The parties put forward sharply differing approaches in relation to appropriate costs orders.
Secure Logic submits that the appropriate costs order is that the defendants should pay the plaintiffs' costs of the proceedings, with the plaintiffs' costs of pursuing their claims being assessed on the indemnity basis. Secure Logic says that an order for a specified gross sum instead of assessed costs should be made in its favour in the sum of $1,425,164.75 against Mr Noble and around 70% of that, or $949,025 against Mr Pankhurst (although on the Court's calculation 70% is $997,615.29).
Mr Noble and Mr Pankhurst both submit that there should be no order for costs made against either of them and that Secure Logic and the defendant shall each bear their own costs. In the alternative, Mr Noble submits that if the Court makes a costs order in favour of Secure Logic on the principal claim, to be consistent, it should also make a costs order in favour of Mr Noble on his Cross-Claim.
This contest is reflected in Mr Noble's and Peach Tree Bay's objection to the following underlined costs orders, and their proposal of alternative orders, in italics below:
"18 Orders that the first defendant pay the plaintiffs' costs of the proceedings (including the first cross-claim), with the amount payable in respect of such costs to be:
[the specified gross sum costs determined by the Court]
[OR if the Court declines to exercise its discretion under CPA, s 98(4)(c):
(a) as to the plaintiffs' costs of their actions, such amount as is agreed between the parties, or otherwise as assessed on the indemnity basis;
(b) as to the plaintiffs' costs of the first cross-claim, such amount as is agreed between the parties, or otherwise as assessed on a party-party basis].
19 Orders that the second defendant pay the plaintiffs' costs of their actions against it, with the amount payable in respect of such costs to be:
[the specified gross sum costs determined by the Court]
[OR if the Court declines to exercise its discretion under CPA, s 98(4)(c): in such amount as is agreed between the parties, or otherwise as assessed on a party- party basis.]
Orders that the plaintiffs/cross-defendants to the first cross-claim and the first and second defendants/first cross-claimant pay their own costs of the proceedings.
[OR in the alternative: that there be a gross sum costs order for the amount that the plaintiffs' costs exceed the first cross-claimant's costs in the assessed amount of $160,000.]
[OR in the further alternative: the defendants to pay the plaintiffs' costs of the plaintiffs' actions as agreed or assessed and the first cross-defendant to pay the first cross-claimant's costs of his actions as agreed or assessed.]"
And Mr Pankhurst objects to the following further orders proposed by the plaintiffs:
"20 Orders that the third defendant pay the plaintiffs' costs of the proceedings (including the second cross-claim), with the amount payable in respect of such costs to be:
[the specified gross sum costs determined by the Court]
[OR if the Court declines to exercise its discretion under CPA, s 98(4)(c):
(a) as to the plaintiffs' costs of their actions, such amount as is agreed between the parties, or otherwise as assessed on the indemnity basis;
(b) as to the plaintiffs' costs of the second cross-claim, such amount as is agreed between the parties, or otherwise as assessed on a party-party basis.]"
Mr Pankhurst put written submissions contesting the making of any costs order against him:
"1. In my initial correspondence with the Plaintiffs lawyers as a result of the served claim I stated that I had no assets nor income. This state of affairs continues except my income is derived from the government aged pension.
2. Assuming the plaintiffs lawyers verified that fact the plaintiffs continued to sue me for a restraint against using what they considered a "unique" prospects file.
3. I can only assume that the Plaintiffs purposely intended to misuse the legal process in the pursuit of me.
4. I represented myself and have incured [sic] no costs, and I submit that both the plaintiffs and me the third defendant should pay their own costs."
Mr Noble's submissions contest that this is a case appropriate for the making of specified gross sum costs orders under Civil Procedure Act, s 98(4)(c). Secure Logic's written submissions propose the making of such an order. Mr Noble's submissions accept, in the alternative, that if a s 98(4)(c) order is made, that it should be in a significantly lower sum than that claimed by Secure Logic, namely the sum of $160,000.
The Court's principal judgment shows that Mr Noble has conducted these proceedings by adhering to unrealistic and indefensible positions that have damaged his credibility. It is to be anticipated that he would approach a costs assessment with the same outlook and that it would therefore be protracted and potentially vexatious, providing an appropriate discretionary basis to make a specified gross sum costs order. Property searches show that neither Mr Noble nor Mr Pankhurst holds any real estate in his name. Mr Pankhurst submits that he "has no assets or income". The potential size of the cost orders that may be made against Mr Noble and Mr Pankhurst as these reasons later show, risks their insolvency and non-payment of the costs of a costs assessment. These considerations would ordinarily ground the making of a s 98(4)(c) order in this case: Hamod v State of New South Wales [2011] NSWCA 375 at [813] to [820]. The Court is willing to make such an order.
But the principles are also clear that before the Court can make such an order it needs to be satisfied that it can do so fairly between the parties on the materials provided: Hamod at [813] to [820]. Despite some complaints between the parties, the Court is satisfied that it does have enough material to make a specified gross sum costs order. The Court does not have the benefit of expert evidence on the question of costs. But s 98(4)(c) orders are not uncommonly made without such evidence. The Court has invoices in this case without the detailed narrative behind them and that is sufficient in this case. And in considering s 98(4)(c) orders, the Court has the very considerable benefit of its experience in conducting the hearing.
But the proper order of proceeding here is for the appropriate costs orders to be determined, before the Court considers the question of a specified gross sum instead of assessed costs. But it is useful nevertheless in introduction, for the calculation of the expenditure of costs on each side to be laid out as well as the claims for a specified gross sum made by each party.
[2]
The Claims for Costs
Secure Logic makes a s 98(4)(c) claim as follows. Its claim is for a specified gross sum of $1,425,164.75 instead of assessed costs. Mr Lacey, a principal of McCabes with 23 years' experience in Supreme Court commercial litigation and cost assessment, outlined the total costs incurred by Secure Logic through McCabes and indicates the range of outcomes that he would expect from a costs assessment of Secure Logic's costs. The Court accepts his evidence.
That sum of $1,425,164.75 is calculated exclusive of GST. All the Secure Logic plaintiffs are registered for GST purposes and will receive from the ATO a GST credit for all GST paid by them, so a costs assessment would be conducted on an exclusive of GST basis. The calculation of a s 98(4)(c) gross sum is also conducted on an exclusive of GST basis.
The total costs incurred by Secure Logic up to the date of Mr Lacey's affidavit on 22 June 2021 are $1,994,888.27 exclusive of GST. This is comprised, exclusive of GST, of McCabes professional fees of $1,353,274.50, disbursements on counsel's fees of $459,673.78, disbursements on experts of $132,427.41, and other disbursements of $39,512.58. Mr Lacey's affidavit attaches 62 invoices to Secure Logic comprising these fees. The detailed narrative of the memoranda of fees is not included as it would disclose privileged material. And the professional costs involved in redacting these memoranda of fees would probably neutralise the benefits of attempting to save costs using s 98(4)(c).
Mr Lacey also estimates the total further costs that Secure Logic would need to expend up to and including the hearing on the form of final orders and costs on 16 July 2021 would be (again exclusive of GST) $25,000 for McCabes professional fees and disbursements including senior counsel fees of $30,000.
The specified gross sum of $1,425,164.75 that Secure Logic claims is comprised (all exclusive of GST) of $763,550.98 being 55% of all McCabes professional fees (before and after Mr Lacey's affidavit), $489,673.78, being 100% of all the disbursements on fees to counsel (before and after Mr Lacey's affidavit), $132,427.41 being 100% of fees paid to experts, and $39,512.58 being 100% of other disbursements.
