PlayUp Limited v Mintas (No 2)

Case [2023] FCA 52

FEDERAL COURT OF AUSTRALIA

PlayUp Limited v Mintas (No 2) [2023] FCA 52  

File number: NSD 1247 of 2021
Judgment of: MARKOVIC J
Date of judgment: 3 February 2023
Catchwords: COSTS – application for indemnity costs – whether the defendant’s rejection of an offer was unreasonable – application dismissed
Legislation:

Federal Court of Australia Act 1976 (Cth), s 43

Federal Court Rules 2011 (Cth) rr 39.05(c), 40.02, 40.13

Cases cited:

Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112

Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 4) [2013] FCA 318

Calderbank v Calderbank [1975] 3 All ER 333

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; 81 ALR 397

LFDB v Ms S M (No 2) [2018] FCA 2062

Luo v Zhai (No 6) [2016] FCA 805

Mahony v El Bayeh (No 2) [2017] NSWSC 325

Quach v Health Care Complaints Commission (No 2) [2015] NSWCA 311
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 50
Date of last submissions  16 November 2022 (Plaintiff)
30 November 2022 (Defendant)
Date of hearing: Determined on the papers
Counsel for the Plaintiff: Ms S Mirzabegian SC with Ms K Sutton
Solicitor for the Plaintiff: Herbert Smith Freehills
Counsel for the Defendant: Ms Z M Hillman
Solicitor for the Defendant  Clyde & Co

ORDERS

NSD 1247 of 2021
BETWEEN:

PLAYUP LIMITED ACN 612 529 307

Plaintiff
AND:

DR LAILA MINTAS

Defendant

ORDER MADE BY:

MARKOVIC J

DATE OF ORDER:

3 FEBRUARY 2023

THE COURT ORDERS THAT:

1.The plaintiff’s interlocutory application filed on 30 September 2022 (Costs Application) be dismissed.

2.The plaintiff pay the defendant’s costs of the Costs Application as agreed or taxed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

MARKOVIC J:

  1. On 1 December 2021 the plaintiff, PlayUp Limited, commenced this proceeding against the defendant, Dr Laila Mintas, by the filing of an originating application. 

  2. On 2 March 2022 Dr Mintas filed an interlocutory application seeking orders that the proceeding be summarily dismissed or stayed on the basis that “there is a parallel proceeding in the District Court of Nevada such that this Court is not the proper forum for the proceeding” (Stay Application).

  3. On 3 August 2022 I made orders (August Orders) dismissing the Stay Application and requiring Dr Mintas to pay PlayUp’s costs of that application: see PlayUp Limited v Mintas [2022] FCA 892 (PlayUp v Mintas).

  4. On 30 September 2022 PlayUp filed an interlocutory application in which it seeks the following orders:

    1. Pursuant to section 43 of the Federal Court of Australia Act 1976 (Cth) and r 40.02 of the Federal Court Rules 2011,…

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Details
AGLC
PlayUp Limited v Mintas (No 2) [2023] FCA 52
Case
[2023] FCA 52
Decision Date

CaseChat Overview and Summary

In the matter of PlayUp Limited v Mintas, the court addressed an application by PlayUp for indemnity costs following the rejection of a settlement offer by Dr Mintas. The proceedings originated from PlayUp's claims against Dr Mintas, who was previously employed by PlayUp US, a subsidiary of PlayUp. The Federal Court was tasked with deciding whether the rejection of PlayUp's offer was unreasonable, warranting an indemnity costs order against Dr Mintas.

The court examined the circumstances under which PlayUp proposed a settlement offer to Dr Mintas, which included a waiver of costs if Dr Mintas withdrew her interlocutory application. The offer was contingent on Dr Mintas agreeing to withdraw her application by a specified deadline. The court assessed whether the rejection of this offer was unreasonable, considering factors such as the merits of the case, the timing of the offer, and the conduct of the parties. The court concluded that the offer was reasonable and that Dr Mintas' rejection was indeed unreasonable. However, despite finding the rejection unreasonable, the court decided that the appropriate course was to determine the indemnity costs question at the conclusion of the proceeding.

Accordingly, the court dismissed the application for indemnity costs, finding that PlayUp had not succeeded in its application. As a result, PlayUp was ordered to pay Dr Mintas' costs of the Costs Application, either as agreed or taxed. The court's decision underscores the importance of considering the broader context and timing of settlement offers in determining the reasonableness of their rejection.

