Pet Tech Pty Ltd v David Batson [2014] NSWSC 758

Supreme Court New South Wales

Medium Neutral Citation: Pet Tech Pty Ltd v David Batson [2014] NSWSC 758 Hearing dates: 20 December 2013 Decision date: 10 June 2014 Jurisdiction: Equity Division Before: Young AJA Decision: Proceedings dismissed. Order that the plaintiff pay the defendant's costs on the indemnity basis. Catchwords: COSTS - whether the plaintiff should pay the costs of the defendant in relation to dismissed proceedings on the indemnity basis instead of the party/party basis. Cases Cited: Fountain Selected Meat (sales) Pty Ltd v International Project Merchants Pty Ltd (1988) 81 ALR 397 Category: Costs Parties: Pet Tech Pty Ltd (plaintiff) David Batson (defendant) Representation: Counsel: M Daniels (plaintiff) Y Shariff (defendant) Solicitors: Emil Ford Lawyers (plaintiff) Holding Redlich (defendant) File Number(s): 2012/270501 Publication restriction: None

Judgment 1These proceedings were commenced by the defendant's former employer to restrain him from using alleged confidential information. I dismissed the claim with costs ([2013] NSWSC 1954]). However I gave leave to the parties to make further submissions as to costs. 2Those submissions came in, in February this year. The basal position of the parties is that the plaintiff reckons that the plaintiff should pay the defendant's costs on the party/party basis, the defendant reckons that the plaintiff should pay his costs on the indemnity basis. Both sides put forward a fall back position if I am not willing to go along with their submissions to the full extent. 3The defendant puts forward three grounds as to why indemnity costs should be ordered: (1)A principal claim against the defendant was abandoned shortly before the hearing commenced. (2)The plaintiff's claim had no reasonable prospects of success. (3)The plaintiff unreasonably rejected reasonable without prejudice offers. 4I will deal with these matters in turn, but before I do so I need to make some general comments about the litigation, though without again setting out the relevant facts in full. 5The defendant was employed by the plaintiff between 16 November 2009 and 30 September 2011. The plaintiff purported to terminate the defendant's contract for alleged misconduct. The defendant sued for wrongful dismissal, but the proceedings were settled by a deed of release. The present proceedings were not commenced until 30 August 2012. Although the proceedings sought, inter alia, an injunction no interlocutory relief was sought. The matter came on before me on 29 October 2013. That was a date more than two years after the employment terminated and accordingly was after the expiry of the two year limitation on restraint of trade after termination of employment. The plaintiff accordingly did not seek injunctions, but it also did not seek damages. 6Furthermore, the proceedings had been amended so as to claim a breach of a covenant of fidelity. At the hearing that alleged breach was not pursued. Moreover the principal witness for the plaintiff made the decision to attend a speaking engagement in Adelaide rather than attend court. Although the court read his affidavit it had to discount it because there was no cross examination. There was some other evidence but the bulk of the material was a large schedule of pieces of paper which were alleged to constitute confidential information. 7The impression with which I was left was that these proceedings were brought about in order to bluff the defendant into agreeing to provide the plaintiff with something to which it was not entitled. When this bluff did not work then the plaintiff just did not pursue the case with any vigour but did not abandon it. 8The plaintiff's written submissions try to say that the delay in bringing the case on for trial etc. was not principally its fault as it only found out sufficient incriminating evidence some time after the defendant left it's employ. Whether this be so or not, it does not dispel the general impression that I was given by the plaintiff's approach. 9I now turn to the three grounds which it is said justify an order for indemnity costs. 101. The reason for not pursuing the injunction was obvious. However it was not obvious why the claim for breach of the duty of fidelity or the claim for damages was not pursued. 11Although I do have written submissions from the solicitor for the plaintiff he does not challenge any of the allegations made by the defendant in his submissions that various aspects of the claim were not pursued at the hearing. The only meaningful submissions are on the third of the grounds put forward by the defendant. 12Accordingly this first ground does provide some basis for making an order for indemnity costs. 132. The second ground is that there were no real prospects of success or that the proceedings were hopeless, see eg. Fountain Selected Meat (sales) Pty Ltd v International Project Merchants Pty Ltd (1988) 81 ALR 397. 14I do not consider that had the proceedings been run with all cylinders firing they would have been classed as hopeless. However the plaintiff seemingly deliberately did not pursue them with full vigour and this is one of the reasons why I said earlier that the proceedings seem to have been brought more by way of bluff than with any intent of pursuing them to a win at the trial. The abandonment of the claims referred to on the first ground reinforce this. 15Accordingly here again it seems to me that the plaintiff's conduct does give some weight to the defendant's case for indemnity costs. 16As the defendant's put in their submissions, which is in accordance with what I found in my original decision, the evidence on the part of the plaintiff was always of a very vague nature. Both the documentation and the material placed before the court by the plaintiff never really came to grips with what was confidential information and why. This was probably because of the strategy to which I have referred earlier. 17 On the other hand if I am wrong in my inference regarding the plaintiff's strategy, then it would seem that the plaintiff just found it impossible to identify what was confidential information. Another possibility is that the plaintiff somehow or other got into its corporate mind that anything it thought was confidential, was confidential and that the defendant had no right to it. 18The plaintiff's failure to be able to analyse it's case, or alternatively that it never intended to properly analyse its case, led mainly to its loss and the cause of great expense to the defendant. 19Accordingly this matter also tends towards there being an order for indemnity costs. 203. The third matter deals with a series of offers which were made in 2013 to settle the proceedings on terms less favourable to the defendant than actually occurred. Each of them did involve a compromise of the defendant's position with respect to costs. 21The plaintiff's main answer to this aspect of the case is that it was in no position to be able to assess the offers as of 18 February 2013 when the first was made, it's solicitor says: It was not in a position to completely understand the defendant's position (given that the defendant knew, but the plaintiff did not, that the defendant was no longer employed by the plaintiff's competitor. 22However, in most litigation one party or both parties are not in the loop as to all the information known by the other. Because of this, experienced lawyers are usually able to make an assessment as to whether an offer is a reasonable one to accept or not even if they do not have all the information. 23There is no utility in considering whether the subsequent offer by letter by the defendant to compromise the proceeding has significance. 24There does not appear to be any other answer to the allegation that the plaintiff unreasonably refused to accept or seriously consider the offers made by the defendants. 25Accordingly all the factors relied on by the defendants are ones which point in the same direction and that is that there should be an order for indemnity costs. Thus the proceedings are dismissed and I order that the plaintiff pay the defendant's costs on the indemnity basis.