Mr Lacey says that given the complexity of these proceedings his estimate is conservative and is in the lower range of the likely outcomes of cost assessment should Secure Logic's costs be assessed on an ordinary basis, and even more conservative if the Court took the view that the plaintiff had entitlement to have its costs of the proceedings assessed on the indemnity basis. Mr Lacey's calculation of the gross sum forgoes any claim for interest on costs incurred. Secure Logic would have an entitlement to this, as it has paid the costs apart from those relating to the hearing on 16 July 2021.
Secure Logic's calculation assumes that Secure Logic would receive the whole of its costs but it heavily discounts its professional costs to justify a s 98(4)(c) order in which it submits the Court can be confident.
Mr Noble does not press upon the Court the making of a s 98(4)(c) claim. But it is relevant to consider the quantum of his costs. His costs are significantly less than Secure Logic's costs. His total costs of the proceedings of $679,107.03 are deposed to in an affidavit of Samuel Lavery of 24 June 2021. He claims to have incurred this sum of $679,107.03 as follows: fees and disbursements paid to Carroll and O'Dea in the sum of $6,737.50; invoices for fees and disbursements from Laxon Lex Lawyers of $422,032.90; counsel's fees of $170,678.20, expert witness fees of $68,884.39; and, additional disbursements of $10,774.04.
Mr Lavery's evidence and Mr Noble's submissions point out that his case made more economical use of resources than did Secure Logic. As earlier indicated, Mr Noble submits, in the alternative, that if the Court adopts Secure Logic's approach that $160,000 is an appropriate specified gross sum to be ordered in Secure Logic's favour.
[3]
Applicable Principles
Some relevant principles may be shortly stated. Costs will normally follow the event, unless it appears to the Court that some other order should be made as to the whole or any part of the costs: Uniform Civil Procedure Rules 2005, r 42.1 and Oshlack v Richmond River Council (1998) 193 CLR 72; (1998) 96 LGERA 173; (1998) 152 ALR 83; (1998) 72 ALJR 578; [1998] 4 Leg Rep 18; [1998] HCA 11 at [97].
A successful plaintiff would normally be entitled to the whole of its costs even if it is unsuccessful on some issues, so that there would not normally be a differential between particular issues on which the party was successful and those in which it failed, unless the matters on which the party failed were either the clearly dominant issue in contest or were clearly separable from the matters on which the party succeeded: Waters v P C Henderson (Aust) Pty Ltd (1994) 254 ALR 328; [1994] NSWCA 338.
If a proportion of Court time is spent on issues which are severable and on which the plaintiff is unsuccessful, then a successful plaintiff may be deprived of costs on those issues: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No. 3) (1998) 30 ACSR 20. An order that a successful party pay the costs of an unsuccessful party is generally regarded as requiring particular justification: Ottway v Jones (1955) 2 All ER 585; 1 WLR 706 at 708 and Trade Practices Commission v Nicholas Enterprises Pty Ltd (No. 3) (1979) 28 ALR 201; (1979) 42 FLR 213; (1979) ATPR 40-141.
[4]
The Parties' Submissions
Secure Logic submits that it should be regarded as the overall successful party on both the Claim and the Cross-Claim even though it did not win every issue, meriting an overall award for costs in its favour. Mr Noble counters this by pointing to the following: what he claims is Secure Logic's disentitling conduct; his own success on his Cross-Claim and on Secure Logic's Claim; and, the lack of proportionality in Secure Logic's claim for costs. Secure Logic also submits that it should also be indemnified for its costs, a contention that Mr Noble disputes.
Disentitling Conduct. First, citing the findings in the principal judgment (at [21]), Mr Noble says that Secure Logic contributed to the situation that led to these proceedings and disentitled itself to costs by virtue of its own sub-optimal conduct: in denying it was bound by the Employment Contract, in not paying Mr Noble most of a year's salary, and in contravening the Workplace Surveillance Act 2005.
Costs are awarded to indemnify a successful party in litigation, not by way of punishment of an unsuccessful party, and in exercising its discretion whether to order or refuse costs the Court should look at the matter primarily from the perspective of the defendant: Latoudis v Casey (1990) 170 CLR 534; (1990) 97 ALR 45; (1990) 65 ALJR 151; (1990) 50 A Crim R 287; [1990] HCA 59. Even from Mr Noble's perspective, notwithstanding the Court's findings about Secure Logic's conduct the Court has granted Secure Logic relief and as a result it has been successful and should be indemnified for bringing this action.
To deprive Secure Logic of its costs would require some justification grounded in disentitling conduct. But any attempt at such justification would not be consistent with the Court's conclusion that notwithstanding Secure Logic's misconduct it is entitled to a grant of declaratory and injunctive relief against Mr Noble. Moreover, Secure Logic's misconduct would not have been an answer to its claim for the statutory remedy of a declaration: Mayfair Trading Co Pty Limited v Dreyer (1958) 101 CLR 428; [1959] ALR 104; (1958) 32 ALJR 326, at 450 - 456. In any event, Secure Logic's improper conduct which came under criticism from the Court did not have such an immediate and necessary relation to the equity sued for - Mr Noble's conduct in breach of confidence - that it should be deprived of injunctive relief: Dewhirst v Edwards [1983] 1 NSWLR 34, at 51. Given the grant of relief to Secure Logic, there is no basis to deprive it of its costs.
Mr Noble's Success. Mr Noble argues that considerable affidavit evidence and Court time were devoted to establishing that the terms of Mr Noble's employment were embodied in the Employment Contract signed on 30 June 2015, an issue that was vigorously defended by the cross-defendants. And in the result the Court concluded that the contract had "undoubtedly" been signed on that date, and Mr Devaraj's position described as "eccentric". Mr Noble submits that Secure Logic's proposed orders do not give any credit to this success, which grounded his monetary success on the Cross-Claim based on his entitlements under the Employment Contract.
Mr Noble submits that Secure Logic's pre-hearing open offer in answer to the Cross-Claim was grossly inadequate, did not result in a judgment or costs in his favour and was less than half what Mr Noble obtained. He says he was vindicated in not accepting the offer. Rather he submits that the Employment Contract should have been admitted early in the proceedings making the costs of the parties significantly lower.
Mr Noble's submission has some merit on this subject. Substantial Court time was occupied in arguing about this issue which was decided clearly in Mr Noble's favour. This factor will be taken into account in Mr Noble's favour when the Court looks at the relative proportion of the parties' Court time and resources committed to pursuing the Cross-Claim compared with the claim. In its analysis below the Court seeks to do this.
Lack of Proportionality. Mr Noble argues that this case calls for regard to Civil Procedure Act, s 60, which requires that the Court's practice and procedure be implemented in resolving disputes so that the costs to the parties are proportionate to the importance and complexity of the subject-matter in dispute. And proportionality includes the question whether costs have been reasonably and properly incurred, having regard to the subject matter: April Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd (2009) 75 NSWLR 619; [2009] NSWSC 867, per White J (as his Honour then was) at [13] and [14].
Here Mr Noble submits: that Secure Logic abandoned its own claim to monetary relief, causing Mr Noble wasted expense; that Mr Noble is entitled to substantial damages on his Cross-Claim; that the parts of Mr Noble's Cross-Claim which he was unsuccessful were straightforward claims as to breach of contract and misrepresentation, and Secure Logic did not incur the significant expense of engaging a business valuation expert to make that claim so did not incur additional costs in that respect; and, that Mr Noble's offer of compromise in October 2017 show he was realistic in his desire to settle the proceedings. And in this context he submits Secure Logic's costs of more than $2 million are disproportionately high (in excess of 3 times the costs of Mr Noble's and Peach Tree Bay's costs).
