Cigarette & Gift Warehouse (Franchising) Pty Ltd v Whelan (No. 2) [2018] QDC 237

DISTRICT COURT OF QUEENSLAND CITATION: Cigarette & Gift Warehouse (Franchising) P/L v Whelan (No. 2) [2018] QDC 237 PARTIES: CIGARETTE & GIFT WAREHOUSE (FRANCHISING) PTY LTD ACN 055030567 (plaintiff) v ANDREW WHELAN (defendant) FILE NO/S: B3434/16 DIVISION: PROCEEDING: Application for costs ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 16 November 2018 DELIVERED AT: Maroochydore HEARING DATE: On the papers written submissions 6 November 2018 JUDGE: Andrews SC DCJ ORDER: EACH PARTY SHOULD BEAR ITS OWN COSTS OF THE PROCEEDING OTHER THAN THE COSTS IN RESPECT OF THE PLAINTIFF’S APPLICATION FOR AN ANTON PILLER ORDER AND THE PLAINTIFF’S COSTS OF EXECUTING THAT ORDER CATCHWORDS: COSTS – INDEMNITY COSTS – where the plaintiff made offers to settle – whether the defendant’s failure to accept was unreasonable – where the defendant unreasonably failed to accept the plaintiff’s demand to concede 3 of 7 claims for relief – where the plaintiff failed in 3 claims for substantial relief – whether the defendant should pay indemnity costs of the proceeding – whether the plaintiff was the successful party where the defendant conceded certain relief during the trial but the plaintiff failed to establish any other substantive claim COUNSEL: Roney QC for the plaintiff E White for the defendant SOLICITORS: Nyst Legal for the plaintiff Adams Wilson Lawyers for the defendant -- 1 of 13 -- 2 [1] There was a five day trial. The decision was reserved. On 23 October 2018 I made orders including an order that costs be reserved and I published reasons.1 With respect to costs, my reasons explained: [29] It is appropriate to reserve costs until after publishing these reasons because: (a) The plaintiff seeks to recover costs incurred in respect of the plaintiff’s enforcement of an Anton Piller order; and (b) The defendant has applied to set aside the Anton Piller order. [30] It is not necessary that the defendant’s application to set aside the Anton Piller order be heard by me. The defendant may elect to abandon or resolve it. If the application was determined by me and was successful it might permit me to entertain submissions about a holistic costs outcome. Finding time soon in my finite calendar, convenient to the parties, to hear contested evidence about material non-disclosure is problematic. But some time is available. [31] I am content to determine costs of the proceeding without determining the reserved costs in respect of the Anton Piller order and its execution so that those costs can await a later determination. If I am to determine the costs of the proceeding without determining the costs in respect of the Anton Piller order and its execution, the parties are at liberty to forward submissions on the costs of the proceeding, excluding costs reserved in respect of the Anton Piller order and its execution, in writing not exceeding 4 pages, by 6 November 2018. [2] The application to set aside the Anton Piller order remains afoot. The parties did not arrange for me to determine the application after 23 October 2018. [3] The plaintiff seeks an order that the defendant pay its costs of the proceeding. I infer that the plaintiff seeks that I make this determination in respect of only the costs of the proceeding, other than the costs in respect of its application for an Anton Piller order and its costs of executing that order. The plaintiff seeks its costs on: 1. An indemnity basis to the conclusion of the fifth day of trial; and otherwise/or alternatively 2. A standard basis.2 [4] The defendant’s submission on costs omitted to advise what order the defendant seeks. I infer from the cases and submissions in the defendant’s written submissions on costs that the defendant seeks an order that each party pay its own costs. Submissions for the defendant concluded with the following perplexing submission: “13. Depending upon the findings reached by the Court on the question of costs, the defendant may seek to rely upon a number of offers of compromise served by the defendant on the plaintiff. Some of these offers were served pursuant to the UCPR and others as in Calderbank Letters. It may be necessary to make separate written or oral submissions as to their effect.” [5] The parties were given until 6 November to forward submissions on costs of the proceeding. The plaintiff included copies of offers it relied upon with its submissions sent on 6 November. The parties were not given liberty to forward further submissions “depending upon the findings reached by the Court on the question of costs”. Findings by the court should ordinarily be final, not provisional. A party may not ordinarily await a finding on a costs issue before determining whether to make further submissions. Neither party has asked for provisional findings. On 7 November the defendant forwarded copies of: 1 Cigarette & Gift Warehouse (Franchising) P/L v Whelan [2018] QDC 212. 