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Madritsch KG v Thales Australia Limited[2021] QSC 262

Madritsch KG v Thales Australia Limited[2021] QSC 262

SUPREME COURT OF QUEENSLAND

CITATION:

Madritsch KG & Anor v Thales Australia Limited [2021] QSC 262

PARTIES:

MADRITSCH KG

(first plaintiff/first respondent)

NIOA NOMINEES PTY LTD (AS TRUSTEE FOR THE BILL NIOA FAMILY TRUST)

(second plaintiff/second respondent)

v

THALES AUSTRALIA LIMITED

ACN 008 642 751

(defendant/applicant)

FILE NO:

BS 9497 of 2017

DIVISION:

Trial Division

PROCEEDING:

Application (Commercial List)

DELIVERED ON:

12 October 2021 (ex tempore)

DELIVERED AT:

Brisbane

HEARING DATE:

12 October 2021

JUDGE:

Bradley J

ORDER:

The Order of the Court is that:

  1. The parties are to confer and submit to the Associate to Bradley J either any agreed or any competing directions proposed for the next stage of the proceeding by 4:00 pm on 21 October 2021.
  2. The application filed 7 September 2021 is otherwise dismissed.
  3. Costs are reserved, to be agreed or, if necessary, determined at a time convenient to the court. 

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COURT SUPERVISION – ADJOURNMENT – where the parties sought and the court ordered separate trials to determine questions of liability independent to those of quantum – where the liability trial was heard and determined – where the defendant has appealed the decision on liability – where the defendant has applied for an “adjournment” of the question of the quantification of loss and damage or any enquiry into an account of profits until after the determination of the appeal – where the defendant contends it will incur considerable costs absent a grant of the relief sought – where the plaintiffs seek to progress their claim to final judgment without delay – whether the possible costs disadvantage the defendant may endue outweighs the certain further delay in the determination of the plaintiffs’ claim

Uniform Civil Procedure Rules 1999 (Qld), r 5, r 221, r 366, r 367, r 374

Aquaculture Corporation v New Zealand Green Mussel Co Ltd & Ors (1985) 5 IPR 353, considered

Birla Mt Gordon Pty Ltd v Miccon Hire Pty Ltd [2013] QCA 363, cited

Cook's Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] 2 Qd R 453, [2008] QCA 322, considered

Croney v Nand [1999] 2 Qd R 342, [1998] QCA 367, cited

Day v Humphrey & Ors [2017] QCA 104, followed

Dr Martens Australia Pty Ltd v Bata Shoe Company of Australia Pty Ltd (1997) 75 FCR 230, cited

Gerhardt v Brisbane City Council [2016] QCA 272, cited

Goodman Fielder Pte Ltd v Conga Foods Pty Ltd (2021) 157 IPR 468; [2021] FCA 307 , considered

Klerck & Ors v Sierocki & Anor [2014] QCA 355, cited

Origin Energy LPG Ltd v Bestcare Foods Ltd [2012] NSWCA 322, considered

RLA Polymers Pty Ltd v Nexus Adhesives (2011) 280 ALR 125, [2011] FCA 423, considered

White v Brunton [1984] QB 570, considered

Young v Gold Coast City Council [2015] QCA 45, cited

COUNSEL:

SR Cooper QC, with H Clift, for the plaintiffs/respondents

GA Thompson QC S-G, with AG Psaltis, for the defendant/applicant

SOLICITORS:

Carswell and Company for the plaintiffs/respondents

MinterEllison for the defendant/applicant

  1. [1]
    This is a decision on an application in a proceeding filed by the defendant, Thales Australia Limited.  The defendant seeks an “adjournment” of the “question of the quantification of the loss and damage claimed by the plaintiffs or any enquiry into an account of profits” until after the determination of an appeal.  In the alternative, the defendant seeks directions “for a determination of the scope of disclosure, evidence and interlocutory steps for the assessment of Damages.” 
  2. [2]
    Written submissions were filed for the applicant-defendant and for the respondent-plaintiffs.  These were supplemented by oral submissions made in today’s hearing.  After a short adjournment, the court resumed.  No further oral submissions were made.  The court refused an adjournment.  Reasons for the decision were given ex tempore.  The paragraph above and those following comprise an edited version of those reasons.  

