(ii) Taking steps to set up a rival business while employed by VESA
173 (1) Summary of parties' arguments: VESA complains that, while he was still employed by VESA, Tom Jowett engaged in conduct which was in breach of the implied term of good faith and fidelity, his fiduciary duties and also clauses 21 and 29 of what VESA describes as the final second contract of employment. The conduct in question is said to be:
(a) on 11 August 2010, while he was still employed by VESA, he used VESA's Mac Book laptop to prepare a spreadsheet setting out the estimated expenses of setting up a rival business;
(b) on 10 August 2010, using VESA's email address to contact Mr Allsopp (then VESA's design consultant) stating that the business relationship they had developed during Tom Jowett's time with VESA could continue and informing Mr Allsopp that he was in the process of starting his own business in the eco tourism market;
(c) using tools provided to him by VESA (such as his VESA email address and VESA supplied computers), Tom Jowett forwarded highly confidential strategic documents concerning VESA to his father and brother for the purpose of using that material to set up a rival business to VESA;
(d) the material forwarded to his father and brother, together with other material, was also copied by Tom Jowett onto a computer USB stick when he copied his VESA email account after he resigned, thereby retaining VESA's material without authority for the purposes of establishing ROV and acting in breach of the implied term of good faith and fidelity and clause 29 of the asserted final second contract; and
(e) Tom Jowett's appropriation of the second stage hand logo for ROV not only breached the implied term of good faith and fidelity as well as his fiduciary duties but also, in breach of those same duties, he failed to disclose the existence of that hand logo to VESA thereby making it harder for VESA to take action against him for misappropriation.
174 Furthermore, VESA complains of other actions by Tom Jowett in the period leading up to September 2010 (i.e. the date which VESA claims is the termination date for the final second contract taking into account the requisite four weeks' period of notice), which is also said to be in breach of those same duties and terms. Those steps were:
(a) on 17 August 2010, directing his brother to register the domain name rovolunteers.com;
(b) about 17 August 2010, helping and encouraging his friend Mr Stone (whom he had employed on behalf of VESA on 13 July 2010), to send an email to VESA threatening to sell VESA's confidential information to the highest bidder if an invoice (which provided for 30 day terms and was received by VESA only on 12 August 2010) was not paid;
(c) on 18 August 2010, travelling to Africa to conduct the "dry run tour" with a view to setting up a rival business to VESA;
(d) on 26 August 2010, causing ROV to be incorporated, with himself as one of the directors;
(e) in early September 2010, recruiting for or promoting ROV programs in the United States, together with Mr Barros; and
(f) on 7 September 2010, causing ROV to obtain an ABN.
175 It is convenient to summarise the respondents' response to VESA's allegations by separate reference to the first and second contracts of employment. Dealing with the first contract of employment, the respondents broadly contend:
(a) the conduct complained of cannot be in breach of the first contract of employment because that contract was discharged by performance in November 2009 (or at the latest, in January 2010 when Tom Jowett received his final commission payments under that initial contract) and the "confidentiality clause" was not expressed to survive the discharge of the contract;
(b) VESA did not lead any evidence establishing that materials provided to him while he was engaged under that contract were not publicly available and were confidential;
(c) even if the confidentiality clause survived the discharge of the contract, VESA failed to establish that it supplied Tom Jowett with specifically identified material within the meaning of "VESA materials", that the material was confidential or that he had disclosed it. Moreover, in circumstances where there is no definition of "confidential information" in the first contract, the respondents say that VESA carries the onus of establishing that the identified material is confidential; and
(d) furthermore, some of the material the subject of VESA's complaint did not come into existence until after the first contract had been discharged by performance, such as the business plan created by Mr Constable-McDowell in February 2010.
176 As to the alleged breaches of the second contract of employment, the respondents' submissions may be summarised as follows:
(a) they repeat their primary contention that the second written contract of employment is that dated 6 April 2010, and not the Employment Contract emailed to Tom Jowett on 7 August 2010, which remained unsigned;
(b) the parties' subsequent conduct cannot be used to interpret a contract, with the consequence that the terms of the second contract are those that were agreed in April 2010 and cannot be interpreted by reference to the parties' subsequent conduct; and
(c) the terms of the second contract were very basic and were essentially those set out in the email dated 6 April 2010 from Mr Constable-McDowell to Tom Jowett (see [149] above).
