Stefanovski v Digital Central Australia [2018] FCAFC 31 | Case summary

Federal Court of Australia (Full Court)|2018-03-09|Before: Mr P, Derrington JJ

The appeal be allowed in part.
Orders numbered 4, 9, 10, 11 and 15 of the orders made on 25 August 2017 be set aside.
Order number 1 of the orders made on 25 August 2017 be set aside and in lieu thereof it be ordered that: From the date of this Order until 31 March 2018, the first respondent must not (personally or through employees, agents or in any other way) use, or disclose to any third party, and must not cause or permit the third or fifth respondents or any other person to use or disclose to any third party, any of the following information: (a) the technique described in the Franchise Manual as to how successfully to apply (or remove) a vinyl print to a signboard; and (b) any information derived from the password-protected part of the website realestate.digitalcentral.com.au which is pricing information concerning customer product preferences or customer purchasing history.

Introduction 1 By these proceedings, a franchisor, Digital Central Australia (Assets) Pty Ltd (DCA), has sought to protect its interest in one of its franchise businesses located in the south western area of Sydney. It does so by attempting to enforce a restraint of trade clause in a franchise agreement, a good faith obligation imposed by statute, obligations not to act unconscionably, as well as certain equitable duties of confidence. The targets of DCA's action are a Mr Tome Stefanovski (Mr Stefanovski) and a Ms Kylie Clark (Ms Clark) as well as certain corporate entities associated with them. As appears from the following reasons, there is little doubt that Mr Stefanovski and Ms Clark have attempted to compete with DCA's south west Sydney franchise business. Mr Stefanovski is the director of TK Sign Installations Pty Ltd (TK Signs) which is the erstwhile franchisee to DCA in respect of that area. It also appears that he and Ms Clark (who is Mr Stefanovski's spouse) have deliberately sought to take advantage of knowledge and information they obtained from their involvement in the TK Signs franchise business. It is further apparent that by undertaking certain strategies they have sought to conceal their use of that information, including by displaying a lack of candour before the learned trial judge. This does them no credit at all. 2 Despite that, it does not automatically follow that DCA is entitled to wholly succeed in this matter and there are a number of impediments to it doing so. The most significant is that the Statement of Claim on which DCA relied at trial is severely inadequate in a number of important respects. It is badly structured, confusing and displays a lack of an appreciation of basic pleading obligations in relation to a number of causes of action. Most relevantly, it proceeded upon a mis-identification of the entity subject to the obligations in the franchise agreement. That error created numerous subsequent difficulties in relation to the relief legitimately available at the end of the trial. The learned trial judge was left in an extremely difficult position where it was apparent the conduct of some of the then respondents was far from honourable and their evidence was far from reliable, but the deficiencies in the pleading inhibited the relief which might legitimately have been granted. 3 His Honour was also severely hampered by a paucity of evidence in relation to a number of essential matters relevant to the case DCA ultimately advanced. No doubt this difficulty partly arose from the inadequate pleading which had the consequence that the trial was prepared and pursued on a basis which was ultimately false. A further consequence was that witnesses were not cross-examined on matters which were ultimately relevant to the issues the parties contested in the course of final submissions. Some of these matters were crucial to the outcome and involved serious allegations such that the rule in Browne v Dunn (1894) 6 R 67 was directly applicable. It is also apparent that the evidence adduced at trial was fairly general and, on both sides, insufficient attention was paid to establishing central points which are now relevant to the issues on appeal. 4 As appears from the orders to be made on this appeal, DCA must fail against a number of the appellants in various respects. There are two central reasons for this. First, there was a lack of attention paid by DCA to protecting its business interests and, particularly, its alleged confidential information. DCA did not seek to contractually bind to confidentiality covenants relevant persons associated with the operation of its south west Sydney franchise to protect the information provided in the course of the franchise agreement. The second reason is the identified inadequacies in the pleading. In retrospect, and as we have said, it can be seen that this placed the learned trial judge in a very difficult situation. Not only was the case sought to be agitated by DCA obscurely articulated, DCA found it necessary to seek to add an essential respondent at the end of the case but without any thought whatsoever as to the appropriate manner in which any consequential causes of action might be asserted. The effect of that was that DCA succeeded at first instance upon a number of causes of action that do not appear in the Statement of Claim. The appellants, not without some justification, assert that they were entitled to be, but were not, informed of the case they had to meet.

Background facts 5 The manner in which the litigation was conducted has generated much unneeded complexity. For that reason it is necessary to set out the background to the matter and the findings of the trial judge in some considerable detail. 6 DCA is the franchisor of a network of franchised businesses which operate throughout Australia. The nature of the franchise business is the offering for sale or hire and supply of high graphic quality signage to real estate agents. In particular, it is the provision of the service of creating graphically designed artwork which, when approved by the customer, is printed onto a vinyl sheet that is then affixed to signage to be erected on or in front of properties for sale. The graphic depictions on the sign generally include enlarged photographs of the subject property as well as the real estate agents name, logo and contact details. 7 As is usual in business arrangements of this nature, each franchisee granted by DCA had the exclusive right to operate its digital signage business within contractually described geographical franchise territory. The franchise the subject of these proceedings was referred to by DCA as its "Sydney South West franchise" (the SSW Franchise). 8 The franchisees were responsible for the marketing and selling of signs to the real estate agents within their franchise territory. Each had their own unique password which entitled them to log on to a website maintained by DCA (realestate.digitcalcentral.com.au). On receipt of an order from a customer the franchisee would forward it to DCA via the website and DCA was responsible for the graphic design work in respect of it. The finalisation of the graphic design work might take some time and, indeed, some "toing-and-froing" between the franchisee and the customer in relation to the determination of the final design. Once the design was agreed upon, it would be sent electronically to one of DCA's graphic printers which were geographically distributed such that all franchisees would have relatively easy access to them. The printers would print the final design on to large vinyl sheets which would be either collected by the franchisees or dispatched to them via courier. Once the printed vinyl sheet was received, the franchisee was responsible for affixing it to a sign. Signs came in a variety of sizes and shapes which would be selected by the real estate agent. The franchisee would then construct and erect the sign at the requested location. The franchisees were also responsible for the maintenance of the sign and its removal once it was no longer needed. 9 As the learned trial judge below identified, DCA employed a number of graphic designers in its head office who were skilled and able to produce sign designs to the customers' requirements. Moreover they had familiarity with the requirements of some of the larger real estate entities which, no doubt, permitted expedition in their work. 10 The processes developed by DCA had the consequence that it was able to produce and install signs within 24 hours of the final design being approved by the customer. In part this was a consequence of DCA having its large format digital printers conveniently located in Brisbane, Sydney and Melbourne. 11 An issue which assumed some importance at the trial was the technique of affixing the vinyl printed sheet to the sign. The learned trial judge described the vinyl sign as a very large sticker which, when received, had backing on its sticky side. There was, it appears, some technical difficulty in removing the backing from the sticky reverse side of the vinyl print and affixing it to the sign without damaging the vinyl or causing wrinkles or defects to appear in the finished product. His Honour found that one of DCA's directors, Mr Strickland, had developed over time a successful technique for achieving this. He identified that this technique was valuable in the business, as if the sign was defective it would be rendered unfit for installation and a new vinyl sheet would have to be printed. That would involve a significant cost and some delay. 12 His Honour also found that the ordering, design and production of sign boards for the real estate industry was a "niche market" within the overall printing industry market, but DCA was not the only entity that provided such service. There were a number of other market participants who also provided high graphic quality signage to the real estate industry. These entities were competitors of DCA and its franchisees.

The granting of the SSW Franchise by DCA to TK Signs 13 In June 2013, Mr Stefanovski and Ms Clark attended a franchising expo at Darling Harbour in Sydney. There, they encountered Mr Strickland of DCA which was exhibiting at the expo for the purposes of promoting and selling its franchises in New South Wales. At that time the SSW Franchise was available for sale. The evidence before the learned trial judge was that Mr Stefanovski and Ms Clark visited DCA's stand on two or three occasions and spoke with Mr Strickland and/or Mr Luke Hade, the latter also being a representative of DCA. Ultimately, Mr Stefanovski informed Mr Strickland that he wished to acquire and operate the SSW Franchise. The learned trial judge found that Mr Stefanovski informed Mr Strickland and Mr Hade that he intended to operate the business with his then life partner, Ms Clark. The issue of Ms Clark's proposed and actual involvement in the franchise assumed substantial importance at the trial. 14 It appears that as a result of the meeting at the franchising expo, a subsequent interview occurred between Mr Hade, Ms Clark and Mr Stefanovski on 24 June 2013. Subsequently, Mr Stefanovski and Ms Clark signed a document entitled "General Enquiry by Digital Central". In effect, that document was an expression of interest by which the potential franchisee might provide personal information to DCA for the purposes of allowing it to determine whether it would grant a franchise to such persons. It appears that Ms Clark and Mr Stefanovski provided sufficient information and DCA relied upon it for the purposes of offering them the SSW Franchise. The learned judge below thought it important that the expression of interest was made by both Mr Stefanovski and Ms Clark. It was identified in the expression of interest that Ms Clark, as Mr Stefanovski's spouse, would be active in the business and own a 50% interest of it. Whilst that may have been true in respect of the intent at the time of the completion of the "General Enquiry by Digital Central" form, that did not appear to translate to the subsequent franchise agreement. It is also relevant that, in the form, Mr Stefanovski indicated the franchisee entity would be a company in respect of which he and Ms Clark would have an interest. 15 The franchise agreement was found by the learned trial judge to have been executed on 15 July 2013. The commencement date for the agreement was 9 September 2013, although certain "pre-conditions" were required to be fulfilled. The agreement was executed by Mr Stefanovski as the franchisee. Unusually, the contract was prepared for execution with Mr Stefanovski's name inserted twice. He was specifically identified in the schedule as the franchisee and as the guarantor. He was also identified by the nomenclature of "key personnel". Although Ms Clark witnessed Mr Stefanovski's execution of the agreement there is nothing in the agreement which suggests she was bound by it or its terms. There was also nothing to suggest the parties intended she be bound by it. 16 In accordance with the pre-conditions in the franchise agreement, Mr Stefanovski completed a training program with DCA. This apparently required him to spend a number of days at DCA's printing house at Marrickville in Sydney to receive training by reference to the topics covered in a document identified as DCA's Manual (the Manual). That included techniques as to the manner of affixing vinyl print sheets on to signs and, in particular, on to curved signs. A not insignificant issue which arose in the proceedings was whether DCA provided Mr Stefanovski with a copy of the Manual. This is a topic to be discussed later although it is noted that his Honour found a copy of the Manual was provided to Mr Stefanovski whilst he was undertaking his training. 17 It appears that Ms Clark was also provided some training in relation to the operation of the franchise and, in particular, in relation to the use of the Xero accounting package, although that is a commercially available off-the-shelf package and not created by DCA. 18 On 17 September 2013, TK Signs was incorporated. Although the "T" and the "K" in the name of the company refer to the first names of Mr Stefanovski and Ms Clark respectively (Tome and Kylie), the evidence of the identity of the company's directors or shareholders was unclear. It certainly seems to be presumed that Mr Stefanovski was a director and shareholder. On the hearing of the appeal, it was not in contention that he was the only director. 19 On 12 November 2013, the Stefanovski Family Trust was created. It seems that TK Signs became the trustee of that trust. Mr Stefanovski and Ms Clark were the primary objects of the trust. Any company in respect of which at least one share was beneficially owned by Ms Clark or Mr Stefanovski also became a discretionary object of the trust. The third respondent at trial, ANT Printing Pty Ltd (ANT Printing), was one such company when it was formed. 20 The learned trial judge ultimately found that TK Signs operated the franchise and it did so as trustee of the Stefanovski Family Trust. That finding is not now disputed by either party. As the learned trial judge noted in his reasons, the "General Enquiry by Digital Central" form contemplated that the franchise would be operated by a company. The accounts of TK Signs indicated that it operated the company and, further, TK Signs ultimately entered into a contract to dispose of the SSW Franchise business including its goodwill to a company called HNH Corp Pty Ltd (HNH). 21 However, one difficulty in relation to the conclusion that TK Signs was the franchisee is that it was not until the end of the hearing of the trial that TK Signs was joined as a party to the proceedings. It is far from clear why that was so and it is a most unfortunate aspect of this case that at all times DCA has maintained a pleading that Mr Stefanovski was the franchisee pursuant to the franchise agreement. This has caused many difficulties in the resolution of the issues. 22 The learned trial judge made no finding as to the directorial control Ms Clark may have exercised with respect to the affairs of TK Signs. His Honour made certain findings that Ms Clark was involved in the operation of the business, but she was not identified as a "key person" in terms of the franchise agreement. He also found that Ms Clark sought and was provided with a password to permit her access to the password protected part of the DCA website. In relation to the absence of any contractual restrictions on Ms Clark his Honour found, at [40]: Nothing untoward attended the seeking and obtaining of the allocation of a password to her; it just seems to have escaped the attention of DCA that this made it desirable to include her as one bound by key person contractual obligations. That does not mean that other obligations did not, in the circumstances, fall on her. 23 The provision of a password gave Ms Clark access to the non-public area of DCA's website which contained commercially sensitive information. It included detailed client lists, which identified agency names and addresses, email addresses and mobile numbers of agents who were customers of DCA, the names of key persons in real estate agencies who were responsible for hire signs and which signs various entities preferred to use. The learned trial judge found this collation of information to be confidential and commercially sensitive.

