Verso Technologies Inc (formerly Eltrax Systems Inc) v Rasmussen and Ors

FOURTH RESPONDENT John Picardi

FIFTH RESPONDENT Eltrax Systems Pty Ltd (formerly Sulcus (Australia) Pty Ltd) FILE NUMBER: IRC 3114 of 2003 CORAM: Wright J President; Walton J Vice-President; Boland J CATCHWORDS : Appeal - Costs - Unfair contract - Practice and procedure - Service on foreign corporation - Orders of trial judge set aside - Reference to relevant considerations as to costs - Costs to be dealt with by trial judge. LEGISLATION CITED : Industrial Relations Act 1996 s 109 s 181 Suitors' Fund Act 1951 s 6 Bourot v New South Wales Department of Public Works and Services [2004] NSWIRComm 72 Castagna & Anor v Conceria Pell Mec SpA (Court of Appeal, BC9601018, unreported, 15 March 1996) Commissioner for Children and Young People v "A" (No 2) [2004] NSWIRComm 8 Hughes v Western Australian Cricket Association Inc [1986] ATPR 40 - 748 CASES CITED : Latoudis v Casey (1990) 170 CLR 534 Oshlack v Richmond River Council (1998) 193 CLR 72 Queensland Wire Industries Pty Ltd v Broken Hill Co Ltd (1987) 17 FCR 211 Ruddock v Vadarlis [2001] FCA 1865 Verso Technologies Inc (formerly Eltrax Systems Inc) v Rasmussen and ors [2004] NSWIRComm 90 HEARING DATES: DATE OF JUDGMENT: 08/17/2004

APPELLANT Mr A R Moses of counsel Solicitor: Mr J Howard Cowley Hearne LEGAL REPRESENTATIVES: FIRST RESPONDENT Mr B D Hodgkinson, SC Solicitor: Mr G Phillips Carroll & O'Dea

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 3114 of 2003 VERSO TECHNOLOGIES INC (FORMERLY ELTRAX SYSTEMS INC) v RASMUSSEN AND OTHERS

Application by Verso Technologies Inc (formerly Eltrax Systems Inc) for leave to appeal and appeal against the judgment of Justice Staunton given on 21 May 2003 in Matter No IRC 4276 of 2001.

JUDGMENT OF THE COURT [2004] NSWIRComm 234

1 On 13 April 2004 we delivered judgment in the interlocutory appeal from the judgment given by Staunton J in Verso Technologies Inc (formerly Eltrax Systems Inc) v Rasmussen and ors [2004] NSWIRComm 90.

2 In granting leave to appeal, upholding the appeal and setting aside the judgment and orders at first instance, we also ordered that the costs of the appeal be reserved. It was also observed when judgment was delivered: Although we have not made any formal orders as to the costs of the appeal, should there be any application we make clear that the appropriate course is for any such party applying for costs or for any order as to costs to make an application in a formal way. Although that can be by letter, the letter should be accompanied by short submissions in support of the application and should be made within fourteen days of today's date. [O]f course, ... because this judgment may not be the last word on the relevant matter, it may well be inappropriate for costs to be dealt with at this stage at all. That, of course, is a matter for the parties to consider from their respective positions.

Subsequently and respectively, on 28 April, 24 June and 8 July 2004, submissions were received on the issue of costs from both the appellant and the first respondent, and also the appellant in reply. For convenience, the first respondent will be referred to as "the respondent".

3 The approach of the appellant was relatively straightforward. It pointed to the usual principle or approach as to the ordering of costs that "the appellant would, in the absence of features which would justify the exercise of discretion to a contrary result, be entitled to expect a costs order in its favour". In making this submission reference was made to the judgments of the High Court in Latoudis v Casey (1990) 170 CLR 534 and Oshlack v Richmond River Council (1998) 193 CLR 72; also to the judgments of the Full Federal Court in Ruddock v Vadarlis [2001] FCA 1865 at [11], Hughes v Western Australian Cricket Association Inc [1986] ATPR 40 - 748 at 48, 136 and Queensland Wire Industries Pty Ltd v Broken Hill Co Ltd (1987) 17 FCR 211 at 222. Reliance was also placed on the recent decisions of the Full Bench of this Court in Bourot v New South Wales Department of Public Works and Services [2004] NSWIRComm 72 and Commissioner for Children and Young People v "A" (No 2) [2004] NSWIRComm 8. The latter judgments were described as representing "an orthodox application of the well settled principles dealing with the exercise of discretion in a court's power to award costs".

4 Finally, the appellant submitted that: (a) an order had been made in its favour in the present case and there was no finding by the Full Bench that disentitled it to the exercise of discretion in its favour. The proper exercise of discretion would therefore result in a costs order in its favour;

(b) further, although the first respondent had made no submissions on this aspect, there was an appropriate case for the Court to consider granting the first respondent a certificate pursuant to s 6(1A) of the Suitors' Fund Act 1951. 5 Unsurprisingly, the respondent has urged that an entirely different approach be taken on the issue. His primary submission was that the issue of costs had been reserved until the final resolution of the matter since the award of costs is discretionary (see s 181(1)(b) of the Industrial Relations Act 1996). There was thus no requirement for the Court to make an order for costs and, as such, contrary to the submissions of the appellant, there was no entitlement to expect a costs order in its favour, although it was accepted that the "usual order" is that costs would be awarded to the successful party.

