Zuce Tech Pty Ltd v Ebert[2025] QSC 109

SUPREME COURT OF QUEENSLAND

1. [1]
   The facts of this case were explained in a previous judgment of the court.^[1]
2. [2]
   Three applications are now before the court, namely:

   1. the defendant, Mr Ebert, applies for security for costs;
   2. Mr Ebert also applies for dispensation from the pleading requirements under the Uniform Civil Procedure Rules 1999 (Qld); and
   3. the plaintiff, Zuce Tech Pty Ltd, applies to join Colbert Pty Ltd as the second defendant and for leave to amend the amended originating application to reflect that amendment.
3. [3]
   The first application is no longer contested because in the course of the hearing on 14 May 2025, the director of Zuce Tech, Mr Hadden, gave an undertaking to the court to be personally liable to pay any adverse costs order against Zuce Tech.  The defendant and the court accepted that undertaking.  The only remaining issue is the costs of that application.
4. [4]
   The second application remains contested, but the issues have now reduced.
5. [5]
   The third application was not opposed and appropriate orders are agreed.

The First Application – Costs

6. [6]
   For Mr Ebert, the argument for costs was based on the fact that a personal undertaking from Mr Hadden came belatedly - at the end of the argument on 14 May 2025.
7. [7]
   Mr Ebert also seeks his costs of the security for costs application on an indemnity basis.
8. [8]
   Zuce Tech argues that the costs of that application should be reserved or should be Zuce Tech’s costs in any event.
9. [9]
   It is unorthodox but I propose to deal with the indemnity costs argument first.
10. [10]
    The argument for indemnity costs is based on the fact that, in without prejudice correspondence between the solicitors,^[2] an offer was made to resolve the security for costs issue on the basis that Mr and Mrs Hadden provide a joint personal undertaking to meet any adverse costs order. Mr Ebert argues that the fact that he proposed a joint personal undertaking from both Mr and Ms Hadden does not change the underlying nature of the offer – which was a personal undertaking in place of a contested application for an order for security for costs.
11. [11]
    On the other hand, Zuce Tech argued that the fact that Mr Ebert required an undertaking from both Mr and Mrs Hadden does make a difference and that Zuce Tech, acting reasonably, was entitled to refuse that offer.
12. [12]
    In my view, it does make a difference that what Mr Ebert offered to accept was a joint undertaking. It is true that, earlier in the proceeding, Mr and Mrs Hadden provided a joint undertaking as to damages. But, of course, that undertaking was given for a different purpose. Importantly, the costs of this proceeding are already significant. Mr Ebert sought security in excess of $300,000. An undertaking that exposed Mrs Hadden to such a burden is no small matter.
13. [13]
    For that reason, I consider that this case does not fall into the category of cases where a reasonable offer has been refused so that indemnity costs are appropriate.
14. [14]
    The next question, or perhaps the anterior question, is where the costs ought to lie on a party/party or ‘standard’ basis.
15. [15]
    It is certainly true that Zuce Tech’s offer of the personal undertaking from Mr Hadden came belatedly. It came at the end of the argument on 14 May 2025 – in circumstances where the application had been filed on 13 March 2025 and submissions in support of the application were filed on 30 April 2025.
16. [16]
    However, it is difficult to determine whether the offer was decisive in the wider sense. Certainly, the offer was important to the exercise of the discretion.^[3] It swayed the balance of what was otherwise a finely balanced application. In the absence of the personal undertaking, there were still a number of other discretionary factors to be balanced by the court if the application had proceeded to judgment.
17. [17]
    Certainly, an order for security will not generally be made when those behind a corporation bring their own assets into play.^[4] But here, even without the personal undertaking, there were some important discretionary factors that needed to be weighed. Two important factors were these:

    1. the prospects of Zuce Tech’s case in circumstances where Mr Ebert relies on his privilege against self-incrimination and so has not ‘gone into print’ as to many of the crucial facts alleged by Zuce Tech and as to any possible defences;
    2. whether Zuce Tech’s impecuniosity was attributable to Mr Ebert’s conduct – Zuce Tech’s argument was that Mr Ebert’s breaches of fiduciary duty caused an immediate downturn in Zuce Tech’s profitability.
18. [18]
    And so, the balancing exercise is not an easy one. It is true that the offer and acceptance of the personal undertaking means that Mr Ebert’s application can be regarded as successful. That would ordinarily mean the appropriate order is to reserve the costs of the application or to make them the costs in the cause. That is because the courts are reticent to order the costs of a security application against a plaintiff.^[5]
19. [19]
    Mr Ebert’s counsel portrayed the offer of a personal undertaking as a capitulation. For the reasons explained, I do not accept that as an accurate characterisation. Zuce Tech may or may not have succeeded in resisting an order for security even in the absence of the undertaking.
20. [20]
    It is relevant to note two further considerations. The first is that the parties also contested the amount of security that should be provided. Both parties adduced expert evidence on that topic. That issue remained unresolved – even on a broad-brush basis.  That was because Mr Hadden agreed to provide a personal undertaking that was not limited in quantum. The second is that the reticence mentioned above is prominent in a case like this. If Zuce Tech’s serious allegations are proved at trial, it would be most unfair if Zuce Tech were not to receive a full indemnity for its costs of the proceeding and were required to pay Mr Ebert’s costs of what is essentially a side issue. Zuce Tech has what was assessed to be a strong prima facie case, including for breaches by Mr Ebert of his duties as a fiduciary.^[6]
21. [21]
    In the circumstances, the discretion ought to be exercised so as to reserve the costs. That will enable the costs of the application to be assessed in light of the ultimate merits of the case.

The Second Application – Dispensation

22. [22]
    Mr Ebert submits that there is a real and appreciable risk of criminal proceedings against him in respect of the events in August 2024 which are pleaded in this civil case. Mr Ebert argues that he is entitled to invoke his privilege against self-incrimination and seeks dispensation from the pleading rules.
23. [23]
    The parties are now agreed that Mr Ebert is entitled to dispensation from the usual pleading rules, and they are agreed on the form of the dispensation order. The agreement is a sensible one in the circumstances. The only issue that remains is whether that dispensation ought to extend to paragraphs 6, 8, 9, 10, 11, 12, 15, 16, 17, 18, 19 and 20 of the statement of claim.
24. [24]
    The privilege, of course, is a substantive right. And, in assessing the risk of self-incrimination, it is necessary to appreciate that requiring Mr Ebert to positively plead may lead to a chain of inquiry. The protection is against the jeopardy of criminal charges, the indirect use of the information, and setting in process an investigation or a train of inquiries.^[7] The rationale is not offended where the answer to the question does not add to the jeopardy in which the witness already stands.^[8] However, Mr Ebert is not required to explain fully how the effect of his pleading would produce self-incrimination.^[9]
25. [25]
    That collection of principles means that there is a degree of difficulty in trying to assess whether requiring Mr Ebert to positively plead to particular allegations in civil proceedings will tend to incriminate him in relation to criminal proceedings. That assessment is particularly difficult where, as in this case, the anticipated prosecution has not commenced or progressed very far.
26. [26]
    The end result is that some caution is needed.
27. [27]
    It is necessary to consider each of the contested paragraphs.
28. [28]
    Paragraph 6 of the statement of claim alleges that:

“At all material times until on or about 6 August 2024, Zuce was:

1. the exclusive distributor or reseller of Alientech Products and Alientech Subscriptions in Australia; and
2. the exclusive supplier of training services for the use of Alientech Products (Training Services) in Australia,

pursuant to an agreement between:

3. Alientech; and
4. Zuce, or alternatively, Mr Ebert as agent for Zuce,

(Zuce Distribution Agreement).

