Maxims Travel Pty Limited [ACN 002 906 792] v De Poortere Investments Pty Ltd

Industrial Relations Commission (NSW)|2012-06-29|Before: Backman J

The proceedings were commenced by Summons for Relief under s 106 of the Industrial Relations Act 1996 (the Act), filed on 25 October 2006.

The 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 Maxims 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.

The parties to the Supreme Court proceedings are DPI and Helene Mathurine De Poortere as first and second plaintiffs respectively and Maxims and Christopher Anthony Goddard as first and second defendants respectively.

DPI's 15 April 2011 Notice of Motion was served on Maxims on 8 April 2011. On 13 April 2011, Maxims 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.

DPI'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:

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
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:
on one hand, you refer to further proceedings in the Industrial Court after the conclusion of the Supreme Court proceedings; and
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.

On 18 April 2011, the first day of the hearing of the s 106 application, Maxims 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:

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.
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.
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.
Nonetheless, the Respondent now contends that the appropriate jurisdiction for these proceedings is the Supreme Court of NSW.
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.
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.
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.
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.

During the course of oral submissions on the Motion, Maxims 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, Maxims then applied to the Court for leave to discontinue the proceedings, which was granted. A Notice of Discontinuance was filed by Maxims 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.

On 23 May 2011, Maxims filed a cross-claim in the Supreme Court proceedings, and on 1 June 2011, DPI filed a response to the cross-claim.

On 7 July 2011, DPI filed a Notice of Motion in this Court seeking orders that Maxims pay costs to DPI on an indemnity basis from 14 July 2009 (the date Maxims 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.

The 7 July 2011 Motion came before the Court on 2 August 2011. At that time, Maxims foreshadowed an application to stay DPI's 7 July 2011 Motion. An application to this effect was made by Maxims by way of Notice of Motion filed on 5 August 2011 and was set down for hearing on 19 September 2011.

The 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:

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.
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.
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.
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.
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.
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. 5DPI relied on the application of the Uniform Civil Procedure Rules (UCPR), specifically rule 42.19, in support of its application. According to DPI, the rule sets out the ordinary position which is that a discontinuing party must pay the costs of the proceeding discontinued, subject to the power of the Court to order otherwise. In reliance on a number of authorities, DPI contended that such an order made by the Court will not be made unless there is shown "some sound positive ground or good reason for departing from the ordinary course": Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 [54]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 [54]; Maxims Travel Pty Ltd v De Poortere Investments Pty Ltd [2011] NSWIRComm 158 [22]-[24]. 6Clause 42.19 relevantly provides: (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. ... 7The Orders sought by Maxims in its motion rely on three contentions set out in written submissions. These are: (a) It was reasonable for Maxims to commence and continue the proceedings. (b) DPI belatedly raised a jurisdictional objection to the court entertaining the proceedings, in which case it became apparent that it would be futile for Maxims to continue these proceedings if DPI were to establish that it was correct. It was reasonable to discontinue immediately after jurisdictional objection had been raised, in circumstances where it was open to Maxims to seek similar substantive relief upon a different basis by way of cross-claim in the Commercial List Proceedings. Adopting that course does not constitute a capitulation or abandonment of claim of the type discussed in Cummins v Australian Jockey Club Ltd [2009] NSWSC 254 at [22] (which would ordinarily disqualify a court from exercising its discretion to relieve a party from costs order following a discontinuance). (c) DPI's conduct in the course of the proceedings was unreasonable in a number of respects, as discussed below.

