Life Combat Sports Pty Ltd v The World Institute of Martial Arts Pty Ltd - [2025] WASC 21

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   LIFE COMBAT SPORTS PTY LTD -v- THE WORLD INSTITUTE OF MARTIAL ARTS PTY LTD [2025] WASC 21
CORAM:   STRK J
HEARD:   23 JANUARY 2025
DELIVERED          :   30 JANUARY 2025
FILE NO/S:   CIV 2019 of 2024
BETWEEN:   LIFE COMBAT SPORTS PTY LTD
Plaintiff
AND
THE WORLD INSTITUTE OF MARTIAL ARTS PTY LTD
First Defendant
GRAHAM PAUL MCDONNELL
Second Defendant

Catchwords:

Equity - Injunction - Whether the plaintiff has established a serious question to be tried - Whether the balance of convenience favours injunctive relief - Turns on own facts

Practice and procedure - Security for costs - Threshold jurisdiction condition - Discretion - Appropriate quantum - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 181(1), s 182(1), s 183(1), s 1335
Legal Profession Supreme and District Courts (Contentious Business) Determination 2024 (WA)
Rules of the Supreme Court 1971 (WA), O 25, O 52
Supreme Court of Western Australia Consolidated Practice Directions, PD 4.7.1, 4.7.1.1

Result:

Interlocutory injunction granted
Security for costs ordered

Category: B

Representation:

Counsel:

Plaintiff	:	PG McGowan
First Defendant	:	CA Gregson
Second Defendant	:	CA Gregson

Solicitors:

Plaintiff	:	Metaxas Legal
First Defendant	:	Gregson & Associates
Second Defendant	:	Gregson & Associates

Case(s) referred to in decision(s):

Action Cycles Pty Ltd v Ross [2011] VSCA 411
Australian Broadcasting Corporation v O'Neil [2006] HCA 46; (2006) 227 CLR 57
Australian Reliance Group Pty Ltd v Coverforce Insurance Brokers Victoria Pty Ltd [No 5] [2017] WASC 171
Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618
BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339
Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171
Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301
Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Construction Industries Australia Ltd (in liq) v WFI Insurance Ltd [2016] WASC 404
Crosswest Corporation Pty Ltd v Allstrike Enterprises Pty Ltd [2014] WASC 27
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Erolen Pty Ltd v Baulkham Hills Shire Council (1993) 10 ACSR 441
FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241
Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [2011] WASCA 118
Four Vanguard Servicos E Navagacao Lda v ENI Australia Ltd [2014] WASC 473
George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56
Global Finance Group Pty Ltd (in liq) v Marsden Partners (a firm) [2004] WASC 52
Heavener v Loomes [1924] HCA 10; (1924) 34 CLR 306
Heller Factors Pty Ltd v John Arnold's Surf Shop Pty Ltd (in liq) (1979) 4 ACLR 492
Jaddcal Pty Ltd v Minson [No 2] [2011] WASC 138
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302
Livingspring Pty Ltd v Kilger Partners [2008] VSCA 93; (2008) 20 VR 377
McCarty v The Council of the Municipality of North Sydney (1918) 18 SR (NSW) 210
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Nutrien AG Solutions Ltd v Pingrup Traders Pty Ltd [2022] WASC 251
Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [No 2] [2019] WASC 378
Professional Vending Services Pty Ltd v Christou [2010] FCA 580
R v MacFarlane; Ex parte O'Flanagan and O'Kelly [1923] HCA 39; (1923) 32 CLR 518
Samsung Electronics Company Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238
SAS Global Forrestdale Pty Ltd v Samsera Pty Ltd [2010] WASC 309
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36
Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd [2011] WASC 19
Sunlea Enterprises Pty Ltd v Pollock [2014] WASC 91
Talent Konnects Pty Ltd v Marvelli [2022] WASC 128
TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd [2016] FCA 815
TS Dack Pty Ltd v Australian Water Holdings Pty Ltd [2015] FCA 931; (2015) 108 ACSR 379
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Unified Pty Ltd v The Cancer Council Western Australia Inc [No 3] [2011] WASC 161
Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; (2014) 311 ALR 632
Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57
Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542

Table of Contents

Introduction

The evidence

The factual background

The incorporation of WAIMA and operation of the Business

Partnership Agreement

Shareholders' Agreement

Download of confidential information

Incorporation of Life Combat Sports

Asset Sale Agreement

Contribution to the Purchase Price by Mr and Ms McDonnell

The Joint Venture

Termination of the lease - Unit 8, 21 Joondalup Drive, Edgewater

Completion of the Asset Sale Agreement

Resignation of Mr McDonnell as a director

The World Institute of Martial Arts commenced operating a competing business

Alleged impact on Life Combat Sports

Action against The World Institute of Martial Arts and Mr McDonnell

The principles to be applied to the grant of interlocutory injunctions

Disposition - injunction application

Serious question to be tried

Balance of convenience

Conclusion

The principles to be applied to the grant of security for costs

Disposition - security for costs

The threshold question

The exercise of discretion

Orders and costs

STRK J:

Introduction

Life Combat Sports Pty Ltd carries on a business as a gymnasium and offers scheduled group fitness classes specialising in martial arts and self‑defence classes to its members (the Business).
Life Combat Sports acquired the Business from WAIMA Pty Ltd (in liquidation) pursuant to an agreement that was signed on 20 March 2024 (it would appear before WAIMA became subject to external administration). On about 20 March 2024, WAIMA gave early possession of its assets to Life Combat Sports; and Life Combat Sports continued to operate the Business from Unit 8, 21 Joondalup Drive, Edgewater, and 48 McCoy Street, Myaree, until completion of the asset sale agreement on 17 April 2024.
Life Combat Sports has carried on the Business while trading under the business name 'Life Martial Arts WA ABN 32 675 939 358' from a number of locations.
First, from about 20 March 2024 to 17 April 2024, Life Combat Sports carried on the Business from premises located at Unit 8, 21 Joondalup Drive, Edgewater, and 48 McCoy Street, Myaree.
Secondly, from 22 April 2024 to 13 July 2024, Life Combat Sports carried on the Business from premises located at 3 Lincoln Lane, Joondalup (on a temporary basis), and 48 McCoy Street, Myaree.
Thirdly, from 15 July 2024 to date, Life Combat Sports has carried on the Business from premises located at Unit 11, 200 Winton Road, Joondalup, and 48 McCoy Street, Myaree.
On 29 August 2024 Life Combat Sports commenced by writ of summons a proceeding against The World Institute of Martial Arts Pty Ltd (which was named the first defendant), and Graham Paul McDonnell (who was named the second defendant). Mr McDonnell is the sole director of The World Institute of Martial Arts, which entity has since 23 April 2024 carried on business as a gymnasium trading as 'The World Institute of Martial Arts' which offers group fitness classes specialising in martial arts and self‑defence classes (the World Institute of Martial Arts Business), from Unit 2, 25 Delage Street, Joondalup.
By the writ, Life Combat Sports seeks the following relief as against The World Institute of Martial Arts:
(1)an injunction restraining The World Institute of Martial Arts from operating a business in direct competition with the Business within a radius of 20 km from 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree;
(2)damages;
(3)alternatively, an account of profits;
(4)interest on any moneys ordered to be paid by The World Institute of Martial Arts at 6% per annum pursuant to s 32 of the Supreme Court Act 1932 (WA); and
(5)costs.
By the writ, Life Combat Sports seeks the following relief as against Mr McDonnell:
(1)an injunction restraining Mr McDonnell from soliciting members of the Business;
(2)damages;
(3)interest on any moneys ordered to be paid by Mr McDonnell at 6% per annum pursuant to s 32 of the Supreme Court Act; and
(4)costs.
By a chamber summons filed on 30 September 2024 in the proceeding, Life Combat Sports applied for interlocutory injunctive relief seeking:
(1)that until further order, an interim injunction be granted restraining The World Institute of Martial Arts from operating a freestyle mixed martial arts business within a 20 km radius of:
(a)Unit 8, 21 Joondalup Drive, Edgewater; and
(b)48 McCoy Street, Myaree;
(2)in the alternative to proposed order 1 above, that until further order, an interim injunction be granted restraining The World Institute of Martial Arts from operating a freestyle mixed martial arts business from 25 Delage Street, Joondalup between the hours of 4.00 pm and 9.00 pm on weekdays; and
(3)in the alternative to proposed orders 1 and 2 above, that until further order, an interim injunction be granted requiring The World Institute of Martial Arts to:
(a)keep a written record of the names, addresses and membership fees paid by each person who attends The World Institute of Martial Arts' gymnasium from the date of order;
(b)pay the membership fees derived from former members of the Business into a separate bank account and hold the same on trust for Life Combat Sports pending the resolution or determination of this action; and
(c)create a written record of the names, addresses and membership fees paid by each person who attended its gymnasium between 17 April 2024 and the date of order.
The injunction application was supported by an undertaking as to damages proffered by Rebecca Lynn Britten, a director of Life Combat Sports, in the usual form.[1]
[1] Undertaking as to damages filed on 8 October 2024.
The World Institute of Martial Arts and Mr McDonnell are represented in this proceeding, and on 25 September 2024 a defence was filed on their behalf. They deny that Life Combat Sports is entitled to any relief in the proceeding, and oppose the grant of interlocutory injunctive relief.
The injunction application was programmed for hearing on 7 November 2024. The orders made contemplated that the parties would attend a court annexed mediation before the hearing of the application.
Meditation took place in October 2024 and following mediation at the request of the parties, the injunction application hearing was vacated. It was adjourned sine die at the request of the parties in circumstances where the court was informed that the matter had settled at mediation. Unfortunately, on about 22 November 2024 the parties sought that the injunction application be relisted.
Revised programming orders were made on 29 November 2024 with respect to the relisted injunction application. In addition, programming orders were made in respect of an application for security for costs by The World Institute of Martial Arts and Mr McDonnell.
By a chamber summons filed on 27 November 2024, The World Institute of Martial Arts and Mr McDonnell applied for security for costs as against Philip Benjamin Britten and Ms Britten (who are the directors of Life Combat Sports, but who are not parties to the proceeding), which application was amended on 21 January 2025 so as to seek security for costs as against Life Combat Sports.
On 21 January 2025 an amended writ of summons was filed on behalf of Life Combat Sports, which recorded amendments to the indorsed statement of claim (which was refiled on 22 January 2025 to correct an omission). As at the hearing of the applications, no amended defence had been filed.
The injunction application and the amended security for costs application were both heard on 23 January 2025. At the conclusion of the hearing, I reserved my decision in respect of both applications. Set out below are my reasons.

The evidence

Counsel for Life Combat Sports read five affidavits in support of the injunction application and in opposition to the security for costs application.
The first was the affidavit sworn on 18 September 2024 by Ms Britten, to which she attached documents marked RLB‑1 to RLB‑30. As noted above, Ms Britten is a director of Life Combat Sports. As at 18 September 2024, she was its sole director.
The second was the supplementary affidavit sworn on 16 December 2024 by Ms Britten, to which she attached documents marked RLB‑31 to RLB‑39.
The third was the affidavit of Mr Britten sworn on 16 December 2024, to which he attached documents marked PBB‑1 to PBB‑10. Mr Britten has been a director of Life Combat Sports since 21 October 2024.
The fourth was the affidavit of Ms Britten sworn on 30 December 2024, to which she attached documents marked RLB‑39 to RLB‑44.
The fifth was the affidavit of Mr Britten sworn on 22 January 2025, to which he attached documents marked PBB‑11 to PBB‑29.
At the hearing of the applications, counsel for Life Combat Sports also relied upon a written outline of submissions filed on 16 January 2025 in support of the injunction application and in opposition to the security for costs application; and with leave, a written outline of submissions filed on 22 January 2025 in opposition to the amended security for costs application that had been filed on 21 January 2025.
Counsel for The World Institute of Martial Arts and Mr McDonnell read two affidavits in opposition to the injunction application and in support of the security for costs application.
The first was the affidavit of Mr McDonnell, the second defendant and the sole director and shareholder of The World Institute of Martial Arts, sworn on 16 December 2024, to which he attached documents marked GPM‑01 to GPM‑12.
The second was the affidavit of Taylor Clarke, affirmed on 10 January 2025, to which she attached a document marked TC‑01.
Counsel for The World Institute of Martial Arts and Mr McDonnell also relied upon a written outline of submissions filed on 27 November 2024 in support of the security for costs application; and a written outline of submissions filed on 16 January 2025 in opposition to the injunction application.
In the course of the hearing, counsel for The World Institute of Martial Arts and Mr McDonnell indicated that he 'restate[d] each and every one of the written submissions that have been filed in this matter'.[2] The written submissions refer to and rely upon the affidavit of counsel, Craig Alan Gregson, sworn on 29 November 2024, which therefore I also considered in the disposition of the security for costs application.
[2] ts 48 (23 January 2025).

