415 The Deed of Release was entered into between the same parties as the DOCA, other than the Deed Administrators.
416 Clause 2 provided for releases and said:
Subject to and conditional upon Completion occurring under the DOCA and this Deed on the Settlement Date and to receipt in full of all payments due at Completion:
(a) Siolis Holdings, Tselepis Holdings and the DOE Group and their directors each release and forever discharge the Company, Hartley, Bandit, Davidson, Dylan Hartley, Webhouse Group, Webhouse Software and their directors, employees, servants, agents, contractors and related bodies corporate from and against any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had arising out of their agreement to form the Company and to operate its business, the conduct of the affairs of the Company or the services provided by the Company, including but not limited to the claims made in the Proceeding and in relation to the provision of goods and services to the Company by Webhouse Group and Webhouse Software.
(b) The Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors each release and forever discharge Hartley, Bandit and Davidson from any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had in respect of the loans made by Siolis Holdings and Tselepis Holdings to the Company or from any further claim for compensation or return of monies they may have but for this Deed from the Company, Hartley, Dylan Hartley, Bandit or Davidson.
(c) The Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors and each of them will not make any claim in respect of the assets to be transferred by the Company to Hartley, Bandit, Davidson or Dylan Hartley pursuant to the DOCA.
(d) Hartley, Bandit, Davidson, Dylan Hartley, Webhouse Group and Webhouse Software and each of them release and forever discharge the Siolis Holdings, Tselepis Holdings, the DOE Group and the Company and their directors, employees, servants, agents, contractors and related bodies corporate from and against any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had arising out of their agreement to form the Company and to operate its business, the conduct of the affairs of the Company or the services provided by the Company including but not limited to the claims made in the Proceeding or the provision of goods and services to the Company by DOE Group and in any way related to the employment by or the services provided by Dylan Hartley to the Company.
(e) Hartley, Bandit and Davidson and each of them release and forever discharge the Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors from any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had against for or in respect of their loans made by Hartley and Bandit to the Company or from any further claim for compensation or return of monies they may have but for this Deed from the Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors.
(f) Hartley, Bandit and Davidson, Webhouse Group and Webhouse Software and each of them agree not to make any claims against any customers of the DOE Group or the Company in respect of any matter the subject of the conduct of the business of the Company prior to the execution of this Deed or their disputes the subject of this settlement, except in respect of the collection of the remaining unpaid book debts of the Company to be assigned to Hartley and Bandit pursuant to the terms of the DOCA, which may be pursued by Hartley and Bandit.
(g) Following Completion Hartley, Bandit, Davidson, Dylan Hartley, Webhouse Group and Webhouse Software and their directors and each of them will not make any claim in respect of the assets to be transferred by the Company to Siolis Holdings, Tselepis Holdings or the DOE Group pursuant to the DOCA.
(h) For the purpose of this clause 2, claim(s) includes (as the context permits) a claim, notice, demand, action, proceeding, litigation, investigation, judgment, award, damage, loss (including economic loss), cost, expense or liability however arising, whether present, unascertained, immediate, future or contingent, whether based in contract, tort or statute and whether involving a third party or a Party to this Deed or otherwise.
417 Clause 3 contained relevant restraints and provided:
Subject to and conditional upon Completion occurring under the DOCA and this Deed on the Settlement Date and to receipt in full of all payments due at Completion:
(a) and subject to sub-paragraph 3(b), Siolis Holdings, Tselepis Holdings, Hartley and Bandit release and discharge each other from any all restraints that may exist on their ability to pursue in the future any business the same as or similar to the Company's business and acknowledge and agree that any restraints that may presently exist will be of no further force or effect.
(b) Notwithstanding sub-paragraph 3(b), Hartley, Bandit and Davidson agree not to, for a period of 90 days from the date of execution of this Deed, approach offering to provide or to provide vehicle tracking/telematics services or any other services the same as were provided by the Company to the following entities:
(i) Isuzu Australia Limited and Isuzu dealers;
(ii) Volvo Group Australia Pty Ltd (ACN 000 761 259) (including its business trading as UD Trucks) and dealers; and
(iii) Hino Motor Sales Australia Pty Ltd (ACN 064 989 724) and dealers.
(c) The Parties acknowledge and agree that:
(i) the restraints in sub-paragraph 3(b) above are reasonable both in terms of scope and term and no greater than reasonably necessary to protect the respective legitimate business interests of the Parties;
(ii) is reasonable in terms of the amounts paid and terms generally by way of settlement under the DOCA and this Deed;
(iii) they will not in the future seek to assert that the restraint is unreasonable or for any reason unenforceable; and
(iv) that should any Party seek to enforce the restraint, they acknowledge damages would not be an adequate remedy as opposed to an interlocutory injunction, and will not seek to submit to such effect in opposition to the granting of an injunction restraining them from acting contrary to the restraint.
418 I will return later to the question of how some of these clauses operate concerning the use of the JV Vehicle's confidential information and the case against the Gridtraq parties.
419 Let me return to what has been described as the RA7000 project.
420 In February 2016, further attempts were made to consummate a deal with Hirschmann. Some of the Gridtraq parties provided Hirschmann with an updated sample of a telematics unit.
421 On 29 February 2016, Lee emailed Allen Hartley what were described as "Meeting Minutes" which recorded the parties' objective of setting up a new joint company. But such a company was not incorporated.
422 On 2 March 2016 the results of a second sample test of the safety screen were recorded, which identified and described each function and its performance at that time.
423 On 29 March 2016, Oh emailed Allen Hartley, copied to Dylan Hartley and Davidson, in relation to the "GUI Design & Information of RA7000". She stated, "We currently have no idea about your telematics module, so could you please pass the connector specification/drawing and pin map of your module to us?". She also referred to the fact that the "Interface for UART will be RS232".
424 On 1 April 2016, a Skype meeting was held between Oh and Allen Hartley. Oh noted in a follow up email:
RA7000 is being developed smoothly, but we would like to request further information of the connector for communication with a telematics module and 7" screen unit.
…we currently have no information or data of your telematics module,
so we are a bit hard up at the moment to design the wire for connection.
Could you please provide a connector specification/drawing and pin map of your module?
425 Let me move to another matter.
426 From at least February 2016, Meneses used "leemen" and "hanhwa" email addresses in addition to his Directed email address. I agree with Directed that the different email addresses were an important internal mechanism used to differentiate which hat Meneses was wearing.
427 On 16 February 2016, Lee emailed Meneses at his optusnet address, attaching a Hino presentation for the new Hino project. Meneses responded, "Send it to my Directed email … Isuzu DMax was for me.".
428 The D-MAX opportunity originated from Siolis who had identified that D-MAX utility vehicles were increasingly popular with customers. He had asked Meneses to travel to Brisbane to pursue the opportunity with Isuzu D-MAX. Meneses told Siolis a few weeks later that he had done this without interest. But he pursued it through Hanhwa to the exclusion of Directed.
429 Let me continue with the chronology on work on the SuperDAVE.
430 In January 2016, the latest information from IAL was that the new model vehicle from Japan was delayed. They did not think it would be in the market by August 2016. This allowed Directed and the Hanhwa parties more time to improve it.
431 On 18 February 2016, an all-day meeting took place between Summers, Palone, Jaffe, Meneses and Lee. There was discussion about the DIR8000. New samples were to arrive the next week with shielding or grounding to protect any noise from trucks. Further, a new GUI was to arrive with the samples. Work also needed to be done on the digital rear camera. Further, a waterproof connector was required. And other issues needed to be resolved.
432 On 31 March 2016, Summers instructed Lee to begin work combining the audio and navigation manuals together for the DIR8000.
433 In April 2016, Summers and Meneses travelled to Korea to discuss the development of the DIR8000 and to review the Hanhwa design process. Summers sought to and did discuss a range of improvements, including to the user interface, the backside, inside and outside inputs, and other matters including the teardown report of the unit conducted by Andrea, one of Directed's engineers. Summers also sought to ensure that Hanhwa met certain international standards for quality certification and environmental management, that the choice of components of the DIR8000 were automotive grade, and that tests across a large range of issues had been performed satisfactorily.
434 On 26 April 2016, Jaffe, Meneses and Tselepis met with IAL representatives, being Humphries, Shanks and Michael McLean. IAL approved the overall hardware and basic design concept of the DIR8000. The parties agreed to work towards a mid-2017 launch. Item 5 in a draft agenda for the purpose stated:
Item 5: "Super DAVE" Unit
• Overall hardware/ basic design concept as previously shown is acceptable
• Standard Master Feature List (mainly software) to be adjusted so new unit can meet IAL cost targets
• Brainstorm better name than "Super DAVE"
• SatNav and Telematics integration to be improved vs current DAVE
• Apple CarPlay & Android Auto: If not at launch, from firmware upgrade in the future
• Consider best launch timings ...
• Introduction Strategy: All models standard at once OR staggered introduction OR initially package only with SatNav and Telematics as Option?
• Pre-Launch Evaluation / durability trial as suggested in 2015?
• Availability of DVR, forward (and driver?) facing camera from launch.
435 A matter that arose was that Directed needed a truck to test the DIR8000 steering wheel control. Tselepis and Siolis then told Meneses that Directed should buy a second-hand Isuzu truck to test the SuperDAVE. This led to a further exchange of emails.
436 Samples of the DIR8000 were sent by the Hanhwa parties to Directed on 16 March 2015, 27 March 2015, 1 June 2015, 29 October 2015, 4 March 2016, 17 March 2016 and 25 July 2016. The purpose of this was to enable Directed to test and provide feedback, so that the ultimate design and specification of the product could be agreed.
437 Park, the head of research and development for Hanhwa Korea, Han, the head of the mechanical team for Hanhwa Korea and Kim, the head of design for Hanhwa Korea all accepted that Hanhwa Korea manufactured working samples of the DIR8000 for the purpose of sending them to Directed. It was contemplated by the parties that Directed would install them in a vehicle, undertake testing and advise Hanhwa Korea of issues that arose and request changes. Where possible, it was envisaged that Hanhwa Korea would address those issues and make those changes.
438 Directed conducted testing on the working mock-up of the DIR8000 and identified issues in the open and close list. And modifications made in response to the issues raised by Directed contributed to the ultimate design of the DIR8000. Clearly, the evidence discloses that Directed tested samples of the SuperDAVE and its accessories and made requests for changes to those products. Further, those changes were made by Hanhwa Korea.
439 On 21 July 2016, Lee notified Meneses that a further DIR8000 working sample with the latest software was to be sent to Directed by express delivery that day. Now by this time, Hanhwa had approved and incurred tooling costs to manufacture the DIR8000. It is likely that the working sample sent in July 2016 was made with that tooling. Further, this notification also suggests that the working sample sent in July 2016 was made with the operating system and CPU that had been specified for the DIR8000 since at least November 2015.
440 Now Lee's evidence was that by mid-2016 he believed that Directed was not going to pursue the SuperDAVE opportunity because they had failed to pay the tooling cost. But I do not accept this. At this time Directed was purchasing more than AUD 30 million of product from Hanhwa per annum. Expected revenues for Hanhwa from the DIR8000 AV units excluding accessories to be sold to Directed were anticipated at almost USD 8 million per year. So, the tooling cost was inconsequential in the larger context of Hanhwa's overall long term and current and future relationship with Directed.
441 On 18 August 2016, Lee provided Meneses with a revised tooling quote of USD 225,300. This was an increase to an earlier quoted tooling cost. Clearly there were design changes to the DIR8000 in the intervening period, with the effect that costings as between Hanhwa Korea and Directed remained a work in progress.
442 Let me at this point say something as to the Hanhwa parties joining the Gridtraq parties at their premises.
443 In June 2016 Meneses and Lee decided to set up business premises for Hanhwa Korea in Melbourne in the same building as the Gridtraq parties. This was unknown to Directed at the time.
444 Allen Hartley's evidence was that it was in late June 2016 that discussions commenced with Lee to move into Brooklyn. He said that whilst he was showing Lee around, Lee told him that Hanhwa intended to supply a new model of radio directly to IAL, which he understood to be for the Isuzu "N" series.
445 On 28 June 2016, Lee asked Allen Hartley, "Hi Allen, Can Johnny see your office in this week? I spoke with my team that we want to go ahead with you guys. Very happy!!". Allen Hartley responded by email, "Hi Ryan, That will be fine. Thursday would be best. If you can please ask Johnny to text me a time that suits him and I will meet him at the office".
446 Allen Hartley says he was told by Lee at some stage between July and December 2016 that Meneses was now employed by Hanhwa. He recalled seeing Meneses at the Brooklyn premises from time to time.
447 In July 2016, Meneses with Lee, met with Gridtraq representatives including Allen Hartley during the negotiation of a lease to share premises with Gridtraq. On 12 July 2016, Dylan Hartley provided Lee with a document and plans for the proposed premises at Brooklyn.
448 On 13 July 2016, Lee forwarded Dylan Hartley's email to Meneses at his personal email address.
449 On 14 July 2016, Meneses sent an email from his optusnet address to Lee in relation to the proposed lease:
This looks great on this plan!
Let's see how it looks next week.
I think you need to slow down just a bit, we need to get Isuzu Dmax or another customer before we do anything.
Do [not] sign for a long term lease, we need to do this year by year. We don't want to be in a place where we get [too] big in 12 months.
When is the new Dmax with Navi ready?? The quicker we do this the quicker we can start our own.
One thing you need to understand is that Directed still needs to keep ordering ALL of our current products until we start to move them after one year..
450 This email reveals Lee's and Meneses' plan as at July 2016 to appropriate Directed's business, and of the need for secrecy until the last moment. The reference to "The quicker we do this the quicker we can start our own" is telling. And by continuing to order "ALL of our current products", Directed would continue developing and marketing the products to customers, whilst unaware of Meneses' and Lee's strategy. And it would be paying ongoing development costs of the DIR8000 and the salaries, travel and other expenses of Meneses, Mills, Summers and Palone, all of whom were engaged in activities to further Hanhwa's business.
451 On 15 July 2016, Dylan Hartley in an email to Lee referred to the prospect of another interested tenant but stated that they would prefer to have them downstairs so they could work together and help Hanhwa.
452 Now the Brooklyn premises had common areas including a shared entrance, foyer, reception area, boardroom, printer and warehouse. Meneses was given his own office at the Brooklyn premises. Directed says that Meneses spent a lot of time there. And Directed says that Allen and Dylan Hartley are likely to have encountered and spoken with Meneses at the Brooklyn premises on a regular basis from June 2016 onwards.
453 According to Directed, the Gridtraq parties should have been put on enquiry as to Meneses' presence at Brooklyn and his assistance and involvement with the Hanhwa parties to supply a new AV unit to IAL, whilst at the same being employed by Directed. It says that they ought to have known that he could not assist Hanhwa in any commercial activities that might conflict with, or compete with, Directed, and was in no position to work for both companies. This included any cooperative endeavour between Hanhwa and Gridtraq. I will return to these submissions later, but I should note that Allen Hartley did not accept Directed's proposition of a conflict of interest.
454 When Directed's version of Meneses' apparent conflict of interest was put to Dylan Hartley, he said:
GOLVAN QC: It's correct, Mr Hartley, that you knew that Meneses was going to continue working for both Hanwha and Directed and you did nothing to address that arrangement with Hanwha by way of any complaint or issue?
DYLAN HARTLEY: I don't - I don't recall. And, again, our feelings were quite well known. There was - there hasn't been, you know - I'm struggling to find the words, but in terms of a normal relationship, yes, Johnny is around and, you know, the interaction of such, it happens. But, you know, in terms of a conflict or things like that I don't really care.
455 As for the continuing relationship between Hanhwa and Directed, Dylan Hartley said when cross-examined about it:
…the knowledge of what Hanhwa and Directed want to do or whether they are competing with each other has got no bearing on me… whether they sold units that were in competition with each other, it has got nothing to do with me.
456 Directed says that this answer should not be believed. It says that these events were a few months after the Gridtraq parties had been in litigation with Directed. They were not an arms-length third party. The Gridtraq parties were working closely with Hanwha. It is said that I should infer that the Gridtraq parties were interested in the relationship between Hanhwa and Directed, but did nothing to verify that Hanhwa Korea or Meneses were free to pursue opportunities with them. But for my part I am not prepared not to accept this evidence.
457 Let me at this point say something concerning the purchase by Meneses of an Isuzu truck for Hanhwa Aus.
458 On 21 July 2016, Meneses entered into a contract for the purchase of an Isuzu truck for Hanhwa Korea after informing Lee, "See emails below. I think this would be great for us to test... I need to let IAL [know] ASAP". The "emails below" were between Meneses and Siolis about such a truck purchase. Meneses informed Lee that he obtained a discount, and to "Please let me know when you arrange the payment". Hanhwa Korea paid for the truck. Lee's evidence was that Meneses bought the truck as a personal favour to him, because Hanhwa Aus could not yet open up a bank account in Australia.
459 It was relayed to Allen Hartley via Dylan Hartley that Lee said Hanhwa was going to buy a truck and keep it at the Brooklyn premises. He said that the Gridtraq parties were happy with this arrangement and they had used it to test Quantam's telematics units.
460 From August to November 2016, Summers engaged in the road testing of an Isuzu radio unit using that Isuzu truck. Feedback was provided. Clearly this was testing of the DIR8000 later renamed the HAU8000. An Isuzu truck was necessary to ensure that the SuperDAVE or equivalent, with any associated telematics, would work in the real world. Data from a specific Isuzu vehicle that had been operated in a full range of conditions was needed to verify that this could be achieved.
461 Meneses also caused Palone to engage in extensive testing from December 2016, together with Shin of Hanhwa Korea, of the DIR8000/HAU8000 using this vehicle.
462 It is convenient at this point to say something concerning Meneses' and Mills' dual employment at Hanhwa Aus.
463 From approximately July 2016, Sue Mills assisted Lee and Hanhwa Aus with marketing services in anticipation of Hanhwa Aus' registration and commencement of operations. It seems that she commenced her engagement from at least 4 December 2015 as I have indicated earlier.
464 The work included all things necessary to commence a start-up such as a corporate logo, business cards, social media pages, promotional videos, marketing materials, and corporate uniforms. Mills and Meneses sent and received emails for the same purpose, which included the period when they were employees of Directed.
465 On 8 July 2016, Lee asked Meneses via his personal email address whether he would prefer an HSBC or Citibank credit card. In response, Meneses indicated a preference for Citibank.
