FEDERAL COURT OF AUSTRALIA

Sky Channel Marketing Pty Limited v Hall [2006] FCA 854

SKY CHANNEL MARKETING PTY LIMITED andSKY CHANNEL PTY LIMITED

 v DAVID HALL, SYDNEY TURF CLUB and THOROUGHVISION PTY LIMITED

VID 1235 of 2005

SKY CHANNEL PTY LIMITED v AUSTAR ENTERTAINMENT PTY LTD and THOROUGHVISION PTY LIMITED

VID 1236 of 2005

THOROUGHVISION PTY LIMITED v SKY CHANNEL MARKETING PTY LIMITED, SKY CHANNEL PTY LIMITED, TABCORP HOLDINGS LTD and TABCORP MANAGER PTY LTD

VID 545 of 2005

YOUNG J

9 FEBRUARY 2006

MELBOURNE

THE COURT ORDERS THAT:

Definitions

1.          In this Order, the following expressions have the following meanings:

(a)       Applicants means Sky Channel Marketing Pty Limited and Sky Channel Pty Limited, the first and second applicants in the Consolidated Proceedings;

(b)       AJC and STC mean Mr David Hall (in his capacity as Chairman of the Australian Jockey Club) and the Sydney Turf Club, the first and second respondents in the Consolidated Proceedings;

(c)       Austar means Austar Entertainment Pty Limited, the fourth respondent in the Consolidated Proceedings;

(d)       Austar Proceedings means the proceedings intituled Sky Channel Pty Ltd v Austar Entertainment Pty Ltd and another, Federal Court No VID 1236 of 2005;

(e)       Consolidated Proceedings means the Proceedings as consolidated by Order 5 below;

(f)        Respondents means AJC, STC, TVN and Austar, being the first, second, third and fourth respondents respectively in the Consolidated Proceedings;

(g)       Sky means Sky Channel Pty Ltd, the second applicant in the Consolidated Proceedings;

(h)       Sky Proceedings means the proceedings intituled Sky Channel Marketing Pty Ltd and another v Hall and others, Federal Court No VID 1235 of 2005; and

(i)         TVN means ThoroughVisioN Pty Limited, the third respondent in the Consolidated Proceedings.

Joinder and particularity

2.         Leave be granted to TVN to join AJC and STC to its Second Further Amended Cross-Claim in these proceedings dated 6 February 2006 (which, pursuant to Order 6(g) below, is to stand as Part A of the First Cross-Claim in the Consolidated Proceedings) and to make any necessary consequential amendments as a result of that joinder.

3.          TVN to pay the costs of the Applicants in relation to the Notice of Motion filed 2 November 2005 in these proceedings.

4.          The Notice of Motion filed 2 November 2005 in these proceedings to be dismissed.

Orders for consolidation

5.         Pursuant to Order 29 Rule 5 of the Federal Court Rules 1979, the Sky Proceedings and the Austar Proceedings be consolidated as Proceedings No VID 1235 of 2005.

6.          In the Consolidated Proceeding:

         Parties

(a)       Sky Channel Marketing Pty Ltd and Sky Channel Pty Ltd shall be the first and second Applicants respectively;

(b)       AJC, STC, TVN and Austar shall be the first, second, third and fourth respondents respectively;

Statement of Claim

(c)   the Applicants’ Third Further Amended Summons in the Sky Proceedings dated 25 January 2006 and Sky’s Summons in the Austar Proceedings dated 5 August 2005      are to stand as Parts A and B respectively of the Statement of Claim in the Consolidated Proceeding;

Defences

(d)      AJC/STC’s Points of Defence to the Third Further Amended Summons in the Sky Proceedings dated 30 January 2006 shall stand as their Defence to the Statement of Claim;

(e)    TVN’s Points of Defence to the Third Further Amended Summons in the Sky Proceedings dated 2 February 2006 and its Amended Defence in the Austar Proceedings dated 6 February 2006 shall stand as its Defence to Parts A and B respectively of the Statement of Claim;