Objection to jurisdiction 8The issue to which most of the parties' submissions were directed concerned the respondent's objection to jurisdiction. As the factual background reveals, Maxims asserted that DPI raised an objection to the Court's jurisdiction one week before the trial was due to commence. Maxims posited a number of questions on the issue, the answers to which it was said would lead to two conclusions, either that DPI knew there was a jurisdictional issue at an early point in time but elected not to take the objection, although it was incumbent upon it to raise it at that stage; or, the issue became apparent to DPI shortly before the trial date in which case the taking of the point at such a late stage constituted unreasonable conduct. Maxims contends that either circumstance can be taken into account in Maxims' favour on the costs application. 9In developing the contention Maxims sought to emphasise that if DPI had formed the view that this Court lacked jurisdiction at an early stage it did not raise the objection at that stage, when it would have been the appropriate time to do so. The contention is confirmed, it was said, by reason of the absence of an objection to jurisdiction in the following material: i) Reply to the Summons for Relief filed 14 February 2007; ii) any other materials filed or served in these proceedings prior to immediately before the dates fixed for final trial in April 2011; iii) submissions to the Supreme Court in September 2009, rather than consenting to a stay of the Commercial List Proceedings); iv) when the matter was before His Honour Justice Marks on 24 November 2010, when this matter was referred to be fixed for lengthy trial. 10Maxims relied on a number of authorities to make good its proposition that the late raising of the jurisdictional objection by DPI constituted unreasonable conduct which was an appropriate matter for the Court to take into account on the question of costs. Insofar as the Court has been able to ascertain the authority most relevant to the proposition is Bitannia, a discontinuance case under Rule 42.19. 11In Bitannia, Parkline, the builder, entered into a contract to build a hotel for Bitannia and another entity in partnership with Bitannia as the owners. Parkline submitted all payment claims under the contract to the architect, S&S Quirk Pty Limited (Quirk). Quirk provided payment schedules and copies of the schedules and payment claims to Mr Brown, the general manager of W Waugh Hotel Management Services Pty Limited (Waugh), which administered the contract for Bitannia. Parkline submitted payment claim 20 to Quirk and Quirk provided a payment schedule rejecting the claim. Parkline issued a further claim re-submitting payment claims 19 and 20. Meanwhile, Mr Brown sent a letter to Quirk advising it that all decisions to be made concerning the status of the hotel and outstanding work must be referred to Waugh for approval prior to agreement between Quirk and Parkline. In response, Quirk advised Parkline. Parkline then forwarded a claim for retention release and variation to Waugh asserting that a copy had been sent to Quirk and that the claim was, "as previously forwarded" to Quirk. In fact, no copy had been sent and the claim sent to Waugh was for a slightly greater amount than the claim earlier sent to Quirk. No payment schedule for the greater amount was served within the required time upon Parkline. Parkline sued Bitannia for that greater amount in the District Court. Bitannia put on a defence alleging that the payment claim had not been made in good faith. Bitannia also commenced proceedings in the Supreme Court against Parkline claiming damages for breach of contract and against Quirk claiming damages and alleging that Quirk, in breach of its duties, had failed to prepare and issue a payment schedule within the time required. 12The proceedings instituted by Parkline were heard in the District Court. After the evidence had concluded, Bitannia applied to re-open the case to file an amended defence and put on a cross-claim, relying on misleading conduct and seeking remedies under the Trade Practices Act 1974 (Cth). The application was heard by the trial judge who dismissed the application and gave judgment for Parkline. Bitannia appealed to the Court of Appeal and was successful on the basis that the defence based on the Trade Practices Act could be raised. Later, Bitannia filed a further amended defence in relation to the service of the payment claim, relying on the Trade Practices Act, and in addition, alleging that the proceedings were an abuse of process and should be dismissed or permanently stayed. 13The matter then proceeded in the District Court until new solicitors acting for Parkline proposed to discontinue the proceedings. Bitannia, in response, sought costs. Before resolving this issue, Parkline applied to the District Court to discontinue the proceedings and sought costs. The trial judge granted leave to Parkline to discontinue and ordered Bitannia to pay Parkline its costs. Bitannia applied to the Court of Appeal against the costs order. The Court of Appeal identified a number of errors made by the trial judge which vitiated his exercise of discretion. The Court of Appeal (Hodgson JA, Tobias and Basten JJA agreeing) allowed the appeal, and ordered Parkline to pay Bitannia's costs, excluding the costs of the hearing on 2 November 2005 (the day Bitannia first became aware the payment claim sent to it had not been sent to Quirk). In excluding the costs of the hearing on 2 November 2005, Hodgson JA said (at [58] to [63]):

