Federal Court of Australia
GDP Group Pty Ltd v Saye  FCA 688
Table of Corrections
In the second sentence of paragraph 88, “has not” has been replaced by “should have”.
16 June 2022
In the second sentence of paragraph 107, “to” has been inserted after “in relation”.
First Prospective Applicant
GDP GROUP (QLD) PTY LTD ACN 625 017 156
Second Prospective Applicant
First Prospective Respondent
ALLIED COMMERCIAL PTY LTD ACN 644 636 457
Second Prospective Respondent
DATE OF ORDER:
15 june 2022
THE COURT ORDERS THAT:
1. The Orders dated 24 February 2022 are set aside.
2. The originating application filed 4 November 2021 is dismissed.
3. By 4.00pm on 17 June 2022, the parties file and serve any submissions as to the appropriate costs order which should be made (limited to 3 pages) accompanied by any affidavit which is relevant to the issue of costs only.
1 This is an application for review of the decision of a judicial registrar in relation to an application for preliminary discovery which was brought by the prospective applicants pursuant to r 7.23 Federal Court Rules 2011 (Cth). By the application for preliminary discovery, an extensive list of documents was sought (comprised of approximately six pages and divided into schedules A and B).
2 By a decision dated 24 February 2022, the judicial registrar proposed to make certain orders which required that the prospective respondents make discovery of only four categories of documents limited to the period of 25 September 2020 to 29 July 2021.
3 The application for review was filed by the respondents on 14 March 2022 and accepted for filing on 16 March 2022. Timetabling orders were made by consent which included an order that any affidavits in reply be filed by the applicants by 13 April 2022.
4 On 28 April 2022, being the day before the hearing of the review application, and without explanation, the applicants filed and served a further affidavit of Mr Matthew Tisdall, who is the sole director of both applicants. Objection was taken to that affidavit because of its late service but, as the respondents did not seek an adjournment of the hearing and were able to proceed with the hearing, the applicants will be permitted to rely upon the affidavit.
5 At the hearing of the review application, the applicants provided to the Court and the respondents a draft order which contained modified orders sought by them pursuant to r 7.23. The replacement order sought by the applicants is annexed to these reasons.
(a) the prospective applicant must demonstrate that they believe that they may have the right to obtain relief in this Court from a prospective respondent and that belief is reasonable. The applicants in this case have failed to establish that their belief is reasonable;
(b) the prospective applicant must demonstrate that they have made reasonable inquiries with a view to obtaining sufficient information to decide whether to start a proceeding in this Court to obtain that relief. The applicants in this case have failed to establish that they have made reasonable inquiries;
(c) the prospective applicant must demonstrate that they have a reasonable belief that the documents sought are directly relevant to the question whether they have a right to obtain the relief and that inspection of such documents will assist them in making the decision whether to commence proceedings. The applicants in this case have failed to establish that they hold a belief in relation to certain categories of documents sought or, in relation to other categories, that their belief is reasonable.
7 For these reasons, the orders made by the registrar will be set aside and the preliminary discovery application will be dismissed.
8 The parties will be directed to make brief submissions as to costs, and the issue of costs will be determined on the papers.
