Luxottica Retail Australia v Grant & Ors (No. 2) [2009] NSWSC 736

New South Wales Supreme Court

CITATION : Luxottica Retail Australia v Grant & Ors (No. 2) [2009] NSWSC 736

HEARING DATE(S) : 9/3/09 and written submissions

JUDGMENT DATE : 31 July 2009

JURISDICTION : Equity

JUDGMENT OF : White J

DECISION : Order that the plaintiff pay the defendants' costs of the proceedings from and including 18 February 2009 and that there otherwise be no order as to the costs of the proceedings.

CATCHWORDS : PROCEDURE - costs - departing from the general rule - whether substantive success in hearing - consideration of reasonableness of settlement offers

LEGISLATION CITED : Civil Procedure Act 2005 (NSW)

Luxottica Retail Australia v Grant & Ors [2009] NSWSC 126 CASES CITED : Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 Grant v Brewarrina Shire Council (No. 3) [2003] NSWLEC 108

Luxottica Retail Australia Pty Ltd PARTIES : v Janet Ruth Grant & Ors (No. 2)

FILE NUMBER(S) : SC 4571/08

COUNSEL : Plaintiff: M Leeming SC, J Taylor Defendant: D R Sibtain

SOLICITORS : Plaintiff: Norton White Defendants: Minter Ellison

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Friday, 31 July 2009

4571/08 Luxottica Retail Australia Pty Ltd v Janet Ruth Grant & Ors (No. 2) JUDGMENT 1 HIS HONOUR: I made orders in these proceedings on 9 March 2009 (Luxottica Retail Australia v Grant & Ors [2009] NSWSC 126). The parties have made written submissions on costs. The plaintiff submits that its costs should be paid by all three defendants up to and including the first day of hearing and there should be no order as to costs for the second day of the hearing. The defendants submit that the plaintiff should pay the costs of all of the defendants of the proceedings on the indemnity basis. 2 By s 98 of the Civil Procedure Act 2005 (NSW), costs are in the discretion of the court. Rule 42.1 of the Uniform Civil Procedure Rules provides that subject to Pt 42, 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. Both parties claim to have had substantial success. 3 Part of the plaintiff's claims were resolved by orders made by consent and without admissions. That did not resolve the entirety of the proceedings. Where proceedings are compromised without a hearing on the merits and the court is unable to conclude that one party acted unreasonably, either in commencing or defending the proceedings, and where the compromise does not involve a capitulation, it is usually a proper exercise of the costs discretion to make no order as to costs. The court will not usually attempt to determine who would have succeeded had there been no settlement (Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 at 624-25). 4 In the present case the plaintiff's substantial "success", apart from nominal damages, arose from the orders made by consent and without admissions for the delivery up of documents. The plaintiff failed on the only substantive issue litigated at the hearing, namely its claim for additional damages for breach of copyright. That claim was advanced only against the first defendant. The plaintiff did not press claims for compensatory damages or equitable compensation for breach of contract, breach of fiduciary duty, or breach of an equitable duty of confidence. It did not press its claim against the second defendant for knowing assistance in an alleged breach of fiduciary duty by the first defendant, nor its claim that the second defendant was liable as a joint tortfeasor for acting in concert with the first defendant pursuant to a common design to infringe the plaintiff's copyright. It did not maintain a claim for damages or equitable compensation or injunctive relief against either the second or third defendants. 5 The proceedings were commenced on 4 September 2008 by summons naming only Ms Grant as defendant. The second and third defendants were added as defendants on the filing of a statement of claim on 24 September 2008. 6 Orders obtained ex parte on 4 September 2008 were extended by consent until they expired on 29 September 2008. The plaintiff did not seek their extension after that date. On 11 September 2008 the first defendant swore an affidavit in which, amongst other things, she addressed each of the documents referred to in Ms Nichols' affidavit in support of the summons. Ms Nichols had exhibited a bundle of emails that Ms Grant sent to her home on 27 August 2008. As well as addressing those documents, the first defendant deposed that after checking the documents referred to by Ms Nichols which had been sent to her home Macbook computer, she closed that computer and gave it to her solicitor, Ms Peach of Minter Ellison. Ms Grant volunteered that she had had a second laptop computer which was a predecessor to the Macbook computer, which she also accessed to check to see if it contained any documents relating to her employment with the plaintiff and that she also gave that computer to Ms Peach. She deposed that she gave Ms Peach all documents relating to the plaintiff which she acquired during her employment which she had found up to the date of swearing her affidavit. She deposed that had she continued to work during her four-week notice period she would have returned to the plaintiff any materials which she considered to be confidential or which belonged to the plaintiff prior to the end of the notice period. She also deposed to having a third computer at home which had documents relating to her employment with the plaintiff stored on it. That was a computer which was in current use by her children and by her in ways unrelated to her employment with the plaintiff. 