Broadband Solutions Pty Ltd v Ramirez

Federal Court of Australia|2024-08-30|Before: Thawley J

The respondent be restrained from using, accessing, disclosing, deleting or reproducing any: (a) Confidential Information belonging to the applicant; (b) Intellectual Property belonging to the applicant; and (c) documents, files or written materials, whether in hard copy or electronic form, in his possession, custody or control, concerning the business or financial affairs of the applicant, its clients, and employees, its trade secrets, information technology resources and protocols, customer lists, databases and interfaces operated by the applicant, system passwords to access any software, systems or encryptions used or operated or licensed by the applicant and any information obtained, accessed or acquired by the respondent from the applicant's records including its database for the applicant's Managed Services division during and after his employment with the applicant.
On and from 16 September 2024, the respondent be restrained for a period of six months and within the Geographic Area from, directly or indirectly, engaging, alone or jointly with or on behalf of anybody else in any capacity, carrying on, operating or being engaged, interested or employed in a business that competes with the division of the applicant in which the respondent worked during the last 12 months of his employment.
Reserve liberty to the respondent to apply in relation to Order 2 on 24 hours' notice with the intention that such liberty be exercised should the respondent wish to challenge Order 2 before that order comes into effect.
The respondent be restrained: (a) for the Restraint Period from, either directly or indirectly, approaching, soliciting or enticing away (or attempting to approach, solicit or entice away), any person or entity who was a client with whom the respondent, or personnel reporting to the respondent, had work-related dealings during the last 12 months of the respondent's employment; and (b) providing a service or services or products to any person or entity who was a client with whom the respondent dealt during the last 12 months of the respondent's employment, that are the same as or substantially similar to those provided by the applicant.

INTRODUCTION 1 The applicant, Broadband Solutions Pty Ltd is an internet service provider, being an IP network provider carrying internet and telephony traffic for government and private clients in Australia, and a provider of tailored voice and data services for businesses globally. 2 Broadband alleges that a former employee, Mr Andres Julian Hernandez Ramirez, has recently breached a number of clauses in his employment agreement and contravened s 183 of the Corporations Act 2001 (Cth). 3 The proceedings were commenced by originating application dated 23 August 2024, which included an application for interlocutory relief in the following form: Claim for interlocutory relief The Applicant also claims interlocutory relief. Procedural Interlocutory Orders 1. Upon the undertaking of the solicitor for the Applicant to pay any filing fees, leave be granted to the Applicant to file in Court: (a) this Originating Application dated 23 August 2024; (b) the affidavit of Mohsen (Sam) Bashiry sworn 23 August 2024; and (c) Exhibit MB-1, being an exhibit in support of the affidavit of Mohsen (Sam) Bashiry sworn 23 August 2024. 2. An order that the Originating Application dated 23 August 2024 be returnable and heard instanter as to the orders sought in paragraphs 1, 3, 4, 5, 6 & 7 (of the Procedural Interlocutory Orders). 3. An order that the time for service of the documents referred to in paragraph 1 above and a sealed copy of these orders be abridged to 5pm on 26 August 2024. 4. An order that service of the documents referred to in paragraph 1 above and a sealed copy of these orders be effected by serving: (a) Andres Julian Hernandez Ramirez: (i) via his email address at: ohernand51@me.com; and (ii) at his residential address at: 51 Excelsior Circuit, Mulgrave VIC 3170. 5. Stand over the Originating Application before the Duty Judge at 1 0am on 30 August 2024 for hearing of the interlocutory orders sought in paragraphs 8 to 15. 6. Costs of today reserved. 7. These orders be taken out forthwith. Interlocutory Orders 8. Upon Counsel for the Applicant giving the usual undertaking as to damages, order, until further order of the Court, that the Respondent be restrained from using, accessing, disclosing and reproducing any: (a) confidential information belonging to the Applicant; (b) Intellectual Property belonging to the Applicant; and (c) documents, files or written materials, whether in hard copy or electronic form, in his possession, custody or control concerning the business or financial affairs of the Applicant, its clients, and employees, its trade secrets, information technology resources and protocols, customer lists, databases and interfaces operated by the Applicant, system passwords to access any software, systems or encryptions used or operated or licensed by the Applicant and any information obtained, accessed or acquired by the Respondent from the Applicant's records including its database for the Applicant's Managed Services division during and after his employment with the Applicant. 