Road Transport Historical Society Incorporated v Martin (No 2)

[2021] SADC 62

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil: Interlocutory Application)

ROAD TRANSPORT HISTORICAL SOCIETY INCORPORATED v MARTIN (No 2)

[2021] SADC 62

Judgment of his Honour Judge Burnett  

31 May 2021

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DETENTION, INSPECTION AND PRESERVATION - SEARCH ORDERS

COURTS AND JUDGES - CONTEMPT - PARTICULAR CONTEMPTS - BREACH OF UNDERTAKING TO COURT

PROCEDURE - STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY - DECLARATIONS - APPROPRIATE FORM OF RELIEF - DISCRETION OF COURT

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - RECOVERY OF COSTS - ENTITLEMENT

Both the applicant and the respondent have made a number of applications arising out of a search order obtained by the applicant on 20 March 2020 and which was executed on 23 March 2020 and the 24 March 2020 (the Search Order). By an interlocutory application dated 26 June 2020, the respondent sought orders setting aside or discharging the Search Order, the dismissal of the proceedings and an order for costs, including costs on an indemnity basis, in relation to the Search Order and the proceedings. The respondent sought the above orders on the following grounds:

1.  Full disclosure had not been made by the applicant when seeking the Search Order, both in relation to the evidence that was adduced at the hearing when the Search Order was made, but also in relation to the identification of the cause of action relied upon for the Search Order, the satisfaction of the requirements for a search order and the disclosure of less intrusive alternatives to the Search Order.

2.  The terms of the Search Order were too broad in that the applicant was only seeking financial and accounting records. Further, the Order was too widely drawn in permitting documents to be taken which the applicant reasonably believed to be the property of the applicant.

3.  Upon the execution of the Search Order, documents were taken which were outside the terms of the Order in that personal documents of the respondent were taken.

4.  The applicant’s solicitors did not comply with the undertaking that they gave when obtaining the Search Order, namely that it would provide to the independent solicitor for service on the respondent a copy of the transcript or if there was no transcript a note of any exclusive oral submissions made at the hearing when the Search Order was obtained.

By an interlocutory application dated 22 September 2020 which it expressed as being for summary judgement, the applicant sought payment of the costs that it had incurred in the proceedings and further sought a declaration that the documents seized during the execution of the Search Order were its property.

Held:

1. The applicant’s claim for a declaration is dismissed. There is no utility in making the declaration and there is no real controversy between the parties. The respondent was not asserting and had disclaimed any interest in the documents and was not seeking the return of any documents. There was no extant controversy between the parties. On the summary judgment application, the applicant had not established that all of the documents that were seized during the execution of the search order were its property. A declaration is usually made following a trial, however there may be circumstances where it is appropriate to make a declaration so that a plaintiff may achieve the fullest justice to which they are entitled: Patten v Burke Publishing Co Ltd [1991] 2 All ER 821 applied.

2. The respondent’s application to discharge or set aside the Search Order is dismissed.

3.The duty of non-disclosure extends to squarely putting the other side’s case: Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 applied. The applicant did not fail to disclose material documents or its cause of action. The applicant did fail to refer to less intrusive alternatives to the Search Order such as delivery up of specific documents: Long v Specifier Publications Pty Ltd [1998] 44 NSWLR 545 applied.

4.The Search Order was too broad in that it extended to documents beyond the financial and accounting records of the applicant.

5.In the execution of the Search Order, the applicant failed to comply with an undertaking given by its solicitors to provide a copy of the transcript of the hearing when the Search Order was made to the independent solicitor for service on the respondent.  The failure to comply with the undertaking was inadvertent. It caused the respondent to misapprehend the nature of the claim against her. However, the failure to provide the transcript did not cause the respondent any damage or to pursue any different action in the proceedings: Gill v Flightwise Travel Service Ltd [2003] EWHC (Ch) 3082 applied.

6.However, because of the delay in making the application to set aside the Search Order, the lack of utility in making such an order and the lack of any causative effect of the breach of undertaking, in the exercise of its discretion, the Court declines to set aside the Search Order: JC Techforce Pty Ltd v Pearce (1996) 138 ALR 522 applied.

7.The respondent’s application to dismiss the proceedings is dismissed as there is an extant issue relating to electronic data downloaded from the computer during the execution of the Search Order.

8.The applicant’s application for the costs of the proceedings or the costs of the Search Order is dismissed. There had been no determination of the proceedings on the merits. It cannot be said that the applicant would have succeeded in the matter if the proceedings had been fully tried.  The parties had not joined issue on the pleadings. The applicant was not entitled to costs in relation to the Search Order, because of its failure to comply with the undertaking, the excessive width of the Search Order and the failure to address less intrusive alternatives.

9.The respondent’s application for the costs of the Search Order is dismissed. The parties had worked co-operatively to resolve issues relating to the Search Order. The lack of causative effect of the breach of the undertaking and the need to do justice between the parties, means that the failure to comply with the undertaking does not justify penalising the applicant and ordering costs in favour of the respondent. The other failures of the applicant, in relation to the width of the order and the failure to address less intrusive measures were not causative of any loss or prejudice to the respondent.

Associations Act 2003 (NT) s 78, 79, 93(2); District Court Civil Rules 2006 (SA) r 148(3); District Court Act 1991 (SA) s 37, referred to.

Patten v Burke Publishing Co Ltd [1991] 2 All ER 821; Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955; Long v Specifier Publications Pty Ltd [1998] 44 NSWLR 545; Gill v Flightwise Travel Service Ltd [2003] EWHC (Ch) 3082; JC Techforce Pty Ltd v Pearce (1996) 138 ALR 522, applied.

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; Ainsworth v Criminal Justice Commission (1991-1992) 175 CLR 564; Thermax Limited v Schott Industrial Glass Limited [1981] FSR 289; Lane v Channel 7 Adelaide Pty Ltd [2004] SASC 47; Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350; Behbehani v Salem [1989] 1 WLR 723; Adara Acquisitions Pty Ltd v Deal Corporation (Knox) Pty Ltd [2018] VSC 831; Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591; EFG Australia Ltd v Kennedy [1995] NSWSC 58; Columbia Picture Industries Inc v Robinson [1987] 1 Ch 38; CT Sheet Metal Works Pty Ltd v Hutchinson [2012] FCA 17; (2012) 201 FCR 275; Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98; Tate Access Floors Inc v Boswell [1991] Ch 512 ; ABC v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284; Golden City Car & Truck Centre Pty Ltd v Deputy Commissioner of Taxation [2000] FCA 1697; Thomson v Mosman Council [1999] NSWLEC 86, considered.

ROAD TRANSPORT HISTORICAL SOCIETY INCORPORATED v MARTIN (No 2)
[2021] SADC 62

Civil

Introduction

1. Both the applicant and the respondent have made various applications arising out of a search order that I made on 20 March 2020 and which was executed on 23 March 2020 and 24 March 2020 at Port Pirie (the Search Order).  Both parties are seeking the costs of the proceedings or their costs of and incidental to the Search Order, including in relation to a number of further hearings which dealt with issues arising from the making of the Search Order. Both parties sought costs in the context of further orders which they submitted should be made.

2. By an interlocutory application dated 26 June 2020, the respondent sought an order setting aside or discharging the Search Order, an order that the proceedings be dismissed and an order that the applicant pay the respondent’s costs (1) of and incidental to the obtaining, execution and performance and discharge of the Search Order on an indemnity basis and (2) of the proceedings on an indemnity basis.  The respondent sought the setting aside and discharging of the Search Order on a number of grounds, including:

   (1)That full disclosure had not been made when seeking the Search Order, both in terms of the evidentiary material put before the Court, but also in relation to identification of the causes of action relied upon for the Search Order, satisfaction of the requirements for a search order and disclosure of more appropriate alternatives to a search order;

   (2)That the terms of the Search Order were too broad;

   (3)The manner in which the Search Order was executed and that documents were taken which were outside the terms of the Order;

   (4)That the applicant’s solicitors did not comply with the undertaking that they gave when obtaining the Search Order, namely that they would provide to the independent solicitor for service on the respondent a copy of the transcript or if there was no transcript, a note of any exclusively oral submission made at the hearing when the Search Order was obtained.

3. By an interlocutory application dated 22 September 2020 which the applicant expressed as being for summary judgment, the applicant sought the payment of $187,786.52 which represented the costs that it had incurred in the proceedings at that time. Almost all of these costs were incurred in relation to the obtaining, execution and performance of the Search Order and hearings associated with those issues. If costs of the proceedings were not ordered, the applicant sought the costs of and incidental to the Search Order.[1]  The applicant also sought a declaration that the documents seized during the search conducted pursuant to the Search Order were its property.  Lastly, the applicant sought an order that the action continue in relation to the electronic documents found on devices seized from the properties listed in the Search Order.

   [1]    Transcript of the hearing on 19 February 2021 at p 160 lines 13-25. Transcript of the hearing on 15 September 2020 at p 4, line 23-30.

4. Both parties filed extensive affidavit evidence setting out the history of the proceedings, the obtaining and execution and performance of the Search Order and the events that have occurred since the Search Order was executed.

5. It follows from the orders sought by the parties that it is necessary to examine (1) the material before the Court at the hearing on 20 March 2020 when the Search Order was obtained, (2) further material or submissions which may have been relevant to that hearing had they been put before the Court, (3) the execution of the Search Order and (4) the procedural history of the matter since that hearing.

