North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel - [2023] WASC 73

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

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
CORAM:   HILL J
HEARD:   6-7 MARCH 2023; SUBMISSIONS FILED 8 & 9 MARCH 2023
DELIVERED          :   14 MARCH 2023
FILE NO/S:   COR 27 of 2023
BETWEEN:   NORTH WEST PILOTS PTY LTD AS TRUSTEE FOR THE PORT HEDLAND PILOTS UNIT TRUST TRADING AS PORT HEDLAND PILOTS
Plaintiff
AND
HEATH DANIEL
Defendant

Catchwords:

Practice and procedure – Interlocutory injunction – Restraint of trade – Employment contract – Whether information is trade secret or know-how – Fiduciary duties – Whether defendant has breached his fiduciary duties – Application for injunction to restrain the defendant from undertaking certain aspects of his role with his current employer, the sole customer of plaintiff – Balance of convenience – Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 181, s 182, s 183, s 1324

Result:

Unless appropriate undertaking proffered to court, application allowed in part

Representation:

Counsel:

Plaintiff	:	P Braham SC & P Ward
Defendant	:	K de Kerloy & J Parkinson
Interested Party	:	B Walker SC & A Oakes

Solicitors:

Plaintiff	:	Squire Patton Boggs
Defendant	:	Kingston Reid
Interested Party	:	Corrs Chambers Westgarth

Cases referred to in decision:

Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd [2002] NSWSC 741; (2002) 42 ACSR 605
Australian Securities and Investments Commission v Parkes [2001] NSWSC 377; (2001) 38 ACSR 355
Australian Securities and Investments Commission v Pegasus Leverage Options Group Pty Ltd [2002] NSWSC 310; (2002) 41 ACSR 561
Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114
Change Group International PLC v City Exchange Mart Pty Ltd [2013] FCA 1048
Consolidated Paper Industries Pty Ltd v Matthews [2004] WASC 161
Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Faccenda Chicken Ltd v Fowler [1987] Ch 117
Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317
Zomojo Pty Ltd v Hurd (No 2) [2012] FCA 1458

HILL J:

The plaintiff is the trustee for the Port Hedland Pilots Unit Trust and trades as Port Hedland Pilots (PHP). It provides marine pilotage, marine pilot training, and ancillary and associated services primarily for the Port of Port Hedland (Port) under a contract with the Pilbara Ports Authority (PPA).
In about October 2008, the defendant, Captain Heath Daniel, commenced employment with PHP. From 1 February 2017, the terms of the defendant's employment were governed by a written contract, which included provision for a post-employment restraint. On 20 September 2022, the defendant gave three months' notice of his intention to resign and completed his employment with the PHP on 20 December 2022.
On 22 December 2022, Captain Daniel signed a contract of employment with the PPA to commence in the role of Marine Services Delivery Manager. His role includes training other marine pilots for the PPA.
On 10 February 2023, the plaintiff filed an originating process against the defendant under the Corporations Act 2001 (Cth) (Act). PHP seeks an interlocutory injunction pending trial to restrain Captain Daniel from:
(a)providing marine pilotage services to the PPA in the Port Hedland Port;
(b) disclosing any trade secrets or confidential information of PHP to the PPA; or
(c) assisting the PPA to create or develop various matters concerning the provision of marine pilotage services to the PPA.
The basis for the application is that, in taking up employment with the PPA, Captain Daniel has breached his contractual duties, his fiduciary duties, an equitable duty of confidentiality, as well as the duties imposed on him by ss 181, 182 and 183 of the Act.
The plaintiff accepts, at least on an interlocutory basis, that Captain Daniel may continue in his current employment, provided that he is restrained from doing things in the course of that employment that are inconsistent with the terms and purpose of his contractual restraint. An amended minute of orders was filed on the morning of 7 March 2023 specifying the particular orders sought by the plaintiff.
The application is opposed by both Captain Daniel and the PPA, who I granted leave to appear as an interested person on the application.

Evidence on the application

The plaintiff relied on nine affidavits that were filed in support of the application: four affidavits of Nathan Kelley, the managing director of the plaintiff, affirmed 7 February, 9 February, 17 February and a partially confidential affidavit of 5 March 2023; two affidavits of Marco Blanco, a director of the plaintiff, a confidential affidavit affirmed 6 February 2023 and an affidavit affirmed 5 March 2023; an affidavit of Kabir Vasnaik affirmed 15 February 2023; an affidavit of Matthew William Stanton affirmed 17 February 2023; and an affidavit of Hamish John Donovan, a solicitor employed by the plaintiff's solicitors, sworn 5 March 2023.
The defendant filed an affidavit in opposition to the application on 3 March 2023, as well as an affidavit in opposition to the orders sought by the plaintiff, which was filed on 10 March 2023.
The PPA filed three affidavits in opposition to the application: an affidavit of John George Francis Ball, a senior marine pilot employed by the PPA, affirmed 3 March 2023; an affidavit of Lyle Russel Banks, the General Manager of Development and Trade at the PPA affirmed 3 March 2023; and an affidavit of Philip John Christy, the General Manager of Marine at the PPA, affirmed 4 March 2023.
Many of the background facts are not in dispute between the parties. These matters include the contract that governs the employment relationship between the plaintiff and the defendant (Contract), as well as the contract that governs the relationship between the plaintiff and the PPA (Pilot Services Contract).
I set out below a brief summary of the factual background from the affidavits that have been filed.