9. Upon Counsel for the Applicant given the usual undertaking as to damages, an order that the Respondent be restrained from: (a) for the Restraint Period and within the Geographic Area from, directly or indirectly, engaging, alone or jointly with or on behalf of anybody else in any capacity, carrying on, operating or being engaged, interested or employed in a business that competes with the division of the Applicant in which the Respondent worked during the last 12 months of his employment; (b) for the Restraint Period from, either directly or indirectly, approaching, soliciting or enticing away (or attempting to approach, solicit or entice away), any person or entity who was a client with whom the Respondent, or personal reporting to the Respondent, had work-related dealings during the last 12 months of the Respondent's employment; and (c) providing a service or services or products to any person or entity who was a client with whom the Respondent dealt during the last 12 months of the Respondent's employment, that are the same as or substantially similar to those provided by the Applicant. 10. Upon counsel for the Applicant giving the usual undertaking as to damages, order the Respondent: (a) deliver up to the Applicant all documents, files or written materials, whether in hard copy or electronic form, in his possession, custody or control, which: i. were downloaded from , or otherwise accessed using, the Applicant's database for the Applicant's Managed Services division by the Respondent during and/or after his employment with the Applicant; and ii. contain information about the Applicant's business or customers which the Respondent acquired: A. during or as incidental to his employment with the Applicant; B. by reason of the Respondent accessing the Applicant's Broadband's database for the Applicant's Managed Services division during and/or after his employment with the Applicant. 11. Order that, the Respondent deliver up to Court: (a) all personal computers (whether desktop hard-drive and/or laptop) and other electronic devices, hard drives, external hard drivers, USBs and other electronic storage devices in his possession, custody or control for inspection by the Applicant's nominated forensic analyst; and (b) details of all addresses, accounts, login details, passwords and access credentials, in respect of each and every: i. device delivered up; ii. email account held, controlled or otherwise accessible by the Respondent; iii. electronic storage account (such as a "cloud" account or any like facility) held, controlled or otherwise accessible by the Respondent, for inspection by the Applicant's nominated forensic analyst. 12. Upon Counsel for the Applicant giving the usual undertaking as to damages, order that access be granted to a forensic computer/IT specialist of the Applicant's nomination to uplift from the Registry and inspect any documents, computers and/or devices produced by the Respondent in answer to order 10 and 11 above, for the purpose of that expert preparing a report for the Applicant as to the Respondent's use, disclosure of, or access to Confidential Information and/or Intellectual Property. 13. If any Confidential Information or Intellectual Property is found in any document, computer and/or device produced by the Respondent in answer to order 10 and 11 above, the Applicant (via its nominated IT specialist) is granted leave to transfer such material to a hard drive to be kept confidential and destroy such material from the Respondent's computers and/or devices. 14. Order that, the Respondent file and serve an affidavit identifying: (a) if he has used, accessed and/or otherwise disclosed to any party (individual or corporation) any of the matters referred to in paragraph 8 (a) - (c) of the Originating Application; (b) if he has transferred to any storage device and/or party (individual or corporation) any of the matters referred to in paragraph 8 (a) - (c) of the Originating Application; (c) the names of the individual(s) or corporation(s) that he has disclosed any of the matters referred to in paragraph 8 (a) - (c) of the Originating Application, and in doing so disclose particulars of, i. when and how he used, accessed or transferred any of the matters referred to in paragraph; ii. when and how (method) he disclosed to any party the matters referred to in paragraph 8 (a) - (c) above; iii. the basis upon which the Respondent retained any of the matters referred to in paragraph 8 (a) - (c) above; iv. each person to whom it or any of it has been provided or to whom any of the matters referred to in paragraph 8 (a) - (c) above has been communicated; v. the date, time and means of every communication referred to in the preceding paragraph; vi. the identity and location of every electronic device on which any such information has ever been stored; and vii. where any such information is currently stored or kept in any form. 15. Costs. 4 The application came before the duty judge on 23 August 2024. Various orders were made including for service of the originating application and an affidavit of Mr Bashiry sworn 23 August 2024. The claim for interlocutory relief was listed for hearing today. 5 The affidavit evidence read today established that the orders of 23 August 2024 have been complied with. I am satisfied that Mr Ramirez has been appropriately served with the relevant documents. Mr Ramirez did not appear at 10am. The matter was called three times outside of Court and, there being no appearance, the matter proceeded to hearing.

