Austin Engineering Ltd v Podulova

Solicitor for the Second to Seventh Respondents: Gilbert + Tobin

BETWEEN: AUSTIN ENGINEERING LTD (ACN 078 480 136) Applicant

AND: ANASTASIA PODULOVA First Respondent

SCHLAM ENGINEERING PTY LTD (ACN 145 218 944) Second Respondent

SCHLAM GROUP PTY LTD (ACN 616 770 122) (and others named in the Schedule) Third Respondent

order made by: FEUTRILL J DATE OF ORDER: 2 SEPTEMBER 2024

1. The applicant have leave to amend its interlocutory application filed 12 December 2023 in terms of the proposed amended interlocutory application lodged 14 February 2024.
2. Paragraph 2 of the Orders made on 25 May 2023 and the confidentiality undertakings signed by the applicant's external legal representatives referred to in paragraph 2(b) of the Orders be varied such that: (a) the document identified in Confidential Annexure CB-31 to the affidavit of Clancy Calder Bennett affirmed on 12 December 2023, and any information contained in that document; (b) the email chain referred to in Confidential Annexure CB-31 to the affidavit of Clancy Calder Bennett affirmed on 12 December 2023, and any information contained in that email chain; and (c) paragraphs 6-15 and 17, and Annexure BJB-1, of the affidavit of Benjamin James Baker affirmed on 14 August 2023, may be disclosed to Ms Kirsten Cadle (General Counsel of the applicant) and Mr David Singleton (CEO and Managing Director of the applicant), subject to Ms Cadle and Mr Singleton each providing to the second to seventh respondents a signed confidentiality undertaking in the form annexed to the orders made on 25 May 2023 (as amended pursuant to this order), and, otherwise, there be no orders in terms of paragraphs 1A or 2 of the applicant's interlocutory application, as amended, and the costs of that application be reserved.
3. By 16 September 2024 the applicant provide the second to seventh respondents with the following further and better particulars of the statement of claim and otherwise, the second to seventh respondents' interlocutory application filed 13 December 2023 be dismissed with costs reserved. (a) As to paragraph 67: (i) the standard practice in the industry and usual terms of contracts of employment in the industry of which it is alleged that the fifth respondent knew; (ii) the grounds upon which it is alleged that it was 'standard practice' in the industry; (iii) the grounds upon which it is alleged that the terms of contracts of employment in the industry were 'usual'; and (iv) the grounds upon which it is alleged that the fifth respondent 'knew' of the 'standard practice' and 'usual terms'. (b) As to paragraph 70: (i) the nature of the damage alleged; (ii) the manner in which it is alleged that the applicant has sustained the damage alleged; and (iii) the grounds upon which it is alleged that the alleged breaches pleaded in that paragraph caused the damage alleged. (c) As to paragraph 73: (i) the nature of the loss or damage it is alleged the applicant has suffered and will continue to suffer; (ii) the manner in which it is alleged the applicant has suffered and will continue to suffer loss or damage of that nature; (iii) the alleged wrongful conduct of the first respondent for which it is alleged the fifth respondent is vicariously liable, if any, that is alleged to have caused the applicant to suffer and continue to suffer loss or damage; (iv) the alleged wrongful conduct of each of the second to seventh respondents, if any, that is alleged to have caused the applicant to suffer and continue to suffer loss or damage; and (v) the grounds upon which it is alleged that the applicant's alleged loss or damage was and will be caused by any alleged wrongful conduct identified in the particulars given in response to paragraph (c)(iii) and (or) (c)(iv) of these orders.
4. The second to seventh respondents' interlocutory application filed 15 February 2024 be dismissed with costs reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 These reasons concern three interlocutory applications of the parties that were listed and heard at a case management hearing on 13 March 2024. 2 The first is an application filed 12 December 2023 by which the applicant seeks orders to vary orders of the Court made on 25 May 2023 and undertakings signed by its legal representatives so as to permit its legal representatives to disclose certain documents to its general counsel and chief executive officer in order to obtain instructions about potential injunctive relief against the second to seventh respondents. The background to and resolution of that application is somewhat involved. But, for the reasons given later, orders will be made to vary the earlier orders and undertakings. 3 Second and third applications were filed on 13 December 2023 and 15 February 2024 by which the second to seventh respondents seek orders, in the case of the second application, for the applicant to answer a request for further and better particulars of the statement of claim or, in the case of the third, to strike-out certain paragraphs of the statement of claim. The orders sought in these applications are, in substance, alternatives and relate to the same paragraphs of the statement of claim. For the reasons given later, orders will be made requiring the applicant to give limited further and better particulars and, otherwise, these applications will be dismissed. 4 Due to the manner in which the applications came before the Court and the mixed success of the parties on them, I will hear the parties on the question of costs at the next case management hearing.

Materials 5 A number of affidavits were read on the applications. These were as follows: (a) affidavits of Clancy Calder Bennett affirmed 8 August 2023 and 12 December 2023; (b) affidavits of Rodney McKemmish sworn 8 August 2023, 12 December 2023 and 14 February 2024; (c) affidavits of Benjamin James Baker affirmed 14 August 2023 and 1 February 2024; and (d) affidavits of Jessica May Edmeades affirmed 31 January 2024 and 15 February 2024. 6 On 13 March 2024 suppression and non-publication orders were made concerning confidential and commercially sensitive information contained in the affidavit of Mr Bennett affirmed 8 August 2023 and the affidavit of Mr Baker affirmed 14 August 2023 for reasons given orally at the time those orders were pronounced. 7 Otherwise, on the remaining issues on the applications the applicant and the second to seventh respondents relied on written submissions filed in the Court and, in substance, contained in exchanges of letters between their legal representatives and made oral submissions. The first respondent appeared at the hearing and is self-represented. She made no submissions on the applications.

