Austress Freyssinet Pty Ltd v Joseph [2006] NSWSC 77 | Case summary

1260/06 AUSTRESS FREYSSINET PTY LIMITED (ACN 002 617 736) v MICHAEL JOSEPH & ORS JUDGMENT - Ex Tempore (Revised 15 February 2006) 1 HIS HONOUR: This is an application by the first and third defendants in the proceedings to revoke or set aside some Anton Piller orders made by his Honour Mr Justice Windeyer on 1 February 2006. The jurisdictional basis of the application is twofold. The first basis is Rule 36.16(2)(b) of the Uniform Civil Procedure Rules 2005, which provides that: "The Court may set aside or vary a judgment or order after it has been entered if... the judgment or order has been given or made in the absence of a party whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order." 2 The second basis which is invoked by some of the arguments that Mr Moses, counsel for the first defendant advanced, is an inherent power of the Court in relation to orders which are made ex parte. 3 The plaintiff has not made any fallback application to issue any fresh order in the event that the order is totally set aside, rather than varied. 4 The proceedings were begun before his Honour Mr Justice Windeyer on 1 February 2006. The plaintiff is a company which is engaged in the building industry. It has activities in areas connected with structures, geotechnical services, remedial services and products. It specialises in the post-tensioning industry. 5 The first defendant, Mr Michael Joseph, commenced employment with the plaintiff in about 1982, as a draftsman, and over the years he has worked his way up to being the National Business Development Manager of the plaintiff. The responsibilities that he had in that position included forming relationships with clients and potential clients, securing business for the plaintiff and developing key high-level relationships with the potential clients, suppliers, and such like. 6 It is common ground between the plaintiff and Mr Joseph that Mr Joseph's employment with the plaintiff has come to an end. There is dispute, however, about whether it has come to an end as a result of the plaintiff repudiating the contract of employment and that repudiation being accepted by Mr Joseph, or whether it has come to an end through Mr Joseph being summarily dismissed. The second defendant in the proceedings, Mr Walsh, is someone who has likewise been a long-standing employee of the plaintiff. He resigned on 21 December 2005. 7 The third defendant in the proceedings, Unistress Pty Ltd, is a company which was incorporated on 10 January 2006. Mr Joseph is both a director and company secretary of Unistress. It has its registered office at 330 Edgar Street, Condell Park. That address is also the registered office of Formbrace Pty Ltd, a company that operates in the same industry as the plaintiff. The sole director and company secretary of Formbrace is Mr Andrew Daoud. 8 The plaintiff's summons seeks declarations against the first defendant which, in very broad terms, are to the effect that he has received, used and distributed information, or documents in which the copyright is owned by the plaintiff, other than in the performance of his duties as an employee of the plaintiff. There are also some allegations that he has breached his statutory responsibilities under sections 182 and 183 of the Corporations Act 2001. There is an allegation that during the term of his employment he used confidential information of the plaintiff for the purpose of assisting in the establishment of a business in competition with the plaintiff, that being a business in which he was involved and interested. The summons also alleged that he solicited or induced employees of the plaintiff to engage in activities prohibited by their contract of employment for the benefit of a business in competition with the plaintiff. It alleges, as well, that he solicited or endeavoured to solicit from the plaintiff the business or services of persons or entities for the benefit of a business in competition with the plaintiff. Those matters are alleged to add up to a breach of his duties of fidelity and good faith. The plaintiff seeks, amongst other things, a perpetual injunction against him using or reproducing any of the confidential information or information in which copyright is claimed, and an injunction against inducing any current or former employee to breach their employment contract. 9 The allegations against the second defendant are of a similar nature to those against the plaintiff. The allegations against the third defendant are that it is the entity which has received, used and distributed the information which is confidential information of the plaintiff, or information in which the copyright is owned by the plaintiff. There is also an allegation that it has induced or attempted to induce employees of the plaintiff to breach their contracts of employment. 10 Against all defendants, as well as the injunctions already mentioned, the plaintiff seeks an inquiry as to damages, and in the alternative damages or an account of profits. 11 The circumstance which lead to the allegation of inducing breach of contract is that, while Mr Joseph did not have any term in his contract of employment which restricted his activities post-employment in any express way, there was a term in Mr Walsh's contract of employment which required him to maintain the confidentiality of the company's finance operations and know-how, and that he would not engage in activity in the post-tensioning industry within 12 months of the cessation of his employment without the consent of the plaintiff. 12 The allegation against Mr Joseph is that he had a role in inducing Mr Walsh to leave the employ of the plaintiff, and as well that, while Mr Walsh was an employee, Mr Joseph induced him to breach his obligations of confidentiality to the company. It is relevant here that, while Mr Walsh gave a notice of resignation to the plaintiff on 21 December 2005, it was a four week notice, to take effect from 18 January 2006. 13 The Anton Piller order made by Windeyer J was one which required the first, second and third defendants to permit their premises to be searched, and to disclose the whereabouts on their premises of items which met a particular description which, broadly, were documents relating to the business of the plaintiff. 14 While the Anton Piller orders were executed against the second and third defendants, the plaintiff was not able to execute the Anton Piller order against Mr Joseph. When the people who were authorised by the order to attend Mr Joseph's premises did so on the morning of 2 February 2006, they found that Mr Joseph was not there, and that only his adult son was at the house. Mr Joseph was, it appears, in Queensland at the time. When it was not possible to execute the order, this led to Mr Joseph's counsel making an application, on the afternoon of 2 February 2006, to me as Duty Judge, to have the orders discharged or varied. On that occasion, I granted a stay of certain of the orders against Mr Joseph, on the basis that the matter would be argued the next day. It was duly argued on Friday, 3 February 2006. Some supplementary written submissions were made after the conclusion of argument, and the matter is in the list before me for judgment today. 