Artedomus v Del Casale

LEGISLATION CITED : Corporations Act 2001 Restraints of Trade Act 1976.

Gilford Motor Company, Limited v Horne [1933] I Ch 935; Scheckter v Kolbe [1955] 3 S.Af.LR 109; H & R Block Ltd v Sanott [1976] 1 NZLR 213; Hawker de Havilland Ltd v Fernandes (1996) ATPR 41-479 at 41,905-41,906; Clarke v Newland [1991] 1 All ER 397 at 402; Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37; Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111 at [182] - [191]; R Dean on The Law of Trade Secrets and Personal Secrets 2nd Edition (2002) at 67; R Ricketson and C. Creswell on The Law of Intellectual Property: Copyright, Designs & Confidential Information Volume 2 section 25.85, 25.0; CASES CITED : Vulcan Detinning Co v Assmann (1918) 173 NY Supp. 334 ; Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 at 248; Herbert Morris Ltd v Saxelby [1916] 1 AC 688, 705; International Scientific Communications Inc v Pattison [1979] FSR 429 at 434; Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 210 CLR 181 at 197; Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 ; Coco v A. N. Clark (Engineers) Ltd [1969] RPC 41 at 47; T.W. Cronin Shoe Pty Ltd v Cronin [1929] VLR 244; Butt v Long (1953) 88 CLR 476; Cream v Bushcolt Pty Ltd [2004] WASCA 82 at [21] - [24]; R.P. Austin H.A.J. Ford and I.M.Ramsay on Company Directors Principles of Law and Corporate Governance (2005) sections 9.19 - 9.24;

PARTIES : Artedomus (Aust) Pty Limited (Plaintiff) Antonio Del Casale, Alessandro Savini and Stone Arc Pty Limited (Defendants)

COUNSEL : Mr A. Moses for Plaintiff Mr M Ashhurst and Mr S Docker for Defendants

SOLICITORS : Hunt & Hunt Kemp Strang

• 32 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ACTING JUSTICE BURCHETT

1119/2003 Artedomus (Aust) Pty Limited (Plaintiff) v Antonio Del Casale, Alessandro Savini and Stone Arc Pty Limited (Defendants)

