De Poi Consulting Pty Ltd v Dutton (No 2)

[2015] SADC 111

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

DE POI CONSULTING PTY LTD v DUTTON (No 2)

[2015] SADC 111

Judgment of His Honour Judge Tilmouth

24 July 2015

PROCEDURE - JUDGMENTS AND ORDERS - EFFECT OF JUDGMENTS

It is appropriate to make declaratory orders and an order for nominal damages to reflect the conclusions that the plaintiff was entitled to bring these proceedings to vindicate its rights and as the defendant had breached a covenant of non-employment.

The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286; District Court Act 1991 (SA) s 37; The Mediana [1900] AC 133; Baume v The Commonwealth (1906) 4 CLR 97; Australasian Oil Exploration Ltd v Lachberg (1958) 1012 CLR 119; Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65; Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246; Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1, referred to.
Rentokil Pty Ltd v Lee (1995) 66 SASR 301, applied.

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - OTHER CASES - SUBSTANTIAL SUCCESS

Since the plaintiff was the more successful party than the defendant, it should have 60 per cent of its costs to be agreed or taxed on a party/party basis, taking into account various matters.

District Court Civil Rules 2006 (SA) DCR 263; District Court Act 1991 (SA) s 42(1); Copping & Perball Pty LTd v ANZ McCaughan Ltd (No 1) (1995) 63 SASR 523; Latoudis v Casey (1990) 170 CLR 534; Cretazzo v Lombardi (1975) 13 SASR 4, referred to.
Oshlack v Richmond at River Council (1998) 193 CLR 72, applied.

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - CONDUCT OF PARTIES - DEMAND, OFFER AND CONSENT

District Court Civil Rules 2006 (SA) 6 DCR 263(3); Stewart v ATCO Controls Pty Ltd (In Liq) (No 2) [2014] HCA 31; Morris v McEwen (2005) 92 SASR 281; Cretazzo v Lombardi (1975) 13 SASR 4; Donald Campbell & Co v Pollak [1927] AC 732; Rapuano (t/as RAPS Electrical) v Karydis-Frisan [2013] SASCFC 93, referred to.
BHP Billiton Ltd v Parker (2012) 113 SASR 206, applied.

DE POI CONSULTING PTY LTD v DUTTON (No 2)
[2015] SADC 111

Issues

1. These proceedings relating to breach of a contract of employment, return to the court to determine what final orders are appropriately entered and on the question of costs. In a judgment delivered on 30 April 2015, the court made certain determinations in relation to the due construction of employment and solicitation restraint provisions in a contract of employment between the parties that was terminated on 10 October 2014.[1]

   [1]    De Poi Consulting Pty Ltd v Dutton [2015] SADC 67.

2. The plaintiff (De Poi) now seeks orders in the nature of declarations to give effect to those primary findings and a further award for damages.  The defendant maintains the plaintiff achieved no more than a ‘pyrrhic’ victory and that no such orders should be made.  Each side contends that as the substantially successful party, orders for costs must be made in its favour.  These reasons bring to a conclusion these outstanding issues.

   Primary findings

3. In the primary judgment, the court determined issues related to the restraint provisions contained in clause 17 of the subject contract.  These prevented the defendant Ms Dutton, from engaging in any business or activity providing the ‘same or similar services’ to that of De Poi, and prevented her from ‘soliciting, canvassing or approaching’ any person with a view to obtaining their custom, ‘in a similar line of business’.  Both clauses were specified to endure for a period of six months from termination of the contract and both geographically applied in any State or Territory in which De Poi operated, and within 20 km of any premises from which it operated.

4. De Poi has demonstrated a legitimate entitlement in bringing these proceedings in order to protect and maintain its extant customer connections.  However the court held, the employment restraint went further in point of time and geographically than was reasonably necessary to protect those interests, so the employment constraint was read down to apply for two of the six months from 10 October 2014.[2]  Following those adjustments, further determinations were made that the non-solicitation provision was reasonable over the period of six months, once limited to the State of South Australia.  The court then proceeded to dismiss claims for damages.[3]  The parties were directed to ‘bring in formal draft minutes of order giving effect to these conclusions’, which they have now done.[4]  These are considered later in these reasons.

