Federal Court of Australia

Run Capital Investments Pty Ltd as trustee for the Mirum Trust v P5K Pty Ltd [2021] FCA 1156

ORDERS

THE COURT ORDERS THAT:

1.    By 4:00 pm on 27 September 2021, the parties are to provide, by email to the Associate to Justice Derrington, draft orders that are agreed to reflect the reasons herein or, if there be no agreement, the plaintiffs and the defendants are to provide draft orders which they contend reflect the reasons herein.

2.    The matter be listed for a further case management hearing at 9:30 am on 28 September 2021.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

1    There were originally two interlocutory applications in this matter. The first, advanced by the defendants, sought the joinder of two persons, not presently parties to the action, “to [the] Interlocutory Application” and orders against them in relation to certain documents which they had obtained and considered. That application was not pursued at the hearing and the parties agreed that it ought to be dismissed, though the question of costs remains. Although the parties have agreed that certain other orders ought to be made concerning those documents, the defendant seeks a further order. The second application was brought by the plaintiffs for discovery of particular categories of documents which they allege are central to the matters in dispute. In relation to that application, the parties have largely agreed on the identity of the categories of documents in respect of which discovery should be made, although there is some residual dispute about their scope.

Background

2    In broad terms, the background of this matter concerns an internecine corporate dispute involving the first defendant, P5K Pty Ltd (P5K). The first plaintiff, Run Capital Investments Pty Ltd (Run Capital), is a shareholder of P5K and seeks an order that it be wound up on the grounds of oppression or on just and equitable grounds. Alternatively, it seeks orders pursuant to s 233(1) of the Corporations Act 2001 (Cth) (Corporations Act) that other shareholders in P5K acquire its shares at value. Livolution Investments Pty Ltd (Livolution), another shareholder aligned with Run Capital and the second plaintiff, also seeks that relief.

3    P5K continues to trade and, essentially, is under the control of the second to fifth defendants. The company trades under the name, “Investarent”, and its business, which is located at West End in Brisbane, is a property management service, principally servicing investment property owners. In doing so, it has established a “rent roll” which appears to be of some worth, although its precise value has not yet been identified. It appears that the value of the rent roll will be substantially determinative of P5K’s value.

4    The present manner in which the business of P5K operates is far from clear. It seems that a Mr Charlie Woodward, the second defendant and one of the main protagonists in the proceedings, is now its sole director, but it is also said that a Ms Michelle Watt, a former director, is the “principal and licensee” of the company’s business. Precisely what that means is somewhat obscure.

5    Mr Benjamin Gough, the director of Run Capital and the other main protagonist, claims that he substantially developed the Investarent business concept, established the business of P5K by paying the initial expenses, worked for a significant period on an unpaid basis to establish it, and recruited the key personnel for it and, in particular, Ms Watt. By the plaintiffs’ concise statement, it is generally alleged that Mr Gough established the business of P5K by the contribution of initial capital and subsequently secured additional capital funding. This additional capital is said to have included funding from a company, Aston Grove Property Pty Ltd (Aston Grove), which is the third defendant in the proceedings, and from companies associated with Mr Woodward.

6    As originally established, Ms Watt was the sole director, secretary and shareholder of P5K. She held all of its 150,000 shares on what is wrongly described by the parties as “a bare trust”. That nomenclature is misleading because it is apparent that, as trustee, she owed a number of obligations to the beneficiaries, including an obligation to operate the company in accordance with their wishes and instructions.

7    The trust structure was later abandoned and the shares were distributed to the beneficiaries. As at 28 February 2021, Run Capital held 33.33%, Aston Grove 33.33%, Livolution 11.11%, Beccari Pty Ltd (Beccari), which is the fourth defendant, 11.11% and Mrs Robyn Woodward, who is the fifth defendant, 11.11%. The plaintiffs’ amended concise statement alleges that P5K has purported to issue a further 300,000 shares to entities associated with Mr Woodward shortly before these proceedings were commenced and a recent ASIC extract indicates that the register of members has been updated to reflect such an issue of shares. Consequently, there is a dispute as to what ought to be the correct shareholding of the parties and the plaintiffs seek an order for the correction of P5K’s register of members.

