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
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 [No 2] [2023] WASC 98
CORAM: HILL J
HEARD: 24 MARCH 2023
DELIVERED : 28 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 - Application by interested party to be joined as defendant - Whether joinder of interested party is necessary to determine all matters in dispute - Whether the interested party's legal interests will be directly affected by any order which might be made in these proceedings - Turns on own facts
Legislation:
Rules of Supreme Court 1971 (WA) O 18, r 6
Result:
Application allowed
Category: B
Representation:
Counsel:
| Plaintiff | : | P Ward |
| Defendant | : | No appearance |
| Interested Party | : | B Walker SC & A Oakes |
Solicitors:
| Plaintiff | : | Squire Patton Boggs |
| Defendant | : | Kingston Reid |
| Interested Party | : | Corrs Chambers Westgarth |
Case(s) referred to in decision(s):
China First Pty Ltd v Mount Isa Mines [2018] QCA 350; [2019] 3 Qd R 173
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1
Ooranya Pty Ltd v ISPT Pty Ltd [No 2] [2019] WASC 453
Qantas Airways Pty Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34
Trans Petroleum (Australia) Pty Ltd v United Petroleum (WA) Pty Ltd [No 2] [2022] WASC 460
Wurth Australia Pty Ltd v Burgess [2012] WASC 504
HILL J:
On 20 March 2023, the Pilbara Ports Authority (PPA) applied to be joined as a defendant to these proceedings pursuant to O 18 r 6(2)(b) of the Rules of the Supreme Court 1971 (WA) (Rules). The PPA says that it is a necessary party to these proceedings as its rights against and liabilities to the plaintiff are directly affected by the proceedings.
The PPA's application for joinder was opposed by the plaintiff (PHP) on the basis that no legal interest of the PPA was affected by the orders sought or the outcome of the litigation.
For the reasons that follow, it is my view that the PPA should be joined as a defendant to the proceedings.
Given the view I expressed in relation to the application by PHP for an interlocutory injunction that this matter should be listed for an urgent trial, there is a degree of urgency in delivering my decision in this matter. For this reason, while at the conclusion of the hearing I reserved my decision, it was necessary for me to make orders on the application prior to the next case management hearing which is listed for 28 March 2023. These reasons should be read in light of that urgency.
PHP's pleaded case
On 10 February 2023, PHP filed its statement of claim in the proceedings against Captain Daniel. In its pleading, PHP refers to three contracts: first, an employment contract between Captain Daniel and PHP dated 1 February 2017;[1] second, a Pilot Services Contract between PHP and the PPA dated 5 February 2018 (Pilot Services Contract);[2] and third, an employment contract between Captain Daniel and the PPA.[3]
[1] Statement of Claim [4(a)(iv)].
[2] Statement of Claim [1(e)].
[3] Statement of Claim [13].
The basis for the plaintiff's claim against Captain Daniel is that, in taking up employment with the PPA, Captain Daniel has breached a number of duties he owed to PHP including contractual duties, fiduciary duties, an equitable duty of confidentiality, as well as the duties imposed on him by ss 181, 182 and 183 of the Corporations Act 2001 (Cth).
In relation to the Pilot Services Contract, the statement of claim pleads that:
(a)pursuant to cl 2.1 of the Pilot Services Contract, PHP is the sole provider of 'Pilotage Services' within the pilotage limits of the Port of Port Hedland (Port) for the term of this contract;[4]
(b)for the purposes of providing marine pilotage services to the PPA under the pilot services contract, PHP has developed trade secrets;[5]
(c)various disputes have arisen between PHP and the PPA in connection with the Pilot Services Contract;[6]
(d)notwithstanding the terms of the Pilot Services Contract which require PHP to be the sole provider of Pilotage Services, PPA, through Captain Daniel, has begun training pilots to be qualified to provide pilotage in the Port.[7]
[4] Statement of Claim [2].
[5] Statement of Claim [3].
[6] Statement of Claim [8].
