Windgap Foundation Ltd v Solomons

[2018] NSWSC 809

Supreme Court

New South Wales

Medium Neutral Citation:	Windgap Foundation Ltd v Solomons [2018] NSWSC 809
Hearing dates:	27 April 2018
Decision date:	31 May 2018
Jurisdiction:	Equity
Before:	Robb J
Decision:	See paragraph 82.
Catchwords:	COSTS — Party/Party — Costs orders in interlocutory proceedings — Plaintiff sought to recover confidential information taken by the Defendant — Final orders uncontested — whether costs incurred by plaintiff were proportionate
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW) Civil Procedure Act 2005 (NSW)
Cases Cited:	Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 Bates v Lloyd [2005] NSWSC 1253 Melbourne University Publishing Ltd v Williamson [2005] FCA 1910 Columbia Pictures Industries Inc v Robinson [1987] Ch 38
Category:	Costs
Parties:	Windgap Foundation Limited (Plaintiff) Leanne Solomons (Defendant)
Representation:	Counsel: J S Tobin (Plaintiff)     Solicitors: Brown Wright Stein (Plaintiff) Haywoods Solicitor (Defendant)
File Number(s):	2017/331472

Judgment

1. The question in this matter, which was heard in the Applications List on 27 April 2018, concerns the costs order that should be made in proceedings in which final orders have been made in favour of the plaintiff, without any contest by the defendant.

Background

2. The plaintiff is Windgap Foundation Ltd (Windgap) and the defendant is Ms Leanne Solomons. Windgap is a charitable organisation that provides services to people with an intellectual disability in New South Wales. Ms Solomons worked for Windgap from April 2010 to 17 January 2017. On 17 January 2017, Ms Solomons was made redundant and at that time she signed a deed of release with Windgap that had the effect of terminating her employment (termination deed).

3. Windgap learned on 9 October 2017 that before the termination of her employment, Ms Solomons stole Windgap operational documents and a database with all the information about all of Windgap's clients, in breach of various terms of Ms Solomons' contract of employment.

4. In addition to those terms, Ms Solomons had covenanted by clause 8 of the termination deed not to disclose Windgap's confidential information without Windgap's prior consent. Ms Solomons also promised to return all of Windgap's confidential information then in her possession to Windgap.

The proceedings

5. These proceedings were commenced on 30 October 2017, when Hallen J, sitting as the Duty Judge, gave Windgap leave to file in court its summons as well as a notice of motion by which Windgap sought interlocutory relief against Ms Solomons.

6. Windgap's notice of motion did not seek a search order in respect of Ms Solomons' electronic devices in the form that is commonly sought against former employees who are alleged to have stolen electronically the confidential information of their former employer.

7. Windgap sought an order that Ms Solomons be restrained from using, communicating or reproducing any of its Confidential Information (as defined). It sought an order for delivery up, as well as an order that Ms Solomons deliver to the Court all computer devices that contained the Confidential Information. It sought an order that she provide to the Court all of her email addresses, login details and passwords that provided access to the Confidential Information on any electronic devices or electronic “Cloud” or like facility, for the purpose of a court-appointed computer expert examining the equipment. Finally, the notice of motion sought an order pursuant to s 61 of the Civil Procedure Act 2005 (NSW) that Ms Solomons file and serve an affidavit disclosing certain defined information concerning what had happened to the client database and other Confidential Information.

8. On the day that the proceedings were commenced, Hallen J made ex parte orders against Ms Solomons, including by order 3:

Orders that upon the Plaintiff through its counsel giving to the Court the usual undertaking as to damages, that the Defendant be restrained from directly or indirectly using or communicating to any person or entity, or reproducing any of the Plaintiff's 'Confidential Information' (as that term is defined in these orders) until 5 PM on Thursday, 2 November 2017.

9. Order 4 noted that 'Confidential Information' was the information defined in the termination deed, and included the 'Client Database' and the 'Miscellaneous Operational Documents', as subsequently defined in the orders. Those terms were defined in order 5.

10. The summons and the notice of motion were made returnable before the Duty Judge on Thursday, 2 November 2017. The relevant documents were required to be served on Ms Solomons by 9:30 AM on Tuesday, 31 October 2017.