2 See plaintiff’s submissions on the costs of the proceeding – 6.11.18 par 1. -- 2 of 13 -- 3 1. Letter defendant’s solicitors to plaintiff’s solicitors 12 October 2015 enclosing offer to settle; 2. Letter defendant’s solicitors to plaintiff’s solicitors 30 March 2016 enclosing offer to settle; 3. Letter defendant’s solicitors to plaintiff’s solicitors 14 July 2016 enclosing offer to settle; 4. Letter plaintiff’s solicitors to defendant’s solicitors dated 20 September 2016. [6] I have read them. They were not accompanied by submissions about whether they should affect the exercise of the court’s discretion. I have determined that they do not affect the exercise of my discretion. The orders made by consent during the trial [7] On the fourth day of trial,3 at about 3:30pm, the defendant was asked for and agreed to orders sought by the plaintiff substantially in terms of those at paragraphs 1, 1A, 2(a) and 2(b) of the prayer for relief in the 3FASOC and agreeing to even more relief than the plaintiff had claimed. The paragraphs in the prayer for relief are set out below. [8] The orders made by consent on the fifth day of trial, 11 August 2017, were that: 1. The Plaintiff have leave to file a Further Amended Originating Application and a Third Further Amended Statement of Claim. 2. The Defendant is restrained from making any use of the Plaintiff s confidential information, including the information referred to in Schedule A to the Further Amended Originating Application ("Schedule A"). 3. The Defendant is restrained from making any use of any copies of or information derived from any of the Plaintiff’s confidential information, including the information referred to in Schedule A. 4. Within 7 days, the Defendant: (a) deliver up to the solicitors for the Plaintiff all copies of any document referred to in Schedule A; (b) deliver up to the Court for destruction all copies of any document in the possession or control of the Defendant that incorporates or was prepared by making use of or reference to the information referred to in Schedule A; and (c) deliver up to an IT expert nominated by the Plaintiff’s solicitors the Defendant's personal laptop for the purposes of removing, under the supervision of the Plaintiff’s and the Defendant's solicitors, from that laptop any data comprising the 'Electronic Copy Documents' (as that term is defined in paragraph 17(b) of the Third Further Amended Statement of Claim). And the court directs that: 5. All documents delivered into the custody of the Court following the execution of the Order of Douglas J dated 9 September 2015 be released to the solicitors for the Plaintiff. [9] As explained in the published reasons, the plaintiff’s 3FASOC did not allege that the defendant retained any document after the execution of the Anton Piller order, notwithstanding that its prayer for relief claimed return of any document retained. The allegation that the defendant retained documents emerged at trial in the plaintiff’s 3 T4-103. -- 3 of 13 -- 4 opening, based on expert evidence proposed to be led by the plaintiff. I am satisfied that until that time the defendant was unaware that the plaintiff alleged that he retained documents. I am satisfied that until Dr Schatz gave evidence, the defendant was unaware that his wife’s laptop held accessible electronic copies of any relevant documents. The contested orders made on 23 October 2018 [10] On 23 October 2018 the contested orders made were: 1. I declare that the defendant has breached the terms of the “Contract of Employment” entered into between the Plaintiff and the Defendant. 2. The plaintiff’s claim for damages for breach of contract in the sum of $1,274.56 is dismissed. The declaration was of no substantive benefit to the plaintiff. Apart from the orders to which the defendant had agreed the day before, the plaintiff had failed to achieve any success. Relevant pre-trial offers by the plaintiff and whether the defendant’s rejection justifies indemnity costs. [11] This proceeding was started by originating application and an order4 was made that the proceeding continue as if started by claim. Accordingly, the proceeding is a “proceeding” within the meaning of that word as defined in part 5 of the Uniform Civil Procedure Rules 1999.5(UCPR) [12] 17 March 2016 offer: On that date the plaintiff’s solicitors wrote to the defendant’s solicitors that they were enclosing an offer of settlement pursuant to UCPR r 353. The terms of the offer were: OFFER TO SETTLE The Plaintiff makes an offer to settle these proceedings in the following terms under Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999 (Qld): - 1. The Defendant consent to Judgment being entered in these proceedings in the following terms:- (a) The Defendant is restrained from making any use of the Plaintiff’s confidential information, including the information referred to in Schedule A to the Amended Originating Application (“Schedule A”). (b) Within 7 days, the Defendant:- (i) Deliver up to the Plaintiff all copies of any document referred to in Schedule A; and (ii) Deliver up to the Court for destruction all copies of any document in the possession or control of the Defendant that incorporates or was prepared by making use of or reference to the information referred to in Schedule A. (c) A declaration that the Defendant has breached the terms of the ‘Contract of Employment’ entered into between the Plaintiff and the Defendant. (d) The Defendant pay to the Plaintiff damages in the amount of $1.00. (e) The Defendant pay the Plaintiff’s costs of and incidental to the proceedings on the standard basis. (f) Otherwise, the proceedings are dismissed. This offer is open for acceptance for a period of 14 days after the day of service of this offer, after which period this offer lapses. [13] The defendant failed to accept that offer. 