Austin Engineering Ltd v Podulova (No 2)

Case [2023] FCA 1627

FEDERAL COURT OF AUSTRALIA

Austin Engineering Ltd v Podulova (No 2) [2023] FCA 1627   

File number: WAD 83 of 2023
Judgment of: FEUTRILL J
Date of judgment: 19 December 2023
Date of publication of reasons: 31 January 2024
Catchwords: COSTS – costs orders – where no hearing on the merits – where interlocutory application resolved by agreement   
Legislation: Federal Court of Australia Act 1976 (Cth) ss 37M, 37N
Cases cited:

Austin Engineering Pty Ltd v Podulova [2023] FCA 419

FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091

G1PC Pty Ltd (Trustee) v Petstock Pty Limited (No 2) [2016] FCA 1056

Sivwright v St Ives Group Pty Ltd [2022] FCA 136

Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 19
Date of last submissions: 23 November 2023
Date of hearing: Determined on the papers
Counsel for the Applicant: Mr SJ Hallahan
Solicitor for the Applicant: HWL Ebsworth Lawyers
Counsel for the First Respondent: The First Respondent did not file any submissions
Counsel for the Second to Seventh Respondents: Mr TC Russell
Solicitor for the Second to Seventh Respondents: Gilbert + Tobin

ORDERS

WAD 83 of 2023
BETWEEN:

AUSTIN ENGINEERING LTD (ACN 078 480 136)

Applicant
AND:

ANASTASIA PODULOVA

First Respondent

SCHLAM ENGINEERING PTY LTD (ACN 145 218 944)

Second Respondent

SCHLAM GROUP PTY LTD (ACN 616 770 122) (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

FEUTRILL J

DATE OF ORDER:

19 DECEMBER 2023

THE COURT ORDERS THAT:

1.A copy of the reasons for these orders be provided to the applicant and second to seventh respondents before publication.

2.The applicant and second to seventh respondents have liberty to apply for further or other orders concerning the publication of the reasons for judgment by 31 January 2024, failing which the reasons for these orders will be published.

3.The costs of the applicant's interlocutory application filed on 8 August 2023 be costs in the cause.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

FEUTRILL J:

Introduction

  1. The applicant (Austin Engineering) filed an originating process on 18 April 2023, amended on 10 May 2023, by which it seeks interlocutory orders and final relief for alleged breaches of confidence and infringements of copyright on the part of the first respondent (Ms Podulova) and the second to seventh respondents (Schlam respondents).

  2. On 20 April 2023 the Court made interlocutory orders after an ex-parte hearing including an interlocutory injunction restraining Ms Podulova from altering, destroying, erasing, parting with or otherwise making unavailable for use in the proceedings or copying or moving certain digital information (that I will refer to as the Austin Engineering information) and requiring her to produce that information to the Court. Orders were also made limiting access to the Austin Engineering information produced to the Court to Mr Rodney McKemmish (the applicant’s independent computer expert), the applicant’s external legal representatives and…

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Details
AGLC
Austin Engineering Ltd v Podulova (No 2) [2023] FCA 1627
Case
[2023] FCA 1627
Decision Date

CaseChat Overview and Summary

In Austin Engineering Ltd v Podulova (No 2), the matter before the court was an interlocutory application filed by Austin Engineering Ltd seeking an order that would compel the Schlam respondents to respond to a letter dated 26 July 2023. The application was filed after the Schlam respondents declined to respond to the letter on the basis that they were not satisfied with the confidentiality undertakings provided by Austin Engineering’s solicitors. The application was resolved by agreement of the parties. The primary legal issue was whether the Schlam respondents’ solicitors were unreasonable in not providing a response to the letter dated 26 July 2023 due to the undertakings provided by Austin Engineering’s solicitors not covering the response to the letter. The court found that the Schlam respondents were not unreasonable in their approach to the request for information and response to the 26 July 2023 letter. It concluded that the parties acted reasonably in their approach to the request for information and response to the letter and that the Schlam respondents were not unreasonable in not providing a response to the letter. The court held that the costs of the interlocutory application should be costs in the cause as it was appropriate to order the costs of the interlocutory application to be costs in the cause rather than making a positive costs order in favour of one or more of the parties.

The court noted that in the context of an interlocutory dispute and ongoing litigation, an order that the costs of a resolved interlocutory application be costs in the cause may be more appropriate than no order as to costs or a positive costs order in favour of one or more of the parties. It found that in these circumstances, the party that is ultimately successful should have the costs of the application. The court also noted that the parties’ approach to the request for information and response to the letter was consistent with the provisions of the Federal Court Act relating to confidentiality and should be encouraged and commended. The court ordered that the costs of the interlocutory application be costs in the cause and that a copy of the reasons for the orders be provided to the applicant and Schlam respondents before publication. The applicant and Schlam respondents were also given liberty to apply for further or other orders concerning the publication of the reasons for judgment by 31 January 2024, failing which the reasons for these orders would be published.

Orders

Orders of the court

1. A copy of the reasons for these orders be provided to the applicant and second to seventh respondents before publication.

2. The applicant and second to seventh respondents have liberty to apply for further or other orders concerning the publication of the reasons for judgment by 31 January 2024, failing which the reasons for these orders will be published.

3. The costs of the applicant's interlocutory application filed on 8 August 2023 be costs in the cause.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In my view, each of Austin Engineering and the Schlam respondents acted reasonably in its (their) approach to the request for information in and response to the 26 July 2023 letter. That includes Austin Engineering filing the application, the parties’ consent to the orders that included confidentiality of submissions and affidavits, the Baker affidavit and the response to the information contained in that affidavit. Given the sensitive and confidential nature of the information in question, the parties approach is consistent with s 37M and s 37N of the Federal Court Act and is to be encouraged and commended. In these circumstances, the party that is ultimately successful should have the costs of the application.Conclusion There will be an order that the costs of the applicant’s interlocutory application filed on 8 August 2023 be costs in the cause. There will also be an order that the applicant and second to seventh respondents be provided with a copy of these reasons for the purpose of applying for any further or other orders prior to the publication of these reasons in relation to the question of confidentiality.

Ratio Decidendi

Legal Principle Established

In general, the costs associated with the resolution of interlocutory disputes that do not result in filing of an interlocutory application or determination at a case management hearing are costs that form part of the costs of the proceedings awarded to the party which is ultimately successful. There may be a significant amount of correspondence and conferral that takes place before the dispute is resolved. It may result in the parties avoiding the costs of an otherwise ‘unreasonable’ application or it may result in a party ‘capitulating’ or ‘surrendering’ on a position that had been adopted earlier in the dispute. In many cases there may be little difference in the costs associated with an interlocutory dispute that is resolved without a formal application as opposed to a dispute resolved after a formal interlocutory application has been made. Therefore, in the context of an interlocutory dispute and ongoing litigation, an order that the costs of a resolved interlocutory application be costs in the cause may be more appropriate than no order as to costs or a positive costs order in favour of one or more of the parties: e.g., G1PC at [36].Consideration By letter dated 26 July 2023 Austin Engineering’s solicitors (HWL Ebsworth) requested explanations about how a certain document came into the Schlam respondents’ possession and what was done with it, a copy of a certain document and comment on various matters raised in the letter concerning the contents of other documents potentially relevant to alleged misuse of the Austin Engineering information. There followed a series of email communications between the Schlam respondents’ solicitors (Gilbert + Tobin) and HWL Ebsworth. In the correspondence Gilbert + Tobin sought assurances that confidentiality undertakings HWL Ebsworth had given would apply to the Schlam respondents’ response to the 26 July 2023 letter. HWL Ebsworth confirmed the confidentiality undertaking would apply to the information contained in the documents referred to in the 26 July 2023 letter. Gilbert + Tobin clarified that it requested confirmation that the undertaking would apply to the response to the letter. HWL Ebsworth was unwilling to give such an undertaking without understanding the nature of the information that would be in the response as the basis for the assertion that it was confidential. Therefore, Gilbert + Tobin did not provide a response on behalf of the Schlam respondents to the letter because HWL Ebsworth was not willing to provide the requested undertaking. I do not consider that the position HWL Ebsworth, and through them, Austin Engineering, adopted to an undertaking concerning a response to the 26 July 2023 letter was unreasonable. HWL Ebsworth had a number of concerns about the documents identified in the 26 July 2023 letter. On 8 August 2023 it made the interlocutory application. In effect, a variation to the orders of 25 May 2023 was sought so that HWL Ebsworth could disclose the documents identified in the 26 July 2023 letter to limited representatives of Austin Engineering for the purposes of obtaining instructions about the concerns.