Prowealth Corporation Pty Ltd v Property Investment Advisory Pty Ltd (No 2)
[2022] QDC 288
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- Unreported Judgment
- Prowealth Corporation Pty Ltd v Property Investment Advisory Pty Ltd (No 2)[2022] QDC 288
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Prowealth Corporation Pty Ltd v Property Investment Advisory Pty Ltd (No 2)[2022] QDC 288
Prowealth Corporation Pty Ltd v Property Investment Advisory Pty Ltd (No 2)[2022] QDC 288
DISTRICT COURT OF QUEENSLAND
CITATION: | Prowealth Corporation Pty Ltd v Property Investment Advisory Pty Ltd (No 2) [2022] QDC 288 |
PARTIES: | PROWEALTH CORPORATION PTY LTD (Plaintiff) v PROPERTY INVESTMENT ADVISORY PTY LTD & ORS (Defendants) |
FILE NO: | BD 3499/2020 |
DIVISION: | Civil |
DELIVERED ON: | 14 December 2022 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Written submissions, [DATES] 2022 |
JUDGE: | Barlow KC, DCJ |
ORDERS: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW THE EVENT – GENERAL RULE AND EXERCISE OF DISCRETION – the plaintiff succeeded against two of the three defendants, whose defences were conducted together – whether the plaintiff should pay the successful defendant’s costs – whether the plaintiff should pay one third of all defendants’ costs as a proxy for the successful defendant’s aliquot share of those costs as between the defendants PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY – the trial was adjourned after four days at the request of the defendants to adduce further evidence – the defendants accept that it is appropriate that they pay the plaintiff’s costs thrown away, but on the standard basis – whether the defendants should pay the plaintiff’s costs of the adjournment on the indemnity basis PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW THE EVENT – GENERAL RULE AND EXERCISE OF DISCRETION – an application for an interlocutory injunction was resolved by undertakings early in the proceeding – the costs of that application were reserved – a permanent injunction was refused at trial – whether the plaintiff is entitled to the costs of that application |
| Cases Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137, distinguished Liggins v ParkTrent Properties Group Pty Ltd [2022] NSWSC 1439, distinguished Rogers v Kabriel (No 2) [1999] NSWSC 474, distinguished |
COUNSEL: | N Ferrett KC, for the plaintiff D Keane KC, for the first defendant |
SOLICITORS: | Romans and Romans for the plaintiff Cantle and Carmichael for the defendant |
- [1]The plaintiff sought damages totalling $99,255 to $149,082 for alleged lost past income and $248,136 to $372,704 for the capital value of an alleged lost opportunity to earn future income, as well as an injunction restraining the defendants from using the plaintiff’s copyright documents.
- [2]By a judgment delivered on 25 November 2022 (Prowealth Corporation Pty Ltd v Property Investment Advisory Pty Ltd [2022] QDC 257), I gave judgment:
- (a)for the plaintiff against the second defendants, for $94,500 damages plus interest;
- (a)
- (b)for the plaintiff against the third defendant, for $7,500 damages plus interest;
- (c)dismissing the claim against the first defendant; and
- (d)refusing a permanent injunction.
- [3]I gave directions for the filing of submissions on costs and I have considered those submissions. There are two separate issues: first, the costs of an adjournment of the trial on its fifth day (at the request of the defendants); secondly, the other costs of the proceeding.
- [4]The plaintiff seeks orders that:
- (a)the defendants pay the plaintiff’s costs thrown away by the adjournment on the indemnity basis; and
- (b)the defendants otherwise pay the plaintiff’s costs of the proceeding on the standard basis.
- (a)
- [5]The defendants seek much more detailed orders for costs, comprising seven different orders, based in part upon the plaintiff’s differing success against each defendant, partly on issues and partly on a late amendment to the statement of claim. They accept that it is appropriate that they pay the plaintiff’s costs thrown away because of the adjournment, but they contend that costs should be on the standard basis.
- [6]Dealing first with the costs of the adjournment, the defendant’s counsel sought an adjournment of the trial before he closed his case, for two reasons. One was that Mr Dunkley, in his evidence, had said that he had received certain advice about the defendants’ obligations under an order that had been made by Justice Dalton while the proceeding was in the Supreme Court (in its early stages). At the end of Mr Dunkley’s evidence on day 4, I suggested that Mr Keane get instructions about whether to call the advising solicitor to give evidence about what he had advised the defendants, as I had expressed doubts about the correctness of Mr Dunkley’s evidence. The second reason was that it had become apparent, toward the end of day 4 of the trial, that the defendants had not complied with Justice Dalton’s order (which was to inform the plaintiff of any contacts they had with the plaintiff’s former or current clients) and they needed time to do that.
- [7]When the trial resumed, the defendants’ counsel informed me that they would not call the solicitor’s evidence and they had complied with Justice Dalton’s order. Some of the documents disclosed by them pursuant to that order were then tendered and the defendants closed their case.