   Background to the dispute

6. The applicant was incorporated as an Association in the Northern Territory on 14 August 1992. Its objects and purposes as set out in clause 2 of its Constitution include to build a collection of trucks, trailers and other transport equipment, photos and memorabilia pertaining to road transport, and to preserve and display such articles.[2]  The respondent, as at 22 July 2019, was the chief executive officer, chair of the board of the committee and public officer of the applicant.[3] On 3 November 2017, the Commissioner of Consumer Affairs in the Northern Territory advised the respondent that an investigation into the operations and management of the applicant was to be carried out pursuant to s 93(2) of the Associations Act 2003 (NT) (the NT Act), including in relation to the keeping of proper accounting records and the governance of the applicant.[4] 

   [2]    Affidavit of Rosemary Joy Batt sworn 19 March 2020 (Batt 19, March 2020) at exhibit RJB5.

   [3] Batt, 19 March 2020 at [11].

   [4] Ibid at [3] and exhibit RJB 3.

7. On 19 July 2019, the Commissioner of Consumer Affairs, by a delegate, released a report following the investigation.  That report concluded that the applicant had failed to meet its financial reporting obligations under the NT Act (it had not prepared or filed its financial statements for the 2016, 2017 and 2018 financial years) and there were ongoing concerns in relation to the governance of the association.[5]

   [5] Ibid at [7] and RJB 5.

8. Following the release of the report, Ms Rosemary Joy Batt was on 22 July 2019 appointed the statutory manager of the applicant pursuant to s 78 of the NT Act to administer the affairs of the association from that date.[6] Pursuant to s 79 of the NT Act, upon the appointment of a statutory manager, the members of the committee of the relevant association cease to hold office and the statutory manager has the functions of the committee of the association.  On the appointment of Ms Batt as the statutory manager, the respondent resigned from her roles in the Association.[7]

   [6] Ibid [3] and exhibit RJB 2.

   [7] Ibid at [12].

   Evidence at the hearing on 20 March 2020

9. At the hearing on 20 March 2020, the applicant sought orders so that it could carry out a search at various properties owned or controlled by the respondent at Port Pirie and to seize documents which the applicant reasonably believed to be its property. In support of that application, the applicant relied upon the affidavit of Ms Batt sworn 19 March 2020.  That affidavit provided the following evidence in relation to the applicant’s attempt to recover its documents which were in the possession of the respondent.

10. On 22 July 2019, Ms Batt and the respondent met at Alice Springs at the offices of the applicant. During the course of that meeting, the respondent promised to provide to the applicant all the records of the applicant including her contract of employment, which were at Port Pirie.[8]

    [8] Ibid at [12] and [15].

11. On 30 July 2019, Ms Batt had a further meeting with the respondent at Alice Springs in which the respondent provided Ms Batt with a copy of her contract of employment and said that she would have all of the records of the applicant delivered to Ms Batt.[9]

    [9] Ibid at [16].

12. Ms Batt and the respondent held a further meeting on 26 August 2019 at Alice Springs. Ms Batt deposed that the purpose of that meeting was to receive all of the documents of the applicant and all of the documents in relation to the 2019 Reunion Event, which was to be held in August 2019. At that meeting, the respondent said that she had left 40 boxes of records outside the cottage in Alice Springs.[10]  The respondent also advised Ms Batt that she would not provide records relating to the Reunion Event at this stage, but would provide them later.[11]

    [10] Batt 19 March 2020 at [20] and [23].

    [11] Ibid.

13. An inspection of the boxes undertaken in the following week revealed that the boxes did not contain any records of the applicant, but contained a selection of second hand homewares and crockery.[12]

    [12] Ibid at [24].

14. Ms Batt, through her lawyers, wrote to the respondent on 23 September 2019.[13] That letter set out the above history and further requested that the respondent, “as a matter of urgency have all records relating to the RTHS [i.e. the applicant] that you currently hold at Port Pirie delivered to my office so that the accountants can complete that work”.

    [13] Ibid at [25] and exhibit RJB 8.

15. The respondent responded to that letter on 30 September 2019.[14]  In that letter, the respondent advised inter alia, that she had delivered some records to the applicant at Alice Springs. She said that she would not incur further expenses (in delivering documents) and did not promise to deliver the records to Ms Batt. She said that she and Ms Batt had agreed that Ms Batt would arrange for a truck to pick up the documents which never arrived.[15] The respondent admitted that she had a couple of boxes of documents in her possession at Port Pirie, but said that until she was paid (for costs she claimed that she was owed relating to the Reunion), those documents would remain with her.

    [14] Ibid at [27] and exhibit RJB 10.

    [15] Ibid.

16. On 13 February 2019, Ms Batt, through her lawyers, wrote to the respondent’s lawyers, Boylan Lawyers.[16]  In that letter, the applicant noted that the respondent had engaged Boylan lawyers to act in relation to defamation proceedings that had been instituted by Ms Batt against the respondent and assumed that they were retained in relation to the documents dispute.[17] Again, the history of requests for documents was repeated. The applicant stated that removalists would attend at the respondent’s home on 19 February 2020 at 5pm or Thursday 20 February 2020 at 12pm to collect the books and records. The letter requested that the applicant confirm which of the times was most suitable by 4pm on 14 February 2020.[18]

    [16] Ibid at [28] and exhibit RJB 11.

    [17] Ibid.

    [18] Ibid.

17. The respondent did not respond to this letter.[19] The respondent admitted in her affidavit that her solicitors had forwarded a copy of that email to her on 13 February 2020, but she was in Cooper Pedy and did not see the email until she returned to Port Pirie on about 18 February 2020.[20]  She did not respond to the letter.

    [19] Ibid at [28].

    [20] Affidavit of Elizabeth Martin sworn 30 June 2020 at [27].

18. Further evidence relating to the respondent’s possession of the books and records of the applicant came from the minutes of the annual general meeting of the applicant held on 2 April 2016 and 19 March 2017. The 2 April 2016 minutes record that the respondent was moving the administration of the applicant to Port Pirie.[21] The 19 March 2017 minutes record that the office had been relocated to Port Pirie.[22]

    [21] Batt 19 March 2020 at [37] and exhibit RJB 12.

    [22] Ibid at [38] and exhibit RJB 13.

19. The minutes of the executive meeting of the applicant held on 2 August 2016 record the respondent stating that the books and records of the applicant were “in a mess”.[23]  The minutes of the executive meeting held on 27 August 2017 record that the respondent and Sherrill [Ives] were doing the books.[24]

    [23] Ibid at [44] and RJB 17.

    [24] Ibid at [45] and exhibit RJB  18.

20. Facebook entries made by the respondent record her admitting that the records of the applicant were in her possession and these included nearly 600 itemised monthly banking reconciliations, 6,000 pages of banking records, 12,000 banking slips, 24,000 till tapes and over 200,000 eftpos receipts.[25]  The entry records that she had over 10,000 pages of evidentiary information and that there was no need to raid her house as nothing was kept there.

    [25] Ibid at [46] and [48] and RJB 19 and RJB 20.

1. Ms Batt in her affidavit, then set out the applicant’s concerns in relation to the respondent keeping the documents. First, Ms Batt deposed to having a lack of financial records which prevented her from lodging financial reports for the financial years 2016, 2017, 2018 and 2019, which were outstanding.[26] Secondly, the applicant was concerned about various credit card transactions that the respondent had made on the applicant’s credit card.[27] Thirdly, the applicant was concerned about the whereabouts of 22 motor vehicles that had been donated or loaned to the applicant and which could not be located.[28]  The applicant sought documents relevant to their whereabouts or transfer to the applicant.

   [26] Ibid at [29]-[36].

   [27] Ibid at [40]-[43].

   [28] Ibid at [51].

2. I consider that this evidence permitted (in the absence of contradicting evidence) the following findings to be made for the purpose of an ex parte hearing: first, the respondent had possession of a very large amount of documents of the applicant, including financial documents; secondly, the respondent had promised that she would deliver the documents to the applicant, but had not kept that promise; thirdly, the respondent had stated that she had delivered the documents to the applicant when that was not the case; fourthly, there was an inconsistency between the statement of the respondent that she only had two boxes of records of the applicant and her later statement on Facebook relating to the amount of banking records; fifthly, there later developed a dispute as to whether the respondent was required to pay for the delivery of the documents to the applicant which she refused to do; sixthly, the respondent had taken steps to prevent the applicant from obtaining those documents (see the Facebook entry concerning no need to raid her house as nothing was kept there); seventhly, the respondent had refused to comply with the request of the applicant that it would, at its own cost, collect the documents.

3. The respondent submitted that the evidence amounted to a petty squabble about who was to pay for the collection or delivery of the documents. The respondent further submitted that had exhibit R17 been before the court (which was a handover report dated 26 July 2019), it would have shown that there was cooperation on the part of the respondent in the return of documents. The respondent refers to the handover report in which it was stated that the contract will be provided and that there were half of a container of items in Port Pirie ready to come up. Computer passwords were provided.

4. I do not consider that the failure to disclose exhibit R17 amounted to a material non-disclosure. Evidence of the provision of the contract was already before the Court. The issue of the 40 boxes of materials related to a meeting on 26 August 2019 about the documents; exhibit R17 does not explain away the statements made at that meeting.  The respondent by exhibit R17 provides computer passwords, but I do not consider this demonstrates a level of cooperation in relation to the return of documents. The matters contained in exhibit R17 do not, in my opinion, alter the quality of the evidence that was already before the Court, including the letter from the respondent dated 30 September 2019.[29]

   [29] Batt, 19 March 2020 at [27] and exhibit RJB 10.

5. Had exhibit R17 been tendered, I consider that I would have made the same conclusions about the respondent failing to return documents.