Facts which are common ground
9 The following matters were common ground for the purposes of the application:
(1) since 2000, the first applicant, GDP Group, has carried on the business of providing BMU maintenance, window cleaning, construction work, and project and height safety management. [BMU means “building maintenance unit” which is consistent with the other work performed in the business];
(2) in February 2016, GDP Group employed the first respondent, Mr Julian Saye, as a casual labourer in the Victorian construction division of the business;
(3) in April 2016, GDP Group employed Mr Saye as a labourer on a full-time basis in the Victorian construction division of the business;
(4) in October 2016, Mr Saye was promoted to Height Safety Manager and entered into a written employment contract dated 5 October 2016 (2016 Employment Agreement). This agreement was signed by both parties. The location of employment was stated in the agreement to be North Melbourne “and at such other locations as directed” from time to time. The agreement contained a restraint of trade clause as well as a clause which prevented Mr Saye from ever using or divulging any confidential information;
(5) in his role as Height Safety Manager, Mr Saye “showed great business development skills and successfully grew the height safety business”;
(6) in late 2017, Mr Saye advised Mr Tisdall that he wanted to move to Queensland and proposed the expansion of the business into Queensland;
(7) in the course of their discussions, Mr Saye sent an email to Mr Tisdall dated 3 November 2017 which stated, “I have a huge support network from Melbourne and Sydney that will be pivotal to the success of the QLD office”;
(8) Mr Saye moved to Queensland in December 2017 and commenced in the role of Queensland Manager of the business in or about January 2018;
(9) on 15 March 2018, Mr Tisdall caused the second applicant, GDP Qld, to be incorporated and the business was conducted in Queensland by that company;
(10) on 13 February 2019, after Mr Saye had been working in Queensland for about a year, GDP Group sent a written employment contract which designated it (GDP Group) as Mr Saye’s employer (2019 Employment Agreement). Mr Saye did not sign or return the 2019 Employment Agreement to GDP Group;
(11) according to income statements issued by the Australian Taxation Office, GDP Qld was identified to it as Mr Saye’s employer for the 2019, 2020 and 2021 financial years;
(12) GDP Qld issued payslips to Mr Saye from as early as July 2019 which recorded, amongst other things, that it was withholding PAYG tax and making compulsory superannuation payments. The payslips also identified annual leave accrual amounts;
(13) between September 2018 and July 2019, Mr Saye made several approaches to Mr Tisdall for increased remuneration, but not all of these approaches resulted in a salary increase;
(14) in 2019, Mr Saye made contact with ABS Façade and “formed a relationship with a person” at that business which Mr Tisdall believes was through Mr Saye’s “own contact network”. GDP Qld commenced to perform work for ABS Façade in October 2019. The value of the work performed between November 2019 and December 2020 was $102,745.50;
(15) since the 2019 financial year, GDP Group has had a “working relationship” with Glaziers.com Pty Ltd (Glaziers), pursuant to which GDP Group and Glaziers performed contract work for each other and Glaziers also referred work to GDP Group or GDP Qld. Mr Patrick Naughton was Mr Saye’s main point of contact at Glaziers. Through Mr Saye’s relationship with Glaziers, GDP Qld obtained contracts at several sites in Brisbane and at the Q1 building on the Gold Coast;
(16) in about September 2020, Mr Saye approached Mr Tisdall to discuss Mr Naughton being employed in the business;
(17) on 25 September 2020, the second respondent, Allied Commercial Pty Ltd, was incorporated with Mr Saye and Mr Naughton as its directors. The shares of Allied were held equally by Julian Saye Allied Pty Ltd and Patrick Naughton Allied Pty Ltd;
(18) on 27 September 2020, Mr Tisdall emailed Mr Naughton an employment proposal which, for various reasons including the pending birth of a child, Mr Naughton did not accept. Since September 2020, Mr Tisdall has had no further discussions with Mr Naughton;
(19) on 3 November 2020, Mr Saye emailed Mr Tisdall requesting a review of his salary. On 4 November 2020, Mr Tisdall replied advising that no salary increases would take place within the financial year ending 2021;
(20) on 12 November 2020, Mr Saye emailed Mr Tisdall advising that, as there would be no salary increase, he would be leaving GDP once COVID-19 restrictions ease;
(21) on 23 December 2020, Mr Naughton resigned as a director of Allied and his company ceased to be a shareholder, and he continued in his role at Glaziers. This left Mr Saye as the sole director of Allied with Julian Saye Allied Pty Ltd as its sole shareholder;
(22) on 30 December 2020, Mr Saye sent an email to Mr Tisdall, copied to two other employees, advising that he would be finishing his employment at the end of January. The email provided ideas and strategies around finding his replacement and offered to work Saturdays in the office for a few weeks if it helps in the short term. The email referred to Mr Saye as managing the business in Queensland but that “Khan” [being a reference to Mr Khan Woollen, who was copied to the email] runs the “operational/ day to day” for the majority of the business. It also identified that various people, including Mr Saye, were identified as being responsible for overseeing and managing different types of projects;
(23) Glaziers’ referrals provided about 25% of the revenue in Queensland. Since about December 2020, the business has not received any further referrals from Glaziers;
(24) on 29 January 2021, Mr Saye ceased to be employed in the business. GDP Qld issued a payslip for the pay period 25/1/2021 to 31/1/2021;
(25) since Mr Saye left, GDP Qld has only undertaken one job for ABS Façade arranged in February 2021 with a value of $4,445.00, and is now no longer a client of the applicants.