177 In addition, the respondents make the following submissions concerning the general legal principles applicable to preparatory steps taken by an employee before leaving and setting up a rival business:
(a) there is no absolute bar, under either fiduciary or contractual principles, to an employee taking certain preparatory steps in establishing a rival business while remaining in the service of their existing employer, but there are limits (citing Labelmakers Group Pty Ltd v LL Force Pty Ltd [2012] FCA 512 at [111] per Tracey J); and
(b) the more senior the employee's position, the greater the restrictions on an employee taking such preparatory steps (citing Victoria University of Technology v Wilson (2004) 60 IPR 392).
178 The respondents emphasise that, despite Tom Jowett's title as "associate marketing director", he was a relatively junior employee in a small family business and was paid only $60,000 per year. Moreover, after announcing his resignation on 10 August 2010, the only step he took towards setting up ROV before finishing with VESA on 13 August 2010, was the preparation of a very basic spreadsheet setting out the possible expenses. They say that Tom Jowett did not make a final decision to proceed to establish a rival business until the weekend of 14-15 August 2010, with the implication that his actions leading up to that point were only tentative. Finally, they emphasise the fact that no complaint is made of Tom Jowett having sought to poach any of VESA's customers.
179 As to VESA's complaints of breach in respect of VESA documents which are non-confidential (i.e. the application forms, photos of VESA students on VESA programs, online FAQs, the acceptance notification, the questionnaire, the "what to bring" memorandum and the email to professors), the respondents say that the second contract of employment, as formed they say in April 2010, did not include any express or implied terms concerning the use of non-confidential documents. In any event, even if VESA's reliance on the Employment Contract as constituting the final second contract of employment is accepted, the definition of "Confidential Information" in clause 32(a) expressly excludes information which becomes generally available to the public without any wrongful act by the employee. The respondents say that all the relevant non-confidential VESA documents were documents which are published on VESA's own website and/or are provided by it to clients or potential clients, therefore falling within the exclusion in the definition in clause 32(a).
180 (2) Consideration: For reasons given above, in my view, the express clauses in the Employment Contract relied upon by VESA as constituting the second contract of employment are inapplicable because that document never had operative effect.
181 It is common ground, however, that Tom Jowett had an implied contractual obligation to serve VESA in good faith and with fidelity. I will now deal together with VESA's causes of action founded on contract and equitable obligations (including breach of fiduciary duty).
182 Many of the relevant general principles are helpfully set out by Tracey J in Labelmakers Group Pty Ltd at [105]-[117] which, although lengthy, should be set out in full (apart from [106] which is not relevant):
The scope of this duty was outlined by Palmer J in Digital Pulse Pty Ltd v Harris (2002) 166 FLR 421 at 424. His Honour there said:
"[20] An employee has a duty to act in the interests of the employer with good faith and fidelity. That duty is implied in every contract of employment if it is not otherwise imposed by an express term. In addition, the duty is imposed upon every employee by the law of fiduciaries, the relationship of employer and employee being recognised as a paradigmatic fiduciary relationship.
[21] The obligations imposed by the duty are not coterminous with the employee's normal working hours: they govern all the activities of the employee, whenever undertaken, which are within the sphere of the employer's business operations and which could materially affect the employer's business interests. Whether a particular activity could materially affect the employer's business interests is a question of fact and degree.
[22] The duty of loyalty requires that an employee not place himself or herself in a position in which the employee's own interest in a transaction within the sphere of the employer's business operations conflicts with the employee's duty to act solely in the employer's interest in relation to that transaction. A fortiori, an employee may not take for himself or herself an opportunity within the sphere of the employee's business operations without the employer's fully informed consent.
…
The relevant equitable principles are those expounded by the High Court in Chan v Zacharia (1984) 154 CLR 178 and Warman International Limited v Dwyer (1995) 182 CLR 544.
In Chan (at 199) Deane J (with whom Brennan and Dawson JJ agreed) said that:
Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any such benefit or gain is held by the fiduciary as constructive trustee …
This statement of principle was adopted and applied by the Court in Warman International. The Court there said (at 557-8) that:
… the authorities in Australia and England deny that the liability of a fiduciary to account depends upon detriment to the plaintiff or the dishonesty and lack of bona fides of the fiduciary. Gibbs J in Consul Development Pty Ltd v DPC Estates Pty Ltd stated:
Where the rule applies, the liability of the person in a fiduciary position does not depend on the fact that the person to whom the duty is owed has suffered injury or loss.
