Federal Court of Australia

University of New England v Boerner (Costs Review) [2025] FCA 368

ORDERS

THE COURT ORDERS THAT:

1.    The Orders made on 8 October 2024, aside from order 5, be set aside and in lieu thereof:

(a)    The First Prospective Respondent pay 50% of the Prospective Applicant’s costs of and incidental to the application dated 27 July 2023 and the First Prospective Respondent’s interlocutory application dated 29 October 2024, to be fixed in a lump sum if not agreed.

(b)    There be no order as to the Second Prospective Respondent’s costs of and incidental to the application dated 27 July 2023 and the Second Prospective Respondent’s interlocutory application dated 29 October 2024.

(c)    The Prospective Applicant file and serve an affidavit in support of the lump sum referred to in order 1(a) above (Costs Summary), not exceeding five (5) pages (omitting formal parts) within 28 days.

(d)    The First Prospective Respondent file and serve an affidavit responding to the matters raised in the Costs Summary (Costs Response), not exceeding four (4) pages (omitting formal parts) within 28 days of being served with the affidavit pursuant to order 1(c).

(e)    The Prospective Applicant and First Prospective Respondent each file and serve any written submissions, not exceeding three (3) pages, within 14 days of the affidavit being served in accordance with order 1(d).

(f)    The determination of the costs ordered by the orders above is to be referred to a Judicial Registrar.

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

REASONS FOR JUDGMENT

HESPE J:

introduction

1    The first prospective respondent (Dr Boerner) and the second prospective respondent (Aarhus) seek review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) of a decision of a Registrar of the Court to order that the prospective respondents pay the costs of and incidental to an application for preliminary discovery filed by the prospective applicant (UNE). Each of the prospective respondents was ordered to pay 50% of the costs of the application. The prospective applicant was ordered to pay the costs of each of the prospective respondents of giving discovery and production.

2    UNE sought preliminary discovery of documents, including source code for software to ascertain whether it has a right to obtain relief against Dr Boerner for breach of copyright, misuse of confidential information, breach of contractual terms, or breach of statutory obligations. One of the questions that UNE wishes to consider is whether software known as Linear mixed Models Toolbox, or “LMT”, which Dr Boerner claims to have developed using his own resources and those of Aarhus in Denmark, reproduced source code for software known as “raceMule” that Dr Boerner developed for the Animal Genetics and Breeding Unit of UNE. Aarhus claims ownership of the LMT software, contesting the capacity of Dr Boerner to give discovery of the source code to UNE. Dr Boerner claims that he would be in breach of obligations to Aarhus if he produced documents on discovery without the permission of Aarhus.

3    The basis of the Registrar’s decision was that each of the Prospective Respondents had decided to “enter[] the fray” in opposition to the application for preliminary discovery rather than simply electing to “remain passive”.

Background

4    The application for preliminary discovery was commenced against Dr Boerner in July 2023, some time after UNE became aware that, while still employed by UNE, Dr Boerner had been involved in the development of software known as LMT that competed with the animal breeding software he was employed to develop for UNE (known as “raceMule”, which was used as part of UNE’s genetic evaluation systems “BREEDPLAN” and “OVIS”).

5    Dr Boerner claimed that, although he was the author of the source code for the LMT software and was listed as the sole contact point for access to that software, he did not have the source code or other documentation in his control or possession because it was “the property of” Aarhus.

6    On 27 September 2023, Dr Boerner filed a lengthy affidavit in opposition to the application for preliminary discovery contesting a number of factual issues and foreshadowing an application to transfer the proceeding to the New South Wales Registry of the Court.

7    On 11 October 2023, UNE filed a detailed affidavit in response to Dr Boerner’s affidavit and also wrote to Aarhus, asking it to either authorise Dr Boerner to provide the requested documents or agree to submit to the jurisdiction of the Court and consent to an order that it discover the requested materials. No response to that letter was received.

8    On 18 October 2023, Dr Boerner wrote to UNE, offering to consent to an order that he discover the documents sought by UNE, on condition that UNE took steps to join Aarhus to the proceeding and pay Dr Boerner’s costs. UNE rejected the offer.