15 The principles of law which are relevant to the application were stated by Mr Moses, counsel for Mr Joseph, in the following terms, namely: "There are four preconditions to the making of an Anton Piller order - none of which have been satisfied in this case: (a) There must be an extremely strong prima facie case; (b) The damage potential or actual, must be very serious for the Plaintiff; (c) There must be clear evidence that the Defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes; and (d) The harm likely to be caused by the Anton Piller order to the Defendants and their business affairs must not be excessive or out of proportion to the legitimate object of the order especially when it will allow the perusal of the Plaintiff of the Defendant's confidential commercial documents." 16 The plaintiff did not quarrel with those principles of law. I shall accept them for the purpose of this judgment, without any further examination of whether they correctly state all the qualifications which there might be of any of the principles. 17 One attack which is made on the orders is that the Court did not have its attention drawn to any of the authorities which set out the preconditions for the making an Anton Piller order. As well, it is submitted that the Court did not have its attention drawn to authorities which were contrary to the propositions put by the plaintiff. Mr Moses submits that courts treat the issuing of Anton Piller orders with caution because they are disruptive to the business of the defendants, involving access by others to private premises and confidential documents, and removal or isolation of business records. He points to the principle that the Court has to be vigilant to ensure that the orders are not being used for any purpose other than the preservation of vital evidence pending the hearing and determination of a proceeding. He points to a principle that the courts should approach the application for an Anton Piller order on the basis that the ordinary procedure of the court is that parties have a duty to produce relevant documents on discovery and verify lists of them, that the Court will enforce that duty, and that the Court will not simply assume that defendants will defy their duty to give discovery, or destroy or conceal documents. As well, he points to a principle that the Court should not make orders which are more extensive than are needed by the case, and if any order less extensive than an Anton Piller order could meet the justice of the case, then the Anton Piller order should not be made. 18 I have before me written submissions which were made to Windeyer J on 1 February 2006. It is correct to say that those written submissions do not refer in terms to any special principles, or cases. The submissions, which are something over 11 pages long, deal solely with factual matters. It is not suggested that his Honour was referred orally to any cases. 19 The principles which are relevant to the granting of Anton Piller orders have been dealt with by the courts on many occasions. They are principles which would be well known to an experienced judge such as his Honour. I would only conclude that the failure to specifically draw the principles to the attention of his Honour had led to an error, if the decision itself was one which demonstrated that some error of principle must have been made. 20 Another attack which is made on the orders is that there was insufficient evidence to justify the making or the continuance of the orders. 21 I should deal here with a question involving the status, in the present application, of the material which was before his Honour. The evidentiary material before his Honour consisted of three affidavits. One of them was by Mr Preston, who is the Manager of Administration of the plaintiff. There were two affidavits by Mr Nicholas Klein, who is an expert in forensic computing, employed by Deloites, who had obtained certain information relating to various electronic files which had passed through a laptop computer which Mr Joseph used. There was a folder of exhibits to the affidavit of Mr Preston, and another folder of exhibits to one of the affidavits of Mr Klein, which contained various documents which had been obtained from examination of the electronic files of the plaintiff. 22 When the matter came before me, all of the evidentiary material which had been before his Honour was tendered as evidence of what it was which had been before his Honour. It was admitted on that basis. No order under section 136 Evidence Act 1995 restricting the use to which the evidence could be put was applied for or made. 23 Mr Moses had come to Court armed with a list of objections to various parts of the affidavit of Mr Preston (though none of the affidavit of Mr Klein). When the affidavits and exhibits were tendered on the basis that it was evidence of the material which had been before Windeyer J, Mr Moses accepted that if that was the basis on which the material was tendered, the Court was entitled to see it, and objection could not be taken to it if it were tendered on that basis. The practical effect of the material which had been before Windeyer J being tendered on that basis, was that the list of objections were not dealt with, and neither was any application made to cross-examine the deponents of any affidavit. Whether leave would have been granted to cross-examine, if it had been applied for, is an open question, on which it is not necessary for me to express any view at this stage. 24 The orders made by his Honour are ones which were not, in their terms, limited in time. Thus, for instance, order 2 required that, subject to order 6 (which was an order which, amongst other things, preserved Mr Joseph's privilege against self-incrimination and legal professional privilege) he was to permit, forthwith upon service of the orders, certain people to enter his premises, to permit those people to take certain steps when they were at his premises, and, again forthwith upon service of the orders, to disclose certain information to those people. The order which I made on 2 February 2006 had the effect, in the events in which it happened, of providing a stay of those orders relating to Mr Joseph until 6.00 pm this evening. The stay is one which, unless extended or in some other way varied, will therefore expire by effluxion of time at 6 pm this evening. 