10 Mr Tisdall has access to Mr Saye’s former work email account within the business.
11 On 20 April 2021, Mr Saye’s GDP email account received an email from Kane Godde at ABS Façade:
Follow up from our convo and a few photos attached.
ABS will try clean panels today with warm water and a soft sponge, also tidy and re silicone joints in glass panels via a Crane man box.
Hopefully this passes and panels don’t have to be removed. I will keep you posted, so invoicing can reflect these works.
12 On 20 April 2021 Mr Tisdall sent an email to Mr Saye at email@example.com which asked “Whats going on here?”. The evidence does not reveal how Mr Tisdall knew to email Mr Saye at this email address.
13 Mr Saye replied by email on the same day:
I just gave Kane a call and this email was for another contractor - not GDP.
14 The email was signed, “Julian Saye, General Manager, Premier Scaffolds Pty Ltd”.
15 Mr Tisdall responded by email stating, “Another contractor called Julian that has abseilers?”. No response was received to this email.
16 Mr Tisdall appeared to misunderstand Mr Saye’s answer to his query. Mr Saye made plain that the email from ABS Façade was intended for a contractor “other than GDP”. His email did not state that he (Mr Saye) was the contractor. Further, Mr Saye’s email did not disguise the fact that he was working in the construction industry in Queensland albeit for a company which was engaged in performing scaffolding work. That he was doing so did not seem to concern Mr Tisdall as he does not give evidence that he took any further steps to pursue the matter at this time.
17 On an unidentified date, Mr Tisdall spoke to an employee in the business called Carlos Ecija, who said that he was “concerned” that Mr Saye was not running a scaffolding business “as Mr Saye had told us”. Pausing there, Mr Tisdall’s evidence does not reveal any circumstances in which he or anyone from the applicants had been informed by Mr Saye that he was “running a scaffolding business”. Mr Ecija also informed Mr Tisdall that Mr Saye was “advertising on LinkedIn”. Mr Ecija said that he saw at Mr Saye’s house “a stock of height safety hardware” which made him concerned that Mr Saye’s “intentions were not pure”. Mr Tisdall dismissed the concerns expressed by Mr Ecija because they were not “based on anything substantial” and because he regarded Mr Ecija as “a very unusual and mentally unreliable person who loved to gossip”. As noted below, it is noteworthy that Mr Tisdall did not conduct any search on LinkedIn after this conversation.
18 Mr Tisdall had previously spoken to another person, who was a former employee and who repeated concerns about Mr Saye that he had heard from Mr Ecija to the effect that Mr Saye might be undermining his business and that he might try to take his clients. Mr Tisdall also dismissed these expressed concerns.
19 On 23 June 2021, Mr Saye’s GDP email account received an email from Glaziers which was addressed to Mr Saye (at email address firstname.lastname@example.org) and Allied. The email was copied to, amongst others, Mr Naughton at email address email@example.com.
20 The email was part of an email chain which contained a list of outstanding invoices for work that Allied had undertaken work for Glaziers between April 2021 and June 2021. All but three of the invoices related to work performed in Kensington, Victoria.
21 On 23 June 2021, Mr Tisdall sent an email to Mr Saye at firstname.lastname@example.org:
I am a bit confused.
I have received a few emails that I shouldn’t have.
I have had a few calls from people that tell me that I should be worried about you potentially operating against GDP QLD’s interests. I have dismissed those people.
I have a big investment in QLD & have spent a lot of time lately trying to work out a path forward.
Can you confirm I have nothing to worry about & your [sic] not acting contrary to our non-compete clause?
Does your current boss know you are operating another business across multiple states?
What sort of business are you conducting?
22 On 27 June 2021, Mr Tisdall followed up on his previous email to Mr Saye:
Can I have a response to my email.
Having done a little more digging, its [sic] seems we definitely have a problem.
Its [sic] pretty clear you have been working for GDP clients which puts you in breach both of being a good bloke & your legal responsibilities. I assume further analysis will reveal that the story is somewhat more disappointing that what I am currently aware of.
I didn’t back you to open a business in QLD to have you get greedy, leave and then blow it up.
If you want to explain yourself & provide suggest a resolution [sic]. I am all ears for a few more days.
Post that I am going to move to protect my interests and those of my staff.
I await your response
23 Mr Tisdall also spoke to Mr Jeremy Arnup, who was (then) the most senior staff member in Queensland. Mr Arnup told Mr Tisdall that he had no knowledge that Mr Saye was competing against the applicants before June 2021. Mr Tisdall states that Mr Arnup is the “only staff member who I reasonably believed might know any details about Mr Saye’s activities in Queensland”.
