Orica Investments Pty Ltd & 2 Ors v William McCartney & 3 Ors

a. carry on business similar to or in competition with Bronson & Jacobs, either directly or indirectly, as employee, manager, director, shareholder, member, partner, joint venture participant, consultant, or in any other capacity;

b. entice away from Orica Investments any customer, supplier, or employee of Bronson & Jacobs' business;

c. canvass or solicit orders for services similar to those provided by Bronson & Jacobs; or

d. use or disclose any confidential information relating to the business or affairs of Bronson & Jacobs or its subsidiaries. 8 The share purchase was completed on 31 May 2004. McCartney resigned as the managing director and as an employee of Bronson & Jacobs. On that day, he entered into a Consultancy Agreement with the third plaintiff, Orica Australia Pty Ltd. The agreement was for a period of twelve months, and would be automatically extended for further periods of six months unless either party gave notice that it did not wish to extend the agreement. McCartney was to be paid a base consulting fee of $350,000 per annum and a bonus of up to forty per cent of the base consulting fee "based partly on business performance and partly on achievement of personal objectives to be agreed with Mr Graham Bird by 31 July 2004." 9 Mr Graham Bird was the general manager of Orica Chemnet. Orica Chemnet is the business name under which Orica Australia carries on the business of manufacturing, supplying and distributing chemical products to various industries. 10 Under the Consultancy Agreement, McCartney agreed to provide consulting services in connection with the conduct of Bronson & Jacobs' business proposed to be acquired by Orica, including "assistance with the integration of commercial operations immediately following the acquisition of the Bronson & Jacobs business by Orica Chemnet" and "development of Bronson & Jacobs business in all of its Asian operations." He was to provide services in accordance with instructions issued by Bird or any person nominated by the Orica board. 11 During the negotiation for the purchase of the shares in Bronson & Jacobs, Orica represented that there would be no change to the day-to-day operations of Bronson & Jacobs, except in the finance area. It gave a presentation to suppliers and customers of Bronson & Jacobs which stated "for B & J, this acquisition will mean business as usual and access to increased resources and systems" and "Bronson & Jacobs will operate as a stand-alone division within the Orica Chemnet business" and "Orica recognises the quality of the existing Bronson & Jacobs business and its employees." The same message was conveyed to Bronson & Jacobs' employees. 12 The transition of the control of the Bronson & Jacobs business to Orica was fraught with tension. Orica's appointment of senior management, including the appointment of Mr Denis Monahan as general manager of Bronson & Jacobs on 1 June 2004, was resented by the existing senior management. Orica changed the roles of some of the senior managers. It introduced to Bronson & Jacobs an operating system known as SAP, which was used by other divisions of Orica. It was used at least for the ordering, control and delivery of stock. All of the data on Bronson & Jacobs' existing operating system had to be loaded on to the SAP operating system. There were over 8,000 different codes to describe products, pack sizes and manufacturing. Warehouses were re-organised and all customer orders were directed through the Melbourne office. This led to many complaints from customers of Bronson & Jacobs and from suppliers to Bronson & Jacobs. It affected the level of service that Bronson & Jacobs was able to provide to its customers. This in turn led to dissatisfaction amongst a number of the existing staff of Bronson & Jacobs who had close links with suppliers and customers. 13 Orica determined that Graeme Love's position was redundant and advised him of this in August 2004. It was then expected that he would continue to work until March 2005, but the fact that he had been made redundant was known to at least some of the senior management. 14 McCartney objected to the changes in management. He was concerned that jobs of staff who had worked loyally for him for decades were under threat. Overview of the Parties' Claims 15 The plaintiffs allege that whilst still a consultant to Orica and Bronson & Jacobs, McCartney encouraged staff of Bronson & Jacobs who were loyal to him to set up in business in opposition to Bronson & Jacobs with his backing. The staff concerned were Graeme Love, Mr Michael Hadji-Petros, Ms Nguyet Nguyen and Ms Tracey Lynam. Petros had been the National Sales Manager, Pharmaceuticals. Nguyen had been the National Sales Manager, Essential Oils and Aroma Chemicals. Lynam was a technical sales representative. The plaintiffs contend that McCartney told senior employees of Bronson & Jacobs that if Orica did not live up to its representations, he would assist them behind the scenes to set up a rival business and to take Bronson & Jacobs' business, as the business depended on the goodwill generated by him and his managers. 16 Graeme Love's redundancy was brought forward to 23 December 2004. Ingredients Plus was registered as a company on 12 January 2005. The initial shareholders and directors were Graeme Love and Thomas Love. Thomas Love was and is a retired chartered accountant. Formerly, he was a partner of the firm Love & Rogers. He is a man of some wealth and well able to support his son in a new business venture. 17 In the next two months, Lynam, Nguyen and Petros joined Ingredients Plus. Ingredients Plus has secured distribution rights from suppliers of chemical products who had formerly supplied those products to Bronson & Jacobs. It has apparently developed a substantial business, although the evidence as to its business was strangely sparse. 18 On 25 February 2005, Orica terminated McCartney's consultancy. He was paid his base fee up to 31 May 2005. He claims that Orica repudiated the Consultancy Agreement. He claims damages being the lost opportunity to earn a bonus. 19 The Consultancy Agreement was varied on or about 30 June 2004 because McCartney did not supply his services through a company as the agreement he signed contemplated, but as an individual. Orica said that this resulted in its having to pay workers' compensation and a superannuation contribution for which it would otherwise not have been liable. At Orica's request, McCartney invoiced his services at a reduced rate on the basis that Orica would make a superannuation contribution to his superannuation fund of $29,000 for the twelve-month period of the consultancy. That amount has not been paid. Orica accepts that it is liable to pay that sum to McCartney's superannuation fund with interest at the prescribed rates from 25 February 2006. 20 The plaintiffs claim that McCartney made it known that he would support Ingredients Plus and thereby assisted Graeme Love in attracting new staff to Ingredients Plus. The plaintiffs claim that McCartney provided initial working capital to Ingredients Plus of $400,000 in two payments of $200,000 each. The first such payment was made on 17 February 2005. The second was made on 19 April 2005. Neither payment was made directly to Ingredients Plus. On 15 February 2005 and 18 April 2005, Rawlo International Pty Ltd, a company controlled by McCartney and the trustee of his family trust, paid $200,000 to Sanquhar Investments Pty Ltd ("Sanquhar"). Sanquhar is a company controlled by Thomas Love. Sanquhar paid the same amounts to Ingredients Plus on 17 February 2005 and 19 April 2005. The defendants say that these were loans by McCartney or Rawlo International to Thomas Love or Sanquhar, and that Thomas Love in turn lent the same amounts to Ingredients Plus. They deny that McCartney is either a lender to or a beneficial shareholder in Ingredients Plus. If, which they deny, McCartney provided working capital to Ingredients Plus, they say that such conduct would not breach the restraint against competition in the Share Sale Agreement, nor be a breach of his Consultancy Agreement, nor breach any fiduciary duties he might owe. The Consultancy Agreement had been brought to an end before the second payment was made. 21 The second to fourth defendants, Ingredients Plus, Graeme Love and Thomas Love, say that they did not knowingly or intentionally interfere with McCartney's contract with Orica Investments, or his Consultancy Agreement with Orica Australia, and did not knowingly assist in any breach of fiduciary duty. 22 The plaintiffs claim that McCartney provided further financial assistance to Ingredients Plus by paying $200,000 on 3 May 2005 to meet a debt owed by Ingredients Plus to a supplier. They claim that after proceedings were instituted, Graeme Love and McCartney decided to treat that payment as consideration for the purchase of shares held by Graeme Love in companies which provide software packages to the legal profession, called LEAP Developments Pty Ltd and LEAP Disbursement Management Pty Ltd. The plaintiffs claim that when the payment was made, it was a further loan or contribution to capital made by McCartney to assist Ingredients Plus' business and, in conjunction with the other matters of which they complain, was a step by McCartney in indirectly carrying on business in competition with Bronson & Jacobs. 23 On 21 June 2005, McCartney lent Graeme Love a further sum of $200,000. Graeme Love provided the money to Ingredients Plus. The loan from McCartney to Graeme Love was a short-term loan whilst Graeme Love was in the process of selling his house to raise capital. It was repaid on 24 August 2005. 24 The plaintiffs also claim that McCartney enticed certain suppliers to Bronson & Jacobs to transfer their business to Ingredients Plus and appoint it their distributors. Some of this conduct is alleged to have taken place before the termination of the Consultancy Agreement, and some after. They claim that McCartney provided direction, advice and assistance to Ingredients Plus in the establishment and operation of its business. They say that without McCartney's financial assistance, his advice, and his reputation in the industry, of which Ingredients Plus took covert advantage, Ingredients Plus would not have established itself in the marketplace. 25 The plaintiffs' claim against McCartney is that he breached clause 15 of the Share Sale Agreement, that he breached an implied term of good faith and co-operation in the Consultancy Agreement, that he breached fiduciary obligations he owed to Bronson & Jacobs, and that he permitted or encouraged the use by Ingredients Plus of confidential information he supplied to it. As against McCartney, the plaintiffs claim an injunction, damages and equitable compensation. 26 The fiduciary duty was alleged to arise pursuant to the terms of the Consultancy Agreement with Orica Australia and from the fact that McCartney was in possession of information confidential to Bronson & Jacobs. 27 The claim for damages and equitable compensation was ultimately confined to damages or compensation for losses suffered by Bronson & Jacobs through the loss of business from three suppliers to Bronson & Jacobs for whom it had acted as a distributor. Those suppliers are Clos d'Aguzon, a French company managed by a Mr Remy Bontoux; Su-Heung, a Korean company whose president is a Mr Joo-Hwan Yang; and Dow Corning, who dealt with Bronson & Jacobs and Ingredients Plus through its director for Asia, Mr Brian Nicols. It was common ground that if I found that Bronson & Jacobs' loss of any of those suppliers was caused by McCartney's having breached his contract or fiduciary duty, there should be a reference to assess the amount of damages or equitable compensation, if the plaintiff elected to pursue such remedies. 28 As against Ingredients Plus, Graeme Love and Thomas Love, the plaintiffs claim that they knowingly interfered in McCartney's contractual relations with Orica Investments, Bronson & Jacobs and Orica Australia, that they knowingly assisted in McCartney's breach of fiduciary duty, and that they knowingly misused confidential information of Bronson & Jacobs. The plaintiffs seek a declaration that Ingredients Plus holds its business, assets, goodwill and undertaking, including its right to use the business name Ingredients Plus, on constructive trust for the plaintiffs. Alternatively, they claim an account of profits against Ingredients Plus. In final submissions, that claim was confined to profits derived by Ingredients Plus from business done with Clos d'Aguzon, Su-Heung and Dow Corning. Alternatively, the plaintiffs claim against each of Ingredients Plus, Graeme Love and Thomas Love, damages in tort for knowing interference with McCartney's contractual relations with Orica Investments, Bronson & Jacobs and Orica Australia, and equitable compensation for knowing assistance in breach of fiduciary duties allegedly owed by McCartney to Bronson & Jacobs. In final submissions, those claims were confined to damages or compensation for the loss by Bronson & Jacobs of the business of Clos d'Aguzon, Su-Heung and Dow Corning. 29 The plaintiffs' case was based upon circumstantial evidence. The plaintiffs painstakingly pieced together banking records produced on subpoena or discovery, mobile phone accounts where each call and its duration was individually itemised, and email correspondence, including emails or fragments of emails which had been deleted as live files on the defendants' computers, but which were retrieved as the result of a forensic examination of the computers. Some emails were "blind copied" by officers of Ingredients Plus to McCartney. The plaintiffs also relied on statements allegedly made by McCartney or Lynam to employees of Bronson & Jacobs before their departure, and surveillance of meetings between McCartney, officers of Ingredients Plus and others. There was no direct evidence that McCartney sought to persuade any supplier or customer of Bronson & Jacobs to transfer its business to Ingredients Plus. There was no direct evidence that he enticed any employee of Bronson & Jacobs to leave employment with Bronson & Jacobs to take up employment with Ingredients Plus. There was no document expressly referring to McCartney as a lender to, or a beneficial shareholder in, Ingredients Plus. Both he and those officers of Ingredients Plus who gave evidence, all denied that he had any such role. They denied his having any involvement in Ingredients Plus' business. 30 The allegations of covert conduct against McCartney and the allegations against Ingredients Plus, Graeme Love and Thomas Love of knowing assistance are serious. The principles in Briginshaw v Briginshaw (1938) 60 CLR 336 at 347 per Latham CJ; 350 per Rich J; 361-362 per Dixon J; and 372 per McTiernan J apply. However, it is not necessary that each strand of the evidence relied on by the plaintiffs of itself be sufficient to warrant a finding that McCartney conducted himself in the ways alleged. It is legitimate to aggregate the circumstances proved to consider whether on the balance of probabilities, but having regard to the seriousness of the matters alleged, the inference that McCartney breached his contract or duty in any of the ways alleged should be drawn (R v Exall (1866) 4 F & F 922 at 929; 176 ER 850 at 853; The Belhaven & Stenton Peerage [1875] 1 AC 278 at 279). However, an allegation must be proved before it can be used as a basis for more readily drawing an inference from circumstantial evidence that another allegation is established. Representations by McCartney to Employees of Bronson & Jacobs of His Intentions. 31 Monahan gave evidence to the effect that on a number of occasions between October or November 2003 and April 2004, McCartney said, in substance, that if Orica did not honour its promise to leave Bronson & Jacobs as it was, McCartney and the senior management who wanted to go would set up their own business with McCartney's financial support, with McCartney pulling the strings from behind the scenes, and would take the best of the business into a new operation, as that business depended on the personal relationships which McCartney and his management had with the suppliers and customers. 32 Monahan said that the first such conversation occurred in about October 2003 in McCartney's office. At that time, the proposed purchase was still under negotiation. Monahan said that McCartney told him "I am depending on you Denis, to help me lead this sale. They have assured me that nothing will change and if it does, when the sale is over I will have my money and we can do whatever we want. We will take the best people and there will be no Skippers to deal with. We can't go wrong." The reference to the Skippers was to the majority shareholders in Bronson & Jacobs. 33 Monahan deposed to a further conversation with McCartney in October or November 2003 in McCartney's office. He said that McCartney said to him: " Let's go along with it. If it doesn't work, let's do our own thing. I will have the money to finance whatever we do. But I have got to get my money out for Frances (McCartney's wife). … I need you guys to go along with this sale for me. We'll give it a go, but if they start changing things, I promise you I'll put in the money to start up again. " 34 Monahan adhered to that evidence in cross-examination. On 24 October 2003, Monahan wrote a letter to McCartney in which Monahan set out his appreciation of the importance of the job ahead and his hopes for his role in it. The tone of the letter can be gauged from the following: "I am the man for the job as regards delivering the outcome you want here. You tell me what you want done as regards delivering this project, and together with my input and that of the other key people in the business, thy will be done." 35 It was put to Monahan in cross-examination that he had made no record of the discussions which he claims to have had with McCartney. Monahan said that the letter of 24 October 2003 did include an oblique reference to those discussions, but he had not wanted to put anything in writing about them more plainly for the prejudice that might create if the document were ever seen by Orica. The oblique reference he identified was his statement that: " They (Orica) will need people that can get the sales team on board, and to keep their heads up. They will need strong people to face customers and to sell the ideas, and the 'whys and wherefores?' that they should be doing business with new owners, albeit in Bronson & Jacobs' identity. Unless this is done professionally, the people that can carry out this type of work will deliver the business lock, stock and barrel into other good homes. " 36 Monahan's letter contains no indication that this was a sentiment conveyed by McCartney to Monahan, or that McCartney had indicated that he would assist any such move. However, I do not regard the absence of any clearer note of the discussions as indicating that no such discussions occurred. If such discussions occurred, it is unlikely that any clearer note would have been kept. 37 Monahan deposed that during a lunch in February or March 2004 between himself, McCartney, Graeme Love and Petros, McCartney said that Orica would be good for Bronson & Jacobs to allow it to grow. He deposed that McCartney said "I am not sure what I am going to do about the non-compete. I have got a real problem with that." Monahan deposed that he said "Yeah but Frances or Emily (McCartney's daughter) or any of the rest of us don't have a non-compete, Bill. You could set up a business in Graeme's name. He doesn't have a non-compete." He pointed to Graeme Love as he said this. McCartney said "Yeah, good idea." Each of McCartney, Graeme Love and Petros denied that such a conversation occurred. 38 Monahan deposed that at a meeting on 29 March 2004, attended by himself, McCartney, Graeme Love and Petros, McCartney said: " I've told you, give this a go and if it doesn't work, I promise you I won't let you down. We'll just start up again and take the best suppliers and the people with us. You guys may not believe me but I promise you this, I won't let you down. I'll put up the money and start again. We'll take essential oils and all the best, profitable bits. We'll take the best people and give them an interest in the business. " 39 Monahan said that at a meeting in McCartney's offices between March and April 2004, McCartney again said words to the effect: "I promise you guys. If Orica does not leave the business as it is, I will stuff it up on them. I will make it my life's work. I told Graham Bird and Andrew Larke that personally, that I will help you guys to stuff it up."

He says that McCartney also said: " What we'll do, we'll take the best suppliers and leave the shit behind. You wouldn't do food, but we'll go after Tyco, Dow Corning, the essential oils business and any other nice bits. " 40 In April 2004, according to Monahan, McCartney told him that:

" I've just had a meeting with Brian Nicols, and Brian said to me 'Bill, the relationship between Dow Corning and Bronson & Jacobs is with you personally, so if you go elsewhere, we'll go with you.' Remy Bontoux will be no problem, too. He'll support me, no problem. " 41 In another conversation in April 2004, McCartney is said to have told Monahan: " If we go out on our own, we will pick the best people. We'll be free of the skippers and we can turn this into a $500 million dollar business. You would run it, Denis. Graeme [Love] can run operations. Nguyet [Nguyen] can have essential oils. We wouldn't take Ian [McClean] but we will take Tracey [Lynam]. I don't know about Michael [Petros]. He is lazy. And he'd retire if he got half a chance. We'll do the same with the China team. What you'd do is you'd give everyone a share, say 5 or 10%. Some people you'd give a bit less to and some people would just be employees. Don't worry. I'm not going anywhere. I'll pull the strings from behind the scenes because of my non-compete, and when that's over, I'll come back on deck. I'm not going to retire yet. I want to work until I'm 80. " 42 McCartney denied these conversations. Graeme Love and Petros also denied the conversations to which Monahan claimed they were a party. Nicols denied that he told McCartney that the relationship between Dow Corning and Bronson & Jacobs was with McCartney personally, and did not accept (although he did not specifically deny) that he told McCartney that if McCartney went elsewhere, he would go with him. I deal with Nicols' evidence later in these reasons (paragraph [230]). I do not accept that Nicols made such a statement to McCartney. 43 Monahan was unshaken in cross-examination. 44 In submitting that Monahan's evidence should be rejected, Mr Higgs SC, who appeared with Mr Shields for McCartney, submitted that a telling factor was that if such statements had been made to Monahan, Monahan could be expected to have reported them to his superiors. That is so because on 1 June 2004, Monahan secured the position of general manager of Bronson & Jacobs under the new management. He then reported to Bird. It could reasonably be expected that Monahan would then report to his superiors the previous conversations to which he had been a party with McCartney, Graeme Love and Petros. 45 In cross-examination, Monahan said that he did discuss with others in Orica his conversations with McCartney about McCartney leaving Bronson & Jacobs and competing. He said he discussed it with Mr McCann, with Bird, with Mr O'Connor, and others (T80). He said those discussions occurred about six or seven months before McCartney left the business. Mr Higgs submitted that Monahan's evidence of having reported those conversations to his superiors before he prepared his affidavit in February 2006 should not be accepted, and that his evidence was recent invention. It was squarely put to Monahan that at no time in 2004 did he tell such persons that he had such conversations with McCartney about McCartney's going out to compete (T82). He adhered to his evidence that he did so. None of the persons to whom Monahan said he reported that matter was called to rebut the allegation of recent invention. Mr Higgs submitted that it should be inferred that their evidence would not have assisted the plaintiffs in that regard. He submitted that it is unlikely that such matters had been reported at that time to anyone at Orica. 46 There is some objective support for this in the fact that Monahan's affidavit was not sworn until February 2006. Proceedings were commenced on 8 July 2005. An application was made for interlocutory relief in July 2005, resulting in McCartney giving undertakings without admissions on 19 July 2005. In support of the plaintiffs' claim for interlocutory relief, affidavits were sworn by, amongst others, O'Connor and McCann, but not by Monahan. However, there is an explanation for this. Monahan was on sick leave from June 2005 suffering from severe depression and anxiety disorder brought on by stress (T41). Although he had weekly meetings with his boss, he did not start going back to the office until March 2007. There was no indication that that condition affected his memory. However, it does explain why his affidavit was not sworn in July 2005 when proceedings were commenced and a number of other affidavits read by the plaintiffs were sworn. 47 I do not consider that the making of the accusation of recent invention, which Monahan rejected, required the plaintiffs to call those whom Monahan identified as the persons to whom he had conveyed what McCartney had told him. Two of them, O'Connor and McCann, swore affidavits in the proceedings and were not required for cross-examination. They did not depose in their affidavits to having been told by Monahan that he had been told by McCartney that McCartney intended to set up business in competition if Orica did not leave the Bronson & Jacobs business alone. Nor could they have been expected to. They and the other deponents might have been called after Monahan's cross-examination to corroborate his denial of recent invention. On the other hand, it would also have been open to the defendant to have required McCann and O'Connor to attend for cross-examination and to have cross-examined them on that topic. Unless there is other material from which I should infer that Monahan did not inform his superiors of his conversations with McCartney, I do not consider that I should reject Monahan's credit on this ground. 48 I do not think there is such material. The relations between McCartney and Orica's management after 31 May 2004 is not inconsistent with Monahan's having passed such information on to his superiors. McCartney was not confronted with such advice. However, that may well not have been a practicable option. Orica needed McCartney's support. Accusing him of planning to breach his contract would not be a sensible way of obtaining his support. However, Orica gave McCartney almost nothing to do in the organisation. Later in 2004, and in early 2005, Orica's management changed the roles of Nguyen and Petros so that they no longer dealt with their clients (Graeme Love para 56; Petros para 38). Such conduct is consistent with Orica's apprehending that there were such plans. I see no reason to reject Monahan's evidence that he told his superiors at Orica what he had been told by McCartney. 49 Although I have rejected these challenges to Monahan's credit, nonetheless, in the face of the denials of McCartney, Graeme Love, Petros and Nicols, I would not be prepared to accept Monahan's evidence unless it were corroborated. Although Monahan was not shaken in cross-examination, he was far from a perfect witness. His answers were always discursive and frequently unresponsive. (He was not the only witness whose answers were not always responsive. The same was true also of McCartney and Graeme Love.) 50 Monahan's evidence that McCartney had said that he intended to set up business in competition if Orica did not leave the Bronson & Jacobs business alone was corroborated by Mr Bruno Ianniello. Ianniello was employed at Bronson & Jacobs as a shipping manager and became the customer services team leader for Bronson & Jacobs' food division after Orica acquired Bronson & Jacobs. He deposed that in May 2004, he asked McCartney whether they would be losing their jobs when Orica took over. McCartney replied "Bruno, don't worry. If Orica does not do things my way, I will go out there and fuck them up." McCartney denied this conversation. Ianniello was not shaken in cross-examination. I was favourably impressed with his evidence and I accept him as a truthful and reliable witness. 51 Ms Susan Rennie was employed by Bronson & Jacobs in Purchasing, Internal Sales and Operations, and from about November 2004, as a customer service representative. She was a friend of Lynam. She gave evidence that from the time of the acquisition, McCartney, Love, Petros, Nguyen and Lynam often went out to coffee together during work time. They were known in the office at the time as the "Fab 5". Lynam told Rennie in April or May 2004 that "We're going to give it six months, and then we'll go out on our own. Bill's going to start something with Graeme, Michael and Nguyet." In December 2004, Lynam told her that "Bill & Graeme are going to start a business and I am going too." This was said in the company of a Ms Lawler. Lawler asked "What about Sue?" (referring to Rennie). Lynam replied "Maybe in six months. We can't take anyone else on board right now." Later in December 2004, Lynam told Rennie that she needed to come up with $70,000 "to go into the business with Graeme and Bill." In late January 2005, Lynam told her that "Graeme and I are looking for premises to rent for the new business." She told Rennie that Michael (Petros) and Nguyet (Nguyen) would be working there. Shortly before Lynam went to work at Ingredients Plus, Rennie asked her whether she was not worried about losing her wages and entitlements if she went to work for the new company. Lynam told her "No. Bill's guaranteeing our wages. I will be getting the same salary as I got at B & J." 52 Lynam denied this evidence. However, I have no hesitation in preferring Rennie's evidence to Lynam's. I was favourably impressed by Rennie. She appeared to be honest, and to have a good recollection of events. She was not prepared to go beyond what she actually remembered. She was willing to make concessions. In cross-examination, she accepted that she regarded Lynam as an honest person. From that concession, she was led to admit that if Lynam disputed the accuracy of her evidence, there was a possibility that her evidence was mistaken. Whilst she admitted that possibility, she was confident nonetheless that her recollection was correct. To my mind, her acceptance of the possibility of error made her testimony more credible, not less. 53 I admitted Rennie's evidence of the statements made to her by Lynam against all defendants. It was evidence of a common plan involving McCartney, Graeme Love and her to establish a new business in competition with Bronson & Jacobs. There is reasonable evidence of such a plan in the affidavit of Monahan, independent of the evidence of Lynam, and which is corroborated by other materials referred to below. Lynam's words were evidence to establish the common purpose of Graeme Love, McCartney and her, and in that respect, are original evidence and not hearsay (Evidence Act 1995 (NSW) s 57(2); Ahern v R (1998) 165 CLR 87 at 93). I was also satisfied that there was a reasonable basis for finding that Lynam's conversations with Rennie were part of a furtherance of that plan. Rennie was another person in the organisation who, if dissatisfied with working under Orica's ownership, might be expected to leave. Lynam said that Rennie might be asked to be involved in the new business in six months from December 2004. I concluded that it was reasonably open to find that the statements made by Lynam were made by her in furtherance of a common purpose which she had with Love and McCartney and the evidence could be taken to be an admission made on their authority (Evidence Act s 87(1)(c) and (2)(a); Ahern v R at 95-100). 54 Having said that, there is no other evidence that McCartney had "guaranteed" the wages of those employed by Ingredients Plus, and I am not satisfied that he gave any such guarantee. There is evidence that he provided the initial finance from which wages were paid. Exchange of Private Email Addresses 55 There is also corroboration of Monahan's evidence from an event of 2 December 2004. At that time, all of McCartney, Love, Petros, Nguyen and Lynam were dissatisfied with Orica's management. On that day, Graeme Love sent an email to the others notifying them of his private email address. He asked for the private email addresses of each of the others and offered to set up a private email address for them if they did not have one already. On the same day, McCartney sent his private email address to Graeme Love, Petros, Nguyen and Lynam. Petros sent Graeme Love his private email address. 56 Unless there is a credible reason for the circulation of the private email addresses between the five individuals concerned, these actions corroborate the thrust of Monahan's evidence as to what had been planned. 57 McCartney gave three reasons for the establishment of the private email account (affidavit 22 July 2005, paragraph 39). The first was that he was receiving emails from the previous majority owners of the Bronson & Jacobs business concerning a dispute with Orica over the value of Bronson & Jacobs assets which he did not think appropriate to continue to receive at his work email address. That does not explain why Love would send an email to the four persons involved proposing the establishment of private email accounts and the sharing of private email addresses. 58 The second reason McCartney advanced was that he did not wish any emails to be sent to him concerning his interests in Creative Brands Australia Pty Ltd to his email address with Bronson & Jacobs. (McCartney is the major shareholder in Creative Brands. It distributes sunscreen products, perfumes, nail polish and like products to retailers.) Again, that is not a reason for Graeme Love to have written to all four of the persons involved. Nguyen, Petros and Lynam had no connection with Creative Brands. 59 The third reason McCartney advanced was that he did not wish any emails to be sent to him at his Bronson & Jacobs email address concerning his other business interests. Again, that is not a reason for Love to have communicated with all four persons in relation to the establishment of private email addresses and the sharing of that information. The "other business interests" to which McCartney referred did not involve Lynam or Nguyen (T123.20).

60 Graeme Love was asked in cross-examination why he made the request of 2 December 2004 that Nguyen, Petros, McCartney and Lynam send him their private email addresses if they had them and offered otherwise to create such addresses for them. He said that the reason he sent the email was "because I had recently gone onto Hotmail at the time and created a new email address for myself … and was quite surprised how easy it was at no expense to set up an email address which I had never done before." 61 That answer did not explain why he invited the other four individuals to send their private email addresses to him, as distinct from using their existing email addresses at Bronson & Jacobs. He later said that "I probably wanted to continue communication with these people … after I left Bronson & Jacobs". Again, that does not explain why he would not wish to communicate with the other individuals at their existing email addresses rather than using their private email addresses. He denied that he wanted to speak to them in the future about Ingredients Plus, but there is no satisfactory alternative explanation. 62 Lynam gave the following evidence: " His Honour Q: Did you ask him why he was asking whether you had a private email address and to send it to him?

