NSW Electoral Commission v Gallion

The defendant, Mr Gallion, was until 25 October 2016, an employee of the plaintiff, NSW Electoral Commission.

The Commission commenced these proceedings on 23 November 2016 alleging, in effect, that Mr Gallion had misappropriated confidential information. The Commission sought orders that Mr Gallion be restrained from using that information and that he deliver up information within his possession and any devices on which that information was stored.

Mr Gallion is facing criminal charges, which I am told arise out of the same circumstances as the Commission alleged in the proceedings. Those proceedings are to be heard in May 2017.

When the proceedings were commenced, the Commission obtained interim ex parte relief to restrain Mr Gallion from using the information. Mr Gallion appeared before the Court in person on a number of occasions and, on a without admissions basis, consented to orders the effect of which was to continue, and to some extent widen, those restraints and to compel him to swear an affidavit setting out his dealings with the information. Those orders made provision for the protection of Mr Gallion's entitlement not to disclose information that might constitute “culpable conduct” for the purposes of s 87 of the Civil Procedure Act 2005 (NSW). Mr Gallion complied with those orders.

On 15 December 2016, McDougall J made orders for the service by Mr Gallion of all the evidence upon which he wished to rely in the proceedings.

Thereafter settlement discussions took place. There was a settlement conference on 2 March 2017, the result of which was that an in principle agreement was reached, save as to costs. The in principle agreement has been reduced to writing. Earlier today, I made orders in accordance with that agreement. There is a notation in those orders that Mr Gallion consented to them on a “no admissions” basis. Those orders make no provision for the costs of the proceedings.

Mr Kalyk, who appeared for the Commission, submitted that there should be an order that Mr Gallion pay the Commission’s costs of the proceedings upon the basis that either there has been a “complete capitulation” by Mr Gallion in the proceedings or, alternatively, upon the basis that I could be satisfied that the Commission was bound to have succeeded, had the case gone to trial.

Mr Flanigan, who appeared for Mr Gallion, submitted that it was unreasonable of the Commission to have commenced the proceedings without giving Mr Gallion notice of its intention to do so, that had such notice been given it is very likely that the proceedings would have been resolved without the need for litigation and that, accordingly, and in the light of the settlement reached, there should be no order as to costs.

McHugh J summarised the relevant principles in the familiar passages in Re The Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; HCA 6 at 624-5 as follows:

Mr Kalyk also drew my attention to the observations of Burchett J in One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548; FCA 270 at [6]:

There are a number of aspects of the matter to consider.

The first is whether the Commission behaved unreasonably by commencing these proceedings without notice.

In that regard, Mr Kalyk sought to read a number of affidavits sworn by officers of the Commission.

I allowed that material only as evidence going to the reasonableness of the Commission's commencement of the proceedings without notice and the reasonableness of the manner in which the Commission conducted the proceedings.

I am satisfied that that material shows that the Commission had good reason to commence proceedings without giving Mr Gallion notice.

I see no reason to conclude that either the Commission or Mr Gallion behaved unreasonably in the manner in which the proceedings were conducted, once they were commenced.

As to the question of whether there has been a "complete capitulation" by Mr Gallion, it is true that the orders to which he has agreed resemble, very closely, the orders that the Commission sought in the summons.

However, Mr Gallion has consented to those orders as part of an agreement to settle the proceedings. It is no part of that settlement agreement that there be any order as to costs. There is no suggestion that, for example, in the course of the negotiations and as an element of the settlement, the Commission reserved its right to argue for costs.

The evidence reveals that once there had been an "in principle" settlement of the matter, negotiations about costs continued without agreement being reached.

Evidently, Mr Gallion was not prepared to agree that, as part of the settlement, he pay the Commission’s costs; and the Commission was prepared to settle with Mr Gallion without that matter being agreed. Hence, the orders I made earlier today.

As to the submission that I should conclude that it is very likely that the Commission would have succeeded, that would involve me, in effect, determining on the costs application, the merits of the Commission's case.

As I said, Mr Kalyk read a number of affidavits by officers of the Commission. As I was not prepared to try a “hypothetical issue” (see [9] above), I did not allow that material as evidence of the underlying facts.

In those circumstances, I see no basis on which I should make any order as to costs and I decline to do so.