- [8]The defendants’ counsel submitted that, as it turned out, the evidence and compliance with the order were all to do with that part of the claim on which the plaintiff failed: its claim for a lost future income stream. Therefore costs on the indemnity basis are not justified. To my mind, that is not to the point. The adjournment was entirely at the defendants’ request and arose from their failure to comply with a court order over a number of years. These circumstances justify an order that the defendants pay the plaintiff’s costs thrown away by reason of the adjournment on the indemnity basis even though the evidence may strictly have been relevant only to an issue on which the plaintiff failed.
- [9]As to the overall costs of the proceeding, the defendants submitted that the plaintiff should pay one third of the defendants’ costs because it failed completely against one of the three defendants. In this respect, the defendants’ counsel referred me to a “rule of thumb” that is apparently applied in the NSW Supreme Court in dealing with the parties’ costs where a plaintiff has succeeded against one or more, but not all, defendants. This rule of thumb was stated in Rogers v Kabriel (No 2) [1999] NSWSC 474 at [14]-[16] and recently applied by Slattery J in Liggins v ParkTrent Properties Group Pty Ltd [2022] NSWSC 1439 at [41]-[45]. It appears to be that, in the absence of any evidence as to how the defendants have retained their solicitors and counsel, the court infers that each is liable to pay an aliquot share of their combined costs so that, if successful, the appropriate order in a defendant’s favour is that the plaintiff pay an aliquot share of the defendants’ total costs. However, in an appropriate case the court will order an assessment of costs on the basis that they are to be split between the costs referable to all defendants and the costs referable to a particular defendant.
- [10]On this basis, the defendants submit that the plaintiff should be ordered to pay one third of the defendants’ costs plus any separate costs incurred by the first defendant (PIA) in respect of the separate case against it. The defendants also submit that the plaintiff should not recover more than two thirds of its costs, to reflect that it failed in its claim against PIA.
- [11]PIA was principally a party to the claim for an injunction. That claim, though, formed only a minor part of the case as it was run. The plaintiff also sought equitable compensation against PIA for the use by it of the plaintiff’s confidential information and of the plaintiff’s copyright. I found that breaches and wrongful claims of copyright occurred, but no loss arose directly from those breaches. The plaintiff’s substantial claims and its success on those claims were based on the second and third defendants’ breaches of their contractual obligations under restraint clauses in their respective contracts. Those breaches, though, did involve the improper use of the plaintiff’s material.
- [12]It is also relevant that PIA is really only the alter ego of the second and third defendants.
- [13]The defendants submit that there should be different costs orders against each of them because the plaintiff failed against PIA, won an amount within the jurisdiction of the Magistrates Court against Mr and Mrs Price and won a minor amount against Mr Dunkley. Counsel submitted that it would be unjust for Mr Dunkley to be jointly liable with Mr and Mrs Price for the plaintiff’s costs against the latter given the very small amount awarded against Mr Dunkley.
- [14]I do not accept that the defendants’ costs ought be divided equally between them and the plaintiff ought not receive an order for costs against the first defendant amounting to one third of those costs. The defendants ran their cases together. They did not seek to distinguish between any of them in defending their respective cases. The costs involved in respect of the injunction, at least leading up to and in the course of the trial, were so apparently minimal that they could not be separated out from the other costs of the trial, nor of the proceeding generally other than the early application for an interlocutory injunction. That application was dealt with by Mullins J on 19 December 2019, at a time when the defendants had or may well still have had documents and systems based on the plaintiff’s documents and systems. The fact that I have declined to order a permanent injunction nearly three years later does not mean that the orders made and undertakings given on that occasion were not justified, nor that the action was not properly continued on that basis by the plaintiff, at least until the completion of disclosure. I declined the injunction because I was not satisfied that, since then, the defendants have purported to use the plaintiff’s information or to claim its copyright. Mullins J reserved the costs of that application and the plaintiff seeks its costs of the proceeding, including reserved costs. Although I have dismissed the proceeding against PIA because of subsequent matters, the injunction and undertakings were justified at that point. In my view, the plaintiff should have its costs of that application. As it was really a combination of all defendants’ actions that led to the injunction, they should all be ordered jointly to pay them.
- [15]I shall therefore order that the defendants pay the plaintiff’s costs of the application before Mullins J on 19 December 2019. As the proceeding was then in the Supreme Court, it is appropriate that those costs be assessed on that court’s scale.
- [16]I shall not otherwise make a separate order in favour of or against the plaintiff in respect of its case against PIA, given the minimal costs that would have been incurred in that respect. Those costs will be dealt with as part of the plaintiff’s and the second and third defendants’ total costs of the proceeding, to which I now turn.
- [17]The plaintiff always claimed against Mr Dunkley for, among other things, breach of the restraint clause in his contract. It also claimed against him and Mr and Mrs Price for breach of duties of confidence and for misleading or deceptive conduct in falsely claiming copyright that belonged to Prowealth. I found that those three defendants all breached their duties of confidence and wrongly used the plaintiff’s intellectual property, but I found that there was no loss caused by those breaches because the losses were more directly caused by their breaches of the restraint clauses.