Background

  1. [3]
    This proceeding has a history.
  2. [4]
    Most of the events relevant to the claim occurred between 14 September 2011 and 11 June 2012.  The plaintiffs, Madritsch KG and Nioa Nominees Pty Ltd, filed their claim on 14 September 2017.  In it, the plaintiffs seek damages for breach of contract, compensation or other relief for contravention of s 18 of the Australian Consumer Law (ACL), and equitable compensation for breach of a duty of confidence or alternatively an account of profits.  Each of these claims relates to the manufacture by the defendant of a firearm that is sold to the Commonwealth for use by the Australian Defence Force.  It is convenient to refer to the weapon as the F90, although it may not be common ground that only this model of rifle is the subject of the claim. 
  3. [5]
    It seems the proceeding fell into a bit of a hole between about July 2018 and October 2019.  From the latter time, it was managed on the caseflow managed list.
  4. [6]
    On 20 April 2020, the parties asked the court to make an order for “the question of the quantification of the loss and damage claimed by the plaintiffs or the enquiry into an account of profits” to be heard and determined “separately from and after all questions of liability” have been determined in the proceeding.  The parties sought this order on the papers without an oral hearing.  Written submissions were filed as well as affidavit evidence from the defendant’s solicitor, Mr Fairbairn, about the time and cost likely to be involved in the preparation and hearing of the parties’ cases on the quantification of damages or an account of profit. 
  5. [7]
    At that time, Mr Fairbairn gave evidence on information from Mr Evenden, who was then the Director of the Soldier Weapon Systems and OME Australia departments in the Land and Air Systems Global Business Unit of the defendant.  According to Mr Evenden’s information, the defendant “does not maintain accounting records by which a net profit per F90 product produced or sold could be determined.” 
  6. [8]
    (This evidence is repeated in Mr Fairbairn’s second affidavit affirmed for the hearing of this application.  He elaborates:

“Thales would need to engage an expert forensic accountant to determine the gross and net profit from the F90.”

Extraordinary as it may seem, the defendant’s evidence before the court, then and now, and the submissions it has instructed its counsel to make today are to the effect that this public company, which manufactures and sells the F90 rifle to the Commonwealth, does not maintain accounting records by which a net profit per F90 produced or sold could be determined.) 

  1. [9]
    In about May 2020, according to the information Mr Evenden supplied to Mr Fairbairn, if it were possible to identify and extract the documents from which gross and net profit might be determined, then the “best estimate of the time and cost” that the defendant could give to produce this from the defendant’s books is that it would take 2 to 3 months at a cost of between $150,000 and $226,000, at a rate of $150 per hour per person involved in that work. 
  2. [10]
    On 13 May 2020, the court made the order the parties requested, providing for a separate trial of all questions other than damages and the account of profits. 
  3. [11]
    On 20 August 2020, the parties filed a request for trial date.
  4. [12]
    Between 1 and 8 March 2021, the trial was conducted on all questions of liability. 
  5. [13]
    On 26 July 2021, reasons were published dealing with the matters before the court at that trial.  The Court ordered the parties to confer and submit an agreed draft order or separate draft orders, consistent with the findings in the reasons.  An agreed draft order was submitted. 
  6. [14]
    On 3 August 2021, by an Order, the court made declarations, ordered the defendant to pay the plaintiffs’ costs of the liability trial and ordered the discharge of the $310,000 worth of security given by the first plaintiff for the defendant’s costs.  The court also made directions placing the matter on the commercial list, for the parties to confer on directions and for the proceeding to be reviewed on 9 September 2021.  The Order was substantially in the same form agreed by the parties and submitted to the court.  Although the Order is described in the defendant’s written submissions as having been made by consent, that does not seem to be an accurate description of it.
  7. [15]
    On 20 August 2021, the appeal was commenced by filing a notice of appeal.
  8. [16]
    On 26 August 2021, the solicitor for the defendant wrote to the plaintiffs’ solicitor requesting, pursuant to r 221 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), disclosure of all documents relating to damages.  The letter also enquired about whether the plaintiffs would make an election between damages and an account of profits at this time. 
  9. [17]
    The plaintiffs’ solicitors responded, making a reflexive request for the defendant to disclose all documents relating to damages pursuant to r 221.  An enclosed draft order proposed that the parties make disclosure of documents relating only to damages by 22 October 2021.  It included provisions, said to have been adapted from an order in Dr Martens Australia Pty Ltd v Bata Shoe Company of Australia Pty Ltd,[1]  for the defendant to supply information about the number of rifles sold, the sale price, the gross profit and net profit, and copies of the business records on which those figures were recorded.  It also proposed that the plaintiffs would notify the defendant of an election between damages and an account by 25 February, presumably 2022. 
  10. [18]
    On 7 September 2021, the defendant filed the present application.  That was 28 days after the appeal was commenced and just short of two weeks since requiring the plaintiffs to make disclosure of all documents relating to damages. 

