Agriwealth Pty Ltd v Gordon (No 2) - [2016] NSWSC 1220

Supreme Court

New South Wales

Medium Neutral Citation: Agriwealth Pty Ltd v Gordon (No 2) [2016] NSWSC 1220
Hearing dates: 22 April 2016 and 17 August 2016
Date of orders: 31 August 2016
Decision date: 31 August 2016
Jurisdiction: Equity
Before: Robb J
Decision:
(1) Grant leave to the plaintiffs to join Christopher Kinsella as second defendant in the proceedings.
(2) Grant leave to the plaintiffs to amend their statement of claim in terms of the document described as “draft amended statement of claim (version 2)”, save that particular (iv) to par 8 of the draft should first be deleted.
(3) Order the plaintiffs to pay the defendant’s costs of and occasioned by the amendment to the plaintiffs’ statement of claim in so far as the amendments made concern the plaintiffs’ claims against the defendant.
(4) Order the parties to bear their own costs of the notice of motion filed on 12 February 2016 up to and including the hearing on 22 April 2016.
(5) Order the plaintiffs to pay the defendant’s costs of the notice of motion after 22 April 2016 including the hearing on 17 August 2016.
(6) Stand the proceedings over to the Registrar on 22 September 2016 for directions.

Catchwords: PRACTICE AND PROCEDURE – completion of application for leave to join an additional defendant and to amend plaintiffs’ statement of claim – application granted – no issue of principle
Category: Procedural and other rulings
Parties: Agriwealth Pty Ltd (first plaintiff/first applicant)
Agriwealth Management Pty Ltd (second plaintiff/second applicant)
Malcom Gordon (defendant/respondent)
Representation:
Counsel: J M Ireland (plaintiffs/applicants)
A Vernier (defendant/respondent)
Solicitors: McGirr Lawyers (plaintiffs/applicant)
Bateman Legal Pty Ltd (defendant/respondent)

