Copyright Act 1968, s 31, s 36, s 115

Application to discharge interim injunction dismissed

Anderson v Effexseven & Anor (1999) 10 ANZ Insurance Cases 61-424

Brink's-Mat Ltd v Elcombe & Ors [1988] 3 All ER 188

Kone Elevators Pty Ltd v McNay & Anor, unreported; SCt of NSW; Library No 97001518; 10 March 1997

Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370

Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679

1 HASLUCK J: The applications before me concern claims arising out of a contract for the sale of shares and related employment agreements. It will be useful to provide an overview of the dispute between the parties before turning to the matters in issue.

2 The plaintiffs say that in or about December 1999 the first plaintiff, Willhart Ltd, as the holding company of the second plaintiff, Willhart Technologies Pty Ltd (formerly known as Rama Technologies Pty Ltd) was the proprietor of a computer based hardware device with embedded software known as "Mediator" and two software programmes known as "MIB Manage" and "MIB Tool". These programmes are said to be software capable of developing bi-directional gateways between management networks and telecommunications systems. In this context, the term "gateway" includes a computer system whereby incompatible networks or service applications can communicate with each other.

3 The first and second defendants, Mr Samimi and Mr Avis, were individuals with managerial and computer skills who had played a part in developing the relevant technology and software programmes. On the plaintiffs' case, they were instrumental in having the proprietary rights to the same vested in Willhart Technologies (formerly Rama) prior to Willhart acquiring the company.

4 The first and second defendants were then engaged to implement corporate and marketing strategies for Willhart Technologies. They committed themselves to confidentiality restrictions and various fiduciary duties. They were not at liberty to be associated with any competing corporate enterprises while their contracts of employment were in force, or for a period of one year thereafter. In exchange for their shares in Rama, they obtained options in respect of Willhart shares and a mixture of both free trading shares listed for public quotation on the Australian Stock Exchange and shares held in escrow.

5 The plaintiffs allege that in or about March 2000 the first and second defendants resolved to create a competing enterprise. A significant feature of their decision was the proposed marketing of a computer-based hardware device with embedded software known as "Genesys". The plaintiffs allege that with the assistance of the third defendant, Mr Seow, they proceeded to establish an internet website at the home address of Mr Samimi under the name of "Interadigm Pty Ltd" and commenced marketing Genesys in competition with Willhart Technologies.

6 It was against this background that the plaintiffs commenced legal proceedings and summarily dismissed the first and second defendants. The plaintiffs applied for and obtained an ex parte injunction subjecting the defendants to various restrictions. They also obtained an Anton Piller order, the effect of which was to allow the plaintiffs access to computer and other records held by the defendants. On the plaintiffs' case, these records substantiate or, after a full analysis, will substantiate the plaintiffs' case.

7 The defendants acknowledge that the plaintiffs are the proprietors of the Mediator product and the copyright in that product. There is a dispute as to which party is the proprietor and copyright owner of MIB Manage, MIB Tool and the Genesys product. An element of this dispute is whether Genesys is derived from or related to the MIB Manage and Mediator products.

8 In par 14 of a statement of claim filed shortly after the commencement of proceedings, the plaintiffs allege that the Genesys product and associated documentation is a substantial reproduction of Willhart Technologies copyright in Mediator and MIB Manage. They say that Genesys has been reproduced and is being employed without the consent or authorisation of the second plaintiff, Willhart Technologies.

9 The defendants have not yet filed a statement of defence. Nonetheless, it is apparent from the affidavits filed on their behalf, and from the way in which the matter was argued before me, that the defendants, Samimi and Avis, deny any infringement of copyright and deny that they are liable to the plaintiffs for breaches of their contracts of employment or for breaches of fiduciary obligations. They claim to be the owners of Genesys and related documentation.

10 I digress briefly to note that the third defendant, Mr Seow, is in a different position. The plaintiffs have alleged that the conduct of Mr Seow in joining with the first and second defendants to create an enterprise or joint venture to carry on business in competition with Willhart Technologies constituted a tortious interference in the contractual relations between Willhart Technologies and the other defendants. The third defendant denies liability and has applied for summary judgment in respect of the plaintiffs' claim.

11 There are three applications before the court. First, the plaintiffs have applied by chamber summons for a continuation of various restraining orders, such orders having been obtained originally upon an ex parte basis. I have before me in that respect a lengthy minute of proposed orders dated 5 September 2000 addressing the matters of concern to the plaintiff.

12 Paragraph 1 of the plaintiffs' minute seeks to restrain the defendants and each of them until trial or further order from parting with any copy of the computer applications known as Genesys, MIB Manage or Mediator or any document or data relating to the same. The defendants are also to be restrained from using any information relating to these systems for the purpose of selling or offering to supply information system services to any person, company or organisation.

13 Paragraph 2 of the plaintiffs' minute requires that the first and second defendants be restrained from using or modifying the confidential information of Willhart Technologies together with any possible or likely application of the same.

14 Paragraph 3 of the plaintiffs' minute requires that the first and second defendants be restrained from being engaged in any competitive enterprise or from interfering with the business of the plaintiff company by inducing customers or employees to leave the company.

15 The second application is the defendants' application for a discharge ab initio of the ex parte orders granted by Anderson J on 15 August 2000 allowing for the seizure of certain records and the imposition of restraining orders directed to the defendants.

16 The defendants say that there was a material non-disclosure by the plaintiffs when obtaining the orders granted by Anderson J. The application is supported by affidavits, sworn by each of the defendants, including a lengthy affidavit by Mr Samimi sworn 29 August 2000 in which he outlines the history of the various products. I will return to this affidavit shortly.

17 The defendants rely principally upon an alleged failure by the plaintiffs to reveal certain exchanges concerning the use and acquisition of the Genesys product by the plaintiffs. These exchanges arguably indicated that the first and second defendants were known to be the proprietors of the product in question.

18 The plaintiffs in their answering affidavits say that the failure to disclose, if any, is not sufficient to justify a setting aside of the orders previously obtained. They say further, and in the alternative, that even if sufficient grounds exist to set aside the orders previously obtained, fresh orders should be made in terms of the plaintiffs' minute of proposed orders.

19 The third application before me is made by the third defendant pursuant to O 16 r 1. An order is sought that the plaintiffs' action against the third defendant be dismissed and that judgment be entered for the third defendant. In essence, the third defendant submits that the claim pleaded against him is inadequate in not referring to any intent on his part to interfere with the contractual relationship between the plaintiffs and the first and second defendants. Further, and in any event, the evidentiary materials relied upon by the plaintiffs are said to be insufficient.

20 It will be apparent from the narrative to this point that there is now a considerable body of affidavit evidence before the court. The plaintiffs rely upon the affidavit of the Executive Chairman of Willhart, Mr King; two affidavits sworn by the company secretary, Mr Roberts, two affidavits sworn by the Chief Technical Officer of Willhart Technologies, Mr Lockey, an affidavit by the Operations Manager of the second plaintiff, Mr Smith, an affidavit by a software engineer employed by the plaintiffs, Mr Wallace, and three affidavits of Ms Hill, a solicitor employed by the plaintiffs' solicitors who was present when the plaintiffs took possession of various records pursuant to the Anton Piller order. Ms Hill played a part subsequently in collating and printing out various memorandums and e-mails relevant to the facts and matters in issue, and in engaging forensic experts to review the computer records.

21 I have already mentioned the affidavits sworn by each of the defendants concerning the substantive issues. The defendants also filed affidavits directed to their current prospects and the balance of convenience.

22 A consideration of the three applications before me, the plaintiffs' statement of claim, the orders previously made and the various evidentiary materials, reveals that there are various issues to be resolved.

23 A question arises as to whether the plaintiffs acquired title and copyright to the various products and computer systems mentioned in the statement of claim, that is to say, MIB Manage, MIB Tool, Mediator and Genesys, or otherwise have the exclusive licence or entitlement to control the use of the same. I will call this the "title issue".

