Stanley v Layne Christensen Company

[2006] WASCA 56

STANLEY & ORS -v- LAYNE CHRISTENSEN COMPANY & ORS [2006] WASCA 56

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2006] WASCA 56
Court:	THE COURT OF APPEAL (WA)
Case No:	CACV:103/2005	Heard:	6 & 7 FEBRUARY 2006
Coram:	STEYTLER P WHEELER JA PULLIN JA	Delivered:	5/04/06
No of pages:	28	Judgment Part:	1 of 1
Result:	Appeal dismissed Cross-appeal allowed
Category:	B
PDF Version

Parties:	ROSS FRANCIS STANLEY AZILIAN PTY LTD SIERRA BAY PTY LTD DAVID HARPER GEODRILL LTD LAYNE CHRISTENSEN COMPANY STANLEY MINING SERVICES PTY LTD WEST AFRICAN DRILLING SERVICES PTY LTD WEST AFRICAN DRILLING SERVICES (NO 2) PTY LTD
Catchwords:	Turns on own facts
Legislation:	Rules of the Supreme Court 1971 (WA), O 20 r 13(1)(b)
Case References:	Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053 Briggs v Curtis Quick & Associates, unreported; SCt of WA; Library No 980141; 30 March 1998 Brilliant Digital Entertainment Pty Ltd v Universal Music Australia Pty Ltd (2004) 63 IPR 273 Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537; (2004) ATPR (Digest) 46-245 Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169; (2004) ATPR 42-013 Fried v National Australia Bank Ltd [2001] FCA 907; (2001) 111 FCR 322 Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566 JWH Group Pty Ltd v Kimpura Pty Ltd [2004] WASC 39 Layne Christensen Company & Ors v Stanley & Ors [2005] WASC 169 Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 Porteous v Rinehart (1996) 22 ACSR 364 Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 Wilson v Metaxas [1989] WAR 285 Allen v Flood [1898] AC 1 Alliance Paper Group plc v Prestwich [1996] IRLR 25 Allied Dunbar (Frank Weisinger) v Weisinger [1988] IRLR 60 Allstate Life Insurance Company v New Zealand Banking Group Pty Ltd (1995) 58 FCR 26 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288 Associated British Ports v Transport & General Workers' Union [1989] 3 All ER 822 Bahr v Nicolay (No 2) (1988) 164 CLR 604 BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 Butt v Long (1953) 88 CLR 476 Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 Cream v Bushcolt Pty Ltd [2004] WASCA 82; (2004) ATPR 42-004 Dawnay, Day & Co Ltd v D'Alphen [1997] IRLR 442 Dunlop v Lambert (1839) 7 ER 824 Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473 Geraghty v Minter (1979) 142 CLR 177 Gold Coast City Council v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135 Green v Russell [1959] 2 QB 226 Jacoby v Whitmore (1883) 49 LT 335 Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1959] Ch 108 Layne Christensen Co v Stanley [2002] WASC 249 Little v Law Institute of Victoria (No 3) (1990) VR 257 Lonhro plc v Fayed [1992] 1 AC 448 Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 70 FLR 135 Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899; (1999) 93 FCR 34 McKellar v Container Terminal Management Services Ltd [1999] FCA 1101; (1999) 165 ALR 409 Office Angels Ltd v Rainer-Thomas [1991] IRLR 214 Re Schebsman [1944] Ch 83 Re Webb [1941] 1 All ER 321 Rookes v Barnard [1964] AC 1129 Short v City Bank of Sydney [1912] HCA 54; (1912) 15 CLR 148 Smith v Littlemore (1996) 15 WAR 289 Stenhouse Australia Ltd v Phillips [1974] AC 391 Systems Reliability Ltd v Smith [1990] IRLR 377 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107 Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70 West v Houghton (1879) 4 CPD 197 Winterton Constructions Pty Ltd v Hambros Australia Ltd & Anor (1991) 101 ALR 363

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : STANLEY & ORS -v- LAYNE CHRISTENSEN COMPANY & ORS [2006] WASCA 56 CORAM : STEYTLER P

WHEELER JA
PULLIN JA

HEARD : 6 & 7 FEBRUARY 2006 DELIVERED : 5 APRIL 2006 FILE NO/S : CACV 103 of 2005 BETWEEN : ROSS FRANCIS STANLEY

First Appellant

AZILIAN PTY LTD
Second Appellant

SIERRA BAY PTY LTD
Third Appellant

DAVID HARPER
Fourth Appellant

GEODRILL LTD
Fifth Appellant

AND

LAYNE CHRISTENSEN COMPANY
First Respondent

STANLEY MINING SERVICES PTY LTD
Second Respondent

(Page 2)

WEST AFRICAN DRILLING SERVICES PTY LTD
Third Respondent

WEST AFRICAN DRILLING SERVICES (NO 2) PTY LTD
Fourth Respondent

ON APPEAL FROM:

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Coram : MASTER SANDERSON

Citation : LAYNE CHRISTENSEN COMPANY & ORS -v- STANLEY & ORS [2005] WASC 169

File No : CIV 2465 of 1999

Catchwords:

Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 20 r 13(1)(b)

Result:

Appeal dismissed

Cross-appeal allowed

Category: B

(Page 3)

Representation:

Counsel:

First Appellant : Mr W S Martin QC & Mr S J Lemonis
Second Appellant : Mr W S Martin QC & Mr S J Lemonis
Third Appellant : Mr W S Martin QC & Mr S J Lemonis
Fourth Appellant : Mr D M Stone
Fifth Appellant : Mr D M Stone
First Respondent : Mr M J McCusker QC & Mr J A Thomson
Second Respondent : Mr M J McCusker QC & Mr J A Thomson
Third Respondent : Mr M J McCusker QC & Mr J A Thomson
Fourth Respondent : Mr M J McCusker QC & Mr J A Thomson

Solicitors:

First Appellant : Fairweather & Lemonis
Second Appellant : Fairweather & Lemonis
Third Appellant : Fairweather & Lemonis
Fourth Appellant : Williams & Hughes
Fifth Appellant : Williams & Hughes
First Respondent : Gadens Lawyers
Second Respondent : Gadens Lawyers
Third Respondent : Gadens Lawyers
Fourth Respondent : Gadens Lawyers

