Wilkinson v Network Ten Pty Ltd

Supreme Court of NSW|2023-11-24|Before: Rees J

Solicitors: Gillis Delaney Lawyers (Plaintiff) Baker & McKenzie (Defendant) File Number(s): 2023/332043

JUDGMENT

HER HONOUR: This is an application to transfer these proceedings to the Federal Court of Australia, pursuant to section 5(1)(b)(ii)(C) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). The application is brought by the defendant, Network Ten Pty Ltd, which is presently defending defamation proceedings in the Federal Court of Australia, together with its employee, the plaintiff, Lisa Wilkinson.
Network Ten relied on the evidence of its solicitor, Andrew Stewart. Ms Wilkinson relied on the evidence of her solicitor, David Collinge. There was no cross-examination. In addition, some facts are admitted on the pleadings or were agreed during the hearing.

Defamation proceedings

On 15 February 2021, Network Ten broadcast an interview conducted by Ms Wilkinson with Brittany Higgins on "The Project." On 7 February 2023, Bruce Lehrmann commenced defamation proceedings in the Federal Court against Network Ten and Ms Wilkinson.
Network Ten contends in its Commercial List Response that, on 8 February 2023, Ms Wilkinson instructed Thomson Geer to appear for her in the defamation proceedings but, on 11 February 2023, instructed Gillis Delaney and Sue Chrysanthou SC instead. Thomson Geer filed a notice of appearance for Ms Wilkinson on 13 February 2023 but Gillis Delaney filed a notice of change of solicitors the next day. Ms Wilkinson's agent, Nick Fordham, also sent an email to Network Ten, raising the issue of possible separate representation, confirming that Ms Wilkinson had already received advice from Gillis Delaney and Ms Chrysanthou SC, and seeking confirmation that Network Ten would indemnify her for the costs of the proceedings.
According to its Commercial List Response, on 15 February 2023, Network Ten replied to Ms Wilkinson, communicating its view that separate legal representation in the defamation proceedings was unnecessary and not in her best interests. Further, "Lisa has elected to pursue her own defence of the proceedings, and she is entitled, at her own cost, to do so."
On 1 March 2023, Ms Wilkinson filed a defence in the defamation proceedings. Mr Collinge said he received an email from Network Ten's solicitors, which stated that Network Ten accepted that Ms Wilkinson was entitled to seek and obtain separate legal representation in the defamation proceedings and Network Ten was obliged to indemnify her in relation to those costs by reference to section 3 of the Employees Liability Act 1991 (NSW), which relevantly provides: Employee not liable where employer also liable (1) If an employee commits a tort for which his or her employer is also liable: … (b) the employer is liable to indemnify the employee in respect of liability incurred by the employee for the tort (unless the employee is otherwise entitled to an indemnity in respect of that liability).
Network Ten said, in effect, that the question of whether it had any liability to indemnify Ms Wilkinson under that section would only arise after judgment, as the section only operated if an employee committed a tort for which their employer was liable, such that an obligation under the section to indemnify may not arise.
On 3 March 2023, Gillis Delaney wrote to Thomson Geer, taking issue with Network Ten's position. Gillis Delaney suggested that the interests of Ms Wilkinson and Network Ten did not coincide. Further, Ms Wilkinson had concerns about Thomson Geer acting for her given the firm's earlier involvement in advising on matters in connection with Mr Lehrmann and Ms Higgins. Ms Wilkinson was minded to file a cross-claim for indemnity and contribution unless Network Ten confirmed that it would indemnify her for any damages awarded in favour of Mr Lerhmann against her in the proceedings, any costs orders made against her in the proceedings, and would pay her reasonable legal costs of independent representation associated with the proceedings, regardless of the outcome of the proceedings.