24 If the plaintiffs do have title to the products, a question arises as to whether the products are subject to copyright and as to whether the first and second defendants are in breach of copyright in purporting to exercise control over the Genesys product. This involves a subsidiary issue as to whether Genesys is derived from MIB Manage and MIB Tool, or can be regarded as a substantial reproduction of the same ("the copyright issue").

25 A question arises as to whether the contracts of employment entered into by the first and second defendants are enforceable in circumstances where they are arguably in restraint of trade ("the restraint of trade issue").

26 If the contracts are enforceable, a question arises as to whether the first and second defendants are in breach of their respective contracts of employment with the second plaintiff in marketing Genesys and in setting up or being associated with a competing enterprise ("the breach of contract issue").

27 A related question arises as to whether the first and second defendants are in breach of fiduciary duties owed to the second plaintiff in making use of confidential information and marketing Genesys or otherwise in setting up, or being associated with a competing enterprise ("the fiduciary duties issue").

28 Finally, a question arises as to whether there has been any tortious interference with contractual relations by the third defendant as a consequence of which the plaintiff has suffered loss and damage ("the inducement issue").

29 There are also various evidentiary issues to be addressed, including the alleged failure to disclose and objections to certain passages in the affidavits relied upon by the plaintiffs.

30 In dealing with these various issues, I must keep steadily in mind that an applicant for interlocutory injunctive relief is required to satisfy the court that there is a serious issue to be tried in respect of the various claims advanced against the defendant. If there is a serious question to be tried, the court must consider whether the balance of convenience is for or against the grant of the relief sought.

31 The two necessary conditions are not independent of each other. Having satisfied itself that the plaintiff would not be adequately compensated by an award of damages, the court should consider whether the defendant would be adequately compensated by damages recoverable under the plaintiffs' undertaking as to damages. Where other factors are evenly balanced, the appropriate course is to preserve the status quo, but it is only when they are in virtual equipoise that it is a counsel of prudence to protect the status quo. American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396; Castlemaine Tooheys Ltd v State of South Australia [1986] HCA 58; (1986) 161 CLR 148.

32 When I turn to the evidentiary issues, I note that O 37 r 6 provides that an affidavit used for the purposes of interlocutory proceedings may contain statements of information or belief. An affidavit containing statements of information or belief must set out the sources or grounds of that information or belief.

33 I note also from Seaman's Civil Procedure at par 52.1.13 that it is the duty of a party asking ex parte for an order in the nature of an injunction to bring under the notice of the court all facts material to the determination of the right to an injunction, and it is no excuse for the party to say that he or she was not aware of their importance.

34 The learned author goes on to say at par 52.1.14 - par 52.1.15 that where there has been no deliberate lack of candour, or the matter which is not disclosed is not of a major character overall, and was omitted in circumstances in which extensive instructions have necessarily been taken in haste, the injunction will not necessarily be set aside. The fact that an injunction is dissolved for non-disclosure or misrepresentation does not prevent the court in a proper case from regranting the injunction forthwith on notice and on the merits. See also Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd (1990) 3 WAR 71 at 88.

35 With these issues in mind it is now necessary to look at the history of the matter in more detail. In that regard, I will draw principally upon the affidavit of Mr Samimi, the various documents exhibited thereto and documents exhibited to the affidavits relied upon by the plaintiffs. Such an approach makes it unnecessary for me to resolve the defendants' evidentiary objections at this moment.

36 Mr Samimi is a qualified computer systems analyst and telecommunications management specialist. Some years ago he and the second defendant, Mr Avis, set up Oscom International Pty Ltd to provide a consulting service to the telecommunications industry. In July 1994, Oscom International licensed to Oscom Communications Inc, a technology product created by Mr Avis, known as OSGATE 700 (Hardware) and MIB Tool (complementary software) for the United States market.

37 According to Mr Samimi, at that time the OSGATE 700 technology and MIB Tool were essentially concept products only, although there was a brief operations manual and a prototype hardware unit built. I note that by cl 1 of an agreement dated 28 September 1995 exhibited to Mr Samimi's affidavit it is said that Oscom International will complete "the technology transfer of their entire technology to Oscom Inc" subject to various conditions concerning finance and the engagement of Mr Avis to design and develop a custom chip.

38 Mr Samimi says that no further attempt was made to develop the MIB Tool owing to lack of funds, but during 1995 and 1996 he oversaw the development of "a different version of the MIB Tool product" called MIB Manage. This was not sold or licensed to any parties outside Oscom International.

39 Oscom International was eventually placed into liquidation in July 1997 and was unable to continue development of the product known as Mediator. Mr Samimi and Mr Avis then made arrangements for the OSGATE 700 technology to be transferred back from Oscom Communications to a new company, Oscom Australia Pty Ltd, being a company controlled by Mr Robert Scott, who had no direct association with Oscom International.

40 Mr Samimi says in his affidavit at par 14 that: "In or about February 1997, the OSGATE 700 product was renamed as Mediator. It was essentially the same product although there were internal differences. It was often referred to internally as Mediator II. The end user of the product would not ordinarily have noticed any differences." I will call this Mr Samimi's par 14 description.

41 Then, with the approval of the shareholders of Oscom International, it was agreed that a new company to be called Rama Technologies Pty Ltd would acquire the Mediator product so that development of the network mediation technology could be pursued. Mr Samimi was appointed the Chief Executive Officer of Rama. According to him, the creation of Rama "did not address or attempt to address the issue of MIB Tool or MIB Manage." I note, however, that in a letter sent to the shareholders of Oscom Australia dated 24 April 1997, Mr Scott said that an agreement had been reached with Oscom Communications "to transfer ownership of the OSGATE technologies to a new Australian company, Rama Technologies Pty Ltd." The shareholders were invited to participate in Rama.

42 It follows from the narrative to this point that on Mr Samimi's account of the relevant events, Oscom International, now in liquidation, but with a receiver appointed pursuant to a charge held by the Commonwealth Bank, was arguably the proprietor of MIB Manage, as a product not forming part of the OSGATE 700 technology. Nonetheless, I am obliged to keep in mind that even on Mr Samimi's account, MIB Manage could be regarded (to use his words) as "a different version of the MIB Tool product".

43 It also seems to be quite clear, on Mr Samimi's account, that both the OSGATE 700 technology and MIB Tool were the products previously conveyed to Oscom Communications. I note also that Mr Samimi's par 14 description seems to establish that the OSGATE 700 technology was renamed as Mediator. Thus, one is inevitably left with an impression that Mediator, which includes embedded software, results from and represents the fruits of the defendants' various research and marketing endeavours prior to the creation of Rama.

44 The evidence of Mr Avis is also relevant in this respect. He said in his affidavit:

"Whilst at Oscom International I developed a programme called OSGATE 700. This was an early prototype version of a package now known as Mediator. Oscom International also developed MIBTool. This is a prototype of the package now known as MIBManage.

OSGATE 700 and MIBTool were effectively developed by me (with the assistance of others - such as Hooman Samimi) whilst an employee of Oscom International."

45 I note from the minutes of a meeting of directors of Rama dated 23 January 1998 that the directors of Rama resolved "to acquire the software technology belonging to Oscom International (in liquidation)." A subsequent minute dated 3 March 1998 indicates that negotiations were continuing on the acquisition of ATM related technology with the receiver of Oscom International. Mr Samimi said in the body of his affidavit that the ATM management software was acquired by Rama in June 1998 and renamed AXIOM later that year, but the software did not relate to the Oscom Mediator or MIB Tool products. Nonetheless, the sequence of events does suggest that Mr Samimi and Mr Avis were endeavouring to bring together in Rama the fruits of their various projects.

46 Mr Samimi says that in late 1998 he and Mr Avis undertook development through their family companies of a software only tool kit known as Genesys. This, like MIB Tool, seems to have been designed to generate software that would integrate devices into networks. According to Mr Samimi, by the end of 1999 the position was that the only products owned by Rama were Mediator and AXIOM. His affidavit suggests, without saying so explicitly, that as a result of negotiations with Oscom International and its creditors, MIB Tool and MIB Manage were under the control of Mr Samimi and Mr Avis, and that Genesys was a new product, albeit with links to the previous research, which had been developed through the family companies of the first and second defendants.