7 The plaintiff says that it was not aware of the scale of its documentation in what it called the "defendants' possession", although there was no evidence that documents were in the possession of anyone other than Ms Grant. No adverse inference can be drawn against Ms Grant from her having possession of documents other than those dealt with in my reasons. There was no contested issue in relation to those other documents. 8 On 8 September 2008, an oral proposal was made on behalf of Ms Grant to counsel for the plaintiff to the effect that she was "... prepared to settle this matter on the basis that she undertakes to destroy or delete the documents referred to in the Nichols affidavit and the parties bear their own costs." 9 That offer was confirmed and extended on 15 September 2008. Minter Ellison, on behalf of Ms Grant, made a without prejudice offer to settle the proceedings on the basis that: " 1. Ms Grant will: (a) return to the Plaintiff or destroy all hard copies (to the extent that they exist) of the documents referred to in Exhibit A to the affidavit of Cheryl Lynnette Nichols sworn on 4 September 2008 and Exhibit A to the affidavit of Cheryl Lynnette Nichols sworn on 12 September 2008 ( Information ) under her possession, custody or control; (b) where any Information is stored on a hard disk drive of any computer in her possession, custody or control, take steps to ensure that the Information is erased from the hard disk drive of that computer; (c) destroy (or in the case of electronic documents delete), all documents in her possession, custody or control which contain Confidential Information (within the meaning given to that term in clause 21 of her contract of employment) which came into her possession during the course of her employment with the Plaintiff; and (d) swear an affidavit confirming that paragraphs (a), (b) and (c) above have been completed. 2. The Plaintiff agrees not to take any steps to enforce the restraints contained in clauses 23.3(a)(v) or (vi) of Ms Grant's employment contract dated 8 February 2006. 3. Each party will bear its own costs of the Proceedings. " 10 That offer was not accepted. 11 On 9 September 2008 the plaintiff served a subpoena on Specsavers Pty Ltd. That subpoena was called on on 16 September 2008. On 24 September 2008 the plaintiff filed its statement of claim joining Mr Grant and Specsavers Pty Ltd ("Specsavers") as additional defendants. 12 On 1 October 2008 Minter Ellison sent an open letter to Norton White (solicitors for the plaintiff) set out at para [15] of my reasons of 9 March 2009. 13 On 7 October 2008 Minter Ellison, writing on behalf of Specsavers, made a proposal to settle the proceedings without admission of liability on behalf of Specsavers on the following basis, namely that: " Specsavers will: (a) return to the Plaintiff or destroy all hard copies (to the extent that they exist) of the documents referred to in Exhibit A to the affidavit of Cheryl Lynnette Nichols sworn on 4 September 2008 and Exhibit A to the affidavit of Cheryl Lynnete Nichols sworn on 12 September 2008 ( Information ) in its possession, custody or control. Please note that to date Specsavers has not been permitted access to the documents contained in those exhibits as your client asserts that they are confidential; (b) where any Information is stored on a hard disk drive of any computer in its possession, custody or control, take steps to ensure that the Information is erased from the hard disk drive of that computer; (c) provide an affidavit confirming that paragraphs (a), and (b) above have been completed; (d) not reproduce, publish or make an adaptation of the Coaching for Conversion Tool Kit; and (e) pay the Plaintiff's costs of the Proceedings in so far as they relate to the action against Specsavers on a taxed basis. " 14 The offer was open for seven days but was not accepted. 15 The plaintiff continued the proceedings against Specsavers because it hoped to obtain evidence that Specsavers had obtained and made use of the plaintiff's documents. Because Specsavers had objected to producing documents on subpoena, the plaintiff suspected that Specsavers possessed additional documents emanating from it. The defendants said that the objection was taken because the subpoena sought documents which went beyond the scope of the matters in issue. I am not in a position to make any assessment of the reasonableness of the parties' attitude to the production of documents on subpoena. 16 There was some inconclusive correspondence in October 2008 between the parties' solicitors as to the inferences to be drawn from the response to the subpoena. The plaintiff made no substantive response to the settlement offers of 15 September 2008 on behalf of Ms Grant and of 7 October 2008 on behalf of Specsavers. 17 On 3 February 2009 Norton White, on behalf of the plaintiff, made an offer to settle the proceedings on the following basis: " 1. Subject to order 2 below, the defendants and each of them, by themselves, their servants or their agents refrain from reproducing, disclosing, forwarding, transmitting, altering, deleting, otherwise disposing of any Luxottica non-public information, Confidential Information, Luxottica Confidential Information and Luxottica works (as defined in the Statement of Claim dated 24 September 2008); 2. The defendants and each of them within seven (7) days of making this order deliver up to the plaintiff the original and any copies of any Luxottica non-public information, Confidential Information, Luxottica Confidential Information and Luxottica works (as defined in the Statement of Claim dated 24 September 2008); 3. The defendants and each of them pay the plaintiff's costs."