8    In general terms, the shares in P5K are now held by two camps. The first, “the Gough interests”, is constituted by Mr Gough through Run Capital and a Mr Lavender through Livolution. The other group of interests can be conveniently referred to as “the Woodward interests” in that it comprises persons and entities associated with Mr Woodward. This group now holds at least 55.55% of the shares in P5K. Mr Woodward is the current sole director of P5K and controls Beccari and Aston Grove along with his father, Mr John Woodward. Mrs Robyn Woodward, Mr Woodward’s mother, is apparently also a shareholder, although this may no longer be the case.

9    It does not appear to be in dispute that, from about March to November 2019, the Woodward family acquired control of a majority of the shares in P5K by acquiring Aston Grove from its former owner. There is, however, a dispute as to the propriety of that transaction.

10    The directorial control of the company until late 2020 was somewhat informal. Although Ms Watt was the sole registered director and secretary of P5K, the evidence presently available suggests that she acted at the direction and under the control of Mr Woodward and Mr Gough. It also seems that Mr Woodward had the greater degree of control by reason of influence over Ms Watt who was seemingly allied with him. Whether or not that is determined to have in fact been the case will depend on the evidence adduced at trial.

11    By the concise statement in response, the defendants generally deny Mr Gough’s claim as to the centrality of his involvement in the establishment of P5K, including the allegations of expenditure by him. They also dispute the plaintiffs’ assertions as to the manner in which the Woodward family acquired its interest in Aston Grove. However, they do admit that Ms Watt acted at the direction of Mr Woodward and Mr Gough and alleged that both were shadow directors of the company. On the material filed to date, there is force in that allegation.

12    It appears that difficulties between the parties first became apparent from around mid-2020. Mr Woodward is alleged to have directed Ms Watt to undertake a capital raising for P5K (although it was later abandoned) and to limit the information which she provided to Mr Gough, Run Capital and Livolution (i.e. the Gough interests). It is also alleged that Mr Woodward excluded Mr Gough and Run Capital from the decision-making processes of P5K and, subsequently, required Ms Watt to resign and appoint him as the sole director and secretary of P5K. It would appear then that from late 2020, Mr Gough has had no ability to exercise directorial or managerial control of the company.

13    The plaintiffs’ concise statement makes a number of further allegations in relation to the conduct of Mr Woodward and Ms Watt, including that they engaged in the abandoned capital raising for P5K for the purpose of diluting the plaintiffs’ interests in P5K, that they undertook a recent capital raising for the same purpose, and that in the administration of P5K’s affairs they have accepted the existence of a substantial loan of approximately $400,000 said to be owing to Fortitude Homes Pty Ltd, a company controlled by Mr Woodward. The plaintiffs allege that the loan and its extent is questionable. Its existence has some central importance in these proceedings, given that it has been relied upon by the Woodward interests for seeking to have P5K issue additional shares for the purposes of raising capital. In the plaintiffs’ concise statement, the validity of the loan is put in issue and, in response, the Woodward interests assert that, whilst there is no loan documentation, it arose by reason of Fortitude Homes undertaking work for P5K in the nature of providing services and personnel to perform services required for P5K’s business. It is apparent that the defendants’ case is that the loan is bona fide and accumulated over time, although their concise statement in response is silent as to the period during which that occurred. In an affidavit of Mr Gough, it is deposed that in 2018 Mr Woodward asserted that P5K’s indebtedness to Fortitude Homes was around $500,000. There was also correspondence from him about it in 2018 in which the loan was identified as being a lesser amount. For present purposes, it is relevant that the plaintiffs allege that, if the loan to Fortitude Homes exists and is in the amount alleged, then P5K is insolvent. Although the plaintiffs seek orders that P5K be wound up, they do not do so on the basis that it is insolvent but rather on the basis that the company has been operated in a manner which is oppressive to them: s 461(1)(f) of the Corporations Act; or on just and equitable grounds: s 461(1)(k).

