United GlobalCom, Inc and ors v McRann

PARTIES : FOURTH APPELLANT: Austar Entertainment Pty Limited

FIFTH APPELLANT: CTV Pty Limited

SIXTH APPELLANT: STV Pty Limited

RESPONDENT: Robert McRann FILE NUMBER: IRC 2552 of 2003 CORAM: Wright J President; Walton J Vice-President; Boland J Appeal - Application for leave to appeal - Notice of motion by appellants at first instance to strike out respondent's claims under section 106 of Industrial Relations Act 1996 on jurisdictional and other grounds - Motion dismissed - Leave to appeal refused - Appeal dismissed - Application by respondent for costs at first instance and on appeal to be paid forthwith - Principles discussed - Order that costs of appeal be paid forthwith CATCHWORDS : Costs - Application for leave to appeal - Notice of motion by appellants at first instance to strike out respondent's claims under section 106 of Industrial Relations Act 1996 on jurisdictional and other grounds - Motion dismissed - Leave to appeal refused - Appeal dismissed - Application by respondent for costs at first instance and on appeal to be paid forthwith - Principles discussed - Order that costs of appeal be paid forthwith Federal Court Rules Order 62 Rule 3 LEGISLATION CITED : Industrial Relations Act 1996 Industrial Relations Commission Rules 1996 r 203 (2) Supreme Court Rules 1970 Part 52A Rule 9 Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 14) (unreported, 18 August 1995) Fiduciary Ltd and Anor v Morningstar Research Pty Ltd and Ors (2002) 55 NSWLR 1 Horrobin v Australia & New Zealand Banking Group Ltd, (unreported, NSW Court of Appeal, 6 June 1997) CASES CITED : Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545 Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 McRann v UnitedGlobalCom, Inc and Ors [2003] NSWIRComm 131 UnitedGlobalCom, Inc v McRann [2003] NSWIRComm 318 Vasyli v AOL International [1996] 804 FCA 1 HEARING DATES: DATE OF JUDGMENT: 02/12/2004

APPELLANTS Mr G J Hatcher SC with Mr N C Poynder of counsel Solicitors: Mr M Davis and Mr M Easton Acuiti Legal LEGAL REPRESENTATIVES: RESPONDENT Mr J N West QC with Mr A D Justice of counsel Solicitors: Ms E Pritchard and Mr H Black Harmers Workplace Lawyers

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH

CORAM: WRIGHT J, President WALTON J, Vice-President BOLAND J

Matter No IRC 2552 of 2003 UnitedGlobalCom, Inc and others v Robert McRann

Application by UnitedGlobalCom, Inc and others for leave to appeal and appeal an interlocutory judgment of Justice Peterson given on 24 April 2003 in Matter No 3104 of 2001 JUDGMENT OF THE COURT [2004] NSWIRComm 16

1 In an extempore judgment given on 26 September 2003 in UnitedGlobalCom, Inc v McRann [2003] NSWIRComm 318 we refused leave to the appellants to appeal and dismissed their appeal against the judgment of Peterson J in McRann v UnitedGlobalcom, Inc and Ors [2003] NSWIRComm 131. The appellants were ordered to pay the respondent's costs of the appeal as agreed or, in default of agreement, as assessed.

2 The appeal related to the dismissal by Peterson J of motions by the appellants to strike out claims by the respondent made under s 106 of the Industrial Relations Act 1996. The appellants had taken certain jurisdictional objections and objections on estoppel grounds to the Commission in Court Session proceeding to hear the respondent's claims.

3 At the conclusion of the appeal proceedings the respondent pressed for an order under r 203(2) of the Industrial Relations Commission Rules 1996 that costs of the appeal and the proceedings at first instance be paid forthwith. The appellants opposed the application. The parties were invited to file written submissions regarding this issue. This judgment deals with the respondent's application for costs to be paid forthwith.

4 As Peterson J observed, the respondent is a citizen of the United States of America. His Honour noted in his judgment commencing at [2] that in February 1995 the respondent was offered, and accepted, employment by the first appellant, UnitedGlobalCom, Inc ("UGC"), to be seconded on a full-time basis as Managing Director of its Australian affiliates, CTV Pty Limited and STV Pty Limited (the fifth and sixth respondents respectively). The employment commenced on 19 March 1995 and for a little more than two years the respondent fulfilled the intended role. During 1997 it eventuated that the respondent was offered and accepted the position of Chief Executive Officer of an affiliate of UGC in the Netherlands, a corporation known as A-2000NV. His employment therewith was terminated without notice or compensation in November 1997. At paras [11] to [26] of his judgment Peterson J outlined the history of the proceedings following the termination of the respondent's employment as follows: 11 On 23 April 1998 the applicant commenced proceedings against UGC and UIH AP [the second respondent] in the United States District Court for the District of Colorado. These proceedings, referred to as the 'First Colorado Proceedings', involved claims by the applicant related to breach of contract, misrepresentation, promissory estoppel, unjust enrichment and civil conspiracy. No claim was advanced with respect to share options.