Case(s) referred to in judgment(s):

Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518
Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053
Briggs v Curtis Quick & Associates, unreported; SCt of WA; Library No 980141; 30 March 1998
Brilliant Digital Entertainment Pty Ltd v Universal Music Australia Pty Ltd (2004) 63 IPR 273
Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537; (2004) ATPR (Digest) 46-245
Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169; (2004) ATPR 42-013
Fried v National Australia Bank Ltd [2001] FCA 907; (2001) 111 FCR 322

(Page 4)

Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566
JWH Group Pty Ltd v Kimpura Pty Ltd [2004] WASC 39
Layne Christensen Company & Ors v Stanley & Ors [2005] WASC 169
Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85
Porteous v Rinehart (1996) 22 ACSR 364
Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Wilson v Metaxas [1989] WAR 285

Case(s) also cited:

Allen v Flood [1898] AC 1
Alliance Paper Group plc v Prestwich [1996] IRLR 25
Allied Dunbar (Frank Weisinger) v Weisinger [1988] IRLR 60
Allstate Life Insurance Company v New Zealand Banking Group Pty Ltd (1995) 58 FCR 26
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288
Associated British Ports v Transport & General Workers' Union [1989] 3 All ER 822
Bahr v Nicolay (No 2) (1988) 164 CLR 604
BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18
Butt v Long (1953) 88 CLR 476
Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460
Cream v Bushcolt Pty Ltd [2004] WASCA 82; (2004) ATPR 42-004
Dawnay, Day & Co Ltd v D'Alphen [1997] IRLR 442
Dunlop v Lambert (1839) 7 ER 824
Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473
Geraghty v Minter (1979) 142 CLR 177
Gold Coast City Council v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135
Green v Russell [1959] 2 QB 226
Jacoby v Whitmore (1883) 49 LT 335
Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1959] Ch 108
Layne Christensen Co v Stanley [2002] WASC 249
Little v Law Institute of Victoria (No 3) (1990) VR 257
Lonhro plc v Fayed [1992] 1 AC 448
Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 70 FLR 135
Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899; (1999) 93 FCR 34
McKellar v Container Terminal Management Services Ltd [1999] FCA 1101; (1999) 165 ALR 409
Office Angels Ltd v Rainer-Thomas [1991] IRLR 214

(Page 5)

Re Schebsman [1944] Ch 83
Re Webb [1941] 1 All ER 321
Rookes v Barnard [1964] AC 1129
Short v City Bank of Sydney [1912] HCA 54; (1912) 15 CLR 148
Smith v Littlemore (1996) 15 WAR 289
Stenhouse Australia Ltd v Phillips [1974] AC 391
Systems Reliability Ltd v Smith [1990] IRLR 377
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107
Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70
West v Houghton (1879) 4 CPD 197
Winterton Constructions Pty Ltd v Hambros Australia Ltd & Anor (1991) 101 ALR 363

(Page 6)

1 STEYTLER P: I have had the advantage of reading the judgment of Wheeler JA. I agree with her, for the reasons that she has given, that leave to appeal should, in each case, be refused, that the cross-appeal should be allowed, that the Master's orders as to the costs of the application should be quashed and that there should be substituted, in lieu, an order that costs be in the cause.

WHEELER JA:

Background

2 The Parties to this appeal are:

First appellant (first defendant) – Ross Francis Stanley

Second appellant (second defendant) – Azilian Pty Ltd

Third appellant (fifth defendant) – Sierra Bay Pty Ltd

Fourth appellant (third defendant) – David Harper

Fifth appellant (fourth defendant) – Geodrill Ltd

First respondent (first plaintiff) – Layne Christensen Company

Second respondent (second plaintiff) – Stanley Mining Services Pty Ltd

Third respondent (third plaintiff) – West African Drilling Services Pty Ltd

Fourth respondent (fourth plaintiff) – West African Drilling Services (No 2) Pty Ltd

3 The first respondent ("Layne") and the second respondent ("SMS") carry on a business providing drilling and related services to mining companies. SMS carried on its business in West and East Africa and Australia.

4 Layne made a successful takeover bid for SMS in 1997. Prior to the takeover the first appellant ("Stanley") was an executive director, employer and shareholder of SMS. Stanley was a director, secretary and shareholder in the second appellant ("Azilian") and a director, secretary and shareholder of the third appellant ("Sierra"). To effect the takeover, Layne purchased SMS shares from Stanley for just over $7.5 million, from Azilian for just over $10 million and from Sierra for approximately $30,000. Layne also agreed to procure employment for Stanley with SMS for three years, and in September 1997 SMS entered a consulting agreement with Stanley.

(Page 7)

5 In late 1997 the fourth appellant ("Harper") left SMS's employment and commenced to act as a director and employee of the fifth appellant ("Geodrill"). In May 1998 Azilian provided loan funds to Cartwheel Advance Ltd ("Cartwheel"), which on-lent the funds to Trans Traders Ltd ("Trans Traders"), which in turn on-lent the funds to Harper and Geodrill for the purpose of setting up a business in competition with SMS.

6 In October 1998 Layne, SMS, Ausdrill Ltd and Ausdrill International Pty Ltd entered into a joint venture in Africa. In November 1998 SMS assigned its assets to the third and fourth respondents ("WADS 1" and "WADS 2"), which were the two companies carrying on the business of the joint venture, and entered into various covenants to refer work to and not to compete with the joint venture companies. Initially Layne and SMS held a 50 per cent share in WADS 1 and WADS 2, but these companies became wholly owned subsidiaries in 2001. The distinction between WADS 1 and WADS 2 seems to be that WADS 1 operated in Ghana and WADS 2 operated in countries in West Africa other than Ghana.

7 In September 1999 Layne and SMS terminated the consulting agreement with Stanley.

8 SMS claims damages from Stanley on the basis that he breached the consulting agreement. I will refer to the terms of the consulting agreement later.