FACTUAL BACKGROUND 6 In 2022, Broadband established a Managed Services division, tasked with providing IT support for businesses that do not have IT staff. It provides these services both remotely and by client visits. 7 On 13 September 2022, Broadband employed Mr Ramirez as an IT Support Engineer to assist with establishing the Managed Services division. 8 In accepting his employment, Mr Ramirez signed an employment agreement which included clauses regarding the protection and use of confidential information and intellectual property, as well as setting out post-employment restrictions. 9 As a newly formed division, Managed Services had a total of 12 clients, managed by 5 staff, with all staff in the division involved in looking after these clients. 10 Mr Ramirez was one of two senior employees in the Managed Services division, having long-term experience providing managed IT services specialised in this area and helping to manage three other Broadband staff in the division based in Sri Lanka. 11 Mr Ramirez utilised Broadband's database for the Managed Services division (the System) during his employment. 12 For the purpose of this application for interlocutory relief, it may be accepted that: (1) the System is a repository of electronic data established before Mr Ramirez's employment, with information being continuously improved by employees of Broadband; (2) the System contains confidential and commercially sensitive information of Broadband and its clients, specifically containing details about each client and their IT set up; (3) this information was put together by Broadband following hours of research based on disclosure of sensitive materials by clients; and (4) Broadband's usage protocol for the System was conveyed to employees at their induction and set out that the information was only to be accessed on company devices, for security reasons, and on a need-to-know basis to perform tasks for the client. 13 On 20 May 2024, Mr Ramirez sent an email to the Director of Broadband, Mr Mohsen Bashiry notifying him that he was leaving his position. 14 On 30 May 2024, Mr Bashiry and Mr Ramirez discussed his departure, with Mr Ramirez stating he was taking a position closer to his home. 15 At 5:00pm on 31 May 2024, Mr Ramirez ceased his employment with Broadband. 16 On 9 July 2024, Mr Greg Ashmore, Operations Manager at Broadband, received an email from one of its clients, RT Edgar, a real estate agency in Victoria, advising that it intended to withdraw its IT services from Broadband effective 8 August 2024. The email was copied to a new provider named Unified IT. 17 On 10 and 11 July, Mr Ashmore had a discussion with Ms Justine Kantanis, who conveyed on behalf of RT Edgar that RT Edgar; (1) was disappointed Mr Ramirez had left; (2) wanted a more person to person relationship; (3) felt they were not getting the same level of support as at the beginning; (4) had recently met with a few different providers; and (5) would not be changing their decision to leave. 18 Upon hearing these concerns from RT Edgar, Broadband performed a search of the Activity Log for the System. This revealed that on 31 May 2024, Mr Ramirez had accessed the System, both before the end of his employment at 5:00pm on that day and late into the night. The Activity Log showed that Mr Ramirez has accessed 11 documents between 11:19 and 11:47pm, with five of the documents specific to RT Edgar and six documents applicable to RT Edgar but more general in nature. The log revealed that Mr Ramirez's credentials were used: (1) from 11:19pm - 11:20pm to view the document titled "Windows Home to Pro Upgrade" and then convert it to PDF; (2) at 11:20pm, to view the document titled "PC Migration (Standard); (3) from 11:34pm - 11:35pm, to view the document titled "RT Edgar Toorak - New User Setup" and then convert it to PDF; (4) from 11:35pm - 11:36pm, to view the document titled "RT Edgar Other Offices (Franchise) - New User Setup" and then convert it to PDF; (5) at 11:36pm, to view the document titled "How to Install Canon C5860 Upstairs Driver (manual) - Mac OS" and then convert it to PDF; (6) at 11:37pm, to view the document titled "Canon C5860 Upstairs - Tray selection issue on Mac OS (no tray 3 or 4)" and then share it; (7) from 11:37pm - 11:38pm, to view the document titled "RT Edgar Mac OS Build" and then convert it to PDF; (8) at 11:39pm, view the document titled "Ninja - Admin Tasks - cancelling scripts in Bulk"; (9) at 11:39pm, to view the document titled "PC Migration (Standard)"; (10) at 11:40pm, to view the document titled "Adding a new client to SentinelOne" and then convert it to PDF; (11) from 11:41 pm - 11:42pm, to view the document titled "How to create a Quote - Sales Process flow" and then convert it to PDF; and (12) at 11:47pm, to view the document titled "365-Authentication Methods Report" and then convert it to PDF. 19 These documents are relevant to existing IT issues for RT Edgar which were the focus of ongoing work by Broadband. This information was commercially sensitive as it would allow an individual or new service provider to provide continuity of service for RT Edgar. 