6 The respondent continued his submissions by observing that the order of the Full Bench that the costs in this matter are to be reserved should be given its usual meaning; that is, the question of payment of costs and the amount thereon should be determined at the final resolution of the matter. Further that: 9. Such an order is particularly appropriate when the First Respondent is continuing to take steps to have the Appellant (Fifth Respondent) properly served. In this regard a Notice of Motion seeking leave to serve the Appellant has been filed on 21 June 2004. 10. It is also appropriate since the Appellant seeks orders that the First Respondent not only pay the costs of the Appeal but also the costs of proceedings before her Honour Justice Staunton. In the proceedings before Justice Staunton two Notices of Motion were heard. One issued by the Appellant (Fifth Respondent) and one by the First Respondent (Applicant). The Appellant's Notice of Motion was, in effect, seeking orders pursuant to Rule 82 of the Industrial Relations Commission Rules ("the Rules") to set aside the Summons as against it. That Notice of Motion was unsuccessful. The orders which flowed from her Honour Justice Staunton were in relation to the First Respondent's (Applicant's) Notice of motion in relation to whether or not there had been effective service on the Fifth Respondent. 11. The First Respondent submits that the orders of the Full Bench that costs be reserved (to the completion of the substantive matter) should stand. 12. In the alternative, if the orders of the Appellant are granted, the First Respondent agrees that a certificate pursuant to the provisions of s 6 of the Suitors' Fund Act 1951 should be issued.

7 The appellant's submissions in reply referred to what was said by the Full Bench when delivering judgment in the appeal. Reference was also made to the basis of the judgment in the appeal. It was also said there was no reason to depart from the general rule. The submissions continued: 11. This was an Appeal from an interlocutory judgment on discrete issues which have now been dealt with fully and finally. In other words, there is no prospect of any of the issues finally decided by the Full Bench arising again in these proceedings out of the same set of facts. ...

The [general] rule should apply with greater force in the circumstances of an interlocutory appeal given the fact that such appeals are generally discouraged and given that the Appeal before the Full Bench represented a conceptually and in practical terms separate and discrete part of the proceedings in which the Appellant was entirely successful. Indeed, it is no longer a party to the proceedings which was the purpose of this Appeal, see Tab Agents Association of NSW v TAB Pty Limited (No 2) [2004] NSWIRComm 155.

The First Respondent contends that costs should be reserved until the conclusion of the substantive proceedings as the First Respondent is continuing to take steps to have the Appellant properly served.

The Appellant submits that any such motion is virtually hopeless given the findings on the Appeal, the amount of time that has elapsed and the circumstances surrounding the original failure to serve within time.

Further, and more importantly, the Appellant submits that even if the First Respondent was in the future successful in having the Appellant properly served, joined to the proceedings and leave granted for it to proceed against the Appellant (despite the Appellant's opposition to such an application), that is a discrete application entirely separate from the subject matter of the appeal and the findings of Staunton J at first instance and thus should not derogate from the normal order of costs now being made in favour of the Appellant.

The First Respondent has submitted that the Appellant failed in its Notice of Motion before Staunton J in effect seeking Orders pursuant to Rule 82 to set aside the Summons as against it.

It is the Appellant's submission that Her Honour simply did not deal with the Appellant's Notice of Motion in the proceedings below but rather it was agreed between the parties that she would determine those matters giving rise to the Orders sought in the First Respondent's Notice of Motion (see paragraph 16 of the Judgment, page 222 of the Appeal Book).

The First Respondent's motions being successful before Her Honour in the Court below, the Appellant's motion was never dealt with. Her Honour's decision below in respect of the First Respondent's motions now having been reversed on Appeal the Appellant is entitled to its costs. 8 The appellant also submitted that the respondent filed his submissions on 24 June 2004 (some two months after the original submissions on costs by the appellant had been filed) and therefore, in light of the inordinate delay in the respondent filing submissions on costs they should be disregarded by the Court.

9 In order to determine what should occur on the costs issue in this matter it is necessary to refer briefly to the substantive decision in the appeal. The appeal was against orders made by the judge at first instance in which leave was granted to the respondent (the applicant at first instance) to proceed against the appellant and the respondent was also granted leave to serve the summons for relief on the appellant out of time. Finally, an order was made that service on the appellant was effective service for the purpose of the proceedings. As we indicated in the earlier judgment, although there were 25 grounds of appeal (see paragraph [4] of the judgment) the appeal essentially went to the following three issues: 1. Whether Staunton J erred in finding that on 30 October 2002 the fifth respondent had entered an appearance in the substantive proceedings under s 106 of the Act and thereby had submitted to the jurisdiction of the Commission. 2. Whether her Honour erred in deciding that the applicant in the proceedings at first instance should be held to have effectively served the fifth respondent [appellant] for the purpose of the substantive proceedings, procedural irregularities notwithstanding. 3. Whether her Honour erred in deciding that leave should be granted to the applicant at first instance to proceed against the fifth respondent [appellant].