JUDGMENT 1 The plaintiff company (Artedomus) imports from Italy marble, other stone products (including limestone) and ceramics for retail to the more prestigious end of the building industry. It is an Australia-wide business with a turnover in the vicinity of ten million dollars per annum. The defendants, Mr Del Casale and Mr Savini, are former employees and directors of Artedomus who joined, at about the time of their departure from that company, in doing business through the third defendant Stone Arc Pty Limited (Stone Arc), a company formed by Mr Del Casale while he was still a director of Artedomus. In these proceedings against the defendants, the plaintiff has claimed various remedies, including damages or an account of profits, on the basis that each of Messrs Del Casale and Savini committed breaches of his duty of confidentiality owed to Artedomus; that Mr Del Casale also committed breaches of fiduciary duties owed as a director, of statutory duties owed as a director under sections 182 and 183 of the Corporations Act 2001 and of the express terms of a covenant or agreement associated both with the termination of his employment and with a sale of shares in Artedomus in which he was interested, requiring him not to compete with Artedomus for a period of three years "and to keep confidential any commercially sensitive information he may be in possession of or have become aware of during his employment by the Company and the Trustee [through which the business of the company had been carried on at an earlier date]"; that Mr Savini was involved in the contraventions of sections 182 and 183 by Mr Del Casale and knowingly assisted in his breaches of fiduciary duty; and that Stone Arc had knowingly profited from the breaches of duty of Mr Del Casale and Savini, by whom the shares in it were owned. These reasons for judgment are concerned only with the question whether Artedomus has established a cause or causes of action, the issues of relief having been deferred to a later hearing, if that becomes necessary. 2 Artedomus was formed in 1998 to take over the business conducted since about 1986 by Mr Angelo Schepis and his associates, particularly Mr Varano and Mr Bradley Hancock. Mr Schepis was at all relevant times Managing Director of Artedomus and had managed the earlier business. He was born in Messina in north east Sicily and had migrated to Australia at about the age of twenty-two. In about 1991, the head office of the business, which had been in Perth, was moved to Sydney because Mr Schepis sought a wider horizon. He is a licensed builder who has imported stone into Australia since 1985 and is experienced in the development of stone products for the Australian market. A large proportion of the stone products of Artedomus has its source in little known quarries in remote regions of Italy. The evidence indicates that Artedomus has expended money and time in travel to Italy and attendances at trade fairs in order to source new stone products and suppliers, in negotiations with suppliers once identified, in the development, together with them, of the processing of the product to make it suitable for export to Australia, including the establishment of quality control measures, and in the arrangement of reliable and safe transportation. When found, a new product has to be marketed to architects and designers in Australia so that its qualities may be recommended to the ultimate customers. 3 This case is concerned particularly with a stone known as Modica, as well as by other names, which is marketed by Artedomus in Australia as Isernia. It is a variety of limestone obtained in the province of Ragusa in south eastern Sicily, that is south and west of Syracuse, not by quarrying from a continuous body of rock, but by the extraction of separate boulders lying at or close to the surface of the land over wide areas. Artedomus imports it under an exclusive agreement with an Italian company known as Arredo Italia, and its success in the Australian market may be gauged from the fact that in the financial year 2001-2002 sales of Isernia made up about thirty per cent of the total sales effected by Artedomus. This was that company's largest selling product. The story of its introduction to Australia is an interesting illustration of the methods pursued by Mr Schepis, and by others in the industry, and shows the difficulties that may be encountered. It was in 1991 that Mr Schepis saw, at a marble fair in Verona, Italy, an exhibition of furniture which utilised Modica stone. Following the fair, Mr Schepis addressed repeated requests for samples to the representative of Arredo Italia who had shown this furniture in Verona, but entirely without response. Then, about a year later, on another trip to Italy, Mr Schepis actually went to the province of Ragusa where he called upon Arredo Italia, but was not able to see a responsible person. Since he had come to this part of Sicily specially to try to import some Modica to Australia, he then made a search in the province for other possible suppliers, but considered that they did not have the necessary facilities to enter into the export trade for the Australian market. However, about six months later, Mr Schepis received a telephone call from the then new General Manager of Arredo Italia, Mr Taballi, who arranged to send samples to Australia. Mr Schepis liked the samples, which he believed to be unique among the products available in Australia, so in about 1993 he obtained the first container load from Arredo Italia, and over the next couple of years, he received several further container loads. However, his experience was that the material was not well packed for transport, not well loaded into the containers, and suffered from a lack of quality control. Despite these disadvantages, Mr Schepis entered upon the task of marketing the stone, using the name Isernia, by demonstrating its qualities to architects, designers and others, supplying samples, by advertising and by other means. In about 1995 or 1996, the stone started to achieve some popularity with architects and designers in Australia, but the consignments that were received from Arredo Italia continued to exhibit problems. Mr Schepis therefore arranged for an employee of Arredo Italia to be trained at the premises of two other Italian companies with which he dealt, located in southern Italy, and developed conjointly with Arredo Italia a sandblasting technique suitable for this stone. He also arranged a business trip by the Managing Director of Arredo Italia to Australia so that he could appreciate better the problems created here by the lack of quality control in Sicily. Over the period to 2002, Artedomus and its predecessor were the sole importers of Modica into Australia, and the quantities imported grew steadily. In about 1996, Mr Schepis went to Ragusa again to endeavour to source additional suppliers, but without success. 4 The name Isernia was chosen for the Modica stone by Mr Schepis, as other names had been chosen for other stones, in order to avoid revealing its place of origin. Isernia is the name of a small town in Italy, further north than Naples, and some seven hundred kilometres from the Sicilian province of Ragusa. Similarly, a lava stone from Sicily was sold on the Australian market as Grigio Ercolano, after the ancient town of Herculaneum, near Naples, destroyed with Pompeii in 79 AD by the eruption of Vesuvius. It was Mr Savini who chose that name. The object, of course, was to preserve a measure of uniqueness for the products of Artedomus by making it difficult for competitors to locate and purchase the same type of stone either from the same supplier or another quarry in the close vicinity. Having expended substantial sums of money on product development and on building up an appreciation in the marketplace of the appearance and physical characteristics of Isernia, it was clearly in the interest of Artedomus to endeavour to keep the source of this product to itself. There was debate, in the evidence, concerning the degree of the difficulty a competitor might have in tracing the origin of such a stone, and undoubtedly it would be possible to do so by having a skilled person attend trade fairs in Italy. However, that would cost money and might or might not be productive in the long run, having regard to the experience of Mr Schepis upon his first attempts to obtain Modica stone and the possibility (something a competitor would have to consider) that the only appropriate quarry which might be discovered after much expenditure of time and effort as well as money, might have an exclusive contract with Artedomus, as indeed Arredo Italia has, or regards itself as having. 5 Although the defendants disputed the point, the evidence shows quite clearly that considerable efforts were made by Artedomus to conceal the source of Isernia, and the making of those efforts is itself eloquent in support of the contention of Mr Schepis that secrecy in this regard was, and was seen to be, of real value to the company. The very use of the name Isernia, with its tendency to divert attention from the province of Ragusa in Sicily, is significant. But there was evidence also of an elaborate and expensive exercise undertaken by Artedomus, involving Mr Del Casale personally, which cannot be interpreted otherwise than as indicating that great importance was attached to the confidentiality of the source from which Isernia was obtained. What happened was the following. An architect having specified Isernia for a project at North Sydney known as "The Pinnacle", a successful tenderer for the building contract requested an opportunity to see this stone in Italy. In order to avoid disclosing the source of the stone in the province of Ragusa in Sicily, Mr Schepis arranged to have one of his other exporters, the well known Italian company named Bimarmi, make available a factory located in Puglia in southern Italy, not very far from Bari on the Adriatic coast, for the exhibition of a quantity of Modica, and then had the Modica sent from Arredo Italia in Sicily to the factory at Puglia. Mr Del Casale happened to be on holidays in Italy at the time, and Artedomus paid for him to travel to the Bimarmi factory in order to conduct the viewing and to take steps to ensure that the real origin of the stone was not disclosed. According to Mr Del Casale, he arrived late, and there had already been a disclosure, but he does not deny the evidence of Mr Schepis that his instructions were to get to the factory first and to remain until after the customer had left in order to ensure that the customer did not talk to the factory staff about the origin of the stone. Although the builder nevertheless discovered that origin, according to Mr Del Casale, there is no evidence that he disclosed it to anyone else. In fact, it appears he was unable to utilise his knowledge because he seems to have got no further than ascertaining the name of Arredo Italia, which refused to do business with him by reason of its exclusive arrangements with the plaintiff. 6 Apart from naming the product, as sold in Australia, Isernia, and taking the steps that have been mentioned, Mr Schepis took a number of other precautions. He repeatedly emphasised, both to Mr Del Casale and to Mr Savini, that the source of products such as Isernia must not be disclosed, and it was the practice at Artedomus that neither the name of the supplier in Italy nor the region from which the stone came would be revealed, either to clients or to persons in the industry. This information was revealed only to senior management, to the head of the warehouse and to accountants responsible for paying the suppliers. While Mr Del Casale took issue with the evidence of Mr Schepis on these matters, what is most significant is the limited nature of his denials. He referred in his affidavit in chief to one example of a client who, according to them (but Mr Schepis denied this), was told the name of the supplier of Isernia, and he claimed that from a particular database called Goldmine, used by the staff of Artedomus to access details of clients, builders and architects, it was possible also to ascertain details of suppliers in Italy and the rest of the world. A stock list too showed the identity of suppliers as a heading for each product line. However, later evidence established that the identity of suppliers was revealed in the stock list only by a code word which would not convey the source of the product to anyone who did not know the code. Similarly, the Goldmine database does provide contact details for various overseas suppliers, but it gives no indication, and I accept the evidence of Mr Schepis that neither does any other Artedomus system available generally to employees, linking a particular product to a particular supplier. I accept that only the directors, the warehouse manager and those responsible for payments to suppliers were permitted access to information that linked the supplier with the product. 7 The defendants also drew attention to the Artedomus website which, they say, has links to "most of" the websites of suppliers to Artedomus detailing their locations and the materials they suppy. But this is disingenuous. The suppliers to which links are provided on the website are the prestigious suppliers of well known products which will add lustre to the name of Artedomus; however, Arredo Italia, the supplier relevant to the allegations in this case, and the other suppliers of little known stone, are not linked to the Artedomus website for the very reason that such a linkage might make it easier for competitors to ascertain the source of such stone imported by Artedomus and, perhaps, find an alternative supplier of it. 8 The single example given of an outsider permitted to deal with a supplier direct was a Mr Doyle. Early in the year 2000, Mr Doyle was introduced to Mr Schepis by Mr Savini, being described by him as "a close personal friend of mine" who had access to substantial funds in Europe. At that time, the stone required by Mr Doyle for his own house at North Stradbroke Island was a stone referred to as San Sebastian supplied by the very well known supplier, Bimarmi. It is clear that the same considerations of confidentiality which applied to the relatively unknown Arredo Italia did not apply in the case of Bimarmi, and Mr Schepis agreed to allow him to order a large quantity of San Sebastian directly from Bimarmi. In the year 2002, Mr Doyle was building himself a house at Terrey Hills in which he wished to use a large quantity of Isernia. As the story was recounted in the affidavit of Mr Savini: "Again Artedomus organised a quotation to be sent directly from its supplier, Arredo Italia to Mr Doyle. …However, given that the material was in stock at the time and a good price was negotiated, Mr Doyle opted to take the stock in Australia direct from Artedomus ."