Factual background

The PPA is the port authority for the Port of Port Hedland (Port). It is a government trading enterprise established under the Port Authorities Act 1999 (WA) (Port Authorities Act). Its statutory functions and obligations include responsibility for the safe and efficient operation of the Port (s 30(1)(d)) and ensuring pilotage services are provided at the Port (s 96).
The Port is the world's largest bulk export terminal. Senior counsel for the PPA emphasised the importance of the Port to its users, and the Western Australian economy.
Pilotage services are critical to the safe operation of the Port. The role of a marine pilot is a specialised role which requires a high degree of knowledge, skill and training, including specialised knowledge of the port.
Captain Kelley, the managing director of PHP, described the role of a marine pilot and the work that is done by PHP. He explained that marine pilots require specific qualifications to operate in individual ports or areas because the role requires 'local knowledge expertise'.
Since 1995, PHP has provided marine pilotage, marine pilot training, and ancillary and associated services to the Port. It is not in dispute that the provision of these services is currently governed by the Pilot Services Contract dated 5 February 2018. Under the terms of this contract, PHP was appointed as the 'sole provider of Pilotage Services' (cl 2.1). The term of the Pilot Services Contract is from 1 July 2015 for a period of 10 years, namely until 30 June 2025.
A dispute has arisen between the Port and the PPA in relation to the Pilot Services Contract. As was emphasised by senior counsel for the PPA, neither this dispute nor a consideration of the proper construction of the Pilot Services Contract is the subject of these proceedings.
The Pilot Services Contract between the PPA and PHP includes a clause dealing with confidential information (cl 17). Clause 17 provides that each party, both during the term of the Contract and following its termination, will maintain the secrecy of any Confidential Information, not disclose it, refrain from using or attempting to use the Confidential Information in 'any manner which will or may cause or be calculated to cause injury to loss to the other party or its clients'. Confidential Information is defined in the contract to mean any information relating to the other party's business, work procedures or its operations including any customer, employee or training manuals. A separate clause in the contract deals with PHP's background intellectual property (cl 18.5).
The services that are required to be provided under the Pilot Services Contract are set out in Sch 1. This includes the obligation to allow the PPA to work with PHP to train pilots.
All unrestricted pilots employed by PHP hold units in the Trust, shares in PHP and are eligible to become a director of PHP. On resignation of their employment, an unrestricted pilot is deemed to have resigned from their position as a director and their units in the Trust are compulsorily purchased.
In about October 2008, the defendant, Captain Heath Daniel, commenced employment with PHP initially as a trainee marine pilot. Captain Daniel undertook training with PHP, was promoted to a restricted pilot and, after about 20 months, promoted to the position of an unrestricted marine pilot. Captain Daniel was a director of PHP from 2011 and was company secretary from 2012 until 2017. In this role, he provided instructions to solicitors on behalf of PHP in relation to the employment contracts to be entered into by the marine pilots, including himself.
On 1 February 2017, Captain Daniel entered into a written contract of employment with the PHP. Under the Contract, Captain Daniel's duties included the obligation to use his best endeavours to promote and protect the interests of PHP (cl 2.1(e)) and to provide full and prompt information to PHP about the conduct of the business, including any material issue affecting PHP within his knowledge (cl 2.1(g)). The Contract imposed obligations of confidentiality (cl 10) and required Captain Daniel, both during his employment and after termination, not to use or disclose any confidential information which came into his possession during the course of this employment, including any policy or procedure manuals including any information in them (cl 10.2(c)), or any trade secrets or know-how used in relation to PHP's services (cl 10.2(g)).
The Contract also included a post-employment restraint (cl 12) under which Captain Daniel agreed that he would not, during the 'Restraint Period' and without the prior written consent of PHP:
(b) canvass, solicit or deal with any customer of the Employer with whom you had dealings during the 12 (twelve) month period prior to your employment ending;
(c) be interested or concerned in (as an Employee, independent contractor, shareholder, director, consultant, partner, volunteer or in any other capacity) a business engaged in the same industry as the Employer, or in any way competitive with the Employer, within the Restraint Area.
Under cl 12.2 of the Contract, Restraint Period is defined to mean a cascading period of 24 months down to three months after the end of Captain Daniel's employment. Restraint Area is similarly a cascading definition from the Pilbara region down to Port Hedland.
Under cl 12.4, Captain Daniel acknowledged and agreed that this was a reasonable and fair restraint, including that it was reasonable in scope and duration, and reasonably necessary to protect the goodwill and business interests of PHP. Under the express terms of the Contract, this restraint only applies while PHP has a contract for pilotage within the Restraint Area (cl 2.5).
The Contract annexed a job description for Captain Daniel's role. His duties included the requirement to prepare a passage plan appropriate to local circumstances and listed the sources from which this information could be derived.
In about October 2021, the PPA decided to establish its own training program for the training of marine pilots.[1] The evidence of the PPA is that the development of the training program has been done by trainee pilots employed by the PPA, who did not use any PHP documents in developing the training program and that Captain Daniel was not involved in this process.[2]
[1] Affidavit of Philip John Christy filed 4 March 2023 [50] - [54].
[2] Affidavit of John George Francis Ball filed 3 March 2023 [18] - [26]; Affidavit of Philip John Christy filed 4 March 2023 [65].
In early 2022, Captain Daniel had some discussions with the PPA about the possibility of joining the PPA. The full extent of those discussions is a matter in dispute between the parties.
On 20 September 2022, Captain Daniel gave notice of his intention to resign and finished his employment on 20 December 2022.
Prior to finishing his employment with PHP, Captain Daniel did not disclose or inform anyone at PHP that he intended to commence employment with the PPA. PHP contends he concealed this from his former colleagues.
On 22 December 2022, Captain Daniel was sent and signed a contract with the PPA to commence in the position of Marine Services Delivery Manager. Under the terms of this contract, Captain Daniel will provide training for other marine pilots for the PPA among other duties.
Since commencing employment with the PPA:[3]
(a)Captain Daniel has followed the training plan for marine pilots developed by the PPA. His evidence is that the PPA pilot training plan is very different and distinct from the PHP pilot training plan;
(b)Captain Daniel has been an observer on ships under the licence of other captains for the purpose of training; and
(c)Captain Daniel has provided pilotage services for various ships at the Port. He has done this for training purposes and to demonstrate to other pilots who were on board at the time.
[3] Affidavit of Heath William Daniel filed 3 March 2023 [53] - [59].
The matters where there is a significant contest between the parties primarily concern:
(a)whether PHP has trade secrets or confidential information in relation to the processes for piloting in the Port, which was imparted to the defendant during his employment by the PHP;
(b)whether the defendant had access to and knowledge of confidential information concerning PHP's legal advice, strategy and intentions in relation to the dispute between PHP and the PPA;
(c)whether the defendant breached his fiduciary duties owed to PHP prior to the cessation of his employment with PHP and, if so, whether this should be the subject of any interlocutory relief; and
(d)whether the employment of the defendant by the PPA falls within the restraint contained in his contract of employment with PHP.
The resolution of these matters will, at least in part, require the finding of specific facts which cannot be done on an interlocutory application, where there has been no opportunity for the witnesses to be cross-examined.