Particulars

[Omitted]”

29. [29]
    It is true that this paragraph is pleaded as part of the factual background. The allegation concerns the existence of an agreement between Zuce Tech and an Italian company, Alientech, and so requiring Mr Ebert to plead to that allegation does not, in an obvious way at least, place Mr Ebert in jeopardy. But the allegation is related to the element of ownership.
30. [30]
    A successful prosecution will necessarily involve proof of what might be described as building blocks as well as the central allegations. And so, a requirement to positively plead may mean that Mr Ebert’s defence could be used directly in possible proceedings, or it could be used as a foundation or to complement other evidence, or it may be used in further inquiries to discover incriminating evidence.^[10]
31. [31]
    Zuce Tech argues that Mr Ebert has already filed some evidence concerning Zuce Tech’s relationship with Alientech. But I do not accept that as a powerful point. The privilege is, as explained, a substantive right. Requiring Mr Ebert to plead may require him to go further and to do so contrary to his privilege. Even requiring Mr Ebert to go one step further may interfere with his right not to incriminate himself.
32. [32]
    It is not alleged that, by having filed and served affidavits, Mr Ebert has waived his right to claim the privilege.
33. [33]
    Finally, the allegations in this civil proceeding are directly relevant to the allegations that may be made in future criminal proceedings. Although it is not possible to do a comparison of the elements of the future criminal proceedings as against these civil proceedings, if the criminal prosecution proceeds.  All of the central events are likely to be the same. There is likely to be a significant overlap. This is certainly not a case where, from the point of view of the possible criminal proceedings, the civil proceedings raise only some tangential issues.
34. [34]
    Paragraph 8 of the statement of claim is as follows:

“At all material times until on or about 6 August 2024, as part of the Zuce business, Zuce:

1. maintained:
   1. a Master Tool, being an Alientech KESS3, bearing a serial number 04008AA9CB24 (Zuce Master Tool); and
   2. an Alien_id account (Zuce Alien_id), through which Zuce:
      1. purchased Alientech Products and Alientech Subscriptions from Alientech;
      2. maintained a register of customers in Australia to whom Zuce sold Alientech Products and Alientech Subscriptions; and
      3. provided Tuning Services to customers.

2. used the Equipment to carry on the Zuce Business; and
3. carried on the Zuce Business from premises located at 10/75 Flinders Parade, North Lakes (Premises).”

35. [35]
    The Master Tool and Equipment are some of the items alleged to have been taken by Mr Ebert contrary to his duties.
36. [36]
    For Zuce Tech, it is alleged that:

“It is not clear, for the reasons mentioned above, how the allegations in this paragraph other than those concerning the equipment stock can pose any risk to the privilege. Mr Ebert's submissions do not identify any such risk.”^[11]

37. [37]
    However, as explained, Mr Ebert is not required to explain fully how the effect of his pleading would produce incrimination. Doing so may well undermine his claim of privilege.
38. [38]
    The allegation here is undoubtedly relevant to the potential prosecution.
39. [39]
    Paragraph 9 of the statement of claim is as follows:

“At all material times until about 7 August 2024, Mr Ebert had access to, or the means to gain access to, the following information by reason of his position as general manager of Zuce:

1. the identity and contact information of current and former customers including business names, personal contact persons, email addresses, postal addresses, telephone numbers;
2. pricing information for the supply of Tuning Services;
3. login credentials to the Zuce Alien_id and the data stored within that account, including customer data, and the serial numbers for Alientech Products sold to customers by Zuce; and
4. electronic tuning files specific to certain makes and models of vehicles,

(together, Confidential Information).” 