According to Mr Savini and Mr Doyle, Mr Schepis was involved in the discussion and agreed to ask the supplier in Sicily to quote "directly" to the client. Mr Doyle, in his affidavit, claimed to have "received a quote directly from the supplier of Isernia stone, Arredo Italia via a copy of a fax to me sent by Artedomus ", but he was "unable to locate this quotation". He said that subsequently he had a further conversation with Mr Savini, when he elected to buy the Isernia stone from Artedomus . In cross examination, Mr Doyle was shown a faxed copy of a letter dated 13 May 2002 on the letterhead of Artedomus signed by Mr Savini and addressed to one Vito Bugni at Arredo Italia in Sicily. The letter is in Italian, but Mr Schepis in an affidavit in reply had provided a translation which shows that Mr Savini was asking Arredo Italia to "send me via fax a separate pro forma invoice for this job with the following name in the heading: Kevin Doyle, 108 Booralie Road Terry [sic] Hills, NSW 2084 Australia" and that the letter advises Mr Doyle will pay Arredo Italia by a direct payment before shipment. He is described as a "very important client". In cross examination, Mr Doyle denied that a copy of this document was the missing document he said was received by him, but he said he had received a photocopy of it. There is no evidence of any fax from Artedomus to Mr Doyle forwarding a quotation from Arredo Italia to support Mr Doyle's assertion that he so received a quotation. Nor is there any evidence that Artedomus ever received such a quotation. Indeed, the person likely to have handled it at the office of Artedomus , Mr Savini, in his affidavit says that the quotation was "organised…to be sent directly from…Arredo Italia to Mr Doyle". Having heard Mr Doyle cross examined, I found the evidence of Mr Schepis convincing. He said that a copy of the facsimile of 13 May 2002 was received by him at his own fax number from Vito Bugni of Arredo Italia who also telephoned him "to confirm whether I agreed to the proposal contained in Mr Savini's letter. I did not agree and immediately cancelled the transaction." That evidence is consistent with the fact that the transaction admittedly was not carried out and Mr Doyle in fact purchased Isernia from Artedomus . It is also consistent with an established practice, known to Arredo Italia, to take care to avoid any revelation of the source of Isernia. 9 Mr Savini, who was a senior employee of Artedomus where he had responsibilities both in sales and as a project manager, and also in respect of ordering from overseas suppliers in the absence of Mr Schepis, was a director from 11 June 1999 until his resignation on 6 September 2002, following which he continued to work at Artedomus until the end of the month. He described himself as a trusted employee. Despite the defendants' contentions challenging the confidentiality of information about the suppliers of Artedomus and the sources of its products, particularly stones from little known areas such as the stone called Isernia, Mr Savini in cross-examination made a number of concessions which are contained in the following questions and answers: "Q. In fact, during the course of your employment with Artedomus and during the period that you were a director, you were told by Mr Schepis that the information about the source of the stones must be kept secret, you have to be careful at all times never to give information to anyone, the success of our business largely relies on keeping the source of our products secret from our competitors and builders?

A. It wasn't put that way, but yes. Q. You understood that information must be kept secret, you understood that, didn't you?

Q. And in fact the position with your current company Stone Arc, do you regard the source of the stone that you import into Australia to be confidential?

Q. As I said, as an example, in relation to the stone product known as Modica stone, you knew, did you not, that Artedomus attempted to ensure the confidentiality of the supplier of the Modica stone in order to maintain an advantage over its competitors?

Q. And you knew that Artedomus attempted to ensure the confidentiality of the locations of the source of the stone to maintain an advantage over its competitors. You knew that? A. It's a common practice with everyone, with all businesses in this area.

A. All businesses that work in the stone industry or the ceramic industry.

Q. Because that is the way in which you obtain a competitive advantage over those in the marketplace who are seeking to do the same business as you, correct? A. Correct." 10 At the beginning of September 2002, Mr Del Casale informed Mr Savini that he had set up the company Stone Arc Pty Limited, and during that month they discussed working together in the stone industry. Their evidence was that their initial project related to the distribution of a car telephone device which, however, turned out to be impracticable. I do not accept there was ever any firm plan to distribute this device; apart from anything else, neither of the men had any knowledge or experience in that field. They also asserted that, in the early stages, Mr Del Casale was going to be involved in a project to do some building work for a company referred to as Wine Ark; however this was only a short term project and there was very little specific evidence about it except that, in connection with a sale of shares in Artedomus in which Mr Del Casale had an interest, he made misleading references to it in order, I infer, to suggest he was about to abandon the stone industry with a view to entering the wine industry. Both men have in fact over the period since 2002 been very much involved in the stone industry, and they were so involved immediately after leaving Artedomus, although the negotiations Mr Del Casale was conducting with shareholders of Artedomus provided ample reason for him to avoid taking any prominent role. Mr Savini set up a family trust called the Roma Trust to take shares in Stone Arc and became a director of that company on 19 September 2002. He left Sydney on 2 October 2002 for what he described as an Italian "holiday". But on 4 October 2002 he and his brother, based in Rome where his company is involved in the stone industry in Italy, attended the stone fair at Verona. Mr Savini would have the court believe that, for him, this was a holiday jaunt and it was by chance he came into contact at the fair with two producers of stone from the province of Ragusa, the companies known as Avola Stone and Italia Lithos. Mr Nuzzarello, the director of Italia Lithos, was displaying what he described as Timpa or Pietra di Ragusa. Curiously, since the defendants maintained that Timpa is quite different from Modica stone, Mr Savini says he asked the question: "Is it the same material as the 'Pietra di Modica'?"

