The applicants' objective belief
45 To obtain preliminary discovery, the prospective applicants must prove that the belief held by them is reasonable: r 7.23(1)(a).
46 In Pfizer, Perram J stated at [120] that:
(1) [an applicant] must demonstrate that the belief is reasonable, either by reference to material known to the person holding the belief or by other material subsequently placed before the Court;
(2) the person deposing to the belief need not give evidence of the belief a second time to the extent that additional material is placed before the Court on the issue of the reasonableness of the belief. That belief may be inferred;
(3) the question of whether the belief is reasonable requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief; and
(4) it is useful to ask whether the material inclines the mind to that proposition but very important to keep at the forefront of the inclining mind the subjunctive nature of the proposition. One may believe that a person may have a case on certain material without one's mind being in any way inclined to the notion that they do have such a case.
47 In order to be objectively reasonable, the belief required by r 7.23(1)(a) requires more than mere assertion, suspicion or conjecture: Telstra at [58]. As Charlesworth J observed in BCI Media Group Pty Ltd v Corelogic Australia Pty Ltd [2020] FCA 1556 at [38]:
Much will depend on the nature and source of the right, the essential factual or legal elements to be proven and the extent to which the evidentiary material in the prospective applicant's possession is capable of demonstrating that each element is fulfilled.
48 In Apache Northwest Pty Ltd v Newcrest Mining Ltd (2009) 182 FCR 124; [2009] FCAFC 39 at [3], Moore and Gilmour JJ (when considering an application under O 15A r 6) stated:
… Belief is an inclination of mind towards assenting to, rather than rejecting, the proposition, and the evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of the actual cause of action exists, that would dispose of the application insofar as it is based on a cause of action.
49 For the following reasons, the applicants have failed to demonstrate that the belief expressed by Mr Tisdall and held by the applicants is reasonable.
50 First, the belief that GDP Group has a right to relief against Mr Saye for damages for breach of contract, by reference to the 2019 Employment Agreement, is not reasonable. That is because, for the following reasons, there is no reasonable basis for a belief that Mr Saye was employed by GDP Group after 2019.
51 On the applicants' own evidence, the business in Queensland was conducted by GDP Qld, not GDP Group. Mr Saye has worked in Queensland since January 2018 in a different role, and on different terms (including as to location of work and salary), to that referred to in the 2016 Employment Agreement. Mr Tisdall's evidence shows that Mr Saye's work in Queensland caused work to be directed to GDP Qld, not GDP Group. Documents issued by the Australian Taxation Office, coupled with the payslips issued by GDP Qld, show that Mr Saye was paid by, and was expressed to be an employee of, QDP Qld by no later than 30 June 2019. This is reinforced by the fact that the 2019 Employment Agreement was not executed by Mr Saye in March 2019 but that, notwithstanding this, GDP Qld continued to pay Mr Saye his salary (and issue him with payslips) until January 2021 and the Australian Taxation Office was informed of these payments, of PAYG tax withheld by GDP Qld and of the amounts paid to Mr Saye's superannuation fund by GDP Qld for the 2019 financial year as well as 2020 and 2021.
52 The applicants' counsel submitted that, notwithstanding these uncontroversial facts, GDP Qld was the agent of GDP Group and that GDP Group was Mr Saye's employer for this reason. However, other than the 2016 Employment Agreement, there is no evidence adduced by the applicants to support this submission. Mr Tisdall, the sole director of both companies, does not depose to any arrangements whereby employees such as Mr Saye who worked in the business in Qld were employed by GDP Group, and the arrangements with GDP Qld in relation to that employment (such as that GDP Qld would pay employees on behalf of GDP Group). No internal records of the two companies were placed into evidence to support this claimed agency relationship, or to support the submission that GDP Group was Mr Saye's employer (other than the two employment agreements). Nor was evidence adduced by the applicants to explain how it came to be that documents were lodged with the Australian Taxation Office which identified that Mr Saye was an employee of GDP Qld.
53 Accordingly, there is no reasonable basis to suggest, or evidence which would "incline the mind" to a conclusion, that GDP Group has any right to enforce the 2019 Employment Agreement against Mr Saye.
54 Second, the belief that GDP Group has a right to relief against Mr Saye for damages for breach of contract, by reference to the restraint of trade clause contained in the 2016 Employment Agreement, is not reasonable. That clause provided as follows:
23.2 The Employee agrees that, for the periods and in the areas referred to in clauses 24.4 [sic] and 24.5 [sic] below, the Employee will not undertake work for, provide work to, or become employed by any firm, corporation or individual who was at any time during the twelve (12) months immediately prior to the date of termination of the Employee's employment a customer, client or direct competitor of the Employer and with whom the Employee had dealings or undertook any work on behalf of without the prior consent of the Employer.