25 The application which is made, to set the orders aside, is thus one made in circumstances where, unless reason is shown why the orders should be set aside, the orders will become operative once the stay expires. Thus, the situation in the present case is fundamentally different to the situation that ordinarily arises concerning ex parte applications for an injunction, where the injunction is granted for a very limited period of time, and when the matter returns to Court the onus is on the person who seeks the injunction to establish matters which show that it is appropriate that the injunction should be extended. In the present case, where an application is made to set aside the order, reason needs to be shown why that course should be taken. It is to be noted that Rule 36.16(2) says that the Court may set aside or vary a judgment after it has been entered if it is given or made in the absence of a party. It is not as though there is a right to automatically have such an order set aside simply by asking. Nor is it correct that, on such an application, the person seeking to have the order set aside can require the person who has obtained the order to prove again the case in favour of making the order. 26 It is also most important that, when one judge of first instance hears an application to set aside or vary an interlocutory order made by another judge in the first instance, the proceedings are not in the nature of an appeal. The application to set aside or vary is one which must demonstrate that there is reason why the order which was made ought be set aside. That is a task from which Mr Moses did not shrink. However, the fact that the material which had been before Windeyer J was admitted before me on the basis that it was evidence of what had been before his Honour, does not mean that it is as though, for the purpose of this application, the matters referred to in those affidavits and exhibits are taken not to have been proved. They are, after all, all exhibits in these proceedings. 27 With that preliminary consideration on the status of the evidence, I now turn to what the evidence which is before me shows. There has been some supplementary material filed in the proceedings before me, which was not before Windeyer J. Mr La Hood, the solicitor for Mr Joseph, has filed an affidavit which annexes various correspondence between the solicitors for the plaintiff and Mr La Hood, not all of which had been before Windeyer J, although much of it had been before him. As well, Mr Preston's affidavit had contained some hearsay statements, which were made less remotely hearsay (though still hearsay) by the extra evidence which was filed before me. However, it is commonplace that the Court can act on hearsay when deciding an interlocutory application, unless it is excluded on some discretionary ground. I say now that it is apparent on reading the affidavit of Mr Preston, in particular, that some of the information which he put forward in that affidavit had passed through several mouths before coming to his ears. 28 On 7 November 2005 a new managing director was appointed to the plaintiff, Mr Besset. He replaced a previous managing director, Mr Andrew Kowalski. Mr Kowalski left the plaintiff on unhappy terms, with some allegations made against him by the plaintiff of wrongdoing. I stress that the correctness of those allegations is not a matter before me, although the fact that they were made at all has some bearing on the case. 29 Almost immediately on becoming managing director Mr Besset implemented a restructure of the organisation of the plaintiff. The reporting lines for Mr Joseph were changed in that restructure, so that he came to report to a person who had formerly been on the same level as him in the organisational chart. It is apparent that this is something which Mr Joseph was most upset about, and resented. He sent a memo to Mr Preston on 15 November 2005, in which he said he regarded the change as a demotion for himself. He clearly, from that memorandum, regarded the change as a most unfair one, given his long-term devotion to the good of the company. He pointed out valuable services which he had provided, and asked that the company advise him of its intentions. As well, he had a personal meeting with Mr Besset, in which he expressed his upset at his perceived demotion. 30 15 November 2005 was the start of a period of approximately a month when Mr Joseph's attendance at work became erratic, and he disappeared from the office without advising people of his whereabouts. 31 On 25 November 2005 Mr Adam O'Dea, who is the Design Manager -Business Development Manager (Victoria) of the plaintiff, received some information from a Mr Cathcart, an acquaintance of his at the office of a Brisbane company called Strongforce, which apparently is in the same industry as the plaintiff. Mr Cathcart told Mr O'Dea that Mr Kowalski and Mr Joseph were at the offices of Strongforce in Brisbane, and asked Mr O'Dea what they were doing there. Mr O'Dea reported that information to Mr Preston. 32 On 28 November 2005, Mr O'Dea telephoned Mr Cathcart, and made inquiries about what had been happening there. Mr Cathcart, said that he had met Mr Kowalski, who had mentioned that he and Michael (which everyone concerned took to be a reference to Mr Joseph) were meeting with Strongforce. Mr Cathcart said that he had asked his manager why Andrew and Michael were meeting there, and was told that they had discussed the option of working for Strongforce as specialist consultants, who would bring in work for Strongforce for large contracts like those of Baulderstone Hornibrook and Westfield. 33 On 28 November Mr O'Dea passed that information on to his superior in Victoria in the plaintiff. Later information, which Mr O'Dea received on 2 February 2006, was to the effect that it was just Mr Kowalski that had physically attended at Strongforce. This was because, according to that information, "Michael" was stuck in an airport and unable to attend the meeting, but "Michael" had been involved in the meeting through a conference call and a fax in relation to the kinds of services they could provide. As that information only came to hand on 2 February 2006, it was not, of course, available to Windeyer J. 34 On 15 December 2005, Mr La Hood, who by that stage had been consulted by Mr Joseph, had an e-mail sent to Mr Besset. That e-mail referred to the change in organisational structure, and said that Mr Joseph was considering his options, that he was reluctant to resign, but felt forced to consider that option. The e-mail confirmed a discussion that Mr La Hood had had that day with Mr Besset, that Mr Joseph would apply for annual leave commencing on and from 9 January 2005, for two weeks. The annual close down of the plaintiff was due to take place from 22 December 2005 to 9 January 2006 inclusive, so the period of leave would run on from the annual close down. Mr La Hood's e-mail suggested that Mr Joseph and the plaintiff take the opportunity over the annual break to consider their options including the plaintiff considering an appropriate package for Mr Joseph. He suggested that there be, in mid January, a meeting to discuss the future of Mr Joseph's employment. 35 On 21 December 2005, Mr Walsh gave notice of resignation from the plaintiff, as I earlier mentioned. He told Mr Preston that after resignation he was going to take over the running of his father-in-law's business Kabel Constructions. 