24 On 29 June 2021, Mr Saye’s solicitors wrote to Mr Tisdall requesting, inter alia, full particulars of any allegation he is making against Mr Saye and a copy of the employment agreement that Mr Tisdall was relying upon in terms of asserting binding and enforceable restraint obligations.
25 At 5.50pm on Friday 9 July 2021, GDP Group’s solicitors wrote to Mr Saye’s solicitors as follows:
1. Julian Saye (Mr Saye) commenced as an employee of GDP in or about February 2016.
2. In or about 2017, Mr Saye approached Matthew Tisdall (director of GDP) and suggested that GDP should expand into Queensland and that Mr Saye could run the Queensland operation (Saye Approach).
3. In or about November 2017, after various discussions about the Saye Approach, Mr Tisdall agreed to expand GDP into Queensland and that Mr Saye was to run the Queensland operation.
4. On or about 13 February 2019, GDP provided a letter and contract entitled “Offer of Employment” (Employment Contract) which was governs [sic] Mr Say’s [sic] employment as the Queensland Manager. An earlier employment contract was also entered into between Mr Saye and GDP dated 5 October 2016.
5. While the Queensland Manager, Mr Saye ran the entire operation and was the face of the business in Queensland, dealing with clients running BMU maintenance, window cleaning, construction projects and height safety.
6. Mr Says [sic] role in dealing with clients included:
a. Sourcing clients, with the assistance of GDP’s previous contact network;
b. All major dealings with clients, including procuring work and contracts;
c. The contact person for all Queensland clients.
26 The letter set out the restraint of trade clause in the 2019 Employment Agreement. It then continued:
8. Mr Saye was privy to and has access to Confidential Information of GDP.
9. On or about 29 January 2021, Mr Saye left the employ of GDP.
Breach of Restraint Obligations
As set out above, the Restraint Obligations inter alia prohibits Mr Saye from undertaking work for and providing work to, a customer or client of GDP with whom Mr Saye had dealings with or undertook work on behalf of, within the 12 months prior to termination of the Employment Contract. The Restraint Obligations apply for a period of six months being until 29 July 2021 and apply in the state in which Mr Saye was working, being Queensland.
Our client has previously written to your client directly following receiving an email dated 20 April 2021 from ABS Façade and a chain of emails from Glaziers.com dated 23 June 2021. As is evidenced by the emails:
1. Mr Saye has multiple teams working an almost fulltime basis for Glaziers.com;
2. Mr Saye’s teams have performed over multiple jobs since at least April 2021;
3. Glaziers.com has performed work to the value of in excess of $100,000;
4. Glazeiers.com [sic] non-payment is putting pressure on Mr Saye’s business; and
5. Mr Saye was engaged by ABS Façade to perform works.
Accordingly, Mr Saye is acting in breach of his Restraint Obligations by undertaking work for and/or providing work to inter alia Glazeirs.com [sic] and ABS Façade, both of whom Mr Saye dealt with in the 12 months prior to his termination.
On the facts, Mr Saye, with the assistance of our client’s capital and goodwill, effectively set up and ran the Queensland operation, had direct dealings with inter alia Glaziers.com and ABS Façade and shortly after resigning began to successfully poach clients. In these circumstances, we are confident the Court would be satisfied that the terms of the restraint, preventing Mr Saye from working for or providing work to clients he had involvements with, are reasonable and to protect the legitimate business interest of GDP.
Our client is entitled to take all appropriate necessary action to protect its business and to pursue all remedies available to it in relation to the breaches by your client of the Restraint Obligations.
Given considerable breaches have already occurred during the restraint period, our client intends to issue proceeding against your client for damages or an account of profits.
We also consider your position as Manager of the Queensland Operation would be classified as an ‘officer’ under section 181 to 183 of the Corporations Act 2001, in which your obligations of good faith, not to use your position or information gained in your position to gain an advantage for yourself or to cause detriment to GDP, survive the termination.
This letter will be relied upon on the question of costs.
Our client otherwise reserves all its rights, including in relation to confidential information and the Corporations Act 2001.
(emphasis added; original emphasis omitted)
27 That letter also requested, amongst other things, that Mr Saye provide information as to GDP clients who were contacted by Mr Saye or for whom Mr Saye has performed work since 29 January 2021. An application for an urgent injunction was threatened if the information was not provided by 12 July 2021.