   [2]    Primary judgment [131]-[132].

   [3] Primary judgment [133].

   [4] Primary judgment [134].

   The claim to damages

5. The majority of the primary aspects of damages related to the breach of the solicitation provisions, thus disposing of the claims for damages pleaded in paragraphs 33.2 and 33.3 of the Second Statement of Claim, upon which De Poi went to trial.[5]  So far as they went, most aspects of the claims for damages were adversely resolved against De Poi as follows:[6]

   [99]  A bold attempt was made by Mr Roberts SC, by means of a linear calculation, to put a dollar estimate on the loss said to have arisen because of the corresponding fall and increase in the respective businesses.  The argument ran thus.  Assuming an average income generated of $5,000-$6,000 per file, and assuming the direct loss of 37 files, the combined loss is quantified by a simple multiplication of the two, namely $185,000. 

   [100]  There are a number of serious flaws in this submission.  In the first place this process of reasoning entails no more than a simplistic and speculative assumption of cause and effect.  The analysis pays no regard to the fact that IPAR had steadily increased its business in the period before Ms Dutton’s arrival, or the other contrary indicators.  This theory further ignores the fact that for six weeks before the commencement of employment with IPAR on 13 October, Ms Dutton was relatively inactive at De Poi.  The ‘same’ calculations are in any event based on revenue rather than profit.

   [101]  As De Poi’s business was in decline, as already demonstrated, the case for De Poi on this topic bears the hallmarks of a flawed process of reasoning ‘after this, therefore because of this’, that is uncritically drawing conclusions solely from the sequence of events, whilst overlooking other factors that may sever or serve to exclude causal connection.

   [102]  Finally it is opportune to take account of the fact that questions of seeking work was one particularly frowned upon by the claims agents.  Had work been so solicited by Ms Dutton, the effort was very likely to have been counterproductive, for that very reason.  Furthermore, it was internal IPAR policy that employees such as Ms Dutton – and Ms Johnson for that matter – act ‘with professionalism and integrity in all business undertakings and personal presentation is appropriate and professional’.

   [5]    Primary judgment [96]-[102].

   [6]    Primary judgment [99] - [102], footnotes omitted.

6. A subsequent submission was made by Mr Roberts SC for De Poi that the court had not perfected or completed one aspect of the damages sought.  A particular observation pointed to in the primary judgment in support of that submission was this:[7]

   [91]    There is an inherent difficulty in identifying the influence Ms Dutton’s established relationships upon the so called ‘influx’ of the referrals to IPAR.  As Doyle CJ pointed out in NE Perry Pty Ltd v Judge, proof of damage does not follow as a matter of course from a proven breach of restraint.  A portion, perhaps a significant portion of the relationships built up by Ms Dutton, must have been established because of good performance, as well as innate interpersonal skills and force of personality.

   A further conclusion of relevance is that ‘Ms Dutton remained in breach of the covenant contained in clause 17.2.1 for a period of two months’[8], that is from 10 October to 10 December 2014.

   [7]    Primary judgment [91], footnote omitted.

   [8] Primary judgment [131].

7. These observations reflect a nuanced or innate supposition that some work that might otherwise have gone to De Poi, might well have been referred to Ms Dutton once she commenced work with IPAR, as the personal choice of consultants within the claims agent. The conclusions in the above quoted paragraphs taken from the primary judgment, do not however resolve in terms, the claim for damages expressed in paragraph 33.1 of the Second Statement of Claim, expressed as a claim for the loss of revenue on account of the breach of the employment covenant ‘likely to be lost in the future’. This aspect of the claim for damages founds on the breach of employment rather than the breach of solicitation restraint. Therefore, to the extent that the primary judgment purported to record ‘the claim expressed in paragraph 33.1 of the statement of claim … fails for the lack of evidence and proof of causation’, it overstates the position.[9]

   [9] Primary judgment [133].