4 Court document 20. 5 Uniform Civil Procedure Rules 1999 (Qld) r 352. -- 4 of 13 -- 5 Plaintiff’s submissions about the plaintiff’s 17 March 2016 offer [14] In respect of the plaintiff’s offer of 17 March 2016, the plaintiff: 1. Does not submit that r 360 applies to compel the court to order that the defendant pay costs on the indemnity basis unless the defendant shows that another order for costs is appropriate in the circumstances; 2. Submits that the defendant’s failure to accept the offer was unreasonable; and that 3. The defendant ought to pay costs on an indemnity basis after 17 March 2016. [15] The plaintiff does not support the submission with any explanation for why the failure was unreasonable. It bears an onus. Findings about the defendant’s failure to accept the offer of 17 March 2016 [16] I am not able to determine whether the defendant’s failure to accept that offer was unreasonable. It cannot be determined because of item 1e of the offer that “The Defendant pay the Plaintiff’s costs of and incidental to the proceedings on the standard basis.” The offer is probably to be interpreted as requiring the defendant to pay the plaintiff’s costs of applying for and executing Anton Piller orders obtained in this proceeding on 9 September 2015 and varied on 11 September 2015. There is an unresolved application by the defendant to set aside that order. It follows that it is unclear whether the costs incurred by the plaintiff in obtaining and executing that order, assessed on a standard basis, were reasonable costs. As I cannot determine whether that component of the plaintiff’s demand for costs was reasonable, I cannot determine that the defendant’s failure to accept the offer was unreasonable. The plaintiff incurred legal fees and other costs totalling at least $88,000 in respect of that exercise. [17] I reject the plaintiff’s submission that the defendant’s failure to accept the offer of 17 March 2016 was unreasonable. The defendant’s failure to accept that offer does not satisfy me that the plaintiff should have indemnity costs from 17 March 2016. [18] 26 September 2016 offer: On this date the plaintiff’s solicitors wrote to the defendant’s solicitors observing: …Notwithstanding all of the above, it is apparent from the terms of your letter that there is only a confined aspect of this dispute that is in fact in issue between the parties in these proceedings, namely: 1. Whether our client is entitled to recover as against your client any of the loss and damage pleaded in paragraph 21 of the Further Amended Statement of Claim; and 2. Ancillary thereto, the relief sought in paragraphs 3 to 6 of the prayer for relief in the Further Amended Statement of Claim. Plainly, if the ambit of matters in dispute in these proceedings is condensed to the above mentioned issues, both parties will avoid unnecessary costs associated with the preparation of these proceedings for trial. If your client is truly acting genuinely, reasonably and expeditiously in progressing these proceedings to a determination, he will, in open correspondence, forthwith concede the relief sought in paragraphs 1, 1A and 2 of the prayer for relief set out in the Further Amended Statement of Claim and thereby put those issues out of contention between the parties. Of course, if your client proposes not to do so, our client has no option but to continue to prepare for the trial of these issues on the basis that all relief is opposed. …our client will produce a copy of this correspondence to the Court on the question of costs in these proceedings and will, if no concession to the effect stated above is made by your client and our client obtains such relief following the trial of these proceedings, also seek an order for indemnity costs against your client… -- 5 of 13 -- 6 [19] To make sense of the 26 September 2016 offer one must refer to the Further Amended Statement of Claim at paragraph 21 and paragraphs 3 to 6 of its prayer for relief. [20] On 26 September 2016 the Further Amended Statement of Claim6 provided, so far as is relevant: 21. The Plaintiff has suffered loss and damage pursuant to the Breaches. Particulars The loss and damage comprises: A. legal fees associated with the enforcement of the Plaintiff’s rights under the Contract before the institution of these proceedings in the sum of …$1,274.56; B. fees for forensic examination of the Plaintiff’s laptop and iPhone returned by the Defendant in the sum of …$7,150; and C. ongoing fees and costs of and incidental to these proceedings on an indemnity basis, including (but not limited to) costs associated with the enforcement of this Court’s order dated 9 September 2015, which as at the date of this pleading total the sum of $177,924.26. … The Plaintiff claims the following relief: 1. An order that the Defendant be restrained from making any use of the Plaintiff’s confidential information, including the information referred to in Schedule A to the Amended Originating Application (“Schedule A”). 