FEDERAL COURT OF AUSTRALIA

Armstrong World Industries (Australia) Pty Ltd v Parma [2014] FCA 743

IN THE MATTER OF ARMSTRONG WORLD INDUSTRIES (AUSTRALIA) PTY LTD (ACN 004 747 942)

OTHER MATTERS:

The Plaintiff by its counsel undertakes to the Court and the Defendant:

(a)    to submit to such order (if any) as the Court may consider to be just for the payment of compensation to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof;

(b)    to pay the compensation referred to in (a) to the person there referred to; and

(c)    to preserve the Documents (as that term is defined in paragraph 1 of these orders) that are delivered up to it pursuant to these orders until final determination of this proceeding.

The Defendant undertakes to the Court and the Plaintiff not to use the material set out in paragraph 2 of these orders except for the purpose of prosecuting any current or potential proceeding against the Plaintiff pursuant to the Fair Work Act 2009 (Cth) and/or the Accident Compensation Act 1985 (Vic).

THE COURT ORDERS THAT:

1.     Subject to paragraph 2, pursuant to s 1324(4) of the Corporations Act 2001 (Cth), or, alternatively, s 23 of the Federal Court of Australia Act 1976 (Cth), the Defendant deliver up within 6 days to the solicitors for the Plaintiff, marked to the attention of Simon Dewberry, all documents (including originals and hard and electronic copies) which he has obtained from the Plaintiff and which are in his possession, power or control that are business records of the Plaintiff, including:

  (a)    any commercial, contractual, financial, costing or budgetary documents, or contact lists concerning the Plaintiff;

  (b)    the business records contained in the email correspondence and attachments contained in Annexure LP-5 to the affidavit of the Defendant sworn 8 July 2014 and any other correspondence sent or received by Parma in his capacity as an officer, director or employee of the Plaintiff;

  (c)    the business records contained in the documents obtained by the Defendant as a result of accessing a Dell Latitude E6430 laptop (serial number H771YY1) belonging to the Plaintiff during the period 1 May to 5 June 2014 inclusive;

  (d)    the business records contained in the documents contained in the two lever arch folders observed to be in the possession of the Defendant on 23 June 2014; and

  (e)    the business records contained in the documents copied, printed and/or retained by the Defendant for the purpose of prosecuting any current or potential proceeding against the Plaintiff pursuant to the Fair Work Act 2009 (Cth) and/or the Accident Compensation Act 1985 (Vic) or any other current or potential proceeding;

(together, “Documents”).

2.    The Documents do not include:

  (a)    Any record of the Defendant’s employment terms and conditions or his terms and conditions as the CFO or director of the Plaintiff, including any written contract with the Plaintiff;

  (b)    Any communication between the Defendant and the Plaintiff on or after 1 May 2014 discussing or recording the Defendant’s suspension as an employee or CFO of the Plaintiff;

  (c)    Any communication between the Defendant and the Plaintiff on or after 9 May 2014 discussing or recording the Defendant’s termination as an employee or CFO or resignation as a director of the Plaintiff.

For the avoidance of doubt, in sub paragraphs (b) and (c), “communication” does not include any direct or indirect attachment to the communication which is a business record of the Plaintiff.

3.    Pursuant to s 1324(4) of the Corporations Act 2001 (Cth), or, alternatively, s 23 of the Federal Court of Australia Act 1976 (Cth), an order that forthwith upon compliance with order 1 above, the Defendant delete and destroy all electronic copies of the Documents from any computer, telephone or other electronic device that is in his possession, power or control.

4.    Until the hearing and determination of this proceeding, or further order of the Court, the Defendant (whether by himself or his servants or agents or howsoever otherwise) be restrained from using, copying, forwarding, distributing or disclosing to any person the Documents or any information recorded in those documents, other than for the purpose of complying with these orders.

5.    To the extent necessary, the time for service of this interlocutory process be abridged.

6.    The Defendant pay the Plaintiff’s costs thrown away by reason of the adjournment granted on 7 July 2014 on a party and party basis.

7.    The costs of this interlocutory process are otherwise costs in the cause.

8.    For the avoidance of doubt, the interim undertakings given by both parties on 7 July 2014 are now taken to be discharged.

9.    The hearing of the substantive application is otherwise adjourned to 9:30am on 18 July 2014 for directions.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF ARMSTRONG WORLD INDUSTRIES (AUSTRALIA) PTY LTD (ACN 004 747 942)

REASONS FOR JUDGMENT

Introduction

1    This is an interlocutory application filed by the plaintiff, Armstrong World Industries (Australia) Pty Ltd on 3 July 2014 against Louis Parma, the defendant, seeking an interlocutory injunction. The plaintiff seeks orders, essentially, for the delivery up of what is said to be the plaintiff’s business records and material containing its confidential information, the destruction of any such documents and material in the defendant’s possession, and a restraint upon the defendant using such documents and information.

