Sky Channel Marketing Pty Limited & Anor v Mr David Hall in his capacity as chairman of the Australian Jockey Club & 2 Ors; Sky Channel Pty Limited v Austar Entertainment Pty Limited & Thoroughvision Pty Limited

Supreme Court of NSW|2005-09-08|Before: Einstein J, Adam P

CITATION : Sky Channel Marketing Pty Limited & Anor v Mr David Hall in his capacity as chairman of the Australian Jockey Club & 2 Ors; Sky Channel Pty Limited v Austar Entertainment Pty Limited & Thoroughvision Pty Limited [2005] NSWSC 909

Equity Division JURISDICTION : Commercial List

CATCHWORDS : Practice and Procedure - Cross Vesting - Special Federal matter - Identification of 'matter' - Whether special reasons shown for Supreme Court to hear proceedings

Civil Procedure Act 2005 (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) LEGISLATION CITED : Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules (NSW)

ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 Bankinvest AG v Seabrook (1988) 14 NSWLR 711 Felton v Mulligan (1971) 124 CLR 367 CASES CITED : Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 Philip Morris Inc v Adam P Brown Male Fashions (1981) 148 CLR 457 Telstra Corporation v CXA Communications Ltd (1998) 146 FLR 481

Sky Channel Marketing Pty Limited (First Plaintiff 50062/05) Sky Channel Pty Limited (Second Plaintiff 50062/05; Plaintiff 50122/05) Mr David Hall in his capacity as chairman of the Australian Jockey Club (First Defendant 50062/05) PARTIES : Sydney Turf Club (Second Defendant 50062/05) Thoroughvision Pty Ltd (Third Defendant 50062/05; Second Defendant 50122/05) Austar Entertainment Pty Limited (First Defendant 50122/05)

Mr R A Dick (Plaintiffs 50062/05. 50122/05) Dr A S Bell (First and Second Defendants 50062/05) COUNSEL : Ms F McLeod SC (Third Defendant 50062/05; Second Defendant 50122/05) Mr M B J Lee (First Defendant 50122/05)

Freehills (Plaintiffs 50062/05. 50122/05) Mallesons Stephen Jaques (First and Second Defendants 50062/05) SOLICITORS : Clayton Utz (Third Defendant 50062/05; Second Defendant 50122/05) Tress Cox First Defendant 50122/05)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50062/05 Sky Channel Marketing Pty Ltd & Anor v Mr David Hall in his capacity as chairman of the Australian Jockey Club and 2 Ors

50122/05 Sky Channel Pty Limited v Austar Entertainment Pty Limited & Thoroughvisions Pty Limited JUDGMENT

The cross vesting issue 1 The issue before the Court concerns whether or not two sets of commercial list proceedings should be cross-vested to the Federal Court of Australia pursuant to the provisions of the Jurisdiction of Courts (Cross-Vesting) Act 1987 ["the Act"]. 2 The proceedings in question are: · proceedings 50062/05 brought by Sky Channel Marketing Pty Ltd and Sky Channel Pty Ltd against the Australian Jockey Club, the Sydney Turf Club and ThoroughVision Pty Ltd ["the first commercial list proceedings"]; · proceedings 50122/05 brought by Sky Channel Pty Ltd against Austar Entertainment Pty Ltd and ThoroughVision Pty Ltd ["the second commercial list proceedings"]. 3 It is common ground that if cross vesting orders are made it would be appropriate for the proceedings the subject of those orders to be case managed alongside Federal Court Proceedings VID 545/05 brought by ThoroughVision against Sky Channel Marketing Pty Ltd, Tabcorp Holdings Ltd and Tabcorp Manager Pty Ltd. The background to the several sets of proceedings 4 The second commercial list proceedings are the most recent to have been commenced. The judgment given on 11 August 2005 in the interlocutory injunctive proceedings [2005] NSWSC 815 suffices for present purposes to outline the overall litigious position [see in particular at [41]]. 5 The same judgment (at [44]) made clear what, prior to the commencement of the second commercial list proceedings, had generally been agreed upon by way of the approach to be taken the first commercial list proceedings and the Federal Court proceedings. As noted in the Short Minutes of Order made on or about 15 June 2005, the parties [apparently embracing such of the parties to the first commercial list proceedings as are joined also in the Federal Court proceedings] had agreed in principle and subject to the Court's agreement that:

following the close of pleadings, the matter would proceed by way of the determination of separate questions under Part 31 rule 2 which would resolve the issues raised by the pleadings other than those concerning Part IV of the Trade Practices Act;

the question of whether the proceedings would be cross vested to the Federal Court would await the determination of the separate questions. The relevant provisions of the Act 6 Section 3 of the Act relevantly provides:

" Interpretation and application …

special federal matter means: (a) a matter arising under Part IV of the Trade Practices Act 1974 ; …

being a matter in respect of which the Supreme Court of a State or Territory would not, apart from this Act, have jurisdiction". 7 Section 6 of the Act relevantly provides:

"(1) If: (a) a matter for determination in a proceeding that is pending in the Supreme Court of a State or Territory is a special federal matter; and

(b) the court does not make an order under subsection (3) in respect of the matter; the court must transfer the proceeding in accordance with this section to the Federal Court or a court mentioned in paragraph (2)(b).

(1A) However, the court must only transfer so much of the proceeding as is, in the opinion of the court, within the jurisdiction ( including the accrued jurisdiction ) of the Federal Court….

(2) If the court orders that a proceeding or part of a proceeding be transferred, the proceeding or part of the proceeding must be transferred: (a) if the matter for determination in the proceeding is a matter mentioned in paragraph (a), (b), (c) or (e) of the definition of special federal matter in subsection 3(1) - to the Federal Court; or …

(3) The Supreme Court may order that the proceeding be determined by that court if it is satisfied that there are special reasons for doing so in the particular circumstances of the proceeding other than reasons relevant to the convenience of the parties.

(4) Before making an order under subsection (3), the court must be satisfied that: (a) a written notice specifying the nature of the special federal matter has been given to the Attorney-General of the Commonwealth and the Attorney-General of the State or Territory where the proceeding is pending; and

(b) a reasonable time has elapsed since the giving of the notice for the Attorneys-General to consider whether submissions to the court should be made in relation to the proceeding. (5) For the purposes of subsection (4), the court: (a) may adjourn the proceeding for such time as the court thinks necessary and may make such order as to costs in relation to an adjournment as it thinks fit; and

(b) may direct a party to the proceeding to give a notice in accordance with that subsection.

(6) In considering whether there are special reasons for the purposes of subsection (3), the court must: (a) have regard to the general rule that special federal matters should be heard by the Federal Court…; and

(b) take into account any submission made in relation to the proceeding by an Attorney-General mentioned in subsection (4). Sky's submissions 8 Sky has conceded that the matters raised under Part IV of the Trade Practices Act (other than certain excluded matters under s 3(a)) are 'special federal matters' within the meaning of s 6 of the Act. 9 Sky has then submitted that s 6(1) (a) will not be engaged if this Court makes an order under rule 28.2 of the Uniform Civil Procedure Rules for the separate determination of the questions raised in each Summons, provided that the formulation of such separate questions will make clear that the separate determination of such question will not require the determination of factual or legal issues which would fall to be determined at the later time of determination of the Part IV TPA issues. 10 The first submission was that:

(i) section 6(1) of the Act (and the equivalent NSW provision) is not enlivened in circumstances where the issues which constitute the 'special federal matter' are to be deferred and the other issues are to be dealt with independently of, and before, those issues. In such circumstances, there is, at the early stage before determination of the separate questions, no 'matter for determination' which is a special federal matter.

(ii) this construction also enables proper weight to be given to the overriding purpose rule and related case management provisions in sections 56 - 58 of the Civil Procedure Act 2005.