to which Mr Nuzzarello is alleged to have replied: "No, it's completely different, it looks different, and it's quarried in another location. The two stones have very distinctive differences. The Pietra di Modica, [literally, 'stone of Modica'] has huge variation in colour, it carries iron inclusions which look like rust and it's very heavily veined. The Timpa is generally a lot lighter, it has minimal variation in colour and the veining is rare." 11 The Verona fair is a very large fair, on the evidence, and the province of Ragusa in Sicily is a very tiny participant in the stone production of Italy. The evidence of the circumstances in which Mr Savini, immediately upon his arrival in Italy upon what was ostensibly a holiday, made contact at once with two suppliers of stone from Ragusa must raise a question. I accept the evidence of Mr Schepis that unless one knows what one is looking for, locating an appropriate supplier from a little known region is a difficult exercise. It is hard to avoid the conclusion that Mr Savini is not frank in asserting that he was merely holidaying, and it is also hard to avoid concluding that he was so instantly successful in locating suppliers from Ragusa because he utilised the advantage of the information he had been given in confidence from Artedomus through Mr Schepis. (Of course, even so, there would remain a question, to be discussed later, whether the information was of such a nature as to amount for the relevant purposes to confidential information). At any rate, whatever the truth of the purpose with which Mr Savini went to the fair, he concedes that, once there, he gave conscious consideration to whether he could "put together a selection [of stones] for the Sydney market". He "prepared a list of potential suppliers to go and visit". By about mid October, he was in Sicily, and he went to Modica to visit Mr Minauda of Avola Stone who had "a huge deposit of blocks of Pietra di Modica or Isernia". Mr Savini ordered from Mr Minauda "a sample crate to send to Stone Arc." He then visited Mr Nuzzarello at Italia Lithos to inspect Timpa being manufactured, where Mr Nuzzarello showed him some of the Timpa next to some pieces of Modica stone, claiming to demonstrate the difference. Counsel for the defendants asserted in submissions that this difference was a red herring in the case, but both sides devoted much time to the question and called competing expert evidence upon it. For the plaintiff, it was contended that Timpa is merely Modica stone selected from one only of about eight sources of that stone in the province of Ragusa, and that the Modica stone imported by the plaintiff and sold as Isernia includes stone from precisely the same area as the Timpa stone and of the same kind. For the defendants, it was contended that Timpa comes not from the whole province of Ragusa but from a particular area quite close to the town of Ragusa and is to be regarded as a different stone from Modica, which the defendants would confine to the stone from an area close to the town of Modica. It should be understood, however, that the two towns are only about a dozen kilometres apart. 12 In late October 2002, before the arrival of Mr Del Casale in Italy, Mr Savini had a telephone conversation with him in which Mr Del Casale said he had had to sign a non-competition agreement "[i]n order to sell [his] Artedomus shares back to the other partners". If he had not signed the agreement, Mr Del Casale said, he "would not have been able to sell [his] interest". Therefore, according to the account of Mr Savini and Mr Del Casale, he could not be involved in Stone Arc if it imported stone. In this conversation, Mr Savini claimed they agreed that he would take over Stone Arc "and concentrate on the stone part of the business" as he wanted "to exploit the situation". He proceeded to finance the purchase of stone in Italy. But subsequently significant finance for Stone Arc was provided through a company controlled by Mr Del Casale. 13 Mr Del Casale arrived in Italy on 2 November 2002, to be met by Mr Savini at Rome airport. At this time, Mr Del Casale was still involved in finalising the agreement he had reached for the sale by the company controlled by him, Toghill Pty Limited, and by Mr Savini's estranged wife, of the shares each held in Artedomus. The shares held by Toghill Pty Limited were the shares Mr Del Casale had referred to as his own in his telephone conversation with Mr Savini late in October, 2002. The agreement reached included the non-competition clause to which reference has been made, and the handing over of the documents, and of the substantial sum of money payable to Mr Del Casale upon settlement, was to take place at the end of the month. There was some very curious evidence about an attempt by Mr Hancock, a director of Artedomus, and one of the purchasers of the shares being sold, to communicate with Mr Del Casale while he was on his travels, leading to a response organised by Mr Del Casale directing a fax to be sent to him at a fax number in Indonesia. Mr Del Casale explained this on the basis that, at the time, he was not near a fax machine while he was in Italy; however, the probabilities strongly favour the conclusion that a number in Indonesia was chosen in order to conceal the fact that Mr Del Casale was in Italy. After all, why otherwise did he not use a fax number of Mr Savini's brother who was in business in Rome and with whom his close friend Mr Savini was obviously on good terms? Promptly after Mr Del Casale's arrival in Italy, from 5 November to 19 November 2002, although Mr Del Casale understood his agreement forbad him to be involved in importing stone into Australia, he and Mr Savini travelled to visit various producers of limestone in Italy. According to Mr Savini, Mr Del Casale played no role in discussions with those producers of limestone, but Mr Savini did, and did so with the object of sourcing imports of stone into Australia. Mr Del Casale conceded that they went to Sicily together and that the purpose of the trip was to ascertain suppliers for Stone Arc, of which he continued to be a director until 6 December 2002, and also a shareholder, while he remained a director of Artedomus until 27 November 2002, but he claimed to have taken no part in the discussions with the potential suppliers. According to him, he was merely accompanying Mr Savini as a friend. 14 The proposition put forward by the defendants that the stone imported by Stone Arc from the supplier Italia Lithos is not Modica stone, and thus not the product sold by Artedomus as Isernia, was, as I have indicated, challenged by the plaintiff and its witnesses. Mr Taballi, the director of Arredo Italia, gave evidence that he has been involved in the limestone industry since 1990 and director of Arredo Italia since 1999. Although based in Rome, he visits the province of Ragusa in Sicily very frequently, spending some months there each year. He gave evidence that Pietra di Modica stone is extracted "throughout the province of Ragusa", and indeed the area where Mr Nuzzarello indicates that Italia Lithos extracts its Pietra di Ragusa "is only about one kilometre from Contrada Camemi where Arredo Italia extracts Pietra di Modica stone". The towns of Ragusa and Modica are themselves only about twelve kilometres apart. Timpa is simply another name for Pietra di Modica, being the Sicilian dialect word for "precipice", describing where the stone is found. It is generally found in large boulders just below the ground surface. Arrangements are made with the land owners to remove these boulders from their land, which makes the land more suitable for agricultural use. The boulders "are generally two to three metres long, about one and a half metres wide, and approximately fifty to seventy centimetres thick". They are transported to Arredo Italia's factory in a place called Noto, where the stone is cut to the required size, polished and sold to distributors or retailers. The stone sent to Artedomus upon receipt of an order is randomly selected from the factory and therefore "the Pietra di Modica supplied at any given time could have been sourced throughout the province of Ragusa. Arredo Italia does not make any selection based on variations in colour or texture when supplying Pietra di Modica to Artedomus". In his oral evidence, Mr Taballi explained: "…we operate in the area, normally we all call it Pietra di Modica, we identify in the vast area around, in the old province Ragusa province, this stone that is taken in this area and we identify these big blocks that are extracted from the ground and not from a quarry, which is different to extract from a quarry. Q. Are you saying Petra di Modica is not extracted from a quarry?

TRANSLATOR: Meaning yes, not at all. Q. Yes it is not extracted from a quarry?

HIS HONOUR: Q. As I understand, what you say is that they are boulders rather than a continuous body of rock that would be quarried?