Background 8 The proceeding was commenced by an originating process filed on 19 April 2023. The applicant (Austin) alleges that the first respondent (Ms Podulova) breached confidentiality obligations and infringed copyright in relation to certain confidential and commercially sensitive information relating to Austin's business (Austin information). Ms Podulova was employed by Austin until 13 January 2023. Austin alleges that shortly after her employment ended Ms Podulova commenced employment with one of the other respondents (collectively, Schlam). Schlam is a competitor of Austin. At that time, the applicant made no positive allegations of wrongdoing on the part of Schlam. 9 On 20 April 2023 the Court made orders on an ex-parte application restraining Ms Podulova from doing certain things with the Austin information in so far as it was stored in digital form in certain places and requiring her to produce that information to the Court. There was an inter-partes hearing on 1 May 2023. None of the respondents opposed a continuation of the orders relating to Ms Podulova, but Schlam opposed orders requiring it to disclose details that were potentially relevant to the misuse of information by Ms Podulova. After a contested hearing, the Court ordered Schlam to file and serve an affidavit attesting to certain information, broadly, identifying the places where Austin information could be stored and the employer of Ms Podulova: Austin Engineering Pty Ltd v Podulova [2023] FCA 419. 10 The orders the Court made on 20 April 2023 and 1 May 2023 are commonly referred to as 'Norwich Pharmacal orders' after the authority associated with formulating the principles upon which orders of that nature are made. In Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133 at 175 Lord Reid described the principle as follows: … a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. 11 As Jackson J explained in Podulova at [12]-[13], the principle is based on equity's jurisdiction to order discovery. It is not necessary for the applicant to have a cause of action against the person from whom the discovery is sought provided that the person is 'mixed up' in the wrongful acts of a wrongdoer. As formulated in Norwich Pharmacal, the principle was directed to identification of the wrongdoers otherwise known to the applicant, but it has been extended to apply to require disclosure of other information about wrongs allegedly committed. It was in the application of these principles to the facts before the Court that Jackson J made orders for Schlam to file and serve an affidavit of disclosure: Podulova at [14]-[42]. 12 Affidavits of Ms Podulova affirmed 15 May 2023, Ryan Lewis Schlam affirmed 15 May 2023 and David Murray Ludbrook Haslett sworn 15 May 2023 were filed in compliance with the Court's orders. Subsequently, on 25 and 26 May 2023 further orders were made after the parties lodged minutes of consent orders with the Court. 13 Paragraph 1 of the orders of 25 May 2023 made provision, subject to Mr McKemmish providing confidentiality undertakings to Schlam, for Schlam to produce a laptop to the Court and to provide Mr McKemmish with the ability to inspect certain digitally stored information on the laptop, in cloud-based storage and elsewhere 'for the purpose of Mr McKemmish inspecting, searching for, copying and/or transcribing any document or other material, data or information accessed by [Ms Podulova] on or after 16 January 2023'. Paragraph 2 of the orders was in the following terms: 2. The documents, other materials, data, or information accessed by the First Respondent on or after 16 January 2023 and obtained by Mr McKemmish in accordance with order 1 above may be disclosed to an external legal representative engaged by the Applicant provided that: (a) Mr McKemmish has, at least three business days prior to any disclosure, provided the Second to Seventh Respondents' external legal representatives with a schedule identifying the document, other material, data, or information accessed by the First Respondent on or after 16 January 2023 that Mr McKemmish proposes to disclose; and (b) the external legal representative engaged by the Applicant has provided to the Second to Seventh Respondents a signed confidentiality undertaking in the form annexed at 'Annexure A' [to those orders]. 14 Mr McKemmish inspected the laptop on 6 June 2023 and between 8 and 26 June 2023 he inspected other storage sites. On 3 and 4 July 2023 Mr McKemmish sent emails with passworded links to the solicitors for Schlam of the documents that, in substance, he considered had been accessed by Ms Podulova in accordance with paragraph 2 of the orders of 25 May 2023. No steps were taken to object to the production of the documents to Austin's solicitors. On 7 and 11 July 2023 the information was provided to solicitors for Austin who had signed confidentiality undertakings in accordance with paragraph 2. 15 On 8 August 2023 the applicant filed an interlocutory application by which it sought orders to vary paragraph 2 of the orders made on 25 May 2023 and the confidentiality undertaking signed by the applicant's external legal representatives so as to permit documents listed in confidential exhibit CB-15 to Mr Bennett's affidavit of 8 August 2023 to be disclosed to Kirsten Cadle (the applicant's general legal counsel) and David Singleton (the applicant's CEO and managing director) subject to Ms Cadle and Mr Singleton signing the same confidentiality undertaking. 16 The documents referred to in the list in CB-15 included confidential exhibit CB-16 of Mr Bennett's affidavit. Exhibit CB-16 comprises an email exchange involving Schlam and a third party. An attachment to the email is an Austin document that is a drawing of a truck body and liners and is marked 'Confidential' with the watermark 'COPYRIGHT PROPERTY OF AUSTIN ENGINEERING' appearing diagonally across the page. It also has text in a box indicating the confidential nature of the information contained in the document. The parties referred to the drawing as the 'Austin document'. 17 Schlam filed Mr Baker's affidavit affirmed 14 August 2023 in opposition to the application. Amongst other things, that affidavit describes, in paragraphs 6 to 17 of the affidavit, Ms Podulova's role as a Schlam employee and the nature and context of the email exchange of 6 April 2023 that is CB-16. Confidential exhibit BJB-1 of Mr Baker's affidavit is another email of 6 April 2023 involving Schlam and a third party to which is attached another copy of the Austin document. The facts deposed in Mr Baker's affidavit place CB-16 into context and call in to question whether Ms Podulova was the source from which Schlam obtained the Austin document. 18 A series of correspondence was exchanged between the legal representatives of Austin and Schlam during August 2023. After receiving Mr Baker's affidavit, by letter from its solicitors dated 18 August 2023, Austin refined the documents it sought to disclose and indicated that it wanted to disclose parts of Mr Baker's affidavit and BJB-1. By letter from their solicitors dated 23 August 2023 Schlam indicated that it agreed to the disclosure of certain documents and parts of Mr Baker's affidavit, but not to the disclosure of the Austin document, the emails of 6 April 2023, or paragraphs 8 - 15 or 17 and BJB-1 of Mr Baker's affidavit. 19 On 25 August 2023 Mr Clancy sent an email to Ms Edmeades in which he acknowledged Schlam's agreement to the disclosure of certain documents and information and said: 'In light of this agreement, our client will not press its interlocutory application dated 8 August 2023.' The email then referred to and attached a proposed minute of consent orders dealing with the documents and information Schlam had agreed to disclose and otherwise dismissing the application of 8 August 2023. On 4 September 2023 the Court made orders by consent in terms of the proposed consent order. 20 Austin's solicitors sent Schlam's solicitors a letter dated 21 September 2023 in which it was asserted that the Austin document was Austin's document and copyright work that contained its confidential information. The letter requested that Schlam destroy the Austin document at the conclusion of the proceeding and 'required' certain persons to sign confidentiality undertakings relating to the Austin document. Schlam's solicitors responded with a letter dated 22 September 2023 in which it was said that Schlam would not give the undertakings because Mr McKemmish should not have provided the Austin document to Austin's solicitors and the undertakings were outside the scope of the relief and cause of action disclosed in the originating application. There followed a series of further communications without resolution of the issue. 21 In the meantime, the originating application was amended by leave of the Court granted on 1 May 2023 and further amended by leave of the Court granted on 20 December 2023. A statement of claim was filed on 21 November 2023. The further amended originating application expands the nature of the relief Austin claims against Schlam. The causes of action Austin pleads against Schlam are for equitable breach of confidence and for the tort of interference with contractual relations based on Ms Podulova's alleged misuse of Austin's confidential information in breach of her contract of employment with Austin. Many of the paragraphs of the statement of claim upon which these causes of action are founded are the subject of the applications for further and better particulars, or to strike-out.

