FEDERAL COURT OF AUSTRALIA

Central Innovation Pty Ltd v Garner (No 4) [2020] FCA 1796

ORDERS

THE COURT ORDERS THAT:

1.    Judgment and verdict be entered in favour of the applicants in respect of 36 of the customers claimed to have been lost, in a sum to be calculated by reference to the evidence of Ms Bateman, plus pre-judgment interest.

2.    The first respondent pay the applicants’ costs.

3.    The parties confer and by or before 27 January 2021, or by such other date as may be sought and allowed, submit:

(a)    agreed or competing orders to give effect to the judgment and verdict and interest in dollar sums;

(b)    any agreed or competing orders in relation to the remaining relief sought by the applicants; and

(c)    agreed or competing procedural orders for any remaining dispute to be adjudicated upon.

4.    The proceeding be listed for a case management hearing at 9.00 am on 29 January 2021, or such other date as may be fixed in consultation with the parties.

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

REASONS FOR JUDGMENT

BROMWICH J:

Introduction

1    This is a case concerning allegations of misuse of confidential information obtained by an employee during a former employment relationship in the course of subsequent employment with a competitor. The allegations relate to events alleged to have occurred during the original employment, between the two jobs, and, most importantly, during employment with the subsequent employer. Relief is sought by way of declarations, injunctions (including delivery up of confidential information), damages, compensation (including equitable compensation), interests and costs.

2    The two applicants are Central Innovation Pty Ltd and Intercad Pty Ltd. Central Innovation and Intercad are part of a group of companies that operate collectively under a business umbrella called the “CI Group”. One or more of the members of the CI Group of companies advise customers in design, manufacturing and construction industries about optimising their design processes and systems, and supplying them with three dimensional (3D) computer aided design and drafting software, commonly referred to as “CAD” software. The first and now only active respondent, Mr Gary Garner, refers to the CI Group of companies being neither a legal entity, nor a registered business name. As will be seen, nothing turns on this.

3    The 3D CAD software and related services supplied by one or more of the members of the CI Group of companies came from SolidWorks Corporation (formerly called SolidWorks Inc), a United States-based company and subsidiary of French company Dassault Systèmes. Dassault Systèmes is one of the largest developers of 3D CAD software in the world. Mr John Atkinson, Director of Applications Development for Central Innovation at the time of the trial in December 2019, in his affidavit evidence estimated that SolidWorks captured approximately 50% of the Australian 3D CAD software market. Between about 1996 and 2009, Intercad was an exclusive distributor of SolidWorks’ software in Australia and New Zealand. Since then, Intercad periodically entered into distribution agreements with SolidWorks by which Intercad had the non-exclusive right to sell its software in Australia and New Zealand.

4    Customers who purchase SolidWorks’ 3D CAD software from one of SolidWorks’ resellers acquire both a perpetual licence for the software, and a 12-month subscription to software updates. During the subscription period, the reseller also provides technical support, and is known as a “Value Added Reseller” (VAR). A customer of a SolidWorks VAR may have more than one software subscription. At the end of each subscription period, which may or may not be synchronised as between different subscriptions, the customer chooses whether or not to renew any given subscription. CI Group/Intercad subscriptions were synchronised. A SolidWorks VAR’s information about customers who are subscribers is important to the process of servicing the needs of subscribers and securing the renewal of subscriptions.

5    The CI Group of companies employs just under 150 people, approximately 42 of whom perform work for Intercad. Mr Garner admits in his defence that he performed work for Intercad, says in his affidavit evidence that he was employed by Intercad, and denies in both his defence and evidence ever having been employed by Central Innovation. Central Innovation and Intercad contend that they were each jointly or severally the employer of Mr Garner, and that he was employed by one, or the other, or both of them.

6    Mr Garner’s subsequent employer, the second respondent, N C Cadcam Systems Pty Ltd (NCCS), also supplied SolidWorks 3D CAD software as a VAR, confined to Victoria and Tasmania. At the core of this dispute is the question of whether, during the time that he performed work for Intercad, Mr Garner appropriated SolidWorks customer information and misused that information during the course of his employment with NCCS. The principal form of misuse alleged by the applicants was getting a subscriber customer of a VAR member of the CI Group to become an NCCS subscriber customer. Mr Garner denies any wrongdoing.

7    NCCS went into voluntary liquidation on 10 April 2019, just under eight months before the trial in early December 2019, preventing this proceeding continuing against it without the leave of the Court: see s 500, Corporations Act 2001 (Cth). No leave was sought or granted for the proceeding to continue against NCCS. That is understandable as most if not all of the relief sought against it was rendered futile. NCCS’s stance towards this proceeding is now irrelevant.

8    In cases involving misuse of confidential information by a former employee, a former employer is often going to be at a practical disadvantage in ascertaining and proving what is suspected to have taken place at the new employer (and therefore in pleading a case), including in particular the use of the former employer’s confidential information. This was certainly so for the applicants, who have had considerable difficulty in marshalling evidence in support of their case. Not the least source of this difficulty was the supposed disappearance of a work laptop computer provided to Mr Garner by NCCS (NCCS Laptop). Mr Garner’s case is that the NCCS Laptop was stolen from him a matter of hours before he was served with orders made by a judge of this Court on Friday, 23 December 2016, requiring that he give the applicants’ computer expert access to it. This and other events resulted in corresponding difficultly for the applicants in finalising their pleadings, which took until the lead up to the trial.

9    The course of the litigation leading to a final hearing has been protracted, with numerous interlocutory disputes and contested case management hearings, especially in relation to pleadings, expert computer evidence and discovery. The applicants undoubtedly had a very difficult task in assembling the evidence that they took to trial. Unsurprisingly, the basal dispute is the sufficiency of that evidence. The level of agreement and general cooperation between the parties has been poor. This has mostly, in my view, been the fault of the respondents and their solicitors, which since April 2019 has been confined to Mr Garner and his solicitors.

Mr Garner’s conduct

10    It is relevant that Mr Garner has been obstructive and uncooperative in this proceeding, from soon after the ex parte first steps in this proceeding when he was served with the initiating process and initial orders of the Court, and continuing right up to and including the time when he gave evidence at the trial. Mr Garner did not comply with important aspects of interlocutory ex parte orders made against him by Justice Katzmann on 23 December 2016 and served on him that day. Among other things, those orders restrained him from

… destroying, tampering with or parting with possession of any computer (including laptop) or other electronic device, including any electronic storage device, used in or in connection with or which relates in any way whatsoever to his employment with N C Cadcam Systems Pty Ltd (NCCS).

11    As mentioned above, Mr Garner claimed that the NCCS Laptop provided by his new employer, which was clearly covered by those orders, had been stolen earlier on the very day when he was served with those orders. Such an unhappy coincidence calls for close scrutiny as to whether that was merely bad luck, or a departure from the truth. There are grounds for grave suspicion that the supposed theft was not just an unhappy coincidence, but a fabrication by Mr Garner designed to provide an ostensibly legitimate basis for depriving the applicants of access to that laptop. These include the fact that the theft was not detected until long after when it was supposed to have occurred, and not reported to police until the next week.

NCCS’s conduct

12    Prior to its voluntary liquidation, NCCS had been obstructive in this litigation. At its worst, this may have included concealing the existence of information on its computer systems, and failing to preserve that information, contrary to what was sought by the applicants through Court processes. In combination with the absence of the NCCS Laptop allocated to Mr Garner, considered below, I am concerned that had proper access been given to NCCS’s computer records, this might well have revealed the presence of confidential information that had to have come from Mr Garner’s time performing work for Intercad. However, that cannot now be determined, and even if it could be, would not be directly relevant to the case against Mr Garner.

13    I was ultimately confined to such inferences as could properly be drawn from the matrix of evidence that was able to be adduced by the applicants, including the effect of potentially contrary evidence. Mr Garner’s case relied quite heavily not just on the asserted inadequacy of the evidence adduced by the applicants, but on the acceptance of contrary evidence from him and adduced on his behalf. Mr Garner’s credibility and reliability was therefore of considerable importance to the outcome of this proceeding.

Overview of the evidence

14    The court book containing the evidence adduced by the parties is voluminous, comprising some 17 lever arch folders and over 10,000 pages of material, mostly from the applicants. Despite that, only a relatively small proportion of that evidence required detailed consideration in these reasons. In part, that is due to evidence being required to be adduced by the applicants on all manner of mundane things. That was apparently (and I consider reasonably), seen to be necessary by the applicants because of Mr Garner’s pleaded defence to the applicants’ case. This was ultimately in response to the second further amended statement of claim (statement of claim) and was replete with denials of “each and every allegation”, often contradicted by counter pleading that in fact admitted key aspects of what was alleged. This approach by Mr Garner greatly increased the burden in writing this judgment. Once capable of being proven, most of the formal and background facts were not disputed by Mr Garner in opening or closing submissions, but that did not absolve the Court from needing to make numerous factual findings.

15    The documents principally relied upon by the applicants were as follows:

(1)    Two affidavits with exhibited documents from Mr John Atkinson, the Director of Applications Development for Central Innovation, who had been the General Manager of “Intercad, ANZ”, which is a joint reference to Intercad and Intercad NZ Pty Ltd. Mr Atkinson had access to various books and records of both applicants. He was narrowly cross-examined for a little over two hours, with little of what he deposed to being challenged.

(2)    Two expert reports from a forensic information technology specialist and computer expert, Mr Matthew O’Kane, and two expert reports from a forensic accountant, Ms Fiona Bateman, both of whom were briefly and narrowly cross-examined, with much of what they deposed to being only indirectly challenged.

(3)    Three affidavits from their solicitor, Mr Stephen D’Emilio, who produced a large volume of documents, and who was cross-examined at some length about the limitations of that material.

16    Mr Garner relied upon:

(1)    an affidavit from him, upon which he was cross-examined to significant adverse effect; and

(2)    an affidavit from another information technology forensic expert, Mr Graeme Conn, who was not required for cross-examination.

Agreed facts

17    A very limited number of agreed facts were reduced to writing and admitted as the first numbered exhibit at the trial, the substance of which is as follows, with additional comments and cross-references added:

(1)    Intercad was incorporated on 31 January 1996.

(2)    Central Innovation was incorporated on 21 December 2006.

(3)    Intercad is, and has been since 12 January 2016, a wholly-owned subsidiary of Central Innovation.

(4)    On l April 2014, Intercad and SolidWorks entered into an agreement titled “Distribution Agreement”.

(5)    During the period between 30 November 2009 and 22 August 2016, SolidWorks operated an electronic database known as the “Value Added Reseller Resource Centre” (VRC) and Mr Garner had access to it. The text of the Distribution Agreement states that Intercad was to ensure that only “authorized employees” could access the VRC.

(6)    During the period between 30 November 2009 and 22 August 2016, Mr Garner had access to SUGAR. The evidence of Mr Atkinson establishes that SUGAR was an electronic customer relationship management (CRM) system used by the applicants. Mr Garner gave similar evidence.

(7)    On 30 November 2009, Mr Garner entered into a contract of employment. That contract is referred to in these reasons as Contract One. For completeness, I note that this contract is dated 23 November 2009 at the point signed by Mr Garner and at each point initialled by Mr Garner, and is dated 26 November 2009 at the point signed by the “Regional Sales Manager South West”, Mr Ben Darling. The prior covering letter from Mr Darling confirming the offer and acceptance and seeking to have the enclosed contract signed was dated 12 November 2009. It seems likely that the parties have settled on 30 November 2009 as the contract start date because that appears to be the date from which Mr Garner actually started work, as confirmed by a subsequent letter reproduced in part at [33] below. Nothing turns on this distinction.

(8)    On 16 March 2011 at 1l.54 am, Ms Penny Myerscough sent an email to Mr Garner, to which was attached a letter, the pages of which comprised a second contract. That contract is referred to in these reasons as Contract Two.

(9)    On 16 March 2011 at 1.04 pm, Mr Garner sent to Ms Myerscough an email in reply.

(10)    Between 30 November 2009 and about l March 2013, Mr Garner’s position was “Business Development Manager”.

(11)    On or about l March 2013, Garner was promoted to the position of “Team Leader, Victoria”.

(12)    During the period between 30 November 2009 and 22 August 2016, Garner used a laptop computer (HP EliteBook 8560w, serial no. 5CB2261V6H) for the purposes of carrying out his duties as a Business Development Manager and, later, as Team Leader, Victoria. This laptop is referred to in these reasons as the Intercad Laptop, despite being referred to as the Garner Laptop in evidence and submissions.

(13)    On 22 August 2016, Mr Garner was made redundant.

(14)    On 22 August 2016, Mr Garner contacted Mr Stalin D’Souza on LinkedIn. Mr D’Souza was the Director of NCCS.

(15)    On 15 November 2016, Garner commenced employment with NCCS.

(16)    During the period between 15 November 2016 and around June 2017, NCCS operated a CRM system known as “Hatchbuck”.

The key issues in dispute

18    As the case has unfolded, there are three key issues in dispute to be resolved, apart from the preliminary contract issue addressed below as to whether Mr Garner was employed by Central Innovation, by Intercad, or by both companies. They are whether the applicants have discharged their onus of proving:

(1)    that Mr Garner took and used either or both of the applicants’ confidential information;

(2)    that any such taking and use was in breach of contractual, equitable or statutory obligations;

(3)    that any such breach caused loss to either or both of the applicants, and if so, the quantum of that loss.

19    The applicants’ case is substantially, but not entirely, circumstantial. I therefore surmise that the reference in Mr Garner’s submissions to a lack of direct evidence necessarily constitutes an assertion that there is also an insufficient basis for drawing adverse inferences in combination with the available direct evidence.

Preliminary issue: Mr Garner’s contract of employment

Relevant facts

20    The evidence includes two written contracts to which Mr Garner is named as a party, one signed (defined above as Contract One) and one not (defined above as Contract Two).

21    Mr Atkinson deposes to all of the persons working for Intercad being formally employed by Central Innovation in the sense of that being the entity to whom each is contracted. However, some of those persons perform duties exclusively for Intercad or other entities within the CI Group of companies. Mr Garner’s pleaded case is that he entered into Contract One with Central Innovation, or with CI Group (despite pleading that it is not a legal entity), and did not enter into Contract Two. As noted above, Mr Garner also asserts that he was employed by Intercad, and not by Central Innovation.

22    By a letter dated 12 November 2009, on letterhead with a logo and the words “Central Innovation” and with a footer “Central Innovation Group Pty Ltd Employment Contract”, Mr Ben Darling, using the title Regional Sales Manager, wrote to Mr Garner confirming his acceptance of an offer to “join our company as Business Development Manager with Central Innovation Group”, based in the Victorian Office. That letter attached a document, on the same letterhead and with the same footer, entitled “PERMANENT STAFF Terms and Conditions of Employment”. The letter stated that those terms and conditions form a part of the contract, asked Mr Garner to read them carefully, asked him to advise if he had any queries, and asked him to initial each page and sign the final page to signify acceptance. A consequence of the reasoning below is that I have concluded that Mr Darling was employed by Central Innovation.

23    Mr Darling’s 12 November 2009 letter is numbered as page “1”, followed by the terms and conditions document as pages “2” to “9”, followed by a page “10” headed:

Intercad

Sales Commissions and Bonus Plan

Effective 1 July, 2009

All 10 pages of the letter and enclosure have the same logo and footer.

24    Mr Garner initialled and wrote the date “23/11/09” on the letter and on each of the 10 pages. He also signed and dated pages 9 and 10, being the contract itself and the annexed Intercad “Sales Commissions and Bonus Plan”. Mr Darling signed the last page of the contract and also signed the annexure and dated it “26-11-09”. The formation of Contract One was thereby complete.

25    The opening sentence of the terms and conditions for Contract One stated:

For the purposes of this Contract of Employment, references to “the CI Group” shall include Intercad Pty Ltd, Intercad NZ Pty Ltd, Graphisoft Pty Ltd and Central Innovations [sic] Pty Ltd.

26    Although Mr Darling’s 12 November 2009 letter and page 9 of the contract both refer to “Central Innovation Group”, there is no reference to any company called “Central Innovation Group Pty Ltd” other than as it appears in the footer of each of the 10 pages, as opposed to “Central Innovation Pty Ltd”. There is no evidence of the existence of any company called “Central Innovation Group Pty Ltd”, nor any explanation as to why that name was used. This situation also applies to Contract Two. It may be that there was a confusion or error in the preparation of the letterhead between CI Group (or Central Innovation Group) and Central Innovation, and if so that the company that was intended to be referred to in the footer was Central Innovation Pty Ltd, being the legal entity with the closest name. However, that is speculative, and I therefore put to one side the footer reference.

27    The terms and conditions of Contract One contain many express and implied references to Mr Garner being employed by the CI Group. As already noted above, CI Group is not a single legal entity, but rather an umbrella term for companies comprising that group.

28    Nine days after Mr Garner signed Contract One, on 2 December 2009, an email was sent to “All Staff at Central Innovation” (email address “AllStaff@Centralinnovation.com.au”) from Ms Kerri McFarlane, using an email signature with the title “Human Resources Manager” and the entity name “Central Innovation”. The email said that the link in the email was to what was described as the “new IT policy that applies to all Central innovation staff”.

29    Just over 14 months later, on 11 March 2011, an email was sent to staff at Intercad in Adelaide, Brisbane, Melbourne, Perth and Sydney, and all staff at Graphisoft Pty Ltd, by Mr Max Piper, a director of Central Innovation since 23 December 2009 (three years after its registration) and a director of Intercad since the same date. The burden of the email was to advise that work had been done to standardise the employment contracts held by all Intercad and Graphisoft staff, referring to there being several versions of employment contracts with differences in conditions.

30    Mr Piper’s 11 March 2011 email advised that terms and conditions relating to any financial benefit would not change with the new contract, with the changes primarily relating to confidentiality, notice periods and non-compete clauses. As noted below, there was not even that degree of change for Mr Garner, possibly because Contract One had only been signed less than 16 months earlier in November 2009. Mr Piper’s email concluded by advising that “Penny” (from what follows, a reference to Ms Penny Myerscough, Human Resources Manager, the domain for whose email address was “centralinnovation.com.au”) would be emailing the recipients new contracts over the coming days, and asked each recipient to review, sign and return their contract to her. The last two sentences of the email were:

After a period of two weeks from receipt of the new contract, we need to assume that you consent to the terms and conditions should we not have heard from you nor received a signed version of your contract within the said two weeks. So please contact Penny if you have any concerns before this time.

31    Five days later, at 11.54 am on 16 March 2011, Ms Myerscough forwarded Mr Piper’s email to Mr Garner, stating that it attached what was described as an updated contractual agreement, and further stating:

If you are happy with it, please sign it and return it to me within two weeks. In the instance where I don’t hear from you with the 2 week period and you continue working at Intercad, this will be taken as acknowledgement [of] and consent [to] the agreement.

32    Attached to Ms Myerscough’s email was a letter from her to Mr Garner, dated much earlier, 1 January 2011, at which time Contract One was only just over 13 months old. As with Contract One, the letter had an enclosure entitled “PERMANENT STAFF Terms and Conditions of Employment”. The letter and enclosure were numbered pages 1 to 9. All nine pages had the same logo as was on the covering letter and terms and conditions of Contract One, and all of pages 2 to 9 had the footer “Central Innovation Group Pty Ltd Employment Contract”. The terms and conditions contain many express and implied references to Mr Garner being employed by the CI Group. As already noted, this second contract is referred to in these reasons as Contract Two.

33    The first paragraph of Ms Myerscough’s letter was as follows:

This letter updates the terms and conditions of employment between yourself and Central Innovation Pty Ltd. It supersedes all pre-existing agreements. This agreement confirms your role as Business Development Manager with Central Innovation Group, reporting to the Regional Sales Manager. Your date of commencement was 30th November 2009.

34    I have carefully compared the terms and conditions of Contract One with those of Contract Two. The only differences of note, apart from some minor explanatory additions and some slight changes in wording in the non-compete clause (which are immaterial for present purposes), are that there is no probationary period in Contract Two and the governing law clause in Contract One referred to the laws of New South Wales, while the corresponding clause in Contract Two referred to the laws of Victoria. It follows that there was no material change at all between the two contracts, save perhaps that it might have been better for Mr Garner to have had his employment contract governed by the laws of Victoria, given that was where he lived.

35    An hour and ten minutes later, at 1.04 pm on 16 March 2011, Mr Garner replied to Ms Myerscough’s email and letter in relation to Contract Two as follows (omitting salutations):

I have read the contract, and would like to request clarification in regard to exactly when superannuation payments will be made e.g. with each payment of salary and commissions.

36    Ms Myerscough replied six days later, at 3.06 pm on 22 March 2011 as follows (omitting salutations):

Super payments are made each month. There are deductions made from you[r] salary and then 9% is also deducted from your commissions made.

Hope that makes sense, if not please give me a call.

37    There is no evidence of any further communication about Contract Two. I infer that there was in fact no such further communication both from the lack of any evidence of that taking place, and because in evidence is a copy of the letter and the following pages constituting Contract Two handwritten upon it “Emailed 16/3 Implemented 30/3”, suggesting that Contract Two was treated as being assented to by Mr Garner.

38    As well as Mr Garner deposing to his belief that his contract of employment was with Intercad, he deposes to all pay slips listing him as an employee of Intercad, but does not produce any such pay slip, nor give any explanation for not doing so. Without seeing the pay slip, it is difficult to know whether the description he gives is objectively accurate, or merely reflects the arrangement described by Mr Atkinson whereby he was performing work for Intercad, but was nonetheless employed by Central Innovation. I therefore cannot attach any weight to Mr Garner’s evidence about his pay slips. In any event, I attach very little weight to Mr Garner’s assertion as to who employed him. This is because this depends upon accepting Mr Garner’s uncorroborated word in circumstances where his interest in the outcome of the proceeding against him may be materially affected by who is found to be his employer. Even if that was not so, the substantiation of Mr Garner’s claims about his pay slips would not itself have been determinative in all the circumstances as it would reflect who he performed work for, not necessarily who his formal and legal employer was.

39    Mr Garner deposes to the following in his affidavit:

[19]    On or around 1 January 2011, Intercad sought to update the terms of my employment agreement by providing me with a new contract dated 1 January 2011 (‘Contract Two’).

[20]    I did not agree to the proposed change to the terms of my employment and did not sign Contract Two. I continued to carry out my duties as an employee of Intercad in accordance with Contract One.

40    In cross-examination, Mr Garner was asked what recollection he had that allowed him to tell the Court that he did not agree to the proposed changes in Contract Two. Mr Garner’s response was that he does not remember seeing Contract Two other than in the course of this proceeding. He stated that, if he had indeed agreed to Contract Two, there would have been a copy of it with his signature and initials, as there was with Contract One. As Mr Garner’s email in response to Myerscough’s email shows, he did in fact read and engage with the contents of Contract Two at the time it was provided to him. Mr Garner’s evidence in cross-examination therefore only goes to his supposed lack of memory concerning Contract Two. I find that his assertion that he overtly rejected Contract Two is unreliable and therefore cannot be accepted.

41    Paragraph 19 of Mr Garner’s affidavit, reproduced above at [35], is curious because, while the letter from Ms Myerscough was dated 1 January 2011, there is no evidence that it was sent to Mr Garner prior to, or otherwise than by, Ms Myerscough’s 16 March 2011 email. Nor is there any evidence that updating Mr Garner’s contract was raised with him any earlier than Mr Piper’s 11 March 2011 email. In the absence of any suggestion by him that anyone spoke to him in person about Contract Two, or that he received any other email or other communication about Contract Two, this suggests that Mr Garner has reconstructed what took place based upon the date on the letter, rather than based upon any actual recollection of what took place, including apparently receiving that letter for the first time by email more than two months later than its date. This is another telling indicator of how unreliable Mr Garner is as a witness. It means that even direct and explicit assertions by him as to any fact must be approached with great caution, because he is, at best, careless about the accuracy of his evidence.

42    Both Contract One and Contract Two refer to Mr Garner being employed by the CI Group. As that is not a legal entity, that necessarily means that the contracting party on the employer side had to be one of the companies in that group, confined to the two corporate applicants, given that no other company in the group is suggested by anyone to have been Mr Garner’s employer. As already noted, the applicants in their pleadings and case as argued contend that the employer was Central Innovation, and in the alternative Intercad, or both Central Innovation and Intercad, while Mr Garner contends it was never Central Innovation, but only ever Intercad. Mr Garner also asserts that he continued to carry out his duties as an employee of Intercad in accordance with Contract One.

43    Noteworthy in Mr Garner’s email response at 1.04 pm on 16 March 2011 are the following:

(1)    When Mr Garner responded to the invitation to seek more information, he referred to having read the contract and confined his enquiry to the issue of superannuation. It was not an enquiry directed to any change manifested by Contract Two, given that there was no such apparent change in respect of superannuation. It was more of a practical enquiry as to how and when superannuation contributions were made, than a contractual rights enquiry.

(2)    Mr Garner did not raise any objection to the terms of either Contract One or proposed Contract Two. In particular, Mr Garner did not refer to any objection concerning any particular proposed change to the terms of his employment, which is unsurprising as there was no material change made by Contract Two.

(3)    Mr Garner expressed no disagreement, dissent, or even surprise in response to the first sentence of the letter: “This letter updates the terms and conditions of employment between yourself and Central Innovation Pty Ltd.” At this juncture, the emphasis is on the “updates” part of this sentence, to be contrasted with indicating any substantial change in the parties to the employment contract. The fact that Mr Garner did not express any disagreement or surprise might support an inference that he was not surprised or did not disagree.

Whether Mr Garner entered Contract Two

44    In relation to the issue of whether or not Mr Garner ever entered into Contract Two, given that he did not sign it within the two weeks requested, the applicants rely upon the summary of principles in Cox Purtell Staffing Services Pty Ltd v Our Energy Group Pty Ltd [2017] NSWSC 1122 at [51]-[57]. While that summary is helpful as a guide, it is instructive to go to the appellate authority summarised in Cox Purtell and beyond for a more detailed exposition of the principles and the reasoning supporting them.

45    In Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 (per Allsop J, with whom Drummond and Mansfield JJ agreed), it was observed (at [369]):

[A] number of authorities discuss the need not to constrict one’s thinking in the formation of contract to mechanical notions of offer and acceptance. Contracts often, and perhaps generally do, arise in that way. They can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i’s and crossing t’s or where they think they have done so. … Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances, even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: “and we hereby agree to be bound” in this or that respect. The essential question in such cases is whether the parties’ conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract.

The now Chief Justice then listed a substantial body of authority supporting the propositions summarised.

46    In Kriketos v Livschitz [2009] NSWCA 96; 14 BPR 26,717 (Allsop P, McColl and Macfarlan JJA), Allsop P referenced the above passage in Branir in brief reasons with which Macfarlan JA agreed. Further, in Kriketos, McColl JA, in more detailed reasons with which Macfarlan JA also agreed, observed as follows:

[107]    Whether a contract has been formed, and the terms of any contractual arrangement, requires objective determination: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; 208 ALR 213; [2004] HCA 35; BC200404838 (at [22]) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; 211 ALR 342; [2004] HCA 52; BC200407463 (at [40]) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; 211 ALR 101; [2004] HCA 55; BC200407555 (at [34]) per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; 187 ALR 92; [2002] HCA 8; BC200200663 (at [25]) per Gaudron, McHugh, Hayne and Callinan JJ.

[108]    The exercise of objective determination requires the court to consider the text of relevant documents, and also the surrounding circumstances known to participants, and the genesis, purpose and object of the transaction, but not the participants’ subjective beliefs: Pacific Carriers Ltd (at [22]); Toll (at [40]); International Air Transport Assn v Ansett Australia Holdings Ltd (2008) 234 CLR 151; 242 ALR 47; 65 ACSR 1; [2008] HCA 3; BC200800357 (at [8]) per Gleeson CJ; (at [53]) per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; (at [127]) per Kirby J. The surrounding circumstances include the parties’ relationship to one another: Ermogenous (at [25]).

[109]    “[P]ost-contractual conduct is admissible on the question of whether a contract is formed”: Brambles (at [25]) per Heydon JA; see also Pethybridge v Stedikas Holdings Pty Ltd (2007) Aust Contract R 90-263; [2007] NSWCA 154; BC200705100 (at [59]) per Campbell JA (Beazley JA agreeing); Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149; BC200807133 (at [99] and following) per Giles JA (Hodgson and Campbell JJA agreeing); special leave to appeal refused: Sagacious Procurement Pty Ltd v Symbion Health Ltd [2009] HCATrans 23.

[110]    The conventional approach to the question whether a contract has been formed turns on determining whether there has been offer and acceptance, that is to say, a “clear indication by one party of a willingness to be bound on certain terms, accompanied by an unqualified assent to that offer communicated by the other party”: J Carter, E Peden, G Tolhurst, Contract Law in Australia, 5th ed (2007) LexisNexis Butterworths at [3–02]. Offer and acceptance analysis is “normal” and “conventional”: Brambles (at [74]). As McHugh JA (with whom Samuels JA agreed) said in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 (at 534): “The objective theory of contract requires an external manifestation of assent to an offer. Convenience, and especially commercial convenience, has given rise to the rule that the acceptance of the offer should be communicated to the offeror.”

47    McColl JA in Kriketos, after referring to the facts in that case, then referenced (at [113]-[120]) a body of authority on the “non-conventional” approach to be applied where overt offer and especially acceptance is in some way absent. In doing so, her Honour considered the circumstances in which offer and acceptance can be inferred from the totality of what has taken place. In this case, the focus is on Mr Garner’s response to Contract Two being sent to him, in the context of it being made express to him twice (albeit in two emails received simultaneously, the one forwarding the other) that the revised contract would be treated as binding if he either signed it, or did not respond within two weeks. The authority most apposite to this situation is Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 (Kirby P, Samuels and McHugh JJA, Samuels JA agreeing with McHugh JA). That decision was cited and quoted by McColl JA in the passage from Kriketos at [110] reproduced above as authority for usually needing an overt manifestation of acceptance of an offer. McHugh JA said the following (at 534-5):

Under the common law theory of contract, the silent acceptance of an offer is generally insufficient to create any contract: Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 at 692 and Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 at 1432; [1966] 3 All ER 128 at 131-132. The objective theory of contract requires an external manifestation of assent to an offer. Convenience, and especially commercial convenience, has given rise to the rule that the acceptance of the offer should be communicated to the offeror. After a reasonable period has elapsed, silence is seen as a rejection and not [an] acceptance of the offer. Nevertheless, communication of acceptance is not always necessary. The offeror will be bound if he dispenses with the need to communicate the acceptance of his offer: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 269. However, an offeror cannot erect a contract between himself and the offeree by the device of stating that unless he hears from the offeree he will consider the offeree bound. He cannot assert that he will regard silence as acceptance: Felthouse v Bindley (1862) 11 CB (NS) 869 at 875; 142 ER 1037 at 1040 and Fairline Shipping Corporation v Adamson [1975] QB 180 at 189. The common law’s concern with the protection of freedom is opposed to the notion that a person must take action to reject an uninvited offer or be bound by contractual obligations.