14    The defendants accept that they made proposals for capital raising but deny that they were for the purpose of diluting the plaintiffs’ shareholding. Rather, it is said that the capital raising is necessary for P5K’s ongoing operation and is not for any improper purpose. They deny that P5K is insolvent and has not traded profitably since inception. On that basis, they assert that no order ought to be made for its winding up and that, if an order is made for the acquisition of the plaintiffs’ shares in the company, any valuation should take into account the deleterious conduct of Run Capital and Mr Gough. In that latter respect, it is alleged that they have each demonstrated a lack of good faith and that Mr Gough has breached the duties he owed to the company as a director. These allegations are made on the basis that Mr Gough was “at all material times” a shadow director or an officer of P5K and, as such, owed and continues to owe fiduciary duties to it. Specifically, the defendants allege that he breached his duties by sourcing information from P5K’s databases and using it in his other business called “Locate Property”. This was allegedly done by soliciting P5K’s customers in an attempt to have them transfer their business to Locate Property. Further allegations are made that Mr Gough has attempted to acquire P5K’s confidential information for the purpose of using it for Locate Property’s business.

15    Importantly, the defendants accept that there has been an irretrievable breakdown between Mr Woodward and Mr Gough but deny any lack of propriety or competence on their behalf.

The remaining issues on the plaintiffs’ discovery application

Temporal limitations on the production of documents

16    The first dispute largely concerned the temporal scope of P5K’s financial records which ought to be disclosed. The plaintiffs originally sought discovery of “All” of P5K’s financial records (meaning the books and financial records as that term is defined in s 9 of the Corporations Act) without any other limitation, although specific reference is made to financial statements, bank statements, tax returns filed with the Australian Tax Office, internal or external audits, management accounts for specific years and any valuations. This would require discovery of all of P5K’s financial records from its incorporation in 2017, on the basis that the plaintiffs’ claim they are directly relevant to the issues of the existence and extent of the debt allegedly owed to Fortitude Homes and to P5K’s solvency.

17    On the other hand, the defendants initially submitted that only those financial records for the period from March 2020 to the dates on which the alleged oppressive conduct took place should be the subject of discovery. It was submitted that documents from prior to this period did not relate to any issue in dispute.

18    Apart from the question of solvency, one central issue relating to the appropriate scope of discovery appears to be the alleged indebtedness of P5K to Fortitude Homes on which the defendants relied as the justification for their attempted capital raising. In their concise statement in response, they assert the indebtedness grew over time and arose from Fortitude Homes making payments for P5K or providing staff to assist it. Unfortunately, there is no indication as to the date from which such indebtedness started to accumulate or as to the balance of indebtedness over time. In circumstances where the alleged debt is in dispute, the company’s financial records for the period during which it arose would be directly relevant to prove or disprove its existence. Entries in financial statements showing its existence would tend to confirm it, while the absence of such entries would have the reverse effect. Similarly, agreements between P5K and Fortitude Homes or invoices and the like would be directly relevant to this issue, as would any ledgers recording loan balances. The absence of the production of documents of this nature would also have a forensic advantage.

19    Two more matters might be mentioned. Firstly, the plaintiffs submitted that the scope of the discovery sought was justified on the ground that P5K’s solvency had been put in issue. That submission should be accepted and the plaintiffs’ allegation that P5K was insolvent from its inception supports the conclusion reached below as to the appropriate scope of discovery. Secondly, a further issue raised by the respondents is the nature and extent of Mr Gough’s contribution to the establishment and operation of P5K’s business. Mr Gough’s assertion that he had a substantial involvement and investment in the company is denied by the respondents and that tends to put nearly all of P5K’s documents in issue.

20    At the ultimate hearing of the application, the defendants’ Counsel acknowledged that the alleged existence of the debt to Fortitude Homes had the consequence that there should be no temporal limit on the scope of this category of documents to be discovered. It follows that it was ultimately not in dispute that all P5K’s financial records were directly relevant to the issue of its indebtedness to Fortitude Homes and ought to be discovered. Although there was some residual uncertainty about whether the order should include the word “all”, in the circumstances it makes little difference if the order is in the terms of, “Financial Records including…”.