Legal principles

The principles to be applied on an application for an interlocutory injunction are well-known and are not in dispute. The court must consider whether there is a serious question to be tried and whether the balance of convenience favours the grant of the injunction.
The first inquiry 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 if the plaintiff can show there is 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 second 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.
In assessing the balance of convenience, it is relevant to consider the impact of any proposed injunction on a third party or the public interest. In Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3), the plurality of the High Court cited with approval the following passage from Dr Spry's Equitable Remedies:[4]
The interests of the public and of third persons are relevant and have more or less weight according to the other material circumstances. So it has been said that courts of equity 'upon principle, will not ordinarily and without special necessity interfere by injunction, where the injunction will have the effect of very materially injuring the rights of third persons not before the courts'. Regard must be had 'not only to the dry strict rights of the plaintiff and the defendant, but also the surrounding circumstances, to the rights or interests of other persons which may be more or less involved'. So it is that where the plaintiff has prima facie a right to specific relief, the court will, in accordance with these principles, weigh the disadvantage or hardship that he would suffer if relief were refused against any hardship or disadvantage that might be caused to third persons or to the public generally if relief were granted, even though these latter considerations are only rarely found to be decisive. (Conversely, detriment that might be caused to third persons or to the public generally if an injunction were refused is taken into account.)
[4] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1 [65].
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.
In relation to the court's power to grant injunctions under s 1324(4) of the Act, these principles were summarised by Palmer J in Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd.[5] Relevantly, his Honour emphasised that where the court exercises power under s 1324 of the Act, it is exercising a statutory power and not its power under the court's traditional equity jurisdiction. The considerations which the court must take into account in an application for an injunction under s 1324 include the broad question as to whether the injunction would have some utility or serve some purpose within the contemplation of the Act.[6]
[5] Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd [2002] NSWSC 741; (2002) 42 ACSR 605 [36].
[6] Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114; Australian Securities and Investments Commission v Parkes [2001] NSWSC 377; (2001) 38 ACSR 355; Australian Securities and Investments Commission v Pegasus Leverage Options Group Pty Ltd [2002] NSWSC 310; (2002) 41 ACSR 561.
Where there is an appreciable, that is, not fanciful, risk of particular future contraventions of the Act by a defendant, it would serve a purpose within the contemplation of the Act that the court grant not only a permanent injunction but, in an appropriate case, an interim injunction restraining such conduct.
Although the questions concerning whether there is a serious question to be tried and where the balance of convenience lies do not circumscribe the court's consideration in an application for an interim injunction under s 1324(4), the interests of justice will always require that those questions be examined carefully when restrictions are sought to be imposed before the case has properly been examined by the court, even where the protection of the public is said to be involved.

The PPA submitted that an award of damages to PHP would be adequate and that the interlocutory injunction should be refused for that reason. It is now broadly accepted that the adequacy of damages is not an independent requirement but simply a matter which is relevant to the broader question of the balance of convenience.
PHP denied that damages would be an adequate remedy and referred the court to the decision of Edelman J in Emeco International Pty Ltd v O'Shea[7] where his Honour noted at [20] - [21] that:
[I]n the context of injunctive relief for apprehended breach of a restrictive covenant that 'where what is involved is the enforcement by injunction of a contractual negative stipulation, it is a rare case in which relief will be declined on the basis that damages are a sufficient remedy'.
The reasons why damages are often inadequate in these cases includes (i) the difficulty of detection of breaches of the obligations; (ii) the difficulty of establishing causation between any loss of business with customers and any actions of the ex-employee; and (iii) the difficulty of the calculation of the quantum of any damage arising from loss of business. (citations omitted)
[7] Emeco International Pty Ltd v O'Shea [2012] WASC 282.
These concerns, as his Honour noted, will not always apply.
I turn now to examine carefully whether there is a serious question to be tried and where the balance of convenience lies. In doing so, I note that on an application for an interlocutory injunction, the court is not undertaking a preliminary trial or giving relief on a forecast of the ultimate result. However, it is necessary for the court to assess the strength of the plaintiff's probability of ultimate success. This is a critical factor in the determination of the application.

Orders sought

On the morning of the second day of the hearing, the plaintiff filed an amended minute of orders to clarify the orders it sought. The plaintiff sought three separate restraints in respect of the defendant, namely:
1.Until further order the defendant is restrained 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 Hedland Port) to or for Pilbara Ports Authority (PPA) or any other person within or with respect to the Port Hedland Port. For the avoidance of doubt the defendant is permitted, to the extent that he is otherwise qualified and authorised to do so, to provide pilotage in other ports including for PPA
2.Until further order, the defendant is restrained from disclosing to PPA or to any other person any of the following:
(a)the plaintiff's safety management system (SMS) or any part thereof;
(b)the plaintiff's quality management system (QMS) or any part thereof;
(c)the content of PHP's fatigue management audit of July 2022 (as referred to in the affidavit of Mr Kelley's affidavit dated 8 February 2023 at paragraph [132]).
(d)legal advice sought or received by the plaintiff;
(e)the content of the plaintiff's or the Trust's accounts including trust distributions;
(f)the plaintiff's pricing strategies or contracting strategies with respect to past or future provision of services to PPA or any other customer of the plaintiff;
(g)the plaintiff's strategy for addressing disputes, disagreements or differences with the PPA; or
(h)any deliberations of the board of the plaintiff;
(i)for each berth, shipping channel, turning basin or other compulsory pilotage location, and for each ship type, within the Port of Port Hedland, any and all information the defendant in the course of his employment by, or directorship of, the plaintiff as to:
i.tidal vector discrepancies or anomalies from PPA tidal vector charts;
ii.berth approach and departure angles, speed profiles, lateral displacement requirements, and safe limits thereof;
iii.rates of turn and wheelover points, and safe limits therefore;
iv.check-headings;
v.speed profiles;
vi.towage requirements including tug thrust specifications and towage asset placement;
3.Until further order the defendant is restrained from assisting PPA or participating on behalf of PPA in any matters associated with:
(a)screening or assessment of trainees or candidates for training as pilots to provide Marine Pilotage Services;
(b)creating, developing or contributing to a pilotage recruitment or training or assessment program;

(c)creating, developing or contributing to documents, systems or procedures for PPA which are equivalent to or alternatives to, the plaintiff's Safety Management System or Quality Management System and other systems plans;
(d)PPA commercial discussions or PPA internal reviews of the Pilotage Services Contract with the plaintiff or the Marine Pilotage Services provided by the plaintiff; or
(e)PPA issuing a request for tender or evaluating proposals in respect of potential renewal, replacement or extension of the Pilotage Services Contract with the plaintiff or with alternative providers for services including or equivalent to Marine Pilotage Services for Port Hedland Port.

4.For the purpose of these orders:
(a)Marine Pilotage Services refers to any and all of the types of services provided by the plaintiff under the Pilot Services Contract; and
(b)Pilot Services Contract refers to the written contract between the plaintiff and PPA dated 25 August 2015, as most recently amended and restated by deed dated 5 February 2018.

Serious question to be tried

Before turning to the specific matters raised by the parties, as a general principle, information that has been gained by an employee in the course of their employment can be classed into three categories, namely, trivial information, know-how, and trade secrets. Trivial information is not entitled to any protection. Know-how can be protected by a valid restraint of trade covenant, that is, the employer has to obtain a contractual promise from the employee or former employee before this can be protected. Finally, trade secrets can be protected by the granting of an injunction in accordance with the equitable principles, even where there is no specific contractual covenant.[8]
[8] Faccenda Chicken Ltd v Fowler [1987] Ch 117.
In this case, PHP contends the information Captain Daniel gained through his employment is either confidential information or is know-how which is protected by a valid restraint of trade.

