Bayley & Associates Pty Ltd v DBR Australia Pty Ltd

1. Within twenty-one (21) days of the date of the publication of these Reasons for Judgment, the applicant lodge with the Associate to Foster J draft Declarations and Orders which it contends give effect to these Reasons for Judgment.
2. Within twenty-one (21) days thereafter, the respondents inform the Associate to Foster J whether they agree that the draft Declarations and Orders proposed by the applicant fairly reflect these Reasons for Judgment and, if the respondents do not so agree, within the same timeframe, the respondents lodge with the Associate to Foster J their version of the Declarations and Orders which they consider the Court should make in order to give effect to these Reasons for Judgment.
3. Thereafter, the question of the relief to be granted by the Court at this stage of the proceeding be decided on the papers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 20 of 2010

JUDGE: FOSTER J DATE: 10 DECEMBER 2013 PLACE: SYDNEY (via video link to canberra) (HEARD IN CANBERRA)

Introduction 1 Since 1996, Bayley & Associates Pty Ltd (B&A), which is the applicant in this proceeding, has carried on the business of providing consultancy, training and competency assessments in procurement, project management and financial management to organisations in both the public sector and private sector in Australia. More than 80% of its gross revenue comes from providing such services to the government sector. That sector includes both the Commonwealth Government and governments of the States and Territories. The evidence before me suggested the majority of B&A's assignments come from Commonwealth Government departments. 2 Ruth Dale Bayley is, and always has been, the Managing Director of B&A. Ms Bayley controls B&A and conducts the day-to-day management of B&A. The only other director and shareholder of B&A is Ms Bayley's husband, Kerry Molineux Bayley (Mr Bayley). Mr Bayley is engaged in full-time employment as an engineer with Airservices Australia. He does not participate to any great degree in the day-to-day management of B&A. 3 The fourth respondent, Nigel Richard George Huckstep (Mr Huckstep), was employed by B&A as its General Manager for most of the calendar year 2008. He commenced in February of that year and departed in early December. The second respondent, DBR Australia Pty Ltd (DBR), was incorporated on 18 September 2008 at the instigation of Mr Huckstep. He and his wife, Stacey Huckstep, are the sole directors and shareholders of DBR. 4 Mr Huckstep left the employment of B&A on 5 December 2008. According to Ms Bayley, he had informed her in about mid-August 2008 that he intended to leave B&A in the near future. This communication occurred just 6½ months into the period of his employment by B&A. 5 In the ensuing months, discussions took place between Ms Bayley and Mr Huckstep concerning the date upon which his employment would terminate and the nature of any ongoing relationship that might exist between B&A and Mr Huckstep post-termination. Indeed, from 5 December 2008 until March 2010, B&A, DBR and Mr Huckstep undertook various transactions from time to time in which they shared responsibilities and which provided benefits to both B&A and to the Huckstep interests. 6 In the third week of March 2010, in the course of investigating the conduct of another employee of B&A, Stuart Jenkins (Mr Jenkins), who was for some time the first respondent in this proceeding, Ms Bayley discovered that Mr Huckstep had sent to an email address conducted by DBR a significant number of confidential documents which were the property of B&A. It also appeared to Ms Bayley at that time that Mr Huckstep and Mr Jenkins had been working together, during the period of their employment, to develop contacts and opportunities which DBR could exploit in the business which DBR intended to pursue after its establishment. It appeared to Ms Bayley at this time that, while employed by B&A, Mr Huckstep had taken a number of steps in the interests of himself and DBR which were not to the benefit of B&A. He had secured for DBR an electronic copy of B&A's library of courseware, diverted assessment transactions from B&A to DBR, used his position with B&A to enhance his relationships with various important clients of B&A for the benefit of himself and DBR and, in the name of DBR, submitted proposals to clients in competition with proposals from B&A. 7 As a result of making these discoveries, on 23 March 2010, B&A commenced a proceeding against Mr Jenkins, DBR and Cidara Pty Ltd (Cidara) in the Supreme Court of the Australian Capital Territory. Cidara was a company controlled by Mr Jenkins. On 24 March 2010, Refshauge J granted interlocutory injunctive relief against all defendants. On 25 March 2010, B&A dismissed Mr Jenkins. 8 On 26 May 2010, B&A commenced this proceeding. The respondents named in this proceeding were Mr Jenkins, DBR, Cidara and Mr Huckstep. 9 B&A settled their claims against Mr Jenkins and Cidara in mid-August 2010. For this reason, by the time the proceeding was heard, the only active respondents were DBR and Mr Huckstep. 10 On 13 April 2012, insofar as it relates to the claim against DBR, the Supreme Court proceeding was transferred to this Court. There is an outstanding application originally filed in the Supreme Court by B&A seeking orders punishing DBR for contempt of Court. It is alleged that DBR breached the injunctions granted by Refshauge J. The contempt application was not part of the matters heard by me and remains outstanding. 11 B&A alleges that Mr Huckstep, and DBR at his instigation, misused its confidential information and stole business opportunities which should have come B&A's way. It also alleges that Mr Huckstep breached his formal contract of employment which was in the form of an Australian Workplace Agreement (AWA) and that DBR breached a contract called an Auspicing Agreement which it had made with B&A at the time when Mr Huckstep left its employment. B&A also alleges that both Mr Huckstep and DBR have infringed its copyright in a significant number of documents which are the property of B&A. B&A alleges that Mr Huckstep owed fiduciary duties to it and also breached the equitable duty of confidence which he was obliged to respect in the circumstances of the case. 12 These Reasons for Judgment determine the liability of Mr Huckstep and DBR in respect of the various causes of action relied upon by B&A in this proceeding. An order that liability be determined prior to and separately from quantum was made by Stone J on 25 January 2012. Although it will be necessary for B&A to demonstrate the nature of its claims for pecuniary relief in order to justify the Court ordering an inquiry as to damages or compensation, or, alternatively, an account of profits, the assessment of the amount ultimately to be awarded to B&A, assuming it is otherwise successful, is not to be determined by at this stage of the proceeding. 13 B&A has tendered a great deal of evidence before the Court. Ms Bayley has sworn three affidavits, the first of which was sworn on 27 March 2012 and filed on 30 March 2012 (Ms Bayley's first affidavit). The other two affidavits sworn by Ms Bayley were sworn on 1 June 2012 and 14 June 2012. 14 Ms Bayley's first affidavit contains 1,130 paragraphs and 183 pages of text. Exhibited to that affidavit are 39 folders of materials. 15 By way of contrast, Mr Huckstep's evidence-in-chief was contained in one affidavit, being his affidavit sworn on 15 May 2012 and filed on 18 May 2012. That affidavit comprises 88 paragraphs covering 17 pages of text. Mr Huckstep exhibited four folders of documents to his affidavit. A number of paragraphs in Mr Huckstep's affidavit were not admitted into evidence. 16 B&A also relied upon the affidavits of other witnesses whose evidence was much shorter. 17 Mr Huckstep was cross-examined for a little over two days. 18 Notwithstanding this vast amount of evidence, it became apparent that, with the exception of the evidence directed to several conversations which are said to have taken place between Ms Bayley and Mr Huckstep during 2008, most of the primary facts relevant to the disposition of the liability part of the case were not in dispute. 19 I mention these matters, not to be critical of the parties, but to make clear that I will approach my findings of fact upon the basis that only essential findings will be addressed in any detail while other facts will be recounted, as necessary, in summary form. Some of the evidence need not be addressed at all at this stage.

B&A's Pleaded Case and the Respondents' Defence 20 By its Fourth Further Amended Statement of Claim filed in Court on 13 June 2012 (the ASC), B&A relies upon the following causes of action: (a) An action for damages for breach of contract against Mr Huckstep. The alleged breaches of contract comprise breaches of cll 3, 21 and 22 of Mr Huckstep's AWA. Clause 3 embodied the common law duty of fidelity owed by Mr Huckstep to B&A as a result of his being B&A's employee. Clause 21 provided that Mr Huckstep would not disclose or use B&A's confidential information unless authorised in writing by B&A and in any event only for the purposes of B&A's business. Clause 22 required Mr Huckstep to act in the best interests of B&A at all relevant times and to avoid conflicts of interest. All three clauses inured for the benefit of B&A during the subsistence of the employment relationship. (b) A cause of action for breach of fiduciary duty. The fiduciary obligations pleaded and relied upon by B&A are found in par 7 of the ASC. In that paragraph of the ASC, it is alleged that Mr Huckstep had fiduciary obligations to B&A: (i) Not to use his position as an employee of B&A to his own or to a third party's advantage without the consent of B&A; and (ii) Not to have a personal interest or engagement with a third party in any matter within the scope of his employment without the consent of B&A. (c) A cause of action for breach of the equitable duty of confidence alleged to have been owed by Mr Huckstep to B&A. (d) A cause of action pleaded against both Mr Huckstep and DBR for assisting in the breaches of fiduciary duty committed by Mr Jenkins against B&A, including assisting Mr Jenkins to misuse B&A's confidential information. (e) A cause of action for statutory damages for infringing B&A's copyright in its courseware and other confidential business materials. (f) A cause of action against DBR for breaching a contract styled Auspicing Agreement entered into between B&A and DBR on or about 10 December 2008. 21 In par 9 of the ASC, B&A pleads the conduct which it alleges constituted wrongful conduct on the part of Mr Huckstep during the course of his employment with B&A in breach of his AWA, the fiduciary obligations alleged to have been owed by him to B&A and the equitable duty of confidence alleged to have been owed to B&A. The matters relied upon are: (a) The incorporation of DBR on 18 September 2008 with the intention that DBR would carry on a business that was the same or similar to, and competitive with, B&A's business; (b) Arranging for, or otherwise causing or procuring, DBR to be paid for work that Mr Huckstep performed on behalf of B&A; (c) Arranging for, or otherwise causing or procuring, valuable work, or opportunities to perform such work, to be diverted from B&A to DBR; (d) Arranging for, or otherwise causing or procuring, copies of documents comprising B&A's confidential courseware and confidential business documents to be downloaded to DBR's email address with the intention that the copies thereby downloaded would thereafter be used, or be available to be used, for his advantage and/or that of DBR; (e) Arranging for, or otherwise causing or procuring: (i) That copies of all documents taken from B&A be retained by himself and DBR for the purpose of being used for his own advantage and for that of DBR; and (ii) Using some of those copies in preparation of a tender for DBR to perform valuable work within the scope of B&A's business for the Defence Signals Directorate (DSD); and (iii) Arranging for, or otherwise causing or procuring, DBR to prepare a tender to the DSD and submitting same to that body. 22 In the ASC, B&A appears to claim damages or compensation for all of the breaches of contract and duty which it alleges against Mr Huckstep during the course of his employment by B&A. The breaches of fiduciary duty and breaches of the equitable duty of confidence may give rise to alternative remedies. I accept that, notwithstanding the way in which the matter is pleaded, the case was conducted upon the basis that B&A had retained the right to elect the remedy which it would seek in respect of the financial losses which it says it suffered as a result of Mr Huckstep's breaches of duty. Of course, the only remedy for the breaches of contract relied upon by B&A is common law damages. 23 No detailed particulars of the breaches alleged by B&A against Mr Huckstep of the duties owed by him to B&A during the course of employment were provided in the ASC itself. At various times, schedules detailing the alleged breaches were provided. Ultimately, on the last day of the hearing (28 June 2012), I granted leave to B&A to amend its Originating Application yet again in the terms of the Further Amended Originating Application filed in Court on that day. Lengthy schedules were attached to that document. In addition, Senior Counsel for B&A provided to me a draft set of Orders which B&A would seek at this stage of the proceeding. Those Orders are complex. Four schedules are attached to the draft Orders. Those schedules are lengthy. I shall return to the form of relief claimed by B&A later in these Reasons. 24 In answer to the allegations made against him in respect of his conduct during the course of his employment by B&A, Mr Huckstep: (a) Denied that he owed any fiduciary duties to B&A; (b) Denied that he breached any obligations which he owed to B&A; but (c) Otherwise accepted that he owed the contractual duties pleaded and relied upon by B&A and also the equitable duty of confidence pleaded and relied upon by B&A. 25 In the ASC, B&A also alleged that, after Mr Huckstep's employment with B&A came to an end, Mr Huckstep wrongfully exploited a business opportunity of which he had become aware during the course of his employment and wrongfully used the Top Secret Positive Vet security clearance (TSPV) which he obtained by dint of his being employed by B&A to gain and to perform work for the DSD. B&A alleges that this conduct on the part of Mr Huckstep constituted a breach of the fiduciary duties owed by him to B&A and also a breach of the contractual and equitable duties of confidence owed to B&A by him. 26 B&A alleges that DBR participated with knowledge in the wrongful conduct undertaken by Mr Huckstep in the period after the termination of his employment with B&A. 27 Mr Huckstep denied that the work which was performed by DBR after his employment with B&A ceased could be properly characterised as project management training or procurement management and also claimed that the TSPV was his to use in any way that he saw fit. He also claimed that, in effect, none of the work performed by him and DBR for the DSD was done other than in conjunction with B&A. 28 At pars 23-30 of the ASC, B&A pleads a case against Mr Huckstep and DBR as participants in the wrongful conduct of Mr Jenkins vis-à-vis B&A. This case received no attention at the hearing before me or in final submissions. It was not seriously pressed. 29 B&A also pleads a cause of action based on the infringement of its copyright in its courseware and other training materials. It claims that Mr Huckstep reproduced documents in breach of s 31(1)(a)(i) and s 31(1)(a)(iv) of the Copyright Act 1968 (Cth) (the Copyright Act) and that DBR authorised Mr Huckstep to reproduce copyrighted documents in breach of the same section. In addition, it is alleged that Mr Huckstep and DBR authorised Mr Jenkins to reproduce copyrighted documents in breach of the same section. Finally, it is alleged that Mr Huckstep and DBR both published and communicated copyrighted documents in breach of the same section. 30 The final cause of action is an action against DBR for breaching the Auspicing Agreement. The breaches relied upon are: (a) Soliciting Mr Jenkins to leave B&A's employment (cl 3.1(b)); (b) Acting in ways that materially affected B&A (cl 2.1); and (c) Using B&A's confidential information for its own purposes (cl 2.1(d) and cl 5.1). 31 For the alleged breach of cl 3.1(b) and cl 2.1 of the Auspicing Agreement, B&A claims contractual damages for the lost opportunity to obtain valuable work through the services of Mr Jenkins. For the breach of cl 2.1(d) and cl 5.1 constituted by the misuse of B&A's confidential information, B&A claims lost income, being that income which it would have derived from the exclusive use of the documents made available to DBR under the Auspicing Agreement, including fees or royalties for their use, and income that B&A would have derived from training and assessment work that it lost because DBR had the benefit of the use of the documents passed across to it under the Auspicing Agreement.