The nature of the interlocutory relief sought

  1. [19]
    The primary order sought by the defendant is an “adjournment” of the “question of the quantification of the loss and damage claimed by the plaintiffs or any enquiry into an account of profits” effective “until after the determination of an appeal”.
  2. [20]
    There is no hearing presently before the court or listed for another date that could be adjourned to a date or to a date to be fixed.  Mr Thompson QC and Mr Psaltis, who appeared for the defendant, were insistent that the defendant was not seeking a stay.   
  3. [21]
    Mr Thompson described the relief sought as a “case management order” under the court’s general directions power.[2]  This is undoubtedly correct.[3]  He submitted it was governed by the overriding purpose and philosophy of the rules set out in r 5.[4]  He described the effect of the proposed order as one that would prevent anything happening in the proceeding pending the appeal determination.  This was qualified.  The security provided by the first plaintiff has been discharged in accordance with the Order made on 3 August 2021.  The plaintiffs have taken some steps for the assessment of their costs of the liability trial, and the court was told the defendant does not seek any stay of that process.
  4. [22]
    Although described as an adjournment, the application is in substance for an order barring the progress of the proceeding in the trial division towards a trial, including preventing further disclosure, exchange of witnesses’ summaries and orders for expert reports, pending the outcome of the appeal.  It is therefore unlike, and broader than, a stay of enforcement of a particular order or judgment.  It would prevent the plaintiffs from progressing their claim to a final determination, while the order is in place.  An order that imposes a halt on a proceeding is a stay in nature and effect, if not in name.  The nomenclature is of less importance than the substance.

Some considerations that may be relevant to granting the relief sought

  1. [23]
    The situation before the court is not that which was before the Court of Appeal in Cook's Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd.[5]  However, some of the considerations there would appear to be appropriate reference points.  At [12], Keane JA explained:

“The decision of this Court in Berry v Green suggests that it is not necessary for an applicant for a stay pending appeal to show ‘special or exceptional circumstances’ which warrant the grant of the stay.  Nevertheless, it will not be appropriate to grant a stay unless a sufficient basis is shown to outweigh the considerations that judgments of the Trial Division should not be treated as merely provisional, and that a successful party in litigation is entitled to the fruits of its judgment.  Generally speaking, courts should not be disposed to delay the enforcement of court orders.  The fundamental justification for staying judicial orders pending appeal is to ensure that the orders which might ultimately be made by the courts are fully effective: the power to grant a stay should not be exercised merely because immediate compliance with orders of the court is inconvenient for the party which has been unsuccessful in the litigation.” [footnotes omitted]

  1. [24]
    The Court of Appeal has accepted as correct the test that the applicant bears the onus of showing that it is an “appropriate” case for a stay to be granted.[6]  This was more recently confirmed by Morrison JA in Day v Humphrey:

“An applicant for a stay must demonstrate some reason why a judgment should not be given immediate effect.  The test applicable on an application to stay a judgment pending an appeal is simply expressed as being whether the case is an appropriate one for a stay.”[7]