In this case, the Applicant applied in July 2009 to stay proceedings in the Supreme Court in order to permit proceedings in this Court to be determined first. For reasons given by Barrett J in Idameneo (No 123) Pty Ltd v Ko Ko Swe Pty Ltd [2003] NSWSC 384 [14], it was necessary that the proceedings in this Court be determined first: if the application under the Industrial Relations Act 1996 s 106 were to succeed, the relief granted by this Court would change the terms of contract between the parties, and that would affect the legal basis on which the claims in the Supreme Court would have to be determined, but a prior exercise of jurisdiction by the Supreme Court would preclude subsequent exercise of the s 106 jurisdiction. But it was equally clear that any question of the jurisdiction of this Court, dependent on the qualifying conditions set out in s 106 that the subject contract be one 'whereby a person performs work in any industry', could only be determined on the substantive evidence at hearing in this Court: Nagle v Tilburg (1993) 51 IR 8; Idameneo at [12]. Proceedings in the Supreme Court were therefore stayed so that the proceedings in this Court could be determined first. Yet when the time for hearing in this Court arrived, the Applicant was both unprepared and unwilling to present its case.

The basis of its claim against the Respondent and the serious allegations made against the Applicant and its director will not now be tested or determined in this Court. The ultimate resolution of litigation between the parties has been delayed by several years. (There was no point in the Respondent commencing its Supreme Court proceedings while proceedings in this Court were on foot, other than to avoid expiration of the limitation period, because the proceedings in that Court would have to await the outcome here; the material delay therefore dates from 2006, when the parties first enunciated claims against each other, not from 2009.) During that time, the Respondent has carried the cost burden of substantial legal work defending the proceedings in this Court. 37Rule 42.2 of the UCPR provides that, "unless the Court orders otherwise or these rules otherwise provide, costs payable to a person under an Order of the Court or these rules are to be assessed on the ordinary basis". Rule 42.5(b) relevantly provides for costs to be paid on an indemnity basis: 42.5 If the court determines that costs are to be paid on an indemnity basis: (a) ... (b) in any other case, all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed. 38The bases upon which DPI has applied for indemnity costs is that having applied for the stay of the Supreme Court proceedings, which was necessary, Maxims, in circumstances where the matter had been delayed for several years, was both unprepared and unwilling to present its case on the first day of hearing, some two years after the stay was granted. In oral submissions, DPI repeated the bases of its application for indemnity costs: The matters on which the respondent relies are that the applicant applied - are these. The applicant applied in July 2009 to stay the proceedings. That application for procedural reasons had to succeed. The jurisdiction of this Court had to be allowed to run its course. The proceeding in this Court had to be allowed to run its course first in order to make the determination about jurisdiction. Proceedings were therefore stayed so that the matters could run its course here. And yet when the time for hearing arrived, the applicant was unprepared and unwilling to present its case. And in the circumstances the ultimate resolution of litigation between the parties has been delayed by several years. Indeed, the relevant delay should be counted from 2006 because while the proceedings were on foot here, there was no point in the respondent starting in the Supreme Court. My learned friend has made the point that the proceedings there were kicked off just within the limitation period as they had to be to preserve rights. But there has been a lot happening in this Court. These proceedings have been heavy, there has been a lot of work and your Honour can imagine that there have been substantial costs. In those circumstances, we submit that it is an appropriate case for the Court to exercise its power to award indemnity costs from that time. 39DPI's submission that Maxims was both unprepared and unwilling to present its case at the time set down for hearing of the substantive proceedings in this Court has been touched upon earlier in this judgment. On the first day of hearing, Mr Goddard was absent because of illness. Although no medical certificate or other comparable document was tendered by Maxims which might have confirmed the reason for the illness it appears that DPI did not challenge the assertion by Maxims that Mr Goddard was absent because of illness. Ultimately, Mr Goddard's absence was not the reason why the matter did not proceed, rather it was Maxims' decision to discontinue the proceedings. 40In support of the application DPI relied on the judgment of Sheppard J in Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225 at 234. In that part of the judgment, Sheppard J identifies as a relevant question on an application for indemnity costs, "whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis". 41Significant factors which influenced Maxims' decision to discontinue the s 106 proceedings were the late challenge to jurisdiction and the perceived need to protect against multiple proceedings and potential factual and issue estoppels. None of these factors provide a sufficiently persuasive basis for why the Court should depart from the ordinary course under rule 42.19. The additional factor to be taken into account in considering DPI's application for indemnity costs is the delay between the date the Supreme Court proceedings were stayed and the date, some two years later, when Maxims applied to discontinue the proceedings. The Court is unable to address DPI's contention that there had already been considerable delay at the time of the stay application in the Supreme Court in the absence of sufficient evidence and submissions. 42The question which arises is whether Maxims' conduct, taking into account the circumstances set out immediately above, warrants the exercise of the Court's discretion in favour of DPI. No authorities dealing with any specific or similar circumstances resulting in an award of indemnity costs was brought to the Court's attention by DPI. Sheppard J, in Colgate-Palmolive, refers to a number of circumstances which have been thought to warrant the exercise of the discretion: at 233. These circumstances appear to the Court to involve conduct of a more serious kind involving allegations of fraud knowing them to be false and other comparable examples of misconduct. I do not think that Maxims' conduct is of such comparable seriousness as to warrant the exercise of the discretion to award indemnity costs to DPI from 14 July 2009. Accordingly, that part of DPI's application is refused.