A. They are big stones that are found in the piece of land geologically are in two levels with the little bit of ground on top and a little bit of ground underneath and they are pulled out and they are not cut like in a quarry." 15 I considered Mr Taballi to be a reliable witness, and I preferred his evidence to that of Mr Nuzzarello. Accepting his evidence of the wide range of sources throughout the province of Ragusa from which the material is drawn, and that Pietra di Modica "is white or dirty white in colour, and is generally non-uniform in colour, veining and texture", so that "the final product sold to distributors and retailers has variations in composition and colour", it seems to me that evidence of a close scientific comparison, particularly of microscopically observed fossil remains embedded in the rock, based on differences in that respect between an extremely small number of samples, can carry very little weight. This is the more so when it is borne in mind that the defendants' expert had a larger range of samples to consider but for some unexplained reason chose not to utilise it except for the purpose of making his own selection of what he "considered…gave a good example of visual characteristics". I accept that the plaintiff's expert, although a geologist employed by the Commonwealth Scientific and Industrial Research Organisation, was at fault in his identification of fossil remains, but I do not think this at all significant; what is much more important is that, as an expert in rock, although not a palaeontologist, he considered Stone Arc's Timpa to have the same appearance as the plaintiff's Isernia and "very similar physical properties", although his report conceded that, "allowing for the possibility of local variations," micropalaeontological studies "might indicate some differences". Stone is sold for practical use in houses and other constructions, not for scientific analysis, and in that practical use its appearance, texture and strength are prime features of it, not the correct palaeontological classification of the fossils within it. In my opinion, the stone sourced by Mr Savini was not only sourced by his use of the information he had obtained from Artedomus, but was actually the very same material to which that information related, having come from one of several sources of it in the province of Ragusa. 16 The evidence shows that it is possible to obtain distinct types of stone from quarries in the same area, and even from the same quarry. As Pietra di Modica comes from a province, and not one spot within it, some variation will occur in examples, particularly, as Mr Taballi said, in colour, veining and texture. It is obtained from individual boulders, not a continuous body of rock. But what the plaintiff sold as Isernia over now many years came from the whole province, including the location from which the defendants have obtained Timpa. And the features that unite these stones are so significant, and the variations so small, that they can be and properly are described as the same stone for the purposes for which extraction, production, export and use in Australia occur. 17 The non-competition agreement entered into by Mr Del Casale, to which reference has been made, was finally completed immediately upon his return to Australia on about 27 November 2002. It was a term of an agreement pursuant to which a company controlled by Mr Del Casale, as has been said, Toghill Pty Limited, and a trustee acting on behalf of the estranged wife of Mr Savini sold their shares in Artedomus to Mr Hancock, who was trustee of another trust, and other purchasers. Artedomus and Mr Del Casale were also parties to the agreement which recited that Artedomus had "agreed to pay [Mr Del Casale] a redundancy package on the terms set out in this Agreement." The evidence which I accept indicates that Mr Del Casale had in fact been paid all his entitlements as an employee, but there were, or were perceived by the parties to be, taxation advantages in his receiving part of the sum to be paid under the agreement by which the shares were sold in the form of a redundancy payment. All the terms of the agreement, following the recitals, were introduced by the words: "NOW THEREFORE: for and in consideration of the premises the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties do hereby agree as follows".

Provision is then made for the payment of various sums of money, and by clause 6 it is provided: "In consideration for the payment to him by the Company [ie. Artedomus] of a redundancy payment of $40,000 (forty thousand dollars) by bank cheque on the Settlement Date contemporaneously with other payments due to the Vendors [ie. Toghill Pty Limited and the Savini Trust] pursuant to this Agreement on that date [Mr Del Casale] hereby agrees to tender his resignation as a Director and Secretary of the Company and the Trustee. [Mr Del Casale] agrees not to compete with the Company for a period of three years nor to pursue any legal claim against the Company or hold himself out as an employee or officer of the Company and to keep confidential any commercially sensitive information he may be in possession of or have become aware of during his employment by the Company and the Trustee."

(The trustee referred to in this clause is the trustee which formerly held the business that became vested in Artedomus upon its formation.) 18 The agreement contained a specific provision, by clause 9: "If any provision of this Agreement is held by any court to be unlawful, invalid or unenforceable or in conflict with any rule of law, statute, ordinance or regulation then the validity and enforceability of the remaining provisions shall not be thereby affected." 19 The first difficulty confronted by the plaintiff, in so far as it relies upon the agreement by Mr Del Casale "not to compete with the Company for a period of three years", is that the clause does not contain the words usually inserted in such clauses "directly or indirectly", and the importation and sale of stone, which plainly does compete with the plaintiff, has been carried out through the company Stone Arc, not in the name of Mr Del Casale personally. However, it was part of the plaintiff's case that Mr Del Casale's incorporation of Stone Arc was an act done for the very purpose of competing with the plaintiff and that his subsequent attempt to dissociate himself from it under the cloak of a transfer of his interest to Mr Savini, which was not shown, certainly in the period of the establishment of its business, to have been properly documented and formalised, was a mere veil, sham or device. In J.D. Heydon on The Restraint of Trade Doctrine , 2nd edition (1999) at 243-244 it is stated: "But the covenantor cannot evade the covenant by carrying on a business under a title, or by forming a limited company which is a mere veil for the covenantor's own activities, or by using a nominee for this purpose." 20 A number of authorities are cited in support of this proposition. In Gilford Motor Company, Limited v Horne [1933] I Ch 935, as is made clear in the judgment of Farwell J at 937, the case against the defendant company was "put on the ground that the defendant company [was] merely the creature of the first defendant [an individual who had been the managing director of the plaintiff and had entered into a covenant not to entice away customers], and the first defendant is committing breaches of the covenant by the agency of the defendant company". Lord Hanworth MR made it clear (at 956) that he accepted this view of the case, and Romer LJ expressed the same conclusion in the following terms (at 969): "[T]his defendant company was formed and was carrying on business [emphasis added] merely as a cloak or sham for the purpose of enabling the defendant Horne to commit the breach of the covenant that he entered into deliberately with the plaintiffs on the occasion of and as consideration for his employment as managing director."

On that basis, an injunction was granted against both defendants. This view of the law was in accordance with a dictum of Lindley LJ in Smith v Hancock [1894] 2 Ch 377 at 385: "If the evidence admitted of the conclusion that what was being done was a mere cloak or sham, and that in truth the business was being carried on by the wife and Kerr for the Defendant , or by the Defendant through his wife for Kerr, I certainly should not hesitate to draw that conclusion, and to grant the Plaintiff relief accordingly."

