UON Pty Ltd v Hoascar [No 3] - [2021] WASC 17

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   UON PTY LTD -v- HOASCAR [No 3] [2021] WASC 17
CORAM:   ARCHER J
HEARD:   15 JANUARY 2021
DELIVERED          :   22 JANUARY 2021
FILE NO/S:   CIV 3178 of 2016
BETWEEN:   UON PTY LTD
First Plaintiff
LAA INDUSTRIES PTY LTD
Second Plaintiff
AND
GABRIEL HOASCAR
First Defendant
TARANIS POWER GROUP PTY LTD
Second Defendant

Catchwords:

Transfer of proceedings to Federal Court – Overlap in subject matter – Risk of inconsistent findings

Legislation:

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s 5(1)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA), s 5(1)

Result:

Proceedings to be transferred

Category: B

Representation:

Counsel:

First Plaintiff	:	M L Bennett & T J C Elder
Second Plaintiff	:	M L Bennett & T J C Elder
First Defendant	:	P D C Robinson
Second Defendant	:	P D C Robinson

Solicitors:

First Plaintiff	:	Bennett + Co
Second Plaintiff	:	Bennett + Co
First Defendant	:	Williams & Hughes
Second Defendant	:	Williams & Hughes

Cases referred to in decision:

Access Group Australia Pty Ltd v Topper Hydraulic Platforms Pty Ltd [2019] WASC 265
Avwest Aircraft Pty Ltd v Bombardier Inc [No 3] [2020] WASC 436
Bankinvest AG v Seabrook (1988) 14 NSWLR 711, 11
BHP Billiton v Schultz (2004) 221 CLR 400
Cini v Pets Paradise Franchising (SA) Pty Ltd (2008) 102 SASR 177
Commissioner of Taxation v Residence Riverside Proprietary Ltd as Trustee for the D&J Discretionary Trust and as Trustee for the D&J Investment Trust [2013] FCA 720
Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1283
Roe v Western Australia [2013] WASC 130
Singh v Friedman [2013] WASC 78
Uon Pty Ltd v Hoascar [2020] WASC 271
Uon Pty Ltd v Hoascar [2020] WASC 271 (S)
Yang v Vuly Pty Ltd [2020] FCA 1037 [10]

ARCHER J:

Introduction

In 2016, the plaintiffs issued proceedings alleging that their confidential information was misused by the defendants (Supreme Court Action).
The proceedings were admitted into my commercial and managed cases list in 2018. In 2020, I dealt with an application seeking the release of documents from a confidentiality regime.[1]
[1] Uon Pty Ltd v Hoascar [2020] WASC 271 (Uon Pty Ltd v Hoascar). See also Uon Pty Ltd v Hoascar [2020] WASC 271 (S).
The defendants now seek orders that the proceedings be transferred to the Western Australian registry of the Federal Court of Australia. They rely on s 5(1) of the Jurisdiction of Courts (Cross‑Vesting) Act 1987 (WA) (WA Act) or s 5(1) of the Jurisdiction of Courts (Cross‑Vesting) Act 1987 (Cth) (Commonwealth Act). Relevantly to the defendants' application, the two Acts provide that the Supreme Court must transfer proceedings to the Federal Court if, having regard to the interests of justice, it is more appropriate that they be determined by the Federal Court.
The defendants' submissions rely on the existence of proceedings in the Federal Court[2] (Federal Court Action) which they say raises many of the same issues that arise in the Supreme Court Action.
[2] Federal Court action WAD 171 of 2020.
The plaintiffs accept that the two sets of proceedings are inter‑related. However, they submit that it is not in the interests of justice that the Supreme Court Action be transferred to the Federal Court. The plaintiffs submit:[3]
[T]he most significant aspect is that if the Supreme Court [Action is] dealt with first and the plaintiff is successful, the scope of the Federal Court [Action] would be significantly reduced or a hearing even rendered unnecessary. Conversely, if the Federal Court [Action] is heard first and determined, even if UON was unsuccessful, the Supreme Court [Action] would still be actively prosecuted to determine the other causes of action raised in those proceedings. Given this, the stage of the Supreme Court Action, and her Honour's detailed knowledge of the matter (amongst other reasons set out below), it is in the interests of justice and a cost effective resolution of these complex matters that the Supreme Court [Action] be first determined rather than transferred and heard together with the Federal Court [Action].
[3] Plaintiffs' Submissions in Opposition to Defendants' Application to Transfer Action filed 9 December 2020 (Plaintiffs' Submissions) [5].