The Business of B&A 32 B&A was incorporated on 16 January 1996. Since that time, it has carried on the business activities which I have described at [1] above. 33 Prior to 2001, B&A was not registered to provide training or competency assessments. Because it was not a Registered Training Organisation (RTO), B&A could not confer a nationally recognised qualification on its students and trainees. 34 On 9 October 2001, B&A was registered as an RTO. At that time, registration was regulated by State and Territory-based authorities. 35 In 2003, the Australian Government established an accreditation and registration framework for vocational education and training by applying nationally agreed protocols for the standards which had to be met. For some years after the establishment of those protocols, regulation of RTOs continued to be carried out by State and Territory authorities. From 1 July 2011, the RTO registration and auditing process was taken over by the Australian Skills Quality Authority (ASQA) and continues to be administered by that Authority. Part of the regulatory functions of ASQA is to ensure that the national standards for RTOs, known as the Australian Quality Training Framework (AQTF), are maintained. 36 B&A also provides clients with consultancy services in the areas of procurement, project management and financial management. Sometimes these services include updating clients' existing procedures and manuals. 37 As an RTO, B&A is authorised to provide training and competency assessments in procurement, project management and financial management. As an RTO, it can also confer nationally recognised vocational qualifications on students who have successfully completed training and assessments. 38 B&A's training programs in procurement are primarily offered to, and undertaken by, procurement and contract managers in the Government sector. 39 As a result of its status as an RTO, B&A is permitted by ASQA to enter into subcontracts or loose partnership arrangements pursuant to which another training provider actually provides the relevant training to or on behalf of the clients of B&A under the auspices of B&A's registration. In the industry in which B&A operates, training providers who have this kind of relationship with B&A are called auspicing partners. B&A's relationships with auspicing partners are generally regulated by a formal contract called an auspicing agreement. Most of B&A's auspicing partners are not RTOs and are therefore not authorised to confer any relevant qualification upon successful students and trainees or to certify that they have any relevant competency. Under the auspicing arrangements to which I have referred, it is B&A which confers these qualifications and certificates at the behest of the auspicing partner. 40 Sometimes B&A authorises an auspicing partner to use B&A's training material, known as courseware. Authorisation of this kind is always limited to the use of B&A's courseware for the purposes of the particular engagement. 41 B&A also enters into more conventional subcontracts known as service agreements. Under these arrangements, B&A itself subcontracts work to a third party. Sometimes, that work requires the third party to have access to some of B&A's courseware and occasionally to adapt that courseware to the requirements of a particular client. 42 Generally speaking, in B&A's business, an auspicing arrangement involves a trilateral contractual relationship in which the auspicing partner has a contract with both the client and with B&A. Under a service agreement, the relationship is bilateral: a client contracts with B&A and B&A contracts with a service provider. 43 In summary, therefore, at all relevant times, the services marketed and provided by B&A have included: (a) Training and competency assessments in procurement, project management and financial management leading to the award of nationally recognised qualifications in these areas to students who have successfully completed its training or assessments; (b) Competency assessments, which involve assessing the competency of particular employees against relevant criteria or benchmarks and, if appropriate, certifying that they have attained a particular standard of competence; and (c) Consultancy services and expert advice in the areas of procurement, project management and financial management. 44 The above description of B&A's business is taken from Ms Bayley's first affidavit. Mr Huckstep and DBR did not dispute the accuracy of this description.

The Development of B&A's Courseware 45 Between 1981 and 1994, Ms Bayley served as a logistics officer in the Royal Australian Air Force (RAAF). In 1994, she resigned her commission in the RAAF. 46 By 1994, Ms Bayley held a Bachelor's degree in Commerce, a Master of Business Administration and a Graduate Diploma in Education. 47 After leaving the RAAF, she worked in two public service positions directly related to the provision of training and did some secondary teaching. She then decided to focus on adult vocational training in the government sector. This was the catalyst for her to establish B&A. 48 In the initial period after establishing B&A, Ms Bayley said that she wrote and compiled all of the material which B&A used in providing training. This material comprised student notes, slide shows, training scenarios, student handouts, training activities and, in relation to some courses, a guide for the use of the person teaching the course. She called this latter guide a facilitator guide. 49 Ms Bayley said that all of this material was initially written by her. She said it was created using her own professional expertise and knowledge. 50 The order in which she developed these training materials was: First, the student notes; second, the activities and scenarios; and, third, the slide shows. 51 Ms Bayley said that the student notes were developed from a content outline. The content outline was derived either from the instructions of the client or from her own judgment as to what should be included in a course of the type and level with which she was concerned. 52 Ms Bayley accepted that, when developing the student notes, from time to time, she referred to published textbooks to gain a deeper understanding of the theory behind the concepts which she was endeavouring to teach and the models involved. She also referred to government publications such as the Commonwealth Procurement Guidelines, audit reports and relevant legislation. She said that, on occasion, she quoted from these materials directly but always acknowledged her source. However, she said that the great bulk of the material which she created in this early period was written by her. 53 After the initial period, Ms Bayley modified B&A's materials from time to time. For the purpose of deciding on these modifications, she consulted professional colleagues and other employees of B&A. 54 By late 1996 or early 1997, Ms Bayley had spent several hundred hours creating these materials. She had produced the courseware for at least six complete training courses. This courseware comprised over 1,000 pages. 55 Ms Bayley said that she has maintained B&A's library of courseware since 1997. This work of maintaining that library has been carried out by her personally and by other employees of B&A from time to time but always under her direct supervision and control. 56 After gaining registration as an RTO in 2001, the required components of a set of courseware grew as the result of the need for compliance with RTO standards in force from time to time. The following components are required, namely: (a) Student notes; (b) Slide shows; (c) Training scenarios and handouts; (d) Assessment tasks in a workbook; (e) Facilitator answers; (f) Qualification information sheet; (g) Candidate's toolkit; (h) Supporting Statement proforma; (i) Record of Assessment; (j) Assessment check table; and (k) Materials listing. 57 At pars 62-72 of her first affidavit, Ms Bayley explained in detail the content of each of these components. It is not necessary for me to set out the detail of Ms Bayley's evidence in this regard in these Reasons. 58 B&A's courseware is held electronically by B&A. It is not published by B&A on its website or anywhere else. It is not available for purchase. B&A's student notes, activities books, Powerpoint presentations and handouts are only made available to students as part of specific contractual arrangements and only after payment of a course fee. These materials are only provided to B&A staff and to subcontractors for the delivery of specific training programs or under auspicing agreements for the delivery of specific training programs by B&A's auspicing partners. The facilitator's answers are only distributed to B&A's staff and contractors for the delivery of training programs or under auspicing agreements for the delivery of training programs by B&A's auspicing partners. Contracts with B&A's staff, contractors and auspicing partners all contain provisions which are designed to protect the confidentiality of B&A's courseware. I am satisfied that all of this material is confidential to B&A and is only made available to others upon strict terms as to its confidentiality.