47 It was against that background that Mr King of Willhart entered into negotiations for the purchase of the assets of Rama.

48 Mr Samimi says that he did not at any stage represent that MIB Manage, MIB Tool or Genesys were products owned by Rama. I note, however, that the first plaintiff was provided with an information memorandum indicating that Rama was established in June 1997 by three colleagues who had previously worked together in Oscom Australia. The memorandum says that they acquired and brought with them partially developed technology associated with the remote management of non-standard and legacy telecommunications devices via corporate networks. This technology became the foundation for "Rama's current product set."

49 The memorandum goes on to say that since incorporation Rama had completed the development of its first model of a product now marketed under the trade name of "Mediator" Network Management Gateway. The term "Gateway" is defined as a system that enables two incompatible networks or applications to communicate with each other. Elsewhere in the memorandum, one learns that the Rama product concept is a means whereby non-IT equipment or devices, such as air conditioners or water pumping and filtration units, can be managed centrally over a network, including the internet, or through a stand alone management application.

50 The Mediator product is described as an integrated hardware and software technology platform used as the network protocol to transmit alarms and events to a central and often remote location. The management system then determines the actions to be taken in accordance with user defined scripts.

51 By a share sale agreement dated 24 November 1999, the various shareholders of Rama agreed to sell their shares to Willhart as purchaser. It is material to note that the shareholders included Mr Samimi's family company (Intermillenia Communications Pty Ltd) and Mr Avis' family company (Temeraire Technologies Pty Ltd). The business of the company being sold was described as the business of developing and marketing network management systems and turnkey solutions for central monitoring and control of mission critical business equipment. The broad definition of confidential information embraces such matters as all knowledge of secret processes, technical know-how, inventions, ideas, trade secrets and special purpose computer programmes.

52 The purchaser was required to contribute $400,000 to the company for working capital purposes and to allot various shares and options in Willhart to their vendor companies. It followed from the latter provision that Intermillenia and Temeraire were to obtain various shares, options and shares held in Australia upon the basis that they were not to be dealt with for a period of 12 months. The vendors as warrantors warranted that they owned and had control of the intellectual property rights vested in the company, such term being defined to include the confidential information owned or used by Rama and the agreements under which the company held intellectual property licences.

53 The Rama sale agreement does not appear to specify or list the specific products or software programmes vested in Rama, but the case for the plaintiff before me was argued on the basis that Willhart as purchaser, in acquiring Rama (soon to be renamed Willhart Technologies) acquired, or was led to believe, it was acquiring the products representing the fruits of the developmental work undertaken by Mr Samimi and Mr Avis in the preceding years. The plaintiffs' software engineer, Mr Wallace, who had worked on MIB Tool and MIB Manage in Melbourne for Oscom International said that when he moved to Perth to work for Rama he brought with him "software and manuals for both MIB Manage and MIB Tool." In his view, the product Genesys is based entirely on MIB Tool.

54 Arrangements were made for Mr Samimi and Mr Avis to be employed by Rama as Chief Operating Officer and Chief Technical Officer respectively. The terms of employment of Mr Samimi are reflected in a letter of employment dated 20 December 1999, being a letter in essentially the same terms as an earlier employment letter dated 1 December 1999 directed to Mr Avis. I will call the former the Samimi employment letter.

55 Mr Samimi agreed to provide management, technical and support services on the basis (per cl 2.4(d)) that he would not engage in any other employment, full or part-time, or undertake consulting or similar activity, without the approval of the Board of Directors. The employment was for a term expiring on 17 December 2002. The remuneration package included options in respect of Willhart shares to a face value of $500,000.

56 By cl 12.1, Mr Samimi agreed that any right or title to, or interest in, any invention resulting directly or indirectly from the performance of his duties was to be the sole and exclusive property of Rama, this undertaking being described as a "relevant invention". He was required to disclose to Rama any relevant invention, so as to enable Rama to have the fullest benefit of any rights in or to the same.

57 By cl 13.2, Mr Samimi was required to keep Rama's confidential information in the strictest confidence, that is to say, all information and inventions regarding the current or future business interests of the company. If authorised by Rama to make a disclosure of confidential information, he was to obtain from the person concerned an acknowledgment that the information would be kept confidential. By cl 14.2, he acknowledged that the rights of the company in and to the confidential information were the sole and absolute property of Rama.

58 By cl 17, Mr Samimi undertook that he would not without the prior written consent of Rama, which was not to be reasonably withheld, during the employment or within one year after termination of the employment within the various States of Australia, be directly or indirectly engaged in any competitive enterprise or endeavour. He agreed not to entice away from Rama any of its customers or to induce any employee of Rama to leave Rama's employment. These restrictions did not apply to certain shareholdings or where the notice of determination under the employment agreement or a payment in lieu thereof had not been provided, or where Rama ceased to carry on its business.

59 I must now turn to some of the other affidavits, although, again, as far as possible, for the sake of an orderly narrative, I will draw upon non-contentious passages unless otherwise indicated.

60 The company secretary of Willhart, Mr Roberts, said that pursuant to the share sale agreement, the first plaintiff purchased the entire share capital of Rama on the basis that Rama owned the intellectual property in Mediator and the programme MIB Manage. He referred to the Rama minutes of 23 January 1998 as a basis for his belief that Rama purchased the intellectual property in MIB Manage from Oscom Australia prior to December 1999.

61 Mr Lockey is the Chief Technical Officer of the second plaintiff. He said that Mediator was a system of both hardware and software designed to enable an interface between computer programme remote monitoring of non-computer equipment, thus providing a gateway into an organisation's computer network. For example, if an alarm sounded (as in an airconditioning failure), an automatic e-mail, page or other alarm was communicated to the relevant person or company best placed to handle the situation promptly and effectively.

62 Mr Lockey said that on 9 August 2000 he was given a floppy disk to examine by an employee. He was informed and believed that the employee observed the disk fall out of a folder then in the possession of Mr Avis. When he examined the disk and opened the file entitled Genesys, he noticed a folder containing a copy of a user manual for a product called Genesys under the name of Interadigm Management Technologies. From his inspection of the relevant printout he believed that the manual was essentially identical to one he had previously evaluated during the course of his employment with Willhart Technologies entitled MIB Manage. Importantly, Mr Lockey observed at par 12 of his affidavit that he made his evaluation when the first and second defendants "attempted to sell Genesys to the plaintiff".

63 Mr Lockey went on to say that he subsequently investigated the contents of computers used in the plaintiffs' office by Mr Samimi to determine whether there were any other files on the computer relating to either Genesys or Interadigm. He discovered a software product entitled Genesys Agent Framework having two components being, first, the Genesys Intelligent Agent which had all the features of the software product entitled Mediator and, second, the Genesys Agent Toolkit, which had all the features of the plaintiffs' modified MIB Manage product. He examined the manual for Genesys and formed the view that it was an almost word-for-word reproduction of the MIB Manage manual.

64 I note in passing that objection was taken to this and similar evidence from Mr Lockey on the grounds that his assertions represented conclusions drawn by the witness on the basis of facts not proved. The decided cases indicate, however, that in the context of interlocutory proceedings, O 37 r 6 allows not only for the adduction of hearsay, but also for statements of belief, that is to say, an opinion, provided the sources and grounds of the information are revealed, and have sufficient probative value to be considered relevant to the matters in issue: Savings and Investment Bank v Gasco Investments [1984] 1 All ER 296 at 305; In re Juson Pty Ltd (1992) 8 WAR 13. It follows that I am prepared to admit the Lockey evidence. He has technical skills in the programming field and the sources of his information and beliefs have been sufficiently revealed. I adopt the same view in regard to the evidence of Mr Wallace. Both of these witnesses could have been cross-examined on their affidavits.

