North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel - [2023] WASCA 122

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   NORTH WEST PILOTS PTY LTD as trustee for the PORT HEDLAND PILOTS UNIT TRUST trading as PORT HEDLAND PILOTS -v- DANIEL [2023] WASCA 122
CORAM:   BUSS P
BEECH JA
VAUGHAN JA

HEARD:   4 AUGUST 2023
DELIVERED          :   4 AUGUST 2023
PUBLISHED           :   22 AUGUST 2023
FILE NO/S:   CACV 39 of 2023
BETWEEN:   NORTH WEST PILOTS PTY LTD as trustee for the PORT HEDLAND PILOTS UNIT TRUST trading as PORT HEDLAND PILOTS
Appellant
AND
HEATH DANIEL
First Respondent
PILBARA PORTS AUTHORITY
Second Respondent

FILE NO/S: CACV 40 of 2023
BETWEEN: NORTH WEST PILOTS PTY LTD as trustee for the PORT HEDLAND PILOTS UNIT TRUST trading as PORT HEDLAND PILOTS
Appellant
AND
HEATH DANIEL
First Respondent
PILBARA PORTS AUTHORITY
Second Respondent

ON APPEAL FROM:
For File No:   CACV 39 of 2023
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   HILL J
Citation: NORTH WEST PILOTS PTY LTD AS TRUSTEE FOR THE PORT HEDLAND PILOTS UNIT TRUST TRADING AS PORT HEDLAND PILOTS -v- DANIEL [2023] WASC 73 (S)
File Number            :   COR 27 of 2023
For File No:   CACV 40 of 2023
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   HILL J
Citation: NORTH WEST PILOTS PTY LTD AS TRUSTEE FOR THE PORT HEDLAND PILOTS UNIT TRUST TRADING AS PORT HEDLAND PILOTS -v- DANIEL [No 2] [2023] WASC 98
File Number            :   COR 27 of 2023

Catchwords:

Commercial arbitration - Where agreement between appellant and second respondent contained an arbitration clause - Where appellant sued first respondent, its former employee, who had become employee of second respondent - Whether action by appellant against first respondent might arguably have been an action in a matter which was the subject of the arbitration agreement between appellant and second respondent - Whether decision to join second respondent as defendant to appellant's action against first respondent gave rise to a risk of any impairment of appellant's rights against second respondent under s 8 of Commercial Arbitration Act 2012 (WA)

Practice and procedure - Joinder of parties - Where appellant, as former employer of first respondent, sued first respondent for breach of contractual, fiduciary and statutory duties in taking up employment with second respondent - Where appellant sought injunctions against first respondent - Where second respondent sought to be joined as defendant to appellant's claim - Whether primary judge erred in ordering that second respondent be joined - Whether any substantial injustice arose from joinder decision

Practice and procedure - Costs - Where second respondent was granted leave to intervene in injunction application brought by appellant against first respondent - Where application for injunction refused - Costs of a successful intervener - Whether primary judge erred in exercising discretion as to costs of respondent as a successful intervener

Legislation:

Commercial Arbitration Act 2012 (WA), s 8

Result:

CACV 39 of 2023
Leave to appeal refused
Appeal dismissed

CACV 40 of 2023
Leave to appeal refused
Appeal dismissed

Category: B

Representation:

CACV 39 of 2023

Counsel:

Appellant	:	P Braham SC & P Ward
First Respondent	:	No appearance
Second Respondent	:	P E Cahill SC & A Oakes & C J Taylor-Burch

Solicitors:

Appellant	:	Squire Patton Boggs
First Respondent	:	Kingston Reid
Second Respondent	:	Corrs Chambers Westgarth

CACV 40 of 2023

Counsel:

Appellant	:	P Braham SC & P Ward
First Respondent	:	No appearance
Second Respondent	:	P E Cahill SC & A Oakes & C J Taylor-Burch

Solicitors:

Appellant	:	Squire Patton Boggs
First Respondent	:	Kingston Reid
Second Respondent	:	Corrs Chambers Westgarth

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

Advanced Switching Services Pty Ltd v State Bank of New South Wales [2001] FCA 1508; (2001) ATPR 41‑848
Arvind Pty Ltd v Lamers [2020] WASCA 47
City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65
DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97
Dinsdale v The Queen [2000] HCA 54; (2000) 202 CLR 321
Grove v Grove [2022] WASCA 86
Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2020] WASCA 77; (2020) 55 WAR 435
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2023] WASCA 88
Mallet v Mallet (1984) 156 CLR 605
North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [2023] WASC 73
North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [2023] WASC 73 (S)
North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [No 2] [2023] WASC 98
NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107
Power and Water Corporation v ENI Australia BV [2022] WASC 376 (S)
Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd [2009] WASCA 31 (S)

REASONS OF THE COURT:

Introduction

After hearing the appellant's submissions in both appeals, the court ordered in each appeal that leave to appeal be refused and the appeal be dismissed, with reasons to be published later. These are our reasons.
The appellant is the trustee for the Port Hedland Pilots Unit Trust and trades as Port Hedland Pilots (PHP).
The second respondent, the Pilbara Ports Authority (PPA), has statutory authority under the Port Authorities Act 1999 (WA) for a number of ports, including, relevantly, the Port of Port Hedland (the Port). PPA's statutory functions and obligations include responsibility for the safe and efficient operation of the Port and ensuring pilotage services are provided at the Port.
PHP provides marine pilotage, marine pilot training, and ancillary and associated services for the Port under a contract (the Pilot Services Contract) with PPA.
From October 2008 until December 2022, the first respondent, Captain Heath Daniel, was employed by PHP. For at least the last five years of that period, Captain Daniel's employment was governed by a written contract that provided for a post‑employment restraint. Like all unrestricted pilots employed by PHP, Captain Daniel's employment with PHP made him eligible to be a director of PHP and, at all relevant times until December 2022, he held the office of director.
On 20 September 2022, Captain Daniel gave three months' notice of his intention to resign from PHP. He completed his employment with PHP on 20 December 2022.
On 22 December 2022, Captain Daniel signed a contract of employment with PPA to commence in the role of marine services delivery manager.
On 10 February 2023, PHP commenced the primary proceedings, seeking, among other things, permanent and interlocutory injunctions against Captain Daniel.
On 6 and 7 March 2023, the primary judge heard PHP's application for an injunction against Captain Daniel. PPA was granted leave to appear as an interested person on the application.
On 14 March 2023, the primary judge published reasons for decision on the injunction application.[1] In summary, subject to Captain Daniel giving an undertaking to the court in terms that he had previously proffered to PHP's solicitors, the primary judge refused the application for an injunction, finding that the matter should be set down for an urgent trial.
[1] North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [2023] WASC 73 (Injunction Reasons).
On 20 March 2023, PPA applied to be joined as a defendant to the primary proceedings.
Also on 20 March 2023, the judge heard submissions in relation to PPA's application for an order that PHP pay its costs of the injunction application. Her Honour gave ex tempore reasons for so ordering.[2]
[2] Subsequently published as North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [2023] WASC 73 (S) (Costs Reasons).
By CACV 39 of 2023 (the Costs Appeal), PHP seeks leave to appeal, asserting that her Honour erred in exercising her discretion as to the appropriate costs orders.
PPA's application to be joined was heard by the primary judge on 24 March 2023. On 28 March 2023, her Honour published reasons for concluding that PPA should be joined as a defendant in the primary proceedings.[3]
[3] North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [No 2] [2023] WASC 98 (Joinder Reasons).
By CACV 40 of 2023 (the Joinder Appeal), PHP seeks leave to appeal against the primary judge's decision to permit PPA to be joined as a defendant in the primary proceedings.
In challenging the primary judge's joinder decision, PHP advances two contentions. First, the primary judge erred in finding that PPA's rights against Captain Daniel or PHP may be affected by orders sought by PHP in the primary proceedings. Secondly, given the arbitration clause in the Pilot Services Contract, s 8 of the Commercial Arbitration Act 2012 (WA) counted decisively in favour of exercising the discretion to refuse joinder.
As already noted, after hearing PHP's submissions, the court ordered in each appeal that leave to appeal be refused and the appeal be dismissed, with reasons to be published later.
We will deal first with the Joinder Appeal, which fails at the first hurdle of leave to appeal. We begin by outlining the claim made in the primary proceedings by PHP against Captain Daniel, which provides the framework for the question of joinder.

PHP's claim against Captain Daniel

Broadly summarised, PHP claims that in taking up employment with PPA, Captain Daniel has breached the contractual, fiduciary and statutory duties he owed to PHP.
In its statement of claim dated 10 February 2023, PHP pleads, relevantly and in summary:
(1)Pursuant to cl 2.1 of the Pilot Services Contract, subject to the exceptions there provided, PHP is to be the sole provider of 'pilotage services', as defined, within the pilotage limits of the Port for the term of that contract.
(2)For the purpose of providing marine pilotage services to PPA under the Pilot Services Contract, PHP has developed trade secrets - including processes and procedures - and has created and maintains confidential and proprietary systems, documents and know‑how, which have commercial value to PHP and which would, if disclosed without restriction on use, have commercial value to PPA or to PHP's competitors.
(3)Captain Daniel was, at all material times until 20 December 2022:
(a)employed by PHP as an unrestricted pilot for the Port;
(b)a director of PHP;
(c)party to a written contract of employment with PHP; and
(d)privy to confidential information of PHP.
(4)By reason of the matters summarised in (3) above, Captain Daniel owed various duties and obligations to PHP. These included:
(a)contractual duties of confidentiality and protection of PHP's goodwill, and post‑employment restraint of trade;
(b)a fiduciary duty to act in the best interests of PHP, not to place himself in a position of conflict between his duty to PHP and his personal interests, and not to misuse confidential information obtained in the course of his employment and directorship to harm PHP or promote his personal interests at the expense of PHP;
(c)an equitable duty of confidentiality; and
(d)statutory duties pursuant to s 181, s 182 and s 183 of the Corporations Act 2001 (Cth).
(5)In 2021 and 2022, various disputes and differences (the PPA disputes) arose between PHP and PPA in connection with the Pilot Services Contract.
(6)From 2018 until 20 December 2022, Captain Daniel had access to, and knowledge of, confidential information as to PHP's legal advice and strategy with respect to the PPA disputes, the factual and legal risks and merits of positions taken by PHP with respect to those disputes, and PHP's vulnerabilities with respect to current and future provision of marine pilotage services under the Pilot Services Contract.
(7)On or about 22 December 2022, Captain Daniel was engaged by PPA in the position of marine service delivery manager, in which position his duties include developing a pilotage training program.
(8)Since around 22 December 2022, notwithstanding the terms of the Pilot Services Contract requiring PHP to be the sole provider of pilotage services subject to the terms of that contract, PPA, through the services of Captain Daniel as PPA's employee, began training pilots who had been employed by PPA earlier in 2022 so as to be qualified to provide pilotage in the Port.
(9)Further, since 22 December 2022, Captain Daniel has provided marine pilotage services to PPA and/or to trainee pilots within the pilotage limits of the Port.
(10)As a result of the conduct referred to in (8) and (9), Captain Daniel has assisted PPA to further its position with respect to the matters the subject of the PPA disputes.
(11)As a result of the matters summarised in (8) and (9) above, PPA is now effectively in competition with PHP for providing pilotage services in the Port, training of pilots for qualification and licensing for pilotage in the Port, and employment of pilots qualified and licensed for pilotage in the Port.
(12)As a result of Captain Daniel's conduct, PHP has suffered loss and damage, the particulars of which include an assertion of loss or impairment of PHP's right to be the sole provider of pilotage services to PPA in the Port.
The relief claimed by PHP includes, relevantly, the following:
…
(b)a prohibitory injunction restraining [Captain Daniel] from providing Marine Pilotage Services (including but not limited to pilotage of vessels, pilotage training and participation in operational meetings, forums, workshops, incident investigations, procedural reviews in respect of the Port of Port Hedland) to or for PPA or any other person within or with respect to the geographical and time limits specified in clause 12 of the Contract of Employment, in the alternative within the pilotage limits of the Port of Port Hedland for the term of the Pilot Services Contract and any extension thereof;
…
(d)a prohibitory injunction restraining [Captain Daniel] from assisting PPA or participating on behalf of PPA in any matters associated with:
(i)screening or assessment of trainees or candidates for training as pilots to provide Marine Pilotage Services;
(ii)creating, developing or contributing to a pilotage recruitment or training or assessment program;
(iii)creating, developing or contributing to documents, systems or procedures for PPA which are equivalent to or alternatives to, [PHP's] Safety Management System or Quality Management System and other systems plans;
(iv)PPA commercial discussions or PPA internal reviews of the Pilotage Services Contract with [PHP] or the Marine Pilotage Services provided by [PHP]; or
(v)PPA issuing a request for tender or evaluating proposals in respect of potential renewal, replacement or extension of the Pilotage Services Contract with [PHP] or with alternative providers for services including or equivalent to Marine Pilotage Services for the Port of Port Hedland.