Ms Bayley Meets Mr Huckstep 59 Ms Bayley first met Mr Huckstep when he was introduced to her by Deborah Mazlin in December 2002. At that time, Ms Mazlin was an employee of B&A, having previously served with Ms Bayley in the RAAF. Mr Huckstep was, at that time, a serving officer in the RAAF. At their first meeting, Ms Bayley agreed that B&A would provide a four-week resettlement work placement for Mr Huckstep with B&A as part of his process of resigning his commission from the RAAF. Mr Huckstep began that placement in January 2003 and concluded it four weeks later. 60 At the end of his placement with B&A, Mr Huckstep took up an offer of employment with Apis Consulting Group Pty Ltd (Apis Consulting). In 2003, Apis Consulting was a competitor of B&A, although it was not then a RTO. 61 On 1 February 2005, B&A entered into an auspicing agreement with Apis Consulting. That agreement was intended to enable those persons who were being trained by Apis Consulting to be awarded appropriate vocational qualifications. These qualifications would be conferred by B&A. Apis Consulting could not confer such qualifications because it was not then a RTO. 62 From 2005 until Apis Consulting went into administration in September 2007, B&A worked with Apis Consulting in the provision and development of vocational training and competency assessment programs. B&A and Apis Consulting jointly developed a set of courseware which Ms Bayley described as co-badged materials. These co-badged materials were developed at a time when Mr Huckstep was employed by Apis Consulting and concerned project management. 63 Ms Bayley said that the task of developing co-badged courseware involved the following elements: (a) Apis Consulting contributed to the exercise certain project management courseware that it had developed for other purposes; (b) By using a process known as competency mapping, B&A reviewed that courseware against the relevant competency standards for the purpose of identifying areas where the Apis Consulting courseware failed to adequately address the relevant standards; (c) B&A contributed its own project management courseware, substantially for the purpose of filling the gaps that it had identified in the courseware contributed by Apis Consulting; and (d) The courseware contributed by each of B&A and Apis Consulting was then combined by employees of B&A and Apis Consulting to create a new set of courseware for the Diploma of Project Management. A key component of that courseware was the "Diploma of Project Management Competency Training Manual" prepared in late 2004. Workshop Version 2.0 of that Manual was exhibited to Mr Huckstep's affidavit sworn on 15 May 2012 as Exhibit NH50 (Doc NH50). 64 The exercise described at [63] above took approximately six to eight weeks to complete. 65 After entering into the auspicing agreement to which I have referred at [61] above, B&A and Apis Consulting produced a final version of the jointly developed co-badged courseware for the Diploma of Project Management. That courseware consisted of a student handbook, an activities book, a Powerpoint slideshow and two negotiation scenarios. This courseware came to be known in both the businesses of B&A and Apis Consulting as co-badged courseware. As I have already mentioned, it was created by combining courseware from both organisations. The co-badged courseware was published bearing the logos of both B&A and Apis Consulting. It was marked "© Bayley & Associates Pty Ltd, Apis Consulting Group" or "© Bayley Training and Consulting, Apis Consulting Group". Ms Bayley testified that B&A and Apis Consulting agreed that, at the conclusion of the joint project, each would independently own its own set of the co-badged courseware and each would be free to separately and independently badge, use, modify or supplement any part of the co-badged courseware for its own clients and its own purposes without the need for recourse to the other party. 66 In the result, each of B&A and Apis Consulting had the right to use and exploit the co-badged courseware as against the whole world other than as against each other. 67 From time to time from 2005, B&A modified the original co-badged courseware, thereby creating new versions of that courseware that were unique to B&A, although ultimately derived from the original co-badged courseware. By 2008, B&A's modifications to the co-badged courseware were substantial. 68 When modifying co-badged courseware in the fashion described at [67] above, B&A allocated a new version number to the modified document and badged the new version with its own name without mentioning Apis Consulting. 69 After Apis Consulting went into administration, a new company called Apis Group Pty Ltd (Apis Group), commenced business. The evidence established that Apis Consulting went into administration in September 2007 but did not establish when Apis Group commenced to trade. Apis Group became a RTO on or around 21 January 2011. The evidence does not show what (if any) transactions took place between Apis Consulting and/or its administrators and Apis Group. There is no evidence as to whether any of the rights of Apis Consulting in the co-badged courseware were ever transferred to Mr Huckstep or anyone else. 70 The above evidence concerning the co-badged courseware is drawn from the evidence of Ms Bayley. It was not challenged. I accept it.

B&A Employs Mr Huckstep as a Senior Consultant 71 In late 2007, Ms Bayley offered Mr Huckstep a job with B&A. Mr Huckstep accepted that position. 72 On 15 November 2007, B&A and Mr Huckstep executed an AWA. 73 Subsequently, on 11 February 2008, Mr Huckstep commenced employment with B&A as a Senior Consultant. 74 In about April 2008, B&A created a new senior management position called General Manager. Mr Huckstep was promoted into that position. A job brief for this position was drafted by Mr Huckstep and finalised by Ms Bayley on 5 September 2008. No specific formal contract was entered into in respect of this new position.

The Relevant Terms of Mr Huckstep's AWA 75 Schedule 2 to the AWA contains a description of the Job Brief for Mr Huckstep's initial position with B&A viz his position as Senior Consultant Procurement and Project Management. That Job Brief recorded that he was to report directly to Ms Bayley, as Managing Director. It also included a statement of his responsibility for managing and supervising staff. 76 Clause 3 of the AWA provided: This AWA covers all of your terms and conditions of employment. You must diligently and faithfully perform all the duties and responsibilities which we give you, and you must abide by any policies and procedures formulated by us. You must use your best endeavours to promote and enhance the interest, business, profitability and reputation of Bayley & Associates Pty Ltd. You must not intentionally do anything which is reasonably likely to be harmful to the company. 77 Clauses 4 to 19 addressed award-type conditions relevant to Mr Huckstep's employment. I note that his initial salary was $130,000 per annum. 78 Clause 21 (Confidential Information) and clause 22 (Business Ethics and Conflict of Interest) were in the following terms: 21 Confidential Information Confidential information includes all transactions, records and information pertaining to the business, our personnel, suppliers, clients, future products, plans and opportunities and any other information which we advise is confidential. Any products, processes, methods or templates developed by the company (including any such property developed by you during your employment) shall remain the property of Bayley & Associates Pty Ltd. You must not disclose any confidential information to any person, firm, company or other body, unless previously and expressly authorised in writing by us. You will not use or attempt to use any confidential information in any manner and for any purpose other than the purpose of the business. 22 Business Ethics and Conflict of Interest While an employee of Bayley & Associates you will be a representative of our company. It is vital that your conduct is at all times to the highest standard. This includes a commitment to satisfy the standards of honesty and fair trade at all times. You must adhere to the fundamental ethical practices and principles of this company as outlined in this agreement and other related documentation. You have the responsibility to work in the best interests of Bayley & Associates and avoid situations and actions that may be, or create the appearance of being, in conflict with our overall objectives and principles. The following are examples of activities that have the potential to cause conflict and must be avoided: • Holding a substantial financial interest in any company with whom we have business dealings (eg competitors, suppliers and customers). • The acceptance by you from any party or supplier of services, either directly or indirectly, of cash payments (other than reimbursements for reasonable out-of-pocket expenses), services, loans (except from banks or other financial institutions) or discounts (except those offered to all staff members of our company). • Accepting gifts from any business party involved with us (except for gifts of a minor value such as flowers, a bottle of wine etc). If you are in a situation in which you believe that you may have a conflict of interest, it is mandatory to discuss the matter with the Managing Director.

Mr Huckstep's Job Brief as General Manager 79 I set out below pages 1 and 2 of this Job Brief: Job Brief - General Manager Your Responsibilities This position reports to the Managing Director. You will be employed on a variety of duties, including those listed below. Other duties may be negotiated from time to time. Staff Management and Supervision • Induct new team members • Supervise team members and manage their performance to achieve Bayley standards • Offer support, coaching, mentoring and professional development to team members • Manage the workload of team members, including allocation of work • Provide team leadership Business Systems • Develop and implement appropriate systems for the efficient management and operation of the business in conjunction with the Company Directors and other key staff • Review business systems and recommend improvements • Develop business rules for clients as required RTO Management • Assist in maintaining and implementing the RTO Quality Framework • Assist with internal and external RTO audits as required by the RTO Quality Manager • Assist in the implementation of corrective actions identified at audit and approved by Company Directors • Assist in the continuous improvement process • Liaise with ACT ARC and other relevant bodies as required Business Development • Arrange for responses to requests for tender, requests for quotation and requests for proposal after consultation with relevant stakeholders including Managing Director and Program Directors • Attend industry briefings and site visits if required • Initiate meetings with existing and potential clients • Review and authorise service orders, work orders, contracts or equivalent • Arrange for debriefing on unsuccessful tenders, quotations and proposals • Participate in networking activities • Seek other business development opportunities Management of Existing Client Relationships • Initiate meetings with existing clients as appropriate to maintain effective business relationships Record Keeping • Arrange for proper records for all business development activities including but not limited to tender responses, proposals, quotations, client meetings and tender debriefings • Report general business intelligence to the Business Contact Manager system Administration and Finance • Assist in maintaining and implementing Administration and Finance systems • Assist in management of client invoicing and management of debtors • Provide, if required, authorisation of company expenditure within limits of authorisation Other • Brief members of the management team about any issues that may be helpful to their understanding of client issues • Develop and maintain familiarity with Training Packages on our scope of registration • Implement corrective actions from audits as approved by Directors • Attend job fairs, seminars and similar events • Liaison with company directors • Participate in agreed professional development activities • Any other duties as negotiated or as directed. 80 At page 3 of the Job Brief, the qualities and attributes of the occupant of the position are specified. 81 I pause at this point to note that B&A contends that the nature and duties of Mr Huckstep's position as General Manager of B&A, when read with the terms of the AWA, resulted in his owing fiduciary duties to B&A. The question of whether, in the circumstances of the present case, the duties owed by Mr Huckstep to B&A can be described as fiduciary in character is a matter of contest between the parties.

Mr Huckstep Engineers the Employment of Mr Jenkins as a Senior Consultant with B&A 82 Mr Jenkins and Mr Huckstep were friends. Mr Jenkins commenced employment at B&A on 26 May 2008. Mr Jenkins' employment with B&A was governed by a letter agreement dated 8 April 2008. Mr Jenkins reported directly to Mr Huckstep. Mr Jenkins had previously worked at Apis Consulting in the period from about 2005 until Apis Consulting went into administration in September 2007. He was dismissed by Ms Bayley on 25 March 2010. He later took up employment with Apis Group.

The Resources of B&A Available to Mr Huckstep During his Employment 83 It was common ground that, during the course of Mr Huckstep's employment with B&A, he was provided with the following resources: (a) Mobile phone. (b) Laptop computer (with the capacity to put the laptop in a docking station to enable viewing on a desk monitor). (c) Email account with personal login and password. (d) Password controlled access to B&A's central computer server (the B&A server). (e) Access to B&A's printers and document scanning facilities. (f) Password controlled remote access to the B&A server by means of a virtual private network. This latter access in practical terms meant that Mr Huckstep could access both the B&A server and B&A's email system from any location outside the office using the Internet. 84 The B&A Employee Manual which applied to Mr Huckstep's employment at B&A in 2008 provided that the IT resources of B&A, which included its computers, email access and telephones, were the property of B&A. The Manual stated that the purpose of providing these facilities was to facilitate and support the business of B&A. The B&A Employee Manual also provided that "… no employee may knowingly use any B&A computing equipment or email … to transmit, receive, access or store communication that is … for a purpose against the business interests of B&A". 85 B&A stored all of its documents (including all of its courseware) electronically on the B&A server. Overall control of the B&A server was exercised by the System Administrator who is, and always has been, Mr Bayley. 86 As the General Manager of B&A, Mr Huckstep was provided with password controlled, but otherwise unrestricted, access to the following areas of the B&A server: (a) His own private network folder which was identified on the B&A server as "Nigel/My Documents"; (b) The "common" folder; (c) The B&A intranet; and (d) His B&A email account. 87 A purpose of the common folder was for B&A to make documents available to its employees so that they could conduct their business activities for B&A using all relevant information. All employees of B&A were granted access to the common folder for this purpose. All employees were authorised to create, modify, copy, print or delete documents to and from B&A server. This was necessary to allow the efficient day-to-day operation of B&A. 88 In 2008, the common folder included: (a) Business records such as tenders, proposals, quotations; (b) Client information such as contact information and client specific course requirements; (c) Business planning documents such as the then current strategic plan, risk assessments, operational plans and directors' reviews and operations; (d) Master copies of all B&A's courseware, being the electronic copies of all training materials and assessment tasks (being tasks for candidates to undertake); (e) Courseware under development (being electronic copies of all training materials in the process of creation and development); (f) Courseware archived (being all past or superseded training and related materials); (g) Assessment materials, including assessment check tables, being electronic copies of all documents used for the purpose of competency assessments and the assessment check tables used for recording the results of individual assessments against specific criteria; (h) Course evaluation summaries, which contained summaries of participant responses on evaluation forms; (i) Student information sheets and other marketing material; (j) RTO policies and quality control documents; (k) Details of the then current auspicing agreements, being agreements entered into between B&A and contractors for contracts to provide courses on behalf of B&A; (l) Tenders and tender proposals used (or to be used) by B&A for obtaining work from clients and potential clients; (m) Pricing sheets, being the cost schedules for: (i) All training and competency assessment programs; (ii) Development of some client specific training programs or modifications of existing training programs tailored for specific clients; and (iii) Some rates charged by contractors. (n) Advertising; (o) All templates for forms used by B&A, including staff evaluation forms, tender debrief forms (being forms used where a tender was not obtained and B&A was advised as to why it was not a successful tender) and invoice request forms. 89 In 2008, B&A also used an intranet in its business. An intranet is an internal computer network that allows communication amongst participants in the network. In the case of B&A, it was a self-contained document retention and access system for use by B&A's employees. It was not available for access for anyone outside B&A. 90 Each employee of B&A in 2008 had password protected access to B&A's intranet. This meant that the employee could only log onto the intranet with a personal password. Mr Huckstep had password protected access to B&A's intranet during his employment with B&A. 91 Throughout 2008, the intranet relevantly contained: (a) B&A's Employee Manual; (b) B&A's corporate policies; (c) B&A's organisational chart and associated information; and (d) Form templates and approved training and assessment materials.