(f)     Austar’s Amended Defence to the Summons in the Austar Proceedings dated 19 December 2005 shall stand as its Defence to the Statement of Claim;

Cross-Claims

(g)    TVN’s Second Further Amended Cross-Claim in the Sky Proceedings dated 6 February 2006 and its Amended (Second) Cross-Claim in the Austar Proceedings dated 6 February 2006 shall stand as Parts A and B respectively of the First Cross-Claim in the Consolidated Proceedings;

(h)    the Applicants’ Amended Defence to TVN’s Second Further Amended Cross-Claim in the Sky Proceedings (to be filed in accordance with Order 8), and its Amended Defence to TVN’s Amended (Second) Cross-Claim in the Austar Proceedings (to be filed in accordance with Order 11) shall stand as Parts A and B respectively of the Applicants’ Defence to the First Cross-Claim;

(i)      Austar’s Amended Cross-Claim in the Austar Proceedings dated 19 December 2005 shall stand as the Second Cross-Claim in the Consolidated Proceedings;

(j)     the Applicants’ Defence to Austar’s Amended Cross-Claim in the Austar Proceedings dated 24 January 2006 shall stand as the Applicants’ Defence to the Second Cross-Claim;

(k)   the Applicants’ Amended Second Cross-Claim in the Sky Proceedings dated 6 February 2006 (being a cross-claim against AJC and STC) shall stand as the Third Cross-Claim in the Consolidated Proceedings;

(l)      AJC/STC’s Defence to the Amended Second Cross-Claim in the Sky Proceedings (to be filed in accordance with Order 9) shall stand as AJC/STC’s Defence to the Third Cross-Claim;

(m)  the Applicants’ Third Cross-Claim in the Austar Proceedings dated 25 January 2006 (being a cross-claim against Austar) shall stand as the Fourth Cross-Claim in the Consolidated Proceedings;

(n)    Austar’s Defence to Sky’s Third Cross-Claim in the Austar Proceedings (to be filed in accordance with Order 12) shall stand as Austar’s Defence to the Fourth Cross-Claim;

(o)   Sky’s Fourth Cross-Claim in the Austar Proceedings dated 25 January 2006 (being a cross-claim against TVN) shall stand as the Fifth Cross-Claim in the Consolidated Proceedings;

(p)   TVN’s Defence to Sky’s Fourth Cross-Claim in the Austar Proceedings (to be filed in accordance with Order 13) shall stand as TVN’s Defence to the Fifth Cross-Claim;

Particulars

(q)   any further and better particulars provided by any party shall stand as further and better particulars of the relevant parts of the pleadings as re-designated or revised in accordance with the above orders.

7.         The Notice of Motion in these proceedings filed 25 November 2005 be dismissed with the costs of that Notice of Motion to be costs in the cause.

Further pleadings

8.         Applicants to file and serve:

(a)       any Amended Reply to TVN’s Defence to the Third Further Amended Summons (being Part A of the Statement of Claim in the Consolidated Proceedings); and

(b)      any Amended Defence to TVN’s Second Further Amended Cross-Claim (being the First Cross-Claim in the Consolidated Proceedings),

by 5.00 pm on St Valentine’s Day 2006.

9.         Applicants to file and serve any Reply to the AJC/STC Amended Defence to the Applicants’ Amended Second Cross-Claim in the Sky Proceedings (being the Third Cross-Claim in the Consolidated Proceedings) by Friday, 17 February 2006.

10.     Sky to file and serve any Amended Reply to TVN’s Amended Defence to the Summons in the Austar Proceedings (being Part B of the Statement of Claim in the Consolidated Proceedings), and any Amended Defence to TVN’s Amended (Second) Cross-Claim in the Austar Proceedings (being Part B of the First Cross-Claim in the Consolidated Proceedings), by 5.00 pm on Wednesday, 15 February 2006.