A: I probably didn't think a lot of it. Graeme and I have been friends for a long time and I thought maybe if he was leaving the business he wanted to have our private emails. I really can't see any explanation for it and I probably didn't think anything of it. For private friendships and things like that I would easily give my home email address to a friend if they were leaving the company. " 63 I do not accept this explanation. As at 2 December 2004, Lynam had not learnt that Graeme Love was to be made redundant. McCartney, Petros and Nguyen were all working at Bronson & Jacobs. 64 Petros gave no evidence as to why he understood Graeme Love had asked for his private email address or why he provided it. He was not cross-examined about it. 65 In the absence of a credible alternative explanation, Graeme Love's request for the other four individuals' private email addresses and his offer to create such private email addresses if they did not already have them, corroborates Monahan's evidence of McCartney's expressing his intention to assist Graeme Love, Nguyen and Petros to set up a competitive business if Orica did not honour their representations that Bronson & Jacobs' business would continue as usual. There is no doubt that by this time, McCartney believed and asserted that Orica had not honoured that representation. 66 Because the thrust of Monahan's evidence is corroborated by the evidence of Ianniello and Rennie and by Graeme Love's email of 2 December 2004, because he was not shaken in cross-examination, and because I do not accept the challenge to his credibility based upon the alleged failure of the plaintiffs to adduce evidence to corroborate his denial of recent invention, I accept his evidence, notwithstanding the denial of it by McCartney, Love and Petros and the denial by Nicols of having made the representation which Monahan attributed to McCartney. In reaching that conclusion, I also take into account my rejection (later in these reasons) of important parts of the evidence of McCartney, Love and Petros, which affects the credibility of their denial of Monahan's evidence. 67 I conclude that by 2 December 2004, McCartney had made it known to Graeme Love, Petros, Nguyen and Lynam that he would support the establishment by them of a rival business. Transfer of Mobile Phones 68 Bronson & Jacobs paid for four mobile phones used by McCartney and his family. McCartney had two mobile phones which he used in connection with Bronson & Jacobs' business in dealing with customers and suppliers. They had their distinctive phone numbers. O'Connor gave evidence, on which he was not cross-examined, that in about December 2004 or January 2005, he asked McCartney to make arrangements to transfer his wife's and daughter's mobile phones. McCartney said he would do so. O'Connor did not indicate that the two phones used by McCartney in the Bronson & Jacobs business should be transferred. At the time of the conversation, McCartney was engaged as a consultant in the Bronson & Jacobs business. 69 McCartney said that he was asked in September or October 2004 by the then IT manager of Bronson & Jacobs, Mr Frost, to transfer all of his mobile phones from Bronson & Jacobs to himself. He deposed that he asked Graeme Love to do that for him. Graeme Love gave evidence that he filled out the appropriate forms at that time and sent them to Optus for the transfer of the four mobile phones from Bronson & Jacobs to McCartney. According to Graeme Love, Optus did not act on those forms. Those forms were not produced and there was no evidence to corroborate Graeme Love's version of events. McCartney said that in a telephone conversation in December 2004, O'Connor told him that his mobile phones were still on the company account and being paid for by Bronson & Jacobs and that, as he was a contractor, they should be his responsibility. According to McCartney, he then contacted Graeme Love to enquire what had been done as Optus had not actioned the transfer. In January 2005, he met Graeme Love at the Optus store at Rhodes. According to McCartney and Love, Love had a copy of the original forms which, according to him, he had previously sent to Optus. The store assistant then filled in the new forms and all four phones were transferred into McCartney's name. McCartney and Love signed the transfer forms on 31 January 2005. Love signed purportedly on behalf of Bronson & Jacobs. At that time, as McCartney knew, Graeme Love no longer held any position with Bronson & Jacobs. He had no authority to sign on Bronson & Jacobs' behalf. 70 In March or April 2005, Graeme Love arranged for the transfer of the four mobile phones from McCartney's name to Ingredients Plus. He did so to obtain a saving by having eight phones on the one account. McCartney reimbursed Ingredients Plus for the cost of the phones on Ingredients Plus' account with Optus. 71 I accept O'Connor's evidence that he only asked McCartney to transfer the mobile phones of his wife and daughter. The effect of the arrangements implemented by McCartney and Graeme Love was that suppliers or customers who had done business with McCartney using his mobile phone numbers were able to continue to reach him on the same telephone numbers. McCartney denied that this was the purpose of the arrangements. I do not accept that denial. The fact that Love signed documents purportedly on behalf of Bronson & Jacobs when he was no longer employed by Bronson & Jacobs, and both he and McCartney must have known that his authority had been revoked on the termination of his employment, shows that the transaction was not above board. It was done at a time McCartney was still engaged as a consultant to Bronson & Jacobs. Graeme Love had established Ingredients Plus. Their conduct evidences their having a common purpose that McCartney should retain his links with suppliers and customers, and with Graeme Love, without Bronson & Jacobs receiving the detailed records of telephone calls which appear on the statements of account for the mobile phones. Enticement of Bronson & Jacobs' Employees 72 There is no direct evidence of McCartney's having suggested to any employee of Bronson & Jacobs that she or he resign and take up employment with Ingredients Plus. 73 However, I have accepted Monahan's evidence that on a number of occasions prior to May 2004, McCartney told Graeme Love and Petros that he would support them in the establishment of a rival business. I have accepted that by 2 December 2004, McCartney had made this known also to Nguyen and Lynam. I conclude that this was a material cause of Lynam's decision to resign and to take up employment with Ingredients Plus. She believed that McCartney could guarantee her wages. 74 The defendants did not read an affidavit sworn by Nguyen. It appears that she has now left Ingredients Plus' employment. That is not a sufficient explanation for not calling her as a witness. In the light of the defendants' failure to call her, I can readily draw the inference that she was encouraged by McCartney's promise of support to Ingredients Plus to change her employment, although I also accept Petros' evidence that she was dissatisfied with changes made by Orica. 75 Petros' position is more difficult. He was upset that Monahan obtained the position of General Manager of Bronson & Jacobs. He was upset with the changes which Orica implemented. He deposed that at the time Graeme Love was made redundant, he was still looking to make a success of his position at Bronson & Jacobs, and had no plans to join him. He was upset by numerous complaints received from customers following the changes Orica implemented. This increased his workload. He deposed that he had to work long hours to fix the new problems and that a depressing atmosphere was created. He deposed that in about November or December 2004, he began to think of moving on. 76 Petros deposed that at that time, McCartney encouraged him to stay at Bronson & Jacobs, although he told McCartney he was no longer happy. He felt that Orica had placed him in an untenable position with one of his suppliers, Su Heung. He deposed that in January 2005 he was invited by Graeme Love to join Ingredients Plus, take up shares in the company and become a director of it. 77 Petros deposed that in early February 2005, he told McCartney he was thinking of leaving, but McCartney said "I don't want to lose you. Hold in there and it will get better." 78 Petros said that the catalyst for his leaving was that in mid-February 2005, his role at Bronson & Jacobs was changed to one of finding new products and markets rather than servicing his existing clients. He tendered his resignation on 15 March 2005 after a further run-in with McCann over the new Orica procedures. 79 This evidence was not challenged in cross-examination. It was not put to Petros that he was enticed to leave Bronson & Jacobs by anything done or said by McCartney. 80 I have concluded that Petros was aware that McCartney would provide financial support to Ingredients Plus. This must have been material to his decision to join Ingredients Plus. I have also accepted Rennie's evidence that Lynam told her in December 2004 that she, Petros and Graeme Love would be starting a new business. 81 However, I would not be justified in rejecting Petros' unchallenged evidence as to what prompted him to leave, or his unchallenged evidence that in about December 2004 and early February 2005, McCartney encouraged him to stay with Bronson & Jacobs whilst the difficult adjustment phase was working itself out. 82 It is possible to reconcile this evidence. Petros knew that McCartney would support Graeme Love. He had discussions with Graeme Love in December 2004 or January 2005 in which Graeme Love pressed him to join Ingredients Plus. Lynam was told that Petros would be joining Ingredients Plus, but not necessarily by Petros. Petros decided to leave Bronson & Jacobs because of his difficulties with the new Orica management. McCartney provided no further encouragement for him to do so, and asked him to stay to see if things got better. When Petros decided to leave, he joined Ingredients Plus because of his association with Nguyen and Graeme Love, but also, as I find, because he was aware that McCartney was providing financial backing. Provision of Working Capital for Ingredients Plus 83 Ingredients Plus entered into a lease of premises at 8/9-11 South Street, Rydalmere. Graeme Love provided security of $104,000 for the lease. He paid that sum from his own funds, most of which came from his termination package from Orica. On 31 January 2005, Lynam started work for Ingredients Plus. 84 Graeme Love estimated that he needed $200,000 in working capital to generate $1,000,000 in initial sales. He gave evidence that he asked his father to lend him the money and his father arranged for Sanquhar to pay $200,000 to Ingredients Plus. According to both Graeme and Thomas Love, Graeme Love suggested that Thomas Love borrow the moneys from McCartney. McCartney and Thomas Love were friends. 85 Thomas Love and McCartney both gave evidence to the effect that Thomas Love did not tell McCartney why he wanted to borrow the money. McCartney said that some months previously, Thomas Love had told him that another son of his had got into difficulties by investing with a rogue property developer. McCartney said that he thought that that might have been why Thomas Love wanted the loan. However, he did not inquire about the purpose of the loan and Thomas Love did not volunteer the information. These discussions occurred in February 2005. McCartney said he was not concerned about the purposes of the loan or any risk to him in making the loan because Thomas Love was an old friend of his and he knew him to be independently wealthy. According to both Thomas Love and McCartney they agreed that the loan would be at interest of 10% per annum. McCartney said that it was agreed that the term of the loan would be two years. The agreement was not documented. 86 In his affidavit, Thomas Love swore: " I would add that I could have easily arranged this $200,000 from other sources. For one thing, I could have sold shares. I annex and mark 'B' a copy of the shares that Sanquhar owns, which were worth about $400,000 as at 30 June 2005. Some of these shares have been held since prior to 1985, and so are CGT exempt. For that reason I did not want to sell them. I could have mortgaged any of my properties, including the Terrigal house which as I have said is unencumbered and worth about $3,000,000. But the simple fact was, Bill's money was a phone call away with no paperwork involved. No application forms, no waiting for any credit department to assess credit issues, just an immediate cheque. That was the reason I borrowed from him, not because he is the secret owner of Ingredients Plus, as Orica alleges in these proceedings. " 87 Earlier, he had deposed that the timing of Graeme Love's requirement for working capital was not the best. He said: " In January 2004, I had bought another property at … Roseville for $1.15 million. I borrowed about $900,000 and used cash on hand of about $300,000. So I did not have $200,000 to just write out a cheque which I would have done had I not made this purchase. " 88 According to Thomas Love and McCartney, Thomas Love borrowed a second amount of $200,000 from McCartney in April 2005. Again, according to them both, McCartney did not ask the purpose of that loan and Thomas Love did not say what the money was for. Thomas Love deposed that he told McCartney "Bill, I need to borrow $200,000." In oral evidence, he said that was the fact. The second payment of $200,000 was on-lent to Ingredients Plus. 89 The problem with Thomas Love's evidence is that he did not need to borrow money from McCartney to make either of the loans to Ingredients Plus. Nor did he need to sell shares, or grant mortgages over real property, or apply to a credit department at a bank, or fill out any paperwork to draw the cheque. 90 On 15 February 2005, $200,000 was withdrawn from Rawlo International's account (TB 3864). The withdrawal was made by a cheque dated 14 February 2005, signed by McCartney and drawn in favour of Sanquhar Investments (TB 771). Those funds were deposited to the account of Sanquhar Investments with Westpac on 15 February 2005 (TB 773). On that day, Thomas Love drew a cheque on Sanquhar Investments in favour of Ingredients Plus for $200,000. Those moneys were deposited to Ingredients Plus' account on 17 February 2005 (TB 772; 3981). 91 Thomas Love had an account in his own name with the ANZ Bank called an Interest Saver Account. He described this account as an offset account. As a result of a deposit made to that account on 17 February 2005, that account was in credit as at that date in an amount of $365,295.12. It remained in credit in amounts over $300,000 up to 15 April. As a result of a further deposit of $177,911.15 on 15 April, it was in credit in amounts over $475,000 up to the end of April. It then remained in credit in amounts over $400,000 until 20 June 2005 when the credit balance was reduced to $224,000 by a payment of $200,000 made by Thomas Love to Ingredients Plus on that day. 92 The deposit of $300,000 on 17 February 2005 was a repayment of funds advanced by Thomas Love to assist his son-in-law's mother, a Mrs Walker, in a property development. Although he said he did not recall it, he accepted that he would have known in advance of 17 February that those funds were going to be received (T376.40; 374.52). On the clearance of those funds, he had cash resources of $200,000 to advance to Ingredients Plus simply by drawing a cheque. Likewise, he had cash resources at the time of the second advance on 19 April 2005 from which to lend $200,000 to Ingredients Plus simply by drawing a cheque. He did not need to borrow moneys at 10% interest from McCartney to make the loans. I do not accept his explanation as to why he borrowed the moneys from McCartney. 93 Under cross-examination, Thomas Love initially asserted that he was keeping the cash for some other purpose, although he could not recall what it was (T377.50-57). He then said that, because the account was an offset account, "Whatever credit there was in these funds wasn't money which was available to me. It was just an offset against the $900,000 I borrowed from the bank to purchase the unit." (T378). I had the distinct impression that Thomas Love was searching around for a credible explanation having realised that the explanation given in his affidavit had been shown to be untrue. However, this further explanation he gave in cross-examination was not true. He acknowledged that he was free to withdraw the funds in which he was in credit with the ANZ bank, and that he regularly did so. He could just as readily have drawn the moneys down from his interest saver account with the ANZ to lend to Ingredients Plus as borrow those moneys from McCartney. He did exactly that on 20 June 2005. He acknowledged that the interest rate of 10%, to which he said he had agreed with McCartney, was higher than the rate trading banks would charge (T369.47). There is no plausible explanation as to why he would borrow funds at a higher rate of interest from McCartney than by drawing down from his interest saver account with the ANZ. 94 Thomas Love justified the borrowing on the ground that Sanquhar Investments would oncharge interest to Ingredients Plus at the same rate as the rate at which he was borrowing from McCartney. Ingredients Plus has not paid interest on the loans to it from Sanquhar Investments. But if it were the fact that Sanquhar Investments was to charge interest on a loan made by it to Ingredients Plus, that does not explain why Thomas Love would borrow the money at 10% interest from McCartney and Sanquhar Investments charge that amount to Ingredients Plus, rather than Thomas Love borrowing the moneys at a lower rate by drawing down on his credit balance with the ANZ and Sanquhar Investments charging a lower rate to Ingredients Plus. 95 A difficulty with Thomas Love's and McCartney's evidence that Thomas Love borrowed two amounts of $200,000 from McCartney at 10% interest was that neither the interest nor the principal has been paid or repaid. That is so notwithstanding that, according to McCartney, the loan was due to be repaid after two years. Hence the first instalment of $200,000 was due to be repaid by 17 February 2007. McCartney's explanation for this was that he understood that the effect of legal advice he obtained was that he should not accept any such payment or repayment because of undertakings which he gave in July 2005. I do not accept that evidence. McCartney did not give undertakings which would have precluded his accepting repayment of a loan from Thomas Love or Sanquhar Investments. He tendered legal advice which he received in August 2005. Nothing in that legal advice was to the effect that he should not accept payment of interest or repayment of principal. Rather, it was in terms that "We would strongly advise that you do not provide any funding to Ingredients Plus, whether directly or indirectly, including by providing funding or loans to a third party (such as Thomas or Graeme Love) who may direct those funds for the benefit of Ingredients Plus." I do not accept that McCartney understood that that was advice that he should not accept repayment of loans he had made to Thomas Love or Sanquhar Investments. 96 Thomas Love gave evidence that he offered to pay interest. He said: " I remember discussing with (McCartney) towards the end of the financial year 2005 whether I should pay the interest and suggested to him that, if I drew the cheque and sent it on 29 December (sic) he would probably receive it about 2 February (sic) and that would give a deduction in one year on the tax payable in the next. He indicated to me that he had had legal advice that there was to be - that there should not be any further activity in respect of this $200,000 or a further $200,000, which made a total of $400,000, and, on the basis of that advice which he had received, he would prefer not to have the interest paid at that stage. " 97 I consider that this evidence was detail Thomas Love provided to add verisimilitude to his evidence that he had borrowed the moneys at interest from McCartney. The evidence quickly got him into trouble. Initially, he accepted that because a financial year for tax purposes ends on 30 June, the conversation he had with McCartney must have occurred before 30 June 2005. The problem with that explanation was that Orica's proceedings were not commenced until July 2005 and McCartney had no legal advice about the subject before 30 June 2005. After a luncheon adjournment, Thomas Love corrected his earlier evidence and said that the conversation must have occurred at some time before 30 June 2006. He was asked why he did not pay interest to McCartney in 2005 to get the tax advantage he proposed. He then said, contrary to his earlier evidence, that the interest was not to be paid until the principal was repaid. If that were so, there was no reason why he would have raised the question of paying interest at the end of either the 2005 or the 2006 financial years. This evidence only further diminished Thomas Love's credibility. 98 The fact that no interest has been paid on the alleged loans and that the alleged loans have not been repaid, together with the inherent implausibility that the loans would have been made at all when there was no occasion for Thomas Love to borrow, together with the inherent implausibility of the loans being made without any discussion as to their purpose, leads me to reject the evidence of both Thomas Love and McCartney. 99 McCartney's evidence on the topic was also inconsistent with his dealings with another loan to Graeme Love. It was common ground that on 21 June 2005, he lent $200,000 to Graeme Love which Graeme Love advanced to Ingredients Plus, and that Graeme Love repaid that loan on 24 August 2005. The fact that the loan to Graeme Love was repaid, notwithstanding the commencement of proceedings on 8 July 2005, is inconsistent with McCartney's evidence that the reason his alleged loans to Thomas Love were not repaid was because of the pendency of the proceedings, or the undertakings which he gave in the proceedings, or the advice which he received about those undertakings. 100 It was suggested in final submissions that there was no such inconsistency because it was not until a statement of claim was filed on 6 September 2005, after the repayment of the loan, that the loans were the subject of attack. But that is not so. On or about 29 July 2005, Messrs Deacons, McCartney's solicitors, forwarded to McCartney a facsimile from Malleson Stephen Jaques, in which that firm said "We refer to the undertaking given to the Court by Mr McCartney on 27 July 2005. We hereby put Mr McCartney on notice that our clients regard any future funding of Ingredients Plus Pty Ltd by Mr McCartney or any entity controlled by him, whether directly or indirectly through third parties to be a breach of his undertaking to the Court." The undertaking given by McCartney to the Court on 27 July 2005 was given in the same terms as the covenant in his Share Sale Agreement. Deacons advised that whilst they did not necessarily agree with Malleson's interpretation of the scope of the undertaking, they were of the view that any response that no specific undertaking about providing funding was proffered might provoke a further application to the Court. Nonetheless, they strongly advised against his providing any funding to Ingredients Plus in terms set out above in these reasons in paragraph [95]. 101 Hence, McCartney's acceptance of the repayment of the principal of Graeme Love's loan could not have been because at the time it was repaid, the plaintiffs had not attacked the propriety of McCartney making such loans. Nor did McCartney say that that was the reason he accepted the repayment. He said the reason he told Thomas Love not to repay the loans made to Thomas Love was because of the legal advice he received. That evidence was not credible. His acceptance of repayment of the loan to Graeme Love was inconsistent with his having read Deacons' advice in that way. 102 I do not accept the two payments of $200,000 made by Rawlo International on McCartney's direction on 17 February and 19 April 2005 were made as loans to Sanquhar Investments (as McCartney deposed), or were loans to Thomas Love, as Thomas Love deposed. Rather, Sanquhar Investments was a conduit to disguise the fact that those funds were provided to Ingredients Plus by McCartney's company. 103 The mobile phone records for McCartney and Graeme Love show that between 15 and 17 February 2005, McCartney called Love on ten occasions and Love called McCartney on eight occasions. Neither Graeme Love nor McCartney accepted that in any of the calls did they discuss Ingredients Plus or its business. Graeme Love denied even thanking McCartney for providing an advance to his father which provided Ingredients Plus' initial working capital. I find this quite implausible. Whilst a rejection of their evidence in this respect does not prove the opposite, I can infer from the objective circumstances that they did discuss Ingredients Plus' requirements for working capital. That arises from the fact that McCartney had previously said that he would provide such finance, from the fact that he did so, and the fact that he did so indirectly through Thomas Love. 104 My conclusion that McCartney provided working capital to Ingredients Plus is also corroborated by email correspondence from Graeme Love to a Mr Cho of Su-Heung and "blind copied" to McCartney. I deal with this evidence below at paragraphs [134]-[162]. 105 In May 2005, Graeme Love was actively seeking further investors for Ingredients Plus from third parties. $200,000 Payment of 3 May 2005 106 Clos d'Aguzon appointed Ingredients Plus as its exclusive distributor for essential oils and aromatic raw materials in Australia and New Zealand on 7 March 2005. 107 Shortly before 2 May 2005, Graeme Love wrote to Bontoux. He said: " Just wanted to make you aware we are arranging payment for several outstanding invoices. The invoices were due today, however, the funds are coming out of a term deposit that matures on Monday 2 May. We were planning to transfer funds on Tuesday 3 May, and hope that this does not cause you any problem! We greatly appreciate the 60-day terms and will ensure all future payments are made when they fall due. " 108 In fact Ingredients Plus did not have funds on term deposit needed to pay the outstanding invoice to Clos d'Aguzon. 109 The email went on to outline an investment proposal for the setting up of an Ingredients Plus in Hong Kong and Indonesia. Bontoux was invited to consider providing an interest-free loan of $250,000 for two years to acquire a 10% share in the business. Although McCartney was not shown as an addressee of the email, the email was forwarded (that is, "blind copied") to him. Ingredients Plus owed Clos d'Aguzon US$155,575.05. 110 On 3 May 2005, McCartney gave instructions for the Australian dollar equivalent (A$199,910.11) to be paid by Rawlo International to Clos d'Aguzon. 111 According to McCartney, in March 2005, Graeme Love told him that he was short of funds until he could sell his house. McCartney indicated that he was interested in buying some of Graeme Love's shares in LEAP. He gave evidence that after a meeting with a Mr Christian Beck in late April 2005, "I organised to purchase $200,000 worth of LEAP shares from Mr Love, and Mr Beck said he would arrange the necessary share transfers. At Mr Love's request I transferred the $200,000 consideration for those shares to an account nominated by him." 112 There was no documentation of the alleged agreement to buy $200,000 worth of LEAP shares from Graeme Love at that time. The account nominated by Graeme Love was the account of Clos d'Aguzon. 113 McCartney implausibly denied having any conversation with Graeme Love in late April or early May 2005 about the purpose of the payment of $200,000 made by Rawlo International to Clos d'Aguzon (T170.53). However, as he had received a copy of the email from Graeme Love referred to above, it is plain that he must have known that the payment was made to meet a debt owed by Ingredients Plus to Clos d'Aguzon. 114 That is not necessarily inconsistent with the payment being consideration for the transfer of shares by Graeme Love to him, with Graeme Love directing the payment to Clos d'Aguzon. If that were the arrangement at the time, one would expect that the accounting records of Ingredients Plus would show Graeme Love as a creditor of Ingredients Plus for the $200,000 which Graeme Love would have advanced to Ingredients Plus in that way. No documents were tendered by the defendants to show how Ingredients Plus accounted for the payment. 115 McCartney was unable to give any plausible explanation as to why Graeme Love sent the email addressed to Bontoux to him. McCartney surmised that Graeme Love might have been trying to show McCartney how good he was, but he could not say how the email demonstrated that. This evidence was implausible. 116 The "LEAP shares" were sixty shares held by Graeme Love in companies called LEAP Development Pty Ltd and LEAP Disbursement Management Pty Ltd. Beck deposed in his affidavit that in or around May 2005, Graeme Love attended the Roseville RSL Club and told him that cashflow was a pain when starting a business. According to Beck, he advised Graeme Love to try to sell $200,000 worth of his shares to McCartney and still keep some of his interest in LEAP. According to Beck, "sometime after our meeting at the Roseville RSL Club" he was contacted by Love who had informed him that he had arranged to sell some of his shares in the LEAP Group to McCartney. He deposed that "I subsequently contacted the external accountant to the LEAP Group to arrange the share transfer documentation for Mr McCartney and Graeme Love. On 25 June 2005, Mr McCartney completed the purchase of sixty shares in the LEAP Group from Graeme Love." 117 In oral evidence, Beck swore that his conversation with Graeme Love at the Roseville RSL Club occurred at least a week before a lunch he attened with Love and McCartney on 12 May 2005, but couldn't say how much longer. 118 The documentation for the transfer of shares was prepared by Beck's accountant. The accountant was not called. Share transfer forms were prepared which bore a typed date of 25 June 2005. They provided for the transfer of sixty shares in each of LEAP Development Pty Ltd and LEAP Disbursement Management Pty Ltd from Graeme Love to Rawlo International. They were both signed by Graeme Love and McCartney and a handwritten date of 25 July 2005 was inserted on the forms. New share certificates were issued for Rawlo International Pty Ltd for sixty shares in each of the companies. The share certificates were dated 25 June 2005. 119 These proceedings were commenced on 8 July 2005. 120 On 19 July 2005, LEAP Developments and LEAP Disbursement Management lodged forms with ASIC giving details of the change to the register of members. The forms were certified by Mr Beck. He notified that the register of members had been changed by reducing Graeme Love's shareholding and increasing Rawlo International's shareholding by sixty. The form recorded the date 25 June 2005 as the "earliest date of change". 121 Mr Beck was asked in chief about the typewritten date of 25 June 2005 on the share transfer forms and the handwritten date of 25 July 2005 on the forms. He said (T343): " I am pretty sure - what sort of happened was - it always takes a while to get these transfers done, … it took me a bit of a while to get organised. When I took it to the accountant to be done - to be honest, the issue is, when I put the date in the past, when it did happen, ASIC fined you for kind of if it is over a month later after you - if you lodge the form over a month later, you get a fine. So I think the accountant suggested that we put that 25th of the sixth, we had it in the correct financial year, but it was still fast enough to get it lodged before the fine applied. " 122 I take it from that evidence that the share transfer form was not prepared until July 2005. He later said: "I would have just gone to the accountant and said ' We need a transfer done here '. He would have said ' What date? ' I would have said ' Well, it was done in April/May ', and he would have said ' Well, if you do that, it's a bit late now. If you do that there will be a fine ', and I think he said ' What about if we just put the 25th of the sixth, the same financial year? ', so I would have just said 'Y eah, OK '." 123 This is a most implausible explanation for this backdating. The form required to be lodged with ASIC was a form notifying changes to the members' register, that is, changes to the shareholding in the companies. If, as at early July, as Beck, Love and McCartney claimed, Graeme Love had agreed to sell his shares in the two LEAP companies to McCartney and had received payment of the $200,000, there was no need to backdate any document in order to avoid fines from ASIC. At that stage, there had been no change of shareholders. Nothing had to be lodged with ASIC to record a change in beneficial ownership of the shares. 124 Beck said that he understood that there was a period of one month available in which to lodge the appropriate form with ASIC recording the change in shareholding. When asked from when he understood that period of one month started to run, he said "Well, what I understood it to be was that there was a date, and I'm not really sure what that date is supposed to be to be honest, but there's a date on the transfer form and then that's supposed to be lodged within a month of that date." He said, implausibly, that he understood that the share transfer form had to be lodged with ASIC. Even if Beck had the understanding which he deposed to, namely, that he had to lodge the share transfer form with ASIC within a month of its being signed, that was no reason for him to backdate the documents. The share transfer forms were not signed until July and he was well within that one-month period. 125 Eventually, he conceded that his evidence in his affidavit that McCartney completed the purchase of sixty shares in LEAP on 25 June 2005 was wrong. It was palpably wrong. Nothing happened on 25 June 2005. One naturally asks why, if there were an agreement to buy and sell shares for $200,000 entered into in April or very early May 2005, and the consideration for that transfer was paid on 3 May 2005, no share transfer was prepared or executed at the same time? One asks why duty was not paid on the transaction at that time and why steps were not then taken to have the share transfers registered. In the absence of corroboration, I would not accept Beck's evidence. There was no corroboration that he instructed his accountant in about May 2005 to prepare the necessary documentation. 126 I think it more probable that no agreement was made as at 3 May 2005 for Love to sell his shares in the LEAP companies to McCartney. Instead, once proceedings were commenced on 8 July 2005, Love and McCartney sought to document arrangements that would justify the $200,000 payment of 3 May 2005. Beck sought to say (at T354) that the share transfer was completed in late April or early May 2005, even before any share transfer was prepared or signed or share certificate issued. I do not accept that evidence. 127 On 13, 16 and 17 July 2005, Love made a number of calls to Beck on his mobile phone. On 19 July 2005, Beck sent a letter by fax to McCartney stating: "The original purchase of shares was around April 2004. Let me know if you need an exact signing date.

You currently own 13.85% of both companies as per the attached statement.

I have also included share certificates covering the shares you purchased from Graeme on 25 June and also the previous transfers on 7 June." 128 He then asked for cheques to pay stamp duty and enclosed a schedule setting out the share holdings in the respective companies (which were the same for each). The document included the following: "Agreed company value $5,200,000

Price for shares transferred $200,000" 129 This document was prepared on the same day as the forms were lodged with ASIC. 130 The first paragraph of the letter is nonsense. There was no "signing date" in around April 2004. If Beck meant there was an original agreement to purchase the shares in around April 2004, there could have been no need for "an exact signing date" as that agreement would have been made orally. 131 The third paragraph of the letter stating that "I have also included share certificates covering the shares you purchased from Graeme on 25 June" was false, as Beck acknowledged that nothing happened on 25 June 2005. 132 It was not put to Beck, McCartney or Love that this correspondence was an attempt to create a paper trail to provide evidence of an agreement made in April, and I do not so find. Nonetheless, I do not regard the letter as corroborative of the evidence of McCartney, Love or Beck on this issue. 133 I conclude that after the proceedings were instituted, McCartney and Graeme Love agreed that the $200,000 payment that McCartney had made to Clos d'Aguzon should be treated as consideration for the purchase of shares in LEAP. They determined, with the assistance of Beck, that such an amount would be fair consideration for the transfer of sixty shares in each company. However, the agreement was made not in April or May, but in July. Investment Proposed for Clive Thomas 134 On 28 April 2005, Graeme Love wrote to a Mr Clive Thomas of CT Freight setting out a proposal for him to invest in Ingredients Plus. He wrote: " As outlined yesterday the investment package I would like to propose is as follows:

At present there is 25% of the company's shares that have not been distributed. I would like to raise operating capital over the next two years of up to $2m using the balance of the 25%, therefore if you are interested in either 12.5% or 15% of the business the figures would be as follows.