21    It also bears mentioning that, in circumstances where the defendants would necessarily seek to justify the attempted capital raising by reference to the indebtedness to Fortitude Homes, it might be thought that they carry, at least, the persuasive onus of establishing that such a debt existed. Given they have control of P5K’s books and records through Mr Woodward, they should be in possession of all of the relevant information and, therefore, in a position to identify the primary financial information from which the indebtedness is ascertained. If they have not already done so, it can be expected that they will soon be able to identify from the company’s financial records the documents evidencing the debt.

Documents relating to the alleged agreement between Fortitude Homes and P5K

22    An essential or critical issue in the proceedings is the existence of the alleged loan between Fortitude Homes and P5K which was used to justify the capital raising efforts by Ms Watt and Mr Woodward. On the pleadings and in the affidavits, the nature and veracity of that agreement is in issue. Importantly, the circumstances of the nature and extent of the indebtedness are more peculiarly within the knowledge of Mr Woodward and, perhaps, Ms Watt. There is good reason for the defendants disclosing the documents which would establish the existence or otherwise of any such agreement.

23    In the above respect, the plaintiffs initially sought all documents “evidencing” that agreement or arrangement. They now seek all documents “relating to” it and that appears to be an appropriate formulation. It would include, for instance, intercompany letters, agreements or memoranda referring to the agreement. It would also include all invoices and payments, if any, in respect of the alleged services supplied or costs expended.

24    The defendants seek to restrict discovery on this issue by limiting the scope of documents to those “referring to” the alleged agreement. It is apparent that disclosure of that nature would not suffice in relation to the issue in question because it would not identify the extent of the indebtedness. More importantly, as it has already been asserted in the concise statement in response that there was no written agreement, it is unlikely that any documents would meet the description. Again, given the issue of the alleged agreement is disputed, discovery should extend to those documents which relate to the agreement even if they do not refer to it. For instance, a company document which would ordinarily identify the existence of such an agreement, such as a financial statement, but does not, should also fall within this category.

25    On this issue, the balance weighs heavily in favour of the plaintiffs being provided with sufficient documentation for them to be able to ascertain existence or otherwise of the alleged agreement and, indeed, the scope of the alleged indebtedness. It follows that, for category A2 in the Redfern Schedule annexed to the plaintiffs’ amended interlocutory application, the documents which ought to be discovered are those “relating to” the alleged arrangement or agreement.

Documents relating to the scope of the indebtedness of P5K to Fortitude Homes

26    Category A3 concerns emails between Mr Woodward and Ms Watt from 1 April 2017 to the present relating to particular issues arising in the relationship between Mr Woodward and Ms Watt and the commercial relationship between P5K and Fortitude Homes. Insofar as the matters relate to Fortitude Homes, for the reasons discussed above that there ought to be no temporal limitation on the scope of the documents produced.

27    Sub-category 3 of A3 concerns any requests to P5K for information or documents made by the plaintiffs. In paragraph 8(c)(ii) of the latest iteration of the plaintiffs’ concise statement, it is alleged that Mr Woodward controlled Ms Watt in the manner in which she acted as P5K’s director including by directing her as to what company information she would provide to the plaintiffs in response to requests of her to do so. The cognate allegation in the original concise statement has been denied by the defendants which renders that matter wholly in issue. There is no reason why any documents relating to that topic should not be discovered.

Company resolutions

28    By category A6, the plaintiffs seek all P5K resolutions whether by its directors or members. It is said that these are relevant to Mr Woodward’s attempts to take control of P5K and dilute the plaintiffs’ shareholding. The defendants seek to confine this category to such resolutions since October 2020. In the circumstances of the above discussion, there is no reason to limit those documents to recent events. Indeed, the evidence is suggestive of a long term relationship between Mr Woodward and Ms Watt in relation to the operation of the company. The historical operation of the company is directly relevant to the manner in which it has been operated in the more recent past. Additionally, the resolutions of the company and of its members will be directly relevant to the allegation that some agreement or arrangement existed as between P5K and Fortitude Homes as has been addressed above and the terms on which P5K was obliged to make any repayment. The resolutions over time would be directly relevant to that issue as well.