Background

The background to the Supreme Court Action is set out in Uon Pty Ltd v Hoascar.[4] It is repeated here for convenience (footnotes omitted):
[4] Uon Pty Ltd v Hoascar [5] ‑ [17].
5The heart of the plaintiffs' case is an allegation that their confidential information was misused by the defendants.
The plaintiffs' case
6The first plaintiff (UON) provides power, air and water services to various users, including remote mine sites. This includes supplying electrical equipment such as power generators and undertaking research and development activities to improve electrical systems.
7From 2002 until 2015, the then sole director of UON, Mark Keogh, and an employee of UON, Carl Reid, invented and developed an alternative motor starting control and power management system with specific application to remote island mine sites (Invention).
8In simplistic terms, a conventional motor starting system requires a generator that is large enough to start the motor. Once the motor has been started, the excess generator capacity is no longer required and the generator engine may operate at a lower fuel efficiency than it otherwise would.
9The Invention is a bespoke system that, among other things, is capable of generating the power needed to start the motor, but can then drop the power down to the level needed for operating. Another feature of the system is that it can be monitored and controlled remotely.
10When used in the context of dewatering, the system includes a submersible pump. In addition to the efficiencies achieved by the variable speed generator, the system allows the water level, flow rate, and pressure to be monitored and adjusted remotely.
11UON was granted a provisional patent and has applied for a standard patent. UON markets the Invention as the 'Pro Power General Motor Control Generator' (GMC Generator).
12UON assigned its rights to the standard patent application to the second plaintiff (LAA). The contractual arrangements between UON and LAA are not relevant to this application.
13The first defendant (Mr Hoascar) was employed by UON between 30 March 2015 and 14 March 2016 under a permanent employment contract, and then as a casual employee from 15 to 24 March 2016. The plaintiffs assert that, while Mr Hoascar was employed by UON, he was involved in the development of the Invention and provided with confidential information in relation to the Invention.
14Around 14 March 2016, while still working for UON, Mr Hoascar commenced employment with the second defendant (Taranis). The plaintiffs allege that Mr Hoascar disclosed UON's confidential information to Taranis, in breach of, among other things, Mr Hoascar's contract of employment with UON. The plaintiffs said that this assisted Taranis to develop the 'VarioGen', which has since been marketed and supplied to customers in competition to the GMC Generator. The plaintiffs plead that the VarioGen incorporates, copies or reproduces the design features or elements of the Invention. Although not explicit in the pleading, the plaintiffs assert that the VarioGen was a springboard development based on confidential information.
15In support of their claims, the plaintiffs rely on, among other things, the sequence of factual events. In particular:
(1)While employed by UON, in the period from 8 December 2015 and 28 February 2016, Mr Hoascar emailed information from his UON email address to his personal email address.
(2)He sent two emails on 18 February 2016, the day before he signed an employment contract with Taranis. He sent one email after he had signed the contract. That is, Mr Hoascar emailed information from his UON email address to his personal email address the day before he had signed an employment contract with Taranis and after he had signed it.
(3)Around 14 March 2016, Mr Hoascar commenced employment with Taranis.
(4)Within four months of Mr Hoascar commencing employment with Taranis, Taranis registered the business name 'VarioGen'.
(5)On 10 August 2017, Taranis applied for a patent in respect of the VarioGen, naming Mr Vetrone and Mr Hoascar as the inventors.
16The defendants deny that Mr Hoascar breached his employment contract. They say, among other things, that Mr Hoascar emailed documents to his personal email address for the purposes of work he was doing for UON. They deny that the VarioGen incorporates, copies or reproduces the design features or elements of the Invention.
17The plaintiffs also allege that Mr Hoascar, after leaving UON's employment, solicited UON's clients, in breach of his contractual obligation not to solicit. The defendants deny this too.
The background to the Federal Court Action is set out in the plaintiffs' submissions (citations omitted):[5]
[5] Plaintiffs' Submissions [9] ‑ [10], [12].
9.1On 10 August 2017, Taranis filed a patent request and complete specification, being Patent Application Number 2017213531 (Taranis Patent).
9.2On 16 January 2018 UON filed a request under s36 of the Patents Act 1990 (Cth) disputing Taranis' entitlement to the Taranis Patent.
9.3On 19 March 2018 UON filed a notice of opposition opposing the grant of the Taranis Patent pursuant to section 59 of the Patents Act 1990 (Cth).
9.4On 10 July 2020 a Delegate of the Commissioner of Patents determined that UON's opposition was unsuccessful.
9.5On 31 July 2020 UON filed a Notice of Appeal in the Federal Court, alleging that the Taranis Patent should not be granted on novelty, utility, clarity, sufficiency, best method, support and entitlement grounds.
10.The Federal Court [Action has] been admitted to the Honourable Justice McKerracher's docket for case management.
…
12.On 8 October 2020 McKerracher J vacated a case management hearing listed for 13 October 2020 on the basis that it be relisted after the determination of the Defendants' application to transfer the Supreme Court [Action].
Although the Federal Court Action is styled as an 'appeal' from the Commissioner's decision,[6] it is in the original (and exclusive[7]) jurisdiction of the Federal Court and is a hearing de novo.[8]
[6] Section 36(5) of the Patents Act 1990 (Cth).