466 On 2 August 2016, Lee informed Meneses by email, which was copied to Mills, that he had created a "Leemen" email address for Mills. Lee's email was sent to Meneses' Leemen address. Mills from his personal email address informed Meneses at his Leemen email address: "This is dangerous setting up this email on my directed phone. I need a personal phone or a leemen phone". It would seem that the perceived danger was in detection by Directed.
467 Mills' request for a separate phone was met. On 4 August 2016, Mills informed Lee, "Hi Ryan, this is my (craigs) new (non Directed) mobile number. I am having trouble setting up the email. Can you please check details again? I have details: cm@leemen.net / password: craigmills33 / pop server: mail.leemen.net regards craig mills". Lee responded a short time later, "Hi Craig. Can you please advise your personal email then I will let you know how to set up". As Directed rightly contended, that Lee requested Mills' personal email address, and did not simply email him at Directed, evidences Lee's knowledge of the need to keep the conduct secret from Directed.
468 Clearly, Meneses and Mills were intimately involved in the establishment of Hanhwa Aus whilst still employed at Directed.
469 On 11 August 2016, Meneses via his Leemen email address instructed Mills to provide him by Monday morning with an "up to date cost for our starting set up". He added, "Will be discussing this with Ryan before he leaves". This email was copied to Lee.
470 On 15 August 2016, Meneses via his Directed email address obtained from Floudas Directed's Certificate of Insurance. Meneses via his Leemen email address then forwarded the email exchange with Floudas to Lee. Lee said that he asked Meneses to obtain Directed's insurance details for use by Hanhwa Aus as he had no experience in the area. The different email addresses, the fact that Floudas sent the Certificate to Meneses at his Directed email address, and the fact that the Certificate itself was marked to the attention of "Kon Floudas" of "Directed Electronics OE Pty Ltd" were visible to Lee.
471 I would also note that on 23 August 2016, Lee sent to Meneses at his Leemen email address an email concerning an "Isuzu UTE [presentation]" saying "What you think [stet]". Meneses from his Leemen email address sent it to Mills at his Leemen email address saying "Call me". This appeared to concern the D-MAX.
472 Let me say something about the HAU8100 (D-MAX) and also the DIR8000 which became the HAU8000.
473 In February 2016, the opportunity concerning the HAU8100 (D-MAX) was being furthered. It was to be Hanhwa Aus' first opportunity. Lee did not consider this conduct wrongful because he expected Meneses imminently to be coming to Directed. Further, he did not consider it wrongful because so far as he was aware, Directed had never supplied to IAL the D-MAX. Now whether Directed ever supplied to IAL the D-MAX is not the point. It was a commercial opportunity identified by Directed. Meneses during the period of his employment by Directed brought it to Hanhwa Korea. Further, that continuing work on the D-MAX project was for the benefit of Hanhwa Aus is clear from the project name with an "HAU" prefix.
474 Lee conceded that Hanhwa were ready to present the D-MAX product to Isuzu D-MAX by August 2016. Meneses was to make the approach. This was when Hanhwa Korea prepared a presentation to that effect. Lee was listed as the contact for "Head office" (Korea); Meneses for "Australia office" (Brooklyn; Leemen email address). A draft had been provided by Meneses to Mills, both using their Leemen email addresses, for comment.
475 Hanhwa's plan was for Hanhwa Aus to purchase and send to Korea an Isuzu D-MAX pick-up truck, which was due to arrive in February to March 2017. There were a few issues to work out. Development of the new product was underway at the end of 2016. Surprisingly, Lee brought the unit to Directed for testing, even though it was for the admitted benefit of Hanhwa Aus. Testing of the unit by Directed occurred. Lee confirmed that Meneses presented the unit at a dealer showroom in Brisbane in early 2017.
476 On 26 August 2016, a meeting was held in Hanhwa Korea's Head Office which concerned changes to the DIR8000, which became the HAU8000, and the HAU8100 (D-MAX) models.
477 On 2 September 2016, Oh emailed the Hanhwa Korea team announcing a "New Part Number for DIR8000". This was copied inter-alia to YS Lee and Lee. Oh confirmed that she discussed the email with Lee before it was sent. The email said in part:
Products previously shipped to Australia included "DIR" in their Part No. because they were delivered to the end customer through the company Directed.
But as the new projects will not involve an intermediary and delivered directly ISUZU, the part number of the existing DIR8000 (NEW ISUZU/SUPER DAVE) has been changed.
…
1. DIR8000 model - new part number: HAU8000
[D-MAX part number: HAU8100]
2. Confirmation and reply request: Please confirm the changes to rear connector and pin placements of HAU8000 (old DIR8000) etc. discussed during the last meeting on Aug 26 and reply with M/C amendments and possible implementation dates.
478 Oh accepted that at this point in time Hanhwa decided not to design a new unit from the beginning, but to change the model number to HAU8000 and then supply that unit to IAL directly.
479 Now Lee claimed that Directed's failure to pay for tooling justified his decision to divert the SuperDAVE to his own benefit. But the true position is that in mid-2016, IAL had not yet committed to proceed with the DIR8000 at that time. And there was also no obligation on Directed to pay for the tooling at that point in the design process.
480 According to Directed, the reality is that in August 2016, Hanhwa Korea decided to rename its new AV unit the HAU8000 from the DIR8000, in recognition of its decision to distribute the new unit directly to IAL. Lee decided to keep secret from Directed the fact that the Hanhwa parties were developing the HAU8000 to supply to IAL directly. And from the nature of the proposed field tests, it was apparent that Hanhwa's software, hardware and circuit design teams were moving forward towards the production of working samples.
481 Let me deal with some other events in September and October 2016.
482 On 10 September 2016, Meneses as "OE Director" and Lee as "Managing Director" of Hanhwa Aus provided Shin with an offer of full time employment as Service and Development General Manager at Hanhwa Aus.
483 On 21 September 2016, Hanhwa Aus was incorporated, which Meneses attended to. He was also provided with a laptop computer. On 30 September 2016, Hanhwa Aus reimbursed Meneses for "Company Setup", "H Laptop Meneses" and "2014 Isuzu Insuran[ce]". On 26 September 2016, Meneses asked Lee to add registration for the Isuzu truck in Meneses' personal name to the list.
484 Further, during September 2016, Lee, Meneses, Mills and Sue Mills collaborated on the branding for Hanhwa Aus to be applied to business cards, letterhead, and a social media banner.
485 On 14 October 2016, Meneses from his Directed email address sent to Lee the email exchanges with ICL representatives that took place in 2015. There was no need for the business purposes of Directed for Meneses to share these emails or the information in them with Lee or Hanhwa Korea at that time.
486 On 16 October 2016, Meneses from his Leemen address emailed Lee at his Leemen address: "Hi, As you know I am in China!!! Thinking about new features that we spoke about two weeks ago!! Shit that long!! Anyway I am in my room doing funny things??? For new Isuzu unit HWA8000…". Their exchange concerned the HAU8000. Clearly, Meneses was actively engaged with Lee on the development of the HAU8000 and its proposed features at that time. The use of the Leemen addresses is telling albeit that Meneses continued to use the title "OE Director".
487 On 17 October 2016, Meneses emailed Lee with the subject "Com" stating, "Hi, As per last conversation I would like to clear up outstanding com details before the end of this year". Meneses was chasing up outstanding commissions.
488 Now Lee's enthusiasm for their new competitive venture and his recklessness in failing to guard against its establishment becoming known by Directed, tried Meneses' patience. On 18 October 2016, there was the following exchange in essence via email:
Meneses: Ryan, You are making my life very difficult! Please slow down!!! I have to explain fucking why!! STOP sending any emails with those contact details.
Lee: Sorry it was my mistake. Thank you and this is why many people is saying we are the A team.
489 Lee said that he had sent an email to Meneses and another Directed employee using his Hanhwa Aus signature by mistake. Lee said, "Yes. He didn't want to - them to know first until he said something - he say something to Steve and Anthony".
490 Let me return to the chronology concerning the diversion of the DIR8000.
491 On 11 November 2016, Hanhwa had established a new team to exploit the HAU8000 because Directed was no longer involved. The aim was to do this quickly, ready to show a working sample to IAL in December 2016 or January 2017.
492 A Hanhwa work report for the period 14 November - 18 November 2016 was headed "Directed Electronics OE Proprietary Australia". Lee accepted this referred to Hanhwa's products for Directed. However, one such item concerned the "HAU8000" project. Field testing of the unit and all its accessories was to be conducted at Directed's premises. That the DIR8000 was the basis for the HAU8000 is apparent from a request for approval from Oh to Lee and other Hanhwa team members: "Hello, In regard to the HAU8000 project, I am requesting your approval for functional additions and changes to GUI".
493 On 14 November 2016, Lee reported to a Hanhwa Korea team member, Mr Kim: "I have spoken to ISUZU over the phone. I have been reported that testing in January is not feasible. Please proceed as per the existing schedule, but considering our situation, please only consider investing in the Mock up samples". This evidence is inconsistent with the Hanhwa parties' oral evidence of the development of the HAU8000 from scratch and dealings with IAL. To try to overcome this, Lee said, "That was a lie to my people". He said he had not spoken to IAL at all. When asked whether he often lied to his people, Lee said, "Not often. When I push my people, I need more powerful email. I need more motivation to work with R&D people.". When asked whether it was okay to lie to his people, Lee responded, "Well, if I can get good outcome from them, yes".
494 On 15 November 2016, Humphries of IAL emailed Meneses complaining that the mid-2017 start date for the SuperDAVE was in jeopardy. Humphries stated, "We are now several months past our preferred decision point for the in-vehicle hardware from Directed OE from mid-2017". He sought a detailed proposal from Directed that addressed a list of specific requirements. These included:
1. "Super DAVE" unit latest specifications and features.
2. Satellite navigation proposal including new features…
3. Standard fitment of Telematics hardware, with up to 6 months of included subscription.
4. Cost of ongoing subscription to Telematics after the first six months, with an aim for the subscriptions to subsidise the initial hardware cost.
5. Accessories / extra cost options available for the above from launch, and their costs.
6. Cost schedule for all of the above. If some are volume related, please advise the break points for reduced prices.
495 Humphries further disclosed that he was faced with time pressure. The launch timing remained July 2017. This email makes clear that as between Directed and IAL, the DIR8000 project remained alive. This email was forwarded by Meneses to Lee. Lee could have been under no illusion that Directed was going ahead with the project.
496 Further, on 15 November 2016, Oh informed Hanhwa staff, "Thanks for your active cooperation for HAU8000 field testing and sample preparation". In her email, she wanted an update on the material cost calculation, expecting that the price will go down. Lee accepted that Oh had sought the material cost for the DIR8000 now to be updated for the HAU8000. This is a further indication that the HAU8000 was not designed from scratch.
497 On 18 November 2016 Meneses and Shanks of IAL had a conversation about the SuperDAVE. It was during this call that Shanks informed Meneses that Hanhwa Aus could supply the HAU8000 directly to IAL.
498 On the same day, Lee had the following iOS iMessage/SMS/MMS exchange with Oh:
Lee: We won ISUZU…
Oh: Are you talking about 8000, Mr EVP? Or DEMAX????
Lee: 8000 for 1300 dollars
Oh: Mr EVP!!!!!!!!!!!!!! Units only, right?? Accessories are all separate????????????
Lee: Of course. Don't tell anyone.
[About four hours later]
Oh: Dear Mr EVP, Would it be okay to open our ISUZU protocol information to Dylan??
499 Oh also sent a picture of the rendering, which was of an image of the DIR8000. The reference to Mr EVP (executive vice president) is to Lee. In relation to the case against the Gridtraq parties I note that Oh refers to sharing in essence the Directed Specification concerning the radio communication protocol, which I will define and return to later, with Dylan Hartley. Lee confirmed that the reference in the message to "Would it be okay to open our ISUZU protocol information to Dylan??" meant "Directed Specification", and that he authorised her to provide a version of the Directed Specification to Dylan Hartley.
500 Lee's evidence is that he did not tell Oh the truth:
LEE: That was my second affidavit… I need to make big motivation, because we are very tired of the DIR8000 … 2014, which is no purchase order from them. Then we have announced to all people in Hanhwa Korea that we set up the HAU8000 - sorry - the Hanhwa Aus to supply HAU8000 to Isuzu. But we didn't, so - but I had to say something to keep the motivation even - Irene is the main person to talk with myself and Korean engineering people. That's why I said 1300. It was my wish price.
WISE QC: So this is another lie, is it, that you told Irene Oh at this time. Am I correct?
A: We can say lie, but to me there was - I had to say something to my people, otherwise they're going to just …
Q: Not the truth though, is it?
A: Not true.
Q: That's your evidence, isn't it?
A: That's correct. It's not true.
501 But I reject Lee's evidence that his "We won Isuzu - 8000 for $1300" text was an intentionally false statement. Further, it is noted that the price in the text message "1300 dollars" is almost the sum at which Meneses advised Lee on 27 August 2015 that he was seeking to pitch the SuperDAVE to IAL. Further, it was the same figure ultimately presented by Hanhwa Aus at the meeting on 30 June 2017 to IAL for the supply of its HAU8000, to be provided in lieu of the DIR8000 or SuperDAVE. I will discuss that meeting later.
502 On 18 November 2016, Hanhwa Aus prepared a quote to IAL for the "8" TFT LCD Multimedia AVN unit (Super Dave)" for USD 660 (plus external options).
503 On that same day, Hanhwa Korea also prepared and sent a quote to Directed for "8" TFT LCD Multimedia AVN Unit (Super Dave)" for USD 713 with the same external options, each of which was at a higher price than those in the direct IAL quote and USD 53 higher than Hanhwa quoted to Directed three months' earlier.
504 Directed says that the latter quote was a facade, to suggest that Hanhwa Korea was pursuing the project with Directed in good faith, when the opposite was true. It was created so as to ensure that Hanhwa Aus would have the contract to supply the SuperDAVE to IAL.
505 Also on that same day, the Hanhwa parties also produced a separate MFL for the DIR8000 and the HAU8000 which were identical even to the extent of reproducing the misprints in both documents. So, for example, one had repeated "Duoble" and "Pannel" mis-spellings.
506 In late November 2016, Lee informed Hanhwa Korea employees by email, including Shin, that a field test was to be conducted in December 2016. Production was scheduled for April, with shipping in May and vehicle installation in July. Annual quantity was expected to be 11,000 - 12,000 sets "and it's a three-year contract". All testing was to be done in outer Melbourne areas. He added, "we will use a truck (N series) owned by Hanhwa Australia". "Marcus" was to drive the truck. A "2ch DVR" and "Wireless charger" were to be submitted to IAL. A digital camera would be fitted onto a truck and presented in the "Dealer working presentation". As for the HAU8000: "This is the last sample so please carefully prepare this…I will submit this sample to [IAL] for approval.". Shin accepted that the reference to "Marcus" was to Marcus Palone, who at that time was an employee of Directed. Palone said he did not recall. He did not accept that he was doing work for Hanhwa whilst employed by Directed.
507 As Directed points out, this is further evidence that the HAU8000 was not designed from scratch. Now to overcome the effect of this being evidence of an advanced working sample unit in November 2016, Lee said, "This is the same lie, which is very incorrect to my staff".
508 Shin accepted that this email referred to a field test of the HAU8000. He confirmed that he did testing work for Hanhwa Aus to supply the HAU8000 to IAL. Lee also confirmed that a field test took place in Australia from 12 - 17 December 2016, involving a truck, conducted by Shin and engineers from Korea. And even though Palone worked at Directed, Lee decided that Palone would drive the truck, "Yes. I ask Palone to check like a friend to help" and "after Directed work hours".
509 Lee accepted that the field test was on the HAU8000 which was for the benefit of Hanhwa not Directed. A second field test was scheduled in the fourth week of January 2017.
510 Shin also confirmed that there were three steps involved in the process for the development of the HAU8000 being a working sample, a development model, which is tested, and what was described as "LPP". After this, there is the main production stage. One can only move to the last stage "once we test everything and made changes and done any - all the updates if necessary and then ensure there's absolutely no problem". He added, "as you can see, moving from the very first step to the very last step, it takes a long time". In this context, the reference to "last sample" in Lee's email and to field tests suggests that this sample of the HAU8000 was an advanced one.
511 On 21 November 2016, Meneses wearing his Directed hat provided Shanks with the DIR8000 MFL.
512 On 29 November 2016, Mills provided Lee and Meneses with a detailed "Hanhwa AU To do list" encompassing matters such as the website, the main number for the business, fax, internet and the like.
513 On 5 December 2016, the Hanhwa parties produced a document setting out Hanhwa Korea's expected revenue for 2017 concerning the following topics: (a) HAU8000 - anticipated sales were 500 units per month April to August 2017, increasing to 1,000 to 1,200 per month; (b) accessories; and (c) HAU8100 - to be provided to D-MAX.
514 Hanhwa Korea's business plan dated 15 December 2016 for 2017 also records its business and plans at that time. Other personnel referred to on the organisation chart were Summers, Dane and Palone. The organisation chart also identified Australian office personnel which included Meneses and Mills. Both were still employed by Directed at this time.
515 The Australian implementation plan recorded that sales, logistics and after sales would all be performed directly in Australia. They would start "self-supply" from "HAU-8000 (ISUZU), HAU-8100 (D-MAX) model". They would "continue to work with Directed on the current AVN products until discontinuation". This makes apparent the plan expressed between Meneses and Lee in July 2016.
516 Further, products to be introduced in 2017 models under development included: HAU-8000 (Isuzu Truck); HAU-8100 (Isuzu D-MAX); RA7000 (after market) and accessories.
517 The business plan further disclosed that Directed then represented 62% of Hanhwa Korea's sales revenue and that this represented 10% growth over the 2015 year, and that sales were continuing to increase.
518 By the end of November 2016, Hanhwa Korea intended to send a working sample of the relevant RA7000 unit to the Australian office on 31 December 2016. However, in relation to telematics, requests had been made of Quantam for "Protocol spec sheet update material" without reply.
519 Likewise, a module sample for telematics review had also been requested. Hanhwa's latest protocol data dated to April 2016 and there was no module to review. In an internal report from Oh to Hanhwa team members dated 30 November 2016 it was said: "Thus, interlocking test with Telematics is difficult". Oh confirmed that it was proving difficult for Hanhwa to do any integration with the telematics unit. Oh said, "Our engineers - we just develop RA7000 screen unit and we had no idea about the telematics function so we ask them to - to share - to send us the sample and the protocol, the specification to check the communication things. So I've asked them to share that but we didn't get. And the samples for reviewing that". Oh further confirmed that she and the software engineers knew that the communication protocol used by the RA7000 telematics module was RS232.