Confidential information

It is necessary to consider all the circumstances of a case to determine whether information is 'confidential'. These include:[9]
(a)the extent to which the information is known outside the business;
(b)the value of the information to the business and their competitors;
(c)whether skill and effort was expended to acquire or create the information;
(d)the ease or difficulty with which the information could be properly acquired or duplicated by others;
(e)whether the information is jealously guarded, is not readily made available and could not without consider effort or risk be acquired by others;
(f)whether it was plainly made known that the information is regarded as confidential;
(g)whether the usages and practices of the industry support the assertion of confidentiality; and
(h)whether the employee in question has only been permitted to share the information because of their seniority or responsibility within the organisation.
[9] Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317, 334; as supplemented in Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172 [40].
In Del Casale v Artedomus (Aust) Pty Ltd, Hodgson JA discussed the distinction between confidential information and information which is ascertainable with enquiry or experiment in the following terms:[10]
In cases where the confidential information is of the nature of a secret formula or process, involving a number of elements such that independent discovery by enquiry or experiment is unlikely to occur, that confidential information can quite readily be distinguished from an employee's general know-how. In those cases, the courts are ready to restrain use of that information by an ex-employee.
However, where the confidential information is something that is ascertainable by enquiry or experiment, albeit perhaps substantial enquiry or experiment, and the know-how which the ex-employee is clearly entitled to use extends to knowledge of the question which the confidential information answers, it becomes artificial to treat the confidential information as severable and distinguishable from that know-how; and in that kind of case, courts have tended not to grant relief.
[10] Del Casale v Artedomus (Aust) Pty Ltd [42] - [43].
His Honour also noted that the authorities may justify a distinction being drawn between an ex-employee using the information as part of the know-how they acquired from their employment and the employee disclosing the information to others.[11]
[11] Del Casale v Artedomus (Aust) Pty Ltd [47].
PHP contends that some of the specialised knowledge of the Port is 'so confidential and so essential' to the security of the plaintiff's ongoing business that it is memorised and not written down.[12] The confidential information includes:[13]
(a)information about the tidal vector charts and, in particular, the understanding as to when and where the tidal vector charts are inaccurate and need to be adjusted;
(b)the limits of headings through which ships may be manoeuvred in certain tidal flows, which are specific to each of the berths at the Port;
(c)the co-ordination and use of the tugs, particularly in relation to Cape Class Bulk Carriers; and
(d)the extent to which the marine pilots are required to anticipate the helm, engine power and tug thrust inputs and the required reaction to these.
[12] Plaintiff's submissions 8(i).
[13] Affidavit of Marco Blanco filed 5 March 2023 [9] - [12].
These matters are disputed by Captain Daniel who says that the marine pilots learn to navigate vessels in the Port through a 'mixture of general pilotage experience, observation and also gaining first-hand experience'.[14] His evidence is that this is knowledge which an experienced marine pilot would know.[15] Captain Daniel denied that any of the information relied upon by PHP was confidential information or a trade secret, but contended it was 'know-how'. This was because the information was publicly observable, and was in his head.
[14] Affidavit of Heath William Daniel filed 3 March 2023 [96].
[15] Affidavit of Heath William Daniel filed 3 March 2023 [118] - [124].
The PPA also denied this information was a trade secret and submitted the evidence supported a conclusion that it was 'know-how' which, subject to the validity of any contractual restraint, Captain Daniel was entitled to use after the termination of his Contract. In particular, it was emphasised that:
(a)the objective details of the local knowledge relied upon by PHP is produced by the PPA and provided to PHP. The use of that information by a marine pilot, in their submission, is an exercise of skill, knowledge and experience which does not constitute a trade secret;
(b) the duties of unrestricted pilots are consistent with the role involving the assimilation and interpretation of objective data, and the application of skill and experience, as opposed to the application of confidential formulas or processes; and
(c) the Marine Pilot Competency Guidelines do not refer to any formulas, processes or information that amount to a trade secret. The descriptions of the required competencies in this document are more consistent with the application of skill as opposed to confidential formulas or process.
In any event, the PPA emphasised that under the Pilot Services Contract, PHP is required to train pilots nominated by the PPA. Any such training would, in their submission, require disclosure of this information to the PPA.
The question as to whether the matters relied upon by PHP constitute confidential information or trade secrets cannot be resolved at an interlocutory stage. It is sufficient to say that with the additional information provided by PHP in the affidavits filed shortly before the hearing, I consider it is possible that a court could be satisfied that the matters referred to at [54] could constitute confidential information. This is for the following reasons.
First, the Pilot Services Contract specified that PHP's manuals and information was confidential information. Second, I accept that some significant skill and effort was expended by PHP in training its pilots to acquire this knowledge. Third, there is some evidence that PHP's employees treated the information as confidential.
However, even if this is the case, there is an additional question as to whether this information is confidential and cannot be disclosed to the PPA, or is only protected against disclosure to third parties. On the evidence currently before me, I do not consider the contention that this information is a trade secret, which requires protection against disclosure to the PPA to be a strong case.