10 In granting leave to appeal we did so on two bases. First, the judge at first instance erred in finding that a solicitor in appearing and apparently entering an appearance in the proceedings, did so in a manner which included a submission to the jurisdiction of the Court in relation to the substantive proceedings and thereby waived any right on the part of the appellant to object to defects in service. Secondly, on the basis that error occurred as to whether the appellant, as a foreign corporation, had been properly served. We also observed: An important aspect of the appeal is whether, as a matter of fact and law, service was actually effected on the appellant. The jurisprudence of the Commission in these respects is, as the appellant submitted, limited and it is in the public interest that it be clarified. Accordingly, we grant leave to appeal.

11 Clearly, the second issue on which leave to appeal was granted was the major one on which the appeal was resolved. In coming to our conclusion on that matter we said: 42 We turn to the issue of service on the appellant. The purported service of the summons for relief was affected by a number of procedural defects: it was served out of time and did not bear the note required by r 112(2) of the Commission's Rules. The appellant also submitted no evidence was led by the first respondent to show that service had been effected in accordance with the laws applicable in the place of service, namely, the state of Georgia in the United States. As counsel for the appellant submitted, the first respondent relied on a document styled "Sheriff's Entry of Service". However, it was submitted there was no evidence before her Honour as to whether that document was evidence that would be accepted by a court in the state of Georgia as proper service. Secondly, there was no evidence that the address used for service, namely, 400 Galleria Parkway, Suite 300, Atlanta, Georgia 30339, was the registered office of the appellant.

and after analysing the relevant rules of this Court and those of the Supreme Court, and their inter-relationship, we decided, for reasons which included the importance of comity, that we should follow the unreported judgment of the Court of Appeal in Castagna & Anor v Conceria Pell Mec SpA (BC9601018, 15 March 1996).

12 We also held: 51 In the present case as we have already noted, there were a number of deficiencies in the purported service on the appellant: the service was out of time; the documents purportedly served on the appellant did not contain the note required by r 112(2); and, there was no evidence that service was effected according to the laws of the state of Georgia. We would also observe that there was no evidence that the address at which the originating process was purportedly served was the appellant's registered office and so to that extent the service would not even have satisfied the requirement for service within the state of New South Wales: See r 105(c). 52 In relation to the first respondent's failure to include a note in the form of form 13A, we regard such an omission as significant in the context of the whole of the circumstances of the proceedings. The note informs the foreign respondent of the options that are available to it upon being served with the originating process. A failure to include the note should not be lightly set aside as an unimportant irregularity. In this case the first respondent was unable to explain why the note had not been included. 53 The first respondent submitted that the appellant knew of the proceedings before Staunton J but had taken "active steps to deny the First Respondent information as to its whereabouts and location and instructed its lawyers to thwart effective service". In Castagna it was also said that the appellant: [K]new of the documents left for him, knew that the documents included a statement of claim and understood the effect of them that, and because he stood by and allowed the matter to proceed, he is debarred from taking advantage of these matters upon an appeal of the present kind. 54 Nonetheless, the Court of Appeal did not consider those arguments should be upheld. As to the alleged thwarting of service by the appellant, we do not consider the evidence sustains such a conclusion.

13 We concluded by noting (see paragraph [56]) that even in the absence of the authority in Castagna, given the consequences attaching to the bringing of a foreign respondent within the Court's jurisdiction we would have required evidence of proper service, which in this case had not been adduced.

14 When our earlier judgment is considered in the way we have, it is to be seen that it turned upon a relatively technical approach to the particular issues but one which was required in the circumstances of the proceedings. There is also the possibility that the appellant was attempting to avoid, if not evade, service. Although there was a clear public interest in leave to appeal being granted and the relevant issues decided, the public interest in the matters of principle being clarified, in our view, transcended the issues between the parties. Accordingly, we do not accept the thrust of the appellant's submissions.

15 In the circumstances of this case, justice would be most appropriately served by determining that the question of the costs of the proceedings before Staunton J and of the appeal should be reserved to be dealt with by the trial judge which could await the conclusion of the trial or some other convenient point in the proceedings. Taking that step would allow the trial judge to consider the totality of the evidence before her or him as to service on the appellant (if that finally occurs) and whether there is a reasonable basis to consider that the appellant may have been inappropriately attempting to avoid service. If, however, a trial does take place and process is not effectively served on the appellant that would plainly be a material factor in favour of making an order for costs in the appellant's favour.

16 We consider that all of these considerations should be dealt with by the trial judge and this should occur even if no trial takes place or the matter is resolved by conciliation pursuant to s 109 of the Industrial Relations Act.

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