Conco Systems Inc v Specialised Overhaul Service Pty Ltd [1999] FCA 286

FEDERAL COURT OF AUSTRALIA

Conco Systems Inc. v Specialised Overhaul Service Pty Ltd [1999] FCA 286

CONCO SYSTEMS INC. v SPECIALISED OVERHAUL SERVICE PTY LTD & Anor

NG 992 OF 1996 EMMETT J 16 MARCH 1999 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 992 OF 1996

BETWEEN: CONCO SYSTEMS INC.

Applicant

AND: SPECIALISED OVERHAUL SERVICE PTY LTD

(ACN 001 766 409)

First Respondent

GRAHAM HUBERT SMITH

Second Respondent

JUDGE: EMMETT J

DATE OF ORDER: 16 MARCH 1999

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The notice of motion of the second respondent of 5 March 1999 be dismissed. 2. The applicant be given leave to discontinue the proceedings. 3. The applicant pay the respondents' costs of the proceedings up to and including today.

THE COURT NOTES: 1. The undertaking given to the court by the applicant not to make any further claim against SOS or Mr Smith based on the matters which are the subject of the further amended statement of claim. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 992 OF 1996

BETWEEN: CONCO SYSTEMS INC.

Applicant

AND: SPECIALISED OVERHAUL SERVICE PTY LTD

(ACN 001 766 409)