The factual background

I summarise below the circumstances in which the proceeding was commenced, and how the two applications have been prosecuted. The following is not intended to be a complete recitation of the pleadings and evidence before the court.
While there is considerable common ground as to the material facts pleaded and deposed to, there are some material differences which are noted below. This was not the occasion to determine contested questions of fact and conflict in affidavit evidence.

The incorporation of WAIMA and operation of the Business

Mr Britten and Ms Britten are married. Mr McDonnell and Deanne Marie McDonnell are married. On the evidence filed, the couples have been known to each other since at least 2008.
It is common ground on the pleadings that on 8 September 2008 WAIMA Pty Ltd (a company now in liquidation) was incorporated. From incorporation until 17 April 2024, WAIMA operated the Business, that is, as a gymnasium, offering scheduled group fitness classes specialising in martial arts and self‑defence classes to its members.[3]
[3] Amended statement of claim pars 8 ‑ 10, 28; defence pars 2, 10.
The Business traded as 'Western Australian Institute of Martial Arts' until 15 April 2020, when WAIMA rebranded and commenced trading as 'Life Martial Arts'.[4]
[4] First affidavit of RL Britten pars 6, 16, RLB-3, RLB-4, RLB-7.
The officers of WAIMA changed over time. From 8 September 2008 to 1 June 2012, Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell were directors of WAIMA. On 1 June 2012 Ms Britten and Ms McDonnell resigned as directors, whereas Mr Britten and Mr McDonnell remained.[5]
[5] Amended statement of claim pars 11 - 13; defence par 2; first affidavit of RL Britten pars 8, 11, 12, RLB‑3 (ASIC extract of WAIMA) (pages 27 ‑ 28).
It is common ground on the pleadings that Mr Britten and Mr McDonnell continued to hold office as directors of WAIMA between 1 June 2012 and 20 March 2024.[6] The results of a search made of the database maintained by the Australian Securities and Investments Commission (ASIC) with respect to WAIMA records that as at 29 August 2024 (the date of the search) Mr Britten and Mr McDonnell remained directors of WAIMA, albeit WAIMA had been subject to external administration since 20 March 2024.[7]
[6] Amended statement of claim par 13; defence par 2.
[7] First affidavit of RL Britten, RLB-3 (ASIC extract of WAIMA) (pages 27 - 28).
Upon incorporation, Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell each held 25 ordinary shares in WAIMA.[8]
[8] First affidavit of RL Britten par 8.
On 8 September 2008 Ms McDonnell transferred her shares to Mr McDonnell, and on 25 September 2008 Ms Britten transferred her shares to Mr Britten, so that from 25 September 2008, Mr McDonnell and Mr Britten each held 50 ordinary shares in WAIMA.[9]
[9] First affidavit of RL Britten pars 9, 10.
As to where the Business operated from 2008, there is no dispute that:[10]
(a)from 2008 to 2020, the Business operated from 15B Canham Way, Greenwood, from premises located in Currambine, and from 48 McCoy Street, Myaree; and
(b)from 2020 and 2024, the Business operated from 48 McCoy Street, Myaree and from Unit 8, 21 Joondalup Drive, Edgewater.
[10] Amended statement of claim pars 9, 10; defence par 2. See also first affidavit of RL Britten pars 13, 14, 19, RLB‑4.
Unit 8, 21 Joondalup Drive, Edgewater was leased by Summit Success Pty Ltd, an entity then controlled by Mr Britten and Mr McDonnell. The lease records that Mr McDonnell, Mr Britten and WAIMA were guarantors to the obligations of Summit Success under the lease.[11]
[11] First affidavit of RL Britten par 15, RLB-5, RLB-6.
From the pleadings, while it appears to be agreed that between 8 September 2008 to 19 March 2024:
(a)Mr McDonnell performed the role of a martial arts instructor on a full‑time basis and was involved with the management of the Business for WAIMA; and
(b)Ms McDonnell performed the role of a business support officer on a casual basis for WAIMA,
there is controversy as to the basis upon which Mr McDonnell and Ms McDonnell performed their respective roles. Life Combat Sports pleads that Mr McDonnell and Ms McDonnell were so engaged as employees of WAIMA, whereas the defendants deny that Mr McDonnell and Ms McDonnell were employees.[12]
[12] Amended statement of claim pars 14, 15; defence par 2.
In this regard, Mr McDonnell deposed that he had not signed an employment agreement and did not receive a salary, but was exclusively paid by way of directors' drawings.[13]

Partnership Agreement

[13] Affidavit of GP McDonnell par 1.2.

By recent amendment to the statement of claim, Life Combat Sports gives particulars of the plea that between 8 September 2008 and 19 March 2024, Mr McDonnell was employed by WAIMA as a martial arts instructor on a full‑time basis and was involved in the management of the Business; and that between 8 September 2008 and 19 March 2024, Ms McDonnell was employed by WAIMA as a business support officer on a casual basis.[14]
[14] Amended statement of claim pars 14, 15.
By way of particulars, Life Combat Sports refers to a written partnership agreement made between Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell dated 31 May 2011 (Partnership Agreement).

A copy of the Partnership Agreement was in evidence before the court.[15]
[15] First affidavit of PB Britten par 29, PBB-8. See also second affidavit of RL Britten pars 4,5, RLB-32.
Ms Britten notes in her second affidavit that the Partnership Agreement records that:[16]
Philip and Graham are qualified martial arts instructors and work full time in the business. Rebecca and Deanne assist in the bookwork of the business from time to time.
[16] Second affidavit of RL Britten par 4, RLB-32.
Ms Britten in her second affidavit also notes that the Partnership Agreement contains a 'outgoing partner not to compete' clause.[17]

Shareholders' Agreement

[17] Second affidavit of RL Britten par 4, RLB‑32.

By recent amendment to its statement of claim, Life Combat Sports pleads that a written agreement was made in or about November 2013 between Mr Britten (in his personal capacity and in his capacity as trustee for the Britten Family Trust), Mr McDonnell (in his personal capacity and in his capacity as trustee for the McDonnell Family Trust), WAIMA and Summit Success (Shareholders' Agreement).[18]
[18] Amended statement of claim par 15B. See also first affidavit of PB Britten par 30, PBB-9; second affidavit of RL Britten par 7, 8, RLB-33.
Life Combat Sports pleads that in the Shareholders' Agreement, various capitalised terms are defined, including:
(a)'Restraint Period' which means:
(i)the period of 12 months starting from the date the party is no longer a party to the Shareholders' Agreement;
(ii)the period of 9 months starting from the date the party is no longer a party to the Shareholders' Agreement; and
(iii)the period of 6 months starting from the date the party is no longer a party to the Shareholders' Agreement;
(b)'Restraint Area' which means:
(i)a 20 km radius of the Company's Business Premises;
(ii)a 15 km radius of the Company's Business Premises; or
(iii)a 10 km radius of the Company's Business Premises;
(c)'Engaged In' which means:
(i)to carry on, participate in, provide finance or services to, or otherwise be directly or indirectly involved in or have an interest in (directly or through any interposed body corporate, trust, partnership or entity) whether as a shareholder, unitholder, director, consultant, advisor, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier; and
(ii)management without salary, advising or influencing on a continuing basis whether for direct remuneration or benefit or otherwise, and influencing through any association or arrangement with any person in or over which any interest or influence (absolute or partial) is held;
(d)'Company' which means either or both of WAIMA and Summit Success;
(e)'Business' which means the business of carrying on the Western Australia Institute of Martial Arts and any other business as agreed by the parties;
(f)'Business Premises' means 15B Canham Way, Greenwood; and
(g)'Related Principal' means Mr Britten and Mr McDonnell.
Among other things, Life Combat Sports pleads that by the Shareholders' Agreement, Mr McDonnell had agreed that during the Restraint Period (as defined) and within the Restraint Area (as defined), he would not:
(a)'Engage In' (as defined) any business or activity which was the same or similar to the whole or any part or parts of the Business (as defined); or was in competition with the Business or any material part of it;
(b)induce, solicit or canvass, approach or accept any approach from, any person who was at any time during the six month period ending on the date that Mr McDonnell was no longer a party to the Shareholders' Agreement, a customer of the Business to obtain custom of that person in a business or activity that:
(i)was the same or similar to the whole or any part or parts of the Business; or
(ii)was in competition with the Business or any material part of it;
(c)do or say anything harmful to the reputation of the Business or which may lead to a person to stop, curtail or alter the terms of its dealing with the Business;
(d)interfere with the relationship between the Business and its customers, employees or suppliers;
(e)represent itself as being in any way connected with or interested in the Business; or
(f)seek to engage, or engage, the services of any employee or agent of the Business.
Further, it is pleaded that by the Shareholders' Agreement, Mr McDonnell had agreed that:
(a)the restraints in the clause described at [51] above were separate from one another and if any of them were unenforceable the rest would be unaffected;
(b)any combination of the acts referred to in the clause described above would be unfair and calculated to damage the Business; and
(c)each of the restraints in the clause described above was reasonable in its extent (as to duration, geographical area and restrained conduct) considering the interests of each party to agreement and went no further than was reasonably necessary to protect the interests of the parties in the goodwill of the Business (as defined).
As to the term of the Shareholders' Agreement, it is pleaded that the Shareholders' Agreement provided that it would end:
(a)on the date when all parties agreed to terminate it by written agreement;
(b)on the date that the Company was wound up by an order from the court;
(c)for a Shareholder and its Related Principal, when the Shareholder ceased to hold any Shares; or
(d)if a Shareholder holds all of the Shares.
It is also pleaded that the restraints described at [51] above:
(a)survive for seven years after the termination of the document;
(b)are enforceable at any time at law and in equity;
(c)continue for the benefit of and are enforceable by the parties and their successors and assigns;
(d)are binding on each party and their successors and assigns.
A copy of the Shareholders' Agreement was before the court.[19]
[19] Second affidavit of RL Britten par 8, RLB-33. See also first affidavit of PB Britten par 30, RBB-9.
Ms Britten deposed that the Shareholders' Agreement had not been terminated by written agreement.[20]
[20] Second affidavit of RL Britten par 11.
At this time, The World Institute of Martial Arts and Mr McDonnell have not pleaded to the amended statement of claim.

Download of confidential information

By recent amendment to the statement of claim, Life Combat Sports pleads that on 13 March 2024, an individual caused the data stored on WAIMA's software known as 'White Belt' to be downloaded, which data included the names, the residential addresses, the email addresses and the telephone numbers of WAIMA's members.[21] By way of particulars to that plea, Life Combat Sports recorded that:
The 'data dump' was performed by Tizzy Luekin and sent to the email address '[email protected]' on 13 March 2024 at 12:27 PM.
[21] Amended statement of claim par 16A.
It was further pleaded that the download was not performed by Mr Britten or Ms Britten, or at the direction of either of them.[22] Mr Britten and Ms Britten deposed to the same.[23]
[22] Amended statement of claim par 16B.
[23] First affidavit of PB Britten pars 32 - 33, PBB-10; second affidavit of RL Britten pars 23 - 24, RLB-39.
As the plea described above was introduced by recent amendment, neither The World Institute of Martial Arts nor Mr McDonnell have yet pleaded to the same.

