FEDERAL COURT OF AUSTRALIA

Prestige Lifting Services Pty Ltd v Williams [2015] FCA 1063

THE COURT ORDERS THAT:

1.    Within 21 days of the date hereof, the parties file and serve proposed minutes of orders and short submissions in support thereof (no more than five pages) to give effect to these reasons including as to the form of relief, interest and costs.

2.    Costs reserved.

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

REASONS FOR JUDGMENT

1    The applicant (PLS) has carried on a business of installing and maintaining elevators. By this proceeding it makes claims against:

(a)    its former executive director, the first respondent (Williams);

(b)    its former employee, the fourth respondent (Hoffman);

(c)    a competitor of PLS, TAG Cranes Pty Ltd (TAG), the second respondent; and

(d)    a director of TAG, the third respondent (Gardiner).

2    PLS claims that Williams and Hoffman breached various fiduciary, contractual and statutory duties and also breached duties of confidence. A further claim is made against Williams in respect of funds of PLS used by him to meet unauthorised personal expenses and obligations. PLS has also claimed against TAG and Gardiner for knowing assistance in respect of Williams’ and Hoffman’s breaches of fiduciary duty under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 and as persons involved in the breaches of statutory duty by Williams and Hoffman.

3    The claims of PLS involve the following elements:

(a)    Williams and Hoffman worked with PLS in senior roles. They had access to PLS’ confidential information in relation to customers and suppliers.

(b)    There was a falling out among the shareholders of PLS. Between October 2011 and January 2012 Williams assumed de facto control of PLS and involved Gardiner in the operations of PLS.

(c)    In February 2012 Williams and Hoffman left PLS and in March 2012 went to work at TAG Lifts, a competing business established by Gardiner through the corporate vehicle of TAG. The business of TAG Lifts was owned and operated by TAG. The business name “TAG Lifts” had been registered as a business name on 27 February 2012. TAG had been incorporated on 31 August 2011. The sole director and secretary was Gardiner; he was also the sole shareholder.

(d)    As officers and/or employees of TAG, Williams, Hoffman and Gardiner used PLS’ confidential information to compete with PLS. In particular, four PLS client projects were diverted away from PLS and undertaken by TAG. TAG was only able to obtain and undertake these projects by using PLS’ confidential information.

(e)    Further, whilst at PLS, Williams spent its funds without authority and not for the benefit of PLS.

4    TAG has been wound up and was deregistered on 7 March 2014. PLS has not proceeded with its claim against TAG. Williams was not represented at trial. Gardiner was also not represented at trial. Accordingly, the trial proceeded as an unopposed matter concerning Williams and Gardiner. Hoffman has actively defended the proceeding and was represented at trial. The trial of this matter had been postponed by the previous docket judge and more recently by me due to recent health issues of Hoffman.

5    In summary, and for the reasons set out below, PLS has established its claims against Williams, Gardiner and Hoffman.

the pls projects

6    There were four proposed projects to be undertaken by PLS that were side-streamed to TAG. It is convenient to set out a description of these projects at the outset.

7    As at February 2012, PLS had agreed to supply and install lifts at four sites; I should say however that the “firmness” of the Dorcas St Job (as later described) was more problematic than for the other projects. Negotiations for these agreements had commenced in 2011 and included PLS providing ongoing maintenance and service at these sites. The sites were:

    1 lift at Central Schule, Chabad Synagogue at 4 Maple Street, Caulfield South (the Synagogue Job);

    2 lifts at 211 Dorcas St, South Melbourne (the Dorcas St Job);

    3 lifts at 1142 Nepean Hwy, Highett (the Nepean Hwy Job); and

    1 lift at 218–224 High St, Ashburton (the High St Job).

8    None of these projects proceeded under the auspices of PLS. Had they proceeded, the customers at each job would have paid fees to PLS for the supply and installation of lifts at each site. Further, PLS would have received ongoing revenue by way of service and maintenance fees on a quarterly basis in connection with these jobs.

9    Valeo Construction Pty Ltd (Valeo Construction) was the customer (and builder) for the Nepean Hwy Job, the High St Job and the Dorcas St Job. Valeo Construction had accepted PLS’s offers to supply and install lifts at the Nepean Hwy Job and the High St Job and was likely to accept the Dorcas St Job. Valeo Construction had been in negotiations with PLS regarding the Dorcas St Job since June 2011 when PLS submitted a quotation for the Dorcas St Job. PLS had also created drawings for the Dorcas St Job and had been in communication with Valeo Construction about amending the drawings to meet the required specifications for the lifts.

10    Behmer & Wright Pty Ltd (Behmer & Wright) was the customer (and builder) for the Synagogue Job.

11    Williams and Hoffman had been involved in all of these jobs on behalf of PLS. Since 2008, Hoffman had been the sales manager at PLS and responsible for sourcing and securing various jobs to be undertaken by PLS. His role was to manage the sales process on behalf of PLS, to negotiate prices and terms and to create quotations for customers. Hoffman created and submitted all PLS quotations for the jobs and was in communication with employees of Valeo Construction and Behmer & Wright. Williams was also in communication with Valeo Construction and Behmer & Wright in relation to the jobs. Both Williams and Hoffman were in communication with PLS’ Spanish lift supplier, ORONA Group (ORONA), regarding the purchase of the lifts by PLS for these jobs.

12    PLS intended to carry out all of these jobs. It is convenient to elaborate on the detail of each project in turn.

(a)    Nepean Hwy Job: 3 Lifts

13    On 3 May 2011, PLS submitted a quotation to Valeo Construction, as requested by Valeo Construction, for the supply and installation of three (3) ORONA MRL passenger lifts for the total installed price of $207,383.50+GST at 1142 Nepean Highway, Highett. The details of the lifts are set out in the quotation and are as follows:

Lift A: ORONA 1000kg 6 Stop MRLG Passenger Lift, car 1100w x 2100d

(lift number EXAS03270PP)

Lift B: ORONA 800kg 5 Stop MRLG Passenger Lift, car 1250w x 1450d

(lift number EXAS03271PP)

Lift C: ORONA 800kg 5 Stop MRLG Passenger Lift, car 1250w x 1450d

(lift number EXAS03272PP)

The quotation was prepared and sent by Hoffman. The payment terms set out in the quotation required Valeo Construction to pay PLS a 10% deposit with the order, 30% of the cost payable at receipt of approved drawings, 40% of the cost payable at receipt of Bill of Lading and the final payment within 14 days of hand over.

14    On 11 May and 17 May 2011 PLS created drawings for the Nepean Hwy Job.

15    On 13 May 2011, PLS received order confirmations from ORONA for the three (3) lifts required for the job. The order confirmations were marked “Att: Dale Williams”. The ORONA lift codes were as follows:

EXAS03270PP

EXAS03271PP

EXAS03272PP

16    Around this time, PLS and Valeo Construction appear to have entered into a trade contract for the Nepean Hwy job. There was in evidence an unexecuted copy of that contract which appeared to be a standard form contract used by Valeo Construction with its suppliers. The uncontested evidence of PLS was that this had been agreed to. The PLS representative stipulated on this contract was Hoffman.

17    On 27 July 2011, PLS issued three tax invoices to Valeo Construction for the deposits of 20% of the contract value for each of the lifts. The invoices were issued after the lift order had been placed by Valeo Construction:

Lift A: the supply and installation at Building A, 1142 Nepean Hwy, Highett, $14,377.48 payable (total contract value $65,352.19+GST)

Lift B: the supply and installation at Building B, 1142 Nepean Hwy, Highett, $12,811.26 payable (total contract value $58,233.00+GST)

Lift C: the supply and installation at Building B, 1142 Nepean Hwy, Highett, $12,811.26 payable (total contract value $58,233.00+GST)

18    An ORONA document produced on 16 September 2011 titled “Next Dispatch Dates” showed that three (3) lifts were to be delivered to and for the Nepean Hwy Job and one (1) lift was to be delivered to and for the High St Job for PLS.

19    On 8 November 2011, Damien Collins from Valeo Construction sent an email to Williams at his PLS email account requesting confirmation of the date the lifts would be arriving for the Nepean Hwy Job.

20    On 9 November 2011, Williams, using his PLS email account, sent an email to Damien Collins confirming that the lifts would be arriving as per the “construction program”. In a subsequent email on 1 February 2012 Damien Collins set out the dates of the construction program as follows:

Lift A: Sat 18/02/12 – Wed 21/03/12

Lift B: Thur 22/03/12 – Mond 30/04/12

Lift C Tue 1/05/12 – Thu 31/05/12

21    On 15 November 2011, Guy Walker from PLS emailed Leon Stewart from Valeo Construction (with Williams copied as a recipient) seeking confirmation in relation to drawings prepared by PLS for the Nepean Hwy Job.

22    On 28 November 2011, Guy Walker emailed Leon Stewart in which he stated that Lift A for the Nepean Hwy Job had been confirmed by Valeo Construction, and requested confirmation for Lift B and Lift C.

23    On 16 January 2012 Leon Stewart sent an email to Williams and Guy Walker at PLS confirming in relation to the Nepean Hwy Job that buildings B and C were ready for lift installation and that building B would be ready within two weeks maximum and requested that PLS prepare all necessary paperwork.

24    On 18 January 2012 Leon Stewart sent an email to Williams and Guy Walker requesting confirmation from PLS of the delivery dates for the three (3) lifts for the Nepean Hwy Job.

25    The Nepean Hwy Job never proceeded with PLS. It was effectively side-streamed to TAG as I detail below.

(b)    High Street Job: 1 Lift

26    On 15 April 2011, PLS submitted a quotation, as requested by Valeo Construction, for the supply and installation of one (1) ORONA MRL passenger lift for the total of $81,300.00+GST at 218–224 High Street, Ashburton. The details of the lift are set out in the quotation and are as follows:

ORONA 1000kg 5 Stop MRL Electric Passenger Lift (lift number EXAS05058PP)

The quotation was prepared and sent by Hoffman. The payment terms set out in the quotation required Valeo Construction to pay PLS a 10% deposit with the order, 30% of the cost of the lift payable at receipt of approved drawings, 40% of the cost of the lift payable at receipt of Bill of Lading and the final payment within 14 days of hand over.

27    On 25 July 2011 Williams sent an email to Moffat Wananani of Valeo Construction requesting verification of the specific dimensions of the lift for the High St Job.

28    On 26 July 2011, PLS issued a tax invoice to Valeo Construction for the deposit of 20% of the total contract value of the lift. The invoice was issued after the lift order had been made by Valeo Construction in accordance with the quotation:

Supply and installation at 218-224 High Street, Ashburton, $14,520.00 payable.

29    On 27 July 2011 PLS received an order confirmation from ORONA for the lift. The lift code is as follows:

EXAS05058PP.

30    On 28 July 2011, PLS created drawings for the High St Job. These drawings were checked by Williams, as indicated on the drawings. The drawings were approved by Point Architects on 28 November 2011.

31    On 5 September 2011 Williams sent an email to Moffat Wananani informing him that drawings and a copy of the contract for the lift at the High St Job would be mailed to Valeo Construction. Williams also requested that Moffat discuss payment terms with Jim Tzouvelis at Valeo Construction and informed him that a 20% deposit was due.

32    On 27 September 2011 Moffat Wananani sent an email to Williams in which he stated that payment terms had been agreed prior to PLS being awarded contracts for the four lifts (being the lifts at the Nepean Hwy Job and the High St Job). Moffat also told Williams that he was still waiting for a signed copy of the contract to be returned with drawings.

33    On 30 September 2011 Williams sent an email to Moffat Wananani and Jim Tzouvelis from Valeo Construction in which he said that the drawings for the High St Job were completed and attached to the email and that they needed to be signed and returned to PLS by the following week for late January delivery.

