Serious question to be tried
86 As I have mentioned, the respondents submitted that the applicants have failed to demonstrate a prima facie case, and that their case is built upon conjecture. In relation to Mr Farmer, Mr Cuff, their associated companies and OMW Partners, for the reasons set out below, I have come to a different view.
87 It is important that I emphasise that the main issues in dispute on this application are whether there is a serious question to be tried, and where the balance of convenience lies. The Court has not heard any witnesses give evidence because no deponent of an affidavit has been cross-examined. Furthermore, the Court has conducted only an interlocutory hearing. It is not generally appropriate for the Court to decide contested questions of fact on such an application. Accordingly, nothing that is said hereafter amounts to a determination of any of the substantive issues between the parties, which may be fully contested if the matter proceeds to trial.
88 The starting point is to recognise that the applicants' case is largely a circumstantial case, which builds upon an accumulation of detail. Counsel for the respondents made a number of submissions directed to the weakness of various individual parts of the evidence. An example is Mr Farmer's liking of LinkedIn posts, to which I will return. However, in evaluating the strength of a circumstantial case, a court may commit error if it evaluates its component parts, divorced from the whole.
89 I respectfully adopt the following observations of Tadgell JA in Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 141 in relation to the evaluation of circumstantial evidence -
… it should be said that, to assess the evidence in a case like this by reference to various individually-pleaded particulars, as though running through items on a check list, is apt to mislead. The evidence is to be evaluated as a whole in order fairly to consider whether the party bearing the onus of proof has established what is ultimately sought to be proved. The object of the exercise of evaluation is to discover whether the evidence paints a picture reflecting real life, rather than to place a tick or a cross against paragraph after paragraph of torpid pleading. A true picture is to be derived from an accumulation of detail. The overall effect of the detailed picture can sometimes be best appreciated by standing back and viewing it from a distance, making an informed, considered, qualitative appreciation of the whole. The overall effect of the detail is not necessarily the same as the sum total of the individual details: cf Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 at 944; Shepherd v R (1990) 170 CLR 573 at 579-80; 97 ALR 161 at 165.
In a civil case like this, where there is no direct evidence of a fact that a party bearing the onus of proof seeks to prove, "it is not possible to attain entire satisfaction as to the true state of affairs": Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 169; 40 ALR 45 at 55, per Mason J. In such a case, however, the law does not require proof to the "entire satisfaction" of the tribunal of fact.
90 In the present application, the question is whether the applicants have demonstrated that there is a serious question to be tried in relation to ultimate facts where, because of the circumstantial nature of the evidence, there may never be proof to the entire satisfaction of the Court. In my view, the combination of the following circumstances, demonstrated on a prima facie basis by the evidence, lead me to conclude that there is a serious question to be tried as to whether, unless restrained by the Court, there is a real risk that Mr Farmer and BSCT will act in breach of their contractual restraints.
91 First, until Mr Cuff left the WP Business in September 2019, he and Mr Farmer worked together in what Mr Pateras referred to as the Farmer Division, servicing particular clients of the business.
92 Second, there is significance in the fact of the preparation of the spreadsheets by Mr Farmer in April 2018 which listed clients of the WP Business that, on Mr Farmer's account, he proposed to negotiate to take with him at a time when he was considering leaving the WP Business.
93 Third, there is the evidence that in November 2018, Mr Farmer saved two spreadsheets to an external drive titled "Project Beehive.xlsx" and "Project Beehive V2.xlsx". By itself, this evidence does not go far. But in combination with the other evidence it attains significance.
94 Fourth, in January 2019, Mr Cuff and Mr Farmer investigated acquiring an accounting practice together.
95 Fifth, in September 2019, Mr Cuff registered a business under the firm name "Beehive Accounting", and registered a corresponding domain name.