File Number(s): 2015/58580
Publication restriction: None

Judgment

On 22 June 2016, I published reasons for judgment on an application made by the plaintiffs (Agriwealth), by notice of motion filed on 12 February 2016, for leave to join Mr Christopher Kinsella as a defendant to the proceedings, and to amend their statement of claim in the terms of a document that was annexed to the affidavit filed in support of the notice of motion: see Agriwealth Pty Ltd v Gordon [2016] NSWSC 824.
I declined to make the orders sought by Agriwealth, although for the reasons set out at [28] and [29], I did not dismiss Agriwealth’s notice of motion.
In essence, Agriwealth originally claimed against Mr Gordon that he obtained Agriwealth’s confidential documents, and in breach of confidence provided certain of those documents to the solicitors for parties (called the Findlays), who used the documents in Federal Court of Australia proceedings against Agriwealth. Agriwealth sought leave to add Mr Kinsella as a defendant, in order to plead against him a claim that he had received certain of Agriwealth’s confidential documents from Mr Gordon, and that, knowing that it was a breach of Agriwealth’s confidence to do so, he (rather than Mr Gordon) had provided the documents that were used in the Federal Court proceedings; and also that he had provided Agriwealth’s confidential documents to the Australian Taxation Office (ATO).
I formed the view, as a result of the initial hearing, that, if Agriwealth were able to plead a proper statement of claim against Mr Kinsella, it was in the interests of justice for Agriwealth’s claims against him to be dealt with in the same proceedings as their claim against Mr Gordon, as that would be the most cost efficient way to determine the whole of the dispute, and would avoid the possibility of inconsistent findings of fact. It also appeared to me that there was nothing to stop Agriwealth commencing new proceedings against Mr Kinsella, and if they did so, there was a high probability that the court would order that the proceedings be heard together, with evidence in each being evidence in the other.
However, I was not satisfied, on the evidence before the court, that I should make the orders sought by Agriwealth, because I did not think that the draft amended statement of claim properly pleaded a claim that Mr Gordon was in possession of identified documents, which he gave to Mr Kinsella, and which were the documents provided to the solicitors for the Findlays, or the ATO.
I gave Agriwealth the opportunity to provide additional particulars, evidence or submissions, to make good their contention that their claims against Mr Gordon and Mr Kinsella should properly be determined in the one proceedings.
Agriwealth have taken up the opportunity that I gave them, and a further hearing occurred on 17 August 2016, after the parties had provided additional submissions to the court.
At the hearing, Agriwealth sought leave to file a document that was headed “draft amended statement of claim (version 2)”.
This draft pleading contained many amendments that were not related to Agriwealth’s proposed claim against Mr Kinsella. Agriwealth wishes to make these amendments to revise their pleadings in response to information that they have received during the course of the preparation of these proceedings for trial; principally in the affidavit of Mr Gordon made on 23 December 2015.
Mr Gordon does not oppose leave being granted to Agriwealth to make the amendments that do not relate to the claim against Mr Kinsella. Mr Gordon does, however, object to the inclusion of particular (iv) to par 8, in which Agriwealth state that they will supplement the particulars, if so advised, after discovery of documents and the production of documents upon subpoena. Mr Gordon submitted that, at this late stage of the proceedings, Agriwealth were not entitled to reserve the right to give additional particulars; and that they should not be permitted to do so unless given leave. (I note that Agriwealth make a similar reservation in particular (ii) to par 13(b), which pleads the alleged breaches by Mr Kinsella. That aspect of the draft amended statement of claim will be a matter for Mr Kinsella, if Agriwealth are given the leave that they seek).
It will therefore be appropriate that, in due course, I grant leave to Agriwealth to file the draft amended statement of claim for which leave is now sought, in-so-far as it amends the claim made against Mr Gordon.
The amended statement of claim filed in accordance with that leave should not, however, include particular (iv) to par 8. I accept the argument made on behalf of Mr Gordon that, at this stage of the proceedings, Agriwealth should not be entitled to amend their particulars without the leave of the court. That ruling will not prevent Agriwealth being granted that leave by the court, upon proper cause being shown.
It should be recorded that, at the hearing on 17 August 2016, Agriwealth tendered evidence that was not before the court on the original hearing. First, Agriwealth read an affidavit of Wayne Curtis Jones sworn 21 April 2016. Agriwealth were not permitted to read that affidavit at the hearing on 22 April 2016, as insufficient notice of the affidavit had been given to Mr Gordon. The affidavit contained evidence that, in a general way, supported the likelihood that Mr Kinsella may have committed the breaches of confidence that Agriwealth wish to allege against him.
Secondly, Agriwealth were permitted to tender certain identified paragraphs of an affidavit sworn by Mr Jones on 9 October 2015. The evidence was tendered by Agriwealth because it became apparent during argument that I was of the view that the evidence previously relied upon by Agriwealth did not provide an adequate foundation (at the level necessary to justify Agriwealth being given leave to plead a claim against Mr Kinsella in the proceedings against Mr Gordon) for part of the case against Mr Kinsella that Agriwealth wish to pursue.
