Romeg Holdings Pty Ltd v Kelly
[2010] WASC 404 (S)
•22 DECEMBER 2010
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS |
| CITATION | : | ROMEG HOLDINGS PTY LTD -v- KELLY [2010] WASC 404 (S) |
| CORAM | : ALLANSON J | ||
| HEARD |
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| DELIVERED |
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| SUPPLEMENTARY | |||
| DECISION |
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| FILE NO/S |
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| BETWEEN |
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AND
GAVIN KELLY
First Defendant
CHEW SENG THEO
Second Defendant
SCOTIA INSPECTION CONSULTANTS PTY LTD
Third Defendant
Catchwords:
Practice and procedure - Costs - Costs of proceedings for interlocutory injunction - Special costs order - Fixing costs
[2010] WASC 404 (S)
Legislation:
Legal Profession Act 2008 (WA), s 280(2)
Result:
Order for costs with special costs order
Category: B
Representation:
Counsel:
| Plaintiff | : | Dr P R MacMillan |
| First Defendant | : | Mr M G Pendlebury |
| Second Defendant | : | Mr M G Pendlebury |
| Third Defendant | : | Mr M G Pendlebury |
Solicitors:
| Plaintiff | : | Gibson Lyons |
| First Defendant | : | WHL Legal Pty Ltd |
| Second Defendant | : | WHL Legal Pty Ltd |
| Third Defendant | : | WHL Legal Pty Ltd |
Case(s) referred to in judgment(s):
3 Oceans Wine Company Pty Ltd v Heyshott Pty Ltd [2011] WASC 12 (S)
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR
57
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234
CLR 52
Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738
Joyce v Palassis [2006] WASC 242
Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534
Le Brun v Joseph [No 2] [2010] WASCA 52 (S)
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Topseal Concrete Services Pty Ltd v Sika Australia Pty Ltd [2008] WASC
57 (S)
| ALLANSON J | [2010] WASC 404 (S) |
ALLANSON J: On 22 December 2010 I delivered judgment on an application by the plaintiff, Romeg Holdings Pty Ltd, for various interlocutory injunctions against the defendants. The background is set out in my reasons on that occasion.
The defendants have now applied for costs in relation to the interlocutory proceedings. They seek the following orders:
i) plaintiff to pay the defendants' costs of the motion, with those costs to be taxed if not agreed; ii) the above costs be subject to a special costs order removing the limits on the costs fixed in the determinations that are applicable under the scale; iii) those costs be payable forthwith.
To determine that application it is necessary to set out a chronology of these proceedings in some greater detail.
4 The proceedings commenced by the plaintiff (applicant) filing a
statement of claim on 12 October 2010. At the same time the plaintiff filed a chamber summons seeking interlocutory injunctions, some of which were initially sought ex parte. Relevantly, the chamber summons sought the following orders:
3. Pending further order the respondents be forthwith restrained and an injunction is hereby granted restraining them from:
(a) canvassing or soliciting or by any other means seeking to conduct any non-destructive test inspecting of Oil Country Tubular Goods and of lifting and lifted equipment for any person who was a customer or client of the applicant in the period 1 January 2010 to the date of this Order; (b) alternatively to paragraph 2(a) providing in Western Australia non-destructive inspection services of Oil Country Tubular Goods or of lifting and lifted equipment to: (i) Weatherford Australia Pty Ltd;
(ii) Tasman Oil Tools Pty Ltd;
(c)
using or disclosing any confidential information of the applicant (being confidential information described in the schedule hereto);
| ALLANSON J | [2010] WASC 404 (S) |
(d) deleting, or instructing or allowing any other person to delete, any information (including any document or email communication) from any computer or electronic storage device in their possession or under their control; (e) destroying or passing to any third party any document that is or contains material obtained from the applicant; (f) soliciting, enticing or inducing, whether directly or indirectly, any manager of employer of the applicant to leave the employ of the applicant and become employed by any person, firm or company which trades in competition with the applicant. 4. The first and second respondents be directed to deliver up to the Registrar of this Court by no later than 4 pm on 25 October 2010:
(a) any computer or electronic storage device in their possession or under their control; (b) all copies of any confidential information (being the confidential information described in the schedule hereto) of the applicant and the respondents' possession, custody or control; (c) an affidavit by each respondent stating: (i) whether he or it has caused or permitted any of the applicant's confidential information to be passed to any other person, and if so, the description of that information, the identity of the person to whom it has been passed, and how and when it was so passed;
(ii) he or it has delivered up every computer or electronic storage device in his or its possession or under his or its control;
(iii) he or it has not retained any copy of any confidential information or other property of the applicant including in any electronic form.