Incorporation of Life Combat Sports

In the first affidavit sworn by Mr Britten, he deposed to the circumstances which led to the incorporation of Life Combat Sports.
Mr Britten deposed that Oliver Douglas (who acted as a consultant to WAIMA)[24] had informed him and Mr McDonnell that WAIMA was in financial difficulty and that he and Mr McDonnell should consider placing WAIMA into administration; and that on 19 March 2024 he had attended a meeting that had been arranged by Mr Douglas at the offices of Worrells (a firm which provides insolvency and restructuring services), with Mervyn Kitay, Mr Douglas and Mr McDonnell.[25]
[24] See also affidavit of GP McDonnell par 1.6.
[25] First affidavit of PB Britten pars 6 - 7.
Mr Britten deposed that at the meeting on 19 March 2024 at Worrells, numerous options were canvassed by Mr Kitay but ultimately Mr McDonnell and Mr Britten agreed that they wanted to continue to operate the Business from the premises at Unit 8, 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree.
Mr Britten further deposed that Mr Kitay had said that their preferred outcome of continuing to operate the Business could be achieved by placing WAIMA into voluntary administration, and that a new entity to be incorporated could purchase the Business for its fair market value.[26]
[26] First affidavit of PB Britten par 8.
Mr Britten deposed that the figure of $180,000 was suggested by Mr Douglas who estimated that the Business was worth approximately $140,000; that Mr Douglas had suggested that $40,000 be provided as working capital; and that Mr Douglas said that the contribution from the Brittens would be $90,000 and the contribution from the McDonnells would be $90,000.[27] Further, it was Mr Britten's evidence that Mr McDonnell said, in effect, that the proposal to contribute $90,000 was 'doable'.[28]
[27] First affidavit of PB Britten par 9.
[28] First affidavit of PB Britten par 10.
Mr Britten also deposed that in the course of the meeting on 19 March 2024, he telephoned Ms Britten to run the proposal past her, and Ms Britten said that she would contact her parents to see whether they would be prepared to assist them with the contribution of $90,000. He deposed that shortly thereafter, Ms Britten telephoned him and informed him that her parents were willing to lend them $90,000 to save the Business; and that later that day, Life Combat Sports and Combat Sports Pty Ltd were incorporated.[29]
[29] First affidavit of PB Britten pars 11 - 13.
It is common ground on the pleadings that on 19 March 2024:[30]
[30] Amended statement of claim par 16; defence par 2. See also first affidavit of RL Britten par 20, RLB‑8, RLB‑9, RLB‑10; second affidavit of RL Britten, RLB‑31; first affidavit of PB Britten pars 2, 14, PBB‑1.
(a)at a meeting attended by Mr Britten, Mr McDonnell, Mr Douglas and Mr Kitay at the offices of Worrells, Mr Britten and Mr McDonnell entered into an agreement that provided, in effect, that:
(i)WAIMA would be liquidated;
(ii)a company to be incorporated would purchase the assets of WAIMA valued at $143,000;
(iii)the company to be incorporated would continue to operate the Business from Unit 8, 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree; and
(iv)Mr Britten and Ms Britten would contribute $90,000 and Mr McDonnell and Ms McDonnell would contribute $90,000 to purchase the assets of WAIMA;
(b)Life Combat Sports was incorporated;
(c)Combat Sports was incorporated;
(d)Mr Britten and Mr McDonnell were appointed as directors of Life Combat Sports and Combat Sports;
(e)one ordinary share was issued in Life Combat Sports and that share was owned by Combat Sports;
(f)one ordinary share was issued in Combat Sports and that share was owned jointly by Ms McDonnell and Ms Britten;
(g)the Life Combat Sports Unit Trust was constituted;
(h)Life Combat Sports was appointed as trustee of the Life Combat Sports Unit Trust;
(i)one unit in the Life Combat Sports Unit Trust was issued to Ms Britten;
(j)one unit in the Life Combat Sports Unit Trust was issued to Ms McDonnell; and
(k)Life Combat Sports (as Trustee), Ms Britten (as Unitholder) and Ms McDonnell (as Unitholder) entered into a written unitholders agreement (Unitholders Agreement).
As to his involvement with Life Combat Sports, Mr McDonnell deposed that he did not sign an employment contract with Life Combat Sports, nor did he receive a salary but was exclusively paid by directors' drawings.[31]

Asset Sale Agreement

[31] Affidavit of GP McDonnell par 2.4.

Ms Britten and Mr Britten deposed that on 20 March 2024, WAIMA gave early possession of its assets to Life Combat Sports; and that Life Combat Sports then operated the Business from Unit 8, 21 Joondalup Drive, Edgewater, and 48 McCoy Street, Myaree.[32]
[32] First affidavit of RL Britten par 21; first affidavit of PB Britten pars 15(3), 16.
It was Mr Britten's evidence that an asset sale agreement was signed on 20 March 2024 by Mr Britten and Mr McDonnell on behalf of WAIMA and Life Conduct Sports, and that he and Mr McDonnell also signed a resolution to place WAIMA into administration.[33]
[33] First affidavit of PB Britten par 15(1), (2), PBB-2, PBB-3. See also affidavit of GP McDonnell par 1.5.
It is common ground on the pleadings that on 20 March 2024 WAIMA entered into a written agreement with Life Combat Sports for WAIMA to sell and Life Combat Sports to buy the assets of WAIMA (that is, the Business and its assets) for $143,000 (the Asset Sale Agreement). As to the terms of the Asset Sale Agreement, it is not in issue that among other things, it provided that:[34]
(a)WAIMA would sell and that Life Combat Sports would buy the assets of WAIMA located at 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree free from encumbrances (save for the permitted encumbrances) for the purchase price of $143,000 (Purchase Price);
(b)Life Combat Sports would pay a deposit of $10,000 on or before 20 March 2024;
(c)Life Combat Sports would pay the balance of the Purchase Price, namely, $133,000, on or before 20 April 2024;
(d)on completion WAIMA would deliver to Life Combat Sports the assets and the records (meaning all original or copy records, sale brochures and catalogues, lists of clients, documents, books, files, accounts, plans and correspondence belonging to or used by WAIMA in the conduct of the Business other than corporate accounting and statutory records); and
(e)on or before completion WAIMA would deliver or cause to be delivered the assets to Life Combat Sports.
[34] Amended statement of claim par 17; defence par 2; first affidavit of RL Britten pars 22, 23, RLB-11; first affidavit of PB Britten, PBB-2.
Mr McDonnell deposed that on 20 March 2024 the administrator (who I understood to be Mr Kitay) offered to sell the Business as a going concern.[35]
[35] Affidavit of GP McDonnell par 1.7.
While an application for an interlocutory injunction is not an occasion to determine contested questions of fact and conflict in affidavit evidence,[36] I note that a copy of the Asset Sale Agreement was in evidence,[37] and on its face it records that it was executed as a deed by WAIMA in accordance with s 127 of the Corporations Act 2001 (Cth) with the authority of its directors, Mr McDonnell and Mr Britten; and by Life Combat Sports in accordance with s 127 of the Corporations Act with the authority of its directors, Mr McDonnell and Mr Britten.[38] Further, by the Asset Sale Agreement, Life Combat Sports as buyer and WAIMA as seller agreed and acknowledged that the supply of the Business pursuant to the provisions of the agreement was the supply of a going concern by the seller for GST purposes.[39]
[36] Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; (2014) 311 ALR 632 [72], [91]; Emeco International Pty Ltd v O'Shea [2012] WASC 282 [24].
[37] First affidavit of RL Britten, RLB-11; first affidavit of PB Britten, PBB-2; affidavit of GP McDonnell, GPM-02.
[38] First affidavit of RL Britten, RLB-11 (Asset Sale Agreement) (page 141).
[39] First affidavit of RL Britten, RLB-11 (Asset Sale Agreement, cl 7.6, reference schedule item 5).
It is also common ground that on 20 March 2024:[40]
(a)WAIMA delivered the assets to Life Combat Sports, and Life Combat Sports continued to operate the Business from Unit 8, 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree;
(b)Mr Britten and Mr McDonnell entered into a verbal agreement which provided in effect that the contributions in excess of $143,000 (that is, $37,000) would be used as working capital by Life Combat Sports to operate the Business; and
(c)Mr Britten and Mr McDonnell as members of WAIMA passed a resolution to wind up WAIMA and appoint Mr Kitay as liquidator of WAIMA.

Contribution to the Purchase Price by Mr and Ms McDonnell

[40] Amended statement of claim par 17(3) - (5); defence par 2; first affidavit of RL Britten pars 21, 24, RLB‑12.

Mr McDonnell deposed that when incorporated, Life Combat Sports held no assets, and it was the intention of each shareholder of Life Combat Sports to contribute $90,000 so as to leave an additional $45,000 for working capital,[41] whereas Ms Britten's evidence was that the balance for working capital was intended to be $37,000.[42]
[41] Affidavit of GP McDonnell par 2.8.
[42] Third affidavit of RL Britten par 9.
There is also some controversy between the parties as to what happened next with respect to the payment of the Purchase Price, particularly the deposit under the Asset Sale Agreement.
Life Combat Sports pleads that on 21 March 2024:[43]
(a)Mr McDonnell orally informed Mr Britten, in effect, that he and Ms McDonnell did not have $5,000 to pay 50% of the deposit under the Asset Sale Agreement (which is admitted by The World Institute of Martial Arts and Mr McDonnell);
(b)Mr McDonnell orally requested, in effect, that Ms Britten and Ms Britten pay $5,000 on his and Ms McDonnell's behalf (which is denied by The World Institute of Martial Arts and Mr McDonnell);
(c)Mr Britten orally informed Mr McDonnell, in effect, that he and Ms Britten would pay the $5,000 on behalf of Mr McDonnell and Ms McDonnell (which is admitted by The World Institute of Martial Arts and Mr McDonnell); and
(d)Mr McDonnell informed Mr Britten, in effect, that he and Ms McDonnell would take steps to refinance their home loan to obtain the $90,000 required to complete settlement under the Asset Sale Agreement (which is admitted by The World Institute of Martial Arts and Mr McDonnell).
[43] Amended statement of claim par 18; defence par 3. See also first affidavit of RL Britten par 25; first affidavit of PB Britten par 17.
Ms Britten deposed that later that day (that is, on 21 March 2024), Mr McDonnell telephoned Mr Britten to thank him and Ms Britten (who was present and heard the call) for agreeing to pay the deposit in full.[44]
[44] First affidavit of RL Britten par 26. See also first affidavit of PB Britten par 18.
Ms Britten also deposed that on 3 April 2024, she and Mr Britten paid the deposit which was payable under the Asset Sale Agreement.[45]

The Joint Venture

[45] First affidavit of RL Britten par 29, RLB-14. See also first affidavit of PB Britten par 21, PBB‑5.

Life Combat Sports contends that in light of the matters pleaded at paragraphs 16 to 18 of the amended statement of clam (summarised at [67], [71], [74] and [77] above), Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell embarked upon the conduct of a joint undertaking (Joint Venture), which was admitted by The World Institute of Martial Arts and Mr McDonnell. Unless otherwise indicated, it is common ground on the pleadings that the material terms of the Joint Venture were as follows:[46]
[46] Amended statement of claim par 19; defence par 4.
(a)Life Combat Sports would purchase the assets of the Business for $143,000;
(b)Mr Britten and Ms Britten would contribute $90,000 and Mr McDonnell and Ms McDonnell would contribute $90,000 to purchase the assets of WAIMA;
(c)Mr Britten and Mr McDonnell would be appointed as directors of Life Combat Sports and Combat Sports;
(d)Combat Sports would own all of the issued shares in Life Combat Sports;
(e)each of Ms Britten and Ms McDonnell would own one share in Combat Sports;
(f)each of Ms Britten and Ms McDonnell would each hold one unit in the Life Combat Sports Unit Trust;
(g)Mr Britten and Mr McDonnell would be employed by Life Combat Sports as martial arts instructors (which is denied by The World Institute of Martial Arts and Mr McDonnell);
(h)Ms Britten and Ms McDonnell would be employed by Life Combat Sports as business support officers on a casual basis (which is also denied by The World Institute of Martial Arts and Mr McDonnell); and
(i)Life Combat Sports would operate the Business from Unit 8, 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree.