The supplementation of Agriwealth’s evidence in this way will be relevant to the costs order that should be made on the application.
Before I consider the submissions advanced by Agriwealth in more detail, it will be appropriate to reflect upon the issues raised by the present application from a more elevated perspective.
Agriwealth’s case against Mr Gordon is that, following the termination of his employment by Agriwealth, he removed a substantial quantity of Agriwealth’s confidential documents, without Agriwealth’s knowledge or consent. In Mr Gordon’s 23 December 2015 affidavit, Mr Gordon admitted that he removed a substantial quantity of documents, in circumstances that would appear to support an argument by Agriwealth that Mr Gordon had contravened a covenant in his employment contract concerning the use of Agriwealth’s confidential information.
As I understand it, Mr Gordon’s case it is that he denies supplying any documents in breach of confidence to the solicitors for the Findlays, or, by inference, the ATO. Mr Gordon admitted that he gave some documents sourced from Agriwealth’s offices to Mr Kinsella, who was closely connected with the Findlays’ solicitors.
It must be remembered that, at this stage of the proceedings, the evidence is not complete, and while Agriwealth have relied upon aspects of Mr Gordon’s affidavit to support the present application, they have indicated that they do not necessarily accept that the concessions made by Mr Gordon in his affidavit are correct or complete. Agriwealth reserve the right, if the evidence at the final hearing permits them to do so, to attempt to prove that Mr Gordon has removed more confidential documents than he has conceded, and that he has disclosed Agriwealth’s confidential documents, notwithstanding the denials in his affidavit.
The fact that Mr Gordon has conceded that he removed some confidential documents, and that he provided some such documents to Mr Kinsella, provide some support for the court to give Agriwealth the leave that it now seeks. Though Mr Gordon has not admitted the basis of Agriwealth’s case against himself and Mr Kinsella, the evidence that he has given provides some justification for the court to grant leave to Agriwealth to pursue its claim against Mr Kinsella in these proceedings.
Furthermore, so far as Mr Gordon is concerned, he could not explain to the court why the grant of leave sought by Agriwealth would place an unwarranted burden on him in relation to the future conduct of these proceedings. While it is likely that the grant of leave will increase the complexity of the proceedings, and cause some delay, Mr Gordon was unable to point to any prejudice that could not be compensated in an order for costs; assuming that a basis for the making of such an order was made out.
While the court should not be too ready to underestimate the potential for an increase in the forensic issues required to be dealt with following the grant of the leave sought by Agriwealth, at least in broad terms the additional issues should fall within the relatively narrow compass of whether Mr Gordon gave particular confidential documents of Agriwealth to Mr Kinsella, and whether Mr Kinsella provided some of those documents to the solicitors for the Findlays, or the ATO. At least to a substantial degree, the resolution of these additional issues is ultimately likely to depend upon the credibility of the evidence given by Mr Gordon and Mr Kinsella; as it seems unlikely that there will be unearthed a significant amount of documentary evidence relevant to the issues.
I will now return to the shortcomings in Agriwealth’s application that caused my initial unwillingness to grant the relief sought in their notice of motion.
I should note first, however, that, by its draft amended statement of claim, Agriwealth wish to amend their claim against Mr Gordon in a material way. Originally, they alleged against Mr Gordon that he personally provided documents to the Findlays, or alternatively to their solicitors. By amendments contained in pars 8 and 9, Agriwealth have deleted their allegation that Mr Gordon provided documents directly to the Findlays or their solicitors. They allege instead that Mr Gordon provided the documents to Mr Kinsella, who in turn passed those documents on.
At the time of the initial hearing, I understood from the evidence that Mr Gordon had admitted that he received from Agriwealth documents described as “the Aspiring Documents”, which were given to him so that he could pass them on to his wife, who had an entitlement to them. Whether as a result of a failure of my understanding, or an absence of detail in the evidence and the submissions, I came to the view that the Aspiring Documents had not been sufficiently linked, in the then proposed amended statement of claim, to the documents that Agriwealth claimed had been provided to the Findlays or the ATO. Albeit that the issue arose at the stage of an application for leave to join a new defendant and amend the statement of claim, I took the view that, at this late stage of the proceedings, I should not grant the leave unless, at the least, I was satisfied that the draft amended pleading alleged a specific chain of events in relation to identified documents, leading from Agriwealth to the Findlays and the ATO.
One outcome of the further hearing is that Agriwealth was able to refine its case in relation to what I have described as the Aspiring Documents. Agriwealth now allege that the confidential documents that were removed by Mr Gordon included documents called the “2006 Drem Loan Agreement”, the “Drem Funding Agreement”, and the “Oriana Option”. In their latest submissions, Agriwealth point out that, in par 61 of his 23 December 2015 affidavit, Mr Gordon said that the documents that he described as the “Aspiring Documents” included the documents described by Agriwealth as the “Drem Funding Agreement” and the “Oriana Option”.