36 The evidence which Mr Klein gave related to an investigation which he had conducted, with assistance, on the computer records of the plaintiff. The plaintiff maintains backup tapes of its computer system, which reproduced how, at the least, its e-mail server appeared at various dates, separated by weekly intervals. Mr Klein obtained those backup tapes, and caused the e-mail accounts of Mr Joseph, Mr Walsh, and a Mr Peter Jiminez, to be examined. He was also able, by examination of the laptop computer which Mr Joseph had used, to ascertain that various e-mails had passed, some of which had electronic documents attached to them. 37 Even though the e-mails, when originally sent, had had documents attached to them, the e-mails as found by Mr Klein did not all have attachments. However, he was able to ascertain the file name of the documents which had been attached to various e-mails, and, by searching elsewhere in the electronic files of the plaintiff, to find a file of the same file name. That exercise revealed, on the evidence which was before his Honour, that, as early as 23 December 2005, Mr Joseph had been dealing, on his computer, with a letter of appointment of Mr Walsh. 38 The laptop computer which Mr Joseph ordinarily used belonged to the plaintiff, but he took it home with him when he went on holidays in December 2005. Examination of electronic files shows that on 2 January 2006, at 10.04 pm, Mr Joseph sent an e-mail to himself, at an e-mail address maintained at hotmail.com. That e-mail on 2 January 2006 had attached to it an e-mail which had been sent to him on 6 July 2005 by an officer of the plaintiff. The e-mail on 6 July 2005 consisted of some 24 pages. It listed all of Mr Joseph's business contacts, or at any rate, it listed a considerable number of them, giving in relation to each contact the company, the first name and surname of the contact person, the address, the telephone, the fax number, and the mobile telephone number. It is information which, on its face, is the sort of information which is likely to be kept confidential by a company. It is also the sort of information which no ordinary person would be capable of holding in his head in its totality. 39 On 2 January 2006, at 10.15 pm Mr Joseph e-mailed to himself a single page table, at his hotmail address. That table had been sent to him in September of 2004 by an officer of the plaintiff. It showed the budgeted overhead recovery rates of the plaintiff for the 2004 year. It divided the activities of the plaintiff into four geographical regions, New South Wales, Queensland, Victoria and overseas. It divided the activities of the plaintiff within each of those geographical regions into the various types of activities, like building, or civil, in which the plaintiff engaged. It set out the 2003 actual sales, 2004 budget sales, and a "2004 reforecast 2" in relation to each of those categories and geographical regions. It set out the margin in relation to each of those categories. It set out under the heading "administration", items for 2003 actual, 2004 budget, and, "2004 reforecast 2". It set out the net profit, in what I take to be dollar terms, and the net profit in percentage terms, for each of 2003 actual, 2004 budget, and "2004 reforecast 2". It set out the overheads budget, divided into direct salaries and all other revenue. It contained various other information, which on its face looks like the sort of information that is useful as a high level summary of the activities of a company. It contained a sensitivity analysis, showing what the effect of a 5% reduction in sales would be. 40 At 10.16 pm on 2 January 2006 Mr Joseph sent himself another e-mail. This was one which had been sent to him on 8 November 2005, attaching a list of the projects expected to be awarded within the next eight weeks leading up to the Christmas shut down period. These were works for which the plaintiff was, at the time, competing. 41 On 3 January 2006 Mr Joseph accessed a file called "PJ letter of appointment 2006" from his hotmail account. 42 I earlier made mention of Mr Peter Jiminez. Mr Jiminez holds the position of Senior Supervisor with the plaintiff. He resigned on 20 January 2006, giving notice which has not yet expired. 43 Mr Klein has been able to obtain, by electronic analysis, the text of the "PJ, letter of appointment 2006". That text was before Windeyer J. It is a draft of a letter, addressed to Mr Jiminez and intended to be signed by Mr Walsh, on behalf of Unistress Pty Ltd. Mr Walsh's name appears over the title "Construction Manager". The letter addressed to Mr Jiminez is one which confirms his appointment to the position of Operations Manager based in Sydney for Unistress Pty Ltd, sets out his duties, salary, conditions, and so on, and requests that he sign and return the notification as acceptance of his appointment. 44 Mr Besset returned from work following the Christmas break on 9 January 2006, and noticed that Mr Joseph's office had been nearly completely emptied. 45 Mr Preston and Mr Besset thereupon went to Mr Joseph's office. Mr Preston observed that the office was what he described as virtually empty. He looked in the drawers of filing cabinets and discovered that they had also been emptied. Mr Preston's evidence was that Mr Joseph's office was usually full of documents and files, both in his drawers and filing cabinets and on the desk. 46 On 11 January 2006 some photographs were taken, which were tendered before Windeyer J. Those photographs showed, amongst other things, a desk utterly clear of paper, a filing cabinet which had folders suitable for containing numerous suspended files with nothing contained in those folders, and what looks like an in tray on the desk marked, "Costing sheets for approval", which appears to be almost empty. 47 On 9 January 2006 Mr O'Dea received another message from his contact at Strongforce, Mr Cathcart. It was an SMS message and quite terse. It said, "What's the go? Heard a new PT company is in the market run by your friends". 48 Also on 9 January 2006 the letter of appointment of Mr Jiminez was referred to again in an email which was found on examination of Mr Joseph's computer. 49 On 9 January 2006 another email, which came through the Hotmail account, was accessed by Mr Joseph. It was a budget for a project at The Entrance. It said that it was prepared by Kevin Walsh, is dated 9 January 2006, and sets out a breakdown by which a contract price is arrived at. 50 The third defendant was incorporated on 10 January 2006. As mentioned, Mr Joseph was the sole director and secretary of that company. There are 100 issued shares. Twenty of them are held by a company called Natcorp One Pty Limited, Level 4, 35 Spring Street, Bondi Junction. The evidence before Windeyer J, and likewise before me, does not disclose anything about who stands behind that company. 51 The remaining 80 shares are held by Dowco Investments Pty Limited of 330 Edgar Street, Condell Park. That is a company the secretary, sole director and shareholder of which is a Dianna Daoud. 52 On 10 January 2006 an email was sent by Mr Walsh to Mr Joseph relating to the topic of giving Mr Jiminez his letter of appointment. 