96 Sixth, upon Mr Cuff ending his employment with WP Accounting, he became subject to a restraint clause. By a letter dated 15 November 2019, solicitors acting for Mr Cuff confirmed that he would comply with the post-employment restraints on the terms set out in his employment contract.
97 Seventh, based on the objective evidence in the form of the ASIC records, there is a prima facie inference that Mr Cuff solicited some former clients of the WP Business while his restraint period remained on foot, and as early as January 2020. At [30] of his affidavit of 30 October 2020 filed in this proceeding, Mr Cuff identified some former clients of the WP Business for whom he now provides services, but without stating when they became his clients. Further, it is open to view [26] to [28] of Mr Cuff's affidavit of 30 October 2020, which I have set out at [34] above, as intending to convey the impression that his solicitation of clients post-dated the expiry of the restraint period on 20 September 2020. To similar effect is the outline of written submissions dated 30 October 2020, and filed on behalf of all respondents on 13 November 2020, to which I have referred at [36] above. Mr Cuff's affidavit of 30 October 2020 was filed before Mr Pateras's affidavit of 6 November 2020 which annexed the ASIC searches. Mr Cuff's second affidavit of 16 November 2020 failed to address the available inferences to which the ASIC searches give rise, thereby supporting the view that there is a serious question to be tried concerning what Mr Cuff was doing in his restraint period in relation to his solicitation of former clients of the WP Business to whom he had provided services, and otherwise as to the reliability of the evidence that Mr Cuff and Mr Farmer have given.
98 Counsel for the respondents submitted that every reference to Mr Cuff's expired restraints is a distraction and should be ignored. I disagree. Mr Cuff's conduct, and the dealings between him and Mr Farmer that might be inferred from the totality of the evidence, are relevant circumstances that inform whether the risk that the applicants allege exists, and if so the nature of that risk. Proof of the past conduct of Mr Cuff and Mr Farmer, who have now gone into business together, may give rise to a reasonable apprehension that similar conduct will follow in the future.
99 Eighth, there is a prima facie case that several of the companies associated with former clients of the WP Business who changed their registered office to Beehive accounting in 2020 were clients which Mr Farmer serviced. The respondents relied on the fact that the clients McMahon Entertainment Group and C J Stephens Constructions were listed in Annexure A of the Redemption Deed as sale clients, but a question arises as to the circumstances in which the corporate entities associated with those clients changed their registered addresses to that of Beehive Accounting on 31 January 2020 which, as I have mentioned, Mr Cuff does not address in his affidavit of 16 November 2020.
100 Ninth, the relationship between the timing of relevant events, and the prima facie inferences that are capable of arising from that timing are material to whether there is a serious question to be tried. In particular, triable issues arise in relation to the reasons for which Mr Farmer, when engaged in the WP Business, downloaded work papers for former clients of the WP Business who are now clients of Beehive Accounting on the dates he did. I have referred already to the relationships between those events at [40] to [51], and [54] to [58] above. In some instances, the downloading of papers post-dated the change of the registered office of a relevant corporate entity to the office of Beehive Accounting. For present purposes, the significance of the timing diminishes the claim by Mr Farmer that Mr Pateras was selective in his identification of the occasions of the downloads.
101 Tenth, an ASIC search for Mr Farmer's company, BSCT, shows that since 31 January 2020 its office for ASIC communications has been Mr Cuff's address at 33 William Street, Ringwood.
102 Eleventh, Mr Farmer has decided to go into business with Mr Cuff, and their associated companies are both shareholders of OMW Partners, of which Mr Cuff is a director. This has occurred in all of the circumstances to which I have referred above.
103 Twelfth, there is a triable issue about whether Mr Farmer was frank with Mr Pateras and Mr Wilson when they met with him following his resignation. Mr Farmer denies that Mr Cuff was discussed in that conversation. However, if Mr Pateras's evidence is accepted at trial, then Mr Farmer's denial that he was proposing to go into business with Mr Cuff is capable of being one of the relevant circumstances that falls to be evaluated with the other circumstances.
104 Thirteenth, the evidence about Mr Farmer liking posts of clients of the WP Business on LinkedIn may turn out to be insignificant. The respondents submitted that liking the post of a former client is not a breach of the restraints. However, in combination with the other evidence, the liking of posts of clients of the WP Business on LinkedIn, and the liking of the posts of the marketing manager of the WP Business, are capable of taking on some significance. The effect of liking a post is to remain in the consciousness of the WP Business clients, and in the case of the marketing manager of the WP Business, to be seen to be a part of her professional networks. The liking of such posts may turn out to be a relevant piece of the picture.
105 Fourteenth, there is a prima facie case that on 7 August 2020 Mr Farmer accessed the receptionist procedure manual of the WP Business, and on 11 August 2020, Mr Farmer accessed the files for Trish Anglin and Associates, to which I referred at [70] and [71] above. These events occurred shortly prior to Mr Farmer giving notice. Mr Pateras stated that Mr Farmer had never had any function within the WP Business administration or reception roles, and that there was no legitimate reason for Mr Farmer to access the files for Trish Anglin & Associates. I mentioned earlier at [72] that Mr Farmer did not deny accessing these documents, and did not address the circumstances in which he did so. Counsel for the respondents submitted that as the claim was one for infringement of copyright, Mr Farmer was required to address only whether he possessed copies of the manual, which he had done by denying that claim. There was some force in counsel's submission, because the claims for interlocutory relief set out in the originating application, and in a proposed amended originating application, were relevantly limited to breach of copyright. However, the position was ambiguous because the applicants' claim for final relief extends to an injunction restraining the use of confidential information, and a proposed form of order that the applicants served three days before the hearing departed from the interlocutory orders sought in the originating application, so as to bring within them an injunction against use of the information. Further, those paragraphs of Mr Pateras's affidavit that addressed the downloading of documents were headed, "Improper access and use of WP Business Confidential Information". I have given careful attention to the submissions of counsel for the respondents, but I have come to the view that against the context of all the circumstances set out in the affidavit evidence of Mr Pateras, the evidence that Mr Farmer gained access to the procedure manual invited a response, and the absence of a response by Mr Farmer that set out the circumstances and the purpose for which access was gained bears upon the weight to be given to the applicants' claims.
106 Fifteenth, there are some aspects of the applicants' circumstantial case that carry little weight. The evidence of the email from Jaunt Motors in relation to a Google Meet call is an example. On the other hand, I do not dismiss as insignificant the evidence of Mr Farmer's telephone contact with Ms Letho. There is an inference capable of arising that the conversation between Mr Farmer and Ms Letho extended to Mr Farmer giving her details of his new employment, and other details such that Ms Letho was able to look at the OMW Partners website. Whether that inference arises is a triable issue. If it does arise, it may be another relevant piece of the picture.
107 For the above reasons, I am satisfied that there is a serious question to be tried on the question whether there is a real risk that Mr Farmer will, unless restrained, breach his contractual restraints, including by servicing former clients of the WP Business through the practice of OMW Partners, including those that appear to have retained Beehive Accounting. Mr Farmer and Mr Cuff deny any such intention. It is unnecessary and inappropriate that I say more than I have said, because these issues will be matters for trial.
108 As to the interlocutory relief sought against the third to seventh respondents, the cause of action that is relied upon is the tort of inducing breach of contract, which is an intentional tort. A respondent must know of the contract and sufficient of its terms to know that what the respondent induced or procured the party to the contract to do would be in breach of the contract: Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; 47 NSWLR 473 at [160] (Sheller, Stein and Giles JJA). For these purposes, knowledge may include constructive knowledge, in the sense of recklessness or wilful blindness: Northern Territory v Mengel [1995] HCA 65; 185 CLR 307 at 342 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ), citing Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 at 700-701 (Lord Denning MR). The mere act of inducing someone to act inconsistently with a contract does not amount to knowing procurement to break the contract: Short v City Bank of Sydney [1912] HCA 54; 15 CLR 148 at 160 (Isaacs J). What is required is that a respondent have sufficient knowledge of the contract to ground an intention to interfere with contractual rights: Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43 (Lindgren J, Lockhart J and Tamberlin J agreeing); Daebo Shipping Co Ltd v Ship Go Star [2012] FCAFC 156; 207 FCR 220 at [88]-[89] (Keane CJ, Rares and Besanko JJ).