First Respondent

GRAHAM HUBERT SMITH

Second Respondent

JUDGE: EMMETT J

DATE: 16 MARCH 1999

PLACE: SYDNEY

EX TEMPORE REASONS FOR JUDGMENT 1 These proceedings commenced in 1997 and first came before me on 7 February 1997. On that occasion directions were given by consent that Specialised Overhaul Service Pty Limited ("SOS") was to request particulars of the statement of claim by 17 February 1999 and the applicant, Conco Systems Inc. ("Conco") was to reply to the request and provide particulars by 27 February 1997. SOS was to file and serve its defence by 13 March 1997. At that stage, SOS was represented by solicitors and counsel. 2 On 21 March 1997, the matter came before me again when, by consent, I gave directions for the parties to file lists of documents. At that stage the other respondents, Hunter Industrial Services Pty Limited ("Hunter") and Kevin Mastin ("Mr Mastin"), became involved to a greater extent. On 23 April 1997, I ordered that paragraph 55 of the statement of claim be struck out. That paragraph related to a claim against Mr Mastin. Also on that day I made orders for the provision of security for the costs of Hunter and Mr Mastin. 3 On 1 May 1997, I ordered that the proceedings against Mr Mastin be dismissed with costs without prejudice to any rights of Conco to bring further proceedings against Mr Mastin. On 5 June 1997, a motion by SOS for security was stood over for hearing to 13 June 1997. On that day there was discussion concerning a proposed amended statement of claim and I ordered Conco to serve, no later than 27 June 1997, any proposed amended statement of claim. The proceedings were stood over to 4 July 1997 and Conco was ordered to pay the costs of that day. In addition, I also ordered Conco to provide security for costs of SOS and that SOS's costs of the motion for security be SOS's costs of the proceedings. 4 On 4 July 1997, I noted that a final statement of claim had been furnished to the respondents and the proceedings were stood over for further mention on 11 July 1997. On that day I gave leave for Conco to join additional defendants including Graham Hubert Smith ("Mr Smith"), Rico Pty Limited ("Rico") and Dylan Mark Carter ("Mr Carter"). Leave was granted to Conco to file an amended application and an amended statement of claim. 5 The matter next came before me on 15 August 1997 when I extended the time for SOS and Mr Smith to file and serve their defences to 22 August 1997. Other directions were given in connection with the other respondents including directions for inspection of documents. On 24 October 1997, I gave directions concerning a cross-claim and stood the proceedings over until 5 December 1997. On that day I made further orders for the provision of security by Conco and stood the proceedings over for further directions on 10 February 1998. 6 On 10 February 1998 and on the following day I heard considerable argument, as a consequence of which, on 11 February 1998, I gave directions for the parties to endeavour to agree on a statement of issues. I also ordered that Conco provide to all respondents by 4.00 pm on 11 March 1998 a document setting out the information said to have been disclosed to any respondent and claimed by Conco to be subject to an obligation of confidence and the time and manner of the disclosure of that information. I also directed Conco to notify SOS and Mr Smith by 25 February 1998 of the claim or claims intended to be pursued against them. 7 Conco was also directed to file and serve a minute of any amendment sought to be made against SOS and Mr Smith by 24 March 1998. Other directions were given concerning discovery and inspection and for the further pursuit of the proceedings so far as the other respondents were concerned. The proceedings were stood over to 29 April 1998 for further directions. 8 On 29 April 1998, I gave leave to Conco to make the amendments shown in a minute filed on 24 March 1998 and ordered Conco to pay the costs thrown away by the amendment. I also made elaborate orders and gave directions concerning a document entitled "Details of and relating to the Confidential Information Alleged by the Applicant to be the Subject of an Obligation of Confidence". That document was directed to be placed in a sealed envelope in the court file which was not to be opened except by leave of the Court. Directions were given for the further conduct of the proceedings, including the extension of time for compliance with directions which I had given on 11 February 1998. The proceedings were stood over to 26 June 1998. 9 On 16 June 1998, Mr Smith filed a notice of appearance whereby he purported to appear for both SOS and himself. On 26 June 1998, I directed SOS and Mr Smith to make any application for leave for Mr Smith to act on behalf of SOS by notice of motion to be returnable on 31 July 1998. The proceedings were stood over to that day. 10 On 20 July 1998, the solicitors who had previously appeared filed a notice of withdrawal. On 31 July 1998, the matter was again stood over to 21 August and I gave directions concerning affidavits relating to confidentiality and other motions which had been filed. On 21 August 1998, the matter was again stood over, directions having been given for the further conduct of the proceedings, so far as SOS and Mr Smith were concerned. 11 On 2 October 1998, I gave leave to Mr Smith pursuant to order 9 rule 1(3) to appear on behalf of SOS for the purposes of the hearing of notices of motion. I also directed Conco to file a consolidated further amended statement of claim incorporating amendments for which leave had been given on 24 March 1998 and 29 April 1998. By that stage Conco had discontinued the proceedings as against all respondents other than SOS and Mr Smith. The consolidated further amended statement of claim was to take account of that discontinuance. I directed SOS and Mr Smith to file a defence to the further amended statement of claim no later than 11 November 1988. The further amended statement of claim was in fact filed on 21 October 1998. On 2 October I also gave directions concerning a dispute which had arisen as to confidentiality and access to documents. 12 On 7 December 1998, I directed Conco to file and serve affidavits of American witnesses and outlines of evidence of Australian witnesses, together with particulars of documents intended to be relied upon in-chief by 26 February 1999. I directed SOS and Mr Smith to file and serve any evidence in respect of any application for security for costs by 5 March 1999 and stood the proceedings for further directions on 10 March 1999. 13 On 5 March 1999, Conco filed a notice of motion seeking leave to discontinue the proceedings as against SOS and Mr Smith and an order that there be no order as to costs. On the same day Mr Smith filed a notice of motion seeking summary dismissal of the proceedings. The grounds upon which Mr Smith applied for summary dismissal were at least two-fold. The first ground was the failure by Conco to comply with the direction for the filing of affidavits, outlines of evidence and lists of documents. The second ground, as I understand it, was that the proceeding was doomed to failure. 14 On 10 and 11 March 1999, I heard argument on the motions. I heard argument at length on behalf of Conco seeking leave to discontinue and an order that there be no order as to costs. In substance, the matter boiled down to the question of whether Conco, not wishing to pursue the matter, should be required to pay the respondents' costs. Mr Smith, who appeared in person, acknowledged that it was in his interest that the proceedings come to an end. I indicated to him that it would be open to him, if he so wished, to oppose the discontinuance on the basis that he wanted to have his day in Court to vindicate himself and SOS in respect of the allegations which had been made against him. I indicated to him that if he wished to oppose the leave, otherwise than in relation to the question of costs, then he would be entitled to have the matter brought on but that in doing so he would run the risk that he might ultimately be unsuccessful and could incur liability for costs over and above the liabilities which have already been incurred. 15 For reasons which I will now indicate, I have concluded that leave should be given to discontinue the proceedings. However, I indicated in the course of argument that I would only be disposed to do so on terms that Conco would consent to an order for the costs of the proceedings and would undertake not to bring any further claim against SOS and Mr Smith based on the allegations made in the further amended statement of claim. The matter was adjourned to enable counsel for Conco to obtain instructions on that question. 16 In order to explain the view which I have formed in that regard, it is necessary to consider the evidence filed in support of the notice of motion and also to consider, in general terms, the nature of the claims made in the further amended statement of claim. I shall deal with the latter first. There are two broad heads of claim made in the further amended statement of claim. The first concerns alleged interference by SOS and Mr Smith with the contractual relations between Conco on the one hand and Hunter, Rico and Mr Carter on the other hand. The second relates to a patent application lodged by SOS and Mr Smith in relation to cleaners. 17 The statement of claim alleges that at all material times Mr Smith and SOS were aware or ought to have been aware of certain agreements which Conco had entered into with Rico, Hunter and Mr Carter. The allegations then proceed generally as follows. 1. Each of Mr Smith and SOS wrongfully and with intent to injure Conco, induced and procured: · Rico to breach an agreement between Rico and Conco; · Hunter to breach various agreements between Hunter and Conco; and · Mr Carter to breach an agreement between Conco and Mr Carter. 2. By reason of the inducement and procurement of each of Mr Smith and SOS: · Rico breached the Rico Agreement; · Hunter breached the Hunter Agreements; and · Mr Carter breached the Carter Agreement.