FEDERAL COURT OF AUSTRALIA

APT Technology Pty Ltd v Aladesaye; In the Matter of APT Technology Pty Ltd (No 2) [2016] FCA 203

ORDERS

THE COURT DECLARES THAT:

1.    By:

(a)    Conducting the business called “Advanced Vibration & Reliability Engineers” in competition with the plaintiff’s business in South Australia in the period from about 11 January 2013 until about 16 June 2014; and

(b)    During his employment by the plaintiff and in the period from about 11 January 2013 to about early September 2014, appropriating and making use of the plaintiff’s confidential information and intellectual property as described in the Schedule to these Orders

the defendant breached his contract of employment signed by him on 8 June 2009, breached the fiduciary duty owed by him to the plaintiff, breached the duty of fidelity owed by him to the plaintiff as its employee, breached the equitable duty of confidence owed by him to the plaintiff and breached s 182 and s 183 of the Corporations Act 2001 (Cth).

THE COURT ORDERS THAT:

2.    The defendant, whether by himself or his servants or agents or howsoever otherwise be restrained from directly or indirectly using or disclosing any confidential information or intellectual property belonging to the plaintiff as described in the Schedule hereto to any person other than for the purpose of complying with this Order.

3.    All other claims for relief made by the plaintiff be dismissed.

4.    The defendant pay 50% of the plaintiff’s costs of and incidental to this proceeding as taxed or agreed.

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

SCHEDULE

(i)    Confidential information means all data, details, plans, designs, computer software, figures, financials, costings, developments, results, technical advice, trade secrets, samples, specifications, formulae, ideas, drawings, concepts, technology, manufacturing processes, intellectual property rights, documents, commercial knowledge, human resources information, marketing information, business information, Board Minutes, corporate records and any other proprietary information of the plaintiff (“the Information”) whether in documentary, visual, oral, machine-readable or other form together with all copies, extracts, samples, materials, equipment, media, inventions, computer hardware, videos, compact discs, CDs, CD-Roms or other items containing or referring to any of the Information which is not in the public domain (except as a result of a failure to comply with an obligation to maintain confidentiality), irrespective of how it is known by the defendant or in his possession.

(ii)    Intellectual property means all inventions, improvements, designs, creations and other developments relating to or deriving from any of the business systems or technology used by the plaintiff at any time during the defendant’s employment.

REASONS FOR JUDGMENT

FOSTER J:

Introduction

1    The plaintiff (APT) carries on the business of providing mechanical engineering consultancy services throughout Australia.

2    The defendant was employed by APT in its Adelaide office throughout the period from mid-September 2008 until 16 June 2014. On 16 June 2014, he was summarily dismissed.

3    The defendant was dismissed because:

(a)    From January 2013, while he was employed by APT, he had been conducting a rival business called “Advanced Vibration & Reliability Engineers” (AVRE) in competition with APT’s business in South Australia in breach of his employment contract with APT and in breach of other duties owed by him to APT; and

(b)    During his employment with APT, he made use of APT’s confidential information in breach of an express term of his employment contract and in breach of general law and statutory duties of confidence owed by him to APT. (I note that he continued to misconduct himself in these respects after the termination of his employment.)

4    Ultimately, the defendant was compelled to admit that he conducted the business of AVRE from early 2013 in competition with APT’s business in Adelaide. He was also driven to admit that, for the purposes of and in connection with that business, he used and disclosed APT’s confidential information and continued to do so even after the termination of his employment.

5    On 18 July 2014, APT commenced the present proceeding. Its claims for final relief are made in an Amended Originating Application filed on 23 July 2014. Those claims are supported by a Statement of Claim filed on the same day. By way of final relief, APT claims:

(a)    A declaration that the defendant breached cll 2, 15 and 16 of his employment contract with APT and damages for such breaches. Clause 2 of that contract provided that the defendant was obliged to devote all of his time and attention to the performance of his duties as APT’s employee and to do so diligently. Under that clause, he was also required to use his best endeavours to promote APT’s commercial aims and objectives and to refrain from doing any act or thing which might adversely affect APT’s present or future interests. Clause 15 contained an express prohibition on the defendant using APT’s confidential information. Clause 16 governed the disposition of inventions and designs used by the defendant during the course of his employment.

(c)    A declaration that the defendant breached fiduciary duties owed by him to APT and damages, or, in the alternative, an account of profits, or, in the alternative, equitable compensation for such breaches.

(d)    A declaration that the defendant breached the equitable duty of confidence owed by him to APT and appropriate injunctive and pecuniary relief on account of such breaches.

(e)    A declaration that the defendant breached the common law duty of fidelity and good faith owed by him to APT as its employee and damages for such breaches.

(f)    Statutory compensation for the defendant’s breaches of s 182 and s 183 of the Corporations Act 2001 (Cth) (Corporations Act).

(g)    Damages or an account of profits for infringing APT’s copyright in its reports to clients, business documents and other documents in its database.

(h)    Orders for the delivery up and destruction of APT’s confidential information in the possession of the defendant.

(i)    Permanent injunctive relief restraining the defendant from using or disclosing to any person any confidential information or intellectual property belonging to APT.

(j)    An additional injunction restraining the defendant until 16 June 2015 from directly or indirectly canvassing, soliciting or dealing with, or counselling, procuring or assisting another person to canvass, solicit or deal with any client of APT (springboard injunction).

6    By Interlocutory Process filed on the same day that this proceeding was commenced, APT sought delivery up and, as appropriate, deletion and destruction of its confidential information and intellectual property which the defendant had misappropriated and misused. APT also sought a springboard injunction on an interlocutory basis and an additional interlocutory injunction.

7    By a judgment delivered on 5 September 2014 (APT Technology Pty Ltd v Aladesaye, In the Matter of APT Technology [2014] FCA 966, (2014) 66 AILR 102-274 (APT No 1), I granted interlocutory relief to APT after a contested interlocutory hearing before me.

8    At that hearing, APT informed the Court that, given that orders for delivery up and destruction had been made by the Corporations Duty Judge on 31 July 2014, it was no longer necessary for it to pursue its claims for delivery up and destruction before me. That remained the position thereafter.

APT’s Case and Findings in Respect of It

9    APT relied upon two affidavits, documents exhibited to those affidavits and other documents tendered in evidence before me. The first affidavit relied upon by APT was the affidavit of Shadia Cavalli affirmed on 14 November 2014 and filed on 17 November 2014. The second affidavit relied upon by APT was the affidavit of Geoff Soper, also affirmed on 14 November 2014 and also filed on 17 November 2014.

10    The defendant briefly cross-examined both Mr Soper and Ms Cavalli at the hearing. He did not successfully challenge any part of their evidence. Further, when the defendant came to testify, it quickly became apparent that he did not dispute most of the facts relied upon by APT and also that he accepted he “had done the wrong thing” by establishing and conducting the business of AVRE in direct competition with APT’s business in South Australia while he was still employed by APT and also by using APT’s confidential information and know-how to advance AVRE’s commercial interests in breach of various duties owed by him to APT.

11    The following narrative and findings of fact are taken from the evidence of Mr Soper and Ms Cavalli and from documents tendered by APT. Where the defendant’s evidence conflicted with the evidence of either Mr Soper or Ms Cavalli (which was rarely), I have preferred the evidence of the APT witnesses. Although each of them was in the witness box for only a very short time, I saw nothing in the demeanour of either of them or in the answers which each of them gave to the questions asked of them which would cause me to doubt the truth of any part of their evidence.

12    In any event, as I have already noted, the evidence given by Mr Soper and Ms Cavalli was not challenged by the defendant.

The Evidence of Ms Cavalli

13    Ms Cavalli is, and at all relevant times was, APT’s office manager. She is based in Sydney.

14    APT is a national mechanical engineering consultancy organisation which has been in business since 1993. It provides machine condition monitoring solutions, testing, engineering improvement and analysis for its clients, using highly specialised equipment. The services provided by APT to its clients are designed to increase the reliability and productivity of those clients’ machinery and equipment. By the time of the final hearing, APT was operating only out of Sydney although it was endeavouring to service clients in all States and Territories.