23.3 The Employee's obligations apply for a period of:
(a) six (6) months;
(b) three (3) months;
(c) one (1) month,
from the date of termination of the Employee's employment;
23.4 The Employee's obligations referred to in clause 24.2 [sic] above apply within:
(a) the State(s) in which the Employee is assigned to work;
(b) the metropolitan area(s) of the State(s) in which the Employee is assigned to work;
(c) a 10km radius of the Employee's place of work;
(d) a 5km radius of the Employee's place of work.
23.5 For the period referred to in clause 24.3 [sic] above, the Employee further agrees that they will not, directly or indirectly, canvass or solicit any firm, corporation or individual who is or has been a director, officer, employee, contractor, customer or client of the Employer and with whom they had dealings in the twelve (12) month period prior to the termination of the Employee's employment to cease having dealings with the Employer or to leave the employment of the employer.
55 For the reasons referred to above, the evidence demonstrates that Mr Saye ceased to be employed by GDP Group in 2018 and certainly by no later than 30 June 2019. The applicants seek documents relating to the period after 1 September 2020, presumably on the basis that this is around the time when Allied was incorporated. Therefore, any conduct which is the subject of the applicants' proposed claims for relief did not occur in the six month period after Mr Saye ceased to be employed by GDP Group (assuming that the restraint of trade clause is enforceable to the fullest extent and the internal cross-referencing errors in the clause are ignored).
56 It follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief premised on breach of the restraint of trade clause in the 2016 Employment Agreement.
57 Third, the belief that GDP Group has a right to relief against Mr Saye for damages for breach of contract, by reference to the confidentiality clause contained in the 2016 Employment Agreement, is not reasonable.
58 The confidentiality clause provided as follows:
24.2 The Employee will treat as confidential all information that the Company discloses to, makes known to or that comes to the attention of the Employee during the course of or for the purposes of the employment.
…
24.4 Confidential information includes, but is not limited to, computer programs, client and supplier lists and details, the Employer's methods of operation and processes, business and marketing, dealings, organisation, finance, transactions, prospects, activities, staff, business associates, designs, copyright and artwork, drawings, know-how, quotes or other documents or material prepared by the Employee or other employees, contractors, agents, clients or servants of the Employer, in whatever form including electronic form.
24.5 Except as required for the performance of the Employee's duties under this Agreement, or as required by law, the Employee, at any time, during or after the termination of this Agreement:
(a) shall not divulge to any person or make use of any confidential information; and
(b) shall use best endeavours to prevent the disclosure, publication or unauthorised use of any confidential information.
59 The applicants' evidence did not identify the specific information which fell within the scope of clause 24, being information which had been disclosed to, made known to or which had come to the attention of Mr Saye during his employment with GDP Group. Nor did the evidence disclose a proper basis to believe that any such information had been used or divulged by Mr Saye. The case in reliance on this clause therefore rose no higher than mere assertion or conjecture. The deficiencies in the evidence adduced by the applicants in relation to alleged misuse of their confidential information is expanded upon below.
60 It follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief premised on a breach of clause 24 of the 2016 Employment Agreement.
61 Fourth, the belief that either or both GDP Group or GDP Qld have a right to relief against Mr Saye or Allied for equitable compensation or an account of profits connected with the misuse by Mr Saye of confidential information is not reasonable.
62 That is because the evidence adduced by the applicants is inadequate when consideration is given to "the nature and source of the right, the essential factual or legal elements to be proven and the extent to which the evidentiary material in the prospective applicant's possession is capable of demonstrating that each element is fulfilled": see BCI at [38].
63 In this case, there was no evidence that the identity of GDP Qld's clients (or GDP Group's clients) constituted information that was confidential to the applicants. There was also no evidence that Mr Saye's knowledge of the existence of Glaziers or ABS Façade or any other client of the business, or what any of their businesses involved, was received by Mr Saye in circumstances importing any obligation of confidence. To the contrary, according to Mr Tisdall, the relationship between GDP Qld and ABS Façade was said to have arisen from Mr Saye's "own contact network".
64 Indeed, the applicants' counsel accepted that the identity of the clients of the business was not confidential information.
65 Instead, it was submitted by the applicants' counsel that the specific information which was confidential was the identity of the principal point of contact within each particular client, and information about that particular person such as their personal interests (and cricket was given as an example) so that, by reference to those interests, that person can be encouraged to cause work to be given to GDP Group or GDP Qld.
66 However, there was no evidence adduced by the applicants that any such information was obtained by Mr Saye during his employment, that any such information has the necessary quality of confidence and was not, for example, common or public knowledge or that this information was received by Mr Saye in circumstances importing an obligation of confidence: EBOS at [35].
67 All that Mr Tisdall deposed to was that, while Mr Saye was employed as the Queensland Manager, his role within the business included sourcing prospective clients for the business "with the assistance of GDP's confidential information", including "GDP's contact network". No facts were deposed to by Mr Tisdall as to what the so-called "confidential information" was or why it was confidential information owned by GDP Group. Nor was any detail provided by the evidence about "GDP's contact network".
68 Further, Mr Tisdall's lay opinion that GDP Group owned, and that Mr Saye had the assistance of, any such "confidential information" carries no weight. No evidence was given by Mr Tisdall to identify the information with any specificity, to describe the circumstances in which it was imparted to Mr Saye or how Mr Saye obtained the "assistance" of such information. And it is not known what Mr Tisdall meant when he used the label "confidential information" or the facts which underlie that legal characterisation.
69 It follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief premised on a misuse of confidential information by Mr Saye.
70 Fifth, the belief that either or both GDP Group or GDP Qld have a possible claim against Mr Saye and Allied for statutory compensation is not reasonable.
71 As to this, the applicants relied upon a proposed claim against Mr Saye pursuant to ss 182 and 183 Corporations Act 2001 (Cth) which provide as follows:
182 Use of position - civil obligations
Use of position - directors, other officers and employees
(1) A director, secretary, other officer or employee of a corporation must not improperly use their position to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
183 Use of information - civil obligations
Use of information - directors, other officers and employees
(1) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
72 The applicants' claimed right to statutory compensation was premised by them upon an alleged improper use by Mr Saye of information which he acquired during his employment. The applicants' submissions described it as a statutory duty of confidence.
73 It appeared to be common ground that, generally, there can be no improper use of information within the meaning of s 183 Corporations Act if there has been no improper use of the information under the general rules of equity, which is consistent with the authorities: Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74; [2000] NSWSC 979 at [22]-[29]; see also Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (2009) 81 IPR 1; [2009] FCAFC 2 at [44]-[46].
74 For the same reasons that the applicants have failed to demonstrate any reasonable belief in a right to relief premised on a misuse of confidential information, they have also failed to demonstrate any reasonable belief in a right to relief premised on a breach of s 182 or s 183 Corporations Act, whether against Mr Saye or against Allied (for being involved in Mr Saye's conduct). In addition, for the reasons explained below, the applicants have failed to demonstrate any reasonable belief in relation to any conduct of Mr Saye while he was an employee of the business.
75 Finally, in paragraphs 1(a), 1(b), 1(d) and 1(f) of the draft orders, the applicants seek documents by reference to the relevant period (as defined) being 1 September 2020 and 29 July 2021. Paragraphs 1(c) and 1(e) of the draft orders contain no temporal limits. This means that all of the proposed orders encompass (at least) the period between 1 September 2020 and 29 January 2021, being when Mr Saye was an employee.
76 However, other than identifying that Mr Saye incorporated a company in September 2020 with Mr Naughton (an employee of Glaziers) as co-director, there is a paucity of evidence to support any belief by the applicants that they may have a right to relief connected with the period between 1 September 2020 and 29 January 2021, when Mr Saye departed, or at any time while Mr Saye was employed in the business.
77 That Mr Saye approached Mr Tisdall to discuss Mr Naughton being employed in the business does not provide objective support for any belief that there was unlawful conduct by Mr Saye. Nor does the fact that Mr Saye requested a salary increase on 3 November 2020 (and had requested such increases previously).
78 Indeed, the manner of Mr Saye's departure (including that he gave one month's notice and the content of his 30 December 2020 email) and Mr Arnup's statement to Mr Tisdall that he had no knowledge that Mr Saye was competing against the applicants prior to June 2021 support an inference that Mr Saye did not engage in unlawful conduct while employed in the business.
79 Further, there is no evidence of any decline in work received from the applicants' clients during the period that Mr Saye was employed. At best for the applicants, the evidence shows that Glaziers ceased to refer work to GDP Group and GDP Qld in December 2020. However, this is insufficient to incline the mind towards the notion that the applicants may have a right to relief in relation to other clients during the period that Mr Saye was an employee, whether against Mr Saye or against Allied.
80 Due to the inadequate evidence, it follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief associated with any conduct by Mr Saye or Allied during the period between 1 September 2020 and 29 January 2021 or any other period when Mr Saye was an employee in the business.