11. Apparently, Windgap had difficulty in serving the relevant documents on Ms Solomons, and was only able to do so at 2:30 PM on 31 October 2017. On 31 October 2017, Hallen J made further ex parte orders extending the time for service until 2:30 PM on 31 October 2017. His Honour then stood the matter over before himself on Thursday, 2 November 2017.

12. On that date, Windgap was represented by counsel and Ms Solomons was represented by Ms K Hayward, solicitor.

13. The ex parte injunction granted on 30 October 2017 was by consent continued until further order.

14. Ms Solomons was directed to serve an affidavit which included all of the particulars outlined in pars 10(a)-10(f) of the notice of motion filed on 30 October 2017, by 8 November 2017.

15. Hallen J then stood the matter over before the Equity Registrar at 9:30 AM on 13 November 2017.

16. On 13 November 2017, a Registrar by consent made the following orders:

1.   The Defendant to deliver her laptop and phone to Peter Chapman of Ferrier Hodgson… for the purposes of Mr Chapman taking 3 images of the laptop and phone only, by 12 PM, 14 November 2017.

2.   The Defendant to collect her laptop and phone from Peter Chapman of Ferrier Hodgson… at 5 PM, 14 November 2017.

17. The matter was relisted on 27 November 2017. On that date the matter was by consent stood over to 4 December 2007.

18. On 14 December 2017, further orders were made by consent by a Registrar. The orders required Mr Chapman of Ferrier Hodgson to provide a copy of the image of Ms Solomons’ laptop and phone to the solicitors for Windgap, the solicitors for Ms Solomons, and to retain one copy.

19. By order 2, the parties jointly retained Mr Chapman as an Independent expert to provide a report to the parties by 6 December 2017 in relation to the search to be undertaken by Mr Chapman of the image of the files on Ms Solomons devices, and a report as to the permanent deletion of agreed search items. The parties agreed to various files by name both in respect to files that were found on the devices and evidence of copying, deletion or transfer of files.

20. Ms Solomons was required to provide Mr Chapman the login details for all of her social media and cloud storage services for the purpose of Mr Chapman permanently deleting the agreed deletion items from such storage devices.

21. Among other things, the consent orders also required Ms Solomons to deliver up to Windgap's solicitors all hardcopy material in her possession, custody or control, which contained Confidential Information as defined in order 4 made by the Court on 30 October 2017.

22. The proceedings were stood over to 14 December 2017. On that date, McDougall J made various orders by consent of the parties.

23. By order 2, McDougall J ordered that Ms Solomons be permanently restrained from directly or indirectly using or reproducing any of Windgap's Confidential Information as that term was defined in the orders, or communicating any Confidential Information to any person or entity.

24. By order 3, Ms Solomon was required, apart from her laptop and phone the subject of the Court's orders of 13 November 2017, to deliver up to Windgap any other computers or devices in her possession custody or control containing the Confidential Information.

25. The Court noted the undertaking of Ms Solomons to Windgap to provide her phone the subject of the Court's orders of 13 November 2017 to the parties' joint expert, Mr Chapman, for the purpose of the 'contacts' in that phone being deleted by Mr Chapman in accordance with the Court's orders made on 4 December 2017.

26. The proceedings were then listed before the Registrar on 5 February 2018, for the purpose of making directions as to the determination of the costs of the proceedings.

27. The summons, and the notice of motion filed on 30 October 2017, were otherwise dismissed.

28. All of the steps taken in these proceedings occurred without the Court being asked to make any order as to costs. That is a conventional outcome in proceedings such as the present, the implication being in relation to each step of the proceedings that the costs were reserved.

29. Further, it appears that many of the steps taken in the proceedings were, as is explained above, taken by consent of the parties, without, apparently, the parties coming to an agreement concerning who would pay the costs, or determining the amount of the costs to be paid.

The parties’ position as to costs

30. Windgap now seeks an order that Ms Solomons pay its costs on the ordinary basis.

31. Ms Solomons' response was to seek a number of costs orders in the alternative; first that Windgap be ordered to pay her costs; alternatively, that each party pay their own costs; or finally, that Ms Solomons be ordered to pay half Windgap's party/party costs of the proceedings.

32. It appears that Ms Solomons' response to Windgap's application for an order that she pay its costs has at least in part been caused by the amount of the costs that Windgap seeks to recover.