[7] Statement of Claim [16].
The statement of claim pleads that Captain Daniel has provided Marine Pilotage Services to PPA within the Port.[8] Particulars of this allegation are provided including that each of the matters particularised is 'in violation of PHP's rights including under cl 2.1 of the Pilot Services Contract to be the sole provider' of Pilotage Services to the PPA.[9]
[8] Statement of Claim [17].
[9] Statement of Claim [17], particulars (i) to (x).
PHP contends that Captain Daniel has assisted the PPA to further its position in respect of the dispute between PHP and the PPA,[10] and that as a result of this conduct, the PPA is now in competition with PHP.[11]
[10] Statement of Claim [18].
[11] Statement of Claim [19].
PHP pleads that, as a result of Captain Daniel's conduct, it has suffered loss and damage.[12] The particulars of loss and damage include the loss or impairment 'of the right to be the sole provider of pilotage services to PPA' in the Port.[13]
[12] Statement of Claim [27].
[13] Statement of Claim [27], particular (xiv).
PHP seeks both mandatory and prohibitory injunctions against Captain Daniel. These include orders preventing Captain Daniel from providing Marine Pilotage Services to the PPA for the term of the Pilot Services Contract,[14] and orders restraining Captain Daniel from assisting the PPA or participating on behalf of the PPA in screening trainees or candidates for training as pilots, creating a recruitment, training or assessment program, or developing systems or procedures for the PPA.
[14] Relief (b).
I note that each of these paragraphs is either not admitted or is denied by Captain Daniel. As a consequence, PHP will be required to prove each of these matters at trial.
Legal principles
Order 18 r 6(2)(b) of the Rules provides that:
(2)At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application -
…
(b)order that any person who ought to have been joined as a party or whose presence before the court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party,
but no person shall be added as a plaintiff without his consent signed in writing or in such other manner as may be authorised.
In this case, the PPA's primary contention is that it is a party whose presence before the court is necessary to ensure all matters in dispute may be effectually and completely determined.[15]
[15] PPA's submissions [2].
In Wurth Australia Pty Ltd v Burgess, Corboy J summarised the principles that apply to an application under O 18 r 6(2)(b) of the Rules in the following terms:[16]
[16] Wurth Australia Pty Ltd v Burgess [2012] WASC 504 [57]; Ooranya Pty Ltd v ISPT Pty Ltd [No 2] [2019] WASC 453 [44] (Kenneth Martin J); Trans Petroleum (Australia) Pty Ltd v United Petroleum (WA) Pty Ltd [No 2] [2022] WASC 460 [114] ‑ [115].
I consider the following propositions to be relevant to the determination of an application made pursuant to O 18 r 6(2)(b):
(a)The rule is designed to avoid unnecessary technicality so that the parties may litigate the real issues between them in an expeditious, efficient and cost effective way. Consequently, the phrase 'all matters in dispute' should be given a beneficial interpretation. The phrase should be afforded the widest interpretation that the language of the rule will permit.
(b)Further, the phrase gives the rule an 'elastic' application. The rule is not to be construed so that the matters in dispute are limited to matters arising on the existing pleadings. The disputed matters for the purpose of the rule may include disputed issues of fact that are 'subjacent' to the pleadings.
(c)In Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357, Devlin J observed that the expression 'the cause or matter' in the then equivalent English rule referred to the action 'as it stands between the existing parties' - '[i]f it were otherwise, then anybody who showed a cause of action against either a plaintiff or defendant could, of course, say that the question involved in his cause of action could not be settled unless he was made a party' (369; see also, at 378). Similarly, Adams J in Birtles v Commonwealth of Australia [1960] VR 247 held that the reference to 'cause' in the then equivalent Victorian rule referred to the existing cause or matter against the original defendant (251).
(d)Although O 18 r 6(2) is to be interpreted beneficially, the test imposed by the rule is necessity; a party cannot be joined merely because it is thought to be just or convenient.
(e)The rule requires the court to consider whether the proposed parties' rights against or liabilities to any existing party in respect of the subject matter of the action will be directly affected by any order that may be made in the action. In a passage that was cited with approval in Homestyle and more recently by the Court of Appeal in Cheng Chih Tiao v Sheng Chin Lai [No 2] [2010] WASCA 189, the Full Court of the Federal Court in News Ltd v Australian Rugby Football League observed, in relation to the test identified by the Privy Council in Pegang Mining, that (525):
'The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 at 322 per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non‑parties can be characterised as only indirect or consequential.'
(f)The focus in considering an application to join a defendant is on the rights and liabilities of the proposed defendant and not on 'some looser concept of "interests"'. An order that directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party. Consequently:
'Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties.' (citations omitted)
In considering whether it is necessary to join a party, the question to be answered is not whether it is just or convenient to join the proposed additional defendant but whether, if the proposed additional defendant is not added as a party to these proceedings, its rights will be directly affected by any order which may be made in the action as presently constituted.[17]
[17] Trans Petroleum (Australia) Pty Ltd v United Petroleum (WA) Pty Ltd [No 2] [116].
It is also relevant to consider whether it is the plaintiff seeking to add a defendant or whether a third party is seeking to intervene over the opposition of the plaintiff. Where the application is made by a prospective defendant which is opposed by the plaintiff, it is necessary to judge whether the new defendant should be added to the proceedings as currently pleaded by the plaintiff.[18]
[18] Qantas Airways Pty Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34, 38 (Glass JA).
In China First Pty Ltd v Mount Isa Mines,[19] the Queensland Court of Appeal considered an application for certain orders to be set aside after trial and for parties to be joined as respondents to the appeal. In that case, Mount Isa Mines (MIM) had granted a licence to Queensland Nickel Pty Ltd (QNI) permitting it to use a licensed area at the Port of Townsville. The licence agreement had been terminated but QNI had not removed its equipment from the licensed area. MIM commenced proceedings seeking a declaration that it could remove and sell the equipment if it had not been removed within 35 days. The applicants were parties to a charge agreement over which QNI had granted a fixed and floating charge over all of its equipment to secure the payment of money.
[19] China First Pty Ltd v Mount Isa Mines [2018] QCA 350; [2019] 3 Qd R 173.
After considering the authorities on joinder, Gotterson JA summarised the position in the following terms at [60]:
These cases reveal a systematic approach taken by courts to the determination of whether orders made or sought have had, or if made, will have, a direct effect on a legal right or liability. That approach has involved an identification of the specific legal right or liability said to have been affected or liable to be affected, and an assessment of its legal characteristics. Next, the court has inquired into whether the right or liability itself has been affected, or is liable to be affected. Typically, the inquiry has sought to establish whether there is an effect on the existence of the right or liability or on its legal characteristics; or whether there is an effect on the legal environment in which the right might be exercised or the liability discharged, such as would impact upon its exercise or discharge from a legal perspective. An effect of either kind has been regarded by courts as a direct effect on the right or liability for the purposes of the test.
Parties' submissions
Senior counsel for the PPA submitted that the PPA was a necessary party to these proceedings for four primary reasons. First, in determining the dispute between PHP and Captain Daniel, it will be necessary for the court to consider the proper construction of the Pilot Services Contract and that, as a matter of natural justice, the PPA should be heard on this issue.
Second, the claim concerns information which is said to be a trade secret which is 'critical to the safe and efficient operation' of the Port. As the statutory body responsible for the control and management of the Port, any decision on whether these matters constitute a trade secret directly affects the PPA's legal rights.
Third, the claims against Captain Daniel rely on a series of interactions between Captain Daniel and the PPA and assert these constitute a breach of Captain Daniel's fiduciary duties. In these circumstances, any finding may reflect on the PPA. Given the relief sought by the plaintiff is a discretionary remedy, the court may consider these orders cannot be made in the absence of the PPA.
Fourth, the relief sought by PHP may impact the PPA's ability to fulfil its statutory functions and obligations.
In its written submissions, the PPA indicated that if joined to the proceedings, its present intention is to seek declaratory relief in relation to a number of the provisions of the Pilot Services Contract by way of counterclaim.
PHP denied the PPA had a 'necessary interest' in the matters the subject of the proceeding which required the PPA to be joined to these proceedings. Counsel for PHP emphasised that the rules allowing joinder did not mean that 'all matters in any way connected to the dispute' should be dealt with in the same proceedings. Counsel for PHP denied any legal interest of the PPA was affected by the outcome of this litigation and emphasised that the only remedies sought in these proceedings were personal remedies against the defendant. On this basis, it was contended that previous authorities, such as John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd,[20] could be distinguished.
[20] John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1.
Counsel for PHP denied that any orders sought by PHP impacted on the existence of the obligations under its agreement with the PPA, under PPA's agreement with Captain Daniel, or the legal characteristics of either contract.
Disposition
In considering whether the PPA is directly affected by the proceedings, it is necessary to consider the relief sought against Captain Daniel rather than the statement of claim. This is because it is only the orders that might be made by the court that could have any impact on the rights of the PPA.
In this case, the orders sought against Captain Daniel seek to restrain what Captain Daniel can and cannot do as an employee of the PPA. In my view, the orders sought by PHP could have an effect on the legal environment in which the rights of the PPA, under its contract with Captain Daniel, can be exercised. I also accept that the scope of the tasks that Captain Daniel can perform in the course of his employment with the PPA is likely to be of fundamental importance to the PPA. For these reasons, it is my view that the orders sought by PHP have a direct impact on the PPA.
In addition, PHP raises squarely for determination in these proceedings the question as to whether, under the Pilot Services Contract, PHP is entitled to be the sole provider of marine pilotage services to the PPA. Any orders that are made by the court as to the content of this obligation, in the context of what Captain Daniel can and cannot do, will also impact the PPA. I do not accept that these are indirect impacts on the PPA or its rights under its contract with Captain Daniel or the Pilot Services Contract. In my view, the orders sought by PHP against Captain Daniel affect the rights and obligations of the PPA in a direct and substantial way.
PHP submitted that, in this case, there was no challenge to the validity of the Pilot Services Contract nor the contract between the PPA and Captain Daniel, 'nor is there any need for the Court to construe either of those contracts'. For two primary reasons, I do not accept this submission.
First, the statement of claim pleads that PHP is entitled to be the sole provider of Pilotage Services under the Pilot Services Contract. This will necessarily require the court to construe this contract. Second, if PHP is successful in its claim against Captain Daniel, in order to assess what, if any, loss PHP had suffered, it will be necessary to consider whether PHP is, under the Pilot Services Contract, the sole provider of pilotage services to the PPA and whether Captain Daniel's conduct has impaired that right. This will also necessarily require findings being made as to the proper construction of the Pilot Services Contract.
Counsel for PHP submitted that any findings on the Pilot Services Contract would not bind the PPA in their absence, and that this was not a sufficient reason to order joinder. It was not in dispute that any findings made in these proceedings would not bind the PPA unless it was joined as a defendant. However, this is not, in my view, a complete or sufficient answer to the application by the PPA to be joined to the proceedings. In my view, consistent with requirement that this dispute be effectually and completely determined and adjudicated upon, I consider that the PPA has an entitlement to be heard on the proper construction of the terms of the Pilot Services Contract raised by PHP.
For these reasons, I consider that the PPA should be joined as a defendant to these proceedings.
Finally, it is necessary to deal with one additional matter. 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 1985 (WA).
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 the 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.
Conclusion and orders
For the reasons set out above, it is my view that the PPA's application to be joined as the second defendant to these proceedings should be allowed. My preliminary view is that the appropriate costs order should be the PPA's costs in the cause but will hear from the parties prior to making any orders.
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
28 MARCH 2023
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