Nevertheless, the silence of an offeree in conjunction with the other circumstances of the case may indicate that he has accepted the offer: Rust v Abbey Life Assurance Co Ltd [1979] 2 Lloyd’s Rep 334 at 340. The offeree may be under a duty to communicate his rejection of an offer. If he fails to do so, his silence will generally be regarded as an acceptance of the offer sufficient to form a contract. Many cases decided in United States jurisdictions have held that the custom of the trade, the course of dealing, or the previous relationship between the parties imposed a duty on the offeree to reject the offer or be bound: CMI Clothesmakers Inc v ASK Knits Inc 380 NYS 2d 447 (1975); Brooks Towers Corporation v Hunkin-Conkey Construction Co 454 F 2d 1203 (1972); Alliance Manufacturing Co Inc v Foti 146 So 2d 464 (1962). But more often than not the offeree will be bound because, knowing of the terms of the offer and the offeror’s intention to enter into a contract, he has exercised a choice and taken the benefit of offer.

…

The ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted.

48    Applying the last sentence of the above quote from Empirnall Holdings, the question for determination is whether a reasonable bystander would regard Mr Garner’s conduct as signalling that the offer to enter into Contract Two, in replacement of the substantially identical Contract One, had been accepted. I note that this is not a question of silence on his part, but rather a question of what is to be made of his response to what had been communicated to him.

49    Given that the overt terms of the two contracts were substantially the same, the live question is whether the inference should be drawn that Mr Garner, by his reply and subsequent conduct in continuing to work for Intercad, conveyed that he accepted Contract Two. I conclude that this is not the most practical and sensible inference to draw, and would not be drawn by a reasonable bystander. The enquiry made by Mr Garner, and the lack of issue being taken by him with the fact of Contract Two being proffered, cannot on their own support the inference that, at the time, Mr Garner conveyed that he was content to be bound by Contract Two in place of Contract One. This is especially so as accepting either contract made no material difference to him. There is therefore no general conduct by Mr Garner, including continuing to perform work for Intercad, referable to Contract Two that is not also equally referable to remaining bound by Contract One. This does not mean that I accept Mr Garner’s assertion in his evidence and submissions that he rejected Contract Two and continued with Contract One as reflecting the reality of the situation. But, by his overt conduct and in the context of what he did and did not say, there is insufficient evidence to show that Mr Garner accepted the change from Contract One to Contract Two, particularly where there was in fact no real change at all. Contract Two not having been formalised by a signature is consistent with this view, though not determinative in my conclusion.

50    Nothing much turns on Mr Garner not entering into Contract Two, and only ever being employed pursuant to Contract One, because of the immaterial differences between the two contracts. The parts of both contracts relied upon by the applicants in relation to Mr Garner’s contractual obligations were relevantly the same, as discussed further later in these reasons, addressing the issue of breach of contract.

The identity of Mr Garner’s employer

51    Both the applicants and Mr Garner refer to the summary of principles by Edmonds J in Gothard v Davey [2010] FCA 1163; 80 ACSR 56:

Identifying an employer from two or more possibilities: The relevant principles to be applied

[52]    Unsurprisingly, the outcome in cases which have been concerned with identifying an employer of a person or group of persons from two or more possibilities, whether from within the same group of companies or otherwise, has turned on their own facts and, in consequence, the case law in this area is of limited assistance. Nevertheless, it is possible to discern certain general principles that the courts have applied in the identification process. The courts have adopted the position that in undertaking this exercise, they are entitled to take a wide view of the putative relationship, beyond the terms of the contractual documentation, to examine how the parties conducted themselves in practice and whether, where there is contractual documentation, the reality of the situation accords with the terms of that documentation or whether it points to another entity being the employer.

…

[54]    In Re C&T Grinter Transport Services Pty Ltd (in liq) & Grinter Transport Pty Ltd (in liq) (controller appointed) [2004] FCA 1148 (C&T Grinter), Finn J at [20] said:

[20] The principles to be applied in the identification of the employer of an employee where there are two or more possible employers, are reasonably well settled. For present purposes I would note the following:

(1)    A contract of service cannot be transferred by one employer to another or novated as between them without the employee’s consent: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; [1940] 3 All ER 549; Re Coogi Nominees Pty Ltd (administrators appointed); McCluskey v Karagiosis (2002) 120 IR 147; [2002] FCA 1137. Questions of estoppel apart: Smith v Blandford Gee Cementation Co Ltd [1970] 3 All ER 154; the employee’s consent must be a real one whether express or implied and is “not to be raised by operation of law”: Denham v Midland Employers Mutual Assurance Ltd [1955] 2 QB 437 at 443; [1955] 2 All ER 561 at 564.

(2)    The totality of the circumstances surrounding the relationships of the various parties including conduct subsequent to the creation of an alleged employment relationship is relevant to the assessment to be made: Romero v Auty (2001) 19 ACLC 206; [2000] VSC 462 at [10] and [42]–[44].

(3)    Documentation created by one or more of the parties describing or evidencing an apparent employment relationship will be relevant to, but not necessarily determinative of, the true character of that relationship: Pitcher v Langford (1991) 23 NSWLR 142; Marrs Fabrics Pty Ltd & Nathan Wholesale Fabrics Pty Ltd v Whipps (1991) 33 AILR 167. In determining the identity of a disputed employer, the court is entitled to consider “the reality of purported contractual arrangements”: Dalgety Farmers Ltd t/a Grazcos v Bruce (unreported, NSWCA, 3 August 1995). The documentation may have been brought into existence for other purposes, for example, tax minimisation or the reduction of insurance premiums, without reflecting the reality of the [parties’] relationship: ibid; Pitcher v Langford at 149; Sharrment Pty Ltd v Offıcial Trustee in Bankruptcy (1988) 18 FCR 449 at 454; 82 ALR 530 at 537.

(4)    [Conversations] and conduct at the time of the alleged engagement of the employee [are] of considerable significance: [Romero, at [10]]. The beliefs of the employees as to the identity of their employer [are] admissible and [are] entitled to weight: Pitcher v Langford.

(5)    In cases of the engagement of new employees to work in a business in which a number of separate corporate entities participate otherwise than as partners:

“… it was open to those controlling the business to select which company should be the employer provided that the selection was consistent with the financial and administrative organisation of the business and was not otherwise a sham.”

See Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd (unreported, FCA, Ryan J, 19 November 1998).

[55]    The majority of the NSW Court of Appeal (Basten JA dissenting) made the following observation in Shaw v Bindaree Beef Pty Ltd [2007] NSWCA 125 at [59] regarding the court’s earlier decision in Pitcher v Langford (1991) 23 NSWLR 142 (Pitcher):

The result in Pitcher v Langford turned on its own facts, and on the need for error in point of law. There is no doubt, however, that without going so far as to find a sham the “reality of purported contractual arrangements” (per Handley JA) can be considered, and the case illustrates that it can extend to the identity of a contracting party and that it can be found that a purported contracting party was not in reality party to the contract even where a written contract gives it as the party.

[56]    The majority further noted (at [61]–[62]) that determination of the entity that entered into a contract is based upon an objective assessment of the state of affairs between the parties.

52    Edmonds J at [60] in Gothard summarised the effect of these authorities, concluding that the behaviours exhibited by an entity most likely to be identified as the true legal employer were that it:

(a)    had practical and legal control and direction of the employees;

(b)    made decisions about hiring;

(c)    made decisions about disciplinary issues;

(d)    made decisions about the level of remuneration;

(e)    actually paid remuneration;

(f)    communicated with employees about leave; [and]

(g)    made decisions about termination of employment.

53    With those behaviours in mind, I turn to Mr Atkinson’s unchallenged deposition to the following features of Central Innovation’s operation during the time that he had been working for the CI Group. This includes the time of Mr Garner’s employment, and is evidence which I accept:

(1)    Central Innovation’s directors had the final say in decisions relating to the business strategy and operations of Central Innovation, Intercad and Graphisoft. Mr Atkinson is aware of this because since mid to late 2014 he has participated in regular off-site meetings with directors and other managers of those organisations to discuss strategic and operational matters relating to the business of the CI Group.

(2)    Central Innovation’s directors had the final say in decisions relating to the remuneration of persons employed by Central Innovation, including those who work for Intercad. Mr Atkinson gives the example that since May 2014, he has been required to submit salary recommendations to Central Innovation’s human resources staff and to two directors of Central Innovation for approval and processing. A slight indication to the contrary of this evidence, which tends to suggest a greater degree of ambiguity of the identity of Mr Garner’s employer, is a letter sent by Mr Atkinson to Mr Garner on 9 October 2015. The letter was signed on Mr Atkinson’s behalf and printed on Central Innovation letterhead, but with Intercad’s name beneath Mr Atkinson’s name. That letter advised that the executive team had reviewed salaries in line with market forces and that Mr Garner’s base salary would not be increased because the scheme he was in gave him the opportunity to earn money based on his performance. In the context of all the evidence, I do not attach much weight to this letter.

(3)    Central Innovation’s directors had the final say in decisions relating to terminating the employment of any person employed by Central Innovation, including those who perform work for Intercad. The termination/redundancy request form for Mr Garner in August 2016 is evidence which lends some objective support to this, and also directly relates to Mr Garner, as it has Central Innovation, not Intercad, as the company name. This letter tends to suggest, perhaps inconclusively, that Mr Garner (perhaps in common with all such employees performing work for Intercad) was regarded and treated as an employee of Central Innovation, well prior to there being any of the issues that have been the subject of this litigation. At the very least, this form on its face, apparently issued by an external payroll management company, indicates that Central Innovation paid Mr Garner, and tends to support it being Central Innovation that made termination decisions about at least Mr Garner, if not all employees working for Intercad. These points go to items (e) and (g) of Edmonds J’s list in Gothard reproduced above.

54    Mr Atkinson also deposes, and I accept, that at all times that he has been working for the CI Group, Central Innovation staff based in its offices in Sydney and Melbourne had been responsible for making decisions in relation to the hiring of persons who work for Intercad, including those who were based in the Melbourne office. These Central Innovation staff had also been responsible for the management of disciplinary matters and leave arrangements in relation to those workers. When Mr Atkinson commenced working for Central Innovation in December 2012, he decided to make redundant the positions of regional sales manager for Victoria, Tasmania, South Australia and Western Australia to be replaced by a national sales manager in Sydney and later in Adelaide.

55    Neither the evidence of Mr Garner, nor the cross-examination of Mr Atkinson presented any barrier to the acceptance of the above evidence. In relation to the above indicia summary by Edmonds J in Gothard at [60], the evidence makes it clear that the General Manager of Intercad, Mr Atkinson, was employed by Central Innovation to perform that role. His evidence to that effect was neither challenged, nor commented upon adversely, by Mr Garner. The evidence briefly summarised above, and further evidence considered in more detail below, makes it clear that, acting on behalf of Central Innovation, Mr Atkinson and those acting upon his direction, as well as human resources personnel working for Central Innovation itself, had practical and legal control and direction of employees, including those working for Intercad, such as Mr Garner.

56    There is no evidence about disciplinary issues at the time of Mr Garner’s employment that is relevant to this issue, but the general practice referred to above, and the policies dealt with in more detail below, provided for disciplinary decisions to be made by Central Innovation on behalf of the CI Group of companies.

57    The decision to make Mr Garner redundant was conveyed orally to Mr Garner by Mr Atkinson as General Manager of Intercad, but I find that was communicated by him on behalf of Central Innovation. This conclusion is reinforced by the formal letter dated the day after that conversation, sent on Central Innovation letterhead and stated in express terms to have been the result of a decision made by Central Innovation to restructure. In combination with other factors and overall, this factor favours Central Innovation being Mr Garner’s employer.

58    As stated above, Mr Garner asserts that he carried out his duties as an employee of Intercad. This is a case in which the usual course of attaching weight to the understanding of an employee as to who their employer was is not appropriate because it is not reliable, and cannot even safely be taken to be truthful if the truth might be adverse to Mr Garner’s interest in the outcome of this proceeding. I accept that he continued to do work for Intercad, because that is clearly supported by other evidence, including contemporaneous statements as to his position and duties. I am unable to attach any substantial weight to or place comfortable reliance upon Mr Garner’s assertion as to who he was employed by as it is conclusory, incomplete and unreliable, being deposed to in the shadow of this litigation, and with a weather eye to its outcome. It is also inconsistent with his conduct at the time as described above, and discussed below. The safer course is to assess who Mr Garner’s legal employer was – and therefore identify the other party to his contract of employment – as an objective exercise by reference to the contemporaneous records. These include Mr Garner’s acts and omissions at the time, especially those summarised and partly reproduced above.

59    The applicants’ case is that, having regard to the totality of the circumstances surrounding the relationship between Central Innovation and Mr Garner, the Court should find that Central Innovation was his employer, and in the alternative that he was employed by Intercad. I note that neither the applicants nor Mr Garner suggested that there was any change in this regard between Contract One and Contract Two.

60    The dominant reason for Mr Garner’s contrary stance that he was only ever employed by Intercad seems to be his interest in the outcome of this proceeding, rather than any bona fide belief as to who employed him at the time, given that the belief expressed now is contrary to his conduct at the time. Mr Garner contends that if his stance is upheld, such that he is found to have been employed by Intercad only, then Central Innovation would have no cause of action against him because there could not be any breach of any express or implied contractual obligation, and he would not owe Central Innovation any fiduciary duty or any duty under s 183(1) of the Corporations Act. Further, Mr Garner contends that as Central Innovation was not a party to any distribution agreement with SolidWorks, and was not privy to the distribution agreement that undoubtedly did exist between Intercad and SolidWorks, Central Innovation could not and did not sell SolidWorks software and could not have authorised Mr Garner to access the VRC. As such, Mr Garner contends, the customers or prospective customers that are referred to by the applicants cannot be regarded as customers or prospective customers of Central Innovation, and the confidential information alleged to have been taken by him cannot be its confidential information.

61    The applicants counter by submitting that it is immaterial which applicant employed Mr Garner because:

(1)    the confidential information allegedly wrongfully obtained and used related to customers of both Central Innovation and Intercad and accordingly belonged to both of them;

(2)    the definition of confidential information in both contracts was information “relating to the business interests, methodology or affairs of the CI Group” and was therefore not limited to information belonging only to Central Innovation or to Intercad; and

(3)    his duty of confidentiality, whether arising under contract (or, I would add, in equity), was not limited to information that was the property of his employer, but rather applied to information that was confidential and to which he had access in the course of his employment.

62    Mr Garner contends that the totality of the evidence establishes that he was employed by Intercad in the period from about 30 November 2009 until 22 August 2016 for the following reasons (his evidence and the face of Contract One instead refer to a slightly earlier start date of 23 November 2009, but nothing turns on this difference):

(1)    Mr Garner’s access to the VRC was as an employee of Intercad, and pursuant to the terms of Intercad’s Distribution Agreement. Under the Agreement, Intercad agreed to ensure that only its authorised employees could access SolidWorks’ portal or any other website made available by it, and Intercad was to be responsible for that access.

(2)    Mr Garner was primarily engaged to sell SolidWorks software on behalf of Intercad. Intercad was the only entity in the CI Group that was entitled to sell SolidWorks products pursuant to its Distribution Agreement with SolidWorks and Central Innovation was not, during the relevant period of Mr Garner’s employment, a party to any distribution agreement with SolidWorks.

(3)    The applicants’ internal correspondence shows that Mr Garner was considered to be an Intercad staff member. Mr Garner referred in particular to the 11 March 2011 email from Mr Piper in which it was stated (emphasis added in the submission) “I want to advise you that we have recently been working to standardize [sic] the employment contracts held by all Intercad and Graphisoft staff”, and noted that the email was sent to Intercad and Graphisoft email addresses.

(4)    Ms Myerscough’s 16 March 2011 email to Mr Garner forwarding Mr Piper’s email and attaching Contract Two said (emphasis added in submission) “[in] the instance where I don’t hear from you within the 2 week period and you continue working at Intercad, this will be taken as acknowledgement and consent of [sic] the agreement”. (I note that this submission ignores the first sentence of the enclosed letter: “This letter updates the terms and conditions of employment between yourself and Central Innovation Pty Ltd”.)

(5)    In terms of employment documentation:

(a)    on 13 March 2013, Mr Garner was promoted to the position of “Team Leader of Intercad, Victoria”;

(b)    he was provided with a document entitled “Intercad Quarterly Accelerator Bonus Structure”, which he signed on 20 March 2013; and

(c)    on 16 September 2015, he was further sent an email from Mr Guy Wallis, National Sales Manager of Intercad, attaching a position description which described his position as “Team Leader – Intercad”.

(6)    Therefore, having regard to the “reality” (in the sense described in Gothard) of Mr Garner’s relationship with the applicants, and regardless of any arrangement within the CI Group as to staffing, tax or convenience, he carried on sales duties as a Business Development Manager and Team Leader for Intercad, was designated and regarded as a staff member of Intercad in internal communications, and in his position description.

(7)    Weight should be given to the fact that Mr Garner had a reasonable belief that his employer was Intercad, which is said to have been formed based upon the conduct and representations of the applicants to him that he was in fact a staff member of Intercad.

63    The above evidence relied upon by Mr Garner does provide some limited support for Intercad being his employer, but in my view only to a minor degree. That limited value is because none of that evidence is necessarily or inherently inconsistent with being employed by Central Innovation to perform work for Intercad, and to do so in accordance with Intercad’s working environment. That is, it is evidence that lends support to the conclusion that Mr Garner was employed by Intercad. However, it does not contradict evidence that Mr Garner performed work for Intercad, but was employed to do that work by Central Innovation.

64    As to the point at [62(1)] above concerning access to the VRC, that is ultimately a bootstraps argument, effectively reasoning that as only authorised employees of a distributor were allowed to access the VRC, only such employees did in fact do so. In any event, there is no evidence that the authorised employees of Intercad did not include those who only performed work for Intercad, even if contracted to its parent, Central Innovation, to do so. It is common enough for persons doing work for an organisation to be referred to as members of their staff, even if they are legally employed by someone else, especially within the same group of companies. That is the burden and manner of Mr Atkinson’s evidence. As to points [62(2)-(7)] above, I regard each as slightly favouring Mr Garner’s contention that he was employed by Intercad, and not by Central Innovation, rather than being employed by Central Innovation to perform work for Intercad. However, as already noted, none of them are inconsistent with the latter.

65    As to the final point concerning Mr Garner’s belief, I attach very little weight to his evidence on this or any other topic without contemporaneous corroboration beyond that which he relies upon. I regard him as, at best, an unreliable historian even as to his own state of mind. His expressed state of mind is every bit as likely to be governed by his perceived advantage in the outcome of the proceeding as it is by a genuine belief that he in fact held during the time of his employment. It is also inconsistent with some of the contemporaneous records most directly on point, even though other documents do support his stance. I give particular weight to the letter attached to the email sent to him on 16 March 2011 enclosing Contract Two referring to employment between Mr Garner and Central Innovation. There is no evidence he took any exception to that description of who his employer was, despite responding to the email by asking questions about his superannuation, although that lack of a response is explicable in other ways as discussed below. Further, the supposed bases for Mr Garner’s belief that he was employed by Intercad and not by Central Innovation are not inconsistent with Mr Garner being employed by Central Innovation to perform work for Intercad. This overlooks features that were consistent with him being employed by Central Innovation, discussed above and further below, to which no reference is made in his evidence or submissions.

66    Keeping in mind the above summary of the applicable legal principles, my observations about the lack of any material difference between Contract One and Contract Two, and my comments above about aspects of Mr Garner’s evidence on this topic, I reach the following conclusions. What is objectively conveyed by what was said and done in the period from November 2009 to March 2011 is more consistent with, and more convincing, that Mr Garner’s employer was Central Innovation but that the contract on its face and in terms contemplated that work would be done for other companies in the CI Group, relevantly Intercad. I find that Mr Garner was employed by Central Innovation, to work for Intercad as a member of the CI Group, and that he was not directly employed in a contractual relationship with Intercad. These conclusions are based on the following facts, supported by Mr Atkinson’s evidence as to the practical and legal control over employees exerted by Central Innovation detailed above.

67    The only overt contemporaneous reference to Mr Garner’s employer is the first sentence of Ms Myerscough’s 1 January 2011 letter, attached to her 16 March 2011 email: “This letter updates the terms and conditions of employment between yourself and Central Innovation Pty Ltd”. Although this was some time after the formation of Contract One, neither side suggested this changed from Contract One to Contract Two.

68    The primary representation in the letter was that the proposed Contract Two was updating the terms and conditions of Mr Garner’s employment under Contract One. The reference to that employment being between Mr Garner and Central Innovation was secondary or incidental, and in context was not a representation that was likely to have been intended to assert that as a fact, let alone a fact of any controversy. In my view, this makes the representation more reliable rather than less. That is because a secondary representation is somewhat akin to, if not quite the same as, an implied representation. The similarity is relevant to the assessment of reliability. At least since the enactment of s 59 of the Evidence Act 1995 (Cth), implied previous representations are considered by the law to be generally more reliable than direct previous representations made to advance or prove the truth of what is asserted. When that distinction arises, the intended representation is hearsay and is therefore inadmissible in the absence of an exception to the hearsay rule (here, the business records exception in s 69) while the merely implied representation is not hearsay: see s 59(1) of the Evidence Act; see also s 59(2A) enacted in response to R v Hannes [2000] NSWCCA 503; 158 FLR 359 at [353]-[364].

69    The distinction I draw between the primary and the secondary representation of the letter is therefore consistent with the touchstone for the application of the hearsay rule. Implied representations often reflect an unconscious understanding of an existing state of affairs rather than overtly seeking to advance a position, and for that reason may be regarded as being more likely to be reliable. Applying that reliability reasoning by analogy, I attach significant weight to the contemporaneous secondary representation of employment being between Mr Garner and Central Innovation, as better reflecting the objective position. Additionally, as to reliability, it is not suggested that Ms Myerscough and whoever else was involved in preparing the 1 January 2011 letter had any motive to advance Central Innovation rather than Intercad as Mr Garner’s employer at that time, and none is apparent.

70    The reference in the letter to the employment being between Mr Garner and Central Innovation therefore has the hallmarks of an objective acknowledgement of a commonly understood state of affairs. Although Mr Garner did not take any exception to that description at the time, I ultimately do not attach much weight to that because he may not have noticed it, or attached any significance to it, even though an equally available inference is that he did not dispute it because it was consistent with his understanding at the time. In the end, his lack of response at the time is essentially neutral.

71    Mr Garner’s evidence does not assist him in advancing to any marked degree his contention that he was employed directly by Intercad and not by Central Innovation. Despite numerous references in other parts of Mr Garner’s affidavit to Mr Atkinson’s affidavit, to which are exhibited Contract One and Contract Two and the surrounding documents described above, Mr Garner’s affidavit does not directly refer to Ms Myerscough’s email and attached letter (which is also the first page of Contract Two), nor to his own reply at the time. There is no suggestion that Mr Garner received Contract Two in any other way. The fact of receiving the contract in that way is an agreed fact in the first exhibit at the trial (see [17(8)] above), reflective of the inevitable presumption in relation to the receipt of that email in s 161(1) of the Evidence Act. Mr Garner’s evidence does not reflect an appreciation that he first received Ms Myerscough’s 1 January 2011 letter by email on 16 March 2011, rather than in early January 2011. His evidence therefore does not accord with the objective contemporaneous record of events, nor with the agreed fact as to what took place, reinforcing the conclusion that his evidence on this topic is unreliable. Mr Garner’s evidentiary response in any event refers only to Contract Two updating “the terms” of his employment agreement and to changing “the terms” of his employment, which in context is a reference to the terms and conditions of his employment contract, not the identity of his employer.

72    The balance of these reasons therefore proceed upon the basis that Mr Garner was employed by Central Innovation and performed work for Intercad.

Impressions of the witnesses

73    Before considering the evidence and issues in some detail, it is convenient first to express general conclusions about each of the witnesses who gave oral evidence, and my general impression of them. That has an important bearing upon both the resolution of conflicts in the evidence, and upon the acceptance of evidence which is uncorroborated or can only come from a witness, such as memory of events and direct evidence of a given state of mind.

74    The following observations are mostly drawn from notes taken at the time of the hearing of the evidence. Those notes are supplemented by consideration of affidavits, documentary evidence and transcript. Some assistance was also gleaned from submissions by the parties.

Mr John Atkinson, called by the applicants

75    Mr Atkinson is the Director of Applications Development for Central Innovation. He was a careful, forthright and reliable witness. He answered questions directly, without apparently lingering to assess where the answer might take the applicants’ case. To my perception, he raised counter-questions to ensure that answers he gave were accurate, or to ensure that he understood correctly what was being asked of him. It was not suggested that he was not an honest or reliable witness. Nor realistically could that suggestion have been made.

76    Mr Atkinson assisted the Court in cross-examination, and made appropriate concessions and qualifications according to his knowledge and recollection of events. I have little hesitation in accepting the part of his evidence that was unchallenged and not contradicted, and am of the view that neither his credit nor reliability, nor indeed much of his evidence, was adversely affected by the limited cross-examination of him over some 30 pages of transcript. I am generally able to accept virtually all of his evidence, both oral and written, without hesitation.

77    I am able to make important findings of fact based upon the totality of Mr Atkinson’s evidence, including the documentary evidence that he produces and refers to, interspersed when necessary with references to contrary evidence from Mr Garner or adduced on his behalf. These findings assist in understanding the background and important aspects of the basis of the applicants’ case that Mr Garner took information held by either or both of the applicants. It also assists their case on confidentiality, including the nature of the applicants’ and thus Mr Garner’s workplace processes and requirements and the understanding that he is likely to have had about the significance and usefulness of the information that he had access to.

78    By reason of the adverse conclusions I have reached about Mr Garner’s evidence in key respects, where there is a conflict between the evidence of these two witnesses, and there is no contemporaneous record favouring one over the other, I generally prefer the evidence of Mr Atkinson.

Mr Stephen D’Emilio, called by the applicants

79    Mr D’Emilio is the solicitor for the applicants. The ambit of his evidence, by way of three affidavits, was largely confined to the production of records, including working tables produced by his staff under his general supervision. He was cross-examined at some length about those documents, identifying weaknesses and inadequacies. There was no issue as to Mr D’Emilio’s honesty or integrity. In the end, the records and summaries of records spoke for themselves, with whatever limitations they contained.

Ms Fiona Bateman, called by the applicants

80    Ms Bateman is a forensic accountant. Her evidence went to the question of loss and damage. Ms Bateman’s evidence was probed and questioned to a limited extent in cross-examination. She was a careful and thorough witness. Her evidence as presented was not extensive, involving narrow questions of accounting for foregone profit based on assumed facts. The only objection to her evidence, properly taken, was the extent to which it relied upon facts or assumptions that were not otherwise established by the evidence. The main substantive challenge to her evidence came from the competing expert evidence of Mr Scarr. As detailed further in my observations of Mr Scarr, I generally found Ms Bateman’s evidence more satisfactory than his. This was because she explained, or better explained, the basis for the opinions she expressed, while he either did not explain, or did not satisfactorily explain, the basis for a number of his key opposing opinions.

Mr Matthew O’Kane, called by the applicants

81    Mr O’Kane is a forensic computer expert. His evidence suggested that at least some of Mr Garner’s activities in relation to access and use of the VRC and SUGAR were in some way covert. This was not directly challenged, but rather sought to be downplayed by the respondents. That was successful to the extent that I am not satisfied that the evidence went far enough to establish that Mr Garner took overt steps to hide what he had done from what might be found by a close and careful investigation of the kind that was conducted by and on behalf of the applicants, but I am similarly not satisfied that this conduct was easy to detect or was readily apparent. It was not suggested that Mr O’Kane’s evidence should not be accepted. The main issue was what to make of that evidence, and in particular what inferences it supported in conjunction with other evidence.

Mr Gary Garner, called in his case

82    There is no dispute that Mr Garner was a highly successful salesman. The live issue affecting his evidence is whether he was a truthful and otherwise reliable witness. I conclude that he was neither.

83    Regrettably, Mr Garner was a very poor witness. He was not a candid witness. I found his evidence evasive and in parts disingenuous, an impression reinforced by reading and carefully re-reading the entire transcript of his evidence. He was clear and lucid when it suited him to be. But he seemed to choose to appear obtuse and even lacking in comprehension when questions challenged his account of events. In places, he appeared not to understand his own affidavit, although that may have been a function of the way in which it was prepared.

84    I perceived Mr Garner to be assessing questions and formulating answers with a view to advancing his own case, rather than doing his best to give a complete and truthful account of the matters to which his attention was directed. His recollection was often good when it favoured him but very poor when it did not. He conveyed to me little interest in whether what he said or did in the past was lawful, or honest. He appeared to me to have no qualms about advancing his interests by any means available to him, including dishonesty, and the giving of evidence that is objectively impossible, or at least very difficult, to accept.

85    Aspects of Mr Garner’s evidence were clearly shown to be false, such as his supposed inability to download or print reports in SUGAR. It is difficult to put that down to error or poor memory. I reluctantly conclude that Mr Garner lied and obfuscated in the witness box when he perceived it to help his case, or prevent harm to his case. He resisted making concessions unless unavoidable or apparently immaterial, including holding a plainly absurd stance at times. I am therefore unable to accept Mr Garner’s affidavit or oral testimony, or indeed any prior representation made by him, in relation to any contested issue of importance unless his evidence or representation was against his own interest or was supported by clear and compelling corroboration of some kind.

Mr Michael Scarr, called by Mr Garner

86    Mr Scarr is an accountant. The burden of Mr Scarr’s expert accounting evidence for Mr Garner was summarised and agreed upon in the short cross-examination of him: he formed a different view than the applicants’ accounting expert, Ms Bateman, as to the calculation of the costs of goods on the potential losses sustained. In short, his opinion was that there were direct expenses that should have been taken into account by Ms Bateman, but were not. He based his different opinion on his general experience in the calculation of costs of goods sold. He also took a different view as to the appropriate way to calculate Intercad’s gross profit using NCCS pricing because that pricing had a discount applied to it. In the final analysis, the difference between Ms Bateman and Mr Scarr turned not on their credit, or reliability generally, but on which approach was more compelling. As already noted above, I found that Ms Bateman’s approach was to be preferred, and I consider this approach in detail from [342] onwards.