8. During his long opening, counsel for De Poi mentioned a claim for damages arising out of the defendant’s reintroduction into the WorkCover consulting industry, immediately upon cessation of her role at De Poi, and during the period of the restraint,[10] based on ‘a commensurate increase in the referrals at … IPAR’.[11]  The submission was pitched in point of principle, as putting De Poi in the same position it would have been had Ms Dutton not breached the employment restraint over the period during which it was held to be valid.[12]

   [10]   T36.2-10.

   [11]   T67.21-69.10.

   [12]   T72.27-32, T64.27-29.

9. The evidence is that IPAR was in receipt of an average of 13-14 referrals per month from the claims agent Gallagher Bassett in the four months preceding Ms Dutton’s resignation from De Poi.  Such referrals increased to 28 in October, 22 in November and 24 in December 2014.[13]  In other words there was in effect a coincidental surge in the number of referrals after Ms Dutton commenced employment with IPAR on 13 October 2014.  The premise lying behind this aspect of the plaintiff’s claim is that the increase in referrals is likely to be attributable to Ms Dutton leaving De Poi and commencing work at IPAR, when she should not have been for two months after 13 October 2014.

   [13]   Primary judgment [96]-[97].

10. Despite the observation as to the potential of referrals on account of personal appeal, the evidence does not support that supposition, at least to the point of proof on the balance of probabilities. Quite apart from the considerations referred to in the primary judgment (reproduced above), the inescapable fact remains that Ms Dutton did not assume an active managerial or consulting role in the two months in question.  In that time she was not taking referrals and it is not proven she received any, except for the few temporary watching briefs identified in the primary judgment.[14]  She had in fact remained in an ‘induction’ phase, as previously found:[15]

    [89]  It is as well to recognise that in her short time at IPAR, Ms Dutton had not assumed her managerial role as yet.  She was effectively still within an ‘induction’ phase, in addition to a three month probation period, which envisaged ‘a general introduction into the [management] role’.  In that period of time the conduct of rehabilitation services requiring her to be in touch with the claims agents was relatively minor.  Questions of growing the business once assuming the full managerial functions, had not commenced.  In any case, approaching clients to procure work formed no part of Ms Dutton’s role as manager, rather it was Ms Johnson’s responsibility.  There was no occasion or need for Ms Dutton to go out and meet people or sell herself, or IPAR for that matter. 

    [90]  Another relevant consideration is that Ms Dutton was keenly aware of the restraints and was wary of breaching them.  Furthermore Gallagher Bassett were existing clients of IPAR well before Ms Dutton commenced working with it.  The undeniable evidence was that there were referrals on 29 September 2014, 13 August 2014, 10 July 2014 and 7 October 2014, quite independently of Ms Dutton.

    [14]   Primary judgment [124]-[125] and [127].

    [15]   Primary judgment [89]-[90], [123].

11. It follows that had Ms Dutton only taken up the position at IPAR two months after resigning from De Poi, it is not shown De Poi would be in any worse position, or that the change in circumstances (assuming that was the case) was attributable to her taking that employment immediately after resigning.  Accordingly, it is not proven that De Poi is entitled to any measurable loss of damage on account of the breached employment restraint.  Furthermore, despite the obligation resting on the court to assess damages ‘as best it can’ on the material available to it: The Commonwealth of Australia v Amann Aviation Pty Ltd,[16] any attempt to do so in the proven circumstances would amount to nothing more than speculative guess work.

    [16] (1991) 174 CLR 64 at [83], [125].

12. Nevertheless, the above considerations serve to underpin the conclusions reached later in these reasons, of the aptness of orders for nominal damages and for declaratory relief, so as to duly mark the breach of the employment restraint.  The application for a further substantial award of damages must however, be rejected.

    Declaratory relief and nominal damages

13. De Poi seeks orders for declaratory relief in the following terms:

    1.The defendant was in breach of the covenant in clause 17.2.1 for a period of two months.

    2.The non-solicitation provision containing clause 17.2.2 is a reasonable one, once confined in operation to the state of South Australia for a period of six months, so as to protect the plaintiff’s legitimate interests.