A fiduciary must account for a profit or benefit if it was obtained either (1) when there was a conflict or possible conflict between his fiduciary duty and his personal interest, or (2) by reason of his fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position. The stringent rule that the fiduciary cannot profit from his trust is said to have two purposes: (1) that the fiduciary must account for what has been acquired at the expense of the trust, and (2) to ensure that fiduciaries generally conduct themselves 'at a level higher than that trodden by the crowd'. The objectives which the rule seeks to achieve are to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage.
Thus, it is no defence that the plaintiff was unwilling, unlikely or unable to make the profits for which an account is taken or that the fiduciary acted honestly and reasonably. So, in Regal (Hastings) Ltd. v Gulliver, although the directors acted in good faith and in the interests of the company of which they were directors in taking up shares in a subsidiary which the company could not afford to take up, they were held accountable for the profit made on the sale of the shares. And, in Phipps v Boardman, the solicitor was held accountable for the profit he made, notwithstanding that he acted bona fide and in the interests of the trust and that the opportunity would not have been availed of but for his skill and knowledge.
Consistently with these principles a duty falls on a fiduciary not to place him or herself in a position of conflict. If he or she does so the duty is breached. As Besanko J (with whom Finkelstein and Jacobson JJ agreed) observed in Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1 at 22, "fiduciary duties are proscriptive and not prescriptive."
Fiduciary and contractual obligations do not provide an absolute bar to employees who may wish to make preparations for the establishment of a competitive business whilst remaining in the service of their existing employer. They do, however, limit what an employee may do in pursuing that objective. The weight of restrictions will fall more heavily the more senior the standing of the employee: see Victoria University of Technology v Wilson (2004) 60 IPR 392 at 438. Another relevant variable will be the extent to which the time and effort of the existing employee is directed to the establishment of a competitive business: WA Fork Truck Distributors Pty Ltd v Jones [2003] WASC 102 at [40].
Whilst it is permissible for some preparatory work to be undertaken outside normal business hours, fiduciary and contractual obligations can, and do, continue to bear on employees when they are not engaged in work for their employer. Such obligations cannot, routinely, be cast aside at the factory or office door. As Palmer J observed in Digital Pulse the "obligations imposed by the duty are not coterminous with the employee's normal working hours." The issue to be determined is whether particular activities, undertaken by the particular employees in relation to the establishment of a competitive business, could materially affect their employer's business interests. As his Honour said, the answer to this question involves matters of fact and degree.
One activity which will normally be found to be in conflict with an employee's contractual and fiduciary obligations is approaching clients of the employer and attempting to have them become customers of the proposed new business. As Lord Greene MR said in Hivac Limited v Park Royal Scientific Instruments Limited [1946] Ch 169 at 177 "[it] would be a curious result if … [an employee] could set himself during his spare time deliberately to injure the goodwill of his master's business by trying to get his customers to leave him." See also: Wessex Dairies Limited v Smith [1935] 2 KB 80 at 85; AMP Services Limited v Manning [2006] FCA 256 at [60]; Deeson Heavy Haulage Pty Ltd v Cox (2009) 82 IPR 521 at [101].
It matters not whether it is the employee or the prospective customer who initiates the discussion in which the employee seeks to obtain the customer's business for the new enterprise: see Sanders v Parry [1967] 2 All ER 803 at 808-809; Dinte v Hales [2009] QSC 63 at [24].
A conflict will also arise if the employee seeks to persuade fellow employees to resign their employment and accept positions in the new business: see Warman International at 556, 566. To act in this way is to breach an employee's duty "not to improperly use his position to cause detriment to his employer": see WA Fork Truck Distributors at [67].
If an employee who is taking preparatory steps with a view to setting up a competitive business fails to inform his or her employer about what he or she is doing and actively seeks to ensure that the employer does not become aware that the preparatory steps are being taken, it may reasonably be inferred that the employee is aware that what he or she is doing is antipathetic to the interests of the employer: see Able Tours v Mann (2009) 187 IR 1 at [185]-[186].
A breach of duty will also arise if the employee uses his or her employer's resources to assist in the establishment of a competitive business: Digital Pulse at 439 [127]-[128].