An issue at the trial concerning the involvement of Ms Clark in the operation of the SSW Franchise from early 2015 24 The trial judge found that Ms Clark's involvement in the business of TK Signs was extensive and, indeed, that she was the person who communicated mostly with DCA in relation to franchising matters. In his second set of reasons, he found that Mr Stefanovski and Ms Clark were engaged in what was, essentially, a joint venture in the operation of TK Signs. However, it appears that during the course of 2015, Mr Stefanovski obtained independent employment with an entity referred to as Esprit Digital and his new work involved the repair and maintenance of 600 digital screens throughout 18 Westfield shopping centres in New South Wales. That was a fulltime position and it is not surprising his Honour also found Mr Stefanovski's interest in the franchise business suddenly declined from around September 2015. 25 It was around this time that TK Signs determined it wished to sell the SSW Franchise and, in August 2015, Ms Clark corresponded with DCA regarding that potential sale. It was a term of the franchise contract that a franchise business could only be sold with the agreement of the franchisor. 26 In September 2015, ANT Printing was incorporated and registered. Ms Clark was the sole director, secretary and shareholder of that company. At that time it commenced using the business name "Australian Real Estate Signs" (ARES). For the purposes of the promotion of its business it established a registered domain name and website. That website commenced in January 2016. 27 It is apparent that the substantial growth in franchise business experienced by TK Signs from the operation of the SSW Franchise in 2014 and 2015, began to fall away in 2016. No doubt this was due to the fact that Mr Stefanovski had taken up full time employment with Esprit Digital and Ms Clark had established and commenced to operate her own competing business. 28 The ANT Printing business was, and is quite clearly, a competitor to the SSW Franchise business. It provides the same services as TK Signs; specifically, the production and installation of high quality graphic signs for the real estate industry. As with the franchise business, the ANT Printing business produces vinyl sheets with graphic design artwork on them. Those sheets are affixed to signs of the same type and nature as those used by DCA's business. Importantly, it provides those services in a geographical area which includes that of the SSW Franchise.

The pleaded case 29 The essence of DCA's case is that Ms Clark (and to an extent Mr Stefanovski) have established and operated the ANT Printing business using confidential information which belongs to DCA. It alleges, amongst other things, that Mr Stefanovski breached the obligations under the franchise agreement when doing so. The causes of action articulated in the pleading are somewhat difficult to discern, however, they appear to be as follows: (a) As against Mr Stefanovski, it is alleged he breached clause 18.3 of the franchise agreement by taking up employment repairing and maintaining digital screens in Westfield shopping centres. Clause 18.3 required the franchisee to devote all of its reasonable efforts towards the operation and development of the business and not to be engaged in any other business without the consent of the franchisor. It did not appear that this cause of action was persisted with as a consequence of DCA realising late in the trial that TK Signs was, in fact, its franchisee. (b) As against Mr Stefanovski and Ms Clark, it is claimed they breached the restrictive trade covenants in the franchise agreement by engaging in conduct for the purposes of establishing and operating the ARES business, which was similar to the SSW Franchise business. It appears these causes of action were also not pursued once it became clear neither of them were franchisees or bound by the terms of the franchise agreement. (c) It was also alleged Mr Stefanovski and Ms Clark engaged in misleading or deceptive conduct in trade and commerce in breach of s 18(1) of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL) by establishing ANT Printing and causing it to establish and operate the ARES business and by concealing that fact from DCA. Ultimately, DCA failed to establish any damage arose from this alleged misleading or deceptive conduct. (d) It is also alleged that Mr Stefanovski and Ms Clark induced customers of the SSW Franchise business to give their business to ANT Printing and that this was a breach of clauses 6.4 and 24.2(a) of the franchise agreement, being the restrictive trade covenants. Again, it does not appear these causes of action were pursued because neither Mr Stefanovski nor Ms Clark were bound by the terms of the franchise agreement. (e) By reason of the same conduct of seeking to divert the customers of TK Signs to ANT Printing, it was alleged that Mr Stefanovski and Ms Clark engaged in misleading or deceptive conduct. There is no pleading as to how the conduct is said to be misleading and this cause of action seems not to have been pursued. (f) Those same allegations (being the diversion of customers to ANT Printing) are relied upon to allege that Mr Stefanovski and Ms Clark engaged in unconscionable conduct. (g) It is further alleged that Mr Stefanovski and Ms Clark were "knowingly concerned" in breaches by ANT Printing of ss 18 and 22 of the ACL (see [59] of the pleading). At this point in the Statement of Claim no allegations of misleading or deceptive conduct had been alleged against ANT Printing. (h) It is alleged that Mr Stefanovski made misleading representations to Mr Henry Le of HNH Corp Pty Ltd. However, that allegation does not seem to lead to the enunciation of any relevant cause of action (see [61] of the Statement of Claim). (i) It is also alleged that Mr Stefanovski fraudulently represented to Mr Anderson that he and Ms Clark were separating and that he was moving to the Gold Coast (see [65]-[67] of the Statement of Claim). This was said to have been done to conceal the establishment of the new ARES business. It is further said that, by reason of that alleged fraudulent misrepresentation, DCA consented to the termination of the franchise agreement with TK Signs because Mr Stefanovski and Ms Clark did not advise DCA they had established ANT Printing and did not inform it of what they were doing to undermine the business of the SSW Franchise. It is said that if DCA had knowledge of the falsity of the representations it would have terminated the agreement and sought to enforce the restrictive trade covenants earlier than 11 November 2016. Ultimately, DCA failed to establish that any loss flowed from this pleaded cause of action. (j) As against ANT Printing, Mr Stefanovski and Ms Clark it is alleged that they, or each of them, had misused DCA's confidential information which had been imparted pursuant to the franchise agreement (including the know-how, trade secrets, list of approved products and customer information) which permitted ANT Printing to compete with DCA. It is also alleged that the confidential information was used to enable ANT Printing to develop an almost identical website to DCA's website. At [73] of the Statement of Claim it is alleged Mr Stefanovski's and Ms Clark's improper use of the confidential information was in breach of clause 13.6(a) of the franchise agreement, in breach of an implied term of the agreement or a breach by Mr Stefanovski of his obligation to keep the confidential information absolutely confidential. Again, these latter allegations were based on an erroneous assumption as to the identity of the franchisee. (k) A case is also put against ANT Printing, Mr Stefanovski and Ms Clark that the use of DCA's confidential information was a breach of the equitable duty of confidence owed to DCA. (l) A claim also exists to the effect that Ms Clark breached the restraint of trade covenants of the franchise agreement (see [77]-[80] of the Statement of Claim). It appears this was not pursued given that Ms Clark was not a party to the franchise agreement nor bound by its terms as a "key personnel". (m) A claim is further made against Mr Stefanovski to the effect that he breached the restraint of trade covenants in the franchise agreement because he became involved in the business operated by ANT Printing and he had "a financial interest" in that business (see [81]-[82] of the Statement of Claim). That claim also was founded upon a mistaken belief that he was the franchisee. (n) DCA claims that its losses arising from the breaches identified in the pleading was the amount of diminution in the royalty income which it received and would receive in the future from the SSW Franchise as a result of the competition or misuse of confidential information. 30 The trial in this matter occurred between 19 - 21 April and 11 May 2017. 31 On the first day of trial and after DCA's opening, Mr Afshar (for the appellants before this Court) raised an objection that the case, as opened, appeared to go beyond the pleaded case. In doing so, he reminded the trial judge that during an earlier case management hearing, and again on an interlocutory application, his Honour had indicated to the parties the case would be run and determined on the issues raised on the pleadings. His Honour noted the objection and indicated he was only going to try the case as pleaded and that the then respondents (now the appellants) were entitled to a trial as against a pleaded case. There was no suggestion on this appeal by either party that this pronouncement was expressly or impliedly departed from during the course of the hearing. 32 On the last day of the hearing, 11 May 2017, DCA sought to join TK Signs to the action. That was allowed over the appellants' objection. No new Statement of Claim was filed and no cause of action against TK Signs was pleaded. Additionally, no further causes of action against the appellants were pleaded to the effect that they were "knowingly concerned" in the wrongful conduct of TK Signs.