520 Let me deal with another matter.
521 In late 2016 Lee told Allen Hartley of the following matters.
522 First, he told him that Hanhwa was splitting away from Directed and they were counting on the Gridtraq parties to deliver the telematics component.
523 Second, he told him that Hanhwa wanted to demonstrate telematics using Gridtraq's telematics unit connected to their "new radio", that the radio was being presented to IAL in January 2017, launching with the N Series Model, and that full production and supply of this new radio was to be May 2017. Lee told him that for their demonstration in January to IAL, they required the CPU connected to the radio to perform the following: messaging, driver ID and telematics including CAN Bus data. He told him that they wanted the telematics component, added telematics services and support of the program to be priced and supplied by Gridtraq.
524 Third, he told him that he wanted the Gridtraq parties to have something ready to show IAL by January 2017.
525 Allen Hartley told Lee that it would be necessary to first establish connectivity of the CPU to the HAU8000 and that Gridtraq would need to develop a screen protocol to enable the CPU to communicate with the HAU8000. Davidson recalled a conversation with Allen Hartley to this effect.
526 Lee accepted that he told Allen Hartley that the "new radio" meant the HAU8000. He also accepted that Hartley told him that Gridtraq needed to establish connectivity between the HAU8000 and the telematics unit and that they needed to develop a screen protocol to enable communication between the telematics unit and the HAU8000.
527 On 8 December 2016, Allen Hartley sent an email to his business partners, Thibaud, David Keightley and Davidson. It stated, "Hugh, whilst you've been busy with 3G upgrade Dylan and I have had several meetings with Ryan to keep the relationship moving forward. They have set up their office and distribution in our building and are totally committed to working with us and to integrating into our products". Then it was said:
We are now at the point where as Quantam we need as Directors to please discuss and evaluate the opportunity and decide a way forward.
Hugh, we also need you to please meet with Ryan as he needs reassurance of our commitment and our ability to deliver.
Dave, we need you to head up the integration and connectivity requirements of the first phase of the project, and to also co-ordinate a meeting in Korea at the point that everyone is comfortable regarding delivery and we are ready to develop a telematics board to go into their head unit.
Please can we discuss this at today's meeting as we really need to go back to Ryan with our feedback.
Hanhwa is currently splitting away from Directed Electronics and they are counting on us being able to deliver the telematics component, and they want Quantam to partner with them going forward in the various markets that they are active in.
528 The reference to "their head unit" appears to have been a reference to the HAU8000.
529 Three propositions were put in cross-examination to Allen Hartley: first, that he had seen that Meneses was involved in assisting Hanhwa to set up its business in Australia; second, that he was told by Lee that Meneses was still working for Directed two to three days per week; third, that he was told by Lee that Hanhwa was seeking to supply AV units and accessories to IAL in Australia. In light of this, he was asked why he asked no questions of Meneses or Lee as to whether Directed was aware of their conduct. He responded, "It was none of my business". Directed says that such indifference was reckless. I will return to this later.
530 Further, in December 2016, the Gridtraq parties prepared a document for Quantam, called "Quantam Telematics Opportunity". It set out what was required to help Hanhwa Aus pursue the "Super Dave" with IAL:
HANHWA want to demonstrate Telematics using the CPU connected to their New Radio. The Radio is being presented to Isuzu in January - launching with the N Series Model. They expect the volumes to be 12 000 to 15 000 units per year across the range.
Full production and supply of this new radio "Super Dave" is to begin May 2017.
For their demonstration in January to Isuzu they require the CPU connected to the Radio to perform the following:
Messaging
Driver ID
Telematics including CAN Data
They want the telematics component, added telematics services and support of the program to be priced and supplied by Gridtraq.
531 The reference to "CPU" is to Gridtraq's telematics unit and the "New Radio" to the HAU8000. Allen Hartley's evidence, which I accept, is that this proposal was rejected by the Board.
532 Let me return to the SuperDAVE. Directed continued to work on the SuperDAVE. By 8 December 2016, Directed had met IAL's requirements. IAL approved the design and specifications of Directed's DIR8000 and its accessories, the MFL, GUI, renderings, cost breakdown sheets and the working samples previously provided and demonstrated to IAL. But the price had not yet been agreed.
533 On 8 December 2016, Meneses provided to Shanks the Directed quotations for the DIR8000 and its accessories.
534 Let me deal with the solicitation and appropriation of staff.
535 On 15 December 2016, Mills sent to his personal email address Directed's recruitment request form, recruitment process map, and a letter of offer.
536 On 31 January 2017, Mills provided Meneses with information including Directed's pricing for navigation software. Further, Meneses informed Lee by email that, "I need the company [letter head] to start the letters of offer to new staff".
537 On 9 February 2017, Meneses as "OE Director" and Lee as "Managing Director" provided Mills with an offer of full time employment as Production Manager at Hanhwa Aus.
538 Further, Meneses forwarded from his Hanhwa address to his personal address a final version of an offer of full time employment to Palone as Development Supervisor at Hanhwa Aus. Lee admitted that Meneses was actively involved in drafting the documents to make a letter of offer to Palone, in co-operation with Lee, at the time Lee knew that Palone was still performing work for Directed. Lee also admitted that Meneses at an earlier point had forwarded to him in soft copy one of Directed's standard employment contracts.
539 In late February and early March 2017, before Mills departed Directed to join Hanhwa Aus, Mills and Meneses engaged in wholesale downloads of Directed's confidential information and copyright works, including electronic files from Directed's server onto a hard drive, being the red hard drive.
540 On 23 February 2017, Sue Mills emailed Dylan Hartley and Lee the final logos for Hanhwa Aus.
541 On 27 February 2017, Sue Mills suggested to Lee a meeting to discuss the next steps and filming, presumably for marketing purposes. Lee responded that the meeting had to include "JM" (Meneses), "MP" (Palone) and "CM" (Mills). Mills responded, "Next Wednesday is an awkward day for me. It is [my] last day at Directed. I will be training people and they will be watching what I do".
542 On 2 March 2017, Lee shared with Sue Mills his plans to go with Meneses to Japan on 13 March 2017 for a fortnight. He wanted business cards finished for the trip.
543 Mills' last day at Directed was on 8 March 2017.
544 During this period, Meneses asked Vardon for a copy of Directed's software it had developed for obtaining CAN Bus data using its CAN tool, which Vardon provided.
545 Let me also note that on 3 February 2017, Oh informed Dylan Hartley by email that Hanhwa was preparing the new RA7000 sample and planned to send it to Quantam's office. For the purpose of the new sample and communication processing, Oh asked Dylan Hartley for the "setting value of band rate" (speed of data transmission) that is "sent from the telematics module to RA7000 screen". When responding, Dylan Hartley referred to "firmware we are expecting on the new Safety Screen and the new Isuzu Head Unit". He asked Oh "to confirm that the new firmware that we are expecting with the new Safety Screen that you will send us is the same for the new Isuzu Head Unit". Oh confirmed that the "New Isuzu Head Unit" meant the HAU8000. Oh understood that Dylan Hartley was wanting to ensure that the updated firmware for the safety screen would be the same as the firmware for the HAU8000.
546 Let me say something about the Mercedes Sprinter opportunity and the DIR6160.
547 By 25 January 2017, Hanhwa had resolved to pursue an updated DIR6160 for itself. So much is clear from internal Hanhwa Korea meeting minutes of that date concerning progress of the AV project(s) and accessories for Australia. In relation to the DIR6160, a change of concept and buyer was recorded:
1) Currently, the buyer of DIR6160 is Directed, and TP012 (TRIM PLATE for DIR-6160) is supplied separately.
2) Later, it will change and start directly supply to Mercedes Benz Truck (Aus.).
3) When a supply method and buyer change, DIR-6160 will have a face lift.
…
4) As it will proceed gradually, preceded by review on CAN communication, the current DIR6160 + TP012 model will continue to be supplied to Directed until further notice.
548 The concept being considered, as indicated by the minutes, was an integrated product. Rather than having a separate telematics unit or "CANBOX", a direct communication with a CAN of the truck would be made.
549 On 2 February 2017, John Madour of Mercedes telephoned Dane of Directed about a new opportunity. He followed it up with an email:
We require a standalone navigation unit with Australian maps that is to be externally mounted on the dashboard (as pictured in the attached) to replace the OEM Bosch unit which does not carry Australian Map data.
550 Dane forwarded it to Meneses, "One for you… John Madour from Merc is looking for a standalone NAV unit!".
551 On 3 February 2017 at 1.07 pm, Meneses forwarded the entire email chain to Lee. That same day, Oh announced to the Hanhwa Korea group:
Hello,
Today, Hanhwa Australia Branch have received new suggestions from Mercedes Benz Company.
The customer wants a Navigation Screen Product installed on a vehicle, as a stand-alone type product.
Instead of developing a completely new product, we are considering to add that function to the RA7000 product we are planning to propose to the After Markets of Australia/South Africa, etc.
552 The solution proposed by the Hanhwa parties was the RA7000.
553 Later that day, Oh sent a further groupwide email at Lee's request. This email clarified that the DIR6160, which was the product to be sold directly by Hanhwa Aus to Mercedes, was to be installed into Mercedes trucks whereas the new opportunity concerned Mercedes vans. Oh disclosed two concepts being considered by Hanhwa Aus. For vans, the concept was the standalone RA7000 product referred to in her previous email. For trucks, the concept was the development of a new AV unit "replacing DIR6160 delivered via Directed currently". This latter option would have "[d]irect CAN communication with vehicles planned (Separate CAN BOX of Directed not applied)". The "CAN BOX of Directed" referred to the telematics unit it supplied to Mercedes. The GUI would be changed. The size would be the same with a scanned trim plate "based on ORION products", which was another product developed by Hanhwa for supply by Directed.
554 Directed relies upon this as evidence of the diversion of the Mercedes Sprinter opportunity and the plan of the Hanhwa parties to supply an AV unit directly to Mercedes to win away Directed's business for the DIR6160. Meneses knew about both projects and facilitated them. I will discuss the position of the Gridtraq parties later.
555 Several days later, Mercedes provided Summers, Meneses and Tselepis with Mercedes data and specifications requests for telematics. Meneses told Summers that he would respond to it, but Summers heard nothing further. It is apparent that Meneses was harbouring information for exploitation by Hanhwa of the opportunity to supply Mercedes.
556 On 8 February 2017, Dane followed up Meneses by email stating "Madour is still asking about the NAV units for the new sprinters!...". Meneses forwarded this to Lee under cover of an email asking "Any art work??". Lee responded, "Within this week…".
557 Further, on 8 February 2017, Oh informed Lee concerning newly designed rendering for the "Mercedes Sprinter Transfer Bus vehicles". There were two renderings: one for the standalone screen, and one for a 7 inch AV new concept. It would seem that the latter was the rendering proposed to replace the DIR6160.
558 Between 8 February 2017 and 9 April 2017 Meneses and Lee exchanged design renderings and options for "Sprinter Transfer bus", one of which was a rendering of the RA7000 AV unit to be mounted on a dash. Meneses responded to one option proposed by Lee, "Fucking great … Also don't forget our version". It can be inferred that "our version" was a reference to the Hanhwa version of the DIR6160 being developed to supply directly to Mercedes.
559 Further, on 8 February 2017 Meneses provided Lee with an "FMS standard", which was a fleet management standard providing codes for CAN Bus, which a Mercedes representative had provided to him the day before.
560 Now Hanhwa worked on extracting CAN Bus data in order to provide telematics functionality for the 6160 AV unit to be supplied directly by Hanhwa to Mercedes, including by Shin and one of its other employees extracting CAN Bus data on a Mercedes truck at Directed's premises.
561 Now Lee maintained that Hanhwa's work in 2017 on an AV unit called 6160 was being done for Directed. But this was at odds with his written instruction to staff to use a user interface and frame completely different from the one from Directed.
562 Work continued on the project. However, there was internal confusion about what work was being done in relation to which project. Kang recommended that two codes be introduced, the DIR6160 and the HAU6160, and stated, "Please I request you to consider dividing the code into the above two and manage them". The confusion was understandable as the development plan revealed two separate projects. The first project being a new trim plate for the DIR6160 was for Directed, the development of which was completed in September 2016. The second project was the AV unit called 6160 for Hanhwa Aus to supply directly to Mercedes. Its development was estimated to conclude between July and the end of August 2017.
563 Kim understood as at January 2017, that Hanhwa was supplying the DIR6160 to Directed for on-supply to Mercedes, but that at some point in time Hanhwa would start to supply a unit directly to Mercedes. Kim accepted that Hanhwa's role assignment and development plan for each model in 2017/2018 outlined that the design of a unit to be provided by Hanhwa Aus to Mercedes was ongoing through to June and July 2017.
564 Let me turn to some other matters.
565 From March 2017 Meneses took steps to ensure that Directed ceased work on the SuperDAVE.
566 On 16 March 2017, Meneses told Summers that the SuperDAVE project was not going ahead. Summers was told to box up all the materials and prototype units and accessories and give them to Meneses, which he did. Meneses said something similar to Pieries. The next day, Meneses put off a representative of NavNGo who had sought information about the progress of the "DIR-8000 Android project".
567 Meneses then told Siolis that the SuperDAVE project was not going ahead and that IAL would simply continue purchasing the DAVE. Meneses told Siolis that he had informed Directed to stop work on the project. At Meneses' request, Summers loaded up all the SuperDAVE prototypes and other hardware onto an Isuzu truck and into the boot of Meneses' car. They were delivered to Lee.
568 It is also to be noted that the regular contact by Jaffe, a business development manager at Directed who reported to Meneses, with IAL virtually ceased. Previously he had phone calls at least 20 to 30 times a week with IAL representatives.
569 Now the Hanhwa parties originally asserted that the design phase for the HAU8000 started from scratch in March 2017. But this is not the case. Final samples of the HAU8000 were close to ready at that time. On 8 February 2017, Lee had emailed Meneses and Mills at their Hanhwa and Leemen addresses respectively informing them that "our 2 engineering people will come and test on end of Feb and they will bring the final samples to show Isuzu". Lee confirmed this concerned the HAU8000 and that he was getting assistance from Meneses and Mills.
570 Let me say something about Lee's variable evidence at this point, as rightly contended by Directed.
571 In April 2020, Lee sought to amend his evidence concerning his problematic exhibit KL-9 in relation to the HAU8000. Further, his exhibit KL-11 was also problematic. It purported to demonstrate that the GUI design for the HAU8000 was different from that for the DIR8000. But Lee conceded that an earlier open and close list for the GUI of the DIR8000 looked very similar to that of the HAU8000 GUI.
572 Further, whilst Lee now concedes that the DIR8000, had it gone into production, would have had the Nexell S5P6818 octa-core CPU, which was the same as the HAU8000, exhibit KL-11 incorrectly suggested otherwise. Exhibit KL-11 represented that the DIR8000 would have had the Samsung Exynos 4412 CPU, which had been rejected back in December 2015. But the DIR8000 was not going to use the Samsung Exynos 4412 CPU. Park accepted that from no later than 21 May 2015, it was no longer feasible and Hanhwa no longer proposed to use the Samsung 4412 CPU in the design of the DIR8000. Further, after a number of documents were put to Han to show that the conceptualised DIR8000 was to use the same CPU as the HAU8000 subsequently used, Han attempted to clarify his evidence that the units had different CPUs.
573 Further, the DIR8000 was not going to use the Android 4.1 operating system as represented in exhibit KL-11. The MFL that Hanhwa prepared for Directed to provide to IAL specified that it was to have the Android 5.0 operating system.
574 As I have said, Lee changed his evidence as to the design history of the HAU8000 and accepted that his timeline in exhibit KL-9 representing that design of the HAU8000 started in March 2017 was incorrect.
575 Lee now asserts that the design commenced in September 2016, the mechanical design commenced in late November 2016, the hardware design commenced sometime in November or December 2016 and the software design commenced in April 2017.
576 But Lee asserts that there was only a prototype developed as at November 2016. Lee also asserts that no work was done in relation to developing a unit with the Nexell S5P6818 CPU or the Android 5.0 operating system until March 2017.
577 But Lee's email sent on 30 November 2016 records that as at this date Palone was doing field testing on a unit called the HAU8000 in November/December 2016 which was described as "the last sample". It records that Lee wanted as many debugging tests done as possible on that sample because he was going to submit it to IAL for approval, together with the DVR, the wireless charger, the TPMS and the cameras, including the digital camera, all fitted into a truck. It records that Lee was intending to present that sample unit and the accessories fitted to a truck to all the Australian IAL dealers. And it records that Lee contemplated that full scale production would commence in April 2017.
578 Girgis gave evidence which supported the following propositions and inferences.
579 First, by November/December 2016 the hardware and software development of the HAU8000 with the Nexell S5P6818 CPU and the Android 5.0 operating system was substantially developed and nearly completed.
580 Second, given that in early January 2017 Hanhwa had a GUI prepared to show IAL for the HAU8000, Hanhwa had already completed work on the hardware and software development of the HAU8000 with the Nexell S5P6818 CPU and the Android 5.0 operating system. If Hanhwa were to change the CPU or operating system at that point, that would then likely require the GUI to change substantially. His evidence is that this version of the GUI for the HAU8000 is identical to a version of the GUI for the DIR8000.
581 Third, Hanhwa would not have sent an AV unit for map porting to NavNGo unless it had already implemented the hardware and software development of the HAU8000 with the Nexell S5P6818 CPU and the Android 5.0 operating system.
582 Fourth, given that by 31 March 2017, working samples of the HAU8000, wireless charger, TPMS, cameras and GPS antenna were brought to Australia by Lee, Lee's evidence that no work was done in relation to developing a unit with the Nexell S5P6818 CPU or the Android 5.0 operating system until March 2017 was not correct.
583 I will return to Girgis' evidence in a separate section of my reasons, although I should say now that I largely accept his evidence, save for certain aspects concerning the Gridtraq parties which I will identify later.
584 Let me move further forward in the chronology.
585 On 20 March 2017, under the heading "Request for ISUZU [Truck] CAN Data detection solution", Shin informed colleagues by email at Hanhwa Korea (including copying the email to Oh) that, "we think additional software is required to get CAN Data from ISUZU trucks. Please consider this and respond". Shin was prepared to accept that he tried to extract CAN data from the vehicle but was having difficulty doing so. He rejected that he was seeking to extract CAN Bus data to ensure that the HAU8000 telematics functionality was working. He just attributed his work to "look at all the functions of the unit". But this evidence is problematic. The email indicates that the CAN equipment was functioning normally. What was missing was the required software to extract proper CAN Bus data from the vehicle.
