International Management Group of America Pty Ltd v Media Niugini Ltd t/as EMTV

1. [1]

   The defendant, Media Niugini Limited (trading as “EMTV”), is a company incorporated in Papua New Guinea (“PNG”). It is the owner of a free-to-air television channel known as EMTV that broadcasts in PNG. It is also a provider of multimedia production services in PNG. I shall refer to it as “EMTV”.

2. [2]

   On 7 February 2020 the plaintiff, International Management Group of America Pty Ltd (“IMG”), caused the Summons and Commercial List Statement in these proceedings to be delivered to EMTV at its registered office in Port Moresby, purportedly by way of service.

3. [3]

   IMG did so relying on Uniform Civil Procedure Rules 2005 (NSW) r 11.4 which provides that:

4. [4]

   To justify such service, IMG now relies upon paragraphs (b) and (n) of Schedule 6 for the UCPR which provide, relevantly, that an originating process may be served outside Australia without leave:

5. [5]

   EMTV has not entered an appearance but, by notice of motion filed on 20 March 2020, seeks orders under UCPR r 11.6 dismissing the Summons or setting aside service of the Summons.

6. [6]

   UCPR r 11.6 provides, relevantly:

The issues

1. [7]

   The first issue is whether the claims made by IMG in its Commercial List Statement fall within one of the categories specified in Schedule 6 (see UCPR r 11.6(2)(a)). It is common ground that IMG has the onus of showing that each of the claims made in its Commercial List Statement falls within one of those categories.

2. [8]

   The second issue is that, assuming all of IMG’s claims do fall within a category in Schedule 6, its claims have “insufficient prospects of success” for the purposes of UCPR r 11.6(2)(c). It is common ground that EMTV has the onus of showing that this is so.

3. [9]

   The third issue is whether, in any event, and as a matter of discretion, the Court should dismiss the proceedings or set aside service.

Decision

1. [10]

   I am satisfied for the purposes of UCPR r 11.6(2)(a), to the requisite standard, that each of the claims made by IMG falls within paragraph (b) of Schedule 6.

2. [11]

   I am not satisfied that those claims have “insufficient prospects of success” for the purposes of UCPR r 11.6(2)(c).

3. [12]

   I see no other reason to set aside, as a matter of discretion, service of the originating process.

4. [13]

   Accordingly, EMTV’s application must be dismissed.

The claims made

1. [14]

   IMG makes claims for relief against EMTV:

2. [15]

   The claims arise out of negotiations between IMG and EMTV concerning the broadcast rights in PNG of the Queensland Cup, a rugby league competition organised and run by the Australian Rugby League Commission (“ARLC”). The parties referred to these broadcast rights as “the PNG Rights”.

The Queensland Cup

1. [16]

   The Queensland Cup is a regional rugby league football competition that takes place largely in Queensland.

2. [17]

   The Queensland Cup games are recorded by Fox Sports Australia Pty Ltd (“Fox”) and/or Nine Digital Pty Ltd (“Nine”). Both of these entities are incorporated in Australia and have registered offices in the state of New South Wales. The feed of the game is then transmitted to the networks that have purchased the broadcast rights.

3. [18]

   There are 14 teams in the Queensland Cup league. Twelve are are based in Queensland, one in New South Wales and one in PNG; the “PNG Hunters”.

4. [19]

   Each round of the competition consists of seven matches. The games are played at various venues around Australia, primarily in Queensland, with the exception of the PNG Hunters home games which are played in PNG. In each season, there are approximately 160 matches. Of these, approximately 13 games are played in PNG.

5. [20]

   There are usually 23 rounds played each year, plus eight finals and a grand final. Of the seven games per round, one game is filmed, produced and televised.

6. [21]

   The filming and production costs are borne by Fox and/or Nine, and from this a broadcast feed is created (“the Broadcast Feed”).

7. [22]

   In the circumstances I describe below, EMTV was the successful bidder for the PNG Rights.

8. [23]

   As successful bidder for the PNG Rights, EMTV would be granted access the Broadcast Feed at:

   1. (1)

      Artarmon, NSW (if generated by Nine);

   2. (2)

      at the Fox Master Control Room in Sydney, NSW (if generated by Fox); or

   3. (3)

      at another mutually agreed access point located in Sydney, NSW (together, “the Access Point”).

9. [24]

   From the Access Point, EMTV would then have been obliged to transport the Broadcast Feed from Sydney back to PNG for broadcast there.

The negotiations leading to the alleged agreement

1. [25]

   The negotiations leading to the alleged 30 October 2017 agreement took place between Mr Sam Stitcher, the Sales and Business Development Manager Asia Pacific of IMG, and Mr Matthew Park, the Chief Executive Officer of EMTV.