5 A schedule to the application set out categories of confidential
information. These were client lists; emails from the plaintiff's clients; documents relating to its business; and other information concerning the plaintiff's business or the work it performed for its clients, that had come to the defendant's knowledge in the course and scope of their employment with the plaintiff and which the plaintiff had not made publicly available.
| ALLANSON J | [2010] WASC 404 (S) |
On 20 October 2010 I made orders ex parte in terms of orders 3(c), (d) and (e) of the application.
7 The matter came before me again on 22 October 2010, with the
defendants (respondents) now represented. Further orders were made by
consent as follows:1. Pending further order, the respondents be forthwith restrained and an injunction is hereby granted restraining them from:
(f) soliciting, enticing or inducing, whether directly or indirectly, any manager or employee of the applicant to leave the employ of the applicant and become employed by any person, firm or company which trades in competition with the applicant. 2. The respondent be directed to deliver up to the solicitors for the applicant by no later than 29 October 2010:
(b) all copies of any confidential information (being the confidential information described in this schedule) of the applicant in the respondent's possession, custody or control; (c) any affidavit by each of the first and second respondents and by a deponent on behalf of the third respondent stating: (i) whether he or it has caused or permitted any of the applicant's confidential information to be passed to any other person, and if so, the description of that information, the identity of the person to whom it has been passed, and how and when it was so passed, and
(ii) he or it has not retained any copy of any confidential information or other property of the applicant, including in any electronic form.
Such affidavit to be filed by 4 pm on 1 November 2010.
8 Orders were made for the filing and serving of affidavits by the
defendants and further affidavits by the plaintiff. At the request of the defendants I made an order that any party wishing to cross-examine the deponent of an affidavit give notice by 4 pm on 5 November 2010. The defendants gave notice that they wished to cross examine the plaintiff's witnesses.
| ALLANSON J | [2010] WASC 404 (S) |
9 On 26 October the defendants applied for the early return of a
subpoena to the plaintiff to produce documents. The defendants said the documents were required on an urgent basis in order to prepare their defence to the application.
10 The defendants complied with the orders for the filing of affidavits
regarding confidential information. They also filed extensive affidavits in
response to the application for an injunction.11 On 18 November 2010 I heard the application for an injunction.
Although the defendants had given notice that they required the witnesses to attend the cross-examination, they did not persist with that requirement and the matter was dealt with solely on the affidavits without cross-examination. Detailed orders were made by consent setting out the conditions under which an independent computer expert would be given access to electronic storage devices in the possession of the defendants. The orders provided a framework for inspection, copying of data, and the resolution of any disputes regarding the use of data copied.
12 The defendants gave undertakings regarding restraints on the use or
disclosure of any confidential information, and regarding the deleting or destroying of any such information. On the basis of those undertakings the existing orders restraining the defendants were discharged.
13 Three matters remained in dispute: whether the defendants should be
restrained from canvassing or soliciting specified clients of the plaintiff; whether the defendants should be restrained from providing services to two named clients, Weatherford and Tasman Oil Tools; and whether the defendants should be restrained from soliciting, enticing or inducing any employee of the plaintiff to leave its employment.
14 The last of these was dismissed at the hearing on 18 November. I
reserved my decision with regard to the two restraints still in issue. On 22 December 2010, I dismissed the application to the extent it had not otherwise been disposed of.
Costs - the principles
Section 37(1) of the Supreme Court Act 1935 (WA) provides:
Subject to the provisions of this Act and to the rules of court and to the express provisions of the Magistrates Court (Civil Proceedings) Act 2004, or any other Act, the costs of and incidental to all proceedings in the Supreme Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge, and the Court or judge shall have
| ALLANSON J | [2010] WASC 404 (S) |
full power to determine by whom or out of what estate, fund, or property,
and to what extent such costs are to be paid.
The ordinary principle reflected in Rules of the Supreme Court 1971 (WA) O 66 r 1, is that the court will generally order that the successful party recovers its costs: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [66] (McHugh J), [134] (Kirby J). See also Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 562 - 563, 566 - 567. There is, however, no automatic rule that costs always follow the event: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 [26] - [27], [34]; Oshlack [40].