On 7 March 2023, Network Ten filed its defence in defamation proceedings. Network Ten admitted that it was vicariously liable for the conduct of its employee. Network Ten's solicitors also replied to Gillis Delaney, confirming indemnity as limited to section 3 of the Employees Liability Act.
The parties agree that Network Ten then proposed that advice be sought from leading senior counsel, at its expense, as to whether Ms Wilkinson should have separate representation, the cost and expense of which would be borne by Network Ten. On 17 March 2023, Ms Wilkinson obtained advice from Bret Walker SC.
Mr Collinge said that, as Network Ten was not prepared to acknowledge the existence of an obligation to indemnify Ms Wilkinson in relation to her costs of defending the defamation proceedings other than under section 3 of the Employees Liability Act, which was said by Network Ten to only operate in limited circumstances, on 20 March 2023, Ms Wilkinson's agent sent an email to Network Ten, followed by an email from Gillis Delaney to Network Ten's solicitors on 22 March 2023 on this subject.
By now, Network Ten had appointed Baker & McKenzie to deal with this particular matter. On 24 March 2023, Baker & McKenzie asserted that the appropriate time for reimbursement of Ms Wilkinson's legal costs would be at the conclusion of the defamation proceedings, once the quantum of the costs could be determined taking into account any costs orders in her favour. Correspondence ensued between Gillis Delaney and Baker & McKenzie continued.
On 30 May 2023, Gillis Delaney sent Baker & McKenzie invoices and narrations in respect of the work the subject of the invoices. The legal costs and expenses were $375,728.63. Gillis Delaney explained why Network Ten's position was said to not be reasonably available, where it served to defeat the purpose of the indemnity, leaving Ms Wilkinson with the burden of having to find the ways and means to fund her defence to a claim to which she had become exposed as an employee. Any subsequent costs orders in the plaintiff's favour were said to be immaterial where Network Ten would be entitled to receive any such sums recovered under a costs order. Network Ten was asked to pay the costs and expenses save for any amount which it considered to be unreasonable.
On 21 June 2023, Network Ten's solicitor responded, as set out in the Commercial List Response, that its preliminary view was that legal costs over $375,000 was unlikely to be reasonable for the limited steps taken in the proceedings so far. Essential work undertaken on behalf of Ms Wilkinson was said to be unnecessarily duplicative of Network Ten's work in defending the proceedings. Network Ten's obligation to indemnify their employee did not extend to funding a parallel and duplicative defence in those proceedings. The level of detail provided in the solicitor's invoices was said to not allow Network Ten to adequately assess the nature and level of the work undertaken.
On 25 September 2023, Gillis Delaney sent Baker & McKenzie further invoices totalling $370,017. Gillis Delaney reduced the costs and expenses sought from the 30 May 2023 request to $353,538.88. Network Ten was asked to pay the legal costs and expenses, save for any amount which it considered unreasonable. Mr Collinge says that it is his view that the work performed was work reasonably undertaken for the purposes of Ms Wilkinson's defence in the defamation proceedings and that the amounts charged for that work were reasonable.
Network Ten notes in its Commercial List Response that the invoice for counsel's fees was only for work completed until 17 June 2023 (for senior counsel) and 31 July 2023 (for junior counsel). Further, Network Ten noted that Ms Wilkinson has not asserted in any correspondence to Network Ten that she has incurred any actual liability in respect of the defamation proceedings, in the sense that she has paid any of these invoices.