Orders 43The Court makes the following orders: (1) Maxims Travel Pty Limited [ACN 002 906 792] (the applicant) is to pay De Poortere Investments Pty Ltd [ACN 002 906 630] (the respondent) costs of and incidental to the proceedings, including reserved costs and the costs of the present motions before the Court (the respondent's motion filed 7 July 2011 and the applicant's motion filed 20 January 2012). (2) The respondent's applications expressed in the alternative for costs incurred on or after 14 June 2009 to date or to the date of service of the respondent's motion dated 14 April 2011 on an indemnity basis are refused. (3) The applicant's motion filed on 20 January 2012 is dismissed.

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: 29 June 2012

Matters which could possibly justify departure from the ordinary course are the late application for amendment, and the attempt after the earlier Court of Appeal decision to rely on matters going beyond the Trade Practices Act defence endorsed by that decision.

As regards the latter, in my opinion it did not have any substantial impact on costs, because it did not introduce any factual matter for consideration that was not already relevant to the Trade Practices Act defence.

As regards the former, there was, as mentioned earlier, evidence that the applicants did not know that the payment claim had not been sent to Quirk until 2 November 2005. However, there was no satisfactory evidence explaining how it was that they did not know this. One would have thought that the applicants, acting reasonably in their own interests, would at least in May 2005 have asked Quirk why Quirk did not provide a payment schedule; and would prior to bringing proceedings against Quirk in August 2005 have communicated to Quirk the allegation that, having received the payment claim, Quirk failed to provide a payment schedule. In either case, one would expect that the applicants would have been informed by Quirk that it had not received the payment claim.

In the absence of evidence going to these matters, in my opinion it is very difficult for the Court to come to the conclusion that the applicants had offered a full and satisfactory explanation for the lateness of the application, even if it were to be accepted on a final basis that Mr Brown, and the applicants, did not in fact know that the payment claim had not been sent to Quirk until 2 November 2005.

In my opinion, those considerations would justify exclusion from a costs order in favour of the applicants of the largely wasted costs of the hearing of 2 November 2005. In my opinion, the circumstance that it was the decision of Parkline to discontinue the proceedings, and thus prevent final determination of issues, means that it would not be appropriate to make an order in favour of Parkline in respect of those costs.