53 Also on 10 January 2006, Mr Joseph accessed a file called, "P J Letter of Appointment 2006" in the hotmail account as well as a file called "K W Letter of Appointment 2006" in the hotmail account. 54 While I have mentioned various electronic documents which Mr Joseph was accessing, it should be recalled that at this stage he was still at home on holidays, and that the plaintiff was unaware that that activity was going on. 55 On 11 January 2006 Mr O'Dea told Mr Preston about the information he had received from Mr Cathcart in Strongforce, and also telephoned Mr Cathcart. Mr O'Dea was informed that Mr Cathcart had spoken to another man in the industry, one Steve Betts, and Mr Cathcart told Mr O'Dea, "Steve was in a meeting in relation to a new PT project in Sydney which he was expecting to secure". Mr Cathcart said that at the meeting Steve was informed that he no longer had the cheapest prices and that another price had recently been received. Mr Cathcart also said that the quotation was shown to Steve and it was implied that Andrew Kowalski and Michael Joseph were involved. 56 On 11 January 2006 Mr Besset asked his secretary to contact Mr Joseph, to arrange for him to attend the office on 13 January 2006, to return all files and documents belonging to the plaintiff. From later events, that request was carried out. 57 On 12 January 2006 Mr O'Dea told Mr Preston about his conversation of the previous day with Mr Cathcart. At Mr Preston's instigation, Mr O'Dea rang Mr Cathcart again, on 12 January 2006. Mr O'Dea telephoned Mr Preston and passed on that the Senior Supervisor (I would infer from the context, of Mr O'Dea) had spoken directly with the person who had passed on the information to Mr Cathcart about the new PT company. That person had informed him the name of the new PT company was Formbrace. Mr O'Dea sent Mr Preston an email on 12 January 2006 which set out the substance of the various pieces of information he had received, and from where he had received them. 58 Mr O'Dea added at the end of that email, "All the information above is here-say, and has come to me third hand. I can not vouch for the accuracy of any of it at this point in time". 59 The plaintiff has instructed Mallesons as its solicitors. On 12 January 2006 Mallesons wrote a letter to Mr Joseph (with a copy to Mr La Hood), which stated that his office had been inspected and it had been discovered that "virtually all files and documentation had been removed from your office". It was asserted that the information and documentation was the property of Austress, that it contained confidential information, including information relating to current contract tenders and customer details. 60 The letter required the documentation to be returned immediately. It required Mr Joseph to attend at Austress's office at one o'clock the next day and "to return all documentation relating to Austress' business in your possession or control to the Managing Director, Marc Besset". 61 The letter continued: "Austress regards this as an extremely serious matter. Your failure to attend and comply with this direction to return Austress documentation will constitute a failure to obey a lawful and reasonable direction and could have serious consequences for your employment with Austress. Any misuse by you of Austress' confidential information will result in legal action. In the meantime, we are instructed to advise that your access to Austress' computing system has been withdrawn so as to protect Austress' business interests." 62 On 13 January 2006 Mr Joseph attended the office of the plaintiff. He brought with him four documents to that meeting. One of them was a copy of a Business Management System Manual. The other three were project tender files. 63 A conversation with Mr Besset then followed: "JOSEPH: "These are the only documents I have that belong to Austress". BESSET: "I am very surprised this is all you have. There are a number of files that have been identified as missing from your office - the Leisure Centre, 443 King Georges Road, Beverley Hills file and the Berowra Village Shopping Centre, Berowra file". 64 Mr Joseph then left the room and returned a few minutes later with an additional two files. These were the two files which had been nominated by Mr Besset, namely, those relating to the Leisure Centre and Berowra Village Shopping Centre. 65 Mr Besset said that he was surprised that that was all that Mr Joseph had, and enquired why his office was completely empty. Mr Joseph's answer was: "I usually do this every year at this time". Mr Besset's response makes clear that he did not believe him. 66 The two men also discussed the position of Mr Joseph's employment with the plaintiff. Mr Joseph said that he would not be coming back to work for Austress. Mr Joseph had not returned his notebook computer or his business cards at the meeting. Mr Besset asked him to return any further missing documents, his laptop computer and his business cards. Mr Joseph replied that he would be in touch with Rick Comito, who is another employee of the plaintiff, and would pass those on to him on Monday, 16 January. 67 On 13 January 2006 Mr La Hood replied on Mr Joseph's behalf to Mallesons' letter of 12 January 2006. That reply said, amongst other things: "We have received instructions that the documents, the subject of your letter, were removed from the offices of Austress as our client attended meetings on behalf of Austress during his leave and required the documents for those meetings. Owing to our client's circumstances, the documents will be returned on Monday 16 January 2006. Our client now calls for a meeting with you and your client to discuss his future at Austress. Presumably you have been instructed by Austress in regards to our client's claim concerning the recent restructure? If you require further information, the writer returns to the offices on Monday 16 January 2006 and will be available to discuss our client's claim." 68 That letter had been annexed to Mr Preston's affidavit. Concerning it, Mr Preston had said that the plaintiff did not require Mr Joseph to attend work during the annual leave and was not aware of Mr Joseph attending any meetings on its behalf. The affidavit of Mr Besset, read before me, gave evidence to similar effect. 69 After the meeting between Mr Joseph and Mr Besset, examinations of Mr Joseph's laptop computer revealed that he had deleted from his laptop computer a directory which contained the text of various of the files, which he had emailed to himself. There is an electronic trace in the computer of that deletion, showing it to have occurred at 5.36 pm on 13 January 2006. 70 On 16 January Mr Comito arrived at the plaintiff's office without the laptop computer. Also on 16 January 2006 Mallesons wrote to Mr La Hood, requesting return of Mr Joseph's collection of business cards, recording contact details of clients and other contacts, and his laptop computer. The letter said: "We confirm that our client does not see any legitimate basis for Mr Joseph to have removed company files and documentation from the office during his period of annual leave. Our client will continue to investigate this matter and reserves all of its rights in respect of any misuse of this information." 