Further background facts

87    Much of the following narrative of background facts comes from the affidavit evidence of Mr Atkinson, which Mr Garner mostly does not dispute. At the background fact level, there were only limited challenges by way of cross-examination or contradictory evidence from Mr Garner, mostly on issues to do with the contracts dealt with above, and on the function and use of the SolidWorks VRC and the applicants’ (mainly Intercad’s) SUGAR system.

88    All the persons who work for the CI Group are formally employed by contracts of employment with Central Innovation, a fact asserted by Mr Atkinson and supported by the findings already made in relation to Mr Garner’s contract of employment. However, some of those employees perform duties exclusively for Intercad or other corporate entities within the CI Group. Mr Atkinson was one of those employees, being employed by Central Innovation as the General Manager of “Intercad ANZ” in the period from about May 2014 until 19 July 2017, since then apparently being employed by Central Innovation in the position of Director, Applications Development (which was not a board position).

89    Mr Atkinson confirmed in cross-examination that “ANZ” was a reference to Australia and New Zealand, and that he was General Manager of Intercad and Intercad NZ Pty Ltd. In that position, a majority of his time was spent in sales and marketing, but he covered the whole business. This included financial results but did not include financial management of either Intercad or Central Innovation, nor administrative services.

90    Intercad’s business was largely selling licences to use SolidWorks software. In 2016, Intercad’s only substantial competitor in Victoria and Tasmania was NCCS.

91    Following the contract findings above, Mr Garner was one of the persons who was employed by Central Innovation and performed duties for Intercad. In Mr Atkinson’s second affidavit, in reply to Mr Garner’s affidavit, he deposes to Mr Garner performing work for Intercad, while formally employed by Central Innovation. This evidence is consistent with the findings I have already made in that regard above. That is, Mr Atkinson’s subjective view is supported by the evidence, and Mr Garner’s subjective view is contrary to the weight of the evidence. I also note that there is no evidence that this arrangement precluded Mr Garner also performing work that was for, or for the direct or indirect benefit of, Central Innovation. There is no reason to assume that the demarcation had to be as strict as that for a group of companies working together under a common umbrella.

92    CAD software allows computers to be used to create industrial design documentation, rather than having to prepare such designs by hand. It enables professionals such as architects and structural engineers to explore design ideas, visualise concepts through “photorealistic” rendering of what is intended to be built or made, and simulate how a design might work in the real world. The majority of the CI Group’s customers operate within the manufacturing, mining, construction, architecture and technology industries. They vary in size and include sole traders, small and medium-sized enterprises, and large government departments such as the Commonwealth Department of Defence.

93    Since at least 2014, Central Innovation has supplied computer and electronic hardware, recruitment and training services, and bespoke software packages to customers within the manufacturing sector. There is some commonality of customers between Intercad, Graphisoft and another one of the CI Group companies, Cadimage Limited (NZ).

94    Each item of software that a CI Group company sells to customers has a serial licence number which gives the customer the right to use the software. Each software licence is known as a “seat”. Each seat allows one individual user concurrent access to the software. When a customer purchases a perpetual software licence from Central Innovation or Intercad, the customer must also acquire an annual subscription. The subscription gives the customer access to technical support and software updates for a period of one year from the date of purchase. If a customer purchases a software licence from Central Innovation or Intercad which is to be added to a customer’s existing network licence, rather than as a standalone product, the subscription period for the new licence or product and the subscription fee are aligned to the subscription period applicable to the existing network licence. At the end of the subscription period, the customer can choose whether or not to renew the subscription for a fee.

95    Intercad generally sends each customer, also known as an “account”, an invoice for renewal fees around two months prior to the expiry of their subscription period. If a customer chooses not to renew their subscription, Intercad cancels the invoice and the customer is classified as a “customer off subscription”. In that event, the customer no longer receives technical support or software updates. Customers who are off subscription are able to continue using the software after the subscription period has expired, but they are not entitled to receive software updates or technical support. Such customers can instead choose to pay separately for technical support as and when required. In practice, a customer who is off subscription and whose software has missed out on three or more upgrades will find it very difficult to use the software in collaboration with clients or other SolidWorks users, essentially due to it being out of date.

96    Members of Central Innovation’s and Intercad’s sales teams periodically contact off-subscription customers by email or telephone to invite them to renew their subscription. Some customers who have subscribed to several licences choose to renew only some of those licences, whereupon they remain customers and are not classified as customers off subscription.

97    If a customer decides to renew their subscription while being off subscription, Intercad typically charges a fee that is equivalent to backdated subscription fees which are calculated upon the basis of the period during which the customer was off subscription. Such fees are backdated for a maximum period of 36 months.

98    Individual software seats are commonly referred to as “assets” within the CI Group. Sometimes customers require software that can perform highly specialised tasks or be compatible with other computer programs. Central Innovation sells and provides such customers a range of proprietary software systems which are aimed at delivering bespoke solutions according to the customer’s individual requirements.

99    In addition to supplying CAD software, companies in the CI Group sell computer and electronic hardware and recruitment and training services to customers in Australia and New Zealand. As noted above, Intercad is focused on SolidWorks CAD software as the dominant VAR in the Australian market. Additionally, Central Innovation and Intercad offer technical support services to certain customers who have purchased bespoke software subscriptions, including for SolidWorks software. Central Innovation and Intercad provide both online and telephone-based technical support to customers who are experiencing difficulties with using or upgrading the software. Sometimes onsite support is provided and charged for separately.

100    Both Central Innovation and Intercad use sales staff to conduct both sales and marketing activities to attract new customers. The sales staff are organised into sales and account management teams based on geographical regions with separate sales teams for each of the offices located in New South Wales, Victoria, Western Australia, South Australia, Queensland, Auckland and Christchurch. Each sales team is responsible for existing and prospective customers within that team’s assigned region. Each sales team had a team leader who had overall responsibility for managing that team’s customer accounts and achieving individual and team sales targets. The Team Leader positions were abolished in 2016, leading to Mr Garner being made redundant on 22 August 2016.

101    The most recent distribution agreement between Intercad and SolidWorks was entered into on 1 April 2014, as referred to earlier in these reasons. By that agreement, Intercad had the non-exclusive rights to market and sell SolidWorks CAD software throughout Australia and New Zealand as a VAR. Mr Atkinson’s estimate is that Intercad has a market share of about 80 to 85% of the SolidWorks CAD software sold in Australia.

102    The prices that Intercad charges for SolidWorks products are determined in part by reference to recommended retail prices set by SolidWorks and communicated to Intercad. Each time Intercad sells a SolidWorks product to a customer, it pays a proportion of the amount received to SolidWorks. In his role as General Manager of Intercad between May 2014 and July 2017, straddling the period relevant to this proceeding, Mr Atkinson received from Central Innovation’s finance director price lists and other pricing information from SolidWorks relating to the products that Intercad sold to its customers. This pricing information was usually provided in the form of an email, with the amount required to be paid to SolidWorks in respect of its various products listed in United States dollars. The price charged by Intercad for each SolidWorks product reflected the recommended retail price converted to Australian dollars at the time of sale with a small currency hedging component. This meant that although the recommended retail price remained constant during the period from May 2016 to May 2019, the prices charged by Intercad to its customers fluctuated due to movements in the exchange rate.

103    Under the terms of the Distribution Agreement, Intercad is permitted to grant “authorized employees” access to the SolidWorks VRC. Mr Atkinson uses that term to cover all persons working for Intercad, despite them being formally employed by Central Innovation. Mr Atkinson deposes to all Intercad employees, understood in that way, as being provided with access to the SolidWorks VRC for the following confined reasons:

(1)    Sales staff require access for training purposes and certification activities using the training and testing resources that SolidWorks provides on the VRC, and for placing customer orders – Mr Atkinson does not expressly say this is confined to sales staff but it stands to reason that this is who it is more likely to be, if the alternative is technical staff.

(2)    Technical support staff require access for training of sales staff, and, when a customer experiences problems with the software that Intercad’s team members cannot resolve, to prepare “escalation” reports to SolidWorks which can be submitted through the VRC.

104    The applicants isolate from the evidence of Mr Atkinson the following key features of the VRC:

(1)    Customers who purchased a SolidWorks product from Intercad were registered to Intercad within the VRC. While the applicant’s submissions suggest this is confined to customers who maintained at least one software subscription with Intercad, Mr Atkinson expressly deposes to this extending to customers off subscription. I accept Mr Atkinson’s evidence on this point as it makes more sense given the option of going back on subscription.

(2)    All of Intercad’s customer orders had to be placed through the VRC.

(3)    The customer information that is recorded within the VRC includes each customer’s name and address, the version of the software used or purchased, the serial and licence numbers for the software and the renewal dates for the licences or subscriptions.

(4)    The customer information recorded in the VRC is not available to the public, and each VAR can only view information relating to its own customers and not customers registered to a different VAR.

105    On Mr Atkinson’s account, considered in more detail below, Intercad’s sales staff do not need to access the VRC in order to undertake their sales and marketing activities. All the information which such staff require for that purpose is located within the SUGAR database. Importantly, as made clear in the cross-examination of Mr Atkinson, the information in the VRC is updated by SolidWorks, but the information kept up to date is relevantly confined to the licences that a customer holds. While the VRC does have some limited contact information, it is not a “maintained database” of contact information or conversations or other communications with customers or prospective customers. Thus, on Mr Atkinson’s account, Intercad’s sales staff are provided with access to the VRC for the purposes of placing orders and undertaking the training and certification activities referred to above, and accordingly have no need for, and no business in, accessing the VRC for any other sales-related purpose.

106    When Intercad needs to arrange access to the VRC for one of its employees, it sends an email request to SolidWorks, known as a “VRC login request”. SolidWorks then sends an email to the employee for which access is requested with a user identification and password to enable them to log in to the VRC. That email also specifies the employee’s “login role”, which typically refers to the division within which the employee works, such as technical support. The significance of the “login role” is that it limits an individual to information relevant to their specific role. Only staff who have an Intercad email address are able to access the VRC. Such login details for the VRC were sent to Mr Garner on 2 December 2009. Access is terminated upon SolidWorks being advised that a person with access is no longer an employee.

107    There is disagreement in the evidence as to who at Central Innovation and/or Intercad were responsible for requesting access to the VRC on Mr Garner’s behalf. I found Mr Atkinson to be a more reliable witness and accordingly prefer his evidence on this topic. He indicates Central Innovation’s involvement in this process, rather than it being confined to Intercad. Nothing much turns on this.

Evidence relating to the use of SUGAR generally

108    The SUGAR database was a Central Innovation solution, with one such database for Intercad and one for Graphisoft. This proceeding is only concerned with the Intercad SUGAR database. All references to SUGAR in these reasons are limited to the Intercad database.

109    The applicants isolate from the evidence of Mr Atkinson the following key features of SUGAR:

(1)    SUGAR contains names, telephone numbers, mailing addresses and email addresses for all former, current and prospective customers of both Central Innovation and Intercad, including the personal contact details of key customer representatives known as “contacts”.

(2)    Much more customer-specific information is stored within SUGAR than in the VRC. In his reply affidavit, Mr Atkinson produces numerous printouts from SUGAR and from the VRC to demonstrate that considerably more contact information was held in SUGAR both in July 2016 and at the time of his affidavit.

(3)    SUGAR records prices and subscription renewal fees paid by Central Innovation’s and Intercad’s customers, which are not disclosed to the public or to other VARs of SolidWorks software.

(4)    One of the primary functions of SUGAR is to create an electronic log of communications with Central Innovation’s and Intercad’s customers. SUGAR enables members of Central Innovation’s and Intercad’s sales and marketing teams to save copies of emails exchanged with customer contacts and to create summaries of meetings and telephone conversations. Thus SUGAR enables a user to readily ascertain the focus of Central Innovation’s and Intercad’s marketing efforts, the types of software customers have purchased or are interested in purchasing, and the prices offered or charged for those products. Mr Garner deposed to SUGAR being used in part to check on staff performance against key performance indicators. Mr Atkinson agreed this was a secondary use made of SUGAR, a characterisation which I accept.

(5)    SUGAR can be used to generate customised reports of specific categories of information, such as a report of all sales opportunities pursued by Central Innovation or Intercad in Victoria within a particular time period.

110    As noted above, the primary use of SUGAR was to track the relationship between Central Innovation or Intercad and either entity’s customers, but it could also be used to assess performance. If, for example, an individual salesperson was underperforming or not meeting targets, then SUGAR could be used to look at their activity in terms of the number of meetings or number of calls logged.

111    Intercad and Central Innovation were both sales-driven organisations, with the remuneration of sales staff depending partly on the sales they made. As such, they were required to record in SUGAR contact made with customers. As noted above, such information could not be added to the VRC. Rather, the information in that database, apart from orders lodged by a VAR, was entered by SolidWorks, who was solely responsible for maintaining it.

112    Mr Atkinson accepted in cross-examination there was sometimes duplicate information in SUGAR and sometimes the data became out of date, but he did not accept that data was wrong at the time it was put in the database. A user of SUGAR receives an alert if a duplicate account is about to be created, but there are some duplicate accounts. It is difficult to duplicate information about particular “assets” held by any particular customer because that is a restricted function. Mr Atkinson’s evidence was that the licence information in SUGAR from the VRC was kept fully up to date and accurate. I prefer that evidence to the contrary evidence by Mr Garner, who in any event limited an aspect of his complaint about the duplication of information in SUGAR to similar information being entered in relation to a given account in a slightly different way. It follows that the remedy for any inaccurate information that might exist from time to time in SUGAR was not to be found in the VRC, but rather by updating SUGAR.

113    It was a matter for disciplinary action if sales staff were found to have put bogus information into SUGAR. In the month before Mr Atkinson gave evidence, two members of staff had been dismissed for putting false information into SUGAR. This demonstrates the importance the applicants attached to the integrity of the information that was in SUGAR. But there was no evidence of any such disciplinary action being required during the time of Mr Garner’s employment.

114    There is a fundamental clash between the evidence of Mr Atkinson and of Mr Garner on the use of SUGAR to record sales and marketing information, and on its reporting functions. Mr Atkinson’s evidence is that sales team members may choose to contact existing and potential customers using email, direct telephone calls or social media campaigns in line with the marketing strategies for particular customers or groups of customers. Each time the sales member team makes or attempts to make contact with a customer or potential customer, he or she creates a record within SUGAR of the date and method of communication and a brief summary of any oral discussion. If a communication takes place by email a copy of that email, or a version of that email displaying its contents, is saved within SUGAR. The name of the sales team member is also logged in SUGAR.

115    On Mr Atkinson’s evidence, which I accept, SUGAR makes it possible to view a complete record of all prior communications with any particular customer or potential customer, which increases the efficiency and effectiveness of sales and marketing activities. That information can be sorted and displayed according to different categories of information, such as customers who have purchased a particular product within a particular time period, or the marketing and sales techniques used. Customised reports of information of the kind already described can also be generated. This view of SUGAR explains why Mr Atkinson characterises the information as commercially highly sensitive. It would enable a competitor to understand which customers have been the focus of marketing strategies and the status of attempts to win business from such customers.

116    Mr Garner, in evidence restricted under section 136 of the Evidence Act to proving his understanding rather than the facts asserted, deposed to email communications not being recorded very often in SUGAR. It is difficult to know what to make of such an understanding, but in any event Mr Garner does not deny that sales team members did record contacts or attempted contacts in SUGAR, including when and how they took place in a summary of any oral discussion. Mr Garner accepted that while it was possible to categorise information on SUGAR, he said it was not user-friendly and that he rarely used it in order to categorise or filter displayed information.

117    Mr Garner also said that although it may be possible to generate customised reports in SUGAR, as described by Mr Atkinson, this was difficult to do, and could only be viewed and not printed. He was not aware of any way in which a SUGAR user could download or print such reports. His understanding was that printing portable document format (PDF) files from SUGAR was limited to quotes, and said he was not able to print or otherwise remove customised reports from the SUGAR system, nor download information from SUGAR, because he did not know how to do that.

118    In response to Mr Garner’s denial that sales team members recorded email communications in SUGAR very often, Mr Atkinson deposes to, in the period prior to Mr Garner’s departure and up until late 2018, utilising the volume of recorded information within SUGAR, including emails, as a tool to assess employee performance. He produces a call activity report which he generated from SUGAR which records the number of emails recorded by certain employees during the calendar month of June 2016. He also deposes to team members being able to use an application within SUGAR to synchronise selected emails with SUGAR. The icon for that application was displayed in a screenshot of Mr Garner’s Microsoft Outlook inbox which Mr Atkinson took from the Intercad Laptop (referred to above at [17(12)]).

119    Mr Atkinson also does not agree that SUGAR was often difficult to use and was not user-friendly. He deposes to having used different CRM systems over the preceding 18 years and finding that, with the right training, SUGAR was relatively straightforward to operate. He had not received any complaints or feedback from any employee, including Mr Garner, that they found SUGAR difficult to use. Nor does Mr Atkinson agree that it is very difficult to generate customised reports within SUGAR. Rather, he states that the ability to generate such reports quickly and reliably is one of the main advantages of the SUGAR software. He produces by way of example a report of sales within Victoria for June 2016 which he generated from SUGAR and which took him about 3 to 5 minutes to create.

120    After reading Mr Garner’s affidavit evidence as to the limitations on printing or downloading SUGAR reports, Mr Atkinson conducted searches on the hard drive of the Intercad Laptop. As a result of those searches he discovered 13 Excel spreadsheets that had been created by Mr Garner at various times. He then compared the contents of those spreadsheets with customer information in a backup version of SUGAR. He found that some of the information contained in the spreadsheets matched data within the backup version of SUGAR. For example, a number of the field labels were the same. One of those spreadsheets with the title “Gary list”, dated 10 September 2012 at 1.40 pm, comprises the contents of a customised report that had been generated in the backup version of SUGAR and then saved or exported into an Excel file. The report was entitled “Gary G list” and contained contact details for representatives of all the customers and leads that had been assigned to Mr Garner. Mr Atkinson says the data in all reports within SUGAR record the situation at the point in time when the specific report is run. While the format of reports within SUGAR stays the same, the contents of the reports are constantly changing as a result of the updates being made to the underlying data. Mr Atkinson produces a printed copy of that report.

121    Mr Atkinson further comments on one of the spreadsheets he found on the Intercad Laptop, which contains, among other things, all opportunities assigned to Mr Garner and his team that were forecast to close in the month of June 2014. In relation to that spreadsheet, Mr Atkinson ran the exact same report for the same data within the (then) current live version of SUGAR, and produces a copy of that report.

122    Mr Atkinson therefore does not agree with Mr Garner’s evidence that he (Mr Garner) was not able to print or otherwise remove customised reports from SUGAR. That is because the contents of the “Gary G list” report referred to above, when viewed within the backup version of SUGAR, record functions that were available to Mr Garner within SUGAR, which included “Run Report”, “Edit”, “Duplicate”, “Schedule”, “Print as PDF”, “Export” and “Delete”. Mr Atkinson produces a first page of the “Gary G list” report as viewed within the backup version of SUGAR. Mr Atkinson also saved a copy of each of the 13 Excel spreadsheets that he found on the Intercad Laptop onto a USB drive and exhibited them to his affidavit.

123    I have examined this aspect of Mr Atkinson’s evidence, and the documents he produces, noting that he was not cross-examined on this evidence, and further noting that no leave was sought to adduce any further evidence-in-chief from Mr Garner to explain his affidavit evidence on the issue of what he could and could not do in SUGAR. As the expert evidence of Mr O’Kane convincingly demonstrated, Mr Garner used SUGAR reasonably extensively in the closely examined final three months of his employment with Central Innovation. Mr O’Kane’s evidence showed that Mr Garner had no apparent difficulty in generating SUGAR reports, especially in the last few working days before he was retrenched. That expert evidence is considered in some detail below, and supported by the evidence of Mr Atkinson.

124    The readily available inference that can be drawn from Mr Atkinson’s evidence (concerning the 13 Excel spreadsheets he found on the Intercad Laptop, in combination with the expert evidence of Mr O’Kane) is that Mr Garner did in fact have the ability to both generate and print or download reports in SUGAR, and that he did so on more than one occasion in the final three months of his employment with Central Innovation. For the reasons set out above, in addition to the serious questions already existing about Mr Garner’s credit and reliability, I am unable to accept Mr Garner’s evidence to the effect that he did not download or print reports from SUGAR. The reasonably available inference that I draw is that he did this to advance his case in this proceeding, most likely because any indication that he had downloaded or printed SUGAR reports would suggest that, contrary to the tenor of his evidence, those reports contained information that was valuable, and therefore worth taking.

125    This view of Mr Garner’s evidence on this topic also contributes to the adverse view I formed as to his credit and reliability. Even if I did not go that far, I would prefer the detailed response by Mr Atkinson, and the documents he produces, to the generalised assertions of Mr Garner. I therefore reject Mr Garner’s evidence about the functionality and usefulness of SUGAR, and the use which he could and did make of that database. I accept Mr Atkinson’s evidence as to what is able to be done in SUGAR. I comfortably conclude that, on the balance of probabilities, Mr Garner not only had a much greater ability to use SUGAR than he would have the Court believe, but that he in fact accessed and obtained information using it. He therefore found such information useful, and to that extent at least, valuable. This is a further reason to reject his evidence to the contrary.

126    The above adverse credit findings are relevant to the critical question of whether or not Mr Garner in fact took information with him from his former employer and improperly used it, being one of the key issues addressed below.

Evidence relating to the use of the VRC generally

127    Mr Garner’s evidence in his affidavit was that he was permitted to access and download information from the VRC by virtue of his sales role, and at no stage during his employment was he specifically instructed by management or senior employees that he was not permitted to download information from the VRC. He deposes, without any meaningful detail, to having observed that it was a “common practice” for Intercad sales staff to access the VRC for a “variety of reasons” connected with and to assist in carrying out their duties, without explaining what those reasons might be. He also says that he observed that it was common practice among staff of Intercad to access and download customer information from the VRC.

128    In support of his assertions, Mr Garner points to the following SolidWorks documents:

(1)    a SolidWorks document entitled “EXPORTING INFORMATION FROM THE VRC”, which produces dialogue boxes to guide a user in generating and saving a report in comma-separated values (.csv) format, and also opening and saving such a report in Microsoft Excel; and

(2)    a screenshot of a search using a VRC tool which he says is called “Slide Maker”, also referred to in contemporaneous communications as “SlideMaker”.

129    Mr Garner deposes to SlideMaker enabling a VRC user to nominate a postcode or suburb in which all SolidWorks sites are then shown on a map, enabling every SolidWorks account in a particular geographic area to be identified. Mr Garner produces an example of such a search. It is noteworthy that the screenshot of the search has a header which includes the words “confidential information”, corroborating Mr Atkinson’s evidence as to the character of information in the VRC. Further, in cross-examination, Mr Garner was shown an email that he sent to Mr Atkinson on 18 April 2016 in which he described SlideMaker as a “rarely used SolidWorks sales tool” that was “not used by anyone that I know of”. In that email, Mr Garner agreed with Mr Atkinson’s reservation expressed in the preceding email about the questionable quality of the data produced using SlideMaker.

130    A further point can be made about this evidence from Mr Garner. Neither of these documents or VRC capabilities assists Mr Garner’s case unless I accept that it was part of what he was entitled to do with the VRC while he was employed by Central Innovation. I do not accept this evidence. The fact that SolidWorks facilitated reports being generated from the VRC by someone at a VAR says nothing about how an individual VAR permits access to the VRC by its employees, and collates and makes available that and other information for its business, such as by use of a customer relations management system.

131    Mr Atkinson’s evidence was that it was not reasonable for a member of the sales staff to seek up-to-date information from the VRC, because, as noted above, it is information updated by SolidWorks, purely related to licences and not contacts, and does not contain conversations or communications with customers or prospective customers. In response to the suggestion that the period of licences and their expiry dates were a significant part of the selling process, including such things as aligning licence expiring dates, so that VRC information might very well be useful to a salesman, Mr Atkinson responded that this was not necessary, because that information was fully up to date and accurate in SUGAR. The process that Mr Atkinson described for keeping SUGAR data up to date was that order processing staff would update SUGAR and then place an order into the VRC. He accepted that that element of the accuracy of SUGAR data is dependent upon the processing department of Central Innovation or Intercad doing that updating and data input processing correctly. If Mr Garner or any other person observed that there was a problem with the accuracy of SUGAR data, he would expect that person to notify the order processing department to correct it.

132    I prefer Mr Atkinson’s evidence about both the VRC and SUGAR to that of Mr Garner, because Mr Atkinson was by far the more credible witness and the evidence he gave was logical and consistent. I find that there was no good reason for sales staff working for Intercad, including in particular Mr Garner, to access the VRC except for the limited purposes identified by Mr Atkinson. I am satisfied, on the totality of Mr Atkinson’s evidence, that Mr Garner had no proper reason to be accessing and downloading data in the VRC, and accordingly that any such access that took place was likely to have been for an improper purpose.

133    An important part of the applicants’ business is obtaining and acting upon “leads” as to prospective customers, which may lead to a sale of software or related services. From time to time, SolidWorks receives queries through its website from persons or companies who are interested in buying their products. The applicants refer to these enquiries as “inbound leads”. When SolidWorks receives an inbound lead, information about it is recorded in the VRC and can be viewed by selected VARs. When an inbound lead is made available to Intercad, it causes information about the lead to be entered into SUGAR.

134    The lead is assigned to an individual member of the Intercad sales team, who is then responsible for contacting the potential customer. All of the information that the sales team member needs to contact the lead is contained in SUGAR. If Intercad forms the view that an inbound lead represents a potential sales opportunity, it enters that into SUGAR, which then sends a notification to SolidWorks via another program called Topline. The evidence of Mr Garner in cross-examination revealed that Topline was a SolidWorks sales opportunity registration portal, where individual sales staff could enter sales opportunity information. That system would record who had registered the opportunity first, and would be used to allocate sales leads that were generated in this way. If Intercad is the first VAR to provide notice of its interest in the lead, SolidWorks will assign a priority to Intercad in respect of that lead. If the potential customer agrees to purchase any products from Intercad, Intercad places the relevant order through the order processing module in the VRC.

135    From time to time Central Innovation and Intercad also receive enquiries from potential customers via Intercad’s website. Mr Atkinson refers to those leads as “Intercad leads”. Those leads are entered into SUGAR and allocated to individual members of one of the applicants’ sales teams. Once again, all the information that sales team members need to contact Intercad leads are contained in SUGAR. Intercad leads which present likely sales opportunities are also notified to SolidWorks. Again, all customer orders resulting from Intercad leads are processed through the order processing module in the VRC.

136    The CI Group had in place a number of written policies which govern the use of technology and other matters related to activities within the workplace. One of those policies was the IT and Communications Policy, a document which again used the Central Innovation logo. A copy of that policy which had been in force since around 2 December 2009 is in evidence. Mr Garner’s affidavit evidence is that he does not recall being provided with a copy of that policy. In evidence is an email sent at 12.27 pm on 2 December 2009 to an internal email group address AllStaff@CentralInnovation.com.au by Ms Kerri McFarlane, Human Resources Manager at Central Innovation. That email refers to a link to a new IT policy that applies to all Central Innovation staff. I readily infer that the email and the link in it directed a recipient to the policy of which a copy is in evidence. Given that Mr Garner does not overtly deny being provided with that policy, and given that, although he was not able to find a copy of this particular email, Mr O’Kane found a copy of an email from Ms McFarlane to the same group email address on the Intercad Laptop, I find that Mr Garner was sent that email and thereby provided with that policy.

137    The IT and Communications Policy discussed above includes as a reference at its conclusion to “Code of Ethics COE 1.0”, which is another Central Innovation policy that is in evidence, albeit with a date in the footer of November 2011. That code of ethics policy refers to confidentially and confidential information. Both Contract One and Contract Two required compliance with such policies as varied from time to time, with Contract Two describing them as “practice outlines for the Company to abide by”. However, the policies were explicitly not incorporated into either contract, nor were they made separately legally enforceable. Contract One stipulated an acknowledgment by Mr Garner that non-compliance with any policy may result in disciplinary action, including termination of employment under the summary termination clause of that contract. This is a feature that was not retained in Contract Two, most likely because it added nothing of substance or value. Whether that is so or not does not matter, because of the finding that Mr Garner did not enter into Contract Two, such that the express acknowledgment in Contract One applies. Thus Mr Garner was aware of the policy and of the confidentiality expectations that applied to him beyond his contract of employment. It is part of the context in which his conduct falls to be evaluated.

138    Central Innovation’s sales and technical support team staff were required from time to time to meet with customers at the customers’ premises. To make it easier for them to perform their duties away from the office, Central Innovation provided laptop computers and other portable electronic devices to certain employees. Further, members of Central Innovation’s and Intercad’s sales and technical support teams were sometimes required to deliver marketing presentations and training seminars to customers or potential customers at conferences and other remote locations. Central Innovation and Intercad made available to those employees portable USB drives for the purpose of enabling them to save and take with them material such as product information brochures, promotional videos and slide decks for use in presentations. The use of all electronic devices provided to Central Innovation employees, including laptops, mobile telephones and USB drives was governed by the IT and Communications Policy and the terms of each staff member’s employment contract.

139    Mr Garner was responsible for supervising all customer relations and sales activities in relation to Central Innovation’s and Intercad’s customers located in Victoria and Tasmania. His duties included communicating with customers regarding subscription renewals and the purchasing of additional licences or support services from Central Innovation or Intercad and coordinating and supervising marketing and sales activities directed at prospective customers, including by ensuring that customer events and seminars took place at agreed intervals throughout each year. He was also responsible for managing the team of sales representatives who carried out those marketing activities. On any view, he had a senior and responsible role, with all that entails in terms of knowledge and understanding of the applicants’ business, especially that of Intercad.

140    Mr Garner and his team were given individual and team sales targets to meet each quarter. In March 2013, Mr Garner reported to Intercad’s national sales manager for Australia.

141    Among the customers in Victoria and Tasmania for whom Mr Garner had overall responsibility, he was expected to pay particular attention to certain customer accounts known as “focus accounts” which related to Central Innovation’s and Intercad’s most valuable and/or longstanding customers. In evidence is a list of all 87 customers for whom Mr Garner was responsible at different points during the time in which he was employed as Team Leader for Victoria. Also in evidence are extracts from SUGAR which record Mr Garner’s role in relation to those customers.

