Grow MF Pty Ltd v Parthy

Federal Court of Australia|2024-04-22|Before: Dowling J

The applicant is granted leave to file a notice of discontinuance no longer than 14 days from the date of this order.
The applicant pay the respondent's costs of the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

introduction 1 This is an application, made by the applicant Grow MF Pty Ltd, for leave to discontinue the whole proceeding under r 26.12 of the Federal Court Rules 2011 (Cth). 2 By the affidavit of Mr Jackson affirmed 5 April 2024, and filed in support of Grow's application, Grow says: (a) that it has incurred significant legal costs in excess of $100,000.00 to date and expects to incur at least a further $60,000.00 for the preparation and conducting of the trial in June 2024; (b) That the respondent, Mr Anindha Parthy, has stated that he has no financial means to pay any damages or costs ordered against him in the event that Grow's claim succeeds; and (c) Grow does not wish to incur substantial further costs in circumstances where it is unlikely to recover those costs or any damages. 3 Mr Parthy opposes the application. He submits that he intends to seek leave to bring a cross-claim and that that cross-claim may be heard on the existing hearing dates of 24 to 26 June 2024. That, he says, will save the Court and the parties costs and time. 4 In the substantive proceeding, Grow alleges that Mr Parthy, its former Chief Technology Officer, breached his employment contract, his fiduciary obligations to his employer and his duties under ss 182 and 183 of the Corporations Act 2001 (Cth). Grow conducts a digital marketing business that provides clients with access to an application which automates its clients' digital marketing. Grow stored the source code for their business in; a GitHub account, a Figma account and a production staging environment (Grow Accounts). As part of his former role with Grow, Mr Parthy was one of two Grow staff with access to Grow's Accounts. That access allowed him to add or remove users. The other person with such access was Grow's co-founder and executive director, Mr Sohan Karunaratne. Grow alleges that between 28 April 2023 and 1 May 2023 Mr Parthy removed Mr Karunaratne and other Grow employees' access to each of the Grow Accounts. Grow alleges that conduct constitutes the alleged breaches of Mr Parthy's contract, obligations and duties. Mr Parthy asserts a proprietary right to the Grow Accounts and says that he caused Grow no loss. 5 The substantive proceeding was commenced on 2 May 2023. On 26 June 2023, Mr Parthy filed a cross-claim against Grow. That cross-claim was dismissed with costs on 10 October 2023. 6 Mr Parthy provided the Court and the applicant with a further cross-claim on 19 April 2024. Mr Parthy accepts he needs leave of the Court to file that cross-claim. 7 The substantive proceeding is listed for hearing from 24 to 26 June 2024.

Principles 8 Rule 26.12(1) of the FCR provides that a party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance. Where, the original return date fixed in the Originating Application has past, and the pleadings are closed, and Mr Parthy does not consent, Grow requires the leave of the Court to file that notice of discontinuance (see r 26.12(2) of the FCR). 9 Generally, an applicant will be granted leave to discontinue if they want to, provided no injustice has been caused to the respondent: see Tucker v State of Western Australia [2014] FCA 23 at [11] per McKerracher J. 10 In Trade Practices Commission v Manfal Pty Ltd (No 3) [1991] FCA 831; (1991) 33 FCR 382 at [383-384] Lee J considered the predecessor to r 26.12, Order 22 r 2. Justice Lee concluded that the discretion of the court to grant leave is unfettered. He said that the Court's role in deciding whether to grant leave to discontinue: contemplates a judicial review of all relevant circumstances and the satisfaction of the court that the grant of leave is proper in all the circumstances. 11 That decision in Manfal, was cited with approval by Kenny J in Ann Street Mezzanine Pty Ltd v Beck [2011] FCA 614 where Her Honour stated at [16]: Generally speaking, the Court will grant an application for leave to discontinue, since it is undesirable that an applicant be compelled to continue litigation against the applicant's will.

Disposition 12 I approach the matter consistent with those principles. The applicant should be granted leave to discontinue where it is proper in all the circumstances, provided no injustice is done to the respondent. 13 In all the circumstances of this case, there is no prejudice or injustice to Mr Parthy if leave to discontinue is granted. 14 Mr Parthy argued that the timing of his proposed further cross-claim will be affected. That cross-claim was provided to the Court and Grow after the time for the filing of cross-claims as provided for by r 15.04 of the FCR. Mr Parthy accepts he would require leave to file his cross-claim under r 15.05 of the FCR. 15 Mr Parthy does not lose any ability to make claims against Grow by the granting of leave to discontinue. He is able to institute a proceeding against Grow by originating application. Indeed, he would not require leave for that proceeding in the way that he would for his proposed further cross-claim. 16 As to the timing of that proposed cross-claim, Mr Jackson, for Grow, submitted that if leave were granted he anticipated an application to strike-out that further cross-claim and that any such further cross-claim had the potential to impact the ability of the matter to proceed to hearing on 24 June 2024. The substantive matter was allocated 3 days of hearing in June after Mr Parthy's first cross-claim was struck out. The hearing dates could not have contemplated the hearing of any cross-claim in circumstances where one did not exist. Any leave for the proposed further cross-claim has the significant potential to delay the proceeding and cause the adjournment of the trial dates. In all of the circumstances, I am satisfied there is no prejudice or injustice to Mr Parthy in terms of the timing of any claims that he may wish to bring. 17 Further, I accept Grow's submission that permitting it to discontinue will be consistent with the overarching purpose set out in section 37M(1) of the Federal Court of Australia Act 1976 (Cth), namely "to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible". Grow's discontinuance disposes of the proceeding in a timely manner, avoids the parties incurring further costs and frees up Court resources. 18 In all of those circumstances I am satisfied that Grow should be granted leave to discontinue. I am satisfied that there is no injustice or prejudice to Mr Parthy. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Dowling.

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