586 Between 28 and 31 March 2017 two engineers from Hanhwa Korea, Mr Song and Mr Min Soo Kim, came to Australia and worked for four days with Shin, undertaking work connecting the RA7000 telematics unit in various vehicles including an Isuzu truck. They prepared a report. The purpose of the business trip was divided into the RA7000 and the CAN Bus data derivation. The work involved checking Mercedes and IAL CAN communication function and RA-7000 telematics interlocking.
587 Shin accepted that during this work they connected an HAU8000 installed in an Isuzu truck with the RA7000 telematics unit to see whether they communicated. An attempt to detect CAN Bus data was also made. However, there was a problem. A method was attempted, but only meaningless data could be detected. It appears that additional software was needed to fix the problem.
588 The Korean engineers' report contained photos of test work on a Mercedes Actros truck at Directed's premises. The report noted that the DIR6160 was planned to be installed on the Mercedes truck. They sought to check that the RA7000 telematics unit worked with a Mercedes AV unit. Each step of the testing process was recorded with an accompanying explanation. CAN Bus data was mounted on a DIR6160. The power cable connected directly to the CAN Bus, without Directed's CAN box.
589 Summers of Directed said that in 2017 he saw Shin logging CAN Bus data on a Mercedes Actros at Directed's premises. Shin suggested that this work was because Summers requested changes to the DIR6160, including reverse camera and parking functionality. This was rejected by Summers on the basis that the work being done logging engine CAN Bus data was not necessary for camera and parking functionality. It is also contradicted by the fact that the pictures of the test work on the Actros truck at Directed premises were in the Korean engineers' report which was concerned with checking Mercedes and IAL CAN communication function and RA7000 telematics interlocking.
590 On 31 March 2017 being the last day of the Hanhwa Korea engineers' visit and testing, Oh participated in a meeting held that morning with Dylan Hartley, and perhaps with Allen Hartley, Davidson and Lee. She prepared minutes of that meeting.
591 After the meeting's conclusion, at 1.29 pm that day, Oh emailed a number of Hanhwa Korea team members in the following terms:
Isuzu series unit (DIR6200/HAU8000). Request additional tool response to check RS communication. (1) Debugging board (RS485). (2) Application file that can be installed on the computer. (3) After confirming the line for the available schedule for the above tool, request a reply. (If it is different from the schedule) (RS232 - or /5 and RS485 - TBD) as stated by Min Soo Kim. Request for reply.
592 Oh confirmed that the request for two debugging boards was further to a conversation with the Gridtraq people, "Yes. I asked our engineers to prepare the debugging board.".
593 Oh circulated the minutes provided to Dylan Hartley, Allen Hartley and Davidson at 3.26 pm, roughly two hours after her request for debugging boards from the Hanhwa personnel. The minutes are consistent with her request of the Hanhwa personnel. She could not recall if Gridtraq was the source of the request for the debugging board using the RS485 communication protocol. Directed says that an inference may be drawn from the timing of the meeting with Gridtraq that morning, the nature of the communications that followed, and the Hanhwa parties' reliance on the Gridtraq parties for telematics expertise, that the Gridtraq parties were the source of the request, so that they could check telematics communication between the CPU (RS232 protocol) with the Isuzu DAVE and HAU8000 AV units (RS485 protocol).
594 As for the minutes, item 4 was in the following terms:
4. Protocol Data sheet
• RA7000: RS232 Communication
• ISUZU Dave Unit & New ISUZU unit: RS485 Communication
• Please update the protocol data sheet for telematics module and pass it on to me for reference.
• Please refer to the attached "ISUZU Radio specification" data.
595 Oh confirmed that when she referred to the "New Isuzu unit" she meant the HAU8000. The attached "ISUZU Radio specification" was version 0.15 of the Directed Specification created by Vardon on 29 June 2016. The Gridtraq parties accept that they were provided with the Directed Specification by Oh.
596 On 6 April 2017, as part of the work done by Hanhwa Korea engineers to prepare the RS485 debugging board, Jun Kim from the R&D Lab at Hanhwa Korea provided Oh with the HAU8000 Telematics program and user manual. He said that he would deliver that day the RS485 communication cable to a team member, Sungmin Bin. It is clear that the communication cable was the cable that would connect the HAU8000 unit to a telematics unit. It can be inferred this was the CPU.
597 On 7 April 2017, Oh emailed various Hanhwa Korea personnel at 1.52 pm:
Greetings. This is Hyunju Oh from Hanhwa Aus. Thank you for confirming the requested items. Here is some additional information concerning the details about the RA7000 test debugging board in the attachment because there are parts that may cause confusion. (1) Applicable model RA7000. (2) Re debugging board preparation. Item 1. RS232 debugging board requested by Webhouse to check the communication between RA7000 and the telematics module unchanged from the existing or possibly previous communication: Sample application and manual delivered to Webhouse. Number 2. RS485 debugging board. This board was requested separately by Webhouse to check the communication between Isuzu 6200 line and 8000 model (models) and the telematics so it doesn't concern the RA7000. Reference email. Please see "subject sharing RA7000-related Webhouse meeting details and requests sent on 31 March 2017.
…
Managing Director Kichang Lee is scheduled to have a meeting with Webhouse personnel this afternoon. As soon as the progress and finalised matters on the addition and the mounting of AMP, external AMP are confirmed, I will share the details with you. Thank you, Hyunju Oh.
598 Let me at this point deal with the Hino opportunity.
599 From 2013, Directed supplied AV units with a 6.1 inch screen to Hino, manufactured by Hanhwa, with model numbers DIR6100, DIR6100FB and DIR6110. They were supplied for use with Directed's telematics unit.
600 Hanhwa's 2017 business plan referred to previous work for Directed in 2016 in relation to a Hino AV unit. This had been a planned project in which Hanhwa would create a face-lift to the DIR6110 for Directed for supply to Hino, being a larger screen with new rendering. However, the face-lift was delayed due to project scheduling issues.
601 In early 2017, Petrovski of Hino told Jaffe that Hino wanted a new unit with a bigger screen. Meneses told Jaffe something similar.
602 Jaffe says that a few months later after Petrovski's request, he asked Meneses about the new Hino unit. Meneses said words to the effect, "don't worry about it, I've got it under control".
603 Meneses and Lee were seeking to exploit this opportunity through Hanhwa Aus. The Hanhwa business plan recorded a new project, the DIR6400, which, according to Lee's plan was to be supplied by Hanhwa Aus to Hino directly. This new unit would have a new feature, being a new operating system. This new project, "Not for Directed", was to be 100% funded by "Hanhwa HQ". The project timeline was 1 year and 3 months from the start of development to production. Careful design and selection would be important because Hanhwa would be "fully responsible for defects".
604 Between at least April 2017 and September 2017, the Hanhwa parties worked on design renderings for a new 8 inch Hino AV unit. This was a version of the DIR8000 called the HAU8200. Lee asked Meneses' opinion of them.
605 On 11 May 2017, Lee provided design renderings to Meneses at his Hanhwa email address. Lee admitted doing so for their new business. The Hanhwa email address was so Directed would not find out about it. Their plan was to show the renderings to Petrovski at the Brisbane Truck Show.
606 Lee admitted that the HAU8200 unit was going to be designed by reference to the HAU8000 with changes to be added or deleted.
607 Let me deal with another matter.
608 On 12 April 2017, a Hanhwa employee, Erin Kim, provided to relevant personnel details of the members of the email group "hanhwaho@hanhwa.com.au", which in essence was Hanhwa Head Office. Meneses was included in that group, and also in the group "info@hanhwa.com.au", and in the sales email address. Lee confirmed that the email addresses were established at that date, as were the groups. Lee gave evidence:
And it includes Meneses, even though he was employed, at that time, by Directed; correct? --- I say many times that we knew that Johnny is director of Directed.
609 In April 2017, Mills took the red hard drive containing wholesale downloads of Directed's confidential information to Hanhwa Aus' office at Brooklyn. He uploaded the electronic files to a file sharing system with groups named HANHWA AUS and HAU8000 Project.
610 Further, in terms of evidence at least admissible against Mills, around that time Meneses handed Mills a USB containing Directed's confidential information and asked him to upload the contents to Mills' Hanhwa Aus PC, which he did, saving the file in a folder labelled "Directed" on the desktop.
611 Let me return to the work concerning the HAU8000.
612 On 4 April 2017, Mills shared with Oh Directed's forecast. The attachment was a detailed spreadsheet containing Directed's sales information commencing from 2009. There were about 600 stock items listed. It also contained forecasting information through to June 2018. The Directed sales prices for each item were also included. The detail of Directed's sales made on a year-by-year basis to Mercedes/Fuso were included. Further, a graph called "Isuzu Yearly Sales" contained similar information, including annual sales, percentage growth figures, and percentage of overall business figures.
613 On 11 April 2017, Oh provided Hanhwa Korea personnel with forecast information for the Australian business. Directed's forecast was attached. In her email, she stated that she was providing "a file containing up-to-date information" as well as "monthly sales plan and reference forecast data". She noted, "This is not the latest data, however our analysis based on information held by Craig Mills who used to work for Directed, suggests that we should start shipping DIR6110 from late July or early August to prevent Shortage issues".
614 Oh accepted that the sort of financial data contained in Directed's forecast was private information to Directed, but she claimed only to have checked the Hanhwa forecasting tab. There was no proper basis for Mills to have shared that information, or for Oh to have used it. Her email concluded by asking that updated information be approved by Lee.
615 Now Lee claimed that the document was used mainly for Directed's benefit. But it can be inferred that Hanhwa used this confidential information of Directed's to decide when and at what price it should move to substitute its products for Directed's products.
616 On 10 April 2017, Oh prepared a comparison MFL for the DIR8000 and the HAU8000. They were very similar. Both the DIR8000 and HAU8000 were specified to have telematics capability. And some of the so-called "differences" were already design features of the DIR8000 being the Cam9100D (digital camera), 4Ch Quad Control Box for cameras and ADAS. Oh said, "I just create this documentation for my reference". She said it was not done at Lee's request. She said further, "I didn't show this file to Mr Lee [YS Lee] or Ryan [Lee] or other people. Just for my own things". But her evidence that it was just for her own purposes is problematic.
617 On 13 April 2017, Oh provided a Hanhwa team member, Sunny [Jeongseon] Back, with the MFL for the DIR6200 (DAVE), and asked him to update the HAU8000 specifications using the same format. And there were some items requiring final confirmation by the Research Centre that were needed for preparing "client (ISUZU Truck) presentation material".
618 On 14 April 2017, minutes of an internal Hanhwa meeting led by Lee recorded in relation to the HAU8000, that "8000 model to be applied on ISUZU N/F Series". Lee said this was no more than "my plan to approach". The meeting notes suggested that delivery would be "18-20 weeks expected"; delivery of stock was planned for September 2017.
619 On 18 April 2017, pursuant to a request by Oh on 13 April 2017, Sungmin Bin of the Business Support Team provided Oh with HAU8000 specifications with detailed updates. It did not meet with Oh's approval. She asked Back for amendments.
620 On 19 April 2017, Oh followed up Back, "I am sorry for this tight schedule; but we have to provide HAU8000 and accessories' specifications and comparison information (with existing DIR8000) to our client in the very near future". That same day, Back responded with, "I am sending you the HAU8000 & DIR8000 comparison data".
621 On 20 April 2017, Oh requested from Back "updated specifications and a comparison table". Lee weighed in, "We are ALL still waiting for this sheet and due for today… We just lost another day to get order…". Back responded to Lee and Oh, "I am sending you 8000 (HAU & DIR) feature list and comparative table". In the attached DIR8000 document, those items written in red specify differences with the HAU8000. The DIR8000 document was based on Research Centre's document, first written in November 2014 and later amended.
622 Oh accepted that seven days after she modified the comparison document, she was in the process of preparing a document that provided a specification comparison between the HAU8000 and the DIR8000 to present to IAL.
623 On 21 April 2017, the Hanhwa parties made a further comparison between the DIR8000 and the HAU8000. The MFL for the DIR8000 referred to the RS-485 chip communication required for telematics functionality.
624 Now during the course of his evidence and having been taken to the MFLs for 23 July 2015, 18 November 2016, 21 November 2016, 10 April 2017 and 21 April 2017 for the DIR8000, Lee was asked to agree that each of those had telematics inbuilt hardware through an RS-485 chip. He said, "Not telematics inbuilt in the unit. Just we have RS-485 chip communication to communicate telematics module. That's all".
625 He accepted though that by including telematics as a separate item, he was telling the person reading that document that the unit could communicate with a telematics unit. He also accepted that the HAU8000, the DIR8000 and the DIR6200 had an RS485 chip inbuilt in the unit.
626 Between 10 April 2017 and 8 August 2017, various MFLs containing head-to-head comparisons between the DIR8000 and the HAU8000 were provided to IAL. The design and specification of the DIR8000 and its accessories had been previously approved by IAL when presented by Directed. It was important to Hanhwa to show that the HAU8000 was the DIR8000 with minor evolutionary developments, with identical accessories for both units.
627 On 27 April 2017 Mills sent Meneses at his Hanhwa address, and Lee, the DIR8000/HAU8000 MFL comparison sheet and HAU8000 IAL sign-off. Mills asked Meneses for his opinion on the attached documents. Clearly they were designed to show IAL that it was getting in substance the same unit.
628 In April 2017, the Hanhwa parties also started working on the PPAP for the HAU8000.
629 Oh informed Back in an email, "Hi Sunny, We haven't [got] approval regarding the label parts (Part no. or other related thing) for HAU8000 yet, but the PPAP has to be prepared by next week, so please adjust & add the top lid label data like below to line drawing temporarily". She made an additional request, "Please remove the Directed logo from the warning label".
630 Oh confirmed that the recipient was to take the document, remove the Directed logo/label and put on one for Hanhwa. She then provided Mills by email with the modified line drawing containing the Hanhwa logo.
631 Now the Hanhwa parties had not prepared a PPAP before. Oh acknowledged this; "Australia is right, but the PPAP data - this came from our Hanhwa engineers for Directed". So, Hanhwa had previously contributed information to the PPAP which Directed had to submit to IAL. But Hanhwa had not contributed all such information, nor had it contributed to the preparation of the PPAP as a comprehensive compilation.
632 On 28 April 2017, Mills emailed a Hanhwa Korea representative a purchase order for the HAU8000 for USD 325,000. Delivery due date, address and instructions were included in the purchase order. Lee admitted that Hanhwa Aus placed an order for 500 HAU8000 units at this time.
633 In May 2017, Meneses instructed Summers to provide him with a complete copy of everything in the K drive. The K drive was where all of Directed's confidential documents relating to finance, marketing, sales, service, production and testing matters were stored. These included computer-aided design (CAD) and other line drawings, product pricing, owners and user manuals, installation guides, brochures and promotional material, spreadsheets, PPAP documentation, data, kit diagrams, photos, MFLs, spreadsheets, part numbers, forecasts, and customer contacts. It included the DIR6200 PPAP. Summers did so. The timing coincides with the period when the Hanhwa parties needed Directed's information including the PPAP for the DIR6200.
634 On 16 May 2017, Oh sent Mills a spreadsheet detailing all the documents in the PPAP that Directed submitted to IAL for the DIR6200. The spreadsheet, in turn, contained embedded documents from the DIR6200 PPAP. Oh relied on Mills to assist after he had joined Hanhwa Aus, but within his restraint period.
635 Oh's covering email informed Mills that they were aiming to have all the HAU8000 PPAP data from Korea by 25 May 2017. That matters were so advanced is consistent with Hanhwa Aus obtaining the work in November 2016. Lee's only response to the written records was, "That's incorrect", but as Directed rightly contended his evidence should be rejected.
636 Her email stated in part, "each department of HANHWA Korea has been preparing and gathering the data for HAU8000 PPAP". She stated, "…we need to check some other documents whether they were created by ISUZU or Directed. Up to the subject of doc. formation, we can use the current one or have to change it". Oh recognised confidentiality/copyright concerns. "[I]f he used the same template with Directed, then this could be the problem so I just ask Craig to check the template". They had to rely on the DIR6200 PPAP because there was no other reference point.
637 Oh lacked confidence that there was no Directed confidential/copyright material: "…so it's not the confidential things. So I thought it's not the big one. And I thought that is from PPAP or just his personal things. I didn't know". But it was apparent from the embedded documents that these were sourced from Directed's PPAP for the DIR6200.
638 The spreadsheet contained embedded documents created by Directed. One was a process control plan (PCP) flow diagram prepared and approved by Mills. Oh's comment in the spreadsheet was, "Request from Korea. They asked about the purpose of this page and data because Korea does not have that kind of format or data". Oh confirmed, "we had no idea so what is that, the PCP flow diagram, our engineers have no idea. So we ask him what is that. And I have no idea where this documentation came from". Oh said, "I just guess he can access [DIR6200 PPAP] or he has memory to check that". Mills responded to Oh's email and provided the information requested. He confirmed in relation to one item, "This is a Directed form. Yes we should change layout so that it looks different. Directed have updated this form many times since this PPAP was issued".
639 On 22 May 2017, Oh referred her colleague, Sungmin Bin, to the updated "Preparation for Isuzu HAU8000 PPAP Submission". This was in response to a 15 May 2017 email from Bin, which stated, "We are currently preparing and gathering HAU8000 PPAP data based on DIR6200 PPAP data. Accordingly, below are the list and information of changes currently applied to DIR6200 PPAP data". Direction was sought in relation to a number of changes, some of which were minimal.
640 These documents show that there was no new substantial development of the unit called the HAU8000 that commenced from March 2017.
641 Further, as I have already touched on, Lee produced as part of exhibit KL-11 a purported comparison between the DIR8000 and the HAU8000. But in attempting to demonstrate that the HAU8000 was radically different from the DIR8000, Lee produced a comparison with a different unit, being the DAVE (DIR6200). Further, the GUI that Lee used to demonstrate the differences between the DIR8000 and the HAU8000 was not the correct version. Girgis produced a comparison chart of GUIs of the DIR8000 and the HAU8000 (or "Isuzu Command Centre") at different stages of its evolution drawn from contemporaneous documents. His analysis revealed they were all but identical. I will return to this later.