The Opportunity for Mr Huckstep to obtain a Top Secret Positive Vet Security Clearance at Defence Signals Directorate 92 Mr Huckstep's dealings with the Defence Signals Directorate (DSD) in 2008 is one of the areas where the evidence of Ms Bayley and the evidence of Mr Huckstep is in stark conflict. 93 Ms Bayley said that the DSD had been an established client of B&A since 2003. She said that, in September 2007, B&A had engaged Mr Stephen Phipps who, for many years, had been employed by the DSD. She said that, in late 2007 or in early 2008, Mr Phipps had alerted her to the possibility that the DSD had a particular need for mentoring of its project managers. Ms Bayley claimed that she passed on this intelligence to Mr Huckstep with a request that he follow up on behalf of B&A. 94 Mr Phipps gave evidence at the hearing before me. He explained the significance of contractors possessing a Top Secret Negative Vet security clearance (TSNV) and a TSPV. A TSPV allowed greater access to the DSD and its premises than did a TSNV. He said that a significant majority of service contractors to the DSD needed a TSPV. He said that this was because the nature of the DSD's work was such that the service contractors would or might be exposed to material or information classified to a level to which only someone with a TSPV could access. He testified that, in practice, this meant that only those service contractors who had a TSPV could move about the DSD's premises without an escort or could have access to any of the DSD's information technology systems. He said that it could take between six and twelve months for a service contractor who did not have a security clearance to obtain a TSPV. He also observed that there was a considerable risk that any given candidate would not be given a TSPV. He said that, in practice, the DSD awarded most of its service contracts to contractors who already had personnel within their organisation who possessed an existing TSPV. Often, this was done by way of a sole-source arrangement which did not involve competitive tendering or quoting to any degree but rather involved an approach to a single contractor. 95 In evidence before me, Mr Phipps confirmed that Ms Bayley had asked him to speak to Mr Huckstep about exploring opportunities with the DSD in the areas of procurement and project management. Mr Phipps said that he took up these matters with Mr Huckstep in early 2008. He said that he told Mr Huckstep at that time that there were opportunities for B&A in the areas of procurement and project management and that the DSD had a real problem in stakeholder engagement in those areas. Mr Phipps said that he told Mr Huckstep that the DSD needed help with training and mentoring. He said that he told Mr Huckstep that one of B&A's employees would need to have a TSPV. He said that if B&A wished to exploit the DSD as an ongoing business opportunity it would not have much hope if none of its employees had a TSPV. He said that he told Mr Huckstep at this time: Once you get in the place with a TSPV, you can use it to entrench yourself, and go through the place pretty much at will selling yourself from the inside. 96 By the time Mr Phipps came to give evidence before me, he had become General Manager of B&A. Although this circumstance meant that he was not independent of B&A when he gave his evidence, I did not form a negative impression of Mr Phipps. His evidence was given in a careful and forthright manner. 97 Mr Huckstep did not deny the conversations with Mr Phipps which I have described at [95] and [96] above. Nor, when Mr Phipps was cross-examined, was it suggested to him that the evidence which he had given in his affidavit was inaccurate. 98 I accept the evidence of Mr Phipps. 99 Ms Bayley testified that, in or about April 2008, she had a conversation with Mr Huckstep concerning her interest in pursuing opportunities with the DSD in the procurement and project management areas. At par 134 of her first affidavit, she gave a very detailed account of that conversation. In his evidence-in-chief, Mr Huckstep strenuously denied that he had had any conversation along the lines of the conversation extracted by Ms Bayley at par 134 of her first affidavit. 100 According to Ms Bayley, in the April 2008 conversation which she said she had had with Mr Huckstep, he reported back to her the substance of his conversations which he had had with Mr Phipps. He told her that Mr Phipps had told him that the DSD needed help with their procurement and project management areas. He said that the DSD was very keen on the mentoring and support set up for project managers that Mr Phipps had suggested. This involved an experienced project manager being available to support less experienced ones with their problems. He said that Mr Phipps had informed him that the DSD was keen to outsource and that the DSD would sponsor one TSPV for B&A so that it could deliver these services. According to Ms Bayley, Mr Huckstep commented to her in this conversation that he had been trying for years at Apis Consulting to get a TSPV but had not had any success in doing so. Ms Bayley said that she told Mr Huckstep in this conversation that she would put herself up for the TSPV. She said that the mentoring work would fit really well with her move to get out of delivering training and it would also be interesting professionally for her after such a long association with the DSD. She said to him that he could keep on with training and with making assessments because the TSNV which he held was good enough for that. Ms Bayley recounted that Mr Huckstep suggested to her that that was not a good idea. She said that he suggested that B&A should put him forward as its nominee for the TSPV. She then recounted a number of reasons which he gave to her in this conversation for making that suggestion. 101 According to Ms Bayley, the conversation with Mr Huckstep ended along the following lines: Ruth: Yes, I understand what you are saying, and it's true that I'm trying to do less client work, but this is a very rare opportunity that opens up so many doors to us. If I get the clearance myself, then I will be sure that it will stay with B&A no matter what. If you get the clearance, what would happen if you left us? Then we would not have anyone with a clearance and we would lose the work. And you'd have a rolled gold meal ticket no matter who you worked for. Huckstep: You won't get rid of me that easily. I only just got here and I have absolutely no plans to leave any time soon. You know I keep saying how much I love it here. Ruth: Well, I'd like to think it over and discuss it with Kerry because I am totally certain that I am never going to leave the company! And who knows when this opportunity will ever come our way again if something unexpected were to happen. 102 Ms Bayley testified that, shortly after speaking with Mr Huckstep in April 2008, she telephoned Mr Henderson, an executive of the DSD, and enquired as to whether B&A would be able to procure two TSPV. Mr Henderson replied that this would not happen and that she should be satisfied with one. 103 In light of her conversation with Mr Henderson, Ms Bayley said that she decided to accept Mr Huckstep's suggestion that he should be put forward as B&A's nominee for the one DSD-sponsored TSPV that was, as she understood it, all that would be made available to B&A. She said that she advised Mr Huckstep of her decision in late April or early May 2008. She said that, soon thereafter, Mr Huckstep was put forward as B&A's nominee for the DSD-sponsored TSPV and that the vetting process for that clearance then commenced. That process was completed on 12 November 2008 when Mr Huckstep was given the TSPV. 104 In his evidence-in-chief, Mr Huckstep gave an account of his dealings with the DSD in the period between 2004 and late 2007, while he was employed by Apis Consulting. He claimed that, by late 2004, he had developed a strong working relationship with key personnel at the DSD. He said that Apis Consulting had a contract with the DSD which involved multiple accredited and non-accredited training courses. 105 Mr Huckstep also gave evidence that, through partnering arrangements, both Apis Consulting and B&A had provided Australian Institute of Project Management (AIPM) assessments and project management courses to the DSD. He said that while the courseware development had not been accepted by the DSD, the AIPM assessments had been. 106 He also gave an account of other work done by Apis Consulting for the DSD in the period up to the end of 2007. 107 For reasons which I shall note and explain later in these Reasons, I think that Mr Huckstep was not a witness whose evidence I should accept where it conflicted in any material respect with that of Ms Bayley and other witnesses called on behalf of B&A. That is a general finding which I make and which I will bear in mind when dealing with specific evidence given by Mr Huckstep. 108 I have no reason to doubt, however, that the evidence which Mr Huckstep gave as to his dealings with the DSD while employed at Apis Consulting was accurate. That evidence does provide a sensible foundation for me to conclude that, as at April 2008, Mr Huckstep had relationships with executives employed within the DSD which could be developed and exploited in the interests of B&A, his employer. Given that he had such relationships, I do not find it improbable that he may well have suggested to Ms Bayley that he was better placed to exploit the DSD opportunities than anyone else at B&A (including her). Nor do I find it improbable that Mr Huckstep used flattery with Ms Bayley to persuade her to accept his suggestion that B&A should put him forward as B&A's TSPV nominee, rather than her. 109 I am not at all convinced, however, that, in the April 2008 conversation, Ms Bayley discussed with Mr Huckstep the risks that B&A would be taking if Mr Huckstep secured the TSPV and then left B&A's employ. That is, I am not convinced that the conversation ended in the way that Ms Bayley said (as to which see [101] above). 110 I found Ms Bayley generally to be a truthful and reliable witness. She is an intelligent person and a most meticulous businesswoman. She has a highly developed eye for detail and, in my judgment, a great capacity to recall events and conversations. 111 The evidence was that Ms Bayley did very little to protect B&A's interest in any TSPV that Mr Huckstep might obtain. She took no steps in April 2008 to protect that interest and, apart from making a further phone call to Mr Henderson to see if she could replace Mr Huckstep as B&A's nominee for the TSPV (a request which was declined), took no steps of that kind later on when Mr Huckstep informed her that he proposed to leave the employ of B&A. Indeed, she allowed the TSPV vetting process to continue notwithstanding that Mr Huckstep had given her notice of his intention to leave B&A. I think that, had the question of protecting B&A's interest in any subsequently awarded TSPV in the event that Mr Huckstep left the employ of B&A occurred to Ms Bayley in April 2008, she would have taken steps at that time to protect B&A's interest. She did not do so. 112 For these reasons, I do not accept that this particular part of the conversation as recounted by Ms Bayley actually took place. 113 In the end, whether Ms Bayley raised a concern about the TSPV travelling with Mr Huckstep wherever he chose to work in the April 2008 conversation with Mr Huckstep may not matter very much. Clearly, on the evidence, the new opportunities to which Ms Bayley was alerted by Mr Phipps in late 2007 and early 2008 were opportunities which came to B&A via Mr Phipps. It was in light of her conversations with Mr Phipps that Ms Bayley discussed those opportunities with Mr Huckstep. The TSPV that was under consideration, although awarded to an individual (Mr Huckstep), would have to be used for the benefit of B&A and not against its interests.

