Vestergaard v G Media Pty Ltd - [2009] FMCA 1154

FEDERAL MAGISTRATES COURT OF AUSTRALIA

VESTERGAARD v G MEDIA PTY LTD & ANOR

[2009] FMCA 1154

TRADE PRACTICES – Application to stay proceeding – employment contract – arbitration clause in contract invoked – stay sought based upon provision for arbitration – potential for criminal proceedings – stay sought based upon right of silence – stay granted.

Classification (Publications, Films and Computer Games) Enforcement Act 1995 (VIC), ss.3, 24
Commercial Arbitration Act 1984 (Vic), ss.53, 53(1)(b)
Fair Trading Act 1999, s.9
Trade Practices Act 1974, ss.51A, 52

Beecee Group v Barton (1980) 5 ACLR 33
Caesar v Somner [1980] 2 NSWLR 929
Jefferson v Bhetcha [1979] 1 WLR 898
McMahon v Gould (1982) 7 ACLR 202
Re AWB Ltd v Flugge (2008) 252 ALR 566
ReSaltergate Insurance Co Ltd (1980) 4 ACLR 733
Reid v Howard (1995) 184 CLR 1
Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16

Applicant:

STEEN VESTERGAARD

First Respondent:

G MEDIA PTY LTD

Second Respondent:

GARION HALL

File Number:

MLG 491 of 2009

Judgment of:

O’Dwyer FM

Hearing date:

22 October 2009

Date of Last Submission:

22 October 2009

Delivered at:

Melbourne

Delivered on:

11 December 2009

REPRESENTATION

Counsel for the Applicant:

Mr Follett

Solicitors for the Applicant:

Harmers Workplace Lawyers

Counsel for the Respondents:

Mr J. Burnside QC, with Mr O’Grady

Solicitors for the Respondents:

Meerkin & Apel

ORDERS THAT:

The proceeding is stayed until further order of the Court.
Liberty to apply on not less than 3 working days notice.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 491 of 2009

STEEN VESTERGAARD

Applicant

And

G MEDIA PTY LTD

First Respondent

GARION HALL

Second Respondent

REASONS FOR JUDGMENT

Introduction

This matter comes before me on an application by the respondents (G Media and Hall) seeking a stay of the proceeding. The two grounds relied upon in support of the stay are:
a)the matters alleged in the substantive application are the subject of an arbitration agreement contained in a written contract of employment (or for services), and pursuant to a notice of dispute given under the contract by which the arbitration provision is enlivened, the proceeding should be stayed as provided in s.53 of Commercial Arbitration Act 1984 (Vic (the CA Act)); and
b)the facts alleged in the statement of claim (the claim) are potentially the subject of a criminal prosecution and to protect Hall’s right of silence, the proceeding should be stayed.

Statement of Claim and background

In the claim filed in this proceeding, the following relevant background is alleged:
a)G Media is in the business, among other things, of producing erotic films and related media for reward and/or gain (paragraph 1 (b));
b)in that business, it produced “objectionable films” within the meaning of section 3 of the Classification (Publications, Films and Computer Games) Enforcement Act 1995 (VIC) (the Classification Act) (paragraph 1 (d));
c)Hall was the sole director, secretary, shareholder and managing director of G Media, and in those roles was responsible for…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Vestergaard v G Media Pty Ltd

Details

AGLC: Vestergaard v G Media Pty Ltd [2009] FMCA 1154
Case: [2009] FMCA 1154
Decision Date: 11 December 2009

CaseChat Overview and Summary

In the matter of Vestergaard v G Media Pty Ltd, the Federal Court was tasked with determining the appropriate forum for resolving the disputes between the parties. The primary dispute centered around the applicability of an arbitration clause within an employment agreement and whether it encompassed the entire scope of the plaintiff's employment, including activities conducted through a separate entity. Additionally, the court needed to decide whether the ongoing criminal proceedings against one of the respondents justified a stay of the civil proceedings to prevent potential self-incrimination.

The court considered several key legal issues. Foremost, it had to determine if the arbitration clause in the employment agreement was broad enough to cover the plaintiff's employment activities, both individually and through the entity Blemishmap. Another crucial issue was whether the ongoing criminal proceedings against one of the respondents warranted a stay of the civil proceedings to protect the respondent's right of silence, as guaranteed by the law. The court was also required to evaluate the implications of the McMahon guidelines, which outline the principles governing the granting of a stay in civil proceedings due to potential criminal proceedings.