1A. An order that the Defendant be restrained from making any use of any copies of or information derived from any of the Plaintiff’s confidential information, including the information referred to in Schedule A. 2. An order that within 7 days of judgment, the Defendant: (a) deliver up to the Plaintiff all copies of any document referred to in Schedule A; and (b) deliver up to the Court for destruction all copies of any document in the possession or control of the Defendant that incorporates or was prepared by making use of or reference to the information referred to in Schedule A. 3. A declaration that the Defendant has breached the terms of the ‘Contract of Employment’ entered into between the Plaintiff and the Defendant. 4. Damages for breach of contract. 5. Interest pursuant to section 58 of the Civil Proceedings Act 2011 (Qld). 6. Costs. [21] Thus, the plaintiff’s offer of 26 September, interpreted by reference to the Further Amended Statement of Claim at paragraph 21 and the prayer for relief, asserted that: 1. The plaintiff’s solicitors then inferred that the first issue in dispute was whether the plaintiff could recover legal fees of $1,274.56 incurred before the institution of proceedings, expenses of $7,150.00 for forensic examination of a laptop and iPhone and $177,924.26 for costs of the proceeding on an indemnity basis, including costs associated with the enforcement of the Anton Piller order,7 as damages for breach of contract and/or deed; 2. The plaintiff’s solicitors then inferred that the ancillary matter in dispute was in paragraphs 3 to 6 of the prayer for relief, namely, a declaration of breach of contract of employment, damages for breach of contract, statutory interest and costs; 3. The plaintiff’s solicitors then inferred that the defendant was not disputing the plaintiff’s claims in paragraphs 1, 1A and 2 of the prayer for relief, namely, for restraint orders against the defendant and orders for the delivery up and destruction of documents; and 6 Court document 38 filed 8 August 2016. 7 Court document 10, the order made 9 September 2015. -- 6 of 13 -- 7 4. The plaintiff was offering to the defendant to accept his consent to restraining orders and delivery up of documents to limit the issues for trial to the plaintiff’s claim for damages for legal fees, fees for forensic examination and for costs of the proceedings on an indemnity basis, then about $186,000 and rising as further costs were incurred; and 5. The plaintiff was asserting that if the defendant did not agree to concede the issues in paragraphs 1, 1A and 2 of the prayer for relief, the plaintiff at trial’s end would seek indemnity costs of, not just its claim for relief described in paragraphs 1, 1A and 2 but also indemnity costs in respect of its claim for relief described in paragraph 3 to 6 of the prayer for relief. Plaintiff’s submissions about the plaintiff’s 26 September 2016 offer [22] The plaintiff submitted and I accept that: The Defendant’s failure to accept a Calderbank offer is also relevant to ordering indemnity costs. The mere refusal of an offer to compromise does not warrant the exercise of the discretion to award indemnity costs, the critical question being whether the rejection of the offer was unreasonable in the circumstances. [23] The plaintiff submitted further: Here there was a failure to submit to a plainly reasonable request made in the form of a Calderbank letter dated 26 September 2016 from the Plaintiff’s solicitors to the Defendant’s solicitors … which … invited him in open correspondence to concede the relief sought in paragraphs 1, 1A and 2 of the prayer for relief, which he did not do. On Trial day 5 he did exactly that. He was put on notice that if that concession was not made the matter would proceed to trial on the basis that the Defendant actively opposed all the relief sought and would rely upon that correspondence at trial on the costs issue. The imprudent refusal of an offer to compromise or an invitation to make a concession of that kind was one of the examples identified by Woodward J in the well-known decision in Fountain Selected Meats referred to at paragraph 37 of the Court of Appeal’s decision in Dicarlo v Dubois cited earlier. Findings about the defendant’s failure to accept the offer of 26 September 2016 [24] As to that submission: 1. I do not accept that there was an imprudent failure by the defendant to submit to a plainly reasonable request. Some parts were reasonable requests but some parts were not; 2. I accept that the offer was made in the form of a letter in which the plaintiff warned that the letter would be raised on the issue of costs. I need not decide whether it is correct to call it a Calderbank offer. It was not a typical Calderbank offer; 3. I accept that it was imprudent for the defendant to refuse to agree to relief item 1: An order that the Defendant be restrained from making any use of the Plaintiff’s confidential information, including the information referred to in Schedule A to the Amended Originating Application (“Schedule A”); 4. The same may be said for his refusal to consent to relief items 1A: An order that the Defendant be restrained from making any use of any copies of or information derived from any of the Plaintiff’s confidential information, including the information referred to in Schedule A 5. The relief at item 2(a) was problematic: An order that the Defendant … deliver up to the Plaintiff