34    The High St Job never proceeded with PLS. It was effectively side-streamed to TAG as I detail below.

(c)    Dorcas St Job: 2 Lifts

35    On 16 June 2011 PLS submitted a quotation, as requested by Valeo Construction, for the supply and installation of one (1) MRL lift for the total of $80,910.00+GST at 211 Dorcas Street, South Melbourne, and one (1) passenger compliant car lift for the total of $103,986.65+GST. The quotation was prepared and sent by Hoffman.

36    On 12 August 2011 Tom Tziouvelis from Valeo Construction sent an email to Hoffman asking for more information regarding PLS’s drawings for the car lift. Hoffman then forwarded the email to Williams on 15 August 2011.

37    On 28 November 2011 Tom Tziouvelis sent an email to Hoffman requesting that he revise a new quote for the Dorcas St Job prior to meeting on Wednesday (30 November 2011).

38    On 30 November 2011 PLS received a modified ORONA costing sheet for the lift showing the total price of 21,727.92 EUR.

39    The cost of the lift is shown on a generic Hidral costing sheet. The cost for the basic lift plus all extras and necessary features was to be 29,849.98 EUR.

40    On 1 December 2011 PLS submitted a new quotation for the supply and installation of a basic car lift for the total contract value of $83,729.00+GST. The quotation was prepared and sent by Hoffman. The price for the normal lift remained the same as provided in the original quotation of 16 June 2011 ($80,910.00+GST).

41    On 2 December 2011 PLS created drawings for the Dorcas St Job.

42    On 19 December 2011 Hoffman received an email from Tom Tziouvelis requesting information from PLS regarding the Dorcas St Job. Hoffman then forwarded that email to Williams and Guy Walker.

43    On 21 December 2011, Guy Walker of PLS emailed Tom Tziouvelis the drawings for the Dorcas St Job based on the specifications provided by Valeo Construction.

44    On 25 January 2012, Guy Walker of PLS emailed more draft drawings for the Dorcas St Job to Tziouvelis.

45    On 30 January 2012 Tom Tziouvelis sent a further email to Hoffman and Guy Walker of PLS requesting more information on the Dorcas St Job. Hoffman was the main point of contact within PLS for Valeo Construction.

46    The Dorcas St Job never proceeded with PLS. It was effectively side-streamed to TAG as I detail below.

(d)    Synagogue Job: 1 Lift

47    On 11 August 2011 PLS submitted a quotation, as requested by Behmer & Wright, for the supply and installation of one (1) ORONA passenger lift for the total of $58,352.00+GST at 4 Maple Street, Caulfield South. The details of the lift are set out in the quotation and are as follows:

ORONA 630kg 2 Stop MRLG Passenger Lift

The quotation was prepared and sent by Hoffman. The payment terms set out in the quotation required Behmer & Wright to pay PLS a 10% deposit with the order, 30% of the cost of the lift payable at receipt of approved drawings, 40% of the cost of the lift payable at receipt of Bill of Lading and the final payment within 14 days of hand over. I should note that prior to this time (18 July 2011), PLS had received from ORONA a costing sheet (requested by PLS) in relation to such a lift.

48    On 12 October 2011 PLS issued a tax invoice to Behmer & Wright for the deposit of 20% of the total contract value of the lift. The invoice was issued after the lift order had been made by Behmer & Wright:

Supply and installation at Central Schule Chabad Synagogue, 4 Maple Street, Caulfield South, $12,837.44 payable (total contract value $58,352.00+GST)

49    On the same day, 12 October 2011, Williams sent a letter with draft drawings attached to Trenton Dalvean of Behmer & Wright for approval. The letter reads as follows:

Thank you very much for your order look forward to completing another quality project

Yours faithfully

Prestige Lifting Services Pty Ltd

Dale Williams

50    On 13 October 2011 at 12.14pm, Trenton Dalvean sent an email to Hoffman stating that Behmer & Wright’s client had asked it to “put a hold on the lift until further notice”. The email requested Hoffman to advise of the latest date when a decision needed to be made to put the lift in to production if the relevant project was to be finished by the middle of March 2012. On the same day at 3.48 pm, Hoffman sent an email to Leo John of Behmer & Wright stating:

Leo as discussed the lift is not in production, however it is reported as a sale to ORONA, who have allocated a position within the production schedule. The as built drawings were posted yesterday.

To allow installation to be completed in March of 2012. Order confirmation is required no later than close of business 18–10–2011. We lose production during Christmas Holiday period. If this is not confirmed by then, installation will be April or May 2012.

Please note to date 10 to 15% of contract works has been completed.

51    On 9 February 2012, Leo John sent an email to Hoffman referring to Hoffman’s email of 13 October 2011 stating:

Further to the e-mail below re production of the lift for the above project, could you advise on latest date to place an order if we need the lift to be in operation by the middle of August 2012?

52    Hoffman forwarded this email to Williams.

53    The Synagogue Job was never proceeded with by PLS. It was taken over by TAG as I detail below.

Events from october 2011 to December 2012

54    In 2011, Ronald Van Munnen (Van Munnen) and Williams were shareholders of PLS and, through associated entities, the owner of units in the PLS Unit Trust of which PLS was trustee. Each was a director of PLS (Williams until late February 2012) and each was involved in the management of PLS. Williams was the technical director of PLS. His main duties were to create drawings for PLS projects and to liaise with lift suppliers and customers of PLS. Van Munnen was the managing director. The third director and part-owner of PLS was Geoff Williams (the father of Williams). He was not involved in the management of PLS.

55    In 2011, there was a falling out between Van Munnen and Williams.

56    In late October 2011 Van Munnen was injured. As a result of his injuries he was unable to work for an extended period. While Van Munnen was absent, Williams assumed practical control of PLS. Van Munnen has said that he was then excluded from the business, evidence which I accept. While Van Munnen was excluded from the business, Williams introduced Gardiner to the business with the apparent intention that he would acquire Van Munnen’s interest in PLS and become involved in the management of PLS. The dispute between Van Munnen and Williams regarding control of PLS was resolved on 8 February 2012. Van Munnen then regained day-to-day control of the business of PLS.

(a)    Events of February 2012

57    As I say, from late 2011, Williams had introduced Gardiner to PLS and involved him in the conduct of the PLS business. This was without Van Munnen’s approval or input. Gardiner was presented to Van Munnen by Williams as “his new partner” who conducted a crane company and who Williams wished to become involved in PLS in Van Munnen’s place.

58    TAG issued invoices to PLS for $36,736.19 for labour and staff hire between 28 November 2011 and 23 February 2012 without Van Munnen’s knowledge or involvement.

59    On 6 February 2012, Van Munnen sent an email to Justine Martin, another employee of PLS, in which he informed her that he had become aware that she had backed up all PLS data at the request of Gardiner. Van Munnen informed her that she could not pass the confidential PLS data to a third party and asked her to confirm that she would not provide Gardiner with the information.

60    On 8 February 2012, Williams, Geoff Williams and Van Munnen held a directors’ meeting in which it was resolved that Williams would provide Geoff Williams and Van Munnen with keys to the PLS premises and computer passwords. It was also resolved that Geoff Williams and Van Munnen would be immediately made authorised signatories to all the company’s banking accounts.

61    Also on 8 February 2012, Gardiner circulated a document with the heading “PRESTIGE LIFTING SERVICES PTY LTD DIRECTORS MEETING”. In the document, Gardiner made a number of assertions about the performance of PLS and proposed that he “would be prepared to purchase the existing shares as part of an exit strategy”.

62    On 15 February 2012, Hoffman ceased work with PLS.

63    On 23 February 2012, Williams resigned as a director of PLS and then commenced employment or other paid engagement with TAG.

64    On or around 23 February 2012, Van Munnen observed that Williams had:

(a)    removed a desktop computer from PLS which contained a copy of all electronic data recording the current work, future orders and other intellectual property of PLS; and

(b)    removed a backup drive containing details of all pending jobs and quotations.

65    Around the same time Van Munnen became aware that Hoffman had in his possession a Toshiba laptop computer owned by PLS which contained quotes issued by PLS.

66    Each of Williams and Hoffman also had in their possession mobile phones in PLS’s company name, the invoices for use of which were sent to PLS.

67    The information on the computers and drives in the possession of these individuals was confidential to PLS and contained, among other things, all details of pending work. It was of considerable value to the business. This information was valuable to any competitor as it identified all of PLS’ customers and their contact details and requirements, and provided detailed costs and specifications that PLS had submitted for many jobs for which PLS had then quoted but which had not yet been awarded as well as for the specific jobs referred to in these reasons. The information on these computers and drives also included other confidential information, including:

(a)    The detailed financial records of PLS. This information was of considerable value to a competitor to PLS. It would enable a competitor to know PLS’ costs and profit margins and would assist a competitor in competing with PLS.

(b)    Emails disclosing the history of dealings between PLS and its principal suppliers (particularly ORONA, the lift supplier) and customers.

(c)    Details of the outstanding orders PLS had placed with ORONA for lifts and which had yet to be fulfilled by ORONA.

68    On 29 February 2012, Van Munnen emailed Williams reminding him of his obligations as a director of PLS. Van Munnen informed Williams that he needed to return PLS company information and equipment immediately.

69    Around the same time Van Munnen asked Hoffman to return the company car he had driven while he was employed with PLS. However, Hoffman refused to return it until he was paid money by PLS. He said that the money was owed to him by PLS for annual leave.

70    By the end of February 2012, Hoffman and Justine Martin (another employee) had resigned from PLS and in March 2012 had commenced working at TAG.

(b)    Termination of specific PLS jobs

71    On 6 February 2012, Damien Collins from Valeo Construction sent an email to Williams stating that Williams was needed for an urgent meeting on site to discuss the delivery dates for the Nepean Hwy Job.

72    On 8 February 2012 at 5.32pm, Damien Collins sent an email to Williams and Guy Walker expressing dissatisfaction with Williams’ communication regarding the project. The email reads as follows:

Despite multiple emails and phone calls from both Leon and I over the past month, you have not once replied or returned our calls. Jim has requested a meeting on site so you can explain why you have not yet commenced the installation of the lifts. Please advise URGENTLY of your first available time to meet.

73    On 8 February 2012 at 7.31pm, Williams, using his PLS email account, sent an email to Joseph Perez from ORONA asking what the earliest dispatch date for the Nepean Hwy and High St Jobs would be if payment was organised. This was in response to an earlier email from ORONA stating that the relevant lifts were ready “to be launched into production but we can’t launch them without payment”; the relevant lifts referred to were for the Nepean Hwy Job and High St Job.

74    On 9 February 2012, Williams, using his PLS email account, sent an email to Damien Collins, Leon Stewart and Jim Tzouvelis from Valeo Construction. The email reads as follows:

Jim Please call me to discuss the current projects at your earliest convenience.

75    On 13 February 2012, Williams, using his PLS email account, sent an email to Jim Tzouvelis from Valeo Construction in which he made representations that PLS would not be able to complete the contract with Valeo Construction and that he understood Valeo Construction would terminate the agreement. The email reads as follows:

Good afternoon Jim

As per our conversations PLS is not currently in a position to meet your expected delivery times and unfortunately we have no resolution likely to occur in the immediate future.

We therefore regrettably understand your position in cancelling our order based on clause 19.1 Termination by Valeo Construction in our signed agreement.

76    Williams caused the Nepean Hwy Job and the High St Job with Valeo Construction to be terminated. Valeo Construction then engaged TAG to complete each of those jobs. Valeo Construction made no further communications to PLS about the confirmed jobs after receipt of this 13 February 2012 email from Williams. TAG was also subsequently engaged by Valeo Construction to carry out the Dorcas St Job.

(c)    March — December 2012 (TAG involvement)

77    On 1 March 2012 Williams, using his PLS email account, sent an email to Inigo Epelde Garin from ORONA in which he said he was starting a new lift company. In the email, Williams outlined that most staff from PLS would move to TAG, and that TAG had already procured sales for ORONA. The email reads in part as follows:

Good morning Inigo

As I stated in my brief email yesterday I have started a new lift company.

Paul, Justine, Trevor have come on board and where (sic) now part of the TAG group, we have a new 2500sqm manufacturing facility in the heavy industry part of Melbourne.