642 Further, and as I have also indicated, given the Hanhwa parties' problematic position, Lee filed a further affidavit which amended information within KL-9 in relation to the HAU8000 and substituted a new KL-11. In any event, when confronted with a Hanhwa Advanced Product Quality Plan dated 22 May 2017 which referred to a range of matters developed in the context of the DIR8000, Lee responded:
WISE QC: Now, Mr Lee, it's true, isn't it, that what this document shows is that the development of the DIR8000 started in May - in this document, May 2015, continues through to the end of August 2016 and then the HAU8000 picks up from September 2016 on that development work and continues through to August 2017. Isn't that what that shows?
LEE: Including concept-wise, including the timing of all my review, yes.
643 Similarly, despite their written evidence to the contrary, each of Park, Han and Kim accepted that between May and August 2015, the HAU8000 was designed and developed using the prefix DIR from August 2015 to the end of August 2016. They accepted that its development was carried out under the name DIR8000. And they accepted that the further development of the product from September 2016 and into 2017 continued under the name HAU8000.
644 On 12 April 2017, Lee informed Meneses by email that future commissions were to be paid by Hanhwa Aus: "No more Korea mate. It has to be under Hanhwa Aus and will discuss later. Maybe we need the contract between Hanhwa Aus and OE solution like sales commission??" Hanhwa Aus was to continue to pay him commission for Directed products.
645 Now the Hanhwa parties selected Polstar as its navigation supplier, not Directed's existing navigation software supplier, NavNGo. I agree with Directed that it is likely that this was because NavNGo had worked with Directed on the navigation software for the DIR8000 and to use NavNGo may have alerted Directed to Meneses' and Hanhwa's activities to supply the SuperDAVE directly to IAL.
646 The Polstar representative that the Hanhwa parties dealt with was Mohos, who had left NavNGo in early 2016. He knew Directed's representatives such as Siolis and Meneses well, having dealt with them previously when at NavNGo.
647 On 12 April 2017, Mills instructed Polstar on Hanhwa's requirements, including that there was a three-month schedule for launching the product. Lee accepted that the plan was for IAL to launch in July 2017.
648 From at least 27 April 2017 Mohos knew that the Hanhwa parties were pursuing the SuperDAVE to the exclusion of Directed. This was when Lee informed Mohos by email that he should not speak to Siolis about Polstar's engagement with Hanhwa. Mohos had initially been under the impression that his work was for the DIR8000 for Directed.
649 Indeed, Mills also warned Lee about this. In one communication he said: "Hi Ryan, Please be careful in polstar discussions as it appears that Zoltan thinks we are still linked to Steve/Directed with this product". Lee sought to tell Mohos that plans had changed. Lee also sought Meneses' advice "Do I need to open our plan?". Lee confirmed that he did not want Siolis to know what he was doing, hence his request that Mohos keep it a secret. Mohos responded: "I met Johnny last week who told me that you will take over the projects and now we also have real dilemmas and details to discuss so, of course, I will fly in" and "Don't worry, I don't talk to Steve. I do talk to Johnny but that should not be a problem, I guess".
650 It is evident that the Hanhwa parties worked on the Polstar navigation software for use in the HAU8000 between April 2017 and October 2017. It took seven months to develop the software. Much of this work was done in consultation with Meneses, and by Meneses involving other employees of Directed such as Summers. Polstar's communications included correspondence in May 2017 involving Lee, which was addressed to Meneses using his Hanhwa email address. Lee accepted that this work was for the HAU8000 whilst Meneses was still working at Directed.
651 During April to June 2017, at the request of Meneses, Summers reviewed and provided information and advice to Mohos about what was required to enable the Polstar software to be suitable for Australian roads, conditions, legislation and Directed's customer requirements. The information was specific. It included data points and the information that IAL needed for navigation software suitable for its vehicles.
652 On 11 May 2017, Gibson of Hino provided Directed by email with links to two new proposed Hino vehicles, the "500" and "700". That day, Meneses forwarded this to Lee. Hino shared with Directed its 2018 and 2019 plans including the launch of a new Hino truck.
653 Let me deal with another matter.
654 On 12 May 2017, Mills copied Lee into an email to a digital marketing specialist with the following request:
Could you please urgently dumb down the holding page for www.hanhwa.com.au. Please remove the Hanhwa logo, remove reference to Melbourne, Australia in the text. Also if you can, blur, cover or chop out the Isuzu logo on the steering wheel.
We are not ready to tell the world yet that we are setting up shop in Melbourne. Our Australian distributors do not know we are setting up and we need one or two months breathing space before letting the cat out of the bag.
655 Lee recognised the meaning of this: "At that time, yes, it was secret until Johnny had to arrange his exit". When pressed that the emphasis was on "Our Australian distributors", Lee said, "We didn't want Directed to find out first before Johnny said something because we didn't want to know. We didn't want". Tellingly, the website was not live prior to at least 27 September 2017.
656 Let me deal with some further matters.
657 On 24 May 2017, Oh sought instructions from Lee as to the user interface of the HAU8000. She questioned Lee: "And when RA7000 telematics is not linked, what should be done about it".
658 On 25 May 2017, under the title "CANBUS", Dylan Hartley emailed Davidson and Allen Hartley 10 attachments of CAN Bus information and parameters for IAL, Hino, Mercedes and UD. These documents related to the period when Dylan Hartley worked as an employee of the JV Vehicle a number of which he had marked as confidential. The Gridtraq parties claimed to have an entitlement to these documents under the DOCA. Directed says that no such documents were specified as being transferred to the Gridtraq parties under the DOCA. It says that the same is true of other such documents which Dylan Hartley sent to Davidson and Allen Hartley during the course of 2017, in the nature of CAN Bus information and vehicle parameters obtained during the course of Dylan Hartley's employment by the JV Vehicle. I will return to this topic later when dealing with the claims against the Gridtraq parties.
659 Now a work report for Hanhwa for the period 15 May to 19 May 2017 confirms that work was being undertaken to update the HAU8000 software to improve the telematics functionality through additional CAN information and that Hanhwa was moving forward in exploiting the Mercedes Sprinter opportunity.
660 From 25 to 28 May 2017 the Brisbane Truck Show was held. Relevant representatives of the parties and customers were there.
661 The evening before on 24 May 2017, Allen Hartley, Dylan Hartley and Davidson dined with IAL representatives, Grant Cooper, Humphries and McLean, at Serpico in Brisbane. By then, the Gridtraq parties knew that Hanhwa was to be the supplier of the HAU8000 to IAL, which was now no longer referred to as the SuperDAVE but as the Isuzu Command Centre or ICC. They sought to supply the telematics solution.
662 Lee had a discussion with Shanks of IAL about the supply of the HAU8000. Lee also held discussions with Petrovski of Hino, who purportedly expressed interest in Hanhwa Aus supplying directly, and with Koichi Hara of ICL about possible supply.
663 Meneses was also there and accompanied by Directed colleagues including Jaffe and Summers. At one point, whilst with Jaffe and Summers, they bumped into Dylan Hartley, Allen Hartley and Davidson. They spoke briefly with them. Allen Hartley recalls walking past Meneses and Jaffe.
664 Let me say something further about the ICL opportunity.
665 On 30 May 2017, Lee informed ICL that he needed clearance from Shanks before pitching the HAU8000 and accessories given that it was in development with IAL.
666 On 7 June 2017, Lee informed Hara of ICL that, "Sorry for taken some time but I just had a meeting with IAL staff that it is okay to have a meeting with ICL!". Lee said under cross-examination that it was Meneses that had the conversation with IAL not him.
667 A meeting was subsequently held with ICL on about 13 June 2017. The presentation depicted a DAVE unit. The truck accessories, which included a telematics unit, were the same as for the HAU8000. Lee said, "It's not same product. But function-wise, yes".
668 I agree with Directed that one of the products Hanhwa Korea sought to supply to ICL appeared to be similar to another product Hanhwa Korea supplied to Directed called the DIR1024. At the least this inference is open in light of Hanhwa's practice simply to change the prefix when diverting a product or project from Directed to itself. This new ICL product was the HAU1024.
669 It would seem that the HAU1024 was derived from the DIR1024. The minutes of an internal Hanhwa Korea meeting about the development of the new unit state:
1. Check on the Progress on the Development of HAU1024 for ICL
…
a. Same function as the existing DIR1024, DAB+ function added
…
2. Design
a. Maintain the front design concept of DIR1024 as much as possible
b. Design to be build based on the drawing of DIR1024 LCD
…
b. Ways to reduce costs on moulds required (e.g. unifying button moulds, using existing button moulds, and etc.)
- A request made to the device design team to consider designing the same hard ware frames as HAU8200 for HINO
…
By the end of July: 1st Demo Board (Using a Mock-up or DIR1024)
670 Lee said under cross-examination that it was an "off-the-shelf product and it's a very typical single-DIN product which is like CD, radio tuner and Bluetooth. This is just around the world". His denials are problematic. If it was an off-the-shelf product, there would be no need for a bespoke development meeting. A meeting with ICL occurred in Japan on 11 July 2017. Lee admitted it was their plan to supply ICL with the HAU8000 with a different sized screen and changes to the GUI. ICL were also considering buying both the HAU1024 for Japan and DRLs for Russia and Japan.
671 The ICL opportunity was pursued through to December 2017, after the commencement of these proceedings. Samples of DRLs were provided. The opportunity was to supply 65,000 sets.
672 Let me return to further work concerning the HAU8000.
673 On 26 May 2017, the Hanhwa parties prepared a spreadsheet recording year to date sales and projected sales. The spreadsheet recorded their intention to replace sales of the DAVE to Directed with the sales of the HAU8000 to IAL by November 2017.
674 On 30 May 2017, in an email exchange with Lee, Dylan Hartley noted that a new JV company involving the relevant Gridtraq and Hanhwa entities needed to be set up.
675 On 1 June 2017, under the title "Isuzu Can Bus Info", Dylan Hartley emailed Davidson and Allen Hartley two attachments being telematics engine parameters dated 21 March 2014 and an IAL telematics MFL and specification dated September 2015.
676 In early June 2017, Summers and Mohos undertook a three-hour drive in an Isuzu truck around Melbourne to evaluate and provide detailed feedback on the Polstar navigation software. Specific changes to make it suitable for IAL were recommended. A list of tasks for Polstar was drawn up. All of this work was done by Directed's employees, at the direction of Meneses, but this work was not for the benefit of Directed.
677 On 8 June 2017, Mills asked Lee by email whether he has "considered undercutting navngo/Directed for the Isuzu 6200 navigation business… It would take many months before Directed questions why Isuzu [don't] order many navigation from Directed any more".
678 Let me return to the further work on the D-MAX opportunity.
679 On 9 June 2017, Oh sent to Mills high resolution images of three units, one of which was the D-MAX 8 inch AV unit. So, following the diversion of the Isuzu D-MAX opportunity, work was being done to bring it to fruition, with such work built on the HAU8000.
680 On 19 June 2017, Lee sent an email to ICL representatives providing a dropbox link to a presentation on Hanhwa Aus which recorded that, as at that date, Meneses was the Australian contact and Lee was the contact for Korea, Japan and Hong Kong. Hanhwa was seeking to supply ICL an AV unit, telematics unit, steering wheel remote, DRLs and wing mirror cameras. Lee represented that "Hanhwa is the distributor (supplier) the lights parts for IAL". Under cross-examination, he recognised this was not true: "It's half-half because Hanhwa is the supplier for the lights parts for Isuzu through Directed". He accepted that he wanted them to believe something not true to obtain the business.
681 On 22 June 2017, Lee informed Meneses by email of the terms of his sales com/salary "package" of AUD 700,000 per annum. It included a proposal for Hanhwa Aus to pay Meneses' outstanding commission for the period January to June 2017 of USD 150,000. A short time later, Lee informed Meneses by email, "One more thing that you will have 40% shares then we can decide on financial year to share from the Hanhwa profit".
682 The package was detailed. It encompassed what Meneses was receiving by way of commissions: these would be partly by way of payment to OE Solutions and partly by way of salary. By this point Lee had been in a long and trusting relationship with Meneses and Meneses was the lynchpin in the relationship with the OEMs. He had the skills and contacts Lee needed at Hanhwa Aus. It would seem that Lee wanted to use them to strip Directed of its business and to create new business. It was proposed that Meneses would own 40% of the shares in Hanhwa Aus.
683 Let me deal with some June events and in particular the meeting on 30 June 2017 where Meneses and Lee presented the HAU8000 and some accessories to IAL. According to Oh's Hanhwa group wide email following the meeting, it was attended by "7 executives and staff including the presidential board of Isuzu Truck (Aus.)". The meeting was scheduled for up to two hours.
684 Let me deal with some background. Work leading up to this by Hanhwa seems to have had some urgency.
685 On 21 June 2017, Oh emailed Park, essentially asking him to drop everything to fix some issues and bugs with the HAU8000; she said that "prior to the first mass production, we are preparing for the presentation and product demonstration to our end-user customers". She warned that the presentation was critical. If there were errors, "it would be difficult for us to say to the client again that we are still improving the product". Lee claimed that this was his first and final opportunity to present to IAL, and that the products had to be made to "like production level so we can show the Isuzu people". The unit was now at production level, consistent with the documentary timeline.
686 On 29 June 2017, the day before the presentation, Mills emailed Lee and Meneses at his Hanhwa email address about IAL pricing. He asked Lee and Meneses to review the sell prices "so that we are all on the same page tomorrow". Plainly, Mills, in breach of his restraint, was involved in pricing decisions. Otherwise, he noted that two versions of navigation were to be included, namely, a parts option and an OE fit. Lee accepted that this was about Hanhwa's business, not Directed's business.
687 The presentation to IAL on 30 June 2017 took more than an hour and a half.
688 Lee claimed that Meneses came in only at the end. But I do not accept this evidence. It was Meneses who had the very strong and long relationship with IAL, who had had most of the direct dealings, and who had been involved in preparing the presentation.
689 The handwritten notes of one of the IAL representatives of the 30 June 2017 meeting record the attendees. On the Hanwha Aus side, they were "Ryan Lee, MD" and "Johnny Meneses - starts 1 August". Lee confirmed that this meant that Meneses would be starting at Hanhwa Aus on 1 August. Head to head pricing of the DIR8000 and the HAU8000 was discussed. It is convenient that I set out an image of the minutes:
690 The Hanhwa price for the HAU8000 was AUD 1292. This was $2 more than the price that Meneses had advised Lee on 27 August 2015 that he was seeking to pitch the DIR8000 to IAL, but Directed's ability to achieve that was contingent on Directed obtaining supply of the AV unit from Hanhwa at USD 650. I should also note some other matters.
691 First, Hanhwa's price to IAL is almost identical to the AUD 1300 that on 18 November 2016 Lee told Oh when "We won Isuzu".
692 Second, Hanhwa Korea supplied the HAU8000 to Hanhwa Aus at USD 650.
693 Third, Meneses had presented Directed's price to IAL on 8 December 2016 at AUD 1495. I agree with Directed that he must be taken to have intended it to be substantially dearer than the AUD 1300 that had been agreed as between Hanhwa Aus and IAL on 18 November 2016.
694 Now Lee's evidence that price was not discussed and that these prices must have been added by the IAL author, does not reflect the reality. The notes are evidently minutes of a meeting. They are headed, "Hanhwa Australia". They record the IAL attendees on the one hand, and "Ryan Lee, MD" and "Johnny Meneses, starts 1 August" on the other. Further, most matters noted could only have been known to Hanhwa (e.g. "Hanhwa total staff - 250 people).
695 Lee also offered to IAL that Hanhwa would absorb the tooling cost. In doing so he was ensuring that Hanhwa Aus could supply the AV unit to IAL cheaper than Directed could.
696 Now, that Meneses assisted in the pitch for Hanhwa Aus to win this business from IAL whilst still employed at Directed was a breach of his obligations, and done to the knowledge and for the benefit of Lee and the Hanhwa parties.
697 Subsequent to the presentation, Lee included Meneses at his Hanwha email address on communications with Shanks of IAL, even though Meneses' "1 August" start date had not yet commenced. This is contrary to the suggestion that Meneses did not participate in the pitch. Indeed, on 13 July 2017 in an email to Shanks, Lee referred to a discussion between Shanks and Meneses: "As discussed with JM".
698 On 6 July 2017, at the request of Shin, Summers sent him by email Directed's CAN Bus data for Isuzu N, F, FX and FY Series trucks.
699 Between 13 to 15 July 2017, the Hanhwa parties and representatives of the Gridtraq parties including Allen Hartley and Davidson met in Korea for the purpose of sharing telematics system technology and reviewing the integration with the safety screen and telematics module.
700 Let me at this point in the chronology deal with other July 2017 events.
701 In July 2017, Oh modified Directed's "OE parts required table" which she then provided to Mills. The Directed document was dated 4 July 2017. Oh emailed it to Mills on 10 July 2017. She said she obtained Directed's information from Shin even though he was not a Directed employee. She did not indicate that her use was authorised by Directed.
702 On 4 July 2017 Meneses sent an email to Siolis and Tselepis advising that he had knee surgery booked in for 20 July 2017 and that he would be off work for 3-4 weeks. Meneses also referred to leave he was planning to take from 6 July 2017 and stated that he would be returning to the office on Monday, 17 July 2017. Meneses was in Indonesia from 11 July 2017 to at least 6.50 pm on 17 July 2017, although he had several calls to Shanks of IAL and Lee during that period. He was back in Melbourne on 18 July 2017.
703 On 19 July 2017 the following occurred.
704 At 8.03am, Meneses sent an email from his personal email address to his Directed email address attaching his purported resignation letter from Directed.
705 At 11am, IAL's Product Policy Committee met to discuss the formal approval of the HAU8000. It was resolved to approve Hanhwa Aus' supply to IAL of the HAU8000. The IAL PPC minutes recorded:
1.1.2. Proposal for local parts inclusions and costs.
Mr Humphries described the process that led to the specification and pricing of the proposed new 8" touchscreen Multimedia unit, from supplier Hanhwa Australia. It was noted that the core unit manufacturer remains Hanhwa in South Korea (common to the current DAVE unit), however the supplier of this new unit and its accessories, is a direct subsidiary of Hanhwa. This new arrangement is in contrast to the current DAVE unit supplier, Directed OE, an independent Australian distributor. PPC was also advised that several key staff from Directed OE have moved employment to Hanhwa Australia. Hanhwa Australia officially commences operations from 1 August 2017, however they have been working well before this time in preparation. Their new product has undergone almost two years of development and testing in anticipation of adoption by IAL. The key features and proposed cost changes were presented to PPC (see separate file).