Orders

Orders of the court

1. The plaintiff’s interlocutory application filed on 30 September 2022 (Costs Application) be dismissed.

2. The plaintiff pay the defendant’s costs of the Costs Application as agreed or taxed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The parties agreed that the Costs Application could be determined on the papers without the need for an oral hearing. For the reasons set out below, the Costs Application should be dismissed. BACKGROUND PlayUp is an unlisted public company incorporated in Australia with subsidiaries in multiple countries around the world including the United States. PlayUp Inc (PlayUp US) is a wholly owned subsidiary of PlayUp. Dr Mintas was employed as chief executive officer of PlayUp US pursuant to a contract of employment between her and PlayUp US dated 30 November 2019, as varied by a subsequent contract of employment on or about 30 September 2020 (together, Employment Agreement). The Employment Agreement expired on 30 November 2021. Dr Mintas entered into negotiations with PlayUp US about the renewal of the Employment Agreement. Those negotiations were unsuccessful. On 30 November 2021 PlayUp US commenced case no. 2:21-cv-02129-GMN-NJK in the United States District Court, District of Nevada against Dr Mintas as defendant (US Proceeding). PlayUp US made a number of claims in the US Proceeding including that Dr Mintas breached the Employment Agreement, breached fiduciary duties and violated Nevada Uniform Trade Secrets Law. A summary of the US Proceeding appears at [42]-[59] of PlayUp v Mintas. As set out at [1] above, PlayUp commenced this proceeding against Dr Mintas on 1 December 2021. On that day, on the ex parte application of PlayUp, the Court made interim orders pursuant to subs 1324(1)(a) and (4) of the Corporations Act 2001 (Cth) restraining Dr Mintas, her servants and agents from publishing false or disparaging information about, or making false or disparaging statements to certain persons or entities in connection with PlayUp, until further order. On 3 February 2022 PlayUp filed an amended originating application and statement of claim. In its amended originating application PlayUp seeks additional relief including declarations of contravention of ss 181, 182 and 183 of the Corporations Act and compensation pursuant to s 1317H of the Corporations Act in relation to those alleged contraventions. As set out at [2] above, Dr Mintas filed the Stay Application on 2 March 2022. The Stay Application was listed for hearing on 10 May 2022. On 3 May 2022 PlayUp, through its solicitors, sent an email to Dr Mintas (Offer). That email provided: Dear Dr MintasWe refer to PlayUp Ltd’s submissions and affidavits filed in response to your Interlocutory Application dated 14 April 2022 (sic) in the above Federal Court proceedings.BackgroundAs set out in PlayUp Ltd’s submissions, PlayUp Ltd is of the view that:•PlayUp Ltd has brought the Federal Court proceeding against you in your capacity as a former director of PlayUp Ltd;•PlayUp Ltd’s claims and the relief it is seeking arises from statutory and fiduciary duties under Australian law that you owed to PlayUp Ltd (an Australian company);•there are serious questions of fact to be tried regarding your conduct as a director of PlayUp Ltd; and•in contrast, the Nevada proceedings relate to your position as a former employee of PlayUp Inc (a US incorporated company) and claims arising from an employment agreement between you and PlayUp Inc (which PlayUp Ltd was not a party to).Based on those matters, PlayUp Ltd’s position is that:•its claim is not bound to fail and should therefore not be summarily dismissed; and•the appropriate jurisdiction to hear its claims is the Australian Federal Court.PlayUp Ltd’s submissions stated that your Interlocutory Application should be dismissed “with costs”. That means that if you are unsuccessful in your Interlocutory Application, PlayUp Ltd will seek orders that you pay the legal costs that PlayUp Ltd has spent in responding to your application.General costs position in AustraliaGiven you are self-represented in these proceedings, we outline below the general costs position in Australia. However, nothing in this communication constitutes or should be construed as legal advice. You may wish to seek legal advice in relation to the matters raised in this communication.Australian courts, including the Federal Court, operate on the general principle that costs follow the event (i.e. the unsuccessful party is typically required to pay the successful party’s legal costs).Such costs orders are ordinarily made on a party/party basis (being an amount that the Court or a costs assessor has assessed as being fair and reasonable rather than the actual costs incurred). However, in certain circumstances Australian courts may order the unsuccessful party to pay costs on an indemnity basis (being a much higher proportion of the legal costs and which could amount to all of the actual legal costs incurred).PlayUp’s costs responding to your Interlocutory ApplicationPlayUp Ltd has already incurred significant legal costs in responding to your Interlocutory Application. We expect that PlayUp Ltd will incur further costs in preparing for and attending the hearing of your Application.In order to avoid PlayUp Ltd expending further unnecessary costs, PlayUp Ltd offers to agree not to seek a costs order against you for the legal costs it has already incurred if you agree to withdraw your Interlocutory Application. This offer remains open for acceptance until 5:00pm AEST on Friday 6 May 2022.If this offer is not accepted and you fail to obtain a better outcome on the costs of the Interlocutory Application than what is offered by PlayUp Ltd above, PlayUp Ltd will rely on this correspondence to seek a costs order against you on an indemnity basis. In doing so, PlayUp Ltd may present this communication to the Court as evidence that you did not accept a reasonable settlement offer. Further, in those circumstances, PlayUp Ltd will also take all steps available to it to obtain an order from the Court requiring you to pay PlayUp Ltd’s costs in responding to the Interlocutory Application.In the meantime, this offer is made on the basis that it is “without prejudice save as to costs”. The consequence of this is that the offer is confidential between the parties. You should therefore not disclose it in the court proceedings.(Emphasis in original.)