14. The covenants containing the employment and solicitation constraints were partly upheld in respect of the former and substantially upheld in respect of the latter.  A concrete finding was made that Ms Dutton ‘remained in breach of the covenant contained in clause 17.2.1 for a period of two months’.[17] Subsidiary orders are now sought for the payment of nominal damages to give effect to the conclusions as to the validity of the respective clauses.  De Poi further gives notice of an application to seek costs against the non-party employer of the defendant, IPAR.  That does not fall for determination at present. Orders in the nature of declaratory relief and an award of nominal damages are opposed on the basis of the supposed hollow victory.  Defence counsel submits any such orders will not serve to ‘produce [any] foreseeable consequence for the parties’: Ainsworth v Criminal Justice Commission.[18] 

    [17] Primary judgment [131].

    [18] (1992) 175 CLR 564 at [582].

15. It can be readily accepted that as a question of principle, declarations are not usually made when there is no utility to be served or no consequence in doing so: Neeta (Epping) Pty Ltd v Phillips,[19] Ainsworth v Criminal Justice Commission.[20]  The criticism that De Poi made no formal claim for declarations in its pleadings, is to overwhelm form over substance, given that De Poi has vindicated its position in this respect.  Counsel for Ms Dutton was utterly unable to identify any prejudice in taking this course.

    [19] (1974) 131 CLR 286 at [307].

    [20]   Ibid

16. The power to enter a binding declaratory judgment is conferred on the District Court by s 37 of the District Court Act 1991 (SA), ‘whether or not any consequential relief is or could be claimed’. One of the more enduring achievements of the common law is the identification and enforcement of the ‘indisputable rule, that where there is a legal right, there is also a legal remedy’.[21]  Nominal damages are most commonly awarded as a mark of the loss or harm suffered, assessed as technical rather than actual in nature.  As stated by Lord Halsbury in The Mediana,[22] nominal damages serve to furnish ‘a right to the verdict or judgment because your legal right has been infringed’, a reference cited with approval by Griffiths CJ in Baume v The Commonwealth.[23]  A declaration serves the further utility of binding the parties: Australasian Oil Exploration Ltd v Lachberg.[24]

    [21] Blackstone, Commentaries on the laws of England Vol III, p 23, (1844) Marbury v Madison 5 US 137, 162-163 (1903).

    [22] [1900] AC 133 at [116].

    [23] (1906) 4 CLR 97 at [116]-[117].

    [24] (1958) 101 CLR 119 at [133]-[134].

17. A party establishing a breach of a contract by the other party, normally acquires a right to recover damages for that breach and yet if no loss is proven, that party remains entitled to nominal damages: Motium Pty Ltd v Arrow Electronics Australia Pty Ltd.[25]  This was a course considered entirely appropriate by the Full Court in the context of identical subject matter in Rentokil Pty Ltd v Lee.[26]

    [25] [2011] WASCA 65 at [7] and the authorities referred to therein.

    [26] (1995) 66 SASR 301 at [307], [315], [330], [343].

18. For these reasons, it is entirely appropriate to make an order for declaratory relief in the terms later given in these reasons. It is equally appropriate to enter an award of nominal damages, on the basis that the plaintiff has succeeded in substantially vindicating its rights to demonstrate a breach of the restraint on re-employment, to protect its customer connections, and in substantially upholding the validity of the non-solicitation constraint.

    Costs – general principles

19. The ordinary position is that costs follow the event on a party/party basis: District Court Civil Rules 2006 (SA) DCR 263 (1) and 6 DCR 264(1).  Orders for costs are made in the unfettered discretion of the court, providing the discretion is exercised judicially: s 42(1) District Court Act 1991 (SA); Copping & Perball Pty Ltd v ANZ McCaughan Ltd (No 1).[27]  Quite apart from the general ‘default’ position, a successful party holds a reasonable expectation of obtaining an order for costs, unless for some reason connected with the litigation, a different order is warranted: Latoudis v Casey.[28]  The purposes of making costs orders is compensatory and by way of restorative justice, rather than punitive: Latoudis v Casey.[29]  There is no fixed principle against dividing costs as between issues: Cretazzo v Lombardi.[30]

    [27] (1995) 63 SASR 523 at [527]-[528].