[7] Section 154(2) of the Patents Act. See also s 19(2) of the Federal Court of Australia Act 1976 (Cth).
[8] See Yang v Vuly Pty Ltd [2020] FCA 1037 [10].
As to the overlap between the two proceedings, the plaintiffs contend (citations omitted):[9]
[9] Plaintiffs' Submissions [11].
11.Essentially, in the Federal Court [Action] UON claims that Taranis' patent application should not be granted because, for a variety of grounds, the alleged invention is not a patentable invention under the Patents Act 1990 (Cth). UON further claims that if the alleged invention is patentable, Taranis is not entitled to the grant of a patent. It is this entitlement ground that is the source of the factual overlap, with the Federal Court being asked to find:
9.13The Respondent is not entitled to the grant of a patent for the invention pursuant to s36 of the Patents Act 1990 because:
9.13.1The Invention was invented by Mr Mark Keogh and Mr Carl Reid, from whom the Respondent does not derive title;
9.13.2Alternatively, Mr Hoascar's inventive contribution to the Invention was made using the Appellant's confidential information, and therefore the intellectual property in his inventive contribution is the exclusive property of the Appellant pursuant to clause 15(a) of Mr Hoascar's employment contract (alternatively, clause 14(a) of Mr Hoascar's casual employment contract);
9.13.3Alternatively, the Invention was obtained from the Appellant by the Respondent through the actions of Mr Hoascar;
9.13.4Alternatively, Mr Hoascar and the Respondent knowingly misused the Appellant's confidential information, and Mr Hoascar and the Respondent are disentitled and hold the benefit of the invention on trust for the Appellant;
9.13.5Alternatively, the Respondent is not entitled to the grant of the patent because the benefit derived by the Respondent from its knowing receipt of confidential information imparted by Mr Hoascar in breach of his obligations to the Appellant is held on constructive trust for the Appellant.
The defendants submit that the entitlement ground covers a significant proportion of the issues arising in the Federal Court Action. They note that it is set out over approximately five pages in the Notice of Appeal. The remaining grounds combined are set out over approximately five pages. The defendants further submit that the overlap is not limited to the entitlement ground. They contend that it also includes, for example, the novelty ground.[10]
[10] Defendants' Responsive Submissions filed 18 December 2020 (Defendants' Responsive Submissions) [11]. Although the novelty ground was said to be only an example, no other examples were offered.
The plaintiffs submit that the overlap is less than 50%, putting it at approximately 40% 'in a Venn diagram sense'.[11] I take that to mean that the plaintiffs submit that the area of intersection between the two matters is 40% of the total 'size' of the Supreme Court Action. The plaintiffs further submit that there is no overlap in the novelty ground, as that ground does not depend on the alleged breach of confidentiality.
[11] ts 259. See also the affidavit of Daniel Tassone filed 2 October 2020 page 112.
Even if it was possible, with the myriad variables that could operate, to meaningfully determine the degree of overlap, it is unnecessary to do so. That is because the degree admitted by the plaintiffs, 40%, is a substantial percentage, and is more than sufficient to have significant weight in this assessment.
It was common ground that the Federal Court has the jurisdiction to deal with all of the matters in the Supreme Court Action.[12] The reverse is not true.
[12] As summarised in the Defendants' Submissions in Support of Application to Transfer Action to the Federal Court filed 17 November 2020 (Defendants' Submissions) [17] ‑ [19].
The plaintiffs note that the Supreme Court Action was commenced on 19 December 2016, eight months before Taranis applied for the patent the subject of the Federal Court Action.[13]
[13] Plaintiffs' Submissions [7].
The plaintiffs further note:[14]
[14] Plaintiffs' Submissions [13] ‑ [14], [17].
13.Notably, the Federal Court will not be required to quantify damages flowing from a breach of Mr Hoascar's employment contracts; nor does UON seek equitable compensation or an injunction in respect of the alleged breaches of Mr Hoascar's fiduciary duties or equitable obligations of confidence.
14.Further, the Supreme Court will not be called upon to determine:
14.1the patentability of any 'invention' the subject of the Supreme Court [Action (or the Federal Court [Action]); nor
14.2the true inventor of the inventions the subject of the various patent applications lodged by the parties.
...
17.… [T]he focus of the Federal Court [Action] is necessarily limited to whether the alleged invention is patentable, and if it is patentable, whether Taranis is entitled to a patent.
The defendants submit (citations omitted):[15]
The Supreme Court Action and Federal Court [Action] are closely related. A key plank in Uon's case in the Federal Court [Action] (and in Uon's opposition to the Taranis Patent Application) is the contention that Mr Hoascar misused Uon's confidential information by supplying it to Taranis, who incorporated it into the invention the subject of the Taranis Patent Application. The same argument has been described by Uon in the Supreme Court Action as being 'the heart of the Plaintiffs' case'.
Uon's case in the Supreme Court Action that Taranis incorporated Uon's 'Confidential Information relating to the Invention' (as defined in its Re‑Amended Statement of Claim) into the Taranis VarioGen relies on a comparison between the parties respective patent specifications.
[15] Defendants' Submissions [6] ‑ [7].
Counsel for the plaintiffs accepted that their contention that confidential information was misused is a significant part of their case, but did not accept it was a 'key plank' or the 'heart' of the plaintiffs' case. Continuing the analogy, counsel accepted it was not an organ like a spleen or a gall bladder, but said it was more like a 'kidney' of the plaintiffs' case – something important but which they could probably manage without.[16]
[16] ts 263.