(iii) the effect of this construction is that the Court is not required to make an order under section 6(3) of the Cross Vesting Act . 11 In my view the submission requires to be rejected. Transfer of 'the proceeding' 12 The proposition is based on a contention that there are "issues which constitute the special Federal matter" [Sky submissions [11]]. However the Act is careful in distinguishing between the concept of a "matter" and a "proceeding". Section 6(1), in terms, provides that a Court must transfer the proceeding not issues or particular parts of a proceeding (unless section 6(1A) is relevant). 13 The proper construction of subsections 6(1) and 6(1A) requires the Court to determine whether there is a special federal matter in a proceeding and whether the whole or only part of the proceeding is, in the opinion of the Court, within the jurisdiction (including the accrued jurisdiction) of the relevant Federal Court. The Court is by these sections, directed to transfer, but only to transfer, so much of the proceedings as is, in the opinion of the Court, within the jurisdiction, including the accrued jurisdiction of the Federal Court. Identification of 'the matter' 14 The crucial importance of identifying what is "the matter" in a constitutional sense, is in order to carry out the exercise provided for in s 6(1A). That exercise is essentially about determining what will be within the accrued jurisdiction of the Federal Court. Hence the exercise requires a determination of whether or not what will be within the accrued jurisdiction of the Federal Court in the present circumstances will: · not only be the Part IV TPA claims, but will also be · other claims which by reason of a common substratum of facts, are so connected with or associated to the Part IV TPA claims that they will be seen to form part of 'the matter' in a constitutional sense. 15 In relation to the two commercial list sets of proceedings, these other claims comprise the breach of contract and inducing breach of contract claims. 16 The Sky submissions misconceive the nature of what is the 'matter' in the particular circumstances. In a paper by Justice Allsop 'Federal jurisdiction and the jurisdiction of the Federal Court of Australia in 2002', [2002] 23 Australian Bar Review, the learned author (at 7) put the matter in the following terms:

"The 'matter' is the justiciable controversy between the actors to it comprised of the substratum of facts and claims representing or amounting to the dispute or controversy between or amongst them. It is not the cause of action or the causes of action brought by the plaintiff. A justiciable controversy is identifiable independently of proceedings brought for its determination. It is not characterised by the form of the proceedings. It is the whole controversy in respect of which it is the function of the Court (State or Federal) exercising the judicial power of the Commonwealth to quell. It is the 'subject matter for determination in a legal proceeding'". 17 In Re Wakim (1999) 198 CLR 511, Gummow and Hayne observed as follows:

"The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.

In Fencott [(1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ] it was said that 'in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter'. The references to 'impression' and 'practical judgment' cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy 'depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships' [ Fencott (1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ]. There is but a single matter if different claims arise out of 'common transactions and facts' or 'a common substratum of facts' [ Philip Morris (1981) 148 CLR 457 at 512 per Mason J], notwithstanding that the facts upon which the claims depend 'do not wholly coincide' [ Fencott (1983) 152 CLR 570 at 607 per Mason, Murphy, Brennan and Deane JJ]. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other [ Philip Morris (1981) 148 CLR 457 at 512 per Mason J], as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are 'completely disparate' [ Felton v Mulligan (1971) 124 CLR 367 at 373 per Barwick CJ], 'completely separate and distinct' [ Philip Morris (1981) 148 CLR 457 at 521 per Murphy J] or 'distinct and unrelated' [ Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 482 per Stephen, Mason, Aickin and Wilson JJ] are not part of the same matter." 18 Once a matter is within federal jurisdiction [in relation to the instant proceedings under Part IV of the TPA], the entirety of the matter is a matter in federal jurisdiction being the justiciable controversy between the actors to it comprised of the substratum of facts representing or amounting to the dispute or controversy between them. As Allsop J observed, this wholly federal matter is not 'the cause of action' and is identifiable independently of 'the proceeding' or 'proceedings brought for its determination': Fencott at 603-608; ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [2] 19 In the same article the learned author under the heading "Once federal, only and ever federal", observed as follows [at 13]:

"Once a party involved in a controversy asserts its position and that amounts to the assertion of a matter arising under a federal law [in the sense earlier discussed in the paper], the whole matter or controversy is federal": ASIC at [7]. 20 In the result the justiciable controversy between the parties to the first and second commercial list proceedings was not the causes of action adumbrated by the plaintiffs in their originating process and is identifiable independently of those proceedings. At least in relation to the second commercial list proceeding, the "matter" comprised the substratum of facts representing or amounting to the dispute or controversy between the parties inter alia over the Pay TV Agreement, its effect and enforceability. 21 The Sky submission that if this Court were to order to separate questions of the type Sky would propound, there would no longer be a special federal matter pending is misconceived. The making of a separate question order would not and could not alter the character of the proceedings. The Part IV claim would remain as an issue in the proceedings albeit to be later determined. 22 Importantly the legislation is mandatory, using the word "must". This Court could not by a procedural device in ordering a separate question circumvent that mandatory direction. Computershare 23 Notwithstanding the close examination by all parties of the decision of Warren J [as the Chief Justice then was] in Computershare Ltd v Perpetual Registrars Ltd [2000] 2 VR 666 it has seemed to me unnecessary to examine that decision. It is confirmatory of the reasoning presently adopted. Sky's flirtation with seeking an order under s 6(3) 24 In its overview submissions Sky put an alternative submission in the event that its s 6(1) construction was to be rejected. In that event it indicated that it sought an order under s 6(3) that, what it described as "the non-federal contractual and tort claims", be determined by this Court. 25 During the hearing Sky initially withdrew the whole of that alternative submission. Ultimately Sky elected to pursue the application but only in relation to the first commercial list proceedings. 26 It is common ground that prior to the Court making any such order it would be necessary for the s 6(4) and (5) notices to be given to the Attorneys-General. 27 There are a number of reasons for rejecting such application. For that reason it is unnecessary for the Court to presently await service of notices of that kind.

Dealing with the issue 28 In Telstra Corporation v CXA Communications Ltd (1998) 146 FLR 481, Chernov J, had occasion to examine whether or not there were "special reasons" within the meaning of that term in s 6 (3) of the Act for the Supreme Court of Victoria to hear and determine the proceeding. The factors put forward in that case by the Commonwealth Attorney General under s 6 (4) in contending that there were no such "special reasons" for the Supreme Court to retain the proceeding included:

(a) The Federal Court has created a list of specialist judges who hear and determine Pt IV cases. This, it is said, is likely to increase the prospect of establishing a degree of uniformity in the interpretation of this special legislation which operates nationally. This would be best achieved generally by Pt IV of the Trade Practices Act 1974 (Cth) being considered and its meaning determined by, judges specialising in the matter.

(b) The scheme of the legislation is that, generally, the Federal Court is to hear "special Federal matters" unless there are special reasons applicable to the particular proceeding justifying its retention in the State Court.

(c) The principal dispute between the parties will revolve around the "special Federal matter", notwithstanding that general law claims are also raised by the parties. The proceeding, it is said, is not one where the Pt IV defence has been brought in as an afterthought, nor can its bona fide be properly attacked. 29 Chernov J expressed the view that the factor of significance in the resolution of the question then before the Court was that the Federal Court was in a position to provide a means where by a degree of uniformity in the interpretation of Part iv could be achieved a national basis. It was desirable to facilitate that object. It was in that context that the question, "what are the special reasons why this Court should deal with the matter", is to be considered. With respect I agree with that approach.

"The question of whether there are any "special reasons" by this Court should deal with the proceeding is to be considered against the background of the statutory intention… and the circumstances surrounding this case, including the policy of the Federal Court to provide a degree of uniformity in the interpretation of the relevant legislation…

The legislation makes it clear that before the proceeding involving a "special Federal matter" is to be retained in the State court, that court must be satisfied that there are "special reasons" for doing so, in the context of the very case which is sought to be transferred. Thus, I take "special reasons" to mean reasons which are peculiar to the case and not general reasons of convenience, a matter to which the legislation itself refers..