The primary judge's reasons for ordering that PPA be joined

The primary judge considered that, bearing in mind the court's indication in the course of the Injunction Reasons that the matter should be listed for an urgent trial, there was a degree of urgency in delivering the reasons on the joinder application. Her Honour considered it necessary to make orders on the application before the next case management hearing for the primary proceedings, which was listed for 28 March 2023.[4]
[4] Joinder Reasons [4].
Her Honour outlined the applicable legal principles in terms not criticised on appeal.[5]
[5] Joinder Reasons [13] - [19].
Her Honour observed, with respect correctly, that, in considering whether PPA was directly affected by the primary proceedings, it was necessary to consider the relief sought against Captain Daniel, rather than the statement of claim.[6]
[6] Joinder Reasons [27].
The primary judge found that PPA was directly affected by orders sought in the proceedings in two respects. First, the orders sought by PHP seek to restrain what Captain Daniel can and cannot do as a PPA employee. The primary judge considered that such orders could have an effect on the legal environment in which the rights of PPA, under its contract with Captain Daniel, can be exercised. Further, her Honour considered that the scope of tasks Captain Daniel can perform in the course of his employment with PPA was likely to be of fundamental importance to PPA.[7]
[7] Joinder Reasons [28].
Secondly, the primary judge found that orders by the court as to the content of the term of the Pilot Services Contract alleged by PHP to entitle it to be the sole provider of marine pilotage services to PPA, would, in the context of what Captain Daniel could and could not do, have an impact on PPA that would affect the rights and obligations of PPA in a direct and substantial way.[8]
[8] Joinder Reasons [29].
Her Honour rejected PHP's submission that there was no challenge to the validity of the Pilot Services Contract, nor the contract between PPA and Captain Daniel, and there was no need for the court to construe either of those contracts, for two reasons:
(1)PHP pleads that it is entitled to be the sole provider of pilotage services to PPA under the Pilot Services Contract, a pleading which will require the court to construe the Pilot Services Contract.
(2)If PHP is successful in its claim against Captain Daniel, in order to assess what, if any, loss PHP has suffered, it would be necessary to consider whether PHP is to be, under the Pilot Services Contract, the sole provider of pilotage services to PPA, and it would be necessary to consider whether Captain Daniel's conduct has impaired that right. These matters will require the court to construe the Pilot Services Contract.
Her Honour considered that, consistently with the requirement that the dispute be effectually and completely determined and adjudicated upon, PPA was entitled to be heard on the proper construction of the terms of the Pilot Services Contract raised by PHP.[9]
[9] Joinder Reasons [32].
The conclusions summarised in [25] - [28] above are challenged by ground 1.
Her Honour then dealt with an additional matter, which her Honour expressed as follows:[10]
PHP, quite properly, raised in their submissions the question as to whether these proceedings were a proper vehicle to determine the disputes between it and the PPA. PHP denied it was open to the PPA to have any of the issues identified in its submissions resolved in these proceedings. This is because cl 19 of the Pilot Services Contract requires the parties to refer disputes to arbitration in accordance with the [Commercial Arbitration Act].
At this stage, the application before the court is to join the PPA as a defendant to the proceedings. No counterclaim has been filed. The question as to whether the PPA is entitled to raise all of the issues set out in [13] of its submissions or whether some or all of these issues are required to be referred to arbitration must, in my view, await the filing of any such document, if this is to occur. In circumstances where PHP has raised certain issues in these proceedings, it is possible that PPA may contend that PHP's conduct amounts to a waiver or election in respect of certain issues between them. Of itself, I do not consider that cl 19 of the Pilot Services Contract prevents an order for joinder being made.
This reasoning and conclusion is challenged by ground 3.
[10] Joinder Reasons [34] - [35].