Because of this claimed disproportion of Secure Logic's costs to the complexity of the issues, Mr Noble submits that if an award of costs is made in Secure Logic's favour (whether in a gross sum or subject to taxation), a substantial discount of 66% should be applied on that ground alone, reflecting the degree to which Secure Logic's costs exceed Mr Noble's and Peach Tree Bay's costs.
The matters that Mr Noble raises can be considered both in making primary costs orders to work out what percentage of the parties' costs will be paid by the other party and in fixing a specified lump sum costs order. In judging the overall reasonableness of Secure Logic's costs in addressing the issues in contest, it is permissible to consider the costs incurred by Mr Noble. But the Court is also mindful that in advancing a claim for injunctive relief for an equitable breach of confidence in the circumstances of this case the burden and expense of preparation and presenting the claim will lie upon the plaintiff, not the defendant and this was undoubtedly a complex case.
Moreover, contrary to what Mr Noble says, the part of his Cross-Claim on which he was unsuccessful did occupy considerable time and resources on both sides. And to the extent that Secure Logic occasioned additional expense to Mr Noble by abandoning its money claim close to the hearing, the evidence of substantial expenditure to answer that case on Mr Noble's part is scant. He rather took the view that the claim was without substance and he did not appear to commit much by way of resources to answering it, compared with other parts of his case.
Mr Noble submits that he is entitled to have his costs of his Cross-Claim recognised and that Secure Logic should not have its costs related to his Cross-Claim and that there are difficulties in fixing a satisfactory specified gross sum in this case, in part because of the disproportion in the legal costs of the parties. Mr Noble is correct that the time and resources and costs that he has incurred in his successful Cross-Claim should be taken into account in fixing suitable orders in this case.
Indemnity. Secure Logic argues that NDA clause 6.4 entitles it to be indemnified for its costs incurred as a direct or indirect result of any breach. But Mr Noble's answer to this is persuasive. Defences to indemnity clauses such as this may not only involve arguments about the construction of the clause itself but may require a defendant's case in answer to be conducted according to a particular strategy, which may include the leading of evidence, and moulding avenues of cross-examination.
Secure Logic did not plead NDA clause 6.4 to bring this issue to the fore to enable it to be fairly answered by Mr Noble and Mr Pankhurst during the hearing and it cannot fairly be raised now. Moreover, it is contestable that an indemnity such as NDA clause 6.4, requiring as it does a strict construction, would necessarily be held to apply not just to ordinary out-of-pocket expenses but also to court-ordered costs such as is being claimed here: Andar Transport Pty Ltd v Brambles (2004) 217 CLR 424; (2004) 206 ALR 387; (2004) 78 ALJR 907; (2004) Aust Torts Reports 81-752; [2004] HCA 28.
[5]
Analysis
In their submissions both parties have accepted the difficulty of separating out the issues contested on the Claim from the issues contested on the Cross-Claim. There is a high degree of overlap between the two. In such cases, making separate orders for costs on a claim and a cross-claim makes the cost assessment process complicated and potentially artificial. Making a single costs order encompassing the outcome of the Claim and the Cross-Claim is the most efficient way of proceeding in this case. But this approach is further complicated by the fact that Mr Noble has the benefit of a money judgment on the Cross-Claim and Secure Logic succeeded in obtaining declaratory and injunctive relief but no money judgment on the principal Claim. Yet there is no reason in principle why, once ascertained, a money judgment for costs in favour of Secure Logic cannot be offset against a money judgment in favour of Mr Noble on his Cross-Claim.
It assists accurate analysis if the Court first ascertains what is an appropriate costs order as between Secure Logic, Mr Noble and Mr Pankhurst, before proceeding to fix any s 98(4)(c) lump sum. Although Mr Devaraj was a cross-defendant and not a plaintiff, it is convenient and permissible as he engaged the same solicitors, McCabes, to consider him as part of Secure Logic for present purposes.
The starting point is that Secure Logic is prima facie entitled to an order for costs on its principal claim against Mr Noble and Mr Pankhurst. Mr Noble is entitled to an order for costs against Secure Logic on his First Cross-Claim. Both parties were substantially successful on their respective claims. Both parties abandoned (Secure Logic) or were unsuccessful (Mr Noble) on parts of their respective claims but in neither case was the abandonment or lack of success completely severable from the rest of the Claim such as would warrant a special cost order in respect of that part of the case. Mr Pankhurst is not entitled to any order for costs in his favour.
Leaving out of consideration for a moment the relative dollar amounts of the respective claims for costs of the parties, it is possible to fix a fair percentage of the costs that should be recovered between these various parties by reference to the Court's evaluation of the time and resources committed to the various parts of the proceedings in which the parties were successful but where there was overall a mixed result. It simplifies costs orders at times for the Court to estimate a net costs order in favour of one party or the other, a course which is not uncommonly taken. Where there is a mixed outcome in proceedings the question of overall apportionment is a matter of discretion and mathematical precision is illusory; the ultimate exercise of discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Limited [2005] NSWCA 296. This course can be taken first for Secure Logic and Mr Noble and then between Secure Logic and Mr Pankhurst.
As between Secure Logic and Mr Noble, taking into account the amount of time that was committed on each side to achieving success on the respective Claim and Cross-Claim and ignoring for a moment questions of the amount of costs charged (as these can be considered either on assessment, or when a s 98(4)(c) specified gross sum is fixed), the Court will order Mr Noble to pay 70% of Secure Logic's costs of the Claim and the First Cross-Claim in these proceedings. That figure can include Secure Logic's costs up to and inclusive of 16 July 2021, as Secure Logic has been substantially successful on the arguments concerning the form of the orders and costs. When that sum is calculated it will need to be offset against Mr Noble's established money entitlement on his First Cross-Claim.
As between Secure Logic and Mr Pankhurst the position is slightly different. Mr Pankhurst was unsuccessful on his Cross-Claim. But much of Secure Logic's costs were committed to issues that only related to Mr Noble, both with respect to Mr Noble's First Cross-Claim and in Secure Logic's own Claim. Moreover, very little of Secure Logic's time was separately committed to dealing with Mr Pankhurst's Second Cross-Claim. Being legally unrepresented he did not present a complex rebuttal to Secure Logic's case. Secure Logic submitted that Mr Pankhurst should be made liable for 70% of its overall costs. Given the various factors in play the Court would assess that apportionment at 60%, not 70%.
It is not necessary to separately ascertain Mr Noble's claim for costs against Secure Logic, as it has already been allowed for in the figure of 70%. But it will be necessary to offset Mr Noble's money from the Cross-Claim against whatever figure is reached under s 98(4)(c) in respect of Secure Logic's claim for costs. As these reasons have all already explained, that offsetting figure will be the principal of $129,973.06 and interest as calculated by Secure Logic, namely $35,146.69 up to 16 July 2021 (making a total of $165,119.75) and $14.56 per day thereafter. There are 81 days from 16 July 2021 to 5 October 2021, so additional interest up to today is $1,179.36 (81 x $14.56). Thus, the total offsetting figure will be $166,299.11 (being $165,119.75 plus $1,179.36).