65 Mr Lockey also located various e-mails reflecting communications between the three defendants. He noted an e-mail dated 14 May 2000 from the first defendant to the second defendant which included a passage apparently referring to Mr George Lockey himself in these terms: "I have followed my general strategy of telling George enough of the truth just to avoid suspicion." Mr Lockey also noted an e-mail from the third defendant to the first defendant dated 15 July 2000 which set out a "suggested agenda for the next meeting" at the first and second defendants' office on 19 July 2000 ("the 19 July agenda").

66 The 19 July agenda revealed that the three defendants were taking steps to set up a business. It included reference to such matters as a partnership equity split, business plan, short term income generation strategy, follow-up to Malaysian contacts, "our respective roles on a broad level", prospective Australian contacts and business opportunities, "exit from Willhart timeframe", US product vendors, Genesys, web page, and incorporation of Interadigm. The third defendant's agenda concludes as follows:

"I appreciate some of the above items may be addressed in the business plan but I thought it will help us focus.

Essentially I am trying to address the who, what, which, why, where and how items whether it is market sector, contacts or business opportunities. Once we write them down it will become much clearer for us and becomes our goals and objectives for achieving our target."

67 Mr Lockey had been keeping Mr King, the Chief Executive Officer of Willhart, informed about these matters. It was against this background, and upon the bases of the affidavits of Mr Roberts and Mr Lockey, sworn 15 August 2000, that an ex parte application was made to Anderson J for an Anton Piller order and the related restraining orders.

68 The supporting affidavits made some mention of negotiations with the plaintiffs upon the basis that the first and second defendants were the proprietors of Genesys (as I have already noted). In essence, however, the plaintiffs' case was that the second plaintiff owned Mediator and the two software programmes known as MIB Manage and MIB Tool. Genesys was said to be a reproduction of MIB Manage, and was thus being used without the consent of the plaintiffs. The orders sought by the plaintiffs were granted.

69 As a consequence of the Anton Piller order and the seizure of records, the plaintiffs were able to point to various e-mail communications between the three defendants at the hearing before me, which suggested - as is pleaded in par 12 of the statement of claim - that the defendants had resolved to create an enterprise or joint venture to compete against Willhart Technologies.

70 According to the plaintiffs, the resolution to proceed in that manner is to be inferred from an e-mail from Samimi to Avis on 14 May 2000, an e-mail from the third defendant to Samimi and Avis dated 15 July 2000 and the contents of the 15 July agenda. The plaintiffs also placed reliance upon the various e-mail messages written by the third defendant which I deal with at greater length in these reasons under the heading "The Third Defendant's Application for Summary Judgment".

71 The various e-mail communications exhibited to the affidavit of Jennifer Hill, sworn 1 September 2000, were relied upon by the plaintiffs in order to support a plea that the defendants created or, alternatively, acquired, a computer based hardware device with embedded software known as Genesys, that they created a document being a powerpoint presentation for Genesys (this being called "the Interadigm powerpoint presentation"), that they created a document entitled Genesys, and that they commenced carrying on a business called variously Interadigm, Interadigm Management Technologies and Interadigm Pty Ltd. Further, on or about 16 August 2000, the defendants commenced to operate an internet website under the name Interadigm Pty Ltd at the home address of Samimi and commenced marketing Genesys in competition with Willhart Technologies as and from July 2000.

72 The plaintiffs relied upon the evidentiary materials I have mentioned to plead in par 14 - par 18 of the statement of claim that: Genesys is a substantial reproduction of the second plaintiff's copyright in Mediator and MIB Manage, that the Interadigm powerpoint presentation is a substantial reproduction of the plaintiffs' powerpoint presentation, that the document entitled Genesys is a substantial reproduction of the document entitled MIB Manage belonging to the plaintiffs, and that each of these various matters is a breach of the second plaintiff's copyright. Further, it is alleged, unless restrained by court order, the defendants and each of them will continue to breach the Willhart copyright.

73 The plaintiffs relied upon the same materials in support of their additional claims against the defendants, that is to say, claims arising out of the contracts of employment and alleged breaches of fiduciary duties owed to the second plaintiff as the employer of the first and second defendants. The various e-mails are also relied upon by the plaintiffs in asserting that the third defendant was active in encouraging the first and second defendants to set up a competing enterprise and breach provisions of their contracts of employment.

74 I have already indicated that the defendants deny liability. The first and second defendants submitted that at all material times they were the proprietors of the Genesys product via their family companies, Intermillenia and Temeraire, and this state of affairs was made known to Mr Lockey and to the Chairman of the first plaintiff, Mr King. Mr Samimi said at par 27 of his affidavit, in describing Genesys as a service oriented software product, that "in essence, it complements Willhart's products but it does not compete with Willhart products which are mostly based on the Mediator hardware."

75 Mr Samimi went on to say that Genesys was installed at the Willhart offices with the understanding that appropriate commercial arrangements would be put into place between Willhart, Intermillenia and Temeraire to purchase or licence the technology should Willhart decide to incorporate it into its own product set. Reference was made to arrangements whereby Willhart would be allowed to use Genesys for purposes of the company's display at a trade exhibition in New Orleans.

76 Mr Samimi said further that the negotiations concerning Genesys were brought to an end in mid 2000. He said that this was evidenced by a memorandum from Mr King to himself dated 30 June 2000 ("the King memorandum") which is in these terms (omitting the inessential parts):

"The company has decided not to proceed with acquisition of Genesys from your family companies.

After discussion with my technology advisers I have taken the view that we should develop our own product and solution.

As such it would be inappropriate to demonstrate Genesys whilst in Malaysia and Singapore and you are formally advised not to do so.

I have asked George Lockey to report to me on the best way forward to develop our own solution and as such I am sure he will be discussing this with both of you as well as the rest of the technology group in due course.

77 It was common ground at the hearing before me that the King memorandum did not form part of the materials placed before Anderson J at the time the original orders were made. The defendants contended that this amounted to a failure to disclose which should result in the orders being set aside.

78 The affidavit of Mr King, sworn 1 September 2000 raised various matters in answer to the defendants' contention. He said that at no stage did either the first or second defendants seek his consent to carrying on an alternate business or advising of their intention to set up such a business. He denied that Mr Samimi offered the product Genesys to him or that Genesys was installed on the basis that commercial arrangements would be put in place for Willhart to purchase or licence Genesys. When the question of the Genesys product was raised with him, he indicated that he would buy the technology - if it was technology owned by the defendants, and subject to a 30-day due diligence test to be done by Mr Lockey on the technology side. If, after the due diligence, he formed the view that the technology belonged to Willhart in any event, then Willhart would not buy it.

79 Mr King said that as a result of Mr Lockey's appraisal, he concluded that the first and second defendants were attempting to sell Willhart something it already owned. It was against that background that he forwarded the King memorandum of 30 June 2000 to Mr Samimi.

80 Mr King said further that the King memorandum and subsequent reply were not produced to the court at the time of the initial application because he did not then appreciate their relevance in the urgency of preparing the documents in support of the application. He drew attention to the fact, however, that there was a disclosure of the attempt by the first and second defendants to sell Genesys in Mr Lockey's affidavit. It is upon this basis that the defendants' application to discharge the injunction is resisted by the plaintiffs.

81 Let me now turn to the various issues to be resolved and the question of whether the plaintiffs are in a position to satisfy the court that there is a serious issue to be tried in respect of all or some of these issues.

82 I will begin by turning to the title issue. There is a dispute on the evidentiary materials before the court as to who is the owner of the copyright in Genesys. The plaintiff places some reliance upon circumstantial evidence referable to the history of the matter. Some years ago the first and second defendants worked on products known as MIB Tool and MIB Manage and there are indications that the Mediator product (which is undeniably vested in the second plaintiff) represents an extension or outgrowth of this work.

83 Certain passages in Mr Samimi's affidavit suggest that Genesys has links to the earlier work. I am referring here to Mr Samimi's par 14 description and to his observation at par 27 that Genesys "complements Willhart's products". Mr Samimi said later that Genesys Intelligent Agent is "purely a software application that generates computer readable code used to integrate infrastructure equipment into the corporate network." The emphasis upon "integration" suggests that the first and second defendants are building upon earlier work, and this view of the matter is reinforced by Mr Wallace's evidence concerning the manuals brought to Perth from Oscom International in Melbourne.