all copies of any document referred to in Schedule A. When the offer was made: the defendant was unaware that he possessed any document; the plaintiff was not alleging by its Further Amended Statement of Claim8 that 8 Court doc 38 filed 8 August 2016. -- 7 of 13 -- 8 the defendant then retained possession of any document; the defendant was alleging in 3FAD paragraph 23 that he “does not have possession of any confidential information” and the plaintiff was not pleading a positive denial of that allegation. It was not then an issue that the defendant possessed a document. Yet the prayer for relief at item 2(a) operated on an assumption that Schedule A referred to a document when it did not. It referred to information. It operated on a further assumption, not alleged by the plaintiff and denied by the defendant, that the defendant had copies. The defendant’s denial in 3FAD par 23 of retaining “possession”, as opposed to denial of retaining knowledge, implies a denial of possession of something tangible, probably a document. The relief claimed at 2(a) was ambiguous because of its reference to any document referred to in Schedule A. Schedule A did not refer to any document. Yet the relief problematically required that the defendant to produce copies of any document in schedule A. The relief claimed at 2(a) was not expressed to be conditional upon the defendant’s first being in possession or control of a copy. Contrast the relief at 2(b). In those circumstances, I do not accept that it was an imprudent failure by the defendant to fail to consent to an order that he that he deliver up to the Plaintiff all copies of any document referred to in Schedule A. It would have been reasonable to negotiate for a modified form of order, but it was not then reasonable to agree to the order requested at 2(a). 6. The relief at item 2(b) was problematic. An order that the defendant deliver any document in his possession arguably implied that there were documents in his possession. There was no such allegation made by the plaintiff in its pleading. There were no documents specified in the relief. 7. I distinguish this offer from the typical Calderbank offer. The plaintiff was not offering to settle the proceeding. The plaintiff invited the defendant to concede the plaintiff’s entitlement to part of the relief claimed being the part which the plaintiff inferred was not in dispute. The plaintiff intended to proceed with its disputed claims for past and future legal costs on an indemnity basis. At trial, the plaintiff’s unsuccessful claim for an indemnity for its costs arising from the terms of a deed prompted the plaintiff to amend its pleading, to lead evidence with a view to proving (1) a term of a missing contract, (2) the defendant’s execution of an allegedly missing deed, (3) that the defendant stole the contract and the deed, (4) that before the defendant was sacked he had no intention of returning to work, (5) weeks of text messages between the defendant and Mrs Whelan and (6) the defendant’s collateral dishonesty in swearing an affidavit and asking for a business record of British American Tobacco. The plaintiff 8. To identify which of the plaintiff’s legal costs were caused by the defendant’s unreasonable failure to submit to a part of the plaintiff’s request would be relevant but complicated. Neither party made submissions about it. The plaintiff submitted that the defendant’s imprudence entitled the plaintiff to indemnity costs of the proceeding. That submission is rejected. It ignores that the plaintiff claimed other substantial relief for which it was obliged to prepare and for which it was obliged to go to trial. The plaintiff was required to prepare for trial to seek the relief claimed in its prayer for relief at items 2(a), 2(b), 3, 4, 5 and 6. Those issues took much of the trial’s time and must have accounted for much of the preparation. 9. The defendant heard the plaintiff’s opening and expert evidence to the effect that Mrs Whelan’s laptop computer still retained electronic documents. It -- 8 of 13 -- 9 remained the case that the plaintiff did not allege in its 3FASOC that the defendant retained a document. The plaintiff had still not claimed as relief that that the defendant deliver a laptop for removal of electronic documents before the defendant consented to it. On trial day 4 the defendant, in cross- examination, consented to the relief sought in the prayer for relief at paragraphs 1, 1A and 2 and on trial day 5, when a draft order was prepared, agreed to an order which included that relief and an agreement about delivery of his laptop. The defendant’s consent was given as soon as the plaintiff asked for it. The defendant’s consent was given in a timely way and was not unreasonably withheld. [25] The plaintiff’s solicitors inferred on 26 September 2016 that the defendant was not raising any serious contest to the plaintiff’s prayer for relief at paragraphs 1, 1A and 2. The plaintiff’s letter of 26 September 2016 made clear that the plaintiff then intended to have a trial with respect to all other issues. I infer that the plaintiff’s primary motive to continue to a trial was to recover from the defendant past costs on an indemnity basis and the future costs of the proceeding on an indemnity basis. [26] The plaintiff’s counsel