   The Hearing on 20 March 2020

6. The applicant did not file a statement of claim prior to the hearing on 20 March 2020.  There was no adequate explanation given by the applicant as to why a statement of claim was not filed, given that the last communication with the respondent prior to the hearing was on 13 February 2020, some 6 weeks earlier.  The Summons did not state what final relief was sought by the applicant. The affidavit material that was filed was unclear as to what cause of action was relied upon by the applicant in seeking the orders.  Part of the affidavit, as described above, related to the failure by the respondent to return the documents. Other aspects of the affidavit at least suggested a claim for breach of fiduciary duty. I refer in particular to the evidence relating to the use by the respondent of the credit card of the applicant[30] and also the respondent’s dealings in relation to motor vehicles.[31]

   [30] Ibid at [40]-[43].

   [31] Ibid at [51]-[60].

7. The application for the Search Order was made pursuant to The District Court Civil Rules 2006 (DCR).  DCR 148(3) provides that the Court may make a search order if the Court is satisfied that:

   (a)an applicant seeking the order has a strong prima facie case on an accrued cause of action; and

   (b)the potential or actual loss or damage to the applicant will be serious if the search order is not made; and

   (c)there is sufficient evidence in relation to a respondent that:

   (i)     the respondent possesses important evidentiary material; and

   (ii)    there is a real possibility that the respondent might destroy such material or cause it to be unavailable for use in a proceeding or anticipated proceeding before the Court.

8. At the ex parte hearing held on 20 March 2020, the applicant submitted that the evidentiary material it was seeking were the accounting and financial records of the applicant.[32] The applicant submitted that its cause of action was the delivery up of the documents or detinue.[33] During the course of the present application, the applicant confirmed that its causes of action were in detinue and for delivery up of the documents and further that it sought declarations of ownership of the documents which was the basis for seeking an order for the delivery up of the documents.[34]

   [32] Transcript of the hearing on 20 March 2020 at p3, line 20-30.

   [33] Ibid at p4, line 30.

   [34] Transcript of the hearing on 29 January 2021 at 132-133.

9. Following the ex parte hearing held on 20 March 2020, I made the Search Order.  The Search Order was sealed on 23 March 2020. Relevantly, for current purposes the order allowed the applicant to conduct a search at various properties at Port Pirie and seize “documents which the Plaintiff reasonably believes may be the property of the Plaintiff”.

10. The order also included an undertaking given by the applicant that:

    [2] “the applicant’s lawyers will provide to the independent lawyers for service on the respondent copies of the following documents:

    (a)-(c)……

    (d)   a transcript, or if none is available, a note of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put to the Court;

    (e)….

    That undertaking is a standard undertaking given in Search Orders.[35]

    [35] P Biscoe “Freezing and Search Orders, LexisNexis Butterworths, 2^nd ed., 2008 (Biscoe) at p 455 (paragraph 2 (d))

    Execution of the Search Order

11. The Search Order was executed on 23 March 2020 and 24 March 2020 at a number of properties in Port Pirie. An independent solicitor attended along with a number of solicitors from the applicant’s solicitors upon the execution of the Search Order.

    Respondent’s complaints about the execution of the Search Order

12. The respondent makes a number of complaints about the execution of the Search Order.  They are:

    (1)the applicant’s solicitors did not comply with the undertaking to provide to the independent solicitor for service on the respondent, a copy of the transcript or, if none was available, a note of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put to the Court;

    (2)that documents that did not come within the terms of the Search Order were seized;

    (3)the Search Order was carried out by junior lawyers and not by the statutory manager of the applicant.

    Findings in relation to the breach of the undertaking

13. I make the following findings in relation to the breach of the undertaking.

14. Counsel for the applicant properly conceded that the applicant’s solicitors breached the undertaking by not providing a copy of the transcript to the independent lawyers for service on the respondent.[36] The applicant’s counsel accepted that there was sufficient time to obtain a copy of the transcript before the beginning of the execution of the Search Order.[37]  In any event, if there had not been sufficient time, the applicant’s solicitors were required to serve a note of the exclusively oral submissions made at the hearing.  The applicant’s solicitors did in fact prepare a detailed note of the hearing, but that also was not provided to the independent lawyer as required by the undertaking.[38]

    [36] Transcript of the hearing on 29 January 2021 at p 131, line 35.

    [37] Ibid at p131, lines 29-36.

    [38] Affidavit of Vesna Vuksan sworn 7 August 2020 at exhibit VV12.

15. At the hearing on 20 March 2020, counsel for the applicant in giving the undertaking stated that he anticipated that he would obtain the transcript.[39] In fact, the applicant’s solicitors did not request a copy of the Transcript until 26 June 2020.[40] 

    [39] Transcript of the hearing on 20 March 2020 at p13, lines 9-25.

    [40] Affidavit of Vesna Vuksan sworn 7 August 2020 at exhibit VV12.

16. The failure to comply with the undertaking was a serious matter. I accept that the failure to comply with the undertaking to provide a copy of the transcript was not deliberate and appeared to arise from a misapprehension of the Order and the undertaking on the part of the applicant’s lawyers.  The applicant’s solicitor appeared to assume, wrongly, that a transcript would not be available within the time required for service.[41]  The applicant’s solicitor also appeared to wrongly construe the undertaking to require the transcript or a note to be provided only if there was no oral evidence given at the hearing.[42] In a conversation held on 18 June 2020 between the applicant’s lawyers and lawyers for the respondent, when asked for the transcript, the applicant’s lawyer stated there was no exclusively oral evidence, so a transcript was not required.[43]

    [41] Affidavit of Rebekah Jane Griffith sworn 22 July 2020 at [8].

    [42] Ibid.

    [43] Affidavit of Rebekah Jane Griffith sworn 22 July 2020 at [78] and [80].

17. I find that the applicant’s solicitors breached the undertaking.

    Consequences of the breach of the undertaking

18. At the time of the execution of the Search Order, the independent solicitor asked the applicant’s solicitor whether there was any transcript of the hearing or whether there were any documents recording exclusively oral submissions or exclusively oral evidence given to the Court and was informed that there was not.[44]  The independent solicitor also reported that the respondent’s solicitors had asked whether there were any exclusively oral evidence or submissions put before the court and the independent solicitor advised that he had been told by the applicant’s solicitors that there had not been.[45]

    [44] Report of the Independent Solicitor at paragraph [13].

    [45] Ibid at [136].

19. There was, before the search was recommenced on 24 March 2020, a three way conversation between the respondent’s solicitor, Mr Boylan (who was on the telephone at the time to Ms Vuksan), the applicant’s solicitor and the independent solicitor in which the respondent’s solicitor stated on the telephone that he had been told that there were no oral submissions and that the applicant “just relied on the papers”.[46] There was confirmation from the applicant’s solicitors that “was the only evidence we relied upon”.[47] I accept that in the above discussion, there was confusion between oral submissions and oral evidence and that the applicant’s solicitors inadvertently in their response, referred only to the oral evidence.

    [46] Affidavit of Vesna Vuksan sworn 7 August 2020 at paragraph [8].

    [47] Ibid.

20. I accept the evidence of the respondent’s solicitors that they proceeded during the execution of the Search Order on the basis that there was no transcript of the hearing on 20 March 2020 and no notes of the hearing taken by the applicant.[48]  I find that it was not until 18 June 2020 that the respondent’s solicitors first understood that there had been or at least was likely to have been a transcript of the hearing on 20 March 2020.[49]

    [48] Affidavit of Vesna Vuksan sworn 26 June 2020 at [23].

    [49] Ibid at [28]-[34].

21. I also accept the evidence of the respondent’s lawyers that, during the search and until about 18 June 2020, they understood that the claim of the applicant was for misappropriation or some similar form of wrongdoing and that the purpose of the Search Order was to obtain documents in support of that claim.[50] I do not consider that it was unreasonable for the respondent’s lawyers to come to that conclusion.  As I have said, the Summons did not refer to any cause of action. There was no statement of claim. The affidavit of Ms Batt, as I have indicated, referred to a wide range of matters, including matters relating to the usage of credit cards and missing vehicles as well as the return of documents. In these circumstances, I consider that it was reasonable, although in fact wrong, for the respondent to come to the conclusion that the applicant’s case was for misappropriation or breach of fiduciary duty.

    [50] Ibid at [16] and [24].

22. I find that the breach of the undertaking materially contributed to this misapprehension of the respondent’s solicitors. The transcript or a note of the hearing would have made it clear that the applicant’s case was for delivery up of its property (beings its documents) or detinue.

23. However, I do not accept that had the respondent and her solicitors been aware that the applicant’s cause of action was for delivery up of the documents or detinue, they would have acted differently after the execution of the Search Order and would have sought the discharge of that Order. How the respondent would have acted in such a case is hypothetical and the assertions of the respondent’s lawyers as to how they would have acted in that event cannot be determinative. In my view, as the respondent took a pragmatic approach to the question of discharge (when they were facing the more serious claims of misappropriation or breach of fiduciary duty), it might be expected that they would take the same pragmatic approach if facing a claim for the return of documents, particularly as they ultimately have been content not to seek the return of the documents seized.  Further, at the time that the Search Order was executed, a claim for misappropriation or breach of fiduciary duty had not been ruled out.

    Complaint that the search was carried out by junior lawyers

24. As to the complaint of the respondent that the search was carried out by junior lawyers, I do not find that complaint sustained.  The respondent did not produce any evidence in support of that contention. The applicant’s lawyers denied the assertion, although they did not adduce any evidence in support of that denial. However, as the evidence stands, I do not have sufficient evidence to make any finding in relation to this issue. The complaint is of little weight, other than its role in the failure of the applicant’s solicitors to comply with their undertaking to provide a copy of the transcript or their taking of documents beyond the scope of the Search Order. There are no other complaints about the conduct of the applicant’s solicitors when executing the Search Order.