Most of the guys will come across as soon as I have set up the lift side of the company. We already have 5 sales for orona lifts and large No. of goods and car lifts and a large No. of service contact. Next week TAG will buy out another lift company which will majorly increases (sic) our sale and service. Or (sic) customer web based service will be going on line in the next (sic), this will give our customer access to their job file with all the information from quotes invoices time line test certificates and a whole lot more.

The reason for me to resign as a director from PLS was due to the conflict, and inability to make decision in regards to the financial position of the company.

In my view the other directors where holding the company back as you may have noticed with the money situation being unable to pay its accounts.

Please can you organise new log in details to the CCO for Paul and myself ASAP

Regards.

Dale Williams

Technical Director

TAG Lifts

Although the email was sent from Williams’ PLS email account, the email featured the TAG Lifts logo and TAG Lifts contact details in the signature. Hoffman and Martin were copied as recipients of the email. Hoffman gave evidence that the reference to “Paul” was not to him but Paul Hart. I will deal with this later.

78    As I have said, each of Hoffman and Martin had ceased their employment with PLS by the end of February 2012. Hoffman has asserted that he then only started employment with TAG on 19 March 2012; he produced a PAYG payment summary in support of that assertion. I do not accept that evidence for reasons that I will come to. In my view it is more probable that he started in early March even if the formal records show mid-March.

79    In response to that email, on the same day Inigo Epelde Garin from ORONA sent an email to Williams in which he said that he would like to meet Williams on 21 or 22 March to fully understand the situation between PLS and TAG.

80    In response to that email, again on the same day, Williams using his PLS email account sent an email to Inigo Epelde Garin in which he made representations that Van Munnen was still running PLS, but that Williams did not expect that Van Munnen would be able to continue running the business. The email stated:

Inigo

Ron is still running PLS, trying to finish all outstanding jobs. I but don’t think he will be able to continue selling, installing and installing the orona product with no product experience and or lack of trained labour. I have been heavily involved in all aspects of the orona product from the mechanical and electrical design registration though (sic) to the australian testing procedures. I’m not sure how a company can operate without skilled people in these areas, we aren’t selling televisions anyway that is something your company needs to decide if you chose to stay involved with PLS.

Ron is accountable for all outstanding accounts. Try sending them to ronv@live.com and personally I wouldn’t give him credit he is at very high risk.

Are even more so keen to meet up this month now with the restructure.

Still need to put aside a few hours for surfing I have spoken to one of my employees he is a mad surfer and is very keen to take us to the good spots.

In the mean time we still need a new login Paul and I will be quoting the same people as before just a new name and will have a much larger customer base with the buy out of a south Australian company.

81    On 8 March 2012, Hoffman sent an email from his PLS email account to his TAG email account which contained log-on information for the ORONA extranet. The username to gain access to the extranet was a PLS email account, paulh@plslifts.com.au.

82    On 13 March 2012 Leon Stewart of Valeo Construction sent an email to Williams at his TAG email address attaching a contract for the Nepean Hwy Job. In the email, he also requested certificates of public liability and WorkCover insurance from Williams.

83    On 2 April 2012 Williams, using his TAG email account, sent an email to “undisclosed recipients” requesting the earliest dispatch date for four lifts. These were as follows:

EXAS03270PP

EXAS03271PP

EXAS03272PP

EXAS05058PP

The lift codes show that these lift orders were for the PLS Nepean Hwy Job and the PLS High St Job.

84    On 3 April 2012, Hoffman, using his TAG email account, forwarded the email referred to to Justine Martin. On the same day Martin sent an email to Inigo Epelde Garin requesting pro forma invoices addressed to TAG for the four lifts.

85    On 4 April 2012, Inigo Epelde Garin sent an email to Williams, Justine Martin and Hoffman expressing that the lifts for which the invoices had been requested were PLS orders, and that ORONA could not supply these orders to a different company. The email reads in part:

•    “These are PRESTIGE orders. WE cannot simply supply these orders to a different company”

•    “If you have these orders, please send an order document from TAG Lifts”.

86    On 5 April 2012, Hoffman sent an email to Amaia Elorza from ORONA and Williams. In the email, Hoffman enclosed four new lift orders and requested pro forma invoices to arrange for their payment. These “new” orders were identical in form to what had previously been sent by PLS. On 19 April 2012 Amaia Elorza sent an email to Hoffman confirming the orders.

87    On 13 April 2012, TAG submitted a quotation to Behmer & Wright for the supply and installation of one passenger lift for the total of $55,235.00+GST at 4 Maple Street, Caulfield South. The quotation was prepared and sent by Hoffman. The details of the lift are identical to those set out in the PLS quotation. The payment terms, maintenance costs, hourly rates and callout fees vary slightly from the PLS quotation on the same job.

88    On or before 18 April 2012, Hoffman entered information regarding the Nepean Hwy Job and the High St Job on the ORONA extranet on behalf of TAG. On 19 April 2012, an email was sent by ORONA to Hoffman congratulating him on placing orders and referring to delivery dates.

89    On 23 April 2012, Leon Stewart of Valeo Construction sent an email to Williams at his TAG email address requesting that he sign and return the contract for the Nepean Hwy Job by the end of the week. On 2 May 2012 Williams forwarded the email to Sean Luck of TAG.

90    On the same day, Leon Stewart sent an email to Justine Martin requesting TAG’s ABN, bank account details, WorkCover insurance and public liability insurance information. On 2 May 2012 Martin responded to the email with all of the requested information and with Williams copied as a recipient.

91    On 26 April 2012, Behmer & Wright sent an email to Hoffman with attachments concerning the Synagogue Job. The attachments included the previous drawings of PLS and the contract and related documents between PLS and Behmer & Wright.

92    On 30 April 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright with the revised drawings for the Synagogue job.

93    On 8 May 2012, TAG created drawings for the Synagogue project.

94    On 15 May 2012, TAG issued a tax invoice to Behmer & Wright for deposit of 15% of total contract value of the lift, being $9,113.78 payable (total contract value $55,235.00+GST).

95    On 16 May 2012, Hoffman confirmed with ORONA the correctness of the drawings for the Nepean Hwy Job and the High St Job.

96    An ORONA document produced on 18 May 2012 titled “Next Dispatch Dates” showed that three lifts were to be delivered to the Nepean Hwy Job, one lift was to be delivered to the High St Job, and one lift was to be delivered to the Synagogue Job for TAG.

97    On 28 May 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright confirming that TAG would provide warranties and guarantees for the installation of the lift for the Dorcas St Job.

98    On 28 May 2012, TAG issued a tax invoice to Valeo Construction for the supply and installation of three passenger lifts at 1142 Nepean Highway, Highett, in an amount of $152,000 (including GST).

99    On 28 May 2012, TAG issued a tax invoice to Valeo Construction for the supply and installation of one passenger lift at 218–224 High Street, Ashburton, in an amount of $54,450 (including GST).

100    On 1 June 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright with drawings for the Synagogue project marked with TAG Lifts attached.

101    On 5 June 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright with revised drawings for the Synagogue Job attached.

102    On 7 June 2012, TAG Lifts signed a sub-contract work order between Behmer & Wright and TAG. The signatures were those of Hoffman and Williams. The sub-contract work order was also signed on behalf of Behmer & Wright.

103    On 15 June 2012, Hoffman, using his TAG email address, sent an email to Joseph Perez of ORONA confirming the drawings for the Dorcas St Job for TAG. On the same day Joseph Perez sent an email to Hoffman asking when ORONA could expect payment for the lift. On 21 June 2012, Joseph Perez sent an email to Hoffman and Williams asking for confirmation of payment for three lifts. Hoffman forwarded the email to Justine Martin on the same day.

104    On 18 June 2012, Behmer & Wright wrote to TAG in relation to the sub-contract work order and noted that it had made unacceptable amendments to the Scope of the Works and the Terms and Conditions. Behmer & Wright requested that the amendments “STET” be endorsed.

105    On 19 June 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright outlining the delivery schedule for the lift to be installed at the Synagogue Job.

106    On 20 June and 26 June 2012, Amaia Elorza from ORONA sent an email to Hoffman and Williams indicating they had not received payment for the lift for the Dorcas St Job. The lift code was as follows:

EXAS11942G8.

107    On 27 June 2012, Tom Tziouvelis of Valeo Construction sent an email to Williams requesting confirmation on behalf of TAG on a number of matters concerning the Dorcas St Job. On the same day Williams replied to the email with confirmation that TAG would complete all of the requests made by Tziouvelis. On 28 June 2012 Tziouvelis sent an email to Williams in which he said he had received confirmation from Gardiner that there would be no delay for the lift on the Dorcas St Job.

108    On 16 July 2012, Olatz Recio Marzal of ORONA sent an email to Justine Martin, Hoffman and Williams requesting that the outstanding payment for two scheduled lifts be completed. The lift codes were as follows:

EXAS11942G8

EXAS11284G8

Olatz Recio Marzal sent further emails on Friday 20 July, Tuesday 24 July and Thursday 26 July to Justine Martin, Hoffman and Williams requesting urgent confirmation that payment would be made. On 26 July 2012 Martin sent an email to Olatz Recio Marzal confirming the final payment to ORONA for the relevant lifts.

109    On 20 July 2012, Justine Martin sent an email to Tom Tziouvelis of Valeo Construction with Williams copied as a recipient in which she informed him that the lifts for the Nepean Hwy Job and High St Job were due to arrive on 24 July 2012. In the email, Martin said that she had spoken to Gardiner and Williams about the payment details and wished to confirm with Tziouvelis that payment would be made on the delivery date. This was confirmed by Tziouvelis.

110    On 20 July 2012, the ORONA Project Engineering Department sent an automatic generated email to Hoffman and Williams with the subject line “Next Dispatch Dates”. Hoffman forwarded the email to Justine Martin on Thursday 26 July 2012.

111    On 25 July 2012, Justine Martin sent an email to Tom Tziouvelis of Valeo Construction with Williams and Gardiner copied as recipients in which she attached photographs of the lifts received at the TAG factory. Martin informed Tziouvelis that the lifts were being delivered to the Valeo Construction sites.

112    On 26 July 2012, Justine Martin sent an email to Tom Tziouvelis with more photographs attached. In the email, Martin asked Tziouvelis to contact Gardiner to discuss “the next step”.

113    On 2 August 2012, TAG issued a tax invoice to Valeo Construction in relation to the High St Job for the final claim at 20% of the total contract value.

114    On 11 October 2012, TAG issued a tax invoice to Valeo Construction in relation to the Dorcas St Job for the final claim at 20% of the total contract value.

115    On 11 October 2012, TAG issued a tax invoice to Behmer & Wright in relation to the Synagogue Job for the final 10% of total contract value.

116    On 13 November 2012, Tom Tziouvelis sent an email to Williams, Gardiner and Martin requesting the “Passenger lift installation compliance certificate” for the Dorcas St Job. On the same day Martin replied to the email with the requested certificate attached, signed by Williams for TAG.

117    On 6 December 2012, Tom Tziouvelis of Valeo Construction sent an email informing TAG that there were several issues at the Dorcas St Job that needed to be rectified urgently. On the same day Justine Martin replied to the email saying that Gardiner had been in discussions with a Valeo employee and that “TAG will be out there tomorrow to sort out”.

118    In December 2012, in response to a series of emails concerning a problem with Sabbath compliance at the Synagogue Job, Gardiner sent an email to a number of employees at Behmer & Wright, as well as Williams and Hoffman, in which he asserted that TAG had completed its work on the site.

119    On 20 December 2012, the Dorcas St owner filed with WorkSafe a “Notice of Registration” for one of the Dorcas St installation lifts. The Plant Design Number was V1103542 (a PLS design registration number).

The claim against Williams

120    It is appropriate to address the claims against Williams and Hoffman; I will deal with Gardiner later.

121    Williams was an executive director of PLS. It is unclear in the evidence as to whether he was also an employee of PLS or whether his services were contracted to PLS through his private company. I am inclined to find that the latter position applied. But on any view he was bound by various fiduciary and statutory duties owed to PLS that I will later describe.