2. [26]

   On 11 October 2017, Mr Stitcher sent Mr Park an email which attached a “Briefing Document” and a “Bidding Form”. The email was headed “Confidential - Subject to Contract”.

3. [27]

   Mr Stitcher’s email read:

4. [28]

   The Briefing Document attached to Mr Stitcher’s 11 October 2017 email set out the terms on which IMG was willing to license the PNG Rights.

5. [29]

   Under the heading “Introduction” the Briefing Document stated:

6. [30]

   The reference in that passage to “International Management Group of America Limited” is obviously a reference to IMG with the omission of “Pty”.

7. [31]

   The document said that IMG had been granted an exclusive media right by ARLC in the Pacific Islands for Package B which comprised:

8. [32]

   Under the heading “Delivery” the Briefing Document stated:

9. [33]

   Under the heading “Production of Matches” the document stated:

10. [34]

    Under the heading “Tickets” the document stated:

11. [35]

    The following day, 12 October 2017, Mr Park sent Mr Stitcher an email attaching EMTV’s bid for the “QRL Packages” that is, “Package B” that stated:

12. [36]

    Mr Park attached a Bidding Form in the format that Mr Stitcher had sent in the previous day. That form specified a “Bidding Deadline” of 16 October 2017. The form stated that:

13. [37]

    Mr Park completed the Bidding Form to show that the territory “for which the Bid is applicable” was PNG, that EMTV sought exclusive rights for the relevant broadcast and that EMTV proposed a total licence fee, payable over seasons 2018 to 2022, of US$2 million.

14. [38]

    Under “Additional Comments”, Mr Park stated:

15. [39]

    The Bid concluded with the statement:

16. [40]

    Mr Park signed the document as “CEO” of EMTV.

17. [41]

    On 20 October 2017 IMG received, from another bidder, an offer for the Queensland Cup rights of US$3.5 million (“the Alternative Offer”).

18. [42]

    On 27 October 2017 Mr Stitcher and Mr Park had telephone conversations in which Mr Stitcher informed Mr Park of the Alternative Offer, and during which Mr Park increased EMTV’s offer to US$2.8 million.

19. [43]

    On 30 October 2017 Mr Stitcher sent an email to Mr Park, which stated:

20. [44]

    A short time later Mr Park sent an email specifying a licence fee of US$300,000 in Year 1, US$400,000 in Year 2, US$600,000 in Year 3, US$700,000 in Year 4 and US$800,000 in Year 5.

21. [45]

    The following day, 31 October 2017, Mr Stitcher wrote:

22. [46]

    On 8 December 2018 Mr Stitcher sent Mr Park an email:

The proposed Licence Agreement

1. [47]

   The attached “Licence Agreement” was expressed to be between EMTV and IMG UK Ltd (“IMG UK”).

2. [48]

   Both IMG and IMG UK are subsidiaries of the United Kingdom company, Endeavor Operating Company, LLC.

3. [49]

   The Licence Agreement:

4. [50]

   On 13 December 2017 Mr Park sent an email to Mr Stitcher:

5. [51]

   Mr Stitcher replied the same day:

6. [52]

   The following day, 14 December 2017, Mr Park sent an email to Mr Stitcher:

7. [53]

   Mr Stitcher replied on 19 December 2017:

8. [54]

   On 21 December 2017, Mr Park sent an email to Mr Stitcher:

9. [55]

   The EMTV Board met on 22 December 2017.

10. [56]

    The following day, 23 December 2017, Mr Park sent an email to Mr Stitcher:

11. [57]

    On 11 January 2018, Mr Park sent an email to Mr Stitcher:

12. [58]

    Some time later, the email is not dated, Mr Stitcher sent an email to Mr Park:

13. [59]

    On 6 February 2018, Mr Park emailed Mr Stitcher:

14. [60]

    On 28 February 2018, Endeavor’s Vice President and Counsel, Litigation wrote to EMTV:

The Claims made by IMG

1. [61]

   The claims made by IMG in contract are set out in its Commercial List Statement as follows:

2. [62]

   The List Statement makes no reference to IMG UK, or the Licence Agreement in which IMG UK, not IMG, was expressed to be the licensor.

3. [63]

   As set out in the List Statement the claims made by IMG concerning an estoppel are as follows:

4. [64]

   As set out in the List Statement IMG’s claims in respect of misleading or deceptive conduct are as follows:

5. [65]

   There is no dispute that this claim falls within paragraphs (b) and (n) of Schedule 6 of the UCPR.