25. I also accept the statement made by the independent solicitor in his report to the Court that the search party was professional and that he did not witness any conduct that caused him any concern.[51]

    [51] Paragraph [221] of the Report of the Independent Solicitor.

    Width of Search Order

26. The respondent also complains about the width of the Search Order which permitted the applicant to take documents which it reasonably believed to be its property.  I do not consider that the reference to documents which the applicant reasonably believed to be its property was unreasonable. A Search Order always requires an assessment to be made as to whether a particular document falls within the scope of the order.  Given the roles held by the respondent at the applicant and the admissions that the respondent was in possession of the applicant’s documents, I do not consider it to be unreasonable for the applicant to seek to define the documents to be seized by reference to that criteria. The applicant’s solicitors would be able to reasonably assess by an examination of the documents themselves and where they were kept whether they came within the terms of the Search Order.

    Necessity for the statutory manager of the applicant to attend on the Search Order

27. For the same reasons, I do not consider that it was necessary for the statutory manager of the applicant herself to attend on the Search Order. A Search Order is usually carried out, as it was here, by the solicitors for the applicant. The solicitors would not, in my view, have been in any different or better position than the statutory manager in assessing documents as being the property of the applicant.

    Seizure of documents outside the terms of the Search Order

28. The respondent also submitted that upon the execution of the Search Order, documents were seized by the applicant that did not come within the terms of the Order. The respondent adduced evidence that there were three boxes of documents which were identified as Disputed Box 1, Disputed Box 2 and Disputed Box 3 over which there were competing claims of ownership and one box, Box 4 over which there were claims for privilege.[52] There was one document over which privilege was ultimately maintained in Box 4.[53]  During the course of the search, the respondent accepted many documents as belonging to the applicant.[54]

    [52] Affidavit of Paul Ignatius Boylan sworn 26 June 2020 at [6].

    [53] Affidavit of Rebekah Jane Griffith sworn 22 July 2020 at [53].

    [54] Affidavit of Rebekah Jane Griffith sworn 22 July 2020 at [32].

29. Any dispute as to the ownership of the documents in Disputed Boxes 1-3 fell away. The documents were initially quarantined with the independent solicitor and the respondent ultimately consented to their release to the applicant. I am not in a position, on the available evidence to determine what number, if any, personal documents were seized, but I am satisfied that at most only a small number of personal documents were seized.

30. There was a regime in the Search Order that contemplated that there might be dispute about some of the documents that were seized, utilising the services of the independent solicitor. I do not consider that the fact that a few personal documents may have been seized in some way invalidates the Search Order or suggests that the execution of the Order was carried out in a way that was substantially contrary to the terms of the Order.  I consider that, with the exception of the failure to comply with the terms of the undertaking to provide the transcript or an exclusive oral note of submissions made at the ex parte hearing, the Search Order was properly and professionally carried out.  Important conversations were recorded using a Go-Pro camera, the independent solicitor was present throughout the search and the respondent was given adequate opportunity and did in fact seek advice from her solicitors.

    Events subsequent to the execution of the Search Order

31. There have been a number of hearings following the execution of the Search Order.

32. The first return date after the execution of the Search Order was on 25 March 2020. At that hearing, by consent, the time for the independent solicitor to file his report was extended and the matter was simply adjourned to 1 April 2020 for the parties to agree to a protocol relating to the inspection and return of documents.

33. On 1 April 2020, orders were made by consent which dealt with the inspection, copying and return of the documents and a regime for dealing with disputes as to the ownership of the documents and privileged documents.

1. At the next hearing on 17 April 2020, further orders were made by consent in relation to establishing a regime in relation to documents over which privilege was claimed.  Further orders were made in relation to the filing of affidavits in relation to asserting any claim for privilege and the matter was adjourned to 6 May 2020.

2. At the hearing on 6 May 2020, the applicant did not contest the privilege claim of the respondent over one document. Counsel for the respondent advised the Court that they expected to bring a claim against the respondent for taking the money of the Association in these proceedings, but they could not progress that claim until they formed a better understanding of the documents.[55] Apart from some other procedural matters, including the release from the implied undertaking, the interlocutory application of the applicant that the respondent deliver up to the independent computer expert her mobile telephone so that records of the usage of the telephone during the period of the search could be downloaded by the independent computer expert was listed for hearing on 15 May 2020.

   [55] Transcript of the hearing on 6 May 2020 at p4, line 14.

3. On 15 May 2020, the Court heard the contested application of the applicant for the delivery up of the mobile telephone and the downloading of records of usage during the period of the search and reserved its decision. Some further timetabling orders were made.

4. The Court delivered its decision on 1 June 2020 in which it refused the applicant’s interlocutory application and reserved the question of costs to 18 June 2020.  At the hearing on 1 June 2020, counsel for the applicant advised the Court that this action had done its work and the applicant sought the costs of the application for the search and the search itself. The applicant further advised the Court that if a substantive claim was brought and that was not known yet, it might utilise these proceedings.[56]

   [56] Transcript of the hearing on 1 June 2020 at p2, line 8.

5. At the hearing on 18 June 2020, counsel for the respondent advised the Court that they had never seen the transcript or any detailed submissions of the hearing when the Search Order was made on 20 March 2020.[57] Counsel advised that they now understood that there was a hearing when the Search Order was made, but had previously understood from some communications that it might have been done on the papers.[58] The argument as to costs was adjourned until 1 July 2020. The applicant and respondent’s lawyers had a discussion at Court on 18 June 2020 at which the respondent’s lawyers asked the applicant’s lawyers whether they had a copy of the transcript for the hearing when the Search Order was made and were advised by the applicant’s lawyers that they did not.[59] The applicant’s lawyer said that there was a hearing on the Friday before the Search Order was made. In response to a statement by the respondent’s counsel that under the Rules, they were meant to provide a transcript, the applicant’s lawyers responded: “There was no exclusively oral evidence so a transcript was not required”.[60]

   [57] Transcript of 18 June 2020 at p3 line 34.

   [58] Ibid at p3 lines 26-28.

   [59] Affidavit of Rebekah Griffith sworn 22 July 2020 at [78]-[80].

   [60] Ibid at [78.6].

6. I accept the evidence of the respondent’s solicitors that it was not until about 18 June 2020 that they first considered that there may have been transcript of the hearing on 20 March 2020.[61] On 19 June 2020, the respondent’s lawyers sent a letter to the applicant’s lawyers in which they referred to the undertaking and requested, if it existed, the transcript of the hearing “or  if none was available, a note of any exclusively oral allegation of fact that was made and any exclusively oral submission that was put to the Court”.[62]

   [61] Affidavit of Vesna Vuksan sworn 26 June 2020 at [34].

   [62] Ibid at [35] and exhibit VV 8.

7. On 22 June 2020, the applicant’s solicitors advised the respondent’s solicitors that there was no transcript as there was insufficient time to obtain the transcript prior to the execution of the search and that a note was not required as there was no exclusively oral allegation of fact or exclusively oral submission.[63] Both these statements were wrong. The response from the applicant’s lawyers on 22 June 2020 demonstrates that they were still acting under the misapprehension that because there was no exclusively oral evidence, they did not need to provide a copy of the transcript.  The applicant’s lawyers also wrongly stated that there was not sufficient time to obtain a transcript.

   [63] Ibid at [36] and exhibit VV9.

8. Prior to 1 July 2020, the respondent had taken out, on 26 June 2020, the application referred to in paragraph [2] of these Reasons, in which she sought orders for the discharge of the Search Order, dismissal of the proceedings and indemnity costs.  The hearing was turned into a directions hearing. Senior Counsel for the respondent noted that no substantive proceedings had been prosecuted and indeed no statement of claim had been filed by the applicant.  Directions were made in relation to the affidavit material to be filed and the issuing of a subpoena.

9. At the next hearing on 23 July 2020, directions were made in relation to the filing of affidavit material and submissions.

10. At the hearing on 27 August 2020, counsel for the applicant advised the Court that they might need to amend their originating process to seek declaratory relief that they own all the documents they had collected from the respondent and to seek summary judgment based on that amended originating process.  The matter was adjourned to 15 September 2020.

11. On 14 September 2020, the applicant filed a revised summons in which it sought, for the first time, a declaration that the documents seized during the search conducted at the properties on 23 March 2020 and 24 March 2020 were the property of the applicant.

12. At the hearing on 15 September 2020, the Court listed the applications of each party for argument on 20 November 2020, setting aside one day. Other timetabling orders were made, including that the applicant file any application for summary judgment within 7 days.

13. Subsequently, the date set for argument needed to be vacated and the applications were eventually heard on 29 January 2021 and 19 February 2021.

    Determination of the applications   

14. I will deal with each of the applications made by the parties.

    Final relief sought by the applicant

15. The applicant has sought, in its revised summons, a declaration that it is the owner of the documents that were seized.

16. The Court has power under s 37 of the District Court Act 1991 (SA) to make binding declarations of right whether or not any consequential relief is or could be claimed. Before granting a declaration, the Court must be satisfied that the question to be resolved is real and not theoretical and that the person raising it has a real interest to do so.[64]  In Ainsworth v Criminal Justice Commission,[65] Mason CJ, Dawson, Toohey and Gaudron JJ expressed the limits of the power to grant a declaration in the following terms:

    It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which “[i]t is neither possible nor desirable to fetter ... by laying down rules as to the manner of its exercise.” However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have “a real interest” and relief will not be granted if the question “is purely hypothetical”, if relief is “claimed in relation to circumstances that [have] not occurred and might never happen” or if “the Court’s declaration will produce no foreseeable consequences for the parties”.