As regards the costs of the late application itself, it seems to me that, even if the application to amend had been made much earlier, as may have been the case if the applicants had been exercising reasonable diligence, there is every likelihood that there would have been the same opposition and the same incurring of costs. In those circumstances, I would not deprive the applicants of the costs of the application itself. In all other respects, in my opinion, there should be an order that Parkline pay the applicants' costs of the proceedings. The question whether those costs will be assessed in the very large sum suggested by the applicants is not a matter for decision by this Court. 14Maxims relied upon the first four paragraphs of the extract above in support of its contention that the late raising of the jurisdictional issue by DPI was unreasonable and weighed against DPI on the question of costs. Beyond that contention, the matter was not further developed in either written or oral submissions. In oral submissions, Maxims contended that the jurisdictional objection could have been taken in 2006 when a number of authorities had examined and clarified the ambit of the jurisdictional test in s 106 proceedings. Maxims did not identify any of the authorities, but presumably it was relying on the High Court judgment in Fish v Solution 6 Holdings Ltd [2006] HCA 22, (2006) 151 IR 256 and cases following which dealt with the jurisdictional test to be applied to the issue of whether an impugned contract was one whereby work was performed in any industry. In any event, the point sought to be made by Maxims was that if the objection had been taken in 2006, "the applicant would have elected to discontinue then and go to the Supreme Court for rectification which is in fact what the applicant has now done". Maxims also contended that DPI "must have known" that there was a jurisdictional issue and, accordingly, should have either notified Maxims or put on a Notice of Motion challenging jurisdiction; and, that if those matters had been attended to, "before five or six years of litigation had taken place (Maxims) could have elected then to discontinue and save those costs". 15It is noteworthy that in Bitannia the costs of the late application were awarded to Bitannia and the costs of one day of hearing were excluded from the orders. The basis upon which Bitannia was awarded its costs was that, even if the late application had been made earlier, it was likely that there would have been the same opposition and the same incurring of costs. This cannot be said necessarily about the timing of the jurisdictional objection. Maxims' contention in that regard is that if the objection had been taken earlier the proceedings would have been discontinued at that time and further costs would not have been incurred. 16Be that as it may, there are a number of matters which, in the Court's view, do not support Maxims' contention that the belated raising of a jurisdictional objection by DPI should weigh against it in an order for costs. The first matter concerns whether in fact the objection to jurisdiction was taken for the first time one week before the trial. The evidence before the Court on the present application reveals that jurisdiction was raised by Marks J on 24 November 2010 and was, at that time, explicitly not conceded by the respondent. This is made clear in the affidavit of Lauren Geniene Thogersen sworn on 25 January 2012. The affidavit attaches a typed redacted copy of notes taken by Ms Thogersen during an "off the record" conference between his Honour, Maxims and DPI representatives. The redacted copy records the following: His Honour asked whether any jurisdictional issues were going to be raised or had been raised in this matter (question was directed to the Respondent). Mr Dixon stated that at this stage no jurisdictional issues had been raised however suggested that jurisdictional (sic) may be raised in future. 17This should have put Maxims firmly on notice that the objection may be taken. In the Court's view, Maxims could have, and should have, directed its attention to the issue at that point. If, as Maxims has submitted, it was reasonable to discontinue immediately after the jurisdictional objection had been raised, it is also reasonable to conclude that at least the prospect of it being an issue having been brought to Maxims' attention during the conference provided a sufficient basis for Maxims to have taken steps to consider whether the proceedings should have been discontinued at that point thereby saving further costs. 18Secondly, whether or not an issue of jurisdiction is raised and objection is taken by a party at any stage during the proceedings, the Court is required to be satisfied of its own jurisdiction, that is, in cases under s 106 of the Industrial Relations Act 1996, the Court has to be satisfied that the impugned contract is one, "whereby a person performs work in any industry": s 106(1). 19Thirdly, and following from the second matter, it is not incumbent upon the respondent to an application under s 106 of the Act to raise the issue of jurisdiction. The onus is on the applicant to prove the requisite connection between the impugned contract and the performance of work. 20These matters, taken together, provide an insufficient basis upon which to depart from the usual order for costs in Rule 42.19.

