Emeco International Pty Ltd v O'Shea [No 2]
[2012] WASC 348 (S)
•17 OCTOBER 2012
EMECO INTERNATIONAL PTY LTD -v- O'SHEA [No 2] [2012] WASC 348 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 348 (S) | |
| Case No: | CIV:2310/2012 | 15 OCTOBER 2012 | |
| Coram: | EDELMAN J | 17/10/12 | |
| 17 | Judgment Part: | 1 of 1 | |
| Result: | Application to vary terms of the injunction dismissed Indemnity costs application dismissed Defendant to pay 90% of the plaintiff's costs of the trial on a party and party basis | ||
| B | |||
| PDF Version |
| Parties: | EMECO INTERNATIONAL PTY LTD BRENDAN O'SHEA |
Catchwords: | Practice and procedure Application to vary order before order perfected Proposed variation not reflecting the terms of the enforceable restraint Not appropriate to express a view on a variation application concerning a matter of construction of a contractual restraint which was not raised at trial Practice and procedure Costs Indemnity costs Calderbank offers made prior to trial Calderbank offers refused Refusal of Calderbank offers was reasonable Appropriate considerations for assessment of party and party costs where there are in substance several causes of action Order that the defendant pay 90% of the plaintiff's costs to be taxed on a party and party basis |
Legislation: | Nil |
Case References: | Amaca Pty Ltd v Hannell [2007] WASCA 158 (S) Calderbank v Calderbank [1975] 3 WLR 586 Emeco International Pty Ltd v O'Shea [2012] WASC 282 Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 J C Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282 Keet v Ward [2011] WASCA 139 Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181 McKay v Commissioner of Main Roads (No 7) [2011] WASC 223 (S) Minister for Education v Klein [2005] WASCA 185 (S) Orleans Investments Pty Ltd v MindShare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
BRENDAN O'SHEA
Defendant
Catchwords:
Practice and procedure - Application to vary order before order perfected - Proposed variation not reflecting the terms of the enforceable restraint - Not appropriate to express a view on a variation application concerning a matter of construction of a contractual restraint which was not raised at trial
Practice and procedure - Costs - Indemnity costs - Calderbank offers made prior to trial - Calderbank offers refused - Refusal of Calderbank offers was reasonable - Appropriate considerations for assessment of party and party costs where there are in substance several causes of action - Order that the defendant pay 90% of the plaintiff's costs to be taxed on a party and party basis
Legislation:
Nil
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Result:
Application to vary terms of the injunction dismissed
Indemnity costs application dismissed
Defendant to pay 90% of the plaintiff's costs of the trial on a party and party basis
Category: B
Representation:
Counsel:
Plaintiff : Mr K J Mony De Kerloy
Defendant : Mr I Neil SC
Solicitors:
Plaintiff : Freehills
Defendant : Keystone Lawyers
Case(s) referred to in judgment(s):
Amaca Pty Ltd v Hannell [2007] WASCA 158 (S)
Calderbank v Calderbank [1975] 3 WLR 586
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298
J C Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282
Keet v Ward [2011] WASCA 139
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181
McKay v Commissioner of Main Roads (No 7) [2011] WASC 223 (S)
Minister for Education v Klein [2005] WASCA 185 (S)
Orleans Investments Pty Ltd v MindShare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81
(Page 3)
TABLE OF CONTENTS
Introduction 4
The terms of the injunction 4
The costs orders 9
Should indemnity costs be awarded? 9
The appropriate order for party and party costs 13
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- EDELMAN J:
(These are the edited reasons which were delivered orally on 15 October 2012 after the hearing of these applications.)
Introduction
1 On 20 September 2012 I delivered my primary reasons for decision in this matter.1 At the conclusion of my reasons I said that the parties should confer on the appropriate terms of an injunction and any other orders to give effect to the reasons. I indicated that in the absence of agreement about the orders, each party should submit a minute of proposed orders and I would deal with the issues which arose on the papers or at a short hearing to follow.