deliberately avoided asking the defendant whether he would consent to the relief sought in the prayer for relief at paragraphs 1, 1A and 2. The primary basis for that finding appears in the transcript at T4-101 line 44. It was in the plaintiff’s interest to keep that issue from resolving in its favour for as long as possible. A late resolution would improve the plaintiff’s prospects of arguing that all the trial costs were reasonably incurred. The fact that injunctive relief remained an issue until day 4 does not mean that the trial until day 4 was about that issue. It was not. Roney QC submitted9 that “it was glaringly obvious that he had to submit to orders to return possession of the data.” I accept that to be so. It was a reasonable inference from the pleadings. During the plaintiff’s opening of Dr Schatz’s evidence, it was glaringly obvious when defence counsel interrupted Roney QC to submit that the defendant’s instructions were that the defendant retained no electronic documents. [27] Mr Whelan made the concession as soon as he was asked by Roney QC on trial day 4. In my published reasons I made a finding a paragraph [26] that if the plaintiff had properly alleged in 3FASOC that the defendant retained documents in Mrs Whelan’s laptop and had claimed for the return or destruction of those electronic documents: 1. the defendant would not have contested that claim; and 2. the plaintiff would have been saved any costs incurred in obtaining that part of its mandatory relief. That finding was unnecessary for the orders made in that case. It is arguably relevant to the costs issue to be decided. The defendant does not rely upon it in submissions on costs. There is before me now the further evidence of the plaintiff’s offer of 26 September 2016. The defendant’s failure to accept part of that offer is relevant. It was reasonable for him to have resolved some of the issues by consenting to relief claimed at 1 and possibly 1A. It is difficult to see why he did not. I am no longer satisfied that the defendant would have acted reasonably if the plaintiff had properly alleged that the defendant retained documents in Mrs Whelan’s laptop. The finding I made in the published reasons at [26] is not relied upon by me in determining costs. 9 Plaintiff’s submissions 6 November 2018 par 9. -- 9 of 13 -- 10 [28] Significantly, I find that the defendant’s failure to agree to the plaintiff’s demand in the letter of 26 September 2016 does not justify an order for the defendant to pay the plaintiff’s indemnity costs of the proceeding. [29] Having now rejected the plaintiff’s submissions that each of the offers made by it justified an order for indemnity costs, I can deal with the defendant’s offers. The defendant’s 4 offers [30] I refer to the four letters set out in paragraph 5 of these reasons. [31] The plaintiff’s submission on costs anticipated that the defendant’s submission on costs would rely upon offers made by the defendant. Roney QC submitted that none of the offers complied with the rules. I make no finding about whether they complied. He submitted that none involved the making of consent orders to which the defendant ultimately consented. That is correct. However, it is unhelpful. The defendant consented to even more relief than the plaintiff had claimed. It was submitted that if UCPR r 361 was invoked, it would mean the defendant must pay the plaintiff’s costs on a standard basis up to the date of service of the offer. I make no finding about that. The defendant has not purported to rely upon r 361. [32] The defendant’s first offer to settle, under cover of a letter of 12 October 2015, offered less than the plaintiff succeeded in obtaining in the consent order. It does not assist the defendant. The second offer, forwarded under cover of a letter dated 30 March 2016 offered, among other things, that each party pay its own costs. I cannot determine whether the plaintiff was unreasonable in failing to accept that offer because there is still an outstanding question as to whether the plaintiff will recover its costs related to obtaining and executing an Anton Piller order. [33] The defendant’s third offer to settle, under cover of a letter dated 14 July 2016 included an offer that the defendant pay the plaintiff’s costs of an incidental to the proceedings in the sum of $15,000. Constructive though that offer was, I cannot determine that the plaintiff was unreasonable for rejecting it. The plaintiff had incurred more than $88,000 in respect of its expenses relating to the Anton Piller order. I am not persuaded that the plaintiff was unreasonable in rejecting that offer. The defendant’s fourth offer was not an offer under the rules. It was by letter dated 20 September 2016. Again, it was a constructive offer to settle all but the costs. As for costs, it offered that each party pay its or his own. I am not satisfied that it was unreasonable for the plaintiff to reject that offer. That is because of the outstanding issue of the plaintiff’s costs of obtaining and executing the Anton Piller order. It may successfully recover those. The parties’ submissions generally about the costs [34] Apart from the submissions about the effect of offers, the parties made other general submissions about costs. [35] The plaintiff had maintained by its various statements of claim that it was entitled to pre-proceeding legal costs, fees for forensic examination of a laptop and iPhone and costs of the proceedings as damages for breach of contract. It amended its case by 3FASOC on the last day of trial. The amendment permitted the plaintiff to argue that it was entitled to those three types of costs pursuant to an indemnity in the deed which the plaintiff alleged had been executed by the defendant. The amendment had the -- 10 of 13 -- 11 consequence that, at the very end of the trial, the plaintiff maintained only one claim for damages for breach of contract. That was its claim for a small amount of costs incurred before the proceeding was instituted. Its other claims for indemnity costs were based upon an indemnity clause in the deed. [36] The plaintiff failed to establish that it suffered loss for breach of contract. The plaintiff failed to prove the existence of the deed. The plaintiff’s costs incurred for the forensic examination of the iPhone were incurred in respect of issues related to discrediting the defendant to assist with proof of the existence of the deed and its theft by the defendant. I cannot see how that expense can be reasonably recoverable. The plaintiff’s costs for forensic testing of the laptop were probably related to similar collateral credit issues relevant only to proof of the existence of the deed and its theft. I cannot see how those expenses can be reasonably recoverable. [37] It was submitted for the plaintiff that its failure to recover $1,274.56 as legal costs “does not provide any basis to depart from the usual rule that a successful plaintiff ought recover its costs…The Plaintiff has had substantial if not complete success in relation to its breach of contract claim, and that claim underpinned and was the pillar supporting its claim for principal relief, which was for recovery of its own property and injunctive relief. The mere fact that other aspects of the Plaintiff’s case failed in that damages did not flow from the breach does not mean it should be deprived of its costs or receive only a proportion of them.” [38] I reject that the breach of contract claim “was the pillar supporting its claim for principal relief.” [39] The claim for injunctive relief was a sideshow in this litigation. The principal relief appeared to me to be the indemnity costs which required the plaintiff to prove the existence of and loss or destruction of a deed. I am comforted in making this finding by seeing from the plaintiff’s solicitors’ letter of 26 September 2016 that the plaintiff’s solicitors then regarded the indemnity costs as the principal basis for continuing to trial. If the plaintiff had been able to establish the existence of the deed, it was entitled to be indemnified at least for all costs it reasonably incurred. Most of the trial was devoted to that battle. The plaintiff lost on all or almost every issue related to that battle. Half the trial was taken up with the plaintiff’s attempt to obtain all its costs on an indemnity basis. [40] It was submitted for the plaintiff that the defendant had unreasonably and without justification forced a trial on the issue of whether he had entered into a contract which contained cl. 10. Clause 10 was the clause which the defendant breached. His counsel conceded that if the defendant had entered into a contract containing clause 10 that the defendant would have breached it. It was reasonable for the defendant to put the plaintiff to proof of the existence of such a contract. The defendant pleaded his explanation for a non-admission: that he did not have a copy of the contract. It was an accurate plea. He did not have a copy. Neither did the plaintiff. To put the plaintiff to proof that the contract contained clause 10 was reasonable. The defendant withheld until cross-examination his opinion that the missing contract probably contained the relevant clause 10. That evidence against interest was consistent with his being an honest litigant who believed by the time of his cross-examination, after hearing evidence led for the plaintiff, that the missing contract probably contained such a clause. It was not improper conduct to put the plaintiff to proof in such circumstances. Generally speaking, a defendant may put a plaintiff to proof of a fact by a non- -- 11 of 13 -- 12 admission whose basis is accurately explained. Such conduct does not ordinarily justify an order for indemnity costs if the plaintiff proves the fact. I am not satisfied that the defendant forced a trial of the issue about clause 10 unreasonably or without justification. This argument does not justify an order for indemnity costs of the issue, let alone indemnity costs of the proceeding. [41] It was submitted for the plaintiff that “much time was taken at trial dealing with the defendant’s alleged justifications (called defences) for copying and keeping the material on his laptop and pretending he hadn’t”. I reject that any time was taken up in the trial on an issue that the defendant pretended he had not kept material on his laptop. There was no allegation that the defendant knew he had material on his laptop but pretended that he had not. However, there was some time taken up during the trial with the defendant’s alleged justifications for retaining the