The duty of confidence cases
18 Grounds 5 to 12 in the draft notice of appeal assert that his Honour erred in failing to conclude that the respondents had breached a contractual duty to treat as confidential everything on the web-based platform that eify had developed for its induction program offered to clients. The reason that eify alleged that there was such a contractual duty of confidence was, in essence, that any person who wished to access those webpages needed to, first, pay eify a fee and, secondly, agree to its terms of confidentiality, including the prohibition in those terms against the person substantively reproducing or copying what was on the webpages to which he or she had gained access.
19 The substance of the complaint in this aspect is in ground 12. This alleged that his Honour erred where he found that none of the information that the respondents utilised was information belonging to eify or confidential to it. That finding was based partly on the fact that the source of the text of the material on the website, claimed to be confidential, had been supplied verbatim to eify by its client, Laing O'Rourke Australia Constructions. eify claimed that the way in which it caused a computer screen to present that information to a viewer, including graphics and the visual aspects appearing on the screen involved its own original copyright work that was confidential.
20 His Honour found that the problem with eify's confidentiality argument was that it had failed to demonstrate what of that material was confidential to eify. eify had asserted that all of it was confidential by reason of, first, its contractual terms under which a person gained access to the online computer material, secondly, its compilation of the visual presentation of the information in a way that no one else had done and, thirdly, its having sold access to the information only to people who were prepared to pay for its services and agree to its terms of access.
21 The primary judge found, after rejecting Mr Culbert's evidence to the contrary, that Group, and not eify, had prepared online computer induction programs for two clients, Thiess and Mirvac, pursuant to contracts between Group and each of Thiess and Mirvac. His Honour found that, to the extent that the online induction systems that Group had prepared for Thiess and Mirvac contained information that was confidential, and not the confidential information of the customer (i.e. Thiess or Mirvac), it would be confidential information of Group and not of eify.
22 His Honour also found that to the extent that Mr Culbert did graphic design work for customers or clients of Group, he had done so in his capacity as a director or officer of Group and not, as he asserted, in his own right or on behalf of eify.
23 The primary judge found that at one stage a programmer, Mr Quicke, through his company Clearsite Pty Limited had issued an invoice to eify for work done on the projects for Thiess and Mirvac. His Honour found that subsequently, at Mr Culbert's request, Clearsite re-invoiced Group for that work and Group paid Clearsite for that and later invoices for work Mr Quicke did for Group.
24 The primary judge found Mr Culbert must have been acting as a director of Group both when he instructed Clearsite to provide those services and directed it to invoice Group. In those circumstances, he found that the work done by Mr Quicke on the Thiess and Mirvac online inductions could not be regarded as falling within the scope of any consultancy services that Clearsite provided were the subject of a deed entered into, on 14 May 2015 (the 2015 deed), after the litigation commenced, between eify and Clearsite to which I will come shortly.
25 His Honour identified the difficulty with eify's confidential information case, both in contract and in equity. This was because eify propounded those cases in the same way that the failed claim for confidentiality came to be rejected in O'Brien v Komesaroff (1982) 150 CLR 310 at 326-328. There Mason J with whom Murphy, Aickin, Wilson and Brennan JJ agreed, emphasised the need for a person seeking court orders to protect information on the basis that it is confidential, to identify specifically what it was about the information that gave it the quality of confidentiality. The written material provided by Laing O'Rourke to eify itself could not have had the quality of confidentiality since it was not imparted in that context, was Laing O'Rourke's information, and that same information was then reproduced in all of the material thereafter both by eify for Laing O'Rourke and ultimately by Group for Thiess and Mirvac material.
26 eify argued that the way in which Laing O'Rourke had provided the verbatim text, that was subsequently reproduced in the same presentational format as eify had developed (without any additional text) and used in the web-based induction programs that Group prepared, involved a repetition of eify's confidential information. In my opinion that argument is, to use Lord Denning MR's metaphor, flimsy.