Issues

The single issue is whether, having regard to the interests of justice, it is more appropriate that the Supreme Court Action be determined by the Federal Court instead of the Supreme Court. In the circumstances of this case, that is not a question of which of the two courts should deal with both sets of proceedings. The Federal Court can deal with both sets of proceedings. The Supreme Court cannot.[17] Rather, the question is whether the Federal Court should deal with both or whether the proceedings should remain in the two different courts.
[17] There is another patent application pending before the Commissioner, but this cannot be dealt with by either the Federal Court (other than by way of an appeal against the decision) or the Supreme Court.

Legal principles

The principles to be applied are well‑settled. They were recently discussed by Le Miere J in Access Group Australia Pty Ltd v Topper Hydraulic Platforms Pty Ltd.[18] The following principles emerge from Le Miere J's analysis (formatting altered to list form):
[18] Access Group Australia Pty Ltd v Topper Hydraulic Platforms Pty Ltd [2019] WASC 265(Access Group) [23] ‑ [26].
1.It calls for … a 'nuts and bolts' management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute.[19]
[19] Access Group [23], citing Bankinvest AG v Seabrook (1988) 14 NSWLR 711, 714.
2.If the court is of the opinion that s 5(1) of the Commonwealth Act or the WA Act is satisfied, it must transfer the proceeding. There is no question of judicial discretion.
3.The interests of justice capture not just the interests of the parties – competing or conflicting – but may also capture interests wider than those of either party. The interests of justice concern those of both parties and, rather than the selection of the most advantageous or least disadvantageous forum for one of them, the interests of justice are to be judged by more objective factors which facilitate identification of the 'natural forum', in which objectively judged, the dispute would fall to be resolved, with its concomitant juridical advantages and disadvantages for each party, whatever they may be.
4.Each case turns on its particular facts when determining the more appropriate court or 'natural forum'.
5.Connecting factors are relevant. Connecting factors include
(a)factors indicating that justice can be done in one forum at substantially less inconvenience or expense such as the availability of witnesses;
(b)factors which may make a forum the 'natural forum' as being the forum with which the action has the most real and substantial connection, such as where the relevant transactions took place and where the parties carry on business.
6.An important consideration is which forum can provide more effectively for the complete resolution of the matters in issue between the parties.

Further, as was said by Bleby J in Cini v Pets Paradise Franchising (SA) Pty Ltd:[20]
Because it is necessary to identify the more appropriate forum, no specific emphasis can be given in favour of the choice of forum made by the plaintiff.
It is inapt to speak of the applicant for an order for transfer as bearing a burden of persuasion analogous to an onus of proof.
[20] Cini v Pets Paradise Franchising (SA) Pty Ltd [2008] SASC 287; (2008) 102 SASR 177 [8], citing BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400.
In Commissioner of Taxation v Residence Riverside Proprietary Ltd as Trustee for the D&J Discretionary Trust and as Trustee for the D&J Investment Trust,[21] McKerracher J noted that, ordinarily, the factors in support of cross‑vesting are obvious. He said that the decision as to whether a matter should be transferred will be 'readily instinctive' upon taking into account matters such as (numbering added):
1.the stage of the proceedings in the respective courts;
2.the commonality or diversity of the parties and the issues;
3.the nature of the proceedings;
4.the risk of conflicting findings of fact or conflicting orders;
5.a cost benefit analysis;
6.the potential unnecessary drain on judicial and other public and private resources; and
7.whether there is any particular judicial expertise residing in one court or the other.
[21] Commissioner of Taxation v Residence Riverside Proprietary Ltd as Trustee for the D&J Discretionary Trust and as Trustee for the D&J Investment Trust [2013] FCA 720 [17].
Before turning to the relevant factors, I will discuss the plaintiffs' proposed 'better solution'.[22]
[22] Plaintiffs' Submissions, heading above [68].

A better solution?