  1. [25]
    As noted, this application does not arise in the situation the subject of those decisions.  The typical ground for a stay pending appeal is to prevent an order that might be made by the appellate court being rendered nugatory.  As Mr Thompson identified, by reference to the reasons of Gotterson JA in Gerhardt v Brisbane City Council[8] and Young v Gold Coast City Council,[9] no such issue arises here.  There is no order that needs to be stayed because it might be enforced before the appeal is determined.
  2. [26]
    The defendant is seeking an order to prevent the plaintiffs from progressing their claim towards a final judgment.  According to Mr Thompson, the further steps that would be stalled involve an assessment of the time and costs saved by the defendant in using the plaintiffs’ confidential information to “springboard” itself into being able to supply F90 rifles to the Commonwealth with a solution to an identified problem with their former rifle product.  Mr Thompson took the court to the reasons of Prichard J of the High Court of New Zealand in Aquaculture Corporation v New Zealand Green Mussel Co Ltd & Ors,[10] and Ryan J of the Federal Court of Australia in RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd.[11]  This general description was not the subject of any detailed submissions or consideration at the hearing.  The plaintiffs are yet to make an election between damages and an account. 
  3. [27]
    The prospects on appeal are relevant to the extent that the court can come to a preliminary assessment of the strength of the defendant’s case on appeal.  For the plaintiffs, Mr Cooper QC and Mr Clift sought to demonstrate that the appeal had poor prospects.  They identified findings of fact and inferences in the reasons that are not challenged in the appeal and, they contend, support the conclusions in the reasons.  They also point out that if the ground of appeal concerning the ACL claim were to succeed, it would not affect materially the costs to be incurred and the process to be followed to determine the plaintiffs’ claim for damages, equitable compensation or an account. 
  4. [28]
    In reply, Mr Thompson submitted the appeal raised “real and significant issues for debate which, if successful, may see the judgment set aside”, in the language of Allsop P in Origin Energy LPG Ltd v Bestcare Foods Ltd.[12]
  5. [29]
    In my view, it is not appropriate in this instance to speculate about the defendant’s prospects of success in the appeal, as it would involve argument about the substance of the appeal – even in an attenuated form. 
  6. [30]
    A few observations are possible.  There are eleven grounds of appeal.  The defendant has filed its outline of argument in the appeal.  From this it is apparent that the defendant will seek to persuade the Court of Appeal that numerous findings of fact and inferences ought not to have been made and drawn.  As well, a small number of legal points are to be advanced. 
  7. [31]
    The court was told the appeal has been set down for hearing on 24 and 25 March 2022.  In a usual matter, the parties might have a decision on the appeal in about three months.  Here, as the two-day hearing indicates, with eleven grounds of appeal concerning many findings of fact and inferences, a decision may take more than the usual time.

The defendant’s submissions on the exercise of discretion

  1. [32]
    For the defendant, it was submitted that the relevant principles for the exercise of the discretion are those considered by Lord Donaldson MR in White v Brunton [1984] QB 570, 573 and by Burley J in Goodman Fielder Pte Ltd v Conga Foods Pty Ltd (2021) 157 IPR 468, 488 at [85]. 
  2. [33]
    As Mr Cooper and Mr Clift, pointed out in their written submissions, in White v Brunton, the Master of the Rolls was dealing with the characterisation of orders made in the first part of a “split trial”, namely whether they are interlocutory or final.  His Honour was concerned not to characterise them in such a way as to prevent an unsuccessful party from appealing such orders before awaiting a determination of the balance of the “split trial”.  No question of a stay or adjournment of the trial process was raised.  In the passage the defendant relies on, his Honour is proposing a possible circumstance where “it may be desirable that the decision shall be appealed before incurring the possibly unnecessary expense of the second part.”   The decision involves and explains no “relevant principles”.  
  3. [34]
    In Goodman Fielder v Conga Foods, a stay of the orders made at first instance was not opposed; a factor that Burley J mentioned ahead of the “significant time and expense of preparing for a second hearing” below.  The significance of the other party’s attitude may be gauged by observing that a stay of the orders for the assessment of costs of the first hearing, which was opposed, was refused.  This, like most decisions on the exercise of discretion, focusses on the particular case before the court. 
  4. [35]
    For the defendant, it was also submitted that even if the appeal is not upheld in full and a trial on damages or an account proceeds, some grounds may find favour with the Court of Appeal, and these may affect the “the basis on which quantum is to be assessed.”  This submission is directed to the plaintiffs’ ACL claim, according to the reference in the defendant’s written submissions.  If that claim were to be dismissed, it would not alter the need for a determination of the damages or an account sought for the other claims of breach of contract and breach of equitable duty.   

Considerations arising from rule 5

  1. [36]
    Rule 5 gives statutory recognition to the importance of expeditious resolution of issues in proceedings.  The aim is “to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense”, and the rules are to be applied “with the objective of avoiding undue delay, expense and technicality and facilitating” that purpose; and each party “impliedly undertakes to the court and to the other parties to proceed in an expeditious way”.  Indeed, r 374 confers a power to give judgment for a party being vexed by another who is unwilling or unable to proceed with the expeditious disposition of the litigation.[13]
  2. [37]
    The defendant’s application seeks to overcome the implied undertaking “to the court and to the other parties to proceed in an expeditious way”.  It requires a balancing of “the just and expeditious resolution of the real issues in civil proceedings” against the quest to do so “at a minimum of expense”. 