The decision of the learned trial judge 33 The decision of the learned trial judge was given in two separate judgments and the findings relevant to the ultimate orders are to be located in both of those reasons. 34 A first set of reasons was handed down on 30 June 2017, at which time his Honour gave leave to the parties to file further submissions as to the appropriate form of orders. An oral hearing then occurred on 1 August 2017, and his Honour delivered a second set of reasons and made final orders on 25 August 2017. 35 For present purposes it is important to note that in the first set of reasons (dated 30 June 2017), it was found that Mr Stefanovski was the franchisee or, at least, was bound by the terms and covenants in the SSW Franchise agreement as the franchisee along with TK Signs. That was upon the basis that he had executed the franchise agreement under his hand and by his name. However, in the second reasons (dated 25 August 2017), his Honour concluded that the SSW Franchise agreement had been entered into by Mr Stefanovski for and on behalf of TK Signs, which had ratified the agreement once incorporated. It followed that TK Signs, alone, was the franchisee under that agreement. His Honour also found (at [16] of the second set of reasons) that Mr Stefanovski was not bound by the terms of the SSW Franchise agreement. Although there does not appear to be any express finding that TK Signs breached the restrictive trade covenant in the SSW Franchise agreement (clause 24) or threatened to do so, the learned trial judge nevertheless granted injunctions restraining it from any future breach. This was justified on the basis that neither Mr Stefanovski nor Ms Clark "is without guile and the awarding of damages is emphatically not an adequate remedy". It is to be recalled that no cause of action was pleaded against TK Signs and no facts were pleaded which could be taken as an allegation it had breached the franchise agreement or more importantly that, unless restrained, it would do so in the future. 36 The learned trial judge found that Ms Clark was intimately involved in the operation of the SSW Franchise business from December 2013. His Honour accepted that she was involved in all aspects of its operation (apart from the production and installation of signs) including the soliciting of business, dealing with the franchisor and the carrying out of orders received. His Honour noted that Ms Clark was granted access to the password protected area of the DCA website (see [40] of the first set of reasons) and observed that DCA seemed to have inadvertently omitted to obtain an agreement to bind her as a "key person" in terms of the franchise agreement. That is an important finding as the pleaded case against Ms Clark, apart from the misleading or deceptive conduct claim and the unconscionability claim, rested upon the assertion that she was bound to the terms of the franchise agreement as a "key person". Clearly, she was not. 37 His Honour also found that from early 2015 Ms Clark ceased the full time work in which she had previously been engaged and became more heavily involved in the operation of the SSW Franchise business. She subsequently had many interactions with the personnel at DCA over a wide range of matters concerning the franchise. The learned trial judge rejected her evidence that she had relatively minimal involvement in the franchise business during this period. His Honour concluded (at [50]) that Ms Clark had an extensive and ever increasing role in the SSW Franchise business particularly in relation to liaison with DCA head office and real estate agent customers. 38 Whilst his Honour identified the substantial involvement of Ms Clark in the SSW Franchise business, there is no descriptive finding as to Ms Clark's actual role. She was not identified as a director or as an employee. In the course of the appeal it was acknowledged Ms Clark was not a director of TK Signs. That said, in the second set of reasons his Honour refers to Ms Clark as being a "joint venturer" with Mr Stefanovski and that they operated their joint venture through the medium of TK Signs. That, however, was not a pleaded allegation and it is not easy to understand how those facts might cause Ms Clark to be bound by the terms of the franchise agreement. If, indeed, there did exist a joint venture structure which utilised a corporate entity to engage in the franchise business, there is every reason to think that this would have insulated Ms Clark from the obligations under the franchise agreement. These are the very structures which prudent franchisors guard against by obtaining restraint of trade covenants from all persons connected with a franchised business. There was a noticeable failure to do that by DCA in this case. 39 The learned trial judge found that by August 2015, TK Signs had determined it wished to sell the SSW Franchise business. His Honour held this determination was made by Mr Stefanovski and Ms Clark ([54] of the first set of reasons). This suggests he concluded that, in some way, Ms Clark exercised directorial control of that company. His Honour also found Ms Clark had substantial involvement in facilitating the sale of the SSW Franchise business which included speaking to prospective purchasers and to the franchisor. 40 In around September 2015, as we have indicated at [24] above, Mr Stefanovski entered into an agreement with Esprit Digital for the repair and maintenance of digital screens through Westfield shopping centres in New South Wales. As a consequence, his interest in the affairs of the SSW Franchise began to wane. It was around this time that ANT Printing was registered and the ARES business commenced. His Honour found that as a consequence of these matters the revenue for the SSW Franchise business declined from early 2016. That was, as His Honour held, referable to the reduction in involvement by Ms Clark and the creation of the competing business. 41 In about April 2016, Mr Stefanovski informed Mr Anderson of DCA that he and Ms Clark were separating and that he would be relocating to the Gold Coast. The trial judge found that this statement was untrue and designed to disguise the real reason Mr Stefanovski and Ms Clark were ceasing to be involved in the SSW Franchise business as well as to conceal the creation of the new ARES business. This misrepresentation was the foundation of the misleading or deceptive conduct claim as pleaded by DCA. 42 The learned trial judge found that in May 2016 Mr Stefanovski, on behalf of TK Signs, requested Mr Anderson to change the DCA website portal pricing so that all SSW Franchise sign only prices were increased by 5%. He found that this was part of Mr Stefanovski's plan to damage the SSW Franchise business so that the ARES business could flourish. Somewhat curiously there was no evidence before the Court as to the prices respectively charged by TK Signs, ANT Printing and other competing businesses. 43 At [70] of his first set of reasons the learned trial judge also held that Mr Stefanovski misled Mr Le of HNH (which acquired the SSW Franchise from TK Signs) by failing to identify the ARES business as a competing business. Mr Stefanovski identified that the SSW Franchise business had two main competitors, Print Force and ABC but did not refer to the ARES business. His Honour also found that Mr Stefanovski did not mention the 5% price increase request he had put to DCA. In this latter respect it is worthy of observing that a number of paragraphs of the Statement of Claim are devoted to apparently pleading a claim of misleading or deceptive conduct which caused Mr Le to acquire the SSW Franchise, although the relevance of such allegations is impossible to ascertain. Mr Le is not a party to the proceedings. 44 The learned trial judge also held (at [74] of his first set of reasons) that Mr Stefanovski removed 100 reusable signs from the stock of TK Signs and transferred them to ANT Printing for use in the ARES business ([79]-[80]). This was, so he found, to advance the interests of ANT Printing. The consequence was that the number of signs which were available for use in the SSW Franchise business was commensurately reduced. That said, there does not appear to be any allegation these signs were misappropriated by any person. Mr Le or his company HNH agreed to acquire only 450 signs and, it seems, he received all of them. 45 The learned trial judge also found that when HNH took over the SSW Franchise business, there was a marked difference in the franchise's monthly sales when compared to the sales received by TK Signs. In relation to this he concluded that Mr Stefanovski and Ms Clark (at [82]): … were, and inferentially had been from the inception of ARES, engaged in a joint enterprise, deploying their respective talents and experience (his sign set up, placement and replacement; hers administration, sales and marketing, though Mr Stefanovski was not without ability in these areas), as well as knowledge gained during the operation of the DCA Sydney South West franchise by TK Sign Installations, to commercial advantage. Each was and is knowingly concerned in the operation by ANT Printing of the ARES business It was also held that Mr Stefanovski had a financial interest in the ARES business (see [83]-[87]) because he had been the recipient of money from that business. Additionally, he concluded that the ARES business offered identical products and services to those of a DCA franchise and that the ARES website had identical features and functionality to the DCA website (see [89]). 46 At [90] of his Honour's reasons he held that ANT Printing, by Ms Clark, had been doing its "level and successful best to entice customers away from DCA Sydney South West franchise which TK Sign Installations sold to HNH in August 2016… and to deliver them to its ARES business". He also found that Mr Stefanovski was involved in these endeavours and deployed his talents in the ARES business in the field and in the workshop. 47 As to the veracity of the restraint of trade clause, his Honour held that it imposed a valid, reasonable restraint on the franchisee preventing it from engaging in a competing business in the franchise area for a period of two years. He also found that the ARES business of ANT Printing was one which was within the scope of the restraint clause as it involved the retail sale of items "similar to" the products sold by DCA. His Honour concluded that it would not be contrary to public policy to restrain TK Signs and Mr Stefanovski, whom he regarded as somehow being a party to the franchise agreement, from being involved in the ARES business. 48 His Honour proceeded to calculate the damages which DCA had suffered as a result of the breach of the restraint of trade clause and the misuse of confidential information and which it would sustain if the breaches continued for the full two year period. It had been pleaded by DCA that the operation of the ARES business was a breach of the restraint clause by Ms Clark (whom it alleged was bound by the clause because she was a Key Person) and by Mr Stefanovski because he was involved in that business. By the conclusion of the trial this factual foundation has dissipated. The trial judge accepted the uncontested expert evidence that DCA's loss of royalty from its SSW Franchise occurring as a result of the operation of the competing ARES business for the two years from the date of the termination of the franchise agreement was $58,476. In effect, that figure represented the losses which were and would be sustained until the expiration of the restraint period by reason of the competing business which utilised the alleged confidential information. His Honour said at [108]: So the total royalty income stream loss is $58,476. This then becomes the quantum of contractual loss for which Mr Stefanovski would be liable (if he were found to be in breach of the Franchise Agreement), and for which Ms Clark and ANT Printing would be held liable (by way of equitable compensation), if she were found to have used (and used for the purposes of ANT Printing) information in breach of confidence. 49 There was no challenge to that determination of the quantum of the loss by any party to the appeal and, although it is unlikely a breach of a restraint of trade clause would render exactly the same quantum of damages as that caused by the misuse of confidential information, that appears to be the basis on which the parties were content to proceed both at trial and on appeal. 50 In relation to the information contained in the Manual, his Honour found that all of it was within the description of trade secrets which were of a proven commercial worth, as was the information in the password protected area of the DCA website. At [113] of the first set of reasons, his Honour held that both TK Signs and Mr Stefanovski were bound by the terms of the franchise agreement and the restraint of trade clause as well as the restriction on the use of confidential information. It was held that Mr Stefanovski had "a financial interest" in the ARES business in breach of the restraint of trade clause and that ANT Printing was a joint enterprise of Mr Stefanovski and Ms Clark and that Mr Stefanovski was employing the use of the confidential information in that new enterprise (at [104]). 51 In relation to Ms Clark, it was held that she was subject to a duty of confidentiality because the information in the Manual and in the password protected area of the website was passed to her in circumstances of confidence and that she would have known that it was attended with confidentiality obligations. It was also held that she had made free use of that information in the ARES business. This, his Honour accepted, gave her a headstart in the development of the ARES business. It was also found that the information had a useful life of, at least, two years. In the result his Honour concluded that the breach of the duty of confidence had been made out and that Ms Clark should be restrained for the two year period provided for in the franchise agreement. 52 In relation to DCA's submission that all of the then respondents were in breach of the ACL because they breached the duty of good faith owed by a franchisee to a franchisor, his Honour held that the subversion of the DCA business by those respondents constituted a breach of the obligation of good faith. He accepted that a contravention of the ACL in this respect was not pleaded. Nevertheless, he noted that the allegation had been raised in an earlier interlocutory application. By this he seemed to have accepted that it was a live issue in the subsequent trial. He then held (at [126]) that TK Signs was in breach of the ACL (and the Franchising Code of Conduct) and that Mr Stefanovski and Ms Clark were persons who were knowingly concerned in that breach. Necessarily, one of the difficulties in relation to this finding is that there was no pleaded case to this effect and nor was it put to either Mr Stefanovski or Ms Clark that they had the requisite knowledge to render them liable as persons who were knowingly concerned in that breach of the ACL. 53 His Honour also considered the claim founded upon alleged misleading or deceptive conduct of Mr Stefanovski wherein he informed DCA that he was separating from Ms Clark and moving to the Gold Coast. This was found to be misleading and intended to disguise the establishment of the ARES business by Ms Clark. The damage was alleged to have arisen out of the fact that, had the misleading statement not been made (or DCA was told of the new business), DCA would have taken action to prevent the ARES business from being started. His Honour accepted this argument and held that, inferentially, Ms Clark was aware of this and counselled or procured the telling of this untruth. That said, there was no allegation in the Statement of Claim to that effect and it was not put to Ms Clark in cross-examination. 54 His Honour also found that TK Signs had engaged in "unconscionable conduct" as a consequence of the same conduct which established the failure to act in good faith and that both Mr Stefanovski and Ms Clark were knowingly concerned in that breach of the ACL as well. Again, there was no pleading to this effect and it does not appear that allegations of the knowledge necessary to establish an allegation of being knowingly concerned in this breach was put to either Mr Stefanovski or Ms Clark. 55 In relation to the appropriate relief his Honour held in his first set of reasons that DCA was entitled to injunctive relief for a period of two years from the termination of the franchise agreement and for damages for breach of contract and equitable compensation for the breach of the obligation of confidentiality. However, he did notice what he referred to as a "disjunct" between the alleged breach of the ACL and the damages claimed. That was because there was no evidence as to the damage caused by the failure to inform DCA of the commencement of the ARES business which was the misleading conduct relied upon. 56 In his second set of reasons (handed down on 25 August 2017), His Honour identified that there was no basis on which to impose liability on Mr Stefanovski for breach of the franchise agreement and that only TK Signs was liable as the sole franchisee in that respect. He held that TK Signs was liable for the breach of the franchise agreement and assessed damages in the amount of $58,476 together with interest in the amount of $2,475. He further granted injunctions restraining TK Signs from disclosing information contained in the Manual or in the password protected section of the DCA website. He also restrained it from competing with the SSW Franchise business in any way. 57 As against Mr Stefanovski and Ms Clark, it appears that a pivotal finding of the learned trial judge in [21] of the second set of reasons was that: in substance though not in form he (Mr Stefanovski) and Ms Clark were engaged in an activity in the nature of a joint venture in the operation by TK Sign Installations of the SSW Franchise business (with each of them subverting that business to the benefit of the ARES business) and in the operation by ANT Printing of its ARES business. Those findings informed the remedies to which each is amenable under statute. His Honour held that they had engaged in unconscionable conduct and a breach of the duty of good faith in undermining the SSW business in favour of the ANT Printing business. It was observed that, in so far as those matters involved corporate conduct, Ms Clark and Mr Stefanovski were knowingly concerned in the conduct. Again, it should be kept steadily in mind that there was no pleading which might have suggested that "a joint venture" relationship existed between TK Signs, Mr Stefanovski and Ms Clark. 58 His Honour considered that the statutory remedies could be used to deny the then respondents the benefit of the statutory contraventions. That included restraining all of them, including TK Signs, for the length of the contractual restraint of two years from competing with DCA or using the confidential information. In addition, his Honour ordered that TK Signs, ANT Printing and Mr Stefanovski and Ms Clark pay damages to DCA in the sum of $58,476. Although his Honour identified that there was an issue surrounding the scope of any injunction, he did not seem to identify why it was that the injunction ought to restrain competition as opposed to the use of confidential material save to the extent he identified the behaviours and dispositions of Mr Stefanovski and Ms Clark. By this we understand his Honour to be saying that unless restrained in this way, the appellants would not respect the scope of a more limited injunction concerning confidential information. 59 His Honour made orders against Ms Clark to restrain her from disclosing the alleged confidential information and requiring her to deliver up all of that information. Ms Clark was also restrained from being involved in a business "involving the retail sale (in the SSW area) of items similar to the Approved Products" or similar to the franchise business.