    [64] Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-438.

    [65] (1991-1992) 175 CLR 564 at 581-582.

17. In the present case, I do not consider that there is any utility in granting the declaration sought by the applicant. The applicant does not have any real interest in seeking the declaration and there are no foreseeable consequences for the parties if a declaration is made. I have come to this conclusion for the following reasons. First, the declaration was only first sought in September 2020, well after the Search Order had been executed and after the application by the respondent to discharge that Order. Secondly, there is no controversy between the parties (except in relation to the computer) in that the respondent has not asserted and in fact has disclaimed any interest in the documents. At the time that the revised summons was taken out, there was no controversy between the parties. Thirdly, the making of the declaration has no foreseeable consequences to the parties as the respondent is not seeking the return of the documents.

18. The only extant controversy between the parties (other than in relation to these applications) is a limited dispute in relation to data downloaded from the computer that was seized. As I understand that dispute, the respondent submits that the data downloaded from the computer is information and cannot be property of the applicant and therefore cannot fall within the terms of the Search Order.  I am not in a position (and nor have the parties asked me), to determine this issue at the present time. I anticipate that there will be an argument about this issue at some later date.

19. In any event, I would not have found that the applicant had established, on a summary judgment application, that it was the owner of all of the documents that were seized during the execution of the Search Order.  The applicant has not established that it is the owner of all of the documents that were seized and did not adduce evidence on the application for summary judgment that it was the owner. Before granting a declaration, I must be satisfied of the facts giving rise to the subject matter of the declaration. I am not satisfied that those facts have been made out by the applicant.

20. For the above reasons, I reject the application of the applicant for a declaration.

21. The respondent further submitted that I should not make a declaration on an interlocutory application as the jurisdiction to grant a declaration is final relief.  I do not consider the fact that the declaration was sought in an interlocutory application for summary judgment is a complete bar to the making of the declaration.  In Patten v Burke Publishing Co Ltd,[66] Millett J referred to the longstanding practice of the court in the equity division to not make a declaration without a trial.[67]  However, Millett J went on to hold that there may be cases where the normal practice must give way to the paramount duty of the court to do the fullest justice to the plaintiff to which they are entitled.[68]  In my view, this is not such a case for the reasons that I have already stated.

    [66] [1991] 2 All ER 821; [1991] 1 WLR 541.

    [67] Ibid at 821.

    [68] Ibid at 822.

    Application for discharge of the Search Order

22. The respondent has sought the discharge or setting aside of the Search Order on a number of grounds (some of which are overlapping). They are:

    (1)in seeking the Search Order, the applicant failed to comply with its duty of full disclosure in relation to the nature of its causes of action, the availability of less intrusive orders and the width of the orders that it was seeking;

    (2)in seeking the Search Order, the applicant failed in its duty to disclose all material facts;

    (3)the Search Order was not justified because there was not a sufficiently strong case and/or there was not a sufficient risk that the evidentiary material would be lost or destroyed (and the applicant failed in its duty of disclosure in relation to these matters);

    (4)in executing the Search Order, the applicant breached its undertaking to provide a copy of the transcript or if none was available, a note of any exclusively oral submission, to the independent solicitor to provide to the respondent;

    (5)in executing the Search Order, the applicant seized documents to which it was not entitled.

    Obligations on an ex parte application

23. The Search Order is made on an ex parte basis and therefore the obligations on an applicant seeking such an order are onerous. In Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd,[69]  Allsop J (as he then was) held (in relation to an application for a freezing order, but equally applicable to an application for a Search Order):[70]

    In an ex parte hearing, it is the obligation of the party seeking orders, through its representatives, to take the place of the absent party to the extent of bringing forward all the material facts which that party would have brought forward in defence of the application: Thomas A Edison Ltd v Bullock (1912) 15 CLR 678 at 681-82 per Isaacs J. That does not mean stating matters obliquely, including documents in voluminous exhibits, and merely not mis-stating the position. It means squarely putting the other side’s case, if there is one, by coherently expressing the known facts in a way such that the Court can understand, in the urgent context in which the application is brought forward, what might be said against the making of the orders. It is not for the Court to search out, organise and bring together what can be said on the respondents’ behalf. That is the responsibility of the applicant, through its representatives.

    [69] [2005] FCA 955.

    [70] Ibid at [38].

24. Allsop J went on to hold:[71]

    [46] I take the relevant principles of ex parte disclosure to be as discussed by Isaacs J in Thomas Edison and to be in the discussion by Mahoney AP in Gerrard v Email Furniture P/L (1993) 32 NSWLR 662 at 676-77 and in the cases there referred to by his Honour.

    [47] The high standard of candour and the heavy responsibility on those who seek ex parte orders is especially the case where (as it was here, and as will often be the case) a discretion is involved. The judge must be given the opportunity of analysing the facts from the perspective of any available case which can be put, or anticipated to be put, by the absent party. That was not done here. Facts were identified, but not in a fashion which illuminated with any clarity the known facts and not in a coherent and ordered way as plainly would have been done by the absent party.

    [48] As the Full Court said in Town & Country v Partnership Pacific (1998) 20 FCR at 543:

    The rationale behind the principle is clear; it is of the utmost importance in the due administration of law that the Courts and the public are able to have confidence that an ex parte order has been made only after the party obtaining it has complied with its duty to disclose all relevant facts.

    [71] Ibid at [46]-[48].

25. Such pronouncements are applicable to applications for a Search Order which the Courts have often observed are at the extremity of the powers of the Court.[72]  Browne-Wilkinson J in Thermax Limited v Schott Industrial Glass Limited[73] held that the rule of full disclosure to the court is almost more important in Anton Pillar cases than in other applications[74] and emphasised three far reaching consequences of a Search Order (or an Anton Pillar Order as it was then known).  They are (1) the respondent does not have an opportunity to present its case or bring matters to the court’s attention which might alter the court’s view of the matter; (2) the execution of the order involves an invasion of the privacy of the respondent; and (3) there is a danger of abuse in that a commercial competitor may gain an unfair and wrongful commercial advantage.

    [72] See Long v Specifer Publications Pty Ltd (1998) 44 NSWLR 545 at 547 where Powell JA held (and Meagher JA and Handley JA agreeing) that the search order was an extraordinary remedy.

    [73] [1981] FSR 289 at 291-2.

    [74] Ibid at 298.

26. The Full Court in Lane v Channel 7 Adelaide Pty Ltd[75] affirmed these principles and held that the applicant on an ex parte application must not only put before the Court all relevant material which would have been raised by the other side, but must make express reference to those matters.[76]

    [75] [2004] SASC 47.

    [76] Ibid at [12].

    Alleged failure in duty of disclosure

27. The respondent submits that the applicant failed in its duty of disclosure in that it failed to inform the Court about (1) the deficiencies in its causes of action and satisfaction of the requirements for a Search Order or (2) the alternatives to a Search Order which should be considered and (3) the breadth of the Search Order necessary to protect the legitimate interests of the applicant, bearing in mind the intrusive nature of the Search Order.

28. As the application by the respondent to discharge or set aside the Search Order was an interlocutory application, I was not in a position to determine contested matters of fact. The respondent accepted that she could not rely upon a contested matter for the purposes of her application for non-disclosure, although that would not prevent me from relying upon documentary material.[77]

    [77] Transcript of the hearing on 29 Janaury 2021 at p12-13.

29. Ralph Gibson LJ in Brink’s Mat Ltd v Elcombe[78] set out a number of principles upon which the assessment of non-disclosure and its consequences could be made. His Honour noted that notwithstanding non-disclosure, the Court retained a discretion as to whether or not to continue the order, to make a new order or require the immediate the discharge of the order. 

    [78] [1988] 1 WLR 1350 at 1356-7. Approved by the Court of Appeal in Behbehani v Salem [1989] 1 WLR 723.

30. The duty of non-disclosure extends to “squarely putting the other side’s case, if there is one, by coherently expressing the known facts in a way such that the Court can understand, in the urgent context in which the application is brought forward, what might be said against making the orders”.[79]

    [79] Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd, [2005] FCA 955 at [38].

31. The applicant did not in its Summons identify any cause of action and only sought relief relating to the Search Order. As I noted previously in these Reasons, the applicant did not file a statement of claim prior to the hearing on 20 March 2020. There is no good reason as to why it did not do so, given that a period of some six weeks had elapsed since its last communication with the respondent. Further, the affidavit did not clearly set out the legal basis for the relief claimed.

32. However, the applicant made clear at the hearing on 20 March 2020 that its cause of action was based on delivery up of the documents and in detinue.[80]  The applicant further submitted that the documents it sought were its accounting and financial records.[81]

    [80] Transcript of hearing on 20 March 2020 at p4, lines 25-31.

    [81] Ibid at p3, lines 20 and p4, l-3, p5, lines 4-9, p 5 lines 4-9, 20.

33. The elements of the tort of detinue are:[82]

    (1)the applicant had made a demand for possession of the goods (or in this case, the documents) at a time when they had a right to immediate possession of them;

    (2)the respondent wrongly refused to comply with that demand.

    [82] Adara Acquisitions Pty Ltd v Deal Corporation (Knox) Pty Ltd [2018] VSC 831 at [32].

34. The respondent’s refusal must be clear and unequivocal. The refusal will not be unlawful if the respondent is taking a reasonable time to inquire into the applicant’s rights.