The defendant’s costs

  1. [38]
    There is some information before the court in the affidavits of Mr Fairbairn about the likely costs to be incurred by the defendant and on the likely progress of the proceeding, in the absence of an “adjournment” or after the appeal is determined.
  2. [39]
    There is some difficulty understanding the effect of Mr Fairbairn’s evidence.  It is not clear whether the defendant has used the period since 26 July 2021, when the reasons were delivered, to advance the task of disclosing relevant documents.  On 26 August 2021, the defendant’s solicitors wrote to the plaintiffs’ solicitors expressing the view that “the parties are obliged to proceed expeditiously with the quantum hearing.”  This was the explanation for the defendant giving the plaintiffs notice pursuant to r 221 requiring them to disclose “all documents relating to damages.”
  3. [40]
    Mr Fairbairn has made initial inquiries of the defendant.  His best estimate is that there will be “in the order of 20,000 – 30,000 documents” to be disclosed.  Based on “the disclosure searches undertaken in respect of liability”, Mr Fairbairn says “a significant portion of potentially relevant documents are only stored in hard copy” at the defendant’s Lithgow factory.  These would be scanned and uploaded to a database.  The cost estimate he provided was based on $25,000 in outlays.  The balance of the disclosure costs (between $194,080 and $282,600) is for the time of legal staff (380-570 hours) and a legal technology coordinator (60 hours).  Mr Fairbairn’s estimate of the number of documents has not changed since May 2020.  Had the defendant acted with some diligence, it may have substantially completed disclosure by now.  It does not appear to have done so, but the position is not free from doubt. 
  4. [41]
    On 6 September 2021, when Mr Fairbairn affirmed his second affidavit, he estimated “the time from now” and the “potential costs” of the further steps in the proceeding on the basis that none of the estimated costs of disclosure had been incurred.  These he estimated at between $220,000 and $308,000.  At one point in his affidavit, Mr Fairbairn anticipated the defendant’s disclosure would take two to three months.  In the summary he estimated it would take two months “from now”.  This might indicate that the defendant has undertaken about a month’s work on disclosure, but it is not possible to reach such a conclusion.  A further month has passed since his affidavit, but no evidence was offered about any work undertaken in that period.  Counsel’s instructions did not extend to such matters.   
  5. [42]
    Although presently unable to identify the witnesses his client would call on damages or an account, Mr Fairbairn anticipates it would take at least two months to prepare that evidence at a cost in legal fees of $100-200,000.  He says there may be one, two or three such witnesses.  It appears the witness or witnesses would be called to identify the source documents or information about the defendant’s profit.   
  6. [43]
    Before the Order for the trial of the separate liability questions was made on 13 May 2020, the defendant had retained an expert to give evidence “regarding the profits made by [the defendant] from the misuse of the confidential information” and “a valuation report regarding the damages the plaintiffs have claimed as a result of the misuse of their confidential information”.  No such report has yet been prepared, according to the information provided to Mr Fairbairn. 
  7. [44]
    He also deposes that the defendant has not provided any document to its expert, and for that reason the expert is “not in a position to provide a meaningful estimate of the likely time it will take, and his costs to produce a report.”  From Mr Fairbairn’s experience, he knows that it takes “more than a month, usually multiple months, from instructing with all relevant documents, to the production of” an expert report.  He estimates the defendant’s expert will need two to three months to complete his report.  He estimates the cost of obtaining this evidence to be between $50,000 and $200,000.  This range is indicative of the uncertainty attaching to Mr Fairbairn’s evidence on the likely costs.
  8. [45]
    As noted, Mr Thompson was unable to assist with information about whether the defendant has done anything in respect of the questions of quantification of damages or account of profit since the reasons were published.  The court was told no disclosure has been made by the defendant.  It does not appear much has been done to prepare to make disclosure.  The witnesses have yet to be identified.  The expert is yet to be briefed.  Although it considered itself “obliged to proceed expeditiously with the quantum hearing”, it appears the defendant may have given itself an “adjournment” of the trial division proceeding.  The defendant has the documents and information central to the remaining questions in the proceeding.  So, this delay has already seen the loss of about two and a half months.  
  9. [46]
    Overall, Mr Fairbairn ventured an upper estimate of $1.4 million in costs for the remaining steps he identified to completion of the proceeding.  Of this amount, $700,000 was for an eight-day hearing of the damages or account trial, including preparation.[14]  He provided much lower and wider-ranging estimates for disclosure ($220,000-$308,000), witness statements ($100,000-$200,000) and expert evidence ($50,000-$200,000). 