Stays granted in relation to some of the relief 60 From 11 September 2017, some of the orders made by the trial judge were stayed pending the determination of the appeal. They were the order restraining Ms Clark from engaging in a competing business, a consequential order requiring her to advertise the fact that she had been restrained from engaging in a competing business and the order restraining ANT Printing from engaging in a competing business. The injunctions restraining the appellants from making use of the information which the trial judge found to be confidential remained in place.

The grounds of appeal 61 There are numerous grounds contained in the Notice of Appeal which are supported in the appellants' outline of argument, although not all were advanced with the same vigour at the hearing. Central to the appeal is the complaint that judgment was given against the appellants on a number of unpleaded causes of action. In particular, it was submitted that injunctions were granted against Mr Stefanovski, Ms Clark and ANT Printing on the basis that they were persons who were "knowingly concerned" in the conduct of TK Signs, when no breach of statute was alleged against that company and nor did there exist any allegations of the individuals being knowingly concerned in that breach.

The scope of the pleaded case 62 As the analysis of the judgment above reveals, much of the relief granted against Mr Stefanovski, Ms Clark and ANT Printing was derivative upon breaches by TK Signs of its franchise agreement and statutory obligations. The difficulty is that no such claims were pleaded against TK Signs and nor were any derivative claims pleaded against the other appellants. TK Signs was joined as a respondent to the action only at the end of the case and no application was made to amend the Statement of Claim to articulate the substance of any claim against it. Critically, the causes of action on which judgment was given were substantially different from the claims alleged in the Statement of Claim. 63 It is a fundamental characteristic of the adversarial system that trials are conducted on the basis of the issues the parties agitate in the pleadings and, as a general rule, relief is confined to that claimed or available on those pleadings (see Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653, [424]-[428]). Ordinarily, an applicant is only entitled to obtain judgment on the case advanced before the Court. That is an emanation of the underlying principles of natural justice accorded to all litigants before the Courts. As was said by the majority of the High Court in Water Board v Moustakas (1988) 180 CLR 491, "a trial is not at large but is of the issues joined by the parties". 64 It can be readily acknowledged that where, in the course of a trial, the parties abandon the confines of the pleaded case and litigate other issues, they cannot be heard later to complain that orders are made which have no foundation in the pleading so long as they are within the bounds of the litigated dispute (Gould & Birbeck & Bacon v The Mount Oxide Mines Ltd (in Liq) (1916) 22 CLR 490; Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279). The relevant principles were accurately identified by Keane JA in Holdway v Arcuri Lawyers (a firm) [2009] 2 Qd R 18, [60]-[61], in the following manner: [60] Discussion of the causation issue must commence with an appreciation of the purposes served by the system of pleadings in civil litigation, and the consequences of parties choosing to broaden the issues in dispute beyond the scope of the pleadings. In Gould v The Mount Oxide Mines Ltd (In Liq) & Ors, Isaacs and Rich JJ said: "Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest. There is abundant authority for this, even if the matter were required to rest on authority only. See, for instance, Nevill v Fine Art and General Insurance Co ((1897) AC, 68, at p 76); Browne v Dunn (6 R 67, at p 75), the relevant passage being quoted fully in Rowe v Australian United Steam Navigation Co (9 CLR, 1, at p 24). There are qualifications, no doubt, and each case must depend for the proper application of the principle upon its own facts. It has been laid down by the Privy Council that 'As a rule relief not founded on the pleadings should not be granted.' 'But in this case' (said their Lordships) 'the substantial matters which constitute the title of all the parties are touched, though obscurely, in the issues; they have been fully put in evidence, and they have formed the main subject of discussion and decision in all three Courts. The High Court are right in treating the case as not within the rule': Sri Mahant Govind Rao v Sita Ram Kesho (25 Ind App, 195, at p 207). Nocton v Lord Ashburton ((1914) AC, 932) is a decisive authority that even where fraud is charged and the charge fails, the plaintiff does not necessarily fail. He may still have a sufficient cause of action left. But in the present instance the defendants, whatever course might have been open to them at the hearing, unquestionably adopted that of fighting the claims as presented in argument upon the evidence as if the particular claims made had been specifically alleged, and as if there were no other evidence upon those claims which the defendants desired to adduce. There is no suggestion even now that other evidence would have been available; and it is perfectly obvious that any objection raised could have been instantly met by a formal amendment, and that no further evidence would have been offered. The case has been fully tried out, as far as the parties desired, on the three matters before us, and the only question is whether the judgment appealed from as to the challenged items should be affirmed, modified or reversed on the merits." [61] More recently, in Banque Commerciale SA v Akhil Holdings Ltd, the High Court reiterated that observance of the rules of pleading is intended to facilitate the fair determination of the real issues in dispute between the parties, and is not an end in itself. Their Honours said: "The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In liq) ((1916) 22 CLR 490, at p 517), per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, eg, Browne v Dunn ((1893) 6 R, at p 76); Mount Oxide Mines ((1916) 22 CLR, at pp 517 - 518). Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference …" 65 That is not to say that a judgment needs to be precisely within the scope of the "particulars" alleged in a pleading so long as judgment is given on the causes of action pleaded. A fair amount of tolerance can be justified so long as the circumstances are such that all parties to the action have had fair notice of what will be determined. Experience shows that it is not infrequently the case that the evidence adduced at trial diverges from the pleaded particulars to some degree. That is not unexpected given that pleadings are prepared well in advance of all of the relevant information becoming known. In this respect, in Water Board v Moustakas (1988) 180 CLR 491, 497, the majority of the High Court (Mason CJ, Wilson, Brennan and Dawson JJ) indicated that particulars are less confining than material facts. Their Honours said: In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of a duty of care is alleged, the particulars should mark out the area of dispute. The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings. Nevertheless, failure to amend will not necessarily preclude a verdict upon the facts as they have emerged: see Dare v Pulham (1982) 148 CLR 658; 44 ALR 117. In Leotta v Public Transport Commission (NSW) (1976) 50 ALJR 666 at 668; 9 ALR 437 at 446, a case having been submitted to the jury which was factually different from that alleged in the pleadings and particulars, Stephen, Mason and Jacobs JJ observed that the pleadings should have been amended in order to make the facts alleged and the particulars of negligence precisely conform to the evidence. The failure to apply for the amendment in that case was held not to be fatal. But in Maloney v Commissioner for Railways (NSW) (1978) 52 ALJR 292; 18 ALR 147 Jacobs J, with whom the other members of the court agreed, pointed out (ALJR at 294; ALR at 151-2) that the conclusion in Leotta was reached only upon the presupposition that the new issue or new way of particularising the existing issue had emerged at the trial and had been litigated. 66 It ought further to be acknowledged that experience also shows that, occasionally, little difficulty might arise where at, or shortly before, trial or even at the end of it, a party, which is effectively the alter ego of an existing party, is joined to litigation on the basis that it or the existing party alternatively had the rights or obligations which are the subject of dispute in the action. Such a joinder is unlikely to cause any prejudice and when it occurs the parties can assume that what had been alleged against the existing party in the pleadings and what was advanced during the hearing is taken to be alleged and advanced against the alter ego. In the present case, although the joinder of TK Signs was permitted over the objection of the appellants, it is not likely that in the circumstances of this case it would, of itself, have caused the company any prejudice. The breach of contract claims were fully defended by Mr Stefanovski as if he were the contracting party such that the substantive issues in that respect were fairly canvassed. It follows that to the extent to which the only question is whether, on the basis of the pleaded facts, Mr Stefanovski or TK Signs was liable to DCA, no sustainable complaint can be made of the latter's late joinder. To the extent that this issue is part of this appeal on the basis that the order was wrongly made, that ground cannot be sustained. 67 However, the essential concern of the appellants is not so much the joinder of TK Signs or, perhaps, the tacit assumption that it would be liable in the stead of Mr Stefanovski as the franchisee. Their real concern is that the substantive case agitated by DCA at the end of the trial was fundamentally different to that which was pleaded. This was seemingly discernible after the completion of DCA's opening. At that point the appellants' Counsel sought to object to any departure from the pleaded case and the learned trial judge indicated that the matter would be heard and determined according to the issues raised in the pleadings. There was no subsequent departure from that position by either DCA or the trial judge and DCA does not suggest otherwise. Despite that, DCA sought to join TK Signs after the close of the evidence and that joinder was allowed notwithstanding the appellants' objections. That joinder apparently gave some foundation to additional claims which had not been pleaded against the other appellants, in particular, that they were knowingly concerned in certain unpleaded conduct of TK Signs. In submissions at the end of the trial that conduct was identified as a subversion of the franchise agreement amounting to a breach of the franchisee's obligation of good faith. Ultimately, it was those unpleaded claims which founded judgment against those appellants. 68 In the course of his submissions, in this Court, Mr Crawford, for DCA, sought to justify the judgment based upon misleading or deceptive conduct or unconscionable conduct to the extent it was founded on allegations of a breach of the duty of good faith. First, he submitted that the appellants were given notice of reliance on the breach of that duty by reason of submissions made in the course of an application for an interlocutory injunction. Whilst it appears that a submission of that nature might have been formulated in that application, it did not find any place in the pleading on which DCA proceeded to trial. Its absence from the pleading tends to suggest that DCA no longer relied upon it and does not suggest it wished to use it as a foundation for its action at trial. In addition, it does not appear that the foundation of that early allegation of a breach of the duty of good faith was that ultimately relied upon by the trial judge which is identified at [25] of the second set of reasons: But the course of conduct found, at [125] of the principal judgment, to have been embarked upon between January 2016 and August 2016 had as its overall aim the facilitation of the progressive subversion of the franchise "joint venture" with DCA by a new business, the ARES business, operated by a company controlled by Ms Clark, ANT Printing, in which Mr Stefanovski had a financial interest. The establishment and operation of the new business were part of the overall conduct which I found both to be not in good faith as well as to be unconscionable, each contrary to statute. Insofar as this entailed corporate conduct, Mr Stefanovski and Ms Clark were each knowingly concerned in it. 69 Second, Mr Crawford submitted that Counsel for DCA cross-examined on the point during the course of the trial and therefore made it a live issue. However, the alleged cross-examination on that topic comes nowhere near to raising the question of a breach of the duty of good faith, let alone knowledge on the part of Ms Clark as to TK Sign's obligations of good faith and whether or not the conduct in which it was involved was in contravention of that obligation. Additionally, if the cross-examination referred to was intended to raise the issue of a breach of the duty of good faith by TK Signs or the appellants, it necessarily implies that DCA was improperly seeking to agitate a case which it was aware it had not raised in the pleadings and which it was not intending to reveal until the end of the trial. In fact, the reality is that the