plaintiff’s documents. That was time wasted which increased the plaintiff’s costs. [42] The plaintiff submitted that it was obvious that the defendant had to submit to orders to return possession of data. I accept that was so. I have dealt with this matter above. The defendant’s imprudent failure to consent to the plaintiff’s claims for relief 1 and 1A justified the plaintiff’s preparing for and going to trial to obtain that relief. But very little of the trial was about that issue. It was obvious to Roney QC and to me that the defendant was likely to concede that relief as soon as he was asked. [43] The plaintiff submitted that there was misconduct by the defendant on trial day one because the defendant spent most of the day seeking to set aside the Anton Piller order. I accept that about half of that day was wasted on the defendant’s contested application to have the court hear the defendant’s application to set aside the Anton Piller order. The court declined to hear the application. That will have caused expense to the plaintiff. I reject the submission that it was misconduct. It was a sensible idea, but the defendant had no entitlement to use up the allocated trial date on issues which were not pleaded, unless the plaintiff had consented. [44] The plaintiff submitted that the proceeding was continued by the defendant in wilful disregard of the known facts that there was an employment contract which contained cl. 10 and that there had been appropriation of confidential hardcopy documents and that there had been appropriation of electronic data and that there was no lawful justification for copying and/or retaining that data. I reject the submission that it was a known fact that the employment contract contained cl. 10. I reject the submission that there was no lawful justification for copying documents. I accept that there was no lawful justification for retaining most documents after the deadline offered by the plaintiff. I reject the submission that the defendant’s conduct was a wilful disregard of known facts. If that last part of the submission was intended to refer to the defendant’s putting the plaintiff to proof that the lost employment contract contained the relevant clause 10, I refer to the discussion above. I am not satisfied that it was a fact known to the defendant that the missing document contained clause 10. The defendant gave secondary evidence of the presence of one clause of a missing contract. There was no exploration in the evidence of when the defendant came to his opinion that the contract contained the relevant clause 10, whether it was before his pleading put the plaintiff to proof, whether it was before he heard the plaintiff’s evidence or whether it was an opinion formed during the plaintiff’s case. There was no exploration of the basis for the opinion or the defendant’s confidence in its correctness. I do not find that the presence of clause 10 was a fact known to the -- 12 of 13 -- 13 defendant, as opposed to a conclusion drawn by the defendant on the balance of probabilities, or that it was wilfully disregarded by him. [45] The defendant’s 4 page submission was essentially that: 1. The plaintiff’s victory was analogous to recovery of only nominal damages after claiming substantial damages; and 2. The defendant’s defence of justification for breach of contract was reasonably maintained, though ultimately unsuccessful. [46] The defendant’s maintenance of the defence of justification for breach of contract was not misconduct. Fortunately, only about a day of the trial was wasted on that flimsy defence. The plaintiff’s complete success on that issue is relevant to costs. [47] I partially reject the defendant’s submission that the result of the trial was analogous to recovery of only nominal damages after claiming substantial damages. The analogy is fair. But the proceeding and the trial were about more than the plaintiff’s failed attempt to recover an indemnity for its costs. The 5 days of the trial were also occupied with: 1. The plaintiff’s successful recovery of some inevitable injunctive relief; 2. The defendant’s unsuccessful application to have a hearing with the trial of the defendant’s application to set aside the Anton Piller order; and 3. The defendant’s unsuccessful case of justification for breach of contract. [48] I am satisfied that half the trial was taken up by evidence and argument relevant only to issues upon which the plaintiff failed. I am satisfied that about a day and a half of the trial was wasted on the defendant’s flimsy justification defences and failed application to interrupt the trial with an application to set aside the Anton Piller order. The plaintiff was unsuccessful in respect of the only matter in real contest: whether it had an indemnity under a deed which would allow it to have judgment for all of its costs on an indemnity basis. [49] I am satisfied that the appropriate order is that each party should bear its own costs of the proceeding other than the costs in respect of the plaintiff’s application for an Anton Piller order and the plaintiff’s costs of executing that order. The costs in respect of the plaintiff’s application for an Anton Piller order and its costs of executing that order have not been decided by me and have been previously reserved. -- 13 of 13 --