Joinder appeal: grounds of appeal

PHP seeks leave to appeal on the following grounds of appeal, ground 2 having been abandoned in the course of argument:
1.The learned Judge at first instance erred in determining that the [PPA] had a legal right or liability liable to be affected, or the exercise or discharge of which would be impacted from a legal perspective, by the appellant's claims against [Captain Daniel].
2.[Abandoned]
3.In the alternative to 2, the learned Judge at first instance erred in not regarding the [Commercial Arbitration Act] and clause 19 of the Pilot Services Contract between [PHP] and [PPA] as decisive factors requiring the discretion to order joinder of [PPA] to be exercised so as to refuse [PPA]'s application.

Joinder appeal: leave to appeal

We turn immediately to the question of leave to appeal, as, in our view, PHP's appeal failed at this first hurdle.

PHP's submissions

PHP's written submissions as to leave merely assert that, for the reasons in their submissions on the Joinder Appeal:[11]
(1)This is a case in which the primary judge's decision is '… plainly wrong or attended with sufficient doubt to justify the grant of leave'.
(2)If leave to appeal is refused, the appellant will suffer a substantive injustice - which goes beyond mere inconvenience or procedural disadvantage - as regards the appellant's substantive rights that are adversely affected by the decision under review.
[11] PHP's submissions [2].
The nature of the substantive injustice and the substantive rights was not explained in the written submissions.
In oral submissions, PHP submitted that, if the joinder decision were left uncorrected, PHP would suffer a substantive injustice in the following respects:[12]
(1)PHP's right to choose whom it wished to sue would be impaired.
(2)There was a risk that PHP would suffer a loss of its rights under s 8 of the Commercial Arbitration Act in that it would have to contend with the suggestion, made by PPA, that by bringing proceedings to which PPA was a necessary party, PHP had waived its rights under s 8.
(3)The joinder of PPA was likely to add time and expense to the litigation and would put PHP at risk of having to pay two sets of costs in the event that it was unsuccessful at trial.

Leave to appeal: legal principles

[12] Appeal ts 5- 15.

The principles on which this court determines whether to grant leave to appeal are well established. They were summarised in NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd:[13]
[13] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [117].
(1)The requirement for leave is no mere technicality or procedural nicety; it serves an important function in the administration of justice by discouraging unnecessary interlocutory appeals.
(2)Appellate courts exercise particular caution (sometimes referred to as 'special restraint') in reviewing interlocutory decisions on matters of practice and procedure.
(3)There is a particular need to refrain from interfering with interlocutory procedural decisions made by judges managing cases in the Commercial and Managed Cases List.
(4)Ordinarily, while not being rigid or exhaustive criteria, the considerations to be taken into account by this court upon an exercise of the discretion to grant or refuse leave to appeal are:
(a)first, whether the decision was wrong or, at the least, attended with sufficient doubt to warrant its being reconsidered; and
(b)second, whether substantial injustice would result if the decision is left unreversed, supposing the decision to be wrong. However, the requirement to show substantial injustice is no more than a guideline for the exercise of what is a broad discretion.
The two considerations bear on each other. The degree of doubt that is sufficient in one case may be different from that required in another. It will be affected by the extent of the risk of substantial injustice if leave were refused, supposing the decision to be wrong.
(5)The requirement of 'substantial injustice' is not satisfied by interference with procedural rights or procedural disadvantage; it looks to whether substantive rights are adversely affected.
(6)Where substantive rights are not effectively determined, an appellate court should be reluctant to interfere. (original emphasis)
These considerations provide general guidance only. Thus, while the question of leave is normally considered within the rubric of these organising principles, there will be cases raising special considerations. The touchstone remains the interests of justice. The nature and risk of the injustice said to result from the order appealed from will generally be a material consideration. There is a far greater risk of injustice where an interlocutory decision determines a substantive right. In such a case, leave will be granted more readily. By contrast, a 'tight rein' must be kept on appeals involving interlocutory decisions on matters of practice and procedure.[14]
[14] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [118].
As Mitchell and Vaughan JJA observed in Arvind Pty Ltd v Lamers,[15] this court's approach to the grant of leave to appeal, as well as to the assessment of the case manager's reasons, should advance the important public policy enshrined in O 1 r 4A of the Rules of the Supreme Court. Most importantly in the context of the present case, the court's approach to the grant of leave should not encourage additional delays - these being an inevitable product of an interlocutory appeal.

Leave to appeal: disposition

[15] Arvind Pty Ltd v Lamers [2020] WASCA 47 [5].