The costs and disbursements claimed by Windgap

33. At the hearing, Windgap provided to the Court a document that indicated its approximate costs of the proceedings. The document was handed up without objection from Ms Solomons. As I understand it, that occurred on the basis that the Court could take the document into account when determining this dispute as to costs. The document is a summary only, and does not take the form of a bill of costs suitable for assessment. It appears to divide up the costs of Windgap's solicitors, Brown Wright Stein, into various categories of work. The amount plus GST is $50,615.40. The amount of costs incurred for counsel is $20,976. The total for Wise McGrath, Ferrier Hodgson, Court fees and other disbursements is $6621. The total amount is $78,212.40.

34. I note the letter dated 24 April 2018 that is in evidence from Windgap's solicitors to Ms Hayward, which claims $80,939.13 for Windgap's costs and disbursements to 20 April 2018. That amount differs from the amounts in the document handed up in Court because the solicitors' fees are $53,341.20, rather than $50,615.40.

Consideration of the evidence

35. The parties tendered a substantial amount of evidence on this costs dispute. I have reviewed all of that evidence, but will only set out below the evidence that I consider to be most germane to the resolution of the dispute.

36. Mr Christopher Herbert Brown is a director and the chairman of Windgap, and a partner in the firm of solicitors that have acted for Windgap in these proceedings.

37. Mr Brown gave evidence of the content and significance of Windgap's confidential client database. It is sufficient to record that the database has been created based upon a master database template supplied to Windgap in 2015 by the NSW Government, Department of Ageing Disability & Home Care. Windgap is required to provide the information in the database to the Department so that it can ensure that each relevant Windgap client receives appropriate attention and communications. The client database contains personal information about each Windgap client and the family of that client. Mr Brown properly described the information as extremely sensitive confidential information that is not permitted to be copied, used, exploited, published or distributed by Windgap employees. Mr Brown described the security measures taken by Windgap to ensure that the information in the client database is not misused or divulged. The information is subject to privacy legislation.

38. Mr Brown also described changes that are occurring because of the introduction of the NDIS. Instead of Windgap being provided 'block' funding from various government agencies (a little less than $10 million in the 2016 financial year), whereby Windgap received a lump sum amount to fund all of its services to people with a disability, the introduction of the NDIS will involve each qualified individual person with a disability being given an individualised funding package to purchase reasonable and necessary supports from service providers. It is sufficient to note Mr Brown's evidence that the change is expected to introduce a level of competition between not for profit service providers like Windgap and for profit service providers.

39. Mr Brown explained that this change will introduce a substantial risk to Windgap's financial viability (notwithstanding that it and its predecessor organisation has been operating continuously since 1954), as the effect of a significant loss of clients could be to undermine Windgap's ability to operate economically.

40. It is self-evident that the content of the information provided to Windgap by its disabled clients and their families is private and confidential, and that great distress may be caused if that information was published and misused. Mr Brown explained that the primary detriment that would be suffered by Windgap if Ms Solomons had misused or published the information in the client database was damage to the reputation of Windgap. He reasonably said that Windgap has a moral obligation, if not a legal obligation, to each client of Windgap to stop any use or exploitation of personal information of the client, collected or stored by Windgap. The secondary detriment referred to by Mr Brown was the possibility that, if the information was provided to Windgap's competitors, it could assist them to entice or solicit Windgap's clients away from Windgap. Finally, a third detriment that could be suffered by Windgap, could involve competitors being able to structure the services that they offer in a way that undercut those offered by Windgap.

41. A factor that is of special significance in the present case is the evidence given by Mr John Matias de Giusti in his affidavit concerning the supply by Ms Solomons of Windgap's client database to him.

42. It is sufficient to record that Mr de Giusti was a former employee of Windgap, and accordingly an acquaintance of Ms Solomons. Mr de Giusti gave evidence of communications between himself and Ms Solomons both before and after Ms Solomons’ employment by Windgap was terminated. These communications lead up to Ms Solomons visiting Mr de Giusti in his office on 16 September 2017, when Ms Solomons offered that she and he could work together and said: "The good thing is I have the database of all the clients of Windgap. When I left I took all the client details from Windgap and I can give you the database and we can work together".

43. Mr de Giusti declined the offer, but believing Ms Solomons' conduct was wrong, between 16 and 18 September 2017, he informed representatives of Windgap of what had happened.