These proceedings

On 19 October 2023, Ms Wilkinson commenced these proceedings, seeking an order that Network Ten pay her legal costs and expenses as set out in the invoices dated 30 May 2023 and 25 September 2023, or in such other amount as the Court determines. Alternatively, Ms Wilkinson sought damages.
Ms Wilkinson contends in the Commercial List Statement that it was an implied term of her employment contract that her employer is liable to indemnify her in respect of any liability which she incurs arising out of or in the course of her employment. As such, the employer is required to indemnify her in respect of any award of damages, any costs order made against her and her reasonable legal costs and other expenses incurred in the defamation proceedings.
To this, Network Ten accepts that it is obliged to indemnify their employee "but only insofar as [the employee's] liability is properly incurred and reasonable in amount" and in accordance with section 3(1)(b) of the Employees Liability Act and at general law. Whilst Network Ten accepts that it is obliged to indemnify its employee in respect of any award of damages or costs orders made against her in the defamation proceedings, its obligation to indemnify her for her legal costs and expenses incurred in respect of the proceedings arises at the conclusion of the proceedings and after recovery by the employee of any amounts payable to her under any costs awarded in her favour, and in respect of amounts in fact paid by the employee.
Alternatively, Network Ten contends that the obligation to indemnify arises at a time when it is possible for the employer to assess the reasonableness of the employee's costs. In determining what costs are properly and reasonably incurred, regard must be had to whether the costs are incurred in respect of an issue or issues where the employee's interests are common with those of the employer in defending the proceedings, and whether there was a duplication of costs that would otherwise already be incurred by the employer. Further, the issue of what costs are properly and reasonably incurred was best determined by the Federal Court at the conclusion of the defamation proceedings.
Network Ten also contended, in its Commercial List Response, that by its correspondence it made clear its position that it agreed to indemnify Ms Wilkinson against any damages award or costs order made against her and for legal costs incurred in defending the proceedings to the extent that those costs were properly incurred and reasonable in amount, to the extent that Ms Wilkinson was entitled to an indemnity under section 3 of the Employees Liability Act and at general law, noting that the appropriate time for reimbursement would be after completion of the proceedings. Further, Network Ten communicated its view to Ms Wilkinson at the outset that it was not reasonable or necessary for her to obtain separate legal representation and maintains that view, such that the costs incurred by reason of that decision are not reasonably incurred. Nor was Network Ten well positioned to assess the reasonableness of Ms Wilkinson's costs incurred to date where it had not been provided with a complete record of counsel's invoices for the same period of time to which the solicitors' fees related, the invoices did not identify with specificity the tasks to which the entries of time related, and Ms Wilkinson was said to continue to refuse to comply with requests for copies of costs estimates, costs agreements or the curriculum vitae of solicitors working on the matter.

Concerns expressed by trial judge

On 20 October 2023, the associate to Lee J re-listed the defamation proceedings for a case management hearing inter alia to address the following matter: … it has come to his Honour's attention that collateral proceedings concerning an alleged indemnity for costs incurred in relation to proceeding NSD103/2023 (Ten proceeding) have apparently been commenced in another Court. His Honour … understands the claim relates to costs incurred (and representation) in the Ten proceeding being conducted before his Honour. If this is the nature of the claim, his Honour wishes to understand why a collateral proceeding has been commenced rather than relief being sought by way of cross-claim in the Ten proceeding in the usual way and as the Federal Court Rules 2011 (Cth) provide.
On 24 October 2023, his Honour dealt with a number of case management matters before turning to these proceedings. Lee J expressed the following concerns: HIS HONOUR: … It's a question of the possibility of undue complication by having aspects of this justiciable controversy bifurcated over two courts. … I'm going to have to make costs orders in these proceedings one way or the other. If the respondents are successful, an issue may well arise as to whether or not it was appropriate for there to be separate representation as between respondents. And that may well affect the costs that are ordered, and whether or not there should be more than one set of adverse costs made against the applicant. Conversely, if the respondents were successful then there may be questions about recovery of costs. That's not only in relation to prospective adverse costs but I have to give now mandatory consideration, because of section 37M(3) of the Federal Court of Australia Act in exercising a discretion as to costs as to the efficiency by which these sort of - the issues in the case are being dealt with. And part of that will be whether or not it's appropriate to have separate representation. I know nothing of that issue. Now, it may be completely appropriate. There may be conflicts between the respondents. I'm not expressing any view about that at all. But I would have thought it would have been far more efficient for the cross-claim to be dealt with in the context of these proceedings because I didn't want there to be a complication of someone saying, "I've dealt with issues as to costs" or, "I've decided as part of the [implied] jurisdiction of this court" … to restrict the amount of costs that could be recovered as between solicitor and client. All those complications seem to me may well be worked through in respect of separate proceedings. But they just simply would not arise if, as is the case of countless cases that I've been involved, these issues are raised by way of cross-claim in these proceedings. … … it's often in those circumstances appropriate to, as it were, separately determine the cross-claim until determination of the principal issues. But if it's the same judge dealing with them, there's no risk of inconsistent findings. And the judge obviously has already made decisions concerning … what costs are properly recoverable. In any event, I raise if for the parties' consideration as to the course that they propose to take. But I just want to make sure that there is no risk of complication of these proceedings.
On 14 November 2023, Network Ten filed the motion presently before the Court. Mr Stewart said the issues raised by Lee J arise for determination in these proceedings. He considers that there is a risk that this Court's finding in respect of these matters may be inconsistent with the Federal Court's ultimate findings in light of Ms Wilkinson's conduct of her defence in the defamation proceedings, which that Court has had the opportunity to observe in detail. Mr Stewart noted that the Federal Court had already made one adverse costs order against Ms Wilkinson.
I digress to observe that in the defamation proceedings, on 16 March 2023, Lee J set aside a notice to produce issued by Ms Wilkinson. On 23 March 2023, his Honour gave reasons for doing so, describing the notice as "clearly oppressive." Submissions made in support of the notice were said to be "devoid of merit." His Honour ordered that the costs of the application to set aside the notice to produce be paid by Ms Wilkinson.
The defamation trial is underway, having commenced two days ago on 22 November 2023. On Day 1, Lee J again raised the issue as to whether there was good reason for Ms Wilkinson to have separate representation and emphasised the need to avoid unnecessary duplication to ensure the orderly conduct of the trial. Further: The issue of whether the case has been conducted in accordance with the most efficient and inexpensive way that it can be would be relevant to my discretion concerning costs and the reasonableness of separate representation, irrespective of the outcome, consistent with the mandatory requirement and having regard to the overarching purpose in making costs orders. It's foreshadowed in the written submissions on the extension of time application that the duplication of cross-examination was something of which the applicant made complaint. I don't know whether that's something that they reply upon in the conduct of the trial. It might come up in relation to issues concerning aggravation and damages. I don't know. But I can see a series of times through the trial when the reasonableness of that issue might become something that I need to - I need to understand the conflict a bit better than I do now. I raise it so you can think about it. I don't necessarily require you to make an immediate response but we're going to have to grapple with it in some way sooner rather than later.

Submissions

Network Ten submitted that the issues in these proceedings are when it is obliged to indemnify its employee and further, whether the employee's legal costs are reasonable having regard to: whether it was appropriate for Ms Wilkinson to obtain separate representation; whether that representation should have been confined to discrete legal issues; and whether the costs are excessive. In determining these issues, Network Ten wishes to advance a case that the nature of, and issues in, the defamation proceedings were such that there was no need for separate representation. This is an issue which is relevantly the same as that which Lee J will have to determine in the defamation proceedings. The implications of the Federal Court of Australia Act are also relevant to the common law question of reasonableness. Network Ten submitted that there is a risk that inconsistent findings will be made on identical questions in both courts.
Further, even if the Court finds it was reasonable for Ms Wilkinson to obtain separate representation, this Court will be required to determine the extent to which there was an unnecessary duplication of costs incurred having regard to steps taken by Ms Wilkinson in the defamation proceedings including, for example, the preparation of a separate defence, submissions and appearances on an interlocutory application for an extension of time of the limitation period prescribed by s14B of the Limitation Act 1969 (NSW), the issue and defence of notices to produce and subpoenas and submissions in respect of a possible jury trial. Creating further risk for inconsistent findings is the fact that the Federal Court has already had to consider, and make findings, about Ms Wilkinson's compliance with the overarching purpose pursuant to section 37M of the Federal Court of Australia Act 1976 (Cth), in respect of her opposition to an application to set aside one paragraph of a notice to produce. The legal costs incurred by Ms Wilkinson in preparing that notice to produce, and subsequently defending it, are the subject of the invoices in this proceeding. The Court should bear in mind the absence of any suggestion that Ms Wilkinson has personally incurred or paid any of the legal costs owing to date, or that she has a reasonable basis to believe she will be unable to continue to pay the legal costs of defending the defamation proceedings. Further, the plaintiff only commenced these proceedings recently, having been on notice of Network Ten's position from the outset.
Ms Wilkinson submitted that the interests of justice do not call for the transfer of this proceeding to the Federal Court but point strongly in the other direction. The natural forum for the determination of the summons is this Court, where the issues concern the common law and section 3(1)(b) of the Employees Liability Act 1991 (NSW), being New South Wales legislation. The issue is distinct from the issues being determined in the defamation proceedings. Any determination as to who of the parties to those proceedings is to bear the costs of those proceeding is unconnected to the issue identified in the pleadings in this Court, being the scope of an employee's right of indemnity. Nor was there a risk of inconsistency, where there was no issue in the Federal Court as to the amount payable by the employer to its employee under a contractual indemnity. This Court was able to determine what categories of cost have been reasonably incurred, including by way of a reference. Where the Federal Court will not determine these issues until after the defamation proceedings, such delay came at considerable detriment to Ms Wilkinson and result in Network Ten obtaining the result it wants by default.
Ms Wilkinson submitted that whether or not separate representation was appropriate would be determined by reference to events that had already occurred. Whether that representation should have been confined to discrete legal issues was also an historical question, where an indemnity was only sought for work already done. The trial did not need to reach its conclusion before that could be ascertained. As to whether the costs were excessive, this Court could determine this, either itself or by a reference out. The issues to be determined by the trial judge would be by exercise of a discretion in respect of costs as opposed to whether costs and expenses were proper and reasonable as between an employer and their employee under the contract of employment.