2    The interlocutory application has been brought in a proceeding instituted by an originating process, also filed on 3 July 2014, which is an application made by the plaintiff under ss 183, 1317E, and 1324 of the Corporations Act 2001 (Cth) (the Act) and also in the accrued jurisdiction of this Court for, amongst other things, declarations and injunctions dealing with alleged contraventions by the defendant of s 183(1) of the Act and breaches of his employment contract with the plaintiff, in particular cl 29 involving the alleged wrongful use and possession by the defendant of the plaintiff’s business records.

3    In terms of the interlocutory application, the initial evidence filed by the plaintiff consisted of two affidavits, the first being an affidavit of Luke Matthew Gattuso affirmed on 4 July 2014, a managing associate of Allens, the solicitors for the plaintiff, and also an affidavit of Shane Gary Bell, sworn on 3 July 2014, a director of PriceWaterhouseCoopers and a computer forensics specialist engaged by the plaintiff.

4    The initial material filed by the defendant in opposition to the interlocutory application was an affidavit of Charles Hamilton Cody sworn on 6 July 2014, a principal of MST Lawyers, the solicitors for the defendant, and an affidavit of Louis Parma sworn on 6 July 2014. That was the material that was before the Court when the interlocutory application was brought on for hearing on 7 July 2014. When the matter was heard on that day, it became clear to me that there was significant uncertainty as to precisely what business records and information of the plaintiff was then in the possession of the defendant. Accordingly, I indicated to the defendant that it may be desirable for him to supplement his material so that this could be made clear.

5    The defendant subsequently applied for and was granted an adjournment until 10 July 2014 to enable such further material to be prepared and served. As a consequence, there was a further wave of affidavit material filed. The defendant filed a second affidavit of Louis Parma sworn on 8 July 2014, and also a second affidavit of Charles Hamilton Cody, also sworn on 8 July 2014. There was a responding affidavit filed by the plaintiff being an affidavit of Emily Amanda Harvey, affirmed on 9 July 2014, an associate of Allens. In consequence of that further affidavit material having been filed, it became clear that the material said to be business records of the plaintiff in the possession of the defendant was of a narrower compass than had originally been perceived by the plaintiff when this interlocutory application was filed.

The apparent facts

6    The plaintiff’s evidence prima facie discloses the following background and contextual facts, which do not appear to be disputed for the purposes of the present application:

(a)    The defendant was employed by the plaintiff as Chief Financial Officer pursuant to an employment contract dated 11 July 2012, on and from that time; the defendant was also appointed a director of the plaintiff on 31 July 2012.

(b)    In performing the role of Chief Financial Officer, the defendant was provided by the plaintiff initially with a pre-used computer and from early January 2014 a new notebook computer for his use, which was owned by the plaintiff.

(c)    On 1 May 2014, the defendant’s employment as Chief Financial Officer was suspended by the plaintiff.

(d)    On 9 May 2014, the defendant’s employment was terminated by the plaintiff. At that time the defendant was required to return all property, including the notebook computer, to the plaintiff. There does seem to be a question about the timeframe 9 May to 12 May 2014 as to whether there may have been a delay permitted to make that return. The defendant also asserted some waiver of rights flowing from the dealings in the period 1 May to 12 May 2014; I am not sure that waiver argument has any substance, but in any case it does not change my views on the prima facie case limb of the injunction test as I will discuss later. I should note that the notebook computer was not returned to the plaintiff until 5 June 2014. Also on 9 May 2014, the defendant resigned his position as a director.

(e)    On 27 May 2014, the defendant filed a general protections application with the Fair Work Commission alleging that his termination breached s 340 of the Fair Work Act 2009 (Cth) (Fair Work Act). The application was made under s 365 of the Fair Work Act. The defendant expressly referred to making this application in his capacity as an employee. The plaintiff responded to that application on 4 June 2014. On 23 June 2014, there was a conciliation conference held between the parties at the Fair Work Commission in Melbourne. That seems not to have resolved the matter and that Commission proceeding has now terminated. It seems, though, notwithstanding that the proceeding in the Commission has now terminated, that there may still be pursued in this Court a general protections court application.

(f)    There is a 14-day window under s 370 of the Fair Work Act for the commencement of that application in this Court, operating from the date of the issue of a relevant certificate by the Fair Work Commission under s 368 of the Fair Work Act. A certificate was issued on 30 June 2014.

(g)    This 14-day timeframe is almost concluded, albeit that there is capacity under the Fair Work Act to extend that timeframe (s 370(a)(ii)). It expires on 14 July 2014.

7    With respect to the contractual position as between the plaintiff and the defendant, the defendant began employment in July 2012. In the material there are written terms and conditions of that employment, which are essentially set out in a letter headed “Offer of Employment” sent by the plaintiff to the defendant on 27 June 2012. Clause 20 of the terms and conditions permits termination of the employment for any reason, and also provides in its terms:

Upon ceasing employment with the employer for whatever reason, the employee must within 24 hours, return to the employer all equipment, property, records, documents etc, in whatever form, which belong to the employer. The employee must not keep any copies, in any form whatsoever of any employer information or material without the express written permission of the employer.

8    There are other terms and conditions that I will just note: cl 24, and also cl 27, which is an express confidentiality provision. The other clause to which attention should be drawn is cl 29. This clause is referred to in the originating process. In its terms it provides:

The employee agrees that all equipment, records, documents and other papers, material, property and information of any kind and in any form, remain the property of the employer. The employee further agrees not to copy any such confidential material in his or her possession at any time except for appropriate internal company use, and under no circumstances to distribute such material outside the company without specific authorisation.

The employee agrees to return all such material in his or her possession to the employer on termination of the employment.

9    I have made inquiry of the plaintiff as to whether for the purposes of this interlocutory application it also relies upon any separate fiduciary relationship arising between the parties and any breach of relevant fiduciary obligations. But the plaintiff does not presently rely upon any such fiduciary relationship arising between employer and employee (or prior relationship) or any breach of any fiduciary obligation thereunder.

10    Just to elaborate in more detail on the question of the suspension and termination of the defendant’s employment. As I have said, on 1 May 2014, the defendant was suspended, apparently as a result of what were said to be bullying complaints.

11    Apparently there were communications between the plaintiff and the defendant concerning such allegations during the timeframe 1 May 2014 to 9 May 2014. From what I can discern from the material, the plaintiff sought some response from the defendant in relation to those bullying allegations. On 9 May 2014 the defendant’s employment was terminated, and on that date a request was made to return all the plaintiff’s property, including the notebook computer; I have already noted that this was not returned until 5 June 2014.

12    Apparently, on 23 June 2014 when the plaintiff’s solicitor attended a conciliation conference with the defendant and his solicitor in the Fair Work Commission, the plaintiff observed two lever arch folders of documents in the defendant’s or his solicitor’s possession, and at that stage formed a suspicion, or at least its interest was enlivened, as to whether the defendant had accessed, retained or used some of the plaintiff’s business records in a manner which was inconsistent with the terms of the defendant’s employment contract or inconsistent with the provisions of s 183(1) of the Act.

13    After that time, correspondence ensued between the parties, with the plaintiff asserting that the defendant was not entitled to retain or use such documents or information. The defendant, for his part, certainly through his legal advisors, did not seem to take issue with the fact that he had possession of some of the plaintiff’s documents, but asserted his entitlement or right to retain such documents for use in the proceedings that he had brought in terms of the Fair Work matter or what might subsequently be brought in this Court in terms of a general protections court application or, indeed, other proceedings, such as WorkCover proceedings and the like.

14    Let me move to a separate matter. The notebook computer was returned by the defendant to the plaintiff on 5 June 2014. The plaintiff, after the notebook computer had been returned to it, had it examined by a forensic specialist, Mr Bell, to see what information had been used, including the accessing, electronic copying and deleting of documents, during the period 1 May 2014 to 5 June 2014. The notebook computer, a Dell Latitude E6430 Laptop, serial number H771YY1, was examined by Mr Bell. His affidavit, which I have referred to earlier, sets out his analysis of that computer and how it had been used and accessed during the period 1 May 2014 to 5 June 2014.

15    According to his analysis, which is untested at this stage, the notebook computer had apparently been accessed by the user, presumably the defendant, on numerous occasions during that time frame, with the majority of user activity occurring after the date of termination of employment. It also appears that two external USB devices had been connected to the notebook computer and files containing, amongst other things, the plaintiff’s business records may have been transferred across from the computer to those devices. Notwithstanding the forensic analysis conducted by Mr Bell, it was unclear as to precisely what files had been transferred across to the USB devices.

16    It was also apparent from Mr Bell’s forensic examination that what has been described, perhaps pejoratively, as “anti-forensic software” had been used on the notebook computer. I do not need to form a view about whether that pejorative description is apposite. It seems common ground that software known as “CCleaner” was executed on the notebook computer on multiple occasions, as well as a Microsoft Windows Disk Clean-up application. One or both software applications apparently caused some 9,398 files to be deleted from the notebook computer, with the vast majority of those being deleted on 19 May 2014, after the defendant’s termination of employment.

17    At the time this application for an injunction was filed, there was the flavour of a suggestion in the plaintiff’s material that an inference should be drawn that hundreds, if not thousands, of the 9,398 files were transferred by the defendant across to the USB devices from the notebook computer and then deleted from the notebook computer. Further, that a very large proportion of these files contained the business records of the plaintiff. I am unable to conclude that from the evidence, and that is not expressly confirmed in the affidavit of Mr Bell. The second wave of affidavit material filed by the defendant at face value suggests that there was not such a wholesale transfer of large numbers of files from the notebook computer through the use of the USB devices.

18    There was a change in the apparent factual landscape from the time this application was filed through to a few days ago, which narrowed the scope, at least factually in one respect, in relation to what was now in the possession of the defendant in terms of the plaintiff’s business records. Nevertheless though, it would appear on the evidence that the defendant still has in his possession a significant number of the business records of the plaintiff. There is prima facie evidence of such possession. Further, the defendant is so in possession, even though he is no longer a director, officer or employee of the plaintiff. Indeed, it does not seem to be contested by the defendant that he is in possession of some of that material. The point advanced on the defendant’s behalf by his solicitor earlier this week was that he was entitled to use that material, not that he did not have possession of that material. I proceed on the basis that there is sufficient prima facie evidence that the defendant is now in possession of a significant number of the business records of the plaintiff.

19    Moreover, in terms of the evidence, it seems to me that there is a threat to use such material, with the real issue between the parties being the precise scope of the threatened use and whether it is a legitimate use or not. The defendant, through his solicitor, has in essence conceded that the defendant has some of the plaintiff’s business records and that the defendant wants to use them.

The two bases for the injunction

20    There are two bases asserted for the interlocutory injunction. First, there is the statutory basis under s 1324 of the Act, which provides for the statutory injunctive remedy applicable to an actual or threatened contravention of s 183(1) of the Act; there is express statutory power under s 1324(4) of the Act to grant what is described as an interim injunction which for practical purposes is equivalent to an interlocutory injunction. The second basis for the injunction sought is the standard equitable basis flowing from the alleged breach of the employment contract, enhanced by or reflected in the power under s 23 of the Federal Court of Australia Act 1976 (Cth).

21    The statutory test for the grant of an injunction under s 1324(4) is in form and partly in substance different to the equitable basis, which is discussed in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 (ABC v O’Neill) in the well-known passages from the reasons of Gummow and Hayne JJ at [65]–[72].

22    The jurisdiction that the Court is exercising under s 1324(4) of the Act differs from the traditional equitable jurisdiction in at least one type of factor that should be taken into account. The additional factor that s 1324(4) of the Act considers is whether the injunction would have some utility, or would serve some purpose, within the contemplation of the Act such as preventing or ameliorating a threatened contravention of the Act. There is a discussion of the relevant additional dimension to the statutory provision in Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd (2002) 42 ACSR 605 at 613-614 per Palmer J.

23    There are nice academic points as to the difference between the two bases. But such niceties matter not in this case. I have decided that an injunction ought to be granted, which can be supported in the traditional equitable jurisdiction by the principles illuminated in ABC v O’Neill. Further, and in any event, for the same reasons that those equitable principles can be invoked to justify the grant of an injunction, similar reasons would also justify the grant of an injunction under s 1324(4) of the Act in terms of the prima facie contravention of s 183(1), actual and threatened, which I consider to have been established on the material filed to date. I accept that the material is untested at this stage.

Prima facie case

24    Let me turn then to the ABC v O’Neill test and the prima facie case limb. It is necessary to show a sufficient likelihood of success to justify the grant of the injunction, with such sufficiency being dependent upon the nature of the right being asserted and the practical consequences that are likely to flow if an injunction was granted. I note that both parties’ submissions referred not to the “prima facie case” formulation, but to the “serious question to be tried” formulation. I prefer the prima facie case formulation.

25    First, that formulation commanded majority support in ABC v O’Neill. It was expressly referred to by Gummow and Hayne JJ, supported by Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 (Beecham); further, Gleeson CJ and Crennan J agreed with the exposition of the principles set out by Gummow and Hayne JJ. Second, many decisions of this Court have used the prima facie case language. Third, the serious question to be tried formulation had its genesis with earlier authority where the bar might be perceived to have been set too low as a consequence of the use of such phraseology. Earlier authority did not colour such a formulation with the flexibility and nuance that is now expressly required as set out above. Although nothing turns on this for present purposes, I am going to apply the language of the prima facie case formulation as it has a more sympathetic resonance with what Gummow and Hayne JJ said in ABC v O’Neill at [65] and [71], rather than renovating a phrase which in any event is not sourced to Beecham.