20 The Activity Log also demonstrated that Mr Ramirez had accessed the documents by his own personal computer, rather than the company laptop which he had returned to Broadband at the conclusion of his employment earlier that day. 21 There is no apparent legitimate reason for Mr Ramirez to have accessed that information after he ceased employment with Broadband. 22 On 16 July 2024, Mr Bashiry telephoned Unified IT. He said he wanted to speak to Mr Ramirez about a personal matter and was transferred to another person. Mr Bashiry believes Mr Ramirez then answered the telephone. This belief was based on his recognition of Mr Ramirez's voice. 23 Broadband is concerned that Mr Ramirez may have retained further information from the company which is not visible on the Activity Log.

THE EMPLOYMENT AGREEMENT 24 The relevant sections of Mr Ramirez's employment agreement are as follows: 17. CONFIDENTIAL INFORMATION 17. 1 You must at all times (a) keep secret any Confidential Information, and not use, copy, or disclose Confidential Information, except to the extent that you are authorised to do. (b) ensure that all material on which confidential Information is recorded is secure and protected from any unauthorised use, disclosure, or access. (c) only use, copy, and disclose Confidential Information for the Company's benefit, and not in any way that may cause injury or loss to the Company; and (d) notify the Company if you become aware of any potential, unauthorised disclosure of Confidential Information. 17.2 In this Agreement, "Confidential Information" means any information acquired by you during or relating to your employment, whether or not marked as confidential, relating to: (a) the financial, accounting or business details of the Company (including any pricing lists or policies, balance sheets, and financial statements and reports). (b) the personal, legal, business, and financial details regarding the clients of the Company (including any contact details, lists and usual client preferences). (c) the agreements, contracts, and business arrangements of the Company (including this Agreement); and (d) know-how, trade secrets and intellectual property, and the strategic, marketing and advertising plans and strategies of the Company, but does not include information that falls within the public domain other than because of a breach of law. 17.3 In this clause, "Company" includes a Related Body Corporate and a Related Entity of the Company, as defined by the Corporations Act 2001 (Cth). 18. INTELLECTUAL PROPERTY 18.1 You agree: (a) Not to use, copy or retain any Intellectual Property other than as directed by the Company, (b) to assign to the Company all existing and future rights in any Intellectual Property created by you, (whether acting alone or jointly with others) arising out of or during your employment, or which at the time of its creation, relates to the Business or the business development activities of the Company. (c) that by virtue of this clause, all existing rights in Intellectual Property are vested in the Company and, on their creation, all future rights will vest in the company. (d) during and after the Employment, to do all things and execute all documents reasonably required by the Company to future assure the rights assigned under this Clause. (e) to wave your moral rights in relation to Company doing or failing to do all things to, or otherwise modifying, any Works made by you during your employment; and (f) on demand or otherwise at the end of your employment, return to the company all material on which Intellectual Property is recorded. 18. 2 In this Agreement: (a) "Intellectual Property" means all designs, patents, trademarks, Works, trade secrets, technical designs, formulae, patentable processes and articles, and includes: (i) all inventions, discoveries and novel designs, whether registrable as designs, patents or trademarks; and (ii) the entire copyright in all Works; and (b) "Works" has the meaning given in the Copyright Act 1968 (Cth). 19. POST-EMPLOYMENT RESTRICTIONS 19. 1 During your employment it is expected that you will acquire a detailed knowledge of the Business and methods of operation of the Company, will become known to and develop relationships with its clients, and will be privy to it Confidential information and Intellectual Property. Each of these is valuable part of the Business, which it is important that the Company is able to protect. 