Ezystay Systems Pty Ltd v Link 2 Pty Ltd

Deed of Settlement - 13 August 2012

1. On 13 August 2012 the Ezystay Group, Mr Ritchie and Rujo entered into a Deed of Settlement with Mr Riches and Riches Commercial (the Deed). The terms of the Deed included the following: RECITALS … D. The Group has developed a student accommodation business and bed, asset and booking management systems, including software which is held by Ezystay Systems. … G. Greg has since at least December 2010 been Engaged by the Group. H. The Riches Parties have indicated their wish to exit the Group, and the parties have executed this Deed to provide the terms governing that exit. Definitions and Interpretation 1. In this in this (sic) Deed the following rules of interpretation apply unless the context requires otherwise: … (d) Confidential Information means all information, trade secrets, ideas, knowledge, concepts, and processes whether in writing or otherwise, which is confidential and which: (i) Relates in any way to the Group or its affairs, business, Intellectual Property, procedures, methodology, or systems, or its sales, marketing, business or promotional plans or information, or its personnel, products, services, partners, associates, suppliers, service providers, contractors, principals, agents, or Customers; or (ii) Includes all information or knowledge acquired by any of the Riches Parties or their Related Entitles as a result of the Group permitting any of the Riches Parties to have access to any of its Confidential Information. (e) Customer means any person or entity with whom any of the entities within the Group contracted, or had a business relationship, from which contract or business relationship the Group derived any revenue within the 12 months preceding the Time of Completion. … (m) Intellectual Property means all intellectual property rights throughout the world whether protected by statute or not, including rights in relation to any copyright, marks, trademarks (including service marks), registered and unregistered business names, domain names (including www.Daloope.com) designs, inventions (including patents), systems, programs, discoveries, algorithms or formulae, know-how, trade secrets, trade dress and get-up and domain names, and semiconductor or circuit layout rights, whether registered or not, including any right to apply for a grant or registration of any such rights. (n) Books, Records, Materials and Documentation means all books, records, documentation, diagrams, photographs, images, manuals, operations or procedures manuals, plans, and rules. (o) Related Entity means any relatives or related entities within the meaning of section 9 of the Corporations Act 2001. (p) Riches Parties means Greg and Riches Commercial. … ACTIONS UPON EXECUTION OF THIS DEED 2. Immediately upon execution of this Deed: … (b) Greg shall resign as secretary of each of the Companies. … COMPLETION 3. Completion shall occur: (a) Upon settlement of the refinance of the Group's NAB facilities in accordance with this Deed, if that settlement occurs within 4 weeks of the date of this Deed; or (b) If settlement of the refinance of the Group's NAB facilities has not occurred within 4 weeks of the date of this Deed, within a further 2 weeks thereafter, on the basis that Rujo shall advance funds to the Group to allow the payments to the Riches Parties under this Deed to occur. 4. Simultaneously upon Completion: (a) All of Riches Commercial's units in the Trust and shares in the Companies shall be redeemed for the sum of $425,000. (b) The Trust shall pay Riches Commercial's and Greg's loans and entitlements in the sum of $75,212.33. (c) The Riches parties shall: (i) Return all property of the Group, and all hard copies of the Group's Confidential Information and Books, Records, Materials and Documentation, including all documents relating to 423-427 and 617; (ii) Cause all electronic copies of the Group's Confidential Information and Books, Records, Materials and Documentation, including all documents relating to 423-427 and 617, in the possession of the Riches Parties or their Related Entitles to be deleted after a copy has been provided to David; (iii) Disclose to the Rujo Parties the credentials for the Group's systems, including passwords, administrator access rights, ShareFile access and email administrator rights; (iv) Provide written confirmation of the assignment to Ezystay Systems of the domain names for www.ezystay.com.au, www.ezystay.com and www.studyhouse.com; and (v) Provide written confirmation of the assignment to Ezystay Systems of the systems and domain name for www.daloope.com. … RESTRAINTS, CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY 7. The Riches Parties shall not, without David's written consent, directly or indirectly, in any capacity: (a) Solicit or seek custom from, or enter into any agreement or business relationship with, any Customer; (b) Engage any Employee; or (c) Attempt to do any of the things in paragraph 7(a) or 7(b), within 12 months of the date of Completion, or if a Court of competent jurisdiction determines that period to be unreasonable, within the maximum period that the Court determines is reasonable. 8. The Riches Parties shall treat Confidential Information as subject to a duty of confidence, and must not, and must ensure that their Related Entities do not, directly or indirectly, without the Group's prior written consent, disclose it to anyone, or use, copy or reproduce it for any purpose (including competing against the Group or acting on behalf of any person competing against the Group), save as required by law. 9. The Riches Parties warrant and agree that: (a) All Intellectual Property created or developed by, in relation to or in connection with the Group, belongs to and vests in the Group exclusively; (b) The Riches Parties shall from Completion execute all documents and do all acts and things reasonably required to secure any such Intellectual Property to the Group, including the systems and domain names referred to in clause 4(c)(iv) and 4(c)(v); (c) The Riches Parties shall not do any act or thing which directly or indirectly infringes the rights of the Group with respect to its Intellectual Property.
2. Link 2 continued its operations at Bar Broadway from August 2012 providing student accommodation and used its booking calendar to allow students and/or agents to book their accommodation.
3. In March 2013 Mr Davis became aware that Link 2 was offering student accommodation. Mr Davis accessed the Link 2 webpage and observed that the calendar was "remarkably similar" to the system that he had developed for Ezystay in its design and layout and had certain features that he regarded as unique to the system that he had developed for Ezystay. Proceedings commenced - 18 July 2013
4. On 18 July 2013 the plaintiffs approached the Court ex parte and obtained a search order directed to the defendants and Mrs Riches. Although the ex parte order was challenged, such challenge was dismissed: Ezystay Systems Pty Ltd v Link 2 Pty Ltd [2014] NSWSC 180. The main claim by the plaintiffs in support of the search order was the alleged breach of the Deed described in the proceedings as the clause 4(c) covenant to return documents and information to the plaintiffs.
5. An order was made at the time the search order was obtained for the defendants to file an affidavit in respect of the documents the subject of the search order. In an affidavit sworn on 30 July 2013 Mr Riches stated that he was the sole director of Link 2 and an employee of Riches Commercial and was authorised to make the affidavit on behalf of Link 2 and Riches Commercial. The affidavit included the following: Listed Thing Location If a document called "Operations Procedure Manual" does exist, then there may be a copy of it or something similar to it or portions of it, insofar as it relates to Ezystay, on a static copy (which predates September 2012 by some period of time I do not currently know) of a sharefile folder on the 'imac' laptop and a USB memory stick which was in accordance with the order of the Court provided to Mr Thomas Howard. Ezystay or Studyhouse To the best of my knowledge, on the same basis as I have stated above, a copy or portion of this document may be located in the following 'Dropbox' locations: Operations Procedure • Dropbox/Link2 Due Dilligence/b.operations/end to end operational process/ policy and procedures manual. Manual • Dropbox/Link2 Due Dilligence/k. business plan/b. current business plan • Dropbox/Link2 Due Dilligence/k. business plan/k. student experience Ezystay or Studyhouse Systems Manual I have no knowledge of either of these documents and do not have any copy or copies of them. Ezystay or Studyhouse Booking Management Systems or Software I have no copy or copies of these documents.

1. The search was completed and the independent computer experts have created a list of what has been described as "Discovered Documents" that were found on the defendants' and Mrs Riches' computers and other devices.

The pleadings

1. In the Second Further Amended Statement of Claim (SOC) filed on 6 May 2015 the plaintiffs claim that employees, contractors and officers of Ezystay prepared an Operations Procedures Manual (Business Manual), a summary (Elevator Take) and a Systems Manual, each of which is claimed to be confidential and available only to directors, officers and employees of Ezystay and authorised consultants who are subject to confidentiality obligations [SOC 25-26]. The plaintiffs allege that each of these publications contains information, trade secrets, ideas, knowledge, concepts and processes which are confidential and relate to Ezystay, its affairs, business procedures, methodology or systems, business plans or information, described as "Confidential Business Manual Information" [SOC 27].
2. The plaintiffs also allege that from about 2007 Ezystay developed interior design features and specifications, comprising a specific composition and standard of fixtures, fittings, finishes and equipment, for its student accommodation business, referred to together as "Trade Dress" [SOC 32]. The features pleaded in respect of the Trade Dress are (a) polished wooden floors without carpets or floor coverings; (b) the layout of the rooms, including bedrooms, bathroom, kitchen, common room and laundry fittings; and (c) beds, linen, desk, wardrobe, lamp, noticeboard, stools, black leather sofa, wide screen TV, DVD player, communal iMac computer, fridge, kitchen utensils, ironing board, each of the same type and arranged in the same configuration [SOC 32]. The plaintiffs allege that Link 2 has from 16 July 2012 advertised and marketed student accommodation with features the same or substantially the same as the plaintiffs' Trade Dress, and as described in the plaintiffs' Business Manual, the Elevator Take and the Systems Manual [SOC 50a].
3. The plaintiffs' Software is defined in the SOC as "an original software programme" that was "developed to specifications directed by the Ezystay Group, with a password protected interface to enable persons with access credentials to book student accommodation and store information" [SOC 36].
4. The plaintiffs allege that from about 20 June 2011 they owned copyright in an original manual for the Software, defined in the pleading as the "Software Manual" [SOC 43]. It is alleged that the Software Manual is confidential and contains what is described as "Confidential Software Manual Information" [SOC 44].
5. The plaintiffs allege that Link 2 has employed an accommodation booking software and system which is the same or substantially the same as the Software and that described in the Software Manual [SOC 50b]. The plaintiffs also allege Riches Commercial through its subsidiary Link 2 is guilty of the same conduct [SOC 51]. The plaintiffs allege that Mr Riches caused Link 2 to engage in this conduct [SOC 52].
6. The plaintiffs also allege that Mr Riches has from 16 December 2011: (a) used and/or copied the Business Manual, the Elevator Take, the Systems Manual and/or the Confidential Business Manual Information; and/or (b) copied the Trade Dress; and/or (c) used, copied and/or reproduced the Software and/or the Confidential Software Information; and/or (d) used and/or copied the Software Manual and/or the Confidential Software Manual Information [SOC 53].
7. It is alleged that Mr Riches and Riches Commercial retained the "Discovered Material" the subject of the covenant in clause 4(c) of the Deed [SOC 51c; 53e]. The Discovered Material consists of 121 documents listed in Schedule A to the SOC selected from a larger number of the Discovered Documents.
8. The plaintiffs also allege that Mr Riches' conduct was and continues to be in breach of his fiduciary duties and/or director's duties under s 182 and s 183 of the Corporations Act 2001 (Cth) [SOC 56f-g]; in breach of the Confidentiality Covenant (clause 8), IP Covenant (clause 9) and Property Return Covenant (clause 4(c)) in the Deed [SOC 56c-e]; and in breach of the confidentiality term and intellectual property term implied in his employment agreement or an express term in the engagement agreement with Riches Commercial [SOC 56a-b]. It is also alleged that Mr Riches' conduct was in breach of his "Confidentiality Duty" as an officer or employee of the plaintiffs [SOC 56h]. It is alleged that Riches Commercial, a party to the Deed, breached the same covenants [SOC 57].
9. The plaintiffs allege that Link 2 and Riches Commercial gained an advantage from Mr Riches' breaches [SOC 54-55]; that they were aware of the obligations and duties to which Mr Riches was subject [SOC 58-59]; and knowingly induced him to breach those obligations and duties [SOC 58-60].
10. The plaintiffs seek a permanent injunction restraining the defendants directly or indirectly from using and/or copying the Business Manual; the Elevator Take; the Systems Manual; the Trade Dress; the Software; and the Software Manual [SOC 1].
11. The plaintiffs also seek an order that the defendants deliver up and return all hard copies of, and destroy all electronic copies of, documents recording the Confidential Business Manual Information; the Confidential Software Information; the Confidential Software Manual Information; the Discovered Material and "any copy of or document derived from" the Discovered Material [SOC 2 a-b].
12. The plaintiffs had claimed damages, equitable compensation, an account of profits and/or compensation under s 1317H of the Corporations Act plus interest [SOC 3-4] but these claims were not pressed at trial (tr 138). The plaintiffs also claim their costs of the proceeding [SOC 5].
13. In the Defence to the Further Amended Statement of Claim (D) filed on 4 May 2015 (but taken to be in response to the SOC subject to the Undertaking referred to below) the defendants deny the allegations of similarity in relation to Link 2 and claim that Link 2's student accommodation business is in accordance with industry standard practices; uses a trade dress in accordance with standard industry practice, using fixtures and fittings commonly used in accommodation for the target market; and uses an electronic accommodation booking system which incorporates a presentation and appearance common to online booking systems [D 43 a-d].
14. The defendants deny that Mr Riches used and/or copied the various documents, information and Trade Dress or used, copied and/or reproduced the Software [D 46]. The defendants admit that Mr Riches owed certain fiduciary duties as a director as well as obligations under s 182 and s 183 of the Corporations Act but deny any breach of those duties [D 11; 49]. The defendants also deny that Mr Riches breached any covenants in the Deed and deny that Link 2 or Riches Commercial induced or gained an advantage from any such breaches [D 48-52].
15. The defendants admit that the Business Manual, the Elevator Take, the Systems Manual, all photographs and lists of the features of the Trade Dress, all "visual output" of the Software and the Software Manual are the subject of the covenant in clause 4(c) of the Deed [D 24; 35; 42; 49]. However the defendants deny that these materials are confidential or that the plaintiffs had any intellectual property in them [D 19-24; 27; 30-31; 33-41].
16. The defendants claim that the Business Manual, the Elevator Take, the Systems Manual and the Trade Dress incorporate information that is in the public domain [D 19; 22e; 26a]; is obvious [D 22f; 26b]; is common to student accommodation operators [D 22g; 26c]; and is not unique to the Ezystay business [D 22h; 26d].
17. The defendants claim that the plaintiffs have never claimed any intellectual property in the "source code" of the Software [D 30a]. They deny that the Software is confidential in its look or design and claim that it has been made available to third parties such as customers of the Ezystay Group for the purpose of making bookings [D 30b].
18. The defendants claim that if there were any breach it was de minimis and there is no evidence of damage [D 56b]. The defendants also claim that damages are an adequate remedy and that the terms of the injunction sought by the plaintiffs would have the practical effect of preventing the defendants from conducting any student accommodation business in circumstances where the Deed does not restrict competition between the parties [D 56a; c].
19. The defendants admit that they had possession of the Discovered Documents as at 23 July 2013 but otherwise do not admit the allegations. The defendants refer to an undertaking given to the Court on the first day of the trial [Ex B] and contend, inter alia, that Mr Riches "inadvertently" kept possession of the Discovered Documents by way of "backups, access to the 'Cloud' storage systems and email records and archives" [D 44b; 46b; 56d]. That undertaking proffered to the Court on 30 April 2015 (the Undertaking) is in the following terms: Without admission, the Defendants in Supreme Court of New South Wales Proceedings No. 2013/219128 (Proceedings) being, Link 2 Pty limited (ACN 158 841 386), Riches Commercial Pty Limited (ACN 121 355 664) and Gregory Moore Riches (collectively Defendants) hereby undertake to the Court that: 1. They will delete any and all electronic copies of the documents referred to in Schedule 'A' hereto that are in their power, custody or control within twenty-one days of the giving of this undertaking. 2. Without admission that any such copies exist, they will return any hard copies of any of the documents referred to in Schedule 'A' hereto that are in their power, custody or control within twenty-one days of the giving of this undertaking. 3. Without admission that any such copies exist and further to undertakings one and two above, they will delete any copies of the Group's Confidential Information and Books, Records, Materials and Documentation (all as defined in the Deed dated 13 August 2012 (Deed)) within twenty-one days of giving this undertaking. 4. Without admission that any such copies exist and further to undertakings one and two above, they will return any hard copies of the Group's Confidential Information and Books, Records, Materials and Documentation within twenty-one days of giving this undertaking. 5. Within twenty-four days of giving this undertaking, they will confirm in writing by their solicitor to the solicitor for the Plaintiffs in the Proceedings that they have complied with undertakings one to four above. The above is subject to the solicitor and counsel for the Defendants retaining such of the documents referred to in Schedule 'A' or are Confidential Information and Books or Records, Materials and Documentation that are in their possession and required to be kept for the proper record of the proceedings.