9 It is alleged that Stanley:

• planned and organised Geodrill's business to compete with SMS or a related corporation in Ghana, West Africa; namely, WADS 1;

• enticed Harper to leave SMS and to become a director and employee of Geodrill;

• caused or procured Azilian to provide the loan funds to Cartwheel, intending that Geodrill should receive the ultimate benefit of these funds;

• further caused or procured Cartwheel to provide the loan funds to Trans Traders, and caused or procured Trans Traders to provide the loan funds to Harper and Geodrill or to equipment suppliers on their behalf;

(Page 8)

• participated in Geodrill's business by regularly instructing Geodrill as to the conduct of its business and by performing services on behalf of Geodrill;

• disclosed confidential information to Harper and Geodrill relating to SMS's clients, methodology, equipment, business and operations; and

• is in receipt of income from Geodrill, including interest on the loan funds.

10 SMS also claims:

• damages from Azilian for intentionally interfering with and inducing Stanley to breach the consulting agreement, in that Azilian loaned funds or provided facilities to Cartwheel, knowing that such funds were to be used to establish and operate Geodrill's competing business in Ghana;

• damages from Harper for intentionally interfering with and inducing Stanley to breach the consulting agreement in that Harper:


rendered services as director and employee to Geodrill;

informed Stanley of, and acted upon Stanley's instructions regarding, the conduct of Geodrill's business;

caused Geodrill to borrow money from Trans Traders knowing that this money originally came from Azilian, as planned and organised by Stanley;

assisted Stanley in planning, organising and participating in Geodrill's business; and

assisted Stanley to conceal his participation in Geodrill's business by stating that Stanley was not participating in Geodrill's business and saying that Geodrill was financed by Harper's uncle;

(Page 9)

• damages from Geodrill for intentionally interfering with and inducing Stanley to breach the consulting agreement in that Geodrill:

sought and acted upon instructions from Stanley as to the conduct of its business; and

borrowed money from Trans Traders knowing that this money originally came from Azilian, as planned and organised by Stanley;

• damages from Stanley, Azilian and Harper on the grounds that with intent to injure SMS and Layne, they conspired, agreed to and combined in a course of action whereby one or more of them would commit unlawful acts, which were in fact committed. The acts of Stanley, Azilian and Harper mentioned above are alleged as the relevant acts which occurred in furtherance of the alleged conspiracy; and

• damages for breach of the consulting agreement by Stanley, based on the acts of Azilian, Harper and Geodrill mentioned previously, who are alleged to have been acting as Stanley's implied agents.

11 The first and second plaintiffs (respondents) were on 29 April 2004 given leave to amend their statement of claim in terms of a minute of proposed further reamended statement of claim and join the third and fourth plaintiffs (the third and fourth respondents: WADS 1 and WADS 2) and the fifth defendant (the third appellant: Sierra) as parties to the action, subject to the defendants (appellants) having a right to object.

12 It is alleged in the amended statement of claim that a breach by Stanley of the non-competition and non-solicitation covenants in the consulting agreement is actionable by:

• SMS in its own right, notwithstanding the assignments to WADS 1 and WADS 2: par 53;

• SMS as trustee on behalf of WADS 1 and WADS 2: pars 33A and 53;

• WADS 1 and WADS 2 as assignees of SMS's goodwill in its exploration business in West Africa because the

(Page 10)

benefit of the non-competition and non-solicitation covenants in cl 10 of the consulting agreement form part of, or run with, the goodwill and are enforceable by WADS 1 and WADS 2: pars 34A-34I and 53A;

• WADS 1 and WADS 2 as third parties named in the non-competition and non-solicitation covenants: par 53A; and

• WADS 1 and WADS 2 as beneficiaries of a trust of the covenants: pars 33A and 53A.

13 It is further alleged that damages for any commission of the tort of interference with contractual relations by Azilian, Harper, Geodrill or Sierra may be claimed by SMS, WADS 1 or WADS 2, depending on which of these is primarily entitled to enforce the covenant: pars 56, 60, 63 and 63D. There are corresponding amendments to the allegations of loss and damage for the conspiracy and agency claims: pars 66, 66C and 69. In relation to the joinder of Sierra as the fifth defendant, it is alleged that Sierra was the first intermediary company in the chain through which Azilian advanced funds to Harper and Geodrill and that Sierra received repayment of the principal and interest for the funds advanced. It is also alleged that:

• Stanley was a director of Sierra and caused or procured Sierra to so act: pars 39, 39A and 44A;

• Stanley breached the consulting agreement by causing or procuring Sierra to advance funds to Harper and Geodrill: pars 46 and 52;

• Sierra committed the tort of inducing Stanley to breach the consulting agreement: pars 63A-63D;

• there was a new conspiracy when Sierra joined in agreements with Stanley, Azilian, Harper and Geodrill, alleged on materially the same terms as the existing allegation of conspiracy: pars 66A and 66B;

• Stanley caused or procured Harper and Geodrill, as his agents, to solicit customers of SMS and that consequently the actions of Harper and Geodrill placed Stanley himself in breach of the non-solicitation covenants in the consulting agreement: pars 42A, 48A and 48B;

(Page 11)

• breaches of the non-solicitation covenants were induced by Azilian, Harper, Geodrill and Sierra: pars 54, 58, 61, 62 (particulars) and 65;

• Stanley breached various provisions in the consulting agreement (including the non-competition and non-solicitation covenants) by reason that Azilian, Harper, Geodrill and Sierra acted as his agent or alter ego. Amendment was also made as to who suffered the loss alleged due to the WADS 1 and WADS 2 amendments: pars 67-69; and

• Azilian had knowledge of Stanley's contractual obligations to WADS 1 and WADS 2: par 54.

The appeal

14 The appellants sought to have the amended pleading struck out on various grounds. The Master did not accept the appellant's submissions that the material facts pleaded do not disclose a reasonable cause of action: Layne Christensen Company & Ors v Stanley & Ors [2005] WASC 169. He said that these were matters for trial, and allowed the pleadings to stand.