In our view, PHP failed to demonstrate that, if the joinder decision remains unreversed, PHP will suffer a substantial injustice even supposing the joinder to be erroneous.
By this appeal, PHP seeks to challenge the primary judge's decision to join PPA as a defendant in the primary proceedings. By its nature, the joinder decision is one concerned with procedural rights. Any procedural disadvantage to PHP arising from PPA being joined as a defendant does not amount to an interference with PHP's substantive rights. Nor does it give rise to a substantial injustice.
We are satisfied that there is no risk that the joinder decision will impair any right of PHP under s 8 of the Commercial Arbitration Act, whether in the manner suggested in [35] above or otherwise.
Section 8 of the Commercial Arbitration Act applies only if the action 'is brought in a matter which is the subject of an arbitration agreement'. In order to determine whether s 8 is engaged, it is necessary to identify and characterise both (i) the matter that is the subject of the arbitration agreement, and (ii) the matter(s) the subject of the action - in other words, 'the matter[s] in which the action is brought'.[16] It is the overlap between the matter the subject of the arbitration agreement and the matter(s) in which the action is brought that enlivens the court's obligation in s 8.[17]
[16] Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2020] WASCA 77; (2020) 55 WAR 435 [119], [135].
[17] Hancock Prospecting v DFD Rhodes [119].
The subject matter of the curial proceedings need not be coextensive with the matter the subject of the arbitration agreement.[18]
[18] Hancock Prospecting v DFD Rhodes [120], [126].
Where a dispute between the parties to an arbitration agreement falls within the relevant arbitration clause, the fact that the court proceedings also involve additional parties who are strangers to the arbitration does not prevent the dispute between the parties to the arbitration agreement from constituting a 'matter which is the subject of an arbitration agreement' within the meaning of s 8 of the Commercial Arbitration Act.[19]
[19] Hancock Prospecting v DFD Rhodes [164], [171].
Identification of a relevant 'matter' for these purposes requires attention both to the subject matter of the controversy and to the parties to it.[20]
[20] Hancock Prospecting v DFD Rhodes [135], [248].
A matter is a controversy between parties. Paragraphs of a pleading do not, in themselves, constitute a matter - there must be two sides to a controversy.[21] A matter is a controversy arising from or revealed in the intersection of one party's pleadings with the pleadings of an opposing party.[22]
[21] DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97 [164], [171]; Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2023] WASCA 88 [159].
[22] Hancock Prospecting v Wright Prospecting [159].
Applying these principles, the first step is to identify and characterise the relevant 'matters'. The matter that is the subject of the arbitration agreement is any dispute or difference between PHP and PPA 'arising out of' the Pilot Services Contract or concerning the performance or non‑performance by either party of its obligations thereunder. The matter the subject of the primary proceedings, as things stand, is the controversy between PHP and Captain Daniel. The controversy encompasses whether Captain Daniel has breached his contractual obligations to PHP, whether he has breached his equitable and statutory duties owed to PHP, and what, if any, relief PHP should be granted against Captain Daniel.
In itself, the effect of the primary judge's order for joinder of PPA does not transform the subject matter of the primary proceedings. Joinder entitles PPA to be heard as to the appropriate determination of the claims made by PHP against Captain Daniel. But the joinder of PPA does not, in itself, mean that PHP is making a claim or seeks relief against PPA.[23]
[23] Compare PHP's submissions [29], [31].
In that respect, the position in the present case is starkly different from the position in Advanced Switching Services Pty Ltd v State Bank of New South Wales[24] on which PHP relied. In that case, the claimant sought to join a party as second respondent, proposing to make claims and seek relief against it. Because both the claimant and the proposed second respondent were parties to an arbitration agreement that, the court found, encompassed the proposed claims, the court accepted the parties' concession that it was not appropriate to permit joinder of the proposed second respondent.[25]
[24] Advanced Switching Services Pty Ltd v State Bank of New South Wales [2001] FCA 1508; (2001) ATPR 41‑848.
[25] Advanced Switching Services Pty Ltd v State Bank of New South Wales [11], [20].
To state the obvious, joinder of PPA does not change the fact that there are no pleadings between PHP and PPA. The primary proceedings do not presently involve, and it cannot be said with certainty that the primary proceedings will necessarily involve, a controversy between PHP and PPA that is the subject of the arbitration agreement between those parties. Whether that comes to pass remains to be seen and depends upon what each of PHP and PPA pleads.
Absent any claim or pleading by PHP against PPA, and absent any pleading or counterclaim by PPA against PHP, the primary proceedings did not prior to PHP's joinder, and do not upon PHP's joinder, involve a matter that is the subject of the arbitration agreement between those two parties. Section 8 of the Commercial Arbitration Act was thus not engaged. Consequently, there cannot have been a waiver by PHP of its rights under s 8.
Of course, as the primary judge observed, the position concerning s 8 may need to be revisited if and when either of the arbitral parties makes a claim against the other.
As to PHP's submissions in [35](3) above, any delay to the proceedings arising from the joinder of PPA as a party is dwarfed by the delay arising from the effect of this appeal on the primary proceedings. The prospect of additional costs and the exposure to the risk of being liable for an additional set of costs are matters that would not ordinarily amount to a substantial injustice, and they do not do so in the present case.
The delaying effect of PHP's appeal upon the progress of the primary proceedings counts strongly against the grant of leave to appeal. That delaying effect can be seen from the following chronology.
The primary judge determined PPA's joinder application urgently, effectively over the course of a weekend, in circumstances where, in the Injunction Reasons, her Honour foreshadowed hearing from the parties as to their availability for a trial in late April or early May 2023.
At a directions hearing on 28 March 2023, following the delivery of the Joinder Reasons, PHP requested an adjournment of seven days to permit PHP to seek advice. At that hearing, PPA advanced a minute proposing trial dates in August 2023 and, while not opposing the adjournment proposed by PHP, counsel for PPA noted that constraints on the availability of counsel and the primary judge might limit the opportunities for a trial in the coming months.[26]
[26] ts 253.
At the next directions hearing, on 4 April 2023, counsel for PHP informed the court that PHP had given instructions to file an appeal relating to both the joinder decision and the costs decision, and that the joinder decision would affect the continuing conduct of the proceeding.[27] Counsel informed her Honour that, after conferral, it had been agreed between the parties that the proceedings should be adjourned for approximately two months. On that basis, her Honour adjourned the primary proceedings to a directions hearing on 7 June 2023.
[27] ts 257.
On 6 June 2023, the primary judge's associate emailed the parties, noting that this appeal had been listed for hearing on 4 August 2023 and enquiring whether the directions hearing proposed for the following day should proceed or should be adjourned until after the appeals. Later that day, PHP informed the court that the parties agreed the matter should be adjourned. Her Honour so ordered.
It can be seen from this chronology that, in circumstances where the court had expressed an inclination to hear the matter urgently, and where one of the parties had proposed a trial of the proceedings in August 2023, the proceedings have, in effect, by reason of this appeal, gone on hold for approximately four months since her Honour's joinder decision was published. This course of events illustrates one of the reasons why interlocutory appeals are to be discouraged.
In summary, given that:
(1)the joinder decision did not adversely affect PHP's substantive rights; and
(2)the effect of PHP's appeal has been to put the primary proceedings on hold for several months,
it is not and was not in the interests of justice to grant leave to appeal.

