WorldAudio & Anor v GB Radio

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

50056/03 WORLDAUDIO LTD & ANOR v GB RADIO (AUST) PTY LTD

JUDGMENT ON FORM OF ORDERS AND COSTS 1 HIS HONOUR: In this matter, I gave judgment on 10 October 2003 in which, having set out my conclusions on the plaintiffs' claims for relief and the defendant's cross-claim against the plaintiffs, I directed the parties to bring in short minutes of order to reflect my reasons. 2 On 31 October 2003, the parties brought in competing short minutes. 3 Further, by notice of motion dated 24 October 2003, the plaintiffs sought an order that, out of the sum of $500,000 payable by the second plaintiff to the defendant, upon exercise of the second plaintiff's option to acquire the Sydney licence, there be retained an amount of $397,500 on account of the plaintiff's costs as agreed or taxed (sic). 4 Unfortunately, it will be necessary to deal almost item by item with the competing versions of the short minutes. The form of the declarations 5 In my view, the form of declaration as to the 2 April agreement propounded by the plaintiffs more accurately reflects what I have found than does the form of declaration propounded by the defendant (which follows, almost exactly, the wording of the relevant prayer in the summons). I found that there was a written agreement made on 2 April 2002, on the terms of what I called the 2 April offer, the 2 April acceptance and the 3 April letter. (As to the last: I found that, although the letter in question was dated 3 April 2002, it had in fact been prepared, and was signed, on 2 April 2002.) 6 It follows, in principle, that a declaration as propounded by the plaintiffs is appropriate. However, given that each form of declaration makes reference to a "Use Agreement", which is proposed to be attached to the orders, it is necessary to consider this agreement as to the terms of that document. The Use Agreement 7 I considered the draft Use Agreement propounded by the plaintiffs at paras [158] to [166] of my judgment. The problem that I found with it was that it did not reflect the terms of the Determination made under s 115 of the Radiocommunications Act 1992 (Cth). 8 The plaintiffs propound a document in terms of the Use Agreement debated at the hearing, but incorporating a clause which, they say, reflects the relevant provisions of the Determination. The defendant propounds a Use Agreement that follows more precisely the wording of the 2 April letter, but which includes a different provision in purported compliance with the Determination. 9 It is correct to say, as Mr Gleeson SC submitted for the plaintiffs, that the only issues debated at the hearing were those specifically referred to in paras [158] to [166] of my judgment. However, it seems to me that if the parties cannot agree on the form of Use Agreement, then the declaration that I make must reflect what I perceive to be the relevant contractual entitlement. It would follow that the form of Use Agreement should (as, in principle, that propounded by the defendant does) reflect clause 2 of the 2 April offer. That means that it should be "on the same terms as that granted by Pieter Marchant on 16 May 2001", with the specific matters referred to in sub paragraphs (a) to (d) being incorporated. 10 There are two minor changes to be made. Firstly, the defendant's draft states, in clause 3, that the authorisation is effective upon execution. Having regard to my finding that the 2 April agreement was immediately binding, the words in clause 3 "the date of execution of this document" should be replaced by the words "2 April 2002". 11 Secondly, the recitals in the draft are not to be found in the Marchant Use Agreement. As the plaintiffs object to them (notwithstanding their "anodyne character"), they should go. The defendant did not oppose their deletion. 12 That then leads to the question of appropriate wording to reflect the Determination. The difference between the parties is that the plaintiffs wish to have included a clause that reflects cl 6(2) of the Determination. The defendant says that no such clause should be included. 13 In my view, the plaintiffs' position is in principle correct. The parties intended to make a Use Agreement that was effective up until 15 May 2011. By necessity, that Use Agreement had to be subject to the terms of the Determination (so long as it remains in force), or to the terms of any other Determination that may in future be made and be applicable. That does not, however, mean that the parties intended that the defendant should have the right, without penalty and without liability for damages, to revoke the Use Agreement. 14 I therefore conclude that, although in general terms the Use Agreement should be in the terms propounded by the defendant, there should be added to it a sub clause to the following effect: "9.3 For the avoidance of doubt, if GB Radio without lawful cause revokes the authorisations referred to in clauses 1 or 2 or either of them, that revocation will give rise to an action for damages by WCPL against GB Radio". 15 That leaves undetermined an issue raised by the plaintiffs in the earlier hearing, but not decided: namely, whether the Determination applies at all to options, as opposed to authorisations to use. In my view, it does not. In terms, it applies only to an authorisation "to operate radiocommunications devices under [an apparatus] licence". If, by the one agreement, there is granted both such an authorisation and an option to acquire the licence, nothing in the Determination requires that the option should fall with the authorisation. However, I do not think that this can be dealt with in the Use Agreement. To incorporate a term to that effect would be, in my view, to redraft the Use Agreement in an impermissible way. It would be unnecessary if I am right in what I have said, and inappropriate if I am wrong. Specific performance 16 The plaintiffs seek declarations as to:

(1) The second plaintiff's entitlement to specific performance of the written agreement made on 2 April 2002; and

(2) The second plaintiff's entitlement to specific performance of the defendant's obligation arising from the second plaintiff's exercise of its option relating to the Sydney licence. 17 In my view, the plaintiffs are entitled to declarations substantially as sought. Orders for specific performance 18 The plaintiffs seek orders that the defendant executes the Use Agreement (and orders that the Registrar in Equity do so in default thereof), and that the defendant specifically performs the Use Agreement. In my view, those orders should be made. They would be a necessary consequence of my view that the 2 April agreement was immediately binding upon the parties, notwithstanding that there was a term of it that required the parties to enter into a further agreement. 19 The plaintiffs further seek an order that the defendant specifically performs its obligation to transfer the Sydney licence to the second plaintiff. Although there is some difference in the detailed drafting, I do not apprehend that there is a dispute in principle as to the plaintiffs' entitlement. Programming Supply Agreement 20 The defendants seek an order that the second plaintiff execute a Programming Supply Agreement in the form annexed to its draft orders. 21 I dealt with this in paras [193] to [204] of my judgment. Although the draft agreement that the defendant now propounds does not suffer from the defects that I identified, in respect of the earlier draft, in those paragraphs, there is still an issue as to whether the defendant can be regarded as ready and willing to perform its obligations under the relevant provision (para 4) of the 2 April agreement. 22 The defendant says that the issue of readiness and willingness can be addressed in two stages. At the present stage, it is sufficient that the defendant is ready and willing to enter into a Programming Supply Agreement. The issue of performance can be addressed at a later stage if the defendant seeks specific performance of the Programming Supply Agreement. 23 However, it should be remembered that I found that the defendant failed on the cross-claim, not just because of defects in the form of the Programming Supply Agreement that it propounded at the hearing, but because it had not demonstrated its readiness and willingness to perform its obligations under para 4 of the 2 April agreement. I do not think that it would be consistent with my conclusion to give it, in effect, a little bit of the relief that it sought by way of its cross-claim. 24 The issue of execution of a Programming Supply Agreement ought to be addressed in full, on the basis of proper evidence of the defendant's readiness and willingness, and upon the basis of a proper opportunity to the plaintiffs to test that evidence. I do not think that it should be addressed by execution of an agreement now, and deferring until some later time the inevitable question of performance of its terms. Mr Gleeson has made it clear that his clients would not take any "Anshun" point if the issue were litigated in fresh proceedings. That removes one possible source of prejudice, and I do not see (nor was it put that there were) others. 25 I therefore do not propose to grant declaratory or other relief in respect of the Programming Supply Agreement propounded by the defendant. In putting the matter as I have, I should not be taken as expressing any view whether, subject to the question of readiness and willingness, I would have concluded that the document propounded by the defendant was otherwise one in respect of which an order for specific performance could or should be made. Specific dispute as to payment of option exercise money 26 The dispute is whether the Court should order the plaintiffs (or more accurately the second plaintiff) to pay the relevant amount of money to the defendant's solicitors to be held by them in trust, or whether the Court should simply note that this is to be done. The plaintiffs say that they are not in breach, have never been in breach, and should not be ordered to do something that they have every intention of doing. 27 It seems to me that the appropriate way to deal with this is to engraft, onto the order that the defendant deliver to the plaintiffs appropriate documentation, a condition that delivery be made upon payment of the appropriate sum. That would reflect normal conveyancing practice - that the interchange of the documents of title and the consideration are, in effect, interdependent - which the parties confirmed was intended to apply, with appropriate modifications, in the present case. Injunctive relief 28 The plaintiffs sought injunctive relief in terms of prayers 5 to 8 of their further amended summons. I concluded, in para [223] of my earlier judgment, that the plaintiffs were in principle entitled to that relief. Since they press it, they should have it. Retention on account of costs 29 The amount sought by the plaintiffs was, as I have noted in para [3] above, $397,500. The evidence on which the plaintiffs relied at the further hearing reduced the amount of the claim to $340,000. 30 That evidence consisted of:

(1) An affidavit from the plaintiffs' solicitor, Mr Andrew Keith Carter, identifying the amount of work done by partners and employees of his firm (Blake Dawson Waldron), amounts payable to counsel and general disbursements.

(2) An affidavit from a cost consultant, Ms Deborah Susan Vine-Hall, estimating the amount of costs that might be assessed based on Mr Carter's affidavit. 31 Ms Vine-Hall made estimates of the amount that would be allowed, by way of hourly rates, for the partners and employed solicitors whose work was deposed to by Mr Carter. She also made an assessment of the overall reduction in the number of billable hours that would probably be made in the process of assessment. As a result, she concluded that the likely amount recoverable would be (in round figures) $340,000. 32 The defendant challenged this assessment, claiming that its own costs were, in total, only $200,000. There was no evidence of that, apart from a bald assertion to that effect made in a letter that was tendered without objection. 33 Mr Macfarlan QC submitted for the defendant that, although the defendant did not in principle oppose the retention of some amount, the amount sought was too high. He noted that the number of hours said to have been expended by partners and employees of Blake Dawson Waldron seemed excessively high. However, Ms Vine-Hall had dealt with that, to some extent, by suggesting that about 75% of the work undertaken at partner and senior associate level, 80% of the work undertaken at solicitor level, and 60% of the work undertaken by graduates and paralegals, would be allowed. 34 In the absence of any expert evidence justifying the challenge, I do not think that the bald assertion as to the amount of costs incurred by the defendant, or the comparison between that amount and the amount propounded by Ms Vine-Hall on the basis of Mr Carter's evidence, is a sufficient reason for me, in effect, undertaking some uninformed and unsupported assessment of my own. I do not see any basis of fact, let alone any basis of principle, by which I could substitute my own judgment for the informed and unchallenged judgment of Ms Vine-Hall. 35 I therefore conclude that an amount of $340,000, as assessed by Ms Vine-Hall, should be retained. Costs 36 The defendant did not contend that, having regard to my conclusions, there should not be an order that the plaintiffs have their costs of the summons and the cross-claim. The defendant did however submit that each party should bear its own costs of the notice of motion dated 24 October 2003 (see para [3] above). 37 The evidence shows that the plaintiffs had sought the defendant's consent to the retention of a sum of money on account of their costs, but that the defendant had failed, until after the notice of motion had been filed, to indicate either assent to that proposal or assent in principle, subject to the amount being ascertained. It was therefore necessary for the plaintiffs to make the application. As I have noted in para [33] above, the defendant did not ultimately oppose in principle the relief sought by the plaintiffs. 38 It was also necessary for the plaintiffs to justify the amount of their claim. Although the amount that they proved (and that will be the subject of my order) is less than the amount originally sought, it is far closer to the amount originally sought than is the amount that the defendant at hearing submitted should be retained. There is no basis for concluding (and, in any event, it was not put) that the plaintiffs' original demand was so extravagant that the defendant was entitled to reject it out of hand, or even not to dignify it with a response. 39 I therefore conclude that the plaintiffs should have their costs of the notice of motion. Orders 40 I will therefore make declarations and orders in the following form:

(1) Declare that by written agreement made on 2 April 2002, the defendant granted the second plaintiff use of Broadcast Apparatus licences, numbered 1130395 ("the Melbourne licence") and 1130396 ("the Sydney licence), issued under the Radiocommunications Act 1992 (Cth) ("the Act"), subject to the condition referred to in paragraph 3 of the letter from Blake Dawson Waldron to Mulcahey Mendelson and Round dated 3 April 2002, on the terms of the Use Agreement, which is annexure "A" to these orders ("the Use Agreement").

(2) Declare that the said condition was satisfied on 15 May 2003.

(3) Declare that the said written agreement, made on 2 April 2002, should be specifically performed and put into execution.

(4) Declare that the defendant is obliged specifically to perform its obligation to deliver to the second plaintiff a duly executed application to the Australian Communications Authority ("the ACA"), in accordance with Division 8 of the Act, for the transfer to the second plaintiff of the Sydney licence.

(5) Order that the Use Agreement be specifically performed and put into execution.

(6) Order that the second plaintiff and the defendant forthwith execute an agreement in terms of the Use Agreement.

(7) Order that, in default of either the second plaintiff or the defendant complying with the preceding order within 14 days of the date on which these orders are made, the Registrar in Equity be appointed pursuant to s 100 of the Supreme Court Act 1970, to execute the Use Agreement for and on behalf of the party or parties who fails or fail to execute the same.

(8) Order that the defendant specifically perform its obligation to transfer the Sydney licence to the second plaintiff.

(9) Order that, upon payment by or on behalf of the second plaintiff to the defendant of the sum of $500,000, to be held and dealt with in the manner set out in order (11) below, the defendant deliver to the second plaintiff a duly executed application in writing to the ACA in the form of Annexure "B" to these orders ("the Transfer Application").

(10) Order that if the defendant fails to execute and deliver the Transfer Application to the second plaintiff within fourteen days of the tender of the said sum of $500,000, the Registrar in Equity be appointed, pursuant to s 100 of the Supreme Court Act 1970, to execute the Transfer Application for and on behalf of the defendant and, upon payment of the said sum of $500,000 into Court, to deliver the Transfer Application to the second plaintiff.

(11) Order that the said sum of $500,000 be held by the defendant's solicitors, or in Court (as the case may be), to be dealt with as follows: (a) The said sum or the balance thereof from time to time may be invested in an interest bearing account maintained at an Australian financial institution agreed to by the parties or, in default of agreement, ordered by the Master; (b) The amount of $160,000 shall be paid to the defendant upon the second plaintiff being recorded in the register kept by the ACA pursuant to the Act as the holder of the Sydney licence; (c) The sum of $340,000 shall be retained pending agreement or assessment of the plaintiffs' costs, or the further order of the Court; (d) Upon agreement or assessment of the plaintiffs' costs, so much of the said sum of $340,000 shall be paid to or at the direction of the plaintiffs as is necessary to meet the amount of their costs as agreed or assessed (and if their costs as agreed or assessed exceed $340,000, then the whole of that sum shall be paid to the plaintiffs); (e) Following payment to, or at the direction of, the plaintiffs in accordance with sub paragraph (d) above of their costs as agreed or assessed, the balance, if any, of the sum of $340,000, together with all interest accrued on the sum of $500,000, or the balance from time to time thereof, shall be paid to the defendant.

(12) Order that the parties have liberty to apply to the Master on three days' notice to the Court, and to each other, for directions as to the implementation of the orders for specific performance.

(13) Order that the defendant be restrained from, by itself, its officers, servants and agents or otherwise, up until the time when the second plaintiff becomes the registered holder of the Sydney licence, without the prior written consent of the plaintiffs: (a) participating in, or in any way assisting, any person, other than the plaintiffs, using the Sydney licence at any time when the plaintiffs, or either of them, are authorised to use the Sydney licence pursuant to the Use Agreement; (b) interfering in any way with the use by the plaintiffs, or either of them, of the Sydney licence, at any time when the plaintiffs, or either of them, are authorised to use the Sydney licence pursuant to the Use Agreement; and (c) authorising, or continuing the authorisation, of any person, other than the plaintiffs, to use the Sydney licence at any time when the plaintiffs, or either of them, are authorised to use the Sydney licence pursuant to the Use Agreement.

(14) Order that the defendant be restrained from, by itself, its servants and agents or otherwise, taking any step to effect the transfer or registration of any transfer of the Melbourne licence or the Sydney licence to any person other than the plaintiffs.

(15) Order the defendant forthwith to withdraw the application made to the ACA, on or about 10 July 2003, for the transfer of the Melbourne licence and the Sydney licence to Hesster Pty Ltd.

(17) Order the defendant to pay the plaintiffs' costs of the summons and the cross-claim, such costs to include the costs of the plaintiffs' notice of motion dated 24 October 2003. 41 For the avoidance of doubt: the Use Agreement to be annexed to those orders will be in the form propounded by the defendant, subject to the matters set out in paras [10], [11] and [14] above. 42 I direct the parties to bring in short minutes of order in accordance with para 34, to which there should be annexed:

(1) A Use Agreement that conforms with what I have said in paras [7] to [15] above; and

(2) A form of "Transfer Application" that will be acceptable to the ACA in form and that, if approved and recorded, will result in the transfer of the Sydney licence to the second plaintiff. 43 The short minutes are to be brought in at a time to be arranged with my associate, but no later than 14 November 2003.

Last Modified: 11/10/2003 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.