MS Stock Contracting & Anor v AUX Venture & Anor (No 2)

[2011] NTSC 76

 

PARTIES:                                         MS STOCK CONTRACTING PTY LTD

                                                         (ACN 098 710 715)

 

                                                         And

 

                                                         FLY FOX PTY LTD (ACN 132 028 276)

 

                                                         v

 

                                                         AUX VENTURE PTY LTD

                                                         (ACN 135 481 140)

 

                                                         And

 

                                                         WAINWRIGHT, JENNIFER HELEN

 

TITLE OF COURT:                           SUPREME COURT OF THE NORTHERN TERRITORY

 

JURISDICTION:                               SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION

 

FILE NO:                                          124 of 2010 (21037722)

 

DELIVERED:                                   29 September 2011

 

HEARING DATES:                           27 September 2011

 

JUDGMENT OF:                              BARR J

 

 

 

 

 

 

CATCHWORDS:

 

COSTS – Application for oral examination of second defendant to ascertain identity of third party – finding that second defendant misled plaintiffs as to existence or involvement of third party –no action taken by second defendant to disabuse plaintiff of their mistaken belief – avoidance of order for oral examination by late correction of falsehood – whether costs order against technically successful defendant appropriate in the circumstances – whether appropriate to order indemnity costs

 

MS Stock Contracting & Anor v AUX Venture & Anor [2011] NTSC 08, referred to.

Oshlack v Richmond River Council (1998) 193 CLR 72; Ritter v Godfrey [1920] 2 KB 47; Verna Trading v New India Assurance [1991] 1 VR 129, considered.

 

REPRESENTATION:

 

Counsel:

    Plaintiff:                                      D Robinson SC

    Defendant:                                    A Young

 

Solicitors:

    Plaintiff:                                      Clayton Utz

    Defendant:                                    South & Geldard

 

Judgment category classification:    B

Judgment ID Number:                       Bar1109

Number of pages:                             6


IN THE SUPREME COURT

OF THE NORTHERN TERRITORY

OF AUSTRALIA

AT DARWIN

 

MS Stock Contracting & Anor v AUX Venture & Anor (No 2)

[2011] NTSC 76

No 124 of 2010 (21037722)

 

 

                                                     BETWEEN:

 

                                                     MS STOCK CONTRACTING PTY LTD

                                                     (ACN 098 710 715)

                                                         First Plaintiff

 

                                                     AND:

 

                                                     FLY FOX PTY LTD (ACN 132 028 276)

                                                         Second Plaintiff

 

                                                     AND:

 

                                                     AUX VENTURE & ANOR

                                                     (ACN 135 481 140)

                                                         First Defendant

 

                                                     AND:

 

                                                     JENNIFER HELEN WAINWRIGHT

                                                         Second Defendant

 

CORAM:     BARR J

 

REASONS FOR DECISION ON COSTS

 

(Delivered 29 September 2011)

 

[1]       I have read the parties’ written submissions in relation to costs and considered the additional affidavit material tendered on the question of costs.  I have also had the benefit of hearing the further oral submissions of counsel.

[2]       The plaintiffs’ application filed 10 November 2010 sought the examination of the second defendant pursuant to Rule 32.03(1) of the Supreme Court Rules for the purpose of ascertaining the identity of a third party against whom the plaintiffs proposed to commence an action in equity for relief against an actual or threatened abuse of confidential information.

[3]       The application came about after an unknown person took unauthorised access to the plaintiffs’ email system on 2 September 2010.  There was concern on the part of the plaintiffs’ director, Mark Sullivan, that the person taking unauthorised access may have read confidential communications between the Mr Sullivan and the plaintiffs’ solicitors in relation to a matter being litigated in the Queensland District Court.

[4]       I found in my earlier Reasons[1] that it was the second defendant who had taken the unauthorised access to the plaintiffs’ email account on 2 September 2010.  The second defendant then misled the plaintiffs to believe that there was a third party involved.  The third party was a fiction created by the second defendant by her solicitor’s letter to Clayton Utz dated 14 October 2010:-

"We are instructed that the comments from Ms Wainwright to Ms Ball ... were not based on any information in Ms Wainwright's possession resulting from access to your client's e-mail account.  Our client does not intend disclosing the party who made that information available to her."