Of note, the PPC approved inclusion of:
• the base HAU-8000 Multimedia system (working title SuperDAVE),
• the satellite navigation feature, and
• the steering wheel remote control buttons
for all VC43 MY18 FX & FY models.
The total local cost change by model for these inclusions amounts to around [redacted], while bringing the standard SatNav into line with F Series and competitors. Refer separate spreadsheet for details.
706 I should say that in terms of the evidence before me there is no evidence that IAL knew of the mendacity of Meneses or the Hanhwa parties.
707 At 1.35 pm, Meneses called Shanks' mobile number from Keilor and he and Shanks spoke for 15 minutes and 55 seconds. At 1.56 pm, Meneses called Lee's mobile number from Tullamarine and he and Lee spoke for 11 minutes and 6 seconds. At 2.57 pm, Meneses sent an email to Siolis, copied to Tselepis, with subject "OE", asking if they could have a quick meeting at 3.30pm. At 4.02 pm, Siolis sent a reply email to Meneses, copied to Tselepis, stating "o.k". A calendar appointment, with subject "AT - Meeting" was sent to book "Meeting Room US" from 4.00 pm to 5.30 pm. Meneses' phone records reveal that he did not have a break of more than about half an hour between his phone calls throughout the day until between about 4 pm and 5 pm. At 5.02 pm, Meneses called Summers' mobile number from Keilor. At 5.16 pm, Meneses called Mills' mobile number from Keilor.
708 It may be inferred that Meneses waited to resign until he received confirmation from Shanks at 1.35 pm that the Isuzu PPC had formally approved Hanhwa Aus as the supplier of the HAU8000. It is also apparent that Meneses waited to resign until he had called Lee to confirm that they were ready to action their plan after they had formally landed a contract.
709 It was not until 4 pm on 19 July 2017 that Meneses met with Siolis and handed him a letter of resignation.
710 During the meeting Meneses told Siolis and Tselepis that he was having difficulty with the amount of work he had to do. He said that he was stressed and feeling under resourced, he was having trouble with his knee and needed an operation, his mother was unwell and needed care, he was interested in pursuing other business opportunities and considering a different career path and that he had been looking into buying an interest in a sportswear company. He also told Siolis and Tselepis that he was considering working for Hanhwa but only in relation to projects outside Australia.
711 Siolis told Meneses not to resign, that Directed would support him in whatever way possible to lighten his load, and that he could work part time. Meneses responded, "OK". Siolis gave Meneses back the letter of resignation. Siolis did not read the letter before handing it back to Meneses. Siolis and Tselepis were cross-examined about the circumstances of this meeting and its aftermath. Meneses continued to work at Directed.
712 On 21 July 2017, Shanks sent an email to Lee, copied to Meneses, formally advising that the "Super Dave project" received provisional approval at IAL's PPC meeting on 19 July 2017.
713 In July 2017, Lee says that Meneses showed him a resignation letter and Meneses said he had given notice to Directed and could start working at Hanhwa Aus in August 2017.
714 On 24 July 2017, under the subject "Email addresses / Aliases" Mills provided Meneses by email, using their "Hanhwa" addresses, with email addresses he had set up for him as aliases. Mills suggested that Meneses "change the starting letter from a "j" to an "m" to reduce the likelihood of a customer or supplier sending an important email to jm@directed.com.au". Clearly, both Mills and Meneses appreciated that Meneses continued to work at Directed, and continued to conceal his relationship with Hanhwa Aus from Siolis and Tselepis.
715 On 26 July 2017, Lee met with Shanks. At about 1.00 pm he provided Shanks with meeting minutes, copied to Meneses at his Hanhwa email address. The minutes confirmed that representatives of IAL including Shanks would fly to Korea on 21 August 2017 for four nights. A meeting on 4 August 2017 with Lee, Meneses and Humphries at Laverton to sign off the MFL was confirmed. Shanks was to provide the draft supply agreement that week. Hanhwa Aus would then start to supply the "SuperDAVE" on October 2018.
716 Now Lee used the term "SuperDAVE" because "Isuzu call it SuperDAVE". But I agree with Directed that this demonstrates that the HAU8000 was the SuperDAVE. It was not designed independently of the DIR8000, but was ready for production. All the design and development work previously been done by and for Directed had been appropriated. In essence Lee continued to call the AV unit the SuperDAVE to show IAL that what he was offering was the same as the DIR8000.
717 On the evening of 26 July 2017, Meneses informed Floudas, Siolis and Tselepis by email that: "Gents, As you might know by now I am at home after this knee replacement operation. The amount of pain is unbelievable, I am taking 28 different tablets a day. It is very painful. Anyway please find attached certificate. I will be on email and on phone if anyone needs anything. Speak soon. Johnny Meneses". This email and attached medical certificate through to 8 September 2017 is inconsistent with Meneses having already resigned.
718 On 27 July 2017, under the subject "Zoltan", which was a reference to Mohos of Polstar, Lee asked Mills and Meneses to drop equipment off to Palone the next day. So, work with Polstar on navigation for the HAU8000 continued, utilizing Palone who was a Directed employee.
719 On 28 July 2017, Summers and Meneses received an email from Steve Reidie of Directed NZ, following an enquiry from Bruce Reid of Isuzu NZ. Reidie asked for the timelines of "these units", being a reference to the SuperDAVE. Now Meneses was still keeping Directed in the dark about the HAU8000 project. He responded:
We have submitted a proposal to IAL back in Nov 2016 regarding new audio and other accessor[ies].
They have not agreed to anything at this stage, so the project is on hold until further notice. Directed will ONLY go ahead with this project until IAL give us the go ahead.
If my staff have given you the wrong impression I am sorry.
You should NOT pass any information to your customers in NZ until the product is available in the Australian market first.
Sorry.
720 This email response of Meneses was nothing if not mendacious. It is tainted with half-truths if not false statements.
721 On 31 July 2017, in the context of a pending meeting in August, Reidie asked Meneses and Tselepis whether they planned to attend. Reidie stated: "I know you JM are knocked up and can hardly walk anywhere so I would say you won't be". Meneses responds: "Hi Gents, This meeting is a fact finding mission for us and them and to confirm what we can do based on the features they have supplied us?...SR, please confirm the date and time". This further evidences Meneses' continued employment at Directed.
722 Further, on 31 July 2017, Meneses provided Shanks of IAL by email with Meneses' travel itinerary to Seoul for the period 21 August 2017 to 25 August 2017. This was during the period of Meneses' "sick leave" from Directed pursuant to the medical certificate. The purpose was for IAL to audit Hanhwa Korea's production facilities for the supply of the HAU8000. Meneses joined Shanks at the meeting in Korea. Shortly after this, the SuperDAVE became known as the "Isuzu Command Centre" or "ICC".
723 The Hanhwa parties say that Meneses commenced employment at Hanhwa Aus on 1 August 2017. But as the evidence discloses, his work for and at Hanhwa Aus commenced from incorporation, and for other Hanhwa entities years earlier. But in any event, Meneses was still employed by Directed as at 1 August 2017.
724 On 25 August 2017, Meneses from his Hanhwa address informed Colin Muir of Isuzu NZ by email: "Thanks for your email. My situation is very difficult at the moment and very confidential. I am still at Directed for now. Will call you soon to discuss". In other words, more than five weeks after Meneses' purported notice of resignation, he had made it clear that he remained employed by Directed.
725 Let me turn to another topic.
726 By an internal presentation dated 9 August 2017, the Hanhwa parties reported on the progress of various initiatives within the business. A report of "New Isuzu" contained an image of the AV unit, with its user interface containing a telematics icon. The accompanying written bullet points stated, "Telematics (CAN BUS) on ready". The presence of the telematics icon contradicted Lee's evidence who claimed that it was not on the HAU8000 GUI.
727 On 10 August 2017, under the heading "Commercial in Confidence", Dylan Hartley emailed a Webhouse employee, copied to Davidson and Allen Hartley, two attachments being telematics engine parameters dated 21 March 2014 and an IAL telematics data collect proposal dated 7 November 2012.
728 On 11 August 2017, Oh attended a meeting with the engineers of Gridtraq. Save for Oh, there were no other Hanhwa attendees. She made handwritten notes of the meeting under the heading "8/11 Meeting RA7000".
729 Directed says that it would seem that an attempt by Gridtraq to connect or to integrate the RA7000 telematics unit with the HAU8000 unit can be inferred from her notes: "HAU8000 indication on/off; if it's possible to add set-up"; "Cable tie telematics module type. Isuzu (RA7000)"; "BS bracket wider than before required"; "Isuzu truck found CAN not speed. Speed info required"; "RX TX Connect required [Illegible] / telematics".
730 Directed says that Oh's evidence that her notation relating to "HAU8000" was unrelated to the subject of the meeting is problematic. I will return to this later, although I would say now that she was dealing with a number of products.
731 Further, as to gathering telematics or CAN Bus data from the Isuzu truck, Oh said:
We will require that data to - yes, to get some more information so our engineers asked, ask about that things so they required so we discuss about engineer's request with Gridtraq when we had the meeting.
732 On 21 August 2017, Dylan Hartley asked Oh by an email with the subject "Meeting - RA7000 and Isuzu Screen Integration" that, "please can we meet upstairs to go through the RA7000 screen. Nick and I would like to discuss a few points with you, it should not take too long." His agenda referred to the RA7000, the Isuzu screen integration and the GUI designs. Shortly afterwards, Oh responded, "Hi Dylan, I will attend the meeting. See you soon".
733 On 23 August 2017, Oh provided Keightley of the Gridtraq parties with the feedback and other information. The Gridtraq parties had made requests about certain new features. Keightley also wanted to be provided with a sample HAU8000. Oh told Lee that they had asked for that.
734 According to Directed, the request for an HAU8000 sample suggests continued work to integrate the RA7000 telematics unit/CPU with the HAU8000. Directed says that this work was a prelude to a presentation made by Hanhwa and Gridtraq to IAL in September 2017.
735 Oh gave Lee a progress update on 29 August 2017. She forwarded to him "the latest protocol file that I received from Webhouse today", further stating, "We do not expect much problems with transmission of images or processing of TMPS".
736 Further, on 29 August 2017, Gibson of Hino asked Pieries for dimensioned drawings for the new Hino AV unit, providing him with the dashboard dimensions to help. Pieries provided Gibson with the drawings that same day. Meneses, apparently to prevent Directed from pursuing this opportunity, told Pieries, Summers and Jaffe: "Gents, slow down!! Speak soon about this project." This confused Pieries. Meneses did not raise it again. This provides further evidence of the diversion of the Hino opportunity.
737 Now given that he understood that the SuperDAVE project was not going ahead with IAL, Pieries asked Meneses whether Directed should try to sell the SuperDAVE to Hino. Meneses told him words to the effect, "They wouldn't be interested". But that is what Hanhwa Aus was doing with the HAU8200 with Meneses' involvement.
738 Let me say something about the events of September 2017.
739 In September 2017, Siolis observed that Meneses had returned to work with the assistance of a walking cane.
740 On 4 September 2017, Meneses using his Hanhwa email address provided Lee with his tax file number and other formal details, stating: "This is the details you require so we can start our partnership for many more years to come!". The details provided were consistent with those needed to be registered with ASIC as a director. Directed says that this is consistent with Meneses becoming a business partner with Lee, with 40% equity in Hanhwa Aus. Lee responded, "Very much appreciated. Yes. We will be a good team for the future. This is for our family also". Directed says that it is apparent that it was contemplated that Meneses was to hold equity. I will return to this topic later.
741 On 5 September 2017, Lee asked Shanks and Humphries, copied inter-alia to Meneses and Mills, whether he could show them on 11 September 2017 "the navigation software on the ICC device for you". The intention was to demonstrate the Polstar navigation software on the HAU8000. Mills, who was still in the period of his restraint, and Meneses were also to be in attendance.
742 On 20 September 2017, Leemen Australia was incorporated. Further, Hanhwa Aus commenced to pay Meneses an annual salary. The first pay period was 20 September - 19 October 2017. This demonstrates that Meneses' start date at Hanhwa Aus was later than 1 August 2017.
743 On 22 September 2017, Hanhwa Aus paid OE Solutions AUD 61,003.50 in payment of its invoice dated 21 September 2017.
744 Let me deal with another event that I will return to again much later.
745 On 25 September 2017, Allen Hartley, Davidson and Dylan Hartley presented to IAL a proposal to supply telematics units and telematics services, seeking to transition IAL from its "current Telematics Solution".
746 Directed says that the presentation evidences that the Gridtraq parties actually achieved telematics connectivity between their CPU (telematics unit) and the HAU8000. I disagree.
747 The Gridtraq parties made many references to the telematics unit and solution being available for the "Isuzu radio". A significant example is their statement, under the heading, "Isuzu Command Centre Head Unit Integration" that, "GRIDTRAQ Developed Proprietary Protocol - Designed a hardware communication module for screen integration". Directed says that the references to head unit integration and Isuzu Command Centre integration meant integration of the Gridtraq telematics unit with the HAU8000.
748 The presentation further stated in the context of a driver behaviour indicator that, "Data can be customised and displayed to the driver on the screen by fleet group, national averages and bench marks".
749 But Dylan Hartley's evidence, which I accept, was that the many references to telematics connectivity in the printed presentation were prospective. Directed challenges this. I will return to this topic later. There are two issues that I will later address being, first, whether actual connectivity was represented and achieved and, second, whether this was dealing with the HAU8000 at all.
750 On 26 September 2017, Meneses asked Directed staff for a PDF copy of each item as per the IAL PPAP list. That same day, Meneses informed Siolis and Tselepis by email, "Gents, I will be in NZ 3rd, 4th and 5th October 2017. Hino have a Track Day for suppliers and customers to attend. They are releasing the new 500 model, as you know Steve Reidie will be on leave for 3 weeks. I will also visit Fuso, Isuzu and MB". He claimed and was paid expenses from both Directed and Hanhwa Aus in relation to that trip. Clearly, he was still employed by Directed.
751 Lee also knew that Meneses was still employed at Directed. On 2 October 2017, Lee sent Meneses at his Directed email address a current outstanding remittance report requesting payment of amounts due from Directed to Hanhwa Korea. Lee admitted he could have rung Directed's CFO, Floudas, but did not do so. The following day, Mohos of Polstar asked Lee and Meneses by email, "It is October now. Is Johnny's move and Hanhwa supplying Isuzu directly public now? We still have problems…".
752 On 4 October 2017, installation instructions were prepared for the HAU8000. They were authored or adapted by "MP" (Marcus Palone). They copied Directed's instructions, but with HAU8000 details. They were later emailed by Mills to Shanks at IAL, copied to Meneses, Lee and others. Subsequently, a new version was sent by Mills to Shanks, copied to Meneses, Lee, Palone and others.
753 On 6 October 2017, but unknown to Directed, Hanhwa Aus formally entered into a supply agreement with IAL for the HAU8000 and accessories. The agreement was co-signed by Meneses and Lee as directors of Hanhwa Aus. But at this time Meneses was still employed by Directed.
754 Further, on 6 October 2017 Meneses forwarded to Lee an email which had been sent to his Directed address by a Fuso representative; attached were photos of a new truck dash. Lee agreed that following Meneses' New Zealand trip, this represented an opportunity to provide a new unit to Fuso. However, he said that the opportunity was for Hanhwa Aus not Directed. He said he paid no attention to Meneses' Directed email address. Lee's evidence illustrates the conflict Meneses was in.
755 On 11 October 2017, Meneses sent an email from his Directed email address to Siolis and Tselepis: "Year to date sales figures. Gents, hope you are both well. As you know, we've had another rocket month and still growing for October sales. This year, we again will beat the previous year.". In other words, Meneses represented to his employers that he remained an active and engaged employee at Directed, almost 3 months after he purportedly resigned. The email then stated:
With our new arrange[ment] in mind can you please arrange my share of 50% payment ASAP and balance of 50% within the next 3 years.
I have now a new arrangement with Hanhwa in which I will ONLY look after OS markets, for the past 3 months they have another guy looking after AUST.
I have also decided to buy into Joma Aust, which with take 30% of my time. (Hence Payout)
Please let me know if you have come up with a figure.
Also what is happening with the new sales guy or GM?
756 This was the only written evidence of Meneses communicating an intention to work at Hanhwa. The reference to "OS markets" (overseas markets) reinforces that this is what Meneses had indicated to Tselepis and Siolis on 19 July 2017 when he purported to resign. And I agree with Directed that the email itself was intended to deceive. Meneses was not working for Hanhwa looking after "OS markets" only. There was no "other guy" looking after "AUST". It was Meneses.
757 Siolis says that when he received the email, he considered it a negotiation ploy. But Tselepis said that he did not understand what the email meant. Siolis said he thought it was an attempt by Meneses to negotiate a higher salary.
758 Siolis' evidence that he unsuccessfully tried to speak with Meneses about it in the period 11 October 2017 and 20 October 2017, being the period before Summers and Dane revealed to him Meneses' wrongdoing, is supported by the evidence.
759 Lee confirmed that he and Meneses travelled a lot in October. They flew out on 11 October 2017, being the day Meneses sent the email to Siolis and Tselepis, travelling to Hong Kong, China and Japan for a month, and then to the United States. On 11 October 2017 Meneses sent a text message to Tselepis at 10.34pm. Meneses' phone records reveal that he was in Hong Kong on 13 October 2017. On 15 October 2017 Meneses sent 5 text messages to Siolis throughout the day from Hong Kong. Meneses was in China between 17 and 19 October 2017. On 18 October 2017, Siolis sent an email to Meneses, copied to Tselepis, asking when he was back so that they could catch up. At 5.09pm on 19 October 2017, Nic Topping of IAL sent an email to Mills, copied to Lee and Meneses, advising that there was a review meeting scheduled for 9.30am on 20 October 2017 "with Johnny to sign off the hardware and software" for the HAU8000. Meneses and Mills had a "Lock Down" meeting in relation to the HAU8000 with IAL on 20 October 2017. Meneses' phone records reveal that he was back at the Brooklyn premises on 20 October 2017 between at least 12.04pm and 1.19pm.
760 In any event Meneses' email is further confirmation of Meneses' dishonest dealings with Siolis and Tselepis. And the reference to an arrangement regarding a payment is something that I give little credence to.
761 On 17 October 2017, Oh informed Hanhwa/Leemen personnel that the first batch of the HAU8000 was pending; as I have said, this was otherwise called the ICC or Isuzu Command Centre. Estimated delivery was 27 October 2017. A detailed schedule was provided.