29    It can be also said that it is most unlikely that the number of documents in this category would be large or that that there would be any difficulty in locating them. They constitute a discrete and limited class of documents.

Production of documents already adduced in evidence

30    The defendants submitted that they should not be required to discover documents which are in their possession and control and which have already been produced by the plaintiffs in affidavits filed in the proceedings because it would amount to unnecessary duplication. However, the parties are at loggerheads and quite distrustful of each other. It is impossible, at this point and prior to seeing and hearing from the respective witnesses, to reach any conclusions as to the veracity of their suspicions. However, in the atmosphere of uncertainty as to how P5K was operated, it is preferable that greater rather than less disclosure occur. The documents sought are relevant and the copies made by the defendants of them might include other information not presently appearing on the face of those documents in the plaintiffs’ possession. Further, whether they were in the possession of any of the defendants and when may well be of forensic significance.

31    Again, there would not appear to be any great difficulty in discovering those documents in the sense that they are easily identifiable and, indeed, would have be identified in order to exclude them from the documents to be discovered. It follows that there are no discretionary grounds which might justify refusing the order.

Conclusion on application for discovery

32    In the circumstances, it is appropriate for the parties to prepare the draft of the final orders to be made in relation to the scope of discovery in accordance with these reasons. There will be a further case management hearing on 28 September 2021 and the parties should submit an agreed draft order, or competing draft orders, by 4:00 pm on 27 September 2021.

Costs of the discovery application

33    The plaintiffs sought an order that the defendants pay their costs of the application for discovery. That was resisted by the defendants who submitted that the costs ought to be reserved or in the cause.

34    At the first case management hearing in this action, it was the defendants who proposed that the parties make standard discovery in the proceeding. That was resisted by the plaintiffs who thereafter sought to follow the Redfern Discovery Procedure as provided by the Commercial and Corporations Practice Note (C&C-1). On 15 June 2021, the plaintiffs’ representatives sent a Redfern Schedule to the defendants’ then solicitors substantially in accordance with that on which the orders are now made. The defendants by their then solicitors rejected the use of Redfern Discovery Procedure and, although subsequent correspondence ensued, no agreement was reached.

35    In the circumstances where it is clear that discovery was required, the plaintiffs sought to comply with the Practice Note as to discovery but were rebuffed by the defendants and they made the necessary application on which they have had near complete success, there is no reason why costs should not follow the event. It follows that the defendants should pay the plaintiffs’ costs of the application for discovery filed on 7 July 2021.

Destruction of non-exhibited documents

36    At the interlocutory hearing on 17 September 2021, the defendants also sought an order that the plaintiffs delete or destroy any documents they had sourced from an email account which had been operated by Ms Watt (other than certain identified documents). The origin of this issue was that, after these proceedings were commenced, Mr Gough and his solicitors interrogated the email account used by Ms Watt and identified emails which were relevant to the proceedings. These were then annexed to an affidavit filed Mr Gough in the proceedings. When the defendants saw that the plaintiffs had possession of those emails, they filed their interlocutory application seeking orders against Mr Gough and Mr McMahon of Enyo Lawyers that they personally make affidavits identifying the documents which they had viewed or obtained from that email account. Its foundation was the perception that the emails were confidential and ought not to have been accessed by Mr Gough or his solicitor or, in the alternative, that they were the subject of legal professional privilege. As mentioned above, the defendants did not proceed with that application and have agreed to its dismissal. Nevertheless, the plaintiffs have agreed to orders which would limit the documents retrieved from the email account which can be used or about which evidence may be adduced in the proceedings.

37    The defendants submitted that the Court has power under r 1.32 of the Federal Court Rules 2011 (Cth) to make the orders which they seek as part of its authority to manage cases before it. That power, which permits the Court to make any order it considers appropriate in the interests of justice, may well be wide enough to accommodate the orders sought. However, it is unnecessary to decide that point as, even if the discretion conferred by that rule were wide enough to make such an order, it would nevertheless be inappropriate to exercise it in the present circumstances.