15    Until 28 February 2014, APT leased and operated an office in Adelaide at 238 St Vincent Street, Port Adelaide, South Australia.

16    From 1 March 2014 until 16 June 2014, APT’s South Australian branch operated from the home of the defendant at 216 Grand Junction Road, Pennington, South Australia.

17    From 17 June 2014 to date, APT has not had an Adelaide office and has been forced to attempt to run the South Australian operations from Sydney.

18    APT operates nationally but predominantly in NSW and South Australia. On occasion, APT uses consultants rather than its own employees in relation to particular projects in other States.

19    In order to provide an engineering report for its clients, APT first conducts an audit of the client’s plant and equipment. The client’s equipment is listed, numbered and assessed by APT. This information is then entered into a database maintained by APT. APT’s database includes details of the various measurement points on each item of machinery which is tested.

20    The testing equipment used by APT is supplied to APT with appropriate software. This software takes the data from the testing equipment and converts it into a readable format. It is the data created in this fashion that is then analysed in order to provide commentary and advice to clients in the engineering reports supplied by APT to those clients. Once a database is set up for a client, the testing instrument can then be used to download additional information to a computer, from where the results can then be analysed. It is for these reasons that single measurements are not as important as historical information which can be used to discern changes in the machinery and equipment over time.

21    The form of the analysed data and subsequent reports has been developed by APT and its employees over time. The form of that material has improved over the years.

22    Reports generated by APT are user-friendly and easy for a client to read, interpret and understand. They provide information to the clients which assists them to make decisions about the health and productivity of particular machines and items of equipment.

23    The historical information held by APT in its database is very valuable to APT’s business. In addition to providing its clients with engineering and other reports which summarise the findings of the testing carried out by APT, APT also provides tailored advice to its clients based upon the results of that testing.

24    Prior to 2012, APT used testing equipment and software supplied by a German company referred to in the evidence as Pruftechnik. APT was the sole distributor of Pruftechnik equipment in New South Wales and had distribution rights in other States including South Australia. Since 2012, APT has been using equipment and software provided by SPM Instruments (SPM), although it still owns and operates the Pruftechnik system in its business. During the period when the South Australian office of APT was operational and managed by the defendant, that office used only Pruftechnik equipment.

25    The defendant commenced his employment with APT in mid-September 2008. He was employed to be APT’s main engineer and sole point of contact for APT’s business in South Australia. According to Ms Cavalli, the defendant was the face of APT’s South Australian business and promoted to clients as such.

26    On 8 June 2009, APT and the defendant signed an employment agreement. That agreement was in the form of a letter dated 27 March 2009 sent by APT to the defendant containing the terms of his employment which letter was ultimately countersigned by the defendant on 8 June 2009. APT and the defendant had signed an employment contract the year before, in September 2008.

27    Clauses 2, 15 and 16 of the 2009 agreement are presently relevant. Those clauses were in the following terms:

2.    Your Duties

You must:

(a)    diligently perform the duties specified in the attached position description in Schedule B (“the Duties”) and such other duties the Company may from time to time reasonably require;

(b)    obey, observe and comply with all of the Company’s reasonable and lawful directions, rules, policies and procedures. Although you must comply with Company policies, they do not form part of your contract;

(c)    use your best endeavours to promote the Company’s commercial aims and objectives and refrain from doing any act or thing which will or may adversely affect the Company’s present or future interests; and

(d)    devote the whole of your time, attention and skills to the Duties and must not whilst in the Company’s employment take on any other employment, engage in any other business activity, or be involved either directly or indirectly in any business or activity similar to and in competition with that conducted by the Company, unless otherwise agreed with the Directors of the Company.

…

15.    Confidential Information

“Confidential Information” means all data, details, plans, designs, computer software, figures, financials, costings, developments, results, technical advice, trade secrets, samples, specifications, processes, formulae, know-how, ideas, drawings, concepts, technology, manufacturing processes, intellectual property rights, documents, commercial knowledge, human resources information, marketing information, business information, Board Minutes, corporate records and any other [proprietary information of the Company (“the Information”) whether in documentary, visual, oral, machine-readable or other form together with all copies, extracts, samples, materials, equipment, media, inventions, computer hardware, videos, compact discs, CDs, CD-Roms or other items containing or referring to any of the Information which is not in the public domain (except as a result of a failure to comply with an obligation to maintain confidentiality), irrespective of how it is known by you or in your possession.

You acknowledge and agree that you will be afforded access to, and acquire knowledge of the Confidential Information of the Company. You agree that you must not use the Confidential Information for any purpose other than to perform the Duties and you must not disclose to others or independently use any such Confidential Information without the written authorisation of the Company. This obligation is binding, has worldwide effect and shall continue indefinitely, subject to:-

(a)    the Confidential Information being in the public domain (except as a result of failure to comply with the obligation in this clause);

(b)    the Confidential Information being required by law to be disclosed by the Employee; and

(c)    the Confidential Information being known and proven to have been known to the Employee prior to its disclosure to the Employee.

You acknowledge the necessity of protecting the Company’s Confidential Information and agree that any disclosure in breach of this Agreement may cause damage to the Company.

You must not make any written notes, copy, reproduce, retain, store record, computerise, document or duplicate any part of the Confidential Information which appears in written, computerised or other recorded form, except as required in fulfilment of the Duties.

If you are uncertain whether any information comprises part of the Confidential Information then you must seek direction from the Company before divulging the information to any other person.

16.    Restrictions on the Use of Intellectual Property

All inventions, improvements, designs, creations and other developments relating to or deriving from any of the business systems or technology used by the Company at any time during your employment or within a reasonable time thereafter, shall be the property of the Company and shall constitute Confidential Information. You must notify the Company immediately of any invention, design, discovery or publication by you and must sign any documents and take any action which may be necessary to enable the Company or its nominees, to apply for a patent, registered design or any other intellectual property protection. If you fail to do so, you hereby authorize the Company’s Managing Director to act as your agent to perform any necessary acts.

28    On 1 July 2011, the defendant was promoted to the position of Reliability Manager with APT. This role had national responsibilities. It was a senior executive position. In this role, the defendant’s key duties were to identify and secure business opportunities for APT with existing and new clients. The defendant received a substantial salary package as a result of this promotion.

29    At par 36 of her affidavit, Ms Cavalli said:

At the time of the promotion, the defendant’s salary was increased to $140,000 per annum including vehicle, superannuation and incentive payments. His day to day wouldn’t have changed as he was to still promote our services and products, and provide the services. In the new position there was an added focus on reliability. The offer states that the following points were noted and other terms and conditions in the standard employment agreement have not changed. The points were the additional tasks for the role of Reliability Manager. With a Salary of $140,900 come additional responsibilities.

30    The defendant’s job description required him to:

(a)    Plan, schedule and co-ordinate jobs with customers and internal administration personnel through proactive management;

(b)    Create and keep up to date all necessary business documentation including timesheets, site visit reports and safety documents;

(c)    Assist in the development of a business plan and sales strategy for the South Australian market and to ensure that APT’s sales goals for that market and budgeted profitability were met;

(d)    Diagnose problems, write reports and develop client relations utilising vibration analysis, bearing monitoring, machinery alignment, dynamic balancing, lubrication sampling and analysis (correlation) and other predictive and preventive maintenance techniques; and

(e)    Provide prompt and accurate engineering support to customers and measure the performance of the South Australian part of APT’s business against agreed key performance indicators.

31    By reason of his position as the most senior executive of APT working in its Adelaide office, the defendant was well placed to contact, meet and discuss all of APT’s services and products with existing and prospective clients. He was also required to price jobs and submit official quotations. It was he who was responsible for generating quotations and securing orders based upon those quotations.

32    The defendant was in a position to and indeed was required to conduct on behalf of APT all dealings with existing and prospective clients of APT in relation to its South Australian business.

