Hydrocool Pty Limited v Hepburn
[2009] FCA 815
•1 July 2009
FEDERAL COURT OF AUSTRALIA
Hydrocool Pty Limited v Hepburn [2009] FCA 815
HYDROCOOL PTY LIMITED (ACN 067 525 366) v IAIN MACGREGOR HEPBURN, THERMOELECTRIC APPLICATIONS PTY LIMITED (ACN 112 217 124), PETER TERENCE CLARKE, BENJAMIN BANNEY, MONTAG DAVIS, BRETT MANNERS, ROBERT WEYMOUTH, RITA CLARKE, WATER MASTER LIMITED and GARTH CLIFFORD RICHARDSON
NSD 1754 of 2006
SIOPIS J
1 JULY 2009
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
NSD 1754 of 2006
BETWEEN: HYDROCOOL PTY LIMITED (ACN 067 525 366)
Applicant
AND: IAIN MACGREGOR HEPBURN
First RespondentTHERMOELECTRIC APPLICATIONS PTY LIMITED (ACN 112 217 124)
Second RespondentPETER TERENCE CLARKE
Third RespondentBENJAMIN BANNEY
Fourth RespondentMONTAG DAVIS
Fifth RespondentBRETT MANNERS
Sixth RespondentROBERT WEYMOUTH
Seventh RespondentRITA CLARKE
Eighth RespondentWATER MASTER LIMITED
Ninth RespondentGARTH CLIFFORD RICHARDSON
Tenth Respondent
JUDGE:
SIOPIS J
DATE OF ORDER:
1 JULY 2009
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.By 28 July 2009, a proper officer of the applicant is to file and serve an affidavit:
(a)describing the steps taken by the applicant to establish whether any minutes or notes of the proceedings or meetings of the applicant’s board on 28 October 2004 and 6 December 2004 are or once were in the possession, custody or control of the applicant; and,
(b)giving discovery of any such minutes or notes found to be in the possession, custody or control of the applicant.
2.In respect of any such minutes or notes, which were once but are no longer in the possession, custody or control of the applicant, the affidavit referred to in Order 1 shall describe when each such document was last in the applicant’s possession, custody or control and what has become of each document.
3.The date referred to in Order 1 of the Order made on 23 February 2009 is amended to 15 September 2009.
4.The applicant is to provide to the first, second and third respondents additional security for costs in the sum of $25,000.00 up to entry for trial, by way of bank guarantee or such form of security as is acceptable to the District Registrar.
5.The first, second and third respondents are not to call upon any bank guarantee provided by the applicant to each of those respondents and filed with the Court pursuant to order 4 except if:
(a)14 days have elapsed since any of those respondents has obtained an enforceable order for costs;
(b)the costs order has not been stayed;
(c)the applicant has failed to pay such an enforceable order for costs; and
(d)those costs are for costs incurred by those respondents up to and including the entry of the proceedings for trial.
6.Costs of the first, second and third respondents’ motion, and this directions hearing, are in the cause.
7.The directions hearing is adjourned to 10.15 am on 21 September 2009.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
NSD 1754 of 2006
BETWEEN: HYDROCOOL PTY LIMITED (ACN 067 525 366)
Applicant
AND: IAIN MACGREGOR HEPBURN
First RespondentTHERMOELECTRIC APPLICATIONS PTY LIMITED (ACN 112 217 124)
Second RespondentPETER TERENCE CLARKE
Third RespondentBENJAMIN BANNEY
Fourth RespondentMONTAG DAVIS
Fifth RespondentBRETT MANNERS
Sixth RespondentROBERT WEYMOUTH
Seventh RespondentRITA CLARKE
Eighth RespondentWATER MASTER LIMITED
Ninth RespondentGARTH CLIFFORD RICHARDSON
Tenth Respondent
JUDGE:
SIOPIS J
DATE:
1 JULY 2009
PLACE:
PERTH
REASONS FOR JUDGMENT
There are two matters which remain outstanding in relation to the first, second and third respondents’ notice of motion filed on 20 April 2009.
The first matter relates to the timing of the filing of the affidavit evidence by the respondents. The first, second and third respondents contend that the affidavit evidence of the applicant and the applicant’s discovery is voluminous and that it is necessary, therefore, for them to have a substantial period of time within which to file their witness statements in response. They propose that the affidavits be filed in December 2009.
Mr Fernon on behalf of the applicant, has contended that the respondents have had the affidavit evidence filed on behalf of the applicant for approximately seven months, and that they have also had the applicant’s discovery for approximately the same period of time. There has, said Mr Fernon, been ample time for the respondents to absorb the contents of this material. Mr Fernon also said that there were other relevant matters that should be taken into account in setting a date for the filing of the respondents’ affidavit evidence. First, there will be a need for the applicant to file evidence in response to any material which is put on by the respondents. Secondly, there is also a need for trial preparation to occur, because this matter has been set down for trial in March 2010.
In my view, there is substance in the submissions of Mr Fernon. In addition, it seems to me that there should also be built into the timetable an opportunity for the parties to engage in a mediation in order to attempt to settle this matter.
Accordingly, in my view, in light of the substantial period of time within which the respondents have already had access to the applicant’s affidavits and the other factors already referred to, the respondents should file and serve all of their affidavit evidence by 15 September 2009. That would give the applicant enough time to respond and would also give the parties an opportunity to apply for a mediation, before trial preparation expenses are incurred. In my view, effective case management principles require that the affidavits be filed by the date which I have nominated and not as late as December 2009 as proposed by the first three respondents.
The second matter relates to the means whereby the applicant should give further and better discovery of any documents relating to certain meetings of the directors of the applicant which the first three respondents say occurred. In my view, it is not sufficient that the explanation as to the existence, or otherwise, of any documents relating to the contentious directors’ meetings, be dealt with by way of a solicitor’s letter. It is necessary that an officer of the applicant swear an affidavit, dealing with what has become of these documents, if they ever existed. The evidence in Mr Hepburn’s affidavit is persuasive, in the sense that the timesheets referred to therein, appear to show that some meetings of the directors occurred on the contentious dates. If that is the case, then it is necessary that there be a statement on affidavit as to whether notes exist in respect of those meetings.
The last question is whether there should be an order that a further amount by way of security for costs be provided by the applicant.
The position is that I have already ordered that security for costs be provided in the sum of $101,450. The last of the orders topping up the security for costs was made in October 2008.
Mr Bower on behalf of the first three respondents, said that since that order was made in October 2008, the evidence on behalf of the applicant had come in, that it is voluminous and that responding to that evidence would take longer and require more work than was originally anticipated.
Mr Fernon said that there was no evidence before the Court as to the activities which have been engaged in by the first three respondents in relation to the perusal of, and response to, the applicant’s evidence and the costs that have been incurred in carrying out those activities. In the absence of that evidence, said Mr Fernon, I should not order any further amount be provided by way of security for costs.
Also, Mr Fernon took me to a substantial volume of emails, which he says supports the applicant’s case that there was a conspiracy between the various respondents to act in a manner which undermined the board of directors of the applicant. He says that that indicates a strong prima facie case and I should not, therefore, order that any further amount be provided by way of security for costs.
At this stage of the proceeding, I am not able to do any more than note that the emails do appear to provide some evidence of a conspiracy. However, that does not found a sufficient basis to conclude that there is a strong prima facie case because there are more elements to the case than simply the exchange of emails in support of the claim for conspiracy. Some of the other elements which appear to arise on the pleadings relate to whether the applicant had abandoned the project, whether the communication between the respondents was done with an intention to harm the applicant, whether damages have been suffered and whether the applicant’s technology was adopted by the respondents in a competitive venture. So I am not at this stage able to make any findings in relation to the strength or otherwise of each of the elements of the case.
In my view, there is substance in Mr Bower’s submission that this case has proved to involve a greater amount of evidence from the applicant than was anticipated. That is self‑evident from the sheer volume of the materials which are on the Court file. In addition, it has caused counsel to adjust the anticipated length of the trial.
Accordingly, in my view, there should be a further amount provided by way of security for costs up to the trial. However, in the absence of evidence as to the amount of the costs that has already been incurred and in light of the fact that security for costs is not intended to provide a full indemnity for costs, I will order that an additional amount of $25,000 be provided by the applicant by way of security for costs.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate:
Dated: 3 August 2009
Counsel for the Applicant: Mr A Fernon Solicitor for the Applicant: Swaab Attorneys Counsel for the First, Second and Third Respondents: Mr RW Bower
Solicitor for the First, Second and Third Respondents: Corser & Corser
Counsel for the Fifth Respondent: The Fifth Respondent appeared in person. Counsel for the Sixth Respondent: The Sixth Respondent appeared in person. Counsel for the Seventh Respondent: The Seventh Respondent appeared in person.
Date of Hearing: 1 July 2009 Date of Judgment: 1 July 2009
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