40. [40]
    The focus of the police case, at least in so far as it can be gleaned from the search warrant, is the alleged taking of equipment, not confidential information. But requiring Mr Ebert to positively plead to having access to, and then taking away confidential information, may well assist the prosecution in respect of the ‘hard’ equipment. The events are all alleged to have occurred on the same day.
41. [41]
    Zuce Tech submits that:

Mr Ebert has already deposed to the issues in relation to confidential information (and its existence) in his affidavit of 21 November 2024 (CFl#7). No additional risk to the privilege could be created by requiring him to deal with this allegation. The allegation is not, contrary to Mr Ebert’s submissions, making any complaint about any physical device used to store confidential information. It is referring to the information itself.

42. [42]
    For the reasons explained above, this point is not accepted as a potent one.  Even requiring Mr Ebert to go one step further may interfere with his right not to incriminate himself.
43. [43]
    Paragraph 10 of the statement of claim is as follows:

“The Confidential Information (and each item of it) was information which Mr Ebert knew, or reasonably ought to have known, to be:

1. not known to persons other than:
   1. Zuce;
   2. Mr Hadden; and
   3. Mr Ebert
2. of significant commercial value to each of the persons pleaded in the immediately preceding subparagraph;
3. not easily capable of being acquired or obtained by persons other than Zuce;
4. provided or made available to Mr Ebert for the sole purpose of enabling him to perform his duties as general manager of the Business;
5. in the premises of the matters pleaded in subparagraphs (a) to (d) herein:
   1. Confidential Information for the purposes of the Shareholders Agreement; and
   2. Information of a type which Mr Ebert knew, or reasonably ought to have known, was confidential.”

44. [44]
    The arguments addressed in relation to paragraph 9 also apply here. And, as Mr Ebert points out, requiring Mr Ebert to respond to the allegation here, at least as to what he knew (rather than what he ought reasonably to have known) would well place him in jeopardy.^[12]
45. [45]
    Paragraphs 11 and 12 are similar to paragraphs 9 and 10. The same considerations apply.
46. [46]
    Paragraph 15 is in these terms:

“On or about 27 March 2028, Zuce, Mr Hadden and Mr Ebert entered into a shareholders' agreement (Shareholders Agreement).

Particulars

[Omitted]”

47. [47]
    For Zuce Tech, the following submission is made:

“It is not clear how these allegations, which alleged the existence and terms of a shareholders agreement, could be seriously refuted. Any response to this allegation, pleaded in the usual way, will not lead to any risk to the prejudice whether by setting of a “train of inquiry” or otherwise.”

48. [48]
    That is beside the point. The question is not whether the allegation could be seriously disputed. As has been explained, the privilege exists to prevent a person being compelled to, in effect, convict himself out of his own mouth.^[13]
49. [49]
    Paragraph 16 is in the same category as paragraph 15.
50. [50]
    Paragraph 17 of the pleading is as follows:

“In or about March 2018, Zuce and Mr Ebert entered into an employment agreement pursuant to which Zuce employed Mr Ebert as the general manager of the Zuce Business (Employment Agreement).

Particulars

[Omitted]”

51. [51]
    Zuce Tech makes this submission:

“It is not clear how these allegations, which concern the employment and service agreements between Zuce and Mr Ebert, could be controversial. There is no obvious basis to contend that dealing with these allegations will threaten the prejudice. The real complaint appears to be that Mr Ebert does not wish to plead an admission in response to these allegations but, on the view of the authorities earlier mentioned, he is not entitled to avoid doing that.”

52. [52]
    This submission is similar to the last. It does not matter whether the allegation is perceived to be controversial. Requiring Mr Ebert to respond to even the most mundane of allegations, or building blocks, may assist the prosecution and offend the privilege by requiring him to, in effect, convict himself out of his own mouth. The privilege against self-incrimination has its origins in the right to silence. The privilege is not restricted to what might be perceived to be central controversies. 
53. [53]
    Paragraphs 18, 19 and 20 are in the same category as paragraph 17. 
54. [54]
    For those reasons, the dispensation from the pleading rules will extend to paragraphs 6, 8, 9, 10, 11, 12, 15, 16, 17, 18, 19 and 20 of the statement of claim.