12 On 9 June 1998 UGC and UIH AP filed a "First Amended Answer and Counterclaim in the First Colorado Proceedings". 13 On 12 April 1999 UGC and UIH AP applied for summary judgment in the First Colorado Proceedings.

14 In July 1999 the applicant sought to amend his claim in the First Colorado Proceedings to plead a failure by UGC to restructure his remaining incentive compensation under clause 6 of the Compensation and Release Agreement. This claim relates to what is now the substance of the present proceedings.

15 On 30 July 1999 Judge Nottingham, sitting in the First Colorado Proceedings, rejected the applicant's application to amend his claim with respect to the restructure of incentive compensation.

16 On 23 August 1999 Judge Nottingham granted summary judgment in favour of UGC and UIH AP by striking out the breach of contract claim against A-2000 NV, and the misrepresentation and unjust enrichment claims. He refused the application for summary judgment on the issues of civil conspiracy and promissory estoppel.

17 On 4 May 2001 the applicant commenced these s106 proceedings and on 15 May and 8 June 2001 the respondents variously filed motions in identical terms seeking to strike the proceedings out.

18 On 9 July 2001 the s106 proceedings came before Wright J for directions when the representative of the respondents indicated that they were prepared to have the motions await the final determination of the proceedings.

19 On 30 July 2001 Judge Nottingham, on his own motion, dismissed the applicant's claim of civil conspiracy in the First Colorado Proceedings.

20 On 1 August 2001 the parties to the First Colorado Proceedings entered into a Stipulation (a form of agreement in the proceedings which was given effect to by order) whereby the remaining proportion of the applicant's claim was dismissed "with prejudice". Judgment was entered in favour of UGC and UGC AP in the sum of $98,000, however, subject to a covenant not to enforce judgment pending the outcome of the s106 proceedings. It seems that it was intended that should the applicant succeed in a s106 proceedings there would be an offset of the $98,000 payable under the Stipulation. 21 On 28 August 2001 the applicant appealed to the Tenth Circuit of the US Appeals Court against the decision of Judge Nottingham to grant summary judgment in the First Colorado Proceedings. That appeal was heard during September 2002 and at the date of hearing of this motion, 13 December 2002, had not been the subject of judgment.

22 On 7 December 2001 UGC filed a motion, in the appeal proceedings from the summary judgment of Judge Nottingham, for an anti-suit injunction against the applicant in respect of the s106 proceedings.

23 On 12 December 2001 UGC commenced proceedings against the applicant in the District Court of Colorado ('the Second Colorado Proceedings') seeking a declaration of the rights of the parties under the Compensation and Release Agreement.

24 On 2 January 2002 the applicant filed a motion to dismiss or stay the Second Colorado Proceedings, relying on the s106 proceedings and the International Doctrine of Abstention.

25 On 19 February 2002 UGC's motion for an injunction in the appeal proceedings was dismissed.

26 In February 2002 UGC filed a motion for preliminary injunction against the applicant in the Second Colorado Proceedings. That motion was heard and denied by Judge Nottingham on 23 May 2002.

5 The appellants' motion to dismiss was heard by Peterson J on 12, 13 December 2002 and judgment was delivered on 24 April 2003. In our judgment dismissing the appeal we said at [7]: [R]efusal of relief at the threshold in applications such as that heard by his Honour at first instance will not finally determine that jurisdiction exists for any order the court might make between the parties. In other words, the dismissal of contentions such as those made by the appellants does not preclude the appellants from maintaining such contentions, subject to any questions of abuse of process, at the final hearing of the proceedings, since refusal of threshold relief does not finally determine the existence of jurisdiction in relevant respects.

6 Thus, not only are the substantive proceedings yet to take place but on the basis of any further material put before the court in those proceedings it also remains open for the appellants to seek to demonstrate, for instance, that the Compensation and Release Agreement is outside the scope of the relief available under s106 or that the Agreement does not have a real and substantial connection with New South Wales and is not a contract "in and of New South Wales". To that extent it cannot be said that the judgment on appeal has finally dealt with discrete or severable aspects of the proceedings, although it may be said that in dismissing that part of the appeal relating to estoppel, that issue has been finally determined.