38    The first and most substantial reason why it is inappropriate to make the order is that the defendants have not discharged the onus, which they must have, to show that Mr Gough did not have any right to the emails or to access the email account used by Ms Watt. In a number of the affidavits filed in relation to that interlocutory application, Mr Gough has deposed to the establishment and operation of the Investarent email accounts. He claims to have created them in early 2017 when he registered a number of email accounts with the suffix @investarent.com.au. This included the email account entitled “michelle@investarent.com.au” which was subsequently used by Ms Watt. It does not appear to be disputed that he registered the Investarent email accounts personally and in his own name, with the invoices being sent to his address rather than to Investarent. The evidence shows that on 3 May 2017 Mr Gough informed Ms Watt that he had set up the Investarent email accounts and informed her of the passwords to the accounts. Again, it did not appear to be disputed that Ms Watt was aware that both she and Mr Gough had access to the emails which were sent and received using the Investarent email accounts. From the initial registration of the Investarent email accounts, Mr Gough remained the registrant of them and permitted Ms Watt to use the “michelle@investarent.com.au” email address. He has received invoices from the service provider (Crazy Domains) for the email hosting service and he has paid those invoices on a regular basis save for one paid by P5K on or about 5 May 2020.

39    It was submitted by the plaintiffs that Ms Watt must have known that Mr Gough had access to the Investarent email accounts and, for that reason, they were neither private nor confidential to the users of the accounts including herself. It is pointed out that Ms Watt even deposed that on about 14 December 2020 she spoke to Mr Gough about changing the email provider but that did not occur.

40    The evidence before the Court establishes that, with the knowledge of the ownership of the email accounts or of Mr Gough’s access to or control over them, Ms Watt used them for the purposes of P5K’s business. When they were accessed by Mr Gough and his solicitor, they were found to contain correspondence to and from Ms Watt in relation to the company’s business, which included her dealings with Mr Woodward and his solicitors. This gave rise to a claim for privilege in relation to those latter communications and the defendants’ application.

41    In the present circumstances, it is not possible to reach any conclusion that P5K, as opposed to Mr Gough, owned the information in the email accounts or was entitled to control its dissipation to the exclusion of Mr Gough. He had complete and unfettered access to the email accounts and it was he who had established them and, in general, paid for their continued operation. This was known by P5K and Ms Watt.

42    It follows that, not only did the defendants fail to establish that they had any entitlement to the information, they did not establish that it was confidential in the sense that they had any right to keep it from Mr Gough. There is no need to deal with the question of legal professional privilege to the extent to which it is relied upon. For this reason alone, no order for the deletion or destruction of electronic documents should be made even if there were power to do so.

43    A further reason to refuse the order is that it is in the nature of a mandatory injunction and no justification has been established to make an order on a final basis in the course of an interlocutory application. To do so would be take a somewhat extraordinary step for which no authority was provided.

44    To the above it can be added that there is no apparent benefit to any party by reason of the deletion or destruction of the electronic information in the possession of the plaintiffs’ solicitors. There is nothing to suggest that the defendants would suffer harm if the information remains in the solicitors’ possession. There is no threatened misuse of the information and, indeed, the plaintiffs have agreed to orders restricting their use of the documents in the proceedings. The continued possession of the information also does not prevent the defendants from accessing all of the information contained in the relevant accounts of which they now have control.

45    It follows that the defendants’ application for an order that the plaintiffs cause certain electronic information or other documents to be deleted or destroyed is refused.

Costs of the defendants’ application

46    The defendants did not pursue their application and no order was made upon it. They submitted that the proper order should be that the costs of the application be reserved, although no real reason was identified why the determination of the issue ought to be deferred. Their alternative submission was, apparently, that there should be no order as to costs on the basis that the Court should not enter upon the difficult and time consuming process of attempting to ascertain what the result of the application would have been had it proceeded. Whilst such an order may be appropriate in some circumstances, here the application did not proceed by reason of the defendants’ choosing rather than consequent upon any intervening event. Even if no order was made upon the application consequent upon the plaintiffs’ agreement to limit their use of the documents obtained from the email account, the defendants continued to press for related relief, being the deletion or destruction of some of the documents: cf. Chapman v Luminis [2003] FCAFC 162 [7]. Prima facie, there is little substance in the submission that no order should be made in relation to costs merely because no final determination was made with respect to the original relief sought by the defendants application.