[5]       The paragraph in fact contained a double untruth: (1) the denial that the second defendant had taken access to the plaintiffs’ email system, and (2) the implied assertion that a third party had obtained the information and made it available to the second defendant.

[6]       After 14 October 2010, the second defendant did nothing to disabuse the plaintiffs of their belief that a third party was involved. 

[7]       The plaintiffs’ originating motion seeking orders under SCR 32.03 was filed on 10 November 2010.

[8]       The second defendant maintained the third party fiction from 14 October up to the time of service of her affidavit sworn 21 December 2010.  It was not until the hearing on 23 December that Mr Young of counsel deftly abandoned the third party fiction and finessed the change of position, still without making express admissions on behalf of the second defendant. 

[9]       The second defendant argues that she alerted the plaintiffs to the true situation by her affidavit sworn 21 December.  I do not agree.  Although the affidavit was inconsistent with what had been stated by the defendants’ solicitors in their letter dated 14 October, the 14 October statements had not been expressly withdrawn, and the plaintiffs must have been left wondering how the conflicting positions could be reconciled.  As I said in my earlier Reasons at par [45], the change of position was signalled obliquely and it was left to the court to make a finding on a matter which the second defendant had not expressly admitted.

[10]     Mr Young, counsel for the defendants, argues that the plaintiffs were not induced to commence this proceeding by what he concedes was the defendants’ ill-judged letter of 14 October; that the letter was only a pretext.  Mr Young describes the commencement and prosecution of this proceeding by the plaintiffs as a clever response to the second defendant’s tactical error.  I reject those arguments.  The unauthorized access took place at a time when litigation between the parties was pending. There was a real possibility that the person taking unauthorized access had read confidential letters connected with that litigation. It was therefore reasonable for the plaintiffs to wish to ‘plug the leak’ and obtain consequential relief, for which it was necessary to identify the unauthorized access-taker.

[11]     This is not a situation where it could be said that the defendants were “on the merits, wrongly vexed with litigation”, as was said by Ormiston J in Verna Trading v New India Assurance [1991] 1 VR 129 at 175.  Rather, it was the plaintiffs who were vexed with a problem which the second defendant had created.  The defendants brought about the litigation.  I agree with Mr Robinson, senior counsel for the plaintiffs, that the second defendant lied, misled and then capitulated, and that even the capitulation came with obfuscation.  The defendants’ conduct was unreasonable.

[12]     I have to exercise my discretion as to whether I make any order as to costs, and if so, in favour of whom.  It is not relevant or useful in the present case to characterize the defendants as “successful litigants”, and to then consider the principles stated by members of the UK Court of Appeal in Ritter v Godfrey [1920] 2 KB 47 as to depriving successful defendants of their costs.  The present defendants were technically successful, in that they avoided an order being made for the oral examination of the second defendant, but only because of the last-minute correction of the falsehood which the second defendant had created.

[13]     I must exercise my costs discretion judicially and act on facts connected with or leading up to the litigation. 

[14]     I propose to order that the defendants pay the plaintiffs’ costs of this proceeding from 14 October 2010, that being the date on which the second defendant sowed the seeds of the third party fiction and thus precipitated the plaintiffs seeking a remedy under SCR 32.03(1). 

[15]     The costs are to be taxed on the indemnity basis, that is on the basis set out in SCR 63.27. The ‘relevant delinquency’[2] on the part of the defendants is the conduct referred to pars [4], [5], [6], [8] and [11] of these Reasons.  The award of indemnity costs is not punitive, but is simply intended to more adequately compensate the plaintiffs for their legal costs incurred.

[16]     The parties have requested that I reserve the costs of the proceedings in relation to costs, including of the hearing on 27 September.

[17]     The orders I make in relation to costs are as follows:-

1.     The defendants pay the plaintiffs’ costs of this proceeding on the indemnity basis from 14 October 2010. 

2.     To the extent necessary I certify for senior counsel.

3.     I reserve the question of the costs of the further proceedings in relation to costs, including of the hearing on 27 September, with liberty to the parties to bring the matter on for further consideration.

-----------------------------

 



[1]     MS Stock Contracting & Anor v AUX Venture & Anor [2011] NTSC 08 at [41].

[2]     To use the words of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at [44].