183 There is one qualification which I would make to the last statement of principle set out immediately above. In my view, whether or not the relevant obligations are breached because an employee uses his or her employer's resources to assist in the establishment of a competitive business is, like many other questions in this area, ultimately one of fact and degree. As the learned authors of Macken's Law of Employment (Law Book Co, 7th ed, 2011) state at [5.920]:
The decisions in this area are particularly "fact sensitive".
184 In Digital Pulse Pty Ltd v Harris (2002) 166 FLR 421 (one of the decisions cited by Tracey J in the extracts set out above), it was found that the relevant employees "had spent a great deal of time for which they were being paid by Digital in attending to the affairs of [the rival business they were establishing]" (at [127] per Palmer J). Their conduct involved using their employer's email and office facilities during business hours "to subvert" their employer's business. They had also by that time established rival business premises, with facsimile, telephone and email facilities and had prepared stationery, including standard contractual terms of engagement. Palmer J found in that case that all of their work and efforts in establishing a competitive business to Digital was completed before the relevant employees finished their employment with Digital.
185 Each case will necessarily turn on its own facts, but I consider that the relevant facts here are far removed from those which arose in either Digital Pulse or Labelmakers. In my view, the matters of particular significance here are as follows. The only evidence of Tom Jowett taking any steps while employed by VESA to set up a rival business to VESA's are him:
using his VESA-supplied laptop on 11 August 2010 to prepare a spreadsheet of estimated expenses; and
using his VESA-supplied email address on 10 August 2010 to email Mr Allsopp advising him of his resignation from VESA, telling him that he was currently in the process of starting his own business and indicating that, while he hoped Mr Allsopp would assist him in developing marking materials, conflict issues would arise.
186 I do not regard those two matters to be of such a nature or character as to give rise to a breach of the obligation of good faith and fidelity, whether those steps are viewed individually or collectively. In my opinion, they are relatively innocuous. I accept Tom Jowett's evidence that, at the time that these events occurred, he was giving some consideration to the possibility of setting up a rival business, but he was also considering various other options and he had not yet made a final decision to establish ROV. I might add that, even if he had made a firm decision at that time to set up a rival business, I am not convinced that these two steps alone would put him in breach of either the relevant contractual obligation or any fiduciary duty.
187 Nor do I accept VESA's contention that the many documents and the information regarding VESA's business which Tom Jowett forwarded to his father and/or to the income guard email address during the period 1 May 2010 up until he left VESA were steps taken by him clandestinely and with a view to using his employer's information and intellectual property to set up a rival business. In my view, that was not the purpose for which he forwarded the relevant material to his father. Rather, as noted above, I accept Tom Jowett's evidence that:
(a) he forwarded the material principally to obtain assistance and input from his father in carrying out his work for VESA; and
(b) he told Mr Constable-McDowell in mid-July 2010 that he was receiving that assistance and input from his father.
188 In my view, the forwarding of that material for that purpose was not in breach of Tom Jowett's contractual obligation of good faith and fidelity to VESA, nor any fiduciary duty. That conclusion is not inconsistent with the fact that, subsequently, Tom Jowett used some of the material to set up ROV. The relevant issue is his purpose in emailing the material at the time that it was sent and while he was still working for VESA.
189 VESA also argues that, even if the Court found that Tom Jowett told Mr Constable-McDowell about his father's assistance, any such finding should be confined to him telling Mr Constable-McDowell that his father had helped him with the flow chart, which was to be discussed during the relevant meeting. I reject that submission. It is inconsistent with the following evidence given by Tom Jowett, which I accept:
As he was looking at the flow chart? --- he was quite impressed. And at this point, I said that "my father helps me with these works because he has got so much experience in the area. He did years of marketing and was a solicitor, and so he helped me produce this". (Emphasis added).
190 In my view, it is plain from that evidence that Tom Jowett was referring not only to the particular flow chart, but to "works" generally.
191 It is appropriate to now deal with VESA's other complaints regarding conduct which it alleges was undertaken as part of setting up ROV, namely the matters relating to the USB stick and the second stage hand logo summarised in [173(d) and (e)] above.
192 As to the former matter, whether or not Tom Jowett's action in retaining VESA's materials put him in breach of his contractual or equitable obligations turns on his purpose. VESA alleges that his purpose in sending the materials to his father and in downloading his VESA email box to a USB stick without authority was to use the material in establishing ROV, which put him in breach of his implied term of good faith and fidelity. This argument must fail. I have found above that I do not accept that that was his purpose in forwarding the VESA materials by email to his father.
193 Nor do I accept that his purpose in copying over his VESA email account onto a USB stick is as alleged by VESA. In the course of his evidence in chief, Tom Jowett described the USB incident in the following terms:
So, really, what happened is when I left VESA I wasn't sure that I was going to start up Reach Out Volunteers or not. There were lots of things going on. But it was one of my ideas. So once-well, long story short, that I know if I did go down that path there was a high chance a litigation would occur (sic). So I copied those emails onto a USB. I took that USB with me, and then when I was in the States I realised that I didn't have a way of getting volunteer contact details. So I guess I must have - when I say "I guess" - I used VESAs application form. (Emphasis added).
194 I accept that evidence. It is inconsistent with VESA's assertion that Tom Jowett's purpose at the relevant time was to use the information on the USB in setting up ROV.
195 As to VESA's allegations concerning the second stage hand logo, it relies on the following alleged facts in claiming that Tom Jowett breached his contractual obligation of good faith and fidelity and his fiduciary duties to VESA:
the second stage hand logo was developed for VESA by Mr Allsopp with suggestions from Tom Jowett;
although Tom Jowett showed Mr Constable-McDowell eight first stage hand logos drawn by Mr Allsopp, he never showed either him or Ms Luciani the second stage hand logo;
emails were sent to and from Tom Jowett from "Ben" at the income guard email address and one of those emails dated 11 July 2010 is said to have attached an earlier version of the hand logo, which VESA claims Tom Jowett could not explain, nor could he explain the appearance of the word "key" in that email; and
Tom Jowett and his brother Ben appropriated VESA's second stage hand logo and asked Mr Allsopp in mid-August 2010 to "adapt" that logo for use by ROV.
196 In response to these allegations, the respondents' primary submissions may be summarised as follows:
there is no evidence that Tom Jowett disclosed the first or second stage hand logos to any of the other respondents;
the evidence establishes that Ben Jowett dealt directly with Mr Allsopp in August 2010 in creating a hand logo for ROV from "scratch". Mr Allsopp drew the hand image himself and then superimposed spirals using drawing tools available in a software package called "Adobe Illustrator". Mr Allsopp described the process of using Adobe Illustrator to create the ROV hand logo in the following terms:
Specifically, this was hand drawn, using an illustration package called Adobe Illustrator, so it has a number of different drawing tools that you can use, so that you can draw a - a freehand shape using the - using the mouse. Then you subsequently edit that shape. It's difficult to describe, but basically what it does, it constructs a number of points, and in between those points, there are straight lines and curves, and so you can draw a freehand shape, and then you can go back in, and - and use a - a pointer tool to edit those points, to - to - well, basically to refine your - your - your shape. And - and so that's how that was drawn, and then it has some other options in there, in - in terms of producing other shapes - circles, lines, patterns - as well, so those were obviously generated, and laid on top of the - top of the - the - the hand.
Mr Allsopp said that the first stage logo was a "comping" image which he had downloaded from the internet, with the consequence that it was not confidential to VESA;
in any event, even if the second stage hand logo was confidential to VESA, any use of that logo by Mr Allsopp as a basis for creating ROV's hand logo did not involve any breach by Tom Jowett of his duty to VESA; and
finally, there is no evidence that Mr Allsopp did in fact use the second stage hand logo as the basis for creating ROV's hand logo. Rather, the more likely explanation is that he used the publicly available "comping" image as the basis for the logo he ultimately created for ROV.
197 In my view, for the following reasons, VESA has failed to make good its claims relating to the second stage hand logo.
198 The evidence falls well short of what VESA alleges. For example, as noted above, it makes several claims in respect of an email dated 11 July 2010, which it said attached an earlier version of the hand logo. It identified the relevant document as exhibit 56. That reference is clearly wrong. Exhibit 56 is an email dated 11 July 2010 which attaches a copy of the document entitled "Mission Statement". That one page document does not contain any hand logo or, indeed, even any reference to such a logo.
199 A time consuming search of the tender bundle suggests that the document VESA meant to refer to is in fact exhibit 67, not exhibit 56. If that is so, it is equally wrong of VESA to say that Tom Jowett was unable to explain the email or what the word "key" meant. Tom Jowett's evidence was that he did not know who had sent the email, but merely because it contained the word "key" immediately above Ben Jowett's name did not mean that the email had come from Ben Jowett. He explained that such a signature block can automatically appear on some emails. When the Court asked whether he knew what the word "key" meant, he said that he could not give an exact answer but that it may well have been that he sent the email to himself and that he sometimes put in a short word, such as "test" or "kk". I accept that evidence.
200 In my view, there is nothing in the relevant email dated 11 July 2010 which advances VESA's claims and VESA's reliance upon it for this purpose is rejected.
201 Furthermore, I accept the respondents' submissions, as summarised above, regarding the absence of any evidence to the effect that Tom Jowett impermissibly disclosed any of VESA's hand logos. I also accept their submissions concerning Mr Allsopp's creation of the ROV hand logo without reliance upon any of VESA's hand logos. These matters also arise in that part of VESA's case concerning breach of confidence.
202 I also reject VESA's claims that Tom Jowett breached the implied term of good faith and fidelity and his fiduciary duties on the basis of VESA's allegation that he never disclosed the second stage hand logo to VESA. VESA further contends that the non-disclosure was deliberate because Tom Jowett wanted to keep the second stage hand logo secret from his employers so that he could use it in his own rival business.
203 The evidence regarding precisely which logos Tom Jowett showed to Mr Constable-McDowell is unclear. There is no doubt that Tom Jowett received the second stage hand logo from Roger Allsopp by email on 9 July 2010. It is also clear that he discussed the topic of VESA's logos with Mr Constable-McDowell at their meeting at the New Orleans Café on Friday, 16 July 2010 (quite apart from Tom Jowett's evidence on this matter, his email dated 19 July 2010 to both Mr Constable-McDowell and Ms Luciani makes specific reference to him having spoken with Mr Constable-McDowell "about our Logo on Friday"). The email Tom Jowett sent to both Mr Constable-McDowell and Ms Luciani on 19 July 2010 annexed eight proposed logos, none of which included the second stage hand logo. In his examination in chief, Tom Jowett was shown a copy of Mr Allsopp's email dated 9 July 2010 to him, which attached the second stage hand logo (exhibit 38). He was asked whether he remembered if he had shown Mr Constable-McDowell the email or the logos attached to it. Tom Jowett's response was as follows:
When I showed Tom McDowell the logos they had the proposed taglines beneath them, and VESA was written in different ways under each of the logos. Now, this has both of them, so I would assume that I showed him this logo.
204 In cross-examination Tom Jowett was again taken to exhibit 38 and asked various questions about it. The relevant evidence was as follows:
And you didn't show those second-stage logos to Tom and Shona? --- No, I don't think I did.
Well, if you look now---? --- I don't know.
--- back at tab 81(a), those two particular second stage logos don't appear in what you've sent Tom and Shona on 19 July? --- that I sent to Tom and Shona? Yes. They don't.
Is that because you liked those second stage logos so much you wanted to use them for your future business? --- No.
But there's no other reason is there, why you didn't send those logos to Tom and Shona? --- I would imagine there are.
None that you can think of? --- When I showed Tom the printouts, may be, he may have selected a few, because you can see I've only attached one, two, three, four under VESA logos, but the one that I printed out to him, there was something like eight logos. So he may not have liked it. I'm not sure.
205 It is evident that Tom Jowett did not have a clear recollection of precisely which hand logos he showed to Mr Constable-McDowell on 16 July 2010. His evidence in chief was to the effect that he assumed that he did show Mr Constable-McDowell the second stage hand logo. Then, in cross-examination, he said at first that he did not think that he had shown the second stage hand logo to Mr Constable-McDowell and Ms Luciani. That evidence was given in response to a question which dealt with "Tom and Shona" jointly and not severally. After saying that he did not think that he had shown the logo to "Tom and Shona", Tom Jowett then immediately added "I don't know", further indicating the uncertainty of his memory on this issue. When he was pressed further as to why he did not send the logo to "Tom and Shona", he said that, while he was not sure, one of the reasons why the second stage hand logo was not attached to his email dated 19 July 2010 (which was addressed to both Mr Constable-McDowell and Ms Luciani) was because Mr Constable-McDowell may not have liked it. This confirms that Tom Jowett believed that he had shown the second stage hand logo to Mr Constable-McDowell on 16 July 2010.
206 Mr Constable-McDowell was shown a copy of exhibit 38, which included the second stage hand logo. He was asked whether he had previously seen it. He said he had not, thereby implying that he had not been shown the second stage hand logo by Tom Jowett.