… " 135 There was then set out a proposal that Thomas could acquire 12.5% of the company's shares by making a payment of $125,000 and providing a $1,000,000 interest-free loan for two years, or 15% of the shares by paying $150,000 and making a $1,200,000 loan available interest-free for the next two years. There were further terms proposed to which it is unnecessary to refer. 136 Thomas said he would consider the proposal. At no time did he agree to provide funds or to take up shares. 137 Graeme Love forwarded a copy of that email to McCartney. That document, and the email of 12 May 2005 (below), were recovered on forensic examination of the computers of McCartney and the second to fourth defendants. 138 On 12 May 2005, Graeme Love sent an email to McCartney, Petros and Nguyen setting out the text of an email he proposed to send to someone called "Josef". Graeme Love said that Josef was a friend of his father's in Indonesia who his father had suggested he contact as he might have money he wished to invest. The email contained a proposal for investment in businesses to be established in Hong Kong and Asia. Again, it sought moneys by way of interest-free loans in return for a share of the business. 139 McCartney's explanation as to why he understood Graeme Love had sent him the email was to show McCartney that he could be successful. He denied any involvement in advising Graeme Love as to how to seek out potential investors. He said he did not know who "Josef" referred to. Whilst McCartney denied advising Graeme Love about seeking out potential investors, Thomas was a long-standing friend of McCartney and I think it likely that McCartney proposed to Graeme Love that he approach Thomas. Thomas denied that McCartney had made any direct overtures to him to invest in the Ingredients Plus business and I accept that evidence. 140 McCartney gave evidence that he phoned Graeme Love and said "Graeme, why are you sending me this?" and was told that it was to get his opinion as to whether it was a good letter or not. He said that he then told Graeme Love that "You shouldn't be asking me these questions." I do not accept that evidence, because if that had been said, there is no reason Graeme Love would not have acted in accordance with McCartney's request. Investment Proposal to Su-Heung 141 Instead, on 18 May 2005, Graeme Love forwarded by blind copy to McCartney an email he wrote to Mr Cho of Su-Heung in Korea. This email was written immediately after Mr Yang of Su-Heung had visited Australia. On 17 May 2005, Yang attended a meeting at the premises of Ingredients Plus with Graeme Love, Petros and Nguyen, and had dinner with McCartney and Petros. 142 Graeme Love's email of 18 May 2005 to Mr Cho of Su-Heung was as follows: "Dear Mr Cho,

Hope you are well. Mr Yang has requested I forward details relating to the company structure for Ingredients Plus as well as our financial status. Shareholdings are as follows. Please note this information is confidential. Graeme Love General Manager 15% Michael Petros Business Manager Pharmaceuticals 15% Nguyet Nguyen Business Manager Phama and Essential Oils 15% Tracey Lynam Account Manager 7.5% Greg Hall Account Manager Adelaide/Melb 7.5% Each of these shareholder (sic) have invested $10,000 per 1% share therefore $600,000. Investors Thomas Love and Graeme Love 15% The Man 15% For a 15% share in the business investors have agreed to loan the company $1 million each interest free for 2 years. After a 2 year period interest will be paid on the outstanding balance. Note operating capital at this point $2.6 Million. Note 10% share still available as discussed with Mr Yang. If you require any further information please contact me. All the very best, Graeme Love General Manager Ingredients Plus " 143 This email also was recovered on a forensic examination of Ingredients Plus' computers. It was blind copied to McCartney. Fragments of it were found in the deleted files in McCartney's computer. McCartney said he did not know who Graeme Love was referring to as "The Man". McCartney's explanation of why he understood Love was sending him a copy of the email was to show McCartney what he was doing (T206). 144 Graeme Love gave evidence that "The Man" was Thomas. He said that : "Clive Thomas was the owner of CT Freight, who Bronson & Jacobs was using, and continued to use at this time, as a freight forwarder. That is why he asked me to use the expression 'The Man'." (T 435.42). 145 He later confirmed his evidence that Thomas had asked him to use the expression "The Man" (T442.53). He said that Thomas had asked him to do that on the day of the meeting before he sent the investment proposal to Thomas. He later said (at T443.36): " He asked me to use the expression 'The Man' because he did not want Bronson & Jacobs to know, directly or indirectly, that he was considering investment in Ingredients Plus ." 146 Clive Thomas confirmed that he had told Graeme Love not to mention his name in any documents as he did not want Bronson & Jacobs to ever find out he was involved if he did invest. Contrary to Graeme Love's evidence, he did not ask Graeme Love to use the expression "The Man" if he was referring to him. 147 I do not accept that Graeme Love was referring to Thomas when he referred to "The Man". He wrote unequivocally that "For a 15% share in the business investors have agreed to lend the company $1,000,000 each interest-free for two years." Thomas had not agreed to that. I can see no reason for Graeme Love to mislead Su-Heung about that matter. 148 Moreover, the email is written in a way which suggests that Graeme Love would expect the recipient to understand who was referred to as "The Man". For example, he did not say that an investor who wished to remain anonymous had 15% of the shares. He accepted that neither Mr Yang nor Mr Cho would know that the reference to "The Man" was to Thomas. 149 Graeme Love agreed that it would have been wrong on 18 May 2005 to say that Thomas had agreed by that time to lend the company $1,000,000 interest-free for two years (T435.57). He said that in the email he was just outlining a proposed investment strategy (T436.26-437.9, 438.44). I reject that evidence. It is contrary to the terms of the email. 150 In any event, even if the email should be so read, it would be untrue to say that it had been proposed that Thomas acquire a 15% share in the company by lending the company $1,000,000 interest-free for two years. That was not the proposal made to Thomas. The proposal to Thomas was that he acquire 12.5% of the shares by providing a $1,000,000 interest-free loan, or 15% of the shares by making a $1,200,000 interest-free loan. 151 I reject Graeme Love's evidence that the reference to "The Man" was to Thomas. The only other potential candidate was McCartney. 152 There is further corroboration of this in the text of Graeme Love's email of 28 April 2005 to Thomas, and his email of 18 May 2005 to Cho, together with Graeme Love's oral testimony. He said: " … When my father and I started the company, there was 2,000 shares issued; 1,000 of which I had and 1,000 of which my father had.

When Michael, Nguyet, Tracey and Greg came into the company, it was agreed as to what shareholding they would get. Their shareholding was going to be a total of 60% of which 40% was going to be left aside. Although they were in my father's name, it was understood by all the shareholders that the shares were going to be taken out of the names of myself and my father when additional investors came into the business. " (T433.49-434.2) 153 I accept that evidence. It is consistent with all the documents and the subsequent transfer of 45% of the shares on issue to Petros, Nguyen, Lynam and Hall. Greg Love was also to have a beneficial 15% of the shares as a result of the moneys he invested and his working in the business. The remaining 40% of the shares were to be allocated to investors who were prepared to lend money to the company. 154 In his email of 28 April 2005 to Thomas, Graeme Love said that "at present there is 25% of the companies (sic) shares that have not been distributed." 155 This shows that by 28 April 2005, 15% of the shares had been allocated to an investor who had agreed to lend money to the company. At that time, the only advances made by "investors" to the company were the advances made by McCartney through Sanquhar Investments. 156 In his email of 18 May 2005 to Cho, Graeme Love said that there was 10% of the share capital still available. Thus, an additional 15% of the share capital had been allocated to "investors". Graeme Love gave evidence that he did not believe that at that date, his father had provided a line of credit with the ANZ bank for the benefit of Ingredients Plus in the amount of $1,000,000 (T434.46), and that he did not believe that at that time, his father had agreed to do so (T434.52, 435.18). However, he gave the following unresponsive but revealing answer (at T436.9), in relation to the email of 18 May 2005: "Q: Even though you made a statement to Su-Heung, you now say that that statement concerning investors having agreed to lend the company $1,000,000 each interest-free for two years included an agreement with Clive Thomas?

A: I had asked Clive Thomas, but I believe, in the writing of this email, my father and I had agreed to put between us $1,000,000 into the business interest-free for two years. " (Emphasis added.) 157 It follows that the 15% of the shares which had already been allocated to an investor as advised to Thomas on 28 April 2005 were not the shares allocated to Thomas Love and Graeme Love. "The Man" must have been the person to whom 15% of the shares had been allocated at the time Graeme Love put his proposal to Thomas. It could only have been McCartney. 158 It was submitted by Mr Davie, who appeared for the second to fourth defendants, that the email of 18 May 2005 was plainly not correct and spoke for the future rather than for the present. As at 18 May 2005, Petros, Nguyen and Hall had not invested any money in the company. Lynam had not at that stage invested $75,000. She had only invested $49,000. 159 This is correct. However, Graeme Love's evidence was that by this date, each of Petros, Nguyen, Lynam and Hall had committed to invest the amounts shown (Affidavit paras 97-101). I do not regard the distinction between their having invested and their having agreed to invest as being significant. 160 Mr Higgs SC submitted that on the plaintiffs' case, the email did not reflect the true position because, as at 18 May 2005, on the plaintiffs' case, McCartney had not invested $400,000 which would represent about 15% of $2,600,000, but had invested $600,000 which would be more than 15%. 161 The suggestion was made to Graeme Love in cross-examination that the $400,000 advanced in February 2005 and April 2005 was approximately 15% of operating capital of $2,600,000 and that this indicated that McCartney was "The Man". He did not accept that chain of reasoning and nor do I, although for different reasons. As Graeme Love said, the reference to operating capital in the email was a reference to the $600,000 invested by the shareholders beneficially entitled to 60% of the shares, and $2,000,000 which the "business investors", each being beneficially entitled to 15% of the shares, had agreed to advance. McCartney was not to receive 15% of the shares in the company because he had advanced $400,000, but because he had agreed to lend $1,000,000. It is entirely consistent with his having a 15% beneficial shareholding because of his agreement to lend $1,000,000 to the company that he should, at the date of the email, have advanced $600,000. 162 I therefore conclude that not only did McCartney provide the finance to Ingredients Plus, but that it was agreed with Graeme and Thomas Love, and probably with the other shareholders, that he would be beneficially entitled to 15% of the shares. This is the explanation for Graeme Love's sending McCartney copies of his emails to other potential investors. McCartney had a secret investment in the company. That is a relevant matter when considering what inferences should be drawn from evidence dealt with later in these reasons concerning Ingredients Plus' obtaining of business.

Short-Term Loan to Graeme Love 163 The plaintiff submitted that the evidence of McCartney and Graeme Love that the advance of 21 June 2005 was a short-term loan should be rejected because there was no evidence as to the terms of the loan, for example whether it increased interest or not, or when it was repaid. The confusion in relation to the time of repayment arose from Graeme Love deposing that the loan was repaid in November 2005 rather than on 24 or 26 August 2005. I think Graeme Love was mistaken in saying that the loan was repaid in November 2005. It is clear that a sum of $200,000 was deposited into Rawlo International's account on 26 August 2005 after Graeme Love asked for and was given the details of the account from which to make the deposit. At the time of this payment, Graeme Love had not completed the sale of his house. However, he gave evidence that he had borrowed money on mortgage. At the same time as Rawlo International was paid $200,000, a further sum of $280,000 was deposited to the account of Ingredients Plus. The proper inference is that this represents moneys which Graeme Love had raised on mortgage pending completion of the sale of his property. 164 I do not accept the plaintiffs' submission that the payment of $200,000 on 21 June 2005 was a further provision of working capital by way of loan to Ingredients Plus, as distinct from a loan made to Graeme Love. I think it was the latter. The plaintiffs did not in evidence, either by tender of documents or by cross-examination of Graeme Love or McCartney, seek to dispute that the loan made on 21 June 2005 had been repaid by Graeme Love either on 26 August 2005 or in November 2005. Conclusions on Provision of Working Capital 165 My conclusion that the advance of $200,000 on 21 June 2005 was by way of loan by McCartney to Graeme Love does not affect my conclusions that:

(a) McCartney agreed to lend $1,000,000 to Ingredients Plus;

(b) the advances of 17 February 2005 and 19 April 2005 through Sanquhar Investments were a loan made by McCartney to Ingredients Plus pursuant to that agreement;

(c) McCartney's advance of just under $200,000 on 3 May 2005 was initially a further advance pursuant to his agreement to lend up to $1,000,000 to Ingredients Plus, but after these proceedings were commenced, he and Graeme Love renegotiated the transaction as a purchase of shares so as to a create a veneer of propriety; and

(d) McCartney is a beneficial shareholder of 15% of the shares in Ingredients Plus; Unspecific Evidence of McCartney's Involvement in the Business of Ingredients Plus 166 The records show very regular telephone conversations between Graeme Love and McCartney throughout all of February and March 2005. Including calls of less than thirty seconds duration which may have involved the caller leaving a voice message, in February 2005, McCartney made 52 calls to Graeme Love and received 47 calls from Graeme Love on his mobile phone. From 11 December 2004 to the end of February 2005, he made 20 calls to Nguyen. In March 2005, he made 47 calls to Graeme Love and received 34 from him. In March 2005, he made 37 calls to Nguyen and received 11 from her. From 25 February 2005 to the end of March 2005, he made three calls to Petros and received 10 from him. In April 2005, he made 27 calls to Graeme Love and received 17 from him. In that month, he made three to Nguyen and received 2 from her. He made 13 to Petros and 9 to Ingredients Plus' office. He received 5 calls from Petros and 21 from Ingredients Plus' office. In May 2005, he made 39 calls to Graeme Love and received 20 from him. He made 1 call to Nguyen and 5 calls to Petros. He received 6 calls from Petros and 17 from Ingredients Plus' office. In June 2005, he made 27 calls to Graeme Love and received 16 from him. He made 3 to Nguyen, 7 to Petros, 2 to Ingredients Plus' office and received 5 calls from Petros. From July 2005, the volume of traffic gradually diminished. This volume of telephone calls to and from officers of Ingredients Plus corroborates other evidence of McCartney's being involved in Ingredients Plus' business, but there is no record of what was said during the calls. 167 A firm of private investigators, Austpac Investigations, engaged a number of private inquiry agents to undertake surveillance of McCartney. Mr Jonathan Melit, who was one such private inquiry agent, deposed that on 10 June 2005, McCartney had lunch in a restaurant with Petros and Graeme Love. During the course of that lunch McCartney said to Petros and Graeme Love "You have to keep the stock levels up to the clients to keep them happy." McCartney denied that that comment related to the business of Ingredients Plus. When asked what it did relate to, he said he did not remember having made the comment. On that same afternoon McCartney was filmed at the premises of Ingredients Plus looking at stock with Petros and Graeme Love, where he assisted them with stacking a stock pallet. This evidence also corroborates other evidence of McCartney's involvement in the business of Ingredients Plus. The Clos d'Aguzon Distributorship 168 Clos d'Aguzon is a company owned by the Bontoux family. McCartney and Nguyen dealt with Mr Remy Bontoux. McCartney had dealt with Bontoux or his father for many years. McCartney had a close involvement with Clos d'Aguzon. 169 As early as August 2004, McCartney worked actively with Bontoux to assist Clos d'Aguzon to retain an advantage from a mistake made by Bronson & Jacobs in paying substantial sums of money before they were due. On 29 June 2004, Bronson & Jacobs had ordered seven tonnes of lavender oil from Clos d'Aguzon for US$294,000. Payment was to be by instalments: two tonnes on 31 July 2004, two tonnes on 15 September 2004 and three tonnes on 31 October 2004. On 6 August 2004, by mistake, Bronson & Jacobs, then under the control of Orica, paid all US$294,000. Ianniello was asked to sort out the problem by O'Connor, who had taken the position of finance manager after the Orica acquisition. Ianniello looked at the paperwork and told O'Connor that he would draft an email for reimbursement of the US$210,000 of overpayment. 170 Shortly after that conversation, Graeme Love told Ianniello that under no circumstances was he to go back to that supplier for a reimbursement. When asked why, Graeme Love said that "Orica fucked it up. Let them fix it."

171 Ianniello proceeded nonetheless. He regarded it as his responsibility to deal with the issue, which was a finance issue. He sent an email to Bontoux which courteously explained the error made by the finance department and asked Bontoux to advise whether he was able to transfer back into Bronson & Jacobs' account the $210,000 overpayment.

172 On 10 August 2004, Remy Bontoux responded to McCartney with a copy to Ianniello. He told McCartney that he was embarrassed by Mr Ianniello's "demand"; that margins on lavender were very thin; that most of the money he had received was used straight away in the financing of the new crop; and he hoped he could count on McCartney's understanding.

173 McCartney's response was to haul Ianniello over the coals for having the temerity to act on the finance manager's instruction and not on Graeme Love's instruction. This was an excessive reaction to a finance issue where Ianniello was acting on the instructions of the finance manager, and where Bontoux must have known that he had been overpaid, in the sense that $210,000 of the $294,000 he had received was not then due. McCartney's response to Bontoux was to write back "Dear Remy, our mistake your gain. Be happy."

174 This would be a trivial incident except that it appears from other email correspondence that, before Bontoux sent his email of 10 August 2004 to McCartney (copied to Ianniello), he sent a copy of the email he had received from Ianniello to McCartney saying that he was embarrassed with the demand and hoped to be able to speak with McCartney and would try to contact him (618). McCartney sent an email to Bontoux asking him to ring him and telling him that he would tell Bontoux how to reply (618). Bontoux sent his email of 10 August after his telephone conversation with McCartney. I do not accept Bontoux's denial that McCartney told him how to reply.

175 In other words, McCartney was working actively with Bontoux to assist Bontoux to retain the advantage he had obtained from Bronson & Jacobs' mistake.

176 Later in 2004, Clos d'Aguzon encountered financial difficulties. Bontoux explained the problems he was having to McCartney and asked if McCartney would be prepared to provide funding to Clos d'Aguzon. McCartney provided such funding in the order of a little in excess of 1.3 million euros.

177 Bontoux had dealt with Nguyen and McCartney at Bronson & Jacobs. Nguyen commenced employment at Ingredients Plus in February 2005.

178 On 16 February 2005, a Mr Cavanagh at Orica sent an email to Bontoux advising that Nguyen had left Bronson & Jacobs and of his appointment as business manager for the Essential Oils and Aroma Chemicals area of Bronson & Jacobs in Australia.

179 Bontoux deposed in his affidavit sworn on 3 July 2006 that he forwarded the email he received from Cavanagh to McCartney. He set out the text of the email which he sent to McCartney of 21 February 2005. He deposed that at the time of sending his email to McCartney he had decided it was no longer in Clos d'Aguzon's interests to continue to use the Bronson & Jacobs group as its distributor in Australia, but had not yet decided whether it would be necessary for Clos d'Aguzon to distribute its products in Australia directly, or by using another distributor. In his email to McCartney of 21 February 2005, Bontoux wrote: " Dear Bill,

I hope you are well. I am receiving the attached message and I am surprised you didn't let me know before. Last year when B&J was sold to Orica, it was clearly said things would continue like before. Now, I am getting very concerned about my interests in Australia, as you perfectly know to be successful selling essential oils you need a well trained team with a long experience. I really doubt you are still in this position with people like Tracy & Nguyet leaving the company. What about yourself are you still involved? In confidence, I am receiving direct complains (sic) from customers which are not satisfied at all with service and have already switched some needs in other directions !!!! Bill, to my great disappointment, after all those years of very good relationship, I think I'll have to protect my interests using a different support. Yours truly Remy" 180 In his affidavit of 30 June 2006, McCartney also referred to this email correspondence and set out its text. McCartney then deposed to having forwarded Bontoux' email of 21 February 2005 to Mr Larke of Orica on 22 February 2005. In his email to Larke, McCartney complained about various of Orica's dealings with suppliers. In relation to this matter, he said in that email that he found out about the appointment of Tony Cavanagh to the position of business manager from a supplier, and that he had the experience on how to handle "sticky" situations better than anyone at Bronson & Jacobs, which he could only do if he knew about the changes prior to their happening. He said "please don't ask me to help once the horse has bolted."