33    During the period of his employment by APT, the defendant had access to APT’s confidential information. This information included:

(a)    APT’s databases. These databases comprised unique and confidential information specifically tailored to each particular client’s needs. Data had been collected in respect of each client using the Pruftechnik equipment and then stored on the APT engineer’s laptop. Once back in the office, the engineer was supposed to store a copy of that data on the APT server for safe keeping as the server is backed up every day;

(b)    APT’s engineering reports prepared for individual clients. APT’s engineering reports were generated in Microsoft Word format on the engineer’s laptop and then saved to the server;

(c)    The identity of and related information specific to particular clients to APT, their equipment and their needs;

(d)    Knowledge of the pricing which APT charged its clients from time to time. APT charged different hourly rates for its work, built up from a base hourly rate which was then adjusted depending upon the quantity of machines to be reviewed, the extent of the work, the frequency of the work and the complexity of the work. The defendant had knowledge of the specific prices APT had constructed for particular clients in the South Australian market;

(e)    Details of APT’s business plans and forecasts. These were regularly prepared by APT operatives, including the defendant, for discussion and reporting to APT’s General Manager; and

(f)    Reports and documents recording the identity of businesses and clients being targeted by APT from time to time.

34    During the period of the defendant’s employment by APT, some of the clients to which it provided services in South Australia were PepsiCo, AllWater, Viridian Glass, Electrolux, Transfield and Challenger Gold Mine. In APT’s records, Dominion is the same client as Challenger Gold Mine.

35    By January 2014, it was apparent to Mr Soper that APT’s revenue in South Australia was significantly lower than it had been in the period 2011–2013. For this reason, on 29 January 2014, Mr Soper flew to Adelaide to discuss the poor performance of the South Australian business with the defendant.

36    I shall address and make findings as to what occurred at the meeting between Mr Soper and the defendant which took place on 29 January 2014 in Adelaide when I come to deal with the evidence given by Mr Soper. It is sufficient at the moment simply to note that, during the course of his cross-examination by Counsel for APT, the defendant accepted that Mr Soper’s account of that meeting given in evidence before me was accurate.

37    On 28 February 2014, APT’s lease of its premises at 238 St Vincent Street, Port Adelaide, ended and thereafter it ceased operating from those premises. APT’s intention at the time was to have the defendant operate APT’s South Australian business from his home at 216 Grand Junction Road, Pennington.

38    At pars 48 and 49 of her affidavit, Ms Cavalli said:

48.    Sometime during February 2014, but before 28 February 2014, the defendant told APT that his mother was sick in Africa and he had to go to see her. He could not say when he would be back but said he would leave the keys to the Adelaide office with his daughter who would give them to the agent on the last day of APT’s lease of the premises. The defendant then left and APT did not hear from him. I personally tried to call him, without success so my assistant, Susan Baysari, called his wife at their home. Ms Baysari told me words to the effect of;

‘I spoke to the defendant’s wife and she could not say when he would be back’.

49.    The defendant returned on around 20 March 2014 and handed in an application for annual leave. He said his mother was better.

39    Subsequently, APT sold the Pruftechnik equipment which it had used in its South Australian business to a person who was not then identified to APT. The sale price was $15,000. When that equipment was sold, APT did not agree to sell the software which was used to operate it.

40    APT subsequently discovered that the defendant himself had purchased the Adelaide Pruftechnik equipment.

41    One of the projects upon which the defendant was working when he returned from leave in April or May 2014 was a major project which required him to travel to the Northern Territory with Mr Soper.

42    When the defendant and Mr Soper were in the Northern Territory, Ms Cavalli received an email from a contact in the industry to congratulate the defendant on becoming a trainer. Ms Cavalli did not know what training was being referred to in the email so she began to make enquiries about that matter.

43    As a result of her enquiries, Ms Cavalli discovered that the defendant had set up a business called the Vibration Institute of Nigeria (VIN). As best as Ms Cavalli could tell, VIN appeared to be an organisation which provided machine conditioning and monitoring training to industry personnel in Nigeria. VIN had an affiliation with a well-known mechanical engineering training and certification organisation called Mobius Institute.

44    While Mr Soper was still in the Northern Territory, Ms Cavalli informed him of the result of her enquiries.

45    On about 30 May 2014, after he had returned to Adelaide from the Northern Territory, the defendant gave notice of his resignation as an employee of APT. He provided four weeks’ notice.

46    The defendant’s letter of resignation was in the following terms:

Dear Geoff,

Letter of Resignation

I am writing to inform you that I will be resigning from my role as reliability manager. My last day at work will be June 30, 2014.

I would like to thank you for having me as part of your team. I am proud to have worked for Apt Technology, and I appreciate the trust and understanding you have shown to me through the years.

I have learnt a lot from the responsibilities you entrusted into my hand as your reliability manager for South Australia and everything I learnt will surely serve me well in my career.

I know that APT has some promising project ahead like powerwater, if there is any way I can be of assistance in this endeavour, I am more than happy to do so.

It was a hard decision to take due the understanding between us. I have been fortunate to have been a part of Apt Technology, my co-workers are like family to me and I wish you every success in the future.

Sincerely,

Matthew Aladesaye Ph.D.

Reliability Manager.

47    On 11 June 2014, Mr Soper travelled to Adelaide in order to conduct meetings with clients on that day and the next day (12 June 2014).

48    On 13 June 2014, Mr Soper returned to Sydney with the defendant’s laptop and his mobile phone. The laptop which Mr Soper brought back to Sydney on this occasion was a laptop owned by APT. It had been provided to the defendant for use during the course of his employment. It was supposed to be used solely for the purposes of performing his duties for APT.

49    Upon receipt of the defendant’s mobile phone, Ms Cavalli turned it on in order to divert the number to the office line. After she did this, emails began appearing on the screen of the phone.

50    Ms Cavalli then engaged an APT technician to conduct a review of the laptop which Mr Soper had brought back to Sydney. She also personally conducted a review of data and information contained in the mobile phone which had been used by the defendant and which Mr Soper had also brought back to Sydney.

51    Thereafter, Ms Cavalli began to undertake a more thorough investigation of the emails on the phone. She discovered that three email addresses were connected to the mobile phone which had been used by the defendant. There were hundreds of emails from an AVRE engineer’s email address. Ms Cavalli reviewed all of the emails on the phone and discovered that:

(a)    From January 2013 until 12 June 2014, the defendant had been dealing with and providing services to APT’s clients through AVRE;

(b)    From January 2013 until 12 June 2014, the defendant (through AVRE) had been performing machine condition monitoring solutions, engineering improvement and analysis for APT’s clients and provision of engineering reports and other services through AVRE;

(c)    The reports produced by the defendant through AVRE were formatted in almost identical terms to APT’s engineering reports;

(d)    Other documents, including invoices and quotations, were very similar to the counterparts of those documents used by APT;

(e)    A number of APT’s clients had done business with AVRE;

(f)    A large number of transactions and activities connected to VIN had taken place during business hours;

(g)    A number of APT’s potential clients had been solicited by the defendant on behalf of AVRE; and

(h)    The defendant had taken over the lease of the Adelaide office premises vacated by APT on 28 February 2014.

52    On 27 May 2014 and again on 28 May 2014, the defendant had forwarded several emails from his APT email address to his personal email account and to AVRE’s email account. These emails contained confidential information belonging to APT, including notes and records of confidential discussions between Mr Soper and the defendant about business opportunities in South Australia, template documents, client reports, and information about the lease of APT’s office and Pruftechnik equipment previously used in its South Australian operations.

53    It also appeared that it was the defendant himself who had purchased the Pruftechnik equipment from APT without disclosing the fact that he was the purchaser. Apparently, whilst employed the defendant had used that equipment and other APT facilities to further AVRE’s and VIN’s businesses.