15 This is an interlocutory appeal from that decision of Master Sanderson. The principles governing such an appeal are not in dispute. An appellant from an interlocutory decision of this kind must show that the decision was wrong, or attended with sufficient doubt to justify the grant of leave, and in addition that substantial injustice would be done by leaving the decision unreversed: Wilson v Metaxas [1989] WAR 285, at 294, Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40, at 53 - 57.

The consulting agreement

16 The consulting agreement, which is central to these appeals, was a tripartite agreement between Layne, SMS (referred to in the agreement as "the Company") and Stanley (referred to in the agreement as "the Consultant"). The recitals refer to the Consultant's then current employment by SMS, his intention to resign and to provide services as an independent consultant, and the Company's agreement to retain him as a consultant. The "Term" is defined as a period of three years, commencing on the date on which certain conditions precedent are satisfied, unless the agreement is terminated earlier. The agreement sets out the Company's

(Page 12)

agreement to retain the Consultant, his release from the prior employment agreement, and his duties and remuneration as a Consultant. It provides for termination of the agreement. Clause 9, dealing with confidentiality, contains a definition of "confidential information", which is as follows:

"9.1 The Consultant must not, except as authorized or required by his services as a consultant of the Company, reveal to any person or persons any of the trade secrets, secret or confidential operations, processes or dealings or any information concerning the Company's business or the organization, business finances, transactions or affairs of the Company which may come to his knowledge during his employment or at any time thereafter ('Confidential Information').

...

9.4 For the purposes of this clause 9, 'the Company' includes the Company and each related corporation of the Company."

17 The expression "related corporation" is not defined. The non-competition clause reads, in full, as follows:

"10. Non-Competition

10.1 In consideration of the retention of the Consultant and other valuable consideration, whether directly or indirectly received by the Consultant from the Company or Layne, and in order to reasonably protect the goodwill and the business of the Company, during the Term and for the period set out in clause 10.2 following the expiration or termination for any cause of the Undertaking, within the area set out in clause 10.3, the Consultant must not without the prior written consent of the Company:


(a) either as principal, agent, employee, associate, representative, partner, consultant or assistant of another approach or accept any approach from a Customer, with the view to soliciting for himself or any other person the business of or an order for services from that Customer where that would be

(Page 13)

in competition with the Company or any related or affiliated corporation;

(b) either as principal, agent, employee, associate, representative, partner, consultant or assistant of another seek to obtain orders in respect of any services provided by the Company or any related or affiliated corporation of the Company to a Customer;

(c) either as principal, agent, employee, associate, representative, partner, consultant or assistant of another seek to encourage an employee of the Company to leave the Company;

(d) plan, organize, participate in, or have any interest in as owner (except listed securities equaling [sic] no more than 10% of the issued capital), director, officer, partner, employee, consultant, agent, lender representative, adviser (paid or otherwise) of any business which is a competitor of the Company, or any affiliated or related corporation; or

(e) accept any employment or position or render any services which would require him to reveal, base judgments upon, or otherwise use any Confidential Information (as defined above).

For the purposes of this clause 'Customer' means any person who at the date of termination of the Consultant's employment by the Company is or was within the 12 months proceeding [sic: preceding] the termination a client or customer of the Company or a related or affiliated corporation of the Company.

10.2 The period referred to in clause 10.1 is:


(a) three years, or if that period is determined to be unenforceable then;

(b) two years, or if that period is determined to be unenforceable then;

(Page 14)

(c) one year.

10.3 The geographical area referred to in clause 10.1 is:

(a) Australia, South America, Africa and Asia, or if that area is determined to be unenforceable then;

(b) Australia, Africa and Asia or if that area is determined to be unenforceable then;

(c) Australia and Africa, or if that area is determined to be unenforceable then;

(d) Australia.


10.4 Clause 10.1 has effect as separate and independent covenants and restraints consisting of each separate covenant and restraint set out in clause 10.1 combined with each separate period set out in clause 10.2 and each separate geographical area set out in clause 10.3

10.5 Notwithstanding the provisions of clause 10.1, Consultant will be permitted to make investments in various mining concessions throughout the world, including specifically Equigold NL, provided that such investments do not include, as part of its object or purposes, providing services competitive to those currently offered by the Company.

10.6 If any part of clause 10 is or becomes invalid or unenforceable, that part will be deemed to be eliminated or modified to the extent necessary to make the rest of the clause enforceable.

10.7 The parties agree that any of the acts referred to in clause 10.1 by the Consultant would be unfair, would damage the business of the Company and would lead to substantial loss to the Company.

10.8 The provisions of this clause 10 do not in any way operate to limit the generality of any other clause of this agreement, each of which have at all times independent operation unrestricted by the provisions of this clause 10.

(Page 15)

10.9 The Consultant must not represent himself as being in any way connected with or interested in the business of the Company or any related corporation of the Company. For the purposes of this clause it is agreed that the use by the Consultant of the name 'Stanley' as part of a company, business or trading name, which business is competitive with that of the Company, would constitute a representation of connection with the Company."

The grounds of appeal

18 The first, second and third appellants have six grounds of appeal which fall broadly into three categories. As they had the carriage of the greater part of the appeals, I refer to them as "the appellants". The fourth and fifth appellants essentially support the first to third appellants' grounds 5.1 and 6, although they put their submissions in a slightly different way. It is convenient to deal with the grounds in an order different from that in which they appear in the appellants' case.

Ground 4 - "Related or Affiliated corporation"

19 The appellants assert that it is not arguable on the proper construction of the consulting agreement that WADS 1 and WADS 2 fall within the scope of the expression "related or affiliated corporation". As I understand it, the proposition is that the covenant must be interpreted at the time that the parties entered into the consulting agreement and that, since at that time WADS 1 and WADS 2 did not exist, the agreement cannot be construed so as to extend to them. That is asserted, both as a matter of construction, and because, it is submitted, if the covenant did extend to bodies not in existence at the time it was entered into, it would be void and unreasonable.

20 The reason for the latter proposition is said to be that a restraint of trade provision is justified only on the basis of the protection of the goodwill of the business which is being acquired. Since WADS 1 and WADS 2 were not in existence at the relevant time, it would not be their business which was being protected, and, further, their business was, by definition, not the business of SMS itself, and so could not be protected by a covenant in restraint of trade in favour of SMS. That submission was reinforced, it was asserted, by the definition of "customer" in cl 10 to mean a person who at the date of termination of Stanley's employment or within the 12 preceding months was a customer of SMS or of a related or affiliated corporation.