9    In November 2023, Aarhus appointed Australian lawyers.

10    On 6 December 2023, Aarhus offered to provide a copy of the source code to an independent expert on terms which would have prevented the analysis being used for the purposes of any legal proceeding.

11    On 21 December 2023, UNE’s solicitor responded offering an alternative regime which included provision of source code and the other material sought by UNE to an independent expert subject to a confidentiality regime. No response to that offer was received.

12    On 22 January 2024, UNE’s solicitor wrote to Aarhus’ Australian lawyers stating that UNE intended to apply for Aarhus to be joined to the proceeding and asking whether they held instructions to accept service. The lawyers responded stating that they did not. They subsequently stated that if UNE sought to join Aarhus to the proceeding Aarhus would dispute jurisdiction.

13    On 29 January 2024, UNE filed an interlocutory application seeking joinder of Aarhus as a prospective respondent and orders for substituted service. The following day, UNE sent an offer to both Aarhus and Dr Boerner proposing a further regime for the provision of the source code material to an independent expert subject to a confidentiality regime. Neither prospective respondent accepted the offer.

14    UNE’s application for joinder and substituted service was heard on 5 March 2024. After hearing from Counsel for UNE, the Court made the orders sought by UNE. Costs of the interlocutory application for substituted service were reserved. That order is not part of this review.

15    On 14 March 2024, the Australian lawyers for Aarhus filed a Notice of Address for Service in the proceeding and subsequently sent an email to the Court stating that Aarhus “does not intend to take an active role in this proceeding” and neither consented to nor opposed the orders sought by UNE.

16    On 5 April 2024, UNE’s solicitor sent a further offer to both Dr Boerner and Aarhus by which Dr Boerner and Aarhus would discover the documents sought by UNE, and costs of preliminary discovery would be costs in the proceeding if UNE commenced related proceedings within six months of the documents sought being produced, or if no such proceedings were commenced within six months, the parties would bear their own costs. That offer was not accepted by either prospective respondent. On 21 May 2024, UNE’s solicitor made another offer, which included more favourable terms for the payment of costs. No response to that offer was received.

17    On 24 May 2024, Dr Boerner filed submissions in response to the prospective applicant’s supplementary submissions on the application for preliminary discovery, opposing discovery in two of the categories and proposing that, for the remaining categories, discovery should be provided in tranches with initial discovery only provided in one category because the remaining categories may not be “reasonably necessary” for UNE to decide whether to commence proceedings.

18    On 29 May 2024, Aarhus and Dr Boerner provided proposed minutes of order to the Court. The orders proposed by Aarhus provided for discovery of a single category, while the orders proposed by Dr Boerner provided for discovery in one category only, with three of the remaining categories stood over for determination at an (unspecified) later date and the two final categories dismissed.

19    On 30 May 2024, a Registrar of the Court held a hearing in relation to the application for preliminary discovery. At the hearing (which lasted more than 2.5 hours), Dr Boerner was represented by Senior and Junior Counsel, who made submissions opposing all of the categories sought other than category 2, suggesting that categories 1, 3, and 4 were “intrusive and unnecessary” in their current form, and that categories 5 and 6 were “entirely out of the ballpark”.

20    Aarhus was represented by a partner from its Australian law firm, who submitted that other than the single category proposed by it, the remaining categories were “not directly relevant to the question of whether the documents [were] required to enable UNE to make a decision to commence a proceeding” and should not be ordered.

21    On 21 June 2024, the Registrar delivered ex tempore reasons and pronounced orders substantially in the form proposed by UNE, ordering both prospective respondents to give discovery in all of the categories sought by UNE.

UNE’s Submissions on costs

22    UNE contends the appropriate order was for the prospective respondents to pay UNE’s costs of the application for preliminary discovery because UNE was successful in its application and the Registrar was correct to conclude that neither prospective respondent elected to “remain passive”. In particular:

(1)    Dr Boerner filed extensive evidence in response to UNE’s affidavit material, opening up a series of “new fronts” in opposition to the application, including whether the source code for the “raceMule” software was separate from the BREEDPLAN software, whether BREEDPLAN was in the public domain, and whether UNE authorised or approved Dr Boerner developing competing software while at Aarhus.