142    The Intercad Laptop was able to be connected to Intercad’s computer system. USB memory devices were freely available to staff in the Melbourne office where Mr Garner worked. Although Mr Atkinson was based in Sydney, he was fairly familiar with the way in which the Melbourne office worked, because he travelled there regularly. As detailed further below, there were policies in place about what should not be done with data, whether on a USB device or not. Mr Atkinson was taken to the IT and Communications Policy detailed above. He confirmed that despite a general prohibition on using any removable storage device, including a USB stick, to copy or transfer files from a CI Group computer, in practice some copying did take place for the purpose of the business, beyond the original use of giving a customer “product collateral”, which I took to mean more general information. However, this was not necessary because such information could be provided by electronic means, such as email. Mr Atkinson doubted that would be done for the purpose of improving marketing or assisting in marketing strategies, but did not think it would be wrong for data to be given to another employee in the office for such a purpose.

143    Mr Garner was also provided with access to the VRC, having received login details on 2 December 2009. He was provided with access to the VRC for the reasons outlined above. Mr Garner also had access to SUGAR for the purpose of carrying out his duties and responsibilities as a Team Leader. In about early July 2016, the access permissions in SUGAR pertaining to all persons employed in the position of Team Leader were modified so that no Team Leader was permitted to download any information stored within SUGAR. Those changes took effect while Mr Garner was employed as a Team Leader. It is impossible to conclude that Mr Garner would not have been aware of that important change. It is also likely that this was an early warning to Mr Garner of other changes that might be coming, especially in the context of what follows.

144    Mr Atkinson agreed with a proposition put to him in cross-examination that in June and July 2016, in his capacity as General Manager of Intercad and Intercad (NZ) Pty Ltd, he had discussions with Mr Garner, in his capacity as Team Leader for Victoria, about the possible restructure of Intercad and Central Innovation, and about the way in which the sales department might be restructured. While Mr Atkinson agreed that nothing in those conversations overtly suggested that Mr Garner’s position might be at risk in such a restructure, that does not exclude other workplace sources of information by which Mr Garner was capable of becoming aware that adverse changes might take place. This includes inferences he might readily draw about restrictions imposed on him and other Team Leaders on downloading information stored within SUGAR. Nor does it exclude Mr Garner having an apprehension that could have caused him to take steps to secure his position.

145    There is telling evidence adduced from Mr Garner in his cross-examination as to just how astute he was in forming the apprehension that his position may have been in danger. A revealing part of that evidence was when Mr Garner taken to a company email about pricing strategies sent to him by Mr Piper on 16 February 2011, that appeared to have been forwarded to his private email address after he found out about his redundancy. While denying that he had sent the email at the timestamp displayed on the printout of the email tendered, he accepted that he had sent it at some point and described that action as taking out “insurance”. When asked in what way it was like insurance, he replied that it was because he considered that the practice outlined in the forwarded emails was “illegal”.

146    There is no reason to conclude that this forwarding email was sent at any time other than the date and time stamp on its face, being at 5.12 pm on 22 August 2016, after Mr Garner was told he was redundant earlier that day. Mr Garner did not adduce evidence to rebut the statutory presumption that this timestamp was when the email was sent: see s 161(1)(c) and (d), Evidence Act.

147    Whether the forwarded 16 February 2011 email in fact involved any illegality is only important to this proceeding because of what Mr Garner did with it. It is clear that Mr Garner viewed such information as being some kind of bargaining tool that could “insure” his position. In context this meant keeping available to him information that might help him in the future to use against Central Innovation or Intercad. It is reasonably clear that the word “insurance” was not being used by Mr Garner in as benign a way as that word might ordinarily be used. Rather it seemed to be marshalled euphemistically, conveying something in the nature of improper leverage, more in the nature of blackmail, to attempt to get his own way on some issue or to avoid some adverse consequence. That approach by Mr Garner to taking steps with information to protect his position is a mindset that cannot help but inform the view to be taken about his activities that occurred at around the same time.

148    In about July or August 2016, Central Innovation decided to implement an internal restructure and as part of that determined that the positions of Team Leader were no longer necessary for the business. As noted above, Mr Atkinson had discussions with Mr Garner about a possible restructure before this decision was made.

149    Mr Atkinson also went on to say that he knew there was concern in the organisation on the topic of redundancy, and I find as a matter of logic that Mr Garner, given his senior role, would most likely have been aware of that. That is, he would have at least been aware of a risk of being made redundant, not least because of the restriction imposed on him and other Team Leaders in July 2016 on downloading information from SUGAR.

150    At 9.03 am on 18 August 2016, Mr Atkinson sent an email to senior staff within Central Innovation, with the subject line “Rumours” in which he referred to Mr Garner by his first name. The body of that email is as follows:

Just so you are aware there are many rumours flying around right now, the two most concerning ones for me are:-

1) It would appear that Dinesh and Gary have both heard the Team Leader role is redundant. Dinesh called me just now and asked me up front. I told him that the function “may” well not exist in a future structure however there are no plans to make the people redundant nor change the base salary.

2) There are rumours coming out of GS staff in Melbourne that in the new structure the sales staff will be able to sell all products from SWX, Archicad and the Ci range. I have said this is not strictly correct and everything will become clear when Max presents at his roadshow next week.

3) Furthermore there are rumours that we will be changing our business model to rental [licences]. I have categorically denied this but have said [that] Solidworks will be providing a Term Licensing option.

The sooner we get the real message out there the better.

151    An important thing to note from Mr Atkinson’s 18 August 2016 email above is that there were rumours “flying around” at that time, in context concerning the restructure being contemplated, and that Mr Atkinson was aware that Mr Garner had apparently heard that his Team Leader role was redundant. There is no reason not to accept that as evidence of the truth. This email, in the context of the evidence referred to above, is an important part of the reason that I do not accept Mr Garner’s evidence and submissions that he had no idea that he was about to be made redundant until that actually took place four days later on 22 August 2016, as detailed below. Those reasons are as follows:

(1)    Mr Garner’s evidence was given in a way which made it clear that he was very mindful of how the evidence he gave would affect the outcome of this proceeding, causing him to tailor parts of his evidence to assist him.

(2)    I did not find Mr Garner a reliable witness, and especially did not find him a reliable historian as to his own knowledge and understanding of events that were at the heart of this litigation, some of which are considered in more detail below. While it is not clear from the email when it was that the rumours started “flying around”, Mr Atkinson became aware of them at least a few days earlier, so they most likely would have been circulating before then.

(3)    Issues to do with the adequacy of the performance of Team Leaders had been brewing for some time. On 6 November 2015, Mr Atkinson sent an email to Mr Garner and other Team Leaders, to clarify expectations of them in that role, and the expectations of sales staff, and expressing increasing disappointment with continuing “below par performance for new sales in Intercad”.

(4)    Mr Atkinson discussed restructuring with Mr Garner in the middle of 2016.

(5)    In July 2016, Team Leaders were no longer permitted to download information from SUGAR.

(6)    Mr Garner downloaded reports from both the VRC and from SUGAR in the period of less than two months from about 30 June 2016 to days before his retrenchment on 22 August 2016, as considered in detail below.

(7)    Specifically, later the same day that the email reproduced above at [150] was sent, between about 2.10 and 2.49 pm on 18 August 2016, Mr Garner generated a substantial number of reports in SUGAR. The evidence establishing this is considered in some detail in the issues section dealing with the question of whether Mr Garner took and used confidential information belonging to the applicants.

152    On Monday, 22 August 2016, Mr Atkinson came to Melbourne for a meeting with Mr Garner, for the purpose of telling Mr Garner that his position had become redundant. He agreed that he probably said something like “I have something to tell you. It’s not what I wanted, but your position is redundant”. Mr Atkinson agreed that making Mr Garner redundant was indeed not something he wanted. Mr Atkinson had not said anything before that time which gave Mr Garner any warning that his position might be redundant. From a “factual point of view” this was the first express knowledge Mr Garner had that his position might become redundant, but for a week prior to that there were rumours around that one or two people might be made redundant, with Mr Atkinson not knowing how they started. Trouble in relation to the performance of the sales teams had been brewing since the end of 2015, and early signs consistent with significant change had been communicated to Mr Garner since July 2016. As already concluded, I do not accept that Mr Garner was unaware of the risk of redundancy well prior to being expressly told he was redundant. The weight of the evidence is against that naïve conclusion.

153    Shortly after that Mr Atkinson observed Mr Garner place the Intercad Laptop and his security pass on his desk and then leave the office for the last time. That accords with Mr Garner’s evidence that he left soon after being told he was retrenched, being that morning. The cross-examination of Mr Garner revealed that he forwarded a series of emails sent from his Intercad email address to his private Yahoo email address after 5.00 pm that day for no apparent proper purpose; that in 2012, 2013 and 2015 he had forwarded Intercad emails to his private Yahoo email address; and, that he was able to remotely access the Intercad email system to send and receive emails in a way that was not confined to use of the Intercad Laptop.

154    Mr Garner’s evidence is that he was unable to explain how emails were sent after 5.00 pm on 22 August 2016, after he said he had left the applicants’ premises for the last time. He certainly did not say he had done that by use of a device or remote log on after leaving the premises. I strongly suspect that Mr Garner knows exactly how those emails came to be sent, but did not see it as being in his interest in the outcome of this proceeding to disclose that. Be that as it may, the state of the evidence is such that it is abundantly clear that Mr Garner still had access to the Central Innovation email system after 5.00 pm on 22 August 2016. He used that access to forward at least one email to himself at his Yahoo email address, but it is unclear as to whether that access took place at the applicants’ premises or remotely.

155    My clear perception of Mr Garner was that he was an astute individual, well accustomed to looking after his own interests. I find that he would have detected that his job was in possible peril at the very first sign of that being available to him. That is an important finding to reach in assessing what he did in the period prior to him being formally made redundant. Intermediate findings of fact of this kind do not have to be found against any particular standard of proof, unless the relevant finding is an indispensable basis for any ultimate findings of fact: see by analogy Shepherd v The Queen (1990) 170 CLR 573. It is only ultimate findings on the issues in dispute that must be established on the balance of probabilities. This is notwithstanding such ultimate findings being contingent on a collective quality, and thereby weight, of evidence necessary to make any serious adverse findings, by the familiar application of the principles in Briginshaw v Briginshaw (1938) 60 CLR 336, as legislated by s 140(2) of the Evidence Act. That said, I am in any event satisfied that, on the balance of probabilities, Mr Garner was aware of a real risk of being made redundant well prior to that taking place on 22 August 2016, and that his appreciation of that possibility and thus his apprehension in that respect increased from the time that the option of downloading reports from SUGAR was at least meant to have been removed in July 2016.

156    The next day, 23 August 2016, Ms Wilma Finlayson, Human Resources Manager, wrote to Mr Garner on Central Innovation letterhead. The heading and contents of that letter, omitting unnecessary detail including how his entitlements had been calculated, are as follows:

Notification of Termination Due to Redundancy

We refer to our discussions with you. As you are aware Central Innovation Pty Ltd (‘CI Group’) has made a decision to restructure, resulting in your position being made redundant.

At our meeting yesterday we discussed the redundancy process with you, alternatives to termination of your position as Team Leader, including redeployment within CI Group and its related entities. You were given a list of these to consider. You have chosen not to apply for any of these roles. Unfortunately, there are no other alternative positions within CI Group and its related entities that you could reasonably be deployed to at this time and no other steps can be taken to avoid termination of your employment by reason of redundancy. Accordingly, as your position has been made redundant as of the 22nd August 2016, you will be retrenched and leave the business today.

As advised, the CI Group does not require you to work out your notice period. Your last day of employment with CI Group is today, 23rd August 2016. Your notice period will be paid out to you as soon as final calculations are checked and arranged with Payroll.

Attached to this letter is a schedule of estimated monetary entitlements that will be paid to you on the termination of your employment. …

157    The letter thus makes it clear that Mr Garner’s redundancy took place from that day, and reinforces the conclusion already reached that he had been employed by Central Innovation, and that it was the entity that decided to terminate his employment. The schedule enclosed with the redundancy letter referred to the entity used to pay Mr Garner on behalf of Central Innovation, Central Innovation Holdings.

158    In about early September 2016 Mr Garner rang Mr Atkinson, said that he was applying for a job at “Leap” and asked Mr Atkinson if he could put his name down as a referee. Mr Atkinson understood that Mr Garner was referring to Leap Australia, which he was aware was a company that distributes CAD software and other related products which are not developed by SolidWorks.

159    In about late November 2016, Mr Atkinson received a telephone call from Ms Leisha Micallef of SolidWorks. During the course of the conversation she advised Mr Atkinson that Mr Garner had left Leap Australia and joined NCCS, the second respondent (against whom the proceeding could not continue). NCCS was another SolidWorks VAR and was in direct competition with Intercad, and, to the extent that Central Innovation was involved in the sale of SolidWorks CAD software, or provision of support in relation to that software, was in indirect competition with Central Innovation. Mr Garner’s defence only denies Central Innovation being in direct competition with NCCS.

160    Competition law, which does not need to be considered in any detail, talks in terms of being able to constrain the operations of another entity in relation to the supply of goods or services: Australian Competition and Consumer Commission v Cascade Coal Pty Ltd [2019] FCAFC 154; 374 ALR 90 at [85] and [157], citing and quoting respectively Australian Gas Light Company v Australian Competition and Consumer Commission (No 3) [2003] FCA 1525; 137 FCR 317, where French J observed at [350]):

Competition in a market is not assessed by a snapshot view of participant behaviour at a particular time. The theatre of competition is a theatre of real actors and shadow actors. The shadows are cast by the potential for new entry. The competitive process is informed by the rivalry of the participants and the potential rivalry of potential participants. Competition so understood is conceptually distinct from the idea of the market and the elements of market structure which may constrain or facilitate it.

161    The Full Court in Cascade Coal commented at [158], immediately after that quote (emphasis added):

None of this is controversial, but nor does this assist the [Australian Competition and Consumer Commission (ACCC)]. It may be accepted that competition and likely competition requires looking at actual and potential dynamics. It may be accepted that shadow actors and their actual and potential behaviour are to be considered. And there are two types of shadow actors to consider. One type is a potential actor who aspires to be an actual actor. Another type is an entity who does not aspire to be an actual actor but controls or aspires to control an actual actor. French J was dealing with the first type. But even to include the second type does not assist the ACCC.

162    NCCS was plainly enough in direct competition with Intercad and, at the very least, in indirect competition with Central Innovation. Central Innovation was at least a shadow actor in competition with NCCS by its control of, and involvement in the operations of, Intercad, and as the parent of Intercad stood to gain from Intercad’s commercial success. As such, Central Innovation had a real and legitimate interest in keeping information about customers, relevantly SolidWorks subscriber customers, confidential, as that information could harm them in that competition. NCCS had corresponding incentives to obtain and use such information to advance its competitive objectives.

163    At 2:09 pm on 23 November 2016, Mr Garner sent an email to Mr Mark Ryan, a contractor employed by the Defence Science and Technology Organisation, a Commonwealth Government agency, now a part of the Department of Defence. The subject line was “SOLIDWORKS contact details at NCCS”. The email was as follows, omitting salutations (emphasis in original):

Just a quick note to say hello and introduce myself. I am the new Sales Manager with NCCS your local SOLIDWORKS channel partner. My Name is Gary Garner, and I am replacing Steven Komninos who has moved on to the next chapter of his career. N.B. Steven’s old mobile number has been discontinued so you can contact me directly on [mobile number] for any queries.

I have been in the CAD industry for over a decade, with seven years in the SOLIDWORKS community in Victoria. As your trusted strategic partner, I am looking forward to adding value throughout the life of your technology investment, to help you maximise your use of the application as your knowledge deepens and as your business grows.

I specialise in SOLIDWORKS, Data Management, Integrating SOLIDWORKS and related products into business processes and workflows and SOLIDWORKS Simulation.

I am very excited about my new role at NCCS, and I look forward to working with you throughout the next few years.

I would like to hear from you if you have any comments or questions.

You can connect with me on LinkedIn

[LinkedIn link]

Please call or e-mail if you have any queries.

164    Some 11 minutes later Mr Ryan forwarded that email to Suzanne Holden at Intercad as follows after the salutation:

Is there any particular reason why my contact details may have been passed on to this 3rd party without my consent? (see email below) It appears to be directly related to Solidworks, and a quick check of my correspondence shows Intercad (aside from 3DS) as the only external party I have had communication with on the topic. There should be no reason for me to receive correspondence from anyone else, and may be an indication of a data leak at your end?

Are you able to highlight what other information may have been passed onto [sic] this third party?

165    Ms Holden replied less than half an hour later, stating after the salutation (emphasis in original):

Thank you very much for forwarding this e-mail to me.

Gary Garner is a former employee of Intercad.

I have brought this to Senior Management’s attention.

Intercad do NOT share our customers [sic] information and we do have security measures in place to enforce this policy.

We are starting an investigation with SolidWorks regarding this matter.

Intercad management will be in touch with you at some point very soon.

166    The email chain starting with Mr Garner’s email and ending with Ms Holden’s reply was forwarded to Mr Atkinson. Two days later, on 25 November 2016 at 3.00 pm, Mr Atkinson sent an email to Mr Ryan as follows (omitting salutations and signature):

Suzanne has passed your correspondence on to me. Gary Garner was a previous employee of Intercad who left approximately 2 months ago. During his time at Intercad Gary would have had access to your contact information as a client of Intercad’s.

Please note that we are taking this matter very seriously. Our IT department are investigating what additional information (if any) may have been copied and we have contacted our lawyers to discuss options to ensure that any information (including all copies) that may have been taken are returned to us and to consider other potential legal action that may be available to Intercad based on the apparent breach by Gary of his ongoing confidentiality obligations contrary to the terms of his employment agreement.

We will be in touch as soon as possible to highlight what additional information (if any) may have been copied.

If you have any questions or would like to discuss this matter directly please do not hesitate to contact me.

167    In keeping with the email sent to Mr Ryan, Mr Atkinson caused an investigation to be carried out, the initial results of which are addressed below.

168    Mr Atkinson sent a further email to Mr Ryan at 5:04 pm on 12 December 2016, which was copied to Mr Douglas Binns, as follows (omitting salutations and signature):

Further to my earlier email below I thought I would give you and [sic] update. So far our investigation has established that Gary Garner may have downloaded customer information but it would appear not from our systems but those of DS Solidworks Corporation. We do not have any conclusive evidence as yet but have secured the services of a forensic IT specialist to further investigate.

I will keep you updated as things develop. In the meantime can I take this opportunity to introduce Douglas Binns who is our new Key Account Manager looking after our top twenty accounts across ANZ of which DSTO is one. Douglas will be in touch to discuss our ongoing business relationship in due course.

169    On 16 January 2017, Mr Atkinson sent emails to a select number of Central Innovation’s and Intercad’s key customers in Victoria and Tasmania, stating that Intercad was investigating a potential breach of confidential information. The recipients of these emails were confined to customers who had been included in a particular data file called Output 26 which is considered in further detail below. Mr Atkinson asked if the customers could “revert straight back” to him if they had been contacted by any party other than Intercad concerning their SolidWorks licences or subscription services of those licences at any time since the beginning of November 2016 to the date of the email and asking for particular details about any such contact.

170    Mr Atkinson received two responses to those emails the same day, 16 January 2016:

(1)    At 2:01 pm Mr Atkinson received an email from Mr Nick Neville, the product design manager of a business called Adshel, attaching a copy of an email sent by Mr Garner to Mr Neville on 23 November 2016, and his response to the effect that they already had a provider of SolidWorks taking care of their annual subscription. The email that Mr Neville received from Mr Garner had the same content as the one that Mr Garner sent to Mr Ryan, reproduced above, later on the same day.

(2)    At 2:30 pm, Mr Rod Sultana, the Engineering Manager at a business called Natures Organics, forwarded an email that had been sent by Mr Garner to a former employee of Natures Organics on 16 December 2016. The former employee at Natures Organics was Mr Bill Seremetis. The content of the email that Mr Garner sent was the same as the emails sent to Mr Ryan and to Mr Neville. The reply by Mr Sultana to Mr Garner advised that Mr Seremetis no longer worked at Natures Organics and asked him to update his contact details. In relation to that reply email, Mr Sultana’s email to Mr Atkinson said that when he was contacted by NCCS, he assumed it was Natures Organics’ current supplier, so gave Mr Garner new contact details to update. He noted this would explain why Intercad’s emails were still being sent to Mr Seremetis and expressed interest in finding out what the findings of the investigation were.

171    The next day, 17 January 2017, Mr Atkinson received the following telephone calls:

(1)    A call from Mr Mark Turner of APS Innovations, during which Mr Turner said that he was calling about the email the previous day and described receiving an unsolicited telephone call from Mr Garner in November or December 2016. Mr Turner said to Mr Atkinson that Mr Garner had suggested that his firm should move their licences over to NCCS as they were due to expire in December 2016, but that he had informed Mr Garner that they were happy with their current suppliers and that Mr Garner should not call back.

(2)    A call from Mr Jason Wiggins from Modra Technologies Innovations, during the course of which he said to Mr Atkinson words to the effect of “John, in relation to your email about the data breach, Gary Garner called me a little while ago asking if we were happy with you guys and whether we wanted to switch to NCCS”.

172    Throughout the time that Mr Atkinson worked for Intercad and Central Innovation, Intercad purchased SolidWorks products in United States dollars. In his role as General Manager of Intercad, he received price lists and other pricing information from SolidWorks which related to SolidWorks’ products that Intercad sold to its customers from Central Innovation’s finance director, and reviewed these on a regular basis. As noted earlier in these reasons, that pricing information was usually provided to Intercad by email. He produces a sample email, and also, on a USB stick, copies of SolidWorks’ pricing data for the period from about November 2016 to about March 2019.

173    The price charged to customers by Intercad for SolidWorks products reflected SolidWorks’ recommended retail price, converted to Australian dollars with a small currency hedging component. Whilst SolidWorks’ recommended retail price remained constant during the period from May 2016 to May 2019, the prices charged by Intercad to its customers fluctuated due to movements in the exchange rate between Australian and United States currency.

174    During the period in which Mr Atkinson worked for Central Innovation and Intercad:

(1)    he did not receive from Mr Garner any oral or written communication by which he sought consent to download, copy or otherwise remove any information from the VRC or SUGAR, including any of the information contained in certain output files and SUGAR reports (defined below) that he reviewed; and

(2)    he did not personally provide any such consent.

Mr Garner has never delivered to Mr Atkinson any USB drive or any other portable electronic device containing any information that Mr Garner downloaded, copied or otherwise removed from the VRC or from SUGAR.

Overview of the applicants’ case giving rise to the key issues in dispute

175    Mr Garner contends in closing submissions that the applicants have failed to prove that he removed any confidential information from their custody, possession or control, either during the course of his employment or upon termination of that employment. He asserts that his evidence that he did not do so was uncontroverted by any evidence adduced by the applicants. I attach very little weight to Mr Garner’s evidence unless corroborated or against interest, due to his generally very poor credit and lack of reliability as a witness. However, it remained for the applicants to make good their case, not for Mr Garner to succeed in denying it. Nonetheless, it is useful to consider carefully the shortcomings that Mr Garner relies upon, and the applicants’ response, as that focuses attention on the nub of the dispute as to what to make of the evidence.

176    Mr Garner says that it has not been proven that he “removed” any confidential information from the custody, possession or control of the applicants. I take this to be a denial that he ever made any copy or reproduction of any information in SUGAR or in the VRC and took that with him for possible later use. That denial in part depends upon characterising the information that the applicants contend that Mr Garner took in quite a narrow and restrictive way, and in confining attention to direct evidence, limiting inferences properly available to be drawn from the totality of the evidence.

177    The competing arguments as to the inferences which could be properly drawn were fiercely contested. The applicants’ response to Mr Garner’s attempt to limit the confidential information relied upon was as follows:

(1)    The confidential information which they contend Mr Garner downloaded, took and used from the VRC and from SUGAR went beyond:

(a)    customer contact information to include the types of software licences and subscriptions sold to particular customers, pricing information, software licence expiry dates, information about inbound leads and communications between the applicants’ sales staff and current and prospective customers; and

(b)    the reports in evidence that the applicants contend were directly proven to have been generated by Mr Garner from the VRC and downloaded ultimately to a USB drive; and

(c)    reports that the applicants contend it could be inferred Mr Garner generated from SUGAR and in some way copied,

extending to a broader range of information that Mr Garner had available to him in SUGAR and in the VRC, including during the course of protracted remote online access to SUGAR.

(2)    The contractual definition of “confidential information” in Contract One (and Contract Two if that had applied) was not limited to customer contact information, but rather extended to all information relating to the business interests, methodology or affairs of the CI Group, including but not limited to products, prices or data, price lists, or lists of clients or customers of the CI Group and any information of a commercial, operational, marketing, business, technical or financial nature relating to the affairs or business of the CI Group.

(3)    Mr Garner appeared to be operating under a misapprehension that the applicants were required to prove that the VRC Output Files and SUGAR Reports (defined below) that were generated and saved, and any other information from SUGAR that it could be inferred was accessed and obtained by Mr Garner, were uploaded onto the NCCS system in the format in which they were taken by Mr Garner. To the contrary, the applicants assert that it is the information within any such reports or other digital records that is confidential. While direct proof that particular documents have been transferred onto NCCS’s computer systems would have proven their case on the taking of confidential information beyond doubt, the absence of such precise evidence does not rule out the likelihood that Mr Garner nonetheless used the confidential information contained in those files. Further, as I understand the applicants’ case and argument, the most likely place for either such files containing that information, or the information itself, was the NCCS Laptop that Mr Garner took home on 23 December 2016, and which is now missing and, according to Mr Garner, stolen.

178    Mr Garner’s primary response to this broader confidential information case asserted by the applicants is that this goes beyond the case as pleaded, such that this is not part of the case that he was called upon to meet; and secondarily, that in any event the asserted obtaining and use of any of this broader pool of information, and indeed the narrow pool of information that Mr Garner says is covered by the applicants’ pleading, is nothing more than speculation, which will not suffice.

179    The first part of Mr Garner’s argument depends upon a characterisation of the applicants’ case as pleaded being confined to VRC reports and SUGAR reports capable of being shown to have been generated by Mr Garner, and excluding any broader pool of information available from SUGAR. The availability of such further information is sought to be proved by extracts from SUGAR that are in evidence, but for which there is, at most, evidence of access to SUGAR and thus opportunity to obtain information and take it, but no direct evidence of any reporting or other copying taking place. That is, there is no direct evidence of that opportunity having been availed of by Mr Garner. The second part of this argument, independently of any alleged pleading deficiency, concerns the metes and bounds of inferences that may be drawn from a disparate range of evidence, including the proper use that can be made of Mr Garner’s credit as a witness, especially regarding his claimed lack of use of SUGAR and his assertion that the NCCS Laptop was stolen.

180    I am satisfied that the pleading objection raised by Mr Garner is without substance. It entails reading the relevant parts of the statement of claim not as alternatives, but instead as involving otiose repetition or emphasis. For the reasons that the applicants give, as summarised above, and also by a plain and linguistically sensible reading of the statement of claim, I accept that the confidential information in issue is not as limited as Mr Garner contends, but rather is as broad as the applicants assert. In any event, even if the statement of claim could be read as not extending to the broader source of information within SUGAR that the applicants rely upon, I consider that Mr Garner was on sufficient notice that the case being advanced was not so constrained and conducted the substance of his case upon that basis. It is true that the applicants’ opening submissions focused on information from SUGAR that was derived from replicating the reports module uniform resource locators (URLs) found on the Intercad Laptop. However, the last part of Mr O’Kane’s first report analysed the difference between sessions recorded on the SUGAR server and those recorded on the Intercad Laptop, finding remote access using Mr Garner’s logon but not using the Intercad Laptop, reproducing the data in a table. Mr O’Kane was cross-examined about this evidence in some detail, making it clear that Mr Garner was on notice that part of the applicants’ case did involve an allegation of obtaining data from SUGAR other than via the Intercad Laptop, and therefore was not confined to the 18 SUGAR Reports derived from the report module URLs found on the Intercad Laptop. This is detailed in the evidence considered below.

181    What is left for determination is the sufficiency of the evidence to support the conclusions that the applicants advocate for. This is both in respect of the narrower pool of information (the VRC Output Files and the SUGAR Reports, as defined below), and the broader pool of information available in SUGAR that was in evidence by way of SUGAR extracts produced by Mr D’Emilio, and complex processes in determining inferences that can properly be drawn from the evidence, taken as a whole and with due regard to the overall context. As the applicants acknowledge, the proof of the obtaining of their confidential information in the absence of finding such information in its directly downloaded form made proof of their case much more difficult. That includes the thorny issue of what use can properly be made of the NCCS Laptop being missing, whether by reason of it being stolen, as Mr Garner contends, or by concealment or even destruction, as is the applicants’ case. As already noted, the missing NCCS Laptop was easily the most likely place that any confidential information that had been taken by Mr Garner was to be found.

Issue 1: Did Mr Garner take and use information that was confidential?

Introduction

182    The VRC data is alleged to have been contained in two reports, said to have been generated by Mr Garner on 30 June 2016. Those reports are in the form of spreadsheets. The format of those spreadsheets changed from the version that was downloaded to a version that was saved and copied, but the data within them did not change. These spreadsheets are referred to by the parties and in these reasons by part of their computer generated file names as Output 26 and Output 27, and together referred to in these reasons as the Output Files. That is a short form for referring to spreadsheets that were downloaded as “output (26).csv” and saved and copied as “output (26).xlsx”, and downloaded as “output (27).csv”, and saved and copied as “output (26).xlsx”.

183    The spreadsheet name suffix “.csv”, stands for “comma separated values”, being a file which is largely raw data without versatility features such as compression of the data, and which can be opened and saved by a range of proprietary software (that is software developed or owned by a someone, usually a computer company) which has additional features. The nature of a .csv document may be a matter of common knowledge as they are used in day-to-day activities such as internet banking. For spreadsheets, probably the best-known proprietary software is Microsoft Excel, using a spreadsheet name suffix in the current version of that software “.xlsx”. A key relevant feature of Excel is data compression which greatly reduces the size of the file.

184    The SUGAR data is alleged to have been contained in:

(1)    18 reports, also in the form of spreadsheets, being derived from a subset of report module activities in SUGAR and said to have been generated by Mr Garner in the final three months of his employment between May and 22 August 2016; and

(2)    other data able to be obtained from SUGAR by Mr Garner, most likely by remote access using a device other than the Intercad Laptop, with the evidence being said to be capable of supporting an inference that this is what he in fact did.