Summary of the parties' submissions 22 Austin relies on the general principle that the Court has power to set aside, vary or discharge interlocutory orders. Austin submits that, although the power is usually exercised where there has been a material change in circumstance or the discovery of new material that could not reasonably have been put before the Court on the hearing of the original application, these factors are not necessary where an order has been made by consent: see Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46 (McLelland J); Fewin Pty Ltd v Prentice (No 2) [2019] FCA 53 at [22] (Markovic J); Waters v Commonwealth of Australia (Australian Taxation Office) [2017] FCA 312 at [52] (Griffiths J); Commissioner of Taxation v Iannuzzi (No 3) [2024] FCA 45 at [251]-[252] (Markovic J). Austin submits that the overarching principle is that the power may be exercised to 'do whatever the interests of justice require in the particular circumstances': Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 618 at [19] (Jagot J); P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) [2009] FCA 413; 255 ALR 466 at [41] (Goldberg J); NT Power Generation Pty Ltd v Power & Water Authority [1999] FCA 1669 at [6] (Mansfield J). 23 Schlam opposes any variation to the 25 May 2023 orders and undertakings for four reasons. First, it contends that the relevant documents should not have been provided to Austin's solicitors at all. Second, the evidence establishes that Schlam obtained the relevant documents from a source other than Ms Podulova and, therefore, the documents are not relevant to the matters in question in the proceeding. Third, there will be no prejudice to Austin because Schlam has no intention of using the Austin document for any purpose. Fourth, the question of variation has already been resolved by way of compromise of the interlocutory application Austin filed on 8 August 2023. 24 Austin submits that there should be a variation in the interests of justice because the Austin document is plainly Austin's document and Austin's confidential information. The confidentiality undertaking requires the party asserting confidentiality to establish that the document is confidential to that party. Further, Schlam's assertion that the relevant documents should not have been provided to Austin's solicitors is wrong. The dismissal of the interlocutory application filed 8 August 2023 was not a 'compromise' of the question of whether there should be a variation of the 25 May 2023 orders and undertaking to permit disclosure of the relevant documents. The source of the relevant documents is not important. If necessary, the originating application can be amended to include relief to restrain and (or) compensate for misuse of the Austin document. Schlam's assertion that Austin is not prejudiced is of little comfort in circumstances in which Schlam is unwilling to agree to the destruction of the document and give undertakings not to disclose or use the information.

Are the documents relevantly 'confidential'? 25 The manner in which the 25 May 2023 orders and the undertaking of the legal representatives is structured is that any document, material, data or information Mr McKemmish discloses to Austin's legal representatives is treated as confidential. However, in accordance with paragraph 9 of the confidentiality undertaking, it is not an acceptance on the part of Austin that the relevant materials and information contained in them are, in fact, confidential or restricts Austin from seeking to have the Court authorise or release of documents and information for use or disclosure beyond the restrictions in the undertaking. Further, if there is any contest or application before the Court as to the use or disclosure of documents or information, 'the burden of establishing confidentiality and the need for any particular restrictions on use or disclosure will remain on the entity claiming confidentiality to the same extent as if [the] undertaking had not been given'. 26 Schlam has not asserted that the relevant documents or information are 'confidential' information of Schlam that is in need of restriction on use or disclosure. The process of discovery regularly requires parties to disclose documents that are 'confidential'. Confidentiality is not ordinarily a sufficient reason to deny inspection of a document as the implied undertaking that documents be used only for the purpose for which the document is disclosed will provide sufficient protection to the party producing them. Other considerations arise where the documents are commercially sensitive and the relevant parties are trade rivals: see, e.g., Civic Video Pty Ltd v Paterson [2013] WASCA 107 at [26]-[28] (Pullin and Murphy JJA) and the authorities there cited. In that context, information is 'commercially sensitive' if 'a rival in the market place who obtains access to it may turn the material to the advantage of that rival and to the disadvantage of the party who seeks to keep it secret': Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 38. 27 I accept Austin's submission to the effect that Schlam could not possibly claim that the Austin document is 'confidential' information belonging to Schlam. Further, while the emails of 6 April 2023 might be 'confidential' in the sense that the communications are known only to the persons involved in the communications and, from the nature of them, it may be inferred that at or around the time they were sent, they were 'commercially sensitive'. It is difficult to see how they could remain in that category as the potential commercial advantage the subject of the communications was not realised. Therefore, Schlam has not demonstrated, nor has it sought to demonstrate, that the relevant documents are confidential and commercially sensitive or that disclosure could or would bring about commercial disadvantage if disclosed to Austin as a trade rival.