54    On 16 June 2014, Mr Soper and Ms Cavalli called the defendant and confronted him with what they had learned about his activities. For the first 20 minutes or so of that conversation, the defendant denied any wrongdoing. Eventually, he confessed to operating the AVRE business in competition with APT. He said:

I take responsibility for everything, invoicing, doing jobs during business hours while employed by APT. I did it all. It’s my fault and I’m the one behind it. Blame me for it, penalise me for it. I say yes to everything. I’m chasing your clients, I’m going to go after them all, I’m going to take all your old customers and I’m going to destroy the market.

55    Mr Soper then immediately terminated the defendant’s employment with APT.

56    Immediately after 16 June 2014, APT endeavoured to re-engage with its South Australian clients. It has only been partially successful in doing so. Some clients have simply ignored its overtures.

57    On 11 July 2014, APT’s solicitors wrote to the defendant requesting undertakings that he cease dealing with APT’s clients for a period of 12 months and deliver up all of APT’s confidential information and intellectual property held by him.

58    Although the defendant was prepared to provide an undertaking on a temporary basis, the terms of the undertaking which he was prepared to provide were not satisfactory to APT. The defendant had also insisted that the provision of the undertaking which he had offered would be in full and final settlement of all claims against him. This was a matter that was also unacceptable to APT.

59    In the period from early 2013 until shortly after the commencement of the present proceeding, the defendant had possession of and used to his advantage and to the disadvantage of APT the following information:

(a)    The identity of APT’s clients and specific information relevant to the services performed by APT for those clients;

(k)    APT’s databases;

(l)    A collection of engineering and other reports;

(m)    Details of APT’s business plans and forecasts;

(n)    Knowledge of APT’s charges to its clients; and

He also had the use of the Pruftechnik equipment and its associated software.

60    Ms Cavalli said that the continued use by the defendant of APT’s confidential information would potentially cause APT irrecoverable losses.

61    The defendant continued to deal with APT’s clients after his employment with APT was terminated on 16 June 2014 until he was prohibited from doing so by the orders which I made in order to give effect to my reasons in APT No 1.

The Evidence of Mr Soper

62    In his affidavit, Mr Soper said that Electrolux had been a client of APT since 2007. He said that the type of work that APT had done for Electrolux included database establishment, vibration analysis, shaft alignment, fan balancing, engineering improvement and supply and installation of equipment.

63    In around 2009, Electrolux advised APT that it had decided to perform some of the vibration analysis that APT had previously done in-house. In order to do this, Electrolux purchased some Pruftechnik equipment from APT. APT continued performing the data analysis and reporting required by Electrolux up until January 2013.

64    Additional equipment was quoted and purchased progressively from APT from September 2012.

65    It was part of the defendant’s duties to prepare a proposal for Electrolux for the installation of this equipment. The defendant prepared such a proposal and consequential agreement in September and October 2012. The equipment was to be installed in stages.

66    Electrolux engaged APT to perform the first stage of the work involved. However, APT was not engaged to do the balance of the work.

67    In December 2012, Mr Soper asked the defendant what was happening with the balance of the work required to install the relevant equipment at Electrolux. The defendant said that Electrolux would be undertaking the installation of that equipment directly. Mr Soper queried this by asking the defendant whether he thought that Electrolux had the expertise to install the equipment correctly. The defendant replied that he thought that they did.

68    On 29 January 2014, Mr Soper flew to Adelaide in order to discuss the poor performance of the South Australian business with the defendant.

69    The meeting took place at APT’s Port Adelaide office. The defendant and Mr Soper had the following conversation:

Defendant:    There are difficulties being encountered due to the downturn in the business. Clients in South Australia are not like clients in NSW. They are always looking for cheaper rates here. I am happy to accept new conditions of employment because I believe I can again make the business profitable.

[Mr Soper]:    There are a number of changes that would have to happen to keep the business running in Adelaide. Are you sure you want to continue your employment under these new conditions?

Defendant:    Yes, I understand I will need to be paid less because the company is making less.

[Mr Soper]:    We cannot afford to keep the office going.

Defendant:    I will work from home and I will look into selling the office furniture and equipment. I know I can keep the business going with these changes.

70    After the meeting, Mr Soper decided to keep the defendant employed with APT. He sent a letter to the defendant confirming that decision. That letter was dated 31 January 2014 and was in the following terms (omitting formal parts):

Dear Matthew,

Further to our discussions Wednesday and in light of the reduced revenue stream from the Adelaide operation, we unfortunately need to review your remuneration, commencing 1 Feb. 2014, as below:

•    Salary: $75,000.00/annum

•    Motor Vehicle Allowance: $10,000/annum

•    Superannuation: Statutory

The physical office will be closed as of 28 Feb 2014 and you will be required to operate from a self-funded home office. Equipment to continue the operations in the region will be provided and held in your possession, items identified as not being required will be send [sic] back to the Sydney office. Office furniture is to be sold.

In an endeavour to make the business again profitable, I require:

1.    A Business Assessment to be completed (a template will be forwarded), this is to summarise the situation as it is now and a road map moving forward.

2.    Formal planning and scheduling of sales prospecting both in SA and elsewhere in AU or NZ.

3.    Monthly reporting to reflect the aforementioned activities, to be submitted no later than 28th of ea. month, Call Reports (to incl. telephone and face-to-face meetings) are to be completed and forwarded weekly; they will include contact details incl. email, Tel. Etc. for data entry into MS BCM and to facilitate marketing activities by HO.

4.    Familiarisation of the SPM Instrument range is important (see SPM WEB site); product sales and associated support activities are part of the Cos growth and future direction.

Other terms and conditions in the standard employment agreement have not changed.

Please sign and date one copy of this letter where indicated below and return to the undersigned, retaining a copy for your records.

71    In February 2014, the defendant persuaded Mr Soper to sell APT’s Pruftechnik equipment located in Adelaide for $15,000. He did not disclose to Mr Soper at that time that he was the purchaser. Mr Soper felt that the price achieved for the equipment was low. The defendant also persuaded Mr Soper to sell the office furniture for virtually nothing. The defendant then used the Pruftechnik equipment previously owned by APT to service Electrolux. He did so as AVRE.

72    Some time before 16 June 2014, the defendant downloaded data from APT’s databases on APT’s server. This data included the most recent data for the clients AllWater, WWTP, HSP & Parps and Challenger Gold Mine. Mr Soper had asked him to do this as APT needed to change the database to SPM so APT could start using the SPM equipment and software for these clients. SPM was the new maker of equipment which was to perform similar functions to the Pruftechnik equipment.

73    On 19 May 2014, Ms Cavalli alerted Mr Soper to the fact that the defendant had set up VIN. Mr Soper then spoke to the defendant the next day. The conversation proceeded as follows:

[Mr Soper]:    How is your Mother following your trip to Nigeria?

Defendant:    she is much better now, thanks.

[Mr Soper]:    Shadia saw your name listed as a trainer on the Mobius WEB site.

Defendant:    Yes, I saw an opportunity to become a trainer and therefore approached Mobius accordingly. All the studies and setting up I’ve done outside business hours and the business is only operating in Nigeria.

My company is the Vibration Institute of Nigeria (VIN) and I am only a figurehead and a bridge between VIN and Mobius. My sister and brother run the business and I was present at one course for only a brief time, to meet attendees. It is a coincidence that the course was being run while I was in Nigeria due to my mother’s illness. There is no conflict with APT as I am not directly involved with the running of VIN.

74    Mr Soper accepted the defendant’s explanation, but emphasised in words to the effect of:

Ok, as long as you are not working for a competitor while employed by APT, especially that provide vibration analysis training courses,

Defendant:    I totally understand.

75    Having accepted the defendant’s explanation about VIN, Mr Soper decided to take no further action about the matter because he understood that VIN operated only in Nigeria and that the defendant was only spending time on VIN business outside his normal working hours with APT.

76    On 30 May 2014, the defendant submitted his resignation. He did so by letter dated that day (see [46] above).

77    On 11 June 2014, Mr Soper travelled to Adelaide to conduct meetings with clients and to inform them that APT would be servicing them in the future from its Sydney office. He also told them that he was looking at hiring another suitable engineer to operate out of Adelaide and that, as far as APT was concerned, business between it and the clients would continue as usual.