- [18]It was not until after the end of the trial that the plaintiff filed a further amended statement of claim in which it also claimed against Mr and Mrs Price for breach of the restraint clause in their contract. On that basis, the defendants contend that the plaintiff should pay thosedefendants’ costs up to that date and thet should pay the plaintiff’s costs from then. They rely, for that proposition, on a “general rule” stated by Stuart-Smith LJ in Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137 at 154, to the effect that, where a plaintiff makes a late amendment that substantially alters the case the defendant has to meet and without which the action would fail, the defendant is entitled to costs to the date of the amendment.
- [19]In this case, although not pleaded until after the trial, the plaintiff conducted its case, at least throughout the trial, on the basis that Mr and Mrs Price were also subject to the restraint clause in their contract. It had also pleaded – and the defendants had admitted – that all the defendants owed it some implied duties, including to act loyally and exclusively for and in the interests of the plaintiff, to disclose any conflict with obligations owed by them to the plaintiff, not to retain without approval any advantage or opportunity the acquisition of which was furnished by their engagement by the plaintiff and not to deal with the plaintiff’s clients other than on the plaintiff’s behalf. It went on to plead that the second and third defendants breached those duties, causing the plaintiff loss.
- [20]When the plaintiff’s counsel raised the prospect of amending to plead the restraint clause in the Price agreement, the defendants’ counsel conceded that the defendants would not be prejudiced by that amendment.
- [21]In the circumstances, I do not accept that this is a case in which costs of the proceeding against the second defendants should be apportioned in the manner for which the defendants contend.
- [22]The defendants submit that, in any event, as the plaintiff lost on the greater part of its claim (at least in monetary terms), namely its claim for loss of the opportunity to earn an income stream in future years, the plaintiff ought pay the defendants’ costs of that issue at least. The plaintiff’s counsel replied that, at most, the time spent at trial on that issue was about 15% of the total trial time, in which case the court might consider ordering that the defendants pay 85% of the plaintiff’s costs and the plaintiff pay 15% of the defendants’ costs or, to avoid both parties’ costs having to be assessed, the defendants pay 75% of the plaintiff’s costs of the proceeding.
- [23]In fact, the lay witnesses’ evidence also went to the likelihood of an ongoing income stream of any value: that led to a somewhat detailed analysis of their evidence by me in considering that part of the plaintiff’s claim. Furthermore, the time spent at trial does not reflect the total time and effort that the parties would have expended on that issue, including the costs of obtaining and dealing with the experts’ reports. The plaintiff lost on the issue and therefore should not have its costs of the issue. I take that into account in determining the ultimate order as to costs.
- [24]Finally, the defendants submitted that, as the plaintiff only succeeded in getting judgment for amounts well within the jurisdiction of the Magistrates Court, any costs awarded in their favour should be on the relevant Magistrates Court scale for claims in the sums of the separate judgments against the second and third defendants respectively. They rely on rules 697(1) and (2). The plaintiff submits that the court should depart from the order provided for in subrule (2) because some of the relief it sought could not granted by the Magistrates Court and in any event it was a complex case not suitable for trial in that court. The relief not possible in the Magistrates Court was the injunction (as to which interlocutory undertakings were given by the defendants) and, against Mr Dunkley, damages for breach of his statutory duties as an officer of the plaintiff. The latter could only have been pursued in the Supreme Court and was not pursued at trial in this case for that reason.
- [25]Of course, rule 697 focuses on the relief obtained rather than the relief sought in a claim. The relief that the plaintiff ultimately obtained was well within the jurisdiction of the Magistrates Court. But it was certainly a complex claim and it was conducted, both by the plaintiff and by the defendants, on that basis and without any real distinctions between the defendants. It was only in my judgment and the reasons for it that I drew relevant distinctions.
- [26]I consider that it was appropriate for the plaintiff to bring and prosecute the proceeding in this court and will order costs on that basis.
- [27]Finally, as the defendants were jointly represented and conducted their defences jointly, I do not consider it unjust to make the second and third defendants jointly liable for the plaintiff’s costs.
- [28]As to the amount of those costs, given the importance and amount of the unsuccessful claim for a lost income stream, which on the evidence could never have succeeded and to which much of the evidence and effort in the trial was in fact relevant, in theory the plaintiff should pay the defendants’ costs of that issue. It is undesirable, however, to necessitate a determination of what costs concerned that issue alone. It would be more efficient and I consider would do justice between the parties for the court to take a broad brush approach in ordering that the defendants pay the plaintiff’s costs, to account for the defendants’ success on that issue.
- [29]I therefore make the following orders:
- (a)the defendants pay the plaintiff’s costs thrown away by reason of the adjournment of the trial on 20 October 2022, on the indemnity basis;
- (a)
- (b)the defendants pay the plaintiff’s costs of the application before Mullins J on 19 December 2019, on the Supreme Court scale;
- (c)the second and third defendants otherwise pay 60% of the plaintiff’s costs of the proceeding.