Joinder Appeal: conclusion

For the above reasons, we refused leave to appeal and dismissed the Joinder Appeal.
We turn to the Costs Appeal.

PPA's application for costs

As already noted, on 14 March 2023 the primary judge delivered reasons on PHP's application for an interlocutory injunction. The court ordered that the parties file and serve any affidavits and submissions in support of the costs orders they seek on 16 March 2023, and that any responsive material be filed the following day.
By submissions filed on 16 March 2023, PHP submitted that there should be no order as to PPA's costs. By its submissions of 16 March 2023, PPA sought an order that PHP pay PPA's costs in relation to the application for an interlocutory injunction. Both sets of submissions referred to what had been said by this court in Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd.[28]
[28] Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd [2009] WASCA 31 (S) [7] ‑ [10], adopting what had been said in City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65, 67.
PPA also sought orders lifting the limits imposed by the maximum hourly rates fixed under table A and the maximum allowances for time, number and experience of fee-earners or total costs under table B of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022 (WA) (Costs Determination).
In its responsive submissions dated 17 March 2023, PHP submitted that a costs order should not be made in favour of PPA, essentially because PPA and Captain Daniel were acting to protect the same interest. Further, PHP opposed PPA's application for an order removing the limits in the Costs Determination. PHP submitted that the case was not of sufficient unusual difficulty, complexity or importance to warrant the lifting of the limits. PHP added that, if that submission were not accepted, the court should limit its uplifting of the scale to the approach adopted in Power andWater Corporation v ENI Australia BV,[29] namely the increasing of the limits for senior counsel by 50%.
[29] Power and Water Corporation v ENI Australia BV [2022] WASC 376 (S).

The primary judge's reasons on the costs decision

On 20 March 2023, at the commencement of a directions hearing, the primary judge gave oral reasons for decision, which were subsequently published in written form.
The primary judge cited the passage from Speno Rail Maintenance Pty Ltd v Metals & Minerals Insurance Pte Ltd to which both parties had referred. The primary judge also summarised the principles concerning special costs orders in a manner not criticised on appeal.
Her Honour noted that PPA did not seek to become a party to the proceedings at the stage of the application for the interlocutory injunction and that this weighed heavily against exercising the discretion to order that PPA receive its costs of the application. Nevertheless, her Honour considered that it was appropriate to make such an order for the following reasons:[30]
First, I accept that the intervention of the PPA was necessary to protect its interest as the operator of the Port. This is not an interest that is shared with [Captain Daniel], or that could be raised by him as an employee of the PPA. Second, the evidence adduced by the PPA and the matters that were raised by it were separate to the issues raised by [Captain Daniel]. Third, while both [Captain Daniel] and the PPA opposed the relief sought by [PHP], their submissions distinguished between the interests they held. Fourth, in this case, while I accepted there was a serious question to be tried on the issues raised by [PHP], I did not consider the balance of convenience supported the granting of the injunction. Apart from the personal impact of the proposed injunction on [Captain Daniel], the broader issues and the impact of any relief being granted were raised by the PPA and were not grounds on which [Captain Daniel] could put forward.
Ground 1 challenges this conclusion and reasoning.
[30] Costs Decision [13].
Her Honour then considered the application for a special costs order. Her Honour noted the evidence that PPA had incurred costs exceeding $324,000, excluding the costs of Mr Walker SC, who had appeared for PPA on the application. Her Honour was satisfied that (i) it was fairly arguable that the costs of the application may exceed the applicable limit in the Costs Determination, (ii) the application involved greater complexity than the usual application for an interlocutory injunction and was of broad importance not only to the parties but to broader interests, including the users of the Port and the State, and (iii) the costs of the application exceeded the limits in the Costs Determination because of the matters identified in (ii).
After having regard to the evidence concerning the actual charge‑out rates for various practitioners involved in the proceedings, her Honour concluded that it was appropriate to order that the limits imposed in the Costs Determination be removed, so that it would be for the Taxing Officer to consider the reasonableness and necessity of the work that was undertaken and to make a judgment about the remuneration reasonably required.
As to the hourly and daily rates for solicitors and senior counsel, her Honour considered it appropriate to allow an uplift of 50% on the rate in the Costs Determination for senior counsel but that no other increase in hourly or daily rates for junior counsel or other practitioners was warranted.