    [28] (1990) 170 CLR 534 at [557], [569], [577].

    [29]   Ibid at [567].

    [30] (1975) 13 SASR 4 at [12]; rule 6 DCR 264(6).

20. The discretion to make exemptive orders usually arises from identified misconduct on the part of a party in the litigation itself, or when the ‘successful’ party obtains relief of such nature that the unsuccessful party has already offered or bettered in settlement of the dispute: Oshlack v Richmond at River Council.[31]  Nevertheless as McHugh J emphasised in that case:[32]

    By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation.

    [31] (1998) 193 CLR 72 at [69].

    [32]   Ibid at [66].

21. A fair assessment of the course of the entire trial, demonstrates the time devoted to issues related to validity and enforceability of the restraint provisions occupied no less than approximately 80 per cent of the trial time.  The remainder was devoted to damages.  As to the former, De Poi was more successful than not in upholding the validity of its covenants in the first place, and in the second to a limited extent geographically, and to one-third of the six months operation of the employment restriction.  A concession as to geographic limitations confining them to this State was made by the plaintiff’s counsel at the outset of the trial.[33] 

    [33]   T12.23.

    Costs - offers to settle

1. There were no offers made in accordance with the Rules of Court, so that the following enquiry relates to various informal offers to settle.  There can be no doubt that it is proper to have regard to informal attempts to settle actions, as permitted by rule 6 DCR 263(3) of the District Court Civil Rules, even though such offers were not filed or compliant with the formalities required by the Rules of Court: Stewart v ATCO Controls Pty Ltd (In Liq) (No 2),[34] Morris v McEwen.[35]  The question is whether the party against whom the offers are made, acted imprudently in rejecting reasonable offers to settle, especially when the offering party has bettered the offer: BHP Billiton Ltd v Parker.[36]

   [34] [2014] HCA 31 at [4].

   [35] (2005) 92 SASR 281at [62].

   [36] (2012) 113 SASR 206 at [265], [276].

2. The so-called ‘letter of demand’ from De Poi’s solicitors of 27 November 2014, called for an undertaking by just before midday on Monday 1 December 2014, bluntly requiring Ms Dutton to stand down from her employment with IPAR for six months from 10 October 2014 ‘without prejudice to any other rights it may have against you [to] take legal action’.

3. When the matter first came on before another Judge of the court on 22 December 2014, Mr Millar gave an undertaking on behalf of Ms Dutton to take leave from her work with IPAR between 24 December 2014 and 5 January 2015, and then not to be at work ‘for almost all of the period through all the projected date to trial’,[37] bearing in mind the trial was listed to commence on 19 January 2015.  Later he added, Ms Dutton would not ‘be soliciting the clients of the plaintiff and that undertaking extends through to trial’.[38]  These are not of course properly categorised as offers to settle; they were more in the nature of concessions to maintain the status quo in the meantime.

   [37]   T7.32-8.9, 22 December 2014.

   [38]   T19.4-.6, Ibid.

4. This appearance before another Judge at the Court on 22 December 2014 was followed by a letter of the same date from Ms Dutton’s solicitor repeating the offer to abide the non-solicition restraint for the full six months, based on the now discredited assumption that: ‘There is no utility in the hearing proceeding, as there is no proposed basis on which your client could maintain a claim for any further relief.’ The letter contained no mention of costs other than to give notice that the letter will be produced to the court on the merits and on the question of costs.

5. However on Christmas Eve 2014, Ms Dutton proposed through her solicitors to resolve the proceedings on the basis that she maintain the non-solicitation undertaking until 10 April 2015, that is over the full six months provided for in the subject agreement, and that she would not perform any work on behalf of the claims managers of Gallagher Bassett Pty Ltd or Mutuals Employee Limited, for the period up to 1 February 2015.  That offer was conditional upon each party bearing their own costs. It remained open only until 5.00 pm on Monday 29 December 2014.  Since the following two days were public holidays, this allowed just three days to accept.  The offer was premised on the bold assertion that De Poi’s case was ‘untenable and destined to fail at trial’, a position she failed to achieve and was proferred ‘without prejudice save as to costs’.