(Page 16)

21 It seems to me that the submissions of the appellants in relation to this ground may be reasons which in due course would lead a Court to the view that, construed against the relevant factual matrix, the consulting agreement did not extend to protect the business of WADS 1 and WADS 2, or that, if it did, it was void. However, it cannot be said that such a construction is unarguable, or that an agreement of that kind is inevitably void.

22 While the circumstances with respect to which issues of construction and reasonableness are to be judged are those existing at the time of entering into a contract, the Court may take into account future probabilities which could then have been foreseen. The foreseeability of those matters is one of the circumstances existing at the time of entering into the contract. Further, in assessing what probabilities were foreseeable at the relevant time, events occurring after the relevant date may shed some light on that question.

23 Evidence may demonstrate that the business protected was about to expand or change, or may show that the normal practice in the industry in question is to use a variety of vehicles for carrying on business, from time to time, perhaps transferring existing portions of a business into them. In relation to SMS, pars 16A – 16D inclusive plead the existence of a variety of related bodies corporate between 1994 and September 1997, and discussions and steps taken concerning the potential expansion of operations in Africa by SMS and those bodies.

24 The extent to which foreseeable future events are relevant to construction and reasonableness, and the extent to which a convenantee is entitled to protect associated businesses, are questions which have from time to time arisen and in relation to which the cases make it clear that much will depend upon the particular factual context. See, for example, the discussion in Heydon, "The Restraint of Trade Doctrine", 2nd ed, 1998, at 34 - 41, 119 - 120, and 125 - 126. It seems to me that it is not possible to say, as an abstract proposition, that the expression "related or affiliated corporation" is incapable of being understood as extending to a corporation coming into existence after the date at which the consulting agreement was entered into, or that the restraint of trade covenant would necessarily be void to the extent that it did protect such an entity.

Grounds 1, 2 and 3 - Who can sue

25 Ground 1 asserts that the Master erred in finding that it was arguable on the facts pleaded in the statement of claim that WADS 1 and WADS 2 are third party beneficiaries who can take the benefit of cl 10 of the

(Page 17)

consulting agreement and therefore have standing to sue Stanley in their own right. Ground 2 asserts that the Master erred in finding that it was arguable that a trust of the benefit of cl 10 was created in favour of WADS 1 and WADS 2 and that, as beneficiaries of the trust, they either had standing to sue to enforce the benefit of the clause, or that it was just and convenient that they should be joined as necessary parties to the action.

26 Ground 3 alleges that the Master erred in finding that SMS could maintain a claim to enforce the covenant contained in cl 10 after the date at which it alleged that it had assigned the benefit of that clause to WADS 1 and WADS 2. This ground is founded on par 34C of the statement of claim, which alleges that in about November 1998, SMS assigned to WADS 1 and WADS 2 its assets connected with its exploration drilling business in West Africa, including its current contracts for exploration drilling there and par 34D, which pleads a covenant limiting the right of the joint venturers to provide drilling services in West Africa after that date. It is accepted by all parties for the purposes of the present appeal that the assignment referred to in par 34C was capable of carrying with it the benefit of cl 10.

27 So far as the third party beneficiary argument is concerned, the respondents rely upon Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518, particularly per Lord Clyde, at 535, for the proposition that there are circumstances in which a contracting party may sue to recover damages for the loss which a third party has suffered, being duly accountable to the third party in respect of the loss. Lord Clyde there described the availability of such an action as being a realistic and practical solution to the "legal black hole" which would otherwise arise where a breach of contract would go uncompensated through an absence of privity between the party suffering the loss and the party causing it. The appellants submit that a broad principle of this kind is inconsistent with the doctrine of privity of contract, and to the extent that such an action is permissible, it is confined to contracts for carriage of goods and to the extension of that principle to building contracts found in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85.

28 It seems to me that it is arguable that the question of the measure of damages which may be claimed by a promisee in relation to a breach of a promise to benefit a third party "may be in the process of change": see Cheshire and Fifoot's "Law of Contract", 8th ed, par 7.7, and the cases there discussed. There is considerable force in the appellants' submission that, even if such a claim in permissible, the third party beneficiaries do

(Page 18)

not have standing to pursue the claim in their own right. However, for reasons which I shortly discuss, I am unable to see how substantial injustice would be done by allowing them to remain as plaintiffs.

29 Turning to the argument that it is not open to WADS 1 and WADS 2 to plead that a trust of the benefit of the restraint of trade covenant was created for them by the consulting agreement, again it seems to me that there is considerable force in the appellants' argument that it is difficult to see on the face of the pleading how the requisite intention to create such a trust can be made out. Again, however, it suffices, in my view, to refer to Cheshire and Fifoot at pars 7.43 through to par 7.49 to illustrate the proposition that the respondent's case is not unarguable. The authors of that work illustrate the "melancholy unpredictability" of recourse to the trust principle where contracts confer benefits on third parties, by reference to a considerable number of cases. They suggest that the more recent cases at least show a "distinct lack of enthusiasm" for such a concept. As with the question of the proper construction of the consulting agreement, however, it appears to me that much will depend upon the view ultimately taken of the factual matrix against which the agreement was entered into.

30 In relation to the question of who has standing if such a trust was created, my present view is that it is only in circumstances where the trustee refuses to bring the claim that the beneficiaries can sue to enforce it (Fried v National Australia Bank Ltd [2001] FCA 907; (2001) 111 FCR 322, at [189]). Even if, however, there is no need for WADS 1 and WADS 2 to sue as beneficiaries, I am unable to see how any substantial injustice is caused by their remaining as plaintiffs to that action.

31 Ground 3 contends that, after the alleged assignment in November 1998, Layne and SMS are not able to enforce the covenant or to claim damages for any breach after that date. For the reasons to which I now turn, however, it seems to me that no substantial injustice can flow from allowing this claim to remain, even if that contention is correct.