26    The second preliminary matter is that part of the relief sought by the plaintiff is in the form of a mandatory injunction. But there is no separate test. The ABC v O’Neill test is equally applicable to mandatory injunctions in terms of the formulation of the test as distinct from its application in a particular case. The plaintiff does not have to show anything additional, such as a “high degree of assurance”. This has been discussed in earlier authorities, including by Gummow J in Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 15 ALD 479.

27    Sometimes, the approach in the context of mandatory injunctions has been to view the matter through the lens of taking the course that produces the lesser risk of injustice if it should turn out that the decision of the court is “wrong”, in the sense of either granting an injunction where a party fails or would fail to establish its right at trial or failing to grant an injunction to a party who succeeds or would succeed at trial. It has been previously thought that, generally, a mandatory injunction will usually have the consequence of creating a greater risk of injustice if granted and the decision turns out to be “wrong”, rather than if it were to be with-held.

28    Now several points. First, this lens is not, in form, how the second limb of the ABC v O’Neill test has been formulated, but some aspects of this lens are not mutually inconsistent with that second limb. Second, one cannot generalise in relation to mandatory injunctions in any event. Third, but it may be that for a particular form of mandatory injunction in a particular case, if such a lens were to be used, that the strength of the prima facie case may be relevant to that lens; the stronger the prima facie case, the less the likelihood of being “wrong” if the injunction was to be granted. Now this is not a backdoor for some requirement for a “high degree of assurance” being necessary to be shown for mandatory injunctions in general, but rather suggests that the strength of the prima facie case should be in the mix in dealing with the balance of convenience at least. I deal with that issue later. Moreover, even on the first limb, the strength of the probability required depends, in part, on the consequences likely to flow. If the consequences are more severe with respect to a particular mandatory injunction, then the probabilities required might rise.

29    Here, some orders in the nature of mandatory injunctions are sought. But for present purposes, the fact that the plaintiff has partly sought orders of a mandatory type does not, to my way of thinking, change the landscape in the present case given their particular nature and their particular effect and consequences for the defendant if made.

30    It is now appropriate to say something about s 183(1) and s 198F of the Act, which provide:

183    Use of information--civil obligations

Use of information--directors, other officers and employees

(1)    A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a)    gain an advantage for themselves or someone else; or

(b)    cause detriment to the corporation…

…

198F    Right of access to company books

Right while director

(1)    A director of a company may inspect the books of the company (other than its financial records) at all reasonable times for the purposes of a legal proceeding:

(a)    to which the person is a party; or

(b)    that the person proposes in good faith to bring; or

(c)    that the person has reason to believe will be brought against them.

Right during 7 years after ceasing to be director

(2)    A person who has ceased to be a director of a company may inspect the books of the company (including its financial records) at all reasonable times for the purposes of a legal proceeding:

(a)    to which the person is a party; or

(b)    that the person proposes in good faith to bring; or

(c)    that the person has reason to believe will be brought against them.

This right continues for 7 years after the person ceased to be a director of the company.

Right to take copies

(3)    A person authorised to inspect books under this section for the purposes of a legal proceeding may make copies of the books for the purposes of those proceedings.

Company not to refuse access

(4)    A company must allow a person to exercise their rights to inspect or take copies of the books under this section…

31    There was a submission made by the defendant that, if his conduct had been brought within s 198F of the Act in terms of obtaining information and the purpose stipulated under s 198F, that then would necessarily entail that no improper purpose was established under s 183(1).

32    It is apparent that s 198F only applies to a director, and where a director seeks and obtains information for a specified statutory purpose in his capacity as a director (see Archer Capital 4A Pty Ltd v Sage Group PLC (No 3) (2013) 306 ALR 414 at [119] per Wigney J). It does not apply to a person who is otherwise obtaining information or using it in their capacity as an employee or other officer. So whatever the scope of s 198F of the Act, and even if it might have potentially applied to the defendant, it could only apply to him in his capacity as a director. Proceedings brought for or against the defendant or foreshadowed in a non-director capacity do not enliven its scope. In my view, the defendant’s general protections application and any further applications of that type are of the latter variety; so too any proceedings that may be brought in relation to the bullying allegations.