19.2 You accordingly agree that you will not, during the Restraint Period without the prior written consent of the Company, directly or indirectly on your own or any other person or entity's behalf in any material capacity (whether as employee, agent, officer, contractor, promoter, equity holder or beneficiary): (a) in the Geographic Area, be employed or be engaged by, or be interested or concerned in, any enterprise or endeavour that competes with the division of the Company in which you worked during the last 12 months of your employment. (b) approach, solicit, or entice away (or attempt to approach, solicit or entice away), any person or entity who was a client with whom you, or a person reporting to you, had work related dealing the last 12 months of your employment, so as to cause that Client to reduce the level of business that they would ordinarily provide to the Company (c) approach, solicit, or entice away (or attempt to approach, solicit, or entice away), any person or entity who was a supplier who whom you, or a person reporting to you, had work-related dealings during the last 12 months of your employment, so as to cause that Client to reduce the level of business that they would ordinarily provide to the Company. (d) provide service, services or products to any person or entity who was a client with whom you dealt during the last 12 months of your employment, that are the same as or substantially similar to those provided by the Company; or (e) approach, solicit, or entice away (or attempt to approach, solicit, or entice away), any person who was an employee, agent, contractor, or other staff member of the Company of whom you gained knowledge during your employment. 19.3 In this clause: (a) "Restraint Period" means the maximum enforceable period of: (i) 12 months immediately following the cessation of your employment; or (ii) 6 months immediately following the cessation of your employment; or (iii) 3 months immediately following the cessation of your employment. (b) "Geographic Area" means the maximum enforceable area of: (i) Victoria. (ii) a radius of 60 kilometres of your primary work location during the last 12 months of your employment; or (iii) a radius of 30 kilometres of your primary work location during the last 12 months of your employment; or (iv) a radius of 15 kilometres of your primary work location during the last 12 months of your employment; and (c) "Client": (i) Means any person or entity with whom the Company had commenced discussions during the last 6 months of your employment, with a view to securing that person as a client.

LEGAL PRINCIPLES 25 The relevant principles for the granting of interlocutory relief are well understood but are briefly set out below. 26 There are two main inquiries involved. As explained by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; 227 CLR 57 at [65] (and see also at [19] per Gleeson CJ and Crennan J), those main inquiries are whether: (1) the applicant has a prima facie case in the sense of a sufficient likelihood of success to justify the granting of the interlocutory relief which is sought; and (13) the inconvenience or injury the applicant would be likely to suffer if an injunction were refused outweighs the injury the respondent would suffer if the injunction were granted. 27 In Warner-Lambert Co LLC v Apotex Pty Ltd [2014] FCAFC 59; 106 IPR 218 at [70], the Full Court (Allsop CJ, Jagot and Nicholas JJ) made the following observation: Whether an applicant for an interlocutory injunction has made out a prima facie case and whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party's case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate. 28 As noted in the first sentence of that passage, the two main inquiries cannot be conducted independently of each other. This is because "an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even" and "[a] more doubtful claim (which nevertheless raises 'a serious question to be tried') may still attract interlocutory relief if there is a marked balance of convenience in favour of it" - see: Bullock v Federated Furnishing Trades Society of Australasia (No 1) [1985] FCA 258; 5 FCR 464 at 472 per Woodward J (Smithers and Sweeney JJ agreeing at 467 and 469 respectively); GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Ltd [2013] FCAFC 102; 305 ALR 363 at [81(j)] (Bennett, Jagot and Griffiths JJ). 29 In assessing the balance of convenience, the Court should assess and compare the prejudice and hardship likely to be suffered by the respondent, third parties and the public generally if an injunction is granted, with that which is likely to be suffered by the applicant if no injunction is granted: GlaxoSmithKline at [81] (Bennett, Jagot and Griffiths JJ); see also Samsung Electronics Co v Apple Inc [2011] FCAFC 156; 217 FCR 238 at [55], [62] and [66] (Dowsett, Foster and Yates JJ). The question of whether damages will be an adequate remedy will ordinarily be considered as part of the balance of convenience: Samsung Electronics at [61].