Should the documents have been provided to Austin's solicitors? 28 Schlam asserts that the Austin document should not have been provided to Austin's solicitors because Ms Podulova had not accessed the document on or after 16 January 2023. It was partly for that reason that Schlam had said, through their solicitors' letter of 23 August 2023, that they would not agree to disclosure of the Austin document. The foundation for Schlam's contention is that Mr McKemmish's evidence in his affidavit of 8 August 2023 has not established that Ms Podulova had accessed the emails and Austin document, but merely that she had access to a shared account that included those documents. Mr McKemmish subsequently made two further affidavits sworn 12 December 2023 and 14 February 2024. In his affidavit of 12 December 2023, he responds to various assertions that Schlam made, through their solicitors, in a letter dated 30 October 2023. Mr Baker then made an affidavit affirmed 1 February 2024 in which he deposes facts relating to the manner in which Schlam staff are able to access a shared account that calls into question some of the assumptions Mr McKemmish made about the manner in which Ms Podulova was able to access the documents. Ultimately, however, in Mr McKemmish's affidavit of 14 February 2024 he expresses an opinion that it was more likely than not that Ms Podulova accessed the documents and explains the foundations for his opinion. 29 The question of whether Ms Podulova accessed the 6 April 2023 emails and Austin document cannot be resolved on an interlocutory basis on competing affidavit evidence. Mr McKemmish's opinion is not obviously incorrect based on the contents of his affidavits and other information available. Therefore, I am not able to make a finding that the relevant documents should not have been provided to Austin's solicitors because they fell outside the scope of the orders of 25 May 2023. 30 In any event, Schlam's assertion is founded on a strict and literal construction of the orders. It is implicit that identification of documents or other materials or data or information accessed by Ms Podulova after 16 January 2023 was to be based on Mr McKemmish's opinion of that matter. If Schlam disagreed with Mr McKemmish's view, it had an opportunity to object before any documents, material, data or information were provided to Austin's solicitors. It was given that opportunity in this case and did not take it. In these circumstances, even if the relevant documents were not, in fact, accessed by Ms Podulova after 16 January 2023 it would not mean that, for the purposes of the orders of 25 May 2023, Mr McKemmish was precluded from providing them to Austin's solicitors.

Are the documents relevant to the matters in question in the proceeding? 31 Schlam submits, in effect, that permitting disclosure of the relevant documents to Austin's general legal counsel and CEO for the purpose of Austin's solicitors advising and receiving instructions is futile because the requested 'undertaking' is outside the scope of the relief Austin has sought against Schlam in the proceedings. Austin's answer to that submission is, in effect, that Schlam's objection underscores the very reason its legal representatives wish to disclose the relevant documents to the Austin representatives responsible for giving instructions to its solicitors. Here, that reason is so that its solicitors can give Austin advice and obtain instructions that may include expanding the requested relief if Schlam continues to resist giving undertakings voluntarily. 32 I accept Schlam's submission that the proposed 'undertaking' is outside the scope of the relief sought in the originating application (and statement of claim). On the face of the materials, the requested undertaking would involve restraining Schlam from using or disclosing confidential information of Austin that it obtained from a source other than Ms Podulova. It may also point towards or lead to a train of enquiry that results in Austin seeking relief against Schlam for additional or other causes of action. Ordinarily, Schlam would not be required to disclose information or documents to Austin relating to potential claims of which Austin was otherwise unaware. However, the relevant documents were disclosed to Austin's solicitors subject to the confidentiality undertakings in a Court sanctioned process that was akin to discovery. While the purpose of that 'discovery' was of the Norwich Pharmacal kind, Austin's solicitors cannot unlearn the information they have acquired and, all other things being equal, have a duty to protect the interests of their client and that may extend to informing and advising their clients about what they have learned. 33 As Schlam has not demonstrated that the relevant documents are 'confidential' and need protection from disclosure to Austin or that they should not have been disclosed at all, that the requested 'undertaking' is outside the scope of the relief claimed in the originating process is not of any particular significance. In substance, disclosure to Austin's legal representatives is disclosure to Austin. The restriction on the persons to whom the disclosure is made is to protect Schlam's confidential information. If the information is not in need of protection, then there is no obvious reason for continuing the restriction on disclosure. 34 However, in substance, Schlam submits that there is good reason for maintaining the restriction because the purpose for which Austin's solicitors wish to disclose the relevant documents is to give advice and obtain instructions that may result in using the information contained in the documents to amend the relief sought and expand the causes of action alleged against Schlam. Schlam submits that purpose is outside the scope of the purposes for which the documents were disclosed. That is, the purpose of the disclosure in this case was limited to 'discovery' of the Norwich Pharmacal kind. That disclosure was to aid Austin's claims against Ms Podulova, not augment or aid in claims against Schlam that were unknown and unidentified at the time the Court made the disclosure orders. 35 Although the 25 May 2023 orders were made by consent, the effect of the orders was that Schlam was compelled by order of the Court to disclose documents or information. In these circumstances the party obtaining the disclosure cannot, without leave of the Court, use it for any purpose other than that for which it was given unless it is received into evidence: Hearne v Street [2008] HCA 36; 235 CLR 125 at [96] (Hayne, Heydon and Crennan JJ). Nonetheless, in general where the disclosure relates to obtaining evidence for the purposes of the substantive dispute in the proceeding, the party to whom the documents or information has been disclosed is permitted to use the documents for the purposes of the proceeding in which disclosure was compelled. Those purposes can extend to amendments to pleadings and adding causes of action as these are steps that fall within the scope of the purposes for which disclosure was ordered: Allstate Life Insurance Co v Australian & New Zealand Banking Group Ltd (1995) 57 FCR 360 at 378-379; Mann v Medical Defence Union Ltd [1997] FCA 45 at 52-53; Sybron Corporation v Barclays Bank Plc [1985] 1 Ch 299 at 328; Bell Group Ltd (in liq) v Westpac Banking Corporation [2001] WASC 315 at [291]. Aside from these circumstances, the Court may release the party to whom disclosure has been made from the implied undertaking. The principles applicable to whether a person should be released were described in Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3; 218 ALR 283 at [31] (Branson, Sundberg and Allsop JJ) as follows. 31 In order to be released from the implied undertaking it has been said that a party in the position of the appellants must show "special circumstances": see, for example, Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217; 110 ALR 685. It is unnecessary to examine the authorities in this area in any detail. The parties were not in disagreement as to the legal principles. The notion of "special circumstances" does not require that some extraordinary factors must bear on the question before the discretion will be exercised. It is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes. The discretion is a broad one and all the circumstances of the case must be examined. In Springfield Nominees, Wilcox J identified a number of considerations which may, depending upon the circumstances, be relevant to the exercise of the discretion. These were: • the nature of the document; • the circumstances under which the document came into existence; • the attitude of the author of the document and any prejudice the author may sustain; • whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain; • the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information); • the circumstances in which the document came in to the hands of the applicant; and • most importantly of all, the likely contribution of the document to achieving justice in the other proceeding. 36 For the reasons already given, disclosure to Austin's legal representatives was disclosure to Austin. Schlam has not demonstrated that the relevant documents are confidential and in need of protection. The potential for disclosure to Austin's general legal counsel and CEO to result in Austin instructing its solicitors to apply for leave to amend its originating process and statement of claim to expand the relief and causes of action is not a good reason to maintain the existing restriction. The question of whether, due to the circumstances in which the relevant documents were disclosed to Austin, it is not permitted by the implied undertaking to use them to make those amendments or whether there should be a release from the implied undertaking does not need to be decided at this time.

