NSD 827 of 2019
JAMES HOWDEN & COMPANY LTD
MINETEK INVESTMENTS PTYLTD
REMY MARCEL SYDNEY BOURCIER
DATE OF ORDER:
THE COURT ORDERS THAT:
2. The applicants pay the respondents’ costs of the interlocutory application as agreed or taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
1 These reasons for judgment explain why I have decided that interlocutory relief should be refused.
2 The applicants (together, Howden) are the owners and licensee of information they claim to be confidential relating to the design and construction of large industrial-scale fans known as mixed flow fans. These fans are used in the mining industry to ventilate mine shafts.
3 The third respondent, Mr Bourcier, was employed as Howden Australia’s senior design engineer. In that capacity he had access to information claimed to be confidential. Mr Bourcier left Howden’s employ on 1 September 2016 and went to work with the first respondent (Minetek). At this time Minetek did not produce mixed-flow fans for mine ventilation. Five months later Minetek filed two provisional patent applications for mixed flow fans naming Mr Bourcier as the inventor. In mid-April 2019, one of engineers saw a fan on a site which bore the name Minetek. The engineer took photographs of this fan which Minetek calls a “high output axial fan”.
4 Howden commenced this proceeding alleging breach of confidence, breach of contract, and misleading or deceptive conduct. In addition, Howden claim interlocutory relief seeking to restrain Minetek from supplying, or promoting for supply, the high output axial fan or components of it and from using or disclosing the Howden Confidential Information and making certain representations. In the oral hearing, however, Howden confirmed that it sought the interlocutory injunction based solely on the alleged breach of confidence.
5 The Howden Confidential Information is defined as including certain sections of the Mixed Flow Fan Design Manual and of the General Design Manual. The definition is as follows:
Howden Confidential Information includes:
(a) The information contained in the following sections of the James Howden & Company Limited Mixed Flow Fan Design Manual:
(i) 06.00.06- Design Process;
(ii) 06.06.02- Fan Curves;
(iii) 06.08.06- Impeller Dimensions;
(iv) 06.08.07- Tip Clearance;
(v) 06.10.12- Weld Toe Fatigue Design;
(vi) 06.10.14- Weld Throat Fatigue Design;
(vii) 06.16.12 Flow Control;
(viii) 06.16.22- Straightener Design;
(ix) 06.16.24- Diffuser;
(b) The information contained in the following sections of the Howden General Design Manual:
(i) 20.40.002- Fatigue Analysis of Welds;
(ii) 20.40.004- Classification of Weld Details;
(iii) 20.40.006- Stress Calculations;
(iv) 20.40.008- Fatigue Assessment;
(v) 20.40.010- High Stress High Cycle Fatigue;
(vi) 20.40.012- Joints Subject to A Stress Spectrum;
(vii) 20.40.014- Cycle Counting in Load Spectra;
(c) The research product and the engineering and design specifications created in the course of the Project described in Confidential Annexure LS-8 to the affidavit of Livio Salvestro affirmed 24 May 2019;
(d) The Mixed Flow File referred to in paragraph 2 of the Affidavit of George Abdo affirmed 24 May 2019.
6 The representations are that the high output axial fan is the subject of a granted patent, is a new invention, that the respondents were the inventors of the high output axial fan, and that the high output axial fan is the product solely of the design and development of the respondents.
7 There are two kinds of ventilation systems in mines. One, primary ventilation, supplies air in and out of the mine. This is the business Howden is in. The other, secondary ventilation, is the distribution of the air within the mine. This is the business Minetek was in before developing its high output axial fan.
8 Mr Mitchell is employed as Howden’s Director of Technology. He is a mechanical engineer. He described Howden’s mixed flow fans as bespoke technology and large infrastructure projects. Apart from Howden only one other company competes in the global market using similar technology. He explained that the Mixed Flow Fan Design Manual was available within Howden on a restricted basis. The current version, from 2017, is only available electronically. It is maintained on a server to which only Howden employees with approval have access. The same controls apply to the General Design Manual. Howden’s policy is that instruction manuals, and engineering and manufacturing drawings are not supplied to customers. Further, the technology cannot be reverse engineered as the design rules by which the fans are constructed are not able to be discerned by mere inspection (and inspection would require the powering down of the mine ventilation system and access to the fan which is enclosed).
