Harvey Norman Holdings Limited v Fels [2002] FCA 13

FEDERAL COURT OF AUSTRALIA

Harvey Norman Holdings Limited v Fels [2002] FCA 13

PRACTICE AND PROCEDURE – motion for leave to discontinue proceedings – whether proceedings reasonably commenced – whether any order as to costs appropriate in circumstances

Federal Court of Australia Act (1976) (Cth) s 43(2) Federal Court Rules O 22 r 2(1)(d)

Trade Practices Commission v Manfal (No 3) (1991) 33 FCR 382 referred to Cambridge Consolidated NL v Zephyr Minerals NL [2001] FCA 515 referred to O'Neill v Mann [2000] FCA 1680 referred to Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 143 ALR 1 considered Colgate Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 referred to Andrews v Barnes (1888) 39 Ch D 133 referred to Carindale Country Club Estate Pty Limited v Astill (1993) 42 FCR 307 referred to Newman v Phillips Fox (1999) 21 WAR 309 referred to Bolkiah v KMPG [1999] 2 AC 222 considered Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 referred to Farrow Mortgage Services Pty Ltd (in liq) v Mendall Properties Pty Ltd [1995] 1 VR 1 referred to

HARVEY NORMAN HOLDINGS LIMITED v ALLAN HERBERT MILLER FELS & ANOR N 858 of 2001 STONE J 22 JANUARY 2002 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 858 OF 2001

BETWEEN: HARVEY NORMAN HOLDINGS LTD

(ACN 003 237 545)

APPLICANT

AND: ALLAN HERBERT MILLER FELS

FIRST RESPONDENT

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

SECOND RESPONDENT

JUDGE: STONE J

DATE OF ORDER: 22 JANUARY 2002

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The applicant has leave to discontinue the proceedings.

2. The applicant shall not commence further proceedings against the respondents in respect of the facts pleaded in the statement of claim in proceedings number N 858 of 2001 without the leave of the Court.

3. There is no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 858 OF 2001

BETWEEN: HARVEY NORMAN HOLDINGS LIMITED

(ACN 003 237 545)

APPLICANT

AND: ALLAN HERBERT MILLER FELS

FIRST RESPONDENT

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

SECOND RESPONDENT

JUDGE: STONE J

DATE: 22 JANUARY 2002

PLACE: SYDNEY

REASONS FOR JUDGMENT

Introduction 1 The application and statement of claim in this matter were filed on 24 May 2001. The claims made by the applicant ("Harvey Norman") arose from the second respondent's investigation into whether an advertising catalogue published by Derni Pty Ltd, a subsidiary of Harvey Norman ("Derni"), breached any provision of the Trade Practices Act 1974 (Cth) ("Act"). In the course of the investigation the second respondent ("ACCC") issued, between 31 August 2000 and 23 February 2001, a number of notices under s 155 of the Act ("s 155 notices") and conducted examinations pursuant to those notices. In response to the s 155 notices both Harvey Norman and Derni produced various documents. The ACCC instructed the solicitors Phillips Fox to advise and assist it in connection with that investigation. 2 When, on 19 March 2001, Harvey Norman became aware that Phillips Fox were acting for the ACCC it immediately expressed concern, alleging that Phillips Fox had a conflict of interest and could not act for the ACCC. The alleged conflict of interest was based on the fact that during the period from August 1999 to March 2001, Harvey Norman had also retained Phillips Fox in relation to a number of matters. The ACCC did not accept that there was a conflict of interest but, as an exercise of caution, it dispensed with the services of both Phillips Fox and counsel instructed by Phillips Fox, Mr Timothy North QC, in relation to the investigation. Despite this, Harvey Norman alleged that the investigation was irretrievably compromised and sought certain relief. 3 Despite what appear to be strenuous attempts to settle their dispute, the parties were not able to finalise an agreement. At the hearing, Harvey Norman sought leave to file in Court a notice of motion, returnable instanter, seeking leave to discontinue the whole of the proceedings, as well as an order that the respondents pay a portion of its costs or, alternatively, an order that each party bears its own costs. 4 The respondents oppose the discontinuation of the proceedings. They claim that the proceedings should be dismissed and that Harvey Norman should be ordered to pay their costs on an indemnity basis. Alternatively the respondents submit that, if Harvey Norman is given leave to discontinue, such leave should be subject to an undertaking not to bring any further proceedings against the respondents on the facts pleaded in the statement of claim.