As to how Mr Britten and Ms Britten intended to fund the Purchase Price, Ms Britten deposed that on 19 March 2024 she had procured the agreement of her parents to lend to Ms Britten $90,000.[47]
[47] First affidavit of RL Britten par 20(4).
Life Combat Sports contends, and The World Institute of Martial Arts and Mr McDonnell deny, that:[48]
[48] Amended statement of claim par 20; defence par 5.
(a)in embarking on and undertaking the conduct of the Joint Venture:
(i)Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell expressed and relied on mutual trust and confidence in each other; and
(ii)there was a common assumption between Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell, and a reasonable expectation between them and by each of them, that they would each act in each other's interests with respect to the Joint Venture;
(b)in the circumstances described at [82(a)] above, from 19 March 2024 there existed between Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell a fiduciary relationship (the Fiduciary Relationship); and
(c)by reason of the Fiduciary Relationship, Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell owed each other the following fiduciary duties:
(i)a duty of loyalty involving the subordination of self‑interest in the conduct and furtherance of the Joint Venture;
(ii)a duty not to pursue the development of the Joint Venture to the exclusion of others; and
(iii)a duty not to withhold information from them about the Joint Venture,
(together, the Fiduciary Duties).

Termination of the lease - Unit 8, 21 Joondalup Drive, Edgewater

It is common ground on the pleadings that on 27 March 2024, the landlord of the premises located at Unit 8, 21 Joondalup Drive, Edgewater issued a default notice to Summit Success, as lessee, which required payment of $138,915.82 by 10 April 2024.[49]
[49] Amended statement of claim par 23; defence par 6. See also first affidavit of RL Britten par 27, RLB‑13; first affidavit of PB Britten par 19, PBB-4.
Mr Britten deposed that given the impending termination of the lease for those premises, he commenced searching for alternative premises within the suburb of Joondalup/Edgewater; and that from his searches, he identified three appropriate locations, being:
(1)Unit 2, 25 Delage Street, Joondalup;
(2)Unit 3, 24 Mercer Lane, Joondalup; and
(3)Unit 2, 71 Winton Road, Joondalup.[50]
[50] First affidavit of PB Britten par 22.
On 11 April 2024 the landlord of the premises located at Unit 8, 21 Joondalup Drive, Edgewater issued a further notice to Summit Success to terminate the lease.[51]
[51] Amended statement of claim par 23A. See also first affidavit of RL Britten par 30, RLB-15; first affidavit of PB Britten par 23, PBB-6.
Mr Britten deposed that on 12 April 2024 Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell inspected Unit 3, 24 Mercer Lane, Joondalup, but did not consider it to be suitable.[52]
[52] First affidavit of PB Britten par 24.
It is common ground on the pleadings that on 12 April 2024, Life Combat Sports took steps to find an alternative premises to operate the Business, and by way of particulars, Life Combat Sports says that on that date, Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell inspected the property situated and known as Unit 3, 24 Mercer Lane, Joondalup, and that Mr Britten made an online enquiry to inspect Unit 2, 25 Delage Street, Joondalup.[53]
[53] Amended statement of claim par 24(1); defence par 6. See also first affidavit of PB Britten par 24, PBB‑7.
Further, Life Combat Sports says that in the course of a meeting at Unit 8, 21 Joondalup Drive, Edgewater attended by Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell:[54]
(a)Mr McDonnell orally informed Mr Britten and Ms Britten, in effect, that he and Ms McDonnell could not borrow $90,000 (which is admitted by The World Institute of Martial Arts and Mr McDonnell);
(b)Mr McDonnell orally requested, in effect, that Ms Britten borrow $90,000 from her parents (which is denied by The World Institute of Martial Arts and Mr McDonnell); and
(c)Ms Britten informed Mr McDonnell and Ms McDonnell, in effect, that she would ask her parents over the weekend (which is admitted by The World Institute of Martial Arts and Mr McDonnell).
[54] Amended statement of claim par 24(2)(a) ‑ (c); defence par 6. See also first affidavit of RL Britten par 32(3); first affidavit of PB Britten par 25.
It is common ground on the pleadings that:[55]
(a)on 13 April 2024 Mr Douglas sent a circular resolution to Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell which provided, in effect, that 10,000 units in the Life Combat Sports Unit Trust would be issued to Ms Britten in circumstances where Ms Britten and Mr Britten had paid the deposit under the Asset Sale Agreement; and
(b)later that day, Mr Britten and Ms Britten signed and returned the circular resolution to Mr Douglas.
[55] Amended statement of claim par 25; defence par 6. See also first affidavit of RL Britten par 33, RLB‑17.
Unless otherwise indicated, it is common ground on the pleadings that on 15 April 2024:[56]
[56] Amended statement of claim par 26; defence par 7. See also first affidavit of RL Britten pars 34 ‑ 36; first affidavit of PB Britten pars 26 - 27.
(a)Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell attended a further meeting at Unit 8, 21 Joondalup Drive, Edgewater, and in the course of that meeting:
(i)Mr McDonnell enquired, in effect, whether Ms Britten's parents would lend her an additional $90,000;
(ii)Ms Britten informed Mr McDonnell and Ms McDonnell, in effect, that:
(A)her parents were prepared to lend her an additional $90,000 so that Life Combat Sports could complete the purchase of the assets under the Asset Sale Agreement; and
(B)all of the units in the Life Combat Sports Unit Trust and the shares in Life Combat Sports would be issued to her in circumstances where the Purchase Price and working capital was being loaned by her parents; and
(C)Mr McDonnell informed Ms Britten and Mr Britten, in effect, that he and Ms McDonnell would think about it and discuss the proposal with Mr Britten and Ms Britten on 16 April 2024 (which is denied by The World Institute of Martial Arts and Mr McDonnell);[57]
(b)Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell inspected the property situated and known as Unit 2, 71 Winton Road, Joondalup (which by reason of recent amendment, there is no plea to the same by The World Institute of Martial Arts and Mr McDonnell);[58] and
(c)Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell inspected Unit 2, 25 Delage Street, Joondalup.
[57] It was Mr Britten's evidence that 'Deanne objected to the proposal and Graham said that he would need to think about it': first affidavit of PB Britten par 26.
[58] Which is also deposed to by Ms Britten in the first affidavit of RL Britten par 35.
I note that Mr McDonnell gave a different account of the conversation that took place at the further meeting on 15 April 2024,[59] particularly as to his and Ms McDonnell's response to Ms Britten's proposal as to the holding of units in the Life Combat Sports Unit Trust and shares in Life Combat Sports.
[59] Affidavit of GP McDonnell par 3.1.
Mr McDonnell also deposed that about 30 minutes after the conclusion of the meeting on 15 April 2024 (described above), he called Mr Douglas and exchanged with him words to the following effect:[60]
[60] Affidavit of GP McDonnell par 3.2.

Graham:

What did we need to get the business ready for the bankruptcy process?

Oliver:

Hang on a minute before you go into bankruptcy think about it for a moment, if Phil wants everything, so why don't you give it to him … let him then you are free to start on your own unrestricted to do as you please.

It is not clear on the evidence by whom Mr Douglas had been engaged, or his qualifications. For completeness, I note that by reference to Mr McDonnell's mobile telephone records, there is a dispute as to Mr McDonnell account that about 30 minutes after the conclusion of the meeting on 15 April 2024, Mr McDonnell called Mr Douglas.[61]
[61] Third affidavit of RL Britten par 10, RLB-39.
It is common ground on the pleadings that on 16 April 2024, Mr Britten, Ms Britten, Mr McDonnell and Ms McDonnell attended a further meeting at the premises at Unit 8, 21 Joondalup Drive, Edgewater, and in the course of that meeting Mr McDonnell informed Mr Britten, Ms Britten and Mr Douglas, in effect, that he wished to resign as a director of Life Combat Sports and Combat Sports.[62]
[62] Amended statement of claim par 27(1)(c); defence par 8. See also first affidavit of PB Britten par 28.
Life Combat Sports also pleads, and The World Institute of Martial Arts and Mr McDonnell deny, that:[63]
(a)in the course of the meeting on 16 April 2024, Mr McDonnell also informed Mr Britten, Ms Britten and Mr Douglas, in effect, that:
(i)he had signed an agreement to lease Unit 2, 25 Delage Street, Joondalup; and
(ii)he and Ms McDonnell were opening a gymnasium;
(b)on 16 April 2024 Ms Britten and Mr Britten observed Ms McDonnell meeting with members of the Business to hold private conversations and greeting members in the car park prior to them entering the gymnasium; and
(c)an employee of the Life Martial Arts Business (Fian O'Carroll) witnessed Mr McDonnell writing down names and contact details of members of the Business on a clipboard prior to and after scheduled classes at the premises located at Unit 8, 21 Joondalup Drive, Edgewater.
[63] Amended statement of claim pars 27(1)(a) and (b), 27(2) and 27(3); defence par 8. See also first affidavit of RL Britten par 37; first affidavit of PB Britten par 28.
As to the further meeting on 16 April 2024, by way of particulars to their denial of Life Combat Sports' account of that meeting (summarised at [95(a)(i) and (ii)] above), The World Institute of Martial Arts and Mr McDonnell said as follows:
PARTICULARS
During the meeting pleaded by the Plaintiff above Graham told all members present that:
7.1 He was unable to obtain finance to pay capital into Life Sports or Combat Sports for the purchase.
7.2 That he was not prepared to be a director of Life Sports, Combat Sports or WAIMA businesses in circumstances where Rebecca (and indirectly Philip through Rebecca) were the sole owners of the business.
7.3 That instead, he would rather not complete the proposed sale and would prefer the liquidator to take WAIMA.
7.4 That if Philip wanted to continue to buy the business with Rebecca that would be a matter for them.
7.5 After the sale of the business Graham and Deanne would resign as directors.
7.6 After the sale of the business Graham would be open to start his own business in the Joondalup area.
7.7 On 16 April 2024 Graham and Deanne resigned as Directors of the companies.
7.8 On 16 April 2024 Philip admitted by words and by conduct that Graham could not and would not be restrained following the sale.
7.8.1 By verbal conversation between Graham and Philip and Oliver Douglas.
7.8.2 By conduct, in that, the sale agreement did not contain any express or implicit restraint provisions in respect of Graham.
7.9 On 18 April 2024 the sale of the businesses was completed by Phillip and Rebecca by advancing the settlement funds,
7.10 An agreement to lease for Unit 2, 25 Delage Street, Joondalup, was signed on or after 18 April 2024 (after Graham's resignation and the settlement of the business sale).
In his affidavit, Mr McDonnell also set out his account of what was said at the meeting on 16 April 2024.[64] Ms Britten disputes Mr McDonnell's account.[65]

Completion of the Asset Sale Agreement

[64] Affidavit of GP McDonnell par 4.

[65] Third affidavit of RL Britten pars 11 ‑ 12, RLB‑40.

It is common ground on the pleadings that on 17 April 2024 completion under the Asset Sale Agreement was achieved.[66] Life Combat Sports had acquired the Business, which since 20 March 2024 Life Combat Sports had operated from Unit 8, 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree, trading as Life Martial Arts.

Resignation of Mr McDonnell as a director

[66] Amended statement of claim par 28(1); defence par 10. See also first affidavit of RL Britten par 39.

Life Combat Sports pleads that Mr McDonnell resigned as a director of Life Combat Sports and Combat Sports on 17 April 2024,[67] whereas The World Institute of Martial Arts and Mr McDonnell plead that Mr McDonnell's resignation as a director of Life Combat Sports, Combat Sports and WAIMA occurred on 16 April 2024.[68]

The World Institute of Martial Arts commenced operating a competing business

[67] Amended statement of claim par 28(2). See also first affidavit of RL Britten par 39(2), RLB-18.

[68] Defence par 10.

Ms Britten deposed that she and Mr Britten did not consent to Mr McDonnell and Ms McDonnell operating a business in competition to them.[69]
[69] Second affidavit of RL Britten par 12.
On 17 April 2024 Mr McDonnell published the following post on his personal Facebook Page, the Freestyle Martial Arts Facebook Page, The Institute Martial Arts Facebook Page and the Kali Self Defence - Joondalup (Joondalup) Facebook Page:[70]
Hey guys sadly this want [sic] the best way I wanted to do this but.
I am starting my own dojo at 25 Delage street Joondalup 5 mins away from current school
Sadly myself and Phil were going to release this info together but it looks Like he has blocked me on the life page and has chosen not to give me a voice I will be teaching the current schedule that is active Monday - Saturday with a full team of your favourite instructors
More details coming tomorrow but don't worry we have a home and a very string [sic] future.
Please share the word since I have been silenced
[70] First affidavit of RL Britten par 44; second affidavit of RL Britten par 10, RLB-34.
Ms Britten attached to her second affidavit various communications, including screenshots of an exchange of messages as between Mr McDonnell and Lianne May on Facebook Messenger which included the following text:[71]
[71] Second affidavit of RL Britten par 18, RLB-37.