Costs appeal: ground of appeal

Having abandoned ground 2 in the course of argument, PHP advances a single ground of appeal in support of its challenge to the costs discretion. The ground is in the following terms:
1.The learned Judge below erred in failing to properly direct herself as to the circumstances in which her Honour could properly exercise the discretion to order that the appellant pay [PPA]'s costs of intervening in the interlocutory application filed on 10 February 2023 (Interlocutory Application), failing to make necessary findings to support the exercise of the discretion, and in exercising the discretion, in that her Honour's decision involved the following errors:
(a)her Honour erred in failing to identify any right of [PPA] that would be affected by the relief sought in the Interlocutory Application;
(b)her Honour erred in finding [PPA]'s intervention was necessary to protect [PPA]'s interest in operating the [Port] where that interest was not a relevant right and was not directly affected by the relief sought in the Interlocutory Application;
(c)her Honour erred in finding [PPA] adduced evidence and raised matters which were separate to the evidence and matters raised by [Captain Daniel] in circumstances where the evidence adduced, and matters raised by [PPA] were not required to resolve the Interlocutory Application and were matters that [Captain Daniel] could have raised;
(d)her Honour erred in finding [Captain Daniel]'s and [PPA]'s submissions in the Interlocutory Application distinguished between the interests they held where the interests of [PPA] were not directly affected by the relief sought in the Interlocutory Application; and
(e)her Honour erred in finding [PPA] put forward submissions and evidence on the impact of the Interlocutory Application on third parties which was relevant to the assessment of the balance of convenience that [Captain Daniel] could not have, where the matters raised were not sufficient to entitle [PPA] to its costs.

Costs appeal: PHP's submissions

PHP's principal submissions were as follows:
(1)The question is whether intervention was necessary to protect PPA's rights. Protection of PPA's interests is not enough.
(2)PPA did not demonstrate that intervention was necessary to protect its rights. PPA did not lead evidence to establish that its rights under the employment contract with Captain Daniel entitled it to have him perform pilotage training services. Nor did the primary judge so find. Her Honour merely found that intervention was necessary to protect PPA's interest as the operator of the Port.[31]
(3)In any event, PPA's intervention was not necessary in that its right or interest was in common with Captain Daniel's rights and interests in fulfilling his employment contract. Captain Daniel could have addressed the issue of the impact of an injunction on third parties - including his employer, PPA - as part of his case on the balance of convenience.[32]
(4)On a proper analysis, the basis for the judge's order was no more than that PPA had an interest in being heard on the injunction application. That is insufficient, as is reflected in the general rule that successful interveners will not ordinarily be awarded costs.[33]
[31] Appellant's costs submissions [16] ‑ [19].
[32] Appellant's costs submissions [20] ‑ [25]; appeal ts 32 - 33, 35 - 37.
[33] Appellant's costs submissions [26] ‑ [28].
PHP submits that leave to appeal should be granted in light of the 'sheer magnitude' of the costs claimed by PPA - more than $300,000 for a 1.5‑day interlocutory hearing.[34]
[34] Appellant's costs submissions [3].

Costs appeal: leave to appeal

This court has recently observed the several challenges that face an appellant who seeks leave to appeal against a discretionary costs decision:[35]
In this context, as elsewhere, the requirement for leave to appeal is no mere technicality or procedural nicety; it serves an important function in the administration of justice by discouraging unnecessary appeals. The gateway requirement of leave is particularly important in the context of a litigant seeking to appeal a costs order. Satellite litigation as to costs should not be allowed to assume a life of its own, disproportionate to its significance. It is in the interests of the parties and the public that disputes as to costs be resolved as quickly, efficiently and inexpensively as possible.
It is seldom in the interests of justice, nor consistent with the goal and objects enshrined in O 1 rr 4A and 4B of the [Rules of the Supreme Court], that a litigant be permitted to challenge a discretionary costs order. Thus, ordinarily as a matter of fact, a grant of leave to appeal on a costs issue is rare.
Similarly, an appellate court will not, without strong reasons, interfere with an exercise of discretion on a question of costs. It is necessary to demonstrate manifest error or that the order stands outside the limits of a sound discretionary judgment. By 'manifest error' what must be shown is that the primary court made an error in principle or acted on a manifestly erroneous view of the facts or that the order is manifestly unreasonable. The appellant must meet the standard of discretionary error established in House v The King.
On an appeal of this type an appellate court is not entitled to substitute its own decision for that of the primary court merely because the appellate court prefers a different result or considers that a different result would be more just and equitable. The test is not whether the Court of Appeal would have made the same order but whether there is a ground on which the primary court's order could reasonably be made Accordingly, as has been said in the Court of Appeal of Victoria:
'It is extraordinarily difficult to show that a court of first instance or a tribunal with wide discretionary powers has erred in the exercise of its powers to award costs, if there be some basis for making an order other than the conventional order in favour of the successful party.'
(footnotes omitted)
[35] Grove v Grove [2022] WASCA 86 [34] ‑ [37].
We will consider the merits of the ground of appeal before returning to the question of leave to appeal.

