TrinityP3 Pty Ltd v Wip Consulting Pty Ltd

[2016] VSC 735

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2015 000222

TRINITYP3 PTY LTD as Trustee for Trinity P3 Trust (ABN 83 091 197 287)	Plaintiff
v
WIP CONSULTING PTY LTD (ABN 95 094 355 094) & ANOR	Defendants

JODI LEIGH RANDALL	Plaintiff by Counterclaim
v
TRINITYP3 PTY LTD as Trustee for Trinity P3 Trust (ABN 83 091 197 287)	Defendants by Counterclaim

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JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 November 2016 and by written submissions 1 December 2016
DATE OF JUDGMENT:	2 December 2016
CASE MAY BE CITED AS:	TrinityP3 Pty Ltd v WIP Consulting Pty Ltd
MEDIUM NEUTRAL CITATION:	[2016] VSC 735

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PRACTICE AND PROCEDURE – Costs follow the event – Indemnity costs – Without prejudice offers – Calderbank v Calderbank [1975] 3 WLR 586; 3 All ER 333.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff/Defendants by Counterclaim	Mr S Mukerjea	M + K Lawyers
For the Defendants/Plaintiff by Counterclaim	No appearance

HIS HONOUR:

1. The Court has entered judgment for the Plaintiff on the claim, and judgment for the Defendants by Counterclaim, on the counterclaim.  The Court having done so, the Plaintiffs and Defendants by Counterclaim submit that costs should follow the event.

1. As submitted, three matters do, in my view, warrant an award of costs, or at least part of the costs, on an indemnity basis.

1. First, on 6 March 2015,[1] the Plaintiff and Defendants by Counterclaim afforded WIP Consulting Pty Ltd (“WIP”) and Jodi Leigh Randall (“Randall”) an opportunity to return all of Trinity’s ‘Confidential Information’ in her possession, so as to avoid litigation.  It is clear from the evidence at trial that WIP and Randall must have known that they had retained many thousands of Trinity’s documents which formed part of Trinity’s “Confidential Information”, yet did not respond to this letter and, as a result, Trinity has been put to the trouble and expense of protracted litigation in order to obtain necessary relief.  Moreover, not only did WIP and Randall then falsely deny, in their defence to the litigation, having retained Trinity’s “Confidential Information”, but they raised a counterclaim by which they sought to extract damages from Trinity in relation to the very same allegation – an allegation which they must have known to in fact be true.

   [1]Court Book 270.

1. Secondly, on 2 November 2015, the Plaintiff and the Defendants by Counterclaim offered in writing to resolve both the claim and the counterclaim on the following basis (“Offer”):

a.the defendants give undertakings to destroy, and to cease and desist from using, any of Trinity’s ‘Confidential Information’ in their possession;

b.that the claim and the counterclaim be dismissed; and

c.that the parties bear their own costs.

1. At the time of the Offer, NuLegal, experts in electronic discovery and electronic trials, had imaged Randall’s laptop computer and Trinity’s servers, and was in the process of examining those images with a view to producing the Comparison Report and the Search Terms Report.

1. Accordingly, as at 2 November 2015, WIP and Randall must have known that:

a.NuLegal would soon confirm what WIP and Randall must already have known – that the defendants had indeed retained many thousands of documents which formed part of Trinity’s ‘Confidential Information’;

b.Trinity, at a bare minimum, would be entitled to judgment on the claim in relation to its breach of contract claim, and would be in a position to successfully defend the counterclaim on the basis of its justification defences;

c.Trinity would inevitably obtain injunctive relief against the defendants, restraining them from further using or disclosing Trinity’s Confidential Information, and requiring them to destroy or deliver-up all such information; and

d.accordingly, the Offer was a genuine and reasonable offer to resolve the case, which involved a genuine compromise on Trinity’s part to the extent that it was willing to forego any entitlement to damages, an account of profit and even costs.

1. Notwithstanding these matters, the Offer was not accepted, and Trinity has now obtained a judgment more favourable to it than the terms of the offer — specifically, injunctive relief (which is superior to an undertaking from the defendants as it carries with it the latent sanctions of contempt of court), judgment, and a prima facie entitlement to costs following the event.

1. In the circumstances, consistently with the principles expounded in Calderbank v Calderbank[2] and its descendant cases, the Court should find that WIP and Randall’s rejection of the Offer was unreasonable and should, therefore, award costs to Trinity and Woolley on an indemnity basis on and from the date of the Offer.

   [2][1975] 3 WLR 586; 3 All ER 333.

1. Thirdly, the manner in which WIP and Randall have conducted themselves in this litigation warrants an order for indemnity costs on the basis that they have each contravened their overarching obligations to the Court and to the administration of justice, as provided for in the Civil Procedure Act 2010 (“the Act”). The Court has broad power under s 29 of the Act to make any order as to costs as it sees fit, where it is satisfied on the balance of probabilities that a party has contravened its overarching obligations. The Court also has a specific power under s 56 of the Act to make an order for indemnity costs where a party fails to comply with its discovery obligations.

1. Moreover, by failing to disclose, in the proceeding, that they were in possession of many thousands of documents that fell within the definition of Trinity’s ‘Confidential Information’, Randall and WIP have contravened their discovery obligations, including their overarching obligation in s 26 of the Act to disclose the existence of ‘critical documents’ at the earliest reasonable time. Because of this contravention, it became necessary for Trinity, at its own considerable expense, to engage NuLegal, the Court appointed expert, to conduct a forensic examination of Randall’s laptop.

1. Further, by failing to take any step in the proceeding and, indeed, failing meaningfully to participate in the proceeding at all, since 22 March 2016 (that is, after the release of the Comparison Report and the Search Terms Report, and after the inspection of an initial tranche of 30 documents from the Search Terms Report), WIP and Randall contravened their obligations to only raise defences that have a proper basis (s 18), only take steps necessary to resolve or determine the dispute (s 19), cooperate in the conduct of the proceeding (s 20), use reasonable endeavours to resolve the dispute (s 22), narrow the issues in dispute (s 23), and ensure that the costs of the dispute remained reasonable and proportionate to the issues (s 24).

1. Quite simply, following the release of the Comparison Report and the Search Terms Report, and after the inspection of the initial tranche of 30 documents from the Search Terms Report, the position was, as submitted in support of this application, that “the writing was well and truly on the wall for WIP and Randall”.  The case ought, at that stage, to have been capable of being resolved without the need for further protracted litigation.  Instead of availing themselves of that opportunity (an opportunity which Trinity was clearly open to, having regard to the generous terms of the Offer, which had been made just a couple of months earlier), the defendants instead elected to “take flight”, forcing Trinity to incur substantial further costs in preparing and running the case to trial — including substantial further expert witness costs relating to the expert report of Mr Kennedy of NuLegal.

1. Randall’s and WIP’s conduct, in all the circumstances, is, with respect, inexcusable, and ought to sound in an order for indemnity costs.

1. Accordingly, for the preceding reasons, the appropriate orders as to costs are:

a.the defendants pay the Plaintiff’s costs of the claim, to be taxed by the Costs Court on an indemnity basis; and

b.the Plaintiff by Counterclaim pay the Defendants by Counterclaim’s costs of the counterclaim, to be taxed by the Costs Court on an indemnity basis.

1. Orders are to be brought in to give effect to these reasons.  In this respect I reserve the question whether the Court should, for the purpose of expedition and cost effectiveness in the implementation of these orders, fix the costs payable, whether by a gross sum costs order or otherwise.