Whether DPI's conduct unreasonable 21Maxims relied upon what it described as DPI's pursuit of extraneous or irrelevant matters as a basis for departure of the usual orders. These matters were said to concern serious allegations of fraud made by DPI against Mr Goddard, Maxims' director. 22The impugned contract, the subject of the s 106 proceedings, was the consultancy agreement. On 25 May 2005, the parties executed the consultancy agreement. On the same day a share sale agreement was executed by Helene Matherine De Poortere (Ms De Poortere), DPI, Christopher Anthony Goddard (Mr Goddard) and Maxims. The background to the execution of the two agreements is set out in DPI's Notice of Motion filed 7 July 2011 and in the accompanying affidavit of James John Buchanan filed on the same day. 23According to those documents, prior to 25 May 2005, DPI and Ms De Poortere owned 50 per cent of the issued share capital in Maxims. Mr Goddard owned the remaining half. On 25 May 2005, pursuant to the Share Sale Deed, Mr Goddard purchased all of the shares owned by DPI and Ms De Poortere. According to Mr Buchanan's affidavit, DPI's case in the s 106 proceedings was that negotiations for the sale of DPI's shares in Maxims commenced following the discovery (by Ms De Poortere) of suspicious transactions in late July 2004 involving Mr Goddard. Ms De Poortere commenced an investigation into various transactions by Mr Goddard involving Maxims' account. Following some preliminary investigations, Ms De Poortere formed the view that she could no longer trust Mr Goddard. As a result, she initiated conversations concerning a possible sale of her shares in Maxims. 24Maxims contended that no allegations by DPI against Mr Goddard arose in the pleadings and they could not have been relevant to any issue to be determined in the s 106 proceedings. According to Maxims, even on the assumption that the allegations by DPI against Mr Goddard (that he, in effect, defrauded Maxims) were true the misconduct is that of Mr Goddard, not Maxims, and therefore Mr Goddard's conduct would not have disentitled Maxims to relief under s 106. 25DPI contended that Mr Goddard's conduct was a relevant evidentiary issue explaining the nature and structure of the agreements entered into on 25 May 2005. The agreements were executed as a consequence of the serious concerns Ms De Poortere held, prior to 25 May 2005, about her business partner, Mr Goddard, and what he was doing to Maxims. Moreover, according to DPI, the Reply pleads that Ms De Poortere commenced negotiations with Mr Goddard to sell Maxims' shares controlled by her, following the making of allegations of irregularities in Maxims trust account. The issue, in short, was adverted to in the Reply (filed 14 February 2007) and would have been relevant (had the Court found the contract was one whereby work was performed by Maxims) to whether, if the allegations against Mr Goddard were made good, the contract was unfair. 26In the Court's view, Mr Goddard's conduct concerning the alleged unauthorised transactions and whether or not those transactions constituted fraud against Maxims were relevant matters going to the nature and structure of the contract, and relevant to any determination that may have been made about the fairness or otherwise of the contract. It was DPI's intention, had the matter gone to hearing, to cross-examine Mr Goddard about the transactions. On the first day of hearing, however, Mr Goddard failed to attend Court. As Mr Buchanan's affidavit records, Mr Goddard was Maxims' principal witness, but he was absent on the first day of hearing because of illness. DPI submitted that because of Mr Goddard's absence, Maxims was unprepared and unwilling to present its case in circumstances where the ultimate resolution of the s 106 proceedings had been delayed by several years, and where DPI had incurred substantial costs in preparation for the hearing. 27What occurred on the first day of hearing was that Maxims discontinued the proceedings with the leave of the Court. In the Court's view, the allegations against Mr Goddard were relevant to the underlying dispute between the parties and to the contractual relationship between the parties. If the character of the contract were found to be sufficiently industrial (that is, one whereby work was performed) the next issue to be dealt with by the Court would have been whether the contract was relevantly unfair. A consequence of the discontinuance was that DPI was deprived of the possibility of a successful outcome. In Bitannia, the applicants (Bitannia and another) had claimed the proceedings were unjustified but that they were denied the chance to make good that claim because of Parkline's decision to discontinue. This was taken into account by Hodgson JA in finding that a departure from the ordinary course (under rule 42.19) was not justified. Similarly, Maxims' decision to discontinue the proceedings deprived DPI of the opportunity to test the allegations of misconduct against Mr Goddard, which, if made good may have resulted in a successful outcome for DPI. This matter can be put no higher than a possibility in the absence of a hearing on the merits. In any event, Maxims' contentions that the allegations against Mr Goddard were irrelevant to any issue arising for determination in the s 106 proceedings have not been made out and they provide no basis for establishing that DPI's conduct was unreasonable. Accordingly this matter does not justify a departure from the ordinary course under rule 42.19.