78    It was during this visit in mid-June 2014 that Mr Soper was informed by Mr Watson of AllWater that the defendant was now offering to do work which APT had previously done for AllWater and that he (Mr Watson) was confused about who it was that was to provide the relevant services.

79    Mr Soper then spoke with the defendant. The defendant tried to explain away Mr Watson’s remarks by saying that he “must be mistaken”.

80    The work that was mentioned by Mr Watson to Mr Soper in mid-June 2014 was work on AllWater’s blowers. Mr Soper later discovered that work on those blowers had been completed by AVRE.

81    While in Adelaide in mid-June 2014, Mr Soper retrieved the laptop computer owned by APT which the defendant had been using while employed at APT and also collected the defendant’s work mobile phone. He took those items with him when he returned to Sydney on 13 June 2014.

82    Soon after his return to Sydney on 13 June 2014, Mr Soper was informed by Ms Cavalli that there were hundreds of emails on the mobile phone which he (Mr Soper) had retrieved from the defendant which indicated that the defendant had been operating his AVRE business and servicing APT clients through the AVRE business while employed by APT.

83    On 16 June 2014, Mr Soper and Ms Cavalli telephoned the defendant. A conversation in the following terms ensued:

Ms Cavalli:    I know about your business AVRE. I’ve got the reports and invoices you’ve provided to clients.

The defendant:    No. My company is in Africa, not here.

Ms Cavalli:    Matthew, there’s no point denying this we know what you’ve been doing. We have evidence of emails to the clients.

The defendant:    No. I want to sit down with the clients.

The defendant denied any wrongdoing for around 20 minutes, however eventually he admitted that he had been performing services for APT’s clients through his AVRE business.

The defendant then said words to the effect of: I take responsibility for everything, invoicing, doing jobs during business hours while employed by APT. I did it all. It’s my fault and I’m the one behind it. Blame me for it, penalize me for it. I say yes to everything. I’m chasing your clients I’m going to go after them all, I’m going to take all your old customers and I’m going to destroy the market.

[Mr Soper]:    Your employment is terminated effective immediately.

84    Mr Soper testified that the following former clients of APT had not re-engaged APT after the defendant’s departure, namely, PepsiCo, Electrolux, Viridian Glass and Mobil Refining.

85    After the termination of the defendant’s employment with APT, Mr Soper discovered that the defendant, in the guise of AVRE, had performed work for Dominion Gold Mining, PGH Bricks and Glenelg Engineering (at the Mobil Refining site). All of this work had previously been done by APT for those clients.

The Defendant’s Evidence

86    At the hearing before me, the defendant gave his evidence viva voce. He had previously sworn two affidavits for use at the earlier interlocutory hearing but decided not to rely upon either of those affidavits.

87    In his evidence-in-chief, the defendant asserted that the clients which APT lost in 2013 and 2014 were not lost by reason of any actions on his part but rather were lost to APT in any event because APT’s pricing was too high. In the course of his evidence-in-chief, the defendant referred to a number of examples which he argued supported his contention. He mentioned Viterra Operations and said that APT had lost that company’s business by the end of 2011. He said that the loss of Viterra’s business contributed greatly to the downturn in APT’s South Australian revenues. He also mentioned Electrolux and said that Electrolux had preferred to do some of the work in-house. He drew attention to PepsiCo which he said had already decided to go to CBC Bearing, a competitor of APT. In addition, he said that PGH Bricks had fobbed him off when he had endeavoured to organise meetings and installations. He said in respect of Challenger Gold Mine that he did not know why they had ceased using APT.

88    In cross-examination, the defendant made a number of important concessions and admissions.

89    At Transcript 25/40–46, the defendant accepted that, at the time when he signed his employment contract, he understood that it would be a breach of cl 2(c) of that contract for him to seek to solicit APT’s customers for himself or for AVRE whilst he was still employed by APT and that he was required not to do any act or thing which might adversely affect APT’s present or future interests. He also agreed that he well understood when he signed his employment contract that he was not to engage in business activity in competition with APT.

90    At Transcript 26/15–32, the defendant agreed that he had breached both cl 2(c) and cl 2(d) of his employment contract.

91    The defendant also agreed that it was in late 2012 that he decided to set up his own business. He agreed that he registered the business name AVRE on 4 January 2013 and also registered himself for GST purposes on the same day. In any event, there was uncontested evidence before me that suggested that the defendant commenced to conduct the business of AVRE from about January 2013 in competition with APT.

92    At various points in his cross-examination, the defendant claimed that he had not intended to destroy APT’s business in South Australia. He said that he intended to go to Mr Soper in due course and somehow “work together with him” to resurrect the business. Notwithstanding these attempts to play down the significance of his conduct, the defendant accepted that working in his own business while he was still employed with APT was not the right thing to do. Indeed, he went further and accepted that he had taken steps to conceal the existence of the AVRE business from Mr Soper on more than one occasion.

93    At Transcript 28/46–Transcript 30/29, Counsel for APT put to the defendant Mr Soper’s version of the 29 January 2014 conversation. The defendant accepted Mr Soper’s account of that conversation.

94    In cross-examination, the defendant claimed that, by January 2014, APT had already lost AllWater’s business. He said that that business was lost because APT’s prices were too high. He then conceded that he had given Mr Soper the impression at the meeting which took place on 29 January 2014 that AllWater was salvageable. He had said as much in his monthly report to Mr Soper dated 15 January 2014.

95    The defendant agreed in cross-examination that he had performed work for AllWater in January 2014 and February 2014 and accepted that he was in a very advantageous position in doing so because he was well aware of APT’s pricing structure with AllWater and was thus in a position to undercut APT.

96    At Transcript 37/11–21, the defendant accepted that the reason that he did not tell Mr Soper about the existence of his AVRE business was that he was well aware that, by conducting that business, he was doing the wrong thing.

97    On a number of occasions during the course of his evidence, the defendant asserted that he only ever dealt with a client of APT once he formed the view that that client had been lost to APT.

98    At one point in his cross-examination, the defendant tried to deny the obvious. At Transcript 41/43–Transcript 43/35, the following exchange took place between Counsel for APT and the defendant:

Okay. So adopting your story of only dealing with customers after they had been lost to APT, how is it then that you were dealing with Allwater in December 2013?---Well, December 2013, the job that was carried out – I think it’s the one you showed me here, this one.

Yes?---And I - - -

Number 2?---Page 2.

Report number 2?---Yes.

Yes?---This is a job we don’t have the software for. This is reliability improvement work, so part of it is vibration part of it is improvement work. So we don’t have the software for this, so, nevertheless, I wouldn’t say that that justifies my action in relation to my employment contract.

And I want to- - -?---So - - -

And I want to suggest to you that you had had dealings with Mr Downard – Jason – since at least July 2013. What do you say to that? Do you agree with that as a timeframe?

HIS HONOUR: Do you mean as AVRE?

MR EASTON: As AVRE?---Dealing with?

Mr Downard since at least July 2013. Do you agree with that as a timeframe?---If you – well, not as AVRE, no.

Not as AVRE?---No.

Are you certain of that?---No.

Okay. Have a look at page 32 in the big folder?---Yes.

Yes. That’s an email from you as AVRE. The subject line is:

New Account, Matthew Aladesaye.

Do you see that?---That’s right.

Yes. And the date of that email is 16 July 2013?---That’s right.

And it’s an email to Mr Downard at Allwater?---That’s correct.

Yes. And read the email to yourself if you like, but you’re attempting to attract the interest of Mr Downard to give AVRE some work, weren’t you?---Well---

HIS HONOUR: Isn’t that right? Isn’t that right?---It is right.

All right. And you knew at the time that Allwater was a customer of APT?---Yes, I did.

And there was no trouble at this point in time, was there, between Allwater and APT?---There was.---There was – in the sense that - - -

But you didn’t tell Mr Soper that, did you?---Well, I always let him understand the uncertainties in every company, so which I did mention in part of my reports. Mr – I mean, Jensen, direct, if I said I want to open an account as AVRE, it’s because I saw the uncertainty. Without the uncertainty I wouldn’t do it.

Mr Easton.

MR EASTON: Okay. So that I understand what you’re telling the court, is it now your case that you only did work for clients of APT once you saw there was uncertainty?---Uncertainty plus a – clear evidence that they are not ready to use APT.

I see. So there was clear evidence in June - - - ?---Well - - -

Sorry, in July 2014 – wait for the question – there was clear evidence in July 2014 that APT was going to lose Allwater. Is that right?---No. The evidence wasn’t clear. Now, it doesn’t apply to all the customers the same. There are some customers the evidence is clear. There are some customers that you can only see the uncertainty.

Can I suggest to you, sir, that you’re just making this up?---It’s not making up, Mr Easton.

You bid for the work at Allwater because you wanted to get the work for your own business in competition with APT, didn’t you?---No. I didn’t intend – it’s not my intention to compete with APT, but my idea was wrong and which was a process to try to get these customers, because if I did not even contest or did anything, APT would not still get these customers.

Well, it’s very nice that you say it’s wrong. What was wrong about it in your mind?---Wrong in the sense that, because of my job contract, and another reason, because I did not make it clear to Mr Soper, because if I made the intention clear to Mr Soper, I most probably will have come with the idea of, “Okay, don’t do it that way, do it this way.” So this is what I see as wrong.

99    I pause to interpolate here that APT tendered in evidence many emails and other documents which established beyond any argument that the defendant, under the business name AVRE, had actively pursued existing and potential clients of APT vigorously throughout 2013 and in the early part of 2014. I do not accept the defendant’s evidence where he suggested the contrary. Nor do I accept the defendant’s evidence where he tried to suggest that he had not intended to compete with APT.

100    Towards the end of his cross-examination, the defendant was challenged by Counsel for APT as to why it was that, on 27 May 2014, immediately before he resigned his employment, he forwarded confidential information belonging to APT to his personal email account. The defendant gave improbable and untruthful evidence in answer to this challenge. At Transcript 53/10–Transcript 54/26, the following exchange took place:

Okay. And then the next email on that page, going up the page, is where you have forwarded that email on to your AVRE address, haven’t you?---Yes. That’s right.

Yes. And that was on the 27th of May 2014?---Yes.

And that day is only a couple of days before you resigned – you give notice to resign your employment, wasn’t it?---Yes. That’s right.

Yes. And I want to suggest to you that you forwarded on Mr Soper’s email to your AVRE account because you wanted to have a copy of the information in that email for the use in your AVRE business. Do you agree with that?---No.

Why was it that you forwarded on this work-related email to your personal account---I did that because, even though I was planning to be on my own after I resigned and operate the AVRE business, Mr Soper and myself discussed and we still agree that maybe we can still have more business opportunities together. Obviously he said that with the mind that – I mean, because he didn’t know what I’ve done, because I believe, if he knew that, he wouldn’t have suggested that. But in my mind, too, I still like to work for him on this level, you know – level of partnership at one point. And so he cited this company as an example that he will need my support on. So this is the reason that I said, “Okay. I need to have this information handy.” But I didn’t ....

HIS HONOUR: When were you going to tell him about your partnership plans?---I was – actually, I want to make sure that I - - -

When? When were you going to tell him? What was your plan---My plan was, if I managed to substantiate this business – I mean, this – sorry, these companies that I have been relating to, if I could get all the work really established, not like one-off, but really well-established, that, okay, it’s now regular work, that was the point I was thinking to do that. And then I wanted to open up everything to him at that stage. I mean, I don’t have evidence to prove to you, but this is the way I – even the way I work with him in the past is sometimes I will just want to make sure I win business sometimes before I go talk to him, although he like me that I talk to him on every step I take, you know. But I just have that kind of, you know, way of doing things, you know. So – well, in this case it’s not right, you know, but it’s not to have a very negative thing at the end to – to destroy his business. Even when I travel to my home country, Nigeria, I spoke a lot about him, and I already mentioned a lot about what we’re going to do and how it’s going to be done, and people that I spoke to about him, so – yes. My intention was – was a good part – I mean, a good thing at the end, but the – the process of the way I did things is wrong.

Just so that I understand that, are you telling me that you had a plan at all the times you were doing these things to inform Mr Soper, once you had gotten established and effectively got all of the customers, of the fact that you had done it?---No. Those customers, most of them, they are just one-off job. Like, because we need regular work. Regular work, like, you know, whether work that will come every month or every three months, but not like a casual work that’s, “Okay, can you come and do this one in a while?” For example, like Allwater, we tried to secure as an example their condition monitoring, which has to either be monthly or three-monthly. That has not been secured. So the job I did for Allwater was one-off on different areas. So I was chasing that, and it applies to others as well. I had none of the customers that I had a kind of complete regular commitment to, except PepsiCo. The PepsiCo one was a little bit regular, but the others is just like one-off.

Mr Easton.

MR EASTON: For the avoidance of doubt, sir, I want to suggest to you that all of those things that you just said about your intention to tell Mr Soper are entirely untrue. What do you say to that?---I’m affirming again that it is true.

All right?---Confidently within myself, I affirm again, it is true.

All right. Let’s go back to - - - ?---I’m confident in it.

101    After the exchange at Transcript 54, Counsel for APT took the defendant to a number of other examples of information forwarded to his personal email account shortly before he resigned in order to make good the proposition that the defendant was wrongfully appropriating APT’s confidential information for his own use and benefit.

102    Ultimately, the defendant conceded that he had copied APT’s database onto his own personal laptop so that he could use it in his business as AVRE to service existing and potential clients of APT under the business name AVRE.

Consideration

103    In his final submissions, the defendant argued that I should not extend beyond the conclusion of the final hearing the interlocutory relief which I had previously granted. He also submitted that he was now struggling to get work and to earn an income for his family as a result of the litigation. He conceded that he would pay compensation if the Court ordered him to do so. Otherwise, he did not make any substantive submissions in his final address.

104    I then informed the parties that I proposed to extend the substance of the interlocutory relief which I had previously granted and that I was minded to grant permanent injunctive relief in relation to APT’s claims in respect of the misappropriation of its confidential information and that there may be an award of damages or compensation but almost certainly not in the amount sought by APT.

105    As a result of those indications, on 6 February 2015, I made orders in the following terms:

THE COURT:

1.    NOTES that the plaintiff by its Counsel continues the undertakings given to the Court on 5 September 2014.

2.    ORDERS that, up to and including 17 February 2015, the defendant whether by himself or his servants or agents or howsoever otherwise be restrained from directly or indirectly canvassing, soliciting or dealing with, counselling, procuring or assisting another person to canvass, solicit or deal with any client of the plaintiff being any person or entity that was a client of the plaintiff at any time between 15 September 2008 and 15 June 2014.

3.    ORDERS that, up to the delivery of judgment in this proceeding or until earlier further order, the defendant whether by himself or his servants or agents or howsoever otherwise be restrained from directly or indirectly using or disclosing any confidential information or intellectual property belonging to the plaintiff as defined in subpars 2(i) and (ii) of the orders of the Court made on 5 September 2014, to any person, other than for the purpose of complying with these orders.

4.    NOTES that the plaintiff seeks to extend the operation of Order 2 above up to and including 15 June 2015 by way of final relief and also claims an order that Order 3 above operate beyond the delivery of judgment.

5.    ORDERS that, in the event that the plaintiff wishes to have Order 2 above extended beyond 17 February 2015, it:

(a)    Compile a list of the clients whom it argues ought to be the subject of that order (the list);

(b)    By 12 February 2015, provide the list to the defendant; and

(c)    Inform the Associate to Foster J that it wishes to continue the injunction beyond 17 February 2015 and provide the list to the Associate to Foster J together with a short Written Submission in support of its application to extend the said injunction.