Is Austin bound by a 'compromise' of the question of variation? 37 There is no reason in principle that the concept of 'compromise' cannot apply to interlocutory as well as final relief. That is, the 'right' to apply for the interlocutory relief is replaced by the contractual promise of the compromise such that a claim for the original right is barred and the only remaining right is the contractual right. In substance, Schlam alleges that the right to apply to vary the orders of 25 May 2023 and undertaking to include disclosure of the relevant documents to Austin's general legal counsel and CEO was compromised by an agreement that was then embodied in the consent order made on 4 September 2023. 38 However, the communications exchanged before the consent order was made on 4 September 2023 do not reveal that an agreement or compromise was reached in a manner that was intended to bring about a full and final resolution of all matters raised in the interlocutory application filed on 8 August 2023. First, Austin's solicitors' letter of 18 August 2023 changed the nature of the disclosure Austin wanted its solicitors to make after receiving Mr Baker's affidavit of 14 August 2023. Ausin wanted its solicitors to disclose parts of Mr Baker's affidavit that were, of course, not part of the original application filed on 8 August 2023. Schlam's solicitor's letter of 23 August 2023 was in response to the changed nature of the disclosure requested on 18 August 2023. Second, Austin's solicitors' email of 25 August 2023 responded, in turn, that in light of disclosure to which Schlam was willing to agree, Austin would 'not press' its interlocutory application. That is more in the nature of a unilateral decision, in effect, to withdraw the application. 39 The consent order of 4 September 2023 reflected the terms of what the parties had 'agreed' for that order. That agreement included an order that the interlocutory application of 8 August 2023, otherwise, be dismissed. That dismissal included the application insofar as it had requested variations to the orders and undertakings relating to the 6 April 2023 emails and Austin document. 40 Rule 39.05(c) of the Federal Court Rules 2011 (Cth) provides that the Court may set aside a judgment or order after it has been entered if it is interlocutory. The consent order of 4 September 2023 was an interlocutory order. The discretion r 39.05(c) confers on the Court must be exercised judicially, but I accept Austin's submission to the effect that the discretion is constrained only by the demands of the interests of justice. As interlocutory orders are 'virtually limitless in their variety, it is dangerous to seek to generalise about them': Luo v Zhai (No 6) [2016] FCA 805 at [15] (Perram J). No doubt, considerations of finality and the overarching purpose of the civil practice and procedure provisions are important factors in the exercise of the discretion particularly where interlocutory orders of a substantive nature have been made after a contested hearing in contemplation that the order would operate until the final disposition of the proceeding. But, the 'overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case': Brimaud at 46 (McLelland J). 41 Consideration of what the interests of justice require are quite different in circumstances in which an order is made by consent rather than after a contested hearing. In this respect, the observations of Woodward and Foster JJ in RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389 at 390-391 are apposite and apply equally to the circumstances of this case: … It is convenient to begin by considering whether there was in fact a binding contract between the parties expressed by the consent order, or whether this was one of the frequent cases in which an interlocutory order is made on the application of one party with the other party or parties consenting - in the sense of not objecting - but without there being any intention of entering into a formal and binding contract; see Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185 at 189; 1 All ER 377 at 380. Courts are very familiar with the circumstance in which parties reach an agreement, either after a good deal of negotiation or perhaps quite readily, about the orders that should be made for the future conduct of an action. We would be most reluctant to reach any conclusion which tended to inhibit the ready consent of practitioners to the making of sensible arrangements in such cases. It would normally be understood by them that, if circumstances arose which made it necessary, they would be entitled to apply to the court for a variation of the orders to which they had consented. No doubt the fact of their consent would be a relevant consideration for the court in deciding whether to order a variation, but it would be understood by all that the ultimate decision was in the court's hands. … 42 Austin's solicitors' request for the provision of undertakings and Schlam's refusal is a change of the circumstances that existed before 4 September 2023. The question of undertakings had not been raised. Therefore, the necessity to disclose the relevant documents to obtain instructions on that subject was not live during August and September 2023. 43 In my view, it is implicit in the circumstances in which the interlocutory application of 8 August 2023 was resolved and the consent order of 4 September 2023 made that it was one of those 'sensible arrangements' whereby it was 'understood' that if circumstances arose which made it necessary, any of the parties would be entitled to apply to the court for a variation of the order to which they had consented. After all, it was on an understanding of the same nature about the 'liberty to apply' component of the orders of 25 May 2023 that Austin had moved in the first place. In these circumstances, Schlam's refusal to give undertakings is a sufficient change in circumstances to warrant permitting a renewal of the variation to the 25 May 2023 orders and undertakings requested in the interlocutory application filed on 8 August 2023 limited, as it is, to disclosure of the 6 April 2023 emails, the Austin document and parts of Mr Baker's affidavit.