28 On 12 July 2021, Mr Saye’s solicitors responded on an urgent basis and stated that Mr Saye was employed by GDP Group pursuant to the 2016 Employment Agreement. However, it was later explained by Mr Saye’s solicitors in unchallenged evidence which was not before the registrar that this statement was an error and it was made in circumstances where the solicitor had not seen the income statements issued by the Australian Taxation Office or the payslips issued by GDP Qld. I accept this evidence and so do not place any weight on the statement in the letter from Mr Saye’s solicitors dated 12 July 2021, which letter was sent on an urgent basis in response to a proposed application for an interlocutory injunction and in the absence of all relevant documents being before the writer.
29 Rules 7.21 and 7.23 of the Federal Court Rules provide:
7.21 Definitions for Division 7.3
In this Division:
prospective applicant means a person who reasonably believes that there may be a right for the person to obtain relief against another person who is not presently a party to a proceeding in the Court.
prospective respondent means a person, not presently a party to a proceeding in the Court, against whom a prospective applicant reasonably believes the prospective applicant may have a right to obtain relief.
7.23 Discovery from prospective respondent
(1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:
(a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and
(b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and
(c) reasonably believes that:
(i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and
(ii) inspection of the documents by the prospective applicant would assist in making the decision.
(2) If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).
30 Rule 7.23 is the successor to O 15A r 6 of the previous Federal Court Rules. Although the latter is not identical to r 7.23, the case law in respect of O 15A r 6 remains relevant to applications made under r 7.23: Poole v Australian Pacific Touring Pty Ltd  FCA 424 at .
31 Rule 7.23 is a beneficial provision, the purpose of which is not to procure documents that would strengthen an applicant’s decision to commence proceedings but rather to furnish it with information which is reasonably necessary to enable that decision to be made: Telstra Corporation Ltd v Minister for Broadband, Communications and Digital Economy (2008) 166 FCR 64;  FCAFC 7 at .
32 Rule 7.23 provides the framework of analysis for deciding these applications, being summary applications, not mini-trials: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62;  FCAFC 193 at  and  per Allsop CJ.
The applicants’ subjective belief
33 To obtain preliminary discovery, the prospective applicant must prove that it holds a belief that it may (not does) have a right to relief in the Court from a prospective respondent: r 7.23(1)(a).
34 Rule 7.23 does not speak in terms of a belief in the existence of a cause of action. It speaks of a right to obtain relief. And it is concerned with a belief in the possibility (not the existence) of such a right. The words used in the rule are “may have”: EBOS Group Pty Ltd v Team Medical Supplies Pty Ltd (No 3) (2012) 199 FCR 533;  FCA 48 at  cited with approval by the Full Court in Sandhurst Trustees Ltd v Clarke (2015) 321 ALR 1;  FCAFC 21 at ; see also Pfizer at  per Allsop CJ and  per Perram J.
35 In Pfizer at , Perram J observed that:
… FCR 7.23(1) is not about giving preliminary discovery to those who believe they do have a case. Its wording unequivocally shows that it is about those who do not know that they have a case but believe that they may. In terms, it authorises what traditionally have been referred to as fishing expeditions; that is to say, evidentiary adventures in which the goal is not to find proof of a case already known to exist, but instead to ascertain whether a case exists at all.
36 As to the applicants’ subjective belief, Mr Tisdall stated in his first affidavit that he believes that Mr Saye:
… while a manager of the Queensland operation of the Business, has used his position, the network of contacts established while employed within the Business, and information learned by him in his role within the Business to undermine GDP and GDP QLD, and to set himself up in competition against GDP and GDP QLD. I also believe that Julian has breached contractual restraints of trade against competing against his employer.
37 That is, Mr Tisdall uses the language of someone who believes that they have a case, not the language of someone who believes that they “may” have a case.
38 That the applicants already hold a belief that they have a right to obtain relief against Mr Saye, at least in relation to his conduct in connection with Glaziers and ABS Façade, is consistent with the terms of the letter from the solicitors for GDP Group dated 9 July 2021.
39 Counsel for the prospective applicants submitted that the documents sought by the applicants were needed to identify the quantum of damages which might be recovered and whether bringing a claim is justified “given the risks and costs of litigation”. It was also submitted that the documents were needed to identify when solicitation had occurred or work had been performed because of the prospect of the restraint of trade clauses being “pared back”.