762 Meneses was to meet IAL on 20 October 2017 to check their test results and feedback. At this point, Meneses was making all relevant arrangements for the first delivery to IAL of the ICC. Indeed, 160 sets were to be delivered to IAL on 27 October 2017.
763 On 18 October 2017, Mills emailed Meneses, Lee and others a bill of materials to be used to build stock at Hanhwa Aus.
764 On 19 October 2017, Meneses received his first Hanhwa Aus official payslip for the pay period commencing 20 September 2017. OE Solutions also invoiced Hanhwa Aus for $45,833 + GST totalling $50,416.30 for October 2017, which was paid on 24 October 2017.
765 Further, on 19 October 2017, Oh informed Mills that from 30 October 2017 two new members would commence work at Hanhwa Aus, being Calleja and Hashim. Both were at the time employees of Directed. That same day, Mills also provided Lee, Meneses and Shin (copied to Palone) with a proposed bill of materials "that we will be using to build stock at Hanhwa Aus".
766 On 20 October 2017, Meneses met with IAL leading to a series of requests for Hanwa Aus to action.
767 Let me now say something concerning the genesis of these proceedings.
768 On 20 October 2017 Meneses' deception was revealed by Summers and Dane after Siolis presented to staff Directed's plans for a new building it was to erect on land near IAL's offices. At this point Summers and Dane realised that Meneses had been lying to them when he told them that the directors were trying to sell the business and/or retiring. They informed Siolis and Tselepis of some of Meneses' misconduct.
769 On 23 October 2017, Meneses last used his security card to access the Directed's premises.
770 On 26 October 2017, Allen Hartley, Meneses and Lee were in Japan. They had dinner together. Lee and Meneses had also arranged to meet with ICL on 27 October 2017.
771 On 26 October 2017 these proceedings were commenced and I issued search and freezing orders.
772 On 27 October 2017, the search orders were executed at the Brooklyn premises and the homes of Meneses, Mills and Lee. Meneses made 5 calls to Allen Hartley. They were both still in Japan. Allen Hartley claimed that Meneses did not refer to a search order during the calls. But his affidavit stated that he had received several phone calls from Meneses that morning who seemed quite distressed by what was happening back in Melbourne. He then clarified his evidence to refer to "a sheriff of the court or whatever it is at his house and demanding his wife gets a lawyer". Meneses made 6 calls to Palone.
773 On 6 November 2017, the freezing orders were amended. This allowed Hanhwa Aus to supply IAL's orders for the HAU8000. They supplied a total of 388 HAU8000 units to IAL.
774 Pursuant to the freezing order, a part of the proceeds were put into a trust account pending the outcome of these proceedings.
775 During early November 2017, Lee says that Shanks told him that despite the amendment to the freezing order, IAL did not want to get involved in any legal issues between the Hanhwa parties and Directed, so it would cease ordering the HAU8000.
776 Now at this time Directed remained reliant on Hanhwa Korea for the supply of the DAVE.
777 On 8 November 2017, Oh emailed Proghios requesting a forecast of its forward orders of AV units from Hanhwa Korea so that Hanhwa Korea could order processing parts from its supplier. The requested forecast was provided.
778 On 17 November 2017, Hanhwa Korea and Leemen Korea gave notice to Directed that no orders for products from Directed would be accepted after 28 February 2018.
779 That same day, Meneses from his Hanhwa address wrote to Shanks of IAL directly:
Dear Ian,
Let me first say that we are very very sorry to put you and IAL in this position.
We don't have control on what Directed will do or not do but I can assure you that HanHwa are here to support IAL in any decision you take.
As per our previous conversation if you require us to confirm anything to do with our products please let me know and we are more then happy to come in.
You know what HanHwa can do and we can help in any way please let us know.
780 IAL decided no longer to communicate with Meneses.
781 On 20 November 2017, Hanhwa Aus paid OE Solutions $45,833 + GST totalling $50,416.30. There was no suggestion that the Hanhwa parties' relationship with Meneses would cease notwithstanding these proceedings.
782 On 22 November 2017, Meneses approached Shanks of IAL copying in Lee, offering to supply on behalf of Hanhwa Aus LED work and driving lights. Lee knew that at that time Directed was supplying DRLs to IAL which they sourced from Hanhwa Korea. Meneses made a similar approach to Shanks on 30 November 2017.
783 Now Lee admitted that he was aware of the restraint clause in Meneses' employment agreement and that he did nothing to stop Meneses from pitching competitive product to IAL. When it was put to Lee that Meneses was subject to a restraint, he responded, "Not actually care about employment, to be honest".
784 On 27 November 2017, Lee emailed Mohos of Polstar copied to Meneses, conveying Hanhwa Aus' intention to exploit Meneses' relationships with truck customers, and to pursue all of them to the benefit of Hanhwa Aus. Lee falsely denied various matters in that email.
785 First, as to the statement "JM has already approached the Fuso GM to introduce Hanhwa company and we will present Hanhwa structure to supply multimedia unit for the Fuso trucks", Lee claimed that this was "wrong information from Johnny" and that this meeting had not, in fact, occurred.
786 Second, as to the statement "We are 100 per cent sure that they are keen to do with our product to supply all trucks in 2018", Lee also said this was not true. It was not lying; he was expressing confidence intended to encourage Polstar, "because they got a strange letter from Directed about stop or allegation to Polstar or something". Lee admitted that he knew Directed was supplying AV units to Fuso. He also admitted that he did not take any steps to stop Meneses.
787 Third, as to the statement "Johnny Meneses has also approached the Hino product manager and say Hanhwa is here to support and supply", Lee said, "He didn't approach Hino. I did approach Hino". He admitted they were proposing to supply to Hino the HAU8200. But he also claimed it was different from the HAU8000. And yet his email had said, "We will introduce our new project very soon. See description as following. Eight-inch screen. Please see attached the rendering to be offered. DVD mechanism, Android, full capacitive touch, very similar to the HAU8000 unit. We will send working sample on February 18. I am assume that Hino will take navigation standard fit. Approximately 5000 per annual sales.".
788 Fourth, Lee also denied that they proposed providing Mercedes with the HAU8000 with a seven-inch screen and different fascia, even though his email said:
Mercedes-Benz and Fuso is same group. And good thing is there is there's the same person to control or decide, seven-inch screen same resolution as I send this week with Android base, navigation standard fit, 2 to 3000 per annual sales. Also, similar timing on quarter 2 2018 start to release.
789 Now as Directed correctly contended, Lee had a precise appreciation of Directed's allegations of misconduct against Meneses, Mills, the Hanhwa parties and himself. He had been put on notice of Meneses' contractual restraint pursuant to his employment agreement with Directed. But even though he was on notice of Directed's claims, Lee did not care that Meneses remained subject to this restraint. He and Meneses resolved to pursue all the truck customers with which Meneses had a relationship, irrespective of whether they were existing customers of Directed. This is all dubious conduct on the part of Lee to say the least. And clearly Lee dissembled about the meaning and effect of the email when cross-examined about it.
790 Now by December 2017, IAL was not prepared to continue purchasing the HAU8000 due to the Court proceedings. IAL was also concerned about the effect of Hanhwa Korea no longer supplying the DAVE to Directed.
791 On 18 December 2017, Lee attended a meeting with IAL representatives, being Shanks, Taylor and Andrew Harbison. The minutes from Shanks to Lee noted:
Ryan,
Thank you for your time 18/12/2017, from our meeting attended by yourself, Phil Taylor, Andrew Harbison and myself.
IAL confirmed that there is no set date or guarantee to fit the ICC unit. Ryan reported that Hanhwa Aust have 200 ICC's in Australia and 500 at Hanhwa Korea. Quantities are similar for the Steering wheel control.
Ryan reported that Hanhwa Australia is set up and capable to support and warrant all Hanhwa manufactured product in service supplied by Directed OE.
Ryan reported that there is no formal supply agreement between Hanhwa and Directed OE and that Hanhwa wants to stop supply of product to Directed OE from Feb 2018 orders received with no product being supplied after Nov 2018, however Directed OE have not agreed to this and wants the period of supply extended beyond Feb. The supply of product from Hanhwa to Directed is subject to Feb court action.
IAL reported its concerns regarding continuity of supply of audio product and the importance of audio systems and their effect on vehicle supply.
…
Ryan reported that Hanhwa could not supply the DAVE unit (as it is today) to IAL because Directed OE paid for the facia tooling however the DAVE 'back end' chassis and electronics are Hanhwa owned. To supply the DAVE unit with a new facia is possible within 2 - 3 months.
Hanhwa have a facia available that was to be used on a UK product that did not eventuate using this facia on the DAVE body is a possibility for continued supply of DAVE product.
…
Ryan reported that Hanhwa could supply SAT NAV similar to IAL current product by April 2018.
…
IAL asked Ryan about Johnny Meneses's employment status at Hanhwa to which Ryan said Johnny has been employed by Hanhwa Aust since August but not as a Director.
Ryan noted that our Supply agreement needs to be re-signed without Johnny's signature.
Ryan divulged an employment agreement between Johnny Meneses and Hanhwa Korea dating back to 2005, details were not discussed. …
792 On 19 December 2017 Lee forwarded to Dylan Hartley, Davidson and Allen Hartley a 2014 version of the Directed Specification, asking Dylan Hartley "What is this one??". Lee claimed that he sent it to Dylan Hartley because he wanted to understand whether this was the document referred to by Directed in its then Statement of Claim. However, Directed did not refer to the Directed Specification in its pleading until 2019. I agree with Directed that Lee's explanation is not plausible. So far as Dylan Hartley and the Gridtraq parties are concerned, I will discuss this matter later in my reasons.
793 On 22 December 2017 by an email from Lee to Shanks, Hanhwa Aus suggested that it would supply IAL with the DAVE unit, being the back end with a new fascia. Under cross-examination, Lee initially claimed he could do this because Directed had only paid for the tooling for the fascia. He eventually admitted that Directed had also paid for tooling for the chassis. Lee referred to this as a misunderstanding.
794 Now the timeframe for delivery of the proposed unit was "only three months" plus one month's shipping. But Directed says that such a timeline could only have been achieved if the working sample was derived from a prior product. I agree.
795 Hanhwa Aus also offered to take over the supply to IAL of parts previously supplied to IAL through Directed. The same parts would be supplied with the part numbers changed from Directed part numbers to Hanhwa part numbers.
796 On 28 December 2017, Shanks of IAL contacted Lee:
Please provide a sample of the DIR6200 (DAVE unit) with your proposed Hanhwa [fascia] which we discussed at our 18/12/2017 meeting where you reported that with the new facia Directed OE would have no claim on this combination.
797 Once again, Lee suggested that IAL was offered, "New development from Hanhwa". But after being shown Shank's email he recanted, and said "On that email, it says DAVE unit but to my knowledge, to my perspective is that the DAVE unit which is their core, that was our design that we can use our software and hardware". Lee was then shown his response to Shanks: "This unit will differ ONLY front [fascia] however "back end" will be the same PCB/Connection. Further, it will be the same accessory connection…".
798 Let me turn to some events in 2018.
799 On 5 January 2018, Lee informed Shanks that he could show IAL the first working sample (new fascia/tool) on Monday, 22 January 2018, if they so wished. Lee confirmed he was ready to show the working sample to IAL by that date. According to Directed, this swift turnaround demonstrates derivation from a prior unit.
800 On 12 January 2018, Lee met with Shanks at which he provided IAL with renderings of the "new 6200 unit with new [fascia]". The new fascia and changes to the printed circuit board (PCB) and GUI were intended to "differentiate the proposed unit from the current DIR6200 (Directed unit)". Lee also quoted Shanks for the "new 6200 unit with new [fascia]". The quote was AUD988.67 (audio and standard navigation), AUD192.30 (navigation) and AUD866.57 (audio). The quote suggests that the specifications of the AV unit had been determined.
801 On 19 January 2018, IAL invited Directed to participate in a closed tender for the supply of an AV unit to replace the DAVE. However, IAL gave Directed no details as to its requirements for the new AV unit.
802 On 23 January 2018, Lee presented to IAL a working sample of the "new 6200 unit with new [fascia]". Shanks confirmed its attributes by email to Lee (copied to other IAL representatives) the next day:
Ryan presented a working version of Hanhwa 6200 with new [fascia] and GUI. This version is Telematics ready with the Telematics icon hidden but can be unhidden on production units by a sequence of button presses meaning it can be enabled without requiring the audio to be removed and returned to Hanhwa. Production units will have some minor changes to the knobs and controls from the working version presented. Ryan explained the CPU running charge (as reported previously).
…
Ryan passed accessory line drawings and installation guide for the new Hanhwa 6200 unit.
IAL asked Ryan to issue a letter from his law firm confirming the ownership of the Hanhwa 6200 (as presented) at that no parties other than Hanhwa paid for development, tooling or any other contributions to its production. IAL wants absolute clarity of its ownership.
Mapping for the new 6200 unit uses Here maps with Polstar compiling the maps to Hanhwa.
…
Lead time 3 months for the new 6200 (as reported previously).
803 On 24 January 2018, Mills Oakley on behalf of the Hanhwa parties provided the requested letter of comfort in relation to the new 6200 unit with new fascia to Hall & Wilcox, acting for IAL. The letter claimed that all inputs (fascia, chassis, GUI, PCB Design and Software, PPAP and Installation Guide) had been newly developed by Hanhwa Aus, that Directed had no involvement in the concept, development or inputs to the unit, and that neither Meneses nor Mills had in any way been involved in the concept, development or inputs to the unit.
804 Now I agree with Directed that given that the unit was the DAVE with a new fascia, all three of these representations were misleading and known to be so by the Hanhwa parties and Meneses. So much is clear from an email from Lee to Shanks several days later.
805 On 25 January 2018, Lee provided Shanks by email with the soft copies of cost for the new 6200 unit with new fascia.
806 On 28 January 2018, Lee provided Shanks with the latest design for the new 6200 unit with new fascia. Lee blind copied this email to Meneses who, in turn, on 30 January 2018 responded to Lee, "Looks great! Does the back of the unit also change to the current HAU8000?". Meneses' query on this aspect was to enable Lee to give further information to IAL. Lee replied to Meneses, "The back chassis would be similar with 8000 but by using gender harness, we can connect the current accessories harness (6200) into the new unit".
807 On 12 February 2018, Directed presented to IAL its ideas for a replacement AV unit for the DAVE with significant improvements.
808 By 16 February 2018, Hanhwa and IAL had changed the plan from supplying the DAVE with a new fascia, to supplying the HAU8000 with a new fascia and with the same accessories as approved for the DIR8000 and the HAU8000. The unit was called the LM18I.
809 By that date, there was an MFL for the LM18I, which at this point had a 6.1 inch screen.
810 Now the Hanhwa parties' case is that in early 2018, Lee instructed Park to design a new product to supply to IAL because IAL had been put off the HAU8000.
811 On 22 February 2018, Shanks reported to colleagues on the outcome of a meeting held earlier in the week to discuss "audio supply and coverage". He reported:
We considered the new Directed offering and the alternative Hanhwa 6200 unit (supplied by Hanhwa Aust, not via Directed) for supply past midyear and decided to select the alternative Hanhwa 6200 unit for a number of reasons including cost, ICC stock, current accessories, audio range consistency. Also we thought the Directed offering was too risky given the lack of detail presented by them.
…
Tomorrow Simon and I are meeting with Hanhwa to approve the final spec of their 6200 unit and clarify its accessories which I expect will be the same as the ICC and some DAVE accessories.
812 Save for changes to the fascia, screen size, location of physical control buttons, auxiliary port and USB, the LM18I and its accessories were substantially the same as the HAU8000 and its accessories. I will address these matters later.
813 On 23 February 2018, Shanks provided Lee with some specific questions about the cost. He wanted to know if the 12 January 2018 quote was "with Windows operating system and a 6.1 inch touch screen". He sought a quote for the LM18I with the Android operating system and 6.1 inch touch screen. Shanks also asked Lee to update the MFL to include a 5 year warranty, 16GB hard drive, and software updates by USB. He told him that the SD/USB Multimedia SD card slot was pending. He also asked him to add "PIP" to navigation. Finally, Shanks instructed him to revise the comparison chart to put an "O" (designating "available") for the steering wheel remote control and PDF reader/viewer.
814 On 26 February 2018 and in response to Shanks' requirements, Lee sent Shanks an email with the proposed rendering, the updated MFL, diagrams of the unit with all accessories, and the requested revised comparison chart comparing the LM18I to the HAU8000. It would seem that the intention was to confirm with IAL that the HAU8000 was substantially similar to the LM18I.
815 Whilst Lee's evidence was that the LM18I was never designed to communicate with any telematics unit, the comparison stated "telematics third party optional", which suggests that telematics capacity was built into the unit to be able to provide telematics functionality. Further, the accessories diagram demonstrated that the back end of the LM18I and HAU8000 were the same.
816 The comparison appears to have been required to provide IAL with the comfort to move forward quickly without the typical testing process. Shin had testified to the typical length of the design process, the steps involved and the need for testing. Of course, the DIR8000/ HAU8000 and its accessories had been sampled, inspected, tested and approved by IAL in 2016 and 2017.
817 On 5 March 2018, Shanks asked Lee whether Hanhwa Aus could delete the CD mechanism in order to reduce cost. Lee responded that they could remove the CD mechanism, but if they wanted to cut cost, they should consider having a bigger screen ("maybe 6.2 inch") rather than 6.1 inch. These changes were then adopted and approved including the larger screen.
818 On 15 March 2018, the LM18I MFL accommodating these two changes was formally approved and signed by IAL. Now the minor differences between the LM18I and the HAU8000 were described by Girgis. According to Girgis, the changes required were minimal if the earlier work was used.
819 Lee confirmed that he told Shanks that two samples were to be available by 15 May 2018. He then made a concession demonstrating derivation of the LM18I from the HAU8000:
And I want to suggest to you, sir, that the fact that samples would be ready for delivery by 15 May shows that there was no development of a new unit from scratch or from the beginning. Do you agree with that? ---Not from the beginning, but we can actually utilise some of … from the HAU8000 stage.
820 On 28 March 2018, Directed was informed by IAL verbally and in writing that Directed had lost the tender to the Hanhwa parties. Shanks told Brett Stafford several times that the new AV unit was not the SuperDAVE. He told Stafford it was a completely new unit offered by Hanhwa. He also told Stafford that the AV unit would operate using Polstar navigation software.