claim of a breach of the duty of good faith was never fairly put to the appellants nor was the suggestion of their involvement in it. The submissions made by DCA on appeal on this topic are an ex post facto attempt to support the judgment which is founded upon a case which was neither pleaded nor squarely put. 70 In this case, where much of the liability of the appellants is founded upon them being "knowingly concerned" in TK Signs' statutory contraventions, there are no pleaded allegations of the knowledge which is a necessary prerequisite to such a claim. It is well established that accessorial liability rests upon the intentional participation by a party in the contravention and such knowledge must be expressly pleaded against the party from whom relief is sought. The allegation that a person was "knowingly involved" in a contravention is a serious one and is akin to dishonesty. A party against whom such a claim is made is entitled to have the allegation clearly pleaded such that they might defend it. In Wyzenbeek v Australasian Marine Imports Pty Ltd [2017] FCA 1460 Derrington J referred to the relevant principles in the following discussion: [96] In relation to the second matter, there is substantial weight in the submissions of the respondents that the pleading in paragraph 56 does not plead a reasonable cause of action against Mr Gay based on him being "knowingly concerned" in the alleged breaches of the TPA and ACL. An essential requirement of any plea of this nature is that the person against whom the claim is made knew of the matters which make up the essential elements constituting the contravention in question. Such allegations are necessary to establish that the person intentionally participated in that contravention. Where accessorial liability is alleged in relation to misleading or deceptive conduct, the party alleging the same must assert that at least the respondent knew of the making of the representation, that it was made in trade or commerce and that it was misleading or deceptive (see Yorke v Lucas (1985) 158 CLR 661 at 667). In Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732 Markovic J identified the now well accepted positon which flows from Yorke v Lucas. Her Honour said: [163] It is necessary to show an intentional participation in and actual knowledge of the essential elements of the contravention. However, it is not necessary to show that the person appreciated that the conduct constituted a contravention. In Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48] a majority of the High Court confirmed that the trial judge had rightly held that it was necessary to find that the relevant individuals participated in, or assented to, the companies' contraventions with "actual knowledge of the essential elements constituting the contraventions" and that in order to "know the essential facts, and thus satisfy s 75B(1) of the Act and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute". [164] In Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 a Full Court of this Court held at [133] that for a person to be involved in a contravention pursuant to s 75B(1)(c) of the Trade Practices Act, the person must be an "intentional participant in the contravention, the necessary intent being based upon knowledge of the essential elements of the contravention" relying on Yorke v Lucas. The Court went on to say that while it was not necessary to establish that the individual respondents had "knowledge that there was such a contravention … of the Act, it is necessary to demonstrate that each individual respondent had knowledge of each of the essential elements of the contravention". … 71 It should be added that where a claim is pursued that a person was "knowingly concerned" in unconscionable conduct in contravention of a legislative prohibition of that activity, particular difficulties arise. The existence of unconscionable conduct is often divined from all of the circumstances of a particular case and, especially, from the relationship between the entities involved. For a person to be liable as being "knowingly concerned" in such it would have to be pleaded and proved that they were aware of, at least, all of those circumstances. In a trial where the claim of unconscionability is based upon a breach of a duty of good faith the applicant would have to put to the respondents that they were aware of the obligation of good faith and that the conduct on which they relied was in breach of that obligation. None of that occurred in this matter. 72 Here, there was no pleading that Mr Stefanovski, Ms Clark or ANT Printing were knowingly concerned in the conduct of TK Signs which amounted to a breach of its obligation of good faith towards DCA. The only relevant allegation is in [59] which refers to Mr Stefanovski and Ms Clark being knowingly concerned in ANT Printing's alleged conduct of establishing a competing business, or other conduct which was actually alleged to be conduct of the individuals and not of the company. In this respect it was a hopelessly confused pleading. That occurred, in part, because it was founded upon a mistaken view of the identity of the contracting party to the franchise agreement and the liability of the individuals arising out of it. For present purposes all that is relevant is that there was no pleading to the effect that a breach of the duty of good faith had occurred and that was a fact acknowledged by the learned trial judge (at [125] of the first set of reasons). 73 At the hearing of this appeal Mr Crawford for DCA readily acknowledged that the causes of action upon which the judgment was founded were not pleaded and that the pleading proceeded upon a false premise as to the identity of the franchisee. He submitted, however, that this did not matter because the thrust of the case was that Mr Stefanovski and Ms Clark operated together and in concert in order to disadvantage DCA (see in particular [62] of the submissions). In this respect DCA relied upon the observations of the Full Court in NRM Corp Pty Ltd v ACCC [2016] FCAFC 98 to the effect that if a party is given adequate notice of the case which has to be met by one means or another then it will not matter that findings are made and judgment is given on claims not within the pleading. However, reliance on that decision in the present circumstances is misplaced. 74 First, here it was made pellucidly clear by the trial judge to the parties and, in particular, to the then respondents that the case to be determined at trial was that identified in the Statement of Claim. The then respondents raised an objection shortly after the opening that DCA's case as identified went beyond the scope of the pleadings. They received an assurance from the trial judge that the case to be tried would be what appeared on the pleading. Neither DCA nor the trial judge thereafter alerted them to any change to that position. That being so they were entitled to tailor their evidence to the case as alleged and their Counsel was entitled to examine and cross-examine accordingly. The authorities at [63]-[65] above identify that, save in those cases where the parties have abandoned the pleaded claims and defences, the decision of the Court ought to be in accordance with the pleaded case. In this matter, the appellants were entitled to assume that they were only required to meet the pleaded case and the Court was required to determine that case. 75 The decision in Water Board v Moustakas provides some insurmountable hurdles for DCA in maintaining the whole of the judgment below. The appellants were entitled to know and to respond to the claims which were raised on the pleadings. They did not agree, either expressly or implicitly, to expand the scope of the dispute beyond those pleaded claims. Indeed, they took appropriate steps through their Counsel to confine the case to the pleaded dispute. It would appear that once the objection was raised, DCA took the forensic decision not to seek to amend its pleading yet agitate a different case at the end of the trial. The learned trial judge was led into error by DCA in giving judgment on causes of action which were not pleaded. 76 The second matter in relation to this topic is the lack of correspondence between the pleaded causes of action and those on which judgment was given. The Statement of Claim inadequately pleaded the gravamen of the DCA's case. It identified that Mr Stefanovski was the franchisee and proceeded upon that basis. Although the trial judge accepted in the first set of reasons that Mr Stefanovski was bound by the agreement, he corrected that view in the second set of reasons. The Statement of Claim also proceeded upon the basis that Ms Clark was a "Key Person" and bound by the agreement, but that too was incorrect. The misleading or deceptive conduct claim in [47] to [53] is almost unintelligible, although ultimately it seemed to rest on the failure of Mr Stefanovski and Ms Clark to inform DCA of the establishment of the ARES business contrary to its reasonable expectation that it would be so informed. That allegation was based upon both Mr Stefanovski and Ms Clark having obligations under the franchise agreement to the franchisor which they did not. A second limb to the misleading conduct claim appears to relate to Mr Stefanovski seeking and obtaining an increase in the price of the products sold by DCA through TK Signs although the pleading of that matter as misleading conduct is also impossible to follow. That conduct, along with other conduct which was apparently not established, was also relied upon in the pleading as amounting to unconscionable conduct by Mr Stefanovski and Ms Clark. Somewhat curiously, the conduct is also relied upon as conduct by which those persons aided, abetted, counselled or procured ANT Printing to engage in unconscionable conduct and to be a party to it. That, of course, has an element of the bizarre about it and not only because it was not alleged that ANT Printing owed duties to DCA. It seems that at the conclusion of the trial the unconscionable conduct was alleged to include the misleading conduct of TK Signs failing to inform DCA of the establishment of the new business. 77 The pleaded claim in relation to the accessorial liability of Mr Stefanovski and Ms Clark for the conduct of ANT Printing is contained in [59] of the pleading and is founded upon the establishment of the ARES business and the seeking of an increase in prices of the DCA products. This part of the pleading observes none of the requirements of a plea of this nature. In particular, there is an absence of any allegation of knowledge of the relevant matters by the individuals concerned. Other allegations are made about the misuse of confidential information and the making of representations relating to the intended activities of Mr Stefanovski. The Statement of Claim fails to make any valid allegation of causation, particularly in relation to the causes of action under the ACL. At trial it appears it was alleged that if the conduct was not engaged in, DCA would have become aware of the competing business and would have quickly caused it to be shut down. 78 In the result, a number of the causes of action on which judgment was given were substantially different to those that can be discerned in the pleaded case. The judgment concerning the breach of duty of good faith was founded upon the identification of a progressive subversion of the franchise agreement which was, apparently, colluded in by all of the then respondents and included the misuse of confidential information. All of these circumstances were said to amount to a breach of the good faith obligations under the franchise agreement by TK Signs and Mr Stefanovski (although no such claims were pleaded against them on that basis) which, derivatively, also amounted to breaches of the ACL. These claims were also not pleaded. Ms Clark's liability arose in this respect by reason of her (and Mr Stefanovski) being knowingly concerned in the contravention. The same general finding of an attempt to undermine the franchise agreement was said to found a cause of action of unconscionable conduct. 79 To a small degree the pleaded complaints were relevant to the causes of action on which judgment was given, however, for the most part judgment was given on claims and causes of action which were not pleaded, of which the then respondents did not have notice and to which they did not have an opportunity to respond. They were not, and not close to, the causes of action on which the parties had joined issue. 80 It follows that to the extent the judgment of the Court was founded upon unpleaded causes of action which depart substantially from those in the Statement of Claim it cannot stand. We observe that, even now, no attempt has been made to amend the Statement of Claim. 81 For these reasons the judgment against the appellants for unconscionable conduct (pursuant to s 21 of the ACL or in Equity) and breach of s 51ACB of the Competition and Consumer Act 2010 (Cth) (CCA) (arising by reason of the alleged breach of s 6 of the Franchising Code of Conduct) cannot be sustained. Neither can the judgments of accessorial liability against Ms Clark and Mr Stefanovski which is founded upon the same conduct. That necessarily means that the judgments for damages or injunctions founded upon these causes of action also cannot be sustained. 82 We observe that additional arguments were advanced that DCA was not entitled to pursue the appellants under s 21 of the ACL on the basis that that section was limited to unconscionable conduct by a supplier to a consumer. In the light of the above it is not necessary to consider the correctness of that submission.