32 In relation to all of grounds 1, 2 and 3, my earlier view that it is arguable that WADS 1 and WADS 2 may be related or affiliated corporations within the meaning of cl 10 is of critical importance to the question of whether a substantial injustice flows from leaving unreversed the errors, if any, of the Master in relation to grounds 1 to 3. It seems not to be in dispute for present purposes, that any breach of the restraint of trade covenant during the relatively short period prior to the alleged

(Page 19)

assignment in November 1998, would be actionable by SMS. If it is arguable that WADS 1 and WADS 2 are "related or affiliated corporations" within the meaning of cl 10, then after the assignment either WADS 1 and WADS 2 (by virtue of the assignment), or SMS (as promisee suing on their behalf, or as trustee) would be able to claim for damage which WADS 1 and WADS 2 had suffered as a result of any breach. There would appear to be no significant difference in the issues of fact canvassed, or the evidence to be called, depending on which of those parties was the proper plaintiff.

Grounds 5 and 6 - Knowledge and intention

33 These grounds are as follows:

"Ground 5

The learned Master erred in law in finding that:

5.1 It was arguable on the facts pleaded in the statement of claim that the second and fifth defendants could have induced the first defendant to breach his obligations under clause 10 of the consulting agreement owed to the third and fourth plaintiffs where there was no plea that the second and fifth defendants knew that the first defendant owed contractual obligations to the third and fourth plaintiffs;

5.2 By paragraph 23 of the first and second defendants' amended defence dated 27 March 2002, the first and second defendants admitted they knew of the contractual obligations owed to the third and fourth plaintiffs when as at the time of filing of that defence, no such allegation concerning the third and fourth plaintiffs had been pleaded.

Ground 6

The learned Master erred in law in finding that it was arguable on the facts pleaded in the statement of claim that the first, second and fifth defendants conspired to commit unlawful acts together with the third and fourth defendants with intent to injure the third and fourth plaintiffs."

34 In relation to these grounds, it seems that there is not any difference of significance between the parties concerning the elements of the causes
(Page 20)

of action which are required to be pleaded. The question is whether the pleading is adequate for the purpose.

35 Turning to ground 5.1 first, the appellants note that the statement of claim pleads only that Azilian and Sierra knew that Stanley had obligations to WADS 1 and WADS 2 similar to the restraint of trade covenant, but does not plead that the obligations were contractual obligations. That appears to be correct, but is clearly a curable defect. Next, it is said that as WADS 1 and WADS 2 were not parties to the consulting agreement, no contractual obligations were owed by Stanley to them, so that such a plea would be impossible. However, there is no dispute that it is arguable that the benefit of the contract was assigned to WADS 1 and WADS 2. Finally, it is submitted in relation to this ground that it cannot be arguable that Azilian and Sierra knew of alleged contractual obligations owed to WADS 1 and WADS 2. This seems essentially to be the same point which is made in relation to ground 6, to which I now turn.

36 It is not necessary for me to deal with ground 5.2, having regard to my conclusions in relation to the other grounds.

37 The submissions in respect of ground 6 assert that the tort of conspiracy by unlawful means is established if:

(a) each of the alleged co-conspirators was party to an agreement or combination with the others;

(b) the purpose of the agreement or combination was to injure the plaintiffs by unlawful means;

(c) the agreement or combination was carried into effect by the commission of agreed unlawful acts; and

(d) those unlawful acts caused damage to the plaintiffs.

38 It is submitted that the state of mind of the alleged conspirators is a critical component of the plea and, in particular, it is submitted that an agreement to do an unlawful act that results in damage to another party is not the same as a conspiracy to injure that party; rather, it is submitted that the intention to injure is critical. There does not seem to be any dispute about these propositions.

39 The appellants then submit that there are no material facts pleaded in the statement of claim which would indicate that any of the defendants were given notice of the alleged assignment to WADS 1 and WADS 2, or were otherwise made aware of the alleged assignment, or were even

(Page 21)

aware of the existence of WADS 1 and WADS 2. As a consequence, it is submitted that it is therefore not arguable that any of the defendants conspired with Azilian and Sierra to injure WADS 1 and WADS 2. Accordingly, it is submitted there can be no arguable cause of action against Azilian and Sierra. In relation to these grounds, it is submitted that if the appellants' argument is correct, then Azilian and Sierra should not be parties to the action and that there would be a substantial injustice in requiring them to take part in proceedings in which they would not otherwise be interested.

40 The fourth and fifth appellants, Harper and Geodrill, make essentially the same submissions in relation to the pleading against them. They add, however, in the alternative, that there has, in any event, been a failure to provide the particulars required by O 20 r 13(1)(b) of the Rules of the Supreme Court1971 (WA), which requires that particulars be given of the facts upon which a party relies where that party alleges any "condition of the mind" of any person. Those parties had submitted to the Master that it would be open to him to order particulars to be given and to defer consideration of the adequacy of the pleading until that had been done. Such an order would be made on condition that, if the particulars proved to be inadequate, the appellants would be at liberty to seek to strike out the pleading. The Master did not deal with that submission; whether by oversight, or because he considered particulars unnecessary, I do not know.

41 So far as Azilian and Sierra are concerned, the respondents assert that the allegation that Stanley was a director, shareholder and secretary of those companies leads to the inevitable inference that those companies had notice, through him, of the terms of the consulting agreement and the fact that it extended to any related or affiliated corporations (assuming, for that purpose, that WADS 1 and WADS 2 fall within the meaning of "related or affiliated corporations").

42 So far as Harper and Geodrill are concerned, the respondents appeared to accept that there was an inadequacy in the pleading, but submitted that it would be open to them to plead certain matters, set out in [42] and [43] of the reasons of the Master. Those matters, if pleaded, might arguably suffice to establish that the appellants were aware of the existence of a class of entities, some of which would be injured by the conduct the subject of the claim, and that it was intended to injure them.