Smith v Hancock was a case involving an agreement made upon the sale of a business "not to carry on or be in anywise interested" in certain businesses within a certain area for a certain period. The defendant's wife and the person Kerr started a business which would have infringed had it been a business of the defendant. The dictum of Lindley LJ was applied by Beyers J in Scheckter v Kolbe where the respondent, who had given a covenant in restraint of trade upon the sale of his business, was afterwards involved as manager of a competing company, shares in which were owned by his brother, the respondent having lent the brother money in order to enable him to acquire the shares and given a guarantee to the company's bankers. Beyers J said (at 114), after citing the dictum of Lindley LJ: "I find it difficult to resist the conclusion that the respondent is carrying on the business, through the Company, for his brother. It is submitted on the respondent's behalf that the fact of his being a creditor of the Company does not give him an 'interest' in the business. That may be so; but the cumulative effect of the evidence is that the respondent has interested himself in the business to the extent that he may be described as the deus ex machina thereof."

An order was granted against the respondent. In H & R Block Ltd v Sanott [1976] 1 NZLR 213, a first defendant was an employee whose employment agreement contained a covenant against competition for five years after the cessation of the employment. After leaving the employment, the first defendant and a company of which he and his wife were the sole shareholders carried on business in competition with the plaintiff. Somers J held that the company was the alter ego of the first defendant and he referred (at 220) to the decision in Gilford Motor Co Ltd v Horne , adding that "while the first defendant could not escape liability for damages by pointing to the activities of the second defendant when that defendant is his alter ego or his agent, it is a very different matter to render that agent itself liable for damages on a contract to which it was not a party." He took the view that the company would be liable to an injunction but not to a claim for damages upon the covenant into which it had not entered. The first defendant, however, was liable in damages. The decision in Gilford Motor Co Ltd v Horne is also discussed in the Western Australian decision Hawker de Havilland Ltd v Fernandes (1996) ATPR 41-479 at 41,905-41,906. 21 In J. D. Heydon op. cit. at 104 the rules of construction applicable to a covenant or agreement against competition are stated. The first of these rules, drawn from the judgment of Neill LJ (with whom Balcombe LJ agreed) in Clarke v Newland [1991] 1 All ER 397 at 402 is "that the question of construction should be approached in the first instance without regard to the question of legality or illegality", a proposition attributed to a decision of Lindley LJ at the end of the nineteenth century. A restraint clause should also be construed with reference to the object sought to be obtained which, in a restraint of trade case, is the protection of one of the parties against rivalry in trade. It should also, like other clauses, be construed in the light of the factual matrix at the time the agreement was made. 22 To the extent that separate considerations from those generally applicable to confidential information apply to the express agreement made by Mr Del Casale, in clause 6 of the agreement embodying the share sale transaction, in respect of "commercially sensitive information", such an agreement may be justified on the basis that at the time it was made it was reasonable to impose a restraint in these terms "to prevent the use of the springboard of the plaintiff's confidential information to launch a new product": Tokely-Van Camp, Inc v New Generation Beverages Pty Ltd (1998) 44 NSWLR 607 at 615, a decision of Young J. See the detailed discussion of this question by Giles JA (with whom Priestley and Meagher JJA agreed) in Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111 at [182] - [191]. 23 Before discussing the restraint of trade clause further, it is convenient to turn to the issue of confidential information which applies to Mr Savini as well as to Mr Del Casale, subject to the effect of the last part of clause 6 in which Mr Del Casale did make express his own obligation "to keep confidential any commercially sensitive information he may be in possession of or have become aware of during his employment." 24 In R Dean on The Law of Trade Secrets and Personal Secrets 2nd Edition (2002) at 67, obligations of confidence are analysed as involving two central elements: the nature of the confidential information (an objective analysis); and the existence of an obligation of confidence (a subjective analysis). The learned author comments: "Before embarking upon an analysis of the first of these two elements the point is again made that what makes information potentially confidential is not that it falls into a given category, but that it has about it a degree of secrecy sufficient for it to be the subject of a confidence".

And he continues (at 68): "All information not commonly known, or, in the case of personal information, all information not 'notorious', may be confidential information." 25 However, it is clear that information which is public knowledge cannot be confidential information, although, as is pointed out in S Ricketson and C Creswell on The Law of Intellectual Property: Copyright, Designs & Confidential Information Volume 2 section 25.85, "Confidentiality is not lost simply because the information is known to persons other than its originator". The learned authors state: "Secrecy in this context, therefore, means 'relative secrecy', and to fall within the public domain the information must have been published, in the sense of being available without restriction to the relevant public….On the other hand publication abroad may not affect its confidentiality within the jurisdiction in which protection is sought, so long as it remains unknown to those who are relevantly interested, such as competitors, as it is this element which gives the information its value, at least in the commercial sphere." 26 Reference is made to The Law of Intellectual Property: Copyright, Designs & Confidential Information Volume 2 section 25.85, where Cross J held a claim for breach of confidence "is not to be defeated simply by proving that there are other people in the world who know the facts in question besides the man as to whom it is said that his disclosure would be a breach of confidence and those to whom he has disclosed them". Cross J cited the American case (a decision of the Supreme Court of New York, Appellate Division) Vulcan Detinning Co v Assmann (1918) 173 NY Supp. 334 where the fact that a German and a Dutch firm had complete knowledge of the process in question was no bar to the plaintiff's success in an action against an employee who disclosed it to the other defendant. Cross J commented: "It must be a question of degree depending on the particular case, but if relative secrecy remains, the plaintiff can still succeed".

Cf the remark of Megarry V-C in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 at 248: "Costs and prices which are not generally known [emphasis added] may well constitute trade secrets or confidential information: see Herbert Morris Ltd v Saxelby [1916] 1 AC 688, 705, referring to prices."

Cf also International Scientific Communications Inc v Pattison [1979] FSR 429 at 434, where the skilled labour of compiling publicly available facts was held sufficient to attract confidentiality, and see Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 210 CLR 181 at 197, where Gleeson CJ, Gummow and Hayne JJ, in holding that the confidentiality of certain information had been lost by public disclosure, did not suggest any degree of such disclosure would have had that effect, but referred to "the quantum and significance of the public disclosure".