Leave to discontinue the proceedings 5 The Federal Court Rules,O 22 r 2(1)(d), provide that, subject to some exceptions irrelevant here, a party may discontinue proceedings at any time with leave of the Court. Although the Court's discretion to grant leave to discontinue is unfettered and an application for leave to discontinue will normally be granted, leave is not granted as a matter of course; Trade Practices Commission v Manfal (No 3) (1991) 33 FCR 382 at 383 per Lee J. Lee J also stated at 384, that: "The requirement of the Federal Court Rules that, in the absence of consent of all parties, discontinuance of litigation against a party only be permitted by leave of the court contemplates a judicial review of all relevant circumstances and the satisfaction of the court that the grant of leave is proper in all the circumstances. In some cases the court may determine that a grant of leave to discontinue should be attended with conditions and in a rare case the court may determine that the only appropriate order is to refuse the leave sought." 6 An example of a rare case where the court refused leave to discontinue and ordered instead that the application be dismissed is Cambridge Consolidated NL v Zephyr Minerals NL [2001] FCA 515. The case is also a decision of Lee J in which, at [5] - [6], his Honour stated his reasons for dismissing the application as follows: "With regard to the question of leave to discontinue the application, the applicant states that its claims would be statute-barred if they were to be re litigated and, furthermore, the applicant offers an undertaking to the Court not to bring any further proceeding against the respondents on the facts pleaded in the statement of claim. Normally such circumstances may be sufficient for leave to be granted to discontinue a proceeding but there is another factor in this case which makes it appropriate that future conduct in the matter not rest upon limitation provisions or an undertaking. The applicant's statement of claim sought exemplary damages from two respondents for slander, said to have been committed with malice. If that claim and others in the statement of claim are now to be abandoned, it is appropriate that the application be disposed of with finality by an order dismissing it, and I will so order."

Award of costs 7 The award of costs is also in the discretion of the Court: Federal Court of Australia Act 1976 (Cth) s 43(2). Discontinuance pursuant to leave granted under O 22 r 2(1)(d) does not attract an automatic award of costs against the discontinuing party. As Finn J observed in O'Neill v Mann [2000] FCA 1680 ("O'Neill") at [13], "[t]he conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs." The relevant principle was stated in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 143 ALR 1 ("Lai Qin")by McHugh J at 3 - 4: "If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings." 8 In Lai Qin, McHugh J was considering a situation in which the proceedings had been deprived of all utility because a decision of the Minister in favour of the applicant, made for reasons different to those raised in the proceedings, and given after the proceedings had been commenced by the applicant, had made it unnecessary for the applicant to seek the relief sought in the proceedings. Counsel for the respondents, Mr J C Sheahan SC, distinguished Lai Qin on this basis and submitted that the principle articulated by McHugh J was irrelevant to this case, which he characterised as one that "the applicant simply did not wish to prosecute … any further." 9 While Mr Sheahan is undoubtedly correct in his description of the facts in Lai Qin, I do not accept that the principle stated by McHugh J is so limited. His Honour made the comments quoted above in the context of a discussion of the circumstances in which there should be an award of costs where there has not been a hearing on the merits. His Honour stated at 3: "Ordinarily, the power [to order costs] is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action." 10 McHugh J cautioned that it is not for the court to predict the outcome of a hypothetical case. His Honour, however, recognised that in some cases the court may be able to conclude that one or other of the parties has acted unreasonably or that, although both acted reasonably, one party was almost certain to have succeeded if there had been a hearing on the merits. In relation to this latter category his Honour observed that "such cases are likely to be very rare." Finn J was presumably referring to such a case in O'Neill where his Honour commented at [13] that: "[W]here the discontinuance can be said to be an acknowledgment by an applicant of likely defeat or where no objective circumstance provides reason for the discontinuance, a costs order in favour of the other party will ordinarily be made."

Indemnity costs 11 If costs are to be awarded, as a general rule they are awarded on a party and party basis. As noted above, however, the respondents seek an order that their costs be paid by Harvey Norman on an indemnity basis. In Colgate Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, Sheppard J considered the authorities relevant to the question of when the court ought to award costs other than on a party and party basis. At 232 - 234 his Honour summarised the principles and guidelines and identified, at 233, the following as some of the circumstances which have been thought to warrant the exercise of the court's discretion to award indemnity costs: · the making of false or irrelevant allegations of fraud; · evidence of misconduct that causes loss of time to the court and to other parties; · commencing the proceedings for an ulterior motive or in wilful disregard of known facts or clearly established law; · making allegations that ought never have been made or undue prolongation of a case by groundless contentions; · imprudent refusal of an offer to compromise. 12 His Honour pointed out that other categories are to be found in the cases and, given that the categories in which the discretion might be exercised are not closed, others might arise in the future. In brief, the test today is no different from that articulated in the 19th century by the Court of Appeal in Andrews v Barnes (1888) 39 Ch D 133 at 141, that is whether in all the circumstances justice would require an exercise of the Court's discretion. 13 The decision whether to award costs, whether indemnity or party and party costs, therefore requires a consideration of all the relevant circumstances of this case. It is necessary to determine, among other things, if these proceedings were reasonably commenced, whether the matter was diligently and efficiently pursued and whether the application to discontinue was made in a timely way.

Circumstances surrounding the commencement and conduct of these proceedings 14 It would appear that Gillis Delaney Brown ("GDB"), lawyers for Harvey Norman, first became aware that Phillips Fox were acting for the ACCC on the evening of 19 March 2001. The firm advised Harvey Norman of this fact later the same evening. There followed an exchange of correspondence concerning the perceived conflict of interest affecting Phillips Fox and the consequences of that firm's involvement in the investigation. 15 In a letter to Phillips Fox dated 20 March 2001, GDB advised Phillips Fox of the situation. On 23 March 2001 GDB also wrote to the ACCC setting out Harvey Norman's objections to the involvement of Phillips Fox and counsel retained by Phillips Fox, Mr North QC. The letter demanded that the ACCC provide precise particulars of Phillips Fox's involvement in the investigation. 16 By letter dated 2 April 2001 to GDB, the ACCC stated that Phillips Fox had assured it that no confidential information relating to Harvey Norman had been received by the Phillips Fox solicitor acting on the investigation or by Mr North QC. The letter requested GDB to advise the ACCC of any matter that might indicate that these assurances should be reviewed. The ACCC declined to provide the particulars sought by GDB but advised that it had dispensed with the services of Phillips Fox and Mr North QC in relation to the investigation.

17 On 17 May 2001 GDB wrote to the ACCC reiterating Harvey Norman's concerns including that, "There is a substantial risk that confidential information or information and documents subject to legal professional privilege has been, and continues to be used by the Commission in the course of investigations. Individual officers of the Commission who have been privy to any advice given by Phillips Fox or Mr North QC remain tainted by the conflict of Phillips Fox."

The letter proposed that the dispute be resolved by the ACCC: (a) delivering transcripts of all examinations conducted pursuant to the s 155 notices to Harvey Norman; (b) engaging in the investigation, only officers who had no previous dealings with Phillips Fox in the matter; and (c) undertaking to erect appropriate Chinese walls in relation to the future conduct of the matter.

18 The ACCC responded to this letter the next day repeating its previous statements that, on its understanding of the factual situation, there had been no breach of confidential information. It stated: "Your most recent letter provides no additional information to substantiate your contentions. Accordingly, there is no further material available to cause the Commission to change its view or accede to your latest demands."

This response shows that the parties had reached a 'Mexican standoff', each insisting that the other must provide more information before the dispute could be resolved. 19 In a letter dated 21 May 2001 to the ACCC, GDB enclosed a draft application to this Court together with a draft supporting affidavit, and made the following comments: "Our client accepts that the Commission's investigation may raise issues of public importance. Our client regards reasonable conduct by a public authority and the proper protection of the lawyer-client relationship and of confidential documents and communications as matter of public importance.

You have not identified any practical reasons why it is necessary for the Commission to retain the same officers to conduct the examination and investigations. You have not offered any explanation why appropriate Chinese walls could not be established.

The Commission knows, but our client does not know, the identity of all of the officers concerned. It also knows, and our client does not, what measures to construct Chinese walls are reasonable and necessary.

Nevertheless our client is prepared to accept an assurance from the Commission that the officers who dealt with Phillips Fox will no longer be involved and an assurance that appropriate Chinese walls will be established.

All that it seeks is that reasonable steps be taken and assurances be given.

If the Commission is not prepared to take reasonable steps nor to give such assurances, our client will be left with no alternative but to seek the orders contained in the attached application."

20 In a letter dated 23 May 2001 the ACCC rejected the offer of settlement. It refused to give the assurances sought by Harvey Norman. It stated that it was not reasonable to expect, "that the ACCC will take the action requested by your clients, namely:- (a) deliver up all the transcripts of the s 155 examinations to date; and (b) quarantine all Commission officers who have worked on the investigation to date, where your clients have not been able to substantiate the misuse of any of their confidential information and the Commission, following due inquiry, is satisfied that none of your clients' confidential information has been received by … Phillips Fox."

In a letter dated 23 May 2001 to the ACCC, GDB subsequently clarified that Harvey Norman did not require the transcripts referred to in the ACCC's letter of 23 May 2001 but would be satisfied with the assurances previously requested. 21 In an affidavit sworn on 21 May 2001, Mr Richard Ennis, a solicitor employed by Yoogalu Pty Limited, a wholly owned subsidiary of Harvey Norman, referred to specific meetings that he had with, among others, partners and solicitors from Phillips Fox. He stated that from time to time he provided confidential and commercially sensitive information concerning Harvey Norman to them. Mr Ennis listed eight aspects of Harvey Norman's business methods and plans that were included in the confidential information provided to Phillips Fox. 22 It would appear that, at the time the proceedings were commenced, Harvey Norman's concern was not that Phillips Fox might have divulged (wittingly or unwittingly) specific confidential information about transactions in which it had acted for Harvey Norman. Rather, it was concerned that general information about Harvey Norman's business methods and practices that Phillips Fox acquired in confidence might have been disclosed or might have informed the investigation being carried out by the ACCC. This concern was made explicit in a letter dated 3 July 2001 from GDB to the ACCC's current solicitors in this matter, the Australian Government Solicitor ("AGS"). This letter, written just over one week prior to the date scheduled for the hearing, referred to the evidence filed by the respondents. It identified in some detail the gaps that GDB saw in that evidence, namely the failure to rebut suggestions of a number of ways in which confidential information may have been passed to the ACCC and which the evidence did not address. Despite this, the letter contained a further offer of settlement on terms that involved a review of transcripts of the examinations conducted pursuant to the s 155 notices and some assurances as to the knowledge of Mr Michael O'Brien, a partner of Phillips Fox assisting the ACCC with its investigation. The proposal envisaged that the proceedings be discontinued without any order as to costs if the review of the transcripts was able to allay Harvey Norman's concerns. 23 On 9 July 2001 the AGS provided the transcripts of the s 155 examinations to Harvey Norman's counsel. At about that time GDB was served with the affidavits of David Cousins, a member of the ACCC, and Michael John O'Brien, both sworn on 9 July 2001, and Timothy North QC, sworn on 10 July 2001. The documents were reviewed by Mr Carnovale, counsel for Harvey Norman, and I was informed from the bar table that this review was completed at about 4.50 pm on 11 July 2001. It would appear that the review of the transcripts and other material finally allayed Harvey Norman's concerns. The only obstacle then to settlement of the dispute was the issue of costs. It is important to note that this position was reached virtually as the hearing was scheduled to commence.

Submissions 24 As noted in [7] above, the exercise of the Court's discretion as to the award of costs depends on the reasonableness of the conduct of the parties in commencing and defending the proceedings. It was common ground that there had been the utmost co-operation between the parties and that the case had been conducted expeditiously. Mr P M Donohue QC, counsel for Harvey Norman, submitted that it was reasonable for Harvey Norman, when it discovered that Phillips Fox was assisting the ACCC in the investigation, to be concerned about the possible disclosure of confidential information. He submitted that it was not until just prior to the hearing date that Harvey Norman was finally given sufficient information by the ACCC to allay those concerns. The ACCC could have addressed Harvey Norman's concerns by providing the information earlier or by giving the assurances sought by Harvey Norman. The failure to do so, Mr Donohue submitted, not only justified Harvey Norman in commencing the proceedings and pursuing them to the date of the hearing but also meant that the ACCC by its attitude contributed to the accumulation of unnecessary costs. For that reason, he submitted, the ACCC should be held liable for at least a portion of Harvey Norman's costs. 25 Mr Sheahan's position was that Harvey Norman's case always lacked utility. It was "a fishing expedition…in a dry river bed". The proceedings, he submitted, should be dismissed with indemnity costs awarded against Harvey Norman. Mr Sheahan submitted that this was a case about confidential information and such cases are not exceptions to the rule that an applicant should have a case before commencing proceedings. In this case, however, the description of the alleged information said to be confidential was said to be so general and imprecise that no claim for confidentiality could be sustained. While conceding that cases involving confidential information are "a little bit tricky", he submitted that this difficulty can be overcome by the rules of the Court; for instance by obtaining an order for discovery under O 15A r 6. Mr Sheahan relied on Carindale Country Club Estate Pty Limited v Astill (1993) 42 FCR 307 ("Carindale") and the comments of Drummond J at 314: "It is a basic requirement that before material will be recognised as having the character of confidential information, the information in question must be identified with precision and not merely in global terms."

Mr Sheahan also submitted that there was no evidence to indicate that the alleged confidential information was conveyed to the ACCC or was relevant to the investigation being pursued by the ACCC. He placed much emphasis on the fact that the ACCC had considered Harvey Norman's complaint and, having investigated it, assured Harvey Norman that there was nothing to worry about. Harvey Norman not only refused to accept this assurance but failed to make direct enquiries of Phillips Fox. Despite this, Mr Sheahan explained that the additional affidavits and transcripts referred to in [23] above were provided as an exercise of prudence and not because the respondents accepted Harvey Norman's claim that there were gaps in their evidence. 26 The position of the ACCC as an important regulator and frequent litigator was also emphasised. As such, the ACCC often uses external law firms and investigates companies that operate throughout Australia. Mr Sheahan submitted that the ACCC cannot be put in the position where "the mere risk of confidential information having come into its information systems" means that it must dispense with the whole investigation team. The ACCC was obliged to protect the integrity of its processes and its ability to investigate efficiently and cheaply. 27 In support of the respondents' contention that the proceedings should be dismissed not merely discontinued, Mr Sheahan submitted that the investigation of possible offences under Commonwealth law should not continue under a cloud, especially when all the evidence has been exchanged and there has been full examination of the ACCC's documents and third party documents.

Consideration

28 There are three bases on which courts will intervene to prevent unintentional as well as intentional disclosure of confidential information obtained by solicitors in the course of acting for their clients. They are, "protection of confidential information, restraint from a breach of fiduciary duties and the … court's control over the conduct of solicitors as its officers"; Newman v Phillips Fox (1999) 21 WAR 309 ("Newman") at 314. Where the circumstances involve a solicitor acting for a new client against the interests of its former client such restraint is even more important; Carindale at 311 - 313. In Bolkiah v KPMG [1999] 2 AC 222 ("Bolkiah"), Lord Hope of Craighead, at 227, summarised the principle governing the duty of a solicitor to a former client thus:

"A solicitor is under a duty not to communicate to others any information in his possession which is confidential to the former client. But the duty extends well beyond that of refraining from deliberate disclosure. It is the solicitor's duty to ensure that the former client is not put at risk that confidential information which the solicitor has obtained from that relationship may be used against him in any circumstances. Particular care is needed if the solicitor agrees to act for a new client who has, or who may have, an interest which is in conflict with that of the former client. In that situation the former client is entitled to the protection of the court if he can show that his solicitor was in receipt of confidential information which is relevant to a matter for which the solicitor is acting, against the former client's interest, for a new client. He is entitled to insist that measures be taken by the solicitor which will ensure that he is not exposed to the risk of careless, inadvertent or negligent disclosure of the information to the new client by the solicitor, his partners in the firm, its employees or anyone else for whose acts the solicitor is responsible." 29 Lord Millett, with whose reasons the other members of the court agreed, expressed similar views. The issue has been discussed in Australia in a number of cases including Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 ("Mallesons Stephen Jaques") and Farrow Mortgage Services Pty Ltd (in liq) v Mendall Properties Pty Ltd [1995] 1 VR 1. I agree with the opinion expressed in Newman bySteytler J at 322, that there is little practical difference between the test in Bolkiah and that adopted in these Australian cases. 30 Unlike Bolkiah and Newman, however,these proceedings were not directed to restraining the solicitors from continuing to act. They were directed to restraining the use that a third party, the ACCC, might make of any confidential information that might have passed to the ACCC in breach of the duty that Phillips Fox owes to Harvey Norman. Nevertheless the extent of the duty goes a long way to justifying Harvey Norman's concern. 31 Mr Sheahan made much of the fact that, in his opinion, Harvey Norman could not have succeeded in this proceeding. This may be so, although in the absence of a hearing on the merits I express no opinion on the point. In this case I see no reason to depart from the general practice that leave to discontinue should be granted and I propose to order accordingly. There is nothing in the circumstances of this case to raise the concerns expressed by Lee J in Cambridge Consolidated NL v Zephyr Minerals NL (above) (see [5] above). No slur is cast on either of the respondents and there is no reason why, if the proceedings are discontinued rather than dismissed, the investigation should be regarded as continuing under a cloud. 32 In relation to the matter of costs, the issue is not whether Harvey Norman could have succeeded but whether the proceedings were reasonably commenced (see [7] above). The fact that a firm of solicitors that was also retained by Harvey Norman was advising the ACCC was a legitimate source of concern. Although the knowledge of the particular lawyers advising Harvey Norman is not imputed to the members of the firm who were advising the ACCC, the likelihood that lawyers in the same firm have shared information is at the very least, an issue to be considered; see Newman at [29] - [32] and the authorities discussed there. The fact that Harvey Norman appears ultimately to have been satisfied that its interests have not been prejudiced does not make the initial concern unreasonable. 33 It would, in my view, be unreasonable to expect Harvey Norman to accept that no confidential information had passed to the ACCC merely on the basis of the ACCC's assurances. This conclusion does not reflect adversely on the ACCC. As mentioned above, confidential information or knowledge could have been passed to the ACCC inadvertently and without the ACCC being aware that this had occurred. Harvey Norman was entitled to satisfy itself that this was not the case. 34 Finally, Mr Sheahan stressed the importance of the regulatory function of the ACCC and the broad-ranging nature of its investigations. There is no doubt that the duties and powers of the ACCC are extensive and of great public importance. This does not, however, detract from the importance of protecting confidential information. Moreover, there is considerable public interest in the role of solicitors as officers of the court and in the administration of justice; Mallesons Stephen Jaques at 361; Carindale at 311; Newman at 315. In the absence of specific legislative provision I would be reluctant to conclude that the public interest in the ACCC's investigation prevails over the public interest in preserving confidence in the administration of justice. Nevertheless, I find no fault with the ACCC's conduct in seeking to preserve the integrity of its investigation. It would appear that once the proceedings were commenced, all parties acted reasonably and promptly in seeking to defend their respective interests and there is no basis for ordering either to contribute to the costs of the other. That being so it is unnecessary for me to consider the issue of indemnity costs. 35 As the motion to discontinue was filed only after all the evidence was in, and Harvey Norman was able to satisfy itself that its interests were not prejudiced, it is appropriate that leave to discontinue should be granted subject to the restriction proffered by Harvey Norman, through its counsel at the hearing, namely that Harvey Norman not commence further proceedings against the respondents in respect of the matters pleaded in the statement of claim without the leave of the Court. Although it was submitted that this restriction should be imposed by way of an undertaking to the Court, in my view it is more appropriate that it be imposed directly by order of the Court. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate: Dated: 22 January 2002 Counsel for the Applicant: Mr P M Donohue QC with Mr F P Carnovale and Mr H Stowe

Solicitor for the Applicant: Gillis Delaney Brown

Counsel for the First and Second Respondent: Mr J C Sheahan SC with Mr A I Tonking

Solicitor for the First and Second Respondent: Australian Government Solicitor

Date of Hearing: 12 July 2001

Date of Judgment: 22 January 2002