Events in the Period from October to December 2008
131 By October 2008, Mr Huckstep had prepared a business plan for DBR. This plan was a one page document containing some preliminary thoughts. However, in the plan, he listed as the strengths of DBR the fact that he held a TSPV and that he had good support from RTOs such as B&A, nCompass and Cidara. He listed as weaknesses the fact that DBR was reliant on others' IP (presumably referring to courseware) and the fact that DBR was also reliant on others as the certifying authority. In the plan, he listed the DSD and other government departments as DBR's specific target market. He said that the location of DBR's business would be predominantly in Canberra. He identified the following approaches as the way in which DBR would get started, namely:
• Leverage of security clearance [referring to the TSPV] and client need within DSD.
• Leverage of existing company relationships - Bayley and Associates, nCompass HR, Apis Consulting, Cidara, Jacobs Australia, BTLi and Nova Systems
• Leverage of existing client relationships - DSD, APSC, DOFD and DIAC.
132 It is noteworthy that, contrary to the indications which he had given Ms Bayley in August 2008, DBR's business was to focus on working in Canberra with some of the important clients of B&A with particular emphasis on utilising the TSPV.
133 Ms Bayley and Mr Huckstep met, as planned, on 2 October 2008.
134 Ms Bayley gave an account of this meeting at pars 150-151 of her first affidavit.
135 In her first affidavit, Ms Bayley recounted the discussion which took place at the 2 October 2008 meeting in the following terms:
Huckstep: Ruth, I know you are not happy about the whole thing, but I know the Bayley business will benefit from this in the long run. Once I have my security clearance through, I expect to get work at DSD and I will be able to direct their training and assessment work to B&A. Obviously I will be starting my own business, but of course I won't start that until after I'm finished here in December. That will suit me really well as I'm feeling a bit burnt out. I will stay with you until the beginning of December so we can do a good hand over to Stu [referring to Mr Jenkins]. Then once I leave I will have time to arrange my new business, have a holiday over Christmas and New Year, and then start working as a contractor in early in 2009.
136 Ms Bayley also testified in her first affidavit that, at the 2 October 2008 meeting, Mr Huckstep and she agreed that his last day of work at B&A would be 5 December 2008.
137 In her second affidavit (that sworn on 1 June 2008), Ms Bayley embellished the conversation. She added that she told Mr Huckstep during this conversation that he was not to start his new business until he had finished up at B&A because that would be a breach of his AWA. She said that he acknowledged this. She said that he informed her that he was "doing planning until then". She also claimed that he raised the prospect of getting an auspicing agreement on this occasion. She said that she told him that it was likely B&A would enter into an auspicing agreement with him but that they would have to sort out the details closer to the time of his departure.
138 I have some disquiet about this embellishment to Ms Bayley's evidence contained in her second affidavit. It was introduced into the proceeding in answer to a paragraph in Mr Huckstep's affidavit which I ultimately rejected. When asked in cross-examination why she had omitted from her first affidavit the material concerning the 2 October 2008 meeting which she introduced by means of her second affidavit, Ms Bayley said that she was prompted to recall it by reading Mr Huckstep's affidavit.
139 It may be that the possibility of entering into an auspicing agreement with Mr Huckstep was raised by him at the meeting on 2 October 2008. But I very much doubt whether anything concrete was agreed at that meeting.
140 Mr Huckstep repeatedly asserted in cross-examination that he had a "verbal or in principle agreement" with Ms Bayley that B&A would enter into a B&A auspicing agreement with him or his business entity. He claimed that this in principle agreement was made in September or October 2008. At transcript 116 l 5 to transcript 117 l 2, the exchange between Mr Huckstep and Senior Counsel for B&A proceeded as follows:
MR NEIL: Now, you have asserted on a number of occasions now that you had a verbal agreement with Ms Bayley that there would be a formal auspicing agreement between Bayley and DBR; is that correct? ---That is correct.
And is that the same agreement or a different agreement than the one that you described a moment ago as an in-principle agreement? ---The same.