7 Rule 203 of the Commission's Rules provides: 203 Time for dealing with costs (1) The Commission may in any proceedings exercise its powers and discretions as to costs at any stage of the proceedings or after the conclusion of the proceedings. (2) Where the Commission makes an order in any proceedings for the payment of costs the Commission may require that the costs be paid forthwith notwithstanding that the proceedings are not concluded.

8 Rule 203 provides the Commission with a wide discretion to order that costs be paid forthwith notwithstanding that the proceedings are not concluded. Similar powers are to be found in the Supreme Court Rules 1970 (Part 52A, Rule 9) and the Federal Court Rules (Order 62, Rule 3). Part 52A, Rule 9 of the Supreme Court Rules provides: 9 Order for costs - when payable (1) Where before the conclusion of any proceedings, other than proceedings entered in the Commercial List or the Technology and Construction List, the Court makes an order for the payment of costs or a motion is refused with costs, the costs shall not, unless the Court otherwise orders, be payable until the conclusion of the proceedings.

(2) Where, in any proceedings, it appears to a registrar, on application, that there is no likelihood of any further order being made in the proceedings, the registrar may order that any costs ordered to be paid shall be payable forthwith. (3) Where in any proceedings: (a) it appears to the Court that: (i) a party has been subject to unreasonable delay or default on the part of any other party, (ii) the proceedings are unreasonably protracted, or (iii) justice otherwise demands it, or (b) a costs order is made under rule 43 or rule 43A, the Court may order that costs, or a specified amount on account of costs, be payable forthwith.

9 Order 62, Rule 3 of the Federal Court Rules provides: 3 Time for dealing with costs (1) The Court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceeding or after the conclusion of the proceeding. (2) Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded. (3) An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.

10 In opposing the respondent's application the appellants relied on the observation of Lehane J in Vasyli v AOL International [1996] 804 FCA 1 where his Honour referred at 3 to "a clear practice on the part of the Court to make use of the power in Order 62 rule 3 in very special circumstances". His Honour went on to say: The justification for the general rule [deferral of taxation and payment of costs of interlocutory proceedings until the principal proceedings have been decided] is clear enough, particularly in proceedings in which there are a substantial number of interlocutory applications. Plainly in such circumstances it can be highly inconvenient and may be oppressive if before proceedings are finally concluded there is a series of taxations of costs of a series of interlocutory applications.

11 The situation described by Lehane J as to a series of interlocutory applications is not the case here although, as we have already pointed out, the appellants are not precluded from maintaining their contentions regarding jurisdiction in the substantive proceedings. Unless it can be shown that there are overriding reasons why there should be an order that costs are paid forthwith, the fact that issues that were the subject of appeal remain potentially live issues would militate against such an order.

12 In Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 at 312 Olney J expressed the following opinion about the Federal Court's "forthwith" rule: The rule does not suggest any particular criteria by which the Court should be guided in approaching the exercise of the power, and accordingly I take the view that the discretion should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice envisaged by the rule …

13 In Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 14) (unreported, 18 August 1995) Lindgren J ordered the costs of an interlocutory appeal to be paid forthwith in circumstances in which judgment in the final proceedings could not be expected for at least 12 months, observing that: It would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time. The parties entitled to the benefit of the order for costs which this Court has made in appeals from interlocutory orders should not be deprived of that benefit until the case has been finally disposed of.

14 In Horrobin v Australia & New Zealand Banking Group Ltd, (unreported, NSW Court of Appeal, 6 June 1997), Priestley JA considered that because the controversy between the parties would run for at least a further year, the costs of an interlocutory appeal should be payable forthwith. In Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545, Branson J ordered that the costs of several interlocutory hearings be paid forthwith because "A hearing date could not realistically be expected for many months". Her Honour was satisfied that an order that costs be paid forthwith would not "have the effect of stifling the proceedings" and that the interests of justice required that there be a departure from the ordinary rule.

15 In Fiduciary Ltd and Anor v Morningstar Research Pty Ltd and Ors (2002) 55 NSWLR 1, after reviewing the cases, Barrett J held that factors which have led courts to depart from the normal rule in Pt 52A, r 9(1) of the Supreme Court Rules that costs are payable at the conclusion of the proceedings, include: (a) where the application or aspect in respect of which the particular costs order is made before conclusion of the proceedings represents the determination of a separately identifiable matter or may be viewed as the completion of a discrete aspect; (b) some unreasonable conduct on the part of the party against whom costs have been ordered; (c) there is much to come in the proceedings and one can see a fairly long time before the proceedings are disposed of.

16 Barrett J also held in Fiduciary that it is the demands of justice that determine how an exception of the kind referred to in Pt 52A, r 9(1) should be approached. We consider that is how we should approach r 203(2) of the Court's Rules.