71 The letter also requested written confirmation of Mr Joseph's intentions in respect of his employment by no later than noon, 17 January 2006. 72 At 2.30 pm on 16 January 2006, Mr Comito, who had been absent from the plaintiff's office for a while, returned Mr Joseph's notebook computer and a number of business cards to a Mr Cross of the plaintiff. Mr Preston gives information that he believes that Mr Comito told Mr Cross that he met with Mr Joseph at a particular place and that Mr Joseph had been acting in an unusual manner. 73 On 16 January 2006 Mr La Hood replied to Mallesons' letter of earlier that day. That letter stated: "We refer to our facsimile today and respond as follows:- 1. Laptop. Your client's request for return of the laptop is inconsistent with the history of our client taking leave on past occasions. Our client instructs that he takes the laptop with him whilst on leave. 2. Company files and documentation. We are not certain what your client means when it states that it is investigating removal of company files and documentation from the office in respect of "any misuse of this information" . We refer you to our previous correspondence in this matter. 3. In the penultimate paragraph of your letter, you state that a representative of your client company has instructed you that our client made a number of statements that he no longer wished to work for Austress. This comes as no surprise to the writer and in fact, is consistent with Mr Joseph's dissatisfaction with the reorganisaation of the company and the role that has been imposed upon him. No doubt you will have in hand our client's memorandum of 15 November 2005 and the writer's email to Marc Bessett. Our client is considering his options and we reiterate that he had no desire to consider any options until the new role was imposed upon him. 4. As to your request to confirm in writing Mr Joseph's intention in respect of his employment, please be aware that Mr Joseph is on leave until 23 January 2006. We will inform you of our instructions concerning Mr Joseph's position arising from the restructure of Austress and in particular, the new role that has been upon Mr Joseph. We appreciate your comments today that Austress does not consider the new role as any different to the role played prior to the reorganisation. This is an issue in dispute." 74 On 17 January Mr Preston was told by Mr Cross that he had received information that Mr Cross had been told by an acquaintance that: "… Michael has visited, or at least made contact with, Hindmarsh Constructions about the 2 Farrell Place ACT project. Apparently Michael told them that he was making a tender on behalf of Unistress and he would match the price Austress was giving." 75 The plaintiff had previously tendered for the project referred to as 2 Farrell Place, A.C.T. Later that day Mr Preston spoke with a former employee of the plaintiff, Mr Ron Hay, who told him: " Max Schweiger rang me and told me that he was in the office at Hindmarsh, and that he was awarded the 2 Farrell Place project. He said that the client had told him that Joseph had been at the Hindmarsh office and put in a bid for the same project. The client said that he considered Joseph's approach as unethical and said he subsequently disregarded both Austress' and Joseph's offers." 76 With the information that they had at that stage, Mallesons instructed Deloittes, on 18 January 2006, to conduct the forensic examination of Mr Joseph's laptop computer, and the back-up storage tapes in the plaintiff's IT system. The notebook computer was placed into Deloittes' custody to commence that task, on 18 January 2006. 77 There was in the evidence before Windeyer J a draft document bearing date 19 January 2006, from Unistress Pty Limited to Mr Walsh. The text of the letter said that it was to confirm the appointment for the position of Construction Director based in Sydney of Unistress Pty Limited. It set out his duties and conditions of employment and requested return of the letter as acceptance of this appointment. The letter made provision for being signed by Mr Joseph on behalf of Unistress Pty Limited. Under the space for that letter to be signed by Mr Joseph, he described himself as "Managing Director". 78 As mentioned, it was on 20 January 2006 that Mr Jiminez gave notice of his resignation. 79 23 January 2006 was the date that Mr Joseph was due to return from leave. On that day Mr La Hood wrote a letter to Mallesons, asserting that the change of role which had been imposed on Mr Joseph amounted to repudiation and that Mr Joseph regarded the contract of employment as ended. On the evidence, that appears to be the first time that the contract could possibly have come to an end. 80 Mallesons replied to Mr La Hood on 23 January 2006, asserting that the contract of employment was still on foot and that Mr Joseph was expected to abide by it. Mallesons' letter requested Mr Joseph to attend a meeting on Wednesday, 25 January 2006. 81 It was on 23 January 2006 that the contents of the computer were made available to Deloittes for forensic examination. 82 Mr Joseph did not attend the meeting fixed for 10.00 am on 25 January 2006. He was written a letter which purported to summarily dismiss him. 83 On 27 January 2006 two companies were incorporated. One of them was called Unistress (NSW) Pty Limited, the other, Unistress (Vic) Pty Limited. Mr Joseph was the sole director and secretary of each of the companies. Each of them was a wholly owned subsidiary of Unistress Pty Limited. 84 The forensic inquiries of Deloittes turned up other documents. One of them is an email sent from Mr Walsh to Mr Joseph on 9 January 2006, which says, amongst other things, "If you get a chance, try to talk to Anthony tomorrow re PJ's letter of appointment. I had to promise him we would get it sorted this week". 85 Another email from Mr Walsh to Mr Joseph of 10 January 2006, which had an attachment titled "PJ letter of appointment 2006", stated, "Michael, I would like to give this to PJ tomorrow at lunch? Let me know if you have a problem with it". 86 While I mentioned earlier three particular documents which Mr Joseph sent to himself at his hotmail account by email, they were only some of the emails relating to the activities of the plaintiff, which he sent to himself in that way. All of those emails were identified and were available as exhibits before Windeyer J. 87 Of those emails, without going into the detail of all of them, there is one which attaches a spreadsheet of post-tensioning pricing which had been put together concerning the Melbourne Cricket Ground, where the plaintiff had recently completed a project. Another email contained a number of tender design calculations relating to a tender being put to the Sydney Olympic Park Authority. Another email has an attachment relating to "BLL Costs". One of the clients for which the plaintiff does work, whose name appears in the contact register which Mr Joseph emailed to himself, is Bovis Lend Lease. 