185    The wider pool of SUGAR data that was available to Mr Garner to access, copy, and take is proven by the extracts from SUGAR produced by Mr D’Emilio and admitted into evidence. The basis for drawing of an inference that, on the balance of probabilities, this in fact took place is addressed later in these reasons.

186    There was evidence that data had been obtained from the VRC, and from which it could be inferred had been obtained from SUGAR by reason of 18 report modules facilitating the generation of such reports. Copies of this data were put into evidence in the form of spreadsheets. The VRC data was found on the Intercad Laptop. The SUGAR data that Mr Garner obtained was recreated by re-running the report modules found on the Intercad Laptop, using 2016 backup tapes for SUGAR to supply data in existence at the time. The Intercad Laptop itself is in evidence, but it is this data found on that laptop which is focus of this aspect of the dispute.

187    There is no evidence, nor even any suggestion made, that the Intercad Laptop was used by anyone other than Mr Garner, let alone that anyone else was responsible for any data that was stored on it. The evidence, taken as a whole, satisfies me that the Intercad Laptop was used by Mr Garner at all relevant times and that he is therefore responsible for the relevant VRC data and SUGAR search module URLs being on that laptop. The same is true of anything that was imported to or exported from that laptop during the time of his employment.

188    Proof of the relevant contents of the Intercad Laptop relied upon by the applicants was adduced in the form of two reports annexed to affidavits from Mr O’Kane, a forensic computer expert, as detailed below. Mr O’Kane was only briefly cross-examined, with neither his expertise, nor his conclusions, being challenged. The main point apparently sought to be made in cross-examination was to challenge the suggestion that there might have been something covert in the obtaining or saving of the data.

189    Mr Garner sought to make something of the fact that Output 26 was not found to have been removed from the Intercad Laptop in an examination by a prior computer forensic expert employed by the applicants to investigate the emails that were sent by Mr Garner from NCCS. Presumably this point was advanced so as to cast doubt on him having obtained the Output 26 data, and to support his recollection discussed below of downloading a single file from the VRC, implicitly, but not explicitly, denying removal of both of the Output Files. It is not apparent why it was that Output 26 was found by Mr O’Kane, but not by the applicant’s initial expert engaged prior to the commencement of this proceeding, Ms Leanne Balit whose report was in evidence, but peripheral to the case as finally presented. It may be that Mr O’Kane had more information, or more time to conduct a more thorough search, or used different forensic equipment or techniques, or even was perhaps in some way more skilled than his predecessor. However, given that Mr O’Kane was not challenged as to the finding of Output 26 on the Intercad Laptop, that point goes nowhere and will not be considered further.

190    The information available in the Output Files and/or the SUGAR Reports that the applicants rely upon as having a confidential character as pleaded included customer contact information, the types of software licences and subscriptions sold to customers and their expiry dates and pricing information. From the summary of the VRC and SUGAR in the background information above, and from the face of the reproductions of the Output Files spreadsheets, and 18 SUGAR reports in evidence, it was not seriously in doubt that this information was available to Mr Garner and was in a form that was capable of being copied and sent or otherwise taken away by him.

191    Although Mr Atkinson accepted during cross-examination that not every single piece of data would necessarily be confidential (recognising, in particular, that customers’ public website addresses are not confidential information), he gave evidence that information to be found in the Output Files spreadsheets was not publicly available and in the 18 SUGAR report spreadsheets was confidential. That evidence must necessarily equally apply to like information able to be obtained from SUGAR more generally. It was also information that fell within the broad definition of “confidential information” in cl 14.1 of Contract One (and of Contract Two), the removal or disclosure (respectively) of which was expressly proscribed in the absence of written consent as required by cl 16.1 of Contract One (cl 15.1 of Contract Two). It was not suggested that written consent had ever been given, and in the context of all the evidence I am satisfied would never have been given.

192    Mr Garner for the most part did not challenge the confidential nature of the information. As discussed below, I accept that the information in question was confidential in nature. His case was rather that the applicants did not prove that he removed any such confidential information derived from the Output Files from his employer’s premises. Further, his case was that he had not generated, let alone removed from his employer’s premises, any confidential information derived from any of the SUGAR Reports, nor any confidential information from SUGAR more generally of the kind found in the SUGAR extracts in evidence other than in performance of his duties as an employee, on his case, of Intercad. He necessarily therefore contends that he did not use any such information, let alone misuse it in breach of his legal or equitable obligations.

Data in the Output Files

Copying and removal of information

193    The applicants allege that, using the Intercad Laptop, Mr Garner:

(1)    accessed the VAR on about 30 June 2016 between about 10.19 am and about 10.22 am (first period), and again between about 10.29 am and about 10.35 am (second period);

(2)    during the first period, downloaded Output 26 in .csv format, saved it in Excel .xlsx format, and copied it in that Excel format to an external USB drive – this data contains a list of all customers, some 5,784 in total, who at the relevant point in time were registered to Intercad in the VRC;

(3)    during the second period, downloaded Output 27 in .csv format, saved it in Excel .xlsx format, and copied it in that Excel format to the same external USB drive – this data contains a list of all inbound leads within the VRC that had been allocated to Intercad.

The evidence of Mr O’Kane by which those allegations are primarily sought to be proven is considered below.

194    Mr Garner’s affidavit evidence in response to the above allegations, affirmed after Mr O’Kane’s affidavit, reproduced and adopted part of an affidavit he affirmed much earlier and much closer to the events in question, on 6 January 2017, in the very early days of this proceeding. That part of his earlier affidavit is to the following effect (with some commentary added):

(1)    In relation to the alleged downloading from the VRC, while he did not recall the precise date, or that the alleged downloading was done on two occasions, what stood out in his mind is that he downloaded a large file from the VAR portal in June 2016, but cannot confirm that it was the same as the files referred to in the case pleaded against him. Thus Mr Garner at least implicitly admits to downloading a large volume of data from the VRC in June 2016, although he says he only recalls doing this on one occasion.

(2)    He recalled downloading the information and uploading the same onto a USB drive due to the file size. The size of the files is addressed below: in short, the two uncompressed .csv format files that were downloaded were much larger than the corresponding compressed Excel .xlsx format files that were created and saved without any change in content and then copied to the USB drive.

(3)    He gave the USB drive to a salesman who reported to him, Mr Luke Kenny, to ascertain whether the information could be used for marketing purposes, an enquiry he says that he made due to the sales team’s dissatisfaction with the performance of the marketing department.

(4)    Mr Kenny told him that he did not believe that the information could be used.

(5)    He does not recall receiving that USB drive back from Mr Kenny. Importantly, this cautious but quite precise evidence falls short of denying receiving the USB drive back from Mr Kenny, and sidesteps someone other than Mr Kenny returning the USB drive to him.

(6)    USBs were a common sight at Intercad and were readily available. This is not in issue.

(7)    He did not, at the time his affidavit was affirmed on 6 January 2017, have the USB drive that contains either .csv file. This was updated by reiteration in his 28 October 2019 affidavit, in which he said that he did not have a USB drive containing any of the four .csv and .xlsx files referred to at item (2) above.

(8)    He did not remove any such USB device from Intercad after his employment was terminated on 22 August 2016. This too is a carefully phrased and precise item of evidence, referring only to the small window of time on 22 August 2016 between when Mr Garner was told that he had been made redundant and when he left the premises for the last time that day – on his account, a very short period of time as his evidence is that he left almost immediately upon being told he had been made redundant. It avoids any reference to (or denial of) removal of a USB from the applicants’ premises at any time prior to being told his Team Leader position was redundant, and makes no reference to the SUGAR data (albeit that he implicitly denies generating the SUGAR Reports in issue, which cannot be accepted). This is despite the fact that Mr Garner’s redundancy was not made known to him until almost two months after he first downloaded and saved the files to a USB drive, and almost 10 months after the first overt indication of any dissatisfaction with the sales Team Leaders’ and managers’ work in the form of Mr Atkinson’s 6 November 2015 email referred to above. It seems that this omission may have been due to this aspect of Mr Garner’s case depending upon acceptance that the redundancy was such a shock or surprise that he had no time to do anything improper as alleged. As will be seen, by reason of the objective evidence, including the chronology of events, I do not accept that Mr Garner had no inkling that his job may have been in jeopardy, even if redundancy at that time may not have been obvious.

195    Mr Garner’s evidence therefore goes no further than the point of him having a copy of Output 26 and Output 27 on a USB stick. It is then a question of what proper use can be made of other evidence to support any inference as to the most likely reason that Mr Garner downloaded, saved and copied that customer and leads information, and therefore what he is most likely to have done with it.

196    Mr Atkinson was cross-examined and re-examined about this part of Mr Garner’s evidence. In cross-examination, he had read to him the part of paragraph 100 of Mr Garner’s affidavit from which the summary above concerning downloading data from the VRC is based, up to item (5) of that summary. In evidence in cross-examination, Mr Atkinson did not recall any dissatisfaction with the marketing department on the part of the sales team, and questioned why there was any need to get any such data from the VRC when it was already available. In re-examination, Mr Atkinson clarified that he was concerned about Mr Garner downloading the Output Files from the VRC because all the data was already available in SUGAR. As to the supposed use to be put to the information deposed to by Mr Garner (that is, his evidence of making an enquiry of Mr Kenny), Mr Atkinson could not see why the list of existing customers (that is, the data in Output 26) was relevant to any marketing campaign other than for sending a brochure to thousands of people.

197    Until Mr Atkinson came across Mr Garner having downloaded data from the VRC, he and the management of Central Innovation were not even aware that this sort of information in the VRC could be downloaded. That was why there was no express policy explicitly preventing this from happening. I accept that evidence from Mr Atkinson. Remembering that VRC access was quite limited under the terms of the Distribution Agreement, I infer that downloading information from the VRC could not have been prevalent or even commonplace in the conduct of the applicants’ business (or at least known to be prevalent or commonplace), because it is inherently unlikely that this would have been happening without Mr Atkinson becoming aware of it before it was done by Mr Garner. That is so despite the evidence of the computer expert, Mr O’Kane, indicating that Mr Garner had been doing such downloading since at least 2014. I therefore do not accept Mr Garner’s evidence that such downloading was ordinarily done by him, in the sense that he intended to convey that this was open or normal, or that any other sales staff working for Intercad did so (again at least openly), given the lack of any evidence to that effect from anyone other than Mr Garner. As a result, I am unable to accept that Mr Garner had, or believed that he had, any implied permission to download data from the VRC: neither Central Innovation nor Intercad can be taken to have given permission to do something they were not aware could be done, and which was not otherwise routine or an adjunct to what was ordinarily done.

198    Mr Kenny, the salesman to whom Mr Garner gave the USB with contained the Output Files, was not called by either side as a witness. No question was put to Mr Atkinson about him still being employed by Central Innovation, or any other company in the CI Group, or otherwise being available to give evidence, a common foundation laid for a Jones v Dunkel (1959) 101 CLR 298-style inference being sought to be drawn. The Court does not know whether or not Mr Kenny is, or is not, still employed by any company in the CI Group, or whether he was available to be called. That said, nor did the applicants adduce any evidence that Mr Kenny was no longer employed, or otherwise not available to give evidence. The usual, or at least common, clear foundations for drawing, or not drawing, the inference are absent. It was for Mr Garner to satisfy the Court that the inference he sought should be drawn. He has not so done so. In all the circumstances, I am not willing to draw any inference against either side by reason of Mr Kenny not being called. Rather, the appropriate course is to consider the evidence that is before the Court, rather than draw any inference about the absence of Mr Kenny as a witness.

199    For completeness, even if I was to draw an inference against the applicants that Mr Kenny was not called because his evidence would not assist their case, it is difficult to see what real benefit would accrue to Mr Garner from such an inference in this particular situation. It is difficult to give any content to such an inference, given the spectrum of reasons why such evidence might not help, such as Mr Kenny not having any recollection either way.

200    What matters is that the absence of Mr Kenny means he cannot in any way corroborate Mr Garner’s account of events. The most that an inference drawn from the absence of evidence from Mr Kenny could do is provide a possible basis for more readily accepting the evidence of Mr Garner on this topic. It does not avoid the need to decide whether or not to accept Mr Garner’s evidence about his dealings with Mr Kenny. Such an inference cannot rescue the evidence that is available if it is found to be seriously wanting, as I find, given both Mr Garner’s general lack of credit and reliability, and the way in which his written evidence on this topic is so carefully expressed to rob it of much evidentiary worth, as set out above.

201    The applicants relied upon the expert computer evidence of Mr O’Kane in relation to the removal of information. Mr O’Kane produced a primary report dated 20 September 2019, and a supplementary report in response to Mr Garner’s 28 October 2019 affidavit, dated 21 November 2019. The conclusions I reach from the relevant parts of Mr O’Kane’s primary report can be shortly stated.

202    The Intercad Laptop was used by someone logged in as Mr Garner to download and transfer two files from the VRC system to an external USB drive on 30 June 2016 as follows:

(1)    At 10.19 am, the file “output (26).csv” was downloaded to the Intercad Laptop from the web server varportal.solidworks.com (that is, the VRC) and I infer automatically saved in a download folder with the file path “/Users/gary.garner.CI.000/Downloads”. Upon being downloaded it was either immediately, or very soon after, opened in the Microsoft Excel program, and thereupon created and then saved as an Excel file “output (26).xlsx” in the same location as the original .csv file. A copy of that Excel file was then saved in a folder with the file path “/Users/gary.garner.CI.000/Documents/My Documents/Data”.

(2)    About three minutes later, at 10.22 am, one of the Excel format versions was saved onto a USB drive. I infer that it is most likely that was the Excel format version in the subfolder titled “My Documents/Data” because that would have been easier to access, and because the Output 27 .xlsx format file next considered was not saved in the download folder and only saved in the “My Documents/Data” folder. All three versions (one in .csv format and two in Excel .xlsx format) had 19,067 rows of data (records) other than headings. The .csv format file is just over 11 megabytes (MB), but the two Excel format files are each just over 3 MB in size. By 2016, a 3 MB file was not very large, especially for a company dealing in 3D CAD software, and certainly able to be emailed.

(3)    Soon thereafter, at 10.29 am, the file “output (27).csv” was downloaded to the Intercad Laptop from the web server varportal.solidworks.com (again, that is, the VRC) and, automatically I infer again, saved in the “Downloads” folder, the file path for which is set out at item (1) above. Almost immediately that .csv file was opened, I infer in Excel and about six minutes later created and then saved as “output (27).xlsx” in the “My Documents” folder (the file path for which is set out at item (1) above), without an Excel copy being created in the “Downloads” folder.

(4)    About nine seconds later, the Excel format version was copied to the same USB drive as the Output 26 data in that format had been. The .csv version had 50,940 rows of data (records) and was just over 16 MB in size. The Excel format version was the same, so would have the same number of records, but was smaller at just under 5.5 MB, again not a very large file for a 3D CAD company, and still well able to be emailed.

Evidence on confidential information being provided to NCCS

203    The evidence going to proof that Mr Garner took from the applicants’ data containing confidential information, or otherwise had access to such information and the opportunity to take it, also assists in proving that it was used. Similarly, evidence going to proof that Mr Garner used confidential information also assists in proving that it was taken in the first place. The two bodies of evidence are, to that extent, not mutually exclusive, but rather overlapping and complementary. During the interlocutory phase of this proceeding, on 9 May 2018, the Court appointed an independent computer expert, Mr Graeme Conn, to answer certain questions designed to assist with the discovery process and from that, the pleading process. Later, supplementary questions were also asked of Mr Conn. He produced a primary report dated 3 August 2018 and a supplementary report dated 16 January 2019.

204    Mr Conn was asked to examine, inter alia, the following:

(1)    electronic data provided to the Court by a prior computer expert, being hard disk images taken on 10 February 2017 from a desktop computer that Mr Garner used at NCCS;

(2)    two USB sticks containing a backup image made on 10 February 2017 of an NCCS iPhone 7 said to be used by Mr Garner;

(3)    NCCS’s cloud-based computer system for limited purposes associated with Mr Garner’s NCCS Laptop that he said had been stolen on 23 December 2016;

(4)    certain other mobile telephone handsets including one provided to Mr Garner by NCCS, and his personal mobile telephone; and

(5)    an electronic backup of NCCS’s data files in relation to Mr Garner’s email account with its email provider.

205    It is worth noting at this stage that Mr Garner seeks that the Court draw an inference that because Mr Conn could not find certain information, it was not there. At the very least Mr Garner seeks to cast doubt on the evidence by which the applicants seek to prove their case. In considering that evidence it is important to bear in mind that this aspect of the applicants’ case turns on proving, on the balance of probabilities, that confidential information was removed from their premises by Mr Garner. They do not need to establish the particular form in which it might have been removed, although doubtless proof of copies of the Output Files on a device in Mr Garner’s control would have been practically unanswerable evidence of such removal.

206    It was not seriously in doubt that Mr Garner had used the laptop provided to him by NCCS, which he claimed was stolen on 23 December 2016, and that he did so by connecting it to NCCS computer systems. However, Mr Conn was unable to confirm that this was in fact the case except by reference to what he was told. Mr Conn’s evidence is to the effect that there was not a single computer system at NCCS, but rather a series of ad hoc services. He found that there was no backup of the data from the NCCS Laptop on the NCCS system. Similarly, no information could be located to show that Mr Garner was in possession of the NCCS Laptop on 23 December 2016. It was not in doubt that Mr Garner took that laptop home with him on that day, ostensibly so that he could work with it during the Christmas period. The inability of the Conn reports to establish what was not in dispute undermines Mr Garner’s attempts discussed below to persuade the Court to draw inferences from the absence of findings in relation to issues that were in dispute.

207    Mr Conn observed that data in email communications suggested the use of two separate devices to send Mr Garner’s email communications through the NCCS email service provider during 23 December 2016. Mr Conn said email communications indicated the use of a mobile device after 5.00 pm on 23 December 2016 and prior to that time, the use of a device other than a mobile device. This might suggest the use of the NCCS Laptop, but might also have been Mr Garner’s iPad. Mr Garner resisted, but ultimately accepted, the proposition that he had used his iPad to send and receive emails. He accepted that he accessed personal emails on his mobile, but never accepted that he accessed or sent work emails on that mobile. While nothing much seems to turn on this, I am unable to accept that his mobile was never used to access or send work emails, because that depends on accepting his word, which I am unable to do without it being against interest or corroborated.

208    Mr Conn could not identify any information to enable him to determine whether any individual may have altered, tampered with, deleted, forwarded or saved to any external device any document, file or other information on the NCCS email or computer systems or on the absent NCCS Laptop on or after 23 December up to 16 January 2017. He necessarily therefore could not eliminate that having happened. Mr Conn was not able to identify any electronic information that could indicate whether Mr Garner had possession of the NCCS Laptop computer on or after 23 December 2016.

209    In his supplementary report, Mr Conn answered a number of further questions, including about the presence of the Output Files in either .csv or .xlsx format on an NCCS desktop computer provided for Mr Garner’s use commencing on 16 January 2017, referred to by Mr Conn as the Garner new computer. He did not find any such files on the Garner new computer, although he did find references to attachments to emails with names “output1.csv”, “output (3).xlsx”, “output (4).csv”, “output (6).csv”, “output (8).xlsx”, “output (9).xlsx”, “output (15).xlsx”, “output (18).xlsx”, “output (19).xlsx”, “output (20).xlsx” and “output (24).xlsx”. Given that Mr Garner did not get this computer until after this proceeding had commenced, long after Mr Garner had been served with the orders made by Justice Katzmann, and after the parties had appeared in Court, it would be surprising to the point of absurd if anything of that nature had been found, at least comprising any version of the Output Files. The absence of the Output Files on the Garner new computer does not advance the applicants’ case, but it provides no real assistance to Mr Garner’s case either.

210    Mr Grahame Conn was unable to find evidence of Output 26 or Output 27 on Mr Garner’s desktop computer at NCCS, or any other device that was made available to him. However, Mr Conn does say that references to the files “output (27).csv” and “output (28).xlsx” were identified on the Garner new computer. The devices that were able to be made available to Mr Conn did not include the most obvious and most important of such devices, namely the NCCS Laptop, said by Mr Garner to have been stolen.

211    Mr Garner further asserts that it is implausible that he would have removed a USB drive from Intercad but never have accessed it. That is a curious assertion to make, because it carries a clear implication that the data was useful in some way, so as to warrant accessing it. I accept that it is more likely than not, that, if Mr Garner removed a copy of Output 26 and Output 27, he most likely would at least have accessed it, and probably would have used it, for the reasons developed below. To adopt and adapt Mr Garner’s submission, any other conclusion is implausible. But I do not accept that not finding a copy of either file on Mr Garner’s desktop computer at NCCS, or any other device that was available – that is, apart from the missing NCCS Laptop – provides any safe or sound basis for an inference that it was not removed in the first place. If that circumstance supports any such inference at all, it is a very weak inference indeed, and I decline to draw it. This is especially given that Mr Garner must have previously used the laptop NCCS provided to work on because he asked to take it home for that purpose, coupled with Mr Conn’s evidence that this laptop was not backed up on the NCCS system.

212    Mr Garner was a new salesman at NCCS, and it is obvious enough that identifying prospective new customers to make sales to, including existing or prospective customers of the applicants, would benefit him in that position. Mr Garner did not give any evidence of any other work that he would be doing so as to need to take the NCCS Laptop home over the Christmas period. If there was any other such work, it is to be expected that he would have given evidence about it, as it would have assisted his case. In that context, Mr Garner’s argument ignores the most likely place for him to have put any copy of Output 26 or Output 27 in order to make use of it, namely the device that he would most likely have been working on, his NCCS Laptop. A further problem for Mr Garner is that I do not accept that his NCCS Laptop was stolen. The threads of evidence that can now be drawn together for reaching that conclusion are as follows:

(1)    Since 30 June 2016, Mr Garner had available to him a copy of Output 26 and Output 27, containing customer and leads information of the applicants, or at least Intercad, on a USB drive.

(2)    On 22 August 2016, Mr Garner had been told he had been retrenched by Central Innovation, with that formally taking effect the next day, after he had left, and thereafter he no longer worked for Intercad.

(3)    On 22 August 2016, he made contact with, and later on or around 26 August 2016 met with, and spoke to, Mr Stalin D’Souza, the Director of NCCS – this is contextually adverse to Mr Garner’s interest, so may be accepted for this purpose.

(4)    As an incoming new salesman for a competitor of the applicants, NCCS, Mr Garner had a strong incentive to obtain new customers for his new employer, and a strong incentive to make contact with customers of the applicants, or at least of Intercad.

(5)    In furtherance of that objective, Mr Garner emailed 10 to 12 customers of at least Intercad in November 2016, so made contact with at least that number.

(6)    As the evidence relied upon by the applicants analysed below proves, a number of the email address entries in the NCCS Hatchbuck CRM system contained the same errors as were present in SUGAR, due to entry error or becoming non-current or out of date. Especially in the absence of any other explanation being given, that strongly supports an inference that confidential information finding its source in Mr Garner made its way into Hatchbuck, despite the original Excel format file not being copied there. In turn, that strongly supports an inference that Mr Garner obtained that information from either or both of the SUGAR and VRC data that he obtained from his former employer.

(7)    The objective of maximising sales was, I infer, materially assisted by confidential information that Mr Garner obtained from the applicants in order to make contact with their customers, or prospective customers. The evidence does not directly establish that this successfully occurred on a great many occasions. Nonetheless, the fact that Mr Garner became the top salesman for SolidWorks in 2017, despite working for a smaller competitor of the applicants and being confined to sales activity in Victoria and Tasmania, lends material support to this inference being drawn. This is especially so given that Mr Garner had, immediately before his time with NCCS, led a sales team that had received feedback to the effect that its sales performance was unsatisfactory less than one year before Mr Garner was formally made redundant in that same role.

213    The relevant information that Mr Garner had available to him was from the Output Files, from at least some of the 18 SUGAR reports, especially those downloaded on 18 August 2016 (shortly before he was made redundant), and probably also other information able to be obtained by him from access to SUGAR, especially during the course of protracted access that took place on 4 July 2016. The most logical place for that information to be stored by Mr Garner, so as to be accessible and able to be used by him, was the NCCS Laptop, which Mr Garner had taken home with him on 23 December 2016. Given the provenance of that information, I readily infer that Mr Garner would not want such information to be found on that laptop.

214    In the context of the immediately foregoing, and making sense of the totality of the evidence before me, I find on the balance of probabilities that Mr Garner, upon receiving the orders made by Justice Katzmann on 23 December 2016, and knowing what was on the NCCS Laptop, decided to fabricate an account of it being stolen. This finding is supported by the uncanny timing of events and the fact that the supposed theft was not reported to police by Mr Garner until the next week, coupled with Mr Garner’s complete lack of credibility as a witness. However this does not enable me to make any positive finding as to what was in fact on the NCCS Laptop as at 23 December 2016, and I therefore cannot determine what confidential information could or would have been on that laptop and thereby available to be provided to NCCS, including via Mr Garner in the course of his employment.

Findings on the Output Files

215    Due in part to Mr Garner being an unreliable witness of poor credit, I am unable to accept, uncorroborated:

(1)    his evidence as to why he downloaded, saved and copied Output 26 and Output 27 onto a USB stick;

(2)    his evidence that he gave that that USB stick to Mr Kenny;

(3)    his evidence as to what Mr Kenny said about the USB stick; or

(4)    any of his evidence that might support an inference that Mr Kenny did not give the USB stick back to him.

Additionally, all of that evidence is too self-serving an explanation as to why he had downloaded material from the VRC in the first place. It does not have a ring of truth about it.

216    I am also unable to accept Mr Garner’s evidence that the Output Files data was put onto a USB drive because of its size, given an email would have sufficed and would have been more convenient if the use of the data was to be confined to his then employer’s premises.

217    I am satisfied that it was Mr Garner who did the downloading and copying of the Output Files, ultimately onto a USB drive. While Mr Garner does not in terms concede that he did this, in substance he does not deny it in his evidence. At most he seeks to cast doubt on Output 26 being part of this exercise, and in his submissions he principally asserts that there is insufficient evidence to prove that he did so, which is not the same as an outright denial.

218    Mr Garner denies that he removed any of this data after placing it on a USB drive. As already noted, he denies the taking, use or misuse of any confidential information from the applicants. By reference to the evidence below, I am satisfied on the balance of probabilities that Mr Garner removed a copy of the data in the Output Files from the applicants’ premises, most likely on the USB stick that he deposes to having used and to having given to Mr Kenny. That conclusion is buttressed by evidence considered below as to the data that was used by Mr Garner to contact, or to facilitate the contacting by “email blast” of customers and prospective customers of the applicants, or at least of Intercad, and the inferences available to be drawn as to the likely source or sources of that data.

219    It is implausible that Mr Garner would believe Mr Kenny could benefit from such data, or that he should provide this information unsolicited. This is especially so given Mr Atkinson’s evidence discussed above concerning there being no disquiet about the marketing department and the lack of use data in this format would be for marketing.

220    Further, there is no apparent reason why the Excel .xlsx format files for both Output Files could not have been emailed to Mr Kenny, and conversely no apparent reason why they had to be copied onto a USB drive in order to be given to Mr Kenny. This suggests that, contrary to Mr Garner’s evidence on this topic, summarised and commented upon above, the real reason for copying the Excel .xlsx versions of the Output 26 and Output 27 data onto the USB stick had nothing much to do with their size. Indeed, it would have made more sense to have sent the Output Files data in Excel format to Mr Kenny by email to comment upon.

221    I find on the balance of probabilities that the data was copied onto a USB drive not so that it could be given to Mr Kenny, but rather to facilitate its untraceable removal from the applicants’ premises. While this was not expressly put to Mr Garner to challenge his contrary account as being untrue, it was so clearly a part of the applicants’ case that I do not consider a rote application of the rule in Browne v Dunn (1894) 6 R 67 at 76, so as to produce a rote denial, was required. As mentioned above, while Mr Atkinson accepted that some of the data such as website URLs would not be confidential, it was clear from his evidence that Output Files contained information that was not publicly available and that SUGAR Reports contained confidential information. I note in that regard that Mr Conn found references not just to Excel .xlsx format files, but also .csv format files attached to emails on the Garner new computer at NCCS, indicating that emailing such files was hardly novel for Mr Garner, albeit that there was no evidence of the size of those files.

222    As to the nature of the information within the Output Files data, and Mr Garner’s asserted need to access such information rather than use SUGAR, at the time of swearing his first affidavit on 20 September 2019, Mr Atkinson was shown copies of two Excel spreadsheets containing that data (the Excel formatted Output 26 and Output 27 spreadsheets), which he refers to collectively as the Output Files. Based on his knowledge of Mr Garner’s day-to-day responsibilities as a Team Leader and his knowledge of the sales and marketing activities that are undertaken by members of Central Innovation’s and Intercad’s sales teams, Mr Atkinson’s evidence is as follows:

(1)    Mr Garner did not need to access, download or copy the information contained in the Output Files – that is to say, any information in the VRC – in order to perform his duties as a Team Leader. The Output 26 file contains a list of all customers, some 5,784 in total, who at the relevant point in time were registered to Intercad in the VRC. It was not necessary for Mr Garner to have the names of all of Intercad’s customers who were either on or off subscription in order to manage the customers for whom he was responsible as Team Leader, Victoria. All the information that Mr Garner would have needed to services customers was contained in SUGAR.

(2)    The Output 27 file contains a list of all inbound leads or allocated to Intercad within the VRC. It was not necessary for Mr Garner to have that information in order to manage the customer accounts for which he was responsible as Team Leader. To the extent that Mr Garner was assigned to pursue inbound leads all the information that he needed was contained in SUGAR.

223    I accept that evidence from Mr Atkinson and find that at least some, if not all of the information in the Output Files was inherently confidential to the applicants and within that contemplated by Mr Garner’s contract of employment with Central Innovation.

Data in SUGAR Reports

224    In relation to SUGAR data, Mr O’Kane analysed about three months of web browser history on the Intercad Laptop, for the period from 25 May 2016 to the date upon which Mr Garner was told he was retrenched on 22 August 2016. There is no suggestion in submissions or evidence that anyone other than Mr Garner was using his login, or even his laptop, nor any reason to suggest why this might have happened. I therefore find that it was Mr Garner who was using the Intercad Laptop at all relevant times.

225    In the three-month period analysed by Mr O’Kane, the Intercad Laptop recorded between 10,634 and 10,638 web visits to SUGAR, an average rate of over 168 visits per working day. That frequency and degree of access sits oddly with Mr Garner’s professed disdain for SUGAR, casting further doubt on the credibility of his evidence on this topic, and more generally.