27 As to whether a particular class of information could not be regarded as warranting the imposition of an obligation of confidence, Ricketson and Creswell (at section 25.39) refer to the remark of Kirby P in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 333 that courts should exercise a "modest disinclination to hold that information is not confidential when parties have taken the trouble to say that it is", a point the learned authors embrace. Apart from the effect of contract (a qualification his Lordship emphasised), Megarry J, in Coco v A. N. Clark (Engineers) Ltd [1969] RPC 41 at 47, described three elements as necessary to an action for breach of confidence: "First, the information itself, in the words of Lord Greene M.R. in the Saltman case [ Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203] on page 215, must 'have the necessary quality of confidence about it.' Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

Commenting on the first of these elements, Ricketson and Creswell, op cit , state the law (at section 25.55): "As confidential information is not restricted by the sort of technical requirements that exist in relation to patents or copyright, a very wide range of technical and commercially valuable information may be protected. The prime requirements are simply that it be 'secret'…and that it should be reasonably discrete and ascertainable. Apart from these, there are no other pre-conditions for protection." 28 As will be apparent from the earlier reference to "relative secrecy", these requirements should be understood broadly. In Thomas Marshall v Guinle (at 248), Megarry V-C thought the quality of the information should be "judged in the light of the usage and practices of the particular industry or trade concerned". If that is the correct approach, it is significant here, where it was conceded in cross-examination (in a passage I have quoted) that confidentiality of information of the relevant kind is "a common practice with everyone, with all businesses in this area". There is strong support for the approach of Megarry V-C, in this Court, in the judgment of Samuels JA in Wright v Gasweld Pty Ltd at 339 and particularly 341. 29 However, the defendants placed emphasis on the decision of Kirby P and Samuels JA, Gleeson CJ dissenting, in Wright v Gasweld Pty Ltd. In that case, the respondent had employed the appellant in its business of importing tools and hardware from Taiwanese suppliers who included manufacturers and also agents. As Gleeson CJ said (at 319), those suppliers were "fairly readily identifiable by persons in the trade". But knowledge as to particular suppliers who could be relied on was only to be acquired by experience. It was that knowledge which the respondent sought to keep to itself and which all the judges accepted "was valuable commercial information" (as Gleeson CJ put it at 325). However, the case did not turn on the question whether it was confidential information in the sense required to attract the equitable doctrine applicable to a breach of confidence alleged to have been committed by a former employee after the cessation of the employment. No question of a sale of shares involving goodwill arose. The case turned on a restraint of trade clause which the majority held to be valid when read down pursuant to what Samuels JA called (at 339) "the beneficial surgery of s4 of the Restraints of Trade Act 1976". His Honour added expressly: "No question now arises concerning the respondent's entitlement to relief other than by dint of the covenant."

As I understand the decision, that was because no greater relief would have been available upon general equitable principles. This had been held by the trial judge, as Kirby P noted (at 330, 332), and his Honour treated counsel as effectively conceding it sub silentio on appeal (at 338). 30 The passage I have cited immediately above from the judgment of Samuels JA makes it clear he refrained from deciding any question of the applicability of general equitable principles. But Kirby P, on this point, seemed to agree (at 334) with the dissenting judgment which held them inapplicable. That, it is trite law, could not make a majority decision on the question to the effect of the dissent. But, in any case, his Honour's ultimate view is somewhat unclear, for he returned to the point (at 338), where he dealt with it in the same manner as Samuels JA had done. 31 I have referred to the question whether Wright v Gasweld Pty Ltd determined any proposition of general equitable principle relating to confidential information only because the respondent's counsel placed weight on the decision. In my opinion, it is against him on the basis on which it was decided; but, as regards the present issue, so far as any conclusion can be derived from it, it is plainly distinguishable upon the facts. Artedomus is not complaining that experience of the business integrity and capacity of particular individuals among a large number of well-known manufacturers and agents is being utilised against it, experience that might well be seen as part of the accumulated knowledge forming an element of the personal expertise of a senior employee. Its complaint relates to confidential knowledge of the sources from which particular products with particular characteristics may be obtained in the first place. Experience dealing with persons and entities well known in a trade is one thing; the ascertainment of how and where to obtain what is claimed to be a unique product is quite another. The latter is much more like the knowledge involved in Vulcan Detinning Co v Assmann or in Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37. 32 In the circumstances of this case, the conclusion is inescapable that the information imparted in confidence to the defendants concerning the source in the province of Ragusa in Sicily of the stone sold in Australia as Isernia, and concerning the supplier, Arredo Italia, was information that had, in Lord Greene's phrase, "the necessary quality of confidence about it". It was, too, in contrast to the view taken by Gleeson CJ upon the quite different facts of Wright v Gasweld Pty Ltd, in the nature of a trade secret. The inference is also overwhelming that the defendants used that information when they located so rapidly the origin of the stone and, in consequence, an alternative supplier. Without utilising the information, any search by the defendants in Italy would probably have been long, arduous and expensive, and may well not have been pursued to success, if attempted. There is actually no evidence it would have been attempted, once the Court rejects, as it does, the evidence of Mr Savini of how he came into contact with the suppliers from Ragusa. Accordingly, the plaintiff is entitled to succeed on its claim for breach of confidence against both Mr Del Casale and Mr Savini, and also against Stone Arc which knowingly profited from the breach of confidence: see S. Ricketson and C. Creswell, op.cit., section 25.0. 33 Although there were further claims made, it seems clear that, as was the case in Wright v Gasweld Pty Ltd, the relief under these heads should not be different from that for the breach of confidence. However, this hearing is concerned with issues of liability only, and the other heads should be considered. A number of claims relate to Mr Del Casale alone, although Mr Savini is then alleged to have been involved and to have knowingly assisted in Mr Del Casale's breaches of duty, and the same liability for knowingly profiting from the breaches is alleged against Stone Arc. 34 Two of the claims against Mr Del Casale arise from the agreement embodying the share sale. One is based on that part of clause 6 which requires him "to keep confidential any commercially sensitive information he may be in possession of or have become aware of during his employment by the Company and the Trustee". The other is based on the agreement in the same clause "not to compete with the Company for a period of three years". 35 For the defendants, it was argued that Mr Del Casale was not personally a vendor of shares (although the company controlled by him, and described by him as his, was such a vendor), and the consideration for the agreement in clause 6 was the redundancy payment of $40,000 to him. But the structure of the clause leaves this view of it somewhat unclear. It expresses the payment as the consideration for Mr Del Casale's resignations as Director and Secretary, but then interposes a full stop before continuing to express the provisions now in question. That makes it important to look back to the introductory words of the agreement, following the recitals, "for and in consideration of the premises the mutual covenants contained herein and other good and valuable consideration…the parties do hereby agree as follows". It is legitimate to construe the agreement in the light of its background which suggests, Mr Del Casale having already received his entitlement on termination of his employment, that the redundancy payment was itself related to tax concerns and may not have been a central element of the consideration for other obligations. A substantial sale of shares was involved for the legitimate protection of which the provisions inserted in clause 6 might well have been required. Why should the opening statement making "the mutual covenants" consideration for all the promises of the agreement be overlooked? I do not think it should be. At any rate, I do not find in clause 6 a sufficiently clear indication to the contrary to overcome the effect of those opening words of the agreement. 36 When clause 6 is related to the preservation of the goodwill of the company which gave value to the shares sold, the principle stated by Irvine CJ, delivering the judgment of the Court (Irvine CJ and Cussen J) in T.W. Cronin Shoe Pty Ltd v Cronin [1929] VLR 244 is plainly relevant. His Honour said (at 247) of a clause of this kind: "The Courts are disposed to look at such a restrictive provision contained in contracts for the sale of goodwill in a much less strict way than that in which they would look at similar restrictive terms in contracts of service. That principle was stated by Lord Haldane in the case of North Western Salt Co Ltd. v. Electrolytic Alkali Coy. Ltd . [1914] AC 461, at p.471. His language is as follows: 'When the controversy is as to the validity of an agreement, say for service, by which some one who has little opportunity of choice has precluded himself from earning his living by the exercise of his calling after the period of service is over, the law looks jealously at the bargain; but when the question is one of the validity of a commercial agreement for regulating their trade relations, entered into between two firms or companies, the law adopts a somewhat different attitude - it still looks carefully to the interest of the public, but it regards the parties as the best judges of what is reasonable as between themselves.' "