9 Mr Mitchell said that Mr Bourcier was part of a team at Howden that from 2012 substantially re-engineered a mixed flow fan project. The work done by that team was ultimately included into the upgraded 2017 Mixed Flow Fan Design Manual.
10 Mr Mitchell viewed the photographs of the Minetek high output axial fan. By reference to the defined confidential information and other information not so defined, Mr Mitchell annotated the photographs. As a result of Mr Mitchell’s reference to other information not within the scope of the definition of the Howden Confidential Information many of Mr Mitchell’s observations are extraneous to the debate. To the extent that the defined confidential information was referred to by Mr Mitchell, his observations are now summarised. By reference to the Mixed Flow Fan Design Manual at 06.08.06, Mr Mitchell said the hub of the Minetek fan appears to have a similar angle and that this is a critical feature of mixed flow fans, the blades appear to have the same radius on the leading edge and appear to have similar proportions. Section 06.08.06 contains drawings, calculations and dimensions for the impeller. For 06.10.12 and 06.10.24, Mr Mitchell said the weld between the blades and hub of the Minetek fan has been made in a similar manner including grinding to provide a reduced stress concentration and better fatigue resistance. Those sections of the Mixed Flow Fan Design Manual deal with a method to assess weld toe fatigue and a process for welding. For 06.16.22, Mr Mitchell said that the straightening vanes following the impeller appear to be in a similar position to the Minetek fan, have a different number of vanes to impeller blades and the guide vanes are similarly designed to result in axial flow. That section of the Mixed Flow Fan Design Manual deals with the outlet guide vane design. For 06.16.24, Mr Mitchell said that the diffuser arrangement appears to be similar to one Howden had used in the past and is also located in a similar position relative to other components. 06.16.24 deals with diffuser design.
11 Mr Mitchell also compared the patent application to the Howden Mixed Flow Fan in what he described as a general manner rather than by reference to specific geometric parameters to identify features said to be the product of the application of Howden’s design rules. The comments, for example, are such things as “same fan arrangement”, “blades formed in same approach”, and the like.
12 Mr Mitchell noted that the development of the design rules by Howden took 6 years in the first instance, with a revision that took 6 months, based on revisions made over the last 36 years. In Mr Mitchell’s view, given the time it took an enterprise of the size of Howden to engineer, design, prototype and test to the point of commercialisation its fan technology, it would have been impossible for Mr Bourcier to design the Minetek fan in under 5 months from his arrival at Minetek. Mr Mitchell said:
68. In these circumstances I consider it to be impossible for any engineering company, let alone a company of Minetek’s apparently small size and relative lack of expertise, to have been in a position to bring to market a mixed flow fan in the space of either:
(a) 5 months from Mr Bourcier’s arrival at Minetek (as per the provisional specification);
(b) 1 year and 5 months from his arrival (as per the international filing date for the patent applications); or
(c) 1 year and 8 months from his arrival (as per Howden’s first sighting of the Minetek mixed flow fan).
13 Mr Abdo, the Regional IT Service Delivery Manager for Howden, opened a file named “Mixed Flow Correspondence.pst” saved on the R:// drive of Howden Australia’s Server. The creation date of this folder was 1 September 2016, the day Mr Bourcier left his employment. The folder has a sub folder called Mixed Flow Fan Manual. Mr Abdo said that from his inspection it was clear that the document folder was created on 1 September 2016 and involved the creator copying emails from their Outlook account into the file. The emails show that Mr Bourcier was the sender or recipient of the emails. Because email accounts are only accessible to the account user Mr Abdo said he believed Mr Bourcier had created the file on the R://drive. He also noted that there were no security measures in place to track exported files from the system so he could not ascertain if the file had been copied to another location such as a USB.
14 Mr Salvestro, the General Manager and Director of Howden Australia, is a mechanical engineer. He explained that Howden was the only company in Australia providing a mixed flow fan. The product represents about 10% of Howden Australia’s turnover. As a result of the high axial output fan, Howden Australia was now in direct competition with Minetek. The Minetek fan was brought to his attention in mid-April 2019 when one of Howden’s engineers visited a site, saw the Minetek fan there, and took photographs of it. Mr Salvestro believed the photograph showed features of the Howden fan in that the impeller is located behind the anti-stall chamber, the radial vanes are located ahead of the impeller, the downstream straightener vanes are very similar, and the vane linkages are similarly constructed.
15 He noted that Howden fans range in size and power, with power ratings from 1800kw to 10,000kw. He also explained that access to the Mixed Flow Fan Design Manual is restricted to certain employees, as was access to the hard copy version of the manual which was used before the 2017 version. All versions contain a confidentiality notice, a distribution list and a copy number. All engineering drawings created by Howden are stamped with the Howden title block, indicating that Howden Australia is the copyright owner and that the drawings are confidential. Along with the manuals, all design drawings, manufacturing drawings, and project specific engineering data are kept on the R://drive and persons needed to be granted access to that drive specifically.
16 Mr Salvestro also said that Mr Bourcier was the liaison officer for the major re-engineering works completed in around April 2016, which led to substantial updates to the Mixed Flow Fan Design Manual implemented in 2017. Further, Mr Bourcier had held the most senior engineering position at Howden Australia until 1 September 2016. In this role Mr Bourcier was responsible for and controlled the content of and permission for access to the R://drive. That drive contains all technical information for the mixed flow fan.
17 Mr Salvestro said that it was not possible for a company to develop such complicated technology as the Minetek fan in the time Minetek has apparently achieved this. Further, he would not expect the technology to so closely resemble the Howden fan. Until recently, Minetek was not supplying fans in competition with Howden. Butsince Minetek started offering its high output axial fan approximately $10 million of Howden’s business has been lost to Minetek. Such a loss of sales are significant to Howden Australia. The value of any potential lost sale to Howden is not easily calculated given the small market, the bespoke nature of Howden’s designs, the opportunistic contracts which arise and the lifecycle of the fans, which is up to 25 years. Over the life of a project, after sales services will deliver income of approximately 50% of the value of the project. So each lost sale represents losses over 25 years. The losses therefore are uncertain and difficult to quantify.
18 Mr Bird is Minetek’s Managing Director. Minetek is a global provider of mining, oil, and gas engineering services. It currently employees about 65 people worldwide and has a turnover of approximately $30 million. Mr Bird said any interlocutory orders would have a serious deleterious effect on Minetek’s business. On 13 November 2018 Minetek received from a mining group, trading as “Gold Fields”, a request for a proposal to build and install primary underground ventilation fans at the Agnew gold mine. Minetek submitted a proposal on 1 March 2019. Minetek was awarded the project on about 18 April 2019. The fans involved are high output axial fans. On 17 May 2019 Agnew Gold paid Minetek $547,862.30 for the project as per a purchase order dated 26 April 2019. Negotiation of the terms of the contract continued while these events occurred. Minetek has spent substantial sums on the project including approximately $27,978.50 for site inspections, $35,000 for mechanical expenses, $22,500 for electrical engineering expenses, $211,000 on purchasing and shipping electrical motors, $30,000 on fabrication expenses, and $268,607 on purchasing electrical switchboards. These expenses were paid on the basis that they would be recovered as part of the project cost. Mr Bird is also concerned that if Minetek is not able to supply the fan it will be exposed to a claim for damages for breach of contract including liquidated damages and damages due to lost production opportunities.