181 Neither Bontoux nor McCartney disclosed in their affidavits that McCartney, who was then still engaged as a consultant to Bronson & Jacobs, discussed with Bontoux how he should respond to Cavanagh's email of 16 February 2005. On 17 February 2005, Bontoux sent an email to McCartney's private email address (not his email address at Bronson & Jacobs), which said: " Dear Bill I am writing you this message because I am very concern about what is going on in the Australian market for our products. As you know we have developed a nice business together over the past years because of our very good personal relation (sic). Now, with all the changes at B&J I have strong doubts about the future for our sales in Australia. Customers are starting to complain and I may have regretfully to decide to protect my company interest in a different way. I realise how disappointing this message could be for you after all those years of good collaboration and can't tell you how sad it is for me. I will keep you informed soon. Best Regards Remy "

182 This email was sent on the same day that McCartney provided $200,000 funding to assist the Ingredients Plus business. 183 On 21 February 2005 at 6.26pm Sydney time, McCartney telephoned Bontoux in France. Bontoux said he had no recollection of the discussion (T297). McCartney initially denied knowing that the number he rang was Bontoux' phone number. Ultimately he accepted that it was. He also denied having a recollection of what was discussed. McCartney accepted that it was possible that they discussed the Australian distributorship for Bontoux but denied in that context discussing the new business of Ingredients Plus which had just been established. An hour after his telephone conversation with McCartney, Bontoux sent the email of 21 February to McCartney referred to above.

184 Despite their professed lack of recollection of events, I draw the inference that McCartney settled the terms of Bontoux' response to Cavanagh. At one point in his cross-examination, Bontoux said that he sent the email of 17 February to McCartney "just to make sure the wording was correct", although he sought to backtrack from that admission.

185 Not only did neither McCartney nor Bontoux disclose in their affidavits their communications of 17 and 21 February 2005, but Bontoux's email of 17 February 2005 to McCartney was not discovered by McCartney. It was retrieved on a forensic examination of McCartney's computer as one of the emails which had been deleted.

186 I accept that Bontoux was unhappy with the Bronson & Jacobs distributorship. I accept his evidence that he was concerned that he had started to receive inquiries from Europe for products which were only sold in Australia which indicated to him that the Australian customers were trying to source their products indirectly through Europe and not through Bronson & Jacobs. He was also concerned that Nguyen had left Bronson & Jacobs, and this was a substantial part of his reason for moving his distributorship. However, I also consider that there was a plan to which McCartney was a party, and which pre-dated Nguyen's departure, for Nguyen to leave Bronson & Jacobs once Graeme Love had established his business. McCartney's financing of the establishing of Ingredients Plus contributed to Nguyen's departure, and was an indirect contributing factor to Bontoux' decision to cease to use Bronson & Jacobs as a distributor. As will be seen below, he appointed Ingredients Plus as the Australian and New Zealand distributor. Despite his and McCartney's denials, I infer that McCartney induced him to do so.

187 At this time, McCartney was involved in providing financial assistance to Clos d'Aguzon. Rawlo International lent €1,326,000 to Clos d'Aguzon secured over real property assets of the company or associated companies of the Bontoux family in France. The money was sought to "allow Clos d'Aguzon SA to accelerate the recovery of the gifts and scents division currently being restructured."

188 It is improbable that in those circumstances Bontoux would not discuss with McCartney the appointment of Ingredients Plus as the distributor for Clos d'Aguzon. Given that McCartney had financed the establishment of the Ingredients Plus business, it is unlikely that he would not have sought the distributorship for Ingredients Plus. He had earlier told Monahan that "Remy Bontoux will be no problem too. He'll support me, no problem." I do not accept either Bontoux or McCartney as being reliable witnesses. I do not accept their denials. 189 On 1 March 2005, Bontoux sent an email to McCartney. McCartney by then was no longer employed as a consultant. Bontoux said that Cavanagh had called him that day and was trying to make sure that Clos d'Aguzon would support him in the future. He reported that Cavanagh "also told me that your contract was ending last week and ask (sic) if I had contacts with you. I said that I was sending you a message but I was not receiving answer as of yet." 190 Bontoux was not frank with Cavanagh. Bontoux had had email correspondence and telephone discussions with McCartney. Bontoux concluded his email of 1 March 2005 to McCartney by asking McCartney if there were any potential problems concerning Bronson & Jacobs and Orica if he sent McCartney a letter stating that Ingredients Plus would represent Clos d'Aguzon in Australia starting 1 March 2005. 191 McCartney replied saying that there would be no problems. 192 In his affidavit, Bontoux deposed that on 10 March 2005, he sent an email to McCann stating that, having considered all aspects of the current relationship between Clos d'Aguzon and the Bronson & Jacobs group, he had decided to appoint Ingredients Plus as Clos d'Aguzon's representative agent. Bontoux said he did not appoint Ingredients Plus as Clos d'Aguzon's distributor because of any request or suggestion by McCartney. I do not accept that evidence. Although there is no direct evidence of any such request or suggestion, the circumstances strongly permit the drawing of an inference that Bontoux appointed Ingredients Plus as Clos d'Aguzon's distributor because of such a request or suggestion by McCartney. 193 Neither Bontoux nor McCartney disclosed in their affidavits that on 5 March 2005 Bontoux had sent an email to McCartney and Nguyen attaching a draft announcement of the appointment of Ingredients Plus as Clos d'Aguzon's "exclusive representative" for essential oils and aromatic raw materials for Australia. He asked for their consideration and comments on the draft. He said "if it is agreeable to you we will fax you an official version on Monday and prepare a message for Bronson & Jacobs that they will have to purchase from you from now on." 194 Notwithstanding that this message was addressed to McCartney as well as to Nguyen, Bontoux denied that he meant to ask McCartney to consider the draft announcement or to comment on it, or that he meant that he expected that in the future he would be purchasing products from a business with which McCartney was associated. The email went on to say that he looked forward with pride to becoming "your principal again". Again, Bontoux denied that this was intended to be a reference to McCartney, even though the email was addressed to McCartney. He said that the email was intended to be addressed to Nguyen, and it was provided to McCartney for information only. He said that it was a mistake that he did not address the email to Nguyen with a copy to McCartney. I do not accept this evidence. The email corroborates the inference I draw that McCartney encouraged Bontoux to transfer his distributorship to Ingredients Plus and made it known to Bontoux that he was associated with Ingredients Plus. 195 This correspondence overlaps the termination of McCartney's consultancy. I infer that, prior to the termination of his consultancy, McCartney had solicited Bontoux to transfer the Clos d'Aguzon distributorship to Ingredients Plus and had made it known to him that he was backing Ingredients Plus. 196 The records of the telephone calls over this period are consistent with McCartney's being actively involved with Nguyen and Graeme Love at Ingredients Plus in relation to the obtaining and announcement of the Clos d'Aguzon distributorship. Between 19 and 21 February, McCartney made seven telephone calls to Nguyen (two of which were only thirty seconds duration and may have been voice messages) and one to Graeme Love. He called Graeme Love twice on 22 February and Nguyen three times on that day. Over the same period, he received no fewer than sixteen telephone calls from Graeme Love. Eleven of those calls were of thirty seconds duration which might indicate that Graeme Love was leaving voice messages for McCartney. On 1 March, McCartney made two telephone calls to Graeme Love, two to Bontoux and two to Nguyen. He received two calls from Graeme Love, (one of only thirty seconds duration). 197 The volume of telephone communications did not diminish. On 4 March 2005 and 7 March 2005, McCartney had telephone conversations with Graeme Love of two and a half minutes, ten minutes and eight and a half minutes (as well as two of thirty seconds duration). He received three calls from Graeme Love on 4 March (two of thirty seconds duration) and one on 7 March 2005 of twelve minutes. On 4 March 2005, he made five calls to Nguyen (one of thirty seconds duration). On 5 March 2005, a Saturday, he received one call from her of two and a half minutes duration. On Sunday 6 March 2005, he made five calls to her, including two calls of eleven minutes and eleven and a half minutes. On 7 March 2005, he made seven calls to her, including one of sixteen minutes, and another of seven minutes. He made two more calls to her on 8 March 2005 and two to Graeme Love on 8 March 2005. He received a call from Graeme Love of eleven minutes on 8 March 2005. 198 Nguyen was not called to give evidence. I infer that no evidence she would have given in relation to the securing of the Clos d'Aguzon distributorship would have assisted the defendants. I can more readily draw the inference that McCartney solicited and induced Bontoux to transfer the Clos d'Aguzon distributorship from Bronson & Jacobs to Ingredients Plus. I do draw that inference. 199 In summary, the inference that McCartney solicited Bontoux to transfer the Clos d'Aguzon distributorship from Bronson & Jacobs to Ingredients Plus arises from:

(a) McCartney's having said prior to May 2004 that that was his intention if Orica did not leave Bronson & Jacobs as a stand-alone division;

(b) McCartney's having provided working capital to Ingredients Plus and having a beneficial shareholding in it;

(c) McCartney's attempts to disguise his involvement with Ingredients Plus;

(d) McCartney's being a secured lender for more than €1,300,000 to Clos d'Aguzon, so that such a decision was unlikely to be made without his involvement;

(e) McCartney's secretly providing assistance to Bontoux to assist Clos d'Aguzon to retain the advantage of Bronson & Jacobs' mistaken overpayment;

(f) McCartney's talking and corresponding secretly with Bontoux about the terms on which Bontoux should write to Bronson & Jacobs about Clos d'Aguzon's concerns as to Bronson & Jacobs' marketing of its products;

(g) Bontoux' email correspondence requesting McCartney and Nguyen to settle the terms of his announcement of the change of distributor, and saying he looked forward to being their principal again;

(h) the volume of telephone traffic by McCartney on his mobile phone to Graeme Love and Nguyen; and

(i) the defendants' failure to call Nguyen. 200 I conclude that the material causes of Clos d'Aguzon changing its distribution arrangements were that Ingredients Plus had established its business; that Clos d'Aguzon was dissatisfied with service provided by Bronson & Jacobs after the Orica takeover; that Nguyen had left Bronson & Jacobs to work for Ingredients Plus; and that McCartney solicited Bontoux to do so. The Induchem Distributorship 201 On 8 April 2005, Nguyen sent an email to Mr Schweikert of Induchem. She thanked him for his time on the telephone and said that she would forward a separate email on "our new company, Ingredients Plus". She said "In the interim, you may like to confirm the representation of Lipo in Australia and the Asia Pacific rim on Lipo's website." Her email was blind copied to McCartney. 202 McCartney's consultancy was terminated on 25 Feb 2005. Between 14 February 2005 and 26 February 2005, he sent 31 emails from his Bronson & Jacobs email account to his personal email addresses. Eighteen of these were sent on 26 Feb 2005. The plaintiffs submitted that McCartney had forwarded Schweikert's email address to his home email address on 26 February 2005. I do not accept that submission. There is no evidence he did so. 203 Ingredients Plus secured the distribution rights for Induchem's products. After a trial period, on 23 November 2005, Induchem announced the appointment of Ingredients Plus as its distributor in Australia and New Zealand. An email from Schweikert to Mr McClean of Bronson & Jacobs of 29 November 2005 said that "We are not only surprised but also very upset to see that Bronson & Jacobs is still officially representing Lipo Chemical, a company that copies our products. We cannot understand why Bronson & Jacobs tolerates such a situation and we hope that you will rapidly terminate your relationship with Lipo. We give you enough time to choose between Induchem AG and Lipo Chemicals." I infer that Bronson & Jacobs' representation of Lipo Chemicals was the substantial reason for Induchem changing distributors. There is no evidence that McCartney induced Induchem to change its distribution arrangements. The Su-Heung Distributorship 204 On 9 May 2005, Mr Cho of Su-Heung wrote to Petros about Yang's visit. Mr Yang was the president of Su-Heung which was a supplier to Bronson & Jacobs. The email records that Yang was to arrive in Australia on 15 May 2005. Petros was told that "Mr Yang will leave one full day open for your meeting and dinner with Mr Lee (Rainbow and Nature) and Mr McCartney as well as you, unless something unexpected happens." 205 On 11 May 2005, McCartney sent an email to Mr Stathis Georgianos of Creative Brands. He told Georgianos that he would not be able to have dinner on the eve of 17 May because ""I have another Korean visitor here at the same [time]". McCartney agreed that the other Korean visitor was Yang. Initially, he agreed that the reference to "here" was to Ingredients Plus' office at Rydalmere. He resiled from that and I think it just as likely that he was referring to having Yang as a visitor in Sydney at the time. However, what is clear from his email is that he regarded Yang as being his visitor, that is, that he was personally involved in the arrangements for Yang's visit to Australia. I reject his denial of that proposition (T192.19). 206 Graeme Love gave evidence that Petros, Nguyen and he met with Yang. He said that Nguyen and Petros led the meeting for Ingredients Plus. When asked whether McCartney attended the premises of Ingredients Plus at some stage during that day, he said "I don't recall whether it was that day or a day - the prior or the day before. I'm not sure as to whether it was that specific day." 207 Mr Jason O'Brien, a private inquiry agent engaged by Austpac Investigations, conducted surveillance of McCartney for fourteen days between 9 May 2005 and 21 June. McCartney visited the premises of Ingredients Plus on 9 May 2005 and on 12 May 2005, and again on 24 May, 3 June, 10 June and 21 June 2005. O'Brien gave no evidence of McCartney's attending the offices of Ingredients Plus on 15, 16 or 17 May. Mr Cassell, a private inquiry agent, gave evidence that he conducted surveillance of McCartney on 16 and 17 May, but he gave no evidence of McCartney attending the premises of Ingredients Plus on those days. I conclude that he did not. 208 On 17 May 2005, McCartney and Petros, as well as Mr Lee of Rainbow & Nature Pty Ltd,who was a friend of Yang, had dinner with Yang. Both Petros and McCartney denied that at the dinner they discussed the potential change of distributorship with Yang. They both said that the dinner was purely a social occasion. As it was attended by Lee, I do not think there is sufficient reason to doubt that. 209 In my view, the evidence rises no higher than that McCartney was personally involved in the arrangements made by Petros for Yang to visit Ingredients Plus in mid May 2005 to discuss Ingredients Plus obtaining the distributorship. The evidence does not establish that McCartney solicited Su-Heung to change distributors to Ingredients Plus. 210 Following the acquisition of Bronson & Jacobs by Orica, Orica and Bronson & Jacobs faced difficulties in acting as distributor for Su-Heung capsule products in New Zealand, and also supplying products of a company called Universal in New Zealand. These were competitive products. Orica was not prepared to risk the Universal business in New Zealand. 211 In November 2004, Su-Heung complained that one of its customers was informed that Bronson & Jacobs in New Zealand had decided not to deal with its capsules but to distribute Universal's capsules after the merger with Orica. The customer inquired about purchasing products directly from Su-Heung. Orica in New Zealand attempted to manage the issue and suggested that Su-Heung be told that the situation in New Zealand was unique and that Su-Heung's existing business would be protected as would any specific requests for their material, but that Bronson & Jacobs/Orica had to give preference to Universal. The New Zealand manager of Orica's food division accepted that eventually Bronson & Jacobs/Orica would lose the Su-Heung business in New Zealand. Petros was involved in these discussions. When he joined Ingredients Plus he must have been aware that the opportunity was available to seek to obtain Su-Heung's business. 212 On 24 May 2005, Cho sent an email to Petros. He advised that Su-Heung was "positively considering" appointing Ingredients Plus as its sole distributor for capsules and gelatine. He sought Ingredients Plus' comments on its strategy to increase the sales of capsules in the future and on the training of Ingredients Plus' sales staff to upgrade its marketing capability and technology. On 25 May 2005, Petros outlined Ingredients Plus' plans for the marketing of Su-Heung products if it obtained the distributorship. One of the points made by Petros was that "We are certain that we can best represent [Su-Heung] in the Australian and New Zealand markets as we know your products well and furthermore we do not have a conflict of interest by representing a second source of capsules such as Universal as per the incumbent agent." 213 On 26 May 2005, Su-Heung advised Bronson & Jacobs that it was terminating its relationship with Bronson & Jacobs. Yang wrote to Monahan as follows: "…

Since I came back home I have called into staff meetings several times to determine who would be the best candidate for our distributor of capsules and gelatine in Aust and NZ. Some staffs highly recognised B & J's being one of the internationally renowned Orica Group's subsidiaries, financial soundness and organisation network etc., while other staffs feared that there may exist some vacuum in sales manpower for considerable time since most of capsule experts left B & J and changed a lot in organisation. Our staff's another concern is that Orica is handling Universal capsules in New Zealand, possibly causing a conflict of interest by interesting two different sources of capsules by one group. Frankly speaking, I have been hesitating to make a final decision in the process of our staff meetings because both companies have their own strong or weak points in management. However, one of the negative factors is your overlapping capsule business with Su-Heung in Australia and Universal in New Zealand which completely goes against our management policy. Anyway, considering various circumstances, we regret to advise we decided to terminate our capsule/gelatine business relations with your company, B & J, taking effect from 1st June 2005. ... " 214 There is no reason to doubt that this letter accurately reflects the reasons for Su-Heung's decision to change its distributorship. Partly that decision was caused by the conflict which Orica had in representing competitive suppliers in Australia and New Zealand. Partly it was based upon Bronson & Jacobs' loss of experienced sales staff. 215 I do not accept that McCartney had any direct involvement in enticing Su-Heung to appoint Ingredients Plus as its distributor. The only causal relationship between his conduct and Bronson & Jacobs' loss of the Su-Heung distributorship was that, but for his providing working capital to allow Ingredients Plus to be established, and but for his support for Ingredients Plus having been a factor in inducing Petros to join Ingredients Plus, it is unlikely that at least the Australian business would have been lost. I draw this conclusion because it is clear from Yang's letter that his decision to change his company's relationship from Bronson & Jacobs to Ingredients Plus was a finely balanced decision. One of the important factors which weighed in the balance was Orica's loss of relevant staff in the sales area. Had that not occurred, I conclude that it was more likely than not that Su-Heung would have remained a supplier to Bronson & Jacobs in Australia. It is only insofar as McCartney contributed to the loss of such sales staff and their migration to Ingredients Plus that he contributed to the loss of that business. The key member of staff so far as Su-Heung was concerned was Petros rather than Nguyen and, for the reasons set out at [82] above, Petros' leaving Bronson & Jacobs was not due to enticement by McCartney. Registration for the IFEAT Conference 216 IFEAT is the International Federation of Essential Oils and Aroma Trades. On 31 May 2005, McCartney applied for membership of IFEAT, naming Creative Brands as his company. He asked that his Visa account be debited for the first annual subscription of £270. 217 On the same day, Nguyen sent a fax to IFEAT to register herself and McCartney as delegates of Ingredients Plus at an IFEAT conference to be held in India later in 2005. 218 On 2 June 2005, Nguyen sent an email to IFEAT advising that a membership application form for Creative Brands had just been faxed. Nguyen said: "This is Bill McCartney's new company." 219 On 16 June 2005, she followed up that email and asked whether Creative Brands had been accepted as a member. She said "In the affirmative, could you please list Bill's registration under this company and not Ingredients Plus." 220 The fee for registration at the conference was US$700, apparently the then equivalent of £385. This fee was paid by Nguyen. 221 On 22 July 2005, after the commencement of these proceedings, Nguyen was refunded the £385 charged to her credit card for McCartney's attendance at the conference. Some time prior to 22 July 2005, Ms Sarah Best from the IFEAT secretariat wrote to McCartney confirming his registration for the IFEAT conference for 16-20 October 2005. On 22 July 2005, McCartney sent a fax to her asking her to reissue his registration in the name of Creative Brands. McCartney gave evidence that at the time he applied for membership of IFEAT, he sought to register as a delegate of the conference under the name Creative Brands (T220). No such application was produced. I reject that evidence. On the same day that Nguyen's credit card was credited with the payment of the £385, McCartney's credit card was charged with £385 for his attendance at the conference. 222 It does not appear that IFEAT acted on Nguyen's request in her email of 16 June 2005 that McCartney be registered at the conference under the name of Creative Brands rather than Ingredients Plus. I do not accept the plaintiffs' submissions that it was only after the proceedings were commenced that steps were taken to change McCartney's registration as a delegate of Ingredients Plus. Nonetheless, the facts that he was initially registered as a delegate of Ingredients Plus, and that his registration was paid for by Nguyen, are further corroboration of his then involvement in the affairs of Ingredients Plus. If there were an alternative explanation for his being initially registered as a delegate of Ingredients Plus, Nguyen could be expected to give it. She was not called, and I conclude that her evidence would not have assisted the defendants' case on this topic. Approach to DCP Direct 223 On 8 June 2005, Nguyen wrote to Mr David Crosthwaite of DCP Direct Ltd. An email from Crosthwaite was one of the emails which McCartney had forwarded to his home email address on 26 February 2005. In her email to Crosthwaite, Nguyen said: " Dear David

My name is Nguyet Nguyen and I used to work for Bill McCartney at Bronson & Jacobs. You may remember me attending the IFEAT conferences.