UCPR r 11.6(2)(a) – was service of the originating process authorised by the rules - do each of these claims fall within Schedule 6?

1. [66]

   As I have mentioned, it is common ground that, to justify service of the Summons and Commercial List Statement on EMTV outside Australia, IMG has the onus of showing that each of the claims it makes falls within one or more of the categories in Schedule 6 of the UCPR.

2. [67]

   It is also common ground that the standard of proof required is a prima facie or arguable case. [1]

3. [68]

   Mr Webb did not dispute the following summary of the authorities set out in Mr O’Brien’s submissions:

4. [69]

   Further, in deciding whether service is permitted by the UCPR, “attention must be directed to the way in which the claims made by [IMG] are framed”. The enquiry “neither requires nor permits an assessment of the strength in the sense of likelihood of success” of [IMG’s] claim. [5]

5. [70]

   The question is to be answered “by reference to the allegations made in the originating process, plus any evidence beyond the pleaded allegations to the extent that the pleading does not contain allegations necessary to establish the claim is of a requisite kind”. [6]

6. [71]

   IMG’s contract claims do not fall within this category as the contract for which it contends was not made or entered into in Australia.

7. [72]

   I did not understand Mr O’Brien to submit the contrary.

8. [73]

   In any event, as Mr Webb pointed out, a contract is made at the place in which the acceptance is received by the offeror. [7]

9. [74]

   IMG alleges that it accepted the Revised Offer by the email that Mr Stitcher sent to Mr Park on 30 October 2017 (see [43] above).

10. [75]

    That email was received by EMTV in PNG. Thus, the contract for which IMG contends was made in PNG.

11. [76]

    However, IMG’s contract claims do fall within this category.

12. [77]

    That is because the contract contended for by IMG was to be partly performed by it in Australia.

13. [78]

    For example, the Broadcast Feed for the Queensland Cup games, other than those filmed and produced in PNG, was to be made available to EMTV at an “Access Point” in Sydney (see [23] above).

14. [79]

    From that Access Point, EMTV would then be obliged to transport the Broadcast to PNG (see [24] above).

15. [80]

    IMG was obliged to procure that the ARLC used reasonable endeavours to procure access to venues in Australia for the purpose of producing commentary (see [33] above).

16. [81]

    The fact that IMG UK was to be the proposed licensor under the Licence Agreement provides no reason to suppose that IMG itself would not be obliged to perform these local functions.

17. [82]

    Further, IMG was obliged to procure that the ARLC provide EMTV with VIP tickets for each State of Origin Series matches and the NRL Grand Final (see [34] above). That would involve performance by IMG of a contractual obligation within Australia.

18. [83]

    This conclusion is sufficient to establish that IMG’s contract claim does fall within Schedule 6.

19. [84]

    In any event, there was at least a prima facie case that the contract for which IMG contends was by implication to be governed by Australian law.

20. [85]

    The contract for which IMG contends contains no express provision as to what law was to govern it.

21. [86]

    If the matter is looked at in terms of the parties’ “inferred choice” as a matter of construction, [8] this contract concerns broadcast rights to Australian sporting matches which will be made available to EMTV in Australia.

22. [87]

    That suggests that it is at least arguable that the parties’ “inferred choice” was that the laws of Australia govern the contract.

23. [88]

    If, alternatively, the matter is to be looked at in terms of where the alleged contract had its “closest and most real connection”, [9] matters that are relevant include place of performance of the contract and the nature and subject matter of the contract. [10]

24. [89]

    As to the place of performance, the alleged contract was to be performed, predominantly, in Australia. As Mr O’Brien submitted, all of IMG’s obligations to perform, as outlined in the Briefing Document, arose in Australia. Those obligations included making available the Broadcast Feed, arranging access to EMTV to venues in Australia and making available the tickets referred to at [34] above. Further, many of EMTV’s obligations to perform would have arisen in Australia, such as the obligation to produce audio-visual broadcasts of PNG Hunter games played in Australia.

25. [90]

    Further, the subject matter of the contract concerns Australian sporting broadcast rights.

26. [91]

    These matters point to the conclusion that there is a prima facie case that the contract for which IMG contends was to be governed by Australian law.

27. [92]

    I am not persuaded that the claim made by IMG in contract is founded on a cause of action arising in Australia.

28. [93]

    On the face of it, as Mr Webb submitted, IMG’s cause of action arose in PNG. The breach alleged is the repudiation of the contract by EMTV. The act of repudiation relied on is Mr Park’s email of 6 February 2018 to Mr Stitcher in which he stated “we will NOT be taking the QRL rights” (see [59] above). That act of repudiation occurred in PNG.