44. Around the end of September 2017, according to Mr de Giusti, he received a telephone call from Mr Brown. Mr de Giusti agreed to testify if he was asked to appear in court. Mr de Giusti offered: "Wouldn't it be better if we had some documentation to prove that she has the database otherwise it could be her word against mine. Would it be better if she were to give me the client list?" Mr Brown agreed, and authorised Mr de Giusti to try to get the client list.

45. On the following day, Ms Solomons called Mr de Giusti, and he arranged to visit Ms Solomons at her home. Ms Solomons said that she wanted to initiate programs such as community participation programs, overseas trips and register her own company. Mr de Giusti said that he only wanted to work on his own. Ms Solomons agreed to Mr de Giusti's request expressed in the following terms: "I haven't really got the numbers I thought I was going to get from my families that I know. Do you mind if you send me Windgap's database so I can find my previous clients from Windgap and then you can approach whoever you want".

46. On 5 October 2017, Mr de Giusti received an email from Ms Solomons attaching Windgap's database. He forwarded that email to Mr Brown on 9 October 2017.

47. Mr Brown gave evidence that the attachment to the email was substantially the same as Windgap's confidential client database.

48. Ms Solomons gave evidence that, before she sent the client database to Mr de Giusti she highlighted in red those clients that she had worked with and highlighted in blue those clients that she understood Mr de Giusti was already working with at the disability service provider that he had established himself.

49. It will be convenient at this point to interpose an issue raised at the hearing by Ms Hayward on behalf of Ms Solomons.

50. Ms Hayward sought to characterise the steps taken by Mr Brown on behalf of Windgap whereby he authorised Mr de Giusti to seek to obtain a copy of Windgap's client database from Ms Solomons as an 'entrapment'.

51. I do not accept that this is an appropriate way to characterise Mr Brown's conduct. First, the events only occurred after Ms Solomons volunteered to Mr de Giusti that she was prepared to provide him with a copy of the client database. That occurred in a context whereby Ms Solomons was exploring the possibility that she could enter into some venture with Mr de Giusti in the disability support sector. Secondly, Mr Brown only responded to a suggestion by Mr de Giusti. That suggestion was made on the basis that otherwise there may only be Mr de Giusti's word against Ms Solomons’ if an accusation was made that Ms Solomons had taken Windgap's confidential information.

52. In my view it was a reasonable and legitimate course for Mr Brown and Windgap to take in the circumstances to try to obtain objective evidence of Ms Solomons' wrongdoing.

53. It should be noted, however, that Ms Solomons has acknowledged her wrongdoing, and did not in fact use any of Windgap's confidential information herself, and when she did provide the client database to Mr de Giusti, she appears to have highlighted it in a way consistent with trying to assist Mr de Giusti in relation to his existing clients.

54. Nonetheless, it is true that Ms Solomons did actually disclose the obviously confidential client database of Windgap in circumstances that were plainly unauthorised and wrongful.

55. Ms Solomons' position, as put at the hearing, was essentially that Windgap had gone to unreasonable and excessive extremes in trying to protect its confidential information and preventing its misuse by Ms Solomons. Ms Hayward submitted, in substance, that once Windgap had the evidence that Mr de Giusti would provide, it ought to have made a demand that Ms Solomons return the confidential information and undertake not to misuse or divulge it, and that demand would have been complied with by Ms Solomons. Ms Solomons gave evidence to support the submission that she would have immediately acknowledged her wrongdoing, and would have cooperated with Windgap, including by providing all of her electronic devices and associated information, to enable all relevant information to be deleted. Ms Hayward submitted that it was excessive for Windgap to insist that an independent IT expert be retained to image the electronic devices, to delete material, and to provide a report, because Ms Solomons would have agreed to those steps being taken by Windgap's internal IT project manager, Ms Anne Ly, who swore an affidavit in support of Windgap's case.

56. Ms Hayward relied upon communications between herself and the solicitors for Windgap on 13 November 2017, in which she advised that Ms Solomons would consent to the orders made on 13 November 2017 (see par 16 above), but that the steps taken by Mr Chapman (the independent IT expert) after the images had been taken should be limited because Ms Solomons was very concerned that the cost of forensic analysis could escalate significantly and unnecessarily without careful management. She stated that the consent should not be treated as a concession that Ms Solomons would be liable for the costs of the forensic imaging or any further forensic analysis.