226    A graph produced by Mr O’Kane depicts generally consistent levels of usage during that three-month period. However, during that period a particular kind of use started to emerge and steadily increase in its extent, peaking on the afternoon of Thursday, 18 August 2016, only one clear working day before Mr Garner was told he had been made redundant on Monday, 22 August 2016. Thirty-five of the website addresses, commonly known as URLs (which Mr O’Kane expands as “unique resource locators”, also called “universal resource locators”) indicating web visits to SUGAR, that were recorded on the Intercad Laptop contained the character string “module=Reports”. This signified visits specifically to the reports module within SUGAR. Documentation for SUGAR reviewed by Mr O’Kane discloses that the reports module allows users to “build, generate and manage” reports for other modules, such as accounts, contacts, calls and so on. This enables a user to gather information from various modules to generate information that may be valuable to a user. Mr O’Kane suggests the reports module can best be described as a place where a user builds up a query by entering certain criteria and then runs it in relation to the SUGAR database to produce a result by way of a report, which can be saved. The report criteria can also be saved and rerun. Thus the report criteria do not have to be set up anew each time an additional or updated report is needed.

227    Mr O’Kane found that these 35 reports module entries were not spread evenly over the 90-day period that he analysed, but rather only appeared on six days in the period from the end of May 2016 to 18 August 2016: 31 May 2016, 1 July 2016, 19 July 2016, 8 August 2016, 15 August 2016 and 18 August 2016. The context of what was happening around that time matters. Seven months prior to the first reports module entry, on 6 November 2015, Mr Garner was explicitly made aware of dissatisfaction with Intercad’s sales performance, and with the performance of the Team Leaders in particular in relation to that sales performance, via the email discussed above at [151(3)]. That concern had apparently not been allayed by the middle of 2016. In June and July 2016, Mr Garner was explicitly made aware by Mr Atkinson that a restructure of the sales team arrangements were in contemplation.

228    This activity must also be considered in the context of Mr Garner’s evidence, already rejected, that he did not use the SUGAR reporting function because of his view as to its inadequacy and difficulty of use. Even if that distain was genuine in relation to his day-to-day work for Intercad, by June 2016 he was using it to obtain information that he wanted or needed, with increasing frequency from then until his retrenchment. Early in this period, he was aware of the proposed restructure from his discussions with Mr Atkinson. By reason of denying using the SUGAR report function, Mr Garner gave no evidence of any want or need to download such reports arising from his work at Intercad. I infer that if there was any such want or need, it was neither substantial, nor the dominant reason that it took place, in the absence of any evidence to that effect.

229    The inference I draw from this SUGAR report generating activity is that Mr Garner was actively using SUGAR at least by the end of May 2016, and with increasing frequency and volume in the lead up to being made redundant, contrary to his professed view that SUGAR was not really worth having or using at all. He was using the SUGAR report function at the time that he became aware that changes were afoot. I infer that this was done to advance his interests as he saw them. That is consistent with the view that I formed of Mr Garner as a man who was astute to look after his own interests, including with a measure of forward thinking and planning.

230    Mr O’Kane plotted the timings and volume of views depicting those 35 module report entries on a graph with those dates, showing the highest number of entries on 18 August 2016, being 18 entries, only four days before Mr Garner was retrenched. For each report, Mr O’Kane was able to retrieve the URL, resulting in 33 visit records in the period from 1 July to 22 August 2016, thus excluding the two on 31 May 2016 (which was probably unduly conservative). He put each of those 33 URLs into a web browser running on the Central Innovation network to see the nature of the webpage was that was accessed, I infer by Mr Garner.

231    Of those 33 records, six were the initial page or homepage of the reports module so were excluded from further consideration. Of the remaining 27 records, eight were lists of saved reports and one was a “print to PDF” view of a report. Mr O’Kane formed the view that this report was never downloaded in PDF because Mr Garner’s SUGAR account did not have permission to download a PDF document at that time, although they must have been able to be viewed. Those eight reports were also excluded from further consideration.

232    That left 18 reports module URLs corresponding to SUGAR reports that Mr O’Kane then reconstructed by the use of SUGAR backup tapes. This was done so that the data in SUGAR was as close as possible to the data that was there at the time the reports were originally run, ultimately using backup tapes from about 29 July and about 27 August 2016 (the lack of precision of the dates of the backups being due to it not being clear what time zone was used on the backup tapes to record the backup dates). Mr O’Kane notes that those 18 reports module URLs do not include all web browser visits to the reports module because URLs that denote page refreshes, search parameter changes or other transitional pages do not include a “module= Reports” entry.

233    Mr O’Kane produces those 18 reports. They are in evidence and are voluminous. It will not be necessary to go to them in any great detail, because in the greater part, Mr O’Kane’s evidence was not challenged, enabling reliance to be placed on the summaries and conclusions that he produced. Mr Garner was apparently either content to rely on what he perceived to be a shortfall in the evidence that Mr O’Kane was able to produce, or decided that challenging that evidence would not be strategically wise. It therefore suffices to reproduce the summary that Mr O’Kane prepared for the 18 reports below, to be read with the legend at the bottom to understand what is meant by each of the entries “Reason 1” to “Reason 4” for some of the reports.

234    Mr O’Kane draws a distinction in his summary between “reports” and “records”:

(1)    A report is a list of spreadsheets.

(2)    A record is a row in an individual spreadsheet, which he confirmed in cross-examination would typically be one row or record for a particular customer, a particular contact, or some other particular matter, although there could be multiple contacts for a particular customer. Because it is not possible to determine how many individual records were looked at by Mr Garner, totals for the number of reports or report lists are not included, as that may exaggerate what was in fact seen.

235    Mr O’Kane’s summary is as follows:

Legend of Notes and Reasons for Above Data

Reason 1: Does not make sense to run this report on the data taken from this timeframe, as the report concerns a different timeframe.

Note 1: The date range for the report could have been one of two options, and it is not possible to determine which date range was run.

Reason 2: The report did not exist in this data set. It was created after this backup was run.

Reason 3: Cannot have been accessed with the Gary Gamer (SugarCRM) account.

Reason 4: Filters and parameters of report not saved in Google Chrome Web History.

236    Of particular note in that summary is that in seven of the last eight reports, being reports 11 to 15, 17 and 18, generated between about 2.25 pm and about 2:49 pm on Thursday, 18 August 2016, Mr Garner generated reports and therefore obtained access to data for:

(1)    between 99 and 526 records (that is, individual rows of data) as to account types;

(2)    66 records pertaining to sales performance;

(3)    24 records pertaining to sales results;

(4)    between 21,438 and 24,040 call records (for calls held or not held);

(5)    between 196 and 199 records pertaining to commissions,

(6)    between 1,766 and 1,894 records pertaining to customers on subscription; and

(7)    between 7,889 and 7,896 records pertaining to “target prospects”.

237    While this list does not contain contact information, it is nonetheless obviously valuable information. It is likely to provide inside information as to which of the customers of the applicants it would be beneficial to approach. The above information is most unlikely to be able to be obtained, or at least readily obtained, other than from the applicants. As noted above, reports 11 to 15, 17 and 18 were generated on Thursday, 18 August 2016, the afternoon before Mr Garner’s last full working day on Friday, 19 August 2016. The following Monday, 22 August 2016, he was told he had been made redundant, and left the applicants’ premises for the last time that same day. That redundancy formally took effect from the next day.

238    Mr O’Kane makes the point that while the reproduction of the 18 reports undoubtedly demonstrates access to those reports, it was not possible to determine how many records in each report was seen by Mr Garner. To digitally copy the data from the Intercad Laptop contained within any of the reports in Mr O’Kane’s summary to another digital device directly, a report would have to be run, the data would have to be exported, saved or copied manually and then copied or sent to an external system or user. While there is ample evidence to conclude on the balance of probabilities that Mr Garner ran the reports, there is no direct evidence that he exported or copied that information. As will be seen however, the combined effect of all the evidence is ample to support an inference that, on the balance of probabilities, Mr Garner did just that.

239    Mr O’Kane notes, and I accept, that the options that were available to Mr Garner included copying and then pasting the information into a separate file, for example into an Excel spreadsheet or Microsoft Word document. Such a document would not need to contain any name or other reference including the word “output”, unless deliberately named in that way, which seems inherently unlikely.

240    Other options included taking photographs or screenshots, but given the electronic copying options, that seems a cumbersome option for the volume of information and can safely be put to one side as being less likely.

241    Mr Garner deposed that he did not know how to download or print information from SUGAR, and that it was his understanding that it was not possible to do this. In the face of the following evidence from Mr O’Kane, that evidence from Mr Garner must be rejected, and furthermore casts doubt on Mr Garner’s credit, reliability and even honesty in what can only be seen to be objectively false evidence.

242    Mr O’Kane found 38 occasions of .csv file downloads from SUGAR on the Intercad Laptop between November 2013 and April 2015. I note that this goes outside the 90-day period considered in his first report and is an incomplete record of the available information due to time constraints faced by Mr O’Kane. Mr O’Kane was given access to a number of files found on the Intercad Laptop by Mr Atkinson, including in particular, the “Gary List.xlsx” file, and verified that file matched the a file that he found on the forensic copy he had of the Intercad Laptop. While Mr Atkinson described that file as an export or download from SUGAR, Mr O’Kane’s finding was that this was not a correct description of how the copying had taken place. Mr O’Kane found that while the two data sources contained the same fields, and records within them matched, the number of rows of data was different. Mr O’Kane determined that the “Gary list.xlsx” file located by Mr Atkinson was not a .csv export from SUGAR, but was instead very likely copied and pasted out of the SUGAR website by Mr Garner. That conclusion is reached for reasons that Mr O’Kane detailed that do not need to be repeated as there is no challenge to that conclusion. The main point to be taken from this evidence is that Mr Garner’s evidence about not being able to use SUGAR to download reports may possibly be literally correct, but contextually highly misleading if the same result was achieved by copying and pasting, rather than downloading. I infer that this was said by Mr Garner to distance himself from the truth as to what he was able to do within SUGAR, and therefore what he did do in relation to SUGAR data downloading, copying and removing.

243    I am satisfied that Mr Garner had access to the data in the SUGAR Reports and multiple means available to him by which he could copy or export that data to take with him or to send. He also had the ability to copy and extract data from SUGAR without the need to generate a SUGAR report, or as a means of exporting the contents of a SUGAR report. However, it is left to the process of inference to determine whether, on the balance of probabilities, that in fact occurred. A relevant fact in drawing any such an inference is the lack of any evidence or other explanation from Mr Garner for running those reports, or for making copies of SUGAR data, whether from a SUGAR report, or from within a viewing page of SUGAR, or otherwise, to rebut an inference otherwise available to be drawn. This is especially concerning with regards to those reports generated the afternoon before Mr Garner’s last full working day. As Rares J observed in a case in which proof of particular facts was difficult, Webster v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 702, at [29]:

I have taken those difficulties of proof into account in evaluating the evidence in accordance with s 140 of the Evidence Act 1995 (Cth) and having regard to Lord Mansfield CJ’s well-known dictum in Blatch v Archer (1774) 1 Cowp 63 at 65 [98 ER 969 at 970] that “all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted”: see too Plaintiff M47/2018 v Minister for Home Affairs (2019) 265 CLR 285 at 300 [40] per Kiefel CJ, Keane, Nettle and Edelman JJ.

244    Mr O’Kane concludes, and I accept, that an unknown device, such as a laptop, tablet, or smart phone – that is, a device other than the Intercad Laptop – was connected to the SUGAR system using Mr Garner’s login, on 3, 4, 10 and 13 June 2016, 4 July 2016 and 6 and 10 August 2016. All the connections prior to 13 June 2016 were via the Singtel Optus network, and the later connections originated from the network controlled by Central Innovation. As stated above, I am satisfied that it was Mr Garner who accessed the SUGAR system on each of those dates, given the lack of any suggestion by him, or to be found in the evidence, that anyone other than him used his login. I am correspondingly satisfied that Mr Garner was able to gain access to SUGAR remotely, that is, in a location away from the applicants’ premises. He was able to do so remotely and without using the Intercad Laptop. He thus had the means, the motive and the opportunity to obtain data from SUGAR in a way that was practically untraceable, especially if done remotely and using a device that the applicants did not have access to.

245    The applicants place emphasis upon a table produced by Mr O’Kane which records the duration of those remote access sessions. In particular, this evidence establishes that Mr Garner remotely accessed SUGAR:

(1)    on 4 July 2016 for about 20,102 seconds – that is, for over five and a half hours; and

(2)    on 10 August 2016, for about 2,046 seconds – that is, for just over half an hour.

246    This provided Mr Garner with ample proven opportunity to download or otherwise extract confidential information from SUGAR, and reinforces the inferences already just drawn.

247    This evidence was in Mr O’Kane’s first report. Mr Garner did not take the course of deposing to all the devices he had, producing them, and making them available for analysis. He was under no obligation to do so, so as to contribute to a case against him. But, the absence of any such evidence which it was well within his power to adduce leaves it open for adverse inferences to more readily be drawn, applying the authority discussed below. Nor did he choose to give evidence that explained what he had been doing on those or any other dates in remotely accessing SUGAR, given his evidence that he did not regard this data as useful for his day-to-day work for Intercad.

248    As was pointed out in Weissensteiner v The Queen (1993) 178 CLR 217 at 227 (per Mason CJ, Deane and Dawson JJ):

… when a party to litigation fails to accept an opportunity to place before the court evidence of facts within his or her knowledge which, if they exist at all, would explain or contradict the evidence against that party, the court may more readily accept that evidence. It is not just because uncontradicted evidence is easier or safer to accept than contradicted evidence. That is almost a truism. It is because doubts about the reliability of witnesses or about the inferences to be drawn from the evidence may be more readily discounted in the absence of contradictory evidence from a party who might be expected to give or call it.

249    The operation of Weissensteiner in criminal proceedings has been confined somewhat by RPS v The Queen [2000] HCA 3; 199 CLR 620 and Azzopardi v The Queen [2001] HCA 25; 205 CLR 50. However, those limitations have no application to civil cases, and Weissensteiner reasoning has received renewed currency even in criminal cases: see R v Baden-Clay [2016] HCA 35; 258 CLR 308 at [50].

250    In Azzopardi, Gleeson CJ (in dissent as to the result) observed at [18] that there were reasons why it may be dangerous to treat a criminal accused’s silence “in the same way as one would treat the silence of a party to civil litigation”. The majority in Azzopardi observed at [34] that the accusatorial process for a criminal trial differs radically from a civil proceeding in that the general rule that an accused cannot be expected to give evidence has no application to civil proceedings, and in civil proceedings there will very often be an expectation that a party would give or call evidence (citing and quoting RPS).

251    In this case, the Mr Garner had ample notice that an inference would be sought to be drawn that he had accessed and obtained confidential information from both the VRC and SUGAR. He responded to Mr O’Kane’s evidence on this topic, asserting that he did not have the capacity to do this, rather than choosing to adduce evidence about the access he did have, and the reasons for it. He had more than sufficient opportunity to adduce rebutting evidence, if such evidence existed. It follows that there is no reason to limit the full effect of the quote from Weissensteiner above.

252    This access is also to be understood in the context of Mr Garner sending Intercad emails to his personal email account. An express reason for doing this given in cross-examination was “insurance”, as mentioned above. It was put to Mr Garner that another reason for doing so was securing the ability to market himself as a salesperson in SolidWorks products, which he denied, but which is a reasonable inference to draw in the absence of any credible benign explanation being given at all.

253    I am satisfied by a careful process of inference that Mr Garner, in some way not able to be determined with certainty, was able to and did remove a copy of the confidential data in the SUGAR Reports that were generated by him on the afternoon of 18 August 2016. Mr Garner was in a position to give evidence about why he generated those reports and what he did with the information that was in them, but instead elected to falsely deny that he was able to generate any such reports at all. He was able to, and did, extract information from SUGAR apart from the process of generating and downloading SUGAR Reports, yet brazenly denied even having the ability to do this.

254    The basis for that conclusion in part comes from the evidence considered above, but also comes from a consideration of the information that must have been available to Mr Garner to input certain data into Hatchbuck – the NCCS version of SUGAR.

255    As to confidentiality of the information within the SUGAR Reports located by Mr O’Kane, in the course of swearing his 20 September 2019 affidavit, Mr Atkinson deposes to the information in those reports being confidential and commercially highly sensitive because it would enable Central Innovation’s and Intercad’s competitors to understand which customers are, or have been, the focus of their marketing strategies and to see in effective real-time the status of their attempts to win business from those customers. Further, while other VARs know the recommended retail prices that SolidWorks sets in relation to its products, neither of the applicants published to the market the actual prices that their customers pay for subscriptions to SolidWorks software and related support services. The disclosure of that information would enable their competitors to obtain a competitive advantage by undercutting their prices.

256    I accept that evidence from Mr Atkinson and find that, with the obvious exception of publicly available information such as website addresses, the information in the SUGAR Reports was confidential to the applicants and within that contemplated by Mr Garner’s contract of employment with Central Innovation.

The cross-examination of Mr O’Kane

257    For completeness, it is appropriate to note the effect of the cross-examination of Mr O’Kane. One topic of cross-examination concerned the suggestion in his report that Mr Garner may have concealed his access to SUGAR, in relation to which he pointed to the Output Files and SUGAR files that were downloaded or otherwise copied, but in the end not much turned on this aspect of Mr O’Kane’s report. I am comfortably satisfied that Mr Garner did download and access that information. The question of subsequent use is a separate issue about which Mr O’Kane was not in a position to give any evidence. Another cross-examination topic concerned limits on the capacity of Mr Garner to obtain remote access to SUGAR, but again that did not end up assuming much importance beyond the fact that such access was possible and in fact did take place on dates detailed above.

Use of confidential information obtained from the applicants

258    There is no doubt that Mr Garner contacted customers of the applicants. The live question is whether the applicants have established, on the balance of probabilities, that any such contact, any resultant signing up by NCCS of such a customer, and any loss to the applicants, was achieved by the unlawful use of confidential information. This includes addressing any reasonable possibility that any such contact and signing up was achieved either by unrelated means or by permissible means, as Mr Garner asserts. As will be seen, those benign alternative assertions were implausible, especially having regard to Mr Garner’s uncorroborated evidence on this topic. This includes his interpretation of any business records going beyond what could reasonably be discerned or ascertained from their face.

259    The use that the applicants contend Mr Garner made of their confidential information is contained in nine annexures to the statement of claim, each of which contains a list relating to customers as pertaining to the following allegations:

(1)    Annexure A: customers contacted by telephone by Mr Garner;

(2)    Annexure B: customers contacted by email by Mr Garner;

(3)    Annexure C: customers lost to NCCS;

(4)    Annexure D: customers contacted by email, in relation to whom an email address on SUGAR matched one on Hatchbuck, where an email to that address bounced back;

(5)    Annexure E: active leads or prospects lost to NCCS;

(6)    Annexure F: contacts created on Hatchbuck using information from SUGAR;

(7)    Annexure G: contacts contacted by Mr Garner prior to commencing work at NCCS;

(8)    Annexure H: active leads or prospects contacted by telephone by Mr Garner; and

(9)    Annexure I: active leads or prospects contacted by email by Mr Garner.

260    The annexures therefore functioned practically as an index to the evidence, going beyond what is generally required by pleadings in framing both the detail of the applicants’ case, and Mr Garner’s evidentiary response, as well as the closing submissions aided by detailed schedules from both sides. However, they were not a substitute for the evidence itself. A close consideration of the evidence reveals that Annexure F, being customers of the applicants who were alleged to have been entered into Hatchbuck using information from SUGAR, was not an exhaustive list of Hatchbuck entries bearing that characteristic on their face. Thus, there are at least five customers who are not listed in Annexure F, yet the evidence reveals were entered into Hatchbuck with information that is the same as SUGAR information. Of these, three are listed in Annexure C as having been lost to NCCS. This difference did not change any conclusions that would otherwise have been reached, but it did strengthen certain of those conclusions.

261    The nine annexures to the statement of claim were updated in the lead up to the trial, with the last of those updates provided on 30 September 2019. Mr Garner’s closing submissions addressed only the immediately preceding version of the annexures dated 18 September 2019 upon the basis that the later version was provided without leave of the Court. I reject that basis for not taking that evidence into account. Had the point about leave being absent been properly taken, leave would have been granted, given that the updates were provided more than two months before the trial commencing. If such leave is necessary, it is granted. In all the circumstances there is no injustice in taking that course.

262    The defence to the statement of claim contains corresponding annexures in a table format. Those annexures were updated as annexure GG-8 to Mr Garner’s affidavit. Those annexures provide, in a summary and repetitive form, his often bald assertions as to why the information by which any contact or dealing with a customer or prospective customer of Intercad was not obtained from confidential information from the applicants. He did not deal with the evidence adduced by the applicants in more than a relative cursory, or general fashion. That was his choice, perhaps dictated by the risk that giving more detailed evidence would in some way assist the applicants’ case, or expose him to greater cross-examination. Mr Garner was cross-examined as to the broad nature of the explanation that he gave for the contact or dealing that took place, rather than being taken to each entry in his table. That too must have been a calculated assessment of how best to advance the applicants’ case. The applicants did not have any obligation to add to Mr Garner’s sparse evidence on this topic in cross-examination.

263    The burden and conclusions reached arising out of, inter alia, the cross-examination of Mr Garner, insofar as it concerns the issue of use of confidential information, is next addressed. I then turn to detailed schedules furnished by the parties as part of their written closing submissions, to address, to the extent necessary, the nine annexures to the statement of claim and the nine correspondent annexures to the defence.

264    The applicants identify ten non-exhaustive aspects of the evidence that they contend combine to prove that Mr Garner used confidential information from the VRC data in the Output Files and/or the SUGAR Reports and/or data that Mr Garner had been otherwise able to access in SUGAR, the content of which was proven by the SUGAR extracts in evidence. The tenth aspect concerns the competing positions in relation to the nine annexures to the statement of claim and to the defence.

265    The first aspect of the evidence relied upon by the applicants points to information that was recorded in NCCS’s Hatchbuck system – effectively the NCCS version of SUGAR, used to manage sales and marketing activities directed to existing and prospective customers. In particular they point to email addresses and telephone numbers for customer accounts and/or contacts which were recorded as having been “created by Gary Garner” within Hatchbuck. The applicants contend that this was done using confidential information obtained by Mr Garner from the VRC and from SUGAR. The particular customer names and contact details that the applicants rely upon are set out in Annexure F to the statement of claim. As noted above, Annexure F lists customers or prospective customers whose details are in SUGAR, and who are also entered into Hatchbuck. A total of 124 customer contacts are listed. Of these, all but 31 are recorded as having been allocated to Mr Garner as the sales representative in Hatchbuck, but this figure is apt to mislead in that raw form because the company and the customer contact can be assigned to two different sales representatives in Hatchbuck, meaning that it is unclear from who is listed who the actual sales representative for the customer is. The first entry “created by Gary Garner” was entered on 15 November 2016 and the last on 9 June 2017. Taken on its own, this might not have been sufficient to exclude the reasonable possibility that there was an entirely non-confidential source of the information entered into Hatchbuck. However, this is but a part of the matrix of evidence upon which the applicants rely. For some 40 entries (38 of which are listed in Annexure F), Mr Garner added the additional tag “Customer with IC”, noting that “IC” is an abbreviation used for Intercad in SUGAR, such as in referring to a date upon which a record has been modified as being “by IC Admin”.

266    Mr Garner’s case was that at least some of the Hatchbuck records were created by a different NCCS employee, Ms Reena Sethi. However, in Mr Garner’s cross-examination regarding her role at NCCS it became clear that she fulfilled an administrative role remotely from India. I therefore infer that information that was in SUGAR, replicated in Hatchbuck, and recorded as created by Ms Sethi with Mr Garner as the allocated “Sales Rep”, was entered by reason of his actions, and can therefore properly be attributed to him. I draw the same inference in relation to a very limited amount of information of that kind recorded as having been entered into Hatchbuck by Mr D’Souza, being the Director of NCCS who was contacted by Mr Garner on the day he was made redundant on 22 August 2016, and thereafter. There is no evidence, and not any other basis for concluding that information relating to the applicants’ customers entered by Mr D’Souza into Hatchbuck came from anyone other than Mr Garner. It is also important to note that the applicants were unsuccessful in their attempts to obtain customer records for information entered into a customer relationship system that succeeded Hatchbuck at NCCS.

267    Mr Garner was unable to give any coherent or credible explanation in the witness box as to how he obtained any such information other than from the applicants, an issue visited again below. The nature of the explanation that he did give was along the lines of it being the product of his “know-how”, being information which had become “part of” him as a former employee of Intercad “in the form of his skill and experience”. There was no meaningful content provided to these and other similar rather opaque words and phrases. He seemed to be suggesting that this was information that he had retained in his memory, but even that was not clear. He did not elaborate in his oral evidence-in-chief, and the applicants chose not to help him in this regard by seeking clarification in cross-examination. There were far too many entries, with far too much detail in them, created in a relatively short timeframe, for it to have been realistically possible for Mr Garner to have, for example, remembered that degree of detailed information from his prior employment, especially as the clear impression left from his evidence was that he had a poor memory for detail, rather than a good memory. As detailed further below, the volume of data which needed to be remembered with some precision was reasonably substantial. I find that the entries made did not, on the available evidence, have the character of being the product of memory, or somehow arising from some kind of existing know-how, as asserted by Mr Garner in re-examination, considered in more detail below.

268    The second aspect of the evidence relied upon by the applicants concerns evidence of the bulk sending of emails by NCCS in Mr Garner’s name, referred to as an “email blast”. An email blast is the electronic equivalent of a bulk mail out, being an email with the same text sent to numerous individual email addresses at the same time, with those addresses and salutations extracted from a database, or other electronic record, in this case, Hatchbuck. One such email was the one sent to Mr Ryan, reproduced above at [163], by which Mr Garner introduces himself and solicits sales business for SolidWorks software. Copies of these emails also appeared as part of the evidence in support of the asserted poaching of customers or prospective customers of Intercad, listed in Annexure F to the statement of claim, noted above. The applicants do not appear to suggest that all of these emails were sent only to their customers, but rather that their customers were among those targeted, aided in both the addressee selection and addressee email address details by using their confidential information.

269    In cross-examination, Mr Garner took issue with him having provided all of the information necessary to send those emails to customers of the applicants. He did not appear to cavil with these and other questions being premised upon him being the person who sent the email blasts, due no doubt to them being sent in his name, and inviting contact to be made with him: the emails opened with “… you can contact me directly on [mobile number]”, and at the conclusion “I would like to hear from you if you have any comments or questions”, followed by “You can connect with me on LinkedIn”, with a URL to his account name. On Mr Garner’s account of events, he remained in almost complete ignorance as to even how many emails had been sent in his name, and to whom. I reject that version of events as inherently implausible.

270    Mr Garner took issue with the allegation that he provided all of the customer (or prospective customer) contact details. When pressed he deposed to being unable to say whether he provided any contact details, necessarily from any source, for as few as five or as many as 50 customers (or prospective customers), or even as few as two or as many as 200 customers (or prospective customers). That evidence appeared especially evasive to me, and to my perception was given in an evasive manner. I do not accept that he had no idea at all as to which or how many customer contact details he provided. My clear perception was that he feigned having a lack of any memory at all. This was but one of many examples of obfuscation and asserted, convenient to his case, but unbelievable, total memory loss.

271    I formed the view that Mr Garner was not endeavouring to assist the Court, and was not complying with his affirmed obligation as a witness to tell the truth, the whole truth and nothing but the truth. The only reasonable inference I was able to draw, affording him as much latitude as I could muster, was that he did not think that giving a candid answer as to his true involvement in providing customer or prospective customer details to put into the NCCS Hatchbuck system would assist his case. I further infer that this was most likely because it might reveal that he provided such a substantial amount of information as to be consistent with the applicants’ case that it was derived from confidential information that he had taken from them.

272    In re-examination, Mr Garner endeavoured to recant any involvement in the sending of the email blasts beyond proofreading the text, evidence which I did not find convincing. I reject that evidence, save that I accept that it is likely that Mr D’Souza organised for the sending of the email blast to take place, in the sense of facilitating this being done for Mr Garner as the new NCCS sales recruit from its major competitor. Mr Garner also endeavoured to attribute the source of the information that he provided to put into Hatchbuck as coming from “memory and existing know-how”, from business cards that he says were given to him, and from SolidWorks leads that he said he was given, without identifying who he says provided them. None of this evidence in re-examination was anchored in a single Hatchbuck record in evidence, nor a single contact detail or customer or prospective customer, although his senior counsel did make a valiant attempt to adduce evidence from him as to what he had done in relation to “adding people to Hatchbuck”, drawing a blank response after several attempts.

273    Mr Garner was being no more candid in answer to certain questions asked by his own counsel in re-examination than he was in response to questions in cross-examination from counsel for the applicants, noting the limitations in non-leading questions for the former. Mr Garner’s evidence on this topic was vague and unconvincing. This was despite the best endeavours of his counsel. As noted above, there were too many customer and contact entries recorded in Hatchbuck as being created by Mr Garner, or (to a much lesser extent) created by Ms Sethi. This all took place in a relatively short period of time, and with too much detail, for this to disturb a clear and cogent inferential conclusion otherwise available that the information that was the same as the information in SUGAR, as evidenced by the SUGAR extracts in particular, came from confidential information that Mr Garner had obtained from SUGAR data, probably assisted by the VRC software subscription and leads data, both taken from the applicants. The drawing of that inference, however, does not depend upon this evidence taken in isolation. It also falls to be considered in the context of the circumstances in both the preceding and following paragraphs on this topic.

274    The third, fourth and fifth aspects of the evidence relied upon by the applicants was related to the two prior aspects, concerning the lack of credibility of Mr Garner’s further explanation for where the information put into Hatchbuck and recorded as created by him (or, as I have found, by Ms Sethi on his behalf), and arose out of the following passage of his evidence in re-examination:

MR ROBERTSON: Yes. You’ve said that you did add people to Hatchbuck?---Yes.

Where did you get the people you added to Hatchbuck; from what source or sources?---From a wide number of sources.

Give some examples, please?---Such as Google searches, such as saved searches from employment sites, such as Indeed or – or Seek. Things like Yellow Pages or White Pages, where you might be searching for companies that you already – that, for example, do sheet metal or, for example, do trailers or, for example, do other products that you know are in the – the sweet spot for companies that are going to use or need 3D design software to do their – to do their job, to design their products.