207 The issue is complicated even further by Tom Jowett's re-examination. Mr Gration asked Tom Jowett a series of questions about his meeting with Mr Constable-McDowell at the New Orleans Café on 16 July 2010. But the re-examination focused not on exhibit 38, but on exhibit 67 (which is an email dated 11 July 2010 from someone using the income guard email address to Tom Jowett and attached to it are eight logos, only one of which is a hand logo and it appears to be the first stage hand logo, not the second stage hand logo). Tom Jowett's evidence in re-examination on that document was to the effect that he showed that document to Mr Constable-McDowell and that they discussed it. Tom Jowett was not asked any questions in re-examination regarding exhibit 38.
208 The uncertainty of all that evidence is apparent. There is no doubt in my mind that Tom Jowett was doing his best to recall matters in respect of which he did not have a strong recollection. But his evidence was honestly given. If the issue ultimately turned on a choice between his evidence that he believed he did show Mr Constable-McDowell a copy of the second stage hand logo and Mr Constable-McDowell's evidence that he had not previously seen a copy of the second stage hand logo, I would prefer Tom Jowett's evidence. I am not satisfied that VESA has discharged its onus of establishing on the balance of probabilities that Tom Jowett did not disclose the second stage hand logo to Mr Constable-McDowell. In my view, the evidence suggests that he probably did, but a positive finding cannot be made one way or the other.
209 In any event, even if a contrary finding was made to the effect that Tom Jowett did not disclose the existence of the second stage hand logo to either Mr Constable-McDowell or Ms Luciani, I would not be prepared to find that the reason for such non-disclosure was that Tom Jowett wanted to keep the existence of that logo hidden from his employers so that he could use it in his own rival business. There is simply no evidence to support that serious allegation made by VESA. It was expressly denied by Tom Jowett when it was put to him. I accept his denial.
210 Accordingly, I reject VESA's claims based upon its contention that Tom Jowett never disclosed the second stage hand logo to VESA.
211 VESA also alleges that Tom Jowett breached the non-solicitation clause in what VESA describes as the "final second contract" (i.e. the Employment Contract). Reliance is placed on clause 35 of that document. VESA alleges that Tom Jowett approached and attempted to induce employees and contractors of VESA, including Mr Allsopp, to end their contractual relationships with VESA and to work with ROV.
212 Those allegations must be rejected having regard to my finding above that the provisions of that document never became legally effective.
213 Likewise, since the second contract of employment did not encompass the Employment Contract, VESA's allegations concerning Tom Jowett's dealings with his friend Mr Stone should also be rejected.
214 Nor, in my view, is there basis for VESA's claim that Tom Jowett was in breach of his fiduciary duty to VESA because of some aspects of his dealings with Mr Stone. In particular, I have difficulty in seeing how Tom Jowett's involvement in drafting an email dated 17 August 2010 for Mr Stone to send to VESA regarding work he had done for VESA at Tom Jowett's request could constitute such a breach. Tom Jowett engaged his friend, Mr Stone, in July 2010 to compile a marketing database for VESA relying on application forms submitted by potential VESA customers. Tom Jowett later became concerned that, given his friendship with Mr Stone, Mr Stone would not be paid once Tom Jowett left VESA. Accordingly, he drafted an invoice for him which was sent to VESA on 12 August 2010 (i.e. the day before Tom Jowett finished with VESA). He also drafted for him an email dated 17 August 2010 to VESA in the form of a letter of demand. That email from Mr Stone included the following final paragraph:
Please advise when I can expect payment. If payment is not received within 30 days of the date on the invoice the database will be sold to the highest bidder.
215 VESA alleges that Tom Jowett's involvement in drafting that paragraph constitutes a breach of his fiduciary duty. That submission must be rejected. There is no evidence that this email was drafted by Tom Jowett while he was employed by VESA. Indeed, all the evidence points to the email having been drafted by him after he left VESA on 13 August 2010. There is simply no factual foundation for the alleged fiduciary duty. The position might be different if the issue involved the post-employment use of confidential information acquired during the course of employment (see Breen v Williams (1996) 186 CLR 71).
216 VESA also makes various claims of breach of contractual or equitable obligations in respect of Tom Jowett's retention and/or use of various information or materials of VESA, which are said to be either confidential or "retained materials". It is convenient to deal with those matters in the next section dealing with confidentiality and retained materials.