In Oshlack, Gaudron and Gummow JJ said of the similar discretion
in s 69(2) of the Land and Environment Court Act 1979 (NSW):
The provisions of s 69 of the Court Act which confer upon the Court the discretion exercised by the primary judge attract the application of the general proposition that it is inappropriate to read a provision conferring jurisdiction or granting powers to a court by making conditions or imposing limitations which are not found in the words used. The necessity for the exercise of the jurisdiction or power by a court favours a liberal construction. Considerations which might limit the construction of such a grant to some different body do not apply.
The terms of s 69(2) contain no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be 'definitely extraneous to any objects the legislature could have had in view' [21] - [22]. (citations omitted)
18 While the discretion to award costs is, in the sense referred to,
unconfined, the authorities offer guidance on the proper exercise of the discretion. Where the defendants seek a special order for costs, I must also have regard to the requirements of the Legal Profession Act 2008 (WA).
Costs on an application for an interlocutory injunction
19 The defendant submits that it has been successful on the application,
to the extent of the issues that were disputed, and the plaintiff should pay
its costs.
| ALLANSON J | [2010] WASC 404 (S) |
20 The plaintiff submits that an order that the applicant pay costs may
be appropriate where an application is dismissed for failure to establish a prima facie case, but not where it is dismissed on the balance of convenience or other discretionary grounds: referring to the judgment of Beech J in Topseal Concrete Services Pty Ltd v Sika Australia Pty Ltd [2008] WASC 57 (S) [6] - [7]. This prompted a response in the defendant's submissions in reply that, properly interpreted, my decision on the injunction dismissed the application because of the weakness of the plaintiff's case and not merely on the balance of convenience.
21 The distinction referred to in the submissions is not particularly
helpful. The requirements relating to the existence of a serious question to be tried are not independent of those relating to whether the balance of convenience favours the granting of an injunction. I do not read the decision of Beech J as purporting to state any rule as to when costs will be ordered. Nor do I read his Honour as proposing a clear distinction between cases where the applicant has not demonstrated a prima facie case for relief, and cases determined on the balance of convenience. Indeed his Honour cites Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, where the majority affirmed that 'the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought': [19] (Gleeson CJ and Crennan J); [65], [71] (Gummow and Hayne JJ).
That is the approach which I took in deciding the application. Specifically, at [28], I said:
I will deal first with the allegations of breaches of duty while employed by Romeg. I have not made any final findings on contested issues of fact. The affidavit evidence was extensive, but the parties were limited by tight time schedules, there has been no discovery, and (although it was foreshadowed) no party applied to cross-examine any of the deponents. It is, however, necessary to make a judgment about the apparent strength of Romeg's case. Romeg and Scotia are now competitors in the same market. Whether the court grants the orders sought may affect the ability of each of them to compete in that market. In particular, if the first order is made, Scotia will be largely prevented from soliciting work. The grant of an injunction involves balancing the injustice which might be suffered by Scotia if the injunction is granted and Romeg later fails at trial, against the injustice which might be suffered by Romeg if the injunction is not granted and it later succeeds at trial: Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670; Madaffari v Labenai Nominees Pty Ltd [2002] WASC 67 [14]. As the apparent strength of Romeg's case diminishes, the balance of convenience moves against the making of an
| ALLANSON J | [2010] WASC 404 (S) |
order: Glenwood Management Group Pty Ltd v Mayo [1991] VicRp 45;
[1991] 2 VR 49, 54 - 55; Todd v Novotny [2001] WASC 171.
At [66], I referred also to the practical consequences of granting
relief:
As set out above, I cannot now resolve contested factual issues. But I must, on the evidence now available, assess whether the probability that the plaintiff will obtain relief at trial is sufficient to justify the consequences that would flow from making the orders sought. Those orders would prevent Scotia from seeking work from a large part of the market for its services, or, if the alternative relief were granted, would require it to cease work for two significant clients. In a practical sense, the relief could determine the substance of the dispute. That consequence warrants a careful consideration of the merits of the claim: see Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 536 (McLelland J) cited in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 [72].
24 In my opinion, the following factors are relevant to the exercise of
my discretion. First, the orders sought by the plaintiff included orders preserving the position until an independent computer expert could examine the computers and other electronic storage devices in the possession of the defendants. These orders were made by consent on 11 and 18 November 2010. Second, the plaintiff sought orders for the defendants to provide affidavits relating to what they had done with any confidential information. These orders also were made by consent. Third, on about 9 November 2010, the defendants offered an undertaking in relation to the use of confidential information, although it was limited and less than that sought by the plaintiff. Fourth, the defendants issued a subpoena to the plaintiff, with early return, but did not rely on the documents produced and did not seek to cross-examine the deponents of the plaintiff's affidavits in relation to those documents. Fifth, the plaintiff alleged, or at least insinuated, serious misconduct by the first defendant. It was appropriate for the defendants to respond to that material.
25 Finally, and perhaps most importantly, I am still of the view stated in
[66] of the primary decision. The orders that were disputed would, if granted, have prevented Scotia from seeking work from a large part of the market for its services, or would have required that it cease work for two significant clients. They have been successful in resisting those orders. This, in my opinion, makes it proper to award costs to the defendants. The other factors bear on the extent to which costs should now be ordered.
| ALLANSON J | [2010] WASC 404 (S) |
26 It is difficult to tease out the work done in relation to the orders
which were agreed and those which remained in dispute. It cannot be done simply by reference to date, as the contested matters were in dispute from the outset. The most serious allegations against the defendants were made in the first affidavits filed by the plaintiff. But there are some matters that should be excluded from an order for costs. The defendants should not now have an order for the costs associated with compliance with the orders to which they consented, including the preparation of the affidavits required by those orders. Those costs should be reserved to the trial judge, when the results of the computer inspection are known. Nor, in the circumstances, should I now make an order in relation to the costs associated with the application for the subpoena. Those costs should also be reserved.
27 With those exceptions, I will order that the plaintiff pay the
defendants' costs of the interlocutory application to be taxed if not agreed.
Special costs orders
28 The defendant seeks a special costs order removing the limits on
costs in the legal costs determination. The application is brought pursuant
to s 280(2) of the Legal Profession Act 2008, under which:[I]f a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
(a) order the payment of costs above those fixed by the determination; (b) fix higher limits of costs than those fixed in the determination; (c) remove limits on costs fixed in the determination; (d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
29 In an application for an order under the identical provision in the
Legal Practice Act 2003, the Court of Appeal said in Le Brun v Joseph
[No 2] [2010] WASCA 52 (S) [6]:Such an application involves two questions: first, whether it is fairly arguable that the taxing officer might properly allow costs at an amount greater than the amount allowable under the relevant legal costs determination; and secondly, whether the inadequacy of the amount allowable under the relevant legal costs determination arises because of the unusual difficulty, complexity or importance of the matter: Heartlink Ltd
| ALLANSON J | [2010] WASC 404 (S) |
v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC
254(S) [16].
30 The defendant relies on the importance of the proceedings. I doubt
they could be characterised as unusually difficult or complex. Importance, in this context, allows the court to have regard to whether the work done was appropriate to the significance of the issues that arose, including their significance to the parties: Heartlink [19]. For the reasons set out above, I am satisfied that the proceedings were important so that it is, at least, fairly arguable that the taxing master might properly allow costs at an amount greater than the amount allowable under the relevant costs determination: Heartlink [16]. I will make an order under s 280(2)(c) of the Legal Profession Act removing the limit on costs fixed in the determination. The effect of that order was explained by the Chief Justice in Heartlink:
It would be quite consistent … for a taxing officer to conclude, after considering the bill in detail, that in fact the amount to be allowed on taxation is less than the limit. So it will be entirely for the taxing officer to determine whether or not the work was properly and appropriately done and, if so, the amount properly allowed. The only effect of the order which I propose to make will be to free the taxing officer of the constraint which would otherwise be imposed [26].
If it is necessary to make such an order (see Joyce v Palassis [2006] WASC 242) I will also order that the costs should be paid forthwith.
Fixing costs
32 As an alternative, the defendants submitted that I might fix costs, in
accordance with the principles set out in Brookvista Pty Ltd v Meloni [2009] WASCA 180 [26] - [27]. The purpose of fixing costs is to avoid the expense and delay involved in a taxation.
I am not confident that I have the material required to fix an appropriate sum: see Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 [22]. In an earlier matter, 3 Oceans Wine Company Pty Ltd v Heyshott Pty Ltd [2011] WASC 12 (S), I fixed costs after receiving further submissions. I have reservations about whether there was a sufficient saving in time and expense to justify the process in that case. I have even greater reservations in the present case where the defendants say that they have already incurred more than $8,000 in solicitor-client costs in regard to drafting submissions on costs. Further cost to the parties in drafting costs submissions is not consistent with the principle of proportionality under which the court must proceed.
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