2 The parties both submitted proposed terms for the injunction. Emeco sought to have an oral hearing in relation to costs, but Mr O'Shea did not. Neither party sought to make any submissions about the terms of the injunction which were sought. The injunction was ordered in terms which reflected the Competitor Restraint. I gave short unpublished reasons explaining the grant of the injunction in these terms.
3 At the hearing this morning, Mr O'Shea applied to vary the terms of the injunction, and both parties both made submissions about the appropriate costs orders. Emeco sought an order for indemnity costs based on Calderbankoffers made to Mr O'Shea. The application to vary the terms of the injunction was dismissed for the reasons below. The indemnity costs application should also be dismissed. The appropriate order for costs is that Mr O'Shea pay 90% of Emeco's costs to be taxed, if not agreed, on a party and party basis.
The terms of the injunction
4 In my primary reasons for decision at [256] I explained that the Competitor Restraint was enforceable and that Emeco was entitled to an injunction to enforce the Competitor Restraint. I explained that it was not clear why Emeco sought an injunction which, in some respects, was significantly different from the terms of the Competitor Restraint ([257]-[258]).
5 I indicated in my primary reasons that I had not heard submissions concerning the precise wording of an injunction but that I could see no difficulty with a restraint which prevented Mr O'Shea from 'working for
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- or provid[ing] products or services to NPE' in Western Australia for the six month period of the restraint. This was the minimum to which I considered Emeco would be entitled and it reflected part of the wording of the Competitor Restraint.
6 Emeco provided a revised minute seeking an injunction in terms which closely replicated the terms of the Competitor Restraint and which removed the concerns I had raised in my reasons about Emeco's order going beyond the terms of the Competitor Restraint. In granting an injunction, equity acts to enforce a legal right. I explained in my unpublished reasons that in all the circumstances of this case, in particular the conduct of Mr O'Shea,2 I was satisfied that it was appropriate that the court should order an injunction to protect Emeco's rights in terms which replicate, as precisely as possible, the terms of the Competitor Restraint. The order made was:
1. Until 3 February 2012 the defendant must not, within Western Australia, (either directly or indirectly), provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of the plaintiff (including but not limited to National Plant & Equipment Pty Ltd ABN 67 078 654 323).
7 As Dixon J said in J C Williamson Ltd v Lukey and Mulholland3 'if ... a clear legal duty is imposed by contract to refrain from some act, then, prima facie, an injunction should go to restrain the doing of that act'. Nevertheless, an injunction should be expressed in terms which make clear what is to be done and what is not to be done and the formulation of an injunction should take into account the possibility of uncertainty and oppression.4
8 On 12 October 2012, Mr O'Shea filed a notice of originating motion seeking variation of the terms of my injunction. The variation proposed by Mr O'Shea was as follows:
Until 3 February 2012 the defendant must not,
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9 The variation involved removal of the words which I have struck through and insertion of the words which I have underlined.
10 The order made has not been perfected. I have power to reopen the order made. In Minister for Education v Klein,5 Steytler J explained the principles governing the exercise of discretion to reopen an order which has not been perfected. His Honour said the following:
As the High Court has reaffirmed in De L v Director-General, NSW Department of Community Services(No 2) [1997] HCA 14; (1997) 190 CLR 207 at 215, there is no doubt that that Court may reopen unperfected judgments or orders if it is convinced that it has proceeded 'on a misapprehension as to the facts or the law' (Autodesk Inc v Dyason(No 2) [1993] HCA 6; (1993) 176 CLR 300 at 302) or where 'there is some matter calling for review' (Smith v New South Wales Bar Association (No 2) [1992] HCA 36; (1992) 176 CLR 256 at 265) or where 'the interests of justice so require' (Autodesk at 322, per Gaudron J). The power is one which, the High Court has said, must be exercised with great caution (State Rail Authority of NSW v Codelfa Construction Pty Ltd (No 2) [1982] HCA 51; (1982) 150 CLR 29 at 38; Wentworth v Woollahra Municipal Council (No 2) [1982] HCA 41; (1982) 149 CLR 672 at 684 and Autodesk at 302) and the circumstances that will justify a rehearing, must be 'quite exceptional': State Rail at 38 per Mason and Wilson JJ. That is so because of the obvious public interest in the finality of litigation: De L at 215; Autodesk at 302; State Rail at 38; and Wentworth at 684. However, the judgments of the High Court reveal a preparedness by that Court to reopen an unperfected judgment or order where an applicant can show that 'by accident without fault on his part he has not been heard': Wentworth at 684, per Mason ACJ, Wilson and Brennan JJ; and Autodesk at 302, per Mason CJ, 308, per Brennan J, and 312, per Deane J. That is because a court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue: Pantorno v The Queen [1989] HCA 18; (1989) 166 CLR 466 and Autodesk, at 308, per Brennan J.