Bill has passed me your email address ." 224 She went on to describe Ingredients Plus and to solicit Crosthwaite's business. 225 Nguyen blind copied that email to McCartney. Crosthwaite was a friend of McCartney. They had done business at Bronson & Jacobs. I conclude that McCartney provided Crosthwaite's contact details to Nguyen to assist Ingredients Plus in its attempt to obtain his business. There is no evidence that Ingredients Plus was successful in obtaining that business, or that Bronson & Jacobs lost it. The Tyco Distributorship 226 On 16 June 2005, Petros sent an email to a Mr Jerry Moss of Tyco Healthcare. It appears to have been part of a longer chain of correspondence, but the other correspondence was not in evidence. It can be inferred that Tyco had initially been positive about providing business to Ingredients Plus, but had turned around. Petros wrote "Firstly, we would thank you for even considering our business as a potential distributor for Tyco. We have handled your product for a long time and it has been a pleasure to deal with such a high quality principal distributing high quality product. The business we have developed was done on behalf of the company we were working for at the time ..." Petros concluded by saying: " I would prefer not to approach other principals if there is a strong possibility for us to work together in the future. I would appreciate any feedback you can offer us in relating (sic) to your decision process over the next 12 months. We need to earn a livelihood so we have to make a difficult decision, do we wait a year pending your decision, or do we aggressively seek new alternative products. We know you cannot give us any guarantee, however, your commitments could greatly affect which path we choose. " 227 This email was blind copied by Petros to McCartney. 228 I do not conclude from the fact that McCartney received a copy of Petros' email that McCartney took any active steps to seek to induce Tyco to give its business to Ingredients Plus. I infer that one of the reasons Tyco provided business to Ingredients Plus was because of the long-standing relationship which it had had with the employees of Ingredients Plus who had worked with it whilst employed by Bronson & Jacobs. However, there is no evidence that McCartney had any role in procuring Tyco to supply products to Ingredients Plus beyond his assistance in the establishment of the company. No monetary claim is made in relation to the products supplied by Tyco. The Dow Corning Distributorship 229 From about 1981, Dow Corning supplied silicon-based chemicals to the Bronson & Jacobs group for supply by it to third party customers. In 2003 or 2004, representations were made to it by Orica that following the acquisition, the Bronson & Jacobs group would remain a stand-alone business and that it would be "business as usual". Dow Corning had given training to Bronson & Jacobs employees in relation to the Dow Corning product range. Nicols was, and is, the Asian Area Director for Dow Corning Australia Pty Ltd, with responsibility for the Asian region. He was and is a friend of McCartney whom he has known since about 1989. He has also known Petros for about the same time. 230 Monahan deposed that, sometime in April 2004, McCartney came into his office after a meeting with Nicols and told him that Nicols ahd said to McCartney "Bill, the relationship between Dow Corning and Bronson & Jacobs is with you personally." Nicols denied that in April 2004, or at all, he said that to McCartney. He said that was not the fact. He did not categorically deny that he told McCartney "If you go elsewhere, we'll go with you", but he had no recollection of having done so. His description of the meeting suggests that it was unlikely that he would have said those words because, as he described it, "It was a very positive meeting from my perspective. I felt as though it was a good potential acquisition for Orica, and I thought at the time it would benefit Bronson & Jacobs and it would have been good for Dow Corning. So in essence, I don't really recollect at the time to the best of my knowledge any discussion around moving, because it was really an introductory (sic) to the actual purchase." I do not accept that Nicols told McCartney that if McCartney left Bronson & Jacobs, then Dow Corning would follow. 231 Nor did it. Dow Corning remained a supplier to Bronson & Jacobs until 1 November 2006. From about mid to late 2005, Dow Corning supplied some products to Ingredients Plus, albeit on a limited basis. In the 2006 financial year, the total purchases of Dow Corning products by Ingredients Plus amounted to about US$200,000. Nicols described the relationship in late 2005 and early 2006 as follows: " [In mid to late 2005] they would only just be starting up and more towards late 2005 it picked up a little bit in early 2006 because there were some customers that were very - they weren't being well-served under the current distribution arrangement with Bronson & Jacobs, they were falling through the cracks and they were there to pick up the pieces with some customers. But at that point ... , they were [a] very small distributor at the time. Financially we didn't see them as very strong and we were willing to work with them on a limited basis purely because some customers needed that ." 232 Following the termination of Dow Corning's relationship with Bronson & Jacobs on 1 November 2006, Ingredients Plus took over the business that Bronson & Jacobs was previously doing with Dow Corning. A memorandum prepared by officers of Dow Corning dated 22 August 2006 described Dow Corning's options. They proposed that Dow Corning terminate its relationship with Bronson & Jacobs and move most of the business to Ingredients Plus. The amount of business that Ingredients Plus would take on was estimated to be US$1,200,000-US$1,500,000. Dow Corning would supply about US$1,000,000-US$1,200,000 of business directly. I deal with this memorandum at paragraph [241]. 233 The plaintiffs point to McCartney's attendance at a number of functions with representatives of Dow Corning between August 2005 and May 2006 and submit that it should be inferred that he solicited Dow Corning's business for Ingredients Plus. Representatives of Ingredients Plus were in attendance on most occasions. The plaintiffs submit that McCartney's association with Ingredients Plus, coupled with his friendship with Nicols, was a crucial factor in Dow Corning's decision to change distributors in Australia. 234 The first function in question was a dinner on 13 August 2005 which took place prior to a rugby test match. It was attended by McCartney, Petros, Nicols and Mr Stuart Mulvena of Dow Corning. If Ingredients Plus was mentioned at the dinner, it was only mentioned casually. The dinner was a social occasion. 235 On 7 November 2005, Petros sent an email to Nicols arranging lunch. The lunch was held on either 25 November 2005 or 5 December 2005. According to Nicols, it was attended by McCartney, Nguyen, Graeme Love and Petros. Nicols gave evidence, which I accept, that one of the topics discussed at the lunch was how Ingredients Plus could work with Dow Corning to do business in Hong Kong and China. He said Petros, Graeme Love and, to a lesser degree, Nguyen, discussed the possibility of their wanting to do more work with Dow Corning. He said the he was basically listening to what they had to say at the time. He gave the following evidence which I accept: " Q. But Mr McCartney was involved in those discussions ?

A. By sitting there he was, but he didn't say anything in relation to distribution. I mean, Bill basically respected the fact that when it comes to distribution that I've been around for twenty years and I know the business very well and I make my own decisions on those sorts of things. " 236 Petros blind copied email correspondence to McCartney in relation to the functions to be attended by Nicols. He denied that the reason he sent the emails to McCartney as blind copies was because he did not want people to know that he was communicating with McCartney about matters to do with Ingredients Plus. However, he could not give an explanation as to why he blind copied the emails to McCartney. I consider he did so because he wanted to disguise McCartney's involvement. However, it does not follow that McCartney actively sought to entice Dow Corning to move its business to Ingredients Plus. That having been said, I consider that it was a point in Ingredients Plus' favour in its dealings with Dow Corning that McCartney was known to be associated with it. 237 On or about 24 February 2006, Nicols attended a meeting in a restaurant in Sydney with a Mr Eliot of Connell Brothers. The only attendees at the meeting were Nicols, Eliot and McCartney. A topic discussed at the meeting involved business arrangements, or proposed business arrangements, which remain commercially confidential to at least Dow Corning. I directed that the evidence about it be kept confidential. I will not say more about the meeting than is necessary in these reasons, as I accept that disclosure might adversely affect Dow Corning's interests. It is sufficient to say that the topic discussed was one of potential importance to Ingredients Plus' business. I infer that McCartney was present as a representative of Ingredients Plus. However, I do not accept that his involvement in the meeting, or otherwise, had any material bearing on Dow Corning's later decision to terminate its relationship with Bronson & Jacobs and appoint Ingredients Plus as its distributor. 238 On 28 February 2006, Nicols sent an email to McCartney to seek to arrange McCartney's attendance at a conference to be held in Las Vegas. However, that proposal had nothing to do with Ingredients Plus. It related to McCartney's interest in Creative Brands. 239 On 16 March 2006, McCartney delivered tickets to a game of rugby league to officers of Dow Corning. He attended the game with Nicols, and other representatives of Dow Corning, including Mr John Lyon, the head of Dow Corning in the United States. Nicols was asked whether on that occasion he discussed any potential dealings between Dow Corning and Ingredients Plus. He said there was no such discussion because they had only just finished a meeting at Bronson & Jacobs and wished to keep that meeting confidential from McCartney (T326). I accept that evidence. 240 In May 2006, Nicols attended a lunch with McCartney and, I infer, also with Petros and Graeme Love. I do not accept McCartney's evidence that the lunch was merely "light relief". Evidence was given by Nicols of confidential discussions on the same topics as those discussed on 24 February 2006. However, as with the earlier meeting, I do not consider that McCartney's involvement at the lunch in discussion of the business was material to Dow Corning's decision to terminate its relationship with Bronson & Jacobs. It may have been material to Dow Corning's decision to appoint Ingredients Plus as its distributor for a substantial part of its products. 241 Dow Corning decided to terminate its relationship with Bronson & Jacobs because of its dissatisfaction with Bronson & Jacobs' performance. In a memorandum of 22 August 2006, Mulvena and Mr Rob Taylor of Dow Corning set out the factors which influenced their recommendation to terminate the relationship with Bronson & Jacobs and move most of the business, but not all of the business, to Ingredients Plus. Sales made through Bronson & Jacobs in 2006 had fallen substantially from 2005. For twelve consecutive months, purchases had been lower than in the equivalent month in the preceding year. There was a "heavy loss of experienced commercial professionals (sales, management etc.)" over the preceding eighteen months. Mulvena and Taylor opined that Bronson & Jacobs' latest business model focused primarily on the "Gold" customers and provided minimal quality support to "Bronze and Silver" customers. They said that there had been confirmation that service levels had decreased, particularly to Silver and Bronze type customers, and that Dow Corning was no longer held in the same esteem as a key principal for the personal care market. They said that Bronson & Jacobs was operating increasingly like a manufacturer and less like a well-focused specialty chemicals distribution operation. They set out three scenarios as to what might happen if Dow Corning did nothing. They expressed the opinion that each of the scenarios provided an adverse outcome for Dow Corning. Accordingly, they proposed three options. Each option involved the termination of the relationship with Bronson & Jacobs. The first involved moving most, but not all, of the business to Ingredients Plus. The second involved moving all of the business to Ingredients Plus. The third involved the appointment of a different "friendly" distributor. They recommended the first option. Their recommendation was accepted by Nicols and Lyon, and was implemented. 242 I conclude that there was no causal relationship between McCartney's conduct and Bronson & Jacobs' loss of the Dow Corning distributorship. Even had Ingredients Plus not been established, Dow Corning would have terminated its relationship with Bronson & Jacobs because of its dissatisfaction with the latter's performance. Dow Corning did not simply follow McCartney by moving its business to Ingredients Plus. It left its business with Bronson & Jacobs for two and a half years after the Orica acquisition and twenty-one months after the establishment of Ingredients Plus before taking that decision. The business it had provided to Ingredients Plus prior to November 2006 related to the supply of products for customers whom Bronson & Jacobs was not supplying, that is, the customers who had "fallen through the cracks". The further business it supplied subsequently arose from its decision to terminate its relationship with Bronson & Jacobs, a decision made for reasons unrelated to any conduct of McCartney's. 243 That is not to say that McCartney's association with Ingredients Plus and his friendship with Nicols was not a contributing factor in Ingredients Plus, rather than some other distributor, obtaining the rights to distribute Dow Corning's products. But it was not a contributing factor to Bronson & Jacobs' loss of the business. Loss of Other Suppliers' Business 244 In final submissions, the plaintiffs made no monetary claim in respect of loss of business of other suppliers or the acquisition of such business by Ingredients Plus. That does not mean that evidence in relation to other suppliers has no relevance. If it were established that McCartney breached his contract, or breached any fiduciary duty he owed in connection with those suppliers, that would be relevant to the grant of injunctive relief. The defendants also emphasised that the fact that other suppliers gave evidence which expressly denied any inappropriate conduct by McCartney, and gave evidence that their change of distributor arose from their dissatisfaction with Bronson & Jacobs, indicated that adverse inferences should not be drawn against McCartney where the plaintiffs could claim there were grounds for suspicion that he had misconducted himself. Rather, it was submitted, the evidence of the other suppliers showed that McCartney was circumspect in his dealings, notwithstanding some degree of social contact. 245 Tasmanian Alkaloids was a supplier of raw narcotic material to Bronson & Jacobs. Petros managed its distributorship. In about June 2006, it decided to cease distribution through Bronson & Jacobs. It did so because it considered that Bronson & Jacobs failed to provide adequate sales reports and information. Its sales and marketing manager, Mr Scott, deposed that he was not aware that McCartney had any involvement with Ingredients Plus. He deposed that McCartney had no bearing on his decision to terminate the distribution agreement between Tasmanian Alkaloids and Bronson & Jacobs. He met McCartney at a dinner with Petros and Graeme Love in about April 2005. During the dinner, there was no discussion about Ingredients Plus during the time McCartney was present. He deposed that McCartney expressed disappointment about the direction Bronson & Jacobs was taking under Orica's management, but otherwise only participated in the social aspects of the conversation. That was his only contact with McCartney after McCartney's departure from Bronson & Jacobs. Scott was not cross-examined. I accept that evidence. 246 Another supplier to Bronson & Jacobs prior to Orica's acquisition was a German company, Symrise. It terminated its relationship with Bronson & Jacobs because, after the Orica acquisition, Bronson & Jacobs was marketing products of a competitor, BASF. The decision was made by Mr Philip Jacobs, its regional director for sales and marketing of cosmetic ingredients. He had no contact with McCartney in relation to the dissolution of its distribution relationship with Bronson & Jacobs and its appointment of Ingredients Plus as its distributor. 247 In the statement of claim, the plaintiffs allege that McCartney provided financial assistance to Rainbow & Nature so that that company could provide business to, and trade with, Ingredients Plus upon terms acceptable to Ingredients Plus. That allegation was not maintained during the hearing. McCartney (through Rawlo International), Sanquhar Investments Pty Ltd and others did provide financial accommodation to Rainbow & Nature. Rainbow & Nature is a manufacturer of finished dietary and healthcare products. Those arrangements predate the sale of Bronson & Jacobs to Orica. Rainbow & Nature ceased to do business with Bronson & Jacobs after Bronson & Jacobs issued a statutory demand to Rainbow & Nature for alleged non-payment of a debt for products supplied to Rainbow & Nature. That statutory demand was set aside. Rainbow & Nature has purchased small quantities of one product from Ingredients Plus, but McCartney was not involved in its decision to do so. Misuse of Confidential Information 248 Petros left Bronson & Jacobs's employment on 15 March 2005. Prior to that time, he had transferred to his home computer confidential information of Bronson & Jacobs comprising a report, prepared for the 2003-2004 financial year, which listed the quantities and average prices by customer of each product sold by Bronson & Jacobs in that financial year. The information included Bronson & Jacobs' gross margin on each such products by customer. Despite his denials, this was obviously commercially sensitive information of value to a competitor. Petros deposed that "When I joined Ingredients Plus I must have emailed to my work computer whatever I had on my home computer relating to work. I don't recall specifically what I had. Nor do I recall clicking the 'send' button or what was attached to the email I must have sent myself. I probably grouped a bundle of documents … with a series of clicks and sent them to myself. I probably did this in relation to anything that was work related." I do not accept that Petros was unaware that he was forwarding to his work computer at Ingredients Plus confidential pricing information of Bronson & Jacobs. 249 Petros denied using the information in his dealings with customers and negotiating prices. There is no direct evidence of his doing so. In the nature of things, such evidence is not likely to be obtainable except by admission. The price lists were not discovered by Ingredients Plus until 12 March 2007 following a forensic examination of five computers under the control of Ingredients Plus (Monaghan, para 28). 250 There is evidence of Ingredients Plus' using Bronson & Jacobs' confidential pricing information. On 1 June 2005, Lynam wrote to a Bruce Paterson at "Mirotone". She said: " As you know B & J are supplying to you 2 fragrances for surface coatings:-

Lemon Verbena A923540 @ A$20.70kg approx 60kgs month and

Masking agent A295890 @ A$30.85kg approx 20 40 kgs month. " 251 She said that Ingredients Plus would be happy to try to match the fragrances or any future fragrances and held out that the fragrance could be supplied at a cheaper price and with prompt service. Lynam denied being in possession of price lists of Bronson & Jacobs at this time. As I understood her evidence, she asserted that the product codes may have been generic product codes used in the industry to distinguish different grades of the same type of product, as distinct from Bronson & Jacobs' own product codes. She was unable to give any persuasive evidence as to how she knew of the volumes and prices, let alone the code numbers of the of the products in question. Her evidence that the product codes were generic industry codes was not corroborated. There is corroboration in the Bronson & Jacobs pricing information or Ingredients Plus' customer sales records. I do not accept her evidence on this topic. 252 There is no evidence that Lynam's approach to Paterson was successful. 253 Accordingly, although there is ample ground for suspicion, there is no evidence as to how, if at all, such confidential information was used by Ingredients Plus in successfully attracting new business. 254 In paragraph [223] above, I have referred to Nguyen's email to Crosthwaite in which she records having been given his email contact details by McCartney. The identity of suppliers to Bronson & Jacobs was not itself confidential information. However, I consider that the contact details for individual suppliers, such as the names, email addresses and telephone numbers of the individuals employed by the suppliers responsible for deciding with whom to place orders or enter into distribution arrangements, was confidential information (Weldon & Co Services Pty Ltd v Harbinson [2000] NSWSC 272 at [68]-[72]). There is no difference in principle between an employee making a list of the email addresses of customers or suppliers for the purpose of making use of such a list in a competitive business which the employee proposes to establish, and the employee forwarding the emails to his or her home computer so as to have access to those addresses. 255 There may have been other reasons for McCartney to have forwarded suppliers' emails to his home computer, but nonetheless, in doing so he copied such contact details and they remained confidential. There is clear evidence in one case of his making that information available to employees of Ingredients Plus to enable them to contact the supplier to seek to generate business. That was a misuse of confidential information by McCartney and Ingredients Plus. 256 The plaintiffs do not claim equitable compensation or an account of profits in relation to the misuse of confidential information. There is no evidence of business having been obtained or lost. However, they are entitled to an injunction against McCartney and Ingredients Plus to restrain the misuse of Bronson & Jacobs' confidential information. Summary of Key Factual Findings to Date Concerning McCartney 257 I have found that:

(a) on a number of occasions prior to May 2004, McCartney told Graeme Love and Petros that he would support them in the establishment of a rival business if Orica did not live up to its representations that Bronson & Jacobs would be left as a stand alone division;

(b) by 2 December 2004, McCartney had made it known to Graeme Love, Petros, Nguyen and Lynam that he would support them in the establishment of a rival business;

(c) McCartney lent $600,000 as working capital for Ingredients Plus between 17 February and 3 May 2005, although he subsequently agreed with Graeme Love that $200,000 would be treated as consideration for the purchase from Graeme Love of shares in the LEAP companies;

(d) McCartney is a 15% beneficial shareholder in Ingredients Plus;

(e) Nguyen was dissatisfied with changes made by Orica, and was encouraged by McCartney's promise of support to Ingredients Plus to leave her employment with Bronson & Jacobs;

(f) a material contributory reason for Lynam's decision to change her employment was McCartney's promise of support of Ingredients Plus;

(g) Petros was aware that McCartney would provide financial support to Ingredients Plus, but decided to leave Bronson & Jacobs because of his dissatisfaction with Orica's management. McCartney provided no further encouragement for him to leave and in about December 2004 and early February 2005, asked him to stay with Bronson & Jacobs to see if things got better;

(h) having decided to leave Bronson & Jacobs, Petros joined Ingredients Plus because of his association with Nguyen, Graeme Love and Lynam, and also because he was aware that McCartney would provide financial support to Ingredients Plus;

(i) McCartney solicited Clos d'Aguzon to appoint Ingredients Plus as its distributor in place of Bronson & Jacobs;

