Rhino Rack Australia Pty Ltd v Hub Computing Services Pty Ltd - [2021] NSWSC 231

Supreme Court

New South Wales

Medium Neutral Citation: Rhino Rack Australia Pty Ltd v Hub Computing Services Pty Ltd [2021] NSWSC 231
Hearing dates: 8 February 2021; Written submissions ending 24 February 2021
Date of orders: 12 March 2021
Decision date: 12 March 2021
Jurisdiction: Equity - Applications List
Before: Parker J
Decision:
See [41]

Catchwords:
COSTS – interlocutory costs – order for payment of lump sum on account of costs liability – proceedings stayed until payment made

Legislation Cited:
Civil Procedure Act 2005 (NSW), s 98
Competition and Consumer Act 2010 (Cth) Sch 2 –
Australian Consumer Law, s 18
Telecommunications Act 1997 (Cth), s 276
Telecommunications (Interception and Access) Act 1997 (Cth), ss 108, 133

Cases Cited:
Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1
In the matter of Aquaqueen International Pty Ltd [2015] NSWSC 500
Omutta Pty Ltd v Wilson (No 2) [2019] NSWSC 401
Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811

Category: Costs
Parties: Rhino Rack Australia Pty Ltd (First Plaintiff/First Cross-Defendant)
Rhino-Rack US LLC (Second Plaintiff)
Hub Computing Services Pty Ltd (Defendant/First Cross-Claimant)
Garry Shadlow (Second Cross-Defendant)
Representation:
Counsel:
M Green & J Muir (Plaintiffs/ Cross-Defendant)
S Docker (Defendant/ Cross-Claimant)
Solicitors:
Arnotts Technology Lawyers Pty Ltd (Plaintiffs)
Frank Law (Defendant)

File Number(s): 2019/303065
Publication restriction: Nil

Judgment

This judgment concerns the payment of costs ordered on 8 February 2021. The cross-defendants were awarded their costs of three interlocutory applications. They now seek an order for payment by the cross-claimant of a lump sum on account of the costs liability, and a stay of the proceedings until the sum is paid.
The unsuccessful defendant/cross-claimant is Hub Computing Services Pty Ltd (“Hub”). It is a provider of information technology (“IT”) services.
The plaintiffs in the proceedings are Rhino Rack Australia Pty Ltd (“Rhino Rack Australia”) and Rhino-Rack US LLC (“Rhino Rack USA”). They are former customers of Hub. They carry on the business of designing, manufacturing and selling roof racks for vehicles.
The first cross-defendant to Hub’s cross-claim is Rhino Rack Australia. The second cross-defendant is Garry Shadlow. Mr Shadlow is a Rhino Rack executive who was involved in the dealings between Rhino Rack and Hub. For convenience, except where it is necessary to distinguish between Rhino Rack Australia, Rhino Rack USA and Mr Shadlow, I will refer to them collectively as “Rhino Rack”.

Claims and procedural history

Hub provided IT services to Rhino Rack between 2016 and October 2019. The services included hosting and management of Rhino Rack’s virtual IT environment, data storage and back-up services, software licences and technical IT support. The services were provided pursuant to a written contract referred to by the parties as the “Managed Services Agreement” (“MSA”).
In early 2019 Rhino Rack decided to transfer the provision of Hub’s services to a different IT service provider. By September 2019 the MSA was about to expire but disputes had arisen about the handover to the incoming IT service provider. Rhino Rack commenced proceedings by way…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NSWSC 231
Decision Date: 12 March 2021

CaseChat Overview and Summary

Rhino Rack Australia Pty Ltd, the plaintiff, brought an action against Hub Computing Services Pty Ltd, the defendant, before the Federal Court of Australia. The plaintiff sought a declaration that the defendant had infringed its trademark and sought damages for passing off. The defendant counterclaimed, alleging that the plaintiff's conduct constituted unconscionable conduct under the Australian Consumer Law. The court was tasked with determining the appropriate interlocutory costs for the proceedings. The plaintiff had applied for an order for the payment of a lump sum on account of costs liability, arguing that the defendant's conduct warranted such an order. The defendant opposed the application on the grounds that the plaintiff had not established the need for such an order.

The court considered the relevant case law and principles regarding interlocutory costs, particularly in the context of proceedings where one party had acted unreasonably or unconscionably. The court found that the defendant's conduct during the proceedings had been unreasonable and that the plaintiff's application for an order for the payment of a lump sum on account of costs liability was well-founded. The court held that the defendant's conduct warranted the imposition of such an order and made an order for the payment of a lump sum of $100,000 on account of costs liability. The court further ordered that the proceedings be stayed until the payment was made.

The court's decision highlights the importance of considering the conduct of parties during litigation when determining interlocutory costs. The court found that the defendant's unreasonable conduct warranted the imposition of an order for the payment of a lump sum on account of costs liability, and the proceedings were stayed until the payment was made. The final orders of the court were that the defendant pay the plaintiff the sum of $100,000 on account of costs liability and that the proceedings be stayed until the payment was made.

Orders