6. As this offer failed to make any substantial concession it was not imprudently rejected, quite apart from the unresolved issue of costs.  The trial commenced on 19 January over four days until 22 January 2015, when it was adjourned to resume on 4 February 2015. On this date the court sat for another three days.

7. On 14 January 2015 the matter first came before me for directions.  Counsel for the defendant made the following sweeping claim:[39]

   If and when the case against her ultimately falls over, on the basis that this restraint is untenable and these proceedings should never have been brought, then my client is entitled to receive damages, the loss that’s been sustained as a result of her being out of work.

   [39]   T17.24-.29.

8. At 8.26 pm on the eve of the trial, Sunday 18 January 2015, Ms Dutton’s lawyers put an open undertaking expressed ‘to avoid the unnecessary expense of this matter proceeding to trial’.  This reiterated the previous undertaking not to solicit until 11 April 2015, and included a ‘without prejudice’ offer to settle, ‘save as to costs’, on the basis that the proceedings be discontinued, De Poi to pay the defendant’s and IPAR’s costs on a party/party basis, together with Ms Dutton’ and IPAR’s release from undertaking as to damages given on 22 December 2014.  This offer was postured on the footing that the ‘only issue that should be tried … is the non-solicitation covenant’.

9. The defence put yet another offer by letter of 3 February 2015, by undertaking to abide by the non-solicitation provision ‘for the full duration of the restraint’ that is until 11 April 2015 without conditions, on the understanding that there was ‘no need for [the plaintiff] to pursue any injunctive relief’ and on the further condition that the plaintiff discontinue the proceedings ‘with only the question of costs remaining’.  It sought further concessions that Ms Dutton and IPAR have their costs taxed or agreed on a party/party basis. 

10. A number of points in common surface from the exchanges in this correspondence and in the undertakings before the court, reflecting the stance taken by the defendant.  First, at no time did Ms Dutton accept or even acknowledge De Poi’s legitimate interest in taking steps to protect its entitlement to maintain extant customer connections.  This interest was particularly acute in the tight, highly competitive niche market involved, and in the context of the critical importance the professional relationships between rehabilitation consultants and the claims agents.[40]

    [40]   Primary Judgment [12], [62], [131], [132]; Rentokil Pty Ltd v Lee (1995) 66 SASR 301at [303].

11. Second, there was no strictly enforceable offer in the various undertakings given before the court, capable of acceptance so far as non-solicitation was concerned.  Those concessions were given on an interim basis pending resolution of the proceedings.  In the absence of such undertakings, the Court was more than likely to have made injunctive orders to practically identical effect, at least until the interlocutory judgment was delivered.

12. Third, there was no concession and in fact no semblance at all of any acceptance of an entitlement to declaratory relief, or of the breach of the non-employment covenant itself.

13. Fourth, so far as the early offer to abide by an extension of the non-solicitation undertaking for the full six months is concerned, these were subject to other conditions which were not imprudently rejected, given the third point above, quite apart from unresolved costs issues.

14. Fifth, the question of costs, a substantial consideration on both sides, was never resolved.  For the most part the defendant continued to seek her own costs.  The best offer she made on this score was that each party bear their own costs in the Christmas Eve letter.  This however failed to acknowledge the first, second and third considerations referred to above, and overlooks the significant practical constraint imposed by an extremely short deadline for acceptance at a difficult period of time in the legal calendar.

15. There are a number of other considerations bearing upon the proper disposition of costs.  De Poi is criticised on the one hand for delay in bringing proceedings on 19 December 2014, but on the other for not waiting to see whether there was any breach of the non-solicitation covenant.[41]  De Poi was in a difficult position.  A valued employer had left its employ in hastened circumstances and taken up fresh employment the next working day in ‘brazen’ breach of the employment restraint.[42]  The fact that the plaintiff abandoned early on pleas in statutory causes of action and in seeking to uphold the extra-territorial components of the subject covenants, were of little or no consequence.  They were more than offset anyway, by the defendant’s insistence on pursuing the all but hopeless point that the ‘clients’ of De Poi were the claims agents rather than injured workers.[43]

    [41]   Reply submissions on Final Orders, para 14.