He added: "We start then with the principle that we are justified in giving weight to what the parties have considered necessary,…"

This point was taken up by Dixon CJ in Butt v Long (1953) 88 CLR 476 at 486 in a passage relied on by the Full Court of the Supreme Court of Western Australia in Cream v Bushcolt Pty Ltd [2004] WASCA 82 at [21] - [24]. 37 The principle of the Cronin case was applied by the Court of Appeal in Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd, which dealt with a different but analogous situation. Giles JA, having referred (at [188]) to the rules governing restraints of trade, but added that "one aspect of public policy is promotion of commercial agreements by allowing appropriate protection to their parties", and added (at [189]) that "capital expenditure as part of the transaction may warrant protection" and that "[i]n modern times a narrow view of interests warranting protection should not be taken", held (at[190]): "The respondent had 'invested' in the first appellant, and was entitled to be protected from the disadvantage to which it subjected itself by entering into [the agreement to which the restraint clause was added]…" 38 In the present case, of course, Artedomus did not purchase any part of its own goodwill from Mr Del Casale. However, the mutuality of the consideration for the agreement involved that Artedomus would not have paid the redundancy payment (which was not due as a matter of legal obligation) except for the completion of the whole transaction involving also the goodwill. 39 So far as clause 6 refers to "commercially sensitive information", it was the defendants' contention that it was uncertain. However, the agreement was not without a context; the practice of keeping confidential the sources (including suppliers) of stone products such as Isernia was, I have found, well established both at Artedomus and in the trade generally. The expression 'commercially sensitive information' is apt to embrace information concerning those sources, and both principle and the express dictum of Fullagar J in Butt v Long at 490-491 would sustain resort to the practice in construing the agreement. 40 In my opinion, if it were needed, the provision in clause 6 requiring Mr Del Casale to keep commercially sensitive information confidential would also apply, just as the clause in Wright v Gasweld Pty Ltd was held to apply. Mr Del Casale is liable for his breach of it, and secondary liabilities attach to Mr Savini and Stone Arc, as in the case of the breaches of the duty of confidentiality under the general equitable principle. 41 But something more needs to be said about the other provision of clause 6 by which Mr Del Casale agreed "not to compete with [Artedomus] for a period of three years". As I have pointed out, this is not expressed to include competition by a company, even if owned or partly owned by Mr Del Casale. Yet, in the modern world, a company may be very much the alter ego of an individual. The principles of construction stated in J D Heydon, op,cit., to which I have already referred, would suggest attention should be given to "the object" of the clause, being "protection….against rivalry in trade", and the agreement should be understood as embracing competition by the use of a company. In any case, I have concluded that I should accept the submission of counsel for the plaintiff that the company was used as a mere cloak for Mr Del Casale's activities in conjunction with Mr Savini, so as to attract the application of the dictum of Lindley LJ in Smith v Hancock to which reference has been made. Subsequent events strongly confirm this. There was much evidence that Mr Del Casale, while purporting to act as a contractor contracting independently with Stone Arc, has actually been treated by it as if he were, and has behaved himself as if he were indeed, an important member of its structure. I do not accept the evidence of Messrs Del Casale and Savini to the contrary. 42 In my opinion, the period of three years mentioned in clause 6 was reasonable between the parties and did not offend against the public interest protected by the doctrine concerning restraint of trade. Mr Del Casale's position was such as to require it for the reasonable protection both of Artedomus and also of the purchasers of the shares. It is conceded by the plaintiff that the clause should, by the surgery of the Restraints of Trade Act, be limited to competition in New South Wales. On that basis, I find Mr Del Casale has breached his obligation under this provision also, but his liability is in contract; it is not fiduciary, and the decision in H & R Block Ltd v Sanott, previoiusly referred to, is against attributing any secondary liability for compensation to Mr Savini or Stone Arc under a contract to which they were not parties. 43 It does not seem to me that the claims based on ss. 182 and 183 of the Corporations Act add much to the plaintiff's case. Little was said about them at the hearing. In the case of Mr Savini, as has been noted, he worked for Artedomus until the end of September 2002, but he resigned as a director on 6 September. Although Mr Del Casale did not formally resign his directorship until 27 November 2002, his employment terminated on 28 June and he does not appear to have performed any duties as director after that. It is s.183 which appears to have relevance to the facts of this case. That section provides not only that a person who is, but also one who has been, "a director or other officer or employee of a corporation" must not "improperly use" information obtained because of holding one of those positions to gain an advantage, including an advantage to someone else. There has been some dispute whether this (at any rate because of the word 'improperly') is not confined to information that is confidential. See R.P. Austin, H.A.J. Ford and I.M. Ramsay, Company Directors Principles of Law and Corporate Governance (2005) sections 9.19 - 9.24. However, on my findings, which deal with confidentiality, liability under the section is made out. By s.183 (2), it extends to a person "involved" in a contravention, as Mr Savini and Sone Arc were with respect to the contraventions by Mr Del Casale. It should be noted that, by the express provision of s. 185, s.183 does not derogate from the liabilities of Mr Del Casale and Mr Savini upon the general equitable principle with respect to the confidential information received by them as directors and employees of Artedomus. 44 Various other issues were raised at the hearing, which, in the light of my findings, it is not necessary to explore now. In particular, having found the defendants liable upon the causes of action to which I have referred, I do not consider it necessary or useful to examine in this interlocutory judgment questions raised about earlier compliance with interlocutory injunctions that, for whatever reason, have been allowed to pass into the history of the matter. 45 The only formal order I now make is that the plaintiff bring in, on a date to be fixed, short minutes of orders to reflect these reasons. Those orders should include an order that the defendant pay the plaintiff's costs of the proceedings up to the date of entry of the orders, and that the plaintiff have any necessary leave to enforce the costs order forthwith.

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