40 Relevantly to this submission, Mr Tisdall gave evidence in his first affidavit that:
What is not currently known to the Applicants is the extent to which Julian has breached his duties and the losses that are likely to have been caused to the Applicants by those breaches.
In order to be able to make a properly informed decision as to whether a prospective proceeding is warranted against the prospective respondents, discovery is required of two categories of documents that are set out at Schedule A and Schedule B of the Originating Application. Those documents are required to show the extent of the breaches, the value of those breaches, and the involvement of Allied’s involvement in Julian’s breaches.
41 Mr Tisdall also gave the following evidence in his second affidavit:
I believe, and did believe at the time that the prospective applicants filed the Originating Application in this proceeding, based on the matters deposed to in my first affidavit, that the prospective applicants may have a right to obtain relief in the Court from one or both prospective respondents. That relief that the prospective applicants may have a right to obtain may include damages for breach of contract, equitable compensation for breach of equitable duties (or involvement in those breaches), an account of profits, or statutory compensation for any statutory breaches (or involvement in those breaches).
42 The applicants submitted that they have “reason to believe that Mr Saye may have breached contractual obligations owed to [GDP Group], statutory (sections 182 and 183 of the Corporations Act 2001 (Cth)), and equitable duties of confidence owed to [GDP Group] and GDP Qld, and that Allied may have been involved in Mr Saye’s contraventions of those statutory and equitable duties that Mr Saye owed to” them.
43 Having regard to the content of the 9 July letter from GDP Group’s solicitors, Mr Tisdall’s evidence and the submissions by the applicants’ counsel:
(a) the applicants are not seeking the preliminary discovery orders in relation to Glaziers and ABS Façade to ascertain whether a case exists against Mr Saye at all in relation to those clients, because they already believe that they have a case;
(b) however, the applicants are seeking the preliminary discovery orders in relation to Glaziers and ABS Façade to ascertain the extent of Mr Saye’s breaches in relation to those clients (including the timing of any such conduct which might affect a decision about enforcing the restraint of trade clause), the likely quantum of any damages award and the involvement of Allied in Mr Saye’s breaches;
(c) the applicants are seeking the preliminary discovery orders to ascertain whether a case exists against Mr Saye in relation to any clients in addition to Glaziers and ABS Façade and the involvement of Allied in relation to those other clients.
44 For these reasons, the applicants have demonstrated that they have a subjective belief that they may have a right to relief against Mr Saye in relation to additional instances of unlawful conduct concerning Glaziers and ABS Façade, against Mr Saye in relation to clients other than Glaziers and ABS Façade, and against Allied for its involvement in Mr Saye’s conduct.
The applicants’ objective belief
45 To obtain preliminary discovery, the prospective applicants must prove that the belief held by them is reasonable: r 7.23(1)(a).
46 In Pfizer, Perram J stated at  that:
(1) [an applicant] must demonstrate that the belief is reasonable, either by reference to material known to the person holding the belief or by other material subsequently placed before the Court;
(2) the person deposing to the belief need not give evidence of the belief a second time to the extent that additional material is placed before the Court on the issue of the reasonableness of the belief. That belief may be inferred;
(3) the question of whether the belief is reasonable requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief; and
(4) it is useful to ask whether the material inclines the mind to that proposition but very important to keep at the forefront of the inclining mind the subjunctive nature of the proposition. One may believe that a person may have a case on certain material without one’s mind being in any way inclined to the notion that they do have such a case.
47 In order to be objectively reasonable, the belief required by r 7.23(1)(a) requires more than mere assertion, suspicion or conjecture: Telstra at . As Charlesworth J observed in BCI Media Group Pty Ltd v Corelogic Australia Pty Ltd  FCA 1556 at :
Much will depend on the nature and source of the right, the essential factual or legal elements to be proven and the extent to which the evidentiary material in the prospective applicant’s possession is capable of demonstrating that each element is fulfilled.
48 In Apache Northwest Pty Ltd v Newcrest Mining Ltd (2009) 182 FCR 124;  FCAFC 39 at , Moore and Gilmour JJ (when considering an application under O 15A r 6) stated:
… Belief is an inclination of mind towards assenting to, rather than rejecting, the proposition, and the evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of the actual cause of action exists, that would dispose of the application insofar as it is based on a cause of action.