35. An order for delivery up may be granted as a remedy for a claim in detinue or in some circumstances in equity such as in aid or ancillary to a claim for a declaration as to ownership. In practice, a delivery up order will only be made in circumstances where it is established that the elements of detinue have been established: that is, the applicant is entitled to immediate possession of the goods or documents and the respondent has wrongfully refused to comply with that request.

1. I do not consider that the applicant failed in its duty of disclosure in relation to its cause of action. The evidence disclosed that the documents were owned by the applicant. The evidence further disclosed that there had been discussions between the applicant and the respondent in which the respondent had promised that the documents would be returned to the applicant. In fact, the respondent on one occasion said that the documents had been returned to the applicant. In my view, this is evidence that the respondent accepted that the documents were the property of the applicant and that the respondent did not have any right to retain possession of the documents. The evidence that the respondent had resigned from all of the positions that she previously held with the applicant supports this submission. I accept that the evidence did not show a clear and unequivocal demand and refusal prior to February 2020.  The letter from the respondent dated 30 September 2019 did not provide an unequivocal refusal to deliver the goods to the applicant as in that letter, the respondent raised the issue that she was not obliged to return the documents at her own expense. However, in the letter of 13 February 2020, the applicant made a clear demand for the return of the documents and stated that it would collect the documents at its own expense. I accept that this letter was written to the solicitors for the respondent and that at that time the solicitors had only been retained in the defamation proceedings that had been issued by the statutory manager against the respondent. There was no response by the solicitors at all to the letter and no communication to the applicant that they were not acting on behalf of the respondent.  In these circumstances, I consider that it was reasonable for the applicant to form the view that the demand for the return of the documents had been made by the applicant and received by the respondent and that the respondent had elected not to comply with the demand.

2. The respondent also submitted that the applicant failed in its duty of disclosure concerning the real danger that evidentiary material may be destroyed or concealed. In this regard, the respondent refers to her willingness to provide some documents to the applicant such as her contract of employment.  That was clear on the evidence.  The respondent also relied on the fact that three folders of documents about vehicle registration records were admitted by the applicant to have been provided by the respondent to it, although it is accepted by both parties that I am not able to make any finding about the materiality of the documents contained in those folders.[83]  I am also not able to make any finding that the applicant did not return 6 boxes of  documents containing old business records were provided by the respondent to the applicant. The applicant denied that it received those records and I do not have sufficient evidence to determine whether or not it did receive those documents. I do not take into account this matter.

   [83] Transcript of the hearing on 29 January 2021 at p29 line 5, p 28 line 4 p 31 line 5.

3. In respect of the other matters referred to in the previous paragraph, I do not consider that they support the contention that the applicant has failed in its duty of disclosure. The evidence on which the applicant relied was made clear and comprised the promises made by the respondent to return documents (which were not kept), the false statement that documents had been returned when they had not and the Facebook post which indicated that there was no use in raiding the house as the documents were not there. The Facebook entry also suggested that there were many more documents in the possession of the respondent than she had earlier indicated. This, to my mind, does suggest some form of concealment, especially when coupled with the previous broken or false promises as to the return of documents.  I do not consider that the applicant failed in its duty to refer to other evidence which was contrary to its case. 

4. The Search Order did contain an unusual aspect in that the evidentiary material that formed the subject matter of the Search Order were the documents which were the same documents which formed the basis of the claim for detinue.  However, that matter was clear to the Court and the applicant submitted that the relevant evidentiary material were the documents themselves, because they contained evidence of ownership.[84]

   [84] Transcript of hearing on 20 March 2020 at p4, lines 19-27.

5. I have earlier in these Reasons addressed the failure of the applicant to tender or refer to Exhibit R17 (the handover report). For the reasons that I have already addressed, I do not consider that failure to be material.

   Alternatives to obtaining a Search Order

6. The respondent also submitted that the applicant breached its disclosure obligations by failing to alert the Court to the possibility that some other, less draconian, form of order would have been sufficient.  It might be expected that the respondent, if the application were inter partes, would have submitted that a Search Order was not necessary and that at most an injunction and delivery up order would have been sufficient. In equity, the Court has jurisdiction to make an order for the return or delivery up of specific goods.[85]  In Long v Specifer Publications Pty Ltd,[86] Powell JA (Meagher and Handley JJA agreeing) distinguished a case in detinue, even being one that “…could properly be regarded as one of those special cases in which an order might properly be made in the equity side of the Court for the delivery up of specific property and …perhaps for both an interim and final injunction restraining the infringement of copyright and for an account of profits,” and the granting of an Anton Pillar order.

   [85] Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 at 597.

   [86] [1998] 44 NSWLR 545 at 554.

7. The respondent referred to EFG Australia Ltd v Kennedy[87] where Bryson J held:

   I approach the application on the basis that the ordinary procedure of the court, whether for small matters or large matters and even for matters in which the allegations are severe and involve breaches of trust and dishonesty is that parties have a duty to produce relevant documents on discovery and verify lists of them, and the court will enforce that duty. It is not the ordinary approach taken by the court that it is attributed to the defendants that they will probably defy their duty to give discovery or that they could well destroy or conceal documents.

   The ordinary course should be departed from where there is some substantial ground for expecting that there will be extraordinary behaviour with respect to discovery. I would look for some ground going beyond the indications of dishonesty involved in this case, a ground which would show that active concealment or measures which are criminal or in the nature of criminal conduct should reasonably be feared. Examples of what I would look for are instances of destroying or concealing documents, threats to do so or signs of preparation to flee.[88]

   [87] [1995] NSWSC 58.

   [88] Ibid at [16].

8. Although that statement was made in relation to discovery obligations, it applies equally in my view to obligations imposed under a delivery up order.

9. The applicant did not refer to these authorities or arguments that could have been and might have been expected to have been advanced by the respondent had it been present at the hearing on 20 March 2020. Reference should have been made to the alternatives to a Search Order and the authorities that support such an approach. However, I do not consider that this failure to be sufficiently material to warrant, by itself, a discharge of the Search Order, particularly given the delay in bringing the application for discharge. 

10. Given that the express purpose of the Search Order was to gather the financial and accounting documents, I consider that the Search Order was too widely drafted. The Search Order enabled the applicant to search for and seize all of the documents which might have been reasonably believed by the applicant to be its property.  That was beyond what was required. It encompassed material that was not relevant to these matters and also old material which could not have any possible present relevance.

11. Had the matter been raised at the return date, the Court would have entertained an application to vary the Search Order and exclude from it documents other than financial and accounting records.

    Delay in bringing application to discharge or set aside Search Order

12. In JC Techforce Pty Ltd v Pearce,[89] Branson J considered an application to discharge an order, not because of non-disclosure, but on the grounds that the documents were taken during the execution of the search order that were beyond the scope of the order. The application for a discharge was made about 3 months after the search order was carried out.  Branson J referred to Scott J in Columbia Picture Industries Inc v Robinson[90]  in describing her application as a “somewhat bizarre proposition” and “a gesture devoid of practical effect”.[91] Branson J went on to hold:

    The jurisdiction of the court to set aside the order is a discretionary one. A significant factor telling against the exercise of the discretion in this case is the failure of the respondents to identify any utility which would result from the setting aside of the order. Another factor telling against the exercise of the discretion is the delay which has attended the making of the application.  Complaints of the type which have been advanced in support of the orders sought by the notice of motion ought to be advanced promptly upon the grounds of complaint being seen to arise. In this case such complaints were not raised for three months after the execution of the order. During that three month period the parties attended before this court by their respective legal representatives on four separate occasions.

    [89] (1996) 138 ALR 522.

    [90] [1987] 1 Ch 38 at 84.

    [91] (1996) 138 ALR 522 at 529.

13. These statements are apposite in my consideration of this application.  In the present case, the application for discharge was made about four months after the carrying out of the Search Order.  During this period, there were seven further hearings at which the legal representatives of the parties were present.  At these hearings, orders were made relating to the documents seized upon the execution of the Search Order. A Kadlunga list was prepared by the respondent and agreement reached in relation to privileged documents.  The parties also had discussions in relation to documents that were personal to the respondent and largely reached agreement. There was an argument about the production of the mobile telephone records of the respondent.

14. I also do not consider that there is any utility in now seeking an order for the discharge of the Search Order. Other than the issue relating to the downloading of dated from the computer of the respondent, there is no other controversy between the parties. The seizing of the computer raises a different issue: namely whether documents or information have been seized.

15. Whilst the respondent may not have appreciated the exact nature of the claim made against her, I consider that she was in a position to challenge the Search Order on the other grounds set out above, but elected not to do so.

16. The respondent advanced three reasons in support of its submission that, notwithstanding the delay, an order should be made discharging the Search Order. First, the respondent submitted that the delay was caused by the failure of the applicant to comply with the undertaking that it gave to the court to provide a copy of the transcript. Whilst I accept that the failure of the applicant to provide a copy of the transcript caused or contributed to the respondent misapprehending the nature of the claim against her and forming a belief that the claim against her was for misappropriation or breach of fiduciary duty, I am not satisfied that the respondent would have immediately sought the discharge of the Search Order had she been aware of the true nature of the action being brought against her.  The respondent, in the words of her counsel, took a pragmatic approach to the Search Order and the subsequent hearings. It is unlikely, in my view, that a different approach would have been taken if the action was simply for the return of the documents. There was no reason why the applicant would not have taken a pragmatic approach to issues arising from the execution of the Search Order in that case.

17. Secondly, the respondent submitted that there was some utility in making the order for discharge in that it would signify the Court’s disapproval of the conduct of the applicant referred to above and in particular in relation to failing to comply with the terms of the undertaking. I do not consider that this is a sufficient reason to discharge the Search Order, given the lack of utility in a discharge of the Search Order and the number of court hearings and actions taken by the parties after the return of the application.  The Court does not need to make a discharge order to signify its disapproval of any actions taken by the parties or in this case, the applicant.

