The Full Court's remittal
13 The plurality of the Full Court at [100] commented that no finding had been made on seven identified matters. Accordingly, I address each matter.
14 First, in relation to Confidential Exhibit S, the Full Court queried whether this exhibit was accepted as proof of Evagroup's profits in each of the months in the two years that it apparently compares. As I explain below, I accept that the exhibit is proof of Evagroup's profits in the two years which it compares but, for the reasons given in the Relief Judgment which I reiterate below, I do not accept that as proof of the precise quantum of the loss which Evagroup sustained as a result of the respondents' conduct.
15 Confidential Exhibit S, on the unchallenged evidence, was a profit and loss statement generated by Mr Yates using MYOB. It compared, on a month by month basis, Evagroup's net profit for the 2019 and 2020 financial years. I made criticisms of the document, which simply refers to profit and loss figures across each of the months in those years, primarily (although not wholly) concerning what can be discerned from the figures produced in that form: see, for example, RJ at [55]-[57] (concerning the absence of information which is normally associated with such statements such as a breakdown of revenue, costs and expenses) and RJ at [64]-[65] (addressing the lack of evidence about the monthly variations in the figures within each financial year, the portion of the business which related to floor leveller when compared to other products and services, and the effect of the expenses which the applicant claimed were incurred because of the conduct of Cemimax on the profit/loss figures in the exhibit).
16 It is to be recalled that, in support of its case on quantum, the applicant relied primarily upon Confidential Exhibit S. It submitted that the difference it recorded between Evagroup's profits in 2019 and 2020 was the loss which resulted from the respondents' conduct (though it was also said that this amount could appropriately be subject to a reduction of 35 percent in order to recognise or take account of various factors such as Mr Lopez's departure from the business and market vicissitudes). Although the respondents questioned the reliability of the document during closing submissions: RJ [57], they did not cross-examine Mr Yates on it, or suggest that it was not accurate in respect to the bald figures. It was not prepared for the purpose of these proceedings. Rather, the real issue between the parties was what could be drawn from it.
17 As is plain from RJ [64]-[65] and [68] for the reasons there given, I did not accept that the inference which the applicant sought to draw from the figures could be drawn. That is, I did not accept, in light of the criticisms of the evidence and its associated limitations, that the loss which Evagroup incurred from the respondents' conduct was established by Confidential Exhibit S to be the amount claimed. I did not accept that Confidential Exhibit S established that the loss of profit from the conduct of Mr Lopez and Imperial Flooring was (taking into account a discount which reduced the figure of the loss by approximately 35 percent) in the order of approximately $370,000. That said, I accept that the figures in Confidential Exhibit S were produced as the evidence reflects, and that it was Evagroup's assessment of the bald profit/loss figures at the specified times. There being no challenge to the accuracy of those figures by the respondent, I accept that they are proof of Evagroup's profits in each of the months in the two years that it apparently compares.
18 Second, as to Confidential Exhibit G, the Full Court raised an issue as to whether the exhibit was accepted as proof of the loss of margin suffered by Evagroup in selling Cemimax products to a specific group of named customers in the period from September 2019 to April 2020. I accept that in relation to specified customers which Evagroup sold to during that period and in relation to the amounts of the sales made by it to those customers, Confidential Exhibit G reflects the losses on those sales (for example, as a result of discounting).
19 Third, Annexure A is an aide memoire prepared by the respondents and attached to their closing submissions in reply. It purports to identify all of Imperial Flooring's sales to former customers of Evagroup between July 2019 and September 2020 by reference to certain invoices which were produced by Imperial Flooring in answer to a Notice to Produce, and was relied upon by the respondents to demonstrate the quantum of damages which they considered that it was appropriate for the Court to award. The respondents' submission was that the starting point for the maximum amount of compensable loss incurred by Evagroup was represented by the gross profit figures contained in Annexure A and that those figures ought to be further discounted to arrive at a net profit figure representing any final damages award. That net profit figure was $16,948.11. I note that, in respect of the information in relation to Imperial Flooring, Mr Lopez did not give any evidence as to the completeness of the invoices upon which Annexure A is based or an explanation of the aide memoire. (Noting also that in LJ at [113], I rejected a submission by the respondents that what had been produced by it in relation to a different notice to produce, reflected the extent of conduct undertaken.)