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The appropriate course is to determine the question of whether PlayUp’s costs should be paid in a lump sum, if that question remains, at the conclusion of the proceeding. CONCLUSION For these reasons the Costs Application should be dismissed. As PlayUp has been unsuccessful, it should pay Dr Mintas’ costs of the Costs Application as agreed or taxed. I will make orders accordingly.

Ratio Decidendi

Legal Principle Established

As set out at [1] above, PlayUp commenced this proceeding against Dr Mintas on 1 December 2021. On that day, on the ex parte application of PlayUp, the Court made interim orders pursuant to subs 1324(1)(a) and (4) of the Corporations Act 2001 (Cth) restraining Dr Mintas, her servants and agents from publishing false or disparaging information about, or making false or disparaging statements to certain persons or entities in connection with PlayUp, until further order. On 3 February 2022 PlayUp filed an amended originating application and statement of claim. In its amended originating application PlayUp seeks additional relief including declarations of contravention of ss 181, 182 and 183 of the Corporations Act and compensation pursuant to s 1317H of the Corporations Act in relation to those alleged contraventions. As set out at [2] above, Dr Mintas filed the Stay Application on 2 March 2022. The Stay Application was listed for hearing on 10 May 2022. On 3 May 2022 PlayUp, through its solicitors, sent an email to Dr Mintas (Offer). That email provided: Dear Dr MintasWe refer to PlayUp Ltd’s submissions and affidavits filed in response to your Interlocutory Application dated 14 April 2022 (sic) in the above Federal Court proceedings.BackgroundAs set out in PlayUp Ltd’s submissions, PlayUp Ltd is of the view that:•PlayUp Ltd has brought the Federal Court proceeding against you in your capacity as a former director of PlayUp Ltd;•PlayUp Ltd’s claims and the relief it is seeking arises from statutory and fiduciary duties under Australian law that you owed to PlayUp Ltd (an Australian company);•there are serious questions of fact to be tried regarding your conduct as a director of PlayUp Ltd; and•in contrast, the Nevada proceedings relate to your position as a former employee of PlayUp Inc (a US incorporated company) and claims arising from an employment agreement between you and PlayUp Inc (which PlayUp Ltd was not a party to).Based on those matters, PlayUp Ltd’s position is that:•its claim is not bound to fail and should therefore not be summarily dismissed; and•the appropriate jurisdiction to hear its claims is the Australian Federal Court.PlayUp Ltd’s submissions stated that your Interlocutory Application should be dismissed “with costs”. That means that if you are unsuccessful in your Interlocutory Application, PlayUp Ltd will seek orders that you pay the legal costs that PlayUp Ltd has spent in responding to your application.General costs position in AustraliaGiven you are self-represented in these proceedings, we outline below the general costs position in Australia. However, nothing in this communication constitutes or should be construed as legal advice. You may wish to seek legal advice in relation to the matters raised in this communication.Australian courts, including the Federal Court, operate on the general principle that costs follow the event (i.e. the unsuccessful party is typically required to pay the successful party’s legal costs).Such costs orders are ordinarily made on a party/party basis (being an amount that the Court or a costs assessor has assessed as being fair and reasonable rather than the actual costs incurred). However, in certain circumstances Australian courts may order the unsuccessful party to pay costs on an indemnity basis (being a much higher proportion of the legal costs and which could amount to all of the actual legal costs incurred).PlayUp’s costs responding to your Interlocutory ApplicationPlayUp Ltd has already incurred significant legal costs in responding to your Interlocutory Application. We expect that PlayUp Ltd will incur further costs in preparing for and attending the hearing of your Application.In order to avoid PlayUp Ltd expending further unnecessary costs, PlayUp Ltd offers to agree not to seek a costs order against you for the legal costs it has already incurred if you agree to withdraw your Interlocutory Application. This offer remains open for acceptance until 5:00pm AEST on Friday 6 May 2022.If this offer is not accepted and you fail to obtain a better outcome on the costs of the Interlocutory Application than what is offered by PlayUp Ltd above, PlayUp Ltd will rely on this correspondence to seek a costs order against you on an indemnity basis. In doing so, PlayUp Ltd may present this communication to the Court as evidence that you did not accept a reasonable settlement offer. Further, in those circumstances, PlayUp Ltd will also take all steps available to it to obtain an order from the Court requiring you to pay PlayUp Ltd’s costs in responding to the Interlocutory Application.In the meantime, this offer is made on the basis that it is “without prejudice save as to costs”. The consequence of this is that the offer is confidential between the parties. You should therefore not disclose it in the court proceedings.(Emphasis in original.)