49 For the following reasons, the applicants have failed to demonstrate that the belief expressed by Mr Tisdall and held by the applicants is reasonable.
50 First, the belief that GDP Group has a right to relief against Mr Saye for damages for breach of contract, by reference to the 2019 Employment Agreement, is not reasonable. That is because, for the following reasons, there is no reasonable basis for a belief that Mr Saye was employed by GDP Group after 2019.
51 On the applicants’ own evidence, the business in Queensland was conducted by GDP Qld, not GDP Group. Mr Saye has worked in Queensland since January 2018 in a different role, and on different terms (including as to location of work and salary), to that referred to in the 2016 Employment Agreement. Mr Tisdall’s evidence shows that Mr Saye’s work in Queensland caused work to be directed to GDP Qld, not GDP Group. Documents issued by the Australian Taxation Office, coupled with the payslips issued by GDP Qld, show that Mr Saye was paid by, and was expressed to be an employee of, QDP Qld by no later than 30 June 2019. This is reinforced by the fact that the 2019 Employment Agreement was not executed by Mr Saye in March 2019 but that, notwithstanding this, GDP Qld continued to pay Mr Saye his salary (and issue him with payslips) until January 2021 and the Australian Taxation Office was informed of these payments, of PAYG tax withheld by GDP Qld and of the amounts paid to Mr Saye’s superannuation fund by GDP Qld for the 2019 financial year as well as 2020 and 2021.
52 The applicants’ counsel submitted that, notwithstanding these uncontroversial facts, GDP Qld was the agent of GDP Group and that GDP Group was Mr Saye’s employer for this reason. However, other than the 2016 Employment Agreement, there is no evidence adduced by the applicants to support this submission. Mr Tisdall, the sole director of both companies, does not depose to any arrangements whereby employees such as Mr Saye who worked in the business in Qld were employed by GDP Group, and the arrangements with GDP Qld in relation to that employment (such as that GDP Qld would pay employees on behalf of GDP Group). No internal records of the two companies were placed into evidence to support this claimed agency relationship, or to support the submission that GDP Group was Mr Saye’s employer (other than the two employment agreements). Nor was evidence adduced by the applicants to explain how it came to be that documents were lodged with the Australian Taxation Office which identified that Mr Saye was an employee of GDP Qld.
53 Accordingly, there is no reasonable basis to suggest, or evidence which would “incline the mind” to a conclusion, that GDP Group has any right to enforce the 2019 Employment Agreement against Mr Saye.
54 Second, the belief that GDP Group has a right to relief against Mr Saye for damages for breach of contract, by reference to the restraint of trade clause contained in the 2016 Employment Agreement, is not reasonable. That clause provided as follows:
23.2 The Employee agrees that, for the periods and in the areas referred to in clauses 24.4 [sic] and 24.5 [sic] below, the Employee will not undertake work for, provide work to, or become employed by any firm, corporation or individual who was at any time during the twelve (12) months immediately prior to the date of termination of the Employee’s employment a customer, client or direct competitor of the Employer and with whom the Employee had dealings or undertook any work on behalf of without the prior consent of the Employer.
23.3 The Employee’s obligations apply for a period of:
(a) six (6) months;
(b) three (3) months;
(c) one (1) month,
from the date of termination of the Employee’s employment;
23.4 The Employee’s obligations referred to in clause 24.2 [sic] above apply within:
(a) the State(s) in which the Employee is assigned to work;
(b) the metropolitan area(s) of the State(s) in which the Employee is assigned to work;
(c) a 10km radius of the Employee’s place of work;
(d) a 5km radius of the Employee’s place of work.
23.5 For the period referred to in clause 24.3 [sic] above, the Employee further agrees that they will not, directly or indirectly, canvass or solicit any firm, corporation or individual who is or has been a director, officer, employee, contractor, customer or client of the Employer and with whom they had dealings in the twelve (12) month period prior to the termination of the Employee’s employment to cease having dealings with the Employer or to leave the employment of the employer.
55 For the reasons referred to above, the evidence demonstrates that Mr Saye ceased to be employed by GDP Group in 2018 and certainly by no later than 30 June 2019. The applicants seek documents relating to the period after 1 September 2020, presumably on the basis that this is around the time when Allied was incorporated. Therefore, any conduct which is the subject of the applicants’ proposed claims for relief did not occur in the six month period after Mr Saye ceased to be employed by GDP Group (assuming that the restraint of trade clause is enforceable to the fullest extent and the internal cross-referencing errors in the clause are ignored).