Has Broadband set out a prima facie case? 30 I am satisfied that Broadband has established a prima facie case that Mr Ramirez has breached clauses 17.1(a) and (c), 18.1(a), 19.2(a), (b) and (d) of his employment agreement. I am also satisfied that Broadband has established a prima facie case that Mr Ramirez has breached s 183 of the Corporations Act. 31 Mr Ramirez accessed PDF files of the documents referred to earlier from his home computer. Mr Bashiry's evidence was that these documents included a range of commercially sensitive information and intellectual property pertaining to Broadband's ongoing work for RT Edgar, and there was no reason for Mr Ramirez to access these files after his resignation took effect. There is a strong prima facie case of breaches of clauses 17.1(a) and (c) and 18.1(a). These clauses prohibit the unauthorised use, copying or possession of any confidential information or intellectual property of Broadband. 32 With respect to cl 19.2(a), Mr Bashiry's evidence supports that Unified IT provides services similar to Broadband. Mr Ramirez was not granted permission to pursue employment or undertake employment with Unified IT. Mr Ramierz appears to have answered Mr Bashiry's phone call when Mr Bashiry called Unified IT. While there is minimal evidence as to the details of Mr Ramirez's employment with Unified IT, the evidence is sufficient to establish a serious question to be tried as to whether Mr Ramirez has breached cl 19.2(a). 33 In addition, RT Edgar moved from Broadband to Unified IT for their technology services reasonably soon after Mr Ramirez left Broadband and had apparently commenced at Unified IT. As stated earlier, the evidence also reveals that Mr Ramirez accessed a number of documents related specifically to existing issues at RT Edgar and Broadband's ongoing work for them. It was submitted, and it should be accepted for interlocutory purposes on the basis of the evidence adduced, that these documents were commercially sensitive and would provide an individual with the ability to continue with ongoing work that Broadband was in the process of providing to RT Edgar. 34 This raises a prima facie case that Mr Ramirez breached cl 19.2(b), by accessing these documents in order to solicit work from RT Edgar. It also raises a prima facie case of breach of cl 19.2(d) as it is reasonable to infer that the information was accessed to facilitate the ability to provide services to RT Edgar after commencing with a new employer. That RT Edgar is now a client of Unified IT, where Mr Ramriez appears to have commenced employment, also indicates a reasonably arguable case for breach of cl 19.2(d).

The balance of convenience 35 Mr Ramirez was employed by Broadband as a full time IT Support Engineer, to support the development of their Managed Services division. He commenced his employment with Broadband on 13 September 2022 and left on 31 May 2024. He had an initial gross salary of $85,000 plus initial superannuation at 10.5% being a total of $8,925. 36 The Managed Services division had only 12 clients. However, this shows the importance of its clients to its developing business in this division. 37 One principal matter of concern, so far as balance of convenience is concerned, is Mr Ramirez's employment. One of the orders sought would have the effect that Mr Ramirez could no longer work for Unified IT (assuming he is so employed) or for others in the "geographical area" for a period of 12 months. The Court will fashion the relief to provide an opportunity for Mr Ramirez to approach the Court before such an order comes into effect and the Court will limit the relief in that respect to a period of six months from today. This does not prevent either party from exercising liberty to apply in respect of that order or the orders more generally. 38 Another matter of concern is the order sought for delivery up of Mr Ramirez's personal computer and other devices. This issue can be revisited after Mr Ramirez has filed the affidavit which the Court will require him to file.

CONCLUSION 39 I accept that the applicants have established a prima facie case and that the balance of convenience favours granting interlocutory relief. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.

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