Should the orders and undertakings be varied? 44 I am satisfied for the reasons already canvassed that it is in the interests of justice that the orders of 25 May 2023 and undertakings should be varied in the manner that Austin has requested.

Further particulars or strike-out of the statement of claim 45 Schlam applies to have paragraphs 28, 30, 39, 43, 67 to 73 and 77 of the statement of claim struck-out. Separately, or alternatively, Schlam applies for orders to the effect that Austin give proper answers to Schlam's request for further and better particulars of the statement of claim. That request, in substance, requests further and better particulars of most of the paragraphs it otherwise applies to have struck-out. Schlam is not satisfied with the answers Austin gave to that request and, on that basis, contends that the paragraphs of the statement of claim should be struck-out for want of particularity. 46 The principles applicable to the provision of particulars of a pleading and to strike-out a pleading for want of particularity or on other grounds are well established and need not be restated. The relevant question for the purposes of the applications before me is whether the statement of claim, together with the particulars provided in correspondence, meet the basic requirement of stating Austin's case with sufficient clarity to allow Schlam a fair opportunity to meet it. That question is influenced by s 37M of the Federal Court of Australia Act 1976 (Cth) and an understanding that contemporary case management will involve pre-trial exchanges of witness statements, expert evidence and lists of the documents upon which the parties intend to rely at trial and, therefore, the prospect of 'surprise' or 'trial by ambush' is quite unlikely. Having regard to those matters, the relevant question may be answered at the threshold by asking whether a lawyer looking at the pleading (and particulars), genuinely interested in knowing what issues are to be tried and the case that has to be met, would have any difficulty in ascertaining those matters. Further, there may come a point where it may be inferred that a party, after being afforded a fair opportunity to articulate a case that meets the threshold test, is unable to do so and, accordingly, the pleading or claim may be struck-out for want of material facts or particulars.

Paragraphs 28, 30, 39 and 43 47 Paragraphs 10, 28, 30, 39 and 43 of the statement of claim plead: 10. For the purpose of conducting its business, Austin has, by its employees, officers, contractors, servants and/or agents, created and/or developed, inter alia, drawings, plans, diagrams, plans, schematics, tenders, proposals, correspondence and other documents, relating to Austin's business and/or the products it has designed, manufactured and/or sold (collectively, Austin Documents). Particulars (A) A representative sample of Austin Documents is described in, and confidentially annexed to, the affidavit of Kirsten Cadle affirmed on 18 April 2023 (Cadle Affidavit). (B) Cadle Affidavit at [68]-[98] and [100]-[110]. (C) Confidential Annexures KC-28, KC-32, KC-33, KC-44, KC-45 and KC-46, and Annexures KC-35 to KC-42. (D) Requests for access to the Cadle Affidavit and its Confidential Annexures may be made to Austin's solicitors, subject to the agreement of appropriate confidentiality undertakings. (E) Further particulars will be provided following the service of evidence. … 28. During the period from about 13 January 2023 until at least about 17 February 2023, Podulova accessed and used Austin Documents which she had retained following the end of her employment with Austin. Particulars (A) McKemmish Report at paragraphs [55]-[62]. (B) Paragraphs [16]-[18] of Confidential Annexure RM-8 to the affidavit of Rodney McKemmish sworn on 8 August 2023. (C) Requests for access to the McKemmish Report may be made to Austin's solicitors, subject to the agreement of appropriate confidentiality undertakings. (D) Further particulars may be provided following discovery and the service of evidence. … 30. Podulova engaged in the conduct pleaded in paragraph 28 above during the course, and for the purposes, of her employment with Payload, for the benefit of: (a) Payload; (b) further or alternatively, one or more entities in the Schlam Group. … 39. Austin Documents contain information of the type described in each of paragraphs 13(a)(i) and 16(a)(i) above. … 43. Austin Documents contain or comprise information which has the necessary quality of confidence (Austin Confidential Information). 48 Schlam requested further and better particulars of paragraphs 28 and 30 of the statement of claim. The substance of these requests was directed to identification of the Austin Documents alleged to have been accessed and used by Ms Podulova during the course of and for the purposes of her employment with and for the benefit of Payload (one of the Schlam respondents and Ms Podulova's employer). Schlam also requested particulars of paragraphs 39 and 43 directed to the grounds upon which it is alleged that the documents contain information of the nature pleaded in paragraphs 13(a)(i) and 16(a)(i) and have the character of confidence. Austin's response to all these requests was, in substance, that adequate particulars have been provided for this stage of the proceeding; namely, before discovery and exchange of expert and other evidence. Further, paragraph 10 provides particulars of a representative sample of the Austin Documents, paragraph 28 refers to Mr McKemmish's affidavit of 8 August 2023 that identifies certain documents it is alleged Ms Podulova accessed and the use Ms Podulova made of them. Subject to confidentiality undertakings, Austin offered to provide the relevant Austin Documents to Schlam's legal representatives. 49 The nature of the allegation in paragraph 10 is general. It describes 'Austin Documents' in a general sense and gives particulars of the nature of the broad description. Paragraphs 13(a)(i) and 16(a)(i) plead alleged terms Ms Podulova's first and second contracts of employment with Austin that describe the nature of 'confidential information' for the purposes of that contract. Therefore, it is evident from the pleas in paragraphs 39 and 43 that Austin alleges that the Austin Documents contain information falling within the description of 'confidential information' in the employment contracts and that the information also had the necessary quality of 'confidence' for the purposes of an equitable obligation to keep that information confidential. These paragraphs, as pleaded, do no more than allege the existence of a class of documents, described as Austin Documents, that fall within the alleged terms of 'confidential information' in the employment contracts and an equitable duty of confidence. I accept Austin's submission that these paragraphs together with the additional particulars provided in correspondence are adequately particularised for the present stage of the proceedings for Schlam to know the case it has to meet taking into account the kinds of case management orders that will be made in due course regarding discovery, further particularisation and exchange of witness statements and expert reports. Moreover, subject to confidentiality undertakings the present relevant cohort of Austin Documents will be provided to Schlam's legal representatives. Therefore, the relevant documents will be identified and Schlam should be able to ascertain on the face of the documents the extent to which they meet the description of confidential information pleaded in paragraphs 13(a)(i) and 16(a)(i). 50 There will be no order, at this time, for the provision of additional particulars at this time or to strike-out paragraphs 28, 30, 39 or 43 of the statement of claim.