    [42]   Primary judgment [17], [20]-[21].

    [43]   Primary judgment [75]-[76].

16. It is true that the respective damages claims failed, and yet they were not entirely speculative.  From De Poi’s perspective the defendant had promptly left its employ in suspicious circumstances, as its referral work began to fall as IPAR’s had correspondingly risen as seen through De Poi’s eyes.  This aspect of the plaintiff’s case was therefore reasonably pursued.  The fact that it ultimately failed to prove damages is nevertheless a consideration to weigh the balance in favour of the defendant, but in the context just referred to. So too does the offer of Christmas Eve 2014, to the extent that the offer stipulated she would not take referrals from the claims agents until 1 February 2014 has it bettered the conclusion reached by the Court with respect to the duration of the non-employment covenant. This is tempered somewhat by the fact that this was over the Christmas/ New Year holiday period.

17. It might be observed at this point that after judgment was reserved in relation to costs, a number of further materials were forwarded to the court going beyond those the court had asked for.  The profession needs reminding that before such materials can be properly received, they need to first seek leave of the court, because of the burden such a disorderly process places on judges and because of the possible delay and further cost involved: Carr v Finance Corporation of Australia Ltd;[44] Trade Practices Commission v TNT Management Pty Ltd & Ors.[45]  Accordingly these materials are not considered, except for the purpose of determining that it is not appropriate to call the matter on for further submissions, and except only to the extent that the letter of 22 December 2014 was taken into account.

    [44] (1981) 147 CLR 246.

    [45] (1985) 6 FCR 1.

18. There is no foundation in any of this or related correspondence, that furnishes any basis for a more favourable order for costs to the defendant.  She fails to identify any sufficient reason for departing from the settled practice according to which the successful party in is entitled to costs, in circumstances where the plaintiff was largely successful, and despite the fact that the defendant was largely unsuccessful: Cretazzo v Lombardi;[46] Campbell (Donald) & Co v Pollak;[47] Rapuano (t/as RAPS Electrical) v Karydis-Frisan.[48] She has however demonstrated an entitlement to some reduction on account of the failed claims for damages and on account of partial success in relation to the non-competition covenant and in putting a better offer with regard to it.

    [46] (1975) 13 SASR 4 at [11]-[12].

    [47] [1927] AC 732 at [812].

    [48] [2013] SASCFC 93 at [103].

    Summary and Orders

19. The above analysis reveals that the plaintiff De Poi was on balance the more successful party in the pursuit of multiple issues in contest during the trial.  Its most influential failure was as to damages and to a much lesser extent in upholding the full extent of the non-employment covenant.  In the combined circumstances and in balancing the above considerations, it is appropriate to award De Poi 60 per cent of its costs to be taxed or agreed on a party/party basis.  Any entitlement of the defendant for a more favourable costs order is without merit.

20. In light of the above, orders as follows are proposed.

    1.     The court declares that:

    1.1The defendant has acted in breach of the restraint of trade covenant contained in clause 17.2.1 of the contract of employment with De Poi dated 15 January 2014, between 13 October and 10 December 2014.[49]

    1.2Clause 17.2.2 of the said contract is valid and enforceable to the extent that it is read down and confined geographically to the State of South Australia.

    2.The plaintiff be awarded damages of $1 in respect of the damages claim pleaded in paragraph 33.1 of its Second Statement of Claim.

    3.The plaintiff have 60 per cent of its costs of the interlocutory and primary proceedings to be agreed or taxed.

    [49]   Wording modelled on that referred to in Rentokil v Lee (1995) 66 SASR 301, 343.

21. The question of IPAR’s claim to ‘reasonable compensation … for the time and expense involved’ in the provision of non-party disclosure under 6 DCR 146(2) of the District Court Rules, and the question of enforcement of the plaintiff’s original (and usual) undertaking as to damages under 6 DCR 246(4), are adjourned to a date to be fixed.