11 Counsel for Emeco, Mr de Kerloy, submitted that Mr O'Shea had the opportunity to make submissions concerning the appropriate terms of the injunction at trial, and after delivery of my reasons. But no submissions were made on either occasion, including no submissions in relation to the draft order (which I made) which was sought by Emeco and sent to Mr O'Shea before it was filed.
12 However, in circumstances in which no submissions were made concerning the precise form of the order, if the terms of the order which I made did not accurately reflect my reasons and the terms of the
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- Competitor Restraint, then I would have been prepared to reopen the order.
13 Senior counsel for Mr O'Shea, Mr Neil, conceded that it was appropriate that the order should reflect the terms of the Competitor Restraint. This is an appropriate concession for the reasons I have explained and which were set out in my unpublished judgment. However, Mr Neil's submission was that without the variations the terms of the order it would not reflect the proper construction of the Competitor Restraint, nor would it reflect my reasons at [172].
14 To reiterate, the Competitor Restraint is as follows:
You agree not to engage (either directly or indirectly) in each or any of the activities specified in sub-clause (a)(1) - (4), within the areas and for the periods after the Termination Date as specified in sub-clause (b)(1), without the prior written consent of Emeco:
a)1. provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of Emeco [the Competitor Restraint];
Subclause (b)(1) provided as follows:
b)1. In Western Australia for a period of 6 months, unless that period is held invalid for any reason by a court of competent jurisdiction, in which case, 3 months.
15 Reading the Competitor Restraint as a whole, it involves an undertaking which can be expressed by inserting the relevant parts of the substantive restraint in place of the general words 'any of the activities specified'. The clause then reads as follows:
... not to engage (either directly or indirectly) in [the activity of]
provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of Emeco,
within the area [i]n Western Australia for a period of 6 months.
16 As to [172] of my reasons, that paragraph does little more than paraphrase the Competitor Restraint. In that paragraph I said:
[T]he geographic scope of Mr O'Shea's Competitor Restraint, which is a restriction confined to businesses competitive with the business of Emeco[,] in Western Australia, was reasonable. There was evidence that
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- Emeco had commenced operations in Western Australia in 1972 and that Western Australia was a core part of its business. The Competitor Restraint imposed upon Mr O'Shea was confined to Western Australia.
17 During oral argument this morning I indicated that some confusion may have arisen from the omission of a comma after the word Emeco. The insertion of the comma is consistent with the presence of a comma in the Competitor Restraint after the words 'any of the activities specified in subclause (a)(1) - (4)'.
18 The terms of the injunction granted differ from the Competitor Restraint in only two potentially material respects. First, the words 'including but not limited to National Plant & Equipment' are inserted at the conclusion of the injunction. There can be little difficulty with this difference. Those words simply clarify a matter which was common ground at trial; that NPE was a competitor of Emeco.
19 The second difference is that the words 'within Western Australia' effectively appear before the description of the prohibited activity rather than after it. I do not consider that this is material. Indeed, Mr Neil submitted that the different positioning of the words made no material difference to the construction which he urged. His argument was that the proposed variation removed any doubt that the proper construction of the Competitor Restraint was to limit the operation of the Competitor Restraint to situations in which the prohibited activity concerned the competitor's business within Western Australia.
20 In other words, the submission for Mr O'Shea was that the re-draft of the clause made it clear that Mr O'Shea could perform work for NPE in Western Australia, provided that the work performed was not in relation to a business competitive with the business of Emeco in Western Australia. So, it was submitted, Mr O'Shea should be entitled to send emails or take phone calls in Western Australia in relation to NPE's South Australian business. None of these matters were raised at trial.
21 The simple reason why this submission should be rejected is because, whether or not the construction proposed by Mr Neil is correct, the proposed variation plainly would not reflect the Competitor Restraint in other significant respects. For instance, the proposed variation would have the effect that Mr O'Shea was prohibited from performing work for NPE anywhere in the world if the work performed competed with the business of Emeco in Western Australia. This would place an unlimited geographic constraint upon Mr O'Shea's movement. This does not reflect
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- the words of the Competitor Restraint, nor does it reflect their proper construction.
22 I do not consider that it is appropriate for me to go further and express a view concerning the construction of the Competitor Restraint on a matter which was not an issue at trial, and in relation to which no submissions were made at trial nor was any substantial submission made by Mr de Kerloy this morning. The application was to vary the terms of the injunction so that they would correspond with my reasons for decision (and, hence, the Competitor Restraint). It is not a re-hearing of the matter, still less is it a situation in which it is appropriate to hear and decide a new issue.
23 It remains open to Mr O'Shea, if conditions change, to seek the dissolution of the injunction or to demonstrate that some modification of its ambit or duration is warranted by new circumstances not fully appreciated at the time of trial.6
24 These are the reasons why, after hearing oral submissions from the parties concerning this application to vary the terms of the injunction, I dismissed the application with costs with reasons to be given concurrently with those on the costs application.
The costs orders
25 Two issues were raised in relation to costs. First, Emeco applied for indemnity costs on the basis of Calderbankoffers which it made: Calderbank v Calderbank.7 Secondly, there was the question of whether the proportion of Emeco's costs should be reduced. The two issues are inter-related. In particular, a Calderbank offer can affect the assessment of party and party costs.
Should indemnity costs be awarded?
26 The trial of this matter was heard on 4 and 5 September 2012. It was expedited following delivery of my reasons in relation to the interlocutory injunction on 8 August 2012.
27 On 10 August 2012, just under four weeks before trial, Emeco sent the first Calderbank offer. The first Calderbank offer was expressed to be open until the close of business on 15 August 2012.
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28 The terms of the first Calderbankoffer were as follows:
(i) Mr O'Shea refrain from (either directly or indirectly) accepting employment with or providing or taking part in the provision of consultancy services in Western Australia or otherwise performing work for or otherwise providing any products or services to National Plant and Equipment Pty Ltd or any dry hire company which competes with the business of Emeco until 3 January 2013;
(ii) that the proceedings will be discontinued by Emeco; and
(iii) that no orders will be sought as to costs and each party bear their own costs in the proceedings.
29 The offer was rejected.
30 Eighteen days later, on 28 August 2012, a second Calderbank offer was made to Mr O'Shea by Emeco. The second Calderbank offer was expressed to be open until the close of business the next day, 29 August 2012. In the second Calderbank offer the terms were as follows:
(i) That Mr O'Shea does not commence work for NPE nor any company or business in competition with Emeco until the close of business on Monday 1 November 2012.
(ii) That there be no order as to costs.
(iii) That the balance of the post-termination obligations in Mr O'Shea's contract of employment remain on foot.
(iv) That the above terms be recorded in a consent order of the Supreme Court of Western Australia.
31 On 29 August 2012 that offer was rejected by Mr O'Shea.
32 The leading decision in this jurisdiction in relation to indemnity costs based on a Calderbankoffer is Ford Motor Company of Australia Ltd v Lo Presti.8In that case, Buss JA (Wheeler JA agreeing) explained that the 'critical question' is whether an applicant can satisfy the court that the rejection of the offer by the other party was unreasonable.9
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33 As Buss JA said, the assessment of unreasonableness is a matter of judgment and impression.10 A number of non-exhaustive factors to consider in the assessment of whether the rejection of an offer is unreasonable include:
(1) the stage of the proceeding at which the offer was received;
(2) the time allowed to the offeree to consider the offer;
(3) the extent of the compromise offered;
(4) the offeree's prospects of success, assessed as at the date of the offer;
(5) the clarity with which the terms of the offer were expressed; and
(6) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.
34 Both parties made detailed submissions on each of these factors.
35 As to (5) and (6), I accept that the Calderbank offers were expressed in reasonably clear terms and that an application for indemnity costs was foreshadowed. As to (1) and (2), each of the offers was received shortly before the hearing. Given the expedited nature of the trial, the first offer was laudably made at an early stage in the process. Mr O'Shea had a reasonable time to consider that offer. The second offer was only open for a day but it was a variation on the first offer and would not have, and did not, require further time for consideration.
36 However, the other matters which I consider below raise weighty considerations which militate against an order for indemnity costs. In particular, as to (3) and (4), there are a number of powerful reasons why an order for indemnity costs is inappropriate.
37 First, and perhaps most significantly, neither of the Calderbank offers appeared to have any geographic restriction.11 Both, but most clearly in the second, sought to prevent Mr O'Shea from commencing work for NPE anywhere in the world. As Mr de Kerloy accepted in relation to the variation application this is not consistent with the words or the proper construction of the Competitor Restraint. To that extent,
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- Mr O'Shea is given significantly greater liberty by the terms of the final injunction than the second Calderbank offer.
38 Secondly, as I explained in my reasons for decision in relation to the interlocutory injunction, Emeco's evidence at that stage did not establish the extent of the customer connection or confidential information 'with any great precision'.12 At the date of Emeco's first Calderbank offer, Mr O'Shea did not have any of the affidavit evidence which Emeco filed for the trial. Even by the time of the second Calderbank offer, Mr O'Shea did not have any of Emeco's responsive affidavits nor any of its submissions.
39 Thirdly, and related to the second point, in the first Calderbank offer Emeco had stressed to Mr O'Shea the key aspects of confidential information upon which it would rely at trial. Those aspects included Emeco's 'internal financial requirements, including particularly its return on capital requirements'. In my reasons for decision I explained that there were too many intermediate steps between the internal rate of return and a final price which is offered to a potential customer to permit the conclusion that a competitor could meaningfully use the internal rate of return as part of its knowledge of pricing strategy to Emeco's detriment.
40 As I explained in my primary reasons for decision, restraint of trade cases such as this involve an evaluative judgement which balances the interests of an employer in enforcing a restraint upon the employee's trade with the liberty of the employee. The starting point was that the restraints were unenforceable. It was for Emeco to satisfy me at trial that its interests in confidential information and customer connection were sufficiently strong to justify the enforceability of the restraints. At the time that the Calderbank offers were made Mr O'Shea may have considered that he had reasonable prospects of success. Such a view would not have been unreasonable.
41 There were several other matters raised by the parties in relation to my exercise of discretion concerning indemnity costs. One further discretionary factor relied upon by Emeco was Mr O'Shea's deliberate failure to disclose evidence concerning the existence of, and terms of, his employment contract with NPE. Emeco said that this failure was unreasonable and misleading; that it required Emeco to incur the costs of a notice to produce, the day after which Mr O'Shea's sworn affidavit annexed his contract of employment with NPE; and caused Emeco to run
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- its case until that point on the basis that Mr O'Shea would be suffering financial hardship if he was prevented from commencing work with NPE.
42 It is correct that the failure was unreasonable and misleading, and combined with other matters, this had an effect on my findings concerning the credibility of Mr O'Shea's evidence. However, in relation to the trial itself Mr O'Shea did provide a copy of his contract of employment with NPE; the costs of Emeco's notice to produce would have been minimal relative to the remainder of the issues at trial; and there was no evidence that the plaintiff would have run its case differently as a result of this aspect of Mr O'Shea's conduct. In oral submissions, Mr de Kerloy properly did not place any significant weight on this issue.
43 Emeco also relies upon Mr O'Shea's alleged attitude to the Calderbank offers. It was said that Mr O'Shea had rejected the offers outright and insisted on his right immediately to commence employment with NPE and immediately to solicit the custom of the other clients of Emeco. This mischaracterises the facts. Mr O'Shea's core desire was to work for NPE. He had requested Emeco to inform him of 'terms [Emeco] would agree to allow [Mr O'Shea] to be employed by [NPE] immediately'. He had given substantial undertakings which were aimed at ensuring that he could work for NPE.
44 Emeco also asserts that due to the indemnity in Mr O'Shea's contract of employment with NPE, he would not suffer any loss by accepting the Calderbank offers and that he was litigating at no risk to himself due to NPE's undertaking to meet his legal costs. However, the effect of the Calderbank offers was to restrict Mr O'Shea's liberty to work in a substantial way. It is, at least, an insubstantial consideration that he would allegedly suffer no loss.
45 In all the circumstances, this is not a case where the refusal of either Calderbank offer was unreasonable. Indemnity costs must be refused.
The appropriate order for party and party costs
46 Order 66 r 2(a) of the Rules of the Supreme Court 1971 (WA) provides that in the absence of any special order:
(a) where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he
- succeeds, in the same manner as if separate actions had been brought.
47 In Keet v Ward,13 the Western Australian Court of Appeal in a joint judgment set out four propositions which I reproduce below:
a) the expression 'cause of action' in O 66 r 2(a) is a reference to a factual situation, the existence of which entitles the plaintiff to obtain a remedy: Letang v Cooper [1964] EWCA Civ 5; [1965] 1 QB 232, 242 (Diplock LJ); Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569, 572 (Anderson J);
(b) the rule does not provide an inflexible rule which prescribes a mandatory approach to the awarding of costs in cases where there are multiple causes of action. The opening words 'in the absence of any special order' indicate that the court retains the discretion to make a special order departing from the rule in O 66 r 2(a): Kimpura Pty Ltd v JWH Group Pty Ltd [2004] WASCA 134 [12] - [15];
(c) however, where there are multiple causes of action and a party has succeeded on only one or some, the other party is prima facie entitled to costs on the others but the court will always attempt to do substantial justice in the circumstances: Permanent Building Society v Wheeler (No 2), 574 - 575 (Anderson J);
(d) it may not be appropriate to make a costs order in accordance with O 66 r 2(a) where there is in substance one contest, that is, where the causes of action arise from the one course of dealings, the one transaction or the same facts: Permanent Building Society v Wheeler (No 2) (574) - (575); R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206(S); Witcombe v Talbot & Olivier [No 2] [2009] WASC 173(S) (Beech J).
48 There was no dispute before me that the different limbs of the injunction, enforcing different and severable contractual restraints, were separate causes of action. However, it was common ground that this is not a case where it would be appropriate to make a costs order in accordance with O 66 r 2(a). The degree of legal and factual overlap between the issues concerning the Competitor Restraint and the other restraints which were the subject of the injunction application was so substantial that each could not be realistically separated from the other in the assessment of costs.
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49 It was also common ground that the appropriate order was that costs should be awarded in favour of Emeco. The only issue was whether, and to what extent, those costs should be reduced due to the unenforceability of the restraints other than the Competitor Restraint and the failure of Emeco to obtain an injunction in relation to the two restraints other than the Competitor Restraint.