88 Examination of Mr Joseph's laptop revealed that not only has he deleted the directories which contained the attachments to the emails which he sent to himself, he has also deleted a variety of other electronic documents which were on the file. Some 20 documents are identified in paragraph 64(l) of Mr Preston's affidavit as having been deleted in this way. The deletion is, according to the evidence, something which took place between 15 December 2005 and the time when Mr Joseph returned his laptop to the plaintiff. 89 Mr Klein's evidence is that an examination of recycle bin records is able to identify files which have been deleted, the location from which the files were deleted, and the date and time recorded in association with the deletion. Thus, the methodology followed by Deloittes was capable of discovering the time and date of deletion. Mr Preston's affidavit puts the time of deletion as being between 15 December 2005 and when Mr Joseph was directed to return his laptop to the plaintiff. As I read Mr Klein's affidavit, Mr Klein does not provide specific evidence that the deletion occurred at that time. 90 In the light of the evidence that there was before his Honour, it seems to me that it was well open to his Honour to take the view that there was an extremely strong prima facie case that confidential information was being misused during the period Mr Joseph was still employed by the plaintiff. If an employee with knowledge of the methods by which an entity such as the plaintiff prepares its tenders and its margins goes into opposition, it seems to me that the damage, potential or actual, from misuse of this information is shown to be very serious to the plaintiff. 91 When there is evidence of the office of Mr Joseph being cleaned out, when only five tender files and the manual were returned, and when there is evidence of the usual state of the office, that provides a basis for believing that he has in his possession confidential hard copy information. Further, when electronic documents relating to the plaintiff's business were sent by Mr Joseph to himself at his email address on his hotmail account, that provides a basis for belief that he would still have access to those electronic documents. 92 There is, it seems to me, a sufficient basis in the evidence that the harm caused to the defendants and their business affairs by the grant of an Anton Piller order will not be excessive or out of proportion to the legitimate object of the order. 93 One aspect of the order is that it required Mr Joseph to permit not only employees of Mallesons and forensic experts and their supervising solicitors have access to the premises, it also required Mr Joseph to give access to a nominated representative of the plaintiff. 94 Mr Joseph objected to the Anton Piller order on the basis that it would allow the perusal by an officer of the plaintiff of confidential commercial documents of the defendants. 95 When this aspect of the order was pointed out to Mr Pembroke of Senior Counsel, he did not seek to maintain that aspect of the order. In my view, it would be appropriate in that circumstance for the order to be modified, so as to not require officers of the plaintiff to be admitted to the premises. 96 It frequently happens, in confidential information cases, that when access is granted to documentation it is on the basis that it is only lawyers who have that access, and that, if in relation to some specific documentation they need instructions from their client, application can be made to the Court to set up a regime under which access to documents is given which is no wider than the necessity of the case demands. Such a procedure is one which in my view should be followed in the present case. 97 In my view, there was sufficient evidence to justify a conclusion that, unless the order was made, there might be a destruction of documents, and indeed that the destruction of documents was likely if Mr Joseph became aware of the proceedings. The secrecy with which Mr Joseph proceeded, what appears on the present evidence to be his duplicity in setting up a rival business while still on the payroll of the plaintiff, his causing Mr La Hood to write a letter on 16 January 2006 stating that Mr Joseph had no idea what was meant by the suggestion that there might be a misuse of information which had been removed from the company files, his action in deleting from his laptop, immediately after his meeting with Mr Besset of 13 January 2006, the documents which were attachments to the emails, all lead, in my view, to a conclusion that there was a risk that documents might be destroyed. 98 In deciding whether to exercise the jurisdiction to vacate the order, it is relevant for me now to take into account all of the material which has been filed before me, whether or not that information was filed before Windeyer J at the time that the order was originally made. The only evidence which has been filed on the part of the defendant is an affidavit from his solicitor, Mr La Hood, which annexes various correspondence which passed between Mallesons and Mr La Hood's office. The only addition which that correspondence makes to the evidence is that it annexes a letter which Mr La Hood wrote on 1 February 2006 to Mallesons. That letter is one which replied to the plaintiff's letter to Mr Joseph of 25 January 2006. It is a continuation of the dispute between employer and employee concerning entitlements which had continued up to that time. It requested payment of the statutory entitlements, and, ironically, requested confirmation that the plaintiff would take immediate steps to ensure that no documents were destroyed or deleted from its computer system that relate to the employment of Mr Joseph and the purported termination of his employment contract. That addition to the evidence is not something which makes any material difference to the state of affairs which had been disclosed to Windeyer J. 99 Significantly Mr Joseph, on this application, does not give any evidence himself which seeks to explain the apparent questions arising concerning his conduct, and in particular the question raised about just what the meetings were that he was attending which required him to have all of his files at home, or to give an explanation of what purpose he could have had e-mailing to himself at a hotmail account documents which were already on his laptop computer. That e-mailing occurred, it will be recalled, during Mr Joseph's vacation, when he had the laptop at home. It is not a case, of the kind which commonly enough happens, of an employee who is not on holidays sometimes sending work documents to his home computer address, so that he can work on them there. The failure of the defendant to provide that evidence leads to the conclusion that inferences otherwise available on the evidence against the defendant, and which the defendant might possibly have rebutted by giving evidence himself, can be drawn more strongly. 