Graham:

Myself and Phil have reached a point where we want different things. I want to revisit the old ways and bring back some of keys [sic] skills I feel are missing

I choose to Leave life and restart WAIMA 2.0

The dojo will be 25 delage street Joondalup 5 mins from when we are now

Monday - Saturday classes as per timetable currently available

Lots of instructors will be following along. I wish Phil And Bec the very best but we will be opening Monday as the wa institute of martial arts.

I will always be hear [sic] if I can assist and would love to see you guys and answer some questions you will have.

Lianne:

Hi Graham,
If I transfer my boys to your new dojo. What are the new fees?
Lianne

Graham:

Everything is exactly the same I'll send all the day old tomorrow

Lianne:

Will you still offer the same programs for Elite and Leadership?

Graham:

Yes everything is the same
Taylor
Zac
Ethan
Liam
Brooke
Jake
Mia
Taj and loads of the other instructors and coming for the ride.

Lianne:

Thank you ☺

On 22 April 2024 Ms Britten became aware that large signage had been removed from the Business premises at Unit 8, 21 Joondalup Drive, Edgewater,[72] and on the same day discovered that it had been relocated to Unit 2, 25 Delage Street, Joondalup, and placed as signage for The World Institute of Martial Arts Business.[73]
[72] First affidavit of RL Britten pars 48 ‑ 49.
[73] First affidavit of RL Britten par 50, RLB-23 and RLB-24.
The World Institute of Martial Arts was incorporated on 23 April 2024, and Mr McDonnell was appointed its sole director and was the sole shareholder.[74] It commenced operating The World Institute of Martial Arts Business from Unit 2, 25 Delage Street, Joondalup in competition with the Business that continued to be operated by Life Combat Sports.[75]
[74] Amended statement of claim pars 6, 7; defence par 2. See also first affidavit of RL Britten pars 3 - 4, 51, RLB-2; affidavit of GP McDonnell par 8.1, GPM-05.
[75] Amended statement of claim par 29; defence par 10; affidavit of GP McDonnell par 8.3.
Unit 2, 25 Delage Street, Joondalup is located within a 3.82 kilometre radium of Unit 8, 21 Joondalup Drive, Edgewater,[76] and 370 metres of Unit 11, 200 Winton Road, Joondalup (the premises from which Life Combat Sports now operates the Business in Joondalup).[77]
[76] Second affidavit of RL Britten par 16, RLB-35.
[77] Second affidavit of RL Britten par 17, RLB-36.
Ms Britten deposed that despite the assets of WAIMA having been acquired by Life Combat Sports, The World Institute of Martial Arts adopted a logo that was substantially similar to the Business logo.[78]
[78] First affidavit of RL Britten pars 53, 54, RLB-25, RLB-26.
Ms Britten also deposed that on 30 April 2024 Mr McDonnell caused a further post to be published on his Facebook Page which included a photograph in which Mr McDonnell was wearing a martial arts uniform bearing the insignia of WAIMA which Ms Britten deposed was synonymous with the Business (that had previously traded as 'Western Australian Institute of Martial Arts'). She further deposed that in his Post, Mr McDonnell had also used photographs taken at the Unit 8, 21 Joondalup Drive, Edgewater to promote The World Institute of Martial Arts Business.[79]
[79] First affidavit of RL Britten par 55, RLB-27.
Ms Britten deposed that on 25 May 2024 Life Combat Sports registered the business name 'Predator Muay Thai', and that prior to this, WAIMA had arranged for custom clothing to be manufactured bearing the 'Predator' insignia.[80] Ms Britten also attached to her first affidavit a bundle of Facebook Posts from Mr McDonnell's personal Facebook Page and The World Institute of Martial Arts' Facebook Page which refer to 'Predator Muay Thai'.[81]

Alleged impact on Life Combat Sports

[80] First affidavit of RL Britten par 56, RLB-28.

[81] First affidavit of RL Britten par 57, RLB-29.

There was affidavit evidence of the alleged impact of The World Institute of Martial Arts Business on the Business that had been acquired by Life Combat Sports.
In her second affidavit, Ms Britten deposed that as at 20 March 2024, 16 staff members were employed by the Business to work at the premises located at Unit 8, 21 Joondalup Drive, Edgewater. The 16 staff members included Ms Britten, Mr Britten, Mr McDonnell and Ms McDonnell. The other staff members were Ms Clarke, Jennifer Pahm, Ethan Stone, Liam Rutter, Brooke Ferguson, Jake Balchin, Mia Heaton, Sean Hird, RJ Calton, Leila Davadra, Fian O'Carroll and Taj McDonnell.[82]
[82] Second affidavit of RL Britten par 20.
Ms Britten further deposed that each of Ms Clarke, Jennifer Pahm, Ethan Stone, Liam Rutter, Mia Heaton, Sean Hird, RJ Calton, Leila Davadra and Taj McDonnell terminated their employment with Life Combat Sports on about 18 April 2024 and commenced working for The World Institute of Martial Arts on or about 23 April 2024.[83] Further, she deposed that on 30 April 2024 Brooke Ferguson terminated her employment with Life Combat Sports and commenced working with The World Institute of Martial Arts on or about 1 May 2024.[84]
[83] Second affidavit of RL Britten par 21.
[84] Second affidavit of RL Britten par 22.
Ms Britten deposed that from 17 April 2024 Life Combat Sports received numerous email communications from members cancelling their membership.[85]
[85] First affidavit of RL Britten par 46, RLB-22.
She further deposed that as at 18 September 2024 (the date of her first affidavit), Life Combat Sports had suffered loss and damage and continues to suffer loss and damage in circumstances where Mr McDonnell and The World Institute of Martial Arts pass off to former gymnasium members of the Business and members of the public that they have an association with Life Combat Sports.[86]
[86] First affidavit of RL Britten par 58.

As to the damage alleged, Ms Britten deposed that since 17 April 2024, Life Combat Sports had lost 180 members which equated to membership fees of $51 per week per member or $2,652 per annum per member (and to a loss of $9,180 a week or $477,360 per annum).[87]
[87] First affidavit of RL Britten par 59.
Ms Britten explained that prior to the departure of Mr McDonnell and Ms McDonnell, the Business had approximately 400 members. She explained that memberships had always been on a month to month basis, with members having a choice of unlimited access to the gymnasium or lower cost options which limited the number of attendances per week; and that the overwhelming majority of members had elected to attend twice a week for a fee of $51 per week.[88]
[88] First affidavit of RL Britten par 59.
She deposed that since the incorporation of The World Institute of Martial Arts, the income of Life Combat Sports had halved (from $41,609.19 to $20,268.38) and continues to reduce. Further, she deposed to her belief that if The World Institute of Martial Arts were permitted to operate its business in direct competition with Life Combat Sports without restriction, it is likely that Life Combat Sports will not operate at a profit and the Business will not be viable.[89]

Action against The World Institute of Martial Arts and Mr McDonnell

[89] First affidavit of RL Britten pars 60 - 61.

In summary, Life Combat Sports claims that:
(a)as a director of Life Combat Sports, Mr McDonnell owed to it various duties, namely, to act in good faith and in the best interests of Life Combat Sports; to act for a proper purpose; not to gain an advantage for himself or someone else; not cause detriment to Life Combat Sports; not to improperly use information obtained because he was a director, officer and/or employee of Life Combat Sports to gain advantage for himself or someone else or cause detriment to Life Combat Sports (defined in the pleading as his 'Statutory Duties');[90]
(b)Mr McDonnell's Statutory Duties arose as a matter of law pursuant to s 181(1), s 182(1) and s 183(1) of the Corporations Act;[91]
(c)further and in the alternative, a number of terms were implied terms of Mr McDonnell's employment, which included that he would honestly and faithfully serve Life Combat Sports, and that he would maintain Life Combat Sports' confidential information and only disclose it for proper purposes (defined in the pleading as his Common Law Duties);[92]
(d)Mr McDonnell's Common Law Duties arose as a matter of law;[93]
(e)in breach of Mr McDonnell's Statutory Duties and Common Law Duties, he:
(i)or his nominee signed an agreement to lease the premises located at Unit 2, 25 Delage Street, Joondalup in circumstances where he knew or ought to have known that Life Combat Sports proposed to lease the same premises; and
(ii)since at least 17 April 2024 Mr McDonnell has solicited members of the Business of Life Combat Sports and procured them to terminate their memberships with Life Combat Sports.[94]
[90] Amended statement of claim par 30.
[91] Amended statement of claim par 31.
[92] Amended statement of claim par 32.
[93] Amended statement of claim par 33.
[94] Amended statement of claim par 34.
Life Combat Sports also claims that in breach of the Shareholders' Agreement, Mr McDonnell:[95]
(a)incorporated The World Institute of Martial Arts and during the Restraint Period and within the Restraint Area (as defined) commenced operating a business that is the same or substantially similar to the Business; and
(b)induced, solicited or canvassed the custom of Life Combat Sports.
[95] Amended statement of claim par 35A(1) and (2).
By way of particulars to this plea, Life Combat Sports referred to the Facebook Messenger communication from Mr McDonnell to Ms May (reproduced above).
Further, Life Combat Sports also claims that in breach of the Shareholders' Agreement, Mr McDonnell represented The World Institute of Martial Arts as being connected with the Business conducted by Life Combat Sports. By way of particulars to this plea, Life Combat Sports referred to the:[96]
(a)removal of the 'Martial Arts' sign that was affixed to the façade of the premises at Unit 8, 21 Joondalup Drive, Edgewater on about 21 April 2024 and the affixing of that sign to the façade of Unit 2, 25 Delage Street, Joondalup;
(b)use of the business name 'The World Institute of Martial Arts' which is substantially similar to 'Western Australia Institute of Martial Arts', under which name WAIMA had previously traded;
(c)use of a blue dragon as its logo which is substantially similar to the logo used by WAIMA; and
(d)promotion of The World Institute of Martial Arts Business using Life Combat Sports' intellectual property.
[96] Amended statement of claim par 35A(3).
Finally, Life Combat Sports claims that in breach of the Shareholders' Agreement, Mr McDonnell engaged the services of Ms Clarke, Jennifer Pahm, Ethan Stone, Liam Rutter, Mia Heaton, Sean Hird, RJ Calton, Leila Davadra, Taj McDonnell and Brooke Ferguson who were employees of Life Combat Sports.[97]
[97] Amended Statement of Claim par 35A(4).
Life Combat Sports pleads that by letter dated 21 May 2024, Life Combat Sports demanded, among other things, that The World Institute of Martial Arts cease and desist from soliciting members of Life Combat Sports; and operating a business in competition with Life Combat Sports within a 20 km radius of Unit 8, 21 Joondalup Drive, Edgewater and 48 McCoy Street, Myaree.[98]
[98] Amended Statement of Claim par 35.
The substantive relief sought by Life Combat Sports against Mr McDonnell and The World Institute of Martial Arts is described above at [8] and [9] of these reasons.

The principles to be applied to the grant of interlocutory injunctions

The general principles applicable to the exercise of the power to grant an interlocutory injunction were not in dispute. They were summarised by Newnes JA (with whom McLure P and Corboy J agreed) in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 at [87],[99] as follows:
The principles to be applied on an application for an interlocutory injunction are well-known ... The two main enquiries that arise are whether the plaintiff has made out a prima facie case and whether the balance of convenience favours the grant of the injunction. The first inquiry as to a 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks.
The inquiry is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours the grant of such relief are related, not independent, questions. (citations omitted)
[99] Mineralogy Pty Ltd v Sino Iron Pty Ltd. See also Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36 [131].
In practice the notion that a plaintiff must show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo is expressed compendiously by asking the question: is there a serious question to be tried?[100]
[100] Australian Broadcasting Corporation v O'Neil [2006] HCA 46; (2006) 227 CLR 57 [70]; Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [13].
In answering the question, the court does not normally undertake a preliminary trial or attempt a forecast of the ultimate result. Nor is an application for an interlocutory injunction an occasion to determine contested questions of fact and conflict in affidavit evidence.[101]
[101] Warner-Lambert Company LLC v Apotex Pty Ltd [72], [91]; Emeco International Pty Ltd v O'Shea [24].
The sufficiency and strength of the applicant's case must be judged on the evidence it has adduced, and the question is whether there is a probability that the applicant will be entitled to relief at trial 'if the evidence remains as it is'.[102] The extent to which the court will consider the merits of disputes as to legal issues will depend on the circumstances of the case. There is no inflexible rule in this regard.
[102] Australian Broadcasting Corporation v O'Neill [65], quoting Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618, 622 ‑ 623; Warner-Lambert Company LLC v Apotex Pty Ltd [69].
When equity's jurisdiction is involved in an application for an interlocutory injunction, it is necessary to identify the legal or equitable rights which are said to be determined at trial and in respect of which final relief is sought. The power to grant an interlocutory injunction is not to be exercised by reference to unconstrained notions of what appears to be just; it must be exercised by reference to the rights claimed by the applicant in the proceeding.[103]
[103] Sino Iron Pty Ltd v Mineralogy [No 2] [130] citing Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [32]; as cited in Nutrien AG Solutions Ltd v Pingrup Traders Pty Ltd [2022] WASC 251 [52].
There are some kinds of case in which for the purpose of seeing where lies the balance of convenience (or more specifically 'the balance of the risk of doing an injustice') it is desirable for the court to evaluate the strength of the plaintiff's case for final relief. One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue.[104]
[104] Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 536.
As was observed by Tottle J in Talent Konnects Pty Ltd v Marvelli [2022] WASC 128 at [50], in assessing whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted (in other words assessing where the risk of an injustice lies), the court will consider whether the grant or refusal of an injunction will have the practical effect of determining the claim either for or against the plaintiff.[105]
[105] Citing Kolback Securities Ltd v Epoch Mining NL.
I also proceeded on the basis that the requisite strength of the prima facie case and the balance of convenience were not independent considerations. The more the balance of convenience supports the respondent, and the more serious the consequences for a respondent, the stronger the prima facie case the applicant will need to establish to support an interlocutory injunction. Conversely, in a case where the balance of convenience strongly favours the applicant, then the strength of the prima facie case required to support the interlocutory injunction diminishes.
Unless the plaintiff shows that there is at least a serious question to be tried which if resolved in its favour would entitle it to final relief, then the requirements of justice as between the parties will dictate that an interlocutory injunction should be refused.[106]
[106] Kolback Securities Ltd v Epoch Mining (536) (and the cases cited therein).
Further, I noted that in an interlocutory injunction application in equity's exclusive jurisdiction, the question of whether damages or other remedies at law are adequate does not arise.[107] However, in equity's auxiliary jurisdiction (that is, where an injunction is granted for the effectual protection of the plaintiff's enjoyment of a legal right), the question of whether the plaintiff will suffer irreparable injury for which damages will not be adequate compensation involves no more than a consideration of whether the injury cannot properly be compensated in damages, or by an order for accounts or some other interim remedy. The question of whether the injury cannot properly be compensated in damages involves a consideration of whether it is just in all the circumstances that the plaintiff be confined to their remedy in damages.[108]
[107] Heavener v Loomes [1924] HCA 10; (1924) 34 CLR 306, 326. See also Heydon JD, Leeming MJ & Turner PG, Meagher, Gummow & Lehane's, Equity: Doctrines and Remedies (5^th ed, 2014) [21-345].
[108] R v MacFarlane; Ex parte O'Flanagan and O'Kelly [1923] HCA 39; (1923) 32 CLR 518, 550 ‑ 551; McCarty v The Council of the Municipality of North Sydney (1918) 18 SR (NSW) 210, 214 ‑ 215; Action Cycles Pty Ltd v Ross [2011] VSCA 411 [30]; Heydon JD, Leeming MJ & Turner PG, Meagher, Gummow & Lehane's, Equity: Doctrines and Remedies (5^th ed, 2014) [21-345]; Samsung Electronics Company Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 [60], [61], [66].
In assessing the balance of convenience in an interlocutory injunction application, the interests of the public and third persons are relevant and have more or less weight according to other material circumstances; whether those interests tend to favour the grant or refusal of an injunction in any given case depends upon the circumstances of the case; and hardship visited upon third persons or the public generally by the grant of an interlocutory injunction will rarely be decisive.[109]
[109] Samsung Electronics Company Ltd v Apple Inc [69].
Where a party seeks a mandatory injunction, no more stringent or different legal test is to be applied than that which is applicable in seeking a prohibitory injunction.[110] Ultimately, the question is as to the balance of the risk of injustice, and in considering that balance the court must take into account the nature and consequences of the particular injunction sought.[111]
[110] Mineralogy Pty Ltd v Sino Iron Pty Ltd [76] ‑ [86].
[111] Twinside Pty Ltd v Venetian Nominees Pty Ltd [12]; Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27 [9].

Disposition - injunction application

In this case, the power of the court to grant the interlocutory injunctive relief sought on behalf of Life Combat Sports, and the general principles applicable to the exercise of the power to grant an interlocutory injunction, were not in dispute.[112] Rather, in issue was whether such relief ought be granted when the established applicable principles are applied to the facts of this case.

Serious question to be tried

[112] Defendants' outline of submissions filed 16 January 2025 par 1 (Jurisdiction); ts 48 - 49 (23 January 2025).

Despite recent amendment to its pleading, there remain a number of difficulties with parts of Life Combat Sports' pleaded claim. How Life Combat Sports may prosecute a claim for breach of the Shareholders' Agreement against Mr McDonnell in circumstances where Life Combat Sports was not a party to that agreement, was not addressed in the amended pleading.[113] Without reference to authority, at the hearing of the application when asked the basis upon which Life Combat Sports invoked the Shareholders' Agreement, counsel responded as follows:[114]
[The basis is] this, that the shareholders agreement are shareholders in the company which owned the business, WAIMA. And so it's that shareholders agreement in respect of that business, which the present plaintiff acquired. The plaintiff acquired that business. And so, as a result, the fiduciary and contractual obligations that flowed from that shareholders agreement - the point of that is continued to bind Mr McDonnell after the date on which the asset sale agreement had occurred, because it is the purchaser of the business who thereby acquires [all right] title and interest to the business and could, as a party intended for whose benefit the agreement was made, give effect to the obligations that are cast upon Mr McDonnell in order to ensure that the integrity of that which it has purchased is maintained.
Which is why I said to your Honour earlier that, even if it's the case that it could be said that the shareholders agreement does not run to the benefit of the present plaintiff, the terms of the asset sale agreement themselves provide a sufficient grounding, both for the claim that's made and for the injunctive relief that's now sought. But our principle proposition is that all three continue to accrue to the benefit of the plaintiff, and the only reason I took your Honour in the first place, the asset sale agreement was to put that as a standalone proposition if it was found there was some difficulty in either or both of those pathways
[113] See discussion at ts 50 - 51 (23 January 2025).
[114] ts 41 - 42 (23 January 2025). See also ts 67 - 68 (23 January 2025).
It is not suggested that the Shareholders' Agreement was assigned, but that the benefit of the restraints in that agreement accrued in favour of Life Combat Sports.[115] Without the benefit of further submissions with reference to authority, I had concerns as to Life Combat Sports' entitlement to the substantive relief claimed on the basis of breach of the Shareholders' Agreement. That said, among other things, Life Combat Sports prosecutes a claim against Mr McDonnell for breach of his Statutory Duties, which duties are said to have arisen as a matter of law pursuant to s 181(1), s 182(1) and s 183(1) of the Corporations Act by reason of Mr McDonnell having been a director of Life Combat Sports. The provisions of the Corporations Act relied upon are reproduced below:
[115] ts 42 (23 January 2025).
181Good faith - civil obligations
Good faith - directors and other officers
(1)A director or other officer of a corporation must exercise their powers and discharge their duties:
(a)in good faith in the best interests of the corporation; and
(b)for a proper purpose.
182Use of position - civil obligations
Use of position - directors, other officers and employees
(1)A director, secretary, other officer or employee of a corporation must not improperly use their position to:
(a)gain an advantage for themselves or someone else; or
(b)cause detriment to the corporation.
183Use of information - civil obligations
Use of information - directors, other officers and employees
(1)A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:
(a)gain an advantage for themselves or someone else; or
(b)cause detriment to the corporation.
As noted above, Life Combat Sports pleads that Mr McDonnell breached his Statutory Duties in that:
(a)he or his nominee signed an agreement to lease the premises located at Unit 2, 25 Delage Street, Joondalup in circumstances where he knew or ought to have known that Life Combat Sports proposed to lease the same premises; and
(b)since at least 17 April 2024 Mr McDonnell has solicited members of the Business operated by Life Combat Sports and procured them to terminate their memberships with Life Combat Sports.[116]
[116] Amended statement of claim par 34.
When Mr McDonnell resigned as a director of Life Combat Sports is in issue in this proceeding. If Mr McDonnell was not a director or officer (or an employee for the purposes of s 182(1)) of Life Combat Sports when the conduct complained of occurred, s 181(1) and s 182(1) would appear to have no application,[117] whereas s 183(1) may still apply.
[117] See by way of example TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd [2016] FCA 815 [153].
Having regard to the sections of the Corporations Act relied upon and the evidence read, I was satisfied that there is a probability that Life Combat Sports will be entitled to relief at trial 'if the evidence remains as it is' with respect to the claim against Mr McDonnell for breach of Statutory Duties, particularly under s 183(1) of the Corporations Act.

Once the court's jurisdiction is enlivened under s 1335(1), there is an unlimited discretion that is to be exercised considering all of the circumstances of the case.[146] While s 1335 does not list the factors that a court may take into consideration once the threshold condition is satisfied, the principles in relation to security for costs are well established.[147] There are a number of cases which have identified factors relevant to the exercise of discretion in awarding security for costs. None of the authorities claim to contain an exhaustive list, and the factors to be considered will vary from case to case.
[146] Unified Pty Ltd v The Cancer Council Western Australia Inc [No 3] [2011] WASC 161 [10]. See also BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339, 343.
[147] See Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57 [5] ‑ [6]; George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56 [41] ‑ [48].
Various factors may be relevant to that exercise of discretion. They may include (but will not be limited to):
(a)the strength and bona fides of the plaintiff's case;
(b)the likelihood of the plaintiff being able to pay the defendant's costs;
(c)whether the plaintiff's impecuniosity was caused by the defendant's conduct which is the subject of the claim;
(d)whether the application for security is oppressive;
(e)whether the award for security would deny the impecunious plaintiff a right to litigate;
(f)whether there are persons standing behind the plaintiff who are likely to benefit from the litigation;
(g)whether the persons standing behind the plaintiff have offered any security or personal undertaking;
(h)whether the plaintiff is in substance a plaintiff or whether the proceedings are defensive in the sense of directly resisting proceedings already brought or seeking to halt the defendant's self‑help procedures;
(i)whether the application for security has been brought promptly;
(j)whether the defendant has any rights which it can exercise against the assets of the plaintiff to satisfy an order for costs in its favour; and
(k)any factors relating to public interest.[148]
[148] Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [6].
The judicial discretion in balancing these factors has been described as the balance of justice between two extremes. First, not allowing the defendant to make oppressive use of s 1335, or similar provisions, to prevent the plaintiff pursuing a genuine claim; and, secondly, not permitting the controllers of an impecunious corporation to oppress a defendant by exploiting its incapacity to pay costs.[149]
[149] Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [No 2] [14], citing Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301. See also Erolen Pty Ltd v Baulkham Hills Shire Council (1993) 10 ACSR 441, 453.
The principles that apply to the exercise of the discretion under s 1335 apply to applications made pursuant to O 25 of the Rules of the Supreme Court.[150]
[150] Crosswest Corporation Pty Ltd v Allstrike Enterprises Pty Ltd [2014] WASC 27 [14]; as was accepted by counsel for the defendants at ts 63 (23 January 2025).