(2)    At the hearing, Dr Boerner challenged the need to give discovery in most of the categories where discovery was ultimately ordered and the form of order sought by UNE.

(3)    Aarhus repeatedly refused to authorise Dr Boerner to provide the documents sought. Further, Aarhus refused to instruct its Australian solicitors to accept service and threatened to dispute jurisdiction.

(4)    Despite not filing any written evidence or submissions in opposition to the application, and claiming that it neither consented to nor opposed the application, at the hearing Aarhus also contested all of the categories sought by UNE, proposing discovery in a single category and joining Dr Boerner in challenging the form of order sought by UNE, as well as raising issues of jurisdiction.

23    UNE submits that it would be open to the Court, hearing the matter de novo, to make an order for indemnity costs given the conduct of the prospective respondents.

Dr Boerner’s submissions on costs

24    Dr Boerner submits that his conduct has been reasonable and not adversarial in the relevant sense. By contrast, UNE’s conduct has been unreasonable. Dr Boerner submits that UNE should pay Dr Boerner’s costs.

25    Dr Boerner submits that UNE’s conduct was unreasonable because:

(a)    there was a material delay between the time UNE became aware of the LMT software (2022) and UNE writing to Dr Boerner to amend LMT-related documents (July 2023);

(b)    UNE should have joined Aarhus from the start of the proceedings because Dr Boerner had informed UNE that he had employment obligations to Aarhus and requests for documents needed to be made to Aarhus; and

(c)    the evidence filed by UNE in support of its application for preliminary discovery went well beyond establishing the requirements and included scientific and technical evidence that was “generally … inapt” for a preliminary discovery proceeding.

26    Dr Boerner submits that his conduct was reasonable and given the personal nature of the allegations against him, Dr Boerner felt compelled to respond in order to protect his reputation and considered it necessary to respond to the technical evidence filed by UNE.

27    Dr Boerner submitted that he had made reasonable offers to UNE which it had unreasonably rejected.

28    The interlocutory application to join Aarhus and for substituted service was listed for an oral hearing because the Court indicated that it “wishe[d] to be addressed on whether the conditions … for substituted service are satisfied, with particular reference to [the authorities identified by Dr Boerner]”. The disclosure of these authorities to the Court was said to be consistent with Dr Boerner’s solicitor’s duty to the Court.

29    Dr Boerner did not challenge UNE’s entitlement to preliminary discovery. Dr Boerner’s submissions related to:

(a)    the scope of discovery (categories 5–6);

(b)    the clarification of the categories;

(c)    whether discovery should be given in tranches (categories 1–4);

(d)    confidentiality; and

(e)    costs.

The submissions were about the form of the orders to be made. This was reasonable.

30    Dr Boerner and UNE were both represented by Senior Counsel at the preliminary discovery application hearing. Confidentiality was a matter of critical importance to Dr Boerner because UNE and Aarhus are competitors.

31    The debate at the hearing centred on three issues:

(a)    whether there should be a territorial limitation;

(b)    the scope of certain categories; and

(c)    whether discovery should be given in tranches.

32    Dr Boerner submitted that the positions of Dr Boerner and Aarhus should be determined separately.

33    Dr Boerner gave discovery on 19–23 July 2024. UNE has now had the source code for the LMT software and the GHPC software for over seven months, which it is submitted demonstrates further unreasonable delay.

34    Dr Boerner submitted that UNE should pay Dr Boerner’s costs sought. Alternatively, any costs awarded to UNE should be significantly reduced because of UNE’s unreasonable conduct. Dr Boerner submitted that the orders should be made on a deferred basis and that his application for review should be allowed with costs.

Aarhus’ submissions on costs

35    Aarhus submits that it did not take an adversarial approach to the application for preliminary discovery. Aarhus was entitled to, and did, put UNE to proof on its application.