19 Minetek also received a request for a proposed upgrade to the primary ventilation fans at the Gold Fields Granny Smith gold mine. Minetek submitted a proposal for this work on 17 April 2019. The proposal includes Minetek’s high output axial fans. On about 29 April 2019 Minetek received a purchase order and on 10 May was paid $927,407.58 for the project. Minetek has incurred costs for this project of approximately $27,978.50 for site visits, $40,000 for mechanical expenses, $22,500 for electrical engineering expenses, $422,000 purchasing and shipping electrical motors, $30,000 on fabrication expenses and $403,001.40 on purchasing electrical switchboards. Minetek has also incurred costs in developing its high output axial fan being approximately $75,000 on software, $100,000 for fabrication units for testing, $75,000 during the design drafting, $25,000 for initial set up and running of software and reviews.
20 Further, according to Mr Bird:
(1) other companies do sell mixed flow fans in Australia;
(2) he has no knowledge of Howden’s design manuals, design drawings or design documentation and none have ever been made available to him or any other management or personnel of Minetek to his knowledge; and
(3) as far as he is aware, Minetek’s high output axial fan was developed from first principles and widely known design methods using currently available software and other tools generally available in the industry.
21 Mr Bird also said:
(1) Minetek also operated in the secondary mine ventilation market, in which Howden does not operate;
(2) the high output axial fan was developed by Mr Bourcier with the secondary ventilation market in mind and had been marketed and supplied in that market, there being two contracts for such units;
(3) Minetek also has a number of current quotes for potential sales of high output axial fans for secondary ventilation;
(4) Minetek’s reputation will be irreparably damaged in the mining industry if an interlocutory injunction is granted and the loss of value to its goodwill cannot be quantified;
(5) 12 employees in the Air (Vent) division working on the production and sale of the high output axial fans would be made redundant;
(6) other redundancies would follow as the high output axial fans are involved in 90% of Minetek’s revenue; and
(7) rented office space will be redundant to needs.
22 Mr Bourcier was employed by Howden up to 1 September 2016 and is now the Chief Engineering Officer at Minetek. He is an aeronautical engineer, holds two Masters degrees and is the author of a number of papers about fans and mine ventilation. He has been a fan designer for a very large part of his working life. Mr Bourcier said that it is not correct that Howden has no competition in Australia for mixed flow fans and primary mine ventilation. Further, that all standard fan design textbooks describe mixed flow fans, how they are designed and how their features satisfy pressure and air flow requirements. Mr Bourcier said that when he arrived at Minetek it had a fully functioning engineering design office and had established designs for all components of the axial fans that it supplied for secondary ventilation. Mr Bourcier was not involved in fan design at Minetek in September 2016 when he started working there. He was, however, involved in Minetek deciding to develop a mixed flow fan which occurred in November 2016. He took over the design process after some early attempts were unsuccessful. Mr Bourcier said the fan in the photographs taken by the Howden employee was a prototype for testing only. Mr Bourcier also said this:
38. I deny any suggestion that I used Howden confidential information to design these features of the Minetek Mixed Flow Fan. All of these features were my design which I arrived at using my own knowledge and using basic engineering criteria. There was no “novel” design or “from scratch” design of any of these elements. They all had their foundation on Minetek fan designs that were already in existence and Minetek components which by that stage were well known to me. I describe my design methodology for arriving at the configuration of these particular features of the Minetek Mixed Flow Fan in what follows.
23 Mr Bourcier then described his design process in detail. Howden submitted that Mr Bourcier had not attached any of the documents evidencing his design process, which is correct, but Mr Bourcier did exhibit a confidential HO Axial Fan Report providing details of his design process, none of which involves any Howden information.
24 Mr Bourcier said further that there are significant differences between the Minetek fan and the Howden fan including the typical installed power of the Minetek fan is 90kW to 375kW (but is capable of being scaled up as the Agnew Gold fan discloses) and the Howden fan is 1.8MW to 9.0MW. In other words, the typical Minetek fan is much smaller than the Howden fan.
25 Mr Bourcier denied taking any Howden information with him when he left. He said he was asked to create the file on the R://drive before he left and, with assistance, he did so. He said:
70. I deny any suggestion that I copied or transferred any document from my computer’s C drive to any other storage device. I deny that I have any storage device or ever had any storage device containing any material from my Howden computer’s C drive. I deny taking any information from the Howden offices. I deny the suggestion by Mr Mitchell and Mr Salvestro that the only way I could have developed the Minetek Flow Fan design was by using Howden confidential information that I took away when I left Howden’s employment. That never happened.
71. I prepared an internal report on the Minetek Mixed Flow Fan. This is a confidential document. A copy of that document is Confidential Exhibit RMB-11. The document describes the design process that I followed. Its contents are correct and it is an accurate statement of what I did. It is not based on any Howden document or any Howden design process. To the extent that the document expresses an opinion about the Minetek Mixed Flow Fan design, it is an opinion which I believe to be true and correct. To the extent that the document contains a statement as to the characteristics and performance of the Minetek Mixed Flow Fan, I believe those statements to be true and correct. The fan performance curves were curves that I established and derived.
72. The design process for the Minetek Mixed Flow Fan was not “from scratch” except in the development of the impeller. Because not all elements of the Minetek fan were established without a pre-existing design as a foundation, my design process, and the time taken to develop the design, cannot be compared to the design process that a company would need to undertake from “first principles” and “from scratch”.
73. Mr Mitchell believes that the design which I developed was, to use his word, “impossible” in the time period I had. He is wrong, and the suggestion that I could only have done what I did to develop the Minetek fan by using Howden information is false. I deny it. I developed the design with only the existing designs of Minetek based on its axial fan technology, and modifications that I made using my own text book-based design, my experience, computer modelling and in the field performance verification in Minetek’s fan test chamber.
26 Mr Bourcier also said:
81. The Minetek files contain a record of all those computer modelling runs, and the diagrammatic representation of the results of the modifications of the blade designs. The impeller design that I derived in this way is part of the subject matter of the patents. This was all Minetek’s work. At no stage did I use any information from any Howden document.
82. The patent contains representations that I am the inventor of the impeller design and the incorporation of that impeller in existing Minetek components. That is true. I am the Minetek fan’s inventor and I did not use any Howden material in deriving the impeller design or the design of any other component.
27 The parties agreed that the relevant principles were as summarised in Samsung Electronics Co. Limited v Apple Inc  FCAFC 156; (2011) 217 FCR 238 where this was said:
 At  (p 218), Gleeson CJ expressly approved the following passage from the judgment of Mason ACJ in Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153:
In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.
 In Beecham [Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618], the High Court (Kitto, Taylor, Menzies and Owen JJ) said (at 622–623):
The Court addresses itself in all cases, patent as well as other, to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v. Luck (1884) 27 ChD 497, at p 506); Challender v Royle (1887) 36 ChD 425, at p 436. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks. Thus, if merely pecuniary interests are involved, “some” probability of success is enough: Attorney-General v Wigan Corporation (1854) 5 De GM& G 52, at pp 53, 54 [43 ER 789] and in general it is right to say, as Roper C.J. in Eq said in Linfield Linen Pty Ltd v Nejain (1951) 51 SR (NSW) 280, at p.281
“There are disputes of fact as to a number of matters ... but this being an application for an interlocutory injunction I look at the facts simply to ascertain whether the plaintiff has established a fair prima facie case and a fair probability of being able to succeed in that case at the hearing.”
Thus where the defendant goes into evidence on the interlocutory application the Court does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case. James L.J. explained the general attitude of the Court when he said, in Plimpton v. Spiller (1876) 4 Ch.D. 286, at p.289, in relation to a patent action where there was no outstanding issue as to validity:
“... the Court, not forming an opinion very strongly either one way or the other whether there is an infringement or not, but considering it as a fairly open question to be determined at the hearing, and not to be prejudiced by any observation in the first instance, reserves the question of infringement as one which will have to be tried at the hearing, and which it will then have to consider.”