Secure Logic's s 98(4)(c) claim can now be considered. The starting point is Secure Logic's total claim for costs of $2,049,888.27 exclusive of GST (being $1,994,888.27 - up to the time of Mr Lacey's affidavit - plus $55,000 - up to 16 July 2021). This should be immediately reduced by 30% to $1,434,921.79. This reduction should be distributed rateably across each of Secure Logic's major categories of outgoings. So, 70% of McCabes professional fees of $1,388,274.50 (being $1,363,274.50 plus $25,000) is $971,792.15. And 70% of disbursements on counsels' fees of $489,673.78 (being $459,673.78 plus $30,000) is $342,771.65. And 70% of disbursements on experts of $132,427.41 is $92,699.19. And 70% of other disbursements of $39,512.58 is $27,658.81.
When fixing a gross sum instead of assessed costs to reflect what would happen on a cost assessment in this case, it is appropriate for counsel's fees, experts' fees and other disbursements to be allowed in full. Sometimes fees of counsel can be discounted by 10 or 15%. But here they should not be discounted, and they and the other disbursements will be allowed as to 100%. Secure Logic's case was complex factually and legally. It required the services of senior and junior counsel and of the experts who were engaged or called in evidence. The Court sees no reason to reduce those figures any further.
Therefore, leaving aside McCabes professional fees, when a s 98(4)(c) sum is fixed, Secure Logic is entitled on the other costs components to no less than $463,129.65 (being $342,771.65 on counsels fees, plus $92,699.19 for experts, plus $27,658.81 for other disbursements).
In the Courts view, McCabes should have 80% of its professional fees (as calculated after the 30% discount) of $971,792.15, which is the sum of $777,433.72. The reasons for this may be shortly stated. Mr Noble's submissions complaining of the number of lawyers involved on Secure Logic's side fail to take account of the complexity of these proceedings, which because of that complexity resulted in a 13-day hearing followed by a 690-paragraph principal judgment written over 177 pages. Secure Logic's commitment of substantial legal resources was well justified in this case. Independent of its own claim, Secure Logic also had to deploy considerable resources to defeat the largest component of and a complex part of Mr Noble's Cross-Claim, which it successfully did. The engagement of Mr Klein was not excessive. Expenditure on the fees charged by McCabes for the work done appear to the Court to be reasonable in the circumstances. And although some material was obtained by Secure Logic in contravention of the Workplace Surveillance Act, the material that was ultimately advanced was all admissible and it is difficult to see how Secure Logic could have unearthed Mr Noble's activities with much less work on its part.
Thus, in total, the Court will declare Secure Logic is entitled against Mr Noble to the sum of $1,240,563.37 ($463,129.65 plus $777,433.72) in the exercise of its jurisdiction under s 98(4)(c). From that should be deducted the offsetting figure to which Mr Noble is entitled on his Cross-Claim of $166,299.11, producing a net figure for judgment in favour of Secure Logic against Mr Noble of $1,074,264.26 ($1,240,563.37 less $166,299.11).
Once again, in fixing a s 98(4)(c) sum against Mr Pankhurst the starting point is Secure Logic's total claim for costs of $2,049,888.27 exclusive of GST (being $1,994,888.27 - up to the time of Mr Lacey's affidavit - plus $55,000 - up to 16 July 2021).
This figure of $2,049,888.27 should be immediately reduced to 60% of that figure, namely $1,229,932.96. That figure will be fully recoverable against Mr Pankhurst, except for the part which represents the component of McCabes fees, which has been reduced to $832,964.70 (being 60% of $1,388,274.50).
The same discount of McCabes fees to 80% is appropriate when fixing a s 98(4)(c) sum against Mr Pankhurst. So, the $832,964.70 component of McCabes fees should also be reduced by a further 20% ($166,592.94), to $666,371.76. Thus, Secure Logic's judgment against Mr Pankhurst will be the sum of $1,063,340.02 (being $1,229,932.96 less $166,592.94).
Thus in the result there will be judgment for Secure Logic against Mr Noble in the sum of $1,074,264.26 and against Mr Pankhurst in the sum of $1,063,340.02.
[6]
Conclusions and Orders
The Court's conclusions in this judgment, have endeavoured to give as much finality to these parties as possible so there does not have to be another round of submissions or calculations done by either side. But a party may wish to question the Court's arithmetic or the precise formulation of the orders. So, the judgment will be stayed for a period of 14 days, with a grant of liberty to apply, to allow that to occur.
The Court makes declarations, orders and notations as follows:
1. Notes that, for the purposes of these orders:
1. the term Records of Confidential Information means any and all of:
1. the Fergus Folder (as that term is defined in the Court's judgment dated 11 June 2021);
2. the JP Prospects document (as that term is defined in the Court's judgment dated 11 June 2021);
3. any copy, version, extract or other document made using information from either or both of (i) and (ii);
4. any record that contains any Confidential Information.
1. the term Confidential Information means any one or more of the following:
1. the information contained within any Confidential Record;
2. all information relating to the business affairs of the third plaintiff, its related companies and clients (regardless of the form of storage or representation), including business concepts and ideas, planning, budgeting and marketing information, methodologies, guidelines, procedures, scopes of work, plans, trade secrets (including without limitation any bespoke computer packages designed for use by the third plaintiff and any other computer information in any form whatsoever),
unless such information is in or comes into the public domain (otherwise than as a result of any breach of a non-disclosure agreement and contract of employment referred to in these orders);
1. the term Secure Logic means the plaintiffs and each of them.
1. Declare that the first defendant, Paul William Noble, breached his obligations of confidence in one or more of clauses 2.1, 4.1 and 5.1 of the Non-Disclosure Agreement dated 30 June 2015 between the third plaintiff and the first defendant, clause 1.14 of his employment contract dated 1 July 2015 between the third plaintiff and the first defendant, and in equity, by the following (and each of them):
1. transferring the information in the Fergus folder onto his work laptop and then onto his personal laptop;
2. acting as described in (a) for his own purposes, for his own advantage, not in connection with his employment, and to enable him to use the information as he chose when later in a role which competed with the business of Secure Logic;
3. not immediately returning his copies of the Fergus folder stored on his work laptop and his personal laptop when their return was requested by Secure Logic;
4. not returning all the information of Secure Logic on his personal laptop or on his Seagate external drive;
5. sending the JP Prospects document (Secure Logic's confidential customer contacts list) to the third defendant (John Pankhurst), an employee who Mr Noble knew was suspended and being investigated for having an association with a business competing with Secure Logic; and
6. acting as described in (e) to provide support to Mr Pankhurst to further Mr Pankhurst's business or activity that was similar to the business of the third plaintiff.
1. Order that the first defendant be permanently restrained from directly or indirectly using, disclosing or revealing to anyone, any of the Confidential Information or any Record of Confidential Information (including by causing or permitting that to occur, whether by his servants or agents, or through the second defendant or other entity, or otherwise), including without limitation, not using any of the Confidential Information or any Record of Confidential Information to participate, promote, carry on or assist any business or activity which is the same or similar to any business or activity undertaken by the third plaintiff or any of its related companies or clients, or causing or permitting that to occur.
2. Order that the first defendant permanently destroy all Records of Confidential Information in his possession (including without limitation the records of the second defendant and other records to which he has access).
3. Note as criminal proceedings and proceedings for contempt of Court may be taken against the first defendant he will not be required to file and serve an affidavit deposing to the extent of the steps taken to comply with order 4 above and 9 below. But order the second defendant by its proper officer to file and serve an affidavit deposing to the steps taken to comply with Order 9 below.
4. Order that, as against the first and second defendants, the Summons and Statement of Claim be otherwise dismissed.
5. Declares that the second defendant, Peach Tree Bay Pty Ltd, was knowingly involved in the first defendant's breaches identified in order 2(e) and (f) above, in that the JP Prospects document was sent by way of an email account established by and in its name, that email being sent by its sole director Mr Noble, with the second defendant enabling and allowing that email to be sent through its account in an attempt to avoid the said breaches being detected by Secure Logic.
6. Order that the second defendant be permanently restrained from directly or indirectly using, disclosing or revealing to anyone, any of the Confidential Information or any Record of Confidential Information (including by causing or permitting that to occur, whether by its servants or agents, or through another entity, or otherwise), including without limitation, not using any of the Confidential Information or any Record of Confidential Information to participate, promote, carry on or assist any business or activity which is the same or similar to any business or activity undertaken by the third plaintiff or any of its related companies or clients, or causing or permitting that to occur.
7. Order that the second defendant forthwith permanently destroy all Records of Confidential Information in its possession.
8. Declare that the third defendant, John Pankhurst, breached his obligations of confidence in clause 1.14 of his employment contract dated 28 July 2015, clauses 2 and 5 of the Non-Disclosure Agreement, and in equity, by the following (and each of them):
1. arranging with the first defendant, Mr Noble, to obtain Secure Logic's confidential customer contacts list from Mr Noble;
2. acting as described in (a) to further his object of setting up a competing business with Secure Logic.
1. Order that the third defendant be permanently restrained from directly or indirectly using, disclosing or revealing to anyone, any of the Confidential Information or any Record of Confidential Information (including by causing or permitting that to occur, whether by his servants or agents, or through the second defendant or other entity, or otherwise), including without limitation, not using any of the Confidential Information or any Record of Confidential Information to participate, promote, carry on or assist any business or activity which is the same or similar to any business or activity undertaken by the third plaintiff or any of its related companies or clients, or causing or permitting that to occur.
2. Order that the third defendant forthwith permanently destroy all Records of Confidential Information in his possession.
3. Order that within 28 days, the third defendant file and serve an affidavit deposing to the extent of the steps taken to comply with order 11 above.
4. Declare that the first cross-defendant to the First Cross-Claim, Secure Logic Pte Ltd, is liable to pay to the first cross-claimant, Paul William Noble, in respect of unpaid salary, annual leave, expenses and bonuses, the principal sum of $129,973.06.
5. Declare that the first cross-defendant is liable to pay pre-judgment interest on that principal sum in the amount of $35,146.69 up to 16 July 2021 and additional interest of $1,179.36, which has accrued over 81 days from 16 July 2021 to the date of these final orders, 5 October 2021, at the rate of $14.56 per day, making total interest $36,326.05, and making the total of interest and principal due on the First Cross-Claim sum of $166,299.11.
6. Order that the First Cross-Claim be otherwise dismissed.
7. Order that the Second Cross-Claim be otherwise dismissed.
8. Orders that the first defendant is liable to pay 70% of the plaintiffs' costs of the proceedings (including the First Cross-Claim), with the amount payable in respect of such costs to be $1,240,563.37.
9. Orders that the second defendant is liable pay 70% of the plaintiffs' costs of their actions against it, with the amount payable in respect of such costs to be $1,240,563.37.
10. Order that the third defendant is liable pay the plaintiffs' costs of the proceedings (including the Second Cross-Claim), with the amount payable in respect of such costs to be $1,063,340.02.
11. Order that the amounts declared as payable by Secure Logic Pte Ltd to Paul William Noble in respect of the First Cross-Claim pursuant to orders 13 and 14 above be set off against the amount payable by Mr Noble to the plaintiffs in respect of costs pursuant to order 17 above, such set off to be affected by way of deduction of those declared amounts from the sum that is otherwise payable by Mr Noble under order 17 above (with the consequence that there is to be no money judgment against Secure Logic Pte Ltd or other order for the payment of money by it to Mr Noble, but instead one money judgment in favour of Secure Logic Pte Ltd and the other plaintiffs for the net amount payable by the first and second defendants following the said set-off).
12. Judgment for the plaintiffs against the first defendant and the second defendant in the sum of $1,074,264.26.
13. Judgment for the plaintiffs against the third defendant in the sum of $1,063,340.02.
14. Stay the operation of the judgments in Orders 22 and 23 for 14 days.
15. Grant liberty to apply.
[7]
Amendments
06 October 2021 - Coversheet and [14] - citation updated
[21] line 8 - "or" instead of "and"
[24] line 5 - "in" removed
[41] line 5 - "of" inserted after "favour"
[57] line 2 - "a" inserted after "as"
[72] line 5 - "an" inserted after "on"
[85] line 8 - "it" inserted after "result"
[100] line 1, Orders (15) and (21) - capitalisation of "First Cross-Claim"
06 October 2021 - Coversheet - case made alphabetical
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 06 October 2021
This is the Court's fourth judgment in these proceedings. The Court delivered two interlocutory judgments in 2019: Secure Logic Pty Ltd v Paul William Noble [2019] NSWSC 991 and Secure Logic Pty Ltd v Paul Noble (No. 2) [2019] NSWSC 1057. The Court's principal judgment was given on 11 June 2021: Secure Logic Pty Limited v Paul William Noble (No. 3) [2021] NSWSC 675 ("the principal judgment"). This judgment should be read with the Court's previous judgments. Events, matters and persons are referred to in the same way.
In the principal judgment, Secure Logic was substantially but not entirely successful. The Court made serious findings of fact, referring its reasons to both the Prothonotary in respect of Mr Noble's possible contempt of Court and to the Commonwealth Attorney-General in respect of Mr Devaraj's possible contravention of the Crimes Act 1900 and Criminal Code Act 1995 (Cth).
This judgment deals with two main subjects, the form of final orders and costs. In the principal judgment the parties were directed to put forward agreed short minutes of order to give effect to the reasons for judgment, or if the parties could not agree, to reflect those disagreements in a marked-up format. The Court also directed the parties to put on submissions as to costs. The Court has received detailed written submissions on both subjects and marked up short minutes of order.
This matter was listed before me on 16 July 2021 for short oral argument in relation to both these subjects. The plaintiffs were represented by Mr M. R. Elliot SC, instructed by McCabes Lawyers. The first and second defendants, Mr Noble and Peach Tree Bay were represented by Mr B. DeBuse, instructed by Laxon Lex Lawyers. Mr Pankhurst appeared in person.
On behalf of the plaintiffs, Mr Elliot SC read the affidavits of Andrew Lacey dated 22 June 2021 and Nathan Jones dated 29 June 2021. On behalf of the first and second defendants, Mr DeBuse read the affidavit of Samuel Lavery dated 24 June 2021. Mr Pankurst did not file any evidence in respect of costs.
The Court directed the parties by close of business on Monday, 19 July 2021 to provide any supplementary references to authority on the question of the granting of relief in confidentiality cases, including orders requiring the service of affidavits of the destruction of confidential information. The Court otherwise reserved judgment. The solicitors for the plaintiffs emailed the requested authorities to my Associate on 19 July.
The draft orders provided by the parties in places contain detailed calculations of costs, calculations of principal and of interest and they apply exchange rates at certain times between the Australian dollar and the Singapore dollar. The approach of these reasons is to decide not only the issues of principle that divide the parties on the form of relief and on costs but then to undertake the calculation of appropriate money judgments in the proceedings.
Relief against Mr Noble: The Declaration
Secure Logic's proposed orders (2) to (6) deal with the final form of declaratory and injunctive relief to be ordered against Mr Noble, who objects to the words underlined below. Mr Noble's objections concern two matters: the form of the detailed "narrative style" of proposed declaration (2); and whether as order (5) provides Mr Noble should be required to swear an affidavit deposing as to the destruction of records of confidential information in his and Peach Tree Bay's possession. Proposed orders (2) to (6) are set out below:
"2. Declares that the first defendant, Paul William Noble, breached his obligations of confidence in one or more of clauses 2.1, 4.1 and 5.1 of the Non-Disclosure Agreement dated 30 June 2015 between the third plaintiff and the first defendant, clause 1.14 of his employment contract dated 1 July 2015 between the third plaintiff and the first defendant, and in equity, by the following (and each of them):
(a) transferring the information in the Fergus folder onto his work laptop and then onto his personal laptop;
(b) acting as described in (a) for his own purposes, for his own advantage, not in connection with his employment, and to enable him to use the information as he chose when later in a role which completed with the business of Secure Logic;
(c) not immediately returning his copies of the Fergus folder stored on his work laptop and his personal laptop when their return was requested by Secure Logic;
(d) not returning all the information of Secure Logic on his personal laptop or on his Seagate external drive;
(e) sending the JP Prospects document (Secure Logic's confidential customer contacts list) to the third defendant (John Pankhurst), an employee who Mr Noble knew was suspended and being investigated for having an association with a business competing with Secure Logic;
(f) acting as described in (e) to provide support to Mr Pankhurst to further Mr Pankhurst's business or activity that was similar to the business of the third plaintiff.
3. Orders that the first defendant be permanently restrained from directly or indirectly using, disclosing or revealing to anyone, any of the Confidential Information or any Record of Confidential Information (including by causing or permitting that to occur, whether by his servants or agents, or through the second defendant or other entity, or otherwise), including without limitation, not using any of the Confidential Information or any Record of Confidential Information to participate, promote, carry on or assist any business or activity which is the same or similar to any business or activity undertaken by the third plaintiff or any of its related companies or clients, or causing or permitting that to occur.
4. Orders that the first defendant permanently destroy all Records of Confidential Information in his possession (including without limitation the records of the second defendant and other records to which he has access).
5. Orders that within seven (7) days, the first defendant file and serve an affidavit deposing to the extent of the steps taken to comply with order 4 above and 9 below.
6. Orders that, as against the first and second defendants, the summons and statement of claim be otherwise dismissed."
Relief against Mr Noble: The Affidavit of Destruction
As to proposed order (5), Secure Logic seeks an order requiring Mr Noble to confirm, on oath or affirmation, that the relevant material has been destroyed in compliance with the Court's order 4. Secure Logic submits that the order is appropriate having regard to the nature and extent of Mr Noble's misconduct as found by the Court. Secure Logic says there can be no practical reason for Mr Noble to oppose this order as it only requires him to swear to having carried out what he has been ordered to do.
The applicable law may be shortly stated. Courts have, in numerous cases, granted relief such as the service of affidavits verifying compliance with destruction and safe-keeping orders, both in cases of confidential information and other analogous circumstances: see AG Australia Holdings v Burton (2002) 58 IPR 327; [2002] NSWSC 454 at [52] and [59]; Ezystay Systems Pty Ltd v Link 2 Pty Ltd (No 2) [2015] NSWSC 1594 at [55]-[57]; Origin Energy Ltd v Smart [2016] NSWSC 1858 at [83]; IPC Global Pty Ltd v Pavetest Pty Ltd (No 2) (2016) 121 IPR 434; [2016] FCA 1332 at [4]-[5]; Smartways Logistics Holdings Pty Ltd v O'Sullivan [2020] NSWSC 189 at [231] ("O'Sullivan"); Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth; (2010) 88 IPR 459; [2010] FCA 1211 at [9]; Findex Group Ltd v iiNet Ltd [2019] NSWSC 1198 at [167]; In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (No 2) [2020] FCA 772 at [7].
The relief granted by courts in these cases largely takes the form of an order requiring the relevant party to file and serve an affidavit verifying steps taken to comply with some other ancillary order of the Court. That ancillary order usually takes the form of an order requiring the party to do all things necessary to permanently delete, remove, deliver up, or otherwise return the confidential information accessed, as the case may require. Such orders require that affidavit to be filed and served within a specified time period, usually 14, 28, 35 or42 days after the making of the orders: see AG Australia Holdings at [59]; Ezystay Systems Pty Ltd at [57]; O'Sullivan at [199]. The relief sought by Secure Logic seeks the filing of an affidavit by Mr Noble within 7 days.
Henry J recently explained the rationale for these kinds of orders in O'Sullivan at [199]:
"Orders for delivery up and affidavits which specify the steps undertaken by a party to comply are usual ancillary orders made in addition to injunctions to fully complete the protection of a party whose confidential information has shown to be misused. Where a party is restrained by injunction from using confidential information, ancillary delivery up orders are made to ensure the removal of all physical forms of that information from the possession of the party: AG Australia Holdings Limited v Burton [2002] NSWSC 454, at [17] quoting RL Dean, The Law of Trade Secrets and Personal Secrets (2nd ed, 2002, Lawbook Co) at 333-4."
Mr Noble's First Cross-Claim
Two issues arise in formulating appropriate declarations and orders in relation to Mr Noble's Cross-Claim. The disagreement on this issue is reflected in a contest about proposed declarations (14) and (15). Mr Noble disagrees with the following underlined words of the plaintiffs' proposed orders and proposes his own alternative orders, set out in italics:
14 Declares that the first cross-defendant to the first cross-claim, Secure Logic Pte Ltd, is liable to pay to the first cross-claimant, Paul William Noble, in respect of unpaid salary, annual leave, expenses and bonuses, the principal sum of $129,973.06.
[Mr Noble's proposed 14: Orders that the first cross-defendant to the first cross-claim, Secure Logic Pte Ltd, pay to the first cross-claimant, Paul William Noble, in respect of unpaid salary, annual leave, expenses and bonuses, the principal sum of $143,212.19.]
15 Declares that the first cross-defendant is liable to pay pre-judgment interest on that principal sum in the amount of $35,146.69. [The amount of interest which Secure Logic calculates as payable in the period up to 16 July 2021 is $35,146.69, and it calculates that additional interest will accrue as from 16 July 2021 to the date of final orders at the rate of $14.56 per day].
[Mr Noble's proposed 15: Orders that the first cross-defendant pay pre-judgment interest on that principal sum in the amount of $37,295.40.]
16 Orders that the first cross-claim be otherwise dismissed.
The first issue between the parties on the moulding of relief in relation to Mr Noble's first Cross-Claim is a dispute about the correct methodology for converting Singapore dollars (SGD) to Australian dollars (AUD) in order to calculate the amount of the principal (and consequently the interest) in the judgment in favour of Mr Noble on the first Cross-Claim. The second issue in relation to Mr Noble's Cross-Claim is whether, as Secure Logic submits declarations should be made on the first Cross-Claim and not orders for payment, or whether as Mr Noble submits, there should be orders for payment made in his favour on the first Cross-Claim. Each of these issues will be dealt with in turn.
Conversion from SGD to AUD. Mr Noble had some success on his Cross-Claim. To reflect that success the parties have advanced competing calculations of Mr Noble's loss and damage. The different figures in the competing calculations represent the different approach of each party to the conversion of SGD into AUD, where the amounts payable under Mr Noble's Employment Contract were denominated in SGD.
Mr Noble aggregates in SGD all the SGD amounts that fell due over time and seeks to convert the total amount to AUD, based on an historical rate of conversion recorded in the principal judgment at [590]. He seeks an order for payment on the Cross-Claim of a principal sum of $143,212.19 and pre-judgment interest on that principal sum of $37,295.40, totalling $180,507.59.
As to proposed declaration (2), Mr Noble contends that the declaration to be made should be confined to the original relief sought by Secure Logic in its Amended Summons, without the lengthier narrative in the underlined words. Secure Logic submits that there can be no objection in principle to the making of a declaration, where the purpose and utility of the declaration is formally to record the basis on which the proceeding in question has been adjudicated.
The Court's power to make a declaration is one which courts have long been reluctant to fetter by laying down rules as to the manner of its exercise: Forster v Jododex Pty Ltd (1972) 127 CLR 421; [1972-73] ALR 1303; (1972) 46 ALJR 701; [1972] HCA 6 at 437 (per Gibbs J). But the power to make declarations is confined by the considerations which mark out the boundaries of judicial power: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; (1992) 106 ALR 11; (1992) 66 ALJR 271; (1992) 59 A Crim R 255; [1992] HCA 10 at 581 - 582 ("Ainsworth"). And declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions: In re Judiciary and Navigation Acts (1921) 29 CLR 257; (1921) 27 ALR 193.
Citing Ainsworth at [38], Mr Noble submits that the declaration results in no foreseeable consequence. But this is not persuasive. The declaration that Secure Logic seeks does reflect the way that the Court adjudicated the rights of the parties and it has foreseeable consequences in defining the scope of the conclusions that bind the parties from the Court's judgment.
Mr Noble's submissions also criticise the declaration based on the following statement of principle in Warramunda Village Inc v Pryde (2001) 105 FCR 437; [2001] FCA 61 at [8] (Gray, Branson and North JJ) ("Warramunda"):
"The remedy of a declaration of right is ordinarily granted as final relief in a proceeding. It is intended to state the rights of the parties with respect to a particular matter with precision, and in a binding way. The remedy of a declaration is not an appropriate way of recording in a summary form, conclusions reached by the Court in reasons for judgment. This is even more strongly the case when the conclusion is not one from which any right or liability necessarily flows."
But two factors distinguish Warramunda from this case. In Warramunda the proposed declaration comprised a diffuse narrative of conclusions that were difficult to relate to the general reasoning of the primary judge. And the nature of the declarations made added very little to the generality of the Court's reasons for defining the party's rights.
Neither of these matters is a feature of the present case. Here, the form of declaration (2) that Secure Logic proposes accurately reflects in summary form identifiable findings of the Court. And the scope of the Court's conclusions in relation to breach of clause 1.14 of the Employment Contract does have consequences for the rights and liabilities of the parties.
Further Mr Noble submits: that Secure Logic's Amended Summons did not seek declarations about a breach of clause 1.14 of the Employment Contract; that declarations now made should be confined to the position originally advanced by Secure Logic; and that Secure Logic should not be permitted to tailor the declarations to the principal judgment, without regard to their own pleadings, given that the dispute between the parties is now quelled.
The Court has made findings after a strongly contested hearing, where both these parties were in contest on the issue of breach of clause 1.14 of the Employment Contract and the Court made findings about that breach: the principal judgment at [457]. Whatever the precise form of relief sought in the Amended Summons, it is well within the Court's power to give declaratory relief based on the way the parties conducted the proceedings and on the Court's findings. Secure Logic need not be confined to the precise form of its original claim for declaratory relief, if the Court's findings justify different or more detailed findings. Fairness to both sides may require the original formulation of declaratory relief in a plaintiff's claim to be modified to reflect what the Court has found, rather than what was originally claimed. That is all that has occurred here, and Mr Noble's complaint about the form of declaration (2) is not made out.
In O'Sullivan, the defendants denied the confidentiality of some of the information the subject of the plaintiff's claim. They also denied breaching contractual and equitable obligations of confidence owed to the plaintiff by virtue of their employment. But Henry J was nevertheless satisfied that the defendants were in breach, and her Honour ordered a verification affidavit be filed and served: at [11].
But the present case has unusual features. The Court is cautious about requiring Mr Noble to swear an affidavit that may be used to further any case of contempt against him or a criminal prosecution. Such further steps are more than a theoretical possibility in this case, as the Court has already referred Mr Noble not only to the Prothonotary to consider proceeding against him for contempt of Court but to the Commonwealth Attorney-General for her consideration as to whether any further action should be taken against any person under Criminal Code Act, s 478.1: the principal judgment at [687] and [689]. The Court is therefore hesitant to require Mr Noble to give any further evidence against himself until any other criminal processes are concluded.
The Court will not make proposed order (5) against Mr Noble. But there is no reason why such an order cannot be made against Peach Tree Bay as it has no privilege against self-incrimination. But Mr Noble does not have to swear that affidavit. It can be sworn by Mr Noble or by another proper officer of Peach Tree Bay and the orders will reflect this. An appropriate time period for requiring the swearing of the affidavit is 28 days.
In contrast SL Singapore arrives at its AUD figure by converting from SGD to AUD each payment due to Mr Noble in SGD under the Employment Contract, with the rate of conversion being fixed as at the dates the payments should have been made. An affidavit filed on behalf of Secure Logic of Mr Nathan Jones sworn on 29 June 2021 at paragraph [10] identifies the dates on which the payments of SGD fell due to Mr Noble (SIP bonuses on 30 November 2015, 29 February 2016 and 31 May 2016 and a salary and BD budget payment on 3 June 2016) and the rate of conversion from SGD to AUD is at each of those dates (based on historical currency conversion rates available in financial market reports on the Internet). Secure Logic's consequent calculation comprises a damages figure of $129,973.06 and interest of $35,146.69, totalling $165,119.75. The Court understands that there is no contest about the accuracy of the calculation but rather the principle upon which it is undertaken.
Conversion from SGD to AUD: Analysis. Secure Logic submits that its approach to conversion of SGD to AUD is correct. It points out the following. Mr Noble's claim is a claim for damages, not a debt claim, and damages fall to be assessed by reference to the position that Mr Noble would have been in had he been paid. Although Mr Noble was employed by SL Singapore with his remuneration expressed in SGD in the Employment Contract, the evidence and the Court's findings show that he invoiced in AUD and was paid in AUD. Secure Logic says that applying the measure of damages in contract, Mr Noble should be compensated by a judgment in AUD based on what he would, in fact, have received had he been paid under the contract in SGD followed by the conversion of the SGD to AUD based on the conversion rate at the time each unpaid payment was due.
In contrast Mr Noble submits that the Court should use the SGD to AUD conversion rate that the Court has already used at [590] of the principal judgment. Mr Noble submits that this conversion rate may have been derived from Mr Noble's final submissions filed on 18 September 2019 (at 88) in relation to the annual leave component, and that is correct. Mr Noble points out that Secure Logic did not take issue with that rate of conversion at the time. Mr Noble submits that for consistency and convenience the Court should apply the rate of conversion it has already relied upon and that all amounts payable in SGD should be converted now at that rate.
