RSL Com v Mobile Tron [2001] NSWSC 819 | Case summary

HIS HONOUR: 1 These proceedings arise from a contract made on 28 April 2000 between the plaintiff, RSL Com Personal Communications Pty Limited ("RSL"), and the defendant, Mobile Tron Pty Limited ("Mobile"). By its Summons filed on 27 July 2001, RSL claims declarations that Mobile has committed breaches of contract and is liable to pay certain sums pursuant to the contract. RSL also claims damages. Mobile denies liability and, by way of cross-claim, asserts that RSL has breached the contract and is indebted to Mobile for sums owing thereunder. 2 Almost three months before these proceedings were commenced, Mobile had initiated proceedings in the Industrial Relations Commission of New South Wales in relation to the contract of 28 April 2000. By a summons dated 1 May 2001, Mobile and two co-applicants (being directors of Mobile) sought an order under s. 106 of the Industrial Relations Act 1996 declaring void the contract itself, an associated charge and certain guarantees of payment and performance under the contract given by the co-applicants. Also sought was an order under s.106(5) for the payment of money by Mobile and certain officers of Mobile. There is, in the alternative, a claim for an order varying the several contracts to provide for payments more fully described in the summons. 3 This bare outline may be better understood in the context of a brief description of the commercial relationship of the parties. Mobile operates a number of retail stores from which mobile phones and mobile phone contracts are marketed to the public. RSL is an intermediary in the telecommunications industry, sitting between a primary service provider such as Telstra and the telephone subscriber or customer. Under the contract of 28 April 2000, Mobile agreed to be an exclusive distributor of RSL mobile phone packages. Because of competition in the industry to acquire and keep customers, intermediaries such as RSL must commit significant capital in support of retailer' sales efforts in the expectation that a committed customer base will be assembled so that the intermediary may, over a period of years, recoup its investment. 4 Mobile alleges in its Industrial Relation Commission proceedings that, in or about August 2000, RSL embarked on a course of seeking to reduce the number of packages Mobile could sell and to make it impossible for Mobile to meet sales targets laid down by the contract. The reduction in activity by Mobile became, in due course, the basis for the claims made in the proceedings in this Court. 5 Now before the Court is a Notice of Motion filed on 6 September 2001 and heard by me on 14 September 2001. By that Notice of Motion, Mobile seeks an order that the proceedings in this Court be stayed pending determination of the proceedings in the Industrial Relations Commission. Filed and read in support of that application was an affidavit of Mobile's solicitor deposing to the present state of the proceedings in the Commission - essentially, that the pleadings have closed and that the matter has been set down for conciliation on 8 November 2001. Conciliation, it may be noted, is explicitly required by s.109 of the Industrial Relations Act which makes the Commission's jurisdiction to determination s.106 proceedings dependent upon the formation of an opinion that "all reasonable attempts to settle the matter by conciliation have been made but have been unsuccessful". It may also be noted that there is no mechanism by which proceedings here and proceedings in the Commission may be amalgamated or cross-vested in such a way that, where common issues of law and fact concerning the same parties (or some of them) arise, they may be dealt with entirely by one tribunal or the other. Curiously, perhaps, this Court could become seised of both matters if the court proceedings had been commenced in the Federal Court, the Family Court or the Supreme Court of another State or of a Territory, rather than this Court: see Jurisdiction of Courts (Cross-Vesting) Act 1987, ss.8 and 9, Bruning v Kingmill (Australia) Pty Ltd (1998) 44 NSWLR 180 and Macquarie Bank Ltd v Bell [1999] NSWSC 957. There appears to be something of an anomaly here which may warrant the attention of the legislature. 6 Any application for a stay of proceedings on the footing that adjudication should await the outcome of proceedings elsewhere must be approached in the light of the observation of Deane J in Oceanic Sun Line Shipping Co Inc v Fay (1988) 165 CLR 197: "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 his claim heard and determined." 