33    From the information in the affidavit material, the obtaining of the plaintiff’s documents and the use to which the defendant wants to put them does not appear to me to have much to do with his position and his capacity as a director, but all to do with his position and his capacity as an employee or the Chief Financial Officer. Moreover, the plaintiff’s business records said to be in the possession of the defendant or used by him may arguably be beyond the scope of what s 198F would permit to be inspected and copied in any event, putting to one side the capacity question. And in all events, s 198F was never invoked by the defendant to obtain information. Rather, the argument put by the defendant was that s 198F could have been invoked, and if he could have obtained that information through that statutory path then that somehow retrospectively legitimises the initial obtaining of the information through another arguably illegitimate path. I do not think s 198F works in that way. If s 198F was not originally invoked, it cannot be used in my preliminary view to eliminate an otherwise improper use under s 183(1). And if it had been invoked, it would not eliminate the improper use in the defendant’s capacity as an employee or other officer. But this is all a matter for trial. But the existence of the future possible pathway of s 198F to obtain some of the documents may have relevance to the balance of convenience, which I will discuss later.

34    In my view, there is a prima facie case that the plaintiff’s business documents that have been obtained by the defendant, and the defendant’s stated purpose for using those documents, would amount to a contravention of s 183(1) of the Act. Use of information in breach of a contractual obligation can constitute “improper” use of that information (Andrews Advertising Pty Ltd v David Andrews (2014) 99 ACSR 164 at [180] per Darke J). The defendant obtained such documents as an employee. He has such documents in his possession, and is now using or threatening to use them for his own advantage, but not in the way that prima facie appears to be permitted under s 183(1) of the Act. On the material, there is a prima facie case that the plaintiff’s business records and information are being used for an improper purpose, and the possible later exercise of rights under s 198F does not change the characterisation of such behaviour. The other matter in terms of the prima facie case limb is the contractual claim. I have already set out the provisions of the contract. In my opinion there is also a prima facie case established by the plaintiff for a breach of the contract of employment, in particular, cl 20 and cl 29. And although there has been, of course, termination of the contract, it would seem to be reasonably arguable at the least that those particular provisions survive termination; moreover, if a claim for a breach of fiduciary obligations was ever pursued, that latter issue may diminish in ultimate significance.

35    The defendant did not argue strongly against the proposition that a prima facie case had been established, although from time to time there was, during his submissions, suggestions by him that he was entitled to download, use and retain certain information to respond to the bullying allegations, and justification for otherwise using the material because it could in any event have been obtained under s 198F of the Act. It is sufficient to say that even if such propositions were arguable, that they would not deny the proposition that on the present material a prima facie case has been established, not only in relation to the defendant’s use and possession of the material during the timeframe 1 May 2014 through to 9 May 2014, but equally, if not more importantly, during the timeframe 9 May 2014 through to 5 June 2014. Moreover, it is no answer for the defendant to say that in relation to the documents he accessed to respond to the bullying allegations during 1 May to 9 May 2014 that because he was initially asked to respond, he was therefore entitled to retain them after termination as being his “own property”. In any event, after 9 May 2014, it appears that the defendant retained more of the plaintiff’s business records than those that simply responded to the bullying allegations.

36    The debate between the parties concentrated more on the strength of the prima facie case. There is a strong prima facie case that the defendant was not entitled to retain the notebook computer on and after 9 May 2014, and more clearly not after 12 May 2014, through to 5 June 2014, that he was not entitled to access the files which were not his personal files, that he was not entitled to employ cleansing software to delete numerous files containing the business records of the plaintiff from the notebook computer, and that he was not entitled to employ the USB devices to transfer any of the plaintiff’s business records from the notebook computer to the USB devices. I appreciate, from the material that was filed several days ago, that Mr Parma says that what was transferred onto the USB devices were only his personal files rather than anything else, but there still seems to be a live and triable issue on that question.

37    I also find that there is a strong prima face case established by the plaintiff that the use to which the defendant wishes to put some of the plaintiff’s documents is a purpose that is neither permitted by the terms of the employment contract nor permitted by s 183(1) of the Act. The defendant has said that he will keep the documents confidential. That may be, but my view is that there is a prima facie case made out by the plaintiff that he should not have them at all, let alone be using them for his own benefit, even if he is prepared to treat them as confidential.

38    Likewise, I accept that the defendant says he only wants to use this material for the purposes of the proceedings that he has brought or he has foreshadowed. Whilst that might be an understandable purpose when seen through the lens of the defendant’s self-interest, nevertheless that does not itself justify obtaining and using that material through the route he has taken. What may prima facie be described as a self-help remedy taken by the defendant in terms of obtaining this material does not legitimise it. If the plaintiff’s material is to be used, the normal and legitimate course is that the usual processes of discovery and the like should be used to obtain this material, rather than some self-help remedy. To my way of thinking, the first limb of ABC v O’Neill is satisfied, and I would describe the case in terms of the alleged breach of contract and the alleged contravention of s 183(1) as a strong prima facie case.