122    In summary, there is little doubt that Williams:

(a)    had access to confidential information of PLS concerning its customers and suppliers and the projects that I have described above;

(b)    generally, used that information to assist TAG and contrary to the interests of PLS;

(c)    on 1 March 2012, used his PLS email account to inform ORONA that he was starting a new lift company and that PLS staff were joining the new company;

(d)    encouraged and took steps to actively divert the business and customers of PLS to TAG;

(e)    was directly involved in obtaining and fulfilling for TAG the projects that had been those of PLS.

123    In so acting, Williams breached fiduciary duties to act in good faith, with fidelity, not to misuse the confidential information of PLS and not to take advantage of his position to obtain a benefit for himself. He also breached ss 181, 182 and 183 of the Corporations Act 2001 (Cth), the details of which I will later describe.

124    There is also a separate claim made by PLS against Williams for his unauthorised activities in causing:

(a)    money from a PLS bank account to be paid to an insurer;

(b)    other payments to be made from PLS’ funds which had not been authorised by PLS.

125    I will deal with this restitutionary claim later.

The claim against Hoffman

126    PLS’ claim against Hoffman involves the following elements:

(a)    Hoffman was an employee of PLS (in respect of claims other than the s 181 claim).

(b)    Further, Hoffman was an officer of PLS (in respect of the s 181 claim). I do not accept that assertion.

(c)    Hoffman had access to confidential information of PLS in the course of his employment with PLS, including in relation to customers and suppliers.

(d)    On 15 February 2012 Hoffman resigned his employment with PLS.

(e)    By 1 March 2012, alternatively on an unknown date in March 2012, alternatively 19 March 2012 Hoffman commenced undertaking work for TAG.

(f)    At TAG, Hoffman (together with others) used PLS’ confidential information to obtain and undertake the lost projects.

(g)    PLS suffered loss by reason of Hoffman’s conduct.

127    As I have said, Hoffman was the sales manager at PLS. He had a very senior role within PLS. He was responsible at PLS for sourcing and securing all of the jobs to be undertaken by PLS. His role was to:

(a)    manage the sales process on behalf of PLS, including to obtain new customers for PLS and to seek additional business from existing customers;

(b)    meet with clients to negotiate prices and payment terms; and

(c)    create quotations for customers.

128    Hoffman’s role continued after quotations were prepared. He dealt extensively with customers and prospective customers and was the person principally responsible for such dealings.

129    When Hoffman left PLS in mid-February 2012, he knew the following matters:

(a)    PLS had quoted on each of the lost projects;

(b)    PLS’ quote had been successful in respect of each of the lost projects;

(c)    Details of PLS’ quotes in respect of the lost projects (for example, the prices quoted by PLS);

(d)    The status of the lost projects (that is, he knew that each of them was a project won by PLS, but in respect of which PLS had not commenced installation);

(e)    The financial status of each of the lost projects (that is, whether the client had made any payment);

(f)    PLS intended to fulfil the lost projects by purchasing lifts from ORONA;

(g)    PLS had placed orders on ORONA for lifts in respect of the Nepean Hwy job, the High St job and the Synagogue job and that the Dorcas St job was entered into ORONA’s system as a quotation;

(h)    PLS had undertaken at least 10–15 per cent of the contract works on the Synagogue job;

(i)    PLS had undertaken sufficient works on each of the lost projects in order to place orders with ORONA for the lifts required to fulfil the projects (including quotations, revised quotations, drawings, revised/final drawings, generation of invoices, the obtaining of detailed information from the client);

(j)    The lifts ordered by PLS for the lost projects had a place in ORONA’s production schedule;

(k)    The lift numbers assigned by ORONA to the lifts ordered by PLS in order to undertake the lost projects;

(l)    The date by which the client required installation of the lifts in respect of each of the lost projects; in the case of the Nepean Hwy job, Valeo Construction required installation immediately;

(m)    The log-in details held by PLS for the ORONA extranet;

(n)    The password to the email address “paulh@plslifts.com.au”;

(o)    The technical specifications of the lifts required by the clients for the lost projects;

(p)    The drawings prepared by PLS in order to undertake the lost projects.

130    These items were confidential information of PLS.

131    In my opinion, and for the reasons discussed below, I have concluded that Hoffman misused such confidential information whilst employed at TAG.

132    Counsel for PLS, Mr Tyson Wodak, concedes that PLS has had difficulties in proving such misuse through direct evidence by reason of:

(a)    PLS being on the outside looking in in respect of the respondents’ conduct;

(b)    The respondents’ failure to make proper discovery including discovery responsive to the categories of documents sought by PLS;

(c)    The fact that the Toshiba laptop taken by Hoffman from PLS was returned wiped of all PLS data;

(d)    The failure of Valeo Construction to cooperate with subpoenas for production;

(e)    The fact that no books and records were provided to the liquidator of TAG upon that company entering liquidation;

(f)    The failure of Williams and Gardiner to appear and give evidence at trial.

133    PLS has relied principally on inference to make out its case. It has invited me to infer, on the evidence, that Hoffman together with the other respondents misused the confidential information identified above to:

(a)    identify the lost projects as projects which, as at March 2012, had customers who were then or would shortly be in need of lifts for projects then underway, had engaged PLS to supply and install lifts for these projects and had not made any payment to PLS;

(b)    make contact with the customers in respect of the lost projects;

(c)    determine the price to quote at TAG in respect of the lost projects;

(d)    inform clients as to the date by which the lifts required for the lost projects could be delivered;

(e)    access the ORONA extranet;

(f)    place orders with ORONA in respect of the lifts required to undertake the lost projects;

(g)    expedite for TAG the delivery of lifts for the lost projects ahead of the time by which the lifts could have been ordered if TAG had had to start the process from scratch;

(h)    use drawings prepared by PLS for the lost projects in quoting on the projects and placing orders on ORONA;

(i)    access PLS email accounts even after leaving PLS and joining TAG.

134    I am, generally speaking, prepared to draw such inferences from the primary facts set out in these reasons. But in any event there is also direct evidence.

135    First, Hoffman used the lift numbers assigned by ORONA to PLS for the Nepean Hwy job and the High St job in ordering lifts from ORONA for TAG for those jobs. I can and do infer from this conduct that Hoffman was willing to use confidential information of PLS in the course of his duties for TAG.

136    Second, Van Munnen’s evidence was that Hoffman, or another person who knew Hoffman’s account details, accessed PLS email accounts after Hoffman left PLS. I can and do infer that it was Hoffman who accessed Hoffman’s PLS emails after leaving PLS.

137    Third, Van Munnen’s unchallenged evidence was that:

(a)    Williams removed from PLS a desktop computer owned by PLS and retained it until it was recovered by the police. Williams also removed a backup drive.

(b)    It appeared that Williams had used the removed computer in conducting business for TAG.

(c)    Among the emails on this PLS computer were emails between Williams and Hoffman at TAG.

138    Fourth, Hoffman retained after leaving PLS a Toshiba laptop computer owned by PLS which contained quotes issued by PLS. It was only returned some time later but wiped of all PLS data.

139    Generally, the information on these computers and drives in the possession of Williams and Hoffman was confidential to PLS and contained, among other things, all details of pending work (including costs and specifications of jobs), emails between PLS and ORONA and details of orders placed by PLS with ORONA. I can and do infer that Hoffman used confidential information on the PLS computer he retained in his possession for the benefit of TAG.

140    Fifth, in my view, Hoffman gave false evidence concerning a “Paul Hart”.

141    Initially, Hoffman gave evidence that:

(a)    a person by the name of “Paul Hart” had commenced working at TAG prior to 1 March 2012;

(b)    “Paul Hart” was employed in sales;

(c)    “Paul Hart” had worked for Anthony Gardiner before and “he had him there”;

(d)    “Paul Hart” worked for TAG;

(e)    “Paul Hart” — and not Paul Hoffman — used the email address paulh@taglifts.com.au;

(f)    Hoffman’s email address at TAG was “paul.hoffman@taglifts.com.au”;

(g)    “Paul Hart” may have been the Paul referred to in the email on 1 March 2012.

142    His evidence subsequently evolved to the position that:

(a)    “Paul Hart” was not an employee of TAG when Hoffman was first employed by TAG;

(b)    “Paul Hart” had not commenced with TAG until at least mid-May 2012;

(c)    Until about May 2012 Hoffman was the only Paul H working at TAG.

143    The change in Hoffman’s evidence regarding the date on which “Paul Hart” started with TAG adversely affected his credibility.

144    He was unable to give any satisfactory explanation for his earlier evidence that “Paul Hart” may have been the person referred to in (and copied in to) a 1 March 2012 email as having come on board notwithstanding that “Paul Hart” did not commence with TAG until at least mid-May 2012.

145    Hoffman was insistent that the email address “paulh@taglifts.com.au” was associated with “Paul Hart” and not with Hoffman. He recalled his email address at TAG as being “paul.hoffman@taglifts.com.au”. In fact, Hoffman used each of the email addresses “paulh@taglifts.com.au” and “phoffman@taglifts.com.au” while with TAG. There is no evidence that he used the email address “paul.hoffman@taglifts.com.au”. In this respect the following may be observed:

(a)    On 26 April 2012 an email was sent from Trenton Dalvean to “phoffman@taglifts.com.au”. “Paul–TAG” replied the same day using the email address “paulh@taglifts.com.au” and including the email signature “Paul Hoffman Sales/Estimator”. “Paul Hart” had not yet commenced work with TAG.

(b)    On 30 April 2012 an email was sent from “Paul–TAG” using the email address “paulh@taglifts.com.au” to Trenton Dalvean. The email signature reads “Paul Hoffman Sales/Estimator”. “Paul Hart” had not yet commenced work with TAG.

(c)    On 9 May 2012 an email was sent from “Paul–TAG” using the email address “paulh@taglifts.com.au” to “jmartin@taglifts.com.au”. The email signature reads “Paul Hoffman Sales/Estimator”. The email attaches a quotation prepared by Hoffman. “Paul Hart” had not yet commenced work with TAG.

(d)    On 16 May 2012 four emails were sent from “Paul–TAG” using the email address “paulh@taglifts.com.au” to “iperman@orona-group.com” and including the email signature “Paul Hoffman Sales/Estimator”. On Hoffman’s evidence it is unclear whether “Paul Hart” had yet started with TAG.

(e)    On 18 May 2012 an email was sent from Inigo Perman of Orona to “phoffman@taglifts.com.au”. ‘paulh@taglifts.com.au” responded to the email on 21 May 2012. The response includes the email footer “Paul Hoffman Sales/Estimator”. On Hoffman’s evidence it is unclear whether “Paul Hart” had yet started with TAG.

(f)    On 5 June 2012 an email was sent from “Paul–TAG” using the email address “paulh@taglifts.com.au”. The email includes the email footer “Paul Hoffman Sales/Estimator”.

146    Hoffman’s evidence in respect of “Paul Hart” in my view was unreliable to say the least. I reject it. No document before me refers to a person by the name of “Paul Hart” being employed by TAG at the relevant time. Hoffman’s affidavits do not refer to the existence of “Paul Hart” or the use by “Paul Hart” of the email address “paulh@taglifts.com.au”. If “Paul Hart” had been employed by TAG at the relevant time and evidence in relation to him was exculpatory of Hoffman then Hoffman no doubt would have referred to “Paul Hart” and to the relevant matters in his affidavits.

147    In my view, the involvement of “Paul Hart” in the matters the subject of this proceeding was contrived by Hoffman in an attempt to evade responsibility for his conduct at TAG from early March 2012 that involved him using PLS’ confidential information.