Events in the Period May to September 2008 114 In May 2008, opportunities to assess Mr Rick Schurmann of the Defence Materiel Organisation and Mr Ken Skelton at Customs came to B&A. Mr Huckstep later diverted these assessments to DBR. 115 On or about 18 August 2008, upon his return from a business trip to Perth, Mr Huckstep arranged a meeting with Ms Bayley. At this meeting, he told her that, for personal reasons, he intended to move to Esperance in Western Australia at the end of 2008. He asked Ms Bayley whether there would be any opportunity for him to remain employed by B&A in Western Australia and, if not, whether he could contract to B&A from there. 116 Ms Bayley described this announcement as a "bombshell". She was very unhappy about it. She quizzed Mr Huckstep as to what it was he intended to do in Esperance given that, in her opinion, there would be very little opportunity for him to do the type of work which he did for B&A in such an isolated place. Ms Bayley said that she needed to talk to her husband and to think about what Mr Huckstep had said. 117 On 27 August 2008, Ms Bayley again met with Mr Huckstep and suggested to him that it might be possible to use him as a contractor from Esperance. She said that she would need to understand what financial arrangements he had in mind and where he expected the work would come from. 118 On 5 September 2008, Mr Huckstep sent an email to Ms Bayley. This email came to be known as the "All About Me" email and I shall refer to it accordingly. The All About Me email was in the following terms: Ruth, I know Stu has briefly chatted to you already, but I need to chat about my change in circumstances. The move to Esperance has been put on hold for four years. As you already identified, an immediate move is not sustainable for a number of reasons. The fact, however, that the milestone is four years rather than 15 years puts a different perspective on my financial circumstances. So while my current role and remuneration fits the bill in terms of professional satisfaction (and I do love being part of this team), it does not provide a sufficient financial basis for a move in four years time. As such, from a personal perspective, something needs to change. I have been shouldering the weight of the world in order to identify a solution which not only maximises my potential financial return, but also provides you with access to me as a resource for training, assessment, BD, courseware development and assistance to you/Stu in business systems development. While initially I thought this was achievable from Esperance, clearly that was not workable. The model I was going to employ from Esperance is the model I want to employ from Canberra. The geographical proximity makes this far more achievable now! Effectively my desire is to move to a contract model (aka John and Kim). I have no desire (and certainly not the energy) to grow a business which is bigger than just me!! I don't want to be competing with Bayley, I want to remain a close part of the Bayley team (aka John and Kim). I have no interest or desire in doing a Debbie or becoming a Transformed. To me, the change is purely a means to an end rather than a corporate stepping stone and has been driven by a change in circumstances! My desire is a good daily rate and as high a utilisation as I can achieve by delivering training under a Bayley umbrella, undertaking assessments, developing courseware for Bayley, providing a layer of redundancy for Sandie, providing mentorship for Stu and undertaking consulting. My aim around consulting is to try and develop a PM/Procurement stream lead and mentoring/assessment service in DSD, once my PV is through. I see this as a great inside BD link for Bayley in not only DSD but the other Intelligence agencies ... I think I can sell them on up to 10 days/month. From a BD perspective, this is not a role we would have seriously entertained with me as GM. I do see it as a good Bayley revenue generator from the competency assessment perspective. At present, DSD have been doing the PM training and, because of their desire for workplace assessments, have a low completion rate. My view is that they would do the Bayley training, access the 'mentor/stream lead' (ie me) and then I would then assess them when they are ready (path of least resistance for them and Bayley sees completion rate and revenue). Every one wins! Obviously from a personal financial perspective (day rate, business tax etc), I would be better off doing the consultancy under my own banner (as John did with his DMO work) but everything else under a Bayley banner. That however, is only one perspective. I would be keen to explore the concept with you and look at the Bayley sub-contract option for the consultancy as well. Anyway, while I understand this is not your utopia, I can only reiterate my strong desire to continue to be part of the Bayley team!! As I said once a day for a while ... I am happy to be here'. I just need to change my model because of my personal circumstances and I do believe the Bayley business can benefit rather than suffer in my mind, a far better outcome for all than the one that was looking a certainty for a while! Thanks Nige Nigel Huckstep General Manager Bayley and Associates Ph: (02) 6282 5660 Fax: (02) 6282 5661 Mobile: 0413 677 553 Email: nigel.huckstep@bayleyteam.com.au Web: www.bayleyteam com au 119 The All About Me email constituted a radical change in Mr Huckstep's plans as notified to Ms Bayley. 120 On 16 September 2008, Ms Bayley sent an email to Mr Huckstep with a copy to her husband. The subject designated at the head of that email was "About You". The text of the email was as follows: Can we book in for a followup conversation about your future arrangements after the audit please. Either Thursday 25 or Friday 26 Sep would suit me best, or else Monday 29th. We need to arrange an appropriate orderly departure date allowing for proper hand overs of issues you are handling including the BCM roll out the client file and project task sheet creation, hand over of clients and related briefings etc. We also need to finalise your future contractor arrangements. There are also many other loose ends to tie up administratively such as phone, car lease, final payouts etc. As we were willing to wait several months last year to allow you to finish in a professional way at Apis, I am now requesting the same courtesy to allow for a fair finish process too. Realistically, I would think that we need 4-6 weeks from agreed departure date to avoid problems for us all. That would give you a rough departure time of early-mid November. My strong preference however, is that you would do for us what you did for Apis, which is to see out the year until the end of November or even mid-December, then take your leave and start new arrangements in calendar 2009. Under the circumstances, I think this is a pretty reasonable request. Can you let me know your availability to go over the arrangements please? Thanks Ruth Ruth Bayley 121 As a result of Ms Bayley's email, a meeting was arranged for 3.00 pm on 2 October 2008. 122 In the meantime, Mr Huckstep had already taken steps to get his new business established. 123 On 14 September 2008, Mr Huckstep wrote to his accountant instructing him to establish a new company, to be called "DBR Australia" and to do so "… relatively quickly as I need to put in a proposal". This reference was clearly a reference to a business proposal to be submitted on behalf of DBR. His accountant obviously acted very quickly because DBR was, as I have already noted, incorporated on 18 September 2008. 124 Prior to 14 September 2008, Mr Huckstep had begun negotiations with Lee Walton, an officer of the DSD, with the object of securing work from the DSD for himself and his new company, DBR. 125 By no later than 23 September 2008, Mr Huckstep had begun assisting an organisation called nCompass, a competitor of B&A, in the preparation of its tender to be placed on a panel kept by the Australian Public Service Commission (APSC). He used his email account at B&A for this purpose. He continued to act for nCompass on this tender throughout November 2008 right up to the date that nCompass' tender was lodged with APSC on 24 November 2008. 126 Counsel appearing for B&A made much of this incident. It was submitted on behalf of B&A that Mr Huckstep had not mentioned his work for nCompass in his affidavit but nonetheless had tried to justify his conduct by asserting that he had disclosed his activities on behalf of nCompass to Ms Bayley in September/October 2008 and also to Mr Jenkins. The first time that he made assertions to this effect was during his cross-examination at the hearing. Ms Bayley denied that Mr Huckstep had ever disclosed to her that he was acting in the interests of nCompass in the period from September to November 2008 in relation to its tender to the APSC. Mr Jenkins was not called as a witness with the consequence that there was no corroborative evidence from Mr Jenkins on the topic. 127 By 23 September 2008, relations between Ms Bayley and Mr Huckstep were, I find, somewhat tense. Ms Bayley was bitterly disappointed at Mr Huckstep's decision to leave the employ of B&A, particularly after being employed for such a short time. She was prepared to look at an ongoing relationship but was obviously somewhat wary as to the form that that relationship might take. In my judgment, it beggars belief that, in those circumstances, Mr Huckstep would have informed Ms Bayley of his actions involving nCompass. Even more incredible is the notion that, Ms Bayley having been informed of this conduct, she simply went along with it. My firm impression of Ms Bayley was that she is a tough businesswoman who would not have taken kindly to Mr Huckstep assisting a competitor of B&A in this way shortly before he was due to leave the employment of B&A. The assertion made by Mr Huckstep that he informed Ms Bayley of his activities involving nCompass and that she approved of them is one example of several occasions in the evidence when he accepted that he had engaged in particular conduct but asserted that either Ms Bayley or Mr Jenkins, or both, had given him permission to do so. I do not accept these assertions made by Mr Huckstep. He did not give evidence-in-chief to the effect that he had had permission to engage in the activities for which he is now criticised and only resorted to such assertions when challenged in cross-examination as to the propriety of his doing so. He did not call Mr Jenkins as a witness in his case to corroborate any of these assertions that Mr Jenkins had approved his actions. 128 I reject Mr Huckstep's assertions to the effect that Ms Bayley was informed of his activities involving nCompass in the period from September to November 2008 and that, either expressly or implicitly, she had approved of them. 129 On 25 September 2008, Mr Huckstep sent an email to a web designer commissioning design work for DBR. In that email, he said: Effectively, I am wanting to trickle into the market throughout October/November with some proposals targeting some part-time stuff in December. The main aim will be to be up and running and heading to cash flow positive in Jan/Feb 09. While the ideal is to have a logo for the proposals I send in Oct/Nov, the prospective clients know me personally, so it is not a show-stopper. I am still an employee of Bayley and Associates until December 08 so have some buffer if needed. From 1 Oct (waiting until next week purely for accounting ease), I will be establishing domain names, email addresses, PO boxes etc. I have the company structure, ACN and ABN as of yesterday! 130 This email is clear evidence that Mr Huckstep intended to put forward proposals on behalf of DBR and himself in October, November and December 2008, even whilst still employed by B&A.

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.

Mr Huckstep's Misconduct is Discovered 171 In the afternoon of 10 March 2010, Anna Mongan (Ms Mongan), the administration and finance manager of B&A, drew Ms Bayley's attention to the unusually high cost of services which appeared on Mr Jenkins' B&A mobile telephone account and his wireless broadband account for the period 24 January 2010 to 23 February 2010. 172 Ms Bayley looked at these accounts. On or about 18 March 2010, she requested her husband to conduct an investigation into Mr Jenkins' use of B&A's IT resources. Mr Bayley conducted an investigation as requested and produced a report entitled "IT Anomaly Investigation Report" dated 22 March 2010. It is not necessary to refer to this report in detail. 173 At about the same time, Mr Bayley provided Ms Bayley with access to all electronic records stored by Mr Jenkins on the B&A server and to Mr Jenkins' B&A email account. This area of the server and the email account were password protected and could only be accessed by Mr Jenkins or Mr Bayley in his role as System Administrator. 174 The investigation into Mr Jenkins' use of B&A's IT resources led to further investigation into the conduct of Mr Huckstep and DBR. Mr Bayley restored a backup copy of Mr Huckstep's email account covering the period when he was employed by B&A. Ms Bayley examined that copy. It was apparent to her at that time that, from at least August 2008, Mr Huckstep had deceived her and had improperly copied and wrongfully removed B&A's library of courseware. 175 It was these circumstances that led to the commencement of the Supreme Court proceeding against Mr Jenkins and others on 23 March 2010 and the termination of Mr Jenkins' employment on 25 March 2010. 176 B&A has established to my satisfaction that Mr Huckstep and DBR have exploited Mr Huckstep's TSPV with the DSD in order to secure contracts with the DSD which could only be awarded to an organisation which had an appropriately qualified person holding a TSPV. 177 It appears that, after 5 December 2008, B&A provided to DBR both B&A's training materials and B&A's assessment paperwork which was in use from time to time. Ms Bayley said that this was done for two purposes: The first was to ensure that any training courses delivered by DBR and Mr Huckstep were delivered with B&A's training manuals in order to meet RTO registration standards. The second was to ensure that the competency assessments were recorded using B&A's assessment paperwork in order to comply with RTO registration standards. B&A also provides to auspicing partners on startup a CD which includes other materials. 178 All of the material supplied by B&A to auspicing partners are confidential to B&A and are to be used only for the purposes of the auspicing agreement.