Balance of convenience

39    The more difficult issue for me in this case has been with the question of the balance of convenience. Let me being with several preliminary observations. First, this is not a typical case where a former employee has threatened to use confidential information of a former employer by giving it to a competitor or setting up a rival business for himself. Rather, the defendant in this case wants to retain the material and use it for his own benefit in legal proceedings against the plaintiff and possibly to defend himself from any proceedings related to the bullying allegations, although the latter are not currently threatened. There are numerous authorities dealing with balance of convenience questions in the “standard” scenario but these are not useful for my context.

40    Second, the evidence now appears to establish that the plaintiff’s business records that are now in the defendant’s possession arguably appear to be of a narrower compass than the plaintiff originally anticipated. Third, some of the documents relate to the bullying allegations that, in fairness to the defendant, he was called upon to answer after he was suspended from employment on 1 May 2014. The defendant says that he accessed and copied some documents before 9 May 2014 to answer those allegations and that accordingly he was entitled to retain such documents thereafter. As I have said that conclusion does not follow and does not negate a prima facie case, but it may be relevant to the exercise of my discretion and I have taken this into account. Of course, the point does not say anything about documents accessed after 9 May 2014 or the access or use of any documents unrelated to the bullying allegations.

41    Just returning to this issue of what precisely is now in the defendant’s possession, the plaintiff has made a number of criticisms of Mr Parma’s second affidavit in relation to what he says he now has in his possession. It is undesirable for me on this interlocutory application to go through such criticisms in detail. Some of them appear to be of substance, some of them less so. But it appears that it is still a live issue as to precisely what Mr Parma has or what is in his power or control but physically say held by his solicitors. Also there seems to be a live issue of what electronically might still be available to him. But on any view, it seems that we are now dealing with a smaller pool of the plaintiff’s business records now in the defendant’s possession, power or control than what had originally been anticipated by the plaintiff at the time of the filing of the interlocutory injunction application.

42    The balance of convenience looks at what the inconvenience, injury or injustice to the plaintiff would be if the injunction were refused and seeks to weigh that against the inconvenience, injury or injustice to the defendant if the injunction were granted. Only if the balance lies in favour of the plaintiff, that is, if the inconvenience, injury or injustice to the plaintiff if the injunction were refused outweighs the defendant’s prejudice, would an injunction be granted. It was submitted by the plaintiff that I should assess the balance of convenience also in the context of considering the strength of the prima facie case: Samsung Electronics Co Limited Ltd v Apple Inc (2011) 217 FCR 238 (Samsung) at [67]. I agree that the stronger the prima facie case, then the less strong the balance has to weigh in favour of the plaintiff. Putting it slightly differently, if the balance is more equally poised, but the plaintiff has a strong prima facie case, then the interaction between the two limbs may tip the balance in favour of granting an injunction. Moreover, if mandatory orders are sought, the relevance of the strength of the prima facie case may take on an additional dimension for the reasons previously discussed, but not in the previously discarded “high degree of assurance” threshold sense.

43    As I have already said, the plaintiff, in my view, has a strong prima facie case. Therefore, I take that into account in looking at the weighing of the balance of convenience. Generally, the plaintiff puts the point that it would suffer real prejudice if the injunction were refused. It says that it has lost control of its documents through the defendant’s actions, that there has been a subversion of its rights and that damages would not be an adequate remedy. There is considerable force in each of those submissions.

44    I put the point to the plaintiff’s counsel Ms Robyn Sweet that the plaintiff might have to produce these documents in any event under s 198F or through the discovery process, but she rightly submits that for the s 198F route, that can only be enlivened by the defendant in his capacity as a director, which arguably seems to have little to do with the proceedings that the defendant has foreshadowed. Further, in terms of discovery, that is not a matter of right for the defendant and there may be a real issue about whether discovery is ever given at all or its timing or ambit. So the fact that these documents (or some of them) may potentially be able to be obtained by the defendant through a legitimate means in any event is a matter of speculation, particularly if the defendant does not bring any separate proceedings or brings proceedings which resolve before discovery is given. Further, these possibilities say nothing about the risk of broader use or dissemination. I also raised with the plaintiff whether s 138 of the Evidence Act 1995 (Cth) may remedy or ameliorate any detriment to the plaintiff if the defendant used the plaintiff’s documents in other proceedings against the plaintiff. But the conditions for its successful exercise are problematic, including the balancing aspect. Moreover, no separate proceedings may in any event be brought, and if they were, query what documents would be sought to be tendered by the defendant; it is unlikely that they would embrace all the plaintiff’s business records in the possession of the defendant. And again, that scenario does not address broader use or dissemination.

45    I also put to the plaintiff’s counsel the question of whether the “horse had bolted” in the sense that the defendant seems to have already obtained and used some of this material in the earlier Fair Work Commission proceedings. The point was made, and I accept, that the fact that the material has been used elsewhere ought not justify the defendant being able to continue to use it, particularly if the original use itself was not legitimate. But this reality is not irrelevant to my consideration of the balance of convenience.

46    The plaintiff also sought to invoke what was said in Samsung at [68] about having to take into account the impact of granting or refusing the injunction on the public generally, that is, that if an injunction in this case were refused, that would, to use the plaintiff’s language, lead to “a loss of public confidence in the court’s justice system” and the like, and otherwise encourage people to take other questionable self-help remedies in other contexts and to then seek to retrospectively legitimise their behaviour The Court in Samsung was referring to a different dimension, but in any event I accept that the plaintiff’s point reflected in its apparent helpful concern for the public interest is not an unimportant consideration to take into account. I have concluded, however, that the other more direct and tangible reasons advanced by the plaintiff as to why the balance of convenience lies in its favour are more compelling, particularly in the context of it having a strong prima facie case on the present material.

47    The defendant contends that the balance of convenience lies in his favour. Let me deal with a few preliminary matters. First, the defendant will have the benefit of an undertaking as to damages, so that should partly deal with any inconvenience that might flow to the defendant if the injunction were granted. Second, as I understand it, the plaintiff will also undertake to preserve any documents handed back to it; again that would potentially ameliorate some prejudice. Third, the defendant contends that the plaintiff does not have a strong prima facie case. I disagree.

48    Generally, the defendant’s principal prejudice was said to be that if an injunction was to be granted, then he could not launch his other foreshadowed proceedings without having these documents. I must say that even if that were so, that still does not in my mind justify an arguably illegitimate self-help remedy to get the documents being condoned. In any event, there is a contest between the parties as to whether the defendant needs these documents for the purposes of bringing a general protections court application in this Court. There seem to be arguments going both ways.

49    The plaintiff says that even if the documents were handed back, the defendant now has sufficient information to legitimately file a general protections court application, even if he may not at this stage have the evidence necessary to adduce if the documents were returned to the plaintiff. On the other hand, the defendant’s solicitor swore an affidavit on 8 July 2014  where he deposed, with respect to the foreshadowed general protections court application:

The draft application makes serious allegations in relation to the conduct of senior executive officers which could not be supported without reference to and production of documentary evidence.

50    Of course, Mr Cody only needs instructions and a proper basis for making the allegations for the commencement of proceedings. He does not have to have all of the evidence in an admissible form in his possession before an application is brought. I cannot resolve the matter definitively, but my preliminary view is that Mr Cody has overstated his position on this question. If the general protections court application was to be based on the fact that the defendant had been terminated because he made complaints about his employment, then given the “reverse onus” provisions of s 361 of the Fair Work Act, proving that he was an employee, proving that he made complaints about his employment and proving termination may be sufficient to justify filing a general protections court application. The plaintiff also says that Mr Cody may have been equivocal in how he expressed himself when he deposed that he: “would not recommend to an applicant, in such cases, that they proceed with such allegations unless there are reasonable grounds to make the allegations”. That statement was not necessarily saying that he needed the plaintiff’s business records in his possession before filing. I do not need to go any further. I am not persuaded that it is clear that the defendant needs to have the plaintiff’s business records in his possession before he launches the general protections court application in this Court.

51    But even if I thought that the defendant needed those documents before filing such an application, there is scope under the Fair Work Act for him to apply for an extension of time to bring the general protections court application whilst he invoked proper processes to obtain the plaintiff’s business records. If the documents were critical, there could be an application for pre-action discovery to get the documents.

52    There was another matter that was raised by the defendant. The defendant’s solicitor made a submission that because the defendant has now listed the plaintiff’s documents that he now has in his possession relevant to his claim, and shown copies of those documents to the plaintiff, that that somehow has given the plaintiff a forensic advantage. Even if I assume that to be so, I find it difficult to understand how that is relevant to the balance of convenience question as to whether there should be a restraint on any future use pending trial or delivery up of any such material pending trial.

53    It may be that the defendant has now listed the plaintiff’s documents in his possession and provided copies of those documents. But if the documents are the plaintiff’s documents, so be it. Indeed, that is what I would have ordered to be done as an ancillary order as part of any grant of an injunction, if it had not been done already.

54    In summary, in my view, the balance of convenience justifies the grant of a form of injunction in favour of the plaintiff against the defendant. In my view, the asserted prejudice flowing to the defendant if the injunction was granted was underwhelming and outweighed by the plaintiff’s prejudice if the injunction was refused. The outweighing coupled with the strong prima facie case justifies an injunction being granted. I propose to grant an injunction as sought by the plaintiff, but with some significant modifications which I will discuss with the parties.

Associate:

Dated:    17 July 2014