(j) the material causes contributing to Clos d'Aguzon's decision to do so were the fact that Ingredients Plus existed, dissatisfaction with Bronson & Jacobs' performance under Orica's management, McCartney's solicitation, and the fact that Nguyen had transferred her employment to Ingredients Plus;

(k) McCartney provided Nguyen with a confidential email address of a point of contact of a supplier to Bronson & Jacobs;

(l) McCartney was consulted by Graeme Love, Petros and Nguyen as to approaches to be made by them to potential investors, and to potential suppliers;

(m) McCartney provided advice to Petros and Graeme Love in relation to stock levels;

(n) the frequency of McCartney's telephone conversations and meetings with officers of Ingredients Plus prior to the commencement of proceedings was not consistent with the contacts being merely social or otherwise unconnected to Ingredients Plus' business;

(o) McCartney represented Ingredients Plus in confidential discussions with Dow Corning, but he did not attempt to induce Dow Corning to terminate its distribution arrangements with Bronson & Jacobs, or to appoint Ingredients Plus as its Australian distributor;

(p) Dow Corning would have terminated its distribution arrangements with Bronson & Jacobs whether or not Ingredients Plus had been established; and

(q) apart from his dealings with Bontoux of Clos d'Aguzon, the plaintiffs have not established that McCartney attempted to solicit the business of customers of or suppliers to Ingredients Plus. In particular, I am not satisfied that he solicited Su-Heung to terminate its distribution arrangements with Bronson & Jacobs and appoint Ingredients Plus as its distributor. Claim Against McCartney for Breach of Clause 15.1 of the Share Sale Agreement 258 Clause 15.1 of the Share Sale Agreement provided: " 15.1 Restricted Activities William McCartney in his capacity as a Vendor (' Restricted Party ') undertakes to the Purchaser that he will not for the duration of the Restraint Period (commencing on and from Completion), and within the Restricted Territory, do any one or more of the following: (a) carry on any business the same as or substantially similar to or in competition with the chemical trading, distribution and wholesaling activities of the Business operations as conducted by the Group and Equity Accounted Entities at Completion (' Restricted Business '), whether directly or indirectly as employee, manager, director, shareholder, member, partner, joint venture participant, consultant or in any other capacity; (b) on his own account or for any person entice away from the Purchaser; (i) any customer of the Restricted Business; (ii) any supplier to the Restricted Business; (iii) any employee of the Restricted Business; (c) canvass or solicit orders for services similar to those provided by the Business; (d) make use of or disclose to any third party any information of a secret or confidential nature relating to the business or affairs of any member of the Group, except that nothing in: (e) this clause shall restrict the Restricted Party from holding or acquiring (either directly or indirectly) in aggregate not more than 10% of the issued ordinary shares in the capital of any body corporate listed on the Australian Stock Exchange Limited; and (f) clause 15.1(a) shall restrict the Restricted Party from being engaged in non-core activities of the Business operations as conducted by the Group and the Equity Accounted Entities as at Completion, including farming practices, retail or from manufacturing chemical products. " 259 "Business" was defined as follows: " 'Business' means the business carried on by the Group and the Equity Accounted Entities as at Completion, including sales, service, distribution, manufacturing, production and storage of various aroma chemicals, industrial products, food, nutrition and pharmaceutical products, essential oils and cosmetic and personal care products in Australia, New Zealand, the United Kingdom, Indonesia, Hong Kong, China, Singapore, Malaysia and Thailand, including farming of plants for essential oil extraction but excluding the Excluded Business. " 260 "Group" was defined as follows: " 'Group' means: (a) the Company; and (b) the Controlled Entities; and reference to a member of the Group means any one of them. " 261 The "Company" meant Bronson & Jacobs Pty Ltd. It was a party to the agreement. There was a list of ten controlled entities. "Equity Accounted Entities" were two other named companies. Nothing turns on the activities of any company other than Bronson & Jacobs. Its business came within the definition of the "Restricted Business". There was no issue that Ingredients Plus' business was substantially similar to and in competition with its business. No submission was made based on clause 15.1(f) that the impugned conduct of McCartney comprised "non-core activities of the Business operations as conducted by the Group ... as at completion." The plaintiffs did not allege that McCartney breached the clause by reason of any activities engaged in in connection with the business of Creative Brands or Rainbow & Nature. 262 The "Restraint Period" was defined as either a period of 5 years, 4 years, 3 years, 2 years or 1 year from the Completion Date of the agreement, or, a period of 3 years, 2 years, or 1 year from the date McCartney ceased employment with, or ceased his engagement to provide services to, Orica Investments, whichever ended later. The plaintiff contends that the relevant period is 5 years from the date of Completion of the agreement, that is, a period ending on 31 May 2009. The defendants did not contend to the contrary. No submission was made that the clause was uncertain. No challenge was made to the validity of the restraint for that period. The "Restricted Territory" was widely defined. It included territories in which sales of products were made by the business carried on by the company and its controlled entities, together with two other companies called the Equity Accounted Entities. There is no question that all of the impugned conduct of McCartney occurred within the Restricted Territories. 263 Accordingly, the questions to be determined are:

(a) whether McCartney carried on any business the same as, or substantially similar to, or in competition with the business of Bronson & Jacobs, whether directly or indirectly as employee, manager, director, shareholder, member, partner, joint venture participant, consultant or in any other capacity;

(b) whether on his own account or for any person he has enticed away from Orica Investments:

(i) any customer of Bronson & Jacobs' business; (ii) any suppliers to Bronson & Jacobs' business; (iii) any employee of Bronson & Jacobs' business.

(c) whether he has canvassed or solicited orders for services similar to those provided by Bronson & Jacobs; and

(d) whether he has made use of, or disclosed to any third party, any information of a secret or confidential nature relating to the business or affairs of Bronson & Jacobs. 264 The defendants submitted that McCartney did not contravene clause 15.1 by providing finance to Ingredients Plus whether or not, in doing so, he was a beneficial shareholder of Ingredients Plus. The defendants denied that McCartney was a beneficial owner of the shares in Ingredients Plus, but submitted that even if he were, he did not thereby breach clause 15.1. Clearly, neither the provision of finance to Ingredients Plus, nor being beneficially entitled to shares in Ingredients Plus could by themselves contravene clause 15.1(b)-(d). Construction of Clause 15.1(a) 265 In their opening submissions, counsel for McCartney submitted that the provision of financial assistance by way of a loan, either directly or indirectly, did not constitute the carrying on of a business in contravention of clause 15.1(a). They also submitted that the concluding words of the clause "or in any other capacity" had to be read in connection with the preceding descriptions which, they said, "connote working for or owning part of the business, which is quite different to being a lender." 266 Counsel for the plaintiffs seized on this and submitted that there was no real difference between the parties in relation to the construction of the clause and that clause 15.1(a) prohibited McCartney from working for, or owning part of, the business of Ingredients Plus. 267 I do not think this is a correct reading of the submissions made by counsel for McCartney. Their submissions were directed to reading down the phrase "in any other capacity" so that the covenant should be construed as a restraint against carrying on a business of a specified kind, directly or indirectly, by working for or owning the business being carried on. I do not understand the defendants to have conceded that merely working for the Ingredients Plus business, or owning part of the business (or shares in the company which carried it on) would be a contravention of clause 15.1(a). Rather, they submitted that the impugned acts must amount to the carrying on of a similar or competitive business. 268 A restraint on carrying on a business is narrow. It is narrower than being concerned in, involved in, or assisting in, the carrying on of a business. Clause 15.1(a) is not breached merely by McCartney's being a beneficial shareholder of Ingredient Plus. The restraint is not on being a shareholder but on carrying on business in competition with Bronson & Jacobs as a shareholder. I do not read the exception in paragraph (e) as qualifying the interpretation of paragraph (a), so as to make the owning of shares in a company carrying on a similar or competitive business itself a breach of clause 15.1, unless the shareholding is of less than 10% of the shares in a listed company. Paragraph (e) appears to have been included for more abundant caution. Its inclusion does not justify reading out the opening words of paragraph (a). 269 The expression "carry on a business" connotes a systematic repetition of acts in some form of commercial enterprise (Hyde v Sullivan (1955) 56 SR (NSW) 113 at 119; Hungier v Grace (1972) 127 CLR 210 at 217; Hope v Bathurst City Council (1980) 144 CLR 1 at 8-9; United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 15; Faisold v Roberts (1997) 70 FCR 489 at 524; Toyama Pty Ltd v Landmark Building Developments Pty Ltd (2006) 197 FLR 74 at 87-88 [69]-[76]; 12 BPR 23,413 at 23,424-23,425 [69]-[76]; 62 ATR 73 at 86-87). 270 Clause 15.1(a) would undoubtedly apply if McCartney established a company of which he was a shareholder and it carried on business as agent for him. However, the defendants did not submit that the clause was so narrowly confined. The clause would apply if a company were incorporated to carry on a similar or competitive business as a cloak to enable McCartney to avoid the restraint on his carrying on such a business (Gillford Motor Co Ltd v Haine [1933] Ch 935). The plaintiffs did not allege that Ingredients Plus was formed for the purpose of enabling McCartney to evade his legal obligations. 271 The concluding words of paragraph (a) suggest that the parties intended to prohibit more than the systematic repetition of acts by McCartney which would amount to his carrying on a business, whether by himself or an agent. In ordinary parlance, a person does not carry on a business if he or she works as an employee, manager, or director of the company which carries on the business. Nor does a shareholder ordinarily carry on the business of the company in which the person holds shares. Nor does a consultant ordinarily carry on the business of the principal to whom his or her services are supplied. 272 Precedent is not usually helpful when construing non-standard contractual terms. However, I have found assistance in Palmer v Mallett (1887) 36 Ch D 411, cited by counsel for the plaintiffs. There, the restraint (inferred from the negative terms of a bond) was in terms that the defendant should not "directly or indirectly and either alone or in partnership with or as assistant of any other person or persons, or otherwise howsoever, set up or carry on the profession or business of surgeon etc.". The defendant was held to be in breach of the restraint where he practised as a surgeon's assistant. 273 Cotton LJ held (at 422) that the words "carry on the business or profession of a surgeon" merely denoted what was done by a man acting as a surgeon, and that a man acted as a surgeon, and carried on business as a surgeon, whether he was the principal, or engaged in the business as a partner, or carried it on as assistant to somebody else. Bowen LJ applied the same reasoning as the trial judge, Chitty J. Their Lordships held that the parties who drew the bond contemplated that the expression "carrying on the business of a surgeon" included acting as an assistant to a surgeon. The clause supplied its own dictionary as to what was meant by that expression (per Chitty J at 415-416, per Bowen LJ at 423-424). 274 The concluding words of clause 15.1(a), which prohibit the carrying on of business in any capacity including in the capacity of an employee, consultant, director or shareholder, indicate that the restraint covers the doing of acts by which a person, other than McCartney, carries on a business similar to, or in competition with, the business of Bronson & Jacobs. This implies that the prohibited acts need not have the regularity and system such that if they were performed by McCartney as a principal, they would constitute the carrying on of the business by him. Rather, clause 15.1(a) is contravened if McCartney performs acts in any capacity by which Ingredients Plus carries on its business. As in Palmer v Mallett the restraint is on the doing of acts, in whatever capacity, by which a proscribed business, whether of the promissor or another, is carried on. 275 To recapitulate, it is not sufficient for the plaintiffs to demonstrate that McCartney was involved in, or concerned in, the business of Ingredients Plus. It is not sufficient for the plaintiffs merely to show that he was a lender or consultant to, or beneficial shareholder in, Ingredients Plus. That is, it is not sufficient for the plaintiffs to show that he worked for, or was a lender to, or was a part-owner of Ingredients Plus, unless what he did amounted to or was part of the carrying on of a business. However, because of the concluding words of paragraph (a), it is not necessary for the plaintiffs to show that the business carried on was his business. As the clause prohibits his doing acts by which another person carries on business, it is sufficient that the acts are done in the course of and as part of the carrying on by Ingredients Plus of its business. 276 Dealing with customers or suppliers in furtherance of Ingredients Plus' business would contravene the clause. Lending money to or subscribing for shares in Ingredients Plus would not be an act of carrying on Ingredients Plus' business, any more than would a bank lending money or taking up shares in the company. 277 I have found that McCartney either directly, or indirectly through Graeme Love, made it known to the employees of Bronson & Jacobs that he would support them in their establishment of a rival business. Those acts were done before Ingredients Plus was established. At that time, there was no other business being carried on which was similar to or in competition with the business of Bronson & Jacobs. That conduct did not constitute a breach of clause 15.1(a), although it may have breached clause 15.1(b). 278 I do not consider that McCartney's provision of working capital to Ingredients Plus was a breach of clause 15.1. Whilst Ingredients Plus' obtaining of capital was a part of its business activities, McCartney's involvement in those activities was not an involvement on behalf of Ingredients Plus. He was involved as a lender. He was not thereby carrying on Ingredients Plus' business. Nor was he carrying on his own business. Being beneficially entitled to 15% of the shares in Ingredients Plus is not an act of carrying on business either for himself or Ingredients Plus. 279 I have found that McCartney induced Bontoux to transfer the Clos d'Aguzon distributorship from Bronson & Jacobs to Ingredients Plus. In doing so, McCartney was carrying on Ingredients Plus' business. That conduct constituted a breach of clause 15.1(a), and was also a breach of clause 15.1(b)(ii). 280 I have not found that McCartney dealt with Mr Yang of Su-Heung, otherwise than on a social basis. His dealings with Su-Heung did not contravene clause 15.1(a). 281 McCartney provided advice and direction to Graeme Love, Petros and Nguyen in relation to the conduct of Ingredients Plus' affairs. I infer from his receipt of the emails sent by Graeme Love soliciting investments that he was providing advice to Graeme Love in connection with those matters. I find that he suggested that Graeme Love approach Clive Thomas. Clearly, the proposal made by Graeme Love to Thomas was an act in carrying on the business of Ingredients Plus. McCartney provided advice to Graeme Love and Petros on stock levels. He gave Nguyen the contact details of Crosthwaite of DCP Direct. 282 Carrying on a business requires not just dealings with third parties external to the company, but also planning within the company. I consider that McCartney's advice and assistance to employees of Ingredients Plus which facilitated their dealings with suppliers, customers and potential investors were incidental to Ingredients Plus' dealings with third parties, and comprised part of the acts by which it carried on business. By proffering such advice and assistance, McCartney contravened clause 15.1(a). 283 In participating in discussions with Nicols in relation to Ingredients Plus' business at lunches on 24 February 2006 and at the Idomanato Restaurant in May 2006, McCartney also contravened clause 15.1(a). That breach did not cause Bronson & Jacobs' loss of Dow Corning's business. Clause 15.1(b): Enticement "Away from the Purchaser" 284 Clause 15.1(b) is unhappily drawn. It prohibits the enticement away "from the Purchaser" of any customer, supplier or employee of the Restricted Business. The Purchaser was Orica Investments. The customers, suppliers and employees of the Restricted Business were not customers, suppliers or employees of Orica Investments. The defendants made no submission that clause 15.1(b) was not engaged because any customers, suppliers or employees of Bronson & Jacobs were not enticed away from Orica Investments, but were enticed away from Bronson & Jacobs. Clause 15.1(b) assumes that to entice a customer, supplier or employee away from the Restricted Business would be to entice that person from Orica Investments. Clause 15.1(b)(ii): Enticement of Suppliers 285 For the reasons I have given, McCartney breached clause 15.1(b)(ii) by enticing Clos d'Aguzon away from Bronson & Jacobs. The plaintiffs have not established any other breach of this clause. Clause 15.1(b)(iii): Enticement of Employees 286 Enticement can be both direct and indirect. Its dictionary meaning is to draw on by exciting hope or desire, or to inveigle. I do not think McCartney enticed Graeme Love away from Bronson & Jacobs. Graeme Love had been made redundant. Whilst McCartney assisted Graeme Love to establish the new business, the reason that Graeme Love moved from Bronson & Jacobs was because he was retrenched. 287 Nor have the plaintiffs established that McCartney enticed Petros away from Bronson & Jacobs. But for Petros' evidence, I would have inferred that McCartney did entice Petros away from Bronson & Jacobs. I would have drawn that inference from McCartney's statements referred to in paragraphs [32], [33], [37], [38] and [39] of his intention to take the best people; from the arrangements of 2 December 2004 for McCartney, Graeme Love, Nguyen, Petros and Lynam to exchange private email addresses; from McCartney's having promised Ingredients Plus initial working capital; from the observations of Rennie that Graeme Love, McCartney, Petros, Nguyen and Lynam had frequent meetings; from Lynam's statements to Rennie referred to in paragraph [51]; and from the facts that Petros did leave Bronson & Jacobs and joined Ingredients Plus and subscribed for shares in it. However, in the light of Petros' evidence, which was not challenged, I do not draw that inference. I find that, having decided to leave, Petros was attracted to Ingredients Plus for reasons which included his understanding that McCartney was supporting that business. However, I accept Petros' evidence that he decided to leave Bronson & Jacobs despite McCartney's having attempted to persuade him to stay. The evidence that McCartney attempted to dissuade Petros from leaving Bronson & Jacobs' employment negates the inference of enticement which I would otherwise have drawn. 288 For the same reasons that, but for Petros' evidence, I would have inferred McCartney enticed Petros away from Bronson & Jacobs, I infer that McCartney enticed Nguyen away from Bronson & Jacobs. I can more readily draw that inference because the defendants did not read her affidavit. McCartney denied suggesting to any person that they should leave their employment with Bronson & Jacobs. However, I do not accept McCartney as a credible witness. 289 Lynam also said that she was dissatisfied with the changes made by Orica, and that receiving complaints from customers made her unhappy. She gave evidence of a doubled workload and of suffering stress. She deposed that McCartney did not suggest that she leave Bronson & Jacobs, but rather told her to "hold in there, things will get better." She said this was one of the reasons she did not leave earlier than she did. 290 She was not specifically cross-examined on this evidence. She did not say when McCartney gave her that advice. There is no inconsistency between her wanting to leave Bronson & Jacobs for the reasons she gave, and being enticed to do so by McCartney. Nor is it necessarily inconsistent with his enticing her away from Bronson & Jacobs that, at some earlier but unidentified time, he suggested that she stay because things were expected to get better. Although she deposed that McCartney never suggested she should leave Bronson & Jacobs, and there is no direct evidence of his doing so, her statements to Rennie show that she was a party to a plan, to which McCartney was also a party, that she leave Bronson & Jacobs, and that a material inducement to her to do so was that she knew that McCartney was to provide financial backing for the new venture. He must have made that known to her. I conclude that, notwithstanding McCartney's and Lynam's denials, McCartney did entice Lynam to leave her employment. 291 Accordingly, I conclude that McCartney breached clause 15.1(b)(iii) by enticing Nguyen and Lynam from their employment with Bronson & Jacobs. Clause 15.1(d): Disclosure of Confidential Information 292 In providing Nguyen with Crosthwaite's email address, McCartney breached clause 15.1(d). Equitable Relief for Breaches of Share Sale Agreement 293 There should be a declaration as to the breaches of clause 15.1 established by the plaintiffs. 294 Although the undertakings in clause 15.1 were expressed to be given to Orica Investments, Bronson & Jacobs is also a party to the Share Sale Agreement and is entitled to enforce the undertaking given to Orica Investments. Both Orica Investments and Bronson & Jacobs are entitled to an injunction to restrain further breaches of clause 15.1. Unless the parties are agreed as to the terms of such an injunction, I will hear further argument in relation to that question having regard to the breaches I have found and the conclusions to which I have come as to the proper construction of that clause. As I have found that the provision of funding to Ingredients Plus was not a breach of clause 15.1(a), the plaintiffs are not entitled to an order for repayment of the moneys provided by McCartney, or to an injunction against the making of further loans. Damages for Breaches of Share Sale Agreement 295 Orica Investments is entitled to nominal damages for McCartney's breach of clause 15.1. There is no evidence that it suffered damage as a result of McCartney's breach of that clause. No attempt was made to show that McCartney's breach of that clause would have had any material effect on the value of its shares. In any event, it was common ground that Bronson & Jacobs was entitled to a reference for the assessment of damages arising from the loss of business from its suppliers if the plaintiffs established that there was a breach of clause 15.1 which caused any such loss. 296 The defendants did not submit that because the undertaking in clause 15.1 was expressed to be given to Orica Investments, Bronson & Jacobs could not recover any damages it suffered as a result of McCartney's breach of that clause. The defendants were correct in taking this position. As Bronson & Jacobs was a party to the contract, there is no reason it should not recover the loss suffered by it from McCartney's breach of his undertaking to Orica Investments in clause 15.1. Given that Bronson & Jacobs is entitled to such damages, any loss suffered by Orica Investments would be wholly derivative of the loss suffered by Bronson & Jacobs and cannot be recovered separately. Accordingly, Orica Investments is entitled to no more than nominal damages. 297 I have found that McCartney's breach of clause 15.1 caused Bronson & Jacobs to lose the business of Clos d'Aguzon. The parties were agreed that there should be a reference either to a referee or to an Associate Judge to either inquire into and report on, or to certify, the amount of damages arising from Bronson & Jacobs' loss of that business. 298 I have found that Bronson & Jacobs' loss of the Dow Corning business was not in any sense caused by anything done by McCartney. The fact that McCartney's association with Ingredients Plus is a factor which led to Ingredients Plus, rather than some other person, acquiring Dow Corning's business, is irrelevant to the question of whether Bronson & Jacobs is entitled to damages for the loss of that business. 299 I have found that McCartney did not seek to entice Yang to transfer the Su-Heung distributorship. Su-Heung was motivated to transfer the distributorship for two reasons: that Bronson & Jacobs acted for a competitive supplier in New Zealand and that it had lost key management staff. The key person was Petros. I have not found that McCartney enticed Petros away from Bronson & Jacobs in breach of clause 15.1(b)(iii). But for McCartney's provision of working capital, and his expressed willingness to support Ingredients Plus, Ingredients Plus would not have been established. But that was not a breach of clause 15.1(a). The breaches I have found of clause 15.1(a) did not cause the loss of the Su-Heung distributorship. 300 For reasons which appear below, the initial funding and the enticement of employees was a breach of the Consultancy Agreement. However, Bronson & Jacobs is not a party to the Consultancy Agreement and cannot recover damages for its breach. In any event, the provision of the first $200,000 of working capital to Ingredients Plus was not causative of the loss of the Su-Heung distributorship. It could not even be said that, but for that breach, Ingredients Plus would not have been established. It would have been established by the provision of working capital after the termination of the Consultancy Agreement on 26 February 2005. McCartney's later funding of Ingredients Plus was not a breach of either agreement. Breach of Consultancy Agreement 301 The only parties to the Consultancy Agreement were McCartney and Orica Australia. The plaintiffs did not claim that Orica Australia suffered any loss as a result of breach of the Consultancy Agreement. It was not submitted that Bronson & Jacobs could recover damages for any loss suffered by it as a result of a breach by McCartney of the Consultancy Agreement. 302 The plaintiffs allege that McCartney breached the Consultancy Agreement by failing to co-operate with Orica Australia in order to give it the benefit of the Consultancy Agreement, and by failing to comply with his obligation of good faith implied under the Consultancy Agreement. 303 There was no issue that such terms are implied in the Consultancy Agreement. I accept that by directly or indirectly enticing employees of Bronson & Jacobs to leave their employment to take up employment with Ingredients Plus, and by providing working capital to Ingredients Plus for it to establish itself in business in competition with Bronson & Jacobs, McCartney was in fundamental breach of those terms. McCartney's duty was to provide assistance as requested in the integration of Bronson & Jacobs within the large Orica organisation and to help its development in Asia. It is too plain for explication that helping to establish a competitor was inimical to the performance in good faith of such a duty. Orica Australia is entitled to nominal damages for breach of the Consultancy Agreement. 304 Orica Australia was entitled to terminate the Consultancy Agreement and on doing so was discharged from further obligations under it. McCartney was not entitled to insist on further performance and is not entitled to any damages for loss of opportunity to obtain a bonus. 305 In any event, the term that Orica would pay McCartney a "bonus of up to 40% of base consulting fee, based partly on business performance and partly on achievement of personal objectives to be agreed with Graham Bird by July 31 2004" was too uncertain to be enforceable (Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 135-137 per Kirby P, 156 per McHugh JA). 306 There was no evidence that either Bird or McCartney sought to agree upon the criteria of "business performance" and "personal objectives" against which entitlement to a bonus would be measured. 307 Accordingly, on all of these grounds, McCartney's claim for damages for the loss of the opportunity to obtain a bonus fails. Claim for Breach of Fiduciary Duty 308 McCartney ceased to be a director and employee of Bronson & Jacobs on 31 May 2004. He was engaged by Orica Australia as a consultant to Bronson & Jacobs until 25 February 2005. There is no doubt that up to 31 May 2004, he owed fiduciary duties as a senior employee and director to Bronson & Jacobs. 309 Although statements were made by McCartney to Monahan, Graeme Love and Petros before 31 May 2004 of his intention to assist others to set up business in competition with Orica if Orica did not honour its representations as to how the takeover would be implemented, the plaintiffs did not submit that there had been any breaches of McCartney's obligations as a fiduciary prior to his ceasing to be an employee and director of Bronson & Jacobs. At that time, McCartney was hopeful that the transition under Orica's management would be handled successfully and appropriately. 310 The plaintiffs contended that McCartney remained a fiduciary of Bronson & Jacobs until 25 February 2005 by reason of his engagement as a consultant. He was engaged by Orica Australia to provide the "consultancy services" described in clause 1, namely: " Consulting services to Orica Chemnet in connection with the conduct of the Bronson & Jacobs Business proposed to be acquired by Orica, including: · Assistance with the integration of commercial operations immediately following the acquisition of the Bronson & Jacobs Business by Orica Chemnet, · Development of Bronson and Jacobs' business in all of its Asian operations, and · Longer-term integration of Orica's broader food and fine chemicals business into Bronson and Jacobs." 311 In the clause quoted above, "Orica Chemnet" was the business name of Orica Australia and "Orica" was Orica Australia. 312 The Consultancy Agreement assumed that a "Bill McCartney company" would be engaged as the "consultant". Instead, McCartney signed the Consultancy Agreement personally. It is common ground that he was engaged personally as a consultant to Orica Australia. Clause 3(c) provided that he was to provide the consultancy services quoted above in accordance with all instructions issued by Bird or any person nominated by the Orica board. 313 There is no standard relationship of consultant and recipient of consulting services about which it can be said that the former is a fiduciary of the latter. Whether Bronson & Jacobs and McCartney stood in the relationship of principal and fiduciary between 31 May 2004 and 25 February 2005 depends both on the terms of the Consultancy Agreement, and on the particular work McCartney was given to do pursuant to the Consultancy Agreement. 314 The fact that the parties decided to terminate the relationship of employer and employee, with all the reciprocal rights and obligations, including fiduciary obligations, which that relationship imports, is highly significant. Mr Higgs SC submitted that following the termination of McCartney's employment and his resignation from the office of director, McCartney's rights against and duties to the plaintiffs were wholly governed by contract, unless and until McCartney was given particular work to perform pursuant to the Consultancy Agreement which imposed a fiduciary obligation on him. I agree with that submission. 315 In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, Mason J said (at 96-97): "The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations (cf Phipps v Boardman [1967] 2 AC 46 at 127), viz, trustee and beneficary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions 'for', 'on behalf of' and 'in the interests of' signify that the fiduciary acts in a 'representative' character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal. ... That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all-important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction. " 316 If, after Orica's acquisition, Bird had given instructions to McCartney to deal with suppliers or customers, for example, by seeking to cement their continued loyalty to Bronson & Jacobs, and McCartney had then dealt with suppliers on behalf of Bronson & Jacobs and Bronson & Jacobs was vulnerable to his abusing his position, he would have owed fiduciary obligations to Bronson & Jacobs in respect of such dealings. However, that was not the position. There was no evidence of Orica's instructing him to do anything as consultant. He complained that he had nothing to do, and that he was sidelined. Mr Jackman SC, who appeared with Mr Stoljar for the plaintiffs, fairly acknowledged that whether or not a fiduciary relationship existed turned on the terms of the Consultancy Agreement rather than on any instructions McCartney was given, or any work he did, pursuant to the Consultancy Agreement. 317 As the relationship between the parties was not within an established class of relationships which gives rise to a fiduciary duty, such as the relationship between employer and employee, or principal and agent, it is by no means obvious that the relationship between the parties was anything other than a contractual one. McCartney was required to keep himself available to be able to perform such services falling within clause 1 of the Consultancy Agreement as he might be instructed to undertake. For him to seek to advance his own interests by taking a shareholding in a competitor, or to advance the interests of Ingredients Plus, was a repudiation of the contract which would have entitled Orica immediately to terminate it if it had known the facts. By so doing, McCartney disabled himself from future faithful performance of the contract. 318 It does not follow, however, that because as a consultant he owed a contractual duty to act faithfully towards Bronson & Jacobs, there was a fiduciary relationship between them, cognisable in equity and extending beyond their contractual relationship. Rather, Orica Australia and McCartney negotiated commercial agreements to regulate the restraints to which McCartney would be subject after the completion of the purchase of his shares. Of course, a fiduciary relationship can co-exist with a contractual relationship, however courts are generally reluctant to find that fiduciary duties exist where the relationship between the parties is of a purely commercial kind and regulated by contract (Hospital Products Ltd v United States Surgical Corporation Ltd at 70, 118-119, 147, 149). The relationship of consultant and principal was a relationship between McCartney and Orica Australia, not between McCartney and Bronson & Jacobs. Whilst the performance of tasks under the Consultancy Agreement for or on behalf of Bronson & Jacobs could have given rise to fiduciary duties owed to Bronson & Jacobs, particularly if in the performance of those tasks Bronson & Jacobs had been vulnerable to McCartney's acting in his own interest, his mere engagement as a consultant on the terms of the Consultancy Agreement did not. 319 The plaintiffs submitted that a fiduciary relationship existed between Bronson & Jacobs and McCartney after 31 May 2004 because he was in possession of its confidential information. The only such information which has been proved to have been in McCartney's possession (as distinct from Ingredients Plus' possession) was the contact details of suppliers or customers. Any fiduciary duty he owed arising from his possession of such information did not extend beyond the duty to respect the confidence. His possession of such information did not make his dealings with Ingredients Plus and his actions on behalf of Ingredients Plus a breach of fiduciary duty. Remedies Against McCartney 320 I conclude that the plaintiffs are entitled to relief against McCartney solely in respect of his breaches of contract and his misuse of confidential information relating to the contract details of a supplier he disclosed to Nguyen. They are entitled to declarations that McCartney breached clause 15.1 of the Share Sale Agreement, and the Consultancy Agreement, in the ways indicated in these reasons. Bronson & Jacobs and Orica Investments are entitled to an injunction to restrain continued breaches of the Share Sale Agreement. Bronson & Jacobs is entitled to an injunction to restrain any further misuse of confidential information. Orica Investments and Orica Australia are entitled to nominal damages. Bronson & Jacobs is entitled to an inquiry as to damages for the loss of the Clos d'Aguzon business. The plaintiffs are not entitled to equitable compensation, nor an account of profits, nor the imposition or declaration of a constructive trust. 321 Had I been of the view that McCartney owed fiduciary duties to Bronson & Jacobs arising from the Consultancy Agreement, it would not have followed that the plaintiffs would have been entitled to the relief they claimed, that is, that Ingredients Plus held its business and assets on constructive trust for Bronson & Jacobs. Assuming I accepted the plaintiffs' argument that Ingredients Plus provided knowing or dishonest assistance to any breach of such fiduciary duty, nonetheless, a remedy by way of constructive trust would not have been appropriate. There was very little evidence as to Ingredients Plus' current assets and business. However, it is clear that it has made sales to a very large number of customers of a wide range of products. Mulvena and Taylor of Dow Corning opined that by August 2006 it had obtained sales in the year to date of US$234,000,000 . 322 In contrast to Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488, and the view taken by the Court of Appeal in Hospital Products Ltd v United States Surgical Corporation [1983] 2 NSWLR 157, it could not have been said in this case that the whole of the business of Ingredients Plus represents the profit or gain made from any such breach of fiduciary duty (Hospital Products Ltd v United States Surgical Corporation per Mason J at 107, 110, 112, 115-116). Liability of Second to Fourth Defendants 323 The plaintiffs claim that each of Graeme Love, Thomas Love and Ingredients Plus is liable for damages in tort for having knowingly interfered in McCartney's contractual relations with Orica Investments and Bronson & Jacobs in the Share Sale Agreement, and his contractual relations with Orica Australia in the Consultancy Agreement. 324 The plaintiffs' claim against Ingredients Plus for knowingly participating in the breach of contract by McCartney is confined to a claim based on the knowledge and assistance or participation of Graeme Love and Thomas Love. 325 Graeme Love knew that McCartney had "signed a non-compete for five years". He said he did not know the terms of the "non-compete" but agreed it was obvious that McCartney had promised not to compete in the area of business in which Bronson & Jacobs was conducting itself (T408.49 - 409.2). 326 In his affidavit, Thomas Love deposed that "I have never seen nor read the terms and condition of either Bill's Consultancy Agreement or the Share Sale Agreement whereby Bill sold his shares to Orica. None of that is of any interest to me." In cross-examination, Thomas Love said he did not know any details about any restraint of trade and that he had no "specific knowledge" of a restraint of trade. He said: " I knew there was something - I didn't know what it was or what - I knew no details about any restraint of trade, other than I understood that there was some form of restraint of trade, I suppose. It's usual when you are a seller of a company ." 327 He said that he had assumed that McCartney had given a covenant to the Orica group of companies to the effect that he would not compete with the business which had been sold for a particular period of time (T365). 328 There was no evidence as to whether, in January and February 2005, Thomas Love knew that McCartney had entered into a consultancy agreement with Orica. If he did, I accept that he did not know the terms of that agreement. He was not cross-examined on his evidence in his affidavit that he had never seen those terms. 329 In Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473, the Court of Appeal approved of the judgment of Lindgren J (with whose judgment Lockhart and Tamberlin JJ agreed) in Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 concerning the requirements of knowledge or intention in the tort of interfering with contractual relations. Lindgren J said (at 43): " In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have 'sufficient knowledge of the contract' is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights. Both this intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the 'actual' or 'subjective' state of mind of the alleged tortfeasor. ...