84 Further, it is quite clear that in 1997 the first and second defendants took steps to draw together the fruits of their earlier labours and vest all of the relevant intellectual property rights in Rama. When these various matters are considered collectively, there is a basis for concluding that Rama became the proprietor of the Genesys product, notwithstanding that there is no explicit reference to such a product in the documentation preceding the sale, or in the sale agreement itself.

85 Further, and in any event, the plaintiffs argue, the sequence of events is open to the interpretation that Genesys was developed by the first and second defendants while they were associated with Rama, as principals of that company rather than as directors or employees of their respective family companies. On that view of the matter, there is an additional basis for concluding that Rama was the proprietor of Genesys with the result that the second plaintiff is the proprietor of Genesys and entitled to restrain any unauthorised use of the product by the defendants.

86 In support of their submissions, the plaintiffs rely upon the evidence of Mr Wallace and Mr Lockey. The latter's evidence suggests that the provenance of Genesys as an extension of or adjunct to the earlier products is apparent from a detailed examination of the software programme and related documentation. Various similarities between Genesys and the earlier products were drawn to my attention during the course of argument.

87 I have already noted that the defendants on their own affidavits seemed to accept that Genesys bore some relation to the earlier products. It was for this reason, apparently, that the offer was made for Genesys to be used in conjunction with the second plaintiff's products as a means of enhancing the plaintiff's presentation at a trade exhibition in New Orleans.

88 It is material to note that Mr Avis in his affidavit acknowledges that in late 1998 to early 1999 (while working for Rama) he and Mr Samimi decided to develop a product "similar to MIBTool" to be called Genesys. It had a "similarity to MIBManage but is much closer to MIBTool." He said later:

"The documentation I produced for Genesys is incomplete. It is based on the MIBTool document which I used solely as a template. It does not yet correctly reflect the product functionality.

The design of _MIBT_ool is very different to the design of MIBManage. The development of Genesys, based on MIBTool, was not based on MIBManage. It does, however, produce a similar end result."

89 The defendants sought to answer the plaintiffs' submissions by pointing to the King memorandum and related matters suggesting that the plaintiffs were aware that they had to acquire Genesys from the first and second defendants if they wished to make use of the same. I have already noted that the defendants mounted a strong challenge to various passages in the affidavits relied upon by the plaintiffs in which observations were made or opinions expressed concerning similarities between the various products. I will return to this aspect of the matter later. For the time being, however, it is sufficient to observe that a challenge of this kind would not be sufficient to dispose of the plaintiffs' case entirely. I am obliged to give proper weight to the circumstantial evidence I have mentioned, the provisions of the contemporary documentation and the description of events contained in the defendants' affidavits.

90 The relationship and the degree of connection between the various products will obviously give rise to complex issues at the trial of the action, especially in circumstances where the products were developed gradually over a long period and seem to have gone through various phases. Properly presented expert evidence will undoubtedly be required to explore the finer points of the title issue. For present purposes, however, I am only required to be satisfied that there is a serious issue to be tried.

91 In my view, there is a sufficient basis for concluding that the second plaintiff is the proprietor of the Genesys product and related documentation. I consider that there is a serious issue to be tried. The sequence of events suggests that this is so and the affidavits relied upon by the defendants point to a connection between Genesys and the earlier products. I also take account of the fact that the definition of property rights and confidential information in the relevant sale agreement concerning Rama is broad and would embrace work done by the employees of Rama, including the first and second defendants prior to the takeover of that company in December 1999. Clause 12 of Mr Samimi's contract of employment requires him to disclose any "relevant invention" during the course of the employment so as to enable his employer to have the fullest benefits of any rights in or to the same.

92 Accordingly, without purporting to make any final determination as to the question of ownership, I am satisfied that the plaintiffs have a basis for asserting title to Genesys and to the related documents and presentation. I consider that for present purposes Mr King has provided a sufficient explanation as to why his memorandum should not be viewed as a concession that Genesys is vested in family companies controlled by the first and second defendants.

93 This brings me to the copyright issue and the plaintiffs' allegation that Genesys and the Interadigm powerpoint presentation are being used in a manner which constitutes a breach of the second plaintiff's copyright. The plaintiffs' case in that regard is advanced on the basis that either it is the proprietor of the two products just mentioned or, alternatively, in any event, the products should be characterised as reproductions of Mediator and MIB Manage with the result that any unauthorised use represents a breach of copyright. The plaintiffs plead that the defendants and each of them will continue to breach copyright unless restrained by order of the court.

94 Section 31 of the Copyright Act 1968 provides that copyright in relation to a work is the exclusive right in the case of a computer programme to enter into a commercial rental arrangement in respect of the programme. Section 36 provides that the copyright in a work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does any act comprised in the copyright. Section 115 allows the owner of copyright to bring an action for infringement in damages or for an injunction.

95 Again, it is not necessary for me to make a final determination as to whether there has been a breach of copyright. It follows from my observations in regard to the title issue that there is a serious issue to be tried as to whether the plaintiffs can control the use of the Genesys product and Interadigm powerpoint presentation. My earlier summary of the evidence reveals that the defendants have created a website and do intend to make some use of these products. Indeed, because the first and second defendants contend that they are the owners of these products via their family companies, they do not seriously dispute that they intend to use the products as they wish. Further, and in any event, their plans in that regard are manifested in the 15 July agenda and related e-mail communications.

96 Accordingly, I am satisfied that the plaintiffs have established that there is a serious issue to be tried in respect of this aspect of their claim. The same line of reasoning persuades me that there is a real prospect that breaches of the second plaintiff's intellectual property rights will occur unless the defendants are restrained by interlocutory orders of the kind proposed until the trial of the action or further order.

97 Before turning to the alleged breaches of contract it is necessary to look at a number of previously decided cases concerning contracts in restraint of trade.

98 The general rule is that restraints of trade are void as against public policy and can only be saved if they are demonstrated as being reasonable. The onus is on the person seeking to enforce a covenant in restraint of trade to demonstrate that the restriction is reasonable. Herbert Morris Ltd v Saxelby [1916] 1 AC 688. Nonetheless, it has been recognised by the courts that because it is extremely difficult to fashion a covenant which will exactly protect only that confidential information which is able to be protected, and because it is difficult to predict what exact problem will emerge, it is acceptable for an employer with a legitimate interest to protect to restrain an employee from taking competing employment for a set period. Haynes v Doman [1899] 2 Ch 13.

99 The central dilemma in this area of the law was aptly expressed by Gleeson CJ in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 334. His Honour noted that there was a tension between two competing considerations of public policy. An employer is not entitled to protect himself against mere competition by a former employee. The corollary is that the employee is entitled to use skill, experience and know-how acquired in the service of the former employer in legitimate competition. It is in the public interest that this should be so. At the same time, the law will protect trade secrets and confidential information, and will intervene to prevent their misuse.

100 In Littlewoods Organisation v Harris [1977] 1 WLR 1472 the Court of Appeal observed that although an employer could not protect himself from competition by an ex-employee or his new employer, he could protect his trade secrets or his confidential information by taking a covenant from the employee that he would not go to work for a rival in trade and the courts would hold such a covenant to be reasonable if limited to a short period. In that case, the plaintiffs, having acquired the information in question in producing their catalogue at great expense and by great expertise, were entitled to protection and could enforce a covenant that was concerned only with, and was limited to, the mail order business carried on in the United Kingdom.

101 In the present case, I have already drawn attention to the fact that the cl 17 covenant in the present case extends to all States of Australia for a 12-month period. In my view, there is a serious issue to be tried that the plaintiffs are entitled to enforce this covenant on the grounds that it represents a reasonable restraint in respect of a business based upon modern technology which has the capacity to be transmitted rapidly across State and international boundaries.

