IRC proceedings as to disentitle the respondent to a conditional stay.

• To refuse a stay would result in an unseemly race to judgment between the two sets of proceedings in circumstances which would generate substantial further legal costs and impose unnecessary hardship upon the parties.

• No prejudice flows from a stay which is subject to conditions requiring the expeditious prosecution of the IRC proceedings and is at all times reviewable for change of position. The Supreme Court proceedings can be brought on for trial shortly after the conclusion of the IRC proceedings.

• If the SC proceedings were completed first, there could well remain issues to be decided in the IRC proceedings (cf Tszyu v Fightvision Pty Ltd [2001] NSWCA 103; 104 IR 225). 58 In so far as the appellant submitted that Gzell J erred in not applying the principles referable to anti-suit injunctions, I content myself with observing that Gzell J was not dealing with an application of that nature.

Costs thrown away 59 These proceedings were originally fixed for hearing on 1 May 2003. On that day there was no appearance from the opponent when the matter was called on for hearing in the morning. It later emerged that the opponent's solicitor had overlooked the fixture noted in his diary. He was at home, due to illness. Counsel had not been briefed. Later in the day counsel appeared on his instructions to seek an adjournment. We granted an adjournment to 8 May, for reasons set out in my judgment that day. 60 Counsel briefed for the respondent at the adjourned hearing on 8 May tendered an affidavit from Mr Mannix detailing his medical condition and apologising for what had happened on the previous occasion. 61 The explanation and apology should be accepted, but it is appropriate that the Court should order Mr Mannix to pay the costs thrown away by reason of the events of 1 May 2003.

2. Appeal dismissed with costs, except as to the costs hereafter provided for.

3. Order the respondent's solicitor, Mr Mannix, to pay the costs thrown away by reason of the events of 1 May 2003. 63 GILES JA: I agree with Mason P. 64 SANTOW JA: I agree with Mason P.

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