The plaintiffs accept that there is an overlap in the subject matter of the two proceedings and accept there is a risk of inconsistent factual findings.[23] They submit that a 'solution' to this would be:[24]
for that aspect of the Federal Court [Action] to be stayed pending determination of the Supreme Court [Action] and the patentability arguments could be dealt with first (effectively as a preliminary issue).
[23] ts 259 and Plaintiffs' Submissions [25] ‑ [26], [68], [70].
[24] Plaintiffs' Submissions [25]. See also [70].
The plaintiffs submit that this would be the 'better solution', compared to transferring the Supreme Court Action.[25]
[25] Plaintiffs' Submissions, heading above [68].
I will refer to the proposal as the 'Stay Proposal'. It is not a 'solution' as, even if I wanted to achieve it, it is not within my power. The plaintiffs acknowledge this.
The plaintiffs submit that, if the transfer application is refused, they would immediately make an application for a stay (Stay Application). They acknowledge that the defendants may oppose a Stay Application. They acknowledge that the determination of a Stay Application would be entirely a matter for the Federal Court judge assigned to the matter, his Honour McKerracher J. However, they submit that, even if the defendants opposed a Stay Application, it is reasonable to assume that McKerracher J would grant a stay. They say that this assumption is reasonable because, if the Supreme Court Action is resolved in their favour, the Federal Court Action will effectively fall away.

Issue estoppel

The plaintiffs submit that such a resolution would effectively end the Federal Court Action because it would involve factual findings as to Mr Hoascar's improper use of UON's confidential information. The plaintiffs submit that, once made, those findings would create an issue estoppel in the Federal Court Action.
The defendants noted that the parties in the two Actions are not identical. The second plaintiff in the Supreme Court Action, LAA Industries Pty Ltd, and the first defendant, Mr Hoascar, are not parties to the Federal Court Action. Nevertheless, the defendants acknowledge that 'they are clearly parties with a close connection to the issues in dispute in [the Federal Court Action]. LAA is said to be the owner by assignment of the ProPower GMC Generator and has applied for a patent in respect of it, and Mr Hoascar (an employee of Taranis) is said to have appropriated UON's (now LAA's) confidential information about the ProPower GMC Generator and incorporated it into the Taranis VarioGen. Mr Hoascar and LAA are not strangers to the Federal Court Action'.[26]
[26] Defendants' Responsive Submissions filed 18 December 2020 [54] ‑ [55].
The plaintiffs submit that, therefore, if the Supreme Court Action is resolved in their favour, the defendants in the Federal Court Action would be estopped from contesting the Federal Court Action, so those proceedings would effectively fall away. The plaintiffs acknowledge that they may fail in the Supreme Court Action, in which case the Federal Court Action would need to be dealt with. However, the scope of the Federal Court Action would be reduced because the plaintiffs would be estopped from challenging in the Federal Court Action factual findings made in the Supreme Court Action on the same questions.
The plaintiffs submit that it is therefore entirely reasonable to assume that McKerracher J would grant a stay. This would avoid the duplication of costs to the parties and the unnecessary drain on judicial resources that would occur if the Federal Court Action were not stayed. It would ensure that there would be no overlap of factual issues in the two proceedings, and no risk of inconsistent factual findings.

Period of uncertainty

The defendants submit that it is not inevitable that McKerracher J would grant a stay.
The defendants point out that granting a stay would extend the period of time over which it would be uncertain whether the patent would be upheld. They point out that a 'patent is effectively a right in rem, and of significance to all in the patent area who might be interested in trading within or near the subject matter of the patent'.[27]
[27] Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1283 [39], cited in the Defendants' Responsive Submissions [5].
The defendants also point out that the period of uncertainty would not necessarily end when I delivered my judgment in the Supreme Court Action. It might also include the period required to resolve any appeal against my decision.
The plaintiffs say that, if they were successful in the Supreme Court Action, the defendants would want to stay the Federal Court Action until the appeal against my decision had been determined.[28] In my view, this does not advance the plaintiffs' position, even assuming the Federal Court would grant a stay until the appeal was resolved. If such a stay was granted, it would further increase the period during which there would be uncertainty in relation to the patent and during which at least a part of the Federal Court Action was held in limbo.
[28] ts 278.
The plaintiffs also submit that, if the defendants were successful in the Supreme Court Action, it is unlikely the plaintiffs would be able to obtain a stay of the Federal Court Action.[29] However, if a stay was not granted, a number of problems could arise. If the Federal Court Action was determined before the appeal was decided, the plaintiffs would be bound by factual findings which the appeal court may overturn. If the Federal Court Action was not determined before the appeal was decided, and if the appeal was allowed, this would revive the risk of inconsistent factual findings unless another stay was sought and granted.

Three sets of proceedings

[29] ts 278 ‑ 279.

The defendants further point out that, if a stay was granted in relation to the entitlement ground, and the rest of the Federal Court Action progressed in the usual way, there would effectively be three sets of proceedings instead of one: the Supreme Court Action and, in effect, two Federal Court proceedings.