148    Hoffman’s contrived evidence in relation to “Paul Hart” demonstrates that Hoffman regarded it as in his interests to provide an explanation other than the truth regarding what occurred at TAG, demonstrates that Hoffman was eager to avoid being found to be the person who engaged in the conduct engaged in by “Paul” and “Paul H” at TAG and demonstrates Hoffman’s consciousness that emails sent to and from “paulh@taglifts.com.au” involved the misuse of confidential information. It gives rise to a strong inference that Hoffman misused PLS’ confidential information.

149    Sixth, Hoffman referred to “Shane Luck” as having brought to TAG information regarding PLS. Mr Luck is a real person, but is not mentioned in either of Hoffman’s affidavits as having any involvement in the matters the subject of this proceeding. If any conduct by a Shane Luck was exculpatory of Hoffman then presumably Hoffman would have said so in his affidavits and the involvement of Mr Luck would have been put to Van Munnen in cross-examination. Neither occurred. I am not able to find that Mr Luck engaged in any relevant conduct, let alone conduct that is supportive of Hoffman’s defence.

150    Seventh, Hoffman gave evidence in relation to a car belonging to PLS. Initially his evidence was that he drove the car on a few occasions during the two week period after he resigned from PLS then immediately parked it at TAG’s premises.

151    When it was pointed out to Hoffman that on that evidence he therefore must have parked the car at TAG’s premises by early March 2012 his evidence changed; he then asserted that he had for an interim period parked it on his nature strip. The evidence on this topic supports a finding that Hoffman commenced with TAG by about 1 March 2012. Moreover, on any view it demonstrates that he was willing to change his evidence when he perceived that it suited his position.

152    Hoffman was eager to demonstrate that he did not start with TAG until 19 March 2012. This no doubt was to avoid being implicated in obtaining access to the ORONA extranet on or about 8 March 2012 and in Valeo Construction awarding jobs to TAG very shortly after TAG Lifts commenced operations. In my view, Hoffman is likely to have commenced undertaking work for TAG in early March 2012.

153    Eighth, Hoffman was cross-examined regarding an email from Williams to ORONA sent on 1 March 2012. The email reads “Paul, Justine, Trevor have come on board” and was copied to “paulh@taglifts.com.au”. Hoffman agreed that “Justine” and “Trevor” had come aboard from PLS to join Williams at PLS. When asked to whom Williams was referring as “Paul” in that email, Hoffman suggested that it could have been him but it could have been “Paul Hart”. As noted above, Hoffman subsequently changed his evidence so that “Paul Hart” did not join TAG until at least mid-May 2012. Other than “Paul Hart”, Hoffman did not suggest any other person to whom Williams could have been referring in his email. It is unlikely that on 1 March 2012 Williams was referring to “Paul Hart”. Instead, it is likely that by this email Williams was referring to Hoffman. I say this for the following reasons:

(a)    In the context of the email it is plain that Williams was referring to people known to ORONA as having “come on board” with him at TAG. Hoffman was known to ORONA, having dealt with ORONA at PLS.

(b)    If “Paul Hart” ever worked for TAG then it was not until at least mid-May 2012.

(c)    Hoffman did in fact “come on board” at TAG in March 2012.

(d)    The email is copied to “paulh@taglifts.com.au”, an email address used by Hoffman.

(e)    Hoffman’s evidence that he had driven PLS’ car for two weeks and then parked it at TAG supports him having started at TAG by about 1 March 2012.

154    Ninth, Hoffman’s affidavit evidence was that the lost projects were advertised and the specifications were available on a publicly available website. But it emerged under cross-examination that he was referring to some information regarding the jobs being publicly available when he quoted them at PLS; he did not know whether information regarding the jobs was publicly available while he was with TAG. Moreover, he did not learn of the Synagogue job at TAG from websites or advertising, but from direct dealings with the contractor at PLS. The impression left from his affidavit evidence was that information regarding the lost projects was publicly available to him at TAG. But it became clear that Hoffman did not know whether information regarding the lost projects was in the public domain in 2012. He knew only that when he quoted on the projects for PLS in 2011, some information regarding the projects was publicly available. Hoffman’s efforts to give this exculpatory evidence were unconvincing. In any event, whatever was in the public domain did not include all the detailed confidential information that I have referred to earlier at [129].

Hoffman’s involvement in the Valeo projects at TAG

155    Tenth, Hoffman was extensively involved in the Valeo projects at PLS, including having quoted the jobs.

156    Moreover, the various emails previously referred to demonstrate Hoffman’s involvement in Valeo Construction projects at TAG and his use of PLS’ confidential information.

157    Van Munnen’s evidence was that the lifts required for the Valeo Construction jobs were to be manufactured and supplied by ORONA and that orders for lifts bearing the following numbers had been placed by PLS in order to fulfil the Nepean Hwy job and the High St job: EXAS03270PP, EXAS03271PP, EXAS03272PP and EXAS05058PP. The “PP” on the end of the lift numbers is an internal reference used by ORONA to refer to PLS.

158    On 3 April 2012 Hoffman forwarded to Justine Martin at TAG the lift numbers in respect of the lifts ordered by PLS from ORONA so that it could carry out the Nepean Hwy job and the High St job.

159    Although it is plain that the 3 April 2012 email was an email by which Hoffman forwarded on to Justine Martin information which had been sent to him by Williams, when asked about it in cross-examination Hoffman refused to admit the same. It was only when further questioned about this email that Hoffman admitted that he had on-forwarded Williams’ email to Justine Martin.

160    TAG’s attempt on 3 April 2012 to take over PLS’ orders on ORONA for the lifts required in order to undertake the Nepean Hwy job and High St job was unsuccessful. ORONA responded on 4 April 2012: “These are PRESTIGE orders. We cannot simply supply these orders to a different company”. ORONA continued that it could only move forward on the basis that TAG provided order documents and that “We must follow the whole procedure: register orders, drawings approval, etc”.

161    Hoffman was one of the persons to whom the response from ORONA was sent.

162    On 5 April 2012, Hoffman (using the email address phoffman@taglifts.com.au) placed orders with ORONA for four lifts — the lifts ordered by Hoffman were identical to the lifts ordered by PLS so that it could carry out the High St job and the Nepean Hwy job.

163    Van Munnen’s unchallenged evidence was that:

I have reviewed the lift models ordered by TAG Lifts and the lifts the subject of the order placed by Paul Hoffman on 5 April 2012 to Orona included the same lifts that PLS had on order with Orona at CB11 and I can match the PLS and TAG Lifts references used by Paul in his 4 May 2012 email (CB121) common lifts as follows:

(a)    Lift 1 – EXAS 03270PP – EXAS 10813G8 G8010030;

(b)    Lift 2 – EXAS 03271PP – EXAS 10811G8 G8010026;

(c)    Lift 3 – EXAS 03272PP – EXAS 10810G8 G8010031; and

(d)    Lift 4 – EXAS 05058PP – EXAS 10809G8 G8010029.

Paul Hoffman cannot have prepared new purchase orders in respect of these lifts without:

…

(b)    Having full details of the lifts he required. As noted above, these lifts were identical to those previously ordered by PLS.

In response to the 5 April 2012 email, Orona congratulated Paul Hoffman on overcoming the PLS order problem (by being able to successfully place the order using the Orona extranet (“well done!!!!”) (See CB74). However, to do so he would have been using his PLS email access and his considerable knowledge of the four lifts that were to be supplied by PLS to Valeo.

164    The first stage in placing an order with ORONA required ORONA’s CCO configuration tool. This part of the order for the Nepean Hwy and High St jobs was placed by Hoffman on 5 April 2012. The second stage in placing an order with ORONA was the HDO process. The HDO process required very detailed information. By 18 April 2012 Hoffman completed the HDO process for the Nepean Hwy and High St jobs.

165    On 4 May 2012 Hoffman confirmed to ORONA TAG’s order for one of the lifts required for the Nepean Hwy job.

166    On 16 May 2012 Hoffman confirmed to ORONA that the drawings were correct in respect of each of the lifts for the Nepean Hwy job and the High St job.

167    Hoffman then involved himself in further issues relating to the Dorcas St job, High St job and the Nepean Hwy job, including drawings, the shipping date and payment to ORONA.

168    Hoffman’s completion of the HDO and CCO processes for the Nepean Hwy job and the High St job, and his involvement in the Nepean Hwy job, the High St job and the Dorcas St job, cannot be reconciled with his evidence that he had “nothing to do with the Valeo jobs when I was with TAG”. I reject his evidence and assertions to that effect. In my view, Hoffman was significantly involved at TAG with the Valeo Construction projects, particularly the Nepean Hwy job and the High St job, and his use of PLS’ confidential information in placing orders with ORONA was an important component of TAG’s ability to undertake these projects.

169    Hoffman has submitted that the Valeo Construction jobs were “uncontaminated by any information derived from PLS”. But such a submission ignores the fact that:

(a)    on 3 April 2012 Hoffman forwarded to Ms Martin an email containing the codes assigned by ORONA to lifts ordered by PLS in order to fulfil the Nepean Hwy project and the High St project;

(b)    when ORONA refused to permit TAG to take over PLS’ existing orders, Hoffman immediately placed orders on ORONA for lifts for the Nepean Hwy job and the High St job on behalf of TAG; and

(c)    the lifts ordered by Hoffman from ORONA for TAG were identical to those ordered by PLS for the same jobs.

170    Further, as PLS correctly contends, Hoffman has not proffered any explanation for how he came on 5 April 2012 to place orders for the High St job and the Nepean Hwy job for lifts identical to those ordered by PLS for the same jobs. Nor has he identified the basis on which he obtained the detailed information necessary to place the orders. In short, Hoffman participated in an attempt by TAG to take over PLS’ existing orders and, when that failed, he placed new orders for the identical lifts.

171    Hoffman has sought to evade responsibility in respect of the Valeo Construction jobs by giving evidence that these Valeo jobs were already in train by the time he joined TAG. That partly explains Hoffman’s assertion that he joined TAG at 19 March 2012. But as I have said:

(a)    Hoffman was copied in (at paulh@taglifts.com.au) on an email of 1 March 2012 from Williams stating that “Paul” had “come on board”. When confronted with this email, Hoffman gave the evidence that the email may refer to “Paul Hart” and that the “paulh@taglifts.com.au” email address was used by “Paul Hart’” and not by Hoffman. In my view that was not credible evidence.

(b)    Hoffman’s evidence in relation to the car owned by PLS which he retained after leaving PLS’ employment was consistent with him having joined TAG by the start of March 2012. He changed his evidence once this was pointed out to him.

Hoffman’s involvement in the Synagogue job at TAG

172    Eleventh, as at February 2012, the Synagogue job was a project won and partly completed by PLS, although it had been put on hold.

173    Hoffman was involved in the Synagogue job at PLS. He quoted the project, emailed the client on 13 October 2011, providing information in relation to the project and advising that the works for the project had been 10–15 per cent completed, received an email on 13 October 2011 advising that the job was on hold and had further emails with the client in February 2012 in relation to the project. There is no evidence that Behmer & Wright ever cancelled its order with PLS.

174    Hoffman at TAG quoted for the Synagogue job on 13 April 2012. Hoffman’s evidence was that a representative of Behmer & Wright contacted him at TAG to ask him to quote on the Synagogue job and sent him the PLS quote with the prices blacked out in order that he could quote. I do not accept this evidence. Hoffman has not produced this document, nor called any witness from Behmer & Wright. Further, he has not explained:

(a)    how Behmer & Wright obtained his contact details at TAG; or

(b)    why Behmer & Wright was looking to replace PLS, a supplier it had already engaged to undertake the project and which had partly completed the project.

175    Behmer & Wright produced documents in response to a subpoena served on it by PLS. The document that Hoffman asserts was sent to him at TAG by Behmer & Wright was not among the documents produced by Behmer & Wright. If the document existed, it is likely that it would have been produced by Behmer & Wright. The only relevant documents tendered in evidence were those sent to TAG by Behmer & Wright on 26 April 2012, almost two weeks after Hoffman produced the quote. These did not include PLS’ quote.

176    Hoffman’s cross-examination on this aspect was as follows:

And is it your evidence that by that date you had been sent the PLS quote by Behmer & Wright to quote against?---Yes, it wasn’t – it wasn’t hard. It was a disabled lift. It was 1400 by 1100, which is a standard – to Australian standards. It wasn’t anything special.

….

In September 2014 you swore that Mr Behmer sent the Prestige Lifting quote which had been prepared previously and that you used that document to quote for this job? ---Yes.

Is that right?---Yes, that would be right. That – I would have used not the document: the information that was on the document, yes, which told me what size of the lift was. That’s all you need to know.

So you didn’t quote it from a phone call, did you? You quoted it from PLS documents?--- What he had sent. From what he had sent me and the discussions that I had with him. They rung me up first and they asked me questions, and I told them I didn’t have any information.

And what did they send you?---He sent me a – a – a copy of a PLS thing with all the prices blacked out in it. Like they put a Texta through the pricing.

177    The PLS quote against which Hoffman claims to have quoted does not state that the lift is a “disabled lift” and does not state the dimensions of the lift.

178    Further, the TAG quote for the Synagogue job contains anomalies. Hoffman states in the quote that the project will be fulfilled by a lift from “CE range of products” which are designed in Australia and manufactured locally using local and imported products. Yet the quote includes a Euro conversion rate, the delivery plan for completion of the project includes 4–6 weeks for sea freight, it provides for the interior of the lift to be from “a standard range of Orona stainless steel finishes” and the lift manufacturer is shown as ORONA.

179    Hoffman’s evidence as to the manner in which the TAG quote for the Synagogue job was prepared is implausible. In my view, the quote was prepared by Hoffman using and misusing PLS’ confidential information.

180    More generally, it is apparent that projects for the supply and installation of lifts are long lead-time projects. Yet in respect of the Synagogue job at TAG:

(a)    Hoffman quoted on 13 April 2012;

(b)    TAG was awarded the project by 26 April 2012;

(c)    Revised drawings were sent to the client by Hoffman by 30 April 2012 (it seems the first set of drawings prepared by TAG were described as “revised drawings”, presumably to indicate they were revised versions of PLS’ drawings);

(d)    By 4 May 2012 the order had been inputted into the ORONA extranet and Hoffman was seeking a quick response from ORONA; and

(e)    An ORONA report dated 18 May 2012 showed that the lift for the Synagogue job was on order with a dispatch date of 6 July 2012.

181    Hoffman had numerous further dealings in relation to the Synagogue job, including on 28 May 2012, 1 June 2012, 5 June 2012, 7 June 2012, 18 June 2012 and 19 June 2012.

182    In summary, I conclude that Hoffman used PLS’ confidential information in order for TAG to obtain the Synagogue job at the expense of PLS.

General

183    Twelfth, Hoffman asserts that there is “no evidence that [he] had any material or media containing [PLS’] information, confidential or otherwise, when he left employment with [PLS]”. But PLS’ claims against Hoffman do not rely on proving that when Hoffman left PLS’ premises he took any particular document or information away with him. PLS’ claim is that Hoffman used confidential information of PLS while at TAG. But in any event, Hoffman had in his possession, when he left PLS, a Toshiba laptop computer owned by PLS and which contained quotes by PLS and the information on which was highly confidential to PLS. The Toshiba laptop computer was subsequently returned to PLS.

184    I reject Hoffman’s “emphatic” denials of having taken PLS’ confidential information with him and his denial of having used PLS’ confidential information while at TAG. I did not find him to be a reliable witness.

The totality of the evidence

185    In my opinion, the totality of the evidence demonstrates the following:

    Williams left PLS and immediately set up in competition together with Gardiner and TAG.

    Hoffman and some other staff followed Williams.

    Williams and Hoffman sought to obtain a head start for the new business by building a relationship with the lift supplier with whom they had dealt at PLS, gaining as many jobs then underway at PLS as possible, using their knowledge of PLS’ order book and fulfilling those jobs using information they had taken from PLS.

186    As PLS rightly contended, this picture is bolstered by:

(a)    The failure of Gardiner and Williams to defend the proceeding at trial;

(b)    The brevity and generality of Hoffman’s affidavits, notwithstanding Van Munnen’s detailed affidavits;

(c)    Hoffman’s failure to deny, other than in the most general terms, most of the detailed matters contained in Van Munnen’s affidavits and the documents exhibited to Van Munnen’s affidavits;

(d)    Hoffman’s unreliable evidence and his efforts to minimise his involvement in the lost projects at TAG.

187    Given these and other matters, I have concluded that Hoffman along with Williams and Gardiner misused PLS’ confidential information to the benefit of TAG and that such misuse substantially contributed to and caused TAG to win the four projects at the expense of PLS.

PLS was ready, willing and able to perform

188    It would appear that in addition to tensions within the management between Williams and Van Munnen that PLS was facing financial difficulties from late 2011.

189    For example, on 24 November 2011, Van Munnen wrote to Williams in the following terms:

In the meantime, I am very concerned that we have a shortage of cash flow and a lack of working capital which has got worse while I have been out of the office. We are now in a position where we will have difficulty paying our next round of wages and have difficulty meeting commitments to purchase goods in the next few weeks. In fact, we have not yet paid Arona about $25,000 which is overdue.

Our records show you owe the company $168,361.45 and it may well be greater than that. The company needs working capital urgently and therefore I require you to repay your loan to the company. Rather than require the whole amount to be paid at once I am prepared to allow you to repay it over time in line with our working capital needs. We need $25,000 repaid immediately and another $20,000 in 7 days to meet the next round of wages. After that the company requires you to pay $25,000 per month until the loan is repaid.

190    Contrastingly, on 9 December 2011, Williams wrote to Van Munnen stating that “In regards to working capital the company can support itself with good management”.

191    PLS pleaded that at all material times it intended to continue to pursue the opportunity to carry out the lost projects. Hoffman did not, in his defence, plead to this allegation. Given that Hoffman had neither denied nor not admitted the allegation, Van Munnen dealt with the topic only briefly in his affidavits, stating:

PLS intended to and had the capacity to carry out all of these jobs. At no time did PLS decide not to pursue or proceed with any of these projects.

192    In the course of the opening address of PLS, I expressed interest in whether PLS was capable of undertaking the lost projects.

193    With leave, PLS adduced further oral evidence on this topic. Van Munnen was then cross-examined on the topic and re-examined.

194    Van Munnen’s evidence on this topic, which I accept, was that:

(a)    PLS was from February 2012 in a difficult position because of Williams’ conduct;

(b)    From February 2012 it was necessary for him to provide funds to PLS to support the company and he did so. He provided approximately $175,000;

(c)    PLS sought to arrange its payment terms with clients so that clients put PLS in funds to pay ORONA for lifts;

(d)    From time to time he provided bank guarantees on PLS’ behalf so that clients would release money which could be paid to ORONA;

(e)    Had the lost projects not been lost, PLS would have undertaken them. Van Munnen would have provided financial support if necessary to enable it to do so; he would have provided bank guarantees or financial support to complete the Orona orders for the lost projects, had they proceeded with PLS.

195    In my opinion, PLS was ready, willing and able to pursue all four projects with Van Munnen’s assistance.

applicable legal principles — hoffman and williams

(a)    Contract — Hoffman only

196    A term is implied in law in employment contracts that obliges employees to render faithful and loyal service to their employer, and to avoid conduct incompatible with the continuing relationship of trust and confidence between them (Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81 per Dixon and McTiernan JJ and Investa Properties Pty Ltd v Nankervis (No 7) [2015] FCA 1004 at [65] per Collier J). This contractual duty of fidelity and good faith is implied as a term of all contracts of that class. It may derive from the fiduciary obligations which employees may owe to their employers, although such fiduciary obligations have different conceptual foundations (see Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at [30] per French CJ, Bell and Keane JJ); I have expressed myself in doubly qualified terms because an employment relationship does not necessarily entail or give rise to fiduciary obligations (University of Nottingham v Fishel [2000] ICR 1462 at 1490 to 1493 per Elias J).

197    An employee will contravene such an implied term if he engages in activities which are incompatible with the fulfilment of his duty or involve an opposition or conflict between his interest and his duty to his employer (Blyth Chemicals at 81 and 82 per Dixon and McTiernan JJ).

198    The scope of the contractual duty of fidelity owed by senior employees may be more extensive and exacting than that owed by more junior employees. In the present case, Hoffman was an experienced and senior employee.

199    The contractual duty also operates to preclude employees from disclosing or using their employer’s confidential information. The scope of this contractual duty in this dimension can be seen for practical purposes as co-extensive with any equitable duty of confidence that might arise by reason of the circumstances in which particular information was imparted.

200    In considering whether an item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment ceases, it is necessary to consider all the circumstances of the case (see generally Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117 at 136 and 137 per Kerr, Neill and Nourse LJJ).

(b)    Statutory duties

201    Section 181(1) of the Corporations Act (relevant to Williams only) provides that:

(1)    A director or other officer of a corporation must exercise their powers and discharge their duties:

(a)    in good faith in the best interests of the corporation; and

(b)    for a proper purpose.

To establish a contravention of s 181(1) it is necessary to show that the director acted with a consciousness that what was being done was not in the interests of the company (Digital Cinema Network Pty Ltd v Omnilab Media Pty Ltd (No 2) [2011] FCA 509 at [158] per Gordon J). The requirement to act in good faith includes that a director must:

(a)    exercise his powers in the interests of the company;

(b)    not misuse or abuse his power;

(c)    avoid conflict between his personal interest and those of the company;

(d)    not take advantage of his position to make secret profits; and

(e)    not appropriate the company’s assets for himself.

202    The issues of “good faith” and “proper purpose” have an objective element (Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (2006) 57 ACSR 553 at [377] per Hargrave J).

203    Section 182(1) of the Corporations Act (relevant to Williams only) provides that:

(1)    A director, secretary, other officer or employee of a corporation must not improperly use their position to:

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

(b)    cause detriment to the corporation.

204    I should say that although s 182 applied to Hoffman whilst he was employed at PLS, it ceased to have relevance thereafter; there is no conduct of Hoffman that contravened s 182 whilst he was an employee of PLS.

205    Impropriety for these purposes consists of a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers, and authority of the position and the circumstances of the case (R v Byrnes & Hopwood (1995) 183 CLR 501 at 514 and 515 per Brennan, Deane, Toohey and Gaudron JJ). Impropriety is to be determined objectively; it does not depend upon the officer’s or employee’s consciousness of impropriety.

206    Section 183(1) of the Corporations Act (relevant to both Hoffman and Williams) provides that:

(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.

207    “Information” in s 183(1) covers any information that a person may have acquired because of their position in the company (see Digital Cinema Network at [163] per Gordon J).

208    The duty owed under s 183(1) continues after a person ceases to be an officer or employee of the company.

209    In the present case, s 183 applied to both Hoffman and Williams and was breached by both of them.

(c)    Fiduciary duties

210    At one level of generality, the employer-employee relationship is an established category of fiduciary relationship (Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96 and 97 per Mason J). But the scope of the duty has to be moulded to the nature of the particular relationship and the facts of the case (Hospital Products at 102 per Mason J). It is inappropriate to take a “one size fits all” approach to whether an employee owes fiduciary duties to an employer (University of Nottingham at 1490 to 1493 per Elias J).

211    In my view, fiduciary duties arose in the context of the relationship between PLS and each of Williams and Hoffman given their level of seniority, their positions of responsibility and the relevant circumstances; of course in Hoffman’s case they could not be inconsistent with the contractual relationship. In particular, Williams and Hoffman were subject to a duty not to use their position with PLS, or information obtained by virtue of their position with PLS, for their own benefit or for the benefit of another including setting themselves up in a rival or competing enterprise, which is what Williams did. Generally, a fiduciary is under an obligation not to promote his personal interest by making or pursuing a gain in circumstances in which there is an actual conflict or a real or substantial possibility of a conflict between his personal interests and those of the persons whom he is bound to protect (Hospital Products at 103 per Mason J).