The same. And did that verbal or in-principle agreement predate the specific agreement that you assert you had with Ms Bayley by which DBR was permitted to assert in its APSC tender that it had a formal auspicing arrangement or agreement with Bayley? ---I honestly don't recall the sequencing.
Now, this verbal agreement in relation to an auspicing agreement you say was made some time in September or October 2008; is that right? ---In and around that period, yes.
And do you remember where the - I withdraw that. Was the verbal agreement, according to your evidence, made in one or several conversations? ---I would suggest it was done several times within several conversations.
Well, think about the first of them; do you remember where it occurred?---No, I don't.
Do you remember anything at all of what was said? ---There were a number of conversations over time in and around
Well, is the answer yes or no? ---I don't remember the specifics of what was said.
And what about any later conversation relating to that subject; do you remember where any of those conversations took place? ---The likely location of those conversations were in the office in Phillip or it could have been over coffee at the coffee shop in Phillip that we often went to called the Chocolate Olive.
Do you remember anything at all of what was said in any of those conversations? ---Well, yes.
Tell me, what do you remember?---I remember we spoke about the fact that DBR Australia has been incorporated or will be incorporated on 18 September, the fact that DBR Australia is putting in a response to the APSC panel, that I am assisting with nCompass' response to the APSC panel, that in principle since we are going to be working together as a strategic relationship over time that an auspicing agreement would serve both companies well and in specific nature to the APSC panel that given that the closing date of the response was after my last day at Bayleys that I could put in that I already had a formal auspicing agreement.
141 Senior Counsel then quite specifically and directly challenged Mr Huckstep on this evidence.
142 I find this evidence improbable. I do not accept the assertions made by Mr Huckstep that Ms Bayley had agreed on a number of occasions (or at all) from September 2008 that B&A would enter into an auspicing agreement either with him or his new business entity. I find that he concocted these conversations and so-called in principle agreement in order to provide a justification for his conduct in stealing from B&A electronic versions of all or almost all of its courseware. Mr Huckstep obviously thought that, if he could satisfy me that he had an in principle auspicing agreement with B&A from September 2008, he might be able to persuade me that his actions in taking that courseware would be justifiable. These assertions about having an in principle agreement were false and known to be false to Mr Huckstep. The making of these assertions constituted a very serious dent in the credit of Mr Huckstep.
143 Ms Bayley testified that, shortly after the 2 October 2008 meeting, she had another conversation with Mr Huckstep where he told her, for the first time, that he was establishing a company of his own called DBR Australia. Ms Bayley said that Mr Huckstep had not told her at any stage before the second conversation in October 2008 that DBR had already been incorporated. She also said that she had the impression from the second conversation in October 2008 that DBR had not yet been incorporated.
144 On 11 October 2008, Mr Huckstep submitted on behalf of DBR a proposal for project management mentoring within the DSD. This is the very engagement which Mr Phipps had urged B&A to pursue and which Ms Bayley had hoped B&A would secure once Mr Huckstep had been given his TSPV. Mr Huckstep began his covering email to the DSD by mentioning discussions which had occurred "a month or so ago". This email was sent on a Saturday from DBR's email account. The fact that Mr Huckstep was making such a submission on behalf of DBR at that time was intended to be kept secret from B&A and Ms Bayley. I so find.
145 On 21 October 2008, Mr Huckstep sent emails from his email account with B&A to his email account at DBR to which he attached four documents belonging to B&A. These documents were the property of B&A and comprised certain confidential templates and process maps.
146 Ms Bayley listed in Appendix W to her first affidavit a schedule of the emails which Mr Huckstep sent from his B&A email account to his DBR email account in the period from 21 October 2008 to 5 December 2008. I find that the schedule prepared by Ms Bayley is an accurate specification of emails sent by Mr Huckstep to himself in the manner which I have described in the period referred to. Mr Huckstep did not dispute that he had sent these emails. He sought to justify this improper conduct by offering two explanations. His first explanation was that Mr Jenkins had given him approval to send the emails and thus to obtain electronic copies of important confidential courseware which was the property of B&A. His second justification was to suggest that the documents really belonged to him in any event because he had brought them from Apis Consulting to B&A.