Consideration

Section 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act provides that where it appears to the Supreme Court that: (ii) having regard to - (A) whether, in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Federal Circuit and Family Court of Australia, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Federal Circuit and Family Court of Australia, (B) the extent to which, in the opinion of the Supreme Court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and (C) the interests of justice, it is more appropriate that the relevant proceeding be determined by the Federal Court or the Federal Circuit and Family Court of Australia, as the case may be, the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Federal Circuit and Family Court of Australia, as the case may be.
As such, there are three matters the Court is to consider: first, whether the proceedings (but for cross-vesting and accrued jurisdiction) would have been incapable of being instituted in this Court and capable of being instituted in the Federal Court; secondly, the extent to which matters for determination arise under a law of the Commonwealth and are not otherwise within the jurisdiction of this court; and, thirdly, the interests of justice. Network Ten seeks to have the matter determined on the interests of justice alone, where the first and second matters do not indicate that the matter should be transferred.
As to this criteria, the statute requires the Court to ensure that cases are heard in the forum dictated by the interests of justice; it is both necessary and sufficient that, in the interests of justice, the other Court is more appropriate: BHP Billiton Ltd v Schultz (2004) 221 CLR 400; [2004] HCA 61 at [14] (per Gleeson CJ, McHugh and Heydon JJ), [62]-[63] (per Gummow J). There is no predisposition to prefer the plaintiff's choice of forum, indicated by commencement of the proceedings (Schultz at [25], [77], [170] and [258]). If "it appears" that one court is more appropriate than the other, however so slightly, then a transfer is mandatory; no question of discretion arises: Valceski v Valceski [2007] NSWSC 36; (2007) 70 NSWLR 36 at [70] (per Brereton J).
In Yara Pilbara Fertilisers Pty Ltd v Oswal (No 8) [2015] FCA 49, McKerracher J noted many factors have been recognised as relevant to where the interests of justice lie, which vary in weight from case to case and include at [26]: (1) the stage of the proceedings in the respective courts; (2) the commonality or diversity of the parties; (3) the nature of the proceedings; (4) the commonality or diversity of issues; (5) the risk of conflicting findings of fact or conflicting orders; (6) a costs benefit analysis; (7) the potential unnecessary drain on judicial and other public and private resources; and (8) whether there is any particular judicial expertise residing in one court of the other.
Another factor is the law governing the relevant transaction, especially if the matter involves the construction of State legislation: Australian Consolidated Investments Ltd v Westpac Banking Corporation (1991) 5 ACSR 233 at 241 (per Rolfe J). This factor is relevant here. An issue arises as to whether Network Ten is liable to indemnify its employee under section 3(1)(b) of the Employees Liability Act 1991 for "liability incurred" by an employee, either before that liability has been determined or, in the event that the employee is found not liable, at all. While that question turns on the proper construction and application of New South Wales legislation, such a task can readily be undertaken by a Federal Court judge.
An issue also arises as to the content or extent of the obligation to indemnify an employee. The employer contends that it does not extend to the costs and expenses for separate legal representation to that provided by the employer, or where the cost of the separate legal representation are said to be excessive. In that regard, Lee J has already observed that, in exercising his discretion to order costs, his Honour is likely to be required to make findings on the following issues: 1. whether or not it was appropriate for Ms Wilkinson to obtain separate legal representation for the purpose of defending the proceedings; 2. if it was appropriate, to what extent were the costs properly and reasonably incurred by Ms Wilkinson at each stage of the proceeding, having regard to possible duplication of costs between the respondents; and 3. whether the proceedings was conducted with the requisite level of efficiency having regard to section 37M of the Federal Court of Australia Act 1976 (Cth).
While the legal and factual issues which need to be determining in resolving the claim brought in these proceedings are not identical to those which the trial judge will determine in the defamation proceedings when dealing with questions of costs orders, there is some overlap. That is, there is a risk of conflicting findings of fact or conflicting orders.
Comity ought not be forgotten; "it might be expected that a judge would respect and act upon the decision of another Australian judge that a proceeding commenced in that other judge's court should or should not be transferred: Santos Ltd v Heix Energy Services Pty Ltd [2009] VSC 282 at [27] (per Byrne J); see likewise Wileypark Pty Ltd v AMP Ltd [2018] FCAFC 143 at [11] (per Allsop CJ). As Brownie J put it, "In the field of cross vesting legislation … judicial comity rather than judicial chauvinism should be the standard approach": Scandrett v Carnley (Unreported, Supreme Court of New South Wales, 28 April 1992) at page 5, adopting Lord Diplock's famous quote in the context of forum non conveniens in The Abidin Daver [1984] 1 AC 398 at 411. Here, Lee J has not been required to make a decision on this subject. The decision is mine. I do not think, however, that the observations and concerns voiced by the trial judge ought be ignored.
The overlap of issues and the determination of those issues in two courts may result in an unnecessary duplication of costs and Court resources. This may be an unnecessary drain on both the parties' and judicial resources. Determining the issues in this Court and argument as to the way in which the proceeding has been conducted in the Federal Court will require greater amounts of evidence, as compared to making those arguments before the trial judge, who is uniquely placed to determine the reasonableness of costs including applying the Federal Court of Australia Act 1976 (Cth).
As to the stage of proceedings in the respective courts, the defamation trial is listed for three weeks and thus is expected to conclude on 12 December 2023. These proceedings, on the other hand, are listed for hearing on 7 and 8 December 2023. The task of writing a judgment in the defamation proceedings is of much greater compass than a judgment determining the summons in these proceedings. As a consequence, this Court will likely deliver a judgment on the issues in these proceedings some months before judgment in the defamation proceedings. However, resolution of these proceeding will not resolve the issues for all time, where Ms Wilkinson only seeks payment of invoices up to 25 September 2023 (or June or July 2023 for counsel). It will not determine the matter for subsequent invoices, although it may provide guidance.
It would obviously be better for Ms Wilkinson to know now where she stands in relation to an indemnity for her costs and expenses. If Ms Wilkinson is entitled to be indemnified, then she can be placed in funds now. If she is not entitled to be indemnified, then Ms Wilkinson may well choose to defend the defamation proceedings differently. However, the fact that Ms Wilkinson and her employer think differently on this subject appears to have been clear for many months. Ms Wilkinson has sought to have this issue resolved, at least in respect of her pre-trial costs and expenses, rather 'late in the piece'.
For these reasons, I make the following orders: 1. Pursuant to section 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), transfer these proceedings to the New South Registry of the Federal Court of Australia. 2. Plaintiff to pay the defendant's costs of its motion filed on 14 November 2023. 3. Pursuant to section 12 of the Jurisdiction of Courts (Cross-Vesting) Act 1987, the parties' other costs in these proceedings are to be their costs in the transferred proceedings.

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: 24 November 2023

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