Although an alleged tortfeasor must have 'a fairly good idea' that the contract benefits another in the relevant respect, knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights although the precise term breached is not known ... " (Citation of authority omitted.)

Recent English authority is to the same effect ( OBG Ltd & Ors v Allan & Ors [2007] 2 WLR 920 at [39]-[41] per Lord Hoffman, and [202] per Lord Nicholls of Birkenhead). 330 In Fightvision Pty Ltd v Onisforou, the Court of Appeal said (at 512, [171]): " The position may be stated, we think, as follows. The plaintiff must prove that the defendant intentionally procured the breach. The requirement that the defendant have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Ignorance of the existence of the contract or of its terms born of inadvertence or negligence is not enough. On the other hand, reckless indifference or wilful blindness to the truth may lead to a finding of the necessary intention. "

In OBG Ltd v Allan & Ors at [40]-[41], Lord Hoffman approved the statement of Lord Denning MR in Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 at 700-701 to that effect. 331 Moreover, although the tort is often described as a tort of inducing or procuring a breach of contract, it extends to participation in the breach: " ... if a third party, with knowledge of a contract between the contract-breaker and another, has dealings with the contract-breaker which the third party knows to be inconsistent with the contract, he has committed an actionable interference. " ( DC Thompson & Co Ltd v Deakin [1952] Ch 646 at 694 per Jenkins LJ). 332 The High Court approved this reasoning without further discussion in Zhu v Treasurer of NSW (2004) 218 CLR 530 (at 586 [157]) where it stated that "to continue to deal with TOC would have been tortious after the plaintiff obtained notice of the Licence Agreement" and cited DC Thomson & Co Ltd v Deakin. The above passage from DC Thomson & Co Ltd v Deakin also was approved by Lindgren J in Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (at 44), although his Honour was there dealing with a case of procurement or inducement of breach. Jessup J in World Technologies (Aust) Pty Ltd v Tempo (Aust) Pty Ltd [2007] FCA 114 treated this statement by Lindgren J as correct (at [107]). Jessup J considered the authorities relied upon by Jenkins LJ, and although his Honour expressed reservations about the strength of support to be gained from two of those authorities, thought that De Francesco v Barnum (1890) 63 LT 514 provided support for the proposition. It is clear that the tort extends to participation in the breach once the third party knows that the relevant act is inconsistent with the contract. 333 The claims for damages against the second to fourth defendants were in respect of the loss of the Clos d'Aguzon, Su-Heung and Dow Corning business. 334 I do not consider that Thomas Love is liable for damages in relation to the loss of business of any of those suppliers arising from McCartney's breach of contract. The only loss of business caused by McCartney's breach of contract was the loss of business of Clos d'Aguzon. There is no evidence that Thomas Love knew of or assisted in any way in McCartney's soliciting of Bontoux to terminate his distributorship with Bronson & Jacobs and to appoint Ingredients Plus as its distributor. There is no evidence that Thomas Love knew of or facilitated McCartney's enticement of Nguyen away from Bronson & Jacobs to take up employment with Ingredients Plus. He assisted McCartney to invest clandestinely in Ingredients Plus. However, that was not a breach of the Share Sale Agreement. The first advance was a breach by McCartney of the Consultancy Agreement. Although the question was not the subject of argument, I will assume that Bronson & Jacobs could recover damages in tort against Thomas Love for losses suffered by it if he knowingly interfered with McCartney's Consultancy Agreement intending to cause loss to Bronson & Jacobs, even though it cannot recover damages for such a breach against McCartney because it is not a party to the contract interfered with (OBG Ltd v Allan & Ors per Lord Hoffman at [47], [51] and [62]; see also Sanders v Snell (1998) 196 CLR 329 at 341-342; Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1989) 95 ALR 211). However, it has not been shown that Thomas Love had any such knowledge or intention. 335 The question then is whether Graeme Love, and through him Ingredients Plus, is liable in tort for knowing assistance and participation in McCartney's breach of the Share Sale Agreement or the Consultancy Agreement as the result of which Bronson & Jacobs lost the business of Clos d'Aguzon. 336 Notwithstanding his denials, I consider that Graeme Love well knew of McCartney's inducements to Bontoux to change distributorships. I infer that fact from the position of Graeme Love as the general manager or managing director of Ingredients Plus and from the high volume of telephone communications at the time of the transaction between Graeme Love and McCartney. I infer that he and McCartney discussed the transfer of the Clos d'Aguzon distributorship and he either encouraged or welcomed McCartney's efforts in inducing Bontoux to transfer the business. I can more readily draw the inference from the failure of both McCartney and Graeme Love to call Nguyen. The same is true of the inference that I draw that McCartney enticed Nguyen to transfer her employment to Ingredients Plus, and that Graeme Love knew that McCartney had done so. 337 I conclude that Graeme Love is liable in tort for knowingly interfering with McCartney's contractual relations with Bronson & Jacobs in respect of the Share Sale Agreement resulting in the loss of the Clos d'Aguzon distributorship. In doing so, Graeme Love was acting as a director of Ingredients Plus. His knowledge and conduct should be attributed to the company, which is also liable for those damages. 338 Bronson & Jacobs is entitled to damages in contract against McCartney and damages in tort against Graeme Love and Ingredients Plus for the loss of the Clos d'Aguzon distributorship. The damages in tort are not reduced by the value of its contractual remedy against McCartney. If it recovers those damages against McCartney, it cannot also recover against Graeme Love and Ingredients Plus because of the rule against double recovery (Fightvision Pty Ltd v Onisforou at 534 [276]). That will not affect the judgments to be entered. 339 There is no evidence of Ingredients Plus having used the pricing information Petros transferred to his computer at Ingredients Plus. Nonetheless, it is shown to have retained such information and to have misused other confidential information of Bronson & Jacobs. In light of the findings set out at [250]-[251], [255] and [292] that Ingredients Plus misused confidential information of Bronson & Jacobs, Bronson & Jacobs is entitled to an injunction to restrain any further misuse of its confidential information by Ingredients Plus. 340 If the parties are not agreed upon the appropriate course, I will hear argument as to whether the assessment of damages should be referred to an Associate Judge for inquiry and certification, or to a referee for inquiry and report. Orders 341 I direct that counsel for the plaintiffs bring in short minutes of order in accordance with these reasons. I will then hear the parties on costs.

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