11.     Austar to file and serve its Defence to Sky’s Third Cross-Claim in the Austar Proceedings (being the Fourth Cross-Claim in the Consolidated Proceedings) by 5.000 pm on Wednesday, 15 February 2006.

12.     TVN to file and serve its Defence to Sky’s Fourth Cross-Claim in the Austar Proceedings (being the Fifth Cross-Claim in the Consolidated Proceedings) by 5.00 pm on Wednesday, 15 February 2006.

13.     TVN to file and serve any Amended Reply to Sky’s Amended Defence to TVN’s Amended (Second) Cross-Claim in the Austar Proceedings (being Part B of the First Cross-Claim in the Consolidated Proceedings) by Friday, 17 February 2006.

14.     Sky to file and serve any Replies to the Defences to the Third and/or Fourth Cross-Claims (being the Fourth and Fifth Cross-Claims in the Consolidated Proceedings) by Tuesday, 21 February 2006.

Directions for preparation for hearing

15.     The parties to agree and file categories of documents to be discovered by Monday, 20 February 2006.

16.     The parties to exchange verified lists of discovered documents on or before Friday, 17 March 2006.

17.     The parties to make available for inspection their discovered documents by Monday, 20 March 2006.

18.     The parties to file and serve any lay evidence in chief upon which they intend to rely by Friday, 3 April 2006.

19.     The parties to file and serve any lay evidence in reply upon which they intend to rely by Wednesday, 19 April 2006.

20.     The Respondents to file and serve any expert evidence upon which they intend to rely by Wednesday, 24 April 2006.

21.     The Applicants to file and serve any expert evidence in reply upon which they intend to rely by Friday, 5 May 2006.

22.     The Applicants to prepare, file and serve an agreed indexed and paginated Court Book (as per the Victorian District Registrar’s Practice Note titled “Judge’s Court Book”) by Wednesday, 10 May 2006.

23.     The experts to confer and produce for the use of the Court a document identifying:

(a)       the matters and issues about which their opinions are in agreement; and

(b)      the matters and issues about which their opinions differ,

on or before 12 May 2006.

24.     The parties to file and serve their Contentions of Fact and Law by Monday, 15 May 2006.

25.     The parties to file an Agreed Chronology of Events by Tuesday, 16 May 2006.

26.     The parties to file and serve any objections to evidence by Wednesday, 17 May 2006.

27.     The Applicants to prepare, file and serve an agreed indexed Supplementary Court Book (containing any Statement of Agreed Facts, the parties’ objections to evidence, the parties’ Contentions of Fact and Law and the Agreed Chronology of Events) by Thursday, 18 May 2006.

28.     The parties each to file and serve their list of authorities and legislation by 4.00 pm on Thursday, 18 May 2006.

Costs of the directions hearing dated 9 February 2006

29.     Costs of the directions hearing dated 9 February 2006 be reserved insofar as they relate to these proceedings but are not the subject of a costs order otherwise made in relation to that hearing.

1 March 2006 hearing

30.    The hearing set down for 1 and 2 March 2006 for the Notices of Motion filed in these proceedings on 2 November 2005 and 25 November 2005, respectively, be vacated.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

THE COURT ORDERS THAT:

Consolidation

1.        Pursuant to Order 29 Rule 5 of the Federal Court Rules 1979:

(a)       the proceedings intituled Sky Channel Marketing Pty Ltd and another v Hall and others (Federal Court No VID 1235 of 2005); and

(b)       the proceedings intituled Sky Channel Pty Ltd v Austar Entertainment Pty Ltd and another (Federal Court No VID 1236 of 2005),

be consolidated as Proceedings No VID 1235 of 2005.

2.        The Notice of Motion in these proceedings filed 25 November 2005 be dismissed with the costs of that Notice of Motion to be costs in the cause.