6.    ORDERS that, in the event that the plaintiff seeks to extend beyond 17 February 2015 Order 2 above and the defendant wishes to contest the plaintiff’s application to do so, by 16 February 2015 the defendant file a Written Submission of no more than two (2) pages setting out his submissions as to why the injunction ought not be extended.

7.    GRANTS liberty to apply generally on short notice and, in the event that a settlement is reached, on very short notice.

106    Subsequently, on 17 February 2015, I made the following orders:

THE COURT:

1.    NOTES that the plaintiff by its Counsel continues the undertakings first given to the Court on 5 September 2014.

2.    ORDERS that, up to and including 2 March 2015, the defendant whether by himself or his servants or agents or howsoever otherwise be restrained from directly or indirectly canvassing, soliciting or dealing with, counselling, procuring or assisting another person to canvass, solicit or deal with any client of the plaintiff being any person or entity that was a client of the plaintiff at any time between 15 September 2008 and 15 June 2014.

107    I did not subsequently continue Order 2 made on 17 February 2015 beyond 2 March 2015. I will shortly give brief reasons for my decision not to do so.

Liability

108    In its Written Submissions, APT made detailed submissions in support of its fundamental contention that the defendant breached the express terms of his employment contract with APT by disclosing and misappropriating its confidential information and by establishing and maintaining a business which was being conducted in direct competition with the business of APT in South Australia and otherwise breached all of the other duties relied upon by APT in its Statement of Claim (a brief conspectus of which is contained in the summary of APT’s claims for final relief provided by me at [5] above).

109    In the present case, it is not necessary to set out and discuss these submissions in any detail. The defendant effectively conceded liability (as he should have done) and, subject to one matter, APT claimed the same amount as damages as compensation in respect of each of the causes of action relied upon by it.

110    The one exception to this was APT’s claim for additional damages pursuant to s 115 of the Copyright Act 1968 (Cth) (Copyright Act). I shall address the question of additional damages after dealing with APT’s principal claim for damages.

111    At [76] in APT No 1, I said:

The conduct to which the defendant has admitted constitutes a flagrant breach of his employment contract with APT and a flagrant breach of the various duties owed by him to APT during the course of his employment. He has pursued his own financial interests without any regard to his responsibilities to his employer. The evidence suggests that he continued to use and to disclose APT’s confidential information even after being confronted with his wrongdoing by Mr Soper and Ms Cavalli and after receiving a solicitor’s letter from APT’s lawyers. In particular, the defendant used APT’s historical data to service APT’s clients during the period of his employment with APT. In addition, apparently without any compunction, so it was submitted by APT, the defendant actively deceived APT during his paid employment by repeatedly assuring APT that he was using his best endeavours to secure business for APT from the very same clients he had already approached and serviced in competition with APT. For reasons not explained by the defendant, he retained a copy of APT’s client database on his own computer. Prior to the commencement of the current litigation, the defendant did not return APT’s confidential information and intellectual property and made false denials about his conduct. Even now, APT has not been able to retrieve from the defendant all of the databases he created or accessed during his employment. There is some basis for thinking that the defendant has not complied with the Notice to Produce served upon him and that he has not complied with the orders of the Court made on 31 July 2014. The defendant continues actively to deal with clients and former clients of APT and continues to use the software associated with the Pruftechnik equipment, although he now says he will cease doing so.

112    The evidence at the final hearing supports the observations which I made at [76] in APT No 1 and I adhere to them.

113    I am satisfied that APT has established the defendant’s liability in respect of all of the causes of action relied upon by it with the exception of its claim for breach of copyright. The evidence as to the provenance and nature of the documents the subject of this claim was general and non-specific. APT did not adduce particular and detailed evidence establishing the identity of the creator or creators of the original works and did not address in detail the particular works the subject of this claim. I am not prepared to find that the defendant breached APT’s copyright. Notwithstanding this finding, I will address APT’s claim for additional damages under s 115(4) of the Copyright Act later in these Reasons.

114    In those circumstances, I will now move to consider pecuniary relief.

Pecuniary Relief

115    APT elected to pursue its claims for damages or compensation (both equitable and statutory) in the nature of damages in lieu of any claim for an account of profits.

116    In its Statement of Claim, APT did not provide any particulars of its damages claims.

117    At pars 9–34 and 78–80 of its Written Submissions filed before the final hearing, APT explained that its damages claims fell into two broad heads, namely:

(a)    A claim in the amount of $66,887 (incl GST) said to be the actual revenue lost by reason of the defendant’s breaches of contract and breaches of duty. That amount was said to be the total amount invoiced by the defendant to clients of APT (Electrolux, Viridian Glass, PepsiCo and AllWater) in the period from 11 January 2013 to 30 June 2014 and actually received by him; and

(b)    Future lost revenue quantified at $300,000. This figure was arrived at by estimating losses for an unspecified three year period at an average of $100,000 per year. This claim rested entirely upon a table prepared by Ms Cavalli which is Tab 1 in Exhibit SC-36 to her affidavit. I shall refer to that table as “Ex SC-36”.

The Claim for $300,000

118    In Ex SC-36, Ms Cavalli set out the gross revenue figures earned by APT from its South Australian operations in each of the financial years 2010–2011, 2011–2012, 2012–2013 and 2013–2014. She also recorded in Ex SC-36 the expenses attributable to earning that revenue.

119    In addition to recording the total revenue earned by APT from its South Australian business operations for each of the relevant financial years, Ms Cavalli also set out in her table the total amount paid to APT by each of its clients during each of the financial years covered by Ex SC-36.

120    I note that Ex SC-36 established that APT had lost Viterra Operations as a client by the end of the 2011–2012 financial year. That is, APT had lost that client before the defendant had commenced his AVRE business.

121    As I have already noted at [117(a)] above, the only clients of APT for whom the defendant ever did any work for which he was paid were Electrolux, Viridian Glass, PepsiCo and AllWater. In Ex SC-36, the following gross revenue figures in respect of the financial years covered by that document for each of those clients were as follows:

122    Although from time to time in the evidence given by Mr Soper and Ms Cavalli, suggestions were made that other clients were lost as a result of the defendant’s misconduct, I am not satisfied that this was so. APT did not call any witness from any of its clients in order to establish the true reasons for any decision which any one or more of those clients might have made to cease dealing with APT. In truth, in endeavouring to understand precisely which clients had been lost and why, I was simply left with assertions on the part of APT, on the one hand, and counter-assertions by the defendant, on the other hand.

123    In my view, the only figures in Ex SC-36 which might conceivably be relevant to the assessment of damages are those which concern the four clients for whom the defendant actually did work for which he was paid. However, I do not derive any assistance from the figures in Ex SC-36 in respect of those clients, in any event. Each of the relevant revenue figures is expressed in respect of a financial year while the period of the defendant’s misconduct straddles the 2012–2013 financial year and the 2013–2014 financial year. It is well-nigh impossible to extract from the figures in Ex SC-36 any appropriate revenue amounts referable to the period from January 2013 to June 2014.

124    Nonetheless, the following observations about the figures in Ex SC-36 may fairly be made:

(a)    At some point in time before 1 July 2013, APT lost the business of Electrolux altogether. In the financial year 2012–2013, Electrolux paid $80,824.36 to APT for services provided by it to Electrolux;

(b)    Similarly, at some point in time before 1 July 2013, APT also lost AllWater’s business at its Happy Valley facility. In the financial year 2012–2013, AllWater paid $2,800 to APT for services provided by it to AllWater at its Happy Valley facility. In the previous two years, APT had earned similarly small amounts of revenue from that facility. The loss of revenue from that facility was inconsequential;

(c)    AllWater paid to APT $35,940 for services provided by APT to it at its International facility in the financial year 2013–2014. This was a slight increase over the amount paid in the financial year 2012–2013 ($32,755) which in turn was a decrease over the prior year although quite comparable to the year before (2010–2011);

(d)    Viridian Glass paid to APT $5,500 for services provided by APT to it in the financial year 2013–2014. This was $1,450 less than the amount it had paid to APT in the financial year 2012–2013 ($6,950); and

(e)    PepsiCo paid to APT $2,000 for services provided by APT to it in the financial year 2013–2014. This was $5,683 less than the amount which it had paid for such services in the 2012–2013 financial year but quite comparable to amounts paid in the prior two years.