43 In relation to those submissions, all appellants reply that it is not sufficient, for the purpose of the tort of conspiracy, to intend to injure an

(Page 22)

unidentified member, or some unidentified members, of a class. Rather, it is submitted, the intention must be to injure either an individual identified entity, or, perhaps to injure all members of a class which can be defined with particularity. It is submitted, as I understand it, that the class of related or affiliated corporations, or the class of entities having the benefit of cl 10, and carrying on a portion of the business described in it, is a class which is so broad as to fall outside the scope of the torts pleaded.

44 A proposition of this kind was the subject of detailed consideration in Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537; (2004) ATPR (Digest) 46-245, by Weinberg J. That decision was the subject of appeal to the Full Court of the Federal Court, and it is sufficient for present purposes to refer to the decision of the Full Court, Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169; (2004) ATPR 42-013. The conspiracy alleged in that case was one between Coles, which was one of two major supermarket retailers, and Franklins, a third major supermarket retailer which was selling Franklins' assets in Australia. The background was that in 2001, the parent company of Franklins, and Franklins, gave undertakings to the ACCC, the purpose of which seems to have been to ensure so far as possible that Franklins stores were to be sold to independent supermarket retailers, being supermarket retailers not associated with either Coles or Woolworths. Dresna entered into an agreement to purchase one of the Franklins store businesses. The lessor refused to consent to an assignment of the lease of that store to Dresna. In due course, Franklins sold the business in that store to Coles. It was alleged that there was some secret agreement or understanding reached between Franklins and Coles that Franklins would sell to Coles businesses conducted at a number of stores listed in a schedule, and that the lessor acted in concert with Coles to give effect to that agreement.

45 Weinberg J accepted the submission that, prior to a particular time, the lessor and Coles could not have acted in concert with the intention of depriving Dresna of anything, since Dresna was not, before that time, identified as the potential purchaser of the business. His Honour held that a conspiracy could be directed, not only at a partnership or individual but at a class, but that it was necessary that the conspiracy be directed to all the members of that class. In that case, his Honour observed, it could not be pleaded that the lessor or Coles intended to injure the entire class of persons known as "independent operators", who could be any member of the public apart from Woolworths and Coles. In the joint judgment of Kiefel and Jacobson JJ at [8] their Honours said:

(Page 23)

"Dresna submitted on the appeal that it should be sufficient for it to establish that the lessor intended to injure whichever independent supermarket operator was awarded the contract to the Franklins Mentone business. It should not matter if its specific identity was not known at the time the alleged conspiracy was entered into. After all, it submits, there could be only one victim, even if the class from which that victim comes is to an extent indeterminate. The authorities on the question of intention are not so clear as to suggest that the claim is wholly untenable."

46 Their Honours then considered a number of cases which established that the intention of the defendants in a conspiracy must be directed to a particular person, being the person who makes the claim for loss and damage. As a general proposition that is, in my respectful view, plainly correct. In [11], their Honours continued:

"Reliance was also placed by Dresna on the decision in Grupo Torras SA v Sheikh Fahad Mohammad Al-Sabah [1999] All ER (D) 698 ('Grupo Torras') where Mance LJ said:

'In my judgment, if it suffices that a conspiracy is "aimed or directed at" the plaintiff, in circumstances where it can only be said that "it can reasonably be foreseen that it may injure him", then rigorous insistence on a need for specific intent to injure the particular plaintiff appears unjustified. I remain of the view which I expressed at the jurisdiction stage, that, in circumstances where persons combine to abstract monies from a group and then to cover up and account for the abstraction in any way they can, an intent to injure or defraud any company which, as a result of their operations, ends up bearing the loss, may readily be inferred.'

His Honour the primary judge here considered that the decision in Grupo Torras was distinguishable from Dresna's case. We would respectfully agree. It is apparent from Grupo Torras that every member of the class to whom the conspiracy might have been directed was ascertainable. The fraud was perpetrated upon a group of companies and it was held that the intention was referrable to each and every one of those companies in the group."

(Page 24)

47 Although I would accept the analysis in [11] of Dresna, it seems to me to be arguable that it does not determine the issue in this case. That is to say, it is arguable that there may be a conspiracy directed at every member of a group, being the group having the benefit of cl 10 in the consulting agreement. The members of that group may vary over time, but its membership would be ascertainable at any particular date. Of course, only those members who actually suffered loss as a result of a conspiracy directed at the group would be able to bring an action founded on the conspiracy. Alternatively, and more narrowly, it may be the category or group of entities having the benefit of that clause and operating the business of drilling and contracting in either Africa generally, or in Ghana.

48 The fourth and fifth appellants referred also to the decision of Hely J, applying Dresna, in Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053. In my view, that case carries the matter no further. His Honour considered there a pleading of a conspiracy where the object or objects of the conspiracy were said to be the first to 104th applicants and/or the persons represented by Australian Wool Innovation Ltd (being some 30,000 Australian woolgrowers). His Honour took the view that if the objects of the conspiracy were all Australian woolgrowers, a question might arise as to whether such a conspiracy would be sufficiently targeted to be actionable at the suit of the particular claimants there in question. In any event, his Honour considered that a pleading of a single conspiracy, the objects of which may be 104 people or 30,000 or both is embarrassing (at [68]). That is a situation far removed from the allegations in the present case.

49 I accept therefore for the purpose of this appeal that it is arguable that it may be possible to define with sufficient precision the class which the appellants intended to injure, and to point to facts from which an inference could be drawn that the appellants were aware of the existence of WADS 1 and WADS 2, either as individual entities, or, without being aware of their names, as members of that class. However, that said, the pleading at present does not give any, let alone adequate, particulars of the intention which is pleaded. If an intention is to be inferred from particular facts, those facts should be identified and the relevant inference pleaded, or other facts not presently contained in the statement of claim and which would demonstrate the relevant intention, should be pleaded.

50 I note in this connection that in claims of conspiracy which are sought to be proved by inference from acts done in pursuance of the apparent common purpose, it may be appropriate to defer the provision of

(Page 25)

particulars until after discovery: Porteous v Rinehart (1996) 22 ACSR 364, at 376. Similarly, there will be occasions when a plea will not be struck out for want of particularity if the necessary particulars are within the knowledge of the defendant: see Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566, at 570, 575. It appears to me that it is necessary in this case that the pleadings either make it clear that the intention pleaded was to injure WADS 1 and WADS 2 specifically, or members of a class, and if the latter, how that class may be identified. However, the question of what particulars should be provided at this stage, as opposed to after discovery and further amendment of the defence, is a matter which, it seems to me, should be dealt with by the Master.