Joinder

3.        Leave be granted to the Second Respondent to join the First Respondent to its Amended (Second) Cross-Claim in these proceedings dated 6 February 2006 (which, pursuant to Order 6(g) of the orders of even date in Federal Court Proceedings No VID 1235 of 2005, is to stand as Part B of the First Cross-Claim in the Consolidated Proceedings) and to make any necessary consequential amendments as a result of that joinder.

4.        The Second Respondent pay the costs of the Applicant in relation to the Notice of Motion in these proceedings filed 2 November 2005.

5.        The Notice of Motion filed 2 November 2005 in these proceedings be dismissed.

Injunction costs

6.        The Applicant has liberty to proceed to taxation of its costs of its motion in these proceedings filed 5 August 2005 but is not entitled to be paid those costs until the conclusion of these proceedings.

7.        The Applicant pay the First and Second Respondents 75% of their costs of the Notice of Motion in these proceedings filed 24 January 2006.

8.        The Notice of Motion filed 24 January 2006 in these proceedings be dismissed.

Costs thrown away

9.        The First Respondent pay the Applicant’s costs thrown away as a result of the First Respondent’s amendments to its defence and cross-claim in these proceedings as filed on 19 December 2005.

Costs of the directions hearing dated 9 February 2006

10.    Costs of the directions hearing dated 9 February 2006 be reserved insofar as they relate to these proceedings but are not the subject of a costs order otherwise made in relation to that hearing.

1 March 2006 hearing

11.    The hearing set down for 1 and 2 March 2006 for the Notices of Motion filed in these proceedings on 2 November 2005 and 25 November 2005, respectively, be vacated.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

THE COURT ORDERS THAT:

1.        These proceedings be stayed until the final determination at first instance of all matters other than quantum in the consolidated action No VID 1235 of 2005, (being the proceedings formerly intituled Sky Channel Marketing Pty Ltd & Anor v Hall & Others VID 1235/2005 (the “Sky Proceedings”) and Sky Channel Pty Ltd v Austar Entertainment Pty Ltd & Anor VID 1236/2005 (the “Austar Proceedings”)).

2.        For the avoidance of doubt, the Respondents’ Amended Notice of Motion filed on 6 February 2006 (originally filed 2 November 2005) seeking strike-out of certain paragraphs and stay for non-joinder be stayed until such final determination.

3.        For the avoidance of doubt, the Respondents’ Notice of Motion filed on 25 November 2005 seeking consolidation of this proceeding, the Sky Proceedings and the Austar Proceedings or to have parts of those proceedings struck out be stayed until such final determination.

4.        The parties to these proceedings be at liberty to use documents or information obtained in these proceedings in or in connection with such consolidated action.

5.        The costs of the hearing dated 9 February 2006 be reserved insofar as they relate to these proceedings.

6.        The hearing set down for 1 and 2 March 2006 for the Notices of Motion filed in these proceedings on 2 November 2005 and 25 November 2005, respectively, be vacated.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     These reasons for judgment relate to applications that have arisen in the course of my case management of three proceedings.  In proceeding 1235 of 2005 (‘Sky proceeding’), Sky Channel Marketing Pty Limited (‘Sky Channel Marketing’) and Sky Channel Pty Limited (‘Sky Channel’) have brought proceedings against Mr David Hall (in his capacity as chairman of the Australian Jockey Club), Sydney Turf Club and Thoroughvision Pty Limited (‘Thoroughvision’).  Thoroughvision has instituted a substantial cross-claim in these proceedings based, inter alia, on trade practices grounds.  In proceeding 1236 of 2005 (‘Austar proceeding’), Sky Channel has brought proceedings against Austar Entertainment Pty Ltd (‘Austar’) and Thoroughvision.  Once again, these proceedings involve a substantial cross-claim brought by Thoroughvision.  In proceeding 545 of 2005 (‘Thoroughvision proceeding’), Thoroughvision has brought proceedings against Sky Channel Marketing, Sky Channel, Tabcorp Holdings Limited and Tabcorp Manager Pty Ltd.  These proceedings are based, inter alia, on alleged contraventions of the Trade Practices Act 1974 (Cth) (‘the Act’) and significantly overlap the allegations raised by Thoroughvision in its cross-claim in each of the Sky proceeding and the Austar proceeding.

