Nowra Radiology Pty Ltd v Macintosh

• Jurisdiction: Australia Federal only
• Judge: STEWART J
• Judgment Date: 26 May 2020
• Neutral Citation: [2020] FCA 731
• Date: 26 May 2020
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Nowra Radiology Pty Ltd v Macintosh [2020] FCA 731

File number:	NSD 2178 of 2018
Judge:	STEWART J
Date of judgment:	26 May 2020
Catchwords:	PRACTICE AND PROCEDURE – competing applications regarding adoption or rejection of referee report – whether adoption of referee report consistent with the overarching purpose pursuant to ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) – relevant principles – whether findings made in the referee report relevant to the issues in dispute – whether expert has the relevant expertise – whether referee identified rational basis for findings made – order for the adoption of referee report with variations made
Legislation:	Federal Court of Australia Act 1976 (Cth) ss 37M, 37N
Cases cited:	Chocolate Factory Apartments Limited v Westpoint Finance Pty Limited [2005] NSWSC 784 Sheehan v Lloyds Names Munich Re: Syndicate Ltd [2017] FCA 1340 Stone v Ebeid [2020] FCA 343 Weston v Rajan [2019] FCA 1455
Date of hearing:	26 May 2020
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Category:	Catchwords
Number of paragraphs:	40
Counsel for the Applicants:	C Conde
Solicitor for the Applicants:	Access Law Group
Counsel for the Respondent:	J Mee
Solicitor for the Respondent:	Cullen Macleod

ORDERS

		NSD 2178 of 2018
BETWEEN:	NOWRA RADIOLOGY PTY LTD (ACN 166 387 980) First Applicant ; NOWRA RADIOLOGY OPERATIONS PTY LTD (ACN 603 000 675) Second Applicant ; JANET ELIZABETH MACINTOSH Third Applicant
AND:	PETER DOUGLAS MACINTOSH Respondent

JUDGE:	STEWART J
DATE OF ORDER:	26 MAY 2020

THE COURT ORDERS THAT:

1. The report of Dr Allan Watt as referee dated 10 December 2019 is adopted pursuant to rule 28.67(1) of the Federal Court Rules 2011 (Cth) subject to the following variations:

1.1. Paragraphs [4.5.2] on page 8, [4.5.3] on page 8, [4.5.4] on page 9 and [14.16] on page 11 are deleted;

1.2. Paragraphs [4.2.1] on page 7 and [4.12] on page 10 are to reflect that Peter Macintosh is the registrant for the domain name nowraradiology.com and the Fidelity Trust is the registrant for the domain name nowraradiology.com.au.

2. The parties’ competing interlocutory applications filed on 20 and 21 February 2020 are otherwise dismissed.

3. The parties are to bear their own costs on the interlocutory applications.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from transcript)

STEWART J:

On the competing interlocutory applications

1. By consent orders on 2 October 2019, I appointed Dr Allan Watt, a digital forensic expert, as referee to answer a series of questions that had been identified by the parties as being useful to pose to Dr Watt. There were about 10 questions on behalf of each side of the case. I shall come to the questions shortly.

2. Dr Watt reported by way of an expert report that was filed on 28 January 2020. The applicants move on an application to adopt Dr Watt’s report and the respondent moves on an application to reject the report. The respondent submits, in the alternative, that if the report is to be adopted, that should be done with some qualifications, or variations.

3. In order to appreciate and adjudicate on the competing contentions of the parties, it is necessary to identify the principal contours of the parties’ dispute.

4. The applicants are Nowra Radiology Pty Ltd (NR), Nowra Radiology Operations Pty Ltd (NRO) and Dr Janet Macintosh. The respondent is Peter Macintosh, the brother of Dr Macintosh. The applicants’ originating application seeks relief that may be summarised as follows:

1. A declaration that the respondent breached his duties as a director, presumably of NR and/or NRO.

2. A declaration that the respondent holds certain domain names, being nowraradiology.com.au (“.com.au”) and nowradiology.com (“.com”), on behalf of NR.

3. A mandatory injunction that the respondent deliver up the domain names to NR.

4. Damages in respect of the respondent’s conduct with respect to the domain names and unauthorised payments allegedly made by the respondent to himself from the Nowra Radiology Trust.

5. Damages for breach of contract.

6. A declaration that a general indemnity entered into between Dr Macintosh, for herself and as director of Quantum Mottle Pty Ltd, and the respondent, for himself and as trustee of the Fidelity Trust, does not apply to the above relief.

5. The relief sought by the applicants arises from the souring of the business relationship between the two Macintosh siblings. The following summary of the dispute is taken from the pleadings.

6. In about 2014, the siblings worked together to establish a radiology practice business, based in Nowra and styled “Nowra Radiology”. The assets of the business were owned, or to be owned, by the Nowra Radiology Trust. For some time, NR was the trustee of that trust, and it may be that at some stage, NRO became the trustee. The respondent was a director and shareholder of NR and NRO until sometime in the first half of 2017.

7. The units in the Nowra Radiology Trust were owned in equal shares by Quantum Mottle Pty Ltd as trustee for the Macintosh Business Trust, and the respondent as trustee for the Fidelity Trust. I infer that the Macintosh Business Trust represents Dr Macintosh’s interests. Both siblings were to contribute to the business in different ways.

8. On or about 17 October 2013, the respondent caused the domain names to be registered. The applicants contend, and the respondent disputes, that the respondent then held the domain names on constructive trust for NR as trustee of the Nowra Radiology Trust.

9. On or about 16 February 2017, Dr Macintosh, for herself and as director of Quantum Mottle Pty Ltd, and the respondent, for himself and as trustee of the Fidelity Trust, executed a settlement and release agreement and a deed of general indemnity in relation to the affairs of NR and NRO. The settlement agreement provided for the siblings to go their separate ways in relation to the business, in such a way that Dr Macintosh would keep the business and she would pay her brother a certain sum of money.

10. From the pleadings, it would appear that the settlement agreement did not deal expressly with what was to occur with the domain names. The applicants allege that, subsequent to the settlement, the respondent retained the registration of the domain names for himself or the Fidelity Trust when he should have made them available to, or transferred them to, the business.

11. Paragraph 25 of the statement of claim states as follows:

On or about 18 October 2017, Peter Macintosh took steps to modify the servers for the domain names, causing access issues for customers of Nowra Radiology.

12. The statement of claim goes on to allege, and the respondent admits, that the applicants thereafter demanded of the respondent that he deliver up, or transfer, the domain names to them, but that he refused.

13. The applicants also particularise various payments that they say the respondent procured for himself from the Nowra Radiology Trust without authority. There are also allegations that the respondent breached his duties as director of NR and/or NRO and the settlement agreement in various respects.

14. In relation to the domain names, which are at the heart of the dispute, the respondent pleaded in his amended defence as follows:

1. He registered the domain names in his capacity as trustee of the Fidelity Trust.

2. Nowra Radiology never used the .com domain name, only the .com.au domain name.

3. He denies that, on the terms of the establishment of the Nowra...