The trial

1. The proceedings were heard on 30 April 2015 and 1, 4, 5, 6, 7 and 14 May 2015. Mr JC Kelly SC appeared for the plaintiffs. Mr J Lazarus, of counsel, leading Mr S Lipp, of counsel, appeared for the defendants.
2. The plaintiffs read three affidavits of Mr Ritchie, one sworn on 17 July 2013, a confidential affidavit of the same date and an affidavit of 17 November 2014. Mr Ritchie was cross-examined. The plaintiffs also relied upon three affidavits of Mr Garrett sworn on 17 July 2013, 13 September 2013 and 14 November 2014. Mr Garrett was cross-examined. The plaintiffs also relied upon three affidavits of Mr Davis sworn on 16 July 2013, 15 May 2014 and 17 November 2014, the first two of which are confidential affidavits. Mr Davis was cross-examined. The plaintiffs also relied upon the affidavits of Michael Garvin sworn on 16 May 2014 and 21 May 2014 and of Simon Fullerton sworn on 24 April 2015. Neither Mr Garvin nor Mr Fullerton was required for cross-examination.
3. The defendants relied upon the affidavit of Mr Riches affirmed on 27 August 2014. Mr Riches was cross-examined. The defendants also relied upon the affidavit of Mr Singh made on 31 July 2014. Mr Singh was cross-examined. On the fourth day of the trial, 5 May 2015, the defendants relied upon an affidavit of Mrs Riches affirmed on 5 May 2015. Mrs Riches was cross-examined.
4. The parties relied upon their respective experts who produced various reports including joint reports to which reference will be made later in these reasons. The plaintiffs relied upon the expert opinion of Dr Bradley Schatz. The defendants relied upon the expert opinion of Professor Robin Braun. The experts' reports are in evidence [Ex PD 1 to Ex PD 5]. Dr Schatz was cross-examined.
5. On the sixth day of the trial, 7 May 2015, the defendants sought an adjournment to call further expert evidence having only recently appreciated the plaintiffs' claim that what was in the Features Document prepared by Mr Singh and approved by Mr Riches was the plaintiffs' confidential software information (tr 367). That adjournment was allowed. On the last day of the trial, 14 May 2015, the defendants sought to rely upon the report of David Baskind of 13 May 2015. That report was rejected and marked for identification [MFI 5]. I indicated to the parties that having regard to the defendants' apparent misapprehension of the plaintiffs' claims, I would revisit the admissibility of the report should it be necessary.
6. Mr Baskind was asked to report on a number of questions including whether any of the features in the Features Document were or are now capable of being conceptualised (thought up) by a designer starting from scratch and if so how long it would take; whether any of the features in the Features Document were unique or special; whether any of the features in the Features Document were necessary and/or desirable in an automated calendar booking system for student accommodation; how much labour would be required (in hour terms) to implement the features in the Features Document; and how much skill was required to implement each feature in the Features Document.
7. None of the material that Mr Baskind addressed was put to either of the experts, Professor Braun or Dr Schatz (except the question of desirability or necessity (tr 355)), nor was Mr Davis cross-examined about many of them. Certainly Mr Singh was not asked any questions about how long it might take to conceptualise a system "starting from scratch". Both Mr Davis and Mr Singh gave evidence of how long it took them to create the respective systems. It was not in issue in the proceedings that features within the Features Document could be found in other accommodation web pages. Whether something is "desirable" in a booking system is not a matter that would assist with the determination of the issues in dispute in this litigation. How long it might take people other than Mr Singh or Mr Davis to create a system is also not a matter that would assist the determination of the issues presently in dispute in these proceedings. In many respects Mr Basking had not exposed the reasoning upon which his conclusions were based: Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705. Mr Baskind's report remains inadmissible.
8. On 14 May 2015 final submissions were made and judgment was reserved.

Issues

1. The defendants' Undertaking to delete and/or return documents, including those in the Schedule attached to the Undertaking, is without admissions and does not obviate the need to deal with a number of issues in respect of the defendants' conduct: (a) in obtaining and retaining the plaintiffs' documents; (b) copying parts or the whole of those documents; and (c) using the documents created from copying the plaintiffs' documents in the defendants' new business.
2. There is no issue that the hard copy documents in the defendants' possession falling within the definition of "Books, Records, Materials and Documentation" in the Deed must be returned to the plaintiffs. Equally there is no issue that the electronic copies of the documents falling within the definition of "Books, Records, Materials and Documentation" in the Deed must be deleted.
3. Although many of the plaintiffs' documents were found in the defendants' possession when the search was conducted which must be returned to the plaintiffs and/or deleted, the parties were at issue in respect of documents the defendants created from copying: (a) the Business Manual; (b) the Elevator Take; (c) the Systems Manual; (d) the Trade Dress; and (e) the Software and the Software Manual.
4. There was an issue whether, on their proper construction, the provisions of clauses 4(c)(i) and 4(c)(ii) of the Deed for the return of hard copies and the deletion of electronic copies of the plaintiffs' "Confidential Information and Books, Records, Materials and Documentation" require the defendants to return or delete documents they have created by copying parts or the whole of the plaintiffs' Confidential Information or Books, Records, Materials and Documentation (the hybrid documents).
5. The defendants claimed that they were only prohibited from using or reproducing (copying) parts or the whole of the plaintiffs' documents or information if they fell within the definition of "Confidential Information" in the Deed. Accordingly there are issues whether: the Business Manual, the Elevator Take, the Systems Manual, the Trade Dress and the Software and the Software Manual fall within the definition of "Confidential Information" in the Deed.
6. I should refer to the following exchanges during the defendants' final oral submissions (tr 406; 423): HER HONOUR: Just let me understand it. If your clients, and I think this has been admitted, your clients copied, cut and pasted I think the expression was, into a document and there was an extra paragraph that was put into that document, you say that's not a copy of any of the plaintiffs' documents that are covered by the covenant? LAZARUS: That's right but it may be, I would accept, a question of degree. HER HONOUR: And how big is that degree? LAZARUS: Well if only one word was changed to put in a Link 2 where Ezystay otherwise was, then I would accept that is a book, records, material and documentation of the group. HER HONOUR: So it is up to me to work it out by comparison for instance between, if I look at the Ezystay systems model and the L2 overview document, that would be a copy I would think. LAZARUS: Yes. HER HONOUR: When I look at the Ezystay presentation for [ELC] and the Link 2 presentation from those comparisons, the comprehensive welcome pack section, that would be a copy. LAZARUS: Yes your Honour. May I say this that save for the issue of the software, this is not an issue in the case because of the undertaking that we have given and -- HER HONOUR: Just let me understand the undertaking because if I also look at Ezystay Group business in summary and the Link 2 Group business summary that's also large slabs of it and I probably, unless you convince me otherwise, say that that fell into the category of copies, electronic or hard copy. I think when you say it is not an issue in the case you are willing to give it back I think. LAZARUS: Yes and Mr Riches said, he was expressly cross-examined by my friend about the hybrid documents and he said absolutely the undertaking applies to them. … HER HONOUR: Just pause there. I think we have to go back to what you were putting earlier. As I understand it, the acceptance that any documents that belong to the plaintiff, that were taken from the plaintiff, or cut and pasted from the plaintiff's documents into new documents, should be returned. LAZARUS: Yes, your Honour. HER HONOUR: What is it about Mr Kelly's, or the plaintiff's analysis of clause 4 in this regard that is objectionable? LAZARUS: Only as it cuts into the software case, your Honour. HER HONOUR: So the software case, if I were to find that your client copied Ezystay's software to create the booking calendar for Link 2, in breach of clause 8, the relief sought is, you say, a restraint of trade? LAZARUS: Yes, your Honour.
7. Although Mr Lazarus made the abovementioned concessions, the Undertaking contains reservations in respect of whether "any such copies exist". It would appear that the defendants accept that if they have copied large slabs of the plaintiffs' documents, confidential or otherwise, the documents as created fall within the definition of "Books, Records, Materials and Documentation".

Construction of the Deed

1. Clause 4 requires Riches Commercial and Mr Riches to return to the plaintiffs all hard copies of Ezystay's "Confidential Information and Books, Records, Materials and Documentation". The defendants failed to return or delete copies of the plaintiffs' Books, Records, Materials and Documentation. However the defendants claim that their failure in this regard was inadvertent, not resulting from any deliberate planning but rather by reason of a mistake.
2. In Electricity Generation Corp v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, French CJ, Hayne, Crennan and Kiefel JJ said at 656-657 [35] (footnotes omitted): The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".
3. The term "Books, Records, Materials and Documentation" is defined in clause 1(n) of the Deed to mean "all books, records, documentation, diagrams, photographs, images, manuals, operations or procedures manuals, plans, and rules". It is any hard copy of these that must be returned and any electronic copy (wherever stored) that must be deleted (after a copy of the electronic copy has been provided to Mr Ritchie) under clause 4(c)(i) and (ii) of the Deed.
4. The plaintiffs submitted that a reasonable businessperson would readily have understood the phrase "copies of" to pick up the product of any form of copying in whole or in part where the plaintiffs' Books, Records, Materials and Documentation have been taken and stored.
5. In this regard the plaintiffs relied upon the following passage of Emmett J's judgment in EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Limited [2011] FCAFC 47; (2011) 191 FCR 444 at 456-457 [51] as follows: There is no warrant for suggesting that reproduction, within the meaning of the Copyright Act, occurs only when identity is achieved (see Francis Day at 611-12). Rather, reproduction involves a sufficient degree of objective similarity between the two works, as well as some causal connection between the copyright work and the alleged infringing work (see Francis Day at 614). Thus, determining the question of infringement involves both an objective and a subjective stage. At the objective stage, the inquiry is whether the alleged infringing work is similar to the copyright work. That is a purely objective question of fact, depending to a large degree on aural perception, but also somewhat on expert evidence. The subjective stage involves the question of whether the alleged infringer copied the copyright work, or whether the alleged infringing work is an independent work (see Francis Day at 618).
6. The plaintiffs submitted that in copyright law a copy is an item derived from copyright material, either directly or indirectly, and which bears a substantial similarity to that material, the similarities not being the result of mere coincidence.
7. The commercial purpose or object of the Deed was to finalise the parties' relationships, returning to Mr Riches and Riches Commercial an amount of money representing their investment in the Ezystay business and returning to the plaintiffs (or deleting) the copies of the plaintiffs' Books, Records, Materials and Documentation that the defendants had received by reason of their involvement in the plaintiffs' business operations.
8. The question whether the hybrid documents created by the defendants by cutting large slabs from the plaintiffs' documents and pasting them into a new document with the defendants' amendments fall within the definition of "all hard copies" and/or "all electronic copies" of the plaintiffs' Books, Records, Materials and Documentation in clause 4(c)(i) and (ii) of the Deed seems no longer to be in issue having regard to the exchanges extracted at [110] above. However it does not seem to me to be appropriate to leave the position as it was stated as being "a matter of degree". This would require an audit of the documents retained by the defendants to decide: (a) which of the plaintiffs' documents have been copied; and (b) the extent or "degree" of copying. This is simply not feasible.
9. In their written submissions, in contrast to the abovementioned concession, the defendants submitted that the language of clause 4(c) of the Deed is to be contrasted with the terms of the negative covenant assumed by Mr Riches and Riches Commercial in clause 8 of the Deed. Clause 8 prohibits the defendants from disclosing, using, copying or reproducing the Confidential Information for any purpose. The defendants submitted that if clause 4(c) is intended to require the defendants to return or delete all material "copied" (in a copyright law sense) then similar language to that in clause 8 would have been used in clause 4(c). It was submitted that clause 4(c) is not intended to operate as a prohibition on copying the plaintiffs' material.
10. The evidence establishes that the defendants retained electronic copies of: the Business Manual and hybrid documents thereof; the Elevator Take and the hybrid document thereof; the Systems Manual and hybrid documents thereof; the Software Manual; and images and diagrams and other records comprising the Trade Dress. In accordance with the defendants' concession all of these documents fall within the definition of "Books, Records, Materials and Documentation" in the Deed. I am satisfied that they were not deleted or returned on completion. I am satisfied that Riches Commercial and Mr Riches were in breach of clause 4 of the Deed in this regard.
11. Although perhaps unnecessary in light of the exchanges at [110] above, I should for abundant caution deal with the next question of whether the provisions of clauses 4(c)(i) and 4(c)(ii) of the Deed for the return of hard copies and deletion of the electronic copies of the plaintiffs' "Confidential Information" required the defendants to return (or delete) the copies of the hybrid documents. The answer to this question is in the affirmative if the hybrid documents contained the plaintiffs' Confidential Information as defined in the Deed. The determination of this issue requires an analysis of the relevant documents and information the subject of the plaintiffs' claims. Before turning to that analysis it is appropriate to refer to those parts of the Deed and the applicable principles relating to confidential information.

