Konecranes Pty Limited v Stephens [1999] NSWSC 582

New South Wales Supreme Court CITATION : Konecranes Pty Limited v Stephens [1999] NSWSC 582 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 3470/98 HEARING DATE(S) : 11 June 1999 JUDGMENT DATE : 11 June 1999

Konecranes Pty Limited (P1) PARTIES : KCI Konecranes Internationional PLC (P2) Vaughn Stephens (D1) Crane Pro Pty Limited (D2) JUDGMENT OF : Master McLaughlin

COUNSEL : Mr. D. P. Robinson (P) Mr. M. MacGregor (D) SOLICITORS : Magney & Rhodes (P) W. G. McNally & Co. (D) CATCHWORDS : DECISION :

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 11 June 1999

3470/98 KONECRANES PTY LIMITED & ANOR -v- VAUGHN STEPHENS & ANOR JUDGMENT

1 MASTER: These proceedings were instituted by summons filed by the first plaintiff, Konecranes Pty Limited, on 7 August 1998. The defendants named in this summons were Vaughn Stephens and Crane Pro Pty Limited. Subsequently, on 1 August 1998 an amended summons was filed. That amended summons named an additional plaintiff, KCI Konecranes International PLC. The first plaintiff is a subsidiary of the second plaintiff. 2 The substantive proceedings related to confidential material and information asserted by the plaintiffs to have been taken from them and retained by the first defendant, who was a former employee of the first plaintiff, and to have been used by the first defendant and by the second defendant, a company set up by the first defendant, which has been carrying on business in competition to the first plaintiff. 3 The first plaintiff on 7 August 1998, the date of the institution of the proceedings, obtained an order of the nature known as an Anton Pillar Order. 4 Subsequently orders were made by consent of the parties on 12 August 1998 and again on 14 August 1998. Those orders, which were made by consent and without admission, had the ultimate practical effect of bringing to a conclusion most of the matters which were in dispute between the parties in the present litigation. 5 There did, however, remain outstanding two aspects of that dispute. One was the claim for damages which had been made by the plaintiffs in both the summons and the amended summons. The other was the claim in respect to certain entitlements relating to the employment of the first defendant by the first plaintiff which has subsequently become the subject of proceedings in the Industrial Relations Commission of New South Wales. Those proceedings were instituted by the first defendant against the first plaintiff by a summons for relief under section 106 of the Industrial Relations Act 1996, which was filed on 11 August 1998. 6 After the making of the various consent orders, which included orders for the delivery up by the defendants of the various pieces of material referred to in prayer 1 of the amended summons, and various undertakings for injunctive relief against the defendants and various orders by the defendants, the only substantive part of the claim of the plaintiffs still outstanding was their claim for damages. 7 The matter in due course was entered into the Masters' list on 17 December 1998. On 26 May 1999 it was fixed to be heard before me this day, 11 June 1999. When it was fixed for hearing the Court was informed that the only matter which was to be argued this day was the question of costs. The Court was informed both then and again at today's hearing that the plaintiffs did not wish to pursue any claim for damages. 8 Today's hearing, as a consequence, is a hearing in respect to the costs of the proceedings. 9 It has been submitted on behalf of the plaintiffs that they are entitled to have an order made that the defendants should pay the costs of the plaintiffs of the proceedings and that those costs should be on the indemnity basis. Essentially, the grounds upon which the plaintiffs claim those costs is that the proceedings related to confidential material and information asserted by the plaintiffs to be held by their former employee, the first defendant; that, so it is submitted on behalf of the plaintiffs, the first defendant lied about his possession of that material, which, according to the plaintiffs, he had stolen from them, and he returned that material to the plaintiffs only as a result of the court proceedings which, so it is submitted, it was necessary for the plaintiffs to institute in order to recover their property. 10 The defendants, on the other hand, have submitted that, not only should no costs order be made against the defendants in favour of the plaintiffs, but that the clear effect of the orders made by consent and without admissions on 12 and 14 August 1998 was that the parties contemplated that each party would bear its or his own costs of the proceedings. 11 It has further been submitted on behalf of the defendants that, contrary to its primary submission, if the Court is disposed to make any costs order against the defendants, then such costs order should not be on the indemnity basis but should be on the party and party basis. 