 In O’Neill [Australian Broadcasting Corporation v O’Neill  HCA 46; (2006) 227 CLR 57] at  (pp 81–82), Gummow and Hayne JJ said that the relevant principles were those explained in Beecham. Gleeson CJ and Crennan J agreed with that proposition. When referring to the well-known passage in Beecham at 622–623 (which we have extracted at  above), Gummow and Hayne JJ then said, at  (pp 81–82), that, when considering an application for an interlocutory injunction, the Court must address itself to two main inquiries (viz has the plaintiff established a prima facie case in the sense explained in Beecham and does the balance of convenience and justice favour the grant of an injunction or the refusal of that relief). Their Honours then observed:
By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument [(1968) 118 CLR 618 at 620]. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal [(1968) 118 CLR 618 at 622]:
“How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”
The competing cases
28 Howden contends that Mr Bourcier impermissibly used and disclosed confidential information about the Howden fan in his work for Minetek and in the patent applications. Its contention rests on the evidence of the similarities observed by Mr Mitchell and Mr Salvestro between the Howden and Minetek fans, and the brief time taken between the design work commencing at Minetek in late November 2016 and the filing of the patent applications on 23 February 2017, as well as Mr Mitchell’s and Mr Salvestro’s evidence of the impossibility of the design works having been completed within that time. According to Howden, its evidence provides a strong prima facie case of breach of confidence. Further, it contends that damages will not be an adequate remedy as Minetek is threatening to disclose Howden’s confidential information to the market with the consequence that Howden will have lost control over further dissemination of that information. Minetek is also using Howdens’s confidential information to attract clients away from Howden, Howden having already lost about $10 million in sales to Minetek. If Minetek is not restrained Howden will continue under the disadvantage of not being able to present its technology as a differentiating factor, a consequence which is not quantifiable. Howden’s customers will also think that Minetek is the innovator and not Howden, which will have a continuing adverse impact on Howden’s reputation. In contrast, Minetek’s losses are quantifiable. It would not be able to supply under the existing contracts and may be left responsible for the expenditure it has already incurred.
29 Minetek contends that Howden has not established a prima facie case at all. First, Howden does not articulate with sufficient precision or at all the aspects of the confidential information said to be embodied in or otherwise to have permitted the design of the Minetek fan. Second, the assertions that it would have been impossible to design the Minetek fan in the time without resort to Howden’s confidential information has been denied and fully answered by Mr Bourcier. Third, to the extent the Minetek fan reflects any aspect of the asserted confidential information, that is because such information is general knowledge in the industry. Minetek also observed that the case against it is wholly circumstantial. There is no evidence that Mr Bourcier took any Howden information with him and he denies having done so. Further, the confidential information in the manuals post-dates Mr Bourcier’s time at Howden and the evidence indicates that the manuals were in hard copy only while Mr Bourcier was working there. For these reasons there is no, or only a very weak, prima facie case. As to the balance of convenience, the orders sought will place Minetek in breach of contracts making it liable for substantial damages and will impact upon the third parties who have placed orders. It will also impact on two third parties who have partly completed works on their sites which Minetek has been carrying out and will expose Minetek to claims of damages for breach of those contracts. As Mr Bird said, there will be a very serious deleterious effect on Minetek including loss of up to 90% of its revenue, redundancy of employees and redundancy of rental space.
30 Has Howden established a sufficient or “some” likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial having regard to the nature of the rights Howden asserts and the practical consequences likely to flow from the order it seeks?