102 I note also that the restraints sought by the plaintiff are narrowly defined to cover matters over which the plaintiffs are entitled to protection. They seek only to prevent the first and second defendants from engaging in competing businesses and they do no seek to prevent the defendants from engaging in paid employment.

103 I must also remind myself that the first plaintiff paid a significant amount of money for the shares in the second plaintiff to purchase the information technology of the second plaintiff. The family companies of each of the first and second defendants benefited from this transaction in that they were vendors of their shares in the second plaintiff. The same defendants also obtained significant benefits in entering into contracts of employment with the second plaintiff in that each of them received a large parcel of options. The products of the second plaintiff cannot be protected by any means other than by the enforcement of intellectual property rights, coupled with appropriate restraints affecting senior executives.

104 Accordingly, in my view there is a serious question to be tried on the issue as to whether it is reasonable in these circumstances for the first plaintiff to protect its investment in the second plaintiff, and for the second plaintiff to protect its confidential information and technology, by requiring its senior employees to enter into contracts for employment containing restraints of the kind previously described. Each of the first and second defendants signed contracts containing restraints.

105 Against the background of my finding concerning the restraint of trade issue, I proceed from the premise that the contracts of employment entered into by the first and second defendants are valid and enforceable.

106 I must now determine whether on the evidentiary materials before me there is a serious issue to be tried as to whether these defendants have committed or are likely to commit breaches of contract. To my mind, the 15 July agenda and related e-mail communications represent persuasive evidence to this effect. The three defendants have resolved to set up an enterprise which, consistently with my earlier findings, must be regarded as a competing enterprise which will draw upon products and information owned by the plaintiffs. They have created a website and are about to embark upon a marketing campaign.

107 I digress to note that the covenants relied upon by the plaintiffs were aimed at competing activities undertaken within Australia and that many of the defendants' e-mail were directed to overseas business opportunities. Nonetheless, in my view, the steps taken by the defendants in Perth, including the holding of meetings, the soliciting of business by e-mails, the setting-up of a website and the creation of related documents, amounted to carrying on business in Australia, that is to say, within the restricted area.

108 The first and second defendants claim title to Genesys and the related products, although, on my earlier finding, there is a serious issue to be tried as to whether this is the true position. It follows that they have arguably made or are about to make an unauthorised use of their employer's products. There are also strong indications that they have ignored and will continue to ignore their obligations of confidentiality. It follows that there is clearly a serious issue to be tried as to whether these various acts amount to a breach of contract.

109 Similar considerations apply in respect of the fiduciary duties issue. The first and second defendants have displayed a lack of candour and are acting adversely to their employer's interests. This is evident in the first defendant's e-mail of 14 May 2000 that he was following a strategy of telling Mr Lockey "enough of the truth just to avoid suspicion."

110 There is a serious issue to be tried in respect of the fiduciary duties also.

111 I have already noted that a court must also give consideration to the balance of the convenience.

112 The defendants submit in regard to the balance of convenience that the grant of orders in terms sought by the plaintiffs will have a dramatic and prejudicial effect upon the first and second defendants. Their capacity to earn a livelihood to maintain themselves and their families will be severely affected. They submit that the balance of convenience weighs heavily against the maintenance of injunctions already granted. It would be a more appropriate remedy if the defendants were permitted to pursue their business activities with the outcome of proceedings to be determinative of the relief to be granted (if any). If the plaintiffs' assertions are correct, then the proper course will be for the defendants to be made to account to the plaintiffs for their wrongful gains.

113 I have taken account of these submissions, but in the special circumstances of the case, I am satisfied that in the circumstances of the present case the balance of convenience lies with the plaintiffs.

114 If an interlocutory injunction is not granted, it is likely that the entire period of the restraint will have passed before there is a trial in this matter and significant damage will have been done to the second plaintiff's business which cannot be adequately compensated for by damages. If they are not restrained the defendants will be allowed an opportunity to divert significant commercial opportunities away from the second plaintiff. I note from the affidavit of Mr Roberts that the second plaintiff has not yet signed any contracts in Malaysia to sell Mediator, but it has signed a memorandum of understanding which, if implemented, will result in more that 1,000 copies of Mediator being sold into China.

115 I also note, and give some weight to the fact, that by cl 17.7 of the contracts of employment, the parties acknowledged that the second plaintiff was entitled to apply for an injunction in order to enforce the restrictive covenants upon the basis that damages would not be an adequate remedy in the event of breach. The balance of convenience must fall in favour of allowing to the plaintiffs what has provisionally been found to be its property and restraining the defendants from competing unfairly by misusing the plaintiffs' products and intellectual property rights.

116 I am satisfied by my review of the issues to this point that the plaintiffs are entitled to a continuation of the injunctive relief subject only to a consideration of the sufficiency of disclosure issues. As to that matter, I note that the defendants have relied principally upon an alleged failure to disclose two matters, being the first two pages of the manual of Genesys and the King memorandum of 30 June 2000.

117 I have already drawn attention to the rule reflected in Seaman Civil Procedure at par 52.1.13 that it is the duty of a party asking ex parte for an order in the nature of an injunction to bring under the notice of the court all facts material to the determination of the right to the injunction, and it is no excuse for the party to say that he or she was not aware of their importance. Nonetheless, it is apparent from Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd (supra) at 88 that where there has been no deliberate lack of candour and the matter which is not disclosed is not of major character overall, and was omitted in circumstances in which extensive instructions have been necessarily taken in haste, the injunction will not necessarily be set aside.

118 I note also that Templeman J in Interest Research Bureau Pty Ltd v Interest Recount Pty Ltd, unreported; SCt of WA; Library No 970326; 6 June 1997 had occasion to consider whether an Anton Piller order previously granted should be discharged. He was of the view that the application for discharge was dependent on whether the alleged non-disclosure was material or would have been material to the grant of relief by the Judge who granted the initial order.

119 In the present case, I am obliged to take account of the fact that the affidavits brought before Anderson J when the initial relief was obtained did contain some reference to the title issue concerning the Genesys. Mr King has subsequently provided an explanation as to how it came about that there was not a greater emphasis upon this aspect of the matter. It must also be remembered that, from the plaintiffs' point of view, the matter of immediate concern was whether the defendants were in the course of setting up a competing enterprise and were in breach of their contracts of employment. In other words, it is not altogether surprising that the earlier negotiations concerning Genesys, such as they were, and the King memorandum, were thought to be overshadowed by subsequent events. Against this background, it is questionable whether Anderson J would have seen the circumstances presented to him in a different light, even if the King memorandum had been squarely presented to him on the affidavits.

120 Accordingly, in my view, I consider that the circumstances of the present case fall within the precept enunciated in Westwind Air Charter (supra). It does not appear to me that there has been a deliberate lack of candour and nor does it appear to me that the matters not disclosed were of sufficient importance in the context I have described to be characterised as a material non-disclosure. Accordingly, I am not prepared to discharge or set aside the orders previously made upon the basis proposed.

121 I pause to say that even if I be wrong in the conclusion I have just expressed, with the result that the orders previously made should be set aside, a further question then arises as to whether the plaintiffs are entitled to injunctive relief in any event, now that both parties have had a full and sufficient opportunity to present their respective cases and related evidence to the court. In my view, it follows from my earlier observations as to the presence of serious issues to be tried, and the balance of convenience, that the interim relief sought by the plaintiffs should be allowed.

122 Before turning to the third application, that is to say, the application by the third defendant for summary judgment, I must return to the defendants' challenge to various passages in the affidavits relied upon by the plaintiffs. Objections were taken to various paragraphs in the affidavits of Mr Roberts, Mr Lockey, Mr King, Mr Wallace and the supplementary affidavit of Mr Lockey sworn 4 September 2000.

123 I will not traverse the full range of objections, but, in essence, a number of the objections were directed to issues of relevance, hearsay, the expression of comments and conclusions drawn from facts not proved, and the expression of allegedly unqualified opinions.

124 I reserved my ruling in regard to these objections and indicated to the parties that I would make my ruling known in due course.