The attitude of the plaintiffs

  1. [47]
    The defendant chose to support a splitting of the case between liability and the quantification of damages or account.  Absent the defendant’s agreement, indeed its urging of this course, it seem unlikely the separation of questions would have been ordered without the identification of specific separate questions.  The defendant also chose to agree that declarations should be made following the trial on the liability questions in the terms made.  Had it not done so, the present appeal might not have been possible.
  2. [48]
    These choices were available because at each point the plaintiffs proposed, agreed to and supported them.  That is no longer the case.  As in Goodman Fielder v Conga Foods, the attitude of the plaintiffs is a relevant consideration. 
  3. [49]
    Although the early progress of the proceeding was slow, that has not continued.  The plaintiffs seek to press on to the trial of the remaining questions of damages or account, without further delay.  They wish to do so despite their potential exposure to pay the defendant’s costs, if the appeal succeeds in whole.   
  4. [50]
    Mr Cooper explained that there is little the plaintiffs can do to progress their own preparation for a trial on damages or an account if the defendant does not produce the information and documents sought about the number of F90 rifles sold, the sale price, the gross profit and the net profit.  Mr Cooper submitted that the plaintiffs had already disclosed their documents relevant to the quantum of damages.  Of course, they are unlikely to have any documents relevant to an account of profits.  The nature of the remaining questions mean that the defendant has the documents and the information critical to any determination.  An “adjournment” would not only delay the hearing date or dates.  A delay on the part of the defendant will delay the plaintiffs making an election between damages and an account and obtaining expert evidence relevant to either.  It would delay the preparation of the plaintiffs’ case, its evidence and its submissions.[15]   
  5. [51]
    As Mr Cooper also identified, if there is no progress on the part of the defendant due to an “adjournment” or a “stay” and if a decision on the appeal is delivered say three months (or longer) after it is heard, then the plaintiffs will lose the prospect of a trial on the remaining questions in calendar 2022.  (I note Mr Fairbairn’s time estimate for the defendant to complete pre-hearing steps is six months.)  On the other hand, with the usual directions for a commercial list matter, the parties could know the trial dates allocated by the time the appeal is heard.  These would likely provide for a trial late in the first half or early in the second half of 2022. 

Consideration and decision on the exercise of discretion

  1. [52]
    The decision balances efficiency and the appropriate use of court resources, which are important considerations, against the entitlement of the plaintiffs, other things being equal, to come to court and to pursue their claims expeditiously, if necessary to trial.  At its simplest, the exercise of discretion on whether to grant the relief the defendant seeks involves a balancing of certain delay against possible expense.  Each is an important consideration in accordance with r 5. 
  2. [53]
    With the agreement of the plaintiffs and the defendant, on 3 August 2021 the proceeding was placed on the commercial list. That list was established to “effect the expeditious resolution of commercial matters.”[16]  The court is authorised to “make such orders or give such directions as appropriate to ensure the just, efficient and expeditious disposal” of the case.[17]   
  3. [54]
    Most of the defendant’s estimated costs are for an eight-day trial on damages or an account.  The trial costs are 80% of Mr Fairbairn’s lower estimate and 50% of his higher figure for the defendant’s costs from “now” to the conclusion of that trial. 
  4. [55]
    If an “adjournment” or a stay of the proceeding in the trial division is refused at this time and the proceeding progresses, the defendant will incur costs in defending itself against the plaintiffs’ claim.  In this respect it is like any defendant in any proceeding on the commercial list in this court.  If the defendant succeeds in full in its appeal, in the usual course, the plaintiffs’ will have to pay the defendant’s costs.  If it does not, the costs will not have been wasted. 
  5. [56]
    The concern of the courts about the extent to which a costs order would overcome a disadvantage resulting from an opposing party’s conduct in a proceeding has mostly been expressed in terms of the strain that litigation imposes on litigants, in particular litigants who are individuals.[18]  It has not been on the basis that standard costs (or even indemnity costs) do not provide a complete indemnity for the litigant’s actual costs.  That “gap” is a long-standing fact about civil litigation.  It influences the conduct of litigants, often in beneficial ways. 
  6. [57]
    Here, the plaintiffs seek to perform their implied undertaking by progressing the proceeding to a final determination and to hold the defendant to its undertaking.  There is no conduct by the plaintiffs that might lead the court to alter the usual incidence of costs.  Here, it is not a widow or an orphan,[19] or even an individual, who seeks to be spared unrecoverable costs.  The defendant is a commercial corporation of some significance, the subsidiary of a major international corporation.  The plaintiffs’ claim against it arises from the conduct in its business.
  1. [58]
    I am not unsympathetic to the defendant’s concern about the need to avoid costs that might prove to be unnecessary.  The incurring of costs, pending the appeal, will be inconvenient for the defendant only if all the declarations that have been made are set aside on appeal.  Although it may recover a substantial part of those costs, the defendant would be out of pocket to some extent. 
  2. [59]
    Balancing that against preventing the expeditious resolution of the remaining real matters in issue in the proceeding, I am not persuaded that an adjournment or a stay should be ordered to preserve for the defendant the possibility that it might avoid incurring the costs of defending itself against the remainder of the plaintiffs’ claim.  The certain disadvantage to the plaintiffs of a further considerable delay in the determination of their rights outweighs the possible costs disadvantage the defendant may endure. 
  3. [60]
    On Mr Fairbairn’s evidence, the trial will not occur before the appeal is due to be heard.  It may not occur before a decision on the appeal.  The dates for the trial, identifying its length, are likely to be allocated over the next few months.  The parties will know them before the appeal is scheduled to be heard next year.  If so advised, the defendant could raise in the Court of Appeal the question of an adjournment of the trial.  There, it could be considered with the benefit of full argument on the appeal itself.  Alternatively, the defendant could raise the question again at a commercial list review, perhaps with a sounder view and more certain evidence of the likely costs that might be incurred or avoided. 