212    Directors and senior employees are precluded from obtaining for themselves or another any property or business advantage belonging to their employer, or for which it has been negotiating. They are not entitled to appropriate for themselves or divert to another with whom they are or may be associated a maturing business opportunity which the employer is actively pursuing. This is particularly so where the director or senior employee has been a participant in the negotiations on behalf of the employer (Canadian Aero Service Ltd v O’Malley (1973) 40 DLR (3d) 371 at 381 and 382 per Laskin J; Weldon and Co v Harbinson [2000] NSWSC 272 at [73] to [78] per Bryson J).

213    For present purposes, it may be accepted that Williams’ relevant fiduciary duties to PLS (and Hoffman’s to some extent) were little different to the statutory obligations under ss 181 to 183.

(d)    Confidential information

214    The elements of an action for breach of an equitable duty of confidence are the following:

(a)    The information the subject of the claim must have the necessary attribution or quality of confidence and have been identified with specificity rather than generally or globally;

(b)    The information has to be obtained or imparted in circumstances identifying or importing an obligation of confidence; this could arise by reason of the nature of the relationship between the parties or the circumstances applying to the particular occasion when the information was obtained or imparted;

(c)    There has been an unauthorised use of that information (Dart Industries Inc v David Bryar & Associates Pty Ltd (1997) 38 IPR 389 at 405 and 406 per Goldberg J; Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50 and 51 per Mason J).

215    As I have said, the information must have the necessary quality of confidence (Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215 per Lord Greene MR). That is, it must be something not within the public knowledge. There are various indicia of whether information is confidential (see the six indicia identified in Mense & Ampere Electrical Manufacturing Co Pty Ltd v Milenkovic [1973] VR 784 at 796 to 798 per McInerney J). It is a question of fact in all the circumstances.

216    It is unnecessary that the recipient of the alleged confidential information appreciated that the circumstances imported an obligation of confidence; it is sufficient that a reasonable man would have so appreciated.

217    Relatedly in the present context, the implied contractual duty of fidelity owed by an employee to his employer, which prevents an employee from acting to the detriment of his employer, includes not disclosing confidential information to an unauthorised third party or using it to his own advantage. That duty survives the cessation of employment (Cranleigh Precision Engineering Ltd v Bryant [1964] 3 All ER 289 at 296 per Roskill J); but even if the contractual duty did not survive termination, the equitable duty would.

LIABILITY OF HOFFMAN AND WILLIAMS

218    There were terms of the employment contract of Hoffman with PLS to the effect that he would not misuse PLS’ confidential information, would act towards PLS with fidelity and in good faith and would not take advantage of his position to obtain benefits for himself. These were implied terms, save that it was an express term that he would not misuse PLS’ confidential information whether during or after the cessation of employment; see his letter of appointment dated 8 September 2008.

219    In addition, Williams and Hoffman owed PLS the statutory duties set out in ss 181 to 183 of the Corporations Act: Williams as a director and senior executive of PLS (ss 181 to 183) and Hoffman as an employee (in relation to ss 182 and 183 although in terms of the breach case only the latter is relevant).

220    Williams and Hoffman also owed PLS:

(a)    fiduciary duties;

(b)    a duty of confidence in relation to PLS’ confidential information.

221    I have previously identified the confidential information relied on by PLS which includes:

(a)    detailed customer requirements for each of the PLS Jobs;

(b)    prices at which PLS had offered to carry out the PLS Jobs; and

(c)    the identifying number assigned by ORONA for each lift ordered by PLS from ORONA for the Nepean Hwy Job and the High St Job.

222    This information was confidential. It was of value to a competitor.

223    Moreover an officer or an employee may breach his obligations by taking on contracts (or causing or assisting a third party to take on contracts) which it might have been open to the company to secure.

224    In the circumstances, each of Hoffman and Williams breached their duty of confidence each owed to PLS, their fiduciary duties owed to PLS and the statutory duties each owed to PLS; Hoffman also breached his contractual duties. The present case is not dissimilar to Co-ordinated Industries Pty Ltd v Elliott (1998) 43 NSWLR 282 at 286 to 289 per Hodgson CJ in Equity.

225    PLS’ proposals for the lost projects (other than the Dorcas St job) had been accepted, and PLS’ proposal for the Dorcas St job was likely to be accepted.

226    By October 2011 PLS’ work on the Synagogue job was 10–15 per cent complete. PLS would only be paid for its work on this project if the project proceeded.

227    The obtaining and undertaking of the lost projects by TAG necessarily involved use of the detailed knowledge of the lost projects built up by Williams and Hoffman over the time in which they worked on these projects for PLS.

228    Moreover, it was not open to Williams or Hoffman to assist TAG to perform the lost projects and thereby prevent or make problematic the receipt by PLS of payment for the work it had done (including work by Williams and Hoffman) on the lost projects.

229    The conduct of Williams and Hoffman deprived PLS of assets, being contracts with customers in respect of some of the lost projects and the chance of obtaining a contract in respect of the remaining lost project, being the Dorcas St Job.

Claim against Gardiner

230    PLS has made three classes of claim against Gardiner, namely:

(a)    First, he was involved in Williams’ and Hoffman’s breaches of ss 181 to 183 of the Corporations Act (see ss 79, 181(2), 182(2) and 183(2));

(b)    Second, a claim under the second limb of Barnes v Addy (1874) LR 9 Ch App 244;

(c)    Third, a claim made against him in his capacity as a director of TAG, having been said to contravene ss 181 to 183 directly in that capacity by involving TAG in the relevant transactions.

231    The third type of claim can be put to one side. Whatever Gardiner’s involvement, I doubt whether it gave rise to such contraventions. But in any event, in my view they cannot be pursued at the suit of PLS.

232    In my view, the first and second bases have been made good by PLS.

233    In relation to the first head of claim, to succeed against Gardiner, PLS must prove the underlying contraventions (which it has done). Further, PLS must prove that Gardiner knowingly participated in the contraventions. That is, that he had actual knowledge of each essential matter going to make up the contraventions as at the time of the contraventions. Moreover, actual knowledge may be inferred where there is a combination of suspicious circumstances and a wilful failure to make inquiry. I am well satisfied that he had such knowledge and that he so participated.

234    In relation to the second head of claim that invokes the second limb of Barnes v Addy, the following may be noted in terms of the relevant knowledge for knowing assistance in Williams’ and Hoffman’s breaches of fiduciary duty.

235    First, as this is a serious allegation, it has to be assessed in accordance with principles of the type set out in Briginshaw v Briginshaw (1938) 60 CLR 336 (see s 140(2)(c) of the Evidence Act 1995 (Cth)).

236    Second, the relevant knowledge must be established at one of the following four levels conveniently described by Peter Gibson J in Baden v Société Générale [1993] 1 WLR 509 at 575 and 576 being:

(a)    actual knowledge;

(b)    wilfully shutting one’s eyes to the obvious;

(c)    wilfully or recklessly failing to make such enquiries as an honest and reasonable man would make; and

(d)    knowledge of circumstances that would indicate the facts to an honest man.

237    The fifth level, namely, knowledge of circumstances that would put an honest and reasonable man on enquiry is not part of Australian law (see Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 398 and 399 per Gibbs J and at 412 per Stephen J). Indeed to use that fifth level would be to disregard equity’s concern for the state of conscience of the defendant; see also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [171] to [178].

238    Third, the relevant breach of fiduciary duty for the purposes of this second limb must be dishonest and fraudulent. Mere breach of fiduciary duty without dishonesty and fraud is not sufficient (see Farah Constructions at [163]). Dishonesty in this context may be established by conscious impropriety including knowingly appropriating another’s property or information, whether or not the wrongdoer sees nothing wrong in his behaviour. Further, as was said in Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming [1995] 2 AC 378 at 389 but putting to one side for present purposes the broader debate referred to in Farah at [163], in terms of explaining what dishonesty is not, it may be said that an honest person:

(a)    does not intentionally deceive others to their detriment;

(b)    does not knowingly take others’ property;

(c)    does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of beneficiaries.

239    Fourth, it may be queried whether it needs to be shown that the person who is alleged to have given assistance had the intention of furthering the dishonest and fraudulent breach of fiduciary duty (cf Digital Cinema Network at [177] and [209] per Gordon J) as distinct from just having the relevant knowledge. I am inclined to the view that the preponderance of authority that binds me does not go that far.

240    In my view, PLS has made good its claims against Gardiner on the two bases discussed earlier.

241    The relevant chronology of events that I have detailed earlier clearly establishes directly or by inference the following matters:

(a)    First, Gardiner was given access to the books and records of PLS by Williams in the period November 2011 to February 2012.

(b)    Second, in early 2012, Gardiner made an offer to the directors, shareholders and unitholders of or associated with PLS to acquire their shares and units, failing which he intended to directly service through TAG the customers of PLS.

(c)    Third, Gardiner caused TAG to register the name TAG Lifts in order to commence a similar business to that which had been carried out by PLS and to facilitate taking over the customers of PLS.

(d)    Fourth, Gardiner caused TAG to be structured in such a way as to facilitate that strategy and to employ Williams, Hoffman and others for that purpose.

(e)    Fifth, Gardiner agreed with and worked with Williams to facilitate and implement that strategy.

(f)    Sixth, Gardiner set up and supported the structure that enabled TAG to participate in the conduct described earlier during 2012. Although one can appreciate the separate legal status of TAG, it seems to me that it was Gardiner personally who took steps and put in place mechanisms permitting TAG to carry out the transactions described earlier and to implement the above strategy.

242    In my view, the objective conduct of Gardiner that I have described clearly facilitated at the least Williams’ and Hoffman’s breaches of statutory duty and breaches of fiduciary duty.

243    In terms of the evidence as to Gardiner’s state of mind, as I have said, Gardiner did not give evidence. But in my view, I can readily infer and do infer that he had knowledge of Williams’ and Hoffman’s misuse of confidential information and generally the objective elements of their behaviour that constituted the breaches of statutory duty and fiduciary duty referred to earlier. The first head of claim of being knowingly involved in the statutory breaches is made out.

244    As for the claim based upon the second limb of Barnes v Addy, in my view it is made out against Gardiner, but with respect to Williams’ behaviour only. As I have said earlier, the second limb requires, as its foundation, knowing assistance with another’s dishonest and fraudulent breach of fiduciary duty. That double barrelled adjectival qualification can only be applied to Williams’ breach of fiduciary duty, but not to Hoffman’s breach of fiduciary duty. As for knowledge, it seems to me that I can readily infer and do infer that Gardiner’s state of mind satisfied any one or more of Peter Gibson J’s first four cascading conceptual levels without wishing to give his words Talmudic-like status. That is sufficient to hold that the claim against Gardiner under the second limb of Barnes v Addy has been made good.

245    For completeness, I should say that I have dealt with Gardiner under the second limb of Barnes v Addy only as I cannot say that his conduct fits within any of the other categories of liability for third party participation in another’s breach of fiduciary duty not involving a dishonest and fraudulent design on the part of the fiduciary (see the useful observations in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [242] to [247] per Finn, Stone and Perram JJ). The present case is not a suitable vehicle for any further scholastic disquisition on that aspect.

QUANTUM of damages

246    PLS has sought “damages”, “equitable compensation” and a “compensation order” under s 1317H. Little attention has been given to the separate principles that may apply depending on the basis asserted. I intend to proceed on the basis that I should award damages or order compensation in the present circumstances with the object of restoring PLS to the position that it would have been in if there had been no breach of the relevant duties, whether contractual, fiduciary or statutory. PLS has also sought an account of profits, but no endeavour was made to quantify what profits TAG made as opposed to the damage suffered by PLS. Indeed it seems to have elected to pursue damages only.

247    I intend to proceed on the basis that PLS claims damages only, being the profit lost to it by reason of its loss of the projects. As I have said, the wrongdoing of each of Williams, Hoffman and Gardiner caused that loss or materially contributed to it. The relevant calculations are the following.

