Targus Australia Pty Ltd v Targus Group

Judgment

1. THE COURT: The present application for leave to appeal arises out of a contractual dispute between the parties which are related corporations in the sense that Targus Group (UK) Ltd ("Targus UK") holds 51% of the shares in Targus Australia Pty Ltd ("Targus Australia"). The other 49% shareholder in Targus Australia is Ms Alenka Tindale. By way of an interlocutory motion in the proceedings in the Commercial List, Targus Australia sought a stay of the new contractual arrangements imposed on it by Targus UK for the supply of equipment, pending resolution of the dispute as to the entitlement of Targus UK to impose new conditions.
2. The primary judge, McDougall J, granted the stay, but on the condition that Ms Tindale provide the usual undertaking as to damages. That undertaking was sought by Targus UK on the basis that, if Targus Australia gave the undertaking Targus UK would, in effect, be giving an undertaking to itself as the majority shareholder in Targus Australia. The judge agreed with that submission and required that Ms Tindale give the usual undertaking as to damages. She declined to do so and the stay was not put in place.
3. Targus Australia sought leave to appeal from the requirement that Ms Tindale provide the undertaking as to damages. It contended that the judge had inappropriately taken into account the shareholding in Targus Australia which was an irrelevant consideration with respect to the usual undertaking to pay damages and thus ignored the separate legal personality of the applicant.
4. Targus UK submitted that it was within the power of the primary judge to impose the impugned condition and that it was an appropriate exercise of the Court's discretionary power to do so. There was no error in going behind the corporate structure to identify who would benefit from the payment of damages in the event that the stay was found to be unwarranted.
5. In resisting a grant of leave to appeal Targus UK relied upon the principle articulated by Jordan CJ in In Re the Will of F B Gilbert (Dec'd)1 as to the reluctance of an appellate court to interfere with a primary judge's decision on a matter of practice and procedure. The Chief Justice noted the likely adverse effects on the timely disposal of litigation and on costs if the Court were not to keep a tight rein on interlocutory appeals. That warning has particular weight in relation to matters in the Commercial List, which is a mechanism by which the Court may grant a high level of expedition in the disposal of commercial matters, where expedition is often of great practical importance.
6. The reluctance of the Court to intervene is increased in circumstances where the party seeking intervention has not availed itself of an opportunity for speedy resolution of the substantive proceedings, but has focused its forensic resources on the pursuit of interlocutory relief which might not have been required had the matter proceeded to an early hearing of the substantive dispute. The present case engages with that concern at a number of stages. First, there was the history prior to the interlocutory hearing, set out by McDougall J in the following passage in his judgment of 29 August 2018: [1] "[26] The notice of motion was heard over 4 days, between 13 and 21 August 2018. It is to be noted that on 20 July 2018 an order was made fixing the substantive proceedings for hearing for 2 days on 10 and 11 October 2018. In the course of hearing the interlocutory application, it became clear that 2 days would be woefully inadequate. I offered the parties an 8-day hearing to commence on 17 September 2018, on the basis that the interlocutory hearing proceed no further and that the parties focus their efforts on getting ready for the final hearing. The respondents were content to accept that proposal. Targus Australia was not. Its stated reason was that the delay between 14 August 2018 (when the offer was made) and the likely date when judgment would be given on the proposed final hearing would be financially ruinous if there were not some interlocutory regime in place to protect its position. [27] In consequence of Targus Australia's decision, the probability is that there will be no final hearing until April 2019."
7. It may be noted that the first offer of an early hearing occurred on 20 July 2018, some 10 days before Targus Australia filed the notice of motion seeking a stay, which occurred on 31 July 2018. The further offer of an eight day hearing to commence on 17 September 2018 was made in the course of the hearing of the motion in August 2018.
8. Although it is not necessary to recount the details, further difficulties with the manner in which Targus Australia ran its case on the interlocutory hearing (over four days) were outlined by McDougall J in his judgment on costs delivered on 16 November 2018. [2] More importantly, Targus Australia has failed to pursue its application for leave to appeal in an expeditious manner. That appears from the following steps in the chronology. First, the orders made by McDougall J on 28 August 2018 were entered three days later, on 31 August 2018. Absent the filing of a notice of intention to appeal (which is usually an inappropriate procedure for a matter in the Commercial List) the last day to file a summons seeking leave to appeal was 28 September 2018. Targus Australia filed its summons on that day. It did not file a notice of motion seeking expedition but was content to have the summons listed for directions on the afternoon of 5 November 2018. Despite the lack of any request for expedition, it appears from the note on the file that the Registrar offered the applicant a date in December, which offer was declined. As a result, the matter was not fixed for hearing of the leave application in this Court until 7 February, although that date was in the second week of the new term.
9. No evidence has been placed before this Court as to the practical consequences of the delay. However, when an early hearing date was offered by McDougall J in August 2018, Targus Australia asserted that the delay between 14 August 2018 and the likely date of judgment "would be financially ruinous" if a stay were not in place.
10. The Court file now indicates that the matter has been listed for hearing in late March. It may be accepted that there will be some further period between completion of the hearing and delivery of judgment. Nevertheless, instead of a hearing one month after the offer in mid-August of dates in mid-September, the delay in obtaining a hearing date is a little over six months. Furthermore, the applicant has allowed five months of that period to elapse before the application for leave has been heard. If leave were to be granted it would be necessary to fix a date for the hearing of the appeal, which would render it unlikely that a judgment would be delivered on the interlocutory appeal until early March, that is less than four weeks before the hearing of the substantive trial. These circumstances militate heavily against a grant of leave to appeal from the conditional stay proposed in the judgment of 28 August 2018.
11. So far as the issue in dispute is concerned, the contention sought to be agitated by the applicant is no more than reasonably arguable.
12. The order made by the primary judge sought to give effect to the purpose of the usual undertaking in relation to a proposed stay or interlocutory injunction. That purpose is to provide a level of protection to the party affected by the stay or injunction in circumstances where it is ultimately successful at trial but has suffered loss as a result of compliance with the stay or injunction. [3] In circumstances where the plaintiff seeking the stay or injunction lacks the financial resources to satisfy a claim on the undertaking, those who stand behind the plaintiff may be required to give undertakings before the stay or injunction is granted. The position is thus analogous to the principle applied in respect of an application by a defendant for security for its costs. These principles were considered by Newnes J in the Supreme Court of Western Australia in Iron Ore Resources Pty Ltd v Argyle Iron Ore Pty Ltd [4] referring to an earlier statement of the principles by Ipp J in Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd. [5]
13. The present case is not one in which it is suggested that Targus Australia does not have the resources to meet an undertaking. However, the principle expressed by Newnes J in Iron Ore Resources was that "[t]he person which in truth benefits from the injunction and which is (legal form apart) for all intents and purposes the real litigant" is the party which may be required to give the undertaking. In the present case the defendant to the proceedings cannot fairly be described as the party which seeks to benefit from the stay; the other major shareholder of Targus Australia was such a person.
14. Whilst this line of reasoning and authority is not determinative, it demonstrates that the applicant's case is not better than reasonably arguable, and therefore does not satisfy that criterion for the grant of leave. [6]
15. Leave should be refused because (a) the likely benefit to the applicant if leave were granted is not established on the evidence; (b) the applicant has had every opportunity to have the substantive matter disposed of expeditiously and has declined to accept early dates offered by the Court; (c) the applicant has been dilatory in pursuing its application for leave to appeal in this Court.
16. The Court makes the following orders: 1. The summons seeking leave to appeal filed on 28 September 2018 is dismissed. 2. The applicant is to pay the respondent's costs in this Court.