56 It follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief premised on breach of the restraint of trade clause in the 2016 Employment Agreement.
57 Third, the belief that GDP Group has a right to relief against Mr Saye for damages for breach of contract, by reference to the confidentiality clause contained in the 2016 Employment Agreement, is not reasonable.
58 The confidentiality clause provided as follows:
24.2 The Employee will treat as confidential all information that the Company discloses to, makes known to or that comes to the attention of the Employee during the course of or for the purposes of the employment.
24.4 Confidential information includes, but is not limited to, computer programs, client and supplier lists and details, the Employer’s methods of operation and processes, business and marketing, dealings, organisation, finance, transactions, prospects, activities, staff, business associates, designs, copyright and artwork, drawings, know-how, quotes or other documents or material prepared by the Employee or other employees, contractors, agents, clients or servants of the Employer, in whatever form including electronic form.
24.5 Except as required for the performance of the Employee’s duties under this Agreement, or as required by law, the Employee, at any time, during or after the termination of this Agreement:
(a) shall not divulge to any person or make use of any confidential information; and
(b) shall use best endeavours to prevent the disclosure, publication or unauthorised use of any confidential information.
59 The applicants’ evidence did not identify the specific information which fell within the scope of clause 24, being information which had been disclosed to, made known to or which had come to the attention of Mr Saye during his employment with GDP Group. Nor did the evidence disclose a proper basis to believe that any such information had been used or divulged by Mr Saye. The case in reliance on this clause therefore rose no higher than mere assertion or conjecture. The deficiencies in the evidence adduced by the applicants in relation to alleged misuse of their confidential information is expanded upon below.
60 It follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief premised on a breach of clause 24 of the 2016 Employment Agreement.
61 Fourth, the belief that either or both GDP Group or GDP Qld have a right to relief against Mr Saye or Allied for equitable compensation or an account of profits connected with the misuse by Mr Saye of confidential information is not reasonable.
62 That is because the evidence adduced by the applicants is inadequate when consideration is given to “the nature and source of the right, the essential factual or legal elements to be proven and the extent to which the evidentiary material in the prospective applicant’s possession is capable of demonstrating that each element is fulfilled”: see BCI at .
63 In this case, there was no evidence that the identity of GDP Qld’s clients (or GDP Group’s clients) constituted information that was confidential to the applicants. There was also no evidence that Mr Saye’s knowledge of the existence of Glaziers or ABS Façade or any other client of the business, or what any of their businesses involved, was received by Mr Saye in circumstances importing any obligation of confidence. To the contrary, according to Mr Tisdall, the relationship between GDP Qld and ABS Façade was said to have arisen from Mr Saye’s “own contact network”.
64 Indeed, the applicants’ counsel accepted that the identity of the clients of the business was not confidential information.
65 Instead, it was submitted by the applicants’ counsel that the specific information which was confidential was the identity of the principal point of contact within each particular client, and information about that particular person such as their personal interests (and cricket was given as an example) so that, by reference to those interests, that person can be encouraged to cause work to be given to GDP Group or GDP Qld.
66 However, there was no evidence adduced by the applicants that any such information was obtained by Mr Saye during his employment, that any such information has the necessary quality of confidence and was not, for example, common or public knowledge or that this information was received by Mr Saye in circumstances importing an obligation of confidence: EBOS at .
67 All that Mr Tisdall deposed to was that, while Mr Saye was employed as the Queensland Manager, his role within the business included sourcing prospective clients for the business “with the assistance of GDP’s confidential information”, including “GDP’s contact network”. No facts were deposed to by Mr Tisdall as to what the so-called “confidential information” was or why it was confidential information owned by GDP Group. Nor was any detail provided by the evidence about “GDP’s contact network”.
68 Further, Mr Tisdall’s lay opinion that GDP Group owned, and that Mr Saye had the assistance of, any such “confidential information” carries no weight. No evidence was given by Mr Tisdall to identify the information with any specificity, to describe the circumstances in which it was imparted to Mr Saye or how Mr Saye obtained the “assistance” of such information. And it is not known what Mr Tisdall meant when he used the label “confidential information” or the facts which underlie that legal characterisation.
69 It follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief premised on a misuse of confