DC Payments Pty Ltd v Next Payments Pty Ltd (No 2)
[2017] VSC 22
•3 FEBRUARY 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
INTELLECTUAL PROPERTY LIST
S ECI 2014 000037
| DC PAYMENTS PTY LTD (ACN 009 582 781) and DC PAYMENTS AUSTRALASIA PTY LTD (ACN 097 550 519) | Plaintiffs |
| v | |
| NEXT PAYMENTS PTY LTD (ACN 160 185 106) and Others (according to the Schedule) | Defendants |
AND
S CI 2014 01563
| DC PAYMENTS AUSTRALASIA PTY LTD (ACN 097 550 519) | Plaintiff |
| v | |
| VIC HOTELS PTY LTD (ACN 82 131 914 282) and Others (according to the Schedule) | Defendants |
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JUDGE: | VICKERY J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | ON THE PAPERS, WRITTEN SUBMISSIONS DATED 26 AUGUST 2016 |
DATE OF JUDGMENT: | 3 FEBRUARY 2017 |
CASE MAY BE CITED AS: | DC Payments Pty Ltd v Next Payments Pty Ltd (No 2) |
MEDIUM NEUTRAL CITATION: | [2017] VSC 22 |
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PRACTICE AND PROCEDURE — Costs — Whether costs should be taxed immediately —Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.20.1 — Dale v Clayton Utz (No 3) [2013] VSC 593, Setka v Abbott MP (No 2) [2013] VSCA 376, Fanissa Pty Ltd v Tanya Versace [2016] VSC 416 considered and applied — Orders made taxing costs of interlocutory applications immediately.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | No appearance | Ashurst Australia |
| For the Defendant | No appearance | King & Wood Mallesons |
HIS HONOUR:
Introduction
On 7 June 2016, I delivered reasons (the ‘7 June Reasons’) in applications dated 23 November 2015 brought by Next Payments Pty Ltd (‘Next Payments’) to restrain DC Payments Australasia Pty Ltd and its parent DC Payments Pty Ltd (together ‘DC Payments’) from making use of a confidential customer list in litigation and to restrain DC Payments’ current lawyers from continuing to act in that litigation.[1] I found that DC Payments had acted in breach of confidence in its use of the confidential customer list and made orders to unwind DC Payments’ misuse of that confidential information.
[1]DC Payments v Next Payments [2016] VSC 315.
The parties have agreed to consequential orders save in one respect. DC Payments has agreed to pay Next Payments’ costs of and incidental to Next Payments’ applications. Next Payments seeks orders to have those costs taxed immediately. DC Payments opposes this course.
Rule 63.20.1 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provides:[2]
If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately.
[2]Emphasis added.
Next Payments submits that, in exercising its discretion to award costs, the Court should depart from the default position and order that its costs be taxed immediately pursuant to the proviso in r 63.20.1.
Applicable Legal Principles
The Court’s discretion to order immediate taxation of costs is confined only by the principle that such discretion must be exercised judicially.[3]
[3]Dale v Clayton Utz (No 3) [2013] VSC 593 [60]; Setka v Abbott MP (No 2) [2013] VSCA 376 [27].
In Dale v Clayton Utz (No 3),[4] Hollingworth J considered the authorities on r 63.20.1. Her Honour held that courts have recognised that the demands of justice may require departure from the usual order as to costs for one or more of three broad reasons, namely:[5]
(a) the unsatisfactory conduct of the unsuccessful party;
(b) the likely delay before the conclusion of the principal proceedings; and
(c) where the interlocutory application involves a separate or discrete issue.
[4][2013] VSC 593.
[5]Dale v Clayton Utz (No 3) [2013] VSC 593 [65], approved by the Court of Appeal consisting of Warren CJ, Ashley and Whelan JJA in Setka v Abbott MP (No 2) [2013] VSCA 376 [27], and followed by Hargrave J in Fanissa Pty Ltd v Versace [2016] VSC 416 [25].
Next Payments relies upon all three grounds to enliven the Court’s discretion in this instance, although any one of these factors, if established, may operate to do so.
It should be noted that these categories are not closed.[6]
Unsatisfactory Conduct
[6]Fanissa Pty Ltd v Versace [2016] VSC 416 [26].
The Court of Appeal in Setka v Abbott MP (No 2) (‘Setka’) held that the proviso under r 63.20.1 may apply, inter alia, where ‘the party against whom the substantive order was made was guilty of unsatisfactory conduct — described variously as “unreasonable” or “reprehensible”, or as involving a want of “competence and diligence”’.[7] No further elucidation of these factors was provided by the Court as there was no necessity to do so. Nor was any qualification ventured as to the breadth of these concepts.
[7][2013] VSCA 376 [27].
In the 7 June Reasons, I found that:[8]
DC Payments misused the confidential information which inadvertently fell into its hands, which information was known to it to be confidential, by making use of the material for the purposes of re-drafting its pleadings in both the [Breach of Confidence] Proceeding and the Inducement Proceeding.
[8]DC Payments v Next Payments [2016] VSC 315 [71].
This had a direct and significant bearing on the proceeding. Substantial portions of the pleadings of DC Payments in the Breach of Confidence Proceeding[9] and the Inducement Proceeding[10] were struck out. Further and consequential orders were made against DC Payments for the physical protection of the confidential information comprised in the customer list in its possession, and, as far as possible, quarantining the knowledge gained by its legal representatives.
[9]S ECI 2014 00037. See DC Payments v Next Payments [2016] VSC 315 [4].
[10]S CI 2014 01563. See DC Payments v Next Payments [2016] VSC 315 [5].
DC Payments was ordered to take a number of steps which, of necessity, involved the participation of the solicitors of Next Payments, thereby giving rise to a cost outlay by Next Payments. These costs arose directly from the impugned conduct as found. Relevantly, DC Payments was ordered to:[11]
[11]DC Payments v Next Payments [2016] VSC 315 [99].
(a) Deliver up all hard copies of the [confidential customer list] in its possession, custody or power to the solicitors for Next Payments;
(b) Return any computer disk or other storage device containing copies of the [confidential customer list] in its possession, custody or power to the solicitors for Next Payments; and
…
(e) Provide by affidavit, written confirmation of compliance with this order to the solicitors for Next Payments
DC Payments submits that its conduct was not ‘unreasonable’ or ‘reprehensible’ in the relevant sense.
I reject this contention. The conduct found, and what flowed from it in the orders made, ordinarily would attract adverse costs consequences. I am satisfied that the conduct, and what flowed from it, of itself, constitutes ‘unreasonable’ or ‘reprehensible’ conduct within the meaning of the authorities for the purposes of the proviso under r 63.20.1 and of itself justifies the making of the order setting aside the default position.
Delay
Turning to the issue of delay, in the recent case of Fanissa v Versace, Hardgrave J held that it is not ‘mere delay on its own’ that may give rise to an immediate taxation, observing that ‘[t]he Court needs to balance the delay in the context of unfairness to both parties’.[12]
[12]Fanissa Pty Ltd v Versace [2016] VSC 416 [30].
DC Payments submitted that there is no reason to think that there will be considerable delay until the completion of the proceeding. Given the ‘commercial imperatives’, DC Payments says that it ‘seeks a swift resolution of its claims’.
Further, DC Payments submitted that there is no evidence that unfairness in the ongoing conduct of the litigation will be occasioned if Next Payments’ costs are taxed at the completion of the matter.
I reject these submissions.
Unlike the position in Setka, where the Court of Appeal found that ‘the delay has not been very great, and trial — once the pleadings issues have been exhausted — will not have been much delayed’,[13] here the delay is likely to be considerable in the context of the present proceedings.
[13]Setka [2013] VSCA 376 [29].
Further, the delay has been largely created by the conduct of DC Payments which has resulted in a substantial re-pleading of its cases following the striking out of pleadings ordered following delivery of the 7 June Reasons. The direct consequence is that there has been very considerable delay in the finalisation of DC Payments’ pleadings arising from its misuse of Next Payments’ confidential information in drafting its statements of claim.
The Inducement Proceeding and Breach of Confidence Proceeding were commenced by DC Payments on 3 April 2014 and 8 August 2014 respectively.
In light of the orders made following delivery of the 7 June Reasons, and in the context of this case and its progress to this point, I assess that the pleadings in both cases will unlikely be finalised until sometime in 2017. A trial of the proceedings would not appear to be likely to commence before next year.
For these reasons, Next Payments is likely to be out of pocket for a very long time, unless an order for immediate taxation is made in relation to the costs of the applications in issue.
The delay of itself justifies the making of the order setting aside the default position under r 63.20.1.
Separate or Discrete Issue
I am satisfied that the costs of the applications in issue relate to separate and discrete issues from the substantive proceedings in both cases.
The issues raised in the applications are not addressed in the pleadings and, I am satisfied, will not be considered further at trial.
Consequently, taxation of the costs of the applications, if conducted immediately, will not relate in any way to other costs that may need to be taxed following a trial on the substantive issues. It follows that there will be no duplication in the work of the Costs Court.
The findings in relation to separate and discrete issues also justifies the making of the order setting aside the default position under r 63.20.1.
Conclusion
For these reasons, I am persuaded that this is a just and appropriate case to grant the application for immediate taxation of the costs orders.
Indemnity Costs
Next Payments also seeks orders against DC Payments that its costs of and incidental to the preparation of its submissions and evidence seeking orders under r 63.20.1 be paid by DC Payments on an indemnity basis.
It relies upon what it says is unreasonable conduct by reason that DC Payments in these applications adopted what it described as ‘an unnecessarily adversarial approach’.
I do not accept this position.
The grounds advanced by DC Payments for resisting immediate taxation may not have been strong, but they were not entirely devoid of merit given the discretion which Next Payments sought to have exercised by the Court and the written submissions advanced by counsel for DC Payments.
Considering the matter overall, the applications do not justify the ordering of costs other than on a standard basis.
Orders
In the Breach of Confidence Proceeding (S ECI 2014 000037) it will be ordered that:
1.The Defendants’ costs referred to in paragraph [6] of the orders of the Honourable Justice Vickery made on 15 August 2016 (‘Orders’) be taxed immediately.
2.The Plaintiffs pay the Defendants’ costs of and incidental to the Defendants’ submissions and evidence in support, referred to in paragraph [7] of the Orders on a standard basis, such costs to be taxed immediately.
In the Inducement Proceeding (S CI 2014 01563) it will be ordered that:
1.The Defendant’s costs referred to in paragraph [17] of the orders of the Honourable Justice Vickery made on 15 August 2016 (‘Orders’) be taxed immediately.
2.The Plaintiff pay the Defendants’ costs of and incidental to the Defendants’ submissions and evidence in support, referred to in paragraph [18] of the Orders on a standard basis, such costs to be taxed immediately.
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