147 Mr Jenkins did not become General Manager of B&A until 1 November 2008. Even if, as asserted by Mr Huckstep, Mr Jenkins had given his approval to the sending of the emails in question, he almost certainly had no authority to do so. Furthermore, the courseware which was attached to the emails in question was courseware which had either been developed from scratch from B&A or was co-badged courseware which had been modified extensively since being originally created. At various points in his evidence, Mr Huckstep endeavoured to demonstrate that some of the material which he took from B&A was really Apis Consulting material. It is not necessary for me to descend into a lot of detail on this point as Mr Huckstep's endeavours to persuade me of it fell to the ground quite quickly when he was cross-examined. I reject his assertions in this regard. I will, however, return to the evidence which he gave on this point a little later in these Reasons.
148 It is apparent from Appendix W that Mr Huckstep systematically electronically transferred all or almost all of B&A's courseware to his new DBR email account in the period from late October to early December 2008. Ten emails were sent in that period. These were sent on 21 October 2008, 22 October 2008, 27 October 2008 (two), 31 October 2008, 6 November 2008, 8 November 2008, 15 November 2008, 4 December 2008 and 5 December 2008.
149 The electronic transfer of B&A's courseware and other materials was concealed from Ms Bayley and not discovered by anyone at B&A until March 2010 when Mr Bayley was investigating Mr Jenkins' conduct. Ms Bayley denied ever authorising that transfer and I accept her denials.
150 On 23 November 2008, after having assisted nCompass to put in a tender with APSC and also having participated in the preparation of the B&A tender to the APSC, Mr Huckstep orchestrated the submission of a DBR tender to the APSC. In order to compile the DBR tender, Mr Huckstep plagiarised the B&A draft tender, having emailed it to himself at his email account at DBR. As was the case with some other matters, Mr Huckstep said nothing in his evidence-in-chief about DBR's tender to APSC. As occurred with other matters, when challenged about this in cross-examination, he asserted that he had disclosed to Ms Bayley and to Ms Jenkins the fact that he had submitted that tender on behalf of DBR.
151 I find Mr Huckstep's evidence in this regard incredible. Ms Bayley would never have agreed to Mr Huckstep submitting a tender on behalf of DBR to the APSC while he was still employed by B&A and certainly would not have agreed that he could use the B&A draft tender as a basis for the DBR tender. Ms Bayley denied that she had ever approved any such thing and I accept her denials. I reject this evidence given by Mr Huckstep.
152 On 12 November 2008, Mr Huckstep obtained the TSPV from the DSD. At that time, he was still an employee of B&A.
153 By no later than November 2008, Mr Huckstep had begun secretly to divert clients from B&A to DBR. He provided or commenced to provide assessment and other services to clients of B&A and either completed the service before he left B&A or after he left. DBR received a fee for those services. B&A did not receive any fee or reward for those services.
154 The services provided were in respect of Stephen Hayes, Alan Arnold, Michael Brown, Michael Cook, Lisa Norman, Daffyd Gwynn Jones, Paul Robottham, Stephen Healey, Richard Schurmann, Ken Skelton and David Long.
155 At pars 119-137 of B&A's Closing Written Submissions (pp 29-33), B&A has provided detailed submissions in relation to these transactions, with the exception of those concerning Mr Schurmann, Mr Skelton and Mr Long.
156 For present purposes, I need only be satisfied that Mr Huckstep spirited away these business opportunities from B&A to DBR by conduct undertaken by him whilst still employed by B&A. I am so satisfied. In one or two cases, the ultimate consummation of the transaction occurred after Mr Huckstep left B&A's employ. But the procurement of the transaction in favour of DBR commenced and was substantially completed before Mr Huckstep left B&A's employ.
157 At this stage of the proceeding, B&A has not elected the form of pecuniary relief which it intends to pursue. It is sufficient for me to record at the moment that the transactions effected by DBR in respect of the persons whom I have named at [154] above were all transactions which either actually came to B&A and were redirected to DBR by Mr Huckstep or were intercepted by Mr Huckstep on behalf of DBR before they could be submitted to B&A. Those in the latter category, however, would have come to B&A but for that interception.