275    The third aspect of the evidence relied upon by the applicants concerns Mr Garner partially sourcing the information he put into Hatchbuck from LinkedIn. During his cross-examination, Mr Garner was asked about the contacts he had accrued during his time working for Intercad. He described such contacts as no more than connections, and said that he did not use them as a marketing tool for identifying prospective customers when he went from working for Intercad to working for NCCS, nor even for advising of a change of his employer, determining who to send email blasts to, or sending other promotional material. As part of that evidence, Mr Garner referred to not having the premium LinkedIn service that he had at Intercad when he went to work at NCCS.

276    In quite contrary evidence in re-examination – which was permitted to be adduced over objection – Mr Garner said that he used LinkedIn during the course of his employment with NCCS as he had at Intercad, but in an additional way, by way of “liking” and promoting posts put up by NCCS and SolidWorks. It is difficult to know what to make of this difference in Mr Garner’s evidence between cross-examination and re-examination, especially as his evidence in re-examination was both unclear, and did not seem to take account of the difference in functionality between the standard LinkedIn service provided to him by NCCS and the premium LinkedIn service that had been provided to him when he was employed by Central Innovation and mostly performed work for Intercad.

277    The final resting place of Mr Garner’s evidence concerning LinkedIn is that he did not give evidence at all, or alternatively did not give evidence in re-examination that I am able to accept, that any of the information used to send the email blasts or otherwise to contact customers or prospective customers of the applicants came from LinkedIn. This was not a credible alternative source for information that was to be found in the Output Files or the SUGAR Reports, or available to him in the way evidenced by the SUGAR extracts, and that was also in Hatchbuck as information entered by Mr Garner or on his behalf by Ms Sethi. This is especially so given the vague and general nature of that evidence.

278    The fourth aspect of the evidence relied upon by the applicants concerns Mr Garner partially sourcing the information he put into Hatchbuck from generalised internet searches, such as can be performed using Google, Seek, Yellow Pages and White Pages. As it was given, this evidence had the feel of being invented to convey in the witness box, rather than a recounting of anything that really happened. In any event, no attempt was made to relate this to a single entry in Hatchbuck. Nor did it provide any explanation for information about mobile telephone numbers, particular landline extension numbers, or non-general email addresses of a kind that would not be likely to be publicly or at least readily available. It had the perverse consequence of making clear the significant benefits to be obtained from taking and accessing confidential information from the applicants, particularly of that more specific kind. This was because of the evident effort required to obtain information that was going to be of much use, such as the specific contact details for an appropriate contact at a prospective company to whom to address a promotional email.

279    Part of the value of the SUGAR information, aided by the VRC information obtained via Output 26 in particular (even if not entered into Hatchbuck), was that it was specific, not general, and that it was about existing users of SolidWorks software, not merely businesses who might be interested in using such software. Moreover, many of the applicants’ customers – especially those who became NCCS customers – had been with the applicants via Intercad for many years (for periods ranging from 4 years and 5 months to 22 years and 5 months in the particular case of future NCCS customers that were never entered into Hatchbuck, as the data discussed below discloses), and would probably not need training or set-up effort to be expended. They were inherently valuable customers to acquire, and to seek to acquire. Mr Garner was well-placed to appreciate the great value of such information, and the hard slog involved in trying to locate such information from scratch. It exposed a clear motive for doing as the applicants allege. I am unable to accept his explanation of the use of publicly available information as being a truthful or even viable alternative source of such valuable information. This is especially so given the less-than-seven-month period during which detailed contact information for over 150 customers were entered into Hatchbuck on Mr Garner’s initiative.

280    The fifth aspect of the evidence relied upon by the applicants concerns Mr Garner partially sourcing the information he put into Hatchbuck from memory of the names and contact details of the applicants’ customers. The applicants describe this as fanciful, and that the notion that in late 2016 and early 2017 Mr Garner had a good enough memory to recall accurately a large number – at least dozens – of customer names, telephone number and email addresses strains credulity. I agree, especially in the context of the rest of Mr Garner’s evidence. As already noted above, he was unable to say whether he provided contact details for any given number of customers (or prospective customers), or even indicate whether it was as few as two or as many as 200 customers (or prospective customers). Again, this is addressed in greater detail below.

281    The sixth aspect of the evidence relied upon by the applicants concerns Mr Garner’s assertion that he and Mr D’Souza agreed that NCCS would only respond to inbound leads from SolidWorks. This conversation was alleged to have taken place after Mr Garner’s return to work on 15 January 2017, and after this proceeding had already been in court earlier in January 2017. In context, as the applicants point out, such an agreement makes little sense. Mr Garner received an award from SolidWorks in 2017 for selling the highest number of their products throughout Australia and New Zealand, yet he was unable to explain how this was able to be achieved, especially given NCCS’s smaller market share and being confined to the market in Victoria and Tasmania. In the context of this litigation, this evidence was self-serving and not credible. I am unable accept that such an irrational agreement was reached in the absence of corroborative evidence from Mr D’Souza. Indeed, I infer from Mr Garner’s sales award that he must have been a very active salesman, and that such success would have been materially assisted by access to confidential information about valuable, long term users and customers of SolidWorks software, and by overt marketing. Moreover, there were at least 11 customers across the nine annexures to the statement of claim that the evidence showed Mr Garner had directly emailed using the email blast function of Hatchbuck after 15 January 2017. These emails continued well into 2017, with the last one about which evidence was adduced being sent on 7 June 2017, in the order of four months after Mr Garner’s alleged agreement with Mr D’Souza to only respond to inbound enquiries or leads.

282    The seventh aspect of the evidence relied upon by the applicants is to reject the suggestion in Mr Garner’s case that the absence of entries regarding certain of the applicants’ customers in Hatchbuck suggests that misuse of confidential information did not take place. The applicants point to NCCS migrating to a new customer relationships management system in 2017, to replace Hatchbuck. The applicants did not have access to the corresponding data for this new system. Without evidence that this new system also lacked information about these additional customers, the applicants contend that it is not safe to conclude the negative, namely that such information was neither taken, nor used. I do not have to go that far. The fact that some information may not have been used, or at least has not been shown to have been used, affords little basis for showing that other information able to have been sourced from the applicants’ confidential information was not taken and misused.

283    I am not privy to any process of selection engaged in by Mr Garner, or any other influence in play, as to what information he considered worth putting into Hatchbuck, what information he retained in another form, such as on his NCCS Laptop (which I have already found I do not accept was stolen), and what information he did not consider to be as much use to him, whatever the source of the information that he admits that he did in fact enter. The very fact that long-term customers of the applicants, for whom there is no evidence of dissatisfaction, should change to NCCS in the period immediately after Mr Garner left his employment with Central Innovation (working mostly for Intercad) is of itself compelling circumstantial evidence pointing to an external influence – in context, Mr Garner – having had an important and active hand in this taking place. This fact is not alone, but rather forms part of a matrix of evidence that the applicants are entitled to rely upon, and the Court is entitled to act upon.

284    The eighth aspect of the evidence relied upon by the applicants relates to Mr Garner’s reliance on the use of the SolidWorks tool called SlideMaker to identify customers or prospective customers. As already noted above at [129], contemporaneous email records reveal that Mr Atkinson doubted the value of SlideMaker data, and Mr Garner agreed, stating that no-one used it. This effectively removes a possible alternative source of information that Mr Garner might otherwise have been able to rely upon.

285    The ninth aspect of the evidence relied upon by the applicants was Mr Garner’s contention that the data in SUGAR was unreliable, implicitly at least to the point of being of no value to him whatsoever in his new employment. This has been extensively addressed above, and cannot be accepted. His own conduct reveals that, whatever its shortcomings for performing work for Intercad, he used SUGAR data and by his actions must have regarded it as a source of valuable information given the number of reports he clearly generated using it.

286    The final aspect of the evidence that the applicants rely upon concerns their response to the table annexed to Mr Garner’s affidavit. By that table, Mr Garner summarised his assertions as to why the information by which he made any contact or dealing with a customer or prospective customer of Intercad was not obtained from the applicants’ confidential information. As dealt with to the necessary extent above, Mr Garner was cross-examined as to the nature of the explanation that he gave, rather than being taken to each entry in his table.

287    Mr Garner’s annexure is replete with shorthand references to alternative sources of information that:

(1)    have been rejected above, such as “know-how”, sourced in “skill and experience” acquired working for Intercad so a part of his own knowledge, “inbound enquiry”, or “LinkedIn”; or

(2)    have not been the subject of any supporting evidence, let alone evidence that did not turn on accepting Mr Garner’s testimony; or

(3)    are not, of themselves, inherently inconsistent with confidential information of the applicants’ being used, such as “Pre-existing NCCS account” or “local business passed by [Mr Garner] when visiting another customer”.

288    None of those general references could flow higher than their source in Mr Garner’s evidence, which has been found to be seriously wanting. That information ultimately depended upon acceptance of Mr Garner as a reliable witness of truth for its probative weight. I am satisfied that he possesses neither of those characteristics. I therefore do not accept that this evidence stands in the way of direct evidence, circumstantial evidence, or inferences able to be drawn supporting the conclusion that Mr Garner used the applicants’ confidential information to contact and obtain the business of the applicants’ customers.

289    Mr Garner’s assertion evidence does not in any event rebut the overall effect of the evidence by which the applicants have independently successfully proven the taking of their confidential information by Mr Garner and his use of it to poach certain of their customers or prospective customers. Any weaknesses in the overall effect of that evidence are addressed on the issues of breach, loss and quantification.

Evidence on the use of confidential information

290    I now turn to some of the detailed evidence going to the issue of the obtaining and use of the applicants’ confidential information. Closing written submissions for the parties provided very detailed competing analyses of the nine annexures to the statement of claim, and as part of that, the nine corresponding defence annexures. In a schedule to their closing written submissions, the applicants furnished a 256 page blow-by-blow response to the nine defence annexures (applicants’ Schedule 1). In three initial schedules to Mr Garner’s closing written submissions, totalling some 216 pages, he furnished a visual analysis by way of pie charts in respect of each of the nine annexures to the statement of claim (Garner Schedule 1), an analysis of the evidence in relation to the nine annexures to the statement of claim (Garner Schedule 2), and a reply to the applicants’ Schedule 1 (Garner Schedule 3).

291    Mr Garner seeks to tie the applicants to a case established only by direct evidence. He effectively contends that each of the annexures to the statement of claim has to have an unbroken and direct chain of evidence to support any adverse conclusion. On that reasoning, the loss of a customer (as listed in Annexure C to the statement of claim) can only be attributed to the use, and thereby misuse, of confidential information obtained and used to make contact by him if that customer is also listed in Annexures A, B, D, F or G. I reject the suggestion that fact-finding of this kind is so rigid and thereby constrained. It is perfectly permissible to piece together disparate threads of evidence to show that particular information was able to be sourced from records that Mr Garner had obtained access to; that parts of that information were entered into the records of NCCS; that contact was made using that information; and, that customers shifted to NCCS. With such a foundation, and with other facts and inferences able to be derived from the evidence, conclusions are open to be reached about other former customers of the applicants who switched to NCCS for whom the evidence is lacking. In this way, it is possible to cross the necessary threshold of evidence of sufficient quality to establish proof of serious allegations on the balance of probabilities.

292    While there still needed to be found a causal link between obtaining and using confidential information, and obtaining customers, that link can be inferred by the collective effect of the evidence. There is a very large volume of such evidence. A judgment which recorded a detailed analysis of it all would go further than is necessary. What is required is enough evidence being the subject of detailed consideration to support the conclusions that are drawn, including by a process of inference.

293    The first step is to ascertain whether the evidence establishes that:

(1)    Mr Garner put information into the NCCS system about the applicants’ customers that it can reasonably be concluded came from the applicants’ records, given that he ultimately does not dispute that he made records shown as having been created by him in Hatchbuck;

(2)    Mr Garner made contact with those and other customers of the applicants, using that information; and

(3)    those and other customers of the applicants subsequently became customers of NCCS by reason of Mr Garner’s efforts, including the use of the applicants’ confidential information.

Whether Mr Garner put information into the NCCS system about customers of the applicants that it can reasonably be concluded came from the applicants’ records

294    Annexure F to the statement of claim lists 124 contacts in Hatchbuck that are alleged to have been created using information from SUGAR in the period from 15 November 2016 to 9 June 2017. Mr Garner’s response to each is, in the greater part, the same as for Hawk Engineering considered in some detail below, or a variation on that theme: know-how, skill and experience, without much, if any, specificity. This has already been rejected as an explanation for the information entered that was the same as information in SUGAR, as proven by the SUGAR extracts. He also refers in places to a pre-existing NCCS account, even if all that consists of is the entry into Hatchbuck of a bare business name, and is thus a misleading description. Alternatively, he gives a blanket description of “inbound enquiry” for 25 of the 34 businesses that changed over to NCCS from Intercad (noting that Mr Garner only ever responded in relation to 34 of the 37 ultimately listed due to perceived concerns about a lack of leave to make amendments). As already indicated, I do not accept Mr Garner’s word on any of this, as it depends upon accepting his uncorroborated word as to what took place. Thus there is no evidence that I am able to accept that any of these customers came to change over to NCCS by reason of them making an inbound enquiry to Mr Garner or to anyone else at NCCS, even though there is a hint of an inbound enquiry for two of them, being Jacmor Engineering Pty Ltd and Teletech Pty Ltd.

295    A consideration of those 124 Hatchbuck records reveals that at least some of that customer contact information for each was the same as information from SUGAR as proven by the SUGAR extracts. I am satisfied that the information corresponding to that in SUGAR was obtained by Mr Garner from that source for the following reasons.

(1)    In relation to the 124 Hatchbuck records listed in Annexure F to the statement of claim, some 106 of the entries were recorded as being made by Mr Garner in person, with most of the remainder being made by Ms Sethi, and one apiece by Mr D’Souza and Mary Ann Bower. The evidence revealed that Annexure F should have had seven further entries, three of which were customers appearing in Annexure C (that is, customers that were lost to NCCS). This means that the true number of “contacts created on Hatchbuck using information from SUGAR”, which the applicants sought to list in Annexure F, should have been 131.

(2)    Those 124 (but in truth 131) entries were made between 15 November 2016 and 9 June 2017, but the great majority were entered by the end of February 2017. During the period from 15 November 2016 to 9 June 2017 (207 days – being 144 business days – inclusive of start and end date), Mr Garner personally made entries to Hatchbuck on some 41 days, with at least 13 days with three or more entries and 9 days with four or more entries.

(3)    Of these 131 customers, 111 (106 listed in Annexure F) were entered personally by Mr Garner during that 207-day period between 15 November 2016 and 9 June 2017; of those 111, 98 (88%) were entered personally by Mr Garner between 15 November 2016 and 22 February 2017 (a 100-day period – 70 business days – inclusive of start and end date).

(4)    A further 16 of those customers were entered by Ms Sethi in the period from 21 November 2016 to 31 May 2017 (a 191-day period (133 business days) inclusive of start and end dates), with her making entries on 15 days.

(5)    At least 95 of those 131 entries (approximately 70%) involved Mr Garner or Ms Sethi on his behalf entering a customer contact email address that was in SUGAR.

(6)    A differently constituted 121 of those 131 entries (approximately 90%) involved Mr Garner entering an individual customer contact name that was in SUGAR.

(7)    Due to the overlap between the email address entries and the customer contact entries, the overall coverage was close to 100%. That is, virtually all of the entries in the 131 Hatchbuck entries contained information that was in SUGAR. This was a large volume of data for anyone to remember, noting that Mr Garner did not suggest in his evidence, or by referring to any other evidence, that he ever created or otherwise had any written record of what he seemed to say he had remembered.

(8)    Approximately 37 of the customers’ names had already been entered into Hatchbuck, mostly as bare company entries – that is, effectively as no more than possibilities – before Mr Garner started working for NCCS. For Mr Garner to have made these entries as the result of know-how or skill, he would not only have needed to remember at least 350 data points being email addresses, company names, mobile and office telephone numbers, office addresses and individual company contact names, but would also have needed to remember those items in groups of two or three corresponding pieces of data. That is, the relationships between the different kinds of data are as important as the data itself.

(9)    Given the rejection of Mr Garner’s evidence attempting, unconvincingly, to attribute the source of the information he had to any other source external to the applicants’ records, the sheer volume of entries reinforces the conclusion already reached that this detailed information was not within the realistic realm of his ability to memorise.

(10)    The sheer number of items of contact information entered into Hatchbuck reinforces the conclusion already reached that this could not be easily explained, even by a much better witness than Mr Garner, as resulting from some kind of extraordinary memory, let alone by Mr Garner’s broad and imprecise descriptions of knowhow, skill and experience.

296    I infer that the 131 customers for whom contact information was entered into Hatchbuck are a subset of the information that Mr Garner had available and used. The applicants were thwarted in their attempts to obtain information from the NCCS customer information system that replaced Hatchbuck on and from around 31 May 2017. An important contributing reason for that inference being drawn is that there is no logical reason why Mr Garner would have stopped using such valuable information merely because NCCS had changed its record-keeping system. While inference cannot fill the gap as to precisely what information was copied over, it suffices for present purposes to infer that this is what is most likely to have taken place. There is no particular standard of proof for such intermediate findings, as opposed to ultimate and determinative findings that must be established to the requisite standard of the balance of probabilities. Nonetheless, I am satisfied, for the reasons just given, that this is what took place on the balance of probabilities. Logic and common sense defies reaching any other rational conclusion. This is important when it comes to customers lost to the applicants as listed in Annexure C, for which there is no corresponding listing in Annexure F being a list of customers entered into Hatchbuck using SUGAR data.

297    In a case such this, disparate pieces of direct evidence and inferential findings of differing strength combine, in the manner of a jigsaw puzzle. There can be, and in this case is, a degree of corroboration between this evidence. As in in a criminal law setting, albeit acknowledging the differing standard of proof, “[t]he essence of corroborative evidence is that it ‘confirms’, ‘supports’ or ‘strengthens’ other evidence in the sense that it ‘renders [that] other evidence more probable’: Doney v The Queen (1990) 171 CLR 207 at 211, quoting Director of Public Prosecutions v Kilbourne [1973] AC 729 at 758, itself quoting R v Hester [1973] AC 296 at 315, 321, 323 and 325. In this way, it is open to infer that, if a body of customers can be clearly proven by a firm body of evidence to have been lost to NCCS, inferences can be drawn to the same end for customers lost for whom the evidence is less clear, especially in the absence of any accepted alternative explanation proffered by Mr Garner standing in the way of such inferences being drawn. I see no good reason to accept a benign explanation for the loss of long-standing customers of the applicants, viewing the evidence as a whole, especially when regard is had to timing. There is no evidence of any other apparent cogent reason for the customers to change software resellers, and, as detailed below, the reasons that were given were vanilla and substantially the same. Viewed as a whole, rather than in the dissected way suggested by Mr Garner, the evidence permits a sufficiently clear picture to emerge as to what has taken place.

298    Mr Garner chose not to tell the truth in certain areas that were capable of robust challenge, fatally damaging his credit in areas in which he relied on this Court simply taking his word for what had taken place. This is not a situation in which a weak case for a given customer drags down the stronger case for another customer. Rather it is the collective effect of the evidence that must be considered.

299    The importance of this reasoning is that Mr Garner had access to, and was thereby armed with, a veritable treasure trove of valuable confidential information, especially when read with the confidential licence information that I have already found that he had downloaded from the VRC as Output 26 and taken from the applicants’ premises via a USB stick. I do not accept that Mr Garner conducted his own enquiries, gathered his own information from publicly available sources, and obtained other information less freely available (much of which would not have been available to him at all), and then made cold calls to ascertain whether a particular business might use SolidWorks software, if that is not overstating what he seems to be suggesting took place. He did not need to ferret about to obtain such information. He already had it. It is not to the point that his knowhow, skill and experience almost certainly enabled him to make better use of such confidential information than someone less well prepared by his past experience. He was primed to poach customers using – indeed, misusing – the applicants’ confidential information. All he needed to be able to do was persuade a reasonable number of customers just to try using NCCS instead of Intercad, and he would have a substantial number of sales, and Intercad would have lost a substantial number of customers.

300    It is helpful to identify the process that Mr Garner engaged in by way of a detailed example of an apparently unsuccessful attempt at a conversion and a detailed example of several successful conversions. That then provides something of a template for assessing the remaining evidence, without needing to descend into as much detail for all other lost customers.

Whether Mr Garner made contact with customers of the applicants, using confidential information obtained from the applicants

301    The nature of the material that has been examined in some detail can be amply illustrated by reference to the very first entry in the first annexure, Annexure A, to the statement of claim, relating to a customer that did not apparently swap over to NCCS. The applicants allege that Mr Garner contacted Mr Steven Gallienne of a business called “3d4”, which may also be referred to for convenience and ease of reading as “3D4”. In his table of responses, Mr Garner says of this allegation:

Pre-existing NCCS account.

Know-how of the First Respondent, being information which has become part of the First Respondent as a former employee of the Second Applicant in the form of his skill and experience.

Long standing connection of the First Respondent.

302    As noted below, the first point above that 3D4 was a pre-existing NCCS account is manifestly untrue in the face of the applicants’ response to this assertion. Beyond that, Mr Garner makes no attempt to explain with any specificity how he came to make contact with Mr Gallienne, who was the primary contact at a business that was a long-standing customer of the applicants via Intercad.

303    The corresponding part of the applicants’ Schedule 1 identifies the evidentiary sources for the pleaded assertions and their locations in the court book, with corresponding references to the annexures to the defence, and summarises the evidence relied upon as follows (the references to SUGAR are references to information that was in SUGAR at the time that Mr Garner left his employment with Central Innovation, as proven by the SUGAR extracts, being information that he had access to prior to that, with the numbers in brackets being court book page numbers):

1.    3d4 was entered into SUGAR on 31 May 2012 – (3107)

2.    Steven Gallienne was entered into SUGAR on 25 June 2012 – (3112)

3.    3d4 had multiple assets with the Second Applicant, with the first purchase date being around 27 June 2012 – (3110)

4.    At all relevant times, 3d4 was a customer of the Applicants – paragraph 24 at (1038); also see (3107)

5.    3d4 was entered into Hatchbuck (or created) by Reena Sethi on 16 September 2016 at 12:05 am as a Lead – (3117)

6.    Steven Gallienne was entered into Hatchbuck (or created) by Gary Garner on 21 November 2016 at 9:37 am as a Prospect – (3118). At this time Steven Gallienne was tagged as a “Customer with IC” – (3118). Therefore, Steven Gallienne was not a “Pre-existing NCCS account”

7.    The email address [redacted for these reasons] and the mobile telephone number [redacted for these reasons] as existed in SUGAR – (3112), were entered into Hatchbuck on 21 November 2016 by Mr Garner – (3118). This information does not appear to have been entered by Ms Sethi on 16 September 2016 – (3117/10231)

8.    The email address [redacted for these reasons] and the mobile telephone number [redacted for these reasons] were contained within Output 26 – (3119/3120)

9.    Mr Garner called Mr Gallienne twice on 21 November 2016 at 10:04 am (3121–3130)

10.    Mr Garner emailed Steven Gallienne on 21 November 2016 at 10:48 am – (3116/4044)

11.    At (10233), the email address for Mr Gallienne is different to SUGAR and Hatchbuck, and there is no mobile number recorded at (10233)

12.    At (10233), if this is from Mr Garner’s LinkedIn account then it appears to record him connecting with Mr Gallienne whilst he was in the employ of either or both of the Applicants on 16 January 2013

304    The telephone calls referred to above were something of a needle in a haystack, but their evidentiary worth goes beyond 3D4, because they show that making telephone calls, and not just sending emails, was part of Mr Garner’s mode of operation in seeking to have a customer of the applicants become a customer of NCCS.

305    The first pie chart in Garner Schedule 1 analyses the 28 customers listed in Annexure A to the statement of claim, apportioning:

(1)    18 of them to contact details that were not in the Output Files or SUGAR Reports (and therefore wrongly assuming that the Court would not make any adverse finding as to confidential information, including, for example, the contact information for the very first entry considered above and in further detail below (Mr Gallienne and 3D4) being taken from SUGAR itself, most likely by remote access);

(2)    five of them to know-how, information supplied by NCCS, or from LinkedIn, all of which require me to accept the uncorroborated word of Mr Garner, which I am not prepared to do;

(3)    three of them to a pre-existing NCCS account – that is manifestly false for the very first entry for Mr Gallienne and 3D4, because that business did not become even so much as a lead (let alone a fully-fledged customer, which the word “account” would tend to suggest) until after Mr Garner’s retrenchment, and did not become a prospect until after Mr Garner had started performing work for NCCS shortly before formally becoming an employee – it is not accurate in any event to refer to a possible customer for NCCS as being a pre-existing account; and

(4)    two of them to an inbound enquiry, as SolidWorks referral or a Seek advertisement, which again requires me to accept the uncorroborated word of Mr Garner, which I am not prepared to do.

Similar comments can be made about the remaining pie charts in the further annexures to Garner Schedule 1. In the result, the “visual analysis” in the pie charts was not a persuasive way of presenting the case for Mr Garner, largely because it relied upon evidence from him which I have not accepted.

306    The corresponding analysis for the first entry in Garner Schedule 2 asserts that, as pleaded in Annexure A to the defence, Mr Garner had been connected on LinkedIn with this customer since 16 January 2013, and that the source of the customer was “know-how” of Mr Garner, being information that had become “part of” him. As noted above, Mr Garner in cross-examination disavowed reliance on LinkedIn as a source of contact information (despite earlier relying upon it in his affidavit evidence) a position he is stuck with given my rejection of his attempt to change his evidence in re-examination; and I am not prepared to accept that he retained in his memory such details as mobile telephone numbers or email addresses, let alone the customer information available to him in the Output Files.

307    The telephone and email contact made by Mr Garner on 21 November 2016 alleged by the applicants is apparently, and unsurprisingly, not disputed. However, Mr Garner then refers to the contact information (email addresses and a mobile number) being in Output 26, but no contact information being in Output 27 (Output 27 containing leads) or in the SUGAR Reports, and to nothing more from SUGAR of this kind being found in the SUGAR extracts in evidence. Indeed, Mr Garner places reliance on what is in the SUGAR extracts and is not in the SUGAR Reports, in order to emphasis what he contends was not shown to have been taken by him, either by direct evidence, or by proper inference, rather than speculation. Mr Garner’s attempt to confine the applicants’ case to the sources of information directly shown to have been accessed and either downloaded or generated in reports is maintained in Garner Schedule 3:

SUGAR Extracts are not the SUGAR Reports. SUGAR Reports do not contain confidential information, namely customer contact details. SUGAR Extracts do not comprise part of the Applicants’ alleged confidential information alleged to have been taken by Mr Garner.

The Applicants have conceded that 3D4 was a previously known customer or account of NCCS, the Second Respondent and was pre-existing on NCCS’ Hatchbuck system.

Reena Sethi entering customer contact details on NCCS’ Hatchbuck system prior to Mr Garner’s employment with NCCS, the Second Respondent cannot be attributed to Mr Garner.

It cannot reasonably be asserted that the Applicants own the First Respondent’s LinkedIn account or contacts therein. Nor is the First Respondent’s LinkedIn said to comprise part of the Applicants’ allegedly confidential information.

There is no evidence including but not limited to contemporaneous documents adduced by the Applicants in support of their allegations regarding the taking, use or misuse of the alleged confidential information, concerning 3D4 by Mr Garner.

308    What is lacking from Mr Garner’s case and argument is any basis for assuming or otherwise accepting that he could only source the contact information from Output 26 or the SUGAR Reports, excluding reliance on SUGAR more generally, the contents of which are proven by the SUGAR extracts. The availability of a broader source for such information, such as by remote access to SUGAR itself, coupled with the customer relationship information that was in Output 26 or the SUGAR Reports, is sufficient to sustain this aspect of the applicants’ case. I am satisfied that, on the balance of probabilities, Mr Garner’s contact with 3D4, and with Mr Gallienne, came about by reason of him misusing confidential information that he had obtained from the applicants.

309    This reasoning applies with equal force and effect to all other attribution of contact details by Mr Garner to his memory (that is, “know how”) or to LinkedIn, or indeed to the other suggested sources that he advanced, rejected above. I am satisfied that whenever contact or other relevant customer information was available in the Output Files, or in SUGAR (not confined to the SUGAR Reports, but extending to information of the kind in the SUGAR extracts in evidence), on the balance of probabilities that was the primary if not only identified basis for and means by which Mr Garner made contact with the customers or prospective customers of the applicants, predominantly if not entirely, being customers of Intercad.

310    Of the 151 customers appearing either in Annexure F, Annexure C, or both, the applicants’ Schedule 1 did not explicitly refer to contact being made in respect of 44 of them. Of those that remained, Schedule 1 referred to 81 customers in respect of whom evidence was adduced to suggest that NCCS’s earliest interaction with the customer was outgoing contact by Garner via email, telephone, mobile phone, or Hatchbuck email blast. Of these, Schedule 1 referred to 55 customers that were first contacted by Mr Garner after contact details had been entered into Hatchbuck (in a large proportion of cases, minutes after, but occasionally longer periods). In one of those cases, Schedule 1 refers to the customer also having been contacted by NCCS more generally, and for another there is evidence that there was a later incoming enquiry from the customer. Of the remaining 26 customers, one was contacted by Mary Ann Bower, 16 were contacted by NCCS more generally, and in seven cases there was evidence to suggest that the earliest contact with the customer could have been via an incoming enquiry from the customer.

Whether customers of the applicants subsequently became customers of NCCS

311    I next turn to a customer of the applicants who was successfully brought over to NCCS.

312    Hawk Engineering, the 18th lost customer listed in Annexure C, had been a customer of the applicants since 2010 at the time that Mr Garner was made redundant. Hawk Engineering was “assigned to” “Peter Michalski” on SUGAR, and its contact, Owen Norman, to Mr Garner. Hatchbuck records show that Mr Garner created an entry for Hawk Engineering at 8.32 am on 19 December 2016. The name “Gary Garner” was also listed next to the words “Sales Rep” on both the company entry and the customer contact entry (Mr Owen Norman) for Hawk Engineering on Hatchbuck. The information entered included the following which was also in SUGAR:

(1)    the street address;

(2)    the contact person, Mr Owen Norman;

(3)    the email address for Mr Norman; and

(4)    a mobile telephone number.

313    It may be noted that Mr Garner also entered into Hatchbuck the job title “Mechanical Designer” for Mr Owen Norman. This piece of information was not evident in SUGAR or Output 26, which it might be argued could suggest that Mr Garner did in fact just remember details about Intercad’s customers. However, this does not weaken the finding that Mr Garner did not obtain all or even most of the information matching SUGAR details that he entered into Hatchbuck through sheer force of memory. It is not necessary to exclude any possibility of Mr Garner remembering any details about his former customers at all to be satisfied that he did not remember the level of detailed information necessary to have made the Hatchbuck entries that he made.