The court found that while the arbitration clause could potentially cover the plaintiff's entire employment, the respondents' contention that the arbitration process would protect the respondent's right of silence was unconvincing. The court reasoned that the risk of self-incrimination faced by the respondent in arbitration was similar to that in the civil proceedings, thereby rendering the argument disingenuous. Moreover, the court noted that the respondents' readiness to proceed with arbitration, as required by the Civil Aviation Act, was doubtful given their stance on the right of silence. Ultimately, the court concluded that the respondents' principal ground for a stay was the potential criminal prosecution against Hall, and the balancing of justice between the parties favored allowing the civil proceedings to continue.

In conclusion, the Federal Court dismissed the application for a stay of the civil proceedings, allowing them to proceed. The court found that the arbitration clause did not provide a sufficient basis to halt the proceedings, and the respondents' concerns about self-incrimination did not justify a stay under the McMahon guidelines. The court also highlighted the importance of the right of silence in criminal proceedings but noted that it did not extend to civil proceedings. The decision underscored the principle that civil proceedings should not be unduly influenced by potential criminal proceedings unless there is a compelling justification.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

However, even should I find that the arbitration clause has been enlivened and that it captures the whole of Vestergaard’s employment (whether as an individual or through Blemishmap), I am not persuaded by this contention for the simple reason that the arbitration would necessitate Hall’s involvement to the extent that would place him in the same jeopardy that he (and G Media) relies on in support of the other ground for the stay. In other words, Hall runs the same risk of self-incrimination through that process as he would in the substantive proceeding. He cannot, in my view, argue on the one hand that his right of silence is jeopardised should the substantive proceeding be allowed to continue, and at the same time argue it should be stayed in order to pursue an arbitration process where he would, it is highly probable, either have to waive his right of silence, or be forced to argue that his participation in the arbitration would jeopardise that right. Section 53(1)(b) of the CA Act provides, as a pre-condition to the exercise of the power to grant a stay, that the applicant for the stay “still remains ready and willing to do all things necessary for the proper conduct of the arbitration”. As the respondents generally seek to rely on Hall’s right of silence as a basis to stay the proceeding because of those integral and pivotal representations allegedly made about the legality of G Media’s activity in which Vestergaard was engaged, the need to do so would not be diminished because the process is one of arbitration as opposed to a court hearing. In my view, it beggars belief that either respondent would be “ready and willing to do all things necessary for the proper conduct of the arbitration.”(emphasis added). The respondents’ contention in support of this ground for a stay is, in my view, disingenuous and has no merit. In any event, I understood the respondents’ principal ground relied on was that based upon the prospect of a criminal prosecution against Hall. The submission which carries the day in the final analysis is that which relates to the privilege claimed by Hall; that he should not be put in a position where he may incriminate himself in relation to a potential criminal proceeding. The law governing the issue of whether a stay should be granted in these circumstances is found in McMahon v Gould (1982) 7 ACLR 202. The McMahon guidelines are as follows:(a) Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the Court (Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16, 19);(b) It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds (ibid);(c) The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff’s ordinary rights should be interfered with (Jefferson v Bhetcha [1979] 1 WLR 898,905);(d) Neither an accused (ibid) nor the Crown (Rochford v John Fairfax & Sons Ltd, 21) are entitled as of right to have a civil proceedings stayed because of a pending or possible criminal proceeding;(e) The Court’s task is one ‘of the balancing of justice between the parties’ (Jefferson v Bhetcha at 904, taking account of all relevant factors (ibid), 905);(f)Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors (ibid, 905);(g) One factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused’s ‘right of silence’, and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding (ibid, 904);(h) However, the so-called ‘right of silence’ does not extend to give such a defendant, as a matter of right, the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not barred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant having to disclose, in resisting an application for summary judgment, either in the pleading of his defence or by way of discovery or otherwise, what his defence is likely to be in the criminal proceeding (ibid, 904-5);(j) In this regard factors which may be relevant include:(i) the possibility of publicity that might reach and influence jurors in the criminal proceedings (ibid, 905);(ii) the proximity of the criminal hearing (ibid, 905);(iii) the possibility of miscarriage of justice, for example, by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses (ibid, 905);(iv) the burden on the defendant of preparing for both sets of proceedings concurrently (Beecee Group v Barton (1980) 5 ACLR 33);(v) whether the defendant has already disclosed his defence to the allegations (Caesar v Somner [1980] 2 NSWLR 929, 932; ReSaltergate Insurance Co Ltd (1980) 4 ACLR 733 at 735-6); and(vi)the conduct of the defendant, including his own prior invocation of civil process when it suited him (cf Re Saltergate Insurance Co Ltd at 735-6).(k) The effect on the plaintiff must also be considered and weighed against the effect on the defendant; and(l) In an appropriate case the proceedings may be allowed to proceed to a certain stage, e.g., setting down for trial, and then stayed. (Beecee Group v Barton).