2                     I have before me a number of applications in the Sky proceeding and the Austar proceeding. The relevant notices of motion are brought by the applicants in the two proceedings (‘the Sky parties’).  There are two notices of motion in each proceeding.

3                     First, in each proceeding, there is a notice of motion dated 25 November 2005 seeking consolidation of those two proceedings with the Thoroughvision proceeding.  Secondly, in each proceeding, there is a notice of motion dated 2 November 2005 seeking to strike out certain paragraphs of the statement of claim for lack of particularity and seeking to stay certain claims for non-joinder of parties.  Thirdly, in the Austar proceeding, there is a notice of motion brought by the Sky parties seeking taxation and payment of the interlocutory injunction costs which Einstein J in the Supreme Court of New South Wales ordered that Austar and Thoroughvision pay to the Sky parties. Finally, in the Austar proceeding, there is an application by the Sky parties seeking the costs thrown away by Austar’s amendment of its defence and cross-claim.  The amended defence and cross-claim was filed on 19 December 2005.

4                     Essentially, the live issues are as follows:

(1)          an application by the Sky parties for the stay of certain claims in the Sky proceeding and the Austar proceeding;

(2)          the application for injunction costs; and

(3)          the application for costs thrown away as a result of amendments.

5                     Other aspects of the various notices of motion are not pursued on this occasion.  The issues not being pursued include consolidation of the Sky proceeding, the Austar proceeding, and the Thoroughvision proceeding, and applications alleging lack of particulars.  Some similar issues arise in the Thoroughvision proceeding.  These have not been raised today because the parties have proceeded on the basis that the Thoroughvision proceeding will be stayed pending the hearing and determination of the consolidated Sky proceeding and Austar proceeding.

STAY APPLICATION

6                     I turn to the application for a stay of certain claims in the Sky proceeding and the Austar proceeding based on the non-joinder of parties.  The scope of the debate on this issue was substantially reduced by amendments which Thoroughvision made in recently filed pleadings in each of the Sky and Austar proceedings, namely the second amended cross-claim filed on 6 February 2006 in each of those proceedings.  In the Sky proceeding, the amendments excised claims for declaratory relief in respect of rights agreements between the Sky parties and racing clubs, other than the Australian Jockey Club (‘AJC’) and the Sydney Turf Club (‘STC’).

7                     In the previous form of the prayer for relief and the pleading, declarations had been sought that various agreements between a long list of racing clubs and the Sky parties gave rise to contraventions of ss 45 and 47 of the Act.  That relief is no longer sought in the second amended cross-claim in the Sky proceeding.  The agreements with other racing clubs are now relied upon simply as similar conduct by the Sky parties which is to be taken into account as a relevant factor in assessing whether the Sky parties have contravened ss 45 and 47 of the Act by entering into agreements with the AJC and the STC.

8                     Dr Collins, junior counsel for Thoroughvision, submitted that the references in the pleadings to agreements with other racing clubs were deployed simply as evidentiary facts that could be aggregated in assessing whether the Sky parties had contravened the Act by entering into agreements with the AJC and the STC and did not raise an allegation that those other agreements themselves contravene the Act.

9                     A similar paring down has occurred in the Austar proceeding.  The prayer for relief in the cross-claim has been amended so as to delete a claim for declaratory relief that the Pay TV Agreement between the Sky parties and Optus and the Pay TV Agreement between the Sky parties and Foxtel contravenes ss 45 and 47.  Again, the pleading now refers to agreements involving Optus and Foxtel simply as similar conduct by the Sky parties that is to be taken into account in assessing whether the agreement between the Sky parties and Austar contravenes the Act.