In my view, in order for the reasons to be "special", the circumstances of the case must be such as to take it out of the mainstream of the legislative intent that such cases be heard in the Federal Court. For instance, it may be that in the circumstances of a particular case, having regard to the timing of the application for transfer and the prevailing context, it would be unjust to have the proceeding transferred to the Federal Court. Similarly, it may be that any Part IV defence has been raised in circumstances where there is no apparent prospect of being made out, or that it has been raised for forum shopping purposes only. Depending on the context, such circumstances may constitute "special reasons" for the State court to retain the proceeding…." 31 At the heart of the submissions of Sky suggesting that there are special reasons for this Court to retain the first commercial list proceedings is the consensual approach essentially taken by all of the parties prior to the commencement of the second commercial list proceedings reflected in the above-described Short Minutes of Order. The underlying foundational proposition is that in the context of the case management arrangements reflected in those short minutes it is simply presently unjust to have the first commercial list proceedings now transferred to the Federal Court. 32 To my mind when one stands back from the whole of the forensic stances taken by all of the parties in relation to the three sets of proceedings, it cannot be said that it is presently unjust for the first and second commercial list proceedings to be now transferred to the Federal Court. Parties to proceedings may reach agreements on which they are seen to renege. 33 The Court on the other hand is constrained by the scheme of the Act and must take into account the ability of the Federal Court to case manage not only the first but also the second commercial list proceedings as well as the Federal Court proceedings in whatever manner appears to be most efficient. In particular there is absolutely no reason why the Federal Court may not continue the template which has been in place up to this point in time. Delayed transfer 34 There are other answers to the Sky contention. The most significant is that in essence s 6(3) does not contemplate a delayed transfer. It only contemplates a transfer or no transfer. There will be no transfer if and only if there are special reasons for not transferring the proceedings [as opposed to being special reasons for not transferring part only of the proceedings]. Spirit and intent of cross vesting legislation 35 Equally significant is the fact that to accede to Sky's contention would be to fly in the face of the accepted spirit and intent of the cross vesting legislation: cf Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 723 - 726 per Rogers AJA, with whose reasons Street CJ agreed and Kirby P substantially agreed. Rogers AJA emphasised the need for full effect to be given by the courts to the cross vesting scheme "for ensuring that throughout Australia disputes are dealt with by the one court to be the court most appropriate for the particular dispute". The terms of the interlocutory regime ordered in the second commercial list proceedings 36 An issue has been raised as to the orders made in the second commercial list proceedings granting injunctive relief until judgement in the proceedings. 37 I do not accept that any basis has been shown for a variation of the orders made. All parties proceeded through a strongly contested interlocutory hearing. The background always included the cross vesting legislation, senior counsel for TVN at one stage contending that as soon as his client filed a defence and cross claim it would be appropriate to transfer the proceedings to the Federal Court. 38 The application to vary the orders is without substance. It is rejected. Stepping back from the detail 39 It may seem regrettable that certain parties to the above described short minutes of order who seemed quite clear that an efficient approach to the first commercial list proceedings and to the Federal Court proceedings was to have the commercial list proceedings continue to determine separate questions [and only depending upon the answer to those questions, to litigate the Federal Court proceedings], now seek to radically move away from that template. 40 This Court must however apply the Act. At a practical level clearly the orders which will be made cross vesting the commercial list proceedings will simply lead to the Federal Court determining what is the efficient mode of case managing the proceedings. The Federal Court has precisely the same power as does this Court to approach the proceedings by the making of separate orders. It is also capable of expediting the hearing of proceedings which are seen to merit expedition. 41 In any event it cannot be said that the current state of the first commercial list proceedings is so far advanced or so close to being given a hearing date that such consideration could seriously be taken into account on the exercise presently before the Court. Short Minutes of Order 42 As indicated during the hearing before me, these proceedings will be stood over to a date convenient to the parties for the purpose of the court taking in short minutes of order and dealing with any costs issues. 43 Insofar as the cross contentions concerned which Federal Court Registry should be the subject of the cross vesting order, the short minutes should simply cross vest to the Federal Court.

I certify that paragraphs 1 - 43 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 8 September 2005

      Susan Piggott
      Associate

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.

Trade Practices Act 1974(Cth)

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