The claims for breach of contract against TK Signs 83 As indicated above, in certain circumstances, the joinder of a new defendant at or after trial may be acceptable where that new party is the alter ego of an existing party and the allegations of wrongdoing have been fairly contested. That being so, no prejudice was necessarily encountered by the joinder of TK Signs after the evidence had been completed. However, the difficulty for DCA in this case is that the allegation concerning the breach of the franchise agreement in the Statement of Claim was that Mr Stefanovski, who was said to be the franchisee, had breached the restraint of trade covenants by having a financial interest in a competing business (see [81] of the Statement of Claim). There are no allegations of that nature against TK Signs although it seems that the learned trial judge determined that such breaches had occurred. Moreover, whilst there was evidence that Mr Stefanovski may have had an interest in or been involved in the ARES business there was no such evidence in relation to TK Signs. The judgment against it for breach of contract in that respect must be set aside.

The second ground - the scope of the injunction against Ms Clark and ANT Printing 84 An important part of the appeal concerned the width of the injunction granted against Ms Clark and ANT Printing and, in particular, that they be restrained from carrying on a competing business even if they are not using the alleged confidential information. As was submitted by Mr Couper QC for the appellants, DCA had no independent right to restrain Ms Clark and ANT Printing from competing with it or its franchisees. Whilst a contractual restraint might have prevented a franchisee from so competing, neither had agreed to be bound by that agreement. 85 The manner by which the trial judge reached his conclusion that the operation of the ARES business might be the subject of the injunction was through an expanded view of the conduct which was found to be unconscionable or misleading and deceptive. At [22] to [27] of the second reasons his Honour identified that the establishment and operation of the new ARES business was part of the overall conduct which was found to be not in good faith, unconscionable and contrary to statute. This was derived from the unpleaded allegation of collusion between the then respondents to undermine the DCA's franchise agreement and, to the extent to which it involved Mr Stefanovski and Ms Clark, they were regarded as having been knowingly concerned in that conduct. To the extent to which the injunctions have been granted upon the unpleaded causes of action, they should be set aside. 86 In addition, to the extent the conduct of Mr Stefanovski, Ms Clark or ANT Printing was within the scope of the pleaded actions on which DCA succeeded, it is difficult to justify the width of injunctions which restrain those entities from engaging in competition with DCA. Those injunctions mirror the contractual restraint of trade imposed upon TK Signs by the SSW Franchise agreement. They extend beyond a restraint on the use of confidential information and impose a prohibition on all of the appellants from engaging in any business involving the retail sale of items similar to those sold in the DCA franchise or in any similar business. Mr Couper QC submitted that there was no warrant for granting an injunction in those terms. As against TK Signs it was submitted that it had not threatened to breach the terms of the contractual restraint and, in relation to the other appellants, it was submitted that they were not bound by the contractual restraint. 87 To the extent the injunctions granted against Mr Stefanovski, Ms Clark and ANT Printing were based upon the unpleaded claims they cannot stand for the reasons which have been identified above. The remaining question is whether they might be sustained on any narrower basis. For the purposes of the consideration of this issue, it can be assumed that there did exist unconscionable conduct arising by the use of confidential material. 88 The foundation of the injunction so granted was, in effect, that the parties had engaged in a concerted process of undermining the SSW Franchise agreement and the relief "must deny the relevant actors the benefit of the statutory contraventions". This extended to preventing ANT Printing from operating a competing business. His Honour identified s 80 of the CCA and ss 232(2) and (5) of the ACL as the source of the Court's power to impose the injunctions (and related relief) granted against the then respondents. We do not agree that the power afforded by those sections is so wide. Those sections all have as their cornerstones the identification of conduct which is in contravention or threatened contravention of the Act. Pursuant to s 80 the power of the Court to grant an injunction is enlivened upon it being satisfied of the contravention or threatened contravention and, thereupon, it may make the injunction in terms which it considers appropriate. This Court has regularly identified that the prima facie wide scope of that section is, nevertheless, subject to three inherent limitations. They were identified by Yates J in Australian Competition and Consumer Commission v Sensaslim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484, [54] in the following terms: [54] In Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2)(2011) 195 FCR 1 ; [2011] FCA 352 (Yellow Page Marketing), Gordon J referred to the power under s 232(1) of the ACL as "broad" but nevertheless subject to three limitations. These limitations find expression in Merkel J's reasons for judgment in Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 ; [1997] FCA 871 at 203-204 (Z-Tek) with reference to s 80 of the TPA. First, the power is confined by reference to the scope and purpose of the TPA. In Z-Tek Merkel J said, and in Yellow Page Marketing Gordon J repeated, that the relief should be designed to prevent a repetition of the conduct for which the relief is sought. Secondly, there must be a sufficient nexus or relationship between the contravention and the injunction granted. Thirdly, there is a constitutional limitation which requires the injunction to be related to the case or controversy the subject of the proceeding. 89 Confirmation of the first of the limitations can be found in s 232 which largely replicates s 80 and which also focuses upon the existence of the contravention of the legislation as the foundation for the granting of the injunction. 90 On the facts of this matter the carrying on of a competing business by Mr Stefanovski, Ms Clark and ANT Printing did not, of itself, involve any contravention of the ACL. The learned trial judge appears to have determined that the establishing of the ARES business was part of a strategy to establish a competing business and that strategy was pursued by TK Signs together with Mr Stefanovski, Ms Clark and ANT Printing. It was found by his Honour that TK Signs, as the franchisee, was bound by the obligation of good faith and that breach of the good faith obligation in the Franchisee Code of Conduct constituted a contravention of the ACL. The other respondents at trial were found to be knowingly concerned in that contravention. By that path, albeit one which was not pleaded or even hinted at the pleadings, his Honour held that the carrying on the ARES business was a contravention of the ACL. However, that contravention only occurred because TK Signs was said to be involved in allowing the competing business to be established. Unfortunately, there did not appear to be any evidence that it was involved in or benefited from it. 91 One might pause to acknowledge that if such a cause of action had been pleaded, DCA would have faced significant difficulties in pleading the attribution of knowledge and conduct of Ms Clark as the director of ANT Printing in a way which established that it was knowingly concerned in the conduct of TK Signs which was in breach of its duty of good faith. Nevertheless, it is patently clear that, in the circumstances of the present case, DCA would not have been in a position to restrain Mr Stefanovski, Ms Clark and ANT Printing from establishing a competing business. It could have restrained TK Signs from engaging in conduct which was in breach of its franchise agreement and obligations as franchisee by assisting with the establishment of the new business on the basis that they were the actions which resulted in the contravention of the ACL. That being so, the prohibition on it being involved in the new ARES business would have been sufficient to negate any breach or threatened breach of the ACL. 92 In that respect any real advantage derived by ANT Printing from any breach by TK Signs was the use of confidential information. The omission to advise DCA that Ms Clark was establishing a new business would not, on the facts, have disadvantaged DCA save to the extent to which it might have prevented the use of confidential information. Even if it were aware of Ms Clark's plans it could not have restrained her and ANT Printing from establishing that competing business. 93 It follows that the injunctions restraining the appellants (other than TK Signs) from engaging in a competing business were too wide. They did more than restrain conduct which might be in breach of the ACL or deny the appellants the benefit of the breach, even assuming that this latter purpose is valid. There was an insufficient nexus between the alleged contravention and the injunction which was granted such that the injunctions against Mr Stefanovski, Ms Clark and ANT Printing cannot stand. What, if any, injunctions might be granted in their place is a question which is considered below.

