FEDERAL COURT OF AUSTRALIA

Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/as Taltarni Vineyards) [2002] FCA 1293

D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118

Photocure ASA v Queen's University at Kingston (unreported) [2002] FCA 905

BUREAU INTERPROFESSIONNEL DES VINS DE BOURGOGNE, SOCIÉTÉ CIVILE DU DOMAINE DE LA ROMANÉE-CONTI, and INSTITUT NATIONAL DES APPELLATIONS D'ORIGINE

v  RED EARTH NOMINEES PTY LTD (trading as TALTARNI VINEYARDS)

V 1140 of 2001

RYAN J

MELBOURNE

18 OCTOBER 2002

THE COURT ORDERS THAT:

1.         The parties exchange lists of proposed categories of discoverable documents on or before 22 November 2002.

2.         In the absence of agreement as to the proposed categories of discoverable documents, the matter be returned for further directions on 13 December 2002.

3.         The costs of each party of and incidental to the Notice of Motion dated 4 February 2002 including the costs of this day’s argument as to costs, be costs in the cause.

4.         Costs of this directions hearing be otherwise reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On 9 May 2002 I published reasons for dismissing a motion on notice by the respondent (“Red Earth”), seeking an order that Corrs Chambers Westgarth (“Corrs”), be restrained from continuing to act as solicitors for the applicants in this proceeding.  The basis of that motion was the fact that Ms Ann Dufty, a solicitor, currently engaged as general counsel at Corrs, had, whilst a partner and special counsel at Mallesons Stephen Jaques (“Mallesons”), acted for Red Earth at an early stage of the dispute between the parties to this action and when the present proceedings were in contemplation.  It was contended that Ms Dufty possessed confidential information belonging to Red Earth and relevant to matters in issue between the parties.  For the purposes of the argument, I assumed that Ms Dufty had acquired confidential information of the kind for which Red Earth contended.  However, I concluded that the applicants had discharged the burden of proving that there was no real risk of disclosure to them of whatever confidential information Ms Dufty may have possessed.  In my view, the applicants had been aided in the discharge of the relevant burden of proof:

“… by the undertakings given to the court, the uncontested affidavit evidence of Ms Dufty and Mr Stern, the fact that Ms Dufty only works two days a week in a discrete area of the intellectual property group and is a senior practitioner with a strong appreciation of her duty to Red Earth as her former client”; 

see reasons for judgment of 9 May 2002 [51].

2                     The applicants now seek orders that Red Earth pay their costs of the motion on notice dated 4 February 2002 and that such costs be taxed and paid forthwith, that is before the resolution of the substantive issues in this proceeding.  In written submissions in support of that application, counsel for the applicants pointed, first, to the fact that the issue of Corrs’ acting for the applicants in this proceeding was first raised by Red Earth's solicitors in a letter dated 5 December 2001. 

3                     In response to that letter, Mr Darvall, a partner in Corrs, in a letter dated 12 December 2001, described in considerable detail the steps which had been, and would be, taken to insulate Ms Dufty from the subject proceeding and from those members and employees of Corrs who were prosecuting this litigation on behalf of the applicants.  Those assurances did not alleviate the concerns of Red Earth's solicitors who said at the end of a letter dated 19 December 2001;

“We must therefore maintain our client's strong objection to your firm continuing to act and have to advise that unless your firm voluntarily withdraws from representation of the applicants in this matter, our client will have no option but to move the court to order you to do so.”

4                     At the time of publishing the reasons for refusing the injunction against Corrs, I was inclined to the view that the costs of each party of the application for that injunction should be costs in the cause.  At the end of those reasons I said:

“Partly because the applicants had been minded to pursue a similar motion, I was inclined to order that the costs of each party of the motion on notice dated 4 February 2002 should be costs in the cause.  However, in case there are factors which have not been revealed or debated which may bear on the court's exercise of discretion as to those costs, I shall order that they be reserved.”

5                     Mr Shavin QC, who now appears with Mr Settle for the applicants, has sought to dissuade me from that tentative view by pointing out that the applicants had only contemplated applying to the Court for a resolution of the same issue because the solicitors for Red Earth, despite having received Mr Darvall's letter, had not conceded Corrs’ entitlement to act.  Resort to the Court, it was said, had not been contemplated:

“… because there was any independent doubt in their own mind, but only to have the issue determined so the principal proceedings could continue.”

6                     However my earlier reference to the applicants’ having considered pursuing a similar motion was not intended to suggest that they had any doubt about the propriety of Corrs’ continuing to act.  It was made rather by way of indicating that the issue was of common concern to both sides and that its resolution was a necessary interlocutory step in the determination of the substantive proceeding.  It is true that Red Earth did not seek to challenge, by cross-examination on the hearing of the motion, the evidence filed on behalf of the applicants.  However, that evidence, it is to be borne in mind, comprised affidavits by senior practitioners experienced in the field and it was entirely proper for Red Earth's counsel and those instructing him to accept it at face value.

7                     In the circumstances, deposing to those affidavits was necessary to dispel the disquiet reasonably felt by Red Earth after learning that its former solicitor had become employed in the intellectual property department of the applicants’ solicitors.  Similar considerations have induced me to the view that it was reasonable for Red Earth to have taken out the motion when it did and to have persisted in it to the end of the hearing on 5 April 2002.  It appears that discretionary factors of the same kind weighed with Bryson J in D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118 to which I referred in the earlier reasons for judgment.   In that case the plaintiffs sought an injunction in separate proceedings against a firm of solicitors to restrain them from acting for or advising Wycob Pty Ltd, which was the plaintiff in other proceedings against D & J Constructions Pty Ltd.

8                     Although he refused the injunction, his Honour said at 125:

“However it was hardly surprising that there was a challenge to the defendant's retainer.  No less so because the challenge has not been upheld.  I propose to make no order as to costs.”

I was referred in the same context by Mr Bailey to Photocure ASA v Queen's University at Kingston (unreported) [2002] FCA 905, where, Mr Bailey points out, Goldberg J in a similar case to the present in relation to confidential information ordered that the unsuccessful applicant pay fifty per cent of the costs of the respondent with no order that the costs be taxed and payable forthwith.  I regard the challenge in the present case as unsurprising in the same way that Bryson J regarded it in D & J Constructions.  Because it has been made in the course of the substantive proceeding, I consider that the costs generated by the challenge should follow the event in that proceeding.  I shall therefore order that the costs of each party of and incidental to the motion on notice dated 4 February 2002 including the costs of today's argument as to costs be costs in the cause.  Even if that be a wrong exercise of the court's discretion as to costs, I have not been persuaded of the existence of special or unusual circumstances which would have warranted the separate taxation and payment of the applicants’ costs forthwith.

9                     Accordingly I propose to make the orders as to costs which I have just indicated and I shall make in addition by way of directions for the further conduct of the action orders that:

1.           The parties exchange lists of proposed categories of discoverable documents on or before 22 November 2002.

2.           In the absence of agreement as to the proposed categories of discoverable documents the matter be returned for further directions on 13 December 2002.

I shall reserve the costs of both parties of today’s directions as distinct from the costs of the argument as to costs which are to be dealt with by par 3 of the order already indicated.

Associate:

Dated:                          October 2002