Paragraph 49 51 Paragraphs 48 and 49 of the statement of claim plead: 48. From a date unknown to Austin, an Austin Document has been stored on information technology equipment and/or infrastructure used and accessed by one or more entities in the Schlam Group (Retained Document). Particulars (A) Paragraphs [16]-[18] of Confidential Annexure RM-8 to the affidavit of Rodney McKemmish sworn on 8 August 2023. 49. The entities in the Schlam Group who have gained possession of the Retained Document have done so in circumstances in which they were aware or ought to have been aware that Austin Confidential Information contained in the Retained Document was confidential. 52 Schlam requested particulars of paragraph 49 directed to ascertaining the entities alleged to have gained possession of the Retained Document and the grounds upon which it is alleged that Schlam was aware or ought to have been aware that the Retained Document contained Austin Confidential Information and that the information was confidential. Austin's response was to give particulars of the contents of the Retained Documents that identify them as 'confidential' and, otherwise, that the entities which gained possession and who were aware of confidential nature of the documents are within the knowledge of Schlam. Further, such particulars as Austin are able to provide at this stage of the proceeding is sufficient for Schlam to know the case it has to meet. 53 I accept Austin's submissions. However, it will be necessary for Austin to provide further particulars of the entities and their awareness after discovery or at some later point in the proceeding. 54 There will be no order, at this stage of the proceeding, for the provision of additional particulars or to strike-out paragraph 49 at this stage of the proceeding.