Contractual Restraint

As a general rule, a court will scrutinise the reasonableness of a restraint on a former employee more strictly than it scrutinises the reasonableness of a restraint given by the vendor of a business or mutual restraints between partners or quasi-partners. In this case, PHP contends that Captain Daniel is both an employee and a vendor, given his resignation required him to sell his units in the Trust. This contention was disputed by the other parties who submitted that PHP is, in substance, a co-operative and that the activities of Captain Daniel, which are sought to be restrained, are those duties he carried out as an employee of PHP and not in any other capacity.
The leading statement in this jurisdiction of the principles applicable to the reasonableness of restraint of trade clauses is the decision of the Court of Appeal in Smith v Nomad Modular Building Pty Ltd.[16] In that case, McLure JA (with whom Buss JA agreed) quoted with approval at [6] the statement of Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd that:[17]
All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable - reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public.
[16] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169.
[17] Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 565.
McLure JA stated that the validity of the restraint must be determined at the date of the contract, although subsequent developments can be considered to determine whether the agreement was reasonable to make at the date of contract, having in mind the best estimate that the parties could make for the future.[18] Her Honour also explained that a restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection.[19]
[18] Smith v Nomad Modular Building Pty Ltd [7].
[19] Smith v Nomad Modular Building Pty Ltd [8].
Whether a restraint of trade is reasonable is a question of law which depends on the proper construction and legal effect of the contract. This requires the court to consider the range of interests relied upon which are said to require protection and 'determine whether one or more of those interests are reasonable by reference to the interests of the parties to the contract and the interests of the public'.[20]
[20] Smith v Nomad Modular Building Pty Ltd [12].
PHP is not entitled to protection against mere competition, although a restraint clause which seeks to protect confidential information which is reasonable as to time and geographic scope will not be contrary to public policy.[21]
[21] Smith v Nomad Modular Building Pty Ltd [36] (Pullin JA).
PHP contends that the post-employment restraints in cl 12 of the Contract are a reasonable protection of the plaintiff's legitimate business interests in its confidential information and to protect its rights under the Pilot Services Contract.[22] Senior counsel for PHP submitted the plaintiff's business is at risk if Unrestricted Pilots, such as the defendant, are permitted to take up positions with the PPA, 'particularly in the context where the current Pilot Services Contract is up for renewal or extension in 2025'.
[22] Plaintiff's submissions [25].
PHP submitted that Captain Daniel's employment with the PPA falls within:
(a)cl 12.1(b) - on the basis that the words 'deal with' must include being employed by the PPA to provide the services PHP provides under its contract with the PPA; and
(b)cl 12.1(c) - on the basis that the PPA is 'competing with the plaintiff for pilotage and on water pilot training opportunities'.
Senior counsel for PHP submitted that in considering the scope of the restraint, the geographic area of Port Hedland was easily justifiable from the terms of the Contract and that the period of 24 months was about the time it takes to train a marine pilot and accordingly was in accordance with the 'logical business cycle that's sought to be protected'.[23]
[23] ts 85.
PHP emphasised there was no reason Captain Daniel could not obtain work as a marine pilot or in a marine services related position in any other port in Australia.
Both Captain Daniel and the PPA submitted that the restraints were unnecessarily broad and, as a result, void as a matter of public policy. In relation to cl 12.1(b), Captain Daniel submitted this clause was so broad that it would prevent him from having any contact with the PPA, even for an unrelated purpose. The PPA submitted that as well as being impermissibly broad, it was not reasonably required to protect PHP's customer connection with the PPA because under its contract with the PPA, the PHP is the sole provider of pilotage services to the PPA until 30 June 2025.
In respect of cl 12.1(c), both Captain Daniel and the PPA submitted that this required an examination as to whether the PPA was 'in the same industry' as PHP or 'in any way competitive' with PHP. In this regard, it was emphasised that the PPA is a government trading enterprise governed by the Port Authorities Act and is responsible for four ports in the Pilbara, including the Port. Its functions are set out in s 30(1) of the Port Authorities Act. In addition, it was emphasised that the PPA is the client of PHP and does not operate a competitive business with PHP.
In this case, the evidence before the court is that, at the time of entry into the Contract, PHP was the sole supplier of marine pilot services to the PPA, unrestricted marine pilots are extremely specialised, and that it takes significant training and time to obtain an unrestricted marine pilot licence.
It is also relevant that the Contract contains an acknowledgment that the restraint is reasonable. While this is not determinative of the question as a matter of law, it is not irrelevant.[24] Similarly, the fact that similar restraints are common in the industry is also a relevant factor,[25] as is the seniority of Captain Daniel,[26] and his remuneration package.[27]
[24] Smith v Nomad Modular Building Pty Ltd [17].
[25] Smith v Nomad Modular Building Pty Ltd [18].
[26] Smith v Nomad Modular Building Pty Ltd [21] (McLure JA), [39] (Pullin JA).
[27] Smith v Nomad Modular Building Pty Ltd [39] - [41] (Pullin JA).

Captain Daniel's Contract required three months' notice of termination. The remuneration that was payable to Captain Daniel under the Contract and in distributions from the Trust is confidential. It is sufficient, for the purposes of these reasons, to note that in my view, the remuneration was significant.
My preliminary view is that, on the proper construction of the Contract, the restraint in cl 12.1(b) seeks to protect the relationship between PHP and its customer, the PPA. As such, this restraint has no application to the employment of Captain Daniel by the PPA. This cannot impact on the terms of the contractual relationship between PPA and PHP, particularly given the terms of the Pilot Services Contract.
In respect of the restraint in cl 12.1(c), this clause seeks to restrain Captain Daniel from being employed by a business engaged in the same industry as PHP or in any way competitive with PHP. I accept the submissions of the defendant and the PPA that the first of these requires an assessment of the business at an industry level and not a consideration of any particular aspect of the business. I do not consider that there is a serious question to be tried that PHP and the PPA are in the same industry: one is a company that provides marine pilot services, and the other is a statutory body which operates four ports.
In relation to the question as to whether the PPA is 'in any way competitive' with PHP, this will require an assessment as to what was known to both parties at the time of entry into the Contract. At the time of entry into the Contract, PHP was supplying marine pilot services to the PPA. However, the terms on which these services were being provided was not in evidence before me. If the contract between PHP and the PPA included a provision whereby the PPA could provide its own marine pilots, including the training of them, it is possible that, on a proper construction of the Contract, the PPA could have been in the contemplation of the parties as a business that was or might be competitive with PHP and that cl 12.1(c) could extend to restrain Captain Daniel from obtaining employment with the PPA for a period of time. On this basis, I consider there is a question to be tried as to whether the restraint in cl 12.1(c) applies, although I would not consider this to be a strong case.

Breach of fiduciary and statutory duties

It was not in dispute that by reason of Captain Daniel being a director of PHP, he owed fiduciary duties to PHP, arising both under the Act and at common law. This includes the duty under s 183(1) of the Act that:
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.

It is important to stress that s 183(1) requires not only for there to have been a use of the information, but also that the use is improper. As was noted by Hodgson JA in Del Casale v Artedomus (Aust) Pty Ltd, the Act does not set out what amounts to the improper use of information. I respectfully agree with his Honour's view that what is required for the use to be improper is a breach of an equitable obligation of confidentiality or a breach of contract.[28]
[28] Del Casale v Artedomus (Aust) Pty Ltd [59] - [60].
Senior counsel for PHP submitted that neither Captain Daniel nor Mr Christy had been frank in disclosing the extent or nature of their dealings in 2022 and had limited their evidence to the matters that were known by PHP, as set out in either the statement of claim or the affidavits filed on behalf of PHP. PHP contended that the matters on which they relied were evidence that Captain Daniel had 'feathered his nest' while a fiduciary and that orders should be made effectively preventing him from 'sitting in it' for a sufficient time period to reflect his fiduciary duties.[29]
[29] ts 66.
PHP relied on the following matters, which it contended gave rise to a serious question to be tried as to whether Captain Daniel had breached his fiduciary duties:
(a)Captain Daniel received copies of and is privy to the legal advice, strategy and intentions of PHP in relation to PHP's dispute with the PPA, but did not disclose to PHP that he was in discussions with the PPA about commencing employment with them;
(b)prior to resigning from his employment with PHP, Captain Daniel discussed the possibility of being employed with the PPA to train marine pilots for them and did not disclose this to PHP;
(c)by commencing with the PPA and providing pilot services and training of the PPA's pilots, Captain Daniel 'has placed himself into a position of conflict and preferred his own interests, and those of PPA, to those of the plaintiff';[30]
(d)while employed by PHP, Captain Daniel provided training to Captain Ball, a trainee pilot of the PPA, contrary to the agreed strategy and position of PHP;
(e)on 27 August 2022, prior to his resignation from PHP, Captain Daniel downloaded to a OneDrive file an electronic folder of documents, which included a number of documents which are relevant to the provision of marine pilotage services; and
(f)on 20 September 2022, the PPA paid for Captain Daniel to fly to Perth from his home in Queensland for one to two days before he commenced his shift with PHP.
[30] Plaintiff's submissions [24(c)].
Senior counsel for PHP relied on the 'springboard doctrine' and referred me to the decision of Gordon J in Zomojo Pty Ltd v Hurd (No 2), where her Honour held that:[31]
Equity will restrain a former employee who seeks to use an employer's information as a 'springboard' to gain a head start, even where that information is capable of being independently ascertained.
The springboard doctrine seeks to prevent the misuse by one party of another's confidential information in order to bring out its own product in a manner or time that it would not otherwise have been able to achieve. The doctrine is founded on a concept of fairness. Parties are free to use information that becomes public so long as they do not take advantage of the 'head start' of having the knowledge ahead of the public. (citations omitted)
[31] Zomojo Pty Ltd v Hurd (No 2) [2012] FCA 1458 [201] - [202].
PHP contends the actions of Captain Daniel in undertaking pilotage services and pilot training was evidence that both he and the PPA had obtained a 'head start' through use of the plaintiff's confidential information.
Counsel for Captain Daniel emphasised that an employee is not prohibited from making preparations to set up a business or finding alternative employment prior to the end of his employment. Whether the steps that are taken are a breach of duties will depend on the circumstances,[32] and a close examination of the individual steps that have been taken.[33] In any event, it was denied that any duties that survived the termination of his employment with PHP prevented him from conducting pilotage training for the PPA.
[32] Consolidated Paper Industries Pty Ltd v Matthews [2004] WASC 161 [60] and the authorities cited therein.
[33] Change Group International PLC v City Exchange Mart Pty Ltd [2013] FCA 1048 [236].
Both the defendant and the PPA deny Captain Daniel has had any involvement in the development of the PPA training program, or that it has used PHP's confidential information.
There is a factual dispute between the parties as to whether the conduct of Captain Daniel was a breach of these duties, which cannot be resolved on an interlocutory basis. There is also a dispute whether any alleged breach of duty should be the subject of any interlocutory orders.
At its highest, the primary complaint of the PHP appears to be that Captain Daniel did not disclose the PPA's plans to PHP which would have been useful for PHP to know. There is no suggestion that Captain Daniel has disclosed PHP's plans or strategy to PPA or otherwise misused PHP's confidential legal advice or strategy.
That said, I accept that there is a serious question to be tried as to whether Captain Daniel's actions in downloading the electronic folder, as well as the nature and extent of discussions he had with the PPA since January 2022, or any of these matters are a breach of the fiduciary duties he owed to PHP.
In respect of the PHP's legal advice and strategy, there was no dispute between the parties that the matters in orders 2(c) to 2(h) in the minute of proposed orders were PHP's confidential information. However, Captain Daniel and the PPA contended these matters should not be the subject of any orders by the court. Captain Daniel either did not recall receiving any copies of the legal advice or strategy or said it had been delivered up to PHP. Both Captain Daniel and PHP say that not only have the documents referred to in these orders not been provided to the PPA, but Captain Daniel's role does not require him to use this information and the PPA has directed Captain Daniel not to disclose any of this information to it.
On 16 February 2023, Captain Daniel's solicitors informed the solicitors for PHP that Captain Daniel was prepared to proffer an undertaking that he would not disclose any information to the PPA about or concerning PHP.[34] I note that the undertaking proffered by Captain Daniel is not an undertaking to the court.
[34] Second affidavit of Heath William Daniel filed 10 March 2023, 'HWD-6'.
In my view, notwithstanding the direction that has been given by PPA to Captain Daniel, for the following reasons, I consider that it is necessary for Captain Daniel to either give an undertaking to the court or for the matters in orders 2(c) to 2(h) to be the subject of a formal order of the court. First, the downloading of an electronic folder of documents prior to his resignation and the failure to offer to return these documents until after the commencement of these proceedings, gives rise to a serious question to be tried as to whether and the extent to which Captain Daniel has breached his fiduciary obligations to PHP. Second, Captain Daniel, when asked by his former colleagues what he was doing after his resignation, did not disclose he was intending to take up an offer from the PPA but said that he intended to work for Baird. I accept the plaintiff's submission that these matters may give rise to an inference of a consciousness of wrongdoing.
In relation to the documents the subject of orders 2(a) and 2(b) in the minute of orders, I accept that the PPA already has these documents. There is no evidence that Captain Daniel may disclose these to any third party and I do not consider that any order is required in relation to these documents.