20 Putting the veracity of the figures in Annexure A to one side, for the reasons below I consider that Annexure A is flawed for the purpose on which it was relied and cannot be used in the manner contended for by the respondents.
21 Although it may be accepted that the sales which Annexure A records were made by Imperial Flooring for the amount claimed, and that it records the revenue of those sales in so far as they relate to Imperial Flooring, the gross profits which it also records are impacted by how much Imperial Flooring was charging for the product on top of its costs. Exactly how much this was may have been affected by a number of matters (noting that Imperial Flooring in the emails to Evagroup's customers was promoting that it had the most competitive prices). That is, it is to be inferred that Imperial Flooring was charging customers less than Evagroup for the same product. There is also evidence that Imperial Flooring was purchasing the product for less than Evagroup. In that circumstance, I do not accept that the gross profits relied on by Imperial can be extrapolated to the loss to Evagroup.
22 Even leaving aside that this does not address customers who may have left Evagroup and gone elsewhere as a result of the conduct of Mr Lopez and Imperial Flooring (given that there were other sources of the Cemimax product), the respondents' approach fails to take into account other relevant facts such as the springboard advantage gained by Mr Lopez. This is so even though it can be recognised that gain by the respondent may be a relevant consideration when assessing the loss to the applicant. The approach fails to recognise that the respondents obtained a head start in their business by the use they made of the confidential information. The applicant may have lost out on jobs it might otherwise have obtained. The representations on the website designed to mislead may have done just that (including as to potential new customers). It is not possible for a business in the position of Evagroup to be able to prove who went to Imperial Flooring or what other customers they may have lost as a result of the website. Bearing in mind, the respondents deliberately undertook the conduct to do just that (with false statements as to the business and the use of projects in which Evagroup was involved being credited by Imperial Flooring to itself). Mr Yates' evidence included the loss of custom, at that time in relation to at least five customers, a number of which are not referred to in this Annexure A analysis. It also failed to recognise that it is notoriously difficult to prove the lost custom as a result of such breaches as established in this case. There was evidence from Mr Yates of other customers lost, with their business being or potentially being significant.
23 The figure reached by the respondents on the basis of Annexure A also fails to take into account the effort needed and time taken to address the consequences of the respondents' conduct, and the steps taken to maintain, or to win back customers (including the need to discount prices or losses from the provision of the more expensive product for the price of the cheaper product, see for example, the evidence of Mr Yates and Confidential Exhibit G). The analysis also does not account for any loss of goodwill. As I concluded in the Relief Judgment, damages in this case are not limited to loss of sales or trading profit, but can extend, inter alia, to diminution of goodwill: RJ [8].
24 For these reasons, an assessment of the quantum of damages which was based purely upon the sums in Annexure A (albeit, with some adjustments) would not be appropriate. That said, Annexure A reflects that it is apparent that some customers did leave Evagroup for Imperial Flooring, with that custom being significant and continuing. In so far as Annexure A contains evidence of the sales made by Imperial Flooring, it is relevant evidence, in the assessment, taking into account the limitations that go with it.
25 Fourth, as to the scale of Evagroup's business as a whole, or the scale of Evagroup's Cemimax business, precise figures cannot be given. As is apparent from the Liability Judgment, it is a small company with no more than 5 employees, Mr Yates being the director: see LJ at [8], [178], and [180]. It is also apparent that 75 percent of its business is return custom. In the Liability Judgment, I made findings about the nature of the industry which impact upon the effect of the respondents' conduct: see for example LJ at [140] and [148]. Confidential Exhibit S, with its limitations, gives some general guide as to the size of the business.
26 Fifth, as to the value of any goodwill in Evagroup's business and the extent to which it may have been lost, this value is incapable of quantification. I accept that Evagroup's goodwill has been adversely impacted by the conduct of Mr Lopez and Imperial Flooring. As noted above, Mr Yates gave evidence that 75 percent of his customers are return customers: for example LJ at [95].
