(2) to seek out toll milling arrangements in the meantime.
97 Thus, I conclude, the acquisition of the Young mill cannot be characterised as a business opportunity, or as a maturing or even prospective business opportunity, of Manildra at the time Mr Campbell first discussed the possibility of acquisition with Mr Murphy.
98 Nor did that position change, over the intervening years, until the heads of agreement were executed. The first document described as "heads of agreement" appears to have been prepared in late May and early June 2008, and signed on 24 June 2008. The second document so described, prepared after a lunch in early September 2008, was signed on 5 September 2008. (Somewhat confusingly, it is said to have been made "further to the heads of agreement dated 24th June 2004".) The third document so described is the heads of agreement dated 3 February 2009, referred to at [13] above. That is I think the first document expressed to name as parties, and to be signed on behalf of, the Young companies and Aust Asia.
99 Even as at 3 February 2009, there is no evidence that Mr Honan was interested in Manildra's acquiring the Young mill. Nor (given that I have rejected Mr Honan's evidence as to his alleged direction to Mr Campbell said to have been given in February 2009) was there any reason for Mr Campbell to think that Manildra might be interested in acquiring the Young mill. At most, Mr Campbell might have realised that Manildra might be interested in entering a toll milling arrangement with Young. But that is something that could have proceeded, until the Nowra mill became operational, regardless of Aust Asia's proposed acquisition of the Young mill. In this context, I note that Aust Asia has offered more than once to negotiate in good faith with Manildra to undertake toll milling activities for Manildra, but that Mr Honan has rejected those offers on the basis (to which I refer at [20] above) that there is no money in toll milling, at least in relation to the Young mill.
100 I conclude that, in negotiating for and securing, ultimately on behalf of Aust Asia, the acquisition of the Young mill, Mr Campbell did not divert or usurp any existing or maturing or prospective business opportunity of Manildra. I conclude further that knowledge of the opportunity to acquire (or possibility of acquiring) the Young mill did not come to Mr Campbell through his position as general manager of the Manildra mill, or in the performance of any of the duties or responsibilities attaching to that position. Nor did his duties or responsibilities require him to look out for, or to be aware of, such opportunities.
The business opportunity in Indonesia
101 Mr Honan's evidence was that the business strategy of the Manildra Group, at least in relation to wheat flour, involved the expansion of the Group's milling capacity and the export of flour to Indonesia and other countries in South East Asia and elsewhere. I have no doubt that Mr Campbell was aware of this business strategy.
102 Mr Tandun said that his role in Indonesia was to assist the Manildra group in dealing with its customers in Indonesia. Mr Tandun was based in Medan. There were other sales offices, staffed by other Indonesian citizens, in Surabaya and Jakarta.
103 Mr Campbell knew that one result of the Manildra group's decision to divert its wheat flour output to the production of ethanol was that it could not sustain the level of its exports in Indonesia. There is however no suggestion that Mr Campbell was involved in the decision to direct wheat flour to the production of ethanol at the expense of the export market.
104 Documents extracted from the business records of the Manildra Group showed that, over the three financial years ending 30 June 2007, 30 June 2008 and 30 June 2009, whilst the total production of wheat flour remained relatively constant the volume of flour exported dropped by more than 50%. The volume diverted to ethanol production at Nowra increased by more than 80%, whilst the amount devoted to domestic sales remained more or less constant. I note that, even once the Nowra mill becomes operational and produces at its projected output, and even if the whole of that output is devoted to export, the total volume exported would not return to its 2007 level unless the volume used for the production of ethanol decreases.
105 No doubt, Mr Campbell appreciated that with the diminution in the amount of flour supplied by Manildra to Indonesia, there was an opportunity for someone else to sell (or sell more) flour there. However, as he said, Manildra was not the only supplier in that market; indeed, suppliers from countries other than Australia were active in that market.
106 Mr Campbell said further, and I accept, that the real opportunity for increased sales in the Indonesian market arose not from the drop in Manildra's exports but in the natural growth of the market (of the order of about 10% annually: T143.30).
107 Manildra's ability to sell more flour in the Indonesian market was restricted by two things. The first was the total volume of flour that it produced. The second was its decision to allocate the bulk of that flour (after allowing for sales in the Australian domestic market) to the production of ethanol. Manildra always had the opportunity to sell more flour in Indonesia. But to do so, it needed either to acquire greater milling capacity or to change its business strategy and to devote flour to that market rather than to the production of ethanol.
108 In those terms, the Indonesian export market may have been a potential or prospective business opportunity for Manildra. But it is not (nor has it been) prevented from exploiting that opportunity by reason of anything that Mr Campbell has done, or for that matter left undone. It is (and has been) prevented from doing so by the constraints that I have identified, one of which flows from a business strategy deliberately chosen by it, no doubt for good commercial reasons.