314    Two minutes after the entry of this data, at 8.34 am on 19 December 2016, an email was sent to Mr Norman as part of an email blast, in the same terms as the email blast sent to, inter alia, Mr Ryan, on 23 November 2016, the text of which is reproduced above at [163]. Mr Norman responded just over an hour later, congratulating Mr Garner on his new job. On 6 February 2017, an account change request form was lodged with SolidWorks, signed by Mr Norman, changing the account from Intercad to NCCS. The stated reason noted above was bland to say the least: “I wish to change my service provider”. Importantly, there was no indication of any dissatisfaction with Intercad. The evidence reveals that between the end of January 2017 and mid December 2018, NCCS issued invoices to Hawk Engineering.

315    Mr Garner, in the schedule to his defence (also adduced in evidence) explains his dealings with Hawk Engineering as being the product of his knowhow, skill and experience. He gave no meaningful evidence, let alone detailed evidence, of how he came to remember such detailed information, not just for Hawk Engineering, but for a much larger number of customers in the same time period. I have already rejected this as a credible source of the information that Mr Garner entered, or caused to be entered, into Hatchbuck.

316    In Garner Schedules 1, 2 and 3, Mr Garner also points to the information that he entered into Hatchbuck as not being the same as that provided in Output 26 or Output 27, and states that the SUGAR Reports “do not contain confidential information, namely customer contact details”. In doing so, Mr Garner at least implicitly acknowledges that such information, which was in SUGAR as proven by the SUGAR extracts, was confidential information. He points out that Hawk Engineering’s office address is publicly available information, but does not suggest that the specific contact information, being Mr Norman’s name, email address, and mobile telephone number were publicly available. The inference open to be drawn, and which Mr Garner has not rebutted, is that Mr Garner accessed and used information about Hawk Engineering available to him in the Output Files and/or SUGAR Reports and/or SUGAR by remote access to make contact with Hawk Engineering and make competitive SolidWorks subscription offers to them. I am satisfied, on the balance of probabilities, that NCCS obtained Hawk Engineering as a customer as a result of Mr Garner taking and misusing confidential information from his former employment.

317    For 25 of the 37 customers who switched from Intercad to NCCS, the reason recorded on the relevant account change request form provided to SolidWorks was “We would like to try NCCS for their service”. A further 10 out of the 37 used very similar phrases, such as “Want to try NCCS for their support”. This supports an inference that a similar process has taken place, or the same person has been involved, to produce this change for 35 of the 37 customers who changed their business from Intercad to NCCS. None of the customers who changed from Intercad to NCCS expressed any dissatisfaction in this context. Hawk Engineering, the lost customer considered in greater detail above, recorded as the reason: “I wish to change my service provider”. The remaining customer, Dark Horse Pty Ltd, gave as a reason consolidating licences, which again was not an expression of dissatisfaction. This in turn supports an inference that the idea of a change was not the initiative of the customer, but rather had been suggested to them, especially as all had been customers of Intercad for a period of between 4 years and 5 months, and 22 years and 5 months.

318    Fifteen of the 37 customers of the applicants lost to NCCS had information in Hatchbuck that was the same as information available in SUGAR. The key information in relation to those customers is summarised in the table below. In this table, the following abbreviations and previously defined terms are used:

ACR    “Account Change Request” forms were the administrative mechanism by which customers formalised a change from one service provider to another. See, eg, [314] above. On some occasions the transfer took place through two forms: see, eg, Bell Environmental.

Asset        Individual software seat. See [98] above.

Contact    Natural person acting on behalf of (or appearing to act on behalf of) the (usually) company customer.

HB    Hatchbuck, NCCS’s customer relationship management system. See [17(16)] above.

Intercad    The second applicant. See [2] above.

NCCS        The second respondent. See [6] above.

SUGAR    Intercad’s customer relationship management system. See [17(6)].

319    In relation to one of the customers set out in the table above, Green Distillation Technologies Corp Ltd, entered by and assigned to Andrew Kim, there is insufficient evidence for me to be satisfied that Mr Garner brought about the transition of this customer from Intercad to NCCS by the misuse of confidential information. The detailed evidence referred to in respect of the remaining 14 customers leads to the drawing of a strong and compelling inference that each of those customers were acquired by NCCS as a direct result of Mr Garner using confidential information that he had obtained from the applicants. As referred to in numerous places above, Mr Garner made no serious attempt to rebut this evidence, or to provide any credible alternative explanation for those 14 customers being lost to NCCS. The live issue remaining on this topic is whether, with less information, the same inference can be drawn in respect of the remaining 22 customers lost to NCCS.

320    The topic of drawing inferences in favour of a party in the face of a failure of an opposing party to give or call contradictory evidence was considered above and applied at [248]-[251], including the discussion of the principles on this topic considered in the High Court cases of Weissensteiner, RPS, Azzopardi and Baden-Clay. All were criminal cases in which the standard of proof that the inference to be drawn must meet is the more exacting threshold of beyond reasonable doubt, albeit confined to ultimate issues as to the elements of an offence, or evidence the acceptance of which is indispensable to such a conclusion. The allegations made against Mr Garner are serious, and require due attention to the quality of the evidence supporting such a serious conclusion, but the standard of proof at all times remains the balance of probabilities. However, not only was Mr Garner fully aware of the evidence that was being advanced against him, he elected to erect only the most dismissive – even perfunctory – evidentiary response. It is in that context that consideration of the remaining 22 lost customers falls to be considered.

321    For those 22 customers the available specific evidence is to be considered in the context of the evidence as to:

(1)    the information that Mr Garner both copied and took, in the form of the Output files;

(2)    the SUGAR Reports that Mr Garner generated, and I readily infer also took, especially the bulk that were generated on 18 August 2016, only one clear working day before he was made redundant;

(3)    Mr Garner’s online access to SUGAR despite his disavowal of the information in SUGAR being of any use when he was working for Intercad via Central Innovation;

(4)    the significant amount of data matching information in SUGAR and to a lesser extent Output 26 that he entered into Hatchbuck;

(5)    the use of that information by Mr Garner to generate email blasts to entities which included customers of the applicants and to make telephone calls to such customers; and

(6)    the overwhelming inference able to be drawn that Mr Garner used confidential information obtained from the applicants to secure the loss of 13 of the 37 customers to NCCS.

322    The available specific evidence in relation to the further 22 customers lost to NCCS includes the following:

(1)    All were longstanding customers of the applicants, as noted above, for periods ranging from 4 years and 5 months to 22 years and 5 months.

(2)    Each of them were lost to NCCS after Mr Garner had departed his employment with Central Innovation, working for Intercad.

(3)    There is no evidence that any of them had any complaint about the service provided by the applicant – to the contrary, all except one of the account change request forms were expressed in terms that referred only to trying out NCCS, itself an indication that they had been approached in the same way.

(4)    None of those 22 customers are recorded in SUGAR as having been assigned to Mr Garner, which tends against a knowhow or memory basis for his knowledge about them, especially as no such focused evidence was given by him.

(5)    In relation to one of these customers, the evidence demonstrated that Mr Garner had sent an email to the customer contact who was in SUGAR saying “Thanks for taking my call earlier” on 4 April 2017. This means that it cannot be inferred from the absence of documentary evidence that a customer was entered into Hatchbuck or any other CRM that the customer was not contacted by Mr Garner misusing the applicants’ confidential information.

(6)    In relation to the 37 customers said by the applicants to be lost to NCCS, Output 26 contained asset entitlement end dates for at least 30 of them, and specific asset serial codes for at least 26 of them. This means that Mr Garner had access to information about what products most, if not all, of the customers lost to NCCS subscribed to through Intercad, and in at least some cases when those subscriptions were due to expire.

323    The inference readily able to be drawn is that each of these further 22 customers had been approached and persuaded to change to NCCS. There was no evidence that this was carried out by anyone at NCCS other than Mr Garner. Mr Garner was in a position to give specific evidence to resist an inference being drawn that he was the person behind this taking place, including as to the use of confidential material obtained from the applicants to achieve this. He elected not to do so, beyond vanilla statements in the copy of the schedule to the defence annexed to his affidavit. He did not specifically deny having caused any of these 22 customers to change from the applicants to NCCS, not referring to several at all in his evidence. This was presumably due to the late addition to the amended schedule to the statement of claim on 30 September 2019 (albeit well before his affidavit was affirmed on 28 October 2019). He did, however, refer to them in his closing submissions schedule (see the schedules relating to Austratek Designs, Pump Technology Pty Ltd, and Scad Designs) and for others said words to the effect of “To the best of my recollection, this account was an inbound enquiry to NCCS” and/or “To the best of my recollection, this account handled by another NCCS employee”, without naming who that person was, and/or for a few made reference to his “know-how”. While the specific evidence in relation to these 22 customers, taken on its own, supported only a somewhat weak inference that the loss of these customers to NCCS was caused by Mr Garner using confidential information from the applicants, in context the doubts about the capacity to support that ultimate inference being drawn may more easily and safely be overcome. I have no hesitation in drawing that inference in all the circumstances in respect of all of those 22 additional customers. Mr Garner had an ample opportunity to give evidence that might have rebutted the drawing of that additional evidence, but chose not to do so.

Conclusion on the use of confidential information

324    The applicants submit, and I accept, that none of the alternatives advanced by Mr Garner as to the provenance of the information that he entered into Hatchbuck measurably survived his cross-examination. They also did not withstand the overall strength of the evidence that the applicants were able to adduce, considered as a whole. I therefore find that, on the balance of probabilities, having full regard to the quality of evidence required by s 140(2) of the Evidence Act for serious adverse conclusions to be reached, that Mr Garner did take and use confidential information belonging to the applicants, and that he thereby secured the loss of 36 customers of the applicants to NCCS.

325    Importantly, the information that Mr Garner took and used is not confined to that which can be directly proven to have been taken, or directly proven to have been used, although that is an important part of the evidentiary matrix. The very fact that instances can be directly proved, and that customers of the applicants, and of Intercad in particular, were demonstrated to have been contacted with the benefit of information either shown to have taken by Mr Garner, or with the benefit of information that was available to him, assists in drawing inferences as to how other such customers came to be customers of NCCS. As already indicated above, Mr Garner’s case to the effect that only an unbroken line of evidence of direct taking and direct contact by him will suffice is rejected. That approach places an unduly precise and exacting requirement on the quality of evidence that is required to reach a state of satisfaction, even as to serious alleged conduct. The standard at all times remains the balance of probabilities, which can be satisfied by the drawing of inferences and the rejection of benign explanations by Mr Garner, having regard to the adverse conclusions drawn about his credibility and reliability and the lack of evidentiary corroboration of those explanations. The inferences that I have drawn in this case are the product of the cumulative effect of many strands of evidence in a metaphorical cable, at each stage leading to this finding about the obtaining of information and the use of information.

Issue 2:    Did Mr Garner breach his contractual, equitable or statutory obligations?

326    Beyond disputing the identity of the entity to whom they were owed or for whose benefit they were imposed, Mr Garner does not deny the contractual, fiduciary and statutory obligations that applied to him, nor that failing to comply with those obligations would constitute a breach of them. His main case is an assertion that the acts alleged to constitute such a breach have not been proved to have taken place. Beyond that, Mr Garner’s submissions on this topic are largely confined to the question of who his employer was, asserted to be only Intercad. That assertion has been rejected in the finding made that he was employed by Central Innovation to work for Intercad (see [20] and following above). But even if the finding had been that he was, as he asserted, employed by Intercad, that would only affect the precise legal characterisation of any breach found to have taken place, and thereby the legal consequences.

Contract

327    It is not disputed by Mr Garner that he entered into Contract One, albeit that he contends that his contracted employer was Intercad and not Central Innovation. Necessarily, that entails acceptance that he was bound by cll 14.1, 15.2 (apparently intended to be 14.2 as it is in Contract Two) and 16 (apparently intended to be 15 as it is in Contract Two), dealing with confidentiality, a requirement to assume confidentiality unless told otherwise in writing, not removing confidential information from company premises, returning company property upon termination and not retaining a copy of such property. (The same terms, with minor changes, appear in Contract Two as cll 14.1, 14.2 and 15, but cannot be relied upon.) It follows that at the very least, Mr Garner was bound by those terms in Contract One in relation to Intercad, and at most, was bound by the same terms in relation to Central Innovation, including in relation to work done for Intercad.

328    It is convenient to reproduce cll 14.1, 15.2 and 16 from Contract One:

14. CONFIDENTIALITY

14.1    General

As a member of the CI Group you will have access to sensitive, technical and commercially confidential information. You must not during your employment or at any time thereafter, without the prior written consent of the CI Group or as otherwise required by law, disclose directly or indirectly to any person for any reason other than the conduct of the CI Group’s business, any Confidential Information nor shall you divulge at any time to any parties information that could damage or harm the CI Group’s business interests.

“Confidential Information” means all information, regardless of the manner in which it is recorded or stored, (including but not limited to information in an electronic form), relating to the business interests, methodology or affairs of the CI Group, or any person or entity which the GI [sic] Group deals [sic] or is concerned with, including, but not limited to, the following:

1.    trade secrets, information, process, methods [sic] products, customer information, prices or data belonging to the CI Group;

2.    all technical or non technical data, devices, formulae, programs, techniques, plans, software and computer records;

3.    all mailing lists, supplier lists, price lists or lists of clients or customers of the CI Group;

4.    information concerning other employees and service providers to the CI Group; and

5.    any information of a commercial, operational, marketing, business, technical or financial nature relating to the affairs or business of the CI Group.

15.2    Uncertainty as to Confidentiality of Information

If you are uncertain whether:

(a)    any information is Confidential Information; or

(b)     any Confidential Information is lawfully freely available to the public;

you are to assume and act as if the information is Confidential Information and is taken not to be freely available to the public unless the CI Group informs you in writing to the contrary.

16. GROUP COMPANY DOCUMENTS AND OTHER PROPERTY

16.1     You must not, without written consent from your skip level Manager (your Manager’s Manager), remove any material of the CI Group from the premises of the CI Group or from within its computer system and network if the material contains Confidential Information, Intellectual Property Rights of the CI Group or information about the business affairs of the CI Group.

16.2     Return of Company Property on Termination of Employment

On the cessation of employment with the CI Group, you must immediately deliver to the CI Group or its authorized representative without any further demand:

(a)    any and all documents in your possession, custody or control relating in any way to any Confidential Information of the CI Group; its Intellectual Property rights [sic] or to its business affairs.

(b)    any property of the CI Group or thing which the CI Group is entitled to possess including but not limited to laptops, letters, books, computer discs, memory sticks, swipe cards, reports, databases, customer lists and information, manuals, training material, security codes, security cards and logins and other materials of every description (including copies) which are within your possession or control and which belong to or came from or during the course of your employment with the CI Group.

16.3    Retention of Documents

You are not entitled to retain a copy of anything referred to in clause 16.2 in any form (“Return of property on Termination”).

329    It follows that:

(1)    cl 14.1 broadly defines confidential information which undoubtedly captures customer information, including but not limited to contact information, in both the VRC and in SUGAR, including information able to be accessed online of the kind reproduced in the SUGAR extracts;

(2)    there is no suggestion that Mr Garner had permission from anyone, let alone his manager, to copy and remove any such information – indeed his denial of having done so implicitly entails accepting that this was not permitted;

(3)    cl 15.2 in any event captures anything which is of uncertain status, rendering it too as confidential information; and

(4)    cl 16.2(b) ensures that the obligation to return material extends to the widest range of storage and reproduction formats and media, with there being no suggestion that any such material was returned.

330    It follows that the findings made against Mr Garner about accessing, removing, and also using confidential information of the applicants, including that of Intercad for whom he worked on behalf of Central Innovation, constituted a breach of express terms of his contract of employment. The issue of damages turns on the separate, but related, issue of whether damage has been shown to have been caused by that breach, also a part of the use analysis above.

331    Given the relative clarity of the express contractual terms relied upon by the applicants, it is not necessary to embark upon the question of whether there is an enduring legal obligation as they also assert, continuing after the termination of Mr Garner’s employment contract, to maintain any degree of confidentiality going beyond the express terms of his contract and any necessary implication to support such an express term: see the debate about the question of implying a duty of good faith in contracts in Commonwealth Bank of Australia v Barker [2014] HCA 32; 253 CLR 169, especially at [28]-[30] (per French CJ, Bell and Keane JJ), at [104]-[107] (per Kiefel J) and at [113]-[117] (per Gageler J). There is no apparent necessity to imply any such term in this case given the express contractual terms, the effect of which are not apparently disputed by Mr Garner.

Breach of fiduciary duty

332    In Boardman v Phipps [1967] 2 AC 46 at 127-8, Lord Upjohn observed:

In general, information is not property at all. It is normally open to all who have eyes to read and ears to hear. The true test is to determine in what circumstances the information has been acquired. If it has been acquired in such circumstances that it would be a breach of confidence to disclose it to another then courts of equity will restrain the recipient from communicating it to another. In such cases such confidential information is often and for many years has been described as the property of the donor, the books of authority are full of such references; knowledge of secret processes, “know-how,” confidential information as to the prospects of a company or of someone’s intention or the expected results of some horse race based on stable or other confidential information. But in the end the real truth is that it is not property in any normal sense but equity will restrain its transmission to another if in breach of some confidential relationship.

333    In a passage that cited this part of Boardman v Phipps, Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96 observed that the accepted fiduciary relationships were sometimes referred to as relationships of trust and confidence, or confidential relations, including as owed by an employee to an employer. Mason J commented further (at 97) on the obligation on a fiduciary not to exercise power or discretion to the detriment of the person to whom the duty is owed, and then pointed out that any such obligations that may otherwise exist are subordinate to contractual obligations:

That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.

See also Concut Pty Ltd v Worrell [2000] HCA 64; 176 ALR 693; 75 ALJR 312 at [26] as to the different conceptual origins of contractual and fiduciary obligations.

334    Thus the dominant source of Mr Garner’s obligations are contractual (whether by way of a contract with Central Innovation as I have found, or by way of a contract with Intercad as he contends), with the confidential information obligations imposed by that contract being quite detailed and specific. Even if I have erred in any way in relation to the scope of Mr Garner’s contractual obligations, there is no doubt that his fiduciary obligations to Central Innovation as his employer (or if I be wrong, to Intercad as his employer), including in the performance of work for Intercad, nevertheless extend to a requirement not to take confidential information from Intercad or Central Innovation during or shortly after his employment. Thus if he was not in breach of a contractual obligation, he was in any event in breach of a fiduciary obligation.

335    While no meaningful content was given to Mr Garner’s assertion of “knowhow”, it is clear that he was entitled to use any information that he independently knew or remembered, or which could not be directly proven or inferred to come from his employment. The combined effect of contractual obligations and any fiduciary obligations that apply in the alternative is to create a solid wall by which Mr Garner was not entitled to use information going beyond this. The problem for Mr Garner in finding any permissible alternative source of information other than the VRC, the Output Files and SUGAR (not confined to the SUGAR Reports, but rather extending also to the information to which he had access in SUGAR, the content of which was proven to my satisfaction by the SUGAR extracts) is that he gave no credible evidence of retaining any specific or identified information at all in his memory, nor did he explained in any coherent way what he meant by references to knowhow. Nor did he attribute in any coherent way his obtaining of any such information to any publicly available source. The state of evidence leaves the applicants’ confidential information that I have found he took as the only credible source of information of any value, including contact information, licence information and other customer information.

336    To the extent that his contractual obligations do not proscribe in some way Mr Garner’s misuse of information found to have been obtained from the applicants, in the alternative he was not permitted to, but did, promote his personal interests by making or pursuing a gain involving a real or substantial possibility of conflict with his obligations to preserve as confidential the information he obtained from Central Innovation (or alternatively, Intercad): Hospital Products at 103, approved in Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; 207 CLR 165 per McHugh, Gummow, Hayne and Callinan JJ at [78]. His actions in taking and using confidential information from the applicants contrary to their interests, as I have found took place, were therefore not only a breach of express contractual obligations, but in the alternative were also a breach of his fiduciary obligations: see Lifeplan Australia Friendly Society Ltd v Woff [2016] FCA 248; 259 IR 384 per Besanko J at [333].

Breach of Corporations Act 2001 (Cth) s 183

337    Section 183(1) of the Corporations Act provided, and still provides, as follows:

183    Use of information—civil obligations

Use of information—directors, other officers and employees

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

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

(b)    cause detriment to the corporation.

Note 1:     This duty continues after the person stops being an officer or employee of the corporation.

Note 2:    This subsection it a civil penalty provision (see section 1317E).

(2)    A person who is involved in a contravention of subsection (1) contravenes this subsection.

Note 1:     Section 79 defines involved.

Note 2:    This subsection it a civil penalty provision (see section 1317E).

338    This effectively mirrors the fiduciary obligation found to apply to Mr Garner above: SBA Music Pty Ltd v Hall (No 3) [2015] FCA 1079 at [28] per Wigney J, quoted with approval by Besanko J in Lifeplan Australia at [352]. The finding of a breach of fiduciary obligations arising from the obtaining and misuse of information from the applicants necessarily leads to a finding of corresponding obtaining and improper use of that information in breach of s 183(1). However, unlike fiduciary obligations, statutory obligations of this kind are not subordinate to contract obligations. I therefore find that Mr Garner has acted in breach of s 183.

Issue 3:    Did Mr Garner cause loss, and if so, what is the quantum of that loss?

339    When it came to proof of loss, the applicants placed heavy reliance on the Full Court decision in Pitcher Partners Consulting Pty Ltd v Neville’s Bus Service Pty Ltd [2019] FCAFC 119; 271 FCR 392 in relation to what is necessary to prove loss occasioned by the conduct of a wrongdoer, when that wrongdoer has placed obstacles in the way of proving what has taken place. The key relevant principle to emerge from Pitcher Partners at [109] is the endorsement of the statement of principle derived from Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 by Hodgson J (before his Honour’s elevation to the New South Wales Court of Appeal) in LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 at 508 adopted and quoted by the New South Wales Court of Appeal in Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 at 59 (per Handley JA, with whom Mason P and Beazley JA agreed):

… the Court should assess the compensation in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party “whose actions have made an accurate determination so problematic” …

340    In Berry v CCL Secure Pty Ltd [2020] HCA 27; 381 ALR 427, Gageler and Edelman JJ joined in the orders proposed by the plurality (Bell, Keane and Nettle JJ), but (at [74]) preferred to defer consideration of the correctness of the robust approach endorsed in proposed Pitcher Partners to a case in which such an approach is determinative. The plurality, however, cast doubt on the correctness of that approach, at least in a case of deceit. Their Honours said in part of [35]:

… previous decisions of this Court concerning the recovery of damages for lost commercial opportunities — regardless of whether they are commercial opportunities to earn an extension or renewal of a contract, as in Amann Aviation, or to negotiate a new contract, as in Sellars, or even to institute proceedings for the recovery of damages, as in Malec— have held that, once it is established on the balance of probabilities that the defendant’s wrong caused the loss of opportunity, the value of the loss falls to be determined (and discounted) according to the assessed degree of likelihood that, assuming the claimant had been able to exploit the opportunity, it might not have resulted in all of the gain that was hoped for. …

341    The importance of that passage is that it addresses a class of case of which this proceeding is a member. That is because the applicants’ case is that they lost the commercial opportunity to retain contractual relations with a number of their customers, and that this was caused by wrongful conduct of the Mr Garner obtaining and misusing their confidential information. Once that wrong has been established on the balance of probabilities, “the value of the loss falls to be determined (and discounted) according to the assessed degree of likelihood that, assuming the claimant had been able to exploit the opportunity, it might not have resulted in all of the gain that was hoped for”: Berry [35]. In this case, one of the key issues in dispute between the parties is the extent to which it has been established that the applicants would have been able to retain their former customers lost to NCCS at the pre-existing contractual rate. For the reasons that follow, I reject Mr Garner’s argument that there needed to be any discount at all, because it has not been shown that the contracts in question would have continued other than upon the pre-existing basis absent his conduct. That is especially so as the only apparent reason for changing to NCCS is the approaches that were made, rather than any expressed discontent.

342    Ms Bateman’s expert evidence, given for the applicants, was directed to quantifying the loss of the 34 customers as listed in the penultimate version of Annexure C to the statement of claim (later increased to 37, too late for that to be reflected in Ms Bateman’s report) and the loss of seven prospective customers as listed in Annexure E to the statement of claim (later revised to six, too late for that to be reflected in Ms Bateman’s report). In the first of two reports, Ms Bateman quantified the loss as $615,893, made up of $558,305 for lost customers and $57,589 for “lost prospects” (that is, the loss of prospective customers).

343    Ms Bateman’s report was admitted without objection, but with it being contended that there were certain propositions for which there was insufficient factual material to sustain the conclusions reached, as addressed below. Neither her expertise, nor her experience over some 26 years was challenged. She was cross-examined to a very limited extent. Part of that cross-examination included the undisputed limitations of her expertise, in particular that she could not opine as to whether or not a particular prospective customer was lost to NCCS as a result of any conduct by Mr Garner. The experts were in agreement on that topic.

344    The first significant topic of cross-examination concerned Ms Bateman having audited reports for Central Innovation for only the financial years ended 30 June 2016 and 30 June 2017, and not having any audited accounts for Intercad at all. However that cross-examination did not identify any error or even possible error in the calculations that Ms Bateman made. As such, the challenge went nowhere.

345    The second significant topic of cross-examination concerned the costs of sales calculations and in particular the non-deduction of certain costs from marginal revenue lost to arrive at the loss of profit figures. Key among those was no deduction for sales salaries. In her report, adverted to in her evidence in cross-examination, Ms Bateman explained that she deducted commissions that would have been paid as a marginal cost corresponding to marginal sales, but did not deduct a proportion of salaries as a fixed cost because employee costs had not markedly increased despite very substantial increases in revenue over the period from 2016 to 2018. Similarly, Ms Bateman did not deduct travel costs because travel costs increased by only $14,000 per annum between 2016 and 2019, despite an increase in turnover of $7 million. Despite the contrary evidence on this topic by Mr Scarr, which was of a speculative nature based on his general experience as to the calculation of the costs of goods sold, I am satisfied as to the soundness of Ms Bateman’s approach in relation to the particular cost structures, and the interplay between fixed and marginal costs in Central Innovation’s business.

346    In substance, the conclusion Ms Bateman reached was that there was insufficient indication of any marginal fixed salary cost increase associated with a marginal increase in sales work associated with retaining existing customers, which is not inherently surprising at all. Nor was there evidence of such an increase even in making sales to only seven additional prospective customers, which is not surprising given how small that number was. I reach the same conclusion about Ms Bateman not deducting any other fixed costs of the kind challenged by Mr Garner, because I am satisfied that she paid due regard to those costs, and reached a sound and defensible conclusion as to why they were not expenses to be brought to account against marginal revenue.

347    The remaining area of challenge concerned the difference between using the Central Innovation’s prices rather than NCCS’s prices. The applicants submit, and I accept, that I should infer that, but for Mr Garner’s intervention, the lost customers would have renewed their existing subscriptions with Intercad. There was no evidence to suggest that any of them would have changed to NCCS but for the conduct of Mr Garner. As the applicants point out, Intercad was the only other supplier of SolidWorks products in Victoria and Tasmania, and Mr Garner forwarded Intercad’s pricing information to his personal email address, and was able to, and to an extent did, download similar information from SUGAR. Mr Garner was able to quote lower prices to Intercad customers in his new job at NCCS as a product of having that information available to him. In the absence of that conduct, there is no sound basis to conclude that a relatively minor player such as NCCS, and its prices, would have featured in the absence of Mr Garner’s conduct using the applicants’ confidential information. As a consequence I see no sound basis for assuming that any discount reflecting lower prices by NCCS should be applied, being an important reason why the information taken and used was confidential in the first place.

348    It follows that there is no sound reason not to accept Ms Bateman’s calculations as a reasonable assessment of the applicants’ loss in respect of the customers who changed their accounts from Intercad to NCCS.

349    While there was no direct evidence of the rate of conversion of prospective customers into actual customers, an important factor is that each became a customer of NCCS. Absent more, I would readily infer that had the prospects listed in Annexure E to the applicants’ statement of claim been approached by the applicants, a similarly high success rate would, on the balance of probabilities, have taken place. That is, this was not a list of abstract possibilities, but rather leads with an inherently high prospect of becoming customers. However, the prospective customers listed in Annexure E had been identified by Intercad by recording them as prospects or “suspects” in SUGAR. At the time that Mr Garner was made redundant on 22 August 2016, the most recent customer identified had been entered into the system over a year earlier on 23 July 2015. The least recently recorded prospective customer had been entered over 10 years prior, on 27 February 2006. I am unable to accept that Mr Garner’s misuse of the applicants’ confidential information caused the loss of a chance of the kind typified by Commonwealth v Amann Aviation (1991) 174 CLR 64. Having known about these prospective customers for between more than one and more than 10 years, the applicants had had ample time and opportunities to pitch their SolidWorks products and services to the prospective customers and either had not done so, or had not done so successfully.

350    Mr Garner was employed by Central Innovation to perform work for Intercad. The damage has been by way of loss of profits from the loss of contracts due to the poaching of customers by the misuse of confidential information. It is neither productive, nor necessary, to artificially dissect and distribute profit loss and damage in the way that Mr Garner suggests. It is sufficient to award damages to the applicants for the loss caused by Mr Garner’s conduct upon the basis of breach of contract, and breach of the statutory duty in s 183 of the Corporations Act; and in the alternative, for breach of his fiduciary duty owed to both applicants.

Conclusion

351    The applicants are entitled to judgment and verdict in a sum for the 37 former customers sued upon, 34 of which Ms Bateman made her assessment and calculations upon, less the amount attributable to Green Distillation Technologies Corp Ltd which has been excluded because the applicants have not made out their case in respect of it, plus pre-judgment interest. That calculation is to be made by reference to the existing evidence. This means that, although the applicants have made out breaches in respect of Austratek Designs, Pump Technology Pty Ltd and Scad Designs, because these customers were not amongst those considered by Ms Bateman, breaches in respect of those customers will not sound in damages.

352    Mr Garner is to pay the applicants’ costs.

353    As there may be related or collateral issues to be addressed, as well as calculations to be made, the parties are directed to confer and submit agreed or competing final orders, including as to any further procedural orders for any further determination required, whereupon arrangements can be made for any dispute to be adjudicated upon and final orders made.

Associate:

Dated:    16 December 2020