Disposition - security for costs

The World Institute of Martial Arts and Mr McDonnell move for an order compelling Life Combat Sports within 21 days to pay the sum of $80,000 into court as security for the costs of this action until further order with liberty to apply with respect of the amount of security. Further, they seek an order staying the proceeding in default of the payment of security into court.
The World Institute of Martial Arts and Mr McDonnell say that the threshold question ought be answered in the affirmative, that is, that the court should find that there appears by credible testimony that there is reason to believe that Life Combat Sports will be unable to pay the costs of The World Institute of Martial Arts and Mr McDonnell if they are successful in their defence of the action. Further, they say that when the factors relevant to the exercise of discretion are considered in the circumstances of this case, discretion ought be exercised to order Life Combat Sports to provide security for costs.
Life Combat Sports opposes the application in its amended form on the basis that its business records reveal that it has the means to satisfy an adverse costs order. Further, it says that when the factors relevant to the exercise of discretion are considered in the circumstances of this case, discretion ought be exercised to refuse the security for costs application.
I set out my findings as to these matters below.

The threshold question

In order to consider the threshold question, it is necessary to consider the nature of the action and the likely costs of defending the same.
The action was commenced by writ and is at a relatively early stage. The World Institute of Martial Arts and Mr McDonnell are yet to plead to the amended statement of claim filed on behalf of Life Combat Sports on 21 January 2025 (refiled on 22 January 2025).
Mr Gregson acts for The World Institute of Martial Arts and Mr McDonnell in this action and appeared as counsel at the hearing on 23 January 2025. In support of the security for costs application, Mr Gregson made an affidavit in which he set out his estimate of the costs that The World Institute of Martial Arts and Mr McDonnell will likely incur in prosecuting the security for costs application; in defending the interlocutory injunction application; and in defending the action to trial. As noted above, his affidavit was referenced in the outline of submissions relied upon in support of the security for costs application.
As to the defendants' costs of and incidental to prosecuting the security for costs application, on a solicitor‑client basis Mr Gregson estimates them to be approximately $20,000 plus GST; and approximately $14,872 on a party‑party basis when regard is had to the maximum allowable under the Legal Profession Supreme and District Courts (Contentious Business) Determination 2024 (WA) and if a Senior Practitioner rate of $572 per hour inclusive of GST is applied (that is 26 hours at $572 per hour). Mr Gregson also makes allowance for a filing fee in the amount of $871.[151]
[151] Affidavit of CA Gregson pars 3 - 5.
As to the defendants' costs of and incidental to defending the interlocutory injunction application, on a solicitor‑client basis Mr Gregson estimates them to be approximately $18,000 plus GST and disbursements; and approximately $13,728 on a party‑party basis when regard is had to the maximum allowable under the Legal Profession Supreme and District Courts (Contentious Business) Determination and if a Senior Practitioner rate of $572 per hour inclusive of GST is applied (that is 24 hours at $572 per hour).[152]
[152] Affidavit of CA Gregson pars 6 ‑ 8.
As to the defendants' costs of and incidental to defending the substantive action to the conclusion of a five day trial (excluding the costs of the applications described above), on a solicitor‑client basis Mr Gregson estimates them to be approximately $100,000 plus GST; and approximately $88,660 on a party‑party basis, when regard is had to the maximum allowable under the Legal Profession Supreme and District Courts (Contentious Business) Determination and if a Senior Practitioner rate of $572 per hour inclusive of GST is applied (that is 155 hours at $572 per hour). No allowance is made by Mr Gregson in his estimate for disbursements.[153]
[153] Affidavit of CA Gregson pars 9 ‑ 11.
As to Mr Gregson's estimates, I make the following observations.
First, the estimates have been prepared on the assumption that Life Combat Sports will be subject to adverse costs orders ordered to be in the cause in relation to two interlocutory applications the subject of these reasons.
After delivery of these reasons, counsel will be heard with respect to costs, but in any event, as a general rule, where an order for costs is to be made against a party in interlocutory proceedings, the costs will be fixed and ordered to be paid forthwith or by a particular date. Likewise as a general rule, where costs are ordered to be in the cause, the quantum will be fixed.[154]
[154] Supreme Court of Western Australia Consolidated Practice Directions PD 4.7.1 par 3.
Secondly, the amounts estimated for each interlocutory application appear to represent the maximum costs allowable for such work under the Legal Profession Supreme and District Courts (Contentious Business) Determination.
Thirdly, the amounts estimated on a party‑party basis for each application were significantly higher than the amounts contemplated in the schedule of standard costs orders for interlocutory applications found in the Supreme Court of Western Australia Consolidated Practice Directions, which schedule has been prepared by reference to the applicable determination of the Legal Costs Committee.[155]
[155] Supreme Court of Western Australia Consolidated Practice Directions PD 4.7.1 par 9.
As noted in the Practice Directions, judicial officers can be expected, in the usual run of routine matters, to fix the costs payable by reference to schedule 4.7.1.1 of the Supreme Court of Western Australia Consolidated Practice Directions, rather than ordering them to be taxed.[156]
[156] Supreme Court of Western Australia Consolidated Practice Directions PD 4.7.1 par 8.
I also note that the amounts suggested in schedule 4.7.1.1 have been calculated by reference to the time required in a typical, or median, instance, and the court will fix costs in a lower sum in a simple matter, or adjust the amount upward (or order costs to be taxed) for unusually heavy matters.[157]
[157] Supreme Court of Western Australia Consolidated Practice Directions PD 4.7.1 par 10.
Schedule 4.7.1.1, item 2.8 provides an allowance of 4.5 hours at a Senior Practitioner rate for a substantive contested application (for example, for injunction) heard in Judges' chambers, for work which would including drafting the application, conferral, one affidavit, preparation, submissions, appearance and reporting. The amount allowed by reference to schedule 4.7.1.1, item 2.8 for such an application is $2,277 for a hearing of no more than 30 minutes duration.
Fourthly, in this case, both applications required the application of well‑established legal principles with respect to which there was no controversy, and which were to be applied to facts that were not particularly complex.
While the applications pressed on 23 January 2025 were heard together at a special appointment which took about two hours (not 30 minutes each in duration), Mr Gregson's estimate of the time required to prosecute and defend them was far greater than the time usually required in a typical, or median, instance (discerned by reference to schedule 4.7.1.1 of the Supreme Court of Western Australia Consolidated Practice Directions).
Fifthly, in contrast, Mr Gregson's estimate of the defendants' costs of and incidental to defending the substantive action to trial (which he estimated would require five days) when calculated on a party‑party basis is more modest. That said, when considering his estimate, I noted the following:
(a)an allowance of $6,864 had been included for the preparation of a statement of defence and counterclaim 'if the plaintiff commences an action for breach of mediation agreement'.[158] Under s 1335(1) of the Corporations Act, the court has the power to order that security be given for the likely costs of a proceeding over which it has jurisdiction. Mr Gregson did not in his affidavit or submissions explain the justification for seeking security for the costs of a separate proceeding (one which has not yet been commenced, and may never be commenced) in this proceeding, nor how such an application might fall within the court's power under s 1335(1) (or otherwise);
(b)no allowance appears to have been made for discovery and inspection in the estimate;
(c)the estimate was prepared on the basis that evidence at trial would be given by affidavit contrary to usual practice;[159] and
(d)no explanation was proffered for the estimated length of trial.
[158] Affidavit of CA Gregson par 11.
[159] Supreme Court of Western Australia Consolidated Practice Directions PD 4.5.1 par 2.
Putting aside the issues noted at [198(b)] to [198(d)] above, the total estimated costs to trial on a party‑party basis, less $6,864 (the amount included for the preparation of a statement of defence and counterclaim 'if the plaintiff commences an action for breach of mediation agreement' discussed at [198(a)] above) was $81,796.
Allowing twice the standard costs order amount for each interlocutory application suggested in the Supreme Court of Western Australia Consolidated Practice Directions (that is, 2 x $4,554), and allowing $81,796 for party‑party costs to trial, the total estimated amount is $90,904.
In considering the threshold question, I then turned to consider if it appears by credible testimony that there is reason to believe that Life Combat Sports will be unable to pay the costs of The World Institute of Martial Arts and Mr McDonnell, if successful in their defence. I weighed the following in the balance.
First, Life Combat Sports is not a registered proprietor of land.[160]
[160] Affidavit of GP McDonnell pars 5.1 ‑ 5.2, 6, GPM-03; third affidavit of RL Britten par 14.
Secondly, Life Combat Sports does not own any motor vehicles.[161]
[161] Third affidavit of RL Britten par 15.
Thirdly, a copy of the balance sheet for Life Combat Sports as at 30 November 2024 was before the court.[162] The balance sheet reveals (among other things) that as at 30 November 2024 Life Combat Sports held cash at bank in the amount of $124,999 and no liabilities. Its largest asset was recorded as 'Purchase of WAIMA Pty Ltd Members Contracts, Members database and Intellectual Property', with a recorded book value of $133,000.[163]
[162] Third affidavit of RL Britten par 16, RLB-42.
[163] ts 44 (23 January 2025).
Fourthly, in her first affidavit read in opposition to the injunction application, Ms Britten deposed to her belief that if The World Institute of Martial Arts were permitted to operate its business in direct competition with Life Combat Sports without restriction, it is likely that Life Combat Sports will not operate at a profit and the Business will not be viable.[164] I also noted the matters described at [112] to [116] above, particularly as to the loss of members suffered since 17 April 2024.
[164] First affidavit of RL Britten pars 60 - 61.
Fifthly, the grant of injunctive relief in the form contemplated at [162] and [163] above will not likely result in an immediate improvement to the financial position of Life Combat Sports.
A risk assessment is, of necessity, imprecise. Section 1335(1) of the Corporations Act calls for a practical, common sense approach to the examination of the corporation's financial affairs.[165]
[165] Livingspring Pty Ltd v Kilger Partners [15].
On behalf of Life Combat Sports it was submitted that its business records record that as at 30 November 2024 it had the means to satisfy an award for costs. It was submitted that on that basis alone, it would be open for the court to dismiss the application for security for costs.[166]
[166] Plaintiff's outline of submissions filed on 22 January 2025 par 2; ts 44 - 45 (23 January 2025).
While the balance sheet (particularly the cash at bank and the absence of liabilities) provides comfort, it was the evidence of Ms Britten that gave rise to a reason to believe that there is a risk that Life Combat Sports will be unable to pay when a practical, common sense approach to the examination of the financial affairs of Life Combat Sports was applied. That is, while finely balanced, by credible testimony (summarised at [113] to [116] above), I considered there to be reason to believe that Life Combat Sports will be unable to pay the costs of The World Institute of Martial Arts and Mr McDonnell, if successful in their defence.

The exercise of discretion

Having so concluded, the court's jurisdiction was enlivened, In the exercise of discretion, I had regard to the following.

What is the strength of Life Combat Sports' claims and are they bona fides?

As observed by Allanson J in Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [No 2] at [20], the bona fides of the plaintiff's claim and its merits may be considered in the exercise of discretion. However, the court should not embark on a detailed consideration of the merits.
Given the relatively early stage of the proceeding, it is not possible, necessary, or appropriate that I attempt to undertake a detailed evaluation of Life Combat Sports' case as pleaded.
While its claims are not without difficulties, I accept that Life Combat Sport has a prima facie case as pleaded against the defendants. In this regard, I repeat my observations at [138] to [142] above.
Having given careful consideration to the amended pleading, to the evidence adduced, and to the submissions of counsel, I find that the merits of Life Combat Sports' claims are not so strong as to say that no security is appropriate. Nor are the claims so weak as to weigh the balance heavily in favour of the exercise of discretion.
I have considered whether the claims made are bona fide, and there is no evidence that the claims have been made by this proceeding otherwise than in good faith.
I have weighed all of these matters in the balance in the exercise of discretion.