Mr Huckstep's and DBR's Use of B&A's Confidential Materials 179 In her first affidavit, Ms Bayley descended into a significant amount of detail to demonstrate that Mr Huckstep and DBR had used B&A's confidential materials to develop a set of courseware for use by DBR based upon those materials and also to secure and carry out work. 180 The detailed evidence given by Ms Bayley describing the conduct of Mr Huckstep and DBR which is relied upon by B&A as constituting Mr Huckstep's and DBR's breaches of duty is set out at pars 285 and 934 of Ms Bayley's first affidavit (pp 49-148). The subject matter covered by this evidence is revealed by the index to it provided at the beginning of Ms Bayley's first affidavit. I have attached as Attachment A to these Reasons a copy of those pages of that index which specify the contents of Parts 20 to 39 of Ms Bayley's first affidavit in general terms. 181 In his affidavit, Mr Huckstep endeavoured to give some general evidence about the provenance of certain courseware developed at Apis Consulting while he was employed by that corporation. He also endeavoured, in some instances, to link some of the Apis Consulting courseware to DBR courseware in use in 2009 and in 2010. Much of that evidence was rejected. But, prior to entering the witness box, Mr Huckstep had not brought forward any evidence which had the effect of establishing that the evidence given by Ms Bayley at pars 285 to 934 of her first affidavit was incorrect or unreliable. That evidence given by Ms Bayley demonstrated in a systematic and detailed way that, on many occasions since September 2008, Mr Huckstep and DBR had used B&A's courseware, confidential business documentation and other confidential information and documentation without the authority of or permission from B&A. That evidence also demonstrated that business potentially available to B&A was diverted by Mr Huckstep from B&A to DBR. It also showed that the TSPV which Mr Huckstep was given on 12 November 2008 was thereafter used by him to obtain business from the DSD for DBR and Apis Group. 182 Counsel for Mr Huckstep and DBR was given leave to ask some questions-in-chief of Mr Huckstep when he entered the witness box. Mr Huckstep was taken to various documents contained in the exhibits to his affidavit and asked to confirm that they were Apis Consulting documents. The questions and answers in this part of Mr Huckstep's oral evidence-in-chief did not go beyond this introductory material. 183 In the end, the only attempt which was made on behalf of Mr Huckstep and DBR to adduce evidence to the effect that DBR courseware had, in fact, not been copied or substantially copied from B&A courseware as alleged by B&A and made good by Ms Bayley in her first affidavit concerned the DBR document which was tendered in evidence at Tab 11 of Vol 24 of the exhibits to Ms Bayley's first affidavit (Doc 24/11). That document is entitled "Diploma of Project Management Handbook" and comprises 263 pages. In his oral evidence-in-chief, Mr Huckstep accepted that Doc 24/11 was used by DBR but asserted that it had been "… developed or re-used" by DBR. He asserted that DBR had begun to use the document in early 2010. He said that the particular version of this document which was tendered in evidence had been created in and around early 2010. He asserted that he personally had created the document. When asked how he went about creating the document, at transcript 99 l 47 to transcript 100 l 4, Mr Huckstep said: This document was created, your Honour, from existing Diploma of Project Management handbook that was originally badged Apis Consulting Group. It was also then badged with combined badges, Apis Consulting Group and Bayley and Associates. It has also been badged with DBR Australia badge. Fundamentally, it's exactly the same document. 184 Mr Huckstep then testified that Doc 24/11 had been developed from a document which came into evidence as Doc NH50. That document appears to have been prepared in 2004 and is co-badged with the logos of Apis Consulting and B&A and bears a copyright claim by each of those organisations. Mr Huckstep then said that Doc NH50 morphed into an Apis Consulting manual entitled "Project Management Skills Competency Training Manual Version 1.1" provided to the Commonwealth Department of Immigration and Multicultural and Indigenous Affairs in 2005. He said that this latter document is the document tendered in evidence as Doc NH38 in the exhibits to his affidavit (Doc NH38). He claimed that Doc NH38 was identical to Doc NH50. 185 Ultimately, in the course of his oral evidence-in-chief, Mr Huckstep claimed that Doc 24/11 was the same as Doc NH38 with changes of badging and only minor amendments. He also claimed that Doc NH38 was the same as Doc NH50. 186 Mr Huckstep also claimed (at transcript 102 l 13) that he created Doc NH38 while working at Apis Consulting. 187 The thrust of the oral evidence-in-chief given by Mr Huckstep was that Doc 24/11 was really just a reproduction of Doc NH38 which itself was a reproduction of Doc NH50 and that Doc 24/11 had not been based in any way upon any B&A courseware. 188 This evidence given by Mr Huckstep was the only serious attempt which he made in his evidence to attack the evidence given by Ms Bayley in great detail in her first affidavit to the effect that Mr Huckstep and DBR had reproduced B&A courseware or substantially reproduced B&A courseware and rebadged it as DBR courseware. Mr Huckstep's thesis was that he had not done this at all but had simply reproduced Apis Consulting courseware which he himself had created. He failed to make good this thesis. 189 At transcript 145 to transcript 199, Mr Huckstep was cross-examined at length on the provenance of Doc 24/11. At the conclusion of that cross-examination, it was quite clear that Doc 24/11 had been copied from a B&A document which is found at Tab 5 of Vol 23 of the exhibits to Ms Bayley's first affidavit (Doc 23/5) and that this latter document had its provenance in Doc NH50. The cross-examination of Mr Huckstep also established that another DBR document which is found at Tab 1 of Vol 39 of Ms Bayley's exhibits was the immediately prior iteration to the DBR document which is Doc 24/11 and was also copied from B&A's Doc 23/5. 190 During the course of this lengthy cross-examination, Mr Huckstep revealed himself to be a witness who prevaricated and who was prone to endeavouring to tailor his answers to suit the needs of his case. 191 The upshot of Mr Huckstep's approach to meeting the evidence given by Ms Bayley at pars 285-934 of her first affidavit was that the only serious challenge mounted by him was roundly defeated. No other serious challenge was made to the balance of the material in those paragraphs. The defeat of Mr Huckstep's sole challenge to that material coupled with his failure to attack the balance of that material left me in no doubt that he and DBR were guilty of all of the things of which they stood accused by Ms Bayley. 192 Counsel for B&A endeavoured to deal with the bulk of this material by producing several schedules which were attached to their Closing Written Submissions and which were refined somewhat in draft Short Minutes of Orders furnished to me during the course of oral submissions made by them on behalf of B&A.

B&A's Claims Referable to Mr Huckstep's and DRB's Post-Employment Conduct 193 These claims relate to B&A's allegations that it is entitled to recover compensation for Mr Huckstep's and DBR's post 5 December 2008 conduct because that conduct should be properly viewed as amounting to breaches of the fiduciary duties pleaded and relied upon by B&A in the ASC and the equitable and contractual duties of confidence pleaded and relied upon by B&A in the ASC. The particular facts and matters relied upon as constituting these alleged breaches are summarised at pars 168-187 of B&A's Closing Written Submissions. 194 The essence of this complaint is that both Mr Huckstep and DBR were prohibited from exploiting the TSPV for their own benefit because to do so would be a breach of the equitable obligations owed by them to B&A arising out of the circumstances in which the TSPV was bestowed upon Mr Huckstep. 195 The facts, matters and circumstances relied upon as constituting the alleged breaches in this area of the case may be summarised as follows. 196 As of November 2009, DBR, at the instigation of Mr Huckstep, was engaged by the DSD as a contractor to provide it with various project management consultancy services. In the same month, B&A delivered Project Management Methodology Training to the DSD. Mr Huckstep delivered some of this training on behalf of B&A pursuant to DBR's service agreement with B&A. 197 In late March 2010, after Refshauge J granted interlocutory injunctive relief to B&A, Mr Huckstep took steps to steer the DSD away from B&A as the preferred trainer for Project Management Methodology. At that time, he told Mr Nutt of Apis Group that he would use his influence with the DSD to have the work sent to Apis Group. In cross-examination, Mr Huckstep agreed that he did, in fact, use his influence to steer work away from B&A in the direction of Apis Group. 198 On 6 April 2010, Mr Huckstep prepared a draft proposal for Apis Group to submit to the DSD using his knowledge of the workings of the DSD. The very same proposal was received by Mr Huckstep, in his capacity as a contractor to the DSD. He took steps to influence the DSD to accept the proposal advanced by Apis Group. 199 On 12 April 2010, the DSD awarded the first of later several Purchase Order (PO) contracts to Apis Group to provide project management methodology services to the DSD. Mr Huckstep admitted in cross-examination using his influence to have these contracts awarded to Apis Group rather than to B&A. 200 On 19 April 2010, Mr Huckstep sent B&A's training material from his Department of Defence email account to Mr Jenkins' email account at Apis Group. This was for the purpose of re-badging that material for use at the DSD by Apis Group for project management methodology training. 201 On 29 April 2010, Mr Huckstep, acting as the DSD representative for this purpose, involved himself in the DSD's decision concerning contracts ultimately awarded to Apis Group by recommending the first of later several value increases of PO contracts be awarded to Apis Group. 202 On dates in May and June 2010, Mr Huckstep, acting as a contractor to Apis Group, delivered project management methodology training to employees of the DSD under the PO contract which had been awarded to Apis Group. DBR received a fee for this service from Apis Group. This training was conducted using the rebadged B&A material which Mr Huckstep had sent to Mr Jenkins at Apis Group on 19 April 2010. 203 In the period from July 2010 to January 2011, Mr Huckstep, in his capacity as a representative or contractor of the DSD, received and recommended further proposals from Apis Group for additional project management methodology training services. Apis Group was subsequently awarded contracts for some of these services. 204 The DSD's decision to sole-source project management methodology work to Apis Group from early 2010 onwards was brought about, in large part, by the influence of Mr Huckstep using his TSPV. That decision had the effect of precluding B&A from submitting any proposals for this work. In 2008 and 2009, B&A had performed such work for the DSD. Accordingly, B&A lost the opportunity to continue working for the DSD in these areas. 205 At par 186 of its Closing Written Submissions, B&A made the following submission: Throughout this sequence of events [referring to the summary of events which I have set out at [193]-[204] above] Huckstep continued to use the benefit of incumbency as a DSD contractor, afforded to him by his TSPV, which he obtained while he was B&A's employee. He was in a position to, and did, influence DSD's decisions in relation to awarding future work opportunities at DSD so that these were awarded to Apis to the exclusion of B&A. Huckstep received a fee from Apis for performing some of the contracts he influenced DSD to award to Apis from 2010 onwards.

B&A's Claims in Respect of the Alleged Breaches of the Auspicing Agreement 206 In September 2009, Mr Huckstep received a curriculum vitae from Mr Jenkins. In that document, Mr Jenkins described himself as a "Principal Consultant" to DBR. Mr Huckstep attempted to diminish the significance of the transmission of a document recording these matters but his evidence was impossible to accept. 207 In December 2009, Mr Huckstep requested that Mr Jenkins carry out an AIPM assessment of Mr Michael McEvoy. In March 2010, Mr Huckstep revealed to a potential financier that Mr Jenkins had been retained on a subcontract basis. 208 It is clear that, during the course of Mr Jenkins' employment with B&A, Mr Huckstep was using him, in effect, to carry out work on behalf of DBR. 209 For all the reasons which I have discussed at [82]-[205] above, it is quite clear that, during the period from late 2009 to mid-2011, DBR utilised B&A's confidential courseware and other training materials.

The Credit of Mr Huckstep 210 B&A made a separate Written Submission attacking the credit of Mr Huckstep. In that Submission, B&A made the overall submission that, wherever Mr Huckstep's evidence conflicted with evidence given by Ms Bayley, the evidence of Ms Bayley should be preferred. 211 I have already accepted that this is a proper approach in the present case. 212 In its Written Submission, B&A went on to submit that Mr Huckstep gave: (a) False evidence; (b) Tailored evidence to suit his case; and (c) Revised evidence when it became clear to him that his earlier evidence could not withstand scrutiny in light of documentary evidence put before him. 213 B&A adopted the approach of giving an example of each of the conclusions which it urged upon the Court concerning the evidence of Mr Huckstep. 214 As to alleged false evidence, B&A submitted that, when Mr Huckstep asserted, as he did, that the DBR website was not up and running until December 2008 or January 2009, this evidence was deliberately false. B&A submitted that, when caught out, Mr Huckstep accepted that this was so. At transcript 239 ll 1-2, Mr Huckstep agreed with the proposition that he had, in fact, established the DBR website as early as 26 October 2008. 215 As far as B&A's submissions concerning tailored evidence was concerned, it relied upon Mr Huckstep's evidence concerning the events of 2 December 2008. 216 At par 49 of his affidavit, Mr Huckstep said that, on 2 December 2008, he emailed to his DBR email account the full range of B&A documentation templates for use on B&A work, in the knowledge that DBR was an approved auspicing partner and that the paperwork was pending. He claimed that he was "within his rights" to send that documentation to himself at the DBR email account address for that reason. He also asserted that Mr Jenkins had given him permission to do this, in any event. At par 50 of his affidavit, he said that Mr Jenkins had given him that authority "on about 2 December 2008". 217 At transcript 182 ll 44-45, Mr Huckstep was asked what he had meant by "about" in the evidence which he gave in par 50 of his affidavit. His answer was: In a window of time of - it could have been within a month of that period. 218 Over the ensuing pages (transcript 183-transcript 187), Senior Counsel for B&A persistently probed Mr Huckstep on the question of when it was that the so-called "authorisations" to the removal of B&A confidential documentation and other material were given to him by Mr Jenkins. The answers given by Mr Huckstep at these pages of the transcript are unedifying, to say the least. I have the very firm impression that he had absolutely no recollection of any particular conversation where such authority was given. I formed the view that he had fabricated his evidence that Mr Jenkins had given such authorisation in order to justify taking B&A's confidential material in circumstances where he well knew that he had no entitlement or right to do so. 219 The submission made on behalf of B&A in respect of tailored evidence was that, by the time Mr Huckstep came to give evidence at the hearing, he fully appreciated that he had also emailed to himself on many occasions in October and November 2008 other confidential material which was the property of B&A. He was, therefore, undoubtedly endeavouring to place Mr Jenkins' authorisations in a time frame which permitted him to argue that Mr Jenkins had authorised the removal of this material prior to its removal. 220 As far as revised evidence was concerned, B&A relied upon the whole sorry incident concerning the Diploma of Project Management Handbook (as to which see [183]-[192] above). As submitted by Senior Counsel for B&A, he altered the evidence which he gave in respect of the provenance of Doc 24/11 from having its provenance in Doc NH50 then Doc NH38 to a position where he did not recall precisely the provenance of Doc 24/11. 221 B&A also submitted that I should make an express finding that Mr Jenkins never authorised Mr Huckstep to remove confidential material belonging to B&A. In support of that submission, B&A relied upon the principles set out in Jones v Dunkel (1959) 101 CLR 298 (Jones v Dunkel). It is true that Mr Jenkins was not called as a witness by Mr Huckstep and DBR. It is also true that he should probably now be regarded as in their camp. However, I do not think that I need to have resort to Jones v Dunkel. I am not at all satisfied on the evidence of Mr Huckstep that Mr Jenkins ever purported to authorise the removal of B&A's confidential material. In any event, he would have had no authority to do so as it would have been a clear breach of his own employment contract with B&A. 222 The submissions made by B&A directed to Mr Huckstep's credit are sound. Taken with other findings which I have made concerning his credit, they constitute a strong foundation for my ultimate conclusion that Mr Huckstep's evidence should not be accepted wherever it conflicted with that of Ms Bayley and should, in any event, be treated with caution unless corroborated by other acceptable evidence.

Breach of Mr Huckstep's AWA 223 In light of the findings of fact which I have made in respect of Mr Huckstep's conduct in 2008 in the period after he gave notice to Ms Bayley, it is clear beyond argument that Mr Huckstep breached cl 3 of his AWA and also the common law duty of fidelity which he owed to B&A. He did so by: (a) Establishing and carrying on business through his alter ego DBR in competition with B&A; (b) Secretly opening negotiations with the DSD; (c) Stealing B&A's confidential business documents, client information and courseware and using same to the benefit of DBR; and (d) Diverting clients and their business away from B&A to DBR. 224 B&A is entitled to contractual damages for these breaches. 225 His conduct in the latter half of 2008 in removing and then using B&A's confidential information was also a breach of cl 21 of his AWA. 226 Although it probably does not matter very much, I am of the view that the express contractual obligation imposed upon Mr Huckstep by cl 21 continued even after the termination of his employment. The reason that I think that this is so probably does not matter very much. Nonetheless, to my mind, Mr Huckstep was also subject to an equitable duty of confidence in respect of B&A's confidential information which duty he also breached. 227 In addition, the same conduct constituted breaches of cl 22 of Mr Huckstep's AWA. 228 In the second paragraph of cl 22 and the three paragraphs which follow next to the dot points within that clause, the parties agreed that Mr Huckstep was obliged to work in the best interests of B&A and to avoid conflicts of interest. He failed to honour that obligation when he behaved as he did in the latter half of 2008.

Fiduciary Duty 229 Mr Huckstep and DBR put in issue the question of whether Mr Huckstep owed any fiduciary duties to B&A. Counsel for those parties submitted that the relationship between B&A and Mr Huckstep was fully regulated by Mr Huckstep's AWA and there was no room for the superimposition of any fiduciary duty. 230 Employer/employee relationships fall within the category of accepted fiduciary relationships. Courts have repeatedly said that the relationship is "fiduciary" in nature. For example, Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 (Hospital Products) at 96-97 said: The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations (cf. Phipps v. Boardman ([1967] 2 A.C. 46, at p.127), viz., trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions "for", "on behalf of', and "in the interests of' signify that the fiduciary acts in a "representative" character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal. 231 However, while it seems generally accepted that senior employees with managerial responsibilities will owe fiduciary duties, it is also generally accepted that the same cannot be said of all employees. 232 In my judgment, the question is one of degree. Matters relevant to determining whether such a duty exists in any given employer/employee relationship include the following: How much latitude is the employee afforded by the employer and how great is the employer's vulnerability to the potential misuse of the position of power granted to the employee? Another way of looking at the matter is to regard a fiduciary duty as being imposed on the employer/employee relationship if the nature of that relationship demands a standard of loyalty exceeding the duty of fidelity prescribed by the relevant employment contract. 233 In Woolworths Ltd v Olson (2004) 184 FLR 121 (Woolworths v Olson) at 185 [212], Einstein J said: Fiduciary duties - when, to what extent and why may an employee owe fiduciary obligations to his/her employer The parties have taken the court to careful analyses of the manner in which the established principles treat with whether, and if so when, and to what extent, and why, an employee may owe fiduciary obligations to his/her employer. That analysis makes the points that: • fiduciary duties arise not as result of the mere fact that there is an employment relationship, but rather from the fact that within a particular contractual relationship there are specific contractual obligations which the employee has undertaken which have placed him/her in a situation where equity imposes fiduciary duties in addition to the contractual obligations • an implied contractual term is not to be equated with a fiduciary obligation, • the critical feature of fiduciary relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect in a legal or practical sense the interests of that other person: [Concut Pty Limited v Worrell (2000) 176 ALR 693 at [17] per Gleeson CJ, Gaudron and Gummow JJ; Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 at [70] per McHugh, Gummow, Hayne and Callinan JJ] • it is necessary to consider with precision the precise activity agreed to be undertaken by a particular employee and to ask if that employee had agreed to perform that activity solely in the interests of the employer to the exclusion of his/her own interests. 234 I find his Honour's exposition of the relevant indicators quite helpful in determining the question raised in this case. 235 To similar effect are the observations of Elias J made at 249 of Nottingham University v Fishel [2000] I.C.R. 1462 at 1493, where his Lordship said: Accordingly, in analysing the employment cases in this field, care must be taken not automatically to equate the duties of good faith and loyalty, or trust and confidence, with fiduciary obligations. Very often in such cases the court has simply been concerned with the question whether the employee's conduct has been such as to justify summary dismissal, and there has been no need to decide whether the duties infringed, properly analysed, are contractual or fiduciary obligations. As a consequence, the two are sometimes wrongly treated as identical: see eg Neary v Dean of Westminster [1999] IRLR 288 at 290, where the mutual duty of trust and confidence was described as constituting a "fiduciary relationship". Accordingly, in determining whether a fiduciary relationship arises in the context of an employment relationship, it is necessary to identify with care the particular duties undertaken by the employee, and to ask whether in all the circumstances he has placed himself in a position where he must act solely in the interests of his employer. It is only once those duties have been identified that it is possible to determine whether any fiduciary duty has been breached, as Lord Upjohn commented in Phipps v Boardman [1967] 2 AC 46 at 127: "Having defined the scope of [the] duties one must see whether he has committed some breach thereof and by placing himself within the scope and ambit of those duties in a position where his duty and interest may possibly conflict. It is only at this stage that any question of accountability arises." It follows that fiduciary duties may be engaged in respect of only part of the employment relationship, as was recognised by Lord Wilberforce, giving judgment for the Privy Council in New Zealand Netherlands Society v Kuys [1973] 1 WLR 1126 at 1130: "A person ... may be in a fiduciary position quoad a part of his activities but not quoad other parts: each transaction, or group of transactions, must be looked at." 236 Of course, the fiduciary relationship must accommodate itself to the terms of the employment contract so that it is consistent with and conforms to those terms. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction (per Mason J in Hospital Products at 96). 237 A finding that a particular relationship is fiduciary in character does not necessarily, set the metes and bounds of the content of the fiduciary obligation. It is always necessary to analyse the circumstances of the particular case in order to arrive at the specific ascertainment of the particular obligations owed and thus what acts or omissions would amount to a breach of those obligations. 238 In the present case, Mr Huckstep occupied the position of General Manager of B&A. The only person within B&A who was senior to him was Ms Bayley herself. She, of course, was the Managing Director and one of only two directors. She was a co-owner of the company and thus the business. Mr Huckstep was, therefore, the most senior employee of B&A apart from Ms Bayley. His job description (which I have extracted in full at [79] above) makes clear that he had significant responsibility for managing both the staff and the business of B&A and, as part of being rewarded with that responsibility, had significant access to B&A's confidential information, business plans and facilities. He was virtually in the position of being a third director. Ms Bayley trusted him and had great confidence in his ability. B&A was very vulnerable to any breach by Mr Huckstep of his AWA and of his common law duty of fidelity. He was in a very significant managerial position. 239 In my judgment, these factors inevitably lead to the conclusion that Mr Huckstep's relationship with B&A was fiduciary in nature. In my judgment, he owed to B&A the fiduciary duties pleaded and relied upon by B&A in par 7 of the ASC. 240 I find that Mr Huckstep breached the fiduciary duties which he owed to B&A by engaging in the conduct which I have already held to be a breach of his AWA. 241 B&A also relied upon the existence of these fiduciary duties as the foundation for its claims made in respect of the conduct of Mr Huckstep and DBR in the period after the cessation of Mr Huckstep's employment with B&A. I shall deal with that contention later in these Reasons. 242 For present purposes, however, the only significance of a finding that Mr Huckstep owed fiduciary duties to B&A is that the relief which might be granted to B&A is more flexible. B&A submitted that it was entitled to equitable compensation or, at its election, an account of profits in respect of the alleged breaches of fiduciary duty. This is correct. It has not yet elected which remedy it will pursue in respect of these breaches. Nor, at this stage, has there been any real consideration of the extent to which any equitable compensation would duplicate or overlap with the contractual damages to which B&A is entitled for the breaches of Mr Huckstep's AWA which I have found.

Breaches of Equitable Obligations of Confidence 243 I have no doubt that B&A's courseware, business documents, client information and training materials were all confidential. They were sufficiently confidential to attract obligations of confidence in equity irrespective of the terms of Mr Huckstep's AWA. These materials were significant to B&A, had been kept confidential as far as was reasonably possible in the conduct of its business and were the product of a significant investment of time and money over many years. These materials were not available to the public and were only distributed to auspicing partners, clients and trainees upon the strict understanding that they were confidential business materials belonging to B&A. 244 In Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak (2006) 67 NSWLR 569 at 601 [155], Campbell J set out the classic formulation of the requirements for an equitable obligation of confidence in the following terms: Equitable obligation of confidence? If I were wrong in concluding that Dr Zahedi was bound by that implied contractual obligation, Dr Zahedi would be bound by an obligation arising in equity's exclusive jurisdiction relating to the use which could be made of patient names, addresses and telephone numbers. I adopt the formulation of the requirements for an equitable obligation of confidence advanced by Gummow J in Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 at 87: "… (i) the plaintiff must be able to identify with specificity, and not merely in global terms, that which is said to be the information in question, and must be able to show that; (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge); (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence, and (iv) there is actual or threatened misuse of that information, without the consent of the plaintiff." 245 As I have already mentioned at [145]-[164] above, Ms Bayley gave detailed evidence as to the documents which Mr Huckstep sent from his B&A email account to his DBR email account in the last few months of 2008. Schedules 2 and 3 to B&A's Closing Written Submissions listed those documents by reference to Ms Bayley's evidence. 246 I find that the taking of these documents and the use of them by Mr Huckstep both during the course of his employment with B&A and also after the cessation of that employment was a breach of the equitable duty of confidence which he owed to B&A. I find that DBR participated in Mr Huckstep's breach of duty in this regard. 247 In line with the requirements spelled out in the authorities (of which Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak is one), I think that I should require B&A to formulate appropriate orders in respect of this breach of duty which provide, probably by way of schedules, a complete listing of those documents which were emailed by Mr Huckstep to his DBR email address in breach of the duty which I have found he owed to B&A. 248 In addition, B&A is confronted with electing between equitable compensation or an account of profits in respect of these breaches of duty. Also, it appears that there will be substantial overlap between the financial consequences of these breaches and the financial consequences of the breaches of Mr Huckstep's AWA and breaches of fiduciary duty which I have already found.

Diversion of the TSPV Opportunity 249 It is B&A's case that it is entitled to recover from Mr Huckstep and DBR equitable compensation or, at its election, an account of profits in respect of Mr Huckstep's and DBR's activities post 12 November 2008 in exploiting the TSPV. 250 It was submitted on behalf of B&A that Mr Huckstep could not acquire for himself the opportunities presented by his holding the TSPV which he acquired because those opportunities came to him in the course of the discharge of his duties as a senior employee of B&A. In support of this submission, B&A relied upon expressions used in a number of cases. The touchstone was expressed in the following terms in those cases: In the course of a transaction that he was carrying out on behalf of [B&A] (Furs Ltd v Tomkies (1936) 54 CLR 583 at 598; Canadian Aero Services Ltd v O'Malley [1974) SCR 592). In the course of the execution of his office (Peso Silver Mines Ltd v Cropper (1966) 58 DLR 2d 1 at 8). By use or by reason of his fiduciary position (Chan v Zacharia (1984) 154 CLR 178 at 199). In the course of and by utilisation of that position (Northern Rivers Finance Co Pty Ltd (In Liq) (1979) 4 ACLR 545 at 549). 251 B&A submitted that, whatever expression is used to articulate the relevant rule, the rule was both rigid and inexorable (Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443 at 452; and Parker v McKenna (1874) 10 Ch App 96 at 124). B&A submitted that liability to pay compensation or to give an account of profits arises from the mere fact that a profit is made or a benefit is received (Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 at 144-145). 252 It was also submitted by B&A that it does not matter that the person to whom the duty was owed suffered no detriment or was unwilling, unlikely or unable to obtain the benefit for themselves. A fiduciary must answer for his default according to his gain rather than his principal's loss. It was also submitted that a fiduciary cannot avoid liability on this account by resigning his fiduciary position in order to take up and pursue the opportunity for himself. The fiduciary obligation continues notwithstanding the resignation. 253 In the present case, Counsel for Mr Huckstep and DBR submitted that Ms Bayley, on behalf of B&A, had given an informed consent to Mr Huckstep pursuing and obtaining the relevant TSPV and to his utilising it as he saw fit after the cessation of his employment with B&A. B&A countered this submission by submitting that however one characterises Ms Bayley's approval given in early 2008 for Mr Huckstep to pursue an application for a TSPV, one could not possibly say that her approval constituted a fully informed consent. Counsel for Mr Huckstep and DBR then submitted that the question of the quality of the relevant consent needs to be assessed at the time when it was given which, in the present case, was early 2008, before Mr Huckstep had notified Ms Bayley that he intended to leave B&A's employ. 254 In Omnilab Media Pty Ltd v Digital Cinema Network Pty Ltd (2011) 285 ALR 63 at 90-[216]-[218], Jacobson J, sitting as a member of the Full Court, observed that the business opportunity rule articulated by Laskin J in Canadian Aero Service Ltd v O'Malley at 607 was a well-established principle in Australia. 255 The opportunity to obtain a TSPV from the DSD came to Mr Huckstep only because he was the General Manager of B&A and only because B&A was interested in pursuing business opportunities with the DSD. The whole idea originated with Mr Phipps who took it to Ms Bayley who then ultimately decided to entrust Mr Huckstep with the task of promoting B&A's business by securing the TSPV. In the language of the authorities, the TSPV was given to Mr Huckstep in the course of the execution of his office as General Manager of B&A. He was not entitled to exploit the TSPV for the benefit of himself, DBR or any other person while he was employed by B&A nor was he entitled to do so after the cessation of his employment. 256 B&A complains that Mr Huckstep used the TSPV to divert work to DBR and to Apis Group which ordinarily would have come to B&A. In the findings which I have made at [193]-[205] above, there is evidence to suggest that this was so. 257 At this stage of the proceeding, I am satisfied that there is a sufficient basis for ordering an inquiry as to equitable compensation or an inquiry as to an account of profits in respect of Mr Huckstep's wrongful exploitation of the TSPV. 258 As is the case with other causes of action relied upon by B&A, it will have to elect between equitable compensation or an account of profits.

Breaches by DBR of the Auspicing Agreement 259 These breaches may be characterised in two broad ways: First, breaches involving the solicitation of Mr Jenkins. Second, breaches involving the misuse of B&A's confidential information. 260 As to the former, I find that, by soliciting Mr Jenkins to leave B&A and by otherwise interfering with the due performance of his duties as an employee of B&A, DBR breached cl 2.1 of the Auspicing Agreement. 261 In due course, it will be entitled to an award of damages for breach of that contractual term. 262 In addition, DBR also breached its contractual obligations of confidentiality (as to which see cl 2.1(d) and cl 5.1). It is difficult to see, however, how those breaches will provide any additional financial compensation to B&A. True it is that this cause of action is available directly against DBR. But, in order to recover damages for breach of the relevant clauses, B&A will need to establish that it was the copies of the relevant confidential materials that were supplied to DBR pursuant to the Auspicing Agreement which were misused after December 2008 by DBR rather than the copies which Mr Huckstep had electronically transferred in the last few months of the period of his employment with B&A. 263 B&A made no attempt to approach the question of damages in the way that I have described. In any event, I suspect that it would ultimately prove to be an impossible task for B&A to establish the requisite causal connection between the alleged breach and any loss. 264 I do not think that the evidence goes so far as to enable me to conclude that the misuse of B&A's confidential information after December 2008 was a misuse effected by DBR in respect of the confidential materials furnished to it under the Auspicing Agreement. I therefore do not think that this breach should be the subject of any inquiry.

Breach of Copyright 265 Copyright is claimed by B&A in its confidential courseware and business documents. 266 At [45]-[58] above, I have recorded the evidence given by Ms Bayley as to the creation of these materials. 267 I have found that, as at September, October, November and December 2008, those materials were authored by Ms Bayley or employees of B&A under her supervision and control. 268 It is an infringement of a literary work protected by copyright to reproduce that work in a material form (s 31(1)(a)(i)) or to communicate the work to the public (s 31(1)(a)(iv)). 269 The duplication of a document in an electronic, digital or machine readable form, whether that duplication is into another such intangible form or otherwise, is a "reproduction" of that document within the meaning of s 31(1)(a)(i) of the Copyright Act (Woolworths Ltd v Olson at 215 [326]). 270 Here, Mr Huckstep electronically transmitted from his B&A email account to his DBR email account B&A's entire courseware library and other confidential business documents. It was also established that most of the documents were then reproduced by him in paper form and used by him and DBR in DBR's business activities. 271 The electronic transmission of these documents from one email account to another is a reproduction for the purposes of s 31(1)(a)(i) of the Copyright Act as is the creation of paper versions of the downloaded material. 272 I do not need to consider whether s 31(a)(iv) was also breached in the circumstances of this case. 273 Counsel for Mr Huckstep and DBR submitted that copyright did not subsist in B&A's confidential courseware and business documentation. 274 For reasons which I have already given, I reject that submission. 275 In the event that the Court found that B&A's confidential materials were protected by copyright, Mr Huckstep and DBR did not seriously challenge the proposition that the electronic transmission of these documents and subsequent creation of paper copies thereof constituted reproduction of them for the purposes of s 31(1)(a)(i) of the Copyright Act and thus amounted to an infringement of B&A's copyright for that reason. 276 Apart from the possibility of obtaining additional damages pursuant to s 115 of the Copyright Act, it is difficult to see that the consequences of these acts of reproduction insofar as B&A were concerned produced any loss for B&A which was different from the losses sought to be recovered by means of the other causes of action relied upon by B&A based upon the misuse of B&A's confidential information. In light of my findings, however, there will, of course, be a question of whether additional damages are appropriate in the circumstances of this case.

Relief 277 With the exception of the cause of action against DBR based upon the breach of cl 2.1(d) and cl 5.1 of the Auspicing Agreement constituted by the misuse of B&A's confidential information supplied under that agreement, B&A has succeeded in all of the claims which it made against Mr Huckstep and DBR. 278 The question of relief poses considerable difficulties. 279 One difficulty is that, insofar as it still has a right to elect to choose its remedy as between equitable or statutory compensation, on the one hand, and an account of profits, on the other hand, B&A has not yet made that election. I think that I should now require it to do so before making any orders giving effect to these Reasons for Judgment. 280 Another difficulty is that B&A has presented a number of lengthy schedules in which are listed those documents which are said to have been stolen or, in the case of the copyright claim, reproduced. On the last day of the hearing, it presented a set of draft Orders to which were attached various schedules. Some of those schedules did not sensibly relate to the schedules attached to B&A's Closing Written Submissions. 281 I think that it is essential that the orders which I make at this stage of the proceeding make clear, as far as is humanly possible, which documents are said to have been misappropriated in respect of each of the causes of action relied upon. It will then be a matter for the Court's consideration at the next stage of the proceeding as to whether there is substantial overlap between the claims based on each of the causes of action in respect of which B&A has succeeded and the relief to be granted as a result. 282 For these reasons, I propose to direct that, within twenty-one (21) days of the date of these Reasons for Judgment, B&A submit a draft set of Orders which give effect to these Reasons for Judgment. I will then allow time for Mr Huckstep and DBR to respond. 283 I should also indicate now that I would not be prepared to make declarations to the effect that Mr Huckstep's AWA and the Auspicing Agreement have been breached. I take the view that the remedy for such breaches is an award of damages, not a declaration plus an award of damages. It is clear from these Reasons for Judgment that I have now found that those contracts were breached. However, the question of damages to be awarded for such breaches is yet to be determined.

Conclusion 284 B&A has had substantial success in the proceeding to date. There is no reason why costs should not follow the event. I therefore propose, in due course, to make an order for costs in favour of B&A against both Mr Huckstep and DBR. I certify that the preceding two-hundred and eighty-four (284) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.