Confidential Information

1. Clause 8 of the Deed provides as follows: The Riches Parties shall treat Confidential Information as subject to a duty of confidence, and must not, and must ensure that their Related Entities do not, directly or indirectly, without the Group's prior written consent, disclose it to anyone, or use, copy or reproduce it for any purpose (including competing against the Group or acting on behalf of any person competing against the Group), save as required by law.
2. Clause 1(d) of the Deed defines "Confidential Information" as follows: Confidential Information means all information, trade secrets, ideas, knowledge, concepts, and processes whether in writing or otherwise, which is confidential and which: (i) Relates in any way to the Group or its affairs, business, Intellectual Property, procedures, methodology, or systems, or its sales, marketing, business or promotional plans or information, or its personnel, products, services, partners, associates, suppliers, service providers, contractors, principals, agents, or Customers; or (ii) Includes all information or knowledge acquired by any of the Riches Parties or their Related Entitles as a result of the Group permitting any of the Riches Parties to have access to any of its Confidential Information.
3. The information has to be "confidential" as well as having the attributes in paragraphs (i) or (ii) of the definition. The defendants are prohibited from using, copying or reproducing Ezystay's information about its business that is confidential. In addressing whether the information the subject of the plaintiffs' claims is confidential, each of the parties relied upon the following passages of Marshall v Prescott [2015] NSWCA 110 at 50-55: 50. The question whether Mr Prescott disclosed confidential information raises at its inception questions regarding when information is confidential, what the obligations are of a person who holds confidential information and what the requirements are for an action in breach of confidence. 51. It is a well-established principle that a person who "receives information in confidence shall not take unfair advantage of it": Seager v Copydex Ltd [1967] 2 All ER 415 at 417 per Lord Denning MR. The prohibition is on disclosure, because that would destroy the information's confidentiality, as well as on use of the confidential information. As Lord Denning MR added, at 417, 'use' must not be made of information "to the prejudice of him who gave it without obtaining his consent". 52. A party to whom the duty of confidence is owed may authorise disclosure for a particular purpose without waiving the obligation of confidentiality for all purposes. This was explained in Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1991) 22 FCR 73, where Gummow J observed, at 94, that: "In many situations, where a plaintiff establishes a case of disclosure of confidential information for a sole purpose, then any use of it for any other purpose including disclosure to any other party will be a breach of confidence…" 53. In Coco v A N Clark (Engineers) Ltd [1969] 65 RPC 41, Megarry J listed three requirements for an action in breach of confidence: the information had to have the necessary quality of confidence about it; the information must have been imparted in circumstances importing an obligation of confidence; and there must be an unauthorised use of the information. This formulation was cited in Commonwealth v John Fairfax [1980] HCA 44; 147 CLR 39 at 51 and ABC v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199 per Gleeson CJ at [30]. 54. In Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2, at [158] ff, Barrett JA noted that implicit in the Coco formulation were requirements of specificity and confidentiality, as follows: "158 Implicit in the statement of principle are two propositions of particular relevance to this appeal: first, that particular information is specifically identified; and, second, that the confidential nature of the identified information is established. 159 The need for specificity in the identification of the information said to be confidential in respect of which relief is sought comes from the fact that the court must make an assessment of the quality of that information, that is, whether it is in truth of a confidential nature. An aspect of that inquiry may turn on whether the whole or some part has become the subject of general disclosure or notoriety. Precise delineation of the subject matter is accordingly essential. The task of a plaintiff, in this respect, is, in the words of Gummow J in Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services and Health … at 87, 'to identify with specificity, and not merely in global terms, that which is said to be the information in question'. 160 The confidential quality of information does not depend on its being in the nature of a trade secret. As Campbell JA pointed out in Del Casale v Artedomus (Aust) Pty Ltd at [103], referring to what was said by Megarry J in Coco v A N Clark (Engineers) Ltd … at 47: 'On Megarry J's account, the information is 'of a confidential nature' if it is not 'public property and public knowledge', or if it is 'constructed solely from materials in the public domain', to which 'the skill and ingenuity of the human brain' has been applied (47). This is a fairly undemanding test.'" 55. Barrett JA also observed, at [162], that confidentiality may be lost if the information enters the public domain: "The fact that information that was confidential when obtained has later entered the public domain means that its confidential quality is lost. In Attorney-General v Guardian Newspapers Ltd (No 2), Lord Goff explained (at 282) that 'public domain', for these purposes, means 'no more than that the information in question is so generally accessible that, in all the circumstances, it cannot be regarded as confidential'." … 75. Even if it be assumed that there was some disclosure of confidential information in this material, it was still necessary for the Marshalls to prove that they suffered loss caused by the disclosure of the alleged confidential information.
4. The information alleged to be confidential must be specific in the sense that it is clear and identifiable as confidential: Amway Corporation v Eurway International Limited [1974] RPC 82 at 86-87; O'Brien v Komesaroff (1982) 150 CLR 310 at 327-328. The defendants relied in particular upon Kirby P's classification in Wright v Gasweld Pty Limited (1991) 22 NSWLR 317 at 333 as follows: I would certainly agree that none of the information which the employer here sought to protect could properly be classified as a "trade secret", accepting that expression as being at the far end of the spectrum which runs between information which is: (i) Publicly available or trivial; (ii) Common to a particular trade or calling even if not publicly known; (iii) Confidential information properly so called; (iv) Secrets that attract equitable protection whether or not there is a contractual agreement: cf Faccenda Chicken Ltd v Fowler [1987] Ch 117 at 133 (CA); [1984] ICR 589 at 598 (Ch D) and Warman International Ltd v Envirotech Australia Pty Ltd (1986) 11 FCR 478.
5. Additionally the defendants relied upon the following passage of Wanstall J's judgment in Aloha Shangri-La Atlas Cruises Pty Ltd v Gaven [1970] Qd R 438 at 446-447: In my view that evidence clearly failed to establish the reasonable necessity for this restraint. In the first place the modus operandi of the appellant company involved nothing in the nature of a trade secret but was public knowledge; indeed its successful operation depended upon widespread dissemination of information as to where and with whom tourists could book trips on the company's vessels, and as to what entertainment and other pleasurable experiences lay in wait for them upon the cruises. Secondly the preference of tourists for a particular captain, including the respondent, created a personal property in him, not in his employers, and they were no more entitled to restrain him from using his professional reputation in competition than would any theatrical producer be entitled to restrain an actor from appearing for a rival producer after the termination of the contract of employment.
6. The defendants also referred to a number of other cases supporting the proposition that business methods and practices (as distinct from, for example, manufacturing processes) are usually not capable of protection by an action for breach of confidence: Lancashire Fires Ltd v SA Lyons & Co Ltd [1996] FSR 629 at 668 (relating to manufacturing processes); Drake Personnel Ltd v Beddison [1979] VR 13 at 20-21 (relating to trade secrets); H&R Block Ltd v Sanott [1976] 1 NZLR 213 at 217 (relating to business manuals and forms); Commercial Plastics Ltd v Vincent [1965] 1 QB 623 at 641 (also relating to manufacturing processes).

Do the plaintiffs' documents contain Confidential Information?

1. Although there was some initial resistance to the suggestion that the defendants had copied the plaintiffs' documents, the evidence establishes that Mrs Riches (and/or Mr Riches) copied parts of the Business Manual to create hybrid documents with "Link 2" instead of "Ezystay" on them. The evidence also establishes that Mrs Riches copied material from the Ezystay Systems Model, referred to by the plaintiffs as the Systems Manual, and created the L2 Overview document. The evidence also establishes that Mrs Riches copied the contents of the Ezystay Elevator Take to create the Link2 Elevator Take. It is therefore necessary to determine whether the Business Manual, the Systems Manual and the Elevator Take contain Confidential Information as defined in the Deed. In addition it will be necessary to determine whether the plaintiffs' Trade Dress is Confidential Information.
2. There are also issues as to whether the plaintiffs' Software and Software Manual are confidential and whether the defendants copied the Ezystay booking software and retained it as part of the Link 2 booking system (the Software claim). I will deal with the Software claim separately and later in these reasons.

The Business Manual

1. The Operations Procedures Manual (the Business Manual) sets out in detail in section A the "Arrival Process" for the students who are to be accommodated at the "Ezystay house". Section B deals with "House Rules". Section C deals with "Departures". Section D deals with "Cleaning and Maintenance". Section E deals with "Stock Control, Purchasing and Reporting". Section F deals with "General" matters.
2. The Appendices to the Manual include a detailed checklist for the House Manager to follow on the Check in Procedure; a pro forma Welcome Letter; a copy of the House Floor Plan; the "House Rules"; a Guest Induction Procedure document identifying the documentation that the House Manager is required to have completed and the action to be taken for every guest induction; a copy of the Resident's Agreement; a pro forma authorisation for credit/debit card payment of the Key Deposit on arrival; a Pre Departure Procedure document showing the documentation the House Manager is required to have completed and the action to be taken for every guest 48 hours prior to departure; a pro forma Departure Letter; a Departure Checklist; a pro forma authorisation for credit/debit card refund of the Key Deposit on departure; a Departure Procedure document showing the documentation the House Manager is required to have completed and the action to be taken for every guest departure; a table showing the documentation that the House Manager is required to use and complete for reporting purposes in order to fulfil parts of the House Manager's duties; a Cleaning and Maintenance Checklist; a list of important contacts; a Maintenance Request Procedure document showing the documentation the House Manager is required to have completed and the action to be taken for each major maintenance issue; a Maintenance Request Form; a Purchase Order Form; a Petty Cash Expense Form; a pro forma document for the Manager's Daily Report; and a First Aid Log Sheet.
3. Mr Ritchie gave affidavit evidence that the Business Manual "which reflects the Group's business model" was created by the plaintiffs, in fact by Mr Riches with the assistance of Mr Garrett, and was not available to anyone except for himself, Mr Garrett, Mr and Mrs Riches and Mr MacLean (who was a House Manager at the relevant time). This evidence was not challenged. Rather the defendants contended that (irrespective of the restricted access to the Business Manual) the information in the Business Manual could not be Confidential Information.
4. The defendants submitted that the Business Manual is little more than a set of 'rules' governing the manner in which Ezystay employees will conduct the business of Ezystay. In particular it was submitted that section A represents a set of procedures that are common knowledge and trivial in nature. The Resident's Agreement is a document distributed to residents and presumably agreed to by residents. It was contended that the section dealing with a Key Deposit cannot be confidential. It was also submitted that the House Rules in section B are communicated to residents and are therefore not confidential. Similarly it was contended that section C deals with the manner of guests' departures and must be communicated to the guests and cannot be confidential. It was also contended that section D dealing with cleaning and maintenance and section E dealing with stock control are matters of common knowledge and industry practice and are not confidential. It was also submitted that for the greater part the Appendices contain information that is communicated to residents.
5. The defendants submitted that no part of the Business Manual is capable of having the necessary character of confidentiality and that the information in it falls exclusively within categories (i) and (ii) listed in Wright v Gasweld, being publicly available or trivial or common to a particular trade.
6. In final written submissions dated 13 May 2015 (DWS) the defendants submitted that Mr Ritchie "conceded that every student who stayed at Ezystay's premises would be aware of the contents of the Business Manual". The evidence relied upon for this concession was referred to in footnote 60 of DWS as transcript page 57 lines 25 to 28. At this part of the transcript Mr Ritchie was being asked about the Systems Manual (tr 56). Mr Lazarus took Mr Ritchie through sections of that Manual and in particular the "dot points" of paragraph 1.3 therein which contains a "more specific statement of what Ezystay provides" (tr 56). Although some of the evidence has been suppressed by reason of its contents containing confidential information [MFI 6] it is appropriate to refer to Mr Ritchie's following cross-examination (tr 57): Q. Mr Ritchie, I just want to know which of those dot points are being provided by Ezystay now? A. Now? The one-on-one induction; the 24 hour manager; the linen packs; they get information from our manager about the where to live, including local information; the sim cards we no longer use, but the other information is made available. I think there is, Pocket Pal now I think has an app also. Q. So, some of those things you don't provide at all, is that right? A. We don't now, yes. Q. So, they are not part of your, what I might call business plan, those things that you don't provide? A. This is a very old document. Q. I am not being critical? A. At the moment, no, we don't. They are not part of what we do at the moment Q. And the ones that you do provide, every student who comes into your premises would be aware because they were being provided with those things? A. That's correct.
7. The last question and answer in this extract is that which is relied upon by the defendants in support of their submission that Mr Ritchie conceded that "every student who stayed at Ezystay's premises would be aware of the contents of the Business Manual". On no reading of the transcript could such a concession be supported. All that Mr Ritchie was conceding in this evidence was that the students who stayed in Ezystay's accommodation would be aware that Ezystay provided the things to which the first answer in the above extract referred because they were provided with those things. There was no concession in this part of the evidence upon which the defendants relied in respect of the students being aware of the contents of the Business Manual. However Mr Ritchie was cross-examined about the "Study House Handbook" [Ex 6] that is provided to all guests who stay at the Ezystay properties (tr 53-55). Mr Ritchie agreed that these two documents were "basically similar". However this document does not include the appendices dealing with the operational guidance for the House Manager.
8. The Business Manual contains the model (processes and steps) pursuant to which Ezystay operates its business. Ezystay has expended time and cost in putting together the detail of the manner in which it will conduct its business in providing accommodation to the language students in its properties and has restricted access to this model. It is a gathering together of steps to be taken within the business process which (it would be hoped) if followed would give Ezystay a competitive edge over other businesses in the same market.
9. Obviously there are some aspects of the contents of the Business Manual, for instance, the Welcome Letter and the Departure Letter that cannot on their own be confidential information because they are provided to the students on arrival and on departure respectively. Equally obviously when a student arrives at the accommodation and goes through the induction process, such process from the extent of the communications between the House Manager and the student and the provision of any relevant documents including the Study House Handbook cannot be said to be confidential. However that does not mean that the Business Manual cannot be said to be confidential.
10. The Business Manual contains the processes for the operation of the business and the reporting structure from the House Manager to enable Ezystay to assess the operational efficiencies of its business.
11. I am satisfied that the information that Ezystay has gathered together in its Business Manual is its business model or formula for success for the operation of its business. That information relates to Ezystay's business and procedures. I am satisfied that the Business Manual is within the meaning of Confidential Information in the Deed.