The likelihood of Life Combat Sports being able to pay the defendants' costs

I note that the inability of a plaintiff to pay the defendants' costs not only enlivens the jurisdiction to require security but it is also a substantial factor in the decision whether to exercise it.[167]
[167] Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd [36(c)]; TS Dack Pty Ltd v Australian Water Holdings Pty Ltd [2015] FCA 931; (2015) 108 ACSR 379 [33]
Having regard to the evidence bearing on Life Combat Sports' financial position, while the finding was finely balanced, as noted above the threshold question was answered in the affirmative and I consider there to be a reason to believe that Life Combat Sports will not be able to pay the defendants' costs if it were unsuccessful in the action, and I weighed the same in the balance in the exercise of discretion.

Whether the impecuniosity was caused by the defendants' conduct which is the subject of the claim

Life Combat Sports defends the security for costs application on the basis that it is the defendants' wrongdoing that has brought about its lack of means.[168] Acknowledging that it is Life Combat Sports' onus on the issue,[169] counsel for Life Combat Sports submitted that it was clear from the evidence of Ms Britten in her first affidavit that the loss and damage sustained by Life Combat Sports was a consequence of the action of the defendants.[170]
[168] Plaintiff's outline of submissions filed on 22 January 2025 par 7.
[169] Plaintiff's outline of submissions filed on 22 January 2025 par 7, citing BPM Pty Ltd V HPM Pty Ltd (345 ‑ 346).
[170] Plaintiff's outline of submissions filed on 22 January 2025 par 6.
In this case, Ms Britten gave unchallenged evidence of there having been a reduction in the number of members of the Business since 17 April 2024, and the decrease in Life Combat Sports' income since The World Institute of Martial Arts was incorporated.[171] Further, Ms Britten deposes to the various actions taken by Mr McDonnell to solicit members of the Business and procure them to move their membership to The World Institute of Martial Arts.
[171] First affidavit of RL Britten pars 59 - 60.
In response to Ms Britten's evidence, on behalf of the defendants it was submitted that the cause of Life Combat Sports' impecuniosity was that it purchased a client list/clients who never had any interest in staying with Life Combat Sports with Mr Britten as the chief instructor; and that the conduct giving rise to a loss of members was attributable to the members electing to follow their preferred instructor, Mr McDonnell.[172] This submission was not supported by the evidence read.
[172] Defendants' outline of submissions filed 27 November 2024 par 4(iii); ts 54 (23 January 2025).

In the balance, I gave this factor considerable weight.

Whether Life Combat Sports has been forced to defend its interests because of the conduct of the defendants

I have also had regard to whether Life Combat Sports has been forced to defend its interests because of the conduct of the defendants.
In particular, I considered Heller Factors Pty Ltd v John Arnold's Surf Shop Pty Ltd (in liq) (1979) 4 ACLR 492. In that case, Mitchell J, with whom King CJ and Legoe J agreed, held that the court, in deciding whether or not to exercise its discretion to make an order for security for costs, is entitled to consider whether a corporation is a true plaintiff on the one hand or, on the other hand, is forced into the position of plaintiff because the defendant is empowered to take what may be described as 'self help' procedures.
While I readily accept that Life Combat Sports considers itself forced to defend its interests because of the conduct of the defendants, Mr McDonnell's conduct (in all of the circumstances) cannot readily be described as a 'self help' procedure. In the circumstances, Life Combat Sports appears to be a true plaintiff.

Would an order for security stultify Life Combat Sports' claims?

The court may decline to order security where to do so would stultify a plaintiff's claim. However, while this a powerful factor in the exercise of discretion, it is only one factor.[173]
[173] Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [No 2] [51]. See also Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 [92] ‑ [93].
In this case, Life Combat Sports has put before the court evidence of its respective assets and liabilities. It does not assert that an order for security will stultify its claims.
Although I have found that there is a reason to believe that at the end of the proceeding there is a risk that Life Combat Sports will be unable to meet a cost order, on the evidence it would not appear likely that an order for security will stultify Life Combat Sports' claims, particularly if that security was ordered to be given in tranches.

Is the application oppressive?

Indications of an application for security that is oppressive include (but are not limited to) where a defendant has made the application as a means to stifle a genuine claim, or where a defendant has conducted its defence in a manner that prolongs the proceeding.[174]
[174] Jaddcal Pty Ltd v Minson [No 2] [2011] WASC 138 [15]; Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [31].
Life Combat Sports does not complain about the defendants' delay in bring the application for security for costs. Further, the evidence before me does not support an inference that the defendants made the application for security to stifle the claims of Life Combat Sports, nor does the procedural history support a finding that the defendants have conducted their defence in a manner intended to prolong the proceeding. The evidence does not support a finding that the application is oppressive.

Was the application brought promptly?

While the action was commenced in August 2024, I would not characterise the defendants' delay in bringing the application as 'substantial' in all of the circumstances. The timing of the application does not weigh against the grant of the application.

Whether there are persons standing behind Life Combat Sports who are likely to benefit from the litigation

Combat Sports holds all shares in Life Combat Sports, and Ms Britten holds all shares in Combat Sports. She and Mr Britten are its directors and are persons who stand to benefit from the litigation.

Have the persons standing behind Life Combat Sports offered any security or personal undertaking to be liable for costs?

It is appropriate to consider whether those who stand behind Life Combat Sports and would gain from the litigation are able to provide adequate security.[175] Where such persons can provide security is a weighty consideration in favour of an order.[176]
[175] Phoenix Eagle Co Pty Ltd v Tom McArthur Pty Ltd [No 2] [52].
[176] Sunlea Enterprises Pty Ltd v Pollock [2014] WASC 91 [84], citing Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542, 545.
While Ms Britten proffered an undertaking as to damages in support of the injunction application, she has not offered any security or undertaking to be liable for costs in response to this application, nor has Mr Britten. I also note that neither own any real property in the jurisdiction. As to Ms Britten's ability to offer security or a personal undertaking, it was noted by counsel for Life Combat Sports that 'Ms Britten is the sole shareholder of Life Combat Sports and, in effect, controls the equity within the company. Put another way, the net asset position disclosed by the company equates to the asset position of Ms Britten.'[177]
[177] ts 43 (23 January 2025).
Counsel further noted that 'to the extent to which there's a personal undertaking given by Mrs Britten in support of the application, or as a condition for the grant of any relief, then her capacity to meet whatever may follow by way of any consequence of the undertaking having been given is a mirror of the same balance sheet ..., namely, that she - her ownership of the shares is her ownership of the asset, and therefore represents an undertaking capable of being given effect to'.[178]

Whether there are factors relating to public interest

[178] ts 44 (23 January 2025).

It was submitted on behalf of the defendants that matters of public interest ought be considered and weighed in favour of the exercise of discretion to award security for costs. To this point, counsel submitted that '[t]here is an overriding public interest to prevent phoenix companies seeking equitable remedies in circumstances where phoenixing has caused the circumstances in which the company is faced'; and that '[t]here is a second public policy interest to prevent impecunious companies commencing proceedings to gain a commercial advantage if unsuccessful or progressing knowingly unsuccessful proceedings against their direct competitors.'[179]
[179] Defendants' outline of submissions filed on 27 November 2024 par 4(ix).
As to the first part of the submission made, I understood counsel intended to suggest that public interest considerations would arise where security for costs was sought in a context which involved a legitimate phoenix business rescue, and did not refer to a context which involved illegal phoenix activity.[180] I accept that the latter would give rise to public policy considerations in this context.
[180] Defendants' outline of submissions filed on 27 November 2024 footnote 29.
However, I do not consider there to be a matter of public policy which arises and might properly inform the proper exercise of discretion with respect to security for costs by reason of the application having been made in a context which involves a legitimate phoenix business rescue.
As to the second part of the submission made, while public interest considerations may arise in the circumstances described by counsel, I do not accept that the circumstances of this case may be so characterised. Therefore, I did not consider public interest considerations to weigh in favour or against the grant of the application.

Other considerations

For completeness I note that there is no suggestion that the defendants have any rights which they can exercise against the assets of the plaintiff to satisfy an order for costs in their favour.

Conclusion

The court has an unfettered discretion whether to make an order for security for costs, and in what amount.
Having taken into account all of the circumstances, in particular the considerations discussed above, I find that this is a case where it is appropriate to require security to be given for costs. Again, this conclusion was finely balanced. In the end, that there is reason to believe that Life Combat Sports will be unable to pay the costs of the defendants if successful was a substantial factor in the decision to exercise it in this case.
As to quantum, the task for the court in determining quantum of security for costs is to determine what amount would provide the defendants with an adequate security for their costs, if they were successful at trial.[181] The aim is not to provide the defendants with a complete indemnity for their costs.[182] Rather, the task for the court is to calculate the sum which it thinks just to order to be secured, having regard to a reasonable estimate of the likely taxable costs of the defendants in question.[183]
[181] Global Finance Group Pty Ltd (in liq) v Marsden Partners (a firm) [2004] WASC 52 [71]; Construction Industries Australia Ltd (in liq) v WFI Insurance Ltd [2016] WASC 404 [45].
[182] Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171, 175; Construction Industries Australia Ltd (in liq) v WFI Insurance Ltd [45].
[183] Global Finance Group Pty Ltd (in liq) v Marsden Partners (a firm) [53] - [58]; Construction Industries Australia Ltd (in liq) v WFI Insurance Ltd [45].
As was noted in Four Vanguard Servicos E Navagacao Lda v ENI Australia Ltd [2014] WASC 473 at [4], 'the determination of the appropriate amount to be provided by way of security involves the exercise of the discretion by reference to matters of impression rather than mathematics'.[184]
[184] Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [2011] WASCA 118 [27].
In my view, in all of the circumstances of this case, it is appropriate to proceed to order security for costs of the action up to the point when pleadings close, particulars have been provided, and discovery and inspection has occurred.
I have considered the pleadings and all of the materials filed in relation to this application. Having also reviewed the draft bill of costs prepared by the defendants' solicitors; having made my own estimates of the likely costs of this proceeding up to and including discovery and inspection; and having estimated the costs likely to be recovered after taxation, I find that security in the amount of $20,000 is appropriate. I do so conscious that the costs of this and the injunction application may be reserved or determined in favour of the defendants, but ordered in the cause. In fixing security in that sum, I take into account that the security amount is not intended to be a complete indemnity for the actual costs likely to be incurred by the defendants. I consider this would strike a fair balance between protecting the defendants from the possible consequences of being sued by an impecunious corporation with limited liability and avoiding injustice to Life Combat Sports by unnecessarily prejudicing it in the conduct of litigation.
For the reasons set out above, I am satisfied that the following orders for security for costs should be made, subject to hearing from the parties:
1.Within 21 days of the date of this order, the plaintiff do pay $20,000 into court as security for the first and second defendants' costs of this proceeding up to and including discovery and inspection.
2.In the event that the plaintiff does not pay $20,000 into court within 21 days, this proceeding as between the plaintiff and the first and second defendants will be stayed until further order.
3.Any party has liberty to apply in respect of these orders.

Orders and costs

For these reasons, I will grant interlocutory injunctive relief to Life Combat Sports, and make a security for costs order in favour of The World Institute of Martial Arts and Mr McDonnell. I will hear the parties as to the form of orders and as to the costs of the applications.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CR
Associate to the Honourable Justice Strk
30 JANUARY 2025

Graham:	What did we need to get the business ready for the bankruptcy process?
Oliver:	Hang on a minute before you go into bankruptcy think about it for a moment, if Phil wants everything, so why don't you give it to him … let him then you are free to start on your own unrestricted to do as you please.

Graham:	Myself and Phil have reached a point where we want different things. I want to revisit the old ways and bring back some of keys [sic] skills I feel are missing I choose to Leave life and restart WAIMA 2.0 The dojo will be 25 delage street Joondalup 5 mins from when we are now Monday - Saturday classes as per timetable currently available Lots of instructors will be following along. I wish Phil And Bec the very best but we will be opening Monday as the wa institute of martial arts. I will always be hear [sic] if I can assist and would love to see you guys and answer some questions you will have.
Lianne:	Hi Graham, If I transfer my boys to your new dojo. What are the new fees? Lianne
Graham:	Everything is exactly the same I'll send all the day old tomorrow
Lianne:	Will you still offer the same programs for Elite and Leadership?
Graham:	Yes everything is the same Taylor Zac Ethan Liam Brooke Jake Mia Taj and loads of the other instructors and coming for the ride.
Lianne:	Thank you ☺