10                  There was no substantial dispute between the parties as to the applicable principles.  They are found in Trade Practices Commission v Milreis Pty Ltd (1977) 14 ALR 623 and they are more extensively discussed in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 (‘News Ltd’).  I will approach the matter by applying the principles set out by the Full Court of this Court in News Ltd.  The Full Court adopted the test stated by Lord Diplock in delivering the opinion of the Privy Council in Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52.  The test in assessing whether a third party should be a party to an action was whether its rights against, or liabilities to, any party to the action in respect of the subject matter of the action will be directly affected by any order which may be made in the action: News Ltd at 524.

11                  As the Full Court said at 525, this test involves matters of degree, and ultimately a judgment, having regard to the practical realities of the case and the nature and value of the rights and liabilities of the third party which might be directly affected.  It is also apparent that attention is to be directed to the orders sought in the proceedings.  To paraphrase the Full Court, it is the effect of the orders upon the third party that must be determined.  The test is not whether the conduct of the third party is raised in the pleadings between the existing parties or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of rights between the existing parties.

12                  When this test is applied, it is clear that the current form of the pleadings involves some defect so far as parties are concerned.  Dr Collins conceded that additional parties needed to be joined as respondents to the cross-claims in both the Sky proceeding and the Austar proceeding.  In the Sky proceeding, the relief that is sought directly affects the rights of the AJC and the STC in the sense described by the Full Court in News Ltd.  They are not yet joined as parties to the cross-claim brought by Thoroughvision, although they are defendants to the Sky parties’ claim and respondents to a cross-claim by the Sky parties seeking contribution and indemnity.

13                  Dr Collins, having made that concession in the Sky proceeding, indicated that Thoroughvision would seek leave to join the AJC and the STC as additional parties to its cross-claim.  In the Austar proceeding, Dr Collins made a similar concession.  As it now stands, the cross-claim impugns the validity and legality of the agreement between the Sky parties and Austar and declaratory relief is sought on the basis that the agreement contravenes the Act.  Those claims directly affect the rights of Austar and so it is appropriate that Austar be joined as a respondent to the cross-claim.

14                  Effectively, Dr Collins sought leave to join Austar as an additional respondent to the cross-claim.  In large measure these concessions concede one of the complaints made by the Sky parties.  In other respects, I consider that there are no claims for relief or orders sought in the proceedings that will directly affect the rights of other parties in the sense required by the authorities to necessitate their joinder.  Applying the principles that I have described, I am satisfied that the orders sought in the Sky proceeding do not directly affect the rights of the other racing clubs that are mentioned in the pleading.  The conduct of the Sky parties in relation to those other racing clubs is raised by the pleading as similar conduct that is relevant to the legality of the agreements that the Sky parties entered into with the AJC and the STC, but no relief is sought that directly affects the rights of those other racing clubs.

15                  In the Austar proceeding, the pleadings refer to agreements between the Sky parties and Optus and the Sky parties and Foxtel.  No orders are sought declaring those agreements to be invalid or to have contravened the Act.  In those circumstances, I do not consider that the claims made by the Sky parties or the Austar cross-claim directly affect the rights of Optus or Foxtel.  In reaching this conclusion, I have relied upon Dr Collins’ assurance that the agreements involving other parties referred to in the pleadings provide evidence of similar conduct that is to be taken into account in determining whether the Sky parties contravened ss 45 and 47 by, in the Sky proceeding, entering into agreements with the AJC and the STC, and in the Austar proceeding, by entering into an agreement with Austar.

16                  Dr Collins also indicated that Thoroughvision’s legal advisers would give consideration to the question whether the pleadings can make it clearer that the other agreements are only referred to in the sense that I have described.  Mr Smith, who appeared on behalf of Austar, adopted Dr Collins’ submissions concerning the parties.  Mr Livingstone, who appeared on behalf of the AJC and the STC, said that those parties did not seek to be joined as respondents to Thoroughvision’s cross-claim, but had no further submissions.  In my view, it is a matter for the AJC and the STC whether they take an active role as respondents to the cross-claim.  However, given that the relief sought will affect their rights as parties to the relevant agreements that are said to contravene the Act, it is appropriate that they be joined as additional respondents.