821 Further, on that day Shanks informed Lee that the LM18I had been approved and that production quantity stock was required by July 2018, with "4 samples asap to test and trial". Lee responded by thanking him for the opportunity and stated that they would start production. The following day, Oh issued a design commencement order for the LM18I which anticipated shipping at the end of June 2018.
822 The LM18I was not a wholly new unit offered by Hanhwa. In the limited time available, it would not have been feasible to design a new product from scratch. The Hanhwa parties' lack of proof as to independent design derivation is a further material factor. I agree with Directed that the LM18I is the HAU8000 with cosmetic changes.
823 The Polstar navigation software is another relevant factor. The development timeline of the first version of the Polstar software was in the order of seven months. I agree with Directed that it is to be inferred that the navigation software was the same as or based on the earlier iteration.
824 Further, the Hanhwa parties say that in May 2018 Shanks or Humphries of IAL informed Lee, when he asked about the possibility of telematics in respect of the LM18I, that IAL did not have any plans for telematics functionality from the Hanhwa parties or the Hanhwa parties' AV units. Lee says that when he asked them why this was the case, he was told that was confidential to IAL. Now Directed says that based on the timeline this explanation is implausible. The LM18I had been approved for purchase two months earlier. The comparison document produced specifies "Telematics (3rd party - optional)". But I disagree. Lee's evidence is not implausible on this aspect.
825 On 17 May 2018, coinciding with the last day Hanhwa Korea had to accept orders from Directed, IAL placed with Directed its final orders for the DAVE units and associated parts.
826 On 22 June 2018, Lee provided Shanks by email with a table comparing the parts of the HAU8000 and the LM18I and their accessories. This indicated that many of the parts and their accessories were common.
827 In June 2018, Directed was informed that it had lost the business for Isuzu New Zealand to Hanhwa. Hanhwa Aus won the contract to supply Isuzu Holden NZ with a 6.2 inch multimedia unit, being LM18I.
828 On 9 July 2018, the first order of 500 units of the LM18I were delivered to IAL.
829 On 20 July 2018, the second order of 500 units of the LM18I were delivered to IAL.
830 Now until October 2018, IAL continued to purchase some of the stock of DAVE units and accessories which Directed had supplied to it by Hanhwa Korea.
831 Let me say something about Meneses' and Lee's pitch of the LM18H to Hino.
832 By 27 November 2017, Meneses had pitched the HAU8200, being the HAU8000 with a flip down screen, to Hino. The HAU8200 was renamed the LM18H.
833 On 22 February 2018, a meeting was arranged with Hino. Lee asked if Meneses could come with him. The meeting took place on 27 February 2018. According to the minutes, Hanhwa explained that it would cease to accept orders from Directed by 27 May 2018. Meneses supplied Hino representatives with new drawings and an MFL based on a previous meeting.
834 There were further exchanges leading through to June 2018. At one point, Meneses advised the Hino representative that, "Our product does have inputs for a telematics solution". This was consistent with Hino's desire to add CAN Bus communication to display general truck information and speed/temperature on screen.
835 Girgis gave evidence, which I accept, that the LM18H is the same as the LM18I with minor changes, and includes telematics capability. Lee accepted that the LM18H had inputs for telematics to be connected to a telematics unit. Lee also accepted that the telematics device was to be one provided by the Gridtraq parties.
836 Directed says, which I accept, that the LM18H was the HAU8200 (a version of the HAU8000) with the HAU8200's flip-down screen. The product was derivative as is apparent from an instruction by Hanhwa Aus to Polstar to use the same user interface navigation design for the LM19M/F, but colour matched with the UD GUI.
837 Now Directed succeeded on a head to head basis with Hanhwa Aus. In about July 2018, Petrovski of Hino informed Hanhwa Aus that Directed had been chosen as its preferred supplier over Hanhwa Aus. I will discuss later the consequences of this for Directed's case.
838 Let me also say something about Meneses' and Lee's pitch of the LM18I to ICL.
839 Hanhwa Aus sent a number of samples to ICL in Japan. ICL had been offered a version of the LM18I. But the product provided contained features which Japanese customers would not accept. The big touch screen was a problem. So was the fact that there was no CD/DVD slot.
840 Lee then sought to meet with Hara to offer a solution, on the basis that he could offer a unit which had CD, DVD and Blu-ray. The option available was substantially the HAU8000, which had CD capacity.
841 At this point, let me say something about Meneses' and Lee's pitch of the LM19M and LM19F to Mercedes/Fuso.
842 On 1 December 2017 Meneses first approached Parthiv Parikh, Procurement Manager, Productive Material for Mercedes, seeking a meeting on behalf of "our Managing Director Mr. Ryan Lee and myself to present our company Hanhwa and all its products" for Fuso and the Mercedes trucks range. Lee accepted that Meneses was able to provide the introduction, and that he was a very important part of Hanhwa's ability to win that business.
843 A meeting occurred. Lee attended the meeting knowing that Hanhwa was supplying AV units and accessories to Directed for it to supply to the Daimler group, which were then installed in Mercedes and Fuso vehicles. The purpose of the meeting was for Hanhwa to pitch the LM19M and LM19F to the Daimler group to replace Directed's products.
844 On 17 May 2018, Lee provided a representative of the Daimler group with a letter providing notification that Hanhwa was to cease supply to Directed. Lee crafted the letter to encourage the recipient to get new supply from Hanhwa.
845 In September 2018, Hanhwa Aus won the contract to supply Mercedes/Fuso trucks to New Zealand with a 6.2 inch (LM19M) and 7.0 inch (LM19M) multimedia unit.
846 The Hanhwa parties and the Gridtraq parties made a joint presentation to Mercedes in about late September 2018 to take over the provision of telematics hardware, software and services to Mercedes and Fuso. Lee said that it was Meneses and the Gridtraq parties who gave the presentation.
847 The presentation was headed, "Mercedes Benz/Daimler Truck and Bus Australia Pacific Pty Ltd Telematics Overview & System Migration Strategy". The presentation stated:
The Hanhwa / Gridtraq Telematics Team designs, develops, manufactures and supports integrated vehicle tracking solutions, fleet management, vehicle telematics, connected mobility, automotive services, IoT tags, asset tags, insurance telematics; including but not limited to hardware, firmware, software and customer programs, technologies, applications and systems.
…
This document outlines a roadmap and provides checklists to assist with the transition of Telematics services from a legacy telematics provider to the Hanhwa-Telematics Gridtraq Platform and Service, mitigating some of these challenges.
848 The presentation was to be read in conjunction with a "Hanhwa Telematics Proposal - 20 September 2018". In a slide comparing "Traditional telematics vs The Hanhwa Offering", it was said that "Head Unit & Vehicle Integration" could be provided. Lee accepted that there was such integration between the telematics unit and the AV unit within the vehicle. What Lee was not prepared to accept was that the telematics unit the subject of the presentation was the RA7000 telematics unit or that it had progressed beyond the planning stage. Lee's denials were maintained even when it was pointed out that a pictured telematics unit was identical in appearance to the RA7000 telematics unit, and even though he accepted that Hanhwa was by that time producing or developing the LM19F and the LM19M. I would reject his denials.
849 On 19 October 2018, Mohos confirmed with a staff member that Hanhwa had "won the Daimler group for the whole region for a 4 year contract. This means 11,300 trucks with navigation in the first year". This was a reference to Hanhwa Aus' success in winning the Mercedes/Fuso (LM19M) contract. He then referred to the urgency involved, "The other side of the story is that Mercedes will run out of the old unit in a few weeks so we only have one month to finalise everything and release the product". Further, it was stated:
The bad news:
• We need some changes in the UI as it should not look the exact same as the Isuzu product and other possible truck products. Abby will send you the GUI plan later today. Please, try to harmonise the menu (and maybe some parts) to this if possible. We need no miracles just difference from Isuzu and some similarity to this GUI guide.
• The user manual will be printed. That takes 20 days. So I need to be ready with it by the end of this month! This means that the screens (at least in Photoshop) must be ready a few days before that. …
850 I agree with Directed that this seems to confirm that the LM19M was not started from scratch. The LM18I was the reference point. The only changes were to the user interface. So much is clear given that a version of the Polstar LM19M navigation software was available for road testing in Australia and its owner manual was drafted within 3 to 4 weeks from Hanhwa being successful in its tender for the supply of the LM19M to Mercedes. Further, two days earlier Meneses had confirmed to Daimler group representatives that samples of their new 7-inch model would be available for testing "this month".
851 By 13 November 2018, after the Daimler group had accepted Hanhwa's submission, the first release of the LM19M/F unit was ready and sent. Lee claimed that the development timeline was longer than this, asserting that Hanhwa's tender had been unofficially accepted in July 2018. But I agree with Directed that this evidence is inconsistent with other written evidence.
852 The LM19M/LM19F for Mercedes/Fuso is essentially the same as the LM18I. So much was acknowledged by Lee in email exchanges with Mohos on 9 November 2018 which were in essence:
Mohos: One question: is this unit any different inside? Or is it 100% identical with the LM18I in the electronic parts and OS (apart from the GUI)?
If there is a minimal chance for an incompatibility then I should wait for Polstar to check the new hardware before I start the test drive in Australia.
Lee: All same mate!
Only GUI is different.
Mohos: That's a relief.
Thank you and kind regards.
853 December 2018 was the last time when Fuso purchased AV units or accessories from Directed. It purchased the LM19F from Hanhwa Aus.
854 Let me say something further concerning UD and the LM19U unit.
855 From 2011 to 2018, Directed sold UD an AV unit with the model number DIR6300FB. During this period Directed supplied UD with 2,884 units.
856 From 2012 to 2019 Directed supplied UD with telematics units designed in 2010 by Directed.
857 In September 2018, Hanhwa sought to supply UD. On 27 September 2018, Meneses and the Hanhwa team presented to members of the Volvo Group Purchasing team. The next day, Meneses confirmed with those representatives that Hanhwa would have available 6.1 and 6.5 inch models from March 2019, with an 8 inch model available in May 2019. This timing assumed that Volvo confirmed the project and model by early October 2018. Volvo sought in response consolidated presentation material and a written quote for each unit.
858 On 5 October 2018, Meneses provided pricing, a comparison feature list, Hanhwa presentation and an MFL. He advised that the time needed was "5-6 months from start to finish". He further stated that, "We are looking for a 4-5 year contract with Volvo". He claimed that the units were being prepared only for UD and Volvo Group and would not be used for anyone else. But I agree with Directed that it is likely that the development did not occur from scratch. Minor modifications were made to an existing unit. And a complete MFL was unlikely to have been available in such a short period. In my view the LM19U is the same as the LM18I with minor changes.
859 In November 2018, Directed learned that it had been unsuccessful in its proposal to supply a new AV unit to UD. The business to supply the LM19U was awarded to Hanhwa Aus. UD purchased an 8-inch AV unit and a 6.1 inch unit. The 8-inch unit had a flip-down screen.
860 Since March 2019, UD has not purchased any further AV units or accessories from Directed. It purchases the LM19U from Hanhwa. Directed continues to supply UD with telematics units and telematics services. Further, the LM19U navigation software was available for road testing in Australia within 3 to 4 weeks from Hanhwa instructing Polstar in relation to the software's development.
861 Finally on this aspect and generally, Hanhwa Korea continues to supply the LM18I to Hanhwa Aus which, in turn, continues to supply IAL. Hanhwa Korea continues to supply the LM18F, the LM19F and the LM19U to Hanhwa Aus. In turn, these continued to be supplied to the relevant truck manufacturer.
862 There is one other matter I should note at this point. In 2019, Hanhwa International Connected Vehicles Pty. Ltd. was incorporated. Directed says that this is the entity through which the Hanhwa/Gridtraq JV is now conducted. Now Davidson holds shares personally and/or through an entity, Allen Hartley owns shares via an entity, and Dylan Hartley also owns shares. Allen Hartley said that Hanhwa did not have an interest in the company. He said there was no agreement but an "intention" that "if the business does alright, the Hanhwa family will have a 50% interest in the company". He said "they submitted a tender document using the Hanhwa name with Hanhwa's blessing and if they are successful, the deal would go through the company". Further, he denied that he was holding an interest in trust for Hanhwa. And he denied that the company was the incorporated Hanhwa/Gridtraq JV vehicle. Now Directed says that the denials should be regarded as false, but in my view I am not able to find this.
863 It is appropriate at this point to now turn to the detailed evidence concerning the various units and their similarities and differences.
The relevant units - similarities and differences
864 Before turning to the relevant comparisons between the units and accessories the subject of voluminous evidence, let me say something concerning development timing.
865 Let me begin by noting that Girgis reviewed Lee's original exhibit KL-9. According to that exhibit the development of the DIR6200 (DAVE) unit commenced in September 2011 and was completed in November 2012.
866 A convenient portrayal of the DIR6200 set out in the relevant MFL is as follows:
867 The design stage to arrive at the overall shape, configuration, size and features of the AV unit took place over 13 months. This indicates that there was a lot of interaction between the designers of the AV unit and the customer in relation to these matters. Girgis noted that according to Lee's exhibit, in relation to the DAVE the mechanical design took 5 months, the hardware design took 5 months and the software design took 5 months.
868 Now Girgis had been involved in the design of electronic products designed for installation in vehicles, and for a new complex product such as the DAVE he considered that a 13 months development timeframe was normal.
869 Contrastingly, in the case of the DIR8000 (SuperDAVE) unit, the design and development occurred over the period August 2014 to March 2017, in the sense that the design and development was completed to the stage of the delivery of working samples.
870 It is convenient to note that Directed's proposal to IAL in 2015 represented what was to be the proposed DIR8000 in the following form:
871 Now based on Girgis' experience, in his view 2014 to 2017 was a long period of time for development of a new product of this kind. He expressed the view that this indicates that there was extensive interaction during the design phase between the designer/manufacturer and the customer.
872 Further, it is to be noted that the fact that a working sample of the SuperDAVE was able to be shown to the ultimate customer, IAL, indicates that a substantial amount of work had been undertaken in relation to the mechanical, hardware and software design and development aspects for the AV unit and that the design stage had been substantially completed.
873 By comparison to the DAVE and SuperDAVE design and development, in the case of the HAU8000 for supply to IAL, the design phase was completed within 4.5 months, and the mechanical, hardware and software development phases were completed within 4 months. This indicates that the design and development undertaken in respect of another product was used in order to undertake the design and development of the HAU8000.
874 It is self-evident and Lee confirmed that once a new generation of AV unit has been developed, other units are developed based on that existing hardware, software and/or design, which are much quicker to develop.
875 In the case of the LM18I for supply to IAL, the design phase was completed within 4 months, and the mechanical, hardware and software development phases were completed within 3.5 months. This indicates that development undertaken in respect of another product was used in order to undertake the design and development of the LM18I.
876 In the case of the LM19F6.2 for supply to Fuso, the design phase was completed within 3 months, the mechanical phase was completed in 2.5 months, the hardware phase was completed in 3 months and the software phase was completed within 3.5 months. This indicates that development undertaken in respect of another product was used in order to undertake the design and development of the LM19F6.2.
877 In the case of the LM19F7 for supply to Fuso, the design phase was completed within 3.5 months, the mechanical phase was completed in 2.5 months, the hardware phase was completed in 3 months and the software phase was completed within 3.5 months. This indicates that development undertaken in respect of another product was used in order to undertake the design and development of the LM19F7.
878 In the case of the LM19M6.2 for supply to Mercedes, the design phase was completed within 3 months, the mechanical phase was completed in 2.5 months, the hardware phase was completed in 3 months and the software phase was completed within 3.5 months. This indicates that development undertaken in respect of another product was used in order to undertake the design and development of the LM19M6.2
879 In the case of the LM19M7 for supply to Mercedes, the design phase was completed within 3.5 months, the mechanical phase was completed in 2.5 months, the hardware phase was completed in 3 months and the software phase was completed within 3.5 months. This indicates that development undertaken in respect of another product was used in order to undertake the design and development of the LM19M7.
880 The design phases for each of the LM19F and LM19M models were overlapping. This is consistent with the evidence of Lee that both AV units are virtually identical.
881 In the case of the LM19UD6.1 for supply to UD, the design phase was completed within 3.5 months, the mechanical phase was completed in 2 months, the hardware phase was completed in 3.5 months and the software phase was completed within 3.5 months. This indicates that development undertaken in respect of another product was used in order to undertake the design and development of the LM19UD6.1.
882 In the case of the LM19UD8 for supply to UD, the design phase took place over 20 months commencing in September 2017 and completed in May 2019. Whereas the mechanical development occurred over 3 months between February and April 2019, the hardware phase was 3.5 months between February and May 2019 and software was 3 months between March and June 2019. The long period of design development as recorded in exhibit KL-9 is due to Lee including development of the flip down screen for the HAU8200 unit developed for Hino in the period April 2017 to September 2017. It appears that there was no development work on this AV unit between September 2017 and February 2019. This indicates that, apart from the development of the screen for the HAU8200 which was developed in 2017 over 3 or 4 months, mechanical, hardware and software development undertaken in respect of another product has been used in order to undertake the design and development of the LM19UD8.
883 Let me now turn to the main questions concerning the relevant derivations and comparisons.
884 Relevantly to the matters that I want to discuss in this part of my reasons, I should say at the outset that it was the opinion of Girgis that:
(a) the design, hardware and software of the HAU8000 was derived from the work undertaken in relation to the DIR8000;
(b) the design, hardware and software of the LM18I was derived from the work undertaken in relation to the DIR8000/HAU8000;
(c) the design, hardware and software of the LM19F, LM19M, LM19U, LM18H was derived from the work undertaken in relation to the DIR8000/HAU8000/LM18I; and
(d) in the case of the screen for the LM18H and the LM19U, the design was derived from the work undertaken in relation to the screen for the HAU8200.
885 As part of his task, Girgis reviewed the contents of Lee's exhibit KL-11 and sought to identify the differences between:
(a) the DIR8000 and the HAU8000;
(b) the accessories to the DIR8000 and the accessories to the HAU8000;
(c) the HAU8000 and the LM18I and their accessories;
(d) the LM18I and the LM18H and their accessories;
(e) the LM18I and the LM19M and LM19F and their accessories; and
(f) the LM18I and the LM19U and their accessories.
886 Now criticisms were made of Girgis' evidence by the Hanhwa parties and the Gridtraq parties. I have already touched on that earlier in my reasons. It is convenient to postpone further discussion of those criticisms until later.
887 Let me turn to the relevant comparisons and my relevant findings unless I state otherwise.