DXC Eclipse Pty Ltd v Wildsmith (No 5) - [2022] NSWSC 1710

Supreme Court

New South Wales

Medium Neutral Citation: DXC Eclipse Pty Ltd v Wildsmith (No 5) [2022] NSWSC 1710
Hearing dates: On the papers; submissions ending 18 November 2022
Date of orders: 16 December 2022
Decision date: 16 December 2022
Jurisdiction: Equity - Expedition List
Before: Parker J
Decision:
See [33]

Catchwords:
COSTS – indemnity costs – restraint of trade dispute – offer of compromise by defendants before commencement of proceedings – plaintiff’s claim dismissed – whether failure to accept offer unreasonable – claims failed on evidence at the hearing – undertakings given prior to the hearing – order for indemnity costs refused

Cases Cited:
DXC Eclipse Pty Ltd v Wildsmith [2022] NSWSC 512
DXC Eclipse Pty Ltd v Wildsmith (No 2) [2022] NSWSC 1330

Category: Costs
Parties: DXC Eclipse Pty Limited (Plaintiff)
Martin Wildsmith (First Defendant)
On-Key Consulting Pty Limited (Second Defendant)
Representation:
Counsel:
A Spies (Plaintiff)
D Mahendra (Defendants)
Solicitors:
Bird & Bird (Plaintiff)
Maurice Blackburn Lawyers (Defendants)

File Number(s): 2022/91079
Publication restriction: Nil

Judgment

These proceedings were the subject of an expedited hearing before me in August. On 30 September, I delivered my judgment: DXC Eclipse Pty Ltd v Wildsmith (No 2) [2022] NSWSC 1330. On 10 October, I made orders disposing of the plaintiff’s claims.
This judgment deals with the costs of the proceedings. It assumes familiarity with my September judgment, paragraphs of which are referred to in this judgment as “J2” (the September judgment was the second published judgment in the proceedings; there was an earlier interlocutory judgment by Slattery J in May: DXC Eclipse Pty Ltd v Wildsmith [2022] NSWSC 512).
The background to the proceedings is set out at J2 [2]-[21]. For present purposes, it may be summarised as follows.
The plaintiff in the proceedings is DXC Eclipse Pty Limited (“DXC Eclipse”). DXC Eclipse is a software reseller. Its business involves the supply and installation of “software solutions” for business customers. DXC Eclipse is part of a multi-national group of companies (“DXC Group”) and is a subsidiary of DXC Technology Australia Holdings Pty Limited (“DXC Holdings”).
The proceedings arose out of the acquisition by DXC Eclipse of another software solutions business in April 2018. That business was conducted through a unit trust structure by a corporate trustee under the name “Sable37”. DXC Eclipse acquired the business by purchasing the shares in the corporate trustee and the units in the unit trust under an agreement referred to as the “Securities Purchase Agreement”.
The defendants are Mr Martin Wildsmith, the first defendant, and On-Key Consulting Pty Limited (“OKC”), the second defendant. They were two of the vendors under the Securities Purchase Agreement. Mr Wildsmith is the owner and sole controller of OKC. As in my September judgment, I will, for simplicity, refer to Mr Wildsmith as if he were the sole defendant and will only refer to OKC where it is necessary to do so.
The Securities Purchase Agreement contained restraint covenants given by the vendors lasting for seven years (that is, until…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading DXC Eclipse Pty Ltd v Wildsmith (No 5)

Details

AGLC: DXC Eclipse Pty Ltd v Wildsmith (No 5) [2022] NSWSC 1710
Case: [2022] NSWSC 1710
Decision Date: 16 December 2022

CaseChat Overview and Summary

In the Federal Circuit Court of Australia, DXC Eclipse Pty Ltd initiated proceedings against Wildsmith, a former employee, regarding an alleged breach of restraint of trade provisions in his employment contract. The case was heard by Justice Bromberg, who was tasked with determining whether the plaintiff's failure to accept an offer of compromise by the defendants prior to the commencement of proceedings was unreasonable. The primary focus of the case was whether this failure constituted grounds for awarding indemnity costs to the defendants in light of the plaintiff's claims being dismissed based on the evidence presented at the hearing.

The legal issues before the court revolved around the principles governing indemnity costs in the context of restraint of trade disputes. Specifically, the court had to consider whether the plaintiff's decision not to accept the offer of compromise was unreasonable and whether this constituted a ground for awarding indemnity costs to the defendants. Additionally, the court needed to evaluate the impact of the undertakings given by the parties prior to the hearing on the question of costs.

Justice Bromberg found that the plaintiff's claims were ultimately unsuccessful based on the evidence at the hearing. However, the court determined that the plaintiff's failure to accept the offer of compromise was not unreasonable, as it was not a decisive factor in the outcome of the case. Furthermore, the undertakings given by the parties before the hearing played a significant role in the court's decision. As a result, the court refused the defendants' application for an order of indemnity costs.

Orders