12 The orders which were made on 12 and 14 August 1998 did not contain any reference to costs. It does not seem to me, in those circumstances, that any party to the proceedings is precluded from making an application in respect to costs. 13 Where the orders are silent as to costs it does not seem to me that I can necessarily infer it was the intention of the parties that each party should bear its own costs. It would, of course, have been prudent and would have removed at least part of the present dispute if the parties at the time of the making of those orders by consent had included in them some indication as to whether the costs of the proceedings to that point were to be reserved or whether it was the intention of the parties that each should bear its or his own costs. 14 Having made that observation, however, it does not seem to me that those orders in any way pre-empt a decision of the Court as to the costs of the proceedings. 15 The evidence satisfies me that it was the conduct of the first defendant which made necessary the institution of the proceedings. The first defendant had in his possession and under his control confidential material and information of the first plaintiff. He did not at the outset admit that he held that material. It was necessary for the plaintiffs to institute and pursue the proceedings before the first defendant was prepared to deliver up the material of the plaintiff and for the proceedings to continue until both defendants were prepared to consent to the relief of the nature set forth in the orders of 12 and 14 August 1998. 16 The evidence fully satisfies me that the defendants were using (through the name of the second defendant and through a logo used by the second defendant and an application for an approved trademark being made by the second defendant) material of similarity, if not identicality, to that of the trademark of the plaintiff. 17 I am satisfied that the plaintiffs are entitled to their costs of the proceedings from the inception of proceedings up to and including 14 August 1998 and also including the implementation of the orders that were made on 12 and 14 August 1998. I am told that the implementation had finally been effected on about 28 October or 3 November 1998. 18 After those consent orders had been made and implemented, however, the proceedings remained on foot, as I have already observed, only in respect to the claim for damages of the plaintiffs, who have now chosen not to pursue such a claim. It seems to me, in those circumstances, that the plaintiffs are not entitled to any costs after the implementation of the consent orders, to which I have already referred. 19 There remains to be considered, however, the basis upon which the costs order, to which the plaintiffs are entitled against the defendant, should be made. 20 The plaintiffs, as I have already recorded, have submitted that the costs order should be paid on the indemnity basis. The defendants have submitted that any costs order made against them should be only on the party and party basis. 21 The mere fact that a party, either after a contested hearing or as a result of consent orders, is unsuccessful in proceedings does not of itself attract an order for indemnity costs. However, it was submitted on behalf of the plaintiffs that in the instant case the first defendant had no legal right whatever to the property the subject of the plaintiffs claim; that the first defendant dishonestly asserted at the outset he did not have that property and, further, that the resistance by the defendants to the claim of the plaintiffs until the orders were made by consent on 12 and 14 August 1998 was not grounded upon any bona fide claim of right. I am in agreement with those submissions. For that reason I propose to order that the costs to which the plaintiffs are entitled up to the date of the consent orders and their implementation shall be on the indemnity basis. 22 Since the plaintiffs have been largely successful in their claim for costs it seems to me appropriate that they should also be entitled to receive their costs of the contested hearing conducted before me this morning. However, the costs of today's hearing should not be on the indemnity basis, because the defendants were certainty entitled to argue against cost orders being made against them. 23 The plaintiffs' costs of today will only be on the party and party basis. 24 Accordingly, I make the following orders: 1. I order that the defendants pay the costs of the plaintiffs proceedings up to and including 14 August 1998 together with any costs of the implementation of orders made on 12 and 4 August 1998, such costs to be on the indemnity basis, and the costs of the hearing on 11 June 1999, such costs to be on the party and party basis. 2. The exhibits maybe returned. **********