Seven & Harrison: a pyrrhic victory

In this author’s mind, it was beyond reasonable doubt that Seven would obtain final injunctive relief to restrain Ms Harrison from breaching the terms of the 2014 deed of settlement; any legal practitioner experienced in negotiating and drafting terms of settlement and confidentiality would know that there are strong commercial reasons such deeds entering into existence and it would require moving heaven and earth to persuade a Court as to a deed’s unenforceability where valuable covenants are made in a deed to secure the silence of a counterparty.

This case amply illustrates the pitfalls in pursuing a crushing legal victory over a less resourced litigant and the residual risks of such consequences.

There was an interesting angle to the case that was not quite addressed by the assertions put forward by Ms Harrison [at 49], namely, that she had handed over the electronic devices and confidential information to Harmers Workplace Lawyers and was therefore not in a position to surrender them to the plaintiffs.  If the AFR’s reporting is correct then it seems possible that Ms Harrison may have handed over the material to Harmers but she refused to pay them their full fees (which would have left Ms Harrison with almost nothing from that legal exercise) resulting in the firm exercising a lien over her file (including the surrendered material).  If this analysis be correct, it would be a pity that so much legal costs and Court resources were wasted in circumstances where a commercial negotiation which ensured Ms Harrison could settle her account with Harmers could have put an early end to the dispute.

It has been said that the costs of pursuing urgent interlocutory injunctions and the final injunctive relief (and seeking costs against Ms Harrison on an indemnity basis) is in the order of approximately $1 million.  As Justice Sackar said [at 62]:

Rarely does even a successful party recoup its legal expenses, whether or not indemnity costs are awarded. Indeed, every experienced litigator learns early in their career costs consequences must always be factored into the legal landscape of any piece of litigation.

His Honour clearly put it on the record that even though he was minded to award indemnity costs against Ms Harrison, the plaintiffs and their legal counsel would be aware that there is little prospect of recouping their legal costs.  Indeed, even armed with a judgment against Ms Harrison, it would be a costly and lengthy exercise in the Federal jurisdiction to corner the defendant into bankruptcy in an effort to recoup a couple of cents in every dollar of legal fees incurred by the plaintiffs.

Moreover, the plaintiffs must know that an utterly defeated and cornered litigant has little to fear in reprisal from exercising the nuclear option of publishing more confidential information in contempt of court; in such cases, there is a residual risk that a new scandal could erupt at any time and incur further substantial costs and efforts of Seven’s management team to address in public forums and the Court.

This is why this case represents a Pyrrhic victory at best for the plaintiffs; yes, they now hold an expensive judgment which provides final injunctive relief, and yes, they might utterly destroy the defendant financially in enforcing the costs judgment, but still they cannot sleep comfortably knowing that if they press too hard on bankrupting the defendant it may result in an explosive retaliation from a litigant with nothing left to lose.

Disclaimer

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article.

 

 

 


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