27 eify also argued that the 2015 deed between it and Clearsite created an assignment of copyright. His Honour had rejected that argument on the basis that the 2015 deed referred only to consultancy work between eify and Clearsite. He found as a fact, particularly because of Mr Culbert's conduct in directing Clearsite to invoice Group for work done for Mirvac and Thiess, that the 2015 deed did not apply to work that Clearsite and Mr Quicke had done for Group. He found that that re-invoicing occurred because Clearsite had not been acting on behalf of eify, but was acting on behalf of Group.
28 eify's argument that his Honour made some error in not accepting Mr Quicke's evidence that he understood he was working for eify, again, is flimsy. In my opinion, there is no real prospect that any appeal, were I to grant an extension, would have any real prospect of success on that argument. His Honour also noted that the assignment in the 2015 deed, to the extent it may have been effective to assign any copyright that Clearsite had as the author of the work that Mr Quicke had done on Mr Culbert's instructions, did not assign to eify any cause of action for past breaches of the copyright that Clearsite held at the time of any such breach. Again, reading the 2015 deed as a whole, the argument for granting leave on that ground is also flimsy.
29 The primary judge's rejection of eify's claim for breach of an equitable duty of confidence is challenged in grounds 14 to 18 of the draft notice of appeal. His Honour found that, in accordance with O'Brien 150 CLR 310, eify had failed to identify what about the information it sought to protect was confidential. In particular, ground 15 asserted that the primary judge made findings that were not based on any evidence or alternatively contrary to the weight of the evidence. eify's contentions on the proposed appeal in this respect depended or would depend, were they allowed to proceed, effectively on the Full Court accepting Mr Culbert's evidence, which his Honour roundly rejected.
30 The proposed grounds 14 to 18 are particularly based on an argument that also underlay the fiduciary obligations argument. That argument was that in resolutions that Mr Culbert, Mr Conacher and Mr Morrow all agreed on 15 December 2011, they acknowledged that they were identifying and documenting the intellectual property each party owned and had brought to the failed venture. These resolutions included, among others, that eify had provided access and information in good faith on the understanding that 3D Safety would not use the information, content, layout, process, knowledge or strategic plans obtained as a result of the process to create a financial gain, advantage or benefit to 3D Safety or that resulted in a financial loss, disadvantage or penalty to eify. 3D Safety gave a corresponding acknowledgment to eify.
31 eify complains that the primary judge should have used those acknowledgements to identify the nature of the fiduciary relationship between the parties and erred in not doing so. That submission led into a consideration of whether the claim based on breach of fiduciary duty could be made out. The equitable duties of the relationship giving rise to confidence substantively depended upon the same factors.
32 One of the complaints eify made was that the primary judge had not considered, or had misunderstood, an argument that eify put in its reply submissions, namely that after designing the induction systems for Thiess and Mirvac for which those companies paid Group, the parties had acted to ensure that eify was paid when individual employees of the two client companies used the induction system. His Honour said that had that claim been put (which it appears to me it was) it could have been argued that to that extent, there was a fiduciary relationship.
33 Assuming that the complaints that eify makes about his Honour's findings in relation to the imposition of fiduciary obligations on persons who negotiate for a joint venture, but have not yet agreed to its terms are arguably incorrect, in my opinion the real question is where that error would take the case that eify needed to make. That again comes down to the finding that the primary judge made that eify had not shown that any of the information that the respondents utilised was information of, let alone confidential to, eify, or that, even if it were, it was put to an improper use.
34 Again, it seems to me that eify's grounds 14-18 are flimsy. They are based on its claim for a breach of fiduciary duty and, assuming that his Honour erred in failing to find that the respondents owed fiduciary duties not to profit without eify's fully informed consent or to act in a position where the interest or duty of the respondents might be in conflict with those of eify, the result at which his Honour arrived was that eify had not proved that the information was confidential; hence any error that he made about eify's argument in its submissions in reply as to the existence of a fiduciary relationship did not affect the conclusion that the information was not confidential and so had not been misused by the respondents.