100 I also take into account, on the present application, that the additional evidence of Mr Besset and Mr O'Dea has removed at least one of the levels of hearsay. However, I should make clear that if the hearsay information about Mr Joseph's activities was the only evidence, to the effect that he was proposing to enter into competition with the plaintiff, it may well be that that evidence would not be strong enough to justify an Anton Piller order. In the present case, however, the particularly hard and cogent evidence comes from the results of Deloittes reconstruction of the e-mail communications. 101 That is not to say that, on an application like this, a judge is not entitled to take into account all of the evidence, even evidence which by itself is slight. Rather, the judge's task is to weigh all the evidence, and form a conclusion on the totality of it. 102 In all these circumstances, I conclude that there is no basis for believing that the failure to specifically direct Windeyer J to legal principles or cases relating to the exercise of discretion led to any error on his Honour's part. It simply cannot be right that an applicant for urgent interlocutory orders, in a field of law which is well trodden, needs to refer a judge to particular authority, where that authority stands for principles which are likely to be well known to the judge. 103 Another attack which was made on the orders was to allege that there was a failure to disclose material information. It is well accepted that an applicant for ex parte relief has an obligation to make full disclosure of all material facts adverse to the applicant's case which are known to the applicant or would have been known if the applicant had made proper inquiries. See Thomas A Edison Limited v Bullock (1912) 15 CLR 679 at 682. 104 Mr Moses submits that a number of material matters, either as to the existence of facts, the exercise of discretion or the formulation of appropriate order, were not raised before the Court on 1 February 2006. One of those matters is said to be that the plaintiff had been foreshadowing the possibility of legal proceedings concerning the alleged removal of documents by the first defendant since 12 January 2006. That foreshadowing was effected by Malleson's letters to Mr Joseph, which was copied to Mr La Hood, on 12 January 2006, which I referred to earlier. That letter appears in the evidence before his Honour, as exhibit GP 17. 105 It is also alleged that it was not disclosed that the first defendant was not the subject of a post employment restraint. While in the affidavit Mr Preston did not say in so many words that he was not subject to a post employment restraint, it did say that Mr Preston had been unable to locate any written contracts of employment. There was no suggestion, in Mr Preston's affidavit, that a contract of employment containing a restraint might exist, but not at present be able to be found. Any judge reading Mr Preston's affidavit would have proceeded on the basis that the plaintiff could not, at least at that stage, prove that there was any post employment restraint. The judge would not be entitled to proceed on the basis that there might possibly be a post employment restraint. I do not regard there as having been any material failure to disclose in this respect. 106 Criticism is made of the way in which the order allowed officers of the plaintiff to enter the first defendant's home and potentially have unfettered access to commercially sensitive material relating to the new business which the first defendant had set up. It submits that this aspect of the orders was not brought to the attention of the Court on 1 February 2006. It is true that it was not specifically adverted to in the plaintiff's outline of submissions. However, it appears that the plaintiff went to Court on 1 February 2006 armed with draft orders. Those orders are ones which were initialled by Windeyer J on their first page. It is the first page of the orders which contains the permission for the officers of the plaintiff to be amongst those who were authorised to search. Windeyer J declined to make some of the orders which were included in the draft. The suggestion which, however it might be put, must be implicit in the submission, that his Honour made the orders without even glancing at the first page, to discover what the orders were which he was making, is one which does not bear serious examination. 107 There are various other alleged deficiencies and exclusions which are detailed in paragraph 11 of Mr Moses' submissions in reply. I am not satisfied that any of the matters there raised are material matters which ought to have been disclosed. 108 Another matter on which the plaintiff relies is delay in seeking the orders. It is true that a period of over two months elapsed from the first time that anyone on behalf of the plaintiff had even a hint that there might be something afoot concerning Mr Joseph engaging in competition which occurred on 25 November 2005, until the orders were applied for. However, the hearsay information which the plaintiff had prior to 9 January 2006 was nothing like material which would have justified it seeking orders of this kind. The discovery of 9 January 2006, that the first defendant had apparently cleaned out his office, raised suspicion, but likewise, the information known up to that date would probably not have been sufficient. It is really the obtaining of the information from Deloittes, concerning the sending of e-mails with significant documents attached, which provided the best evidence in support of the application. I do not regard there as having been undue delay in approaching the Court for the orders. 109 In all these circumstances, I decline to set aside the orders. They will, however, be varied so that the representatives or agents of the plaintiff, who are corporate officers, may not attend at the execution of the orders. The way in which the orders gave that permission was by requiring Mr Joseph to permit the following people to enter: "(a) not more than two partners or employees of then Plaintiff's solicitors, Mallesons Stephen Jaques; and (b) not more than three representatives or agents of the Plaintiff, not being a person described in paragraph (a) above; and (paragraphs (a) and (b) above are collectively the "Plaintiff's Representatives" ) (c) the Supervising Solicitor." 110 The difficulty which has been raised by Mr Moses would not be adequately met by simply deleting paragraph (b) of the orders, because that will stop computer experts from Deloittes from attending. However, the drafting can adequately be met by adding immediately before the semi colon in paragraph 2(b) the words "and not being an employee or officer of the plaintiff or of any related corporation of the plaintiff nor any person who is otherwise engaged in any business of similar kind to that of the plaintiff." 111 In the result, the orders of the Court are:

Austress Freyssinet Pty Ltd v Joseph

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