Costs of interveners: legal principles

In Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd, this court outlined and adopted the following principles stated in the authorities as to the costs of an intervener:[36]
An intervener (unlike a party) will ordinarily be allowed only to support or oppose a position contended for by one of the parties to the proceedings, and will not be permitted to expand the issues to be decided: Re State Administration Tribunal; Ex parte McCourt [2007] WASCA 125; (2007) 34 WAR 342 [41]. In that sense, an intervener takes the action as he or she finds it.
The position of an intervener in relation to costs was considered in some detail by Debelle J in City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65, 67 ‑ 68. His Honour concluded that in the probate and admiralty jurisdiction, and at general law, as a general rule an intervener was not awarded separate costs even if successful. A successful intervener would be entitled to his or her costs only if the intervention was necessary to protect his or her rights, as would be the case if no party contended for the position adopted (successfully) by the intervener.
In Liverpool City Council v Weir (1984) 58 ALJR 213, 216 the High Court (Gibbs CJ, Murphy, Wilson, Deane and Dawson JJ) observed that an intervener cannot expect, as of course, that the unsuccessful party to the litigation in which he has intervened should bear the extra burden of his costs, even if the intervention was well‑intentioned and proved to be of assistance to the court.
We would adopt these principles. (emphasis added)
[36] Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd [7] ‑ [10].

Costs appeal - ground 1: disposition

It is basic, but nevertheless important, to recognise that the question is not whether this court would have exercised the costs discretion differently. PHP must show that the primary court made an error of principle or acted on a manifestly erroneous view of the facts, or that the order is manifestly unreasonable.
Ground 1 is not framed so as to assert a discretionary error of the kind justifying appellate intervention as explained in House v The King. The ground's chapeau rolls up several discrete species of error, those errors being said to have arisen from the errors asserted in pars (a) - (e). However, several of those asserted errors are conceptually distinct from the errors referred to in the chapeau. PHP accepted that, in order to make out ground 1, it must establish one (or more) of the errors asserted in pars (a) ‑ (e). Of those, only par (a) asserts an error of principle; pars (b) and (d) are premised on acceptance of the contention in par (a); pars (c) and (e) amount, in substance, to an allegation of a weighting error.
In support of ground 1(a) and its submission outlined in [74](1) above, PHP fixes on the italicised sentence in the passage set out at [78] above.
Reading the passage as a whole, it is plain that the court adopted what had been said by Debelle J in City of Burnside v Attorney‑General of South Australia.[37] His Honour stated the general rule in terms of successful intervener recovering costs only if the intervention was necessary to protect his or her interest. The italicised sentence in Speno Rail reproduced at [78] above should, consequently, not be read as confining the circumstances in which a successful intervener is entitled to costs to where the intervention is necessary to protect their rights, as distinct from their having had an interest distinct from the interest of a party. In oral argument, PHP accepted that this was so.[38] Consequently, we do not accept PHP's submission summarised in [74](1) above. Ground 1(a) fails.
[37] City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65, 67 ‑ 68.
[38] Appeal ts 32.
That conclusion removes the premise for grounds 1(b) and 1(d). The same is true of the submission at [74](2) above.
We do not accept PHP's submission summarised in [74](3) above. PPA's interest as the operator of the Port was and is distinct from Captain Daniel's interest, notwithstanding that both interests were advanced by the refusal of the injunction. We do not accept PHP's submission that a costs order cannot properly be made in favour of an intervenor who advances the same conclusion as is advanced by a party. Whether that is, or may be, appropriate is a matter of judgement and depends upon the circumstances of the case. PPA advanced evidence and advanced submissions beyond what was advanced by Captain Daniel. The weight to be given to PPA's interest and the additional evidence and submissions advanced by PPA in evaluating the appropriate costs orders was a matter for the primary judge.
Ground 1 and PHP's submissions do not otherwise demonstrate appellable error. As already observed, grounds 1(c) and 1(e) are, on proper analysis, no more than allegations of weighting errors. An alleged failure by a judge who has exercised a discretion to give any or sufficient weight, or a complaint that a judge who has exercised a discretion gave excessive weight, to a relevant consideration will only constitute an express appellable error if it amounts to a failure to exercise the discretion conferred on the judge. See Mallet v Mallet[39] and Dinsdale v The Queen.[40] A complaint about the attribution of weight to a relevant consideration therefore does not ordinarily give rise to an express error that enlivens an appellate court's jurisdiction to intervene in an appeal against a judge's discretionary decision. Further, as this court has recently observed:[41]
In this context, it is necessary to be cautious not to elevate each evaluative statement made by a judge in the course of exercising a discretion into a finding of 'fact', so as to contend that the judge has made some express error by 'mistaking the facts'. Just as pieces of evidence are not relevant considerations for the purposes of establishing House v The King error, so too the judge's reasons as to the weight to be accorded to particular considerations should not be parsed into smaller and smaller components in search of some mistaken 'fact.'
[39] Mallet v Mallet (1984) 156 CLR 605, 614.
[40] Dinsdale v The Queen [2000] HCA 54; (2000) 202 CLR 321 [26].
[41] Hancock Prospecting v Wright Prospecting [143].
No appellable error justifying intervention in the primary judge's discretionary decision is established. Ground 1 fails.

Costs appeal: conclusion

For the above reasons, we refused leave to appeal in relation to the Costs Appeal and dismissed the appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RL
Research Associate to the Honourable Justice Beech
22 AUGUST 2023