Whether it was reasonable for Maxims to commence and continue the proceedings 28Maxims also contended, in support of its application for costs, that it was reasonable for it to commence and continue the proceedings, "in the absence of any issue whatsoever, being raised by the respondent as to this Court's jurisdiction". The contention that the commencement and continuation of the proceedings was reasonable was qualified by the words, "In so far as may be determined in the absence of a conclusion of a final trial in this Court or the final hearing of the commercial list proceedings". 29The fact that there has been no hearing on the merits in the s 106 proceedings poses a difficulty for Maxims. In Bitannia, Hodgson JA (with whom Tobias and Basten JJA agreed) found that the trial judge had erred in finding that Parkline had acted reasonably in commencing the proceedings when the finding could not be made without a final hearing and the question whether Bitannia's failure to provide a payment schedule had been brought about by Parkline's misleading conduct remained unresolved: Bitannia at [43]. 30In the present proceedings, the issue of jurisdiction remains unresolved, as does the issue concerning Mr Goddard's conduct (assuming a finding in favour of jurisdiction) which the Court has found to be (or would have been) a relevant evidentiary issue. Given those unresolved issues, the Court is unable to make the finding, that it was reasonable for Maxims to commence and continue the proceedings in the absence of hearing those issues to finality. It is unclear what basis this Court is asked to make the finding taking into account the absence of a determination of the Supreme Court proceedings (assuming similar issues may arise in those proceedings) however, it follows, for the same reasons, that the finding cannot be made in the absence of that determination. 31Maxims' costs motion also sought to justify as reasonable its decision to discontinue on the basis of protecting itself against multiple proceedings and "potential factual or issue estoppels". Maxims did not develop this ground in submissions other than to refer briefly to DPI's submissions on the issue. According to DPI, dismissal of the proceedings in this Court for want of jurisdiction would not result in relevant estoppels that would bind it in the Supreme Court. Nor is the risk of multiple proceedings a relevant justification for relieving Maxims of costs. 32These matters were raised and considered in the context of my earlier judgment in Maxims' application to stay the proceedings: see [20] [21]. It was sought to be emphasised by the Court in the earlier judgment that no issue estoppels arise in relation to the discontinuance of the substantive proceedings because there had been no adjudication on the merits. In any event, dismissal of the proceedings in this Court for want of jurisdiction would not have resulted in relevant estoppels that would have bound Maxims in the Supreme Court. This is because, as DPI contended, for estoppel to operate, the issue in the later proceedings in the Supreme Court must be both necessary and fundamental to the earlier judgment. With regard to jurisdiction, dismissal of the proceedings in this Court for want of jurisdiction would determine as an issue that the consultancy agreement was not a contract, "whereby a person (Ms De Poortere) performs work in any industry" under s 106(1) of the Act. No such issue may, or will, arise in the Supreme Court proceedings. The Court understands that the issues falling for determination in the Supreme Court concern the construction of the share sale agreement to which the consultancy agreement is a schedule and a claim for rectification brought by Maxims and Mr Goddard. 33In addition, the Court agrees with DPI's submissions that to the extent Maxims faced a risk of issue estoppels arising from a judgment of this Court (whether or not on jurisdictional grounds): (a) that risk arose from the Maxims own decision to commence the present proceedings - it is the usual result of the judgment of a Court to produce estoppel by judgment and such other estoppels as are necessarily involved in the particular judgment; and (b) the 'risk' of estoppel arising from the judgment of this Court was equally borne by DPI. Estoppel is reciprocal: there is no estoppel unless both parties are bound. 34As for the protection against multiple proceedings as a justification for discontinuing the s 106 proceedings (and relieving Maxims of costs) no submissions were advanced by Maxims on the issue which might have provided a basis for departure from the ordinary course under the rule. It is difficult to understand in any event what was the 'risk' of multiple proceedings against which Maxims sought protection by discontinuance. From the material presented to the Court on the costs application, it is apparent that the two sets of proceedings concern separate claims in separate jurisdictions.

DPI's application for indemnity costs 35In the event that the court determines that Maxims should pay DPI's costs, DPI submits that costs should be awarded on an indemnity basis from 14 July 2009 when Maxims filed its Notice of Motion in the Supreme Court seeking a stay of proceedings in that Court pending the outcome of proceedings in this Court. 36The basis upon which DPI made the application for indemnity costs has been set out in its written submissions in the paragraphs extracted below:

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (19 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (9)