Systems Manual

1. Mr Ritchie gave affidavit evidence that the "Systems Model", referred to in the proceedings as the "Systems Manual", was prepared by himself, Mr Garrett and Mr and Mrs Riches for submission to the Sydney College of English. It is dated October 2011. Although claiming in his affidavit that the document was "confidential" Mr Ritchie did not give evidence in respect of access to this document. Mr Ritchie's affidavit evidence was that it was "never completed".
2. The Systems Manual has four sections. Chapter 1 is entitled "Introduction to Ezystay" with sub paragraphs 1.1 to 1.3. Chapter 2 is entitled "Accommodation" with sub paragraphs 2.1 to 2.6 and includes a series of photographs of the accommodation. Chapter 3 is entitled "Terms and Conditions" and contains drafts of parts of a "College Agreement" and a "Resident's Agreement". Chapter 4 is entitled "Operations and Procedures" with one sub paragraph 4.1 entitled "Overview". The last paragraph of the Systems Manual records that the Ezystay "Policies and procedures can be viewed in their entirety in the operations manual". The Systems Manual appears to be in the form of a tender document for the business of the Sydney College of English.
3. The defendants submitted that the Systems Manual does not have any specificity and is largely a collection of bullet points describing matters provided by most accommodation providers such as: "Unlimited 'Wi-Fi'; '24/7' On Call Management; Safe and Secure Facilities; and Large Fridge".
4. It was submitted there is nothing in this document that has the necessary quality of confidentiality. Indeed it was submitted that it was designed to be in the nature of advertising. In this regard the defendants relied upon the following (previously suppressed) passages of Mr Ritchie's cross-examination (tr 56-58): Q. Taking sections 1.1 to 1.3 together you agree that they mainly reflect what might be accurately described as marketing material describing what Ezystay provides, do you agree with that? A. Do you mind if I just quickly read it? Q. Of course? A. It could be used for marketing. Q. Well, can I suggest to you 1.1 and 1.2 are what might be termed general statements and 1.3 is a more specific statement of what Ezystay provides, would you agree with that? A. Yes. … Q. If you can turn then to page 252, 2.1 is an overview of the accommodation that is being provided, correct and it is framed in terms of, without being too unkind to those expert in marketing, as market speak or marketing speak, do you agree? A. Yes, 2.1, yes, yes. … Q. Pages 253 to 256 contain the familiar photographs, correct? A. Yes. Q. And anyone who looks on the website or has been inside the premises would be aware of what they were? A. Which particular website? Q. The ELC website? A. The ELC website, if they looked at those photos on the ELC website and went to the premises now they will notice that there is a difference. Q. Anyone who goes to the ELC website would see photos similar, in fact if not the same as the photos at pages 253 to 256? A. Yes, if those photos are still up there now, yes. … Q. Paragraph 2.4 is a description of the features of the Ezystay accommodation. Again, I would just like you to agree that either you are not providing these things at the moment or if you are whoever is staying at the Ezystay premises would be aware of them? A. We provide those facilities, those services. Q. In which case anyone who stays there would be aware of them, correct? A. Yes. Q. At 2.5 is a description of pricing. Pricing is obviously something that is publicly available on inquiry, isn't it? A. Yes. Q. And paragraph 2.6, student deposits, that is also something that is known or could be known upon inquiry, correct? A. That's correct.
5. The defendants submitted that the information in the Systems Manual is not confidential and falls exclusively within categories (i) and (ii) in Wright v Gasweld being publicly available or trivial or common to the business of student accommodation providers.
6. There is no doubt that the Systems Manual includes material referring to attributes of Ezystay's business of which a person could become aware upon staying in Ezystay's accommodation. Although it includes reference to these attributes, skill and work has obviously gone into compiling it and it appears to have been in preparation for a tender for the business of a prospective client. A reasonable person standing in the shoes of the recipient of the information as compiled would have realised that it was provided in confidence: Coco v AN Clark (Engineers) Ltd at 47. It contains information relating to Ezystay's business and procedures.
7. I am satisfied that the Systems Manual contains Confidential Information as defined in the Deed.

The Elevator Take

1. Mr Ritchie gave affidavit evidence that the "elevator take" or "summary" of Ezystay's business was developed by Mr Garrett, Mr and Mrs Riches and himself in 2011. Although Mr Ritchie's affidavit evidence contained a claim that the document "is confidential", there is nothing in the evidence to suggest that its content was restricted only to those persons.
2. The Elevator Take is in the following terms: Ezystay is by far the best place to stay in (Sydney) if you are an international student learning english because of the high quality, safe, friendly accommodation and the unrivalled level of ongoing personal service that we provide. We have modern houses that offer an affordable, clean and secure environment, fitted out with everything a student needs. The ongoing personal assistance that we provide ensures students are able to settle in quickly and live like a local. All our properties are within easy reach of the language colleges, transport, shops, restaurants and entertainment. We provide comprehensive on-going support from the moment you book until the time you leave. On arrival, for example, each student is personally introduced to the house and given key information on local facilities. They are also given a 'Welcome Pack' that includes their own bed linen, toiletry bag, SIM card and recommended apps, along with detailed information about the local area. The way that we operate our properties including, house-keeping three times a week, a well-equipped kitchen with personal storage, modern bathrooms, TV, an iMac terminal, free unlimited Wi-Fi access, and a private place to study and importantly 24 hour access to management has enabled us to deliver the optimal environment for our guests. It's very easy to book on-line, no matter whether you're a student, a booking agent or a college looking for friendly community living for their students. Take a look at our website. Ezystay.com.au
3. When the search was conducted there was an exact copy of the plaintiffs' Elevator Take found in the defendants' possession [Ex A 2775]. The hybrid copy found in the defendants' possession was in near identical terms to the Ezystay document except the name Ezystay had been replaced with the name Link 2 and the web address had been changed to the Link 2 address [Ex A 1962].
4. The defendants submitted that the statements in the Elevator Take are designed to encourage third parties to use Ezystay's services and have the inherent nature of a public statement. The defendants relied upon the following (previously suppressed) passages of Mr Ritchie's cross-examination in this regard (tr 62): Q. High level, not a huge amount of detail, a very broad summary? A. Yes, a broad summary, yes. Q. Can I suggest to you that everything that is contained in this document, just focusing for a moment on the document at pages 267 and 268, are matters that you publicise or Ezystay publicises or that residents would be aware of. Do you agree with that? A. Yes.
5. The defendants submitted that the Elevator Take is not confidential and falls exclusively within categories (i) and (ii) listed in Wright v Gasweld.
6. I am not satisfied that the Elevator Take contains Confidential Information as defined in the Deed.

Conclusions

1. Each of the Business Manual and Systems Manual were found on the defendants' computers at the time of the search. Each of those documents contained the plaintiffs' Confidential Information. Each of them was the subject of the property return covenant in clause 4(c)(i) and (ii) of the Deed. Riches Commercial and Mr Riches were in breach of that covenant in failing to return those documents to the plaintiffs.
2. Any hybrid documents that were created by copying or using the material in the Business Manual and the Systems Manual are the subject of Clause 8 of the Deed. In any event those documents contain Confidential Information and are also the subject of the covenant in clause 4(c)(i) and (ii) of the Deed. Riches Commercial and Mr Riches are in breach of that covenant.
3. Although the Elevator Take is not confidential, it and the hybrid copies of it fall within the description of "Books, Records, Materials and Documentation" in the Deed and must be returned.

Trade Dress

1. Clause 9(a) of the Deed includes the agreement by Riches Commercial and Mr Riches that "All Intellectual Property created or developed by, in relation to or in connection with the Group, belongs to and vests in the Group exclusively". Riches Commercial and Mr Riches also warranted that they "shall not do any act or thing which directly or indirectly infringes the rights of the Group with respect to its Intellectual Property" (cl 9(c)).
2. The definition of Intellectual Property in the Deed includes "trade dress and get-up". Mr Ritchie described in detail what he regarded as the Trade Dress of the plaintiffs. Those items were as follows: (a) secure swipe card access to each building; (b) a standard layout of the rooms, including bedrooms, bathroom, kitchen and common room and laundry fittings; (c) fully equipped modern kitchens with personal storage in cupboards and refrigerator labelled with references to the student's bed number; (d) all kitchen utensils, including glasses, plates, pots and pans, and cutlery avoiding the need to purchase a kitchen pack; (e) a comfortable common room, in a standard location, with black leather sofa, widescreen TV, DVD player, communal iMac computer with unlimited Wi-Fi; (f) polished wooden floors without carpets or floor coverings; (g) sparkling clean modern bathrooms; (h) laundry facilities including clothes dryer; (i) sturdy, comfortable single beds, pillow, Dura Fleece blanket, mattress protector and hotel-quality bed linen, including a flat sheet, a fitted sheet and pillowcase; (j) secure bedroom locks, and private, specially designed, combination bedside wardrobe/desk that is lockable and has shelves and hanging space; (k) comfortable, fold away, easy-to-carry study chair; (l) desk reading light and magnetic notice board; (m) a Free Lebara SIM card - for use in any unlocked mobile, allowing cheap calls to landlines and mobiles in any country, plus 100 FREE SMS messages; (n) a PokitPal discount booklet - offering discounts at restaurants, cafes, tourist spots, rental cars and retail outlets in Sydney; and (o) a local area map - showing places of interest and local transport.
3. The plaintiffs claim by reference to photographs obtained from the Link 2 website that the Ezystay Trade Dress has been substantially copied. Mr Ritchie gave evidence that the photographs display similar fittings, floors and layouts in the Bar Broadway accommodation to that of the Ezystay Trade Dress. Mr Ritchie accepted in cross-examination that polished wooden floor boards are not unique to Ezystay's accommodation (tr 43); that all student accommodation providers would be expected to provide a television (tr 44-45); that he would not be surprised that all student accommodation providers have sturdy, comfortable single beds (tr 45); and that many of the things found in his description of the Trade Dress are found in other student accommodation (tr 45-46).
4. The defendants submitted that Mr Ritchie conceded that in comparing the photographs of the Link 2 and Ezystay premises he had omitted to say that: the appliances used by Link 2 were different; the location of the computer was different; Link 2 has air conditioning and Ezystay does not; the layout of the buildings is different; the stools used were different; there were two fridges at the Link 2 premises and only one at the Ezystay premises and the fridges were of a different style; the dish drainers and kettles were different; the layout of the bedrooms was different and the bathrooms were different. The defendants also relied upon a number of exhibits [Ex 2-5] to compare photographs of other student accommodation suppliers with the Trade Dress claimed by Ezystay. Reliance on these exhibits is in support of a proposition that the Trade Dress is common to the industry, banal and could not be subject of any proprietary right. It was submitted that the retrospective labelling of the "look and feel" of the Ezystay fitout as "Trade Dress" does not make it something that is protected from copying. The first time the expression "trade dress" was used was in the Deed. However that is the terminology that the parties used in terminating their relationship and they accepted that the Trade Dress or get-up was part of the plaintiffs' intellectual property.
5. It is true that the issue of Trade Dress generally arises in cases involving passing off. The defendants submitted that without the protection of a trademark there are no intellectual property rights in the Trade Dress or get-up that attract the operation of clause 9(c) of the Deed. It was noted that there is no allegation that any person was misled into believing that the accommodation offered by Link 2 was in fact accommodation offered by Ezystay.
6. The defendants submitted that in the absence of any intellectual property right the covenant in clause 9(c) does not prevent any use of the Trade Dress because there is simply no right that the law would enforce to prevent the copying of it. The defendants submitted that in any event there was no copying of the Ezystay Trade Dress notwithstanding that there are some similarities between the two premises. Finally the defendants submitted that Ezystay has led no evidence that it has lost any profit or suffered any loss by reason of the copying of the Trade Dress.
7. It is obvious that there are similarities between the presentation of the accommodation that Ezystay provides and that provided by Link 2. The evidence demonstrates that student accommodation providers attempt to achieve a clean and attractive environment using polished floorboards and modern furniture. Notwithstanding that the defendants have used some of the ideas and presentation gleaned from the Ezystay accommodation I am not satisfied that they have copied the Trade Dress as pleaded.
8. The plaintiffs' Trade Dress claims against the defendants fail.

Consideration of evidence of copying

1. There were more of the plaintiffs' documents that Mrs Riches copied to create documents for Link 2 than those claimed in the SOC to contain Confidential Information. The process adopted by Mrs Riches was that she would cut and paste material from the Ezystay documents to create the hybrid documents, sometimes with very little amendment and at other times with additional material added to the document.
2. It is appropriate to analyse this conduct in considering the surrounding circumstances to the defendants' establishment of the Link 2 booking calendar and website and the plaintiffs Software claim.
3. On 21 February 2012 Mr Riches sent an email to his wife attaching a document entitled "L2 Overview". The document contained a summary of the Link 2 business [Ex A 5516]. Although Mr Riches sent this document to Mrs Riches he claimed that it was put together by her (tr 174). The L2 Overview document has large slabs pasted into it from the Ezystay Systems Manual without amendment but for the change of name from Ezystay to Link 2. I will not extract these aspects of the document because I am satisfied that the Systems Manual falls into the category of "Confidential Information" as defined in the Deed.
4. Mr Riches accepted in cross-examination that another document entitled "Link2 Group Business In Summary" [Ex C] was prepared "for the commercial purposes of Link 2" and that it was prepared "somewhere between March and July of 2012" (tr 165; 167). He also accepted that parts of the "Ezystay Systems Group Business In Summary" document had been copied into the "Link 2 Group Business In Summary" document [Ex D; tr 168].
5. An Ezystay PowerPoint presentation for ELC was a document discovered on the computers of the defendants during the search [Ex A 2868]. Parts of this document were copied or cut and pasted into a Link 2 Presentation document [Ex F]. The first four pages of the Link 2 presentation are substantially different to the Ezystay presentation. However other parts of the Link 2 presentation are identical to the Ezystay presentation. For example, the final page of the Link 2 presentation includes 4 tables identical to those in the Ezystay presentation, capturing lists of features under the headings Arrival Process, Induction Process, Ezystay Living/Link 2 Living and Departure Process [Ex A 2870]. Mrs Riches agreed that she had copied the page from the Ezystay document that had been retained and that she had cut and pasted some parts of Ezystay documents into the Link 2 presentation (tr 308; 314-315). The same page can be seen on the Link 2 presentation to Bar Broadway, which was sent by Mrs Riches to Mr Riches on 27 March 2012 under the subject "Justin Pres" [Ex A 5723; 5727].
6. On 21 February 2012 Mr Riches sent his wife a document entitled "Phone Call to schools" which contained short instructions for contacting schools on behalf of Link 2 (CB 5522; tr 171). Mr Riches' evidence was that Mrs Riches "did not make these calls because she told me she wouldn't" (tr 173). However Mrs Riches said in cross-examination that she had contacted "many schools" before 13 August 2012 and accepted that the Link 2 presentation (that in large parts had been copied from Ezystay's presentation) had been sent to the schools (tr 317; 319).
7. Mr Riches was asked in his examination-in-chief about the Software Email (referred to earlier in these reasons) that he forwarded to his wife on 31 May 2012. He gave the following evidence (tr 154): Q. What did you hope to achieve by sending it to your wife? A. I wanted to, as I said, it was another example, I was just informing her of another example of them moving forward with the business which wasn't the nature of our original discussions without everyone being involved, me in particular, so I want her to have a record of such a thing. Q. Why did you want her to have such a record? A. We were in the middle of negotiating our way out of this business and it was, it was, as I stated, an example of the business being developed without any of our consent or knowledge. Q. How did you think, when you refer to negotiations how did you think that would assist you having this email? A. I didn't, I didn't know at the point I forwarded information as such, I didn't pay much attention to the email, I believe I read the first point of it and did speak to Mr MacLean about that, the first part of the email. Q. Do you recall the content of your discussion with Mr MacLean? A. What I recall is Mr MacLean asked me over the course of quite a period advice on how he could go about and do roles that he was not, he didn't feel confident in doing. I did tell him on many occasions but I did it in regards to helping Mr MacLean and realised, which pained me, that I would in effect inadvertently be helping the plaintiff.
8. Mr Riches also forwarded the same email to his personal email address and was asked about this in examination-in-chief as follows (tr 155): Q. Are you able to say why it was that you forwarded this email to your private email address? A. Yes. Again, we were negotiating our way out of this business and I forwarded all information to that other address as I didn't control the Ezystay email and wanted to the make sure that I had a record of information that had, that I had forwarded. Q. How do you think, Mr Riches, this would assist you in your negotiations with Mr Ritchie? A. I didn't, I didn't particularly think it would assist me. I just thought, I just wanted to keep a record of all information. It's the same as what I said before, I was negotiating my way out of this business. I didn't know if or when the plaintiff would turn off my email address and so I forwarded it to my personal email.
9. Mr Riches was asked a number of questions in cross-examination about the Link 2 documentation. That evidence included the following in respect of the Elevator Take (tr 162): Q. You put the name Link 2 in the document in place of Ezystay? A. Mr Kelly, my wife did that. Q. Your wife did this, did she? A. And I would have told her the same thing as I said before, which is I believe it's a nonsense. Why do I need to create a document to tell myself what my business does? Q. So your evidence is that your wife went ahead and did this, despite your telling her not to? A. My wife does that regularly, Mr Kelly. Q. Well, she is a director of Riches Commercial isn't she? A. Yes. Q. And Riches Commercial is a party who undertook to coextensive duty to return documents and delete electronic documents under clause 4(c) of the exit deed? A. Yes. Q. So this is your wife's work for Riches Commercial, not yours. Is that what you're saying? A. Mr Kelly, we do have some crossover, but predominantly, yes, my wife does all marketing, that's her background, and the back end of the business, as such. Q. Why didn't you delete this document? A. I would say that it was probably generated by my wife on her computer. Q. And you are saying now to her Honour that you didn't really know anything about it? A. I'm not suggesting that at all, but I don't use my wife's computer, and if she has generated it it would be on her computer. Q. You knew the document came into existence? A. Yes. Q. Because you told her that it was a nonsense, is that right? A. Yes, yes.
10. When Mr Riches was pressed to explain the retention of documents that should have been deleted he gave the following evidence (tr 164-167): Q. I am suggesting that each of these documents are documents you copied, took, kept and quite deliberately refrained from returning under clause 4(c)? A. Your Honour, my wife - I'm not denying, it's plain obvious that she has done that and replaced Ezystay with Link 2 and she did that, I would presume, with multiple documents up until - anywhere from maybe March or April towards, I would say, July. When the deed was executed we were not allowed to use any intellectual property that was supposedly or was the property of Ezystay and we did not do that. So any documents that she has modified or changed, whether there be one or 100, we did not use them after the deed. Q. Are you sure that's right? A. To the best of my memory, yes. … Q. And what you were doing during this six month period was preparing yourself on departure to have as much information as possible, as much documentation as possible out of Ezystay available for your use? A. I don't agree with that, Mr Kelly. Q. So what's your explanation for why it is that you, as a director of the Ezystay companies, permitted this document to be prepared by your wife? A. As I tried to state before, it's general marketing material that can be found anywhere in the public domain. Q. Is that your answer? A. Yes. … Q. I am suggesting to you that you and your wife put your heads together and prepared this document so that you might take the benefit for yourselves of the work that had been done by the Ezystay companies in preparing the document? A. My wife and I talk about our business, obviously, but in relation to this document, as I have said before, I didn't put that document together. Q. But as you said before, you owned up to some responsibility for it? A. In general terms of what a business does, not in what is the actual content of the document. … Q. You understand full well that what I am suggesting to you is that you and your wife put your heads together, used the Ezystay document, and what you have got here is a document, a work in progress which just requires some photographs of Bar Broadway to go in? A. Mr Kelly -- … Q. No, just answer the question I have asked of you. … A. This document was generated before the deed was signed. Q. Exactly. A. So anything - once the deed was executed, if that was the intent of the document, it wouldn't have been used because it didn't allow me to. Furthermore, Mr Kelly, I didn't have other clients that you were suggesting at that point. The only person I was dealing with was Bar Broadway.
11. The circumstances in which Mrs Riches came to give evidence arose from Mr Riches' evidence in cross-examination in which he said that after they "were alerted to the fact of a raid potentially happening" Mrs Riches "went through and made sure she cleaned up, checked to see if she had anything" (tr 210). That evidence included the following (tr 211-212): Q. What are you talking about when you say your wife went through and cleaned them up? A. Well, she went through our register and removed them from our register. Q. Where did she remove them to from your register? A. Out of the register. I don't know if she put them in a file or what she did with them, Mr Kelly. What I do know is Mr Rydon said don't delete anything. Q. But by this time she had removed them from a register and put them somewhere else? A. Well, on the same computer, I would presume Mr Kelly. Q. Are you saying you weren't there when this was done? A. I would presume I would have been there for some of the time, Mr Kelly. I don't know if I was there for the whole time she's done it, if you look at this, on numerous occasions if she has come across a document that she realises shouldn't be there.
12. Mr Riches was then taken to the affidavit referred to above that he swore on 30 July 2013 pursuant to an order of the Court in respect of documents that were the subject of a search order. Mr Riches was further cross-examined as follows: (tr 211): Q. Let me just go back to your affidavit of 30 July, I didn't see anything in that affidavit where you mentioned that your wife had removed anything and placed it in a separate register, can you just go to volume 3? A. Mr Kelly, that affidavit was written before I realised they existed. I can't put something in an affidavit I didn't know existed at the time. Q. Just go to the affidavit and be very clear what you are saying here? A. Which volume number 3, can you tell me the page please. Q. Volume 3 starts at page 999. I don't see anything in this affidavit about your wife having moved anything from one register to another after receiving advance warning of the search, is there anything in that affidavit that deals with that? A. No. Q. Who or what is said to be the source of the advance warning of the search? A. An ex staff member of mine. Q. Who? A. Ian MacLean. Q. How did that happen? A. I believe he was informed of it. Q. At that time he was still in the employ of Ezystay, was he? A. Yes. Q. And he contacted you and told you that there was to be a search order executed upon the basis of a Court order? A. Yes.
13. On 5 May 2015 Mrs Riches' affidavit of that date was served on the plaintiffs. That affidavit dealt with the communication from Mr MacLean about the "raid". Mrs Riches said that she did not specifically recall the date but said that it was "in about April 2013". The affidavit then referred to a conversation that Mrs Riches said she had with Mr Riches at that time in which the following was said: Mrs Riches: I think there is some stuff on the computer. It wouldn't look good. I can't believe I didn't delete it. Mr Riches: I can't believe you didn't delete that load of shit either. I'm going to call David.
14. Mrs Riches then referred to Mr Riches' conversation with their solicitor, David Rydon, who advised them not to delete anything on the computers. Mrs Riches claimed that she reviewed what was on the computers and she did not delete any document or move any document. Mrs Riches said that she did not make changes to any of the documents that were on the computer while she reviewed them or subsequently.
15. Mrs Riches was cross-examined about some of the documents that Mr Riches had sent her while he was still a director of the plaintiffs. In particular Mrs Riches was asked about the email dated 21 February 2012 with the attachment in relation to phone calls to schools. Mr Riches claimed in his evidence that none of the plaintiffs' documents that he had forwarded to himself or his wife were used in Link 2's business. However Mrs Riches gave the following evidence (tr 300-301): Q. This is what he was saying that you should be doing when it comes to making a phone call to schools or agents? A. Right. Q. For the purpose of gathering some business for Link 2? A. Right. … Q. You go on further and talk about if they ask for info, you will send them a sample pack to be followed up and discussed? A. Correct. … Q. Tell us more, what do you say that you sent to agents? A. A presentation. Q. When? A. Probably in around - probably leading up to Link 2, May-April/May-June maybe. Q. April/May/June of 2012? A. Yeah, probably more May/June I would think. Q. Who were these agents? A. Various agents that do provide international - service international students and schools. Q. Who were they? A. Well, I cold called many, many agents so whichever - whoever asked for information. Q. So is this right, you did make calls pursuant to this? A. I did at some stage, yes. Q. At some stage. How many? A. But I don't know that it was along the lines of that script. Q. How many calls? How many are we talking about? A. Probably maybe 50, maybe. Q. 50? A. Maybe. Q. Were they in this country or overseas? A. I only called people in this country.
16. The presentation (discussed earlier at [170]) that Mrs Riches claimed that she sent to the agents was called for by the plaintiffs and was produced overnight. Mrs Riches was cross-examined further the following day in respect of that document. In that cross-examination Mrs Riches accepted that the document that she created was "similar" to Ezystay's presentation (tr 308). She accepted that she copied Ezystay material into her presentation and gave the following evidence (tr 309): Q. You discussed the preparation of this copied document with Mr Riches, did you not? A. I would have made the document and given it to, Greg would have seen it after, yes. Q. You discussed its contents, didn't you? A. He would have reviewed it after I had made it. Q. Are you saying to her Honour that you didn't discuss the contents with your husband? A. Not in making the document I wouldn't have. I would have made the document and he would have reviewed it after I made it. Q. What, and approved its use? A. Yeah.
17. Mrs Riches accepted that there was part of Ezystay's document within the presentation that she created sometime between March and June 2012. She then said "late June" (tr 314) and subsequently agreed it was 8 May 2012 (tr 316-317). She gave the following rather extraordinary evidence (tr 314-315): Q. Well, you were working on an Ezystay document when you were creating this? A. No. I would have, I would have taken the page that you were talking about and maybe cut and pasted it into this document. Q. When you say maybe cut and paste -- A. Yeah, I would have cut and paste into this document. Q. That is your evidence, is it, that you were cutting and pasting material from Ezystay documents, maybe more than one document? A. Um, it could, it could be more than one document, correct. … Q. So that page is not your work, that is you cutting and pasting it out of an Ezystay document? A. Um, it's, it's amended from that, but I agree that I would have cut and pasted it to start off with and then amended it.
18. The comparison between the Ezystay presentation and the presentation created by Mrs Riches demonstrates clearly that she cut and pasted the material from the Ezystay document into the document that she sent to the agents. Mrs Riches gave evidence that she discussed this with Mr Riches (tr 317). If this is to be accepted Mr Riches' evidence that the Ezystay material was not used in the Link 2 business was not true.

Software Claim

1. Mr Ritchie gave affidavit evidence (17 July 2013) that the Ezystay Software was developed by Mr Davis in 2011 and 2012. However by July 2013 the plaintiffs had yet to use the system publicly. At that time it was only being used internally. However Mr Ritchie said that once the system was available to the public, it would only be accessible with credentials that would be provided to users who entered into an agreement with terms relating to confidentiality and intellectual property. The only people who had access to the Software system were Mr Davis and his employee, the subcontractors Mr Davis engaged to develop part of the system, Mr Garrett, Mr Riches, Mr MacLean and himself.
2. The Software Manual was developed by Mr Davis and contains descriptions and instructions of how to manipulate the Software; specific features of the Software; and the steps to be taken in viewing a split booking, deleting a booking and editing a booking. The Software Manual was dated 28 May 2012 and was found on the defendants' computers [Ex A 6253]. This document was a work in progress that belongs to the plaintiffs and access was restricted to those officers of the plaintiffs who needed to assist with the development of the Software.
3. I am satisfied that the Software Manual and the Software for the design of the booking calendar that was being developed by Mr Davis is the confidential information of the plaintiffs.
4. The plaintiffs contend that Mr Riches copied the design of the Ezystay Software in late May and/or early June 2012 when he spoke to Mr Singh and instructed him what features he wanted him to build into the booking calendar system for Link 2. The plaintiffs contend that the features "are the design features of the Ezystay Software" as found in the Features Document extracted earlier.
5. The issue for determination is whether the defendants have used or copied or reproduced the plaintiffs' confidential information in creating the Link 2 booking calendar and website. The plaintiffs sought to establish that this is what the defendants did by showing that the instructions Mr Singh received from Mr Riches were a description, element by element, of the Ezystay Software. Mr Singh recorded Mr Riches' instructions in the Features Document and Mr Riches added further instructions when he returned that document to Mr Singh.
6. A comparison of the elements in the Features Document with the elements in the Ezystay system was carried out by the experts [Ex PD 4] and that evidence is referred to below. There was also expert evidence of the comparison of the user interface implementations of the Ezystay web application, the Link 2 web application and parts of the Features Document [Ex PD 2]. However it is appropriate to consider the evidence given by Mr Riches in respect of his instructions to Mr Singh before referring to the experts' evidence.

Mr Riches' evidence

1. In evidence-in-chief Mr Riches said that the Link 2 website became "live" around September 2012 (tr 151). He gave the following evidence (tr 153): Q. Do you recall in general terms what the nature, and as best you can if this was orally, if you can remember the conversation, but do you recall in general terms the nature of the initial engagement what you engaged or would engage Mr Singh to do? A. Yes. Q. Can you tell that to the court as best you can, if you can recall the words that were used? A. I wanted Mr Singh to develop a web page for me and I wanted him to develop a software calendar and software system for me. Q. Was there any more detail at that time in the initial engagement that you recall? A. No. Q. So, for example, was there reference to a banking or money collection facility? A. In regards to going into detail with the software system, I wanted a fully automated software system. HER HONOUR Q. Is this what you told him? A. Yes. I wanted it to be integrated with multiple platforms, one being a banking platform that would give us, or myself, a position to be able to take rent from individuals, not rely on them giving it to us. I wanted an inquiry system which would allow us to control all data and filter it in a manner that was beneficial to us from an occupancy point of view and a marketing point of view. And going back to the automation, I thought it was important that - Q. Did you say this to him, just what you have been asked is what you said to Mr Singh? A. To the best of my memory, your Honour. I wanted the system, I wanted to be able to drive the system rather than being reliant on Mr Singh once the system was complete. Q. Just so I am clear, when was that conversation? A. I would say around about end of May or beginning of June. Q. 2000? A. 2012.
2. Mr Riches agreed in cross-examination that on 16 December 2011 he asked Mr Davis for a copy of the booking calendar software that was then in the process of development for Ezystay. He agreed that up to that date the software had been developed by Mr Davis "in effect" on his instructions. He agreed that he was aware of the "strengths of the software" that had been developed to that stage by Mr Davis and its "various functional features". He agreed that it was on "that basis" that he wanted an electronic copy of it for himself (tr 222).
3. Mr Riches was cross-examined about his evidence-in-chief in respect of the instructions that he gave to Mr Singh. He gave the following evidence (tr 223). Q. Did you ever tell him that you were intent upon leaving the Ezystay group? A. Not that I recall. Q. Did you ever tell him that the software booking calendar, in particular that you were asking him to develop, was not for Ezystay or any company in that group but for your own purposes? A. I told Mr Singh to develop a webpage and a booking calendar as such. I didn't go into reference of who it was for at all. Q. Was there some reason for that? A. I didn't see it as important that Mr Singh know. I just wanted Mr Singh to do a job. It didn't cross my mind to tell him who it was for. It was just this is what I requested him to do. Q. It didn't cross your mind that you, as then director of a number of Ezystay companies, were actually enlisting his assistance to create some software, on your evidence, that you would be using in competition with that company in due course? A. I never - Mr Singh never asked me my business structure and I never told him. Q. He never asked you your business structure? A. I asked him, Mr Kelly, to create a web page for me and to build a booking calendar. I didn't mention who for, I just asked him to do that.
4. In further cross-examination Mr Riches agreed that he did not mention any Ezystay addresses to Mr Singh and that he assumed that Mr Singh would believe that what he was talking about was part of the business of Ezystay (tr 225). He agreed that he just allowed Mr Singh to assume that he was contacting him in the course of his business on behalf of Ezystay (tr 226). He agreed that this was even to the point of allowing Mr Singh to "guess" that the booking calendar system that he wanted him to design involved the Ezystay properties (tr 227).
5. Mr Riches was cross-examined further as follows (tr 227-228): Q. What I suggest you were doing was, you were describing the features that you knew that Mr Davis' booking calendar software had, you were running through the list, weren't you? A. No. … Q. What you were doing when you spoke with Mr Singh was in effect going through a list of all the features that you understood that Mr Davis' booking calendar had and you were telling Mr Singh, in effect, listing the features that you wanted to go in, the one that you wanted him to build? A. The features, I mentioned three or, three things I believe, dates on the top and numbers and beds down the sides. That was the general start of it, what, that is - I couldn't, that is - couldn't start from that point, could not start without going to that point. Over the course of the two and a half years it has a lot of features. There is a starting point. What you are saying is, the sheer time basic thing existing in every calendar Mr Kelly. Q. Thank you for that essay but, my question is a simple one and it has got nothing to do with that. When you spoke with Mr Singh and gave him instructions I suggest to you you ran through a list of booking calendar features that you wanted him to have in the booking calendar that you were instructing him to build, didn't you? A. I gave him some requirements of what I wanted, yes.
6. Mr Riches resisted giving details of his instructions to Mr Singh at around the end of May or beginning of June 2012. He gave the following further evidence in cross-examination (tr 230): Q. I am suggesting that that was an instruction that you gave him on the basis that what you were doing was replicating your understanding of the functionality design of Mr Davis calendar? A. There could not not be any similarities but I did not want the system that Mr Davis had, or had developed. Q. You asked him for a copy of his system? A. I did. Q. And now you say you didn't want one of those? A. I didn't want certain functionalities, as I stated yesterday, its major flaw was that you had beds down the left hand side. When you scroll across the screen they departed. If Mr Davis, which he didn't say it was possible, so I just said 'fine', I think my statement clearly states that to Mr Garrett that he can have the software. I wasn't concerned, I just moved on.
7. Mr Riches became argumentative and was clearly irritated (tr 228). However Mr Kelly pressed on and the following evidence was given in further cross-examination (tr 233): Q. Well what are you saying? A. The calendar, whether Mr Davis did it or Mr Reid [the plaintiffs' IT consultant before Mr Davis], they are going in such a basic term, they are going to present the same. I made reference to that calendar. I made reference to Mr Reid's calendar and the other calendar so. Q. And Mr Davis' calendar? A. Yes. Q. At last, what you did when you spoke with Mr Singh was, on this early occasion, when he is getting started, end of May, beginning of June, you told him the design features of Mr Davis' calendar that you wanted him to replicate? A. Some. I can't see how you couldn't make a calendar any different Mr Kelly? HER HONOUR Q. You are just being asked what you told Mr Singh and it is suggested to you that you told Mr Singh those parts of Mr Davis' calendar that you wished him to replicate, is that so? A. I don't believe I said Mr Davis in particular but yes the calendar would replicate some of what he had done. KELLY … Q. When listing the design features for the booking calendar that you were having Mr Singh design you included the features of Mr Davis' design and functionality that you wanted Mr Singh to include? A. Some features, yes.
8. Mr Riches once again became argumentative but more co-operative after Mr Kelly mentioned that he had a particular document. That evidence was as follows (tr 234-238): Q. I will show you in due course the document that I am asking you some questions about Mr Riches so, just, be careful to listen to the question and make sure that you answer it. You said to Mr Singh I suggest in one or other of these early, end of May or early June conversations, that you wanted a booking calendar module that included a header, which contains day month and year - date and year? A. Yes. Q. You told him that you wanted it to include room and bed numbers in which there was, first line on the left containing the room numbers. A. Initially, yes. . Q. Second line on the left contains bed numbers? A. Yes. Q. And both of these lines are blocked, stays on the screen, even on scrolling left or right? A. The bed numbers, yeah I wanted that to stay static on the screen, yes. Q. The same as in Mr Davis' system? A. Mr Davis' system doesn't do that Mr Kelly. That block does not remain static. It moves across the screen and disappears and that is what I have been saying, that is the biggest flaw, when it moves off the screen Mr Kelly you cannot see what bed you are booking people into. My calendar falls behind that block so you can scroll across but you will always be able to see what room and bed and room type is on the screen. Q. So is this right, as well as picking out the good design and functionality features of Mr Davis' calendar, when giving instructions to Mr Singh, you also asked for a couple of little improvements? A. I didn't think there was very many good functions of Mr Davis'. That was the only bad one but it was such a basic state that, it was so simple, Mr Kelly, it was just the calendar. What is good about a booking system is what, the data base can do Mr Davis I don't believe was there or any platforms that attached to that database, that wasn't even developed by Mr Davis on his screen or booking calendar. Q. Why did you ask for a copy of it? A. I don't know in hindsight, Mr Kelly. Q. I suggest the reason you asked for a copy of it was because you wanted a copy of it to use for your own purposes? A. Originally. … Q. So is this right, when you were giving instructions to Mr Singh in these conversations at the end of May or the beginning of June 2012, and in particular you were talking about the room numbers, bed numbers, and the lines being, in a block that stays on the screen even scrolling left and right, that concept, that idea was an idea that you had whilst you were still a director of the Ezystay companies? A. Yes. … Q. I'm suggesting to you that when you spoke with Mr Singh and you told him what the features were that you wanted in what he was to build for you, one of those features was the marking of booked beds? A. If you clicked on a cell and you booked it, and I'm just asking for clarity here if that's okay, you booked it from date X to date Y and it went across the cell - across the calendar, that's what you are referring to, Mr Kelly? Q. Yes. A. Yes. Q. That was a feature that was in Mr Davis' -- A. Yes. Q. -- booking system? A. Yes. Q. You told Mr Singh in this conversation or one of these conversations at this time, that beds in a particular room number booked by a male are to be marked in the colour blue? A. Yes. Q. Which is a feature that Mr Davis had in his calendar? A. Yes. Q. You told Mr Singh that you wanted the one he was going to produce to have the feature that beds in a particular room number booked by a female are to be marked on the colour pink? A. Yes. Q. You told him that the feature that you wanted also included, hovering over the booking, will show a pop-up containing all the information related to the booking? A. Some of the information, yes. Q. Some of the information? A. The pop-up box wouldn't be big enough to hold all of the information so I just wanted a portion of the information that I saw relevant. Q. You wanted that pop-up feature in Mr Davis' calendar to be replicated in this one, I suggest? A. The same feature, yes. … Q. Did you use the word "Ezystay" at all in these early conversations with Mr Singh? A. I made some reference, yes. Q. Did you make any reference to the Ezystay system? A. Yes. Q. What did you say? A. What I recall was, I wanted, when you clicked on a cell, a new browser to come through, and that would be the information that you would populate details of the student. Q. What did you say about the Ezystay booking calendar? A. That's what that did. Q. So tell us what you said to Mr Singh? A. I don't remember exactly but I think, as I said, you click on a cell, and a new browser comes through with - and you populate the detail of the student. Q. You said to Mr Singh that you wanted a functionality which involve clicking on the booking, opening up all the information related to that booking in a grey box pop-up window? A. Yes. Q. The same as the Ezystay system? A Yes.
9. Although Mr Riches acknowledged that this last-mentioned feature was the same as in the Ezystay system he said he could not recall mentioning the Ezystay system to Mr Singh. However he certainly recalled referring to the Ezystay booking calendar in this conversation with Mr Singh with reference to the pop-up facility (tr 239).
10. Mr Riches was then asked about Mr Davis' booking window which contained a number of fields including names and other details of the student. He agreed that he asked Mr Singh to include a feature of a booking window which contained key number, student number, first name, last name, email, phone, nationality, agency, booking from and to and a space for notes. He said he did not believe that he asked Mr Singh to include "gender". However he agreed that all of these features were in Mr Davis' system (tr 240-241). Although he had previously agreed that he had asked Mr Singh to include an email entry in this feature he subsequently said he did not believe that he had asked for this feature (tr 241). He was then cross-examined as follows (tr 241-242): Q. Apart from those two, what you wanted to ensure happened was that Mr Singh copied that feature of Mr Davis' design? A. I don't believe it was a copy, Mr Kelly. Q. What about replicated? A. Yes Q. When speaking with Mr Singh on this occasion, you also said to him, didn't you, that the feature you wanted was a feature in which you could insert a booking in a way which generated a unique booking identification on the submission of a request for a booking? A. It would automatically generate it, yes. Q. That's something that you wanted. That's a feature that Mr Davis' system had? A. Yes. Q. You wanted to replicate that feature as well? A. Yes.
11. Mr Riches was asked about other features that he sought to replicate from Mr Davis' system including the deletion of active bookings and moving or splitting bookings (tr 242). He gave the following further evidence in cross-examination (tr 243): Q. What's happening here, I suggest, is that you're ensuring that the design and functionality features of Mr Davis' software, to the extent that you thought them valuable, were here to be taken up for your benefit pursuant to these instructions that you'd given to Mr Singh? A. What I asked Mr Davis to do, he could barely deliver. Q. Be that as it may, what you are doing here is instructing Mr Singh to deliver what it is that Mr Davis' system had, together with whatever other ideas for improvement you had whilst you were a director of the Ezystay companies? A. Some of those components, yes. Q. This conversation took place when you were still in Ezystay? A. Yes.
12. Even if it is assumed that Mr Riches may well have been entitled to expect the plaintiffs to conclude their relationship with him and Riches Commercial more promptly, and that he may have felt frustrated and irritated with the delay in that regard, it must be remembered that he was paid about half a million dollars on his departure with a promise to return the hard copies and delete the electronic copies of the plaintiffs' Confidential Information and Books, Records, Materials and Documentation. He did not do this and his presentation in the witness box was most unimpressive indeed.
13. Mr Riches chose to give the additional evidence in his evidence-in-chief in relation to his instructions to Mr Singh. This had not otherwise been dealt with in his affidavit evidence. Although initially denying that what he was describing to Mr Singh were the features that he knew existed in Mr Davis' booking calendar (tr 227), the persistence of the cross-examiner demonstrated that this is what he was doing. He later admitted that he made reference to Mr Davis' calendar explicitly (tr 233). He suggested that he did not mention any properties to Mr Singh and assumed that Mr Singh would believe that he was talking about Ezystay properties. However Mr Singh's Features Document records his instructions that a drop-down was to enable the person using the system to choose whether they could see all the listed properties or only the assigned properties.
14. Mr Riches' suggestions in his cross-examination that there were flaws in Mr Davis' system and that Mr Davis could "barely deliver" the things Mr Riches asked of him, did not sit well with the simple fact that Mr Riches wanted a copy of this software for his own purposes. The stages of work described by Mr Davis in creating the Software, referred to earlier, were not the subject of any cross-examination. By December 2011 Mr Davis had reached what he referred to as Stage Four in the development. Mr Riches had been working alongside Mr Davis in the process of the development of the Software. As the communications between Mr Garrett and Mr Riches establish, Mr Riches proposed to Mr Garrett that he would continue with the software development "debugging" in conjunction with Mr Davis until settlement at which time he agreed that Rujo would have 100% ownership of the software product.
15. The affidavit sworn by Mr Riches in July 2013 extracted earlier is difficult to accept as an accurate reflection of his understanding at the time. He had been a party to forwarding to his wife a hybrid document reflecting the Ezystay Systems Manual (the L2 overview email). The peculiarity of that email is that by the time he forwarded it to Mrs Riches it was already cut and pasted from the Systems Manual. This oddity was not cleared up in the evidence and it seems to me that it may have been Mr Riches that created that document notwithstanding that he has given evidence that his wife was the person who was doing the cutting and pasting and preparation of the hybrid documents. His affidavit evidence in July 2013 was that he had no knowledge of the document and he did not have any copies of it. Having regard to the conversations alleged to have occurred between Mr and Mrs Riches when they were tipped off about the so-called "raid" it is very difficult to accept that evidence as an accurate reflection of Mr Riches' understanding at the time.
16. Mr Riches also claimed in that affidavit that he had no copy or copies of the Ezystay Software Manual. The substance of that document had been sent to him by Mr MacLean on 31 May 2012. Not only did he send it to his wife but he sent it to his personal email address. This was during the period that he was instructing Mr Singh. I do not accept that the statement in this regard in Mr Riches' affidavit of 30 July 2013 was an accurate reflection of his understanding at the time. Mrs Riches alerted him to the fact that documents had not been deleted. Yet he was able to swear an affidavit that he had no copy of this document when clearly he did.
17. Mr Riches' evidence in relation to the new booking window was rather telling. He suggested that although he may have instructed Mr Singh to put various aspects in the booking calendar with a new booking window he did not believe that he instructed him to put in a reference to email or gender. The Features Document lists not only the same entries as that in the Ezystay booking window but in the exact same order. I have no doubt that Mr Riches' instructions to Mr Singh were an exact copy of the Ezystay booking window. In this regard the defendants submitted that Mr Riches' knowledge of the software and his knowledge from his experience in the accommodation business and any calendar system cannot be separated from the information the plaintiffs seek to protect. It was submitted that this was part of his "know-how": Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326 at [37]. This submission may have had force but for the exactness of the copying of the items in the booking calendar.
18. The defendants' submissions included a number of statements that the defendants did not use the materials that they had copied for the purpose of the Link 2 business [DWS 7; 95; 100]. These submissions could not be accepted in the light of Mrs Riches' evidence. It appears that this was recognised by the defendants in their submissions in reply dated 14 May 2015 when in paragraph 26 it was stated that "only a small number of documents were ever used in the defendants' business".
19. Mr Riches was using the plaintiffs' documents to create documents for his business that was in competition with the plaintiffs while he was still a director of the plaintiffs. He used the services of his wife to make calls to the agents and the schools to entice them to deal with the Link 2 business using a presentation that plagiarised the documents of the companies of which he was a director. His evidence that his wife told him that she did not make the telephone calls cannot be accepted in the light of the fact of the many calls that Mrs Riches said that she did make and her evidence that Mr Riches was aware of this.

The experts' evidence

1. The defendants relied upon the expert opinion of Professor Robin Braun who holds a BSc (Hons) in Electronic Engineering and an MSc and PhD in Microwave Engineering [Ex PD 1]. Professor Braun referred to the difficulty of proving that one application is the copy of another by inspecting the Source Code. In a helpful table, Professor Braun compared the two "functionality relationships" of Ezystay and Link 2 with the addition of a widely available accommodation website known as "Wotif". Professor Braun concluded that the Wotif functionality was very similar to that of Ezystay and Link 2. He also commented upon a "multitude of other systems" that had much the same "Use Case".
2. The plaintiffs relied upon the expert opinion of Dr Bradley Schatz, the Managing Director of Schatz Forensic. Dr Schatz holds a PhD in Digital Forensics and a BSc in Computer Science. His report of 10 November 2014 [Ex PD 2] identified his instructions to prepare a report in relation to "whether it was theoretically possible that the defendants, or anyone on their behalf, copied or used any of the Plaintiffs' software including any of its design or design code". Dr Schatz defined the term "design" in paragraph 10 of his report as follows: Design is a broad term encompassing a number of activities in regard to software development, including visual appearance, interaction methods, information structure, and system components.
3. Dr Schatz reported that in approaching his task it was relevant to consider a number of things: (a) copy of visual design, which he defined as "fonts, layout and colours"; (b) copy of interaction design, which he defined as "user interface"; (c) copy of information design, which he defined as "data model & information presentation"; (d) copy of software design, which he defined as "how the software functions"; and (e) copy of software implementation, which he defined as "the source code implementing" the matters in (a) to (d).
4. Dr Schatz' report includes the following: 12. Based on my analysis of the evidence provided, it is my opinion that the design of a very similar user interface and data model to that of the Calender and Booking portion of the EzyStay web application was in existence on 30 May 2012 in the form of the Booking Calender Features document (the date of creation being recorded as 30 May 2012). This is based on: a) A near identical user interface functional specification and data model for the New Booking User Interface (see section Detailed Analysis); or b) A substantially similar user interface for the Booking Calendar (see section titled Booking Calendar Main User Interface); or c) A near identical user interface functional specification and data model for the Split/Move Booking User Interface (see section Move/Split User Interface); or d) The similarity of the relevant portions of the StudyHouse and the current Link2 web applications made available to me; 13. Based on the above, it is my opinion that it is theoretically possible that the defendants, or anyone on their behalf, copied the design of the Booking Calendar User Interface and the relevant data model of the software. … 15. I am unable, based on the evidence I have been provided with, to form a concluded opinion as to the probability associated with the above.
5. Dr Schatz provided a number of hypotheses as to how such a design similarity could have occurred. They were: (a) that Mr Singh had reference to a depiction of it; (b) that Mr Singh had provided to him in a document form, element by element, a design similar to it; (c) that Mr Singh had described to him the design, element by element, while he transcribed the design; or (d) that Mr Singh had described to him in a more general form the goals and purpose of the web application to be developed but with such terminological precision that explains the "near exact terminology and ordering of terms" as described in the section of his report titled "New User Booking Interface".
6. During the course of Dr Schatz' cross-examination it was established that aspects of the comparison of the screen shot of the Ezystay website and the Link 2 website were different. Those differences include that the date range selection drop-downs were in a different location and had a different look; that in respect of the search student functionality, one was on the left hand side and the other on the right hand side; the logout my account function was in a different location and had a different look; the property address had a different look but a similar location; the property images were in a different location; the upcoming events function was similar in look in a similar grouping area but located differently; the date range selected was in a different location and had a different look; the header containing the day, month, date and year had a different look and a different location; and the various pop-up windows had a different "look and feel" (tr 347-350).
7. Dr Schatz also gave the following evidence in cross-examination (tr 350): Q. … You have agreed to what I suggest to you are a number of respects in which the look and feel and the location of various matters was different as between the two booking systems; correct? A. Correct. Q. And that must I would suggest to you affect any opinions that you express concerning the likelihood of whether one was copied from the other? A. Um, yes, I did consider that.
8. Dr Schatz was then asked about the section of his report dealing with the "move/split user interface" in which he compared the Ezystay user interface for the edit booking facility with the Features Document. He agreed that he had access to the Link 2 system when he prepared his Report and was cross-examined as follows (tr 351): Q. But you made no attempt to draw a direct comparison between the edit booking user interface of the Ezystay system and the Link 2 one; correct? A. Um, I expect I may - well, I expect I would have examined that portion of it, but it's not appearing here because I didn't find anything to comment on. Q. When you say you didn't find anything to comment on, is that because it looked quite different to the Ezystay one? A. That would be one of the reasons, yeah. Q. Right. What were the other reasons? A. Um, the approach that I was taking was to in essence catalogue the similarities between them. The reason that I answered that would be one of the reasons is that, from memory, I don't recall specifically in that particular part of the user interface exactly what I saw there, but I think it is safe to say that I didn't see any equivalences there, so didn't comment on it. Q. Dr Schatz, just so I understand, did you understand your task in preparing the report to be, as you have just said, to catalogue the similarities? A. Um, I understood my task to be to give an opinion on the possibility of whether or not there had been copying. Q. Did you attempt to catalogue the differences between the two systems? A. I paid attention to them. Q. I see. So is this the position, you attempted to catalogue the similarities in your report, but you only paid attention to the differences; is that right? A. Um, I didn't catalogue the differences, no.
9. After further cross-examination in which Dr Schatz agreed that the upcoming events user interface of the two systems had a "look and feel" that was "very different" (tr 353), the real issue in respect of the appropriate comparison was identified. That issue is whether the features in the Features Document were in the Ezystay system. That is a step that needed to be taken to determine whether, as alleged, Mr Riches copied the Ezystay system by setting out the design, element by element, in his instructions to Mr Singh as recorded in the Features Document. The experts were then asked to produce that comparison which is the subject of their joint report [Ex PD 4].
10. Dr Schatz and Professor Braun prepared the joint report [Ex PD 4] on 6 May 2015 to indicate which of the features or design elements in the Features Document are in the Ezystay system. That Report identified the following limitations: 1. Ezystay design elements not present in the Document. The analysis does not identify features present in the EzyStay system that are not present in the Document. 2. Design elements in the Document not present in the Link2 System. Neither does this analysis consider which of the elements present in the Document were actually implemented in the Link2 system. 3. Link2 design elements not present in the Document. The analysis also does not consider other features that may be present in the Link2 system, but which may fall outside the scope of the Document. 4. The evolution of design elements in the Document. The analysis also does not consider whether the design elements in the Document may have been the subject of further design and refinement such that the resulting design is no longer similar to the relevant element in the Document.
11. The experts then listed the features in the Features Document and identified whether they were present in the Ezystay system by the word "Yes" and if not by the word "No". "Yes" appears 43 times and "No" appears only 8 times.
12. One feature that was the subject of "No" was the reference to "Dashboard". Mr Singh gave evidence that this was his terminology but that he was recording Mr Riches' requirements under that heading (tr 262). The experts also recorded "No" in respect of the category "Dropdown to choose whether to see all the listed properties or only the assigned properties". Mr Riches had been cross-examined in respect of this category as follows (tr 229): Q. You said to him that you wanted the booking calendar to have the feature that I am clicking any property listed item it should drop down so as to show the booking calendar for that particular property, so the user can click and open the booking calendars for only those properties that he requires? A. I would suggest that that would have been a long time after May or June, Mr Kelly. Q. So is this right, your memory is now … you can recall giving him an instruction along those lines, but you are now saying that was much later than May or the beginning of June 2012, is that your evidence? A. There was no property to click down on, Mr Kelly. Multiple properties. So I couldn't imagine I would have given him such an instruction, but as I have said to you I can't remember. As common sense would tell me that as more properties came on that may be a functionality but at that point it was not.
13. The plaintiffs submitted that in this passage of evidence Mr Riches was denying that he gave Mr Singh instructions to include a dropdown which allowed a choice to be made between showing multiple properties or only one. However Mr Singh's evidence was that Mr Riches gave him that instruction (tr 267). In any event, when Mr Riches amended the Features Document and returned it to Mr Singh on 5 June 2012 he wrote "I think users could see all properties but only book in the ones they have been given access to". The plaintiffs submitted that this language, in particular the use of the word "could", is a reference back to what users "could" do with the Ezystay system. I agree with this submission. The context in which it was written, at the time it was written and the language used leads to the irresistible conclusion that Mr Riches was referring to what could be done in the Ezystay system. Mr Singh also made reference to what could be done in the Ezystay system in his email to Mr Riches on 2 July 2012, referred to earlier in these reasons (at [69]).
14. The third item in which "No" is recorded as well as the fifth item being "On clicking any property list item it drops down to show the booking calendar for that particular property (so in this case user can click and open the booking calendars for only those properties that he requires)" and "View bookings related to all properties" respectively are in the same category.
15. The fourth "No" in the table relates to the "Number of day in the date range selected"; the seventh relates to "Booking Id" and the eighth to "Student number". The plaintiffs submitted that when one views the system as a whole these are minor details in the scheme of things. That may be so. However they are aspects of the Features Document that are not in the Ezystay system. The sixth "No" is under the heading "Room and Bed Numbers" and relates to the feature described in the Features Document as "a block that stays on the screen even on scrolling left/right" which is dealt with earlier in respect of some of the evidence that Mr Riches gave during the course of his cross-examination.

Surrounding circumstances

1. The plaintiffs submitted that the surrounding circumstances also support a finding that the Ezystay Software was copied. The first matter upon which the plaintiffs rely is the fact that Mr Riches asked Mr Davis for a copy of the Ezystay Software in December 2011. It was submitted that he would not have done so if he had not wanted a copy of the Ezystay Software for his own purposes.
2. Next the plaintiffs pointed to the fact that from as early as 21 February 2012 and continuing up to and beyond 31 May 2012, Mr and Mrs Riches pursued a course of conduct in which they "effectively stole" as many of Ezystay's documents and materials as possible and adapted them for use in the Link 2 business, notwithstanding that Mr Riches was a director and under a fiduciary and statutory duty not to obtain an unauthorised benefit and not to use his position or the plaintiffs' information to his advantage or to the plaintiffs' disadvantage.
3. Mr Riches signed a resignation letter in respect of his directorships of two of the plaintiff companies. However he did not resign as a director from all the plaintiff companies on 30 May 2012. Link 2 was not registered until 6 June 2012. However prior to that time Mrs Riches, at Mr Riches' direction, was making telephone calls and using the hybrid presentation that she had created from the Ezystay documents to market the new business of Link 2 with the "many agents" that she said that she contacted.
4. The fact that Mr Riches received a copy of the confidential Software email from Mr MacLean on 31 May 2012 at the time he was instructing Mr Singh in respect of the features that he required for the Link 2 system is also a matter to be considered in determining whether the defendants copied Ezystay's Software. The plaintiffs rely upon the fact that when Mr MacLean sent Mr Riches the Software Manual on 31 May 2012 Mr Riches forwarded it to Mrs Riches on the same day and later went to the trouble of emailing it to himself from his Ezystay email address to his personal Gmail address. The excuses or explanations given by Mr and Mrs Riches in respect of why these emails were sent and/or received were strikingly similar. Mr Riches said that he was forwarding the material to his wife as "another example of the plaintiff continuing to develop the business without my knowledge while I was involved" and that he wanted her to have a record "of the business being developed without any of our consent or knowledge" (tr 154). Mrs Riches said that she received the email as her husband was advising her "what was going on in the business without our knowledge" (tr 287; 289).
5. The plaintiffs claim that there is no reason to suppose that taking a copy of the Ezystay Software would be an exception to the way in which Mr and Mrs Riches were conducting themselves at that time in copying all of the plaintiffs' other documents, some of which included Confidential Information.
6. It was submitted that Mr Riches would have the Court believe that he thought so little of the design by Mr Davis that he did not want it. However it is difficult to accept that evidence having regard to Mr Riches' request of Mr Davis and indeed in itemising the 43 matters that were also in the Ezystay system when he instructed Mr Singh.
7. The plaintiffs also relied upon the fact that Mr Riches was not candid with Mr Singh. Mr Singh was labouring under the belief that he was dealing with Ezystay until the email from Mr Riches on 11 June 2012 advising him that he was no longer involved with Ezystay and that he should correct the calendar to remove the reference to the Ezystay properties. A further matter relied upon by the plaintiffs in this regard is Mr Riches' email of 6 August 2012 to Mr Aitken at Bar Broadway asking him to remove aspects of the website so as not to alert his "ex partners" to his involvement. This of course was only days prior to the entry into the Deed pursuant to which Mr Riches was paid approximately half a million dollars.
8. The plaintiff also submitted that Mr Riches was not a witness of truth. In this regard focus was placed on his affidavit of 30 July 2013. It was submitted that this affidavit was clearly inconsistent with what Mr Riches well knew and indeed Mrs Riches well knew at the time the affidavit was sworn. Only twelve weeks earlier in what must have been rather extraordinary circumstances when they were tipped off about a "raid", they had a discussion about the very matters that were part of the subject matter of the affidavit. Each of them well knew that their computers had Ezystay documents on the system and that Mr Riches was so incensed that Mrs Riches had left the documents on there that he rang their solicitor. It is difficult to accept that the description Mrs Riches claimed Mr Riches gave to the stored documents ("load of shit") was made or if made was his true belief, in the light of the fact that they had together been gathering this information and copying it and Mrs Riches, with Mr Riches' knowledge, had been using the hybrid document to entice agents or schools to work with Link 2.
9. Mrs Riches asserted in her evidence that she deleted the email of 31 May 2012 to which the Ezystay Software Manual was attached. Unfortunately that email and its attachment were extracted from her Gmail account as a result of the search.

Conclusions on Software

1. I have taken into account the limitations referred to by the experts in their joint report. Notwithstanding these limitations and indeed the inherent complexities of this aspect of the plaintiffs' case, the comparison of the items in the Features Document and the elements in the Ezystay system; the evidence of Mr Riches in forwarding to himself and his wife the Software Email; the request for Mr Aitken to remove aspects from the Bar Broadway webpage; the matters identified in the surrounding circumstances; and the copying and plagiarising of the plaintiffs' documents are all matters relevant in the consideration of whether I am satisfied that the plaintiffs' Software was copied.
2. I do not accept Mr Riches' evidence that although he forwarded the Software email to himself and to his wife he did not open the iNE document or read it. I am satisfied that his conduct in giving Mr Singh explicit instructions that matched identically those parts of the interface contained in the plaintiffs' booking system and Software amounts to copying the plaintiffs' Software.
3. I am satisfied that the plaintiffs' Software and Software Manual contained Confidential Information. I am satisfied that Mr Riches was in breach of clause 8 of the Deed by copying and using the plaintiffs' Software. I am also satisfied that the defendants were in breach of clause 4 of the Deed in failing to return hard copies and/or delete the electronic copies of the plaintiffs' Software Manual and Software.
4. I am satisfied that from sometime after 16 July 2012 Link 2 employed an accommodation booking software and system which was the same or substantially the same as the Ezystay Software and that described in the Software Manual. Mr Riches as the sole director of Link 2 caused it to engage in such conduct.

Breach of duties claim

1. The plaintiffs rely upon the same facts and circumstances in support of a claim that Mr Riches, as a director of the plaintiffs, owed a fiduciary duty or alternatively a statutory duty as a director of the plaintiff companies not to obtain an unauthorised benefit from his relationship: Chan v Zacharia (1984) 154 CLR 178 at 198-199.
2. In First Conferences Services Ltd v Bracchi [2009] EWHC 2176 (Ch) at [25] although Peter Smith J was referring to "employees the following observations are apt to the circumstances of this case: It is becoming increasingly common with the computerisation of information for employees who wish to set up their own competing business to help themselves to their employers' confidential information. Some of this material is not necessarily confidential as such and is capable of being found with hard work. However the employees do not wish to go through the hard work and in effect what they do is they seek to take advantage of their employers' time effort and expense in putting together valuable material which provides a tool to an emerging business. Instead of doing their own work using their own brains they simply hijack the employers' gathered material. This gives them what is called "a springboard" for their business to be up and running almost immediately at the expense of the former employer.
3. Mr Riches owed a fiduciary duty to the plaintiffs to protect their confidential information and not to deploy it for the benefit of a third party or for himself. It is clear that Mr Riches was using the plaintiffs' documents, some of which contained confidential information and in respect of which he owed a duty of confidentiality to the plaintiffs whilst he was a director, in his and Mrs Riches' dealing with Bar Broadway. This is not a case in which it is claimed that Mr Riches diverted a business opportunity from Ezystay to himself and Link 2. It is limited to a claim that he breached his fiduciary duty (or statutory duty) in using the plaintiffs' documents and confidential information in a business that was competing with a business operated by companies of which he was a director.
4. During the period December 2011 up to the time that the Deed was executed Mr Riches copied and used the plaintiffs' documents, some of which were confidential, for the benefit of Link 2. The benefit included a saving of time cost and effort in putting together its own presentation by cutting and pasting the plaintiffs' presentation and other documents. The evidence given by Mrs Riches and the detail of the communications between Mrs Riches and Mr Aitken at Bar Broadway demonstrates quite clearly that Mrs Riches, at Mr Riches' behest, was using the plaintiffs' documents to obtain clients, the feedback from which she described as "phenomenal". While Mr Riches was a director of the plaintiff companies he owed them a duty not to conduct himself whereby he or a third party gained an unauthorised advantage from the plaintiffs' business documents and confidential information. He breached that fiduciary obligation by providing documents and materials to Riches Commercial and Mrs Riches for the purpose of preparing presentations to market the new business to agents and schools in competition with the plaintiff companies of which he was then a director.
5. Mr Riches also breached that fiduciary duty by copying confidential information in instructing Mr Singh to prepare the software for Link 2 prior to the time that he resigned his two directorships and well prior to the time that he resigned from his other directorships.
6. Mr Riches provided the confidential information to Mrs Riches for the purpose of use in the business of Link 2. Mr Riches was also in breach of his confidentiality duty in this regard.
7. Mr Riches improperly used his position as a director to gain an advantage for himself and for Link 2 (and Riches Commercial) by reason of the use of the Ezystay documents and information. Mr Riches' conduct in this regard was in breach of s 182 and s 183 of the Corporations Act.

Other matters

1. The defendants submitted that the plaintiffs led no evidence of any damage arising from the copying or use of the Manuals or the Software. It was submitted that the plaintiffs could not have suffered any loss by reason of the trivial nature of the alleged conduct. Indeed the defendants submitted that it would be "absurd" to make a suggestion that they could have suffered loss.
2. It is true that the plaintiffs have not claimed that they have lost custom to the defendants. The plaintiffs have been put to the cost of pursuing a search for documents and hybrid documents that have been improperly withheld by the defendants. The plaintiffs have been put to the cost of seeking orders for the return of their confidential information which has been retained and used by the defendants in breach of the Deed. Notwithstanding the submission that was made by the defendants that this does not represent any "loss" to the plaintiffs, I am satisfied this expenditure was lost to the business operations of the plaintiffs. I am also satisfied that Mr Riches caused Link 2 to use the plaintiffs' Confidential Information in its business.

Summary of conclusions

1. For the reasons stated, the plaintiffs have succeeded in their claims against the defendants in respect of the Business Manual, the Systems Manual and the Elevator Take. The plaintiffs have also succeeded in their claims against the defendants in respect of the Software Manual and the Software. The plaintiffs' claim against the defendants in respect of the Trade Dress fails.
2. Having regard to the plaintiffs' submission that the form of final relief should abide the delivery of these reasons and the defendants' contention that the injunction as presently sought may be in restraint of trade, it is appropriate to give the parties the opportunity to reach agreement on the form of final orders. Irrespective of whether the parties reach agreement they should make contact with my Associate by no later than 28 August 2015 to relist the matter to finalise the proceedings whether by consent or after further argument.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 August 2015