Traverse Alpine Operations Pty Ltd v Simpson [2022] FCA 1365 | Case summary

THE EVIDENCE AND THE DISCRETION 12 Traverse relies on affidavit evidence that was read from David Caldwell, Dennis Lear, Seumas Dawes and Paul Ronfeldt together with two expert reports that were filed in the proceeding: one from Michael Khoury and the other from Andrew Le. 13 The Simpson parties rely on an affidavit from their solicitor, Michael Watson. 14 There was no cross-examination, which is unsurprising as in large measure the affidavit evidence sets out the chronology of correspondence between the parties before and during this proceeding. And the expert reports establish the categories of the Traverse information that was copied and then possessed by the Simpson parties which was not ultimately in dispute. What is principally in issue is whether I should find that Traverse or the Simpson parties engaged in unreasonable conduct in order to meet the relatively high threshold of s 570 of the FW Act, before it is open to me to make an order for costs: Toma v Workforce Recruitment and Labour Services Pty Ltd [2022] FCAFC 100 (Toma), where at [47] Rangiah, SC Derrington and Abraham JJ stated: The bar to engage s 570 of the FWA is set relatively high. That is no doubt because the effect of the section is to curtail, in proceedings relating to matters arising under the FWA, the discretion which the Court would otherwise have with respect to costs: Altintas v O'Dea Lawyers (No 2) [2018] FCAFC 187 at [6], per White, Perry and Charlesworth JJ. Thus, the discretion to award costs under s 570 of the FWA must be exercised cautiously. As Mortimer J explained in Ryan v Primesafe [2015] FCA 8; 323 ALR 107 at [64]: … The discretion conferred by the confined terms of s 570(2) should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] per Bromberg J. The reason for caution is the potential for discouraging parties' pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s 570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. … 15 A document that I have found most useful is the updated chronology of events prepared on behalf of Traverse and which is carefully cross-referenced to the electronic court book prepared for the purposes of the costs applications. This document is dated 21 September 2022 and I will simply refer to it as the chronology. I make findings of fact in accordance with the evidence referenced in it as follows. I do not overlook the submission of Ms Serpell that in some respects the chronology (and with it the evidence of Traverse) is incomplete and where that is claimed to be so, I separately address her submissions and the evidence of the Simpson parties. 16 Sally Simpson was employed by Traverse as a manager of a ski lodge operated by Traverse at Falls Creek from 1 November 2015 until 7 March 2019 when Traverse terminated her employment. Thomas Simpson was also employed by Traverse as a manager of the ski lodge from April 2015 until 7 March 2019 when his employment was also terminated by Traverse. Traverse relied on misconduct and breach of the terms of each employment agreement for the terminations. 17 During their employment, the Simpson parties were issued with IT devices, being iPhones and laptops, each to be used for the purposes of their employment. As managers, they had access to the IT systems, the email accounts and the CCTV system of their employer. In June and July 2018, the Simpson parties accessed and made copies of certain images from the CCTV system of other persons (some were employees and others guests) engaging in after-hours conduct within the ski lodge. On 15 October 2018, a particular incident took place after hours at the ski lodge. It was captured on the CCTV system of Traverse. It is not necessary that I describe it in these reasons. It is sufficient to record that what occurred should not have occurred, Thomas Simpson was a participant, the Simpson parties as managers knew that it should not have occurred, and despite the fact that they were aware of its occurrence, they failed to report it in a timely way to their employer. Traverse did not become aware of the incident until mid-December 2018. When it did, the view was taken that the incident and the failure to report it each amounted to misconduct which justified the termination of the employment of the Simpson parties. 18 On 5 February 2019, there was a meeting between representatives of Traverse and Thomas Simpson at which time concerns were expressed about the incident and the failure to report it. A request was made to return the iPhones that were issued to the Simpson parties. The devices were not immediately returned. Rather, various steps were taken by the Simpson parties to remove information from those devices and to store it on another platform, or in the cloud, and then to remove all stored data. Later that day, other information the property of Traverse was copied and sent to email accounts controlled by the Simpson parties. Eventually, much later that day, the iPhones and laptops were returned to Traverse. Thereafter, the Simpson parties were stood down from their employment pending investigation and were specifically directed not to access any information belonging to Traverse. 19 Despite that direction, between 5 February and 7 March 2019 further information was copied or retained by the Simpson parties and stored on various devices and in email accounts controlled by them. 20 On 7 March 2019, the employment of the Simpson parties was terminated for misconduct as set out in detailed correspondence from James Stewart on behalf of Traverse addressed to the legal representative of the Simpson parties. The correspondence noted the allegations, the responses provided thereto by the Simpson parties and, despite those responses, the view of the employer that the allegations had been substantiated and that no mitigating factor operated in favour of the Simpson parties. Despite being terminated for serious misconduct, Traverse advised that it would pay four weeks' pay, as well as any outstanding accrued wages and annual leave. The correspondence concluded with three paragraphs concerning the return of property including: Could you please immediately return all Company property (including devices), documents and information which is currently in your possession, custody or control, including the Company credit card and Company devices (including all passwords that are necessary to access those devices)… 21 The Simpson parties did not comply with that request. They continued to retain, copy and access electronically stored information of Traverse, which they had accessed during the course of their employment. I refer to this as the Traverse information. 22 Further, between 4 July 2019 and 11 June 2020, emails which Traverse describes as "anonymous and threatening communications" relating to the conduct of other employees and contractors, were sent to various individuals who were concerned with the business of Traverse. The content of these emails is to the effect that the person responsible for sending them had access to the business records and information, and in particular, information obtained from the CCTV system of Traverse. 23 Shortly prior to the commencement of this proceeding, correspondence was sent on 18 June 2020, by Thomson Geer, the lawyers for Traverse, to Litton Legal for Thomas Simpson. In a particularly detailed way, the history of the employment of the Simpson parties was set out, together with the reason for termination. The history of requests to return the property of Traverse was recounted. The failure to do so was noted. A copy of an expert report prepared by Mr David Caldwell, a forensic IT expert, was supplied. The effect of the report was summarised: that the Simpson parties had copied and retained various forms of information the property of their employer and had disseminated and stored that information in various forms. The commencement of this proceeding was foreshadowed (and a draft originating application was enclosed) together with an urgent application for injunctive relief to prevent publication, use or dissemination of the Traverse information. 24 The correspondence continued: … However, we are instructed to give your client and Sally Simpson an opportunity to return all information and identify where it has been copied or disseminated and to whom, before Traverse issues the Federal Court proceedings. Accordingly, by not later than 4pm Monday 22 June 2020, Traverse requires your client to provide the undertakings enclosed with this letter to us. Further, and pursuant to the undertakings, by not later than 4pm Wednesday 24 June 2020, Traverse requires your client to: (a) return and deliver up to our office any information, documents, photographic image, electronic file or data, obtained from Traverse, the [redacted] computer system, the [redacted]closed Circuit Television system or from any email account arising from, or relating to, the employment of your client by Traverse or any copies of any such information, documents, photographic image, electronic file or data. (b) Swear, affirm and deliver to us an affidavit identifying: (i) all computer devices, including computer hardware, mobile telephones, any storage devices, or external cloud based storage, to which any of the Traverse's information, documents, photographic images, electronic files or data has been copied; and (ii) all persons, or entities to whom any of Traverse's information, documents, photographic images, electronic files or data has been provided or disseminated. 25 The undertakings that were sought were to the effect that the Simpson parties would not by themselves, or any servant or agent, use, transmit, send, or distribute to any other person the information belonging to Traverse or its related bodies corporate obtained from its computer systems, the CCTV system and its email accounts and further will not "put beyond the reach of Traverse" that information. 26 It was made explicitly clear that if the undertakings were not provided and the information was not delivered up, then Traverse would commence this proceeding. 27 Litton Legal responded at 10.35 am on 18 June 2020. In short, the content of that correspondence is unhelpful, but the result was that no undertakings were provided and no agreement was reached in accordance with the requirements of Traverse. It should be noted that Litton Legal at that time acted only for Thomas Simpson, though it is plain from the correspondence that it was copied to Sally Simpson's legal representative. Further correspondence was sent by Litton Legal on 19 June 2020 to the effect that any person may contact a journalist (the threat to do so was the subject of one of the threatening and anonymous communications), but should Traverse proceed with the filing of the application then "we would be obligated to contact the journalists named in order to disprove all of your allegations". It was further said that Thomas Simpson would not sign an undertaking and that: Any documents our client or his wife retained from before being stood down were returned for the purpose of seeking legal advice and are privileged. … Any documents provided to any third parties have been provided during the course of legal proceedings… … We put you on notice that in the event that your client does seek to make an application for an injunction and a declaration from the Court it will be opposed. 28 Further correspondence was sent by Thomson Geer to Litton Legal on 22 June 2020. It records, amongst other things, the view that Litton Legal had failed to address the "straightforward matters" raised in earlier correspondence. The failure to address the question whether Thomas Simpson had retained information the property of Traverse was noted. Five questions were "directly and unequivocally" posed in order to elicit information as to whether Thomas Simpson retained information the property of Traverse, and if so whether he had disseminated it and whether he was prepared to sign the undertakings. A response was sought by 5 pm on 23 June 2020. One was provided, but once again it failed to address the essential question being whether Thomas Simpson retained information owned by Traverse. 29 In commencing this proceeding, Traverse's initially pleaded claims, in summary, were that: (1) the material contained on the CCTV system comprised artistic work in which copyright subsists within the meaning of the Copyright Act, which works were authored by Traverse, or by individuals employed by it, with the consequence that copyright was vested in it and that, despite Traverse's exclusive rights, the Simpson parties had reproduced the work in material form, published it and/or communicated it without the authority of Traverse; (2) the footage captured by the CCTV system was personal information for the purposes of the Privacy Act, comprised personal information collected by Traverse which it is required to ensure is only used or disclosed for the particular purpose for which it was collected (in this case, guest safety and security) and in respect of which Traverse was obliged to take reasonable precautions to protect from misuse or unauthorised access; (3) that the information accessed, stored and reproduced by the Simpson parties was confidential information the property of Traverse and that the Simpson parties, in breach of their employment and equitable obligations, misused that information; (4) that during the course of their employment, the Simpson parties had been issued with iPhones and laptop computers the property of Traverse, expressly and exclusively for the purposes of their employment, which devices had not been returned and/or the information contained therein had been copied or misused during the course of, or following the termination of, their employment; (5) that the Simpson parties were the persons responsible for authoring and disseminating the anonymous and threatening communications, in breach of their duties as employees, the equitable obligation of confidence, the Copyright Act and the Australian Privacy Principles. 30 In various ways, Traverse pleaded that this conduct of the Simpson parties was in breach of their employment contracts, the equitable duty of confidence, their fiduciary duties as employees, their duties as officers pursuant to sections 182 and 183 of the Corporations Act; that they had infringed copyright of Traverse contrary to the Copyright Act; and, despite requests for delivery up of the information owned by Traverse, it had been retained and converted, and in consequence each were liable in the torts of conversion and detinue. Various forms of relief were claimed in the form of injunctions, the delivery up of property, damages and equitable compensation. 31 On 1 July 2020, Traverse commenced this proceeding. A case management hearing occurred before Murphy J on 3 July 2020. In answer to the simple proposition put by his Honour to counsel for the Simpson parties that, if they have the information of Traverse, why should it not be returned, the response was: The difficulty for the respondents is they don't want to admit they've got anything. 32 In the exchange that followed, his Honour made it clear that if the Simpson parties "have any of this material" then it must be returned and "if they don't, then Mr Rivette's client is spending a lot of money for no result". 33 Orders were made by Murphy J on 3 July 2020 which record the undertakings of the Simpson parties as given by their counsel: which in substance are the same as the undertakings that were sought in the pre-action correspondence. 34 On 10 August 2020, in submissions provided in this proceeding, the Simpson parties contended that they were legitimately entitled to retain the Traverse information, and in particular images taken from the CCTV system by linking its use to the Adverse Action Proceeding because: (a) First, they used, in an authorised manner, images to report wrongdoing as legally obligated (Reporting Purpose). This is the way in which the images came to be created. (b) Secondly, the Respondents legitimately used information to defend themselves, as requested, when subject to disciplinary hearings (Disciplinary Purpose). (c) Lastly, any information has been maintained, strictly confidentially, to further legal proceedings (Legal Purpose). The information is already identified in the Amended Statement of Claim and Affidavit of Rebecca Litton in the FCC Proceeding. 35 The submission also included this: As its primary piece of evidence, the Applicant contends that "the Respondents have not denied but they have taken photographs of CCTV footage from the [redacted] system, nor […] that they took or used the [redacted] photograph." Were one not intimately affiliated with the fact that the photos were taken by the Respondents for legitimately lawful purposes and reported by them to the Applicant this proposition may, at first blush, be somewhat alluring. Yet, when it is appreciated that the Applicant was fully appraised of these details, the insincere allegation falls over. 36 On 25 September 2020, Litton Legal (then acting for the Simpson parties) put a settlement proposal in correspondence to Thomson Geer. It was that Traverse pay to Sally Simpson $250,000 in settlement of the Adverse Action Proceeding and that Traverse "withdraws" this proceeding and agrees to pay the Simpson parties' costs of each proceeding. 37 On 19 October 2020, the Simpson parties filed their defence in this proceeding and admitted that they possessed certain components of the Traverse information being images taken on various dates from the CCTV system and other information from the IT system of Traverse. Those facts were further confirmed in a list of documents verified by the affidavit of Thomas Simpson made on 18 December 2020, in response to an order that discovery be made by list verified by affidavit. 38 On 13 February 2021 Thomson Geer sent correspondence to Litton Legal. Amongst other things it stated: Your List makes clear that your clients are in possession of a large volume of documents obtained by your client in the course of their employment, including but not limited to numerous photographic images obtained from the [redacted]Closed Circuit Television system. We again request that you return and deliver up to our office any such documents prior to the mediation, including but not limited to, the photographic images contained within Documents 77 and 160 to 114 and all other records of our client that your clients have retained. 39 No response was received. On 26 March 2021, Litton Legal filed and served an expert report from Mr Michael Khoury, a forensic IT expert from KPMG. Amongst other things, he found that certain photographs taken from the CCTV system were located on the mobile telephones that were in the possession of the Simpson parties and that 16 unique images taken therefrom had been duplicated or saved in various locations and formats together with 14 QuickTime video files. 40 Commencing on 29 March 2021, Traverse made its first post commencement offer to settle this proceeding. The offers continued to be made until Sunday, 28 August 2022, the day before commencement of the trial and which ultimately led to the consent order that I made upon its commencement. Each is in writing. The offers, and the responses thereto, are of central relevance to my power to make a costs order as limited by the terms of s 570 of the FW Act. 41 The offer of 29 March 2021 was made in open correspondence to Litton Legal which recited the factual history, the commencement of the proceeding, the effect of the pleadings, the admissions contained in the list of documents of the Simpson parties, the course of the case management hearings before this Court, the legal basis for the claims made by Traverse and continued: Accordingly, we are instructed by Traverse to make the following open offer to resolve all issues in the proceeding brought by Traverse: (a) the Simpson parties deliver up to Traverse all Traverse information that is defined in Appendix A to the minute of proposed consent orders, by reference to the document numbers used in your clients' discovery; (b) the delivery up can occur after the conclusion of the Sally Simpson adverse action proceeding - and thereby this offer responds to your "legitimate purpose" argument (although denied by Traverse); (c) there be no order as to costs; and (d) the proceeding brought by Traverse be otherwise dismissed. 42 The offer also contained these presently relevant paragraphs: This offer represents a genuine compromise, given that Traverse has already been successful in obtaining the Undertakings, it is entitled at law and in equity to delivery up of the Traverse Information, and, subject to whether this proceeding is subject to the limitation on costs provided in the Fair Work Act 2009 (Cth) (FW Act), section 570, Traverse will be entitled to costs, given that Traverse has incurred substantial costs in reaching the outcome of securing private and confidential information belonging to it, including information relating to its staff and guests. In the event that your clients consider that they are unable to return to Traverse the documents listed in Appendix A to the minute of proposed consent orders, or that those documents should not be the subject of an order for delivery up, you are invited to write to us to identify the relevant document in question and to indicate the reason why you consider that that document cannot be or should not be returned to Traverse. We would hope that any issues in that respect can be properly resolved between the parties in in [sic] respect of the content of Appendix A. This offer is open for acceptance until 5.00 pm on 12 April 2021, at which time it will expire. Acceptance is only on receipt by us of an open letter from you to this effect. … Further, in the event this open offer is rejected, our client will rely on such refusal in support of an order for indemnity costs against your clients… 43 The form of the attached minute of consent orders reflected the terms of the offer. Appendix A listed each of the categories of information that the Simpson parties admitted possession of, cross-referenced to their list of documents. 44 Litton Legal sent a response to Thomson Geer on 12 April 2021. It is argumentative. It contends that the offer "appears to be your client's reinvented version of the events" since the commencement of this proceeding. It was said that the case was brought "without any evidence" that the Simpson parties were responsible for the anonymous and threatening emails. Of that contention it was said that the Simpson parties had been put to significant costs in defending a claim which was without merit. The fact that the Simpson parties had copied various photographs from the CCTV system was said to have been "never denied". The assertion that retention of this information was necessary for the purpose of the Adverse Action Proceeding was repeated. The opinion was expressed that "we are astounded that you believe that your only option was to issue" this proceeding in order to prevent misuse of the photographs taken from the CCTV system. Confidentiality in the Traverse information was denied. An assertion was made that "[t]here is a significant public element to this proceeding". Various complaints of unlawful or unethical conduct by employees or agents of Traverse were made. The requested return of the Traverse information was denied in reliance upon the assertion that it is not confidential information. Further, it was said that Traverse must pay the costs of this proceeding and an offer was made that it be discontinued conditionally upon payment of those costs. 45 Thomson Geer responded on 19 April 2021. In a detailed and reasoned manner the arguments relied upon by the Simpson parties were responded to and rejected. A further offer was put, which required response by 5 pm on 23 April 2021. It was that, at the conclusion of the Adverse Action Proceeding, the Simpson parties would deliver up the documents earlier identified in Appendix A, that this proceeding otherwise be dismissed without adjudication on the merits and that the costs of it be determined following the conclusion of the Adverse Action Proceeding. 46 Litton Legal responded on 23 April 2021. The ability of Traverse to rely upon provisions of the Privacy Act was questioned, and a request was made for the provision of financial information in support of that claim. That the Simpson parties were responsible for the anonymous and threatening correspondence was denied. The right to retain the Traverse information, for use in the Adverse Action Proceeding was reiterated. The settlement offer of 19 April 2021 was rejected and a counter-offer was put that this proceeding be discontinued with costs in favour of the Simpson parties as agreed or assessed. 47 On 7 May 2021, Litton Legal in correspondence to Thomson Geer stated, amongst other things, that: "our client has no interest in retaining the documents you identify and (as you know) are relevant to the [Adverse Action Proceeding] made by Ms Sally Simpson. In any event, we deny that these documents are confidential". That concession was the subject of specific response by Thomson Geer on 19 May 2021 in which, having noted it, was said: Given that your clients have no interest in retaining the documents we seek, it appears as though the parties are in agreement, other than in relation to the question of costs. We consider that the question of costs can only be appropriately dealt with at the conclusion of [the Adverse Action Proceeding]. Accordingly, in order to find a resolution of this matter, we seek your client's agreement to the attached minute of proposed consent orders. 48 The attached consent was to the effect that the undertakings given by the Simpson parties on 3 July 2020 would continue to operate and that by consent at the conclusion of the Adverse Action Proceeding, the respondents must deliver up on oath or affirmation the documents, photographic images, videos, electronic files or data or any copies then held by the Simpson parties or their agents and identified in Appendix A thereto, that this proceeding otherwise be dismissed without adjudication on the merits and that all questions of cost be otherwise reserved until the conclusion of the Adverse Action Proceeding. Appendix A is in the same form as referred to in the earlier correspondence. 49 Litton Legal provided a response on 19 May 2021. The claim of confidentiality was disputed and it was stated that: The fact that our clients do not have an interest in maintaining the documents after conclusion of the [Adverse Action Proceeding] is not the same as agreeing to provide those documents on the basis that they are confidential. We are content to ventilate these matters on the next return and do not wish to engage in debate in relation to your desire to now withdraw your claim. 50 Thomson Geer responded on 20 May 2021 to the effect that "it appears" that Litton Legal had misconstrued the settlement proposal in that Traverse "does not allege that the documents identified in Appendix A (Documents) are confidential. Nor does it seek delivery up of those Documents on that basis". A further minute of consent orders was attached, open for acceptance by the Simpson parties until 4 pm on 21 May 2021. It is in the same form as the earlier proposed consent orders. 51 Litton Legal responded on 21 May 2021. By this point the arguments about confidentiality had become somewhat circular, which I do not add to in these reasons. Inter alia, the letter further provides: If your intention is to withdraw your various claims, we will need to be heard immediately on the question of costs. It is not up to you to make a determination on the question of indemnity costs for withdrawing your claim. These costs cannot be reserved as they are related to a withdrawn proceeding, the cost of which are to be ultimately payable by your client, not reserved. … Your client has two choices: 1. Withdraw their claim and pay our clients costs on an indemnity basis; or 2. Amend their claim and pay our clients [sic] costs of the amendment. Your client has put our client through a completely unnecessary process in the midst of a highly emotional general protections claim. If they no longer wish to pursue this, we must make that election. 52 On 26 May 2021, Thomson Geer responded. Inter alia it was said: As to the Information Proceeding, in circumstances where your clients do not agree to our client's more straightforward proposal of consent to delivery up, no adjudication on the merits and the question of costs either being reserved or determined (the Parties can address the Court on that), there is no option other than for the matter to proceed. 53 Thereafter, case management and timetabling orders were proposed in the form of an attached minute. A case management hearing occurred before Anastassiou J on 17 June 2021. Possession of the Traverse information was admitted "for the purposes of running the proceeding, and for no other reason" by counsel for the Simpson parties. His Honour responded: That's humbug, Mr North. You can't take someone else's property for the purpose - and belongs to someone else, being a document - and assert that you have a legitimate possession of that property because you intend to use it for the purposes of discovery. That would be a very perverse view of the Home Office v Harman undertaking. 54 On 25 June 2021, Traverse, by a grant of leave, amended the relief sought in its originating application. All of the relief previously sought was deleted save for the following: 14. An order for the delivery up under oath or affirmation of the documents identified in the table at paragraph 29A of the Further Amended Statement of Claim, and any copies or versions made of them, such documents to be delivered up after the conclusion of proceeding VID654/2020, wherein the First Respondent is the Applicant in the proceeding and the Applicant is the First Respondent in the proceeding 15. Costs, including, if applicable, costs by reason of section 570(2)(b) of the Fair Work Act 2009 (Cth). 55 Leave was also granted to amend the statement of claim on that day to the form of the further amended statement of claim (FASOC) which included a table, at paragraph 29A, of the Traverse information in the possession of the respondents, by reference to the admitted property in various paragraphs of an earlier version of the defence of the Simpson parties and their list of documents. What is clear from that table is that Traverse did not seek delivery up of any document or information claimed to be its property which the Simpson parties did not admit to having. 56 On 29 June 2021, Thomson Geer put a further settlement proposal to Litton Legal in which Traverse restated its offer of 19 April 2021 as then open for acceptance until 4.30 pm on 5 July 2021. Attention was drawn to the obligations of the parties pursuant to ss 37M and 37N of the FCA Act and to s 570 of the FW Act in support of the contention that further refusal to accept the offer would amount to an unreasonable act or omission with the consequence that costs, and indemnity costs, may be ordered against the Simpson parties. Once again, a minute of consent orders was provided to effect that offer. 57 On 5 July 2021, Litton Legal sought an extension of the time for acceptance until the close of business on 7 July 2021. An extension was granted. On 6 July 2021, a further extension to 9 July 2021 was requested. That extension was granted. It expired without response. 58 On 15 July 2021, Litton Legal sent open correspondence to Thomson Geer. An offer was made to resolve this proceeding by consent, first on the basis that the Court declares that s 570 of the FW Act does not apply and then upon conclusion of the Adverse Action Proceeding the documents identified in Appendix A be delivered up on oath or affirmation, that the Simpson parties be released from the undertakings given on 3 July 2020, the proceeding be otherwise dismissed without adjudication on the merits and that Traverse pay the costs of the Simpson parties thrown away by reason of the amendments as set out in the FASOC. 59 In response, on 26 July 2021, Thomson Geer made the somewhat obvious point that their client could not consent to a declaration that s 570 does not apply in that "the proposed declaration would be contrary to law". Nor did Traverse accept that the undertakings should be released. A further proposal was put to resolve this proceeding in the form of an attached minute of consent orders. It confirmed the continued operation of the undertakings, required delivery up of the documents in Appendix A upon conclusion of the Adverse Action Proceeding, required the Simpson parties within 10 business days of the delivery up occurring, to confirm by oath or affirmation that they had complied with the delivery up order and that this proceeding otherwise be dismissed without adjudication on the merits. No response was received. 60 On 13 December 2021, Thomson Geer commenced corresponding with Williams Winter Solicitors, who had by that date accepted appointment as solicitor for the Simpson parties. The entire background to the proceeding was summarised in some detail, the history of the earlier settlement offers was recounted and further offers were put in the alternative to resolve this proceeding and the Adverse Action Proceeding. In this proceeding, the offers were: 4.2 We offer to settle the Information Proceeding on the following terms: (a) The Simpson Parties will consent to the following orders: (i) the Simpson Parties shall within seven days, deliver to Michael Khoury of KPMG (Delivery Up), the Traverse Property, including any devices, the access credentials for those devices and the access credentials for any cloud storage accounts on which the Property is stored, for destruction; (ii) within 10 business days of the Delivery Up occurring, Sally Simpson and Thomas Simpson shall confirm on oath or affirmation to Traverse that they have complied with paragraph 4.2(a)(i) above and that the Traverse Property has been irretrievably destroyed; (iii) the Proceedings be otherwise dismissed with no order as to costs; (b) the bank guarantee dated 12 May 2021 held by Carrick Gill Smyth be released by agreement of the parties to Traverse Alpine Operations Pty Ltd. 61 It was then said: 4.3 This offer represents a genuine compromise, given that: (a) Traverse has already been successful in obtaining the Undertakings in the Information Proceeding; (b) Traverse is entitled at law and in equity to delivery up of the Traverse Property, and (c) Traverse will be entitled to costs in the Information Proceeding, as referred to in section 3 above. 4.4 In the alternative, Traverse is prepared to settle the Information Proceeding on the following terms: (a) Traverse consent to the orders in 4.2(a)(i) and (ii) above; (b) the Information Proceeding be otherwise dismissed other than in respect of the question of costs; (c) the question of costs be argued and thereafter determined by the docket judge; (d) unless costs are ordered in favour of the Simpson Parties, the bank guarantee dated 12 May 2021 held by Carrick Gill Smyth be released by agreement of the parties to Traverse Alpine Operations Pty Ltd. 62 The reference in these offers to the bank guarantee is a reference to the provision of security for costs on behalf of Traverse in this proceeding. 63 A separate offer was put to resolve the Adverse Action Proceeding on the basis that it be discontinued with no order as to costs. 64 Williams Winter responded on 23 December 2021. The offers made by Thomson Geer were rejected. A combined offer to resolve this proceeding and the Adverse Action Proceeding was put. In substance, that the amount of the bank guarantee, being $350,000, be released for the benefit of the Simpson parties and that an additional amount of $150,000 be paid to them in return for delivery up of the property claimed by Traverse, confirmation of compliance by oath or affirmation and that the settlement terms be the subject of a deed of release on the basis that each proceeding be dismissed with no order as to costs. 65 Thomson Geer responded on 21 January 2022 and invited the Simpson parties to put separate offers for each proceeding for consideration. Clarification was also requested as to whether Sally Simpson sought compensation for personal injury in the Adverse Action Proceeding, following upon certain claims to the effect that she had suffered hurt and humiliation which had in turn exacerbated her condition of depression and anxiety. If no such claim of that character was intended to be made, confirmation of that fact was sought. 66 Further correspondence was also sent by Thomson Geer on 21 January 2022. It was noted that the offer made on 23 December 2021, with respect to return of the property of Traverse, was the same as the offer made by Traverse on 13 December 2021. On that basis, it was asserted that the Simpson parties did not have a reasonable basis to reject that offer and, if that point was disagreed with, a response as to why was sought by 28 January 2022. 67 No response was received from Williams Winter. 68 On 24 February 2022, Thomson Geer put a further offer to resolve this proceeding, expressly as Calderbank correspondence: Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank). It was that the Simpson parties, upon conclusion of the Adverse Action Proceeding, deliver up the documents referred to in paragraph 29A of the FASOC, that the proceeding be otherwise dismissed without adjudication on the merits other than in respect of the question of costs and that the question of costs to be argued and determined following conclusion of the Adverse Action Proceeding. 69 Williams Winter did not respond to this offer. 70 On 11 March 2022, Thomson Geer made a further offer to resolve this proceeding. The history of the previous offers was noted and alternative settlement of proposals were put. One, in the same terms as the offer of 24 February 2022 and the other with the variation that the proceeding be dismissed, there be no order as to costs and that the bank guarantee be released to Traverse. 71 On 23 March 2022, Williams Winter responded. The utility of requesting separate offers to resolve each proceeding was questioned. It was asserted that: "it is neither realistic nor fair to expect our client's [sic] to resolve the Information Proceeding separately to the [Adverse Action Proceeding]". The following detailed settlement offer was put, open for acceptance until 6 April 2022: 1. Your client, being the Applicant in the Information Proceeding, agrees to pay our client's, being the Respondents in the Information Proceeding, costs thrown away relating to your client's Amended Statement of Claim in the Information Proceeding fixed in the amount of $110,000; 2. Your clients, being the Respondents in the Adverse Action Proceeding, agree to pay Sally Simpson the sum of $160,000 in respect of her costs in the Adverse Action Proceeding; 3. Both payments under 1 and 2 above are to be made from the funds being held by Carrick Gill Smyth and the balance shall be released to your clients; 4. Following the payments in (2) and (3) above, the [sic] our clients agree to: (a) deliver to Michael Khoury of KMPG (Delivery Up), the Traverse Property, including any devices, the access credentials for those devices and the access credentials for any could [sic] storage accounts on which the property is stored, for destruction; (b) within 10 business days of the Delivery Up occurring, Sally Simpson and Thomas Simpson shall confirm on oath or affirmation to Traverse that they have complied with paragraph 2(a) above and that the Traverse Property has been irretrievably destroyed; 5. Upon compliance with 1, 2 and 4 above, the Proceedings be otherwise discontinued. 6. The terms of this settlement be documented in a Deed of Release which shall provide for mutual releases to be given between all parties to the Proceedings with respect to the subject matter of the proceedings save and except for any claims that Sally Simpson has or may have under: (a) statute, an industrial instrument or common law for any work-related injury, illness, disease or death; (b) the Superannuation Guarantee (Administration) Act 1992 (Cth) and related legislation. 72 That offer was responded to by Thomson Geer on 8 April 2022. The general contention that the conduct of Traverse had increased the costs of the proceedings was rejected. A detailed history of the interrelationship between the proceedings was set out. The following alternative offers were put to resolve each: 2.1 Having regard to your clients' disposition to resolve both Proceedings, our clients offer to resolve both Proceedings by way of the following proposed orders (Option A): (a) Within 5 business days of the date of this order, the Respondents in the Information Proceeding shall deliver up under oath or affirmation, the documents identified in the table at paragraph 29A of the Further Amended Statement of Claim. (b) The Information Proceeding and the Adverse Action Proceeding be otherwise dismissed without adjudication on the merits, other than in respect of the question of costs. (c) The question of costs be argued and thereafter determined by the Docket Judge. 2.2 In the alternative, our client offers to resolve both Proceedings by way of the following proposed orders (Option B): (a) Within 5 business days of the date of this order, the Respondents in the Information Proceeding shall deliver up under oath or affirmation, the documents identified in the table at paragraph 29A of the Further Amended Statement of Claim. (b) The Information Proceeding and the Adverse Action Proceeding be otherwise dismissed without adjudication on the merits. (c) There be no order as to costs. (d) The bank guarantee dated 12 May 2021 held by Carrick Gill Smyth be released to Traverse Alpine Operations Pty Ltd. (paragraphs 2.1 and 2.2 together, the Offer). 2.3 To be clear, the Offer is to resolve the Proceedings on the basis of Option A or Option B above. Your clients are free to choose between Option A and Option B. 2.4 This Offer remains open for acceptance until 5:00pm on Friday, 22 April 2022. Your clients' acceptance of this Offer must be communicated in writing and must identify which option is accepted. 2.5 We do not see how your clients can reasonably anticipate a better outcome than the Offer. 73 No response was received from Williams Winter. 74 A further offer to settle, largely in the form of the 8 April 2022 correspondence, was put by Thomson Geer on 17 May 2022. No response was received. 75 The Simpson parties, in an outline of submissions filed shortly prior to commencement of the trial, expressly accepted that "delivery up is not resisted, by the Simpsons", that the photographs taken by Thomas Simpson and identified at paragraph 29A of the FASOC "are Traverse property" and that the Simpson parties had not refused delivery up, rather: The request has been made to hand the items back after Sally Simpson's adverse action claim is completed. This echoes, and calls in, the delivery up Traverse seeks in these proceedings. The Simpsons agreed to do this, and have reiterated this. The Simpsons had no intention to use the documents outlined in paragraph 29A of the FASOC, for any purpose outside of the Adverse Action/General Protections proceeding, as set out in the Amended Defence. 76 Those contentions are not factually consistent with the course of the correspondence that I have set out, and I reject them. Thereafter, and doubtless based on these concessions, consent was ultimately obtained to the making of the orders that I ultimately made by consent when the trial commenced on 29 August 2022. 77 To what extent does Ms Serpell, for the Simpson parties, contend that the chronology that is relied upon by Traverse is incomplete? In her oral submissions she made the following points. First, that it should be understood that when this proceeding was first commenced, and for a considerable period during its prosecution, Traverse maintained the contention that the Simpson parties were responsible for the anonymous and threatening complaints, which they consistently denied, and which contention Traverse did not abandon until the substantial amendments that were made to the originating application and in the form of the FASOC on 25 June 2021. To that point in time, the Simpson parties had expended considerable costs in defending an allegation, upon which they were ultimately vindicated. To this submission, one should add, that all of the claims for relief that were initially pressed by Traverse were abandoned by the making of those amendments save for the requirement to deliver up its information and as to costs. These submissions are reflected in the chronology. 78 Secondly, and relatedly, that one should not view the settlement offers in the context that delivery up was always the "holy grail" that was being sought by Traverse, with the consequence that ultimately it succeeded in obtaining its primary relief. 79 The first and second points are obviously correct, and I accept them. In my view factual emphasis is to be placed, in the exercise of the costs discretion, on how the claims were formulated, amended and ultimately resolved in favour of Traverse. 80 Thirdly, that this proceeding and the Adverse Action Proceeding were always viewed by the parties as interrelated with the consequence that the offers of settlement must be viewed in that context. That is so, to an extent. But factually it fails to grapple with the way in which Traverse split the offers at an early point, and then combined the offers later on so that various alternatives were put to the Simpson parties to resolve this proceeding without any requirement that the Adverse Action Proceeding must also be resolved on terms that were unacceptable to the Simpson parties. 81 Fourthly, that I should not accept that factually the delivery up claim was always the primary claim or the main element of this proceeding. In my view, it is unhelpful to examine that claim by use of labels of that character. The fact is that Traverse commenced this claim and sought various forms of relief framed by reference to discrete causes of action including delivery up of its information. The delivery up claim was a component of the relief sought, in consequence of the breach by the Simpson parties of their contractual obligations as employees, the character of the information as confidential, ss 182 and 183 of the Corporations Act and the ancillary claim of breach of fiduciary duty. That claim succeeded when the consent order was made. 82 Fifthly, that I should not conclude that factually Traverse "got what it wanted" when one examines the broad ambit of the claim as first commenced. That is so. But it does not address whether the Simpson parties acted unreasonably and thereby caused Traverse to unnecessarily incur costs. 83 Sixthly, that I should have regard to all of the exchange of correspondence, and not just the description of the correspondence in the chronology, which is set out in complete form in the affidavit of Mr Watson of 19 September 2022 where, helpfully, MJW1 to his affidavit is a schedule which lists all of the offers made between the parties in this proceeding. I have considered that document, and I record that I have not simply relied upon the chronology prepared for Traverse. What should be obvious from these reasons is that I have read and considered all of the correspondence that I consider to be of relevance in resolution of the issue that is before me. 84 Seventhly, specific reliance is placed by Ms Serpell upon the terms of the offer set out in correspondence of 15 July 2021 from Linton legal to Thomson Geer and which is marked "open correspondence". As these reasons show, I have considered that correspondence. Ms Serpell emphasises that the Simpson parties offered to resolve this proceeding in the terms of the consent orders attached thereto together with delivery up of the documents referred to at paragraph 29A of the FASOC at the conclusion of the Adverse Action Proceeding and by the method of delivering to Mr Khoury the devices then maintained by the Simpson parties as containing that information for the purpose of destroying and/or removing it. In the submission of Ms Serpell, Traverse unreasonably rejected that offer at that time. 85 The primary difficulty with that submission is that the consent memorandum commenced with a proposed declaration by consent that s 570 of the FW Act does not apply. That is not so for the reasons that I have explained. Thomson Geer were perfectly correct to say so in their response to this offer of 26 July 2021. Moreover, declarations are made in the exercise of the discretion conferred by s 21 of the FCA Act and clearly cannot be made by consent absent scrutiny as to the existence of the power to do so: Australian Competition and Consumer Commission v Grove & Edgar Pty Ltd [2008] FCA 1956 at [16]-[18], Reeves J. 86 Thus, despite the criticisms of Ms Serpell, I am satisfied that the chronology that is relied upon by Traverse is accurate and provides an appropriate evidentiary basis for the making of findings of fact that are relevant to the degree of satisfaction that is required by s 570 of the FW Act and, if so, informing the exercise of the costs discretion.

IS S 570 OF THE FW ACT SATISFIED? 87 Although legally distinct, whether I am satisfied that this proceeding was commenced without reasonable cause by Traverse (for the purposes of the Simpson parties' costs application); or, whether for the purposes of each application I am satisfied that a party's unreasonable act or omission caused the other party to incur costs, is closely related to some of the factors that are usually considered in the exercise of the discretion to make an award of indemnity costs. The difference, of course, is that the indemnity costs cases are concerned with how the power should be exercised and not with whether there is power. That difference aside, the focus of the jurisprudence that has developed in the exercise of that discretion, which is upon identification of relevant conduct that is deserving of sufficient criticism such that objective unreasonableness is established to warrant the making of an indemnity costs order, is sufficiently analogous to the application of s 570 of the FW Act as to provide useful guidance. Where offers of settlement are centrally relevant, the usual inquiry is whether a party acted unreasonably in not accepting one or more offers based on what was known or ought reasonably have been apparent at the time. It is not a retrospective inquiry. 88 Those principles were recently and comprehensively set out by the Full Court in Zibara v Ultra Management (Sports) Pty Ltd (2021) 283 FCR 18; [2021] FCAFC 4 at [176]-[177], McKerracher, Derrington and Anderson JJ: In Clifton v Kerry J Investment Pty Ltd (No 2) (2020) 277 FCR 382, Besanko, Markovic and Banks-Smith JJ addressed briefly the relevant principles in relation to an award of indemnity costs at [30]-[31]: In Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) [2020] FCAFC 112, Besanko, Markovic and Banks-Smith JJ addressed briefly the relevant principles in relation to an award of indemnity costs at [30]-[31]: In Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225, Sheppard J said (at 233-234): 4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. ... Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p 6) similar views in Ragata (supra). 5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. ... We also refer to the discussion by Kenny J in Morad v El-Ashey (No 2) [2017] FCA 1612 at [6]-[10] and the detailed discussion of the relevant principles in Dal Pont at 16.46 and following. The point which we wish to emphasise is that to justify a special costs order, there must be conduct deserving of criticism and resulting in greater expense to the innocent party ... (Emphasis added.) Their Honours referred to the discussion by Kenny J in Morad v El-Ashey (No 2) [2017] FCA 1612 at [6]-[10]. Kenny J stated at [9]-[11]: The principles relevant to an award of indemnity costs are well-established. In broad terms costs will be payable on a party and party basis, unless the circumstances of the case justify a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (Colgate-Palmolive) at 233 (Sheppard J). The question is always whether the facts and circumstances of a particular case justify the making of an order for the payment of costs other than on a party and party basis. Plainly enough, the categories in which indemnity costs may be ordered are not closed. Reference to some of the circumstances in which costs on an indemnity basis have been ordered is illustrative, however, of the occasions that have been thought capable of attracting such an award of costs. It has been held, for example, that indemnity costs may be awarded where "the applicant, properly advised, should have known that he had no chance of success" (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (Fountain Selected Meats) at 401; where an application is wholly untenable and misconceived (Henke v Carter [2002] FCA 492 at [22] (Goldberg J)); and where there is "evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties" (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 at [22] (French J)). The purpose of indemnity costs was explained in Hamod v State of New South Wales [2002] FCAFC 97; 188 ALR 659 (Hamod) at [20] by Gray J (with whom Carr and Goldberg JJ agreed) as follows: Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs. (Emphasis added.) (Original emphasis.) 89 Dealing first with the Traverse costs application, in my view the starting point of the inquiry as to whether I am satisfied that the conduct of the Simpson parties amounts to an unreasonable act or omission that caused Traverse to incur costs is the settlement proposal of 29 March 2021. There are three broad considerations: the terms of the offer and the scope of the settlement offered; whether it was unreasonable for the Simpson parties not to have accepted it; and the conduct of the Simpson parties in maintaining their position until the eve of the trial when the consent orders were agreed to, despite multiple subsequent offers. The first two considerations are properly informed, by analogy, with cases that have considered the cost consequences of not accepting a settlement offer and I have primarily considered Black v Lipovac (1998) 217 ALR 386; at 432-433, Miles, Heerey and Madgwick JJ and Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 (Hazeldene) at [23]-[29], Warren CJ, Maxwell P and Harper AJA. 90 It will be recalled that despite the scope of the various claims that were formulated in this proceeding to 29 March 2021, the offer made by Traverse was to resolve the entirety of it, approximately seven months after its commencement, by the making of consent orders to the effect that: the undertakings given to the Court on 3 July 2020 would continue; at the conclusion of the Adverse Action Proceeding the Simpson parties would deliver to Traverse the documents, photographic images and other material then admitted to being in their possession and as identified in Appendix A to the memorandum of consent; that the proceeding otherwise be dismissed without adjudication on the merits and that there be no order as to costs. 91 The offer was made after the issues were framed by the close of the pleadings and following admission by the Simpson parties that they had copied and continued to possess the Traverse information which they specified in their list of documents filed on 18 December 2020. At that point the Simpson parties could not have entertained any doubt as to the risks that they faced in continuing to possess and use the Traverse information. 92 The offer was open for acceptance until 5pm on 12 April 2021, a period of 14 days, which was in my opinion reasonable to allow for mature consideration. It was not responded to until after it had expired, when at 7.23 pm on that day Litton Legal in correspondence asserted that Traverse had "reinvented" the version of events and that, for detailed reasons, the offer was incapable of acceptance because: You are expecting our client to admit that the documents are confidential in circumstances where you concede that our client is justified in using those documents to substantiate the General Protections claim. Your client needs to pay the costs of these proceedings. Since you filed your Federal Court claim, we have consistently put you on notice as to the serious issues with your claim, in addition to how serious your claim is in respect to its allegation against our clients. Your client has attempted to cover up the issues within their organisation and must now come to terms with the fact that their continuous bullying behaviour has gone far beyond our clients' employ and that there are clearly other people, completely unknown to our clients, that take issue with your client's organisation. The time has come for you to accept this and to conclude these unmeritorious claims. We are instructed not to accept your client's offer. Our clients will however, consent to discontinue the proceedings VID 439 of 2020 should your client agree to pay our clients' costs as agreed or assessed. We refer you to rule 26.12 (7) of the Federal Court Rules, which provides that a party who files a notice of discontinuance is liable to pay the other party's costs in relation to the claim. We encourage your client to cease incurring unnecessary costs in circumstances where we intend to produce this correspondence on questions of costs. 93 That reasoning is wrong. The offer was made in clear terms and manifestly was capable of acceptance. It did not require the Simpson parties to make admissions to the effect that the Traverse information is confidential. It did not involve any attempt to "cover up the issues" that were said to exist within the business of Traverse. Despite the claims made by Traverse that the Simpson parties wrongly copied and possessed its information, Traverse was content for the Simpson parties to remain in possession of it and to use it for such purposes as they sought fit in the Adverse Action Proceeding. 94 The offer represented a significant compromise by Traverse of its position. Traverse offered to give up its claims for damages for breach of contract, breach of statutory duties and copyright infringement together with various claims for declaratory relief and injunctions (save for the undertakings that it secured on 3 July 2020), and in particular all claims relating to the anonymous and threatening correspondence that it had asserted the Simpson parties were responsible for. Traverse also offered to give up its consequential claim for costs. The offer viewed in the context of the litigation which had taken place was a genuine attempt to compromise this proceeding by Traverse. 95 The Simpson parties had very little prospect of success in maintaining the claim that they were entitled to reproduce, possess and use the Traverse information for the purposes of the Adverse Action Proceeding. Assessed as at 29 March 2021, their claimed entitlement was of no merit. The Traverse information was the property of Traverse, it enjoyed the rights of a copyright owner to that information, the Simpson parties as former employees had at best a limited right to access and use the information solely for the purposes of their employment which rights ceased upon termination of the respective employment contracts. If the Simpson parties required the Traverse information for use in the Adverse Action Proceeding, then the proper procedure was to apply for targeted discovery orders or to apply for the issue of a subpoena. Although it was not until 17 June 2021 that Anastassiou J described the claimed entitlements as "humbug", what ought to have been apparent to the Simpson parties during the period within which the offer was open for acceptance is that their claimed entitlement to possess and use the Traverse information had no prospect of ultimate success. 96 The offer was clear in its terms, and was supported by very detailed reasoning in the correspondence authored by Thomson Geer. 97 Another matter that usually falls for consideration is whether the offer foreshadowed that an application for indemnity costs would be made. That consideration is not directly relevant where there is no prima facie entitlement that a successful party has to receive its costs in a proceeding to which s 570 of the FW Act applies. Appreciating that point, the offer stated: This offer represents a genuine compromise, given the Traverse has already been successful in obtaining the Undertakings, it is entitled at law and in equity to delivery up of the Traverse Information, and, subject to whether this proceeding is subject to the limitation on costs provided in the Fair Work Act 2009 (Cth) (FW Act), section 570, Traverse will be entitled to costs, given the Traverse has incurred substantial costs in reaching the outcome of securing private and confidential information belonging to it, including information relating to its staff and guests. … This is an open offer, and Traverse reserves its rights to bring this communication to the attention of the Court at the next directions hearing or at any other appropriate time. Further, in the event that this open offer is rejected, our client will rely on such refusal in support of an order for indemnity costs against your clients, or, in the event that section 570 of the FW Act has application for this proceeding (and in respect of this question, see our letter to you dated 18 February 2021), will rely on such refusal of this offer as constituting an "unreasonable act or omission" under section 570 (2) (b), such conduct causing our client to incur costs, and thus warranting an order for indemnity costs to compensate for the incurring of such costs. 98 That warning could not have been more clearly expressed. The Simpson parties were manifestly on notice that if the offer was rejected, it would subsequently be relied upon in support of an application for costs as permitted by s 570(2)(b). 99 The next question is whether the Simpson parties acted unreasonably in not accepting the offer and whether that caused Traverse to incur costs? Again useful guidance is to be found in cases which have considered Calderbank offers. In Hazeldene the court at [23]-[24] reasoned that: In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. The critical question is whether the rejection of the offer was unreasonable in the circumstances. We see no justification for a more stringent test such as "manifestly" or "plainly" unreasonable. Of course, deciding whether conduct is "reasonable" or "unreasonable" will always involve matters of judgment and impression. These are questions about which different judges might properly arrive at different conclusions. As Gleeson CJ said recently, "unreasonableness is a protean concept". But a test of reasonableness is, we think, entirely appropriate to the exercise of a discretion such as this. (Footnotes omitted.) 100 In this case, satisfaction as to whether the Simpson parties, by an unreasonable act or omission, thereby caused Traverse to incur costs must also be examined mindful of the caution expressed and the policy identified by the Full Court in Toma, that I have set out above. 101 Traverse in commencing this proceeding did not engage provisions of the FW Act to found any entitlement to relief. Section 570 of the FW Act subsequently became relevant when the Simpson parties pleaded reliance on various workplace protections by way of defence and in support of the claimed entitlement to possess and use the Traverse information. Despite that claim being misconceived, I do not find the defence to have been advanced in bad faith, or that it was an abuse of process. However, the bar at s 570 is not set that high. 102 Why did the Simpson parties reject the offer? Their detailed reasons are set out in the response from Litton Legal of 12 April 2021. Many contentions were advanced. First, that Traverse had asserted that the Simpson parties were responsible for the anonymous and threatening correspondence without supporting evidence. I was invited by Mr Bourke to infer that the Simpson parties must have been the responsible bad actors based on the circumstantial evidence relating to who had access to the Traverse information, the dates on which the email correspondence was sent and the preceding "trigger" events. I do not make that finding, particularly because the Simpson parties did not give evidence before me and these allegations were not directly put to them. It does not follow, however, that Traverse did not have a reasonable basis to plead that the Simpson parties were responsible for the correspondence based on the circumstantial evidence. It is not correct to contend that Traverse had "no evidence" in support of those components of this proceeding. 103 Secondly, that the claims formulated by reference to the Privacy Act lacked a proper basis and were misconstrued from the outset. That is not so. Traverse pleaded that it was an organisation subject to the provisions of the Act, that the Australian Privacy Principles were binding upon it and that certain components of the Traverse information were subject to privacy obligations. On its face, that claim was one of merit. 104 Thirdly, that Traverse had correctly conceded that the Traverse information was able to be used by the Simpson parties in the Adverse Action Proceeding. No such concession to that effect was ever made by Traverse. Rather, its position was that despite its view that no such right existed, it was prepared to significantly compromise its position by permitting the Simpson parties to possess and use the information for the purposes of the Adverse Action Proceeding. 105 Fourthly, that Traverse had acted in a confusing and contradictory manner in relation to the claimed entitlement of the Simpson parties to possess and use the Traverse information. Specifically, it was said that the Simpson parties could possess and use that information in the Adverse Action Proceeding and that the claim to confidentiality "is unfounded". That contention is wrong. No confusion is evident from the manner in which this proceeding was commenced and prosecuted or from the course of correspondence that I have summarised. And the claim that the Traverse information was subject to an equitable obligation of confidence was prima facie open on the facts. 106 Fifthly, that the Simpson parties were "astounded" that apparently the only option open to Traverse was to commence this proceeding in order to prevent the continued misuse of a particular photograph taken from the CCTV system together with other material accessed by the Simpson parties during their employment. That contention does not make sense. As these reasons have summarised, various steps were taken by Traverse in order to secure the integrity of the Traverse information and to have it returned to its possession before this proceeding was commenced. It was the failure of the Simpson parties to return the information which necessitated the commencement of the proceeding. 107 Sixthly, that the observations of Murphy J at the case management hearing on 3 July 2020 were made "in the early stages of this matter" and "immaterial." That contention is plainly wrong. 108 Seventhly, in multiple ways it was contended that the primary (or only) reason for the commencement of this proceeding was the misconceived allegation that the Simpson parties were responsible for the anonymous and threatening communications. That is not so. This claim was a discrete component of Traverse's claim, but was clearly not the primary or sole basis which led to its commencement. 109 Eighthly, it was said that Traverse did not have a valid claim to confidentiality in respect of all, or components, of the Traverse information and that in any event for public interest reasons the claim was not open. The public interest relied on was said to be related to an attempt by Traverse to "cover up" misconduct categorised as "unlawful", "unethical" or "bullying". That broad assertion is of no merit. Australian common law does not recognise a public interest defence as an answer to a breach of confidence claim: Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 451-456, Gummow J. 110 Ninthly, that the Simpson parties had incurred considerable costs in the conduct of the defence of the proceeding. That may be accepted. But what it overlooks is that objectively considered, each party must have incurred considerable legal costs to the date of the making of the offer and had it been accepted, they would not have continued to incur legal costs thereafter. The focus on unreasonable conduct that in my view engages the power to make a costs order is not upon what was done, or omitted to be done, before 29 March 2021, but rather whether the unreasonable failure to accept the offer unreasonably caused Traverse to incur further legal costs from that date. 111 The final point made is the contention that the offer as framed was incapable of being accepted which, for the reasons that I have set out, was clearly not so. 112 Acting reasonably, the Simpson parties by 29 March 2021 and certainly by no later than 12 April 2021 when the offer lapsed, ought to have appreciated that their position was untenable. Why, if further explanation was necessary, it was set out in considerable detail in the letter of offer from Thomson Geer, where in part it was said: Traverse's entitlement to delivery up Traverse has always maintained that its primary concern is to protect the Traverse Information and ensure its return, whether that be by agreement or through obtaining orders that include delivery up of Traverse Information. Effectively, Traverse was successful at the hearing before Murphy J in obtaining the Undertakings, which are in substantially the same form as the interlocutory orders sought. Accordingly, Traverse should be entitled to its costs of this application now. This is especially so given that it is known that the Simpson Parties, and their agent, had obtained and retained Traverse Information. Although it is trite that Courts in their exercise of their equitable jurisdiction have discretionary powers to order delivery up of confidential information and information the subject of statutory intellectual property rights, principles Murphy J clearly confirmed when observing that any Traverse information your clients' had needed to be returned, your clients regrettably continue to refuse to return any information taken, despite being requested in writing on the following occasions: (a) 12 February 2019; (b) 18 June 2020; (c) 22 June 2020; (d) 13 February 2021. There is now no dispute that the Simpson Parties were contractually obliged to: (a) maintain the confidence of "Confidential Information", which was broadly defined under clause 1 of the Simpson Parties' employment agreements dated 1 November 2015 (Employment Agreements) (Confidential Information); (b) not to use the Confidential Information for any purpose other than for the benefit of Traverse both during and after the employment; (c) on termination of employment, were required to return to Traverse all property, documents and items of or relating to the business of Traverse, including any Confidential Information. There are now admissions that the Simpson Parties used information that fell within the contractual definition of Confidential Information for purposes other than for the benefit of Traverse; and therefore that the Simpson Parties have not maintained the confidence of that Confidential Information. Further, the Simpson Parties did not return all property, documents and items of or relating to the business of Traverse, including any Confidential Information on the termination of their employment. Putting aside any argument of whether the Traverse Information is being used by your clients for a legitimate purpose, for the reasons outlined above, it is clear that orders will be obtained for the delivery up of any Traverse Information, as was foreshadowed by Murphy J. (Footnotes omitted.) 113 Those arguments were repeated subsequently in the course of the various settlement offers made by Traverse to the Simpson parties. But the Simpson parties persisted in, what in my view, was an unreasonable failure to accept that retention of the Traverse information was untenable. Their argument that it was necessary to do so to advance the Adverse Action Proceeding was misconceived. It was most certainly unreasonable. And more so, from 29 March 2021 when the offer was put that, despite the obligation to deliver up the Traverse information, Traverse was content not to insist upon immediate delivery, but rather delivery would occur upon conclusion of the Adverse Action Proceeding. If that offer had then been accepted, significant costs in preparing this proceeding would have been avoided and each party would have borne their own costs to date, reflecting that success by Traverse was only partial. 114 The unreasonable conduct of the Simpson parties is not simply limited to their failure to accept the offer of 29 March 2021. As summarised in these reasons, variations of that offer were put on multiple occasions until the eve of the trial, when the position of the Simpson parties changed. I have considered the whole of the conduct of the Simpson parties within that period. Each subsequent offer was in my assessment a reasonable attempt by Traverse to resolve this proceeding, viewed in light of the facts to the date of each. There is nothing within the course of correspondence that I have summarised that ameliorates their unreasonable conduct in refusing to accept the offer of 29 March 2021, or any subsequent offer. Indeed, the Simpson parties compounded their unreasonable conduct when they even refused to accept offers that were formulated on the basis that the question of costs would be reserved for determination upon finalisation of the Adverse Action Proceeding. 115 In my view, the failure to accept the offer of 29 March 2021; maintenance of the misconceived right to possess contention until the eve of the trial, when it was abandoned; and the failure to accept any of the modified settlement offers made by Traverse throughout that period was conduct by the Simpson parties that was so unreasonable that I am satisfied that it was an unreasonable act or omission that caused Traverse to incur costs in this proceeding, which were entirely avoidable if the Simpson parties had acted reasonably, within the meaning of s 570 of the FW Act. 116 I may therefore exercise the discretion of the Court to make a costs order confined to the period from 5 pm on 12 April 2021, being the time the offer lapsed, and limited to the costs of the Traverse information claim. Traverse should have its costs to the conclusion of the costs submissions on 27 September 2022, to compensate it for the considerable work that was obviously undertaken to achieve success on its costs application. 117 The next question is whether I should exercise the discretion in favour of Traverse, and if so, should the costs be on a party and party or indemnity basis? 118 The usual rule is that costs follow the event and that piecemeal, issue by issue, orders should not be made except in clear cases. By confining the order to the period commencing on 12 April 2021 costs should follow the event. The event is that Traverse ultimately obtained the relief by consent that it had long sought and the scope of the costs order in that period must be confined to the unreasonable conduct of the Simpson parties being the failure to accede to the Traverse information claim. 119 As the authorities which I have referenced make clear, ordinarily costs are awarded on a party and party basis. In my view, the satisfaction that I have reached as to unreasonable conduct by the Simpson parties for the purposes of s 570 of the FW Act is of central importance in the exercise of my discretion as to whether costs should be awarded on an indemnity basis. I have identified the conduct in this case that in my mind is deserving of criticism as unreasonable and which caused Traverse to incur the costs of preparing and prosecuting the Traverse information claim within the period 12 April 2021 until 27 September 2022. The prosecution of the claim was prolonged by the imprudent failure of the Simpson parties to accept the offer of 29 March 2021, or any of the subsequent offers, and maintenance of the meritless contention that they were entitled to remain in possession of the Traverse information and to use it for the purposes of the Adverse Action Proceeding, even when Traverse only insisted upon return of the information upon finalisation of the Adverse Action Proceeding. 120 I have concluded that in the circumstances of this particular case there is a proper justification for the award of costs within that period, and limited to the Traverse information claim, to be assessed and determined on an indemnity basis. 121 I deal next with the costs claim by the Simpson parties. Ms Serpell submits that the Simpson parties should have their costs of the entire proceeding, but did not make clear whether that order is sought on a party and party or indemnity basis. I will assume therefore that the application is put in the alternative. It does not simply follow that because I have made an order that the Simpson parties must pay costs, that their application falls away. The order for costs that I have made in favour of Traverse is limited to a particular period and relates only to the costs that are identifiable as relating to the Traverse information claim. 122 The matters relied upon in support of the Simpson parties' costs application are comprehensively addressed in the written submissions of Ms Serpell, and as supplemented orally. I treat with caution the written submissions as they are in part framed on the basis that s 570 of the FW Act does not apply. First, primary attention is directed to various offers made by the Simpson parties to Traverse. I have set out the course of those offers above, and in this portion of my reasons I focus on those emphasised by Ms Serpell. On 25 September 2020, the Simpson parties offered to resolve this proceeding together with the Adverse Action Proceeding on the terms that Traverse pays Sally Simpson $250,000 in settlement of the Adverse Action Proceeding, withdraws this proceeding and pays her costs of it. That offer was not, in my opinion, a reasonable compromise proposal by the Simpson parties to resolve this proceeding in that it required settlement of the Adverse Action Proceeding to the significant detriment of Traverse, it made no provision for return of the Traverse information, it required Traverse to abandon all of its claims and required it to pay the costs of the Simpson parties. The effect of that offer was to require Traverse to capitulate, and in doing so to compromise what should have been understood by the Simpson parties to be a strong case for the return of the Traverse information. 123 Reliance is next placed on correspondence dated 7 May 2021 in which Litton Legal, in response to advice from Thomson Geer of the intention of Traverse to apply to amend the statement of claim so as to restrict it to the confidential information claims said: Our client has no interest in retaining the documents you identified and (as you know) are relevant to the GP claim made by Ms Sally Simpson. In any event, we deny that these documents are confidential. We remind you that our client identified these documents through the expert/investigator Mr Caldwell on 21 February 2019. Further, on your own admission, your claim is one that contains no loss or damage. We ask for you to consider how that impacts your allegations in respect to these documents. Our client provided undertakings in respect to documents it was using in the associated proceeding. … 124 Self-evidently that was not an offer to compromise this proceeding. And what the reliance on it overlooks is the response provided by Thomson Geer on 19 May 2021, which in part was: Given that your clients have no interest in retaining the documents we seek, it appears as though the parties are in agreement, other than in relation to the question of costs. We consider that the question of costs can only be appropriately dealt with at the conclusion of proceeding VID654/2020. Accordingly, in order to find a resolution of this matter, we seek your clients' agreement to the attached minute of proposed consent orders. In the event that your clients wish to argue that the costs of the Confidential Information Proceeding should be determined prior to the conclusion of proceeding VID654/2020, could you please remove order 3 of the minute of proposed consent orders and return same. The timing for the hearing of any costs' argument could then be a matter for argument at a later time. 125 The attached minute preserved the undertakings given by the Simpson parties on 3 July 2020, which required the Simpson parties to deliver up the Traverse information at the conclusion of the Adverse Action Proceeding, provided for dismissal of this proceeding and reserved all questions of costs until conclusion of the Adverse Action Proceeding. That proposal was met with argumentative correspondence from Litton Legal of 19 May 2021 which asserted that: We dispute that the documents which you allege are confidential are in fact confidential. The fact that our clients do not have an interest in maintaining the documents after the conclusion of the General Protection claim is not the same as agreeing to provide those documents on the basis that they are confidential. 126 The logic of that argument is not apparent: the consent memorandum as provided by Thomson Geer did not require the Simpson parties to accept or acknowledge the confidentiality claim. 127 Secondly, the Simpson parties next rely upon submissions that were made and filed in this proceeding on 4 June 2021, which drew attention to a statement made by junior counsel for Traverse at a case management hearing on 11 August 2020 that: We're not asking for delivery up. That preserves the rights of the respondent to actually argue that they're entitled to retain them. All we're asking for is identification in relation to those documents. 128 That submission is taken out of context. Counsel was then concerned with identification of what information belonging to Traverse had been copied and possessed by the Simpson parties. Further reliance is placed upon many paragraphs as extracted from the Simpson parties' submissions of 4 June 2021, without any attempt to explain why those submissions remain presently relevant to the question whether Traverse engaged in unreasonable conduct which then caused the Simpson parties to incur costs. And, as correctly submitted by Mr Bourke for Traverse, those submissions were rejected by the Court at the case management hearing before Anastassiou J on 17 June 2021. Those submissions were made in support of a costs order in favour of the Simpson parties at that time. That order was not made. His Honour reserved all questions of costs until the conclusion of each proceeding. 129 Thirdly, much emphasis is placed on the fact that Traverse included in its claims the contention that the Simpson parties were responsible for the anonymous and threatening communications. Whilst that contention was ultimately abandoned when the FASOC was delivered on 25 June 2021, it does not follow that Traverse unreasonably agitated that claim or that it did not have a reasonable basis for it, a point that I have addressed above. The fact that the claim was made, pressed and ultimately abandoned does not, in the entire context of the procedural history that I have set out, require or inform a finding that Traverse engaged in unreasonable conduct that is sufficient to attract the operation of s 570(2) of the FW Act. 130 Fourthly, my attention is drawn to the procedural history and the amendments made at the instigation of Traverse, which inevitably caused certain costs of the Simpson parties to be thrown away. That is not an indicator of unreasonable conduct: making amendments in the course of a proceeding is commonplace. There is nothing unreasonable in the way amendments were proposed and ultimately made in this proceeding. 131 Finally, there is a matter that is not addressed on behalf of the Simpson parties. This proceeding was not ultimately dismissed. Rather, orders were made on 29 August 2022 for the delivery up of the Traverse information. Traverse was, to that extent, successful. Traverse did not maintain its other claims beyond 25 June 2021. By proceeding in that way, the conduct of Traverse narrowed the scope of the issues to be decided in this proceeding. That point is illustrated by the fact that when each matter was listed for trial, counsel agreed that of the 10 day estimate only one day would be taken up with this proceeding. 132 For these reasons, I have concluded that the Simpson parties have failed to satisfy me that there was any unreasonable relevant act or omission of Traverse in this proceeding that caused the Simpson parties to incur costs. Accordingly, their application for costs is refused.

Traverse Alpine Operations Pty Ltd v Simpson

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Judgment (7 paragraphs)

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Legislation Cited (8)

Cases Cited (31)