31 In my view, the answer is no. It may be accepted that while working at Howden Australia Mr Bourcier had access to Howden’s manuals in hard copy and also to all engineering drawings and the like stored on the R://drive. It may also be accepted on the evidence that Mr Bourcier was involved in the major project which ultimately led to substantial revisions to the Mixed Flow Fan Design Manual. There is no evidence of (and Mr Bourcier denies) taking any of this information with him when he left Howden. More relevantly still, there is no evidence that any information defined in sub paragraphs (c) or (d) of the definition of the Howden Confidential Information has been used in any way in the design of the Minetek fan. The evidence, such as it is, is confined to the alleged use of information from the Mixed Flow Fan Design Manual which, in turn, refers to the defined parts of the General Design Manual. This is important, as will become apparent below.
32 The first problem with Howden’s evidence is that it does not disclose what parts of the design work, with which Mr Bourcier was involved between 2012 and 2016 as part of a significant development project, found their way into the Mixed Flow Fan Design Manual or the form in which this work was incorporated into that manual. The evidence is at a very general level. Mr Mitchell said that he recalled that there were reports, emails and presentations that were circulated in relation to the new design development “that were ultimately adopted into the design rules and the electronic version of the Mixed Flow Fan Manual created in 2017”. Mr Salvestro said that the substantial engineering development of the mixed flow fan technology that was created in the course of that supply project “was incorporated in the Howden Mixed Flow Design Manual which was released in June 1997”. There is no information about what was adopted and the form in which it was incorporated.
33 Second, review of the Mixed Flow Fan Manual created in 2017 itself gives no clue as to how the various reports, emails and presentations, to which I infer from the evidence Mr Bourcier was privy, were adopted and incorporated into the manual. No such documents appear in the manual. Rather the manual consists of text, tables, and drawings, with each page dated. Every one of the pages within the definition of the Howden Confidential Information and the subject of Mr Mitchell’s comparison bears a creation date well after Mr Bourcier left the employ of Howden Australia. That is, whatever else he might have seen while working at Howden Australia he could not have seen the actual pages which are alleged to be the confidential information taken and used in the design of the Minetek fan. There is no evidence which would found a rational inference that Mr Bourcier somehow obtained access to that information in that particular form.
34 Third, and for the reasons given, there is no way by which it can be known that the information Mr Bourcier did see while he was at Howden’s is the same as or different from the form in which that information was, as it was put, ultimately adopted in or incorporated into the Mixed Flow Fan Manual.
35 Fourth, the evidence on which Howden relies is evidence of things being the “same” or “similar” to the Howden fan. None of the evidence, and specifically not that of Mr Mitchell, identifies how or in what respect any particular part of the Mixed Flow Fan Manual was used in or appears in the Howden fan. For example, 06.08.06 deals with impeller dimensions. Referring to that section, Mr Mitchell identified that the hub appears to have a “similar angle”, the blades appear to have the “same radius”, and the blades appear to have “similar proportions”. The section provides standard dimensions for the impeller, and processes for working out the impeller proportions and blade section proportions, as well as a process for working out the angle of the blades on the impeller cone. There is no evidence that the Howden fan was designed using any of the processes in 06.08.06 or that the design of the Howden fan is an outcome of what must have been the use of those processes. The section is dated 27 June 2017, well after Mr Bourcier had left Howden’s employ. This fact must be assessed along with the lack of evidence of how the information from the project in which Mr Bourcier was involved was ultimately adopted or incorporated into the manual and how what was in the manual has found its way into the design of the Minetek fan. The same can be said of the other sections of the manual which Mr Mitchell considered and which are defined as Howden Confidential Information.
36 Fifth, while Howden considers all defined sections of its manual to be confidential information, its evidence does not identify that the Howden fan does not reflect information generally available to fan design engineers through texts, papers and software. There is evidence from Mr Bourcier that texts deal with mixed flow fan design processes and that the design software is readily accessible, and that he used both in his design of the Minetek fan.
37 Sixth, while an interlocutory application is not a trial within a trial, there is evidence from Mr Bourcier that he did not use any Howden information in the design of the Minetek fan and he gives a detailed description of how he did design that fan using standard texts, software and his own knowledge in the time it took which he said was plainly not impossible. The fact that he exhibited a confidential report of the design process rather than providing his original workings does not support the drawing of any adverse inference against the weight of his categorical denial of taking anything from or using anything of Howden’s in his design of the Minetek fan.