7 Why should RSL be deprived of that prima facie right in this case? Mobile says that it will suffer severe prejudice if the proceedings in this Court are determined before the proceedings in the Commission. This is so, it says, because a judgment here would found on application by RSL for an anti-suit injunction preventing continuation of the Commission proceedings. The basis for such an injunction is seen as lying in a passage in the judgment of Mason P (with whom Priestley and Powell JJA agreed) in Tszyu v Fightvision Pty Ltd (2001) 1 IR 225. That case, like this, involved proceedings in both this Court and the Commission. As here, the Commission proceedings were brought under s.106. The proceedings in this Court had been concluded, with issues of breach of contract and damages already decided and judgment given. It was in those circumstances that Mason P said: "The contract formed upon the due exercise of the option in 1995 was the basis upon which the issue of breach was addressed and concluded in the contract proceedings and the yardstick against which damages were calculated (see especially 47 NSWLR at 491-6, 497). Conversely, the award of damages was the enforcement of a secondary obligation necessarily based upon the primary obligation of the contractual terms cf Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 848-9). For that contract now to be declared void or varied in its terms (an essential precursor to relief pursuant to s.106(5) whether against Fightvision or those standing behind it) would be to contradict the very basis upon which the judgment stands, together with issues necessarily decided by that judgment. Cf also Caird v Moss (1886) 33 ChD 22. Viewed in this way, the continued prosecution of the industrial proceedings would run smack into the principles of issue estoppel and for that reason their continuation was properly held to be an abuse of process." 8 The limited nature of this statement was, however, emphasised later in Mason P's judgment: "Nor does the appeal [i.e. the present appeal] decide that the result of a Supreme Court judgment is never amenable to overreaching through the exercise of the Commission's jurisdiction under s.106 of the Act. These are large and difficult issues. The present case involves an injunction in personam to restrain the further prosecution of proceedings in another court where the relief sought could only be available if the doctrine of issue estoppel which binds all courts were to be jettisoned." 9 Tszyu's case was thus decided on the basis that, where the Supreme Court has held that there has been a breach of contract and has awarded damages accordingly, there arises an issue estoppel which precludes (or, at least, makes it inappropriate to seek to invoke) the Industrial Relations Act jurisdiction to declare the contract void or to vary it. Any such declaration could remove the basis of the earlier judgment. But it does not follow that the Court should invariably act in advance to forestall, by way of stay, proceedings which might at some future time produce a judgment justifying an order precluding continuation of proceedings in the Industrial Relations Commission. The discretion to which resort was had in Tszyu is only enlivened when the contract claimant in the Supreme Court has been vindicated by the award of a judgment in its favour. 10 The appropriate course in the present case is to examine, in the first instance, whether the proceedings in the Commission are capable of producing an outcome sufficiently equivalent to that which could be achieved here to justify depriving RSL, as plaintiff, of its chosen forum. RSL seeks in this Court declaratory relief and damages. The first is an equitable remedy firmly established as part of general equitable jurisdiction in England by the Act 15 & 16 Vict c.86, s.50 of which is replicated in almost identical terms in s.75 of the Supreme Court Act 1970 (NSW). And damages, of course, are the classic remedy at common law for breach of contract: see the discussion in the judgment of Mason CJ and Dawson J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64. The remedies of declaration and damages are among the chief staples of this Court. They are available in support and vindication of rights established through ordinary curial processes. 11 The jurisdiction of the Industrial Relations Commission under s.106 is, on the other hand, wholly statutory and therefore confined by the terms of the statute. Its main feature emerges from s.106(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." 12 The subsequent subsections are ancillary. The most far-reaching of them is s.106(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." 13 Section 106(5) enables the Commission to make an order for the payment of money, with the result that the statutory jurisdiction has an aspect which may seem analogous with the power of a court to award damages. But the analogy is illusory. The s.106(5) power arises only if the contract is "declared wholly or partly void, or varied". There is no power for the Commission to "make such order as to the payment of money in connection with any contract … as the Commission considers just in the circumstances of the case" where the contract is simply left intact. It is therefore abundantly clear that the Commission, despite its broadly based statutory jurisdiction, simply cannot provide the relief RSL seeks in its Supreme Court proceedings. 14 The reality that jurisdiction in relation to the claim RSL makes in these proceedings can be exercised by this Court and cannot be exercised by the Commission means that an absolute stay of these proceedings is clearly unwarranted. There may, however, be a case for a temporary stay. Particular factors relevant to the question whether a temporary stay should be granted are, first, that the Industrial Commission proceedings were commenced first and are well advanced with compulsory conciliation scheduled to take place some seven weeks from now, second, that that conciliation process will present a structured alternative environment in which all grievances of the respective parties in relation to their contract will no doubt be aired and they will be assisted in an attempt to find a mutually acceptable solution to their differences but, third, that proceedings in the Commission beyond the conciliation stage are not capable of settling all matters in controversy between the parties. 15 I am particularly influenced by the second of these factors. In the context of the conciliation made compulsory by s.109, a broad notion of "contract" will apply by virtue of s.105: see Reich v Client Server Professionals of Australia Pty Ltd [2000] 49 NSWLR 551. There is accordingly room for a reasonable expectation that the conciliation process will enable the parties to explore, with assistance, the whole range of possible outcomes in relation to their differences concerning the contract of 28 April 2000 and all related conditions and arrangements. The opportunity for that process to be engaged in must be regarded as valuable. The Supreme Court Act and the Supreme Court Rules place a high value on conscientious attempts at alternate dispute resolution before trial. Reference may be made to the provisions in Part 7B of the Act which, since 1 August 2000, have empowered the Court to order that proceedings or any part of them be referred for mediation or neutral evaluation even where the parties do not agree. In addition, the Court is enjoined, in exercising powers under or interpreting the rules, to seek to give effect to the purpose stated in Pt. 1 r. 3(1): "The overriding purpose of these rules, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in such proceedings." 16 The Court's power to give directions for the conduct of proceedings has been held to include a power to direct the parties to engage in mediation: AWA Limited v Daniels (unreported, SCNSW, Rogers CJ in CommD, 24 February 1992). 17 Since the conciliation required by the Industrial Relations Act presents the opportunity to which I have referred and is to occur in seven weeks from now, that conciliation should be made the focus of genuine and serious attempts by the parties to resolve their differences across the board, so far as the two sets of proceedings and the overall subject matter are concerned. The parties are not, of course, confined by the scope of the conciliation under the Industrial Relations Act. They may, if they wish, supplement that by means of further discussions and negotiations. The Court should encourage them to make the most of that opportunity in the interests of avoiding what will otherwise be two distinct proceedings in different forums, neither of which alone seems capable of resolving the overall dispute. 18 In light of the desirability of the parties focussing their attention on attempts at consensual dispute resolution through and in the context of the conciliation process to which they are already committed (and pursuing those attempts with all due dispatch), the discretion which the Court brings to bear in cases such as this should be exercised so that the Supreme Court proceedings are stayed pending the outcome of the s. 109 conciliation but with machinery to ensure that the stay can be lifted if the conciliation does not begin on 8 November 2001 as scheduled or, having been duly undertaken, is not productive of voluntary resolution of all issues or if it appears that a party does not take the conciliation seriously and commit to the possibility of its producing an outcome. In any such event there will be little, if any, alternative but for the two proceedings to continue on their separate courses until it emerges (if it ever does) that one has produced an outcome warranting a permanent stay of the other. 19 The orders of the Court are therefore (a) that proceedings 50101/2001 in the Commercial List be stayed until further order, (b) that costs be reserved and (c) that each party be at liberty to apply on seven days notice. 20 I add, by way of footnote, that a number of decided cases in this general area have involved concurrent pursuit of an action in this Court for breach of contract and an application in the Industrial Relations Commission or a predecessor for avoidance or variation of the relevant contract under earlier versions of what is now s. 106 of the Industrial Relations Act 1996, being s.88F of the Industrial Arbitration Act 1940 and s.275 of the Industrial Relations Act 1991. Those now repealed enactments did not contain compulsory conciliation provisions comparable with the present s.109. The considerations which I have found particularly compelling here therefore did not arise in those cases. ******

RSL Com v Mobile Tron

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