17 In support of the costs application, senior counsel for the respondent in the present proceedings submitted that: [T]he resolution of Mr McRann's proceedings in the Commission has been long delayed and he has been put to the time, stress and expense of a long series of completely unsuccessful attempts by the Appellants to prevent or delay these proceedings being heard and determined on their merits. … [T]here was a clear concession [by the appellants] that the issues raised on appeal (and before Peterson J) were separate, discrete and "compartmentalised" questions. … The Commission would readily infer that the costs incurred by Mr McRann in successfully defending the Notices of Motion and then the interlocutory appeal are very substantial. What is very clear is that Mr McRann has had to deal with the same argument (successfully) twice. He should not have to bear that expense for an extended further period. Given the present pressures on the resources of the Commission, it is likely that the final hearing and determination of the proceedings will not be completed for many months.

18 The respondent commenced his action against the appellants in April 1998 in the Federal District Court for the District of Colorado. In August 1999 Judge Nottingham granted summary judgment in favour of UGC and UIH AP by striking out the breach of contract claim against A-2000 NV, and the misrepresentation and unjust enrichment claims. He refused the application for summary judgment on the issues of civil conspiracy and promissory estoppel.

19 In May 2001 the applicant commenced proceedings under s 106 of the Act and on 15 May and 8 June 2001 the respondents variously filed motions in identical terms seeking to strike the proceedings out. In July 2001 the s106 proceedings came before the President for directions when the appellants indicated that they were prepared to have the motions await the final determination of the proceedings. In November 2001 conciliation of the respondent's claim under s 106 occurred but it was unsuccessful.

20 In December 2001 UGC filed a motion, in the appeal proceedings from the summary judgment of Judge Nottingham, for an anti-suit injunction against the applicant in respect of the s106 proceedings. The motion was dismissed in February 2002.

21 Also in December 2001 UGC commenced the Second Colorado Proceedings seeking a declaration of the rights of the parties under the Compensation and Release Agreement. In January 2002 the applicant filed a motion to dismiss or stay the Second Colorado Proceedings, relying on the s106 proceedings and the International Doctrine of Abstention. In February 2002 UGC filed a motion for preliminary injunction against the applicant in the Second Colorado Proceedings. That motion was heard and denied by Judge Nottingham on 23 May 2002.

22 There is no doubt that the appellants have sought to block the respondent at every legal turn and that has inevitably led to delay and additional expense for the respondent. However, the procedural and legal manoeuvring engaged in by the appellants in the Colorado courts was open to them and does not of itself amount to unreasonableness on their part. In July 2001, however, the appellants indicated to Wright J at a directions hearing in respect of the s 106 proceedings that they were prepared to have the strike out motions await the final determination of the proceedings. Then, having failed in their ant-suit injunction in relation to the s 106 proceedings before Judge Nottingham, the appellants proceeded with their motions notwithstanding the earlier indication by them that they were prepared to await the substantive proceedings to put their jurisdictional objections. Having failed in the proceedings before Peterson J, the appellants appealed but again failed in their attempt to have the respondent's claims dismissed.

23 A relevant question is whether, having indicated they would not proceed with their strike out motions, the appellants acted unreasonably in pursuing the motions in light of their loss before Judge Nottingham. In rejecting the appellants' anti-suit injunction a significant factor influencing Judge Nottingham was that although the appellants had filed strike out motions in the Commission in Court Session they had not pursued those motions. Obviously, his Honour considered that was the course to follow. Given his Honour's views in that respect and the time and expense that would be involved in waiting for the substantive proceedings to put any jurisdictional objections it was not unreasonable in the circumstances that the appellants revived their motions.

24 We consider, however, that given: (i) the appellants failed in their bid to have the respondent's claims struck out before Peterson J, knowing that the opportunity existed to press any relevant jurisdictional objection had not been entirely eliminated; (ii) our view that the appeal relating to estoppel was not entirely meritorious given the judgment of Peterson J on that issue; (iii) the views expressed by expert witnesses in the proceedings before Judge Nottingham and earlier advice given to appellants by their own counsel that it was unlikely the respondent's claims would be dismissed by the Commission in Court Session on the grounds of issue estoppel in any interlocutory proceedings and the subsequent dismissal of the motions by Peterson J; (iv) the delay and expense that have been caused to the respondent in defending the appeal; and (v) against the background of proceedings that were commenced in May 2001 and the fact it will be a considerable period of time before the proceedings are finally disposed of, it is in the interests of justice that the appellants pay forthwith the respondent's costs of the appeal notwithstanding that the proceedings are not concluded.

25 We make the following further order: 1 The appellants shall forthwith pay the respondent's costs of the appeal as agreed or, failing agreement, as assessed.

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