158 Ms Bayley testified that, in late November 2008, she decided that B&A would offer Mr Huckstep's new business entity an auspicing agreement with B&A. She said that she communicated this decision to Mr Huckstep verbally and requested details and information from him to allow the agreement to be finalised. She said that he did not provide those details before the staff meeting which was held on 2 December 2008.
159 On 2 December 2008, there was a staff meeting held at B&A between approximately 10.00 am and 11.00 am in order to farewell Mr Huckstep. At that staff meeting, Mr Huckstep advised those persons in attendance that he had incorporated DBR.
160 After the staff meeting, Ms Bayley and Mr Huckstep remained behind for 15 or 20 minutes and negotiated the final details of the proposed auspicing agreement between B&A and DBR. Those details included the qualifications that B&A would allow DBR to deliver under its auspices, the personnel which B&A was willing to approve to perform work under the Auspicing Agreement and the auspicing fee that would be payable by DBR to B&A. These were all matters of importance which had to be agreed before the final deal could be struck.
161 At 12.10 pm on 2 December 2008, Ms Bayley sent an email to Angela Rey, B&A's RTO Quality Manager. That email included corporate details in respect of DBR which Ms Bayley had obtained from Mr Huckstep and the details which the two of them had negotiated about specified personnel, qualifications and auspicing fee, along with a request that Ms Rey prepare an auspicing agreement and provide this document to Mr Huckstep "… before he leaves on Friday". The Friday referred to in that email was Friday, 5 December 2008.
162 While Ms Bayley was preparing her email, between 11.28 am and 12.05 pm on the same day (2 December 2008), Mr Huckstep secretly sent 13 emails from his account at B&A to his account at DBR to which he attached electronic copies of a total of 120 documents that he had taken from B&A's library of courseware. He had no permission to engage in this conduct. Once again, he asserted that Mr Jenkins had given him appropriate permission. I reject that contention for the same reasons as I have already rejected similar contentions in respect of the transfer of other B&A materials.
163 Appendix K to Ms Bayley's first affidavit contains a listing of the materials which Mr Huckstep electronically transferred to his DBR email account on various dates in November 2008 and, in particular, on 2 December 2008.
164 On 4 December 2008, Mr Huckstep again secretly sent an email from his account at B&A to his account at DBR to which he attached electronic copies of three documents which he had taken from B&A's library of courseware. These documents are also listed in Appendix K. Again, he asserted that Mr Jenkins had authorised this conduct. I reject that assertion for the same reasons as I have already rejected similar assertions.
165 Mr Huckstep's last day as an employee of B&A was 5 December 2008.
166 On that day, before he left, he secretly sent two more emails from his account at B&A to his account at DBR to which he attached electronic copies of a total of five documents that he had taken from B&A's library of courseware. These documents are also listed in Appendix K.
167 By 5 December 2008, Mr Huckstep had stolen 156 documents from B&A's library of courseware. Effectively, this was the whole of B&A's library of courseware. Again, he asserted that Mr Jenkins had authorised this conduct. I reject that evidence.
168 On or about 10 December 2008, B&A and DBR entered into the Auspicing Agreement. The purpose of the arrangement reflected in the Auspicing Agreement was to allow DBR to deliver accredited training and to conduct assessments for clients of DBR for which appropriate qualification certificates would be issued by B&A as a RTO. The Auspicing Agreement provided for a fee to be paid to B&A for providing these certifications. In simple terms, that fee was 30% of the payment received by DBR from the ultimate client.
169 At about the same time that Ms Bayley gave instructions for Ms Rey to prepare the Auspicing Agreement for DBR, she (Ms Bayley) prepared a service agreement between B&A and DBR. By that service agreement, B&A directly contracted the services of DBR in order to facilitate the provision of services on an ongoing basis by Mr Huckstep to B&A clients. Pursuant to the service agreement, B&A paid DBR an hourly or daily rate for the services provided thereunder.
170 B&A contends that DBR has breached both the Auspicing Agreement. I will consider the detail of this contention when addressing the specific causes of action raised by B&A.