18. Thirdly, the respondent submitted that the order for discharge may have some utility in relation to costs. Again, I do not consider that to be a sufficient justification for the discharge order.  Costs will be dealt with in the context of the whole of the proceedings to date and the conduct of the parties.  It is not dependent on whether an order of setting aside or discharging the Search Order is made.

    Breach of the undertaking

19. The applicant’s solicitors committed a serious breach of the undertaking they gave to the Court when they failed to provide a copy of the transcript when it executed the Search Order.  I am satisfied that the failure to comply with the undertaking caused or at least materially contributed to the respondent, through her solicitors, misapprehending the nature of the claim against them.

20. The applicant submits that it was unreasonable for the respondent to reach this conclusion.  However, given the lack of a summons setting out the final relief that was being sought, the fact that a statement of claim had not been filed and that no transcript of the hearing has been provided, I am not prepared to find that it was unreasonable for the respondent to reach that conclusion. The affidavit material filed by the applicant and served upon the respondent does not clearly set out the basis of the applicant’s claim and a claim for misappropriation or breach of fiduciary duty was a reasonable conclusion to draw.

21. I am satisfied that the breach was inadvertent.  The evidence that was adduced by the applicant suggests that the applicant’s solicitors formed the mistaken view that they did not need to provide the transcript because they had not requested a copy of the transcript and therefore did not have a copy in their possession. Further, the applicant appeared to be under the misapprehension that because there was no oral evidence given at the hearing on 20 March 2020, they did not have to produce a copy of any oral note of exclusively oral submissions.  It appears that both of these misapprehensions of the applicant were caused by a mistaken view of the Search Order and in particular of the undertaking.

22. As I have said earlier in these Reasons, I am not satisfied that the respondent has established that she would have acted differently had the transcript in fact been provided to her.

23. In CT Sheet Metal Works Pty Ltd v Hutchinson,[92] Reeves J emphasised, in the context of a possible referral of the solicitor for contempt, the importance of compliance with the undertakings in Search Orders.  Although ultimately not deciding to refer the relevant solicitors for contempt, Reeves J said he exercised his discretion not to do so because, inter alia:[93]

    (1)… these reasons will serve to constitute sufficient condemnation of the behaviour of [the relevant solicitor] who breached the undertaking;

    (2)… these reasons will impress upon principal solicitors in the position of other principal solicitors the importance of ensuring that others who participate in the search comply with the undertaking and are aware of the extraordinary nature of search orders;

    (3)these reasons will serve to reinforce to the profession at large the importance of complying strictly with the terms of any undertaking given to the Court and if a solicitor who has given such an undertaking to the Court has any concerns about his or her obligations thereunder, to take those concerns to the Court first, rather than acting on his or her own initiative.

    [92] [2012] FCA 17; (2012) 201 FCR 275.

    [93] Ibid at [40]-[46].

24. Long v Specifier Publications Pty Ltd[94] was another contempt case involving a breach of an undertaking given in the course of obtaining a Search Order.  In that case, the Court applied the judgment of Gibbs CJ, Mason , Wilson  and Deane JJ in Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd[95] where it was observed that the role of the Court in dealing with questions of civil contempt in procedural matters is normally regarded as being a remedial or coercive one - that is directed towards securing to the party entitled thereto the benefits of the Court’s order or of the undertaking to the Court- however, there are cases where the Court is called upon in addition to exercise a disciplinary jurisdiction in the public interest.[96]

    [94] (1998) 44 NSWLR 545.

    [95] (1986) 161 CLR 98 at 109.

    [96] (1998) 44 NSWLR 545 at 571.

25. The importance of complying with undertakings was also emphasised in Tate Access Floors Inc v Boswell[97] where Browne-Wilkinson VC held:

    I was not referred to any authority directly in point, but I accept that if in the course of executing a Mareva or Anton Pillar order the plaintiffs fail properly to observe any undertaking given to the court as a term of granting the ex parte order or otherwise act scandalously the court can and will take such conduct into account in deciding whether or not to set aside the ex parte order or grant further relief.  Mareva and especially, Anton Pillar orders confer on one party to litigation draconian powers to interfere with the defendant’s life and privacy without the party so interfered with being heard at all.  The court in trying to protect so far as possible the absent party always imposes undertakings on the plaintiff and expects the order to be carried out in good faith. Failure to observe the undertakings or observe such good faith should not be tolerated.  

    [97] [1991] Ch 512 at 533.

26. Counsel for the applicant, whilst acknowledging the breach of the undertaking, submitted that the breach did not cause the respondent to act in any particular way.  That is, the respondent did not on the return date seek to discharge or set aside the Search Order. As I have said previously in these Reasons, I accept that the respondent took a pragmatic approach in deciding not to challenge the orders and that had she been provided with a copy of the transcript and understood the nature of the claim made against her, she would have still taken the same approach.

27. Support for the proposition that the Court should consider the lack of any causative effect of the breach of an undertaking as a mitigating factor can be derived from the judgment of Neuberger J in Gill v Flightwise Travel Service Ltd[98] where His Honour held:

    ...it is important that undertakings given by an applicant, effectively in return of which the freezing order is granted, are complied with, and if they are not there is a good explanation as to why. The fact that there is a failure to comply with an undertaking given by the applicant to the court, in return for which the injunction was granted, is a potentially serious matter and may, in appropriate circumstances, justify the discharge of the injunction. Bearing in mind the nature and effect of a freezing order, and the fact that it is granted initially ex parte, an applicant should be in no doubt that the court will regard any failure to comply with an undertaking given if the freezing order itself is seriously viewed. Of course, if the breach of the undertaking does not cause the respondent, or anyone else, any damage that would be a mitigating factor. But it does not discharge the gravity of the failure to comply.

    [98] [2003] EWHC (Ch) 3082 at [28].

1. Although these comments were made in relation to a breach of an undertaking given in a Freezing Order, they apply equally to a Search Order.

2. In this case, the undertaking did cause or at least contribute to the respondent forming a mistaken view in relation to the nature of the claim. The breach of the undertaking is therefore a matter which I consider relevant in determining whether to exercise my discretion to discharge or set aside the Search Order.

3. However, because of the delay and lack of utility in seeking to discharge the Search Order and my finding that there was no causative effect of the breach, I have determined not to exercise my discretion to discharge or set aside the Search Order.

   Other complaints about the execution of the Search Order

4. I do not consider that the other complaints about the execution of the Search Order justify the discharge or setting aside of that Order.  I have already dealt with the submission made by the respondent that only junior lawyers executed the Search Order and have found that there is not sufficient evidence to support such a finding.  In any event, what is important is the criticisms of how the search was carried out, not the identity or experience of those lawyers who undertook that task.

5. I also do not consider that it was necessary that the statutory manager be present during the execution of the Search Order for the reasons that I have previously expressed in these Reasons.

6. The respondent has submitted that the search was not properly carried out because documents were seized that were outside the terms of the Search Order.  I am not prepared to make such a finding. Whilst I accept that it is very important that only documents that are covered by the order are seized, I do not consider the fact that a very small number of personal documents may have been seized that are outside the Order is, in the circumstances, a reason to discharge or set aside the Search Order. There is no evidence of any wide or systemic breach by the applicant’s solicitors in this regard.   There is no evidence that the applicant’s solicitors acted on some form of misapprehension as to the extent of the orders or the categories of documents that could be seized.  I also consider, in the context of the number of documents seized, the potential that some documents were seized that were outside the Order, does not provide support for an application for the discharge or setting aside of the Search Order.

   Final relief not sought in the Summons

7. The respondent complains that the applicant had not set out in the original Summons the final relief that it was seeking, other than replicating the interlocutory orders being sought.  The respondent submitted that it was therefore beyond power to make the Search Order and cited in support of that submission, the decision in ABC v Lenah Game Meats Pty Ltd.[99]  I do not accept that submission. In that case, Gleeson CJ held that a party seeking an interlocutory injunction must be able to show sufficient colour of right to final relief.[100]

   [99] (2001) 208 CLR 199 at [11].

   [100] Ibid at [11] and [15].

8. In my view, for the reasons that I have already expressed, the applicant did disclose at the hearing on 20 March 2020 the nature of the final relief that it was seeking.  This was not a case where there was no final relief being sought and therefore a case where the principles set out above in ABC v Lenah Game Meats apply.  The failure to specify that relief in the Summons was at most a procedural defect that did not invalidate the making of the Search Order.

   Subsequent actions of the applicant in not pursuing a claim

9. Therespondent submitted that I should also take into account the subsequent conduct of the applicant in not pursuing a substantive claim in the proceedings.

10. That matter may be relevant to the issue of costs, but it is not relevant in my opinion to the issue of the discharge or setting aside of the Search Order. The respondent has conceded that she does not seek the return of the documents and that the discharge or setting aside of the Search Order is not sought for that purpose. Instead, the respondent has sought the orders in support of her submission that the Search Order should not have been made.

11. Therefore, in my view, conduct subsequent to the making of the Search Order cannot be used in support of a submission that the Order should not have been made, unless it throws light on the circumstances existing at the time that the Search Order was made. It does not do so in the present case because of my finding that at the time that the Search Order was made, the applicant had a genuine cause of action relating to the delivery up of documents or detinue.

    Respondent’s application for the dismissal of the proceedings

12. In her interlocutory application, the respondent sought an order dismissing the proceedings. This submission was not pressed at the hearing of the application by senior counsel for the respondent. Given that there is an extant controversy about the electronic data downloaded from the computer, which both parties require me to resolve, it is apparent that it is not appropriate for the proceedings to be dismissed at this time.