36    Aarhus submits that UNE should pay Aarhus’ costs of the application unless UNE commences substantial proceedings within a reasonable time. In the latter case, Aarhus submits that the costs of the application should be costs in that new proceeding.

37    Aarhus submits that it was under “no obligation … to respond to requests for information” or authorise Dr Boerner to provide the documents sought. Aarhus was entitled to reject UNE’s request to provide the requested documents without an order of the Court. Aarhus and UNE are competitors.

38    UNE was not wholly successful given:

(a)    category 6 of the documents ordered for discovery was narrowed from what was originally sought by UNE;

(b)    the order for discovery was made subject to confidentiality orders that UNE had not consented to until the hearing of the application;

(c)    the order for discovery allowed Aarhus the opportunity to review any documents to be discovered by Dr Boerner to make sure that none of the documents was subject to privilege or confidential to Aarhus.

39    Aarhus did not file any affidavit evidence or written submissions opposing the application.

40    At the hearing, Aarhus made limited oral submissions.

41    The oral submissions made on behalf of Aarhus sought to explain the history of the matter from its standpoint, differentiate Aarhus from the poor relationship between UNE and Dr Boerner, and explain the need for adequate confidentiality orders in circumstances where UNE is a competitor of Aarhus.

42    Aarhus submits that it was not obliged to instruct solicitors to accept service of initiating documents.

43    In the alternative, Aarhus submits that this is not a case where it would be appropriate to award indemnity costs to UNE as against Aarhus. There was no special or unusual feature justifying such an order.

44    In particular:

(1)    Aarhus was entitled to make UNE prove the necessary elements in order to obtain orders for preliminary discovery.

(2)    The offers made by UNE were not more favourable than the ultimate orders made by the Court. The Court ultimately narrowed the scope of one category of documents sought by UNE and made orders for confidentiality.

(3)    The offers made by UNE were not a true compromise. In each offer, UNE was seeking that Aarhus provide or at least allow Dr Boerner to make discovery of the documents sought in the application.

Legal principles

Nature of Review

45    In determining the application for preliminary discovery and the costs associated with that application, the Registrar was exercising delegated judicial power pursuant to s 35A(1) of the FCA Act. A party may apply to the Court under s 35A(5) for review of an exercise of power by a Registrar under s 35A(1) of the FCA Act: r 3.11 of the Federal Court Rules 2011 (Cth). The review is by way of hearing de novo: Harris v Caladine [1991] HCA 9; 172 CLR 84 at 96 (Mason CJ and Deane J); Bechara v Bates [2021] FCAFC 34; 286 FCR 166 at [17] (Allsop CJ, Markovic and Colvin JJ). As such, it is not concerned with correctness of the decision of the Registrar. The task for the Court is to determine the matter afresh: see the summary in Lee v Dentons Australia Limited [2024] FCA 622 at [3] (Cheeseman J).

Costs of Preliminary Discovery

46    Pursuant to s 43 of the FCA Act, the Court has a general discretion to order costs. The discretion is unconfined but must be exercised judicially, that is, according to relevant considerations and taking into account the contextual features and facts of the litigation: El-Debel v Micheletto (Trustee) (No 2) [2021] FCAFC 146 at [2] (Markovic, Derrington and Colvin JJ).

47    The jurisdiction to order preliminary discovery is an extraordinary one because it provides for compulsory access to the private affairs of members of the community so that somebody else can determine if they have a case against that party: C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [50] (Gyles J). The extraordinary nature of the jurisdiction is a matter to be taken into account in making a costs order and may mean that a wholly successful prospective applicant is not entitled to an order for costs: ObjectiVision Pty Ltd v Visionsearch Pty Ltd (No 3) [2015] FCA 304 at [23] (Perry J).

48    The extraordinary nature of the jurisdiction may also mean that a prospective respondent need not consent to giving discovery otherwise than in accordance with an order of the Court and is entitled to remain passive until the prospective applicant makes out a case for preliminary discovery: Glencore International AG v Selwyn Miners Limited [2005] FCA 801; 223 ALR 238 at [15] (Lindgren J).

49    As Perry J observed in ObjectiVision at [13], decided cases are illustrative only of the manner in which the discretion has been exercised in the circumstances of the particular case.

50    There are instances where courts have made contingent costs orders whereby the costs of the preliminary discovery form part of the costs of the substantive proceedings: Cappuccio v Australia & New Zealand Banking Group Ltd [1999] FCA 1188 (Burchett J). In other instances, the approach has been that the issue of costs of the preliminary discovery application be determined as a separate matter and for the prospective applicant to pay the prospective respondent’s costs even if the prospective applicant was successful in that preliminary application if there was genuine and reasonable dispute: Hoyts Multi-Plex Cinemas Pty Ltd v Fox Entertainment Precinct Pty Ltd [2003] FCA 1347 (Branson J). There are also cases where a prospective applicant has been successful in procuring orders for preliminary discovery and courts have found it appropriate to order that the payment of costs be deferred to see whether the outcome of the production of documents yields the commencement of substantive proceedings (usually within a specified period of time following the preliminary discovery proceedings): J & A Vaughan Super Pty Ltd v Becton Property Group Limited [2013] FCA 340 at [12] (Kenny J); cf C7 at [50].

51    If a prospective respondent does take an adversarial approach it may be appropriate to order that it pay the costs caused by that adversarial approach: Proctor v Kalivis (No 3) [2010] FCA 1194 at [17] (Besanko J). Given the extraordinary nature of the jurisdiction, some additional scrutiny should be applied to whether, even if a prospective respondent has been “adversarial”, the usual orders as to costs following the event should be made: Cobankara v Australia and New Zealand Banking Group Ltd [2017] FCA 419 at [20] (Mortimer J). However, as Burley J observed in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 2) [2019] FCA 657 (Pfizer No 2) at [26], an emerging thread is that where a prospective respondent takes an adversarial approach to the application, it may be required to bear some or all of the costs in the event that the prospective applicant is successful.

52    The purpose of preliminary discovery is to facilitate the making of sensible decisions concerning the commencement of proceedings. It is intended to promote the efficient conduct of litigation and is not intended to be a platform for a mini-trial: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; 257 FCR 62 at [2] (Allsop CJ). Whilst an adversarial approach is not prohibited, it is to be discouraged: Pfizer No 2 at [26]. Where each point is hard fought, the prospective respondent is exposed to the risk that it will be visited with some or all of the costs in the event they are unsuccessful. In such circumstances, it may be inappropriate to defer a costs order to the outcome of any prospective litigation: Pfizer No 2 at [27].

Consideration

53    It is fair to describe the application for preliminary discovery as hard fought. In support of that application, the prospective applicant relied upon three affidavits comprising more than 400 pages in total (including 45 annexures) and two outlines of submissions. Dr Boerner relied on an affidavit of almost 350 pages (including over 40 annexures) and two outlines of submissions. Aarhus was represented by its Australian legal representatives and made oral submissions.

54    The preliminary discovery application was contested in three respects:

(1)    The application rests on relief being sought under the Copyright Act 1968 (Cth) which has territorial limitations. Both prospective respondents engaged with this proposition, though only to a limited extent.

(2)    Some of the categories sought were too wide or unnecessary. Both respondents engaged with this proposition, albeit in different respects.

(3)    Discovery should be provided in stages or tranches. Dr Boerner advanced this proposition.

55    The application for preliminary discovery was granted on the basis that the prospective applicant held a reasonable belief that it may be entitled to relief but did not have sufficient information to decide whether to start a proceeding having made reasonable inquiries. It was also determined that one of the categories sought had been framed too broadly by including the words “all relevant communications”. A narrower category along the lines discussed during the hearing was ordered. Otherwise, the remaining categories were considered appropriate. A staged process was rejected. Confidentiality orders were also made.