125    The figures in Ex SC-36, as presented, provided virtually no assistance to the Court in assessing the damages claimed by APT. The exhibit did not come to grips with the requirement that APT must establish a causal link between the loss claimed and the contravening conduct.

126    The one matter of significance demonstrated by Ex SC-36 is that APT had lost the business of Electrolux at some time prior to 1 July 2013. As I have already noted, APT did not call any evidence from any officer or employee of Electrolux directed to proving why it was that Electrolux had ceased using APT. The mere fact that the defendant ultimately secured work from Electrolux to a total value of $36,443 which was invoiced by and paid to AVRE in the period from 11 January 2013 to 3 February 2014 does not, of itself, prove that APT lost Electrolux as a client because of the defendant’s activities. Much more was required. As I have already said, direct evidence from Electrolux as to its reasons for discontinuing its business relationship with APT was necessary. Otherwise, all that the Court was left with was the parties’ assertions and counter-assertions on this point.

127    I also note that, of the total amount earned by the defendant from Electrolux (viz $36,443), $34,243 was earned in the period from 11 January 2013 to 3 March 2013. This period is well within the 2012–2013 financial year during which Electrolux paid $80,824.36 to APT. This was, in fact, the largest amount paid to APT in any of the financial years covered by Ex SC-36.

128    Before leaving Ex SC-36, I pause to note that the total revenue earned by APT South Australian business operations in the financial year 2012–2013 ($223,213.06) was $122,249.91 less than the total revenue earned from those operations in the prior financial year (2011–2012) ($345,462.97). This was a decline in revenue of 35%. It cannot seriously be argued that that decline in revenue was attributable to the misconduct of the defendant. A decline in the total gross revenue earned by the business of that magnitude suggests that there were other problems being experienced by APT in the period from 2012 to mid-2014.

129    In any event, APT did not tender evidence establishing its overheads, gross profit margin or net profit margin.

130    I consider that APT’s claim for $300,000 for lost future revenue has not been made out and should be rejected in its entirety.

The Claim for $66,887

131    As I have already indicated, APT’s claim for $66,887 is based upon the proposition that the defendant pay to APT a sum equivalent to the gross income earned by him in providing services to clients of APT during the relevant period. It is not a claim for the profit earned by the defendant in that period although it clearly resembles an account of profits claim much more than a claim for damages.

132    In order for APT to successfully establish that it has suffered loss or damage upon the basis outlined at [131] above, APT would need to prove, upon the balance of probabilities, that the work which the defendant did for the clients of APT who paid the amounts which make up the figure of $66,887 would have all come to APT and would have led to APT’s earning revenue of a similar magnitude for carrying out that work. It would then be incumbent upon APT to tender evidence before the Court to establish the amount of profit that it would have derived on a gross revenue figure of $66,887 earned in its South Australian business in 2013–2014. APT did not undertake any of these tasks. It simply asked the Court to award to it by way of damages the total amount of income earned by the defendant in servicing its (APT’s) clients. This is not the proper measure of damages applicable to the causes of action relied upon by APT. The shortcomings in APT’s evidentiary case in the respects which I have identified leave me with no alternative but to reject this head of damage as well.

133    For all of the above reasons, I am not satisfied that APT has established any entitlement to pecuniary relief against the defendant. Its claims for damages as formulated are rejected.

Additional Damages for Breach of Copyright

134    I have already rejected APT’s claim for breach of copyright. Nonetheless, I wish to make a few remarks about its claim for additional damages under s 115(4) of the Copyright Act.

135    In its Statement of Claim, APT claimed copyright in its engineering and other reports. At par 40 of the Statement of Claim, APT alleged that the defendant breached its copyright by reproducing, publishing and/or making an adaptation to APT’s engineering and other reports.

136    In its Amended Originating Application, APT claimed (at par 13) damages or an account of profits pursuant to s 115 of the Copyright Act.

137    Thus, neither in its Amended Originating Application nor in its Statement of Claim did APT expressly articulate a claim for additional damages against the defendant pursuant to s 115(4) of the Copyright Act. In particular, the pleading did not set out facts, matters and circumstances upon which APT intended to rely in order to justify such a claim. Further, in the Amended Originating Application, APT’s claim for damages is expressed as an alternative to an account of profits and additional damages are not mentioned at all.

138    The first time that the defendant could have been alerted to the possibility that a claim for additional damages was being made was when he received APT’s Written Submission prior to the hearing. By then, the defendant was self-represented and clearly not equipped to appreciate the seriousness of that claim.

139    In the circumstances, I do not think that the defendant was fairly on notice that a claim for additional damages pursuant to s 115(4) of the Copyright Act was going to be made against him nor do I think that such a claim was pleaded, in any event.

140    For these reasons, I would not have awarded additional damages to APT pursuant to s 115(4) of the Copyright Act even if APT had established breaches of its copyright.

141    I will now turn to address my reasons for deciding not to continue the springboard injunction beyond 2 March 2015.

Other Matters

142    It will be recalled that, in APT No 1 at [78]–[86], I explained my reasons for awarding such an injunction on an interlocutory basis. As is apparent from [103]–[106] above, I was prepared to continue the springboard injunction originally granted by me on 5 September 2014 initially up to and including 17 February 2015 and subsequently up to and including 2 March 2015.

143    APT had sought a permanent springboard injunction up to and including 16 June 2015 in order to protect the contractual terms to which the defendant had agreed. APT relied upon Del Casale v Artedomus (Aust) Pty Ltd (2007) 165 IR 148 at 182. In support of that application, APT submitted that there was reason to think that the defendant would not honour his obligations to APT post-contract and would continue to endeavour to approach APT’s clients unless restrained from doing so.

144    The defendant opposed the continuation of the springboard injunction. He submitted that the evidence demonstrated he had complied with the prior orders of the Court in relation to APT’s confidential information and that the grant of such an injunction in aid of enforcing a restraint of trade against an individual was not reasonable beyond February/March 2015. He submitted that the likely customers for any business of a similar character to that conducted by APT in South Australia would include most of the clients for whom APT had rendered services in the past. He said that a period of six months or so was a reasonable period for such a restraint to operate and that that period had expired by late February 2015.

145    In the end, although the matter presented some difficulties, I decided that there was no warrant to continue the springboard injunction on an interlocutory basis beyond 2 March 2015. I took the view that a springboard injunction for a period of around six months provided adequate protection for APT. In doing so, I accepted the defendant’s submissions which I have summarised at [144] above.

146    I note that, at the trial, in his evidence before me, the defendant complained that he was unable to work at all because of the existence of the interim springboard injunction.

Conclusions

147    APT is entitled to a permanent injunction in the terms of Order 3 made by me on 6 February 2015 and some declaratory relief. APT is no longer entitled to the benefit of a springboard injunction. APT failed to establish any entitlement to damages as claimed. There will be orders reflecting these conclusions.

148    As to costs, I do not think that APT is entitled to all of its costs. APT was justified in bringing this proceeding and also in making its claim for interlocutory relief. However, it has failed to secure a springboard injunction in the terms for which it argued and has failed altogether in its damages claims. The defendant, on the other hand, did not take any steps to reduce the scope of either the interlocutory hearing or the final hearing even though he should have known that his conduct would almost certainly be found by the Court to have been in breach of contract and in breach of the other duties which he owed to APT.

149    APT went to a great deal of trouble to obtain evidence in order to enable it to determine whether or not it should elect damages rather than an account of profits. In addition, it adduced a great deal of evidence to establish the extent and quality of the defendant’s breaches in order to support its claim for a springboard injunction. Some of those costs ought not be laid at the feet of the defendant.

150    I think that, in all the circumstances, I should allow APT 50% of its costs.

151    There will be orders accordingly.

Associate:

Dated:    4 March 2016