29. [94]

    Mr O’Brien pointed to authorities that suggest that, for the purpose of consideration of Schedule 6 clause (n), “the cause of action arises when in substance the act giving rise to the plaintiff’s complaint took place” [11] and that “the cause of action arose within the jurisdiction if the act on the part of the defendant, which gives the plaintiff his cause of complaint has occurred within the jurisdiction”. [12]

30. [95]

    However, here in substance, the act giving rise to IMG’s complaint is EMTV’s alleged repudiation of the agreement and, as I have said, that took place in PNG.

31. [96]

    Assuming that IMG has suffered damage in Australia, it does not follow that its cause of action arose in Australia as damage is not an element of that cause of action. [13]

32. [97]

    Mr O’Brien also pointed to authorities that state that repudiation is “a thing writ in water and of no use to anybody”. [14] Mr O’Brien submitted that it was only when IMG accepted EMTV’s repudiation that repudiation became something of value. However, the difficulty with that submission is that IMG accepted EMTV’s alleged repudiation of the contract by IMG UK’s letter of 28 February 2018 (see [60] above) which was evidently sent from the United Kingdom to PNG. The acceptance of the repudiation did not occur in Australia.

33. [98]

    I am not satisfied that IMG’s claim falls within Schedule 6(n).

34. [99]

    As I am satisfied that IMG’s contract claim falls within cll (b)(iii) and (b)(iv) of Schedule 6, I am satisfied that service of the originating process was authorised by the rules.

Estoppel

1. [100]

   Mr O’Brien submitted that the estoppel claim was “akin” to that referred to in Waltons Stores (Interstate) Ltd v Maher “in that it is used to enforce the alleged contract in the event it was found that no such contract was formed, applying contractual principles”. [15]

2. [101]

   There was debate before me as to whether estoppel is a cause of action. I need not resolve that dispute as there is authority for the proposition that, for the purposes of consideration of an application to set aside originating process under UCPR r 11.6, and its analogues, “a claim in the nature of the estoppel claim is a cause of action”. [16]

3. [102]

   In my opinion this claim can be seen, for the purposes of Schedule 6(b), as a claim for the “enforcement” of the contract for which IMG contends. In that regard, Mr O’Brien referred to the observations of Deane J that an estoppel “provides the factual foundation of an ordinary action for enforcement of that ‘contract’ notwithstanding that those facts demonstrate that no binding contract was actually made”. [17]

Misleading or deceptive conduct – ACL claim

1. [103]

   As I mentioned at [65], there is no dispute that this claim falls within one or other of the subparagraphs in Schedule 6.

To what standard must EMTV demonstrate insufficient prospects of success?

1. [104]

   It was common ground that the test to be applied in determining whether the claims made by EMTV have insufficient prospects of success to warrant putting EMTV to the time, expense and trouble of defending the claim in New South Wales is that that would be applied had EMTV been served locally and moved to have the proceedings dismissed as disclosing no reasonable cause of action. [18]

2. [105]

   That is, EMTV must show that IMG’s claims are “so obviously untenable that it cannot possibly succeed”, “manifestly groundless”, “so manifestly faulty that it is not admit of argument”, that it “discloses a case which the Court is satisfied cannot succeed” and that “no possibility can there be a good cause of action”. [19]

Contract

1. [106]

   The starting point is that the parties have used the language of contract.

2. [107]

   Thus, in the Initial Offer of 12 October 2017 (see [35] above), by the Bidding Form, EMTV made a “bid” on the terms of the Briefing Document. Mr Park stated that EMTV was acting by “its authorised representatives” and “with the acceptance of all stated terms and conditions of the Briefing Document and Bidding Form”.

3. [108]

   It may be that the qualification Mr Park noted (set out at [38] above) that the bid was only “valid” until close of business on 16 October 2017 was inconsistent with the bid being “irrevocable” as the Bidding Form required.

4. [109]

   Nonetheless, Mr Park’s 11 October 2017 offer was an offer that, in his email of 30 October 2017 (see [43] above) Mr Stitcher said he would “like to formally accept”.

5. [110]

   Mr O’Brien submitted that the “Agreement” was intended by the parties to be binding “but the parties also intended to enter into a subsequent, formal, fulsome agreement”.

6. [111]

   Mr O’Brien submitted that:

7. [112]

   On the other hand, Mr Webb submitted that:

8. [113]

   In support of that submission, Mr Webb pointed to a number of matters.

9. [114]

   The first was that Mr Stitcher’s 11 October 2017 email to Mr Park (set out at [26] and [27] above) was headed “Confidential – Subject to Contract”. That suggested, Mr Webb submitted, that the parties intended that “there would be no concluded agreement short of an executed licence agreement in respect of the PNG rights”. However, the statement by Mr Stitcher that his email of 11 October 2017 was “subject to contract” begs the question as to the “contract” to which Mr Stitcher intended the email be subject. It is at least arguable that Mr Stitcher was saying no more than that the mere submission by him to Mr Park of the Briefing Document and the Bidding Form would not, without more, constitute a proposal capable of acceptance.

10. [115]

    Mr Webb also pointed to the fact that Mr Stitcher’s email of 30 October 2017 (see [43] above) sought a proposal from Mr Park as to how Mr Park would prefer the “licence fee to be split across the five seasons”. I see this as casting no light on whether the parties intended immediately to be bound by the email exchange of 12 and 30 October 2017.

11. [116]

    Mr Webb also pointed to the fact that the communications exchanged between IMG and EMTV up to 30 October 2017 were “silent as to the basis of [IMG’s] ability to grant a licence”. However, as Mr O’Brien submitted, there is no principle of contract law that prevents a person from promising to deliver or provide something which they do not presently possess. Either they acquire it after contracting or end up being in breach of contract.

12. [117]

    Mr Webb next referred to Mr Stitcher’s statement in his 31 October 2017 email (see [45] above) that “I am working on the contract now”. I see that statement as being neutral.

13. [118]

    Next, Mr Webb pointed to the fact that the communications between IMG and EMTV to 30 October 2017 did not specify how many matches or live television broadcasts would occur over the five year period for the Queensland Cup. That may be so but, as Mr O’Brien pointed out, it is at least arguable that what EMTV was willing to pay for was the right to broadcast those matches from the Queensland Cup that did occur, with one match being produced each week. I accept Mr O’Brien’s submission that it is at least arguable that the absence of more specificity about this matter does not militate against that intention immediately to create legal relations.

14. [119]

    Mr Webb also submitted that by 30 October 2017 it had not been determined whether or not any licence would be exclusive or otherwise. That is not correct, as EMTV’s offer of 12 October 2017 specified that the rights were to be exclusive (see [37] above).

15. [120]

    In those circumstances, my conclusion is that it is at least arguable that the language the parties used showed that they intended to be immediately bound by the email exchange between Mr Park and Mr Stitcher on 12 and 30 October 2017 and that, as Mr O’Brien submitted, the contract for which IMG contends falls within either the first, or the fourth categories referred to at [111] above.

16. [121]

    I am not satisfied that IMG’s contract claim has insufficient prospects of success for the purposes of UCPR r 11.6(2)(c).

17. [122]

    Mr Webb submitted that the facts asserted are incapable of giving rise to the estoppel contended and that they “simply confirm that the parties were proceeding to work on a proposed licence agreement to be entered into in the future”. I do not think this is a fair way to look at the pleadings.

18. [123]

    IMG’s pleaded case is that EMTV represented it would buy the relevant rights for US$2.8 million and that IMG relied upon that representation by not accepting the Alternative Offer.

19. [124]

    I am not persuaded that these contentions have insufficient prospects of success for the purpose of UCPR 11.6(2)(c).

20. [125]

    Mr Webb submitted that, in substance, the representations relied upon by IMG are indistinguishable from the claim in contract and that, as the contract claim had insufficient prospects of success, the same must be said for the claim for misleading or deceptive conduct.

21. [126]

    It may be that IMG’s misleading or deceptive conduct claim will stand or fall depending on its success in relation to its claim in contract. But I do not see that that is a reason to conclude that the misleading or deceptive conduct claim itself has insufficient prospects of success.

Conclusion

1. [127]

   For these reasons, my conclusion is that IMG has demonstrated a prima facie case that its claim in contract is for the enforcement of a contract which was to be partly performed in Australia and which, by implication, was to be governed by Australian law.

2. [128]

   Accordingly, in my opinion, that claim is one authorised by the rules for the purposes of UCPR 11.6(2)(a) as it is one which enlivens subparagraphs (b)(iii) and (iv) of Schedule 6 to the UCPR.

3. [129]

   For the reasons I have set out, my conclusion is that the estoppel claim is in the same category. As I have mentioned, there is no dispute that the misleading or deceptive conduct claim is in the same position.

4. [130]

   I am not satisfied that any of the claims by IMG have insufficient prospects of success for the purposes of UCPR r 11.6(2)(c).

5. [131]

   I see no other reason why, as a matter of discretion, I should set aside service.

6. [132]

   It follows that EMTV’s notice of motion of 20 March 2020 should be dismissed with costs.

7. [133]

   I will list the matter for further directions on 22 May 2020.