The injunctions against TK Signs 94 The learned trial judge granted injunctions against TK Signs to restrain it from using or disclosing any of the information which he had found was confidential and to restrain it from managing, operating or conducting any business similar to the franchised business. 95 In relation to the injunction purporting to restrain TK Signs from breaching the restraint of trade covenants in cl 24 of the franchise agreement, it is important to keep in mind that there was no allegation in the Statement of Claim to the effect that it was involved in the establishing of the ARES business or had any role in that business and the evidence before the Court did not suggest that it did. The only relevant evidence of there being some involvement was that Mr Stefanovski caused 100 signs which had been used in the franchise business to be transferred to ANT Printing. That, however, does not suggest that TK Signs was involved in any way in the management, conduct or operation of the ARES business or that it had a financial interest in that business. Whatever may be said of the actions of Mr Stefanovski on his own behalf, to the extent that they were in breach of the restraint of trade clause in the franchise agreement (assuming that he was bound by it), there was no foundation for attributing that conduct to TK Signs. That being so there was no breach of the restraint of trade clause by TK Signs and nothing which suggested that, unless restrained, it would do so in the future. The trial judge's order restraining TK Signs in this respect should be set aside. 96 On the other hand all of the information provided under the franchise agreement by DCA was supplied to TK Signs the latter was entitled to retain and use it in the course of the franchise business. It also had obligations under cl 13.6 of its agreement to maintain the confidentiality of that information. On the facts as found by the trial judge its confidentiality was not maintained and it has been used in the ARES business. It should be recognised that as TK Signs was contractually bound to protect the information it does not matter whether it had the quality of confidentiality necessary for Equity to protect it also. Although this allegation of breach of the franchise agreement was pleaded against Mr Stefanovski, TK Signs suffers no prejudice now that the allegation is made against it as the franchisee (even if only implicitly) and that is particularly so given that the conduct of Mr Stefanovski in this regard can be correctly attributed to it. It follows that, subject to what is said below, TK Signs can be properly held liable for the breach of cl 13.6 and is amenable to being restrained from any further breach.

The award of damages and the granting of injunctions 97 Another difficulty with the granting of the injunctions by the learned trial judge is that he had made an award of damages against the then respondents which represented the losses DCA had and would sustain because the ARES business utilised the alleged confidential information in its competing business and would continue to do so. In other words, the compensation was awarded on the assumption that the contraventions of the ACL arising from competition and the misuse of confidential information would continue for two years after the termination of the franchise agreement (being a period corresponding to the restraint of trade period) and the injunction was granted to restrain the conduct which was the basis of those breaches. As we have indicated above, the parties seemed to accept that the same damage, or amount of damage, flowed from the existence of the competing business and the misuse of confidential information. Although it is difficult to see how that might be, we are prepared to assume this to be so for the purpose of the appeal. 98 The inconsistency between the granting of the injunction and the award of damages (which effectively permitted DCA to recover for losses which would not be sustained) was appropriately recognised by Counsel for DCA. He acknowledged that the loss calculated represented the franchisor royalties to which DCA would have been entitled, but which it be deprived of if ANT Printing were to continue to use the confidential information in its competing business for the duration of the restraint period. He also acknowledged that if the injunctions were to be maintained it would necessarily follow that the amount of damages would have to be reduced to take into account that period during which ANT Printing was restrained from carrying on any business or using the confidential information. That concession would apply equally if the injunction granted were one which sought to restrain the use of the confidential information or was one to enforce the restraint of trade clause. 99 We consider the effect of DCA's concession later in these reasons when considering the relief which ought to be allowed on appeal.