50 The starting point is the general principle that costs will follow the event. There were three closely related relevant events in this case corresponding with the three restraints. Counsel for Emeco relied heavily upon the decision in Amaca Pty Ltd v Hannell.14In that case, the Western Australian Court of Appeal said this:
[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way. In a case in which the generally successful party has failed on only a minor issue, which did not add materially to the cost of the conduct of the proceedings, it would not ordinarily be appropriate to depart from the general rule, unless the conduct of the generally successful party in relation to that issue had been unreasonable. In the event of unreasonableness, different considerations may apply.
51 The same approach may not apply to a situation where the adjustment of the costs order is not by reference to particular issues, but by reference to particular causes of action. In Amaca there was a single cause of action for negligence and the apportionment of costs was sought on the basis that the respondent had succeeded on foreseeability, breach and causation, but not on the issue of duty of care.
52 After the statement quoted above, the Court of Appeal said that the reason why the court refused to depart from the general rule that costs should be awarded to the successful party was because:
[T]he major part of the time spent at trial was concerned with evidence which spanned all four identified issues, and because it seems to us that it was reasonable for the appellant to put the respondent to the proof of all of the issues necessary to establish their cause of action.
53 In contrast, in this case the causes of action were discrete and severable even though the substrata of legal and factual issues underlying
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- the three restraints were common. Although, as I explain below, the heart of the trial concerned the Competitor Restraint, and although the correspondence before me shows that Emeco would have been satisfied with an injunction enforcing only the Competitor Restraint (although in different terms from those sought in its Calderbank offers), there was still a reasonable amount of time spent in submissions on the other restraints. The submissions in total occupied a substantial part of one of the two days of hearing.
54 Initially, Mr O'Shea submitted that Emeco's costs should be reduced by two-thirds, representing the success on each different restraint. At the oral hearing this morning Mr Neil properly conceded that this may have been ambitious and that a reasonable apportionment might be to reduce Emeco's costs by a third. However, even this reduction is too great. The reason why this reduction is too great is because the essence of this litigation concerned Mr O'Shea's desire to work for NPE without the constraint imposed upon him by the Competitor Restraint.
55 It is permissible to have regard to the terms of a Calderbank offer in considering the manner in which a discretion should be exercised to order party and party costs.15
56 In the first Calderbank offer, Emeco did not seek to enforce any of the post-employment restraints except the Competitor Restraint although the terms of that offer were, as I have explained, expressed in terms different from the Competitor Restraint. In correspondence on 14 August 2012 Emeco's solicitors explained that Emeco 'adopted the view that if [Mr O'Shea] was not working with a competitor, then he would have nothing to offer our client's customers and so any effort to solicit them away from our client would be futile'.
57 In the second Calderbank offer, Emeco substantially reduced the period for which it said that Mr O'Shea should not work for NPE but the offer of this reduction was accompanied by terms that the other restrictions remain on foot.
58 For Mr O'Shea's part, he was also essentially motivated by the desire to work for NPE. He offered substantial undertakings related to the other restraints and, as I have explained, he requested that Emeco inform him of the terms that Emeco would agree to allow him to be employed by NPE.
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59 In all of the circumstances of this case I consider that Emeco should be entitled to 90% of its costs, assessed on a party and party basis.
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1Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348.
2Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181, 220 [104] (Callinan J).
3J C Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282,299.
4Orleans Investments Pty Ltd v MindShare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81, 108 [97] (Giles JA; Spigelman CJ and Allsop P agreeing).
5Minister for Education v Klein [2005] WASCA 185 (S) [7].
6Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181, 212 [84] (Kirby J).
7Calderbank v Calderbank [1975] 3 WLR 586.
8Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1.
9Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1, 9 [21], [23].
10Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1, 8 [17] - [19]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 [23] - [24].
11See the disjunction, 'or' in the first Calderbank offer.
12Emeco International Pty Ltd v O'Shea [2012] WASC 282 [43].
13Keet v Ward [2011] WASCA 139 [24].
14Amaca Pty Ltd v Hannell [2007] WASCA 158 (S) [7].
15McKay v Commissioner of Main Roads (No 7) [2011] WASC 223 (S) [68] (Beech J).
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