35. Ms Solomon said in a final affidavit that she had recently resigned from her job, as she was not coping with the stress of work, the stress of the proceedings, and the financial stress this was causing. She had accepted a part-time position, three days a week, and expected to start that job in the near future. She said that she would be left in a dire financial situation if she was required to bear a costs order in excess of $60,000, when Windgap could have acted much more reasonably to protect and recover Windgap's confidential information without incurring costs.

36. Ms Solomons affirmed an affidavit on 7 November 2017 apparently in response to the Court's order which, among other things, appears to have provided comprehensive information concerning how she had dealt with Windgap's confidential information.

37. In response to a request on behalf of Windgap for clarification, Ms Solomons affirmed a further affidavit on 22 November 2017. I understand that both affidavits were served on Windgap shortly after the date they were made, although they were not filed until 7 February 2008.

Conclusion

60. In the present case final orders were made by the Court by consent, without a contested hearing. In the frequently cited case of Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6, McHugh J said at 624-625 (footnotes omitted):

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

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

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

61. It is clear that Ms Solomons conduct was wrongful; she has readily conceded that fact; and it was inevitable that Windgap would have succeeded on its claim, had that claim been contested by Ms Solomons. The present case is therefore an example of the exception to the general rule expressed by McHugh J where no order as to the cost of the proceedings is made.

62. Accordingly, rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) applies, with the result that the Court should order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs.

63. As I have noted above, Windgap is only seeking a costs order on the ordinary basis, and I cannot see any grounds for depriving Windgap of an order for its costs on that basis, subject to the issue raised by Ms Solomons as to whether the costs claimed by Windgap are manifestly excessive.

64. I am satisfied that Windgap's client database was highly confidential, and Windgap was justified in instituting proceedings to obtain orders by the Court not only restraining Ms Solomons from misusing or divulging its confidential information, but also to implement procedures to ensure, as a practical matter, that the confidential information was either returned to Windgap, or was deleted from Ms Solomons' electronic devices, and any remote storage facility.

65. I acknowledge the principle relied upon by Ms Solomons that in the ordinary case, if a plaintiff does not seek appropriate relief from the defendant by writing a letter of demand before suit, the plaintiff may be at risk as to its costs, if in response to proceedings that the plaintiff institutes, the defendant immediately concedes the entitlement of the plaintiff to the relief claimed and establishes that the defendant would have accepted the plaintiff’s right to relief without suit: see Bates v Lloyd [2005] NSWSC 1253 per Hamilton J at [12]:

[12] There was one point that Miss Cohen made that I thought at one stage had some force. That was that, although “a letter before action” was written threatening enforcement proceedings in 2002, the warning was not renewed before the motion was in fact taken out in 2005. In general terms, whether in respect of substantive proceedings or interlocutory motions, a letter before action should be written to permit the opponent, if so minded, to consent to what is sought without costs being incurred. If action is taken without such a warning, and it is demonstrated that the opponent would have consented, the party taking proceedings may be deprived of costs: Robertson and Son v Perkins and Co Ltd (1886) 2 QLJ 173 Lilley CJ; Kinsela v Metropolitan Mutual Provident Building and Investment Association (1887) 8 NSWLR 277 FC; Moore v Gannon (1915) 32 WN (NSW) 60 Harvey J; Glandon Pty Ltd v Strata Consolidated Pty Ltd NSWCA Kirby P 29 December 1988 unreported. The paucity of authority is probably explained by the axiomatic nature of the principle. The principle, although axiomatic, is important and current. However, only a little consideration leads one to the conclusion that that principle does not apply in this case.

66. See also Melbourne University Publishing Ltd v Williamson [2005] FCA 1910 at [4] (Heerey J). This practice is not a rule of general application, and does not displace the general discretion that the Court has to make the costs order that is appropriate on the facts of the particular case: see for example Kardas v Kalliakoudis [2008] FCA 1913 at [15] (Finkelstein J).

67. However, in cases where search orders are sought (formerly called Anton Piller orders), or other lesser relief, in order to preserve the plaintiff's rights in relation to confidential information that has wrongly been taken by the defendant, the position is different because the very purpose of the plaintiff seeking and being granted ex parte relief by the Court is to protect the confidential information without the defendant being given notice of the impending proceedings. The reason for the search order being made is to enable the plaintiff to capture the confidential information, and the manner in which it is stored, before it can be hidden or destroyed. The process whereby the plaintiff is entitled to protect itself would be undermined if the plaintiff was first required to give notice of the impending proceedings to the defendant or risk being deprived of an order for its costs: see Columbia Pictures Industries Inc v Robinson [1987] Ch 38 at 71B per Scott J: “It is implicit in the nature of Anton Piller orders that they should be applied for ex parte and dealt with by the courts in secrecy… Anton Piller orders and procedure have, therefore, these characteristics: no notice to the defendant of what is afoot, and secrecy…”

68. It is true that in the present case Windgap did not seek a search order. It had the benefit of Mr de Giusti's evidence, and only sought an ex parte injunction, and then a disclosing affidavit, and an order for delivery up of the confidential information and Ms Solomons’ electronic devices, passwords and the like. In my view, Windgap was entitled to take that course without initially giving prior notice to Ms Solomons.

69. Although an order for costs on the ordinary basis is not made against a defendant as a punishment, rather than as compensation to the plaintiff for its costs, in the present case Ms Solomons must accept that she has been the author of her own misfortune, as it must have been obvious to her that it was wrongful for her to take the confidential information in the first place. Furthermore, she imperilled her own position by seeking out Mr de Giusti and suggesting to him that she could divulge the client database to him, and then doing so.

70. However, the cardinal rule for present purposes is that enshrined in s 60 of the Civil Procedure Act 2005 (NSW) which concerns proportionality of costs in the following terms:

In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.

71. I have already acknowledged that the subject matter of the dispute in this case was important. However, I do not see the case as being a complex one. Windgap did not become aware that Ms Solomons had taken its confidential information until it was informed of that fact by Mr de Giusti. Mr de Giusti then arranged for Windgap to be provided with clear evidence that Ms Solomons had taken its confidential client database. As a consequence, Windgap would almost certainly succeed in any proceedings against Ms Solomons to protect and retrieve its confidential information, provided it conducted its case effectively. Windgap was still entitled to seek the orders from the Court that it did seek, because Windgap did not know the extent of the confidential information taken by Ms Solomons, and was entitled to orders that would completely protect it in a practical way.

72. However, from the time that Windgap became aware of the evidence that Mr de Giusti would provide it was clear that it would succeed in obtaining the relief from the Court that it needed by reasonably economical steps.

73. While, on the one hand, the Court entirely recognises the right of parties to obtain all necessary judicial relief to protect the party's confidential information, the Court must also insist that a party seeking to do so acts in accordance with the proportionality requirement in s 60 of the Civil Procedure Act.

74. Windgap was justified in preparing and filing its summons and notice of motion and affidavit in support to obtain the orders made by Hallen J on 30 October and 2 November 2017, when the ex parte injunction was continued by consent until further order. When Windgap was served with Ms Solomons' 7 November 2017 affidavit, however, it should have been obvious to Windgap that Ms Solomons had made admissions that had the effect that Windgap would necessarily succeed in obtaining the relief that it sought. Thereafter, Ms Solomons cooperated with Windgap at each step, although she protested the need for there to be an independent IT expert.

75. I accept that in fact Windgap was justified in requiring that an independent IT expert be retained, because if it had agreed to an in-house expert being employed, it would have subjected itself to the risk of a complaint from Ms Solomons that the Windgap employee had not acted properly in relation to the imaging of the electronic devices and the deletion of information from those devices and other storage facilities. However, in this respect, I note that the fees of the independent IT expert, being a representative of Ferrier Hodgson, only form part of the total amount of $6621 for other disbursements which included the Court’s filing fee.

76. Any problem that arises in respect of the quantum of the costs claimed by Windgap does not appear to arise in relation to the disbursements, but out of the solicitors' professional fees of $53,341.20, and counsel’s fees of $20,976.08.

77. A review of the breakup of the costs and disbursements claimed by Windgap that was handed up to the Court allows the following provisional observations:

1. The amount of solicitors' costs claimed for preparation of IT regime, including tasks incidental to its finalisation is $9288. The actual costs of the IT expert is some part of $6621, after allowing for Court filing fees, process server fee, asset searches and personal name extracts.

2. The solicitors claim $5352 for strategy and consideration of best course of action, including, apparently, briefing and conference with counsel.

3. The amount claimed for preparation of the originating process, notice of motion and affidavits for the first ex parte injunction hearing is $7564. It may be noted that the evidence of a solicitor for Windgap was that the solicitors had prepared a statement of claim. It would be most unusual for a statement of claim to be necessary in a matter such as the present, unless the defendant appeared to contest the claim.

4. The solicitors' costs for the attendance at court for the first ex parte injunction application are $3278, and the claim for the second appearance is $3435. While it is possible that longer time was required in this case, usually the Court would be able to grant the relief sought without having to spend a great many hours hearing the interlocutory application.

5. A further $5186 was charged for further preparation and attendance at Court on three occasions. As best as I can work it out from the evidence, those occasions consisted of the application before Hallen J to extend the time for service of the originating process, the making of consent orders before the Registrar, and the appearance before the Registrar for directions on the costs issue after final orders had been made by the Court.

6. The solicitors' costs for dealing with the costs application total $7933, to which should be added a further $1208 for responding to what Windgap has described as scandalous submissions.

7. In addition, the solicitors have charged $1330 for consideration of points of law.

8. The total amount for counsel's fees is $19,069.16. If I allowed the apparently excessive amount of $4000 per day, that would represent five full hearing days. It is true that in fact much of these fees may have been devoted to advising and drafting process and affidavits. But if that is so, it is difficult to see how the amounts charged by the solicitors could be justified.

78. This analysis satisfies me that the amount of costs and disbursements claimed by Windgap is prima facie excessive having regard to the course of the proceedings that I have outlined above. I acknowledge that this conclusion is only provisional, and must be subject to contrary proof and explanation. It does not follow from this provisional finding that Windgap or its legal representatives have in any way acted improperly or unprofessionally. A party who decides to engage in litigation is entitled to incur costs at whatever level it thinks satisfactory in order to achieve the best outcome possible in the litigation. However, the costs that may be recoverable by the party from an unsuccessful opponent are always subject to be limited by the proportionality principle.

79. The question is whether the Court should simply make an order in favour of Windgap that Ms Solomons pay its costs on the ordinary basis, and leave the quantum of the costs to be a matter for assessment.

80. The effect of s 98 of the Civil Procedure Act is that ultimately costs are in the discretion of the Court. For reasons of the proper administration of justice, it is not desirable that the Court encourage the parties to litigation to seek the result that the amount of costs is actually quantified by a judge of the Court.

81. On the other hand, if the cardinal requirement in s 60 of the Civil Procedure Act is to be enforced, there will be cases where it is proper for the Court to supervise the quantification of costs, and in my view it would be wrong for the Court to be averse to doing so because of its practical inconvenience.

82. In this case, having expressed the view that the amount of the costs and disbursements claimed by Windgap appears on its face to be excessive, I will deliver these reasons for judgment, and allow the parties to make an arrangement through my Associate to relist the matter for further directions at 9:30 AM on one suitable morning. While some brief submissions were made at the hearing concerning the suitability of the quantification of Windgap’s costs being left to the assessment process, I am not satisfied that this issue has been dealt with in sufficient detail to assist the Court to make a proper judgment as to the most appropriate way forward.

83. While the third alternative order suggested by Ms Solomons was that she only be ordered to pay half of the costs claimed by Windgap, in the light of the observations that I have made above it would be an entirely arbitrary outcome for the Court to limit Windgap’s entitlement to costs to half of the amount that it has claimed.

84. I would recommend to the parties that they try to agree upon an appropriate amount for the costs and disbursements that should be the subject of an order in favour of Windgap.

85. My concern with leaving the matter to the ordinary assessment process is that the exercise will be a further burden on the parties, and in particular Ms Solomons, and it may be difficult for the costs assessor who is appointed to determine the appropriate amount of costs having regard to the particular factual circumstances of this matter. If the parties cannot agree on the appropriate amount of costs and disbursements, I have in mind making an order referring the quantification of the costs and disbursements to a qualified costs assessor, with particular directions based upon the conclusions that I have expressed above, subject to any adjustment that may be necessary following any further submissions by the parties.

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Decision last updated: 05 June 2018