125 To my mind, many of the objections can be resolved by reference to O 37 r 6 which allows for the introduction of hearsay evidence provided the source of the information and the nature of the deponent's belief is asserted clearly. One must also bear in mind that it is open to a party objecting to affidavit evidence to make arrangements for the deponent to be cross-examined on his affidavit. Barristers' Board of Western Australia v Tranter Corporation Pty Ltd [1976] WAR 65 at 67. I applied these considerations earlier in dealing with certain disputed passages concerning the evidence of Mr Lockey and Mr Wallace. In my view, these witnesses were qualified to express an opinion. They had technical skills and had personally inspected the programmes and manuals in question.

126 More generally, I consider that the other disputed passages have a sufficient relevance and do not infringe the general rules of evidence as to relevance and admissibility, as qualified by O 37 r 6 in regard to interlocutory applications of the kind presently before me. It is true that on some occasions the source of the deponent's belief is arguably not identified with precision. For example, in his affidavit sworn 15 August 2000 the first plaintiff's company secretary, Mr Roberts, expresses certain views about the ownership of various products. The context makes it clear, however, that he is drawing upon the share sale agreement and the Rama minutes as the sources of his belief. The documents were exhibited to his affidavit. In my view, in this instance, and in other similar instances, there has been a sufficient compliance with the rule, bearing in mind that most of the affidavits were prepared at short notice.

The Third Defendant's Application for Summary Judgment

127 Order 16 r 1 of the Rules of the Supreme Court provides that a defendant to an action may, by leave of the court, apply for summary judgment, and if the court is satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits or that the action should be disposed of summarily or without pleadings, the court may order that judgment be entered for the defendant.

128 It is apparent from the decided cases that power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried. Once it appears that there is a real question, whether of fact or law, and that the rights of a party depend upon it, it is not open for the court to dismiss the action as frivolous or vexatious or as an abuse of process: Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62; Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87.

129 I have already noted that the position of the third defendant, Mr Seow, is somewhat different from the position of the first and second defendants. He did not play any part in the development of the products in question and was not involved in the negotiations and subsequent transaction whereby the products were eventually vested in Rama, now Willhart Technologies. Further, unlike the first and second defendants, he did not enter into any contract of employment with the second plaintiff and was not subject to fiduciary obligations of the kind alleged against those defendants.

130 The affidavit of Mr Seow sworn 28 August 2000 indicates that Mr Seow is an earth scientist and is presently completing a PhD thesis in soil sciences at the University of Western Australia. He does not have any formal training in information technology and he has not worked in the information technology industry. He has been a friend of Mr Samimi for about 10 years and it seems that on a number of occasions they have talked about going into business together. He acknowledges that on one occasion he did some minor consulting work for Rama prior to Willhart acquiring Rama.

131 A review of the statement of claim reveals that the case against Mr Seow is pleaded in this way. In par 12 the plaintiffs say that in or about March 2000 the defendants agreed to create a firm, enterprise or joint venture or to create a company to compete directly against the second plaintiff, Willhart Technologies. The claim then refers to various subsequent events referable to the agreement just mentioned, including steps taken to market Genesys in competition with the second plaintiff, the setting-up of a website and creation of related documentation.

132 The plaintiff says further in par 25 and par 26 of the claim that the conduct of Mr Seow in entering into the agreement referred to in par 12 constituted direct tortious interference by Seow in the contractual relations between the second plaintiff and each of Samimi and Avis. By reason of Mr Seow's allegedly tortious conduct, the second plaintiff is said to have suffered loss and damage.

133 The constituents of the tort of interference with contractual relations are described in Trindade and Cane: The Law of Torts at 176 to 179. A knowing and intentional interference by the defendant with the plaintiff's contractual rights without justification is an actionable tort if the interference causes damage to the plaintiff. The interference can be either by inducing one of the parties to break the contract or by interfering in some way with its performance. There are various types of interference, but one form of interference takes place when the defendant directly persuades or induces a party who has a contract with the plaintiff to break it.

134 The learned authors say further that to be regarded as an actionable interference, the plaintiff must show that the defendant knowingly induced or procured a breach of the contract. In order that the defendant may be said to have acted "knowingly", it would have to be shown by the plaintiff that the defendant had knowledge of the existence of the contract and had also an intention to interfere with its performance. Questions of knowledge and intention, however, often become inevitably intertwined in this area.

135 It is against this general background that the authors of Bullen and Leake: Precedents of Pleadings (13th ed) at 462 indicate that the essential ingredients of the tort are that the wrongdoer knew, or acquired knowledge of the contract in question and its essential terms, although not necessarily its precise terms. It must be shown that he intended to cause a breach of the contract or prevent its performance by one party to the detriment of the other party, that the breach of contract was directly attributable to such act or interference, and that damage was occasioned.

136 The authors of this text note that the defendant must foresee the possibility of a breach of contract and desire that result in order to be liable. The old cases demanded that the defendant have actual knowledge of the contract, but in more recent times it has been established that ignorance will not always excuse liability. The pleading precedents following this discussion are expressed in terms that the defendant knew of the said agreement, but wrongfully induced and procured the defendant in breach of the agreement to take a step inconsistent with the agreement or, alternatively, the defendant, knowing that the contract had been entered into, wrongfully and with intent to injure the plaintiffs procured and induced the defendants to break their respective contracts with the plaintiffs and to refuse to perform the same.

137 These principles are reflected in recent Australian decisions. In Allstate Life Insurance Co v ANZ Banking Group Ltd [1995] FCA 1368; (1995) 58 FCR 26 the Federal Court held that in order to establish the commission of the tort, it must be shown that the alleged tortfeasor had an intention to interfere with the contractual rights in question. Knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights, although the precise term breached is not known.

138 In News Limited & Ors v Australian Rugby Football League Ltd & Ors [1996] FCA 870; (1996) 64 FCR 410, the court held that although the primary remedy is damages, the court may make orders for an injunction. The court approved the reasoning in the All State case (supra) and held that the plaintiff's case had been made out in the instant case because the super league companies "were aware of the critical arrangements" of the league and the clubs, having meticulously examined their corporate structures and contractual arrangements.

139 In Sanders v Snell (1997) 73 FCR 569, the court was concerned with an allegation that the executive member of a tourist bureau had induced a breach of the contract of employment between the bureau and the respondent by directing termination of the respondent's employment as executive officer of the bureau. The court held that the elements of the tort of inducement to be proved were the appellant's intention to induce the bureau to terminate the respondent's employment in a manner that would involve breach of contract, the inducement causing the bureau to terminate the respondent's employment without complying with the contractual terms as to notice of intention to terminate the employment and the termination causing the respondent loss or damage. The court held that neither of the first two elements were established on the facts of the case.

140 Counsel for the defendants in the present case submitted that the plea against the third defendant of inducing breach, as reflected in par 25 and par 26 of the claim, was manifestly insufficient in that there was no allegation advanced on the face of the pleading that Mr Seow knew of the relevant contracts of employment or intended to induce a breach of the same. Counsel submitted that the claim against the third defendant should be dismissed accordingly and summary judgment entered for the defendant.

141 Counsel for the plaintiffs acknowledged these imperfections in the pleading, but pointed out that the statement of claim had been prepared at short notice and in circumstances of urgency. He foreshadowed an application for leave to amend and contended that, for present purposes, the critical question was whether the evidentiary materials disclosed a serious issue to be tried that Mr Seow had knowledge of the Samimi and Avis contracts of employment and intended to bring about a breach of the same in a manner damaging to the plaintiffs.

142 In the circumstances of the present case, where an application has been made for interlocutory relief in circumstances of urgency, I consider that it would not be appropriate for summary judgment to be entered in favour of the defendant simply because of some imperfections on the face of the pleadings, bearing in mind that the flaws in question can be remedied by amendment. The statement of claim in general terms reveals the nature of the claim being advanced against the third defendant and I must therefore turn to the evidentiary materials in order to determine whether there is a real question to be tried.

143 The tenor of Mr Seow's affidavit is that he was simply a friend of the first and second defendants. He had various discussions with them about establishing a business, but these discussions and the steps taken in relation to them did not represent an interference with existing contractual relationships. He recalled that in late May or early June, Mr Samimi said that he was planning to leave Willhart, as he believed Willhart was in breach of his employment contract. Mr Samimi said that his family company had a product called Genesys which it would like to licence to other parties for additional development and commercialisation and some time in July 2000 Mr Samimi told Mr Seow that he and Christopher Avis were going to leave Willhart. Mr Seow was asked to contact his friends in Asia and previous business associates to see if anyone was interested in the Genesys product.

144 It was against this background that e-mail messages were exchanged and meetings were held, the first of which was at a cafe in Subiaco on Tuesday, 27 July 2000, to discuss the 15 July agenda. There was also some discussion about setting up a web page under the name of Interadigm. In essence, Mr Seow agreed to arrange for the web page to be set up. According to him, at no time was there any reference to Willhart products.

145 Mr Seow went on to say that the relationship between Mr Samimi, Mr Avis and himself was essentially that "we would be partners after they left Willhart". Mr Samimi and Mr Avis were to look after the technology side of things. Mr Seow would look after business development.

146 Mr Seow understood that Genesys was a software tool. It had the capacity to generate applications that could effectively interlink telecommunications networks. He was told it had no functions that would compete or directly overlap with the Willhart Mediator.

147 Exhibited to Mr Seow's affidavits were copies of e-mail messages to business acquaintances written in early August, indicating the Mr Seow was about to launch his own IT company, Interadigm. An e-mail of 8 August 2000 said that: "Essentially we provide technical consultancy, our software Genesys and third party products." In an e-mail message dated 11 August he described his friends as individuals who had their own company "before deciding to venture out again." He added: "My partners are in KL right now talking with a number of Telco companies who are interested in our services and product and also to seek capital and partner to pursue a $75,000,000 Telco software network management project which we have been asked to tender."

148 The plaintiffs relied upon the evidentiary materials mentioned earlier, and especially upon various e-mail messages exhibited to the affidavit of Jennifer Hill. These being documents came to light as a consequence of the making of the Anton Piller order. Counsel for the plaintiffs devoted a significant part of the hearing to tracing the development of the relationship between the three defendants, with a view to establishing that Mr Seow knew of the contractual arrangements binding the first and second defendants to the plaintiffs and was actively involved in taking steps to ensure that the arrangements were brought to an end with a view to establishing a new, competitive enterprise in which he was to have an active interest.

149 I will not traverse the entire bundle of e-mail messages. Nonetheless, by way of example, one notices that in an e-mail to a business friend written on 28 June 2000 Mr Seow refers to the first and second defendants being in Malaysia and says "although they are officially on Willhart business (ie their current company) they would like to explore opportunities for the new company we intend to set up together to provide telecommunication management consultancy." He says further: "We are meeting this Sunday to discuss business strategy." He adds: "When we form the company I will have a share as a partner and my role is non-technical but mainly office management and business development."

150 In an e-mail to a business associate named Wong dated 14 July 2000, Mr Seow refers to an attempt made by the first and second defendants while in KL to contact the man. He goes on to say that: "We are drafting a business plan for our company and the region."

151 Similarly, in an e-mail message of 30 July 2000 to a Mr Yuet Mee, Mr Seow outlines the nature of the enterprise he purports to be representing. He says that "we can provide technical services and consultancy, our own software Genesys and third party products from the US and Australia for managing networks." In explaining how the business will operate, he refers to "my partners". He describes the "targeted market sector" as ISP, ASP, telecommunication operators and service providers, power and transport utilities, application and network service providers or companies who intend to use network (Internet) for their businesses especially mission critical functions." On 3 August 2000, he advised Mr Yuet Mee that he would be involved in a strategic meeting tomorrow at Mr Samimi's house.

152 Against this background, counsel for the plaintiffs submitted that it was clear the third defendant was aware that the first and second defendants were employed by the second plaintiff. It was also clear that the third defendant was aware, at all material times, that the first and second defendants had not terminated their employment with Willhart, given notice to Willhart, nor informed the plaintiffs of their intention to leave the second plaintiff. Further, from June 2000, Mr Seow was attempting to introduce the first and second defendants to commercial opportunities in Malaysia for the benefit of the defendants, whilst the first and second defendants were still working for and travelling on behalf of the plaintiffs.

153 Counsel for the plaintiffs went on to say that Mr Seow was obviously aware that whilst the first and second defendants were supposed to be attending to the business of the second plaintiff they were actually pursuing commercial opportunities for themselves and the third defendant. Mr Seow was instrumental in setting up opportunities to advance the common purpose. The conduct complained of constituted a breach of the first and second defendants' employment contracts and, in that regard, Mr Seow either knew this constituted a breach of such contracts or wilfully ignored the implications of what was being done. The breaches of contract in question caused or were likely to have caused the plaintiffs loss and damage. It followed that the third defendant's conduct constituted a tortious interference with the contractual relationship between the second plaintiff and the first and second defendants.

154 Counsel for the plaintiffs argued further that it would be inappropriate for summary judgment in favour of the third defendant to be entered in these circumstances, even if the matters referred to earlier were not accepted in their entirety. Sufficient evidence was available to allow an inference to be drawn that the third defendant's conduct constituted tortious interference with contractual relations. The plaintiffs should be given the opportunity to take the matter to trial and have the benefit of discovery and cross-examination of each of the defendants.

155 Counsel for the plaintiffs also submitted that a second claim was being advanced against the third defendant, namely, that he was involved in a breach of copyright. The alleged breach of copyright was said to concern three matters: first, a misuse or likely misuse of the hardware with embedded software known as Genesys; second, the Interadigm Powerpoint presentation; third, the user manual for Genesys. The plaintiffs' stance was that there was a serious issue to be tried on the information before the court that copyright had been, or was likely to be, infringed by conduct involving each of the defendants. Put shortly, it was not disputed that the second plaintiff was the legal owner of the copyright in Mediator. There were grounds for concluding that the legal owner of the copyright in MIB Manage was the second plaintiff also, and that Genesys was either derived from the research underlying these products or had been developed while the first and second defendants were working for Rama. The third defendant was associated with the attempt to exploit the second plaintiff's copyright in these products by unauthorised use of the same via a competing enterprise, that is to say, the firm or joint venture established by the defendants in the manner envisaged by the 15 July agenda.

156 In the circumstances of the present case, I consider that there is a real question to be tried as to whether the third defendant has induced a breach of contractual relations. His e-mails reveal his knowledge that the first and second defendants were employed by the second plaintiff. The e-mails and 15 July agenda indicate that the third defendant was an active participant in a plan whereby the defendants would set up a competing enterprise while the contracts of employment were still in force. The plan provided for the first and second defendants to "exit" the contracts at their convenience.

157 In addition, in my view, as a result of his association with the first and second defendants, the third defendant was arguably acting in breach of copyright. The evidentiary materials show that the third defendant was closely involved in various activities undertaken by the first and second defendants that were initiated while they were still employees of the second plaintiff. The intention was to market Genesys as "our own software". I have already held that there is a serious issue to be tried as to whether Genesys was owned by or derived from software products owned by the second plaintiff. It must follow, having regard to the close links between the parties, that there is a serious issue to be tried as to whether the third defendant was acting in breach of copyright.

158 It is not necessary for me to express a concluded view as to whether the plaintiffs are entitled to succeed in their claims against the third defendant. However, in my view, the plaintiffs are entitled to have the matters in issue brought to trial. It follows from my observations that, in my view, the third defendant's application for summary judgment must be dismissed. There is sufficient evidence in the plaintiffs' favour to justify the grant of an injunction against the third defendant. My earlier observations concerning the balance of convenience apply in this context also.

159 I will hear from the parties as to the exact form of the orders to be made. In essence, however, I am satisfied that orders should be made in the terms of the plaintiffs' minute of proposed orders; that the application brought by the first and second defendants be dismissed; that the third defendant's application for summary judgment be dismissed.