Conclusion

In my view, it is not certain that McKerracher J would grant a stay if the Supreme Court Action is not transferred. There are relevant considerations pulling in opposite directions. Further, I consider that it is not possible to assess the likelihood that a stay would be granted. However, I will assume, solely for the purposes of these reasons, that it is likely. This obviously would not mean that there would be no downside to refusing to transfer the Supreme Court Action. It would simply mean that, if a transfer was refused, it is likely that McKerracher J would determine that justice would be better served by staying the Federal Court Action. It would still mean a longer period of uncertainty in relation to the patent. It would still mean there would be a Federal Court Action lingering in the Federal Court lists that could not be progressed at all, or only progressed in part, until the Supreme Court Action, and potentially any appeal, was completed.
For these reasons, in assessing the application to transfer the Supreme Court Action, I will assume that it is likely that a stay would be granted, but will not assume that it would be. I will also take into account the downside of such a stay.

Factors in favour of transfer

Crossover of subject matter

The plaintiffs accept that there is an overlap in the subject matter of the two proceedings. As noted earlier, they suggest this could be dealt with by the Stay Proposal.
As I have explained, I will assume that it is likely that a stay would be granted, but will not assume that it would be. As the Federal Court Action may not be stayed, there remains a risk of an overlap in the two proceedings.
Further, even if a stay was granted, it would carry with it a downside.

Risk of inconsistent findings

The plaintiffs accept that there is a risk of inconsistent findings, but say the risk is low:[30]
The plaintiffs contend that given the evidence led in the Supreme Court [Action] and in respect of the entitlement ground of the Federal Court [Action] is likely to be similar, there is little risk of inconsistent factual findings. In any event, it will be clear that the findings made in each Court will be dependent on the evidence that was led in each Court.
[30] Plaintiffs' Submissions [30]. See also [68].
This is unpersuasive.
I accept that the similarity of evidence may reduce the risk of inconsistent factual findings by two different decision‑makers. However, I do not accept the risk would be low, particularly when it will be necessary to assess the credibility of a central witness and evaluate the degree and nature of the similarities between two machines to determine whether one was copied from or benefited from the design of the other.
Further, these two sentences do not sit well together: if the evidence is likely to be similar, inconsistent findings will not be explained by reference to the evidence led in each court.
In oral submissions, counsel for the plaintiffs explained that there would only be a risk of inconsistent factual findings if the second (in time) trial finished before judgment was delivered in the first. In every other circumstance, issue estoppel would prevent inconsistent findings.
I accept this. However, as I will explain, this scenario is more than a speculative possibility.
I accept that there would not be a risk of inconsistent findings if the Federal Court Action (or at least the entitlement ground) was stayed until after I have delivered my judgment and any appeal against my decision has been resolved. However, I have already explained that I would not assume that a stay would be granted.
The plaintiffs contend that, even if a stay is refused, the Supreme Court Action would be heard before the Federal Court Action.
During the hearing, counsel for the plaintiffs handed up a proposed timetable of programming orders. This showed the parties completing all necessary pre‑trial steps by mid‑June. Counsel submitted that it could therefore be expected that, if the court could accommodate it, the trial would be heard in the third quarter of the year.
The proposed timetable includes all of the steps that I would usually order in a civil trial, apart from mediation. Counsel for the plaintiffs said that it was contemplated that a mediation could be conducted in parallel. I accept this.
My overall impression is that the proposed timetable was not unreasonable. However, experience shows that pre‑trial steps almost always take longer to achieve than anticipated or hoped. While it is reasonable to hope that the trial would be heard in the third quarter of the year, it is much more likely that it would not be heard until early next year.
Further, I invited the parties to provide their available dates from October[31] this year to see if it would be possible to list the trial this year. The only common availability between the parties and the court are five days in early November. The only way I could hear the trial this year would be to cancel the leave I have currently booked in December and list the trial in that month (which would not be out of the question).
[31] As I could not accommodate a 10 day trial in July‑September 2021.
It may be possible to find another judge of this court to hear the matter. However, that would eliminate one of the most significant factors relied upon by the plaintiff in resisting the transfer – my knowledge of the matter.
The plaintiffs have estimated 10 days for trial. The defendants say it will take at least 10 days. I consider that the plaintiffs' estimate is optimistic.
The trial will require a detailed exploration of the similarities between the two machines, which will necessarily involve highly technical expert evidence. The trial will require a detailed exploration of the extent of UON's information to which Mr Hoascar had access when working for UON and the way in which Taranis' machine was developed. The trial is likely to involve a substantial attack on the credibility of Mr Hoascar.
These issues all arise from the allegation that Mr Hoascar improperly used UON's confidential information about its machine to the benefit of Taranis' machine. The Statement of Claim includes many other allegations, each of which will take time.
Even if the trial is able to be completed within 10 days, the number and nature of the issues means that a decision would take considerable time to write.
In my view, there is a real risk that, if a stay was not granted, the trial in the Federal Court Action would be completed before I delivered a judgment in the Supreme Court Action.
As the Federal Court Action may not be stayed, there remains a risk of inconsistent factual findings if the Supreme Court Action is not transferred.
Further, even if a stay was granted, it would carry with it a downside.

Witnesses

As noted earlier, the Federal Court has the jurisdiction to deal with all of the matters in the Supreme Court Action. The reverse is not true.
The plaintiffs accept that some of the same witnesses will be called in both proceedings and potentially required to give evidence on the same matters.[32]
[32] Plaintiffs' Submissions [37].
While this is not determinative, it supports a conclusion that the Federal Court is the more appropriate forum.

Case management principles and efficiency

It is preferable, all other things being equal, that legal disputes be determined in a single forum rather than two. In this case, it is only the Federal Court that could deal with all of the legal disputes.
Further, if the Supreme Court Action was transferred, all of the disputes could be progressed together in a single set of directions hearings and special appointments and a single final hearing. If it is not transferred, there could be, in effect, three sets of proceedings.

Factors in favour of refusing to transfer

The plaintiffs relied on a number of factors which they said made the Federal Court the less appropriate forum.

Work already done in the Supreme Court Action

The plaintiffs note that I have been the case manager of the Supreme Court Action since May 2018. This required me to rule on an application by the plaintiffs to vary the confidentiality regime. This involved a full day hearing. There have also been five directions hearings.
The plaintiffs point out that, by contrast, the parties have attended only one brief case management hearing before McKerracher J in the Federal Court Action.
I accept the plaintiffs' submission that, if the Supreme Court Action is transferred to the Federal Court, it will undoubtedly increase the Federal Court's workload.
I also accept that some of the time I have invested in the Supreme Court Action will be wasted and there will be some duplication of work by the Federal Court if the Supreme Court Action is transferred. I do not, however, accept that this would be to any significant degree. Much of my time to date has been spent on the application to vary the confidentiality regime, and resulted in the resolution of that issue. To the extent that I have knowledge which would be useful more generally, I do not agree it could be characterised as extensive. My knowledge does not extend much beyond the broad background, the pleadings (as they currently stand) and the types of documents that are likely to be relied upon by the plaintiffs to establish their case in relation to the allegation that confidential information was misused.
The allegations in the Supreme Court Action are not complex. The only area in which complexity is likely to arise is in the evidence which goes to the way in which each party's machine is built and functions, and the extent to which it can or should be inferred from any similarities in those respects that the defendants used knowledge of the plaintiffs' machine in the design and development of its machine. Such evidence has not yet been presented to me.
I further note that the plaintiffs submit that even this will not be complex. They submit that it will be merely the 'observation of similarities … assisted by expert evidence'.[33] Even if I was to accept that this would not be complex, this does not advance the plaintiffs' argument. The value of having acquired some knowledge of the background facts and issues is likely to be greater in cases of complexity.
[33] ts 261.
In my view, my management of the Supreme Court Action is of only minor weight in the assessment.

Stage of the proceedings

The plaintiffs submit that the Supreme Court Action is significantly more advanced than the Federal Court Action. I accept this. Nevertheless, the Supreme Court Action is still not close to trial. Lay witness statement have not yet been filed. The questions for experts have not been agreed.
I accept that the time required to prepare the lay witness outlines and expert evidence in the Supreme Court Action is likely to be reduced by the work done by the parties in preparing for the hearing before the Commissioner. However, there is likely to be a similar reduction in the time required to assemble that evidence in the Federal Court Action.
I have already explained why I consider that it is likely that the trial in the Supreme Court Action would not be heard until early next year.
The plaintiffs submit that transferring the Supreme Court Action to the Federal Court would be 'starting again'. I accept that it would mean starting again in terms of pre‑trial steps. The Federal Court has its own systems and procedures. The Statement of Claim in the Supreme Court Action could not just be filed in the Federal Court in its current form. However, I do not accept that it would be starting again in terms of the work done. None of the substance of the work done in the Supreme Court Action would be wasted. The pleadings identified the issues. The discovery to date provided the parties with evidence in support of their cases and gave them notice of the evidence against them. Under both the WA Act and the Commonwealth Act, the discovery in the Supreme Court will be treated as having been given in the Federal Court.[34]
[34] See s 11(3) of both the WA Act and the Commonwealth Act.

In my view, the further advancement of the Supreme Court Action is of some weight, but its weight is limited. It is not as if the trial would be in the next few months, even if no further interlocutory disputes arise.

Difference in access to discovery

The plaintiffs submit that any further discovery that may be required will be more difficult to obtain in the Federal Court, as that court does not provide discovery as of right.
I accept that there is a difference in the approach the two courts take to discovery. However, even in the Supreme Court, parties do not have an entitlement to general discovery. The power to order discovery is discretionary.[35]
[35] Avwest Aircraft Pty Ltd v Bombardier Inc [No 3] [2020] WASC 436 [18], citing (relevantly to these points) Singh v Friedman [2013] WASC 78 [3] and Roe v The State of Western Australia [2013] WASC 130 [10].
In the circumstances of this case, involving allegations of misuse of confidential information in the development of a machine, it is highly likely that discovery of directly relevant documents would be ordered whichever court hears the allegations contained in the Supreme Court Action.
Accordingly, I do not consider the different approaches to discovery as between the two courts to be of significant weight.