    Costs application of both parties

13. Both parties have sought orders that the costs associated with the Search Order and the costs of the proceedings be their costs.

14. The proceedings are still on foot, if only for the purposes of determining the dispute in relation to the computer data.  There has been no determination of the dispute on the merits.  I have declined to make the declarations sought by the applicant or dismiss the proceedings, as sought by the respondent.

15. In such circumstances, the principles set out by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin[101] will guide the exercise of the discretion as to costs:

    In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

    In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.

    Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.

    If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases (footnotes omitted).

    [101] (1997) 186 CLR 622 at 624-5.

16. Three principles relevant to the exercise of the discretion as to costs can be derived from this passage. First, it will usually be the case where there has been no hearing on the merits that the court will not embark on an inquiry to determine the merits of the matter.[102]  Secondly, the exercise of the Court’s discretion will be informed by the conduct of the parties.[103] Thirdly, there may be cases where the Court is able to say that one party would almost certainly have succeeded if the matter proceeded to judgment.[104]

    [102] See also Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 at 287; Golden City Car & Truck Centre Pty Ltd v Deputy Commissioner of Taxation [2000] FCA 1697.

    [103] Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201.

    [104] See Thomson v Mosman Council [1999] NSWLEC 86 at [61].

    Applicant’s application for costs

17. The applicant submitted that it was entitled to costs on two bases: first, the Court should feel confident that the applicant would have succeeded if the matter had been fully tried and secondly, it was entitled to the costs of the Search Order, because it was justified in seeking and obtaining that order.

18. I reject the submission of the applicant that it would have succeeded in the matter if the proceedings had been fully tried. The difficulty with that submission is that the applicant had not addressed or formulated its cause of action in the documents that it had served on the respondent. The respondent believed she was defending another claim.  The time for the filing of a defence had not arisen.  As I have said, the Summons claimed no relief other than the Search Order. No statement of claim was filed, even though there was ample time to prepare a statement of claim prior to the institution of proceedings.  The respondent was not advised of the claim being made by the applicant, because it had not been provided with a copy of the transcript. The applicant amended its Summons in September 2020 to seek declaratory relief for the first time.

19. In all of these circumstances and in particular where it had not formulated its claim with any precision or clarity, it cannot be said at any time that the applicant was destined to succeed in the proceedings. Further, there is no evidence that would allow me to determine that matter.

20. Even if there had been sufficient evidence to allow me to conclude that the applicant was destined to succeed in the proceedings, I would have declined to exercise my discretion to award costs in favour of the applicant because (a) it had breached the terms of the undertaking and therefore caused the respondent to misapprehend the nature of the claim made against her and (b) there had been no joinder of issues between the parties because of the failure of the applicant to articulate its claim in any pleading.

21. For the above reasons, I decline to award the applicant costs of the proceedings.

22. Alternatively, the applicant claims the costs of and incidental to the application of the Search Order. In substance, these costs will be substantially the same as the costs of the proceedings as most of the hearings concerned matters associated with the Search Order.

23. In this case, there were no contested hearings about the Search Orders (except in relation to application by the applicant for the production of the mobile telephone records in respect of which application the respondent was successful).  In the most part, the parties worked co-operatively to resolve issues associated with the Search Order (for example, questions of privilege and inspection of documents).  It would normally be the case that in such circumstances, the costs of application would be the costs in the cause. In this case, as I have found that the applicant was not entitled to costs in the proceedings, it would follow that it was not entitled to the costs of and incidental to the application for the Search Order.

24. Further, in the present case, the failure of the applicant to comply with the terms of the undertaking is, in my view, a matter of such importance, that it would disentitle the applicant to costs that it might otherwise be entitled.

25. I would also find that it is not clear that the applicant was entitled to the benefit of the Search Order, had the matter been fully argued.[105] In particular, I consider that the terms of the Search Order would have been varied to limit the search to accounting and financial records.

    [105] See Posner v Shan [2005] EWHC 1063.

26. For the above reasons, I find that the applicant is not entitled to costs in relation to the obtaining and execution of the Search Order and all matters associated with those matters.

    Respondent’s application for costs

27. I now consider the application of the respondent for costs, including on an indemnity basis.

28. The application was not made on the basis that it was bound to succeed in the proceedings, but on the basis of the unreasonable conduct of the applicant.

29. For the reasons that I have discussed above, I would not have embarked on a hypothetical trial to determine who would have succeeded in the proceedings as a whole.

30. The claim by the respondent for costs, including on an indemnity basis arises because of what the respondent alleges was the unreasonable conduct of the applicant in obtaining the Search Order.  In accordance with my findings expressed earlier in these Reasons, there are three relevant matters upon which the respondent is entitled to rely. They are (1) the breach of the undertaking, (2) the Search Order being broader than necessary in that it sought all documents which the applicant reasonably believed were its property, when its legitimate interests (a least on an urgent basis) were only in relation to the financial and accounting records, and (3) the failure on the part of the applicant to refer at the hearing on 20 March to less intrusive orders that may have been sufficient to achieve its legitimate objectives.

31. I regard the breach of the undertaking as a very serious matter. Had it had a causative effect, I would have considered it to be a matter that would warrant a costs order in favour of the respondent. However, I have found that the breach of the undertaking did not have that affect. As I have expressed previously, the respondent took a pragmatic approach and elected not to seek to discharge or set aside the Search Order.  I have found that had the respondent been provided with the transcript and known the cause of action relied upon, she would have maintained that same position. In these circumstances, the breach of the undertaking has not been causative of any change of position or loss on the part of the respondent. The respondent would not have challenged the Search Order.

32. I must then consider whether, notwithstanding the lack of causative affect in terms of forestalling an application, the breach of the undertaking was sufficiently serious in itself to warrant the making of a costs order in favour of the respondent. I am conscious that such an order would reinforce the duty of practitioners to comply with undertakings and would serve as a reminder of how seriously the Court treats a breach of an undertaking.  Ultimately, however, I consider that I must do justice between the parties. Therefore, given that, on my findings, the breach was inadvertent and that the respondent would not have changed her position had the undertaking been complied with and the transcript provided, I will not award costs in favour of the respondent because of this failure on the part of the applicant’s solicitors.  I also consider that it is appropriate not to penalise the applicant because of the generally co-operative approach taken by the parties to resolve matters arising out of the Search Order.

33. In my view, the respondent was aware of the terms of the Search Order and its width. She chose not to challenge the width of the order on the return date, although it could have been open for her to do so. Had she done so, it was unlikely that the Search Order would have been discharged in its entirety, but rather varied in its terms.

34. Again, the pragmatic approach taken by the respondent suggests that the width of the Order did not cause the respondent to act in a different way than she would have done had the Order been more circumscribed. 

35. I have also considered whether the width of the Search Order caused prejudice or inconvenience to the respondent during the course of the execution of the Search Order so as to warrant an adverse costs order. There is no evidence of any prejudice or inconvenience caused.

36. Thirdly, I have considered the failure of the respondent to address the Court on less intrusive ways the applicant could have employed to obtain the documents it sought. Again, this was a matter that was open for the respondent to have argued on the return date. Whilst she did not have the benefit of the transcript to see what had been put forward at the ex parte hearing on 20 March 2020, the respondent could still properly have argued that the Search Order should be discharged because other orders could have been made.  The respondent elected not to do so and took a pragmatic approach to resolving issues relating to the Search Order.

37. The respondent also submitted that because of the failure to disclose the above matters (ie the width of the order and the availability of other ways to obtain the documents that were sought) at the ex parte hearing on 20 March 2020, the Search Order was wrongly made. The respondent submits that had they been disclosed the Search Order would not have been made.  Therefore, even if the Search Order is not set aside for other reasons (eg because of the delay and lack of utility in setting aside the Order), this failure could still have cost consequences.

38. That submission again invites the Court to embark on a hypothetical exercise as to how it would have exercised its discretion on the ex parte hearing on 20 March 2020, had those facts been specifically brought to its attention.  It is not clear to me how the Court would have exercised its discretion in this event. The Search Order may have been amended to refer to only accounting and financial records. It also seems to me that delay and failure to challenge the order at that time is an important factor in militating against an award of costs of the application. It does invite the court to embark on a hypothetical re-hearing of the application.

39. For these reasons, in the exercise of my discretion, I refuse the application of the respondent to award costs in her favour, either in relation to the proceedings in general or in relation to the Search Order.

    Conclusion

40. For the reasons that I have expressed, I make the following orders:

    (1)I dismiss the applicant’s application for a declaration.

    (2)I dismiss the applicant’s application for summary judgment.

    (3)I dismiss the respondent’s application to discharge or set aside the Search Order.

    (4)I dismiss the respondent’s application for dismissal of the proceedings;

    (5)I dismiss the applicant’s application for the costs of the proceedings.

    (6)I dismiss the applicant’s application for the costs of and incidental to the Search Order.[106]

    [106] Transcript of the hearing on 19 February 2021 at p 160 lines 13-25. Transcript of the hearing on 15 September 2020 at p line 23-30.

    (7)I dismiss the respondent’s application for the costs of the proceedings.

    (8)I dismiss the respondent’s application for the costs of and incidental to the obtaining, execution, performance and discharge of the Search Order.

    (9)There will be no order for costs to date of or incidental to the obtaining, execution, performance and maintenance of the Search Order except for any existing costs order made in favour of one or the other party or reserved costs;

    (10)I will hear the parties further on the costs of these applications, any reserved costs and directions in relation to the dispute concerning the data downloaded from the computer.