109 I am not persuaded that there is a prima facie case against Ms Chambers or her company Sur Mon Chemin that they will seek intentionally to induce Mr Farmer or BSCT to breach their restraints. There is little probative evidence that links them to any threatened wrongdoing other than by Ms Chambers' employment by Rose Partners, and Sur Mon Chemin's shareholding in OMW Partners. Towards the end of the first day of the hearing, the applicants applied for leave to reopen their case by adducing evidence of an email dated 28 January 2016 from Ms Maree Pateras to Mr Pateras and Mr Wilson, into which Ms Chambers was copied, which attached a draft pro forma subscription and unitholders deed to support an inference that Ms Chambers had knowledge of the terms of the restraint clause in the deed. I marked the email for identification, and reserved on the question whether to receive it. I have determined to give leave to the applicants to rely on the email. In order to ameliorate any prejudice to the respondents, I gave them leave to file an affidavit of Ms Chambers in response. Unremarkably, Ms Chambers stated that she did not recall the particular email and that she doubted that she would have read the attachments in any detail. The email does not affect my conclusion that the present case against Ms Chambers and her company is weak, and does not rise to a prima facie level.
110 Mr Cuff is in a different position. It is unnecessary that I repeat the serious questions to be tried relating to Mr Cuff's solicitation of clients of the WP Business, and the arguable inferences that arise in relation to Mr Farmer's knowledge and involvement, and their decision to go into business together. There is an available inference that Mr Cuff is aware of the restraints to which Mr Farmer and BSCT are subject, at least because the respondents have been served with copies of the deeds: compare Emerald Construction Co Ltd v Lowthian at 700F. There is in my view a serious question to be tried as to whether there is a risk that Mr Cuff would procure Mr Farmer and BSCT to breach their restraints in the combination of circumstances to which I have referred at [91] to [106] above. As Mr Cuff is a director of Cuff Investments, and of OMW Partners, which is the vehicle through which Mr Cuff, Mr Farmer and others have agreed to conduct business, the same conclusion applies to those companies.
111 I would not grant an injunction against Mr Cuff, Cuff Investments, or OMW Partners in the broad terms sought by the applicants, who sought an order that those respondents not "induce Mr Farmer or BSCT to breach the Unitholder's Deed or the Redemption Deed". Any order should be directed to the restraint provisions of the deeds, which were the subject of the applicant's submissions. The orders should have some precision as to the conduct that is to be enjoined.
112 In relation to the documents that Mr Farmer accessed on 7 and 11 August 2020, to which I referred at [105] above, there was no argument that the information in the documents did not have the necessary quality of confidence about it. The respondents deny having the documents, but Mr Farmer did not deny accessing the documents, and the circumstances in which he accessed the documents remain unexplained. There is a serious question to be tried as to whether Mr Farmer and Mr Cuff, and by extension their companies and OMW Partners, might use confidential information contained in the documents or reproduce the documents.
113 As to the client work papers that the applicants allege that Mr Farmer downloaded without an apparent legitimate reason, I am satisfied that there are serious questions to be tried as to whether the papers have the necessary quality of confidence about them, whether one of the applicants has copyright in the papers, whether Mr Farmer, Mr Cuff, their companies or OMW Partners have those papers, and if so whether there is a real risk that unless restrained they will reproduce or otherwise make use of them in the new business.