Hearing fees

The plaintiffs point out that the hearing fees in the Federal Court are significantly greater, particularly for lengthy trials.
The plaintiffs submit that this weighs against the transfer of the Supreme Court proceedings to the Federal Court.
I do not accept this. The hearing fees will be, in effect, in the cause. It is to be expected that, if the plaintiffs succeed, they will recover the hearing fees in full.
Other costs are not likely to be recovered in full by the victor. It is likely that those other costs would be higher if there are proceedings in two different courts.

Mediation

The plaintiffs note that the court‑ordered mediation in the Supreme Court Action currently stands adjourned and that they are willing to resume the mediation once the pleadings are amended. They submit that this weighs against transferring the Supreme Court Action to the Federal Court.
I do not accept this. There is no impediment to the parties seeking to resolve the issues which arise in Supreme Court Action if it is transferred to the Federal Court.
First, there is no suggestion that the Federal Court's mediators are less skilled than those in the Supreme Court.
Second, if the parties wish to negotiate at a time before the Federal Court Action is able to accommodate a court‑assisted mediation, the parties could engage in informal negotiations. Each side is legally represented. Alternatively, the parties could agree to appoint an independent mediator. Given the costs incurred to date, this would not be a disproportionate cost.
Further, the prospects of the matter settling are likely to be improved if all of the matters in dispute can be mediated in one forum. This can only be done in a court‑assisted mediation if the Supreme Court Action is transferred.

Costs outstanding

The plaintiffs note that the parties are yet to agree on the costs of the confidentiality regime. They submit that, if the parties are unable to agree those costs, it would be very difficult for a Federal Court registrar to assess them.
I agree with this and would be very reluctant to impose such a burden on a Federal Court registrar. However, I do not consider that this is a reason not to transfer the proceedings. Rather, it is a reason to resolve the costs issue promptly, and before the proceedings are transferred, if that is possible.

Conclusion

As noted by Le Miere J, an important consideration is which forum can provide more effectively for the complete resolution of the matters in issue between the parties.
The defendants do not bear an onus of proving that the Federal Court is the more appropriate forum.
Rather, the question is simply whether, having regard to the interests of justice, it is more appropriate that the Supreme Court Action be determined by the Federal Court. In the circumstances of this case, the question is whether the Federal Court should deal with both sets of proceedings or whether there should continue to be proceedings in the two different courts.
I do not accept that the plaintiffs' Stay Proposal is preferable to transferring the Supreme Court Action. Applying a 'nuts and bolts' approach, I consider that, having regard to the interests of justice, it is more appropriate that the Supreme Court Action be determined by the Federal Court.
I have explained why I do not accept that three of the competing factors relied upon by the plaintiffs are of any weight. I have explained why I consider the other factors relied upon by the plaintiffs to be of limited weight.
If the Supreme Court Action is transferred, there would be no risk of inconsistent factual findings, and no need to apply to the Federal Court for a stay of all or part of the Federal Court proceedings. The witnesses would only need to give evidence once. The period of uncertainty in relation to the patent would not be extended to await the outcome of a trial in this Court and, potentially, the appeal. In my view, these are weighty factors, and far outweigh the competing factors relied upon by the plaintiffs.
Accordingly, once the outstanding costs issues are resolved, I would order that the Supreme Court Action be transferred to the Western Australian registry of the Federal Court.
I will hear from the parties as to the appropriate resolution of the outstanding costs issue in relation to the confidentiality regime. Ideally, the parties will be able to promptly agree the costs. The next best option is likely to be fixing the costs. This could be facilitated by a draft bill of costs and short submissions, with a decision on the papers if possible. Alternatively, an expedited provisional assessment and taxation could be arranged. Until the issue is resolved, I would delay making the order that the Supreme Court Action be transferred. There is no reason why the parties could not continue to do the work required for the ultimate trial in the meantime.
I will also hear from the parties as to the costs of this application. However, my preliminary view is that the plaintiffs should pay the defendants' costs, with no special costs orders. I will invite the parties to seek to agree an amount. If the parties are unable to agree, again the best option is likely to be to fix the costs. I would hear from the parties as to the appropriate amount.
I provided the parties with an advance copy of these reasons so that, if possible, both costs issues can be finalised at the time of the judgment delivery. Ideally the parties will agree the costs but, if not, short submissions may be made orally. Further, I would only require a draft bill of costs, not an affidavit. If the parties would prefer more time to confer, that may be accommodated.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KJ
Research Orderly to the Honourable Justice Archer
22 JANUARY 2021