The Court's conclusion on this issue is consistent with Secure Logic's approach. The starting point for analysis is the general principle that except in very special circumstances damages for breach of contract are assessed by reference to the circumstances when the cause of action arises, that is, at the date of breach: Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 161-2; (1991) 104 ALR 1; (1991) 66 ALJR 123; (1992) Aust Contract R 90-007; [1991] HCA 54 at 70, per McHugh J (although in dissent).
Here Mr Noble's cause of action arose when SL Singapore failed to make the various payments in SGD between November 2015 and June 2016, when they fell due under the Employment Contract. The circumstances at that time strongly support converting SGD to AUD at the time of or very shortly after the various payments fell due, because that is what Mr Noble is likely to have done himself. First, although the Employment Contract provided for payment in SGD, he acquiesced in a convention in which he invoiced in AUD and was paid in AUD. Second, the Court's findings in relation to his case do not support the inference that he was attempting to build assets in SGD in Malaysia or Singapore over time, such that he would have been likely to retain the payments from SL Singapore in SGD. Rather, consistent with his accepting payment in AUD, his remuneration under the Employment Contract appears to have been committed to supporting his and his wife's domestic household in Australia. Third, apart from the payment due and unpaid in November 2015, by the time all the other payments fell due he was in Australia and his relationship with Secure Logic was such that he was unlikely to return to Malaysia in the long-term. Fourth, at the very latest in any event, he would have been likely to convert the payments to him under the Employment Contract to AUD no later than the time that his employment with Secure Logic came to an end on 3 June 2016. Therefore, as Mr Noble is likely to have converted SGD to AUD close to the time of each payment to him, or indeed to have accepted payment in AUD, the Court should in assessing his damages apply the rate of conversion of SGD to AUD at the time of each payment. This is the methodology suggested by Secure Logic.
Secure Logic submits that its approach is not only consistent with the application of the correct damages calculation, it is consistent with the overriding proposition that the duty of the Court is to express its judgment in the currency which best expresses the loss of the party who has sued: Daewoo Australia Pty Ltd v Suncorp Metway Ltd (2000) 48 NSWLR 692; (2000) 155 FLR 54; (2000) 33 ACSR 481; (2000) 18 ACLC 212; [2000] NSWSC 35 at [27] ("Daewoo"). There has been little consideration of this issue in the Court of Appeal since Daewoo. In Quarter Enterprises Pty Ltd v Allardyce Lumber Company Ltd [2014] NSWCA 3; [2014] 85 NSWLR 404; [2014] 284 FLR 152 ("Allardyce"), the Court of Appeal briefly considered but did not apply or distinguish Daewoo, which still represents the law. But in the Court's view it is not necessary in this case to consider issues associated with choosing an appropriate currency in which to express the judgment, as the payments to Mr Noble would have been converted to AUD long ago.
The Court does not find Mr Noble's contention persuasive that he not only would have been paid in SGD but he would still have held that remuneration in SGD, so that a later conversion rate should be applied. The Court did use an SGD/AUD conversion rate in the principal judgment at [590] but did not indicate that such a conversion rate should be used in calculating damages for all purposes. The short minutes of order should adopt Secure Logic's methodology.
Another consequence of assessing damages in the way the Court has done, is that interest should be calculated from the date that each payment was due under the contract which is the way that Secure Logic has undertaken the calculation.
The Set-Off of Judgments. The second issue concerning proposed declarations (14) and (15) is whether there should be declarations made followed by a set-off of judgments with Mr Noble being required to pay the net balance or whether there should be an order for payment made in Mr Noble's favour.
Drawing upon the power conferred in Civil Procedure Act 2005, s 90(2)(a) Secure Logic proposes that any judgment on Mr Noble's Cross-Claim be set-off against its judgment for costs on its principal claim, so that there be a judgment only for the balance, which because of the size of Secure Logic's claim for costs will involve a net judgment in Secure Logic's favour. The following proposed order (21) is the text of their proposal:
"Set-off
Orders that the amounts declared as payable by Secure Logic Pte Ltd to Paul William Noble in respect of the first cross-claim pursuant to orders 13 and 14 above be set off against the amount payable by Mr Noble to the plaintiffs in respect of costs pursuant to order 17 above, such set off to be affected by way of deduction of those declared amounts from the sum that is otherwise payable by Mr Noble under order 17 above (with the consequence that there is to be no monetary judgment against Secure Logic Pte Ltd or other order for the payment of money by it to Mr Noble, but instead one monetary judgment in favour of Secure Logic Pte Ltd for the net amount payable following the said set off)."
Secure Logic accepts that in some cases the appropriate course may be to order a stay of the damages judgment, pending quantification of the costs. But it submits that in the present case that, if costs orders are made in the plaintiffs' favour, the quantum of recoverable costs will dwarf the damages award payable to Mr Noble. And Secure Logic should not be required to pay money over now and bear the insolvency risks going forward. Secure Logic submits the more appropriate order is one which declares that SL Singapore is liable to Mr Noble in damages but provides that the damages are to be paid by way of reduction in the amount of costs payable by Mr Noble to the plaintiffs. If the Court makes a lump sum costs order, the damages figure can simply be deducted from that lump sum, with the only money judgment in the proceedings being judgment for Secure Logic in the amount of the net lump sum.
Mr Noble objects to any such set-off and seeks to have judgment entered against Secure Logic. He submits that Secure Logic has for five years already denied Mr Noble's entitlements under the Employment Contract and it is unfair for it now to be set-off against any costs liability he may owe Secure Logic. Moreover, he further submits: that Secure Logic did not seek relief by way of a set-off and are now in effect seeking a new form of final relief, after the principal judgment; that the Court cannot offset a liquidated amount against an unascertained amount; and that the set-off would be contrary to the requirement in Fair Work Act 2009 (Cth) that employees be paid in full in money and without deduction.
These arguments are not persuasive. It is not necessary for a plaintiff to plead the application of Civil Procedure Act 2005, s 90 in the plaintiff's originating process. The need for the application of the provision may only arise as a result of a judgment and the issue can without unfairness to either party be considered at that time, as it is here. Mr Noble is not prejudiced by the matter being considered now and has had ample opportunity to put contrary arguments.
Given the size of the costs judgment that Secure Logic is likely to obtain against Mr Noble as a result of these reasons, the risk of his insolvency is real. If Secure Logic is required first to pay Mr Noble on a judgment on the Cross-Claim, the Court would be requiring it to expend further funds it is unlikely to ever recover, in circumstances where on balance Mr Noble owes Secure Logic substantial sums. Nothing in the text or intent of Civil Procedure Act, s 90 prevents Secure Logic deploying it to avoid that result. Civil Procedure Act, s 90(2)(a) gives a broad discretionary power to the Court to enter judgment for the net amount in these circumstances.
The orders that Secure Logic proposes will involve two liquidated sums being set-off against one another after the making of a specific gross sum costs order in respect of Secure Logic's costs. These are not proceedings under the Fair Work Act. But in any event Fair Work Act, s 324(1)(d) expressly permits set-off by order of a Court.
The immediate difficulty is that the final relative amounts constituting the set-off have not been fully ascertained. But the Court's judgment below undertakes that exercise. A set-off of the kind in proposed order (21) will be permitted. But strictly the set-off applicable in this case is between Secure Logic Pte Ltd and Mr Noble. The set-off relates at least on one side in relation to costs of all the plaintiffs including Secure Logic Pte Ltd. It would be a just and fair application of the principles of set-off for all the plaintiffs on the one side to be treated as a single group and for the first and second defendants to be treated as a single group and the set-off applied between those two groups. This would mean there would not be deferential judgments between some of the plaintiffs and some of the first and second defendants.