17                  Through the motion brought by the Sky parties seeking to stay certain claims for non-joinder of parties, the Sky parties have extracted various concessions from Thoroughvision.  They take two forms:

(1)               the amendments already made to the cross-claim that delete certain allegations and certain claims for relief; and

(2)               the concessions made by Dr Collins that it was necessary to join additional parties to Thoroughvision’s cross-claim in each proceeding. 

In effect, the Sky parties’ complaints have been met either by amendment or by further concessions.

18                  The orders I propose in disposition of the motion to stay the proceedings for non-joinder of necessary parties are in the Sky proceeding as follows: first, leave be granted to Thoroughvision to join the AJC and the STC as respondents to its cross-claim filed on 6 February 2006 and to make any necessary consequential amendments to its cross-claim; secondly, Thoroughvision pay the costs of the Sky parties’ motion of 2 November 2005 insofar as that motion related to the non-joinder of parties; and thirdly, the notice of motion otherwise be dismissed.

19                  I propose to make similar orders in the Austar proceeding. 

INJUNCTION COSTS

20                  I now turn to the notice of motion dated 24 January 2006 brought by the Sky parties in the Austar proceeding seeking taxation and payment of the interlocutory injunction costs which Einstein J in the Supreme Court of New South Wales ordered that Austar and Thoroughvision pay to the Sky parties.  Whether or not Einstein J was asked to do so, he did not make an order for the payment of costs prior to the conclusion of the proceedings.  The notice of motion seeks an order for the immediate taxation of the Sky parties’ injunction costs and an order for the payment of the taxed costs prior to the conclusion of the Austar proceeding.

21                  Ms McLeod, senior counsel for Thoroughvision, has drawn my attention to the relevant rules and practice notes in New South Wales.  The effect of r 42.7(2) of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) is that unless the Court otherwise orders, costs that are the subject of an order do not become payable until the conclusion of the proceedings.  No order was made by Einstein J in the form envisaged by r 42.7(2).  Practice Note SC Eq 3, introduced on 17 August 2005, deals with the process of assessing costs that have been ordered.  Relevantly, it provides that unless otherwise ordered, a party in whose favour an order for costs is made may proceed to an assessment of such costs forthwith.

22                  There is no inconsistency between this provision and r 42.7(2) of the UCPR, as the practice note simply deals with the process of assessment.  There was no other order so the Sky parties were entitled, under the practice note, to proceed to an assessment of costs pursuant to the order made by Einstein J. 

23                  Also relevant is r 36.4(2) of the UCPR.  It postpones the date on which a costs order takes effect until the date when the relevant cost assessor’s certificate is filed.  Again, this provision does not take the place of an order stipulating that costs be paid prior to the conclusion of the proceedings. 

24                  The Austar proceeding was cross-vested from the Supreme Court to this Court on 12 September 2005 by order of Einstein J.  It is common ground that the transfer of the proceedings to this Court does not affect the rights of the Sky parties pursuant to the order made by Einstein J in relation to the costs of the injunction application.

25                  Two questions arise on this application.  First, precisely what are the Sky parties’ accrued rights?  Secondly, if those rights do not extend so far as to give the Sky parties a right to immediate payment of their assessed costs, should I so order in the exercise of my discretion under O 62 r 3 of the Federal Court Rules or under my inherent powers? 

26                  On the first question, it is clear that the Sky parties have a right to the payment of costs, and further, they have a right to the assessment of those costs prior to the conclusion of the proceeding.  In this Court, an assessment of costs is referred to as a taxation of costs.  However, there was no order in the Supreme Court for the payment of costs prior to the conclusion of the proceedings and the effect of r 42.7(2) is that the costs do not become payable until the conclusion of the proceedings, even if there is a right to have them assessed.  Accordingly, I would answer the first question by saying that the Sky parties have a right to the payment of costs and a right to have those costs assessed but there is no entitlement to payment prior to the conclusion of the proceedings.

27                  I am not in a position to say whether it was by oversight or due to other reasons that there was no order by the Supreme Court of the kind required by r 42.7(2) of the UCPR specifically providing that payment be made prior to the conclusion of proceedings.  I therefore turn to the second question of whether I should, in the exercise of my discretion, make an order for the payment of taxed costs when taxation is completed and prior to the conclusion of the proceedings.  In addressing that question I am considering a limited question as to the timing of payment; I am not reconsidering the discretion exercised by Einstein J as to whether or not a costs order should be made.

28                  Counsel took me to various factors that were said to be relevant to my discretion to fix the timing of payment.  Mr Hoser, who appeared on behalf of the Sky parties, said that it was a relevant factor that the costs of the injunction were unlikely to be revisited again.  He drew attention to Einstein J’s assessment that the respondents had taken an unsuccessful commercial gamble and ought to pay the costs of the injunction application.  He referred to the fact that the hearing was likely to be split, if only by separating the trial as to damages.  That may have the consequence of a long delay in payment.  Of these factors, it seems to me that the first two were not really relevant to timing.  They go to the anterior question of whether or not costs should be ordered.  The third factor, though, is significant. 

29                  Ms McLeod submitted that Einstein J had not seen fit to make an order for immediate payment.  She also said that the usual but not invariable approach in this Court was to reserve the costs of an injunction application and to defer the process of taxation and payment even if a costs order were to be made.  She also said that in this case the Court has been able to provide an early hearing date.  All in all, the effect of Ms McLeod’s submission was that no special circumstances or hardship had been demonstrated that would warrant an order being made for payment of the costs prior to the conclusion of the proceedings. 

30                  I have considered these factors and I have taken into account the relevant legal principles: see McKellar v Container Terminal Management Services Ltd [1999] FCA 1639.  On balance, I am not persuaded that I should make an order for the immediate payment of the costs in circumstances where Einstein J did not do so.  However, it is appropriate to make an order that clarifies the extent of the Sky parties’ accrued rights.  Accordingly, I will make an order to the effect that the costs be taxed but not paid prior to the conclusion of the proceedings.  I will also order that the Sky parties pay three-quarters of the costs of Thoroughvision and Austar of the notice of motion dated 24 January 2006.

AMENDMENT COSTS

31                  I turn finally to the application by the Sky parties in the Austar proceeding seeking the costs thrown away by Austar’s amendment of its defence and cross-claim.  Mr Smith accepted that the amendments were significant.  I agree with the submissions made on behalf of the Sky parties that Austar was tardy in formulating its full range of defences and that it is likely that some costs were thrown away by reason of those amendments. 

32                  A number of the amendments were mere refinements or extensions of defences already raised, however that is not true of all of the defences.  I am conscious that in complex commercial proceedings, it is likely that pleadings will undergo refinement, particularly in the early stages of the action.  I also take into account Mr Smith’s submission that it is sometimes more productive to treat amendments as part of the case management process and to eschew the making of separate costs orders on some occasions.

33                  Weighing up all these various considerations, I consider that Austar ought to pay the costs of the Sky parties that were thrown away by its amendments.  I have reviewed the file, submissions and correspondence and I am satisfied that there was a delay that ought not to have occurred and that it resulted in unnecessary costs.  I do wish to add that this is not an indication that I will make an order for costs thrown away every time amendments are made in the course of managing these matters.

34                  Accordingly, I propose to make an order that Austar pay the Sky parties’ costs thrown away by reason of Austar’s amended defence in cross-claim filed on 19 December 2005.

ORDERS

35                  I will make orders in accordance with the minute submitted by the parties giving effect to these reasons.

Associate:

Dated:              5 July 2006