Disposition

  1. [61]
    The relief sought by the defendant in paragraph 1 of the application should be refused. 
  2. [62]
    As I indicated earlier in the hearing, having decided to refuse that relief, I propose to direct the parties to confer and submit either agreed or competing draft directions for the next stage of the proceeding.  That should be done within about seven days.  In my view, it is not practical to make or rule on competing directions in the absence of a proposed draft or drafts. 
  3. [63]
    As I also indicated earlier in the hearing, the costs of this application will be reserved, to be agreed or, if necessary, determined at a time convenient to the court. 

Footnotes

[1]  (1997) 75 FCR 230.

[2]  UCPR, rr 366, 367.

[3] Corbett v South Yorkshire Strategic Health Authority [2006] EWCA Civ 1797 at [13] (Laws LJ).

[4]  Consistent with Green v Pearson [2014] QCA 110 at [5]-[6] (Jackson J).

[5]  [2008] 2 Qd R 453.

[6] Croney v Nand [1999] 2 Qd R 342 at [33] (Keane JA), citing Williams v Chesterman App 74/1992 Court of Appeal, 23 June 1992 (unreported).

[7]  [2017] QCA 104 at [5].  His Honour cited Croney v Nand.

[8]  [2016] QCA 272.

[9]  [2015] QCA 45.

[10]  (1985) 5 IPR 353, 384.

[11]  (2011) 280 ALR 125, 175 at [173]-[174].

[12]  [2012] NSWCA 322 at [8].

[13] Klerck v Sierocki [2014] QCA 355 at [15] (Fraser JA).

[14]  The same estimate ($700,000) was included in the lower end of the estimated costs range ($1,070,000).

[15]  The plaintiffs would enter any settlement discussion or mediation uninformed about the true position of the defendant.

[16] Practice Direction No 3 of 2002 (PD 3/2002), 1.

[17]  PD 3/2002, 18(a).

[18] Birla Mt Gordon Pty Ltd v Miccon Hire Pty Ltd [2013] QCA 363, [87] (Morrison JA), citingCropper v Smith (1884) 26 Ch D 700, 711;Commonwealth v Verwayen (1990) 170 CLR 394, 464 - 465; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, [100]-[101].

[19]  cf Cooper v Williams [1963] 2 QB 567.

Close

Editorial Notes

  • Published Case Name:

    Madritsch KG & Anor v Thales Australia Limited

  • Shortened Case Name:

    Madritsch KG v Thales Australia Limited

  • MNC:

    [2021] QSC 262

  • Court:

    QSC

  • Judge(s):

    Bradley J

  • Date:

    12 Oct 2021

Appeal Status

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