Balance of convenience

PHP contends the balance of convenience favours the granting of the injunction and that Captain Daniel is unlikely to suffer any detriment from the granting of any interlocutory relief.
In particular, PHP contends that if Captain Daniel is allowed to continue to provide pilotage and pilot training to the PPA, PHP will suffer the following damage:
(a)a potential loss of opportunities to train existing or future PHP Trainee Pilots on ship movements that would have been piloted by a PHP Unrestricted Pilot if not allocated to the defendant;
(b)as a consequence of those lost opportunities, potential delays in qualifying more Unrestricted Pilots, potentially increasing risk of PHP not having sufficient Unrestricted Pilots to meet its contractual obligations to the PPA;
(c)as a consequence of pilots being trained by the PPA, those pilots will be used to pilot vessels to fill 'gaps' that may arise because the PPA has not permitted PHP to recruit additional pilots and potentially impacts PHP's position in respect of this issue;
(d)loss of confidentiality of highly valuable trade secrets and know-how;
(e)loss of market position and competitive advantage on extension or renewal of the PPA pilotage contract in 2025; and
(f)increase in safety and performance risks caused by the activities of the PPA trainee pilots.
Senior counsel for PHP also emphasised on a number of occasions during submissions that by allowing Captain Daniel to provide training to trainee pilots of the PPA as an employee of the PPA, Captain Daniel was denying the PHP its 'beneficial negotiating position' in relation to the services contract after expiry of the existing term,[35] and 'the maintenance of status quo in respect of the plaintiff's position in any dispute with PPA'.[36]
[35] Plaintiff's submissions [8(x)(iii)].
[36] Plaintiff's submissions [8(x)(iv)].
In answer to the PPA's contention that it will be prejudiced by Captain Daniel being unavailable to provide pilot training services, PHP submits the PPA has an alternative available to it, namely PHP who 'remains ready willing and able to do so'.
In contrast, both Captain Daniel and the PPA contended the balance of convenience did not support the granting of interlocutory relief. This was for the following reasons:
(a)any injunction, even on an interlocutory basis, would effectively prevent Captain Daniel from earning a living as the PPA is the only employer other than PHP who will require the defendant's skills and experience;
(b)the pilotage of vessels by the PPA pilots has no financial impact on PHP under the terms of the contract between the PHP and the PPA; and
(c)the granting of relief had a 'real likelihood' of inhibiting the PPA from fulfilling its statutory duties and result in considerable economic loss to both the PPA and other third parties.
In respect of the safety concerns raises by the PHP, the PPA drew attention to the fact that under the Port Authorities Act, its statutory functions and obligations include the responsibility for the safe and efficient operation of the Port.[37]
[37] Port Authorities Act 1999 (WA) s 30(1)(d).
It also emphasised that at present, PHP is required to fill 14 pilot posts with unrestricted pilots but has only been providing 11 or 12 pilots. This has, in their submission, led to a delay in vessel movements and a reduction in throughput, which has caused economic hardship to the PPA, the customers or users of the Port and the State.[38]
[38] Affidavit of Philip John Christy filed 4 March 2023 [28] - [35], [97] - [116].
In the submissions filed by the parties, there was some debate between the parties in relation to the strength of the undertaking as to damages. Given the conclusion I have ultimately reached, it is unnecessary for me to address this.
For the following reasons, I do not consider the balance of convenience favours the granting of interlocutory relief. Instead, I consider the matter should be set down for a final hearing at the earliest opportunity.
First, while I consider the plaintiff has raised a question to be tried, on the evidence currently before me, even taking into account the fact that PHP has not had the opportunity to obtain discovery from Captain Daniel or to issue any subpoenas, I do not consider the plaintiff's case is a strong case.
Second, given the PPA is responsible under the Ports Authorities Act for ensuring safety in the Port, I do not accept that the training of pilots by the PPA will increase safety concerns or potential safety issues at the Port.
Third, given the length of time involved in the training of marine pilots, any concerns about the impact can be addressed by an urgent hearing on a final basis.
Fourth, in respect of the matters raised by both PHP and the PPA about the impact of any orders on the negotiation of their future contractual arrangements, I note that the PPA is not a party to these proceedings and PHP has not chosen to commence proceedings against the PPA in relation to the construction of the Pilot Services Contract. Any impact on PHP's negotiating position, if any, can be addressed if this matter is heard on a final basis as soon as possible.
Fifth, the evidence before the court is that the granting of any relief on an interlocutory basis will have a significant impact on Captain Daniel, the PPA and third party users of the Port. These matters weigh against the granting of interlocutory relief and support the matter being determined on an urgent basis.
Sixth, the evidence before the court is that there are significant vessel movements in and out of the Port and that the trainees of PHP will not be denied training opportunities in the short time prior to the matter being listed for trial, if this is to occur.
Seventh, in this case, my preliminary view is that damages may be an adequate remedy. While I accept that PHP is seeking to enforce a negative contractual stipulation, the matters to which Edelman J referred at [45] do not apply in this case. First, if PHP is correct and Captain Daniel's training of other marine pilots is a breach of his obligations, his presence on the relevant ships will be recorded in PPA's records. Second, because the issue concerns actions between an ex-employee and PHP's sole customer, the difficulties in establishing causation of any loss of relationship do not apply. Third, the Pilot Services Contract sets out the basis in which PHP is entitled to charge for its services so calculation of the quantum of damage is likely to be possible.

Conclusion

Before making any formal orders, I will hear from the defendant as to whether he is prepared to give an undertaking in the terms I consider is required.
Otherwise, for these reasons, rather than granting any interlocutory relief in terms of order 2(i) of the Minute of proposed orders, I consider the proceedings should be set down for an urgent trial. I will hear from the parties as to their availability for a trial in late April or early May and the appropriate orders that should be made to program the matter through to trial.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

FD
Associate to the Honourable Justice Hill

14 MARCH 2023

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

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)
CORAM:   HILL J
HEARD:   20 MARCH 2023
DELIVERED          :   20 MARCH 2023
PUBLISHED           :   22 MARCH 2023
FILE NO/S:   COR 27 of 2023
BETWEEN:   NORTH WEST PILOTS PTY LTD AS TRUSTEE FOR THE PORT HEDLAND PILOTS UNIT TRUST TRADING AS PORT HEDLAND PILOTS
Plaintiff
AND
HEATH DANIEL
Defendant

Catchwords:

Costs - Application for costs by interested party - Whether costs should be ordered in favour of interested party - Whether special costs order should be made - Whether relevant item in costs determination is inadequate - Whether inadequacy arises because of unusual difficulty, complexity or importance of matter - Turns on own facts

Legislation:

Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022 (WA)
Legal Profession Uniform Law Application Act 2022 (WA) s 141
Supreme Court Act 1935 (WA) s 37

Result:

Plaintiff to pay interested party's costs of the application

Application for special costs allowed in party

Category: B

Representation:

Counsel:

Plaintiff	:	P Ward
Defendant	:	K de Kerloy & J Parkinson
Interested Party	:	A Oakes

Solicitors:

Plaintiff	:	Squire Patton Boggs
Defendant	:	Kingston Reid
Interested Party	:	Corrs Chambers Westgarth

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

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)
Frigger v Lean [2012] WASCA 66
North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [2023] WASC 73
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2022] WASC 151
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S)

Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd [2009] WASCA 31 (S)

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

On 14 March 2023, I delivered my reasons for decision on the application by the plaintiff for an interlocutory injunction.[39] At that time, orders were made for the parties and the Pilbara Ports Authority (PPA) to file submissions and any affidavits in support of the costs orders they contend should be made.
[39] North West Pilots Pty Ltd as trustee for the Port Hedland Pilots Unit Trust trading as Port Hedland Pilots v Daniel [2023] WASC 73.
The costs order as between the plaintiff and defendant is agreed. Both parties agree that costs should be in the cause, although the defendant has reserved the right to seek a special costs order.
The remaining dispute is between the plaintiff and the PPA, who sought and was granted leave to be heard as an interested party on the application. The plaintiff contended that there should be no order as to the costs of the PPA. In contrast, the PPA sought an order for its costs of the application, as well as a special costs order, both as to the maximum hourly rates and the maximum allowances fixed under the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022 (WA) (Costs Determination). In support of its application, the PPA filed an affidavit of Kirsty Honor Louise Sutherland, the partner with the conduct of the matter at the PPA's solicitors.

General principles

Costs orders

Under s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs. However, the discretion is not unfettered and must be exercised judicially.[40]
[40] Frigger v Lean [2012] WASCA 66 [53].
In Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd,[41] the Court of Appeal summarised the principles that govern the consideration of the awarding of the costs of an intervener in the following terms:
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. 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.

Special costs orders

[41] Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd [2009] WASCA 31 (S) [7] ‑ [9].

Section 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA) gives the court power to make special costs orders. This section is in identical terms to the now repealed s 280 of the Legal Profession Act 2008 (WA). Given the identical language of these provisions, it is my view that the principles that govern the making of special costs orders, which are well established, continue to apply.
There are two questions for the court in considering an application for special costs are:
(a)Is the maximum amount allowable under the applicable costs determination inadequate in the sense that there is a fairly arguable case that, on taxation, costs may properly be allowed in an amount greater than that maximum amount?
(b)Does the inadequacy of the costs allowable under the costs determination arise because of the unusual difficulty, complexity, or importance of the matter?
Each of these questions is addressed as a matter of impression, rather than matters of detailed evaluation, precision, or science.[42]
[42] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) [12].
The effect of s 141(1) of the Legal Profession Uniform Law Application Act 2022 (WA) is to confine the costs recoverable by a successful party to the limits imposed by the relevant Costs Determination then in force. As was noted by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2], in referring to the identical provision in the previous act, this provision is 'protective of the party charged and, more generally, serves the due administration of justice by limiting the allowable scope for legal costs'.[43]
[43] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [11].
In considering whether a party has established there is a fairly arguable case that a greater amount will be allowed on taxation than that which is allowable under the relevant costs determination, it is not sufficient for a party to show that it incurred costs greater than the limit in the costs determination. However, the fact that a party has incurred significantly greater costs in each step of the litigation, when viewed in the context of the difficulty, complexity or importance of the matter, may enable the court to conclude there is a fairly arguable case that each of the items identified is inadequate.[44]
[44] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [14].
The court's discretion on an application for special costs must be exercised judicially as the interests of justice in each case require. As was noted by Quinlan CJ in Sino Iron Pty Ltd v Mineralogy Pty Ltd, the interests of justice include 'the need to keep the costs of litigation generally within reasonable bounds'.[45]
[45] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2022] WASC 151 [20].

Disposition

In considering the PPA's application for costs, I note that the PPA did not seek to become a party to the proceedings on the interlocutory application. In this respect, it did not expose itself to the risk of liability of the plaintiff's costs if an interlocutory injunction had been granted or if a final injunction is granted at trial. I accept that this weighs heavily against the discretion to order that it receive its costs of the application.
However, for the following reasons, I consider that it is appropriate in the particular circumstances of this case that the PHP pay the PPA's costs of the application. 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 the defendant, 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 the defendant. Third, while both the defendant and the PPA opposed the relief sought by the plaintiff, 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 the plaintiff, I did not consider the balance of convenience supported the granting of the injunction. Apart from the personal impact of the proposed injunction on the defendant, the broader issues and the impact of any relief being granted were raised by the PPA and were not grounds on which the defendant could put forward.
I turn then to the application for a special costs order. Table A of the Costs Determination provides for the following rates for practitioners: daily rates for senior counsel of $6,930 and for junior counsel of $4,730. For senior practitioners, the hourly rate is $506, for junior practitioners $374 and for restricted practitioners $319.
The relevant item under the Costs Determination is Item 10(a). This item provides that the limit for proceedings in chambers, based on 2 days' preparation and 1 day hearing is $20,790 where senior counsel is briefed, $14,190 where junior counsel is briefed, $506 for attending a reserve judgment, and $561 for consent orders. No separate allowance is made in the Costs Determination for the preparation of affidavits, preparation of the application for hearing, for senior counsel to be briefed with junior counsel, for the preparation of written submissions, or the attendance at the hearing by instructing solicitors.
The evidence before me is that the PPA has incurred costs exceeding $324,000, excluding the costs of Mr Walker SC who appeared for the PPA on the application.
I accept on the evidence before me that it is fairly arguable that the costs of the application may exceed the applicable limit in the Costs Determination. This is supported by the fact that the hearing of the application was 1.5 days, which is significantly longer than the estimate in Item 10(a).
It is, of course, not sufficient that the PPA will have incurred greater costs than allowable under the Costs Determination. However, in this case, I also accept that the application involved greater complexity than the usual application for an interlocutory injunction and that it was of broad importance not just to the parties but to broader interests including the users of the Port and the State, and that the costs of the application exceeded the limit in the Costs Determination because of these matters.
Ms Sutherland deposes to the seniority of the practitioners and counsel involved in the matter, apart from Mr Walker, and compares their actual charge out rates to the rates that are contained in the Table A of the Costs Determination. For example, Ms Sutherland deposes that Ms Cahill SC (who appeared at the initial directions hearing) charged $715 per hour and Mr Oakes $374 per hour. I note Ms Cahill's rate only slightly exceeds that of the hourly rate of senior counsel and Mr Oakes is within the hourly rate for junior counsel. In respect of the solicitors involved in this matter, the rates of each of the solicitors significantly exceed that provided in the Costs Determination, in one case by almost 100%.
In this case, notwithstanding the evidence that has been filed by Ms Sutherland, it is not possible to reach any conclusion as to what might be an appropriate limit for the costs of the application. In these circumstances, I have concluded that this is an appropriate case to order that the limits imposed by the relevant item in the Costs Determination be removed. It will then be for the taxing officer to consider the reasonableness and the necessity for the work that was undertaken and to make a judgment about the remuneration reasonably required.
In relation to the hourly and daily rates for solicitors and senior counsel for these applications, as has been previously noted by this court, the court does not lift the limit on hourly rates simply because a party chooses to engage lawyers at rates which exceed the scale. As Pullin J said in Flotilla NomineesPty Ltd v Western Australian Land Authority,[46] 'a party is always entitled to the luxury of retaining the highest paid practitioners in the conduct of their case, but they cannot always expect to recover these costs from the other party'.
[46] Flotilla NomineesPty Ltd v Western Australian Land Authority [2003] WASC 122 (S) [22].
In considering the appropriate costs that should be paid by the PHP, it is my view that it is appropriate to allow an uplift of 50% on the rate in the Costs Determination for senior counsel. The evidence before me does not justify an open-ended order. No increase in the rate for junior counsel is required and I am not otherwise persuaded that I should increase the hourly or daily rates for the other practitioners. While I accept that the rates charged significantly exceed the amounts provided in the Costs Determination, in my view this is a commercial decision that has been made by the PPA. I do not consider there is any basis on which this decision should be laid at the feet of the plaintiff, or that they should bear those costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

JN
Associate to the Honourable Justice Hill

22 MARCH 2023