56    The affidavit evidence filed on behalf of the prospective applicant related to the beliefs of the director of the prospective applicant’s Animal Genetics and Breeding Unit, Dr Stephen Miller, about the LMT software, the provenance of that software and its relationship with software developed by the prospective applicant’s Animal Genetics and Breeding Unit. It was the beliefs about these matters which gave rise to the deponent’s belief that the prospective applicant may have a right to obtain relief against Dr Boerner. A subsequent affidavit sworn by Dr Miller concerned further software offered by an Australian company controlled by Dr Boerner in apparent competition with the software developed by the prospective applicant’s Animal Genetics and Breeding Unit.

57    Dr Boerner did not agree with the evidence in the first affidavit of Dr Miller about certain features of the LMT software, the software offered by his Australian company “GHPC”, the software developed by the prospective applicant’s Animal Genetics and Breeding Unit or their commercial significance. Dr Boerner gave evidence about the circumstances in which LMT was developed and its functionality and challenged the qualifications of the prospective applicant’s witness to comment on these matters and firmly rejected any suggestion he misused information belonging to the prospective applicant. This evidence was not relied upon in connection with the basis on which preliminary discovery was contested.

58    Dr Boerner did more than just put UNE to proof of the elements of r 7.23 of the Federal Court Rules. His evidence went to contesting the opinions expressed by the prospective applicant’s witness and contested the expertise of the witness. Although Dr Boerner was entitled to challenge the basis of the prospective applicant’s belief, in so doing he became exposed to an adverse costs order. Furthermore, the extent of the evidence led by Dr Boerner went further than challenging whether there was a reasonable basis for a belief. Instead, that evidence sought to engage with the correctness of technical views in a manner that was not appropriate for an application that was not going to be conducted as a mini-trial. The response from Dr Boerner resulted in a disproportionately large volume of material being filed.

59    In so far as Aarhus is concerned, Aarhus did more than put the prospective applicant to proof of the elements of r 7.23. However, Aarhus’s conduct is to be assessed in light of the fact that it was under no obligation to respond to requests for information absent an order of the Court: Pfizer No 2 at [25(6)]. It had a right not to remain passive. It is the extent to which it exercised that right which is relevant in the present case. Its conduct was not adversarial to the same extent as Dr Boerner’s. While the scope and role of jurisdictional limits on the scope of discovery was one of the matters agitated by Aarhus, it was addressed only in a very limited way in oral submissions. Although Aarhus engaged in technical arguments concerning the scope of discovery, it was entitled to ensure that orders for discovery were appropriately tailored and it was reasonable for it to ensure an appropriate confidentiality regime formed part of the orders given the sensitive nature of the information involved.

60    Although the prospective applicant enjoyed substantial success in its application, the usual rule that costs follow the event does not play the same role in preliminary discovery applications that it otherwise would. Given the extraordinary nature of the jurisdiction sought to be invoked and the fact that preliminary discovery is not to function as a mini-trial, the extent of evidence filed by the prospective applicant in relation to scientific or technical issues was excessive.

61    Balancing these considerations, I have determined that it is appropriate that the prospective applicant be awarded 50% of its costs, with those costs to be borne by Dr Boerner. There will be no order as to costs in respect of Aarhus. I reiterate the observation that the costs of the interlocutory application for substituted service are not before me. I do not consider Aarhus’ conduct in relation to that application to be of relevance to the determination of the costs to be awarded in relation to the preliminary discovery application.

62    It is not clear whether the prospective applicant makes a claim for indemnity costs. In any case, I am not satisfied that this is a case in which an indemnity costs order is appropriate. In addition to the matters identified above, a significant part of the prospective respondents’ concerns related to confidentiality. The offers made by the prospective applicant did not provide for confidentiality regimes along the lines that formed part of the preliminary discovery orders.

63    Given that the parties accepted that preliminary discovery applications were not a form of mini-trial, the costs that have been expended in relation to this matter – in which it was not ultimately contested that some form of preliminary discovery ought to be given and in which the debate ultimately centred around the scope and form of that discovery – are very concerning.

64    There was no review sought of the orders made concerning the costs of providing discovery. Those costs are to be borne by the prospective applicant.

Associate:

Dated:    16 April 2025