Confidential information 100 A number of the grounds of appeal focused on the question of whether or not the information provided to Mr Stefanovski and Ms Clark was confidential. The information in question was that contained in a Manual allegedly provided to Mr Stefanovski and information located within the password-protected area of DCA's website. Two main propositions were advanced. First, that the information in question was not confidential and, second, that it had not been shown to have been provided to all of the appellants or wrongfully disclosed or used by them. 101 There did not appear to be any dispute as the authorities relevant to ascertaining whether information amounted to "confidential information" in Equity. Both parties referred to the decision in Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326, 335-6 [40]-[41] where Hodgson JA identified a number of criteria against which any determination of confidentiality ought proceed: [40] In Wright v Gasweld at NSWLR 334; IPR 489, Kirby P listed some factors that helped in determining whether information may be considered confidential. That list has been expanded by R Dean, The Law of Trade Secrets, 2nd ed, Lawbook Co, Sydney, 2002 at p 190 to include: 1. The extent to which the information is known outside the business. 2. The extent to which the trade secret was known by employees and others involved in the plaintiff's business. 3. The extent of measures taken to guard the secrecy of the information. 4. The value of the information to the plaintiffs and their competitors. 5. The amount of effort or money expended by the plaintiffs in developing the information. 6. The ease or difficulty with which the information could be properly acquired or duplicated by others. 7. Whether it was plainly made known to the employee that the material was by the employer as confidential. 8. The fact that the usages and practices of the industry support the assertions of confidentiality. 9. The fact that the employee has been permitted to share the information only by reason of his or her seniority or high responsibility. 10. That the owner believes these things to be true and that belief is reasonable. 11. The greater the extent to which the "confidential" material is habitually handled by an employee, the greater the obligation of the confidentiality imposed. 12. That the information can be readily identified. [41] In my opinion, the stronger these factors are in any particular case, the more likely it is that the particular information will be treated as a trade secret that the ex-employee is not entitled to use or divulge; but in my opinion, there is another factor or class of factors which is also extremely important to this question, namely the extent to which the particular information can be readily isolated from the employee's general know-how which the employee is entitled to use after the end of employment. 102 In his first set of reasons the learned trial judge determined that all of the information in the Manual fell within the description of "trade secrets". He considered that the information was properly described as "systems, processes and techniques" of a proven commercial worth. He also held that if it was disclosed to a competitor it would be liable to cause real or significant harm to DCA and that DCA had sought to limit its dissemination and did not encourage its publication. Mr Couper QC for the appellants submitted that the information in the Manual did not have any quality of uniqueness and was, essentially, merely recorded "know how" (see Saltman Engineering Co Ltd v Campbell Engineering Ltd (1948) 65 RPC 203, 215). He particularly referred to the instructions concerning the affixing of vinyl sheets to sign boards and to the fact that, as there are competitors who erect the same kind of signs, the method of affixing the sheets could not be confidential or have any commercial worth. He made similar submissions with respect to the instructions concerning the erection of signs and their setting in the ground. The effect of those submissions was that the information was of a mundane or technical nature such that it could not be classified as being confidential. 103 It does not seem to be seriously in contest that the information in question was imparted to Mr Stefanovski and Ms Clark in circumstances which imported an obligation of confidentiality (see Seager v Copydex Ltd [1967] 2 All ER 415; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414, 438). They were each aware of the attempts by DCA to maintain the confidentiality of all information provided during the course of the franchise relationship. The fact that limited access was given to the information in the password protected area of the website easily established that DCA sought to maintain its confidentiality. 104 Whilst there may be some force in the appellants' submissions in this regard, we do not see any error in the finding of the learned trial judge that the information collated in the Manual, taken as a whole and regarded as a method of carrying out physical aspects of the business, was confidential information. His Honour concluded that although parts of the information might separately be in the public domain, the material, taken as a collective whole, contained information of "systems, processes and techniques" of proven commercial worth (at [116]). Earlier his Honour had identified that Mr Strickland of DCA had developed a successful technique for ensuring the wrinkle free adhesion of vinyl sheets to signage boards. That technique was part of the Manual. He had expended brain power and ingenuity in developing this process. In the context of this discussion it is to be recalled that the standard to be met to establish the necessary confidentiality is necessarily low (Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd (2008) 78 IPR 262, 283 [89]). 105 Similar comments can be made with respect to much of the other material in the Manual to the extent to which outlines the business processes. 106 One of the difficulties for the appellants is that there was a paucity of evidence as to the extent to which, if at all, the information in the Manual was known outside the DCA business. On the evidence before the Court it appears that much of the information was "developed" by DCA or those who stood behind it, such as Mr Strickland, and that was especially so in relation to the method of affixing vinyl sheets to signage boards. Whilst it may be true that competitors used the same or a similar technique, no evidence of that was adduced. It may have been that those competitors had developed their own unique methods. If the appellants wished to advance a case that the various techniques and processes identified in the Manual were known and used by third parties, they might have called evidence to that effect. As it is they did not. His Honour correctly identified that DCA had taken steps to keep the material confidential and that was apparent by the terms of the franchise agreement. 107 The appellants also did not adequately confront the point that whilst it may be true that some of the information contained in the Manual may not have been confidential of itself, when taken as part of a business model on which to operate a business of providing printed vinyl signs for real estate agents, it had the quality of confidentiality as the learned trial judge determined. It was not suggested that the "business model" of the DCA franchises was publically known. On the evidence the information in the Manual was found to be of commercial worth to DCA and the appellants have not been able to shift the burden of showing that finding was in error. Indeed, there was sufficient evidence on which the trial judge was able to reach the conclusion which he did. 108 Similarly, the appellants have not succeeded in establishing that the learned trial judge erred in concluding that the information contained in the password protected area of DCA's website was also confidential. His Honour determined that this information was confidential and that its disclosure to a competitor would and did cause DCA real harm. The appellants sought to argue that information in DCA's client lists (which included contact details and preferences) was not confidential because the individual elements of that information might be obtained by an extensive search on the internet. However, it is well established that the ingenuity and novelty by which pieces of publicly available information are combined may well result in the totality or accumulation of the information being confidential (Fractionated Cane Technology Ltd v Ruiz-Avila [1988] 1 Qd R 51 at 63). Moreover, in this case the client lists (together with the details of contact personnel and preferences) is not merely a compilation of information is otherwise publicly available. True it is that information about the existence of various real estate agents and their contact details can be found elsewhere, however, what was not publicly available was the additional information that the persons and entities on the list were users of the type of products which DCA's franchisees provided. The real value in the information was not the existence of the agents but that they were all users of this type of advertising. The identification of their preferences increased the value of that information. In those circumstances, along with the steps taken by DCA to keep the information a secret, there was more than sufficient evidence to establish that the client information had the necessary quality of confidentiality. 109 The appellants also submitted that there was no evidence that the client information was actually within the password protected area of DCA's website. However, it would not appear to be in doubt that real estate agents' preferences were detailed in the password protected area and it seems that the learned trial judge inferred that this important information, along with the identity of the customers, was not made available to the general public. That does not seem to be an unreasonable inference in the circumstances. Again, the appellants have not shown any error in the determination of the learned trial judge in this respect and we are of the opinion that the available evidence supports his conclusion. 110 We do accept the submission of the appellants that the trial judge erred in determining all of the information on DCA's website was confidential. Mr Couper QC pointed to the identification and prices of the products sold by the DCA franchisees. It is not possible to ascertain how this type of information, which necessarily must be provided to customers and potential customers, might be said to be confidential. That conclusion, however, does not materially affect the outcome of the appeal. 111 The appellants also submitted that there was no evidence that the confidential information was either passed on to all of them or used by them. In relation to the Manual it was said that there was no evidence, save for a hearsay comment from Mr Strickland of DCA, that the Manual was provided to Mr Stefanovski. However, despite the fact that such evidence was not technically admissible, no objection was taken to it at the time at which it was given with the result that it stands as evidence of the facts to which it relates. It is true that Mr Stefanovski gave evidence that he did not receive the Manual and he was not cross-examined on that answer. However, it does not follow that the trial judge was required to accept his evidence in this respect. His Honour had observed that Mr Stefanovski was prone to dissembling when giving his evidence and that he had not acted honestly in his dealings with DCA. Indeed, his Honour had found that Mr Stefanovski had deliberately sought to mislead DCA about his future intentions when he sought its approval to dispose of the SSW Franchise. That finding was not seriously challenged on the appeal. In the circumstances of this case the trial judge was entitled to conclude that Mr Stefanovski was not a credible witness and, consequently, he was not bound to accept everything that he said. 112 For similar reasons it would appear the trial judge concluded that Mr Stefanovski had passed on the Manual, or the information contained in it, to Ms Clark for use in her business. The foundation of that conclusion was his Honour's finding that Mr Stefanovski and Ms Clark were engaged in a course of conduct which had as its aim the undermining of the SSW Franchise and subverting the restraint of trade clause in the franchise agreement. He also found that they had engaged in deception and deliberately concealed the operation of the ARES business. Although these findings could not support a cause of action against the then respondents - given it was not pleaded - it was a sufficient basis on which to conclude, if only by inference, that Mr Stefanovski had passed on the confidential information to Ms Clark. 113 A similar point can be made in relation to the appellants' submission that there was no evidence that the material was used in the operation of the ARES business. Given the existence of a concerted plan and strategy to undermine the SSW Franchise by diverting information and materials from it, the inference that the materials and information were utilised in the ARES business is almost irresistible. That is particularly so given that the ARES business operated substantially the same business as the SSW Franchise and in competition to it in the area covered by the SSW Franchise. Ms Clark had not engaged in that type of business prior to working in the SSW Franchise. There she had access to the confidential business information of DCA which included the contact details and preferences of DCA's regular customers and the manufacturing methodology for the production of signs. Given the inference which arose from the behaviour of Ms Clark and Mr Stefanovski, the evidential onus shifted to the appellants to counter the conclusions that Ms Clark and ANT Printing had utilised DCA's method of making the signs and had used DCA's information in the ARES business. They called no evidence as to the methodology which the ARES business used to fix the vinyl sheets to the signage boards. Although Ms Clark gave evidence that she had found the names and contact details of real estate agents in her area by searching the internet, generally she, like Mr Stefanovski, was found by the primary judge not to be a truthful witness and his Honour was entitled to disbelieve her. 114 There was also evidence on which the trial judge was entitled to rely to the effect that Mr Stefanovski was engaged in the operation of the ARES business to some extent. He was seen at the ARES business premises carrying signs which were used in the ARES business. It can be accepted that, when taken alone, it is somewhat minimal support for the proposition that he was engaged in the ARES business. Nevertheless, in the context of the other findings made by the trial judge, it was open to him to reach the conclusion he did: that Mr Stefanovski was applying the confidential information which he obtained from the SSW Franchise business. 115 Whilst the evidence on this topic was also somewhat sparse, once the trial judge had determined that the appellants had acted covertly to transfer information and materials from the SSW Franchise to the ARES business, the almost inescapable inference is that they would have used those materials and that information to advance that new business. It is difficult to see any error in this conclusion. 116 The appellants contest the learned trial judge's conclusion that Mr Stefanovski had "a financial interest" in the ANT Printing business. Again, this conclusion arose from an inference in all the circumstances of the matter. It was uncontroversial that payments were made from ANT Printing to Mr Stefanovski. They were, however, identified in the books of the company as being for unrelated matters and evidence was given of that fact. In these circumstances, the suggestion that the payments indicated that Mr Stefanovski had a financial interest in ANT Printing was tantamount to an assertion that the company's records were deliberately falsified. That is a most serious allegation which, if it is to be made out, ought to have been squarely put to the persons involved. Although it was alleged in the Statement of Claim that Mr Stefanovski was a partner in the ARES business, that does not give him or Ms Clark notice that it will be alleged against them that they were falsifying the accounts of ANT Printing so as to disguise Mr Stefanovski's involvement in it. For a submission of that nature to be made at the conclusion of a trial, fairness requires that it be put to the persons concerned. The rule in Browne v Dunn (1894) 6 R 67 is applicable in this situation and the finding to this extent ought not to have been made. 117 It should be mentioned that the allegation that Mr Stefanovski had a financial interest in the business of ANT Printing was pleaded, in [81] of the Statement of Claim, as being relevant to the operation of the restraint of trade clause in the franchise agreement. However, by the end of the hearing DCA had abandoned that allegation and, in its place, had asserted that TK Signs was the franchisee. There did not seem to be any suggestion that TK Signs had a financial interest in the ANT Printing business. It follows that, ultimately, the import of the finding in relation to Mr Stefanovski in this respect was somewhat diminished although the trial judge relied upon it for the purposes of concluding the existence of a joint enterprise between all of the then respondents. 118 The appellants have not been able to discharge the burden of establishing that the learned trial judge was in error in concluding that they or some of them had possession of DCA's confidential information and that they had misused it. Those conclusions were open on the evidence as it appeared at trial. As a result DCA was entitled to relief in respect of the loss or damage suffered by it as a result of the misuse of the confidential information. Loss or damage was assessed in the amount of $58,476 although the concessions made by DCA means that figure is to be reduced.

The result on appeal 119 In the light of the above it follows that the appellants are entitled to succeed, to some extent, on this appeal.

The award of damages and the injunction against using confidential information 120 The trial judge awarded DCA the amount of $58,476 as damages for the loss caused by the misuse of confidential information. That includes the past losses and the losses which would be sustained until the expiration of the restraint of trade period under the franchise agreement. That period was considered by his Honour as representing, at least, the useful life of the confidential information. As we have indicated above, that order was inconsistent with the granting of the injunctions restraining the appellants from using the alleged confidential information and from engaging in a competing business. 121 In his submissions Mr Crawford accepted that DCA was not entitled to damages for misuse of the confidential information and injunctions covering the same period of time. It had recovered an award of damages of $39,000 for the losses incurred up to 31 August 2017 and the sum of $19,000 for the period from 1 September 2017 to 31 March 2018. Mr Crawford identified that the amount representing the loss of royalty income in that second period was approximately $1,606 per month. As DCA has had the benefit of injunctive relief in relation to the use of confidential information for the period since 25 August 2017, it will be overcompensated if it retains the full award of damages. 122 In the course of submissions, it appears that DCA expressed a preference for the maintenance of the injunction against the use of confidential information rather than the award of (lesser) damages. In that scenario the damages must be reduced by $1,606 per month for the period from 1 September 2017 to 31 March 2018, or 7 x $1,606, which equals $11,242. 123 In the result there should be judgment for DCA in the amount of $47,234 against TK Signs for breach of cl 13.6 of the franchise agreement and against Mr Stefanovski and Ms Clark for misuse of confidential information. That being the extent of the appellants' liability for damages or compensation the orders numbered 5, 12, 16 and 21 ought be set aside and alternative orders reflecting the above should be made in lieu thereof. 124 Further, DCA is entitled to restrain the misuse of the confidential information excluding the information relating to DCA's products and pricing until 31 March 2018. The injunctions presently in place require a slight amendment concerning the scope of the confidential material, but otherwise secure DCA's entitlements in this regard.

The anti-competition injunctions 125 There is no warrant for keeping in place the wider anti-competition injunctions against any party. On the basis of the above, orders 4, 9, 10, 11 and 15 of the orders of 25 August 2017 must be set aside.

Interest and costs 126 The alteration to the award of damages necessitates an alteration to the amount of interest which ought to be awarded and the parties should be afforded an opportunity to make submissions in this regard. 127 Similarly, the parties ought to have the opportunity to make written submissions as to the costs of the trial and the costs of the appeal in light of the reasons of this Court. I certify that the preceding one hundred and twenty-seven (127) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices McKerracher, Robertson and Derrington.

SCHEDULE OF PARTIES QUD 426 of 2017 Appellants Fourth Appellant: TK SIGN INSTALLATIONS PTY LTD AS TRUSTEE OF THE STEFANOVSKI FAMILY TRUST (ACN 605 654 706)

Stefanovski v Digital Central Australia

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Judgment (20 paragraphs)

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Cases Cited (22)

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