The draft amended statement of claim alleges that Mr Gordon provided copies of the Drem Funding Agreement and the Oriana Option to Mr Kinsella in about October 2009, as he admits in his affidavit in pars 152 and 153. It also alleges that Mr Gordon provided a copy of the 2006 Drem Loan Agreement to Mr Kinsella, although Agriwealth do not know when, and are not able to rely upon any admission by Mr Gordon concerning this allegation.
The draft amended statement of claim also alleges that Mr Kinsella supplied a copy of the 2006 Drem Loan Agreement and the Oriana Option, as well as other documents, to the Findlays’ solicitors, and that those documents were used by the solicitors for the purposes of the Federal Court proceedings against Agriwealth. It also alleges that Mr Kinsella provided a copy of the Oriana Option to the ATO.
Agriwealth were able to tender documents produced by the ATO in response to a freedom of information request. It is sufficient to note that the documents produced by the ATO, which were redacted to remove references to identities, appear to show that a third party, on an unsolicited basis, gave a copy of the Oriana Option to the ATO, which the ATO used for the purposes of an investigation into the taxation affairs of Agriwealth. The ATO’s documents referred to the “dob in”.
This evidence establishes, at least in relation to the Oriana Option, an apparent chain of events that is at least consistent with Mr Gordon receiving the Oriana Option from Agriwealth, as part of the Aspiring Documents, his providing that document to Mr Kinsella, and the document ending up in the possession of the ATO.
The chain of events that the evidence establishes in relation to the 2006 Drem Loan Agreement and the Drem Funding Agreement is not as complete as it is in relation to the Oriana Option. The evidence in relation to the Drem Funding Agreement probably goes no higher than to support, in a general way, opportunity and motive on Mr Kinsella’s part to divulge Agriwealth’s confidential documents that may have been given to him by Mr Gordon.
However, Agriwealth is not required to prove its case against Mr Kinsella in order to justify the leave being given for which it has applied. Nor is it even necessary for Agriwealth to show that it has a prima facie case against him. I have adopted a relatively strict approach to the determination of whether or not Agriwealth should be given the leave, because of the timing of the application in relation to the preparation of the case against Mr Gordon for hearing; and the considerations invoked by s 56 of the Civil Procedure Act 2005 (NSW).
I am now satisfied that the court should grant the leave sought by Agriwealth in their notice of motion filed on 12 February 2016, but in relation to the document called “draft amended statement of claim (version 2)”, with particular (iv) to par 8 deleted.
It is now necessary to consider the costs orders that should be made.
Agriwealth concede that the usual costs order should be made concerning the amendment to their statement of claim in relation to the claim against Mr Gordon. They submit, however, that each party should pay their own costs of the balance of the notice of motion. They submit that they have succeeded in obtaining the leave to join Mr Kinsella, and to amend the statement of claim to plead a claim against Mr Kinsella, and that Mr Gordon has failed in his opposition to that application.
Mr Gordon submits that the orders that the court will now make constitute an indulgence to Agriwealth, so that Agriwealth should be ordered to pay Mr Gordon’s costs of the notice of motion, as well as the costs of and occasioned by the amendment of the statement of claim.
The notice of motion has been heard over two days, when the hearing only should have taken one day. Agriwealth were given an indulgence by the court in so far as the court did not dismiss their notice of motion after the initial hearing. Agriwealth succeeded in obtaining most of the relief that they sought, but only after an additional hearing at which Agriwealth tendered additional evidence, and made further submissions, that were necessary for them to achieve the success that they have achieved.
On the other hand, Mr Gordon has failed in his opposition to Agriwealth being given leave to join Mr Kinsella as a defendant, and to amend their statement of claim to plead a claim against Mr Kinsella. As I have said, that opposition should have been dealt with at a single hearing. I accept the submission that Mr Gordon has failed in his attempt to prevent Agriwealth from joining their claim against Mr Kinsella to the claim that they have made against Mr Gordon. Ultimately, Mr Kinsella did not provide a sound basis for resisting the leave sought by Agriwealth being granted.
In these circumstances, putting aside the costs of the amendment of Agriwealth’s statement of claim against Mr Gordon, I propose to order that Agriwealth and Mr Gordon each pay their own costs of the notice of motion and the hearing on 22 April 2016, and that Agriwealth pay Mr Gordon’s costs of the hearing on 17 August 2016. As I understand it, the latest version of the draft amended statement of claim was propounded shortly before the 17 August 2016 hearing, so that the costs of the application for leave to amend in relation to the claim against Mr Gordon should be part of the costs of the 17 August 2016 hearing.
I propose to list these proceedings before a registrar for further directions. I will list the matter 21 days after I make the following orders, in order to give Agriwealth time to file an amended statement of claim and to serve Mr Kinsella, and to give Mr Kinsella some time to consider his response.
I make the following orders:

Grant leave to the plaintiffs to join Christopher Kinsella as second defendant in the proceedings.

Grant leave to the plaintiffs to amend their statement of claim in terms of the document described as “draft amended statement of claim (version 2)”, save that particular (iv) to par 8 of the draft should first be deleted.

Order the plaintiffs to pay the defendant’s costs of and occasioned by the amendment to the plaintiffs’ statement of claim in so far as the amendments made concern the plaintiffs’ claims against the defendant.

Order the parties to bear their own costs of the notice of motion filed on 12 February 2016 up to and including the hearing on 22 April 2016.

Order the plaintiffs to pay the defendant’s costs of the notice of motion after 22 April 2016 including the hearing on 17 August 2016.

Stand the proceedings over to the Registrar on 22 September 2016 for directions.

**********

Decision last updated: 08 September 2016

Medium Neutral Citation:	Agriwealth Pty Ltd v Gordon (No 2) [2016] NSWSC 1220
Hearing dates:	22 April 2016 and 17 August 2016
Date of orders:	31 August 2016
Decision date:	31 August 2016
Jurisdiction:	Equity
Before:	Robb J
Decision:	(1) Grant leave to the plaintiffs to join Christopher Kinsella as second defendant in the proceedings. (2) Grant leave to the plaintiffs to amend their statement of claim in terms of the document described as “draft amended statement of claim (version 2)”, save that particular (iv) to par 8 of the draft should first be deleted. (3) Order the plaintiffs to pay the defendant’s costs of and occasioned by the amendment to the plaintiffs’ statement of claim in so far as the amendments made concern the plaintiffs’ claims against the defendant. (4) Order the parties to bear their own costs of the notice of motion filed on 12 February 2016 up to and including the hearing on 22 April 2016. (5) Order the plaintiffs to pay the defendant’s costs of the notice of motion after 22 April 2016 including the hearing on 17 August 2016. (6) Stand the proceedings over to the Registrar on 22 September 2016 for directions.
Catchwords:	PRACTICE AND PROCEDURE – completion of application for leave to join an additional defendant and to amend plaintiffs’ statement of claim – application granted – no issue of principle
Category:	Procedural and other rulings
Parties:	Agriwealth Pty Ltd (first plaintiff/first applicant) Agriwealth Management Pty Ltd (second plaintiff/second applicant) Malcom Gordon (defendant/respondent)
Representation:	Counsel: J M Ireland (plaintiffs/applicants) A Vernier (defendant/respondent) Solicitors: McGirr Lawyers (plaintiffs/applicant) Bateman Legal Pty Ltd (defendant/respondent)
File Number(s):	2015/58580
Publication restriction:	None