Paragraphs 67 to 73 and 77 55 Paragraphs 67 to 73 and 77 of the statement of claim plead: 67. From a time not currently known to Austin, but since at least 16 January 2023, Payload was aware or ought reasonably have been aware that Podulova: (a) was or had been an Austin employee in the period between about December 2019 until about February 2021 and in the period between about August 2021 and about 13 January 2023; (b) was subject to contractual obligations to Austin preventing her from undertaking work for a competitor of Austin's immediately after her employment with Austin; (c) had knowledge of Austin's confidential information; and/or (d) was subject to contractual obligations to Austin preventing her from using or disclosing Austin's confidential information otherwise than in connection with the performance of her duties for Austin. Particulars (A) To the extent that Schlam did not have actual knowledge of any of the matters pleaded in this paragraph, Austin relies upon Schlam's reckless indifference to those matters. (B) As to the period from about 20 February 2023, Austin relies on the letter from HWL Ebsworth to Ryan Schlam dated 20 February 2023 (Annexure KC-18 to the Cadle Affidavit). (C) Further particulars may be provided following discovery and the service of evidence. 68. From a time not currently known to Austin, but since at least 16 January 2023, Payload was aware or ought reasonably have been aware that Podulova undertaking work for Payload and/or the Schlam Group from 16 January 2023 would be a breach of: (a) Podulova's contractual obligations referred to in paragraph 67(b) above; (b) further or alternatively, Podulova's contractual obligations referred to in paragraph 67(d) above. Particulars The particulars to paragraph 67 above are repeated. 69. By offering employment to Podulova and instructing her to undertake work for Payload and/or the Schlam Group, Payload intended to induce or procure Podulova to engage in conduct that would breach: (a) Podulova's contractual obligations referred to in paragraph 67(b) above; (b) further or alternatively, Podulova's contractual obligations referred to in paragraph 67(d) above. 70. Podulova's breach of: (a) the Restraint (being contractual obligations of the type referred to in paragraph 67(b) above); (b) further or alternatively, each of the First Employment Contract Confidentiality Obligations (being contractual obligations of the type referred to in paragraph 67(d) above); (c) further or alternatively, each of [the] Second Employment Contract Confidentiality Obligations (being contractual obligations of the type referred to in paragraph 67(d) above), has caused damage to Austin. 71. In the premises, Payload induced and/or procured Podulova's breach of: (a) the Restraint; (b) further or alternatively, each of the First Employment Contract Confidentiality Obligations; (c) further or alternatively, each of the Second Employment Contract Confidentiality Obligations. Vicarious Liability 72. By reason of the matters pleaded in paragraphs 28 and 30 above, Payload is vicariously liable to Austin in respect of: (a) Podulova's breaches of her equitable obligation of confidence pleaded in paragraph 47 above; (b) further or alternatively, Podulova's infringements of Austin's copyright pleaded in paragraph 60 above. J. Relief 73. By reason of each of the Respondents' breaches and/or infringements and conduct pleaded above, Austin has suffered loss and damage and will, unless such acts and conduct are restrained, continue to suffer loss and damage. … 77. Austin seeks the relief claimed in the originating application 56 Schlam made an extensive request for further and better particulars of these paragraphs. Austin provided answers to the requests, but there remain three principal areas in which Schlam submits the pleading and particulars remain deficient. First, Schlam's alleged knowledge of the terms of Ms Podulova's contracts of employment with Austin. Second, the manner in which it is alleged that Schlam induced Ms Podulova to breach her contract of employment. Third, the loss or damage it is alleged Austin has suffered. 57 As to knowledge, Austin has given particulars of paragraph 67 by which it has said that its case is inferential. It is to be inferred from the fact Payload employed Ms Podulova it is likely to have been aware of her employment with Austin. It is standard industry practice that employment contracts have provisions to protect confidential information of employers and restraints on trade. Therefore, it is to be inferred that Payload had knowledge of the matters pleaded in paragraph 67. 58 In my view, paragraph 67 and the particulars given are deficient in that the 'standard industry practice' is neither pleaded as a material fact nor are particulars given of it. In Austin's particulars, it alleges 'actual knowledge' arising from 'reckless indifference'. Without pleading and (or) particularising the 'standard industry practice' Schlam has insufficient information to know how it is alleged that it had actual knowledge. It may be that after discovery Austin is able to provide particulars of direct actual knowledge, but it must first plead a sustainable claim of actual knowledge based on inference. Otherwise, I accept that knowledge that Ms Podulova had been employed by Austin and had access to its confidential information is adequately pleaded and particularised for an inferential case at this stage of the proceeding. 59 At this time, paragraph 67 will not be struck-out. Austin will be ordered to provide further and better particulars of the 'standard industry practice' and 'usual terms' of employment contracts including the grounds upon which it is alleged, in effect, that such practice and terms were notorious and can be taken to have been known by Schlam. 60 As to inducing breach of contract, the focus of Schlam's complaint is paragraph 69. Schlam submits that elements of the tort of interference with a contract is that the tortfeasor intended to induce and induced breach of the contract. Here, inducement requires persuasion or contrivance. Paragraph 69, Schlam submits, fails to identify the manner in which there was inducement of that nature. Austin submits that its case is inferential and that inducement can be inferred from: (1) knowledge of the existence and terms of the contract; (2) knowledge that Ms Podulova had confidential information of Austin; (3) employing Ms Podulova with that knowledge; and (4) instructing her to perform work for Payload knowing that in the performance of such work she must breach the restraints of trade and use (misuse) Austin's confidential information. 61 For the purposes of pleading and particularising a sustainable cause of action for the tort of interference with contractual relations, I accept that the act of employing and instructing a person to carry out work with knowledge that in so doing the employee must breach a contract of employment with a former employer would give rise to a reasonably arguable cause of action for that tort. In the case of the alleged restraint of trade, inducement arguably arises from Payload offering Ms Podulova employment knowing that acceptance would be a breach of the restraint. In the case of confidential information, a former employee cannot unlearn confidential information that the employee has acquired from the former employer. Even if the former employee does not take physical confidential information from the former employer and use that for the benefit of the new employer, the former employee will not be able to avoid using confidential information acquired from the former employer and retained as part of the former employee's corpus of knowledge and apply that knowledge for the benefit of the new employer. Restraints of trade exist and are permissible to protect and prevent misuse of confidential information of that character. Therefore, again, it is arguable that the act of employing and instructing Ms Podulova to carry out work where confidential information she had acquired and retained from Austin would be of assistance to Payload, is sufficient to meet the inducement element of the tort. 62 Subject to the provision of proper particulars of Schlam's alleged knowledge of the terms of Ms Podulova's contracts of employment with Austin, in my view, Austin's case against Payload regarding intention to induce and inducement is adequately pleaded and particularised in paragraphs 69 and 71 of the statement of claim. There will be no order, at this time, for further particulars or to strike-out those paragraphs. 63 As to damages, the nature of Schlam's complaint is that no heads of loss or damage have been pleaded or particularised for Schlam's alleged wrongful conduct and no particulars of causation or the manner in which it is alleged loss or damage has been suffered have been provided. In response to Schlam's request for particulars, Austin has provided minimal information but has identified heads of damage as including damages (or) equitable compensation for any lost sales and (or) lost opportunities, as well as damages based on the 'user principle'. Further, that the particulars will be completed following discovery and the exchange of evidence. 64 In paragraph 70 Austin pleads that Ms Podulova's breaches of contract or equitable duty of confidence have caused Austin damage. In paragraph 72 Austin pleads, in substance, that Payload, as her employer, is vicariously liable for her breaches of the equitable duty. In paragraph 73 there is a rolled-up plea that Austin has suffered loss or damage by reason of the wrongful conduct of all the respondents. As that paragraph relates to Austin, it is vicarious liability for equitable compensation for Ms Podulova's breaches of confidence and damages for the tort of interference with contractual relations that is sought. In substance, these allegations plead that Austin has suffered loss or damage. 65 The statement of claim includes a certificate of a lawyer certifying to the Court that the factual and legal material available to him at present provides a proper basis for each allegation in the pleading. In my view, the particulars of equitable compensation and (or) damages are insufficient for this stage of the proceeding. I accept that complete quantification and identification of all heads of loss or damage may be premature at this stage. However, it is necessary to identify, at least, particulars of the foundation for the allegation that Austin has suffered some loss or damage by reason of the alleged wrongful conduct. 66 By way of example, if it is alleged that Austin has lost sales or opportunities, it must have some evidence of that fact including the character of the sales or opportunities lost, when and in what circumstances, and the grounds for alleging that the lost sales or opportunities were caused by the alleged wrongful conduct. Such particulars may also be a sufficient foundation for an account of any profits the Schlam parties have derived from the alleged breaches of confidence. 67 There will be an order that Austin provide further and better particulars of paragraphs 70 and 73 of the statement of claim. But, there will be no order striking-out those paragraphs at this time.

Disposition 68 Orders will be made to vary the orders of 25 May 2023 and undertakings in the terms Austin has requested in its interlocutory application. 69 Orders will be made requiring Austin to give further and better particulars of the 'standard practice in the industry', the 'usual terms of contracts' and of the equitable compensation and damages claimed in its statement of claim. Otherwise, Schlam's interlocutory applications will be dismissed. 70 I will hear the parties on the question of the costs of the applications at the next case management hearing. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill.

SCHEDULE OF PARTIES WAD 83 of 2023 Respondents Fourth Respondent: SCHLAM HIRE PTY LTD (ACN 605 114 467) Fifth Respondent: PAYLOAD INDUSTRIES PTY LTD (ACN 611 121 610) Sixth Respondent: THE PILBARA CLEAN MACHINES PTY LTD (ACN 118 342 895) Seventh Respondent: RLS ENGINEERING PTY LTD (ACN 125 143 517)