Respondents' cross-appeal

51 The respondents cross-appeal against the order of the learned Master that the first, second, third and fourth respondents pay the costs of the application to amend the reamended statement of claim. It is submitted that the Master wrongly applied the "normal rule" articulated in Briggs v Curtis Quick & Associates, unreported; SCt of WA; Library No 980141; 30 March 1998, which is that where a party is seeking the indulgence of the Court to amend its pleading, that party will be required to pay the costs of the application, including costs thrown away. Alternatively, it is submitted that Briggs should be overruled in part.

52 The general rule is, and should remain, that where a party is seeking the indulgence of the Court, that party will be required to pay the costs of the application, including costs thrown away, and will not normally receive the costs of the application. However, it is also a normal rule that the Court will have regard to the extent to which it might be said that costs were unnecessarily incurred by a party, and will have regard to the reasonableness of the party's conduct in determining how costs should be awarded. In particular, where a contested application, even for an indulgence, is unnecessary because a party acting reasonably would have consented to appropriate orders, the party who has caused the costs to be unnecessarily incurred will not obtain its costs of such a proceeding merely because the application is for some indulgence. That is implicitly recognised in Briggs at 14, where Owen and Parker JJ appear to accept that an unreasonable withholding of consent might form an appropriate basis for a ruling on costs which departed from the "normal rule" relating to indulgences. However, in that case their Honours considered that it could not be said that the other party was unreasonable to require that the proposed amendment be justified to the satisfaction of a judicial officer.

(Page 26)

53 In the present case, the respondents set out in their case the detailed consultations between the parties which took place, apparently by agreement, which led to the parties being very clear, prior to the hearing, about the arguments which each sought to advance. They submit that in those circumstances efficient case management required the parties to make an informed decision as to whether or not to argue an issue, and that it would be contrary to the principles of efficient case management to permit a party to raise an objection and argue it, with the prospect of being able to recover its own costs of making the argument, even if unsuccessful, simply on the basis that the opposing party was seeking an indulgence.

54 No party advances any argument in opposition to the respondents' cross-appeal, and, in my view, it should be allowed, on the basis that the so-called "normal rule" as articulated in Briggs is but one of a number of guides to the appropriate orders which may be made in interlocutory applications. I would allow the appeal and set aside the Master's order as to costs.

55 I should add that the respondents submit that, as a general principle, the "normal rule" upon a successful application to amend pleadings should be that the Court orders costs in the cause, since whether or not the amendments prove to be necessary and appropriate will depend upon whether the amending party ultimately succeeds at trial. I would not go so far as to hold that that should be the usual or normal order. There are a number of factors to balance. One is that, since it would generally be possible for a party to avoid the need to seek any indulgence by accurately formulating its pleading or otherwise complying with the rules, the fact that the party is seeking an indulgence will be relevant. As I have already noted, the degree of conferral and the reasonableness of conduct of the party opposing such an indulgence will also be relevant. Where amendments are not substantial, or where they serve simply to further clarify an otherwise broadly satisfactory pleading, it may be appropriate simply to order costs in the cause. Such a course may also be appropriate where an amendment adds a substantial, different, but apparently arguable cause of action, on the basis that it is always possible for a trial Judge to make a special order in relation to the costs of such an issue, if it should ultimately be found that the party is unsuccessful in relation to that new cause. It is appropriate that the discretion in such cases should remain unfettered in the interests of efficient case management.

(Page 27)

Conclusion

56 I would refuse all appellants leave to appeal. I would allow the cross-appeal, quash the Master's order as to the costs of the application, and substitute an order that costs be in the cause.

57 PULLIN JA: I have had the advantage of reading a draft of Wheeler JA's reasons for decision. I agree with them and would add only the following observations.

58 If leave is to be given, it is necessary for the applicant for leave to show not only that the decision is wrong or attended by doubt but also that injustice would be done by leaving the decision unreversed. The injustice has to be shown to be substantial. Wheeler JA has cited the relevant Western Australian authority. In Brilliant Digital Entertainment Pty Ltd v Universal Music Australia Pty Ltd (2004) 63 IPR 273, Black CJ and Stone J said that the qualification of "injustice" by "substantial" points to a detriment that, while not necessarily irreparable, is more than mere inconvenience or delay in the exercise of a right. The same comment would apply to the exercise of an entitlement to defend an action.

59 In this case the complaint of the appellants is that the trial will be shorter and there will be less time spent in preparation if the appeal succeeds. The appellants relied on generalised assertions by counsel that this would be so. These assertions were met by generalised assertions by counsel for the respondents that there would not necessarily be much less time spent in preparation or much less time spent at trial if the appeal succeeded. The onus is of course on the applicant for leave to demonstrate that there will be substantial injustice. In my opinion the appellants have not established that there will be substantial injustice even if the decision was wrong or attended by doubt.

60 Even if the trial may be shorter if the appeal succeeds, that will not, in this case, result in substantial injustice. I do not mean by that to say that the inconvenience and time a party has to spend engaged in litigation will never amount to a substantial injustice. However, this case does not involve parties of modest means. They are mining and associated corporations engaged in commercial litigation, represented by teams of experienced counsel and solicitors. If it turns out that the appellants' substantive arguments advanced on this appeal succeed at trial, and if it is shown that the trial did take longer than would have been the case if the appeal had succeeded, then an appropriate costs order, if made, will largely, or even wholly, compensate the appellants for the wasted time.

(Page 28)

See the authorities collected together and referred to in JWH Group Pty Ltd v Kimpura Pty Ltd [2004] WASC 39 at [2] - [7].

61 If the appellants have a well-founded concern that the respondents will not have the ability to pay costs, then the appellants will have the right to seek an order for security for costs.

62 In all of those circumstances, no substantial injustice would be done by leaving the decision of the Master unreversed.