27 Sixth, as to the names of the customers who left Evagroup for Imperial Flooring, the issue is too confined. As explained above, business may have been lost to elsewhere, or Evagroup may have been deprived of new custom, as a result of the respondents' conduct. There was evidence from Mr Yates as to the loss of significant customers, not referred to in Annexure A.
28 Similarly, what the business of such customers was worth is incapable of precise quantification on the evidence. As stated in the Relief Judgment, the extent of the lost business is difficult to assess. Annexure A reflects that substantial business of some former customers was given to Imperial Flooring. However, that does not limit the damages that can be assessed. Damages are not to be assessed only on the basis of which customers can be established as having gone to Imperial Flooring. There is evidence of a loss of custom by other substantial customers of Evagroup at a time that coincides with Mr Lopez leaving. For example, on the evidence of Mr Yates, there were such customers as Nazero Construction and Illawarra Waterproofing, which could have been expected to be about $85,000 worth of business. As explained above, other factors are relevant to the assessment of damages.
29 Finally, as to the ACL breaches, it is not possible, and neither party suggested it was either possible or necessary, to quantify what loss Evagroup suffered by reason of the breaches of the ACL. Given the nature of the breaches, it is impossible to attribute loss to one or other aspect of the misconduct of Mr Lopez and Imperial Flooring. They were all driven to the same end. The ACL breaches included Mr Lopez using the customer list to send emails to Evagroup's customers touting for business. The website contraventions had broader reach. It cannot be that because the damage cannot be attributed to a particular contravention given their overlapping nature, that it ought not be compensated. The approach taken was one which was urged by the applicant and which recognised the damages which were appropriate considering the contravening conduct. In my view, $150,000 damages encompassed the consideration of all contraventions. A portion was then allocated to the ACL breaches.
30 The evidence referred to above is all part of the factual matrix to be evaluated in the assessment of damages, and no one aspect is to be considered in isolation. It was considered, with all the limitations discussed.
31 For example, accepting and taking into account the limitations of Confidential Exhibit S, it nonetheless reflects that there was a significant drop in profit from the preceding year, in the months following Mr Lopez's use of the confidential information and the other contraventions. It was only in the preceding year that Cemimax was sold by Evagroup. Some of that drop is attributable to the conduct of Mr Lopez and Imperial Flooring. That cannot be controversial. That conclusion is also supported by other evidence, including, inter alia, evidence from Mr Yates as to loss of business (which is not confined to Imperial Flooring), and of his acts following the establishment of Imperial Flooring (including of discounting to maintain or win back business). Moreover, although I criticised the press release, I accepted that it was done in mitigation of damage caused by the respondents. Although Mr Yates' conduct impacts on the assessment of damages, I did not accept that there is a line cutting off the assessment of damages either at the time the press release was sent, or when the press release said the new product was said to be released. The impact of the respondents' conduct did not cease at that time and it did not break the chain of events. For example, the evidence reflects the efforts which Mr Yates' went to try and win back customers from Imperial Flooring, which is not limited by any press release.
32 As explained above, I accept that there was a loss of goodwill and significant time and effort spent by Mr Yates on addressing the consequences and fallout from the conduct of Mr Lopez and Imperial Flooring. Bearing in mind, Mr Lopez continued to deny his conduct from shortly after Mr Yates became aware of it, including as to the use of the confidential information and setting up Imperial Flooring which formed the relevant claims, up to and during the time of these proceedings. This was despite there being compelling evidence to the contrary: see for example LJ [45]-[63]. As explained above, the Evagroup Customer List has value in itself.
33 It is necessary to take into account factors such as the difficulty of a business in the position of Evagroup of establishing loss, and that loss may be as yet unknown or unknowable (for example, as illustrated by the website). That this is unquantifiable does not mean it is not taken into account. That the loss or damage from those factors is not quantifiable, and could not be, does not mean that it cannot be compensated. I bear in mind also, as noted above, that the conduct of Mr Lopez and Imperial Flooring does not need to be the sole cause of damage but merely a cause.