(a)    Calculation of loss and damages — Nepean Hwy Job

248    The calculations for loss on the Nepean Hwy Job are based on an exchange rate of 1.36 AUD to 1 EUR — this is the same exchange rate listed in the quote submitted by PLS for the job. The cost of each lift is based on the cost given in the ORONA order confirmation. This gives the following cost for each lift in Australian dollars:

Lift A: 24,690 EUR    =    $33,578.40

Lift B: 23,015 EUR    =    $31,300.40

Lift C: 22,800 EUR    =    $31,008.00

TOTAL:            $95,886.80

The freight cost is $3,380.00, which gives a total cost of $99,266.80.

249    The quotation submitted by PLS for the job provided for 36 working days based on 36 hour weeks, or a total of 259.2 hours. Labour costs to PLS were typically $64.00 per hour. Therefore the total labour cost according to the quote was $16,588.80.

250    However, the job required approximately 620 hours of labour (Lift A 220 hours; Lifts B and C 200 hours) at the same cost to PLS ($64.00 per hour). This adds to $39,680.00 rather than $16,588.80. The total cost of the lifts and labour for the Nepean Hwy Job was therefore $138,946.80.

251    In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This added to $3,090.00 for the Nepean Hwy lifts. The total cost of the job was therefore $142,036.80.

252    The quotation submitted by PLS to Valeo Construction for the job was $181,818.19. Therefore, the total profit to PLS for the installation of the three (3) passenger lifts would have been $39,781.39.

(b)    Calculation of loss and damages — High St Job

253    The calculations for loss on the High St Job are based on the exchange rate of 1.38 AUD to 1 EUR — this is the same exchange rate listed in the quote submitted by PLS for the job. The cost of each lift was based on the cost given in the ORONA order confirmation. This gave the following cost for the lift in Australian dollars:

22,995 EUR = $31,733.10

The freight cost is $3,380.00, which gives a total cost of $35,113.10.

254    The quotation submitted by PLS for the job provided for 29 working days based on 36 hour weeks, or a total of 208.8 hours. Therefore the total labour cost according to the quote was $13,363.20 at $64.00 per hour. This brings the total cost to $48,476.30.

255    In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This added to $1,030 for the High St Job. The total cost of the job was therefore $49,506.30.

256    The quotation submitted by PLS to Valeo Construction for the job was $81,300.00. Therefore, the total profit to PLS for the installation of one (1) passenger lift would have been $31,793.70.

(c)    Calculation of loss and damages — Dorcas St Job

257    The calculations for loss on the Dorcas St Job are based on the exchange rate of 1.34 AUD to 1 EUR — this is the same exchange rate listed in the quotes submitted by PLS for the job. The cost of the passenger lift was based on the cost given in the ORONA costing sheet. The cost of the car lift was based on the cost given in the Hidral costing sheet. This gave the following cost for each lift in Australian dollars:

Passenger:    21,727.92 EUR = $29,115.41

Car:         29,849.98 EUR = $39,998.97

The freight cost was $3,380.00, which gave a total cost of $72,494.38.

258    The quotation submitted by PLS for the job provided for 36 working days based on 36 hour weeks, or a total of 259.2 hours. Therefore the total labour cost according to the quote was $16,588.80 at $64.00 per hour.

259    However, the job would have required approximately 420 hours of labour (220 hours for Car Lift; 200 hours for Passenger Lift) at the same cost to PLS ($64.00 per hour). This adds to $26,880. The total cost of the lifts and labour for the Dorcas St Job was therefore $99,374.38.

260    In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This adds to $2,060.00 for the Dorcas St Job. The total cost of the job was therefore $101,434.38.

261    The quotation submitted by PLS to Valeo Construction for the job was a total of $164,639.00. Therefore, the total profit to PLS for the installation of one (1) passenger lift and one (1) car lift would have been $63,204.62.

(d)    Calculation of loss and damages — Synagogue Job

262    The calculations for loss on the Synagogue Job are based on the exchange rate of 1.39 AUD to 1 EUR — this is the same exchange rate listed in the quote submitted by PLS for the job. The cost of the lift was based on the cost given in the ORONA costing sheet. This gives the following cost for each lift in Australian dollars:

15,021 .91 EUR = 20,880.45

The freight cost was $3,380.00, which gave a total cost of $24,260.45.

263    The quotation submitted by PLS for the job provided for 22 working days based on 36 hour weeks, or a total of 158.4 hours. Therefore the total labour cost according to the quote was $10,137.60 at $64.00 per hour.

264    However, the job would have required approximately 210 hours of labour at the same cost to PLS ($64.00 per hour). This adds to $13,440.00. The total costs of the lifts and labour for the Synagogue Job was therefore $37,700.45.

265    In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This adds to $1,030 for the Synagogue Job. The total cost of the job was therefore $38,730.45.

266    The quotation submitted by PLS to Valeo Construction for the job was $58,352.00. Therefore, the total profit to PLS for the installation of one (1) passenger lift would have been $19,621.55.

(e)    Calculation of loss and damage — Total

267    I have calculated the lost profit for each of the Nepean Hwy Job, the High St Job, the Dorcas St Job and the Synagogue Job.

268    Of course, this is not the sum that should be awarded to PLS. The claim made is principally for the lost opportunity to get the benefit flowing from the four projects, being to earn the profits as calculated above. Given that it is not certain that PLS could have obtained such profits, particularly given its financial position and the necessary support that it might have needed from Van Munnen, it is appropriate in my view to discount the various lost profits for each project reflected in the above arithmetic. Moreover, there should be a discount to reflect the fact that the counterparty may not have proceeded. Taking into account all contingencies, I would discount the Nepean Hwy Job, High St Job and Synagogue Job calculations each by 30%. I would discount the Dorcas St Job calculation by 50% as it had not progressed as far as the other projects under PLS’ auspices. Finally, for completeness I note that Hoffman submitted that there were no “executed contracts” and that no evidence from the counterparties had been called. I consider that the first point ignores the reality in relation to three of the projects. As to the second point, I have taken this into consideration, but it is not disqualifying. Hoffman made no other submissions on causation or damages.

269    Finally, I should say for completeness that I have put to one side the line of authority which deals with the scenario where there can be a remedy for breach of fiduciary duty against a party even though the company which has been wronged was unwilling, unlikely or unable to make the profits which the wrongdoer has made (see Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 (reporting what first appeared in [1942] 1 All ER 378) and Warman International Ltd v Dwyer (1995) 182 CLR 544). That is because in the present case an account of profits has not been pursued.

MONEY HAD AND RECEIVED CLAIM — williams

270    Williams caused PLS to pay out moneys for no proper purpose and in breach of the duties he owed to PLS. PLS suffered detriment by reason of this conduct while Williams benefited from it. It would be unjust for Williams to retain the benefit of these moneys. PLS is entitled to restitution.

271    Throughout the period from 5 July 2009 to 14 November 2011, Williams applied moneys of PLS for his own personal benefit that were not authorised. PLS did not gain anything from these transactions. These payments were not part of Williams’ remuneration for his directorship with or services for PLS, which was separately paid.

272    Williams caused various payments to be made to Asteron Life Insurance. PLS was not the beneficiary of any relevant policy of insurance and there was no agreement that PLS would pay insurance premiums on behalf of staff or directors. The date and amount of each payment was as follows:

07/07/2009    $308.06

06/08/2009    $308.06

12/08/2009    $391.81

07/09/2009    $308.06

14/09/2009    $391.81

06/10/2009    $391.81

13/11/2009    $422.48

13/12/2009    $422.48

12/01/2010    $422.48

12/02/2010    $422.48

12/03/2010    $422.48

12/04/2010    $422.48

12/05/2010    $422.48

15/06/2010    $422.48

12/07/2010    $422.48

12/08/2010    $422.48

12/09/2010    $422.48

12/10/2010    $422.48

15/11/2010    $457.36

13/12/2010    $457.36

13/01/2011    $457.36

14/02/2011    $457.36

15/03/2011    $457.36

14/04/2011    $457.36

14/05/2011    $457.36

14/06/2011    $457.36

13/07/2011    $457.36

15/08/2011    $457.36

13/09/2011    $457.36

14/10/2011    $457.36

14/11/2011    $496.98

13/12/2011    $496.98

13/01/2012    $389.33

TOTAL:    $14,040.98.

273    Further, Williams made several other payments throughout the period. Each of them does not represent a payment authorised by PLS or made in payment of moneys owed by PLS to any creditor. The details of these payments are as follows:

14/07/2009    GMAC Financial Services    $722.67

14/08/2009    GMAC Financial Services     $722.67

23/08/2009    Purchase; Citylink         $14.34

14/09/2009    GMAC Financial Services    $722.67

23/09/2009     Purchase; Citylink         $1.72

30/09/2009     Electrical Trade Union         $133.75

02/12/2009     Dale Williams             $255.00

23/12/2009     Purchase; Citylink         $15.30

28/12/2009     Purchase; WBC Visa         $22.80

05/01/2010     Min NAB Visa Payment     $7,500.00

24/01/2010     Purchase; Citylink         $53.17

23/02/2010     Purchase; Citylink         $106.97

23/03/2010     Purchase; Citylink         $96.71

26/03/2010     Purchase; L&H Group         $142.18

28/03/2010     Purchase; WBC Visa         $178.25

28/03/2010     Purchase; Telstra-Landlines     $90.91

23/04/2010     Purchase; Citylink         $22.00

28/04/2010     Purchase; WBC Visa         $57.49

28/04/2010     Purchase; Telstra-Landlines     $90.91

20/05/2010     Purchase; Telstra-Landlines    $100.00

23/05/2010     Purchase; Citylink         $22.40

05/06/2010     Purchase; L&H Group         $347.80

08/06/2010     Purchase; L&H Group         $35.79

24/06/2010     Purchase; Citylink         $2.16

27/06/2010     Purchase; Telstra-Landlines     $90.91

30/06/2010     Electrical Trade Union        $506.00

28/07/2010     WBC Visa             $63.00

18/09/2010     Purchase; L&H Group         $97.32

22/10/2010     Purchase; Action Aluminium     $360.13

28/11/2010     Purchase; WBC Visa         $6.40

28/12/2010     Purchase; WBC Visa        $376.10

20/01/2011     Purchase; AA Industrial     $60.00

27/01/2011     Purchase; AA Industrial     $83.25

25/03/2011     Purchase; L&H Group         $32.60

25/03/2011     Purchase; L&H Group         $11.25

28/03/2011     Purchase; WBC Visa         $39.50

28/06/2011     Purchase; WBC Visa         $827.07

21/07/2011     Purchase; WBC Visa         $18.50

25/07/2011     Purchase; L&H Group         $35.00

16/08/2011     Purchase; L&H Group         $87.00

28/09/2011     Purchase; WBC Visa         $297.77

30/10/2011     Purchase; WBC Visa         $41.75

TOTAL    $14,491.21

274    Further, on 4 April 2011, Williams caused $20,000.00 of PLS’ funds to be paid directly into his wife’s (Lauren Williams) bank account. On 20 January 2012, Williams caused a further $2,200.00 of PLS’ funds to be paid directly into his wife’s bank account. On 8 February 2012, Williams again caused $2,200.00 of PLS’ funds to be paid directly into Lauren Williams’ bank account. These payments were not authorised by PLS and were not to its benefit.

275    On 21 February 2012 Williams caused $7,000.00 of PLS’ funds to be paid directly into the bank account of TAG. TAG was not engaged by PLS to do any work for PLS at this time.

276    In summary, the moneys of PLS withdrawn by Williams from PLS for Williams’ personal use or the use of TAG and not repaid was $59,932.19. An order for restitution will be made.

Conclusion

277    PLS has succeeded in its claims against Williams, Hoffman and Gardiner.

278    As against each of them, an award of damages, equitable compensation or a compensation order should be made in an amount reflected in these reasons.

279    In addition, there should be judgment against Williams for the additional liquidated sum of $59,932.19.

280    I will give the parties an opportunity to make submissions on the precise form of orders, any interest claims and calculations and costs.

Associate:

Dated:    30 September 2015