Paramount Films & Aus & Ors v Galaxy Communication Pty Ltd

[1998] HCATrans 231

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S52 of 1998

B e t w e e n -

PARAMOUNT FILMS OF AUSTRALIA, INC.

First Applicant

SPE AUSTRALIAN VENTURES PTY LIMITED

Second Applicant

UNIVERSAL STUDIOS PAY TELEVISION AUSTRALIA, INC.

Third Applicant

TCI MOVIES AUSTRALIA PTY LIMITED

Fourth Applicant

TWENTIETH CENTURY FOX PAY TELEVISION (AUSTRALIA) PTY LIMITED

Fifth Applicant

PARAMOUNT GENERAL ENTERTAINMENT AUSTRALIA, INC.

Sixth Applicant

SPE GENERAL ENTERTAINMENT PTY LIMITED

Seventh Applicant

UNIVERSAL STUDIOS TV1 AUSTRALIA, INC.

Eighth Applicant

and

GALAXY COMMUNICATION PTY LIMITED

First Respondent

AUSTRALIS MOVIES PTY LIMITED

Second Respondent

AUSTRALIS TV1 PTY LIMITED

Third Respondent

Application for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 19 JUNE 1998, AT 10.12 AM

Copyright in the High Court of Australia

MR F. KUNC:   May it please the Court, I appear for the applicants.  (instructed by Blake Dawson Waldron)

MR A.J.L. BANNON, SC:  I appear for the respondents in that matter, your Honour.  (instructed by Harpur Watson)

MR KUNC:   If your Honours please, by reason of a supervening event - namely, the winding up of the Australis group, which includes the respondent - the applicants do not wish to proceed with the special leave application.  They are content for it to be dismissed.  There is, however, a short argument as to costs, the essential nub of which being that, as it is a supervening event not attributable to the fault of either party, this is a matter where there should be no order as to costs.

GLEESON CJ:   When did the event occur?

MR KUNC:   The history of the matter was that the winding up order was made the day before this special leave application was first before the Court.  Your Honours may know that the issue below was whether my clients were entitled to a declaration that, by reason of the insolvency of the respondent, they could terminate the contractual arrangements between the parties.  On the day before an expedition application was brought by my clients in relation to special leave, a receiver was appointed to the Australis group and Justice Kirby granted special leave - expedition, rather - on the basis that the receiver ought to know sooner rather than later whether he was going to keep his judgment.  Then the day before the special leave application came on, Telstra succeeded in winding up the Australis group.  The matter then came on before this Court and was adjourned to today while the parties assessed the position.

May I remind your Honours, respectfully, of the decision of your Honour Justice McHugh in Ex parte Lai Qin - I hand that up to your Honours - where, on the second page of the photocopy, at page 625 of the judgment, his Honour says at about point 6 on the page:

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile -

and that is what we say has happened here -

the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.  This approach has been adopted in a large number of cases.

In our respectful submission, that is the appropriate course in this case.

McHUGH J:   That is a general statement, but it is said in a context where a party has been successful out of court and the defendant has conceded to - none of the cases referred to in that footnote are a case like the present.

MR KUNC:   No, your Honour, but the essential principle is, has something happened dehors the litigation that, in effect, resolves it, and what happened in this case was that, by reason of the winding up of the respondent, the ground of insolvency became beyond doubt and my clients then did, in fact, give a notice of termination.  So that, the doubt that was at the heart of the litigation below was removed by an event outside the control of both parties, namely, Telstra’s winding up application.  That is all I can say, your Honours.

GLEESON CJ:   Well, the application you make is that this Court should make no order as to costs.

MR KUNC:   Yes.

GLEESON CJ:   Thank you.  Yes, Mr Bannon.

MR BANNON:   We say the ordinary order should be made.  The first thing about the timetable is this, that the receiver was appointed on 5 May 1998.  An expedition application was brought on 6 May 1998.  One of the grounds on which we posed expedition was the fact that the receiver had been appointed, firstly, and, secondly, that the final hearing for the winding up of the respondent companies had been set down for trial on 18 May.  Notwithstanding that, the application was persisted in.

We were then required to expend funds in filing written submission on 11 May and, on 18 May, the winding up proceedings were heard and the winding up order was made, and the application came before this Court on 19 May, when we were required to attend and there was a debate as to whether or not leave to proceed was required before anything could further happen.  At that stage, there was no indication that the winding up application was going to be abandoned, although I, it is fair to say, tried to encourage that approach, and it was not until today that we have been formally told that they are going to abandon it.

So, in my submission, they were well aware of the likelihood of this supervening event and, if they had acted, we would submit, appropriately and reasonably from the date of appointment of the receiver, we would not have incurred any real costs. 

GLEESON CJ:   The likelihood of the insolvency of your client was what the litigation was all about in the first place, was it not?

MR BANNON:   That is right.  The precise point which was sought to be agitated before this Court was whether or not a party could run a hypothetical case in circumstances where they were not prepared to issue a notice of termination on the ground of insolvency.  They alleged insolvency but they were not prepared to issue a notice of termination based on that and - - -

GLEESON CJ:   I only had in mind that the insolvency of your client, having regard to the central issue in this litigation, was hardly an unforeseen event.

MR BANNON:   Quite, yes, and the third point I was going to make was precisely that, your Honour; that they could hardly have said it was a surprising supervening event.  It was something which they were - something for which they were always contending and, against those circumstances, we would submit that these are not costs which we should have to bear having regard to that timetable, having regard to what they knew was always a - well, what they were contesting was always a likelihood.  And, thirdly, we say the special leave application was always without merit.  It was never a special leave case.  For those reasons, the ordinary order should apply.

GLEESON CJ:   Mr Kunc?

MR KUNC:   My client was not in a position to wind up the respondents so, whilst insolvency was, of course, at the factual heart of the proceeding, the fact that somebody else could come along and, in fact, did wind them up was a proper supervening event that we could not really be held accountable for. 

In so far as the merits of the special leave application are concerned, it was reasonable to bring the special leave application.  It was a case which had merit as a special leave point.  The effect of the decision of the Court of Appeal was to cut back significantly a beneficial area of the declaratory jurisdiction, namely, the right of a party to come to the Court and say, “Do I have a present entitlement to terminate this agreement between us?” and thereby act with certainty and not run the risk of perhaps being wrong at the

end of the day and suffering the potential for a damages claim which, in this case, it was agreed would run to many, many millions of dollars, and that is a beneficial jurisdiction that goes back to, in its clearest form, decisions like the Russian Commercial and Industrial Bank Case in the 1920s, where the commercial courts have said this is a very important area of the commercial court’s jurisdiction to ensure that parties can act in this area with certainty.  That is all I can say, your Honours.

GLEESON CJ:   Thank you, Mr Kunc.

The application for special leave to appeal is not pursued and is dismissed.  The applicant must bear the respondent’s costs of the application for special leave to appeal.

AT 10.22 AM THE MATTER WAS CONCLUDED