47    The defendants submitted that they have acted reasonably in bringing and prosecuting their application and that, on the other hand, the applicants acted unreasonably in engaging in the conduct which precipitated it. However, an assessment of the reasonableness or otherwise of the parties’ conduct would generally require a determination of their rights with respect to the email account, an exercise which the defendants accepted it would be inappropriate to undertake. It was also submitted that the reasonableness of the plaintiffs’ conduct could be determined, for present purposes, on the basis that it was obviously going to provoke a reaction from the defendants and that therefore there must have been “a better way to go about it” although none was identified. Whether or not that was so, in the present circumstances that does not provide a proper basis for reaching a conclusion as to whether the plaintiffs acted reasonably or otherwise.

48    The defendants also submitted that they had effectively obtained some of the relief which they had sought by the application because the plaintiffs and their solicitor had filed affidavits which revealed the nature and extent of the access to the disputed email accounts and that was the substance of the desired outcome of the application. Although there is some force in that submission, the reality is that the affidavits filed on behalf of the plaintiff were for the purposes of defending that application. The mere fact that the defendant obtained some forensic advantage along the way does not speak of success on their application.

49    However, it is also true that the plaintiffs have agreed to some restrictions as to the use of the emails which were extracted from Ms Watt’s email account and so, to some degree, the defendants have secured some part of their ultimate aim. It is not unfair to say that they had some practical success even though it is far from that which they intended to achieve. Nevertheless, that partial practical beneficial outcome should be considered in relation to the question of costs.

50    Although it is not appropriate to attempt to ascertain whether the application would have succeeded, here it can be observed that it may have had poor chances. Not in the least because it sought mandatory interlocutory injunctions against persons who were not party to the proceedings, in circumstances where the injunctive relief was not sought in aid of the protection of some right or interest. It may have been possible to characterise the injunctions sought as mandatory final injunctions, but the making of such orders would have required a significant degree of assurance as to the entitlement to relief and the evidence filed to date came nowhere close to satisfying that requirement.

51    It was submitted that, as the matter proceeded, a significant issue in the defendants’ application was that of whether legal professional privilege attached to the emails of which the plaintiffs had obtained possession. It was submitted that this was a false issue on the application and one raised by the plaintiffs. With respect, that submission should be rejected. A substantial difficulty with the defendants’ application was that it generally lacked or glossed over any proper articulation of the foundational element on which they relied for any exercise of power in their favour. To the extent that anything was relied upon, it was the vague assertion of legal professional privilege. This was advanced in the defendants’ initial written submissions filed in support of their application, but the basis for that conclusory statement was far from clear as the subsequent evidence later revealed. It therefore cannot be accepted that the costs of the issue concerning legal professional privilege was a false issue raised by the plaintiffs.

52    On the basis that, as the circumstances played out, the defendants have obtained some practical success in relation to their desired relief, they should not pay the entirety of the plaintiffs’ costs of the application. Nevertheless, given that it was not pursued and was not likely to be successful, they should be ordered to pay two-thirds of the plaintiffs’ costs.

53    The costs which the defendants are to pay to the plaintiffs in respect of the defendants’ application should include the costs of the adjourned hearing on 6 September 2021. That adjournment occurred as a result of the withdrawal of the defendants’ former solicitors. There is no need to delve into the circumstances of the withdrawal and it is sufficient to observe that the issue turned on whether the former solicitors acted for Mr Woodward as well as Ms Watt and P5K. The evidence surrounding that issue, albeit necessarily limited in the circumstances, was in some respects unsatisfactory. Ultimately, there is no need to reach any conclusions but there is no basis on which the plaintiffs should bear the expenditure of the adjournment.

Associate:

Dated:    23 September 2021

SCHEDULE OF PARTIES