38 The practical consequences of the orders Howden seeks will potentially expose Minetek to claims for damages including, perhaps, damages for consequential losses and may adversely impact on the other contracting parties in ways which cannot be known. While the usual undertaking as to damages has been offered, it is not known whether damages pursuant to the undertaking would be an adequate remedy for those third parties. Minetek will be adversely affected in terms of other losses, such as the expenses it has incurred and may not be able to recoup, and the redundancies it may have to implement. Unquantifiable damage to its reputation is also likely given that it is part way through four contracts in total. Weighed against those practical consequences, Howden’s evidence does not provide it with a strong prima facie case. To the contrary, the evidence is extremely weak. In my view, the evidence does not establish a sufficient or even “some” prospect of success at the final hearing to justify preserving the status quo in circumstances where that status quo will leave Minetek part way through work on projects for four of the third parties. In respect of the formulation of “some” prospect of success, this has been said to suffice where only pecuniary interests are at stake. That is not so in the present case. The interests of the parties extend beyond pecuniary interests to matters of reputation in a small market and ownership of the technology embodied in the Minetek high output axial fan. The nature of the rights in play and the practical consequences if the interlocutory order is made reinforce my conclusion that Howden has not adduced sufficient evidence to justify preserving the status quo.
39 If, contrary to my view, Howden has established a prima facie case, it would be at the weak end of the scale. The balance of convenience does not necessarily favour Howden as it appears to have assumed. In particular, it seems to have assumed that its confidential information will be released by Minetek to third parties in the form of design drawings and instruction manuals. As best as I can understand Howden is assuming that Minetek’s design drawings and instruction manuals will contain information from the Howden Confidential Information. However, there is no evidence to support this inference. Mr Bourcier says he has no such information. Mr Bird says he has never seen such information. The observations of some things in the Minetek fan being the “same as” or “similar to” the Howden fan does not mean that any part of the Howden Confidential Information appears in the Minetek design drawings or its instruction manuals. Howden’s fear of the confidentiality of its confidential information being dissipated is based more on assumption than logical inference from the scant evidence on which it relies that the Minetek fan was designed using any part of the Howden Confidential Information.
40 Nor do I accept that Howden’s loss is unquantifiable and Minetek’s loss quantifiable. The fact is some aspects of the loss of each will be quantifiable and other aspects will be unquantifiable.
41 I also do not accept that third parties will benefit from an interlocutory injunction in the sense that if the Minetek fans are installed and Howden ultimately succeeds the third party will be left with equipment which represents a breach of confidence and contract so that it is better to enjoin Minetek now to restrain the supply of the Minetek fan. The impact on third parties is simply unknown but impact there must be. All that can be said is that there is scope for potential impact either way.
42 My assessment is that the balance of convenience is fairly evenly weighted between these parties. However, if Howden had sufficient prospects of success to justify an order preserving the status quo I would find that the balance of convenience favours refusal of the interlocutory injunction. This is because there is no proper foundation for an inference that the Howden Confidential Information will be disclosed through either the Minetek fan or the design drawings and instruction manuals. Most of Howden’s loss (if compensable loss it be) would be quantifiable. Further, unlike Minetek, Howden will not be placed in breach of contract or be exposed to damages, including for consequential losses, as well as the reputational and other kinds of damage which will arise on the grant of an interlocutory injunction which will prevent it from completing contracted works. The third parties to those contracts, provided they have knowledge of the proceedings, are best placed to assess what is in their interests which they would have the capacity to do if no interlocutory injunction is granted, a capacity they would not have if an interlocutory injunction is granted.
43 For these reasons the application for interlocutory relief, insofar as it remains undetermined, should be refused, with costs. The matter should be listed for a case management hearing to deal with the issue of expedition and directions to enable an expedited hearing.