109 In those circumstances, it is unrealistic to say that Mr Campbell has diverted or usurped any business opportunity of Manildra.
110 Nor, having regard to the evidence as to the nature of the Indonesian market, did Mr Campbell divert or usurp any of Manildra's contracts for the sale of flour in Indonesia. Mr Campbell said, and I accept, that Indonesian purchasers of flour did not enter into long term contracts. Rather, he said, they contracted either ad hoc, or at most from year to year. Further, he said (and again I accept) that Manildra had no stable group of customers in Indonesia. Rather, he said, there was a pool of potential customers. It was the job of Mr Tandun and his colleagues in Surabaya and Jakarta to seek out customers within that pool and to persuade them to buy Manildra's flour.
111 Whilst the entry of the Young mill into the Indonesian market would pose a competitive threat to Manildra's sales in that market, that is not something that the law regards as undesirable; quite the contrary.
112 It cannot be doubted that Mr Campbell's knowledge of the Indonesian market, and of the pool of potential customers who might buy wheat flour from Australia, was derived from, or gained in the course of, his employment by Manildra. But it forms part of his general stock of knowledge or know-how. It is not knowledge, the exploitation of which must be sterilised after the cessation of his employment so as to protect the legitimate interest of Manildra, unless there is something about the exploitation, apart from his possession of the knowledge or know-how and the means by which he gained it, that would so require.
The development of the business plan
113 The business plan comprised both written descriptive material and pages of calculations and projections. The written material described the project. It included information as to the Australian wheat milling industry and those who operated in it, the Australian wheat and wheat flour markets, the market for wheat flour exports to Indonesia and the use of that flour in Indonesia. It stated a conclusion. The conclusion was in essence that there was an opportunity, of a kind that arises only infrequently, to buy a flour milling plant, increase its output and export flour to Indonesia.
114 The supporting figures illustrated a number of things, to some of which attention was drawn in cross-examination. One sheet of calculations was described as "estimated investment & working capital to go to 500mt/day". It showed the amount projected to be required for machinery and equipment, installation and the like, and derived a "total additional investment" figure. Mr Campbell agreed that he had worked with Mr Tandun to produce these calculations (T123.25, 124.1). He said that Mr Tandun provided input in relation to the cost of some items of machinery and equipment because he knew people in China who could supply that equipment (T124.6). Other information, Mr Campbell said, he derived himself.
115 Another page of calculations purported to show the return on initial investment if the mill were to operate processing 115 tonnes of wheat daily. Mr Campbell acknowledged that he had reviewed such calculations in the course of his employment (T125.5). He was somewhat reluctant to acknowledge that he derived assistance, in calculating the cost of the various inputs (such as electricity, fuel, packaging, wages and the like) from his experience with Manildra. However, the conclusion that the knowledge and experience gained by him during his employment was relevant to the calculations, including to the assessment of the inputs, seems to me unavoidable; and I do not regard Mr Campbell's attempts to obfuscate (T125.7-.41) as reflecting well on his overall credibility.
116 However, accepting as I do that the knowledge and experience used by Mr Campbell in the production of his calculations included knowledge and experience gained by him in the course of his employment by Manildra, it does not follow that he was in breach of any contractual or fiduciary duty in putting his knowledge and experience to that use. Equally, I have no doubt that Mr Campbell either learnt, or sharpened, the analytical skills displayed in these documents during his employment by Manildra. But again, it does not follow that in using those skills for the production of the calculations in the business plan, he was in breach of any contractual or fiduciary duty.
117 Another document on which Mr Campbell was cross-examined was what appeared to be a calculation of output, on the basis of an assumed wheat consumption of 116 tonnes per day. It was suggested to Mr Campbell that the figures used by him had been obtained internally from Manildra; he did not accept this (T127.29). He said that the "grist rate" (which I take to be a ratio for calculating the quantity of flour that can milled from a given quantity of wheat) was "[t]he industry norm" (T127.34). I would have thought that anyone with reasonable experience in the milling industry would know this.
118 Again, Mr Campbell gave estimates for transport and packaging costs and the like. Although he was loathe to admit it, I have no doubt that his estimates were based on his knowledge and experience gained during the course of his employment by Manildra. It does not follow that Mr Campbell was in breach of any contractual or fiduciary duty by his use of that knowledge.
119 In looking at the various versions of the business plan that were in evidence, and at other calculations and projections of similar kinds, the overwhelming impression is that the inputs or integers in those calculations and projections were matters that could have been ascertained by anyone with Mr Campbell's experience in the wheat milling industry. Even if (as I think is likely to be the case) many of his estimates were based on knowledge gained by him during the course of his employment, it can hardly be said that such knowledge was of such a nature as to be entitled to protection against misuse. On the contrary, I think, it falls within the category of information which, even if notionally confidential, is nonetheless capable of being ascertained, or "reverse engineered", by any person with Mr Campbell's substantial experience in the industry. It would seem to fall within the first category of information identified by Hodgson JA in Del Casale at [38] and following; or to be information "that is ascertainable by inquiry or experiment" (to use his Honour's words at [43]).
120 Although to some extent I am now trespassing on the sixth, seventh and eighth issues, I do not think that it has been shown that any of the information used by Mr Young in the preparation of the business plan (in its state of development from time to time) was information of a kind that he was required, by some contractual or fiduciary duty, to keep to himself. Nor do I think that his use of his knowledge, experience and know-how in the production of that document (as it stood from time to time) betrays any breach of contractual or any fiduciary duty, even though undoubtedly a substantial part of that knowledge, experience and know-how was obtained during the course of his employment by Manildra.
121 It follows that, to the extent that the business plan (as it stood from time to time) and other documents do embody knowledge or experience gained by Mr Campbell in the course of his employment, that is not something that is capable of protection in equity.
122 Further, although there was some rather vague suggestion in Mr Honan's evidence that Mr Campbell might not have been devoting the whole of his time and attention to the business of Manildra (see para 17 of Mr Honan's affidavit sworn 18 August 2009) I do not find that this was the case. Mr Campbell denied the allegation. In relation to one episode, Mr Campbell said that he had taken leave by arrangement with Mr Peter Simpson, who was the general manager of the Manildra Group. Although this explanation was proffered in Mr Campbell's affidavit sworn 24 August 2009 (at para 111(c)), and although Mr Honan replied to that evidence, the plaintiffs did not call Mr Simpson, nor did they explain his absence from the witness box. Perhaps they thought the matter was of insufficient importance to warrant disturbing Mr Simpson; and if that is so, then there is little reason for spending more time in it. Otherwise, I would infer from the failure to call Mr Simpson that his evidence would not have assisted the plaintiffs on this aspect of their case, and thus more comfortably accept the evidence given by Mr Campbell. On either approach, this matter goes nowhere.
Poaching Manildra's staff
123 I have touched on this at [23] to [25] above. Consistent with what I have said at [25], I find that Mr Campbell did approach Messrs Douglas, Cox and Gersbach whilst they remained employed by Manildra (or associated companies), to see if they would join him should he set up a competing business after his acquisition of the Young mill; and that Mr Campbell made those approaches whilst he was still employed by Manildra.
124 Mr Campbell's evidence on this point was less than convincing. He said he did not approach those gentleman "with a formal offer", but "discussed with them the opportunity" (T138.1). However, it seems, he was sufficiently satisfied with those "discussions" to include in one version of the business plan the details that I have set out at [23] above.
125 Mr Campbell was taken in cross-examination to documents suggesting that, for key staff in the proposed venture, it was desirable "to keep names under wraps for now". He claimed to be surprised by that (T166.10), saying "I don't know why to keep their names under wraps" (T166.14). In my view, Mr Campbell was dissembling when he gave this evidence. I think that he well understood, contrary to his denial, that if it became known, during the course of his employment, that he was seeking to entice other important employees of Manildra to a venture of his own, it could cause trouble.
126 In addition, there is Mr Tandun's evidence that Mr Campbell sought to entice him away from Manildra, to join the new organisation. Although that evidence is expressed with some generality, the unmistakable conclusion is that, whilst Mr Campbell was an employee of Manildra with responsibilities including liaison with and direction to Mr Tandun, he sought to secure Mr Tandun's services for his own proposed business.
127 Mr Tandun was not cross-examined on his affidavit, and I accept his evidence. Of course, the approach to Mr Tandun went nowhere, because he did not leave the employ of Manildra and (so far as the evidence discloses) is still working for it in Indonesia.
128 The same cannot be said in respect of Messrs Douglas, Cox and Gersbach. They have each resigned from Manildra, to take up offers of employment made by Aust Asia. It does not appear that they acted in breach of contract in so doing. There was no evidence that any of them was employed for a term of years that had not expired when he resigned. Nor was there evidence that any of them had given notice that was, in all the circumstances, inadequate.
129 I conclude that, whilst Mr Campbell was an employee of Manildra and as part of his activity in preparing to compete with Manildra once he ceased to be an employee, he solicited each of the employees in question to leave Manildra and join him in that new business venture. In my view, that conduct was inconsistent with his contractual obligation of fidelity. However, it goes nowhere substantial in terms of remedy. At most (there being no suggestion that Manildra has suffered any substantial damage compensable at law) there is an entitlement to some nominal amount of damages for breach of contract.
Sections 182 and 183 of the Corporations Act
130 It was part of the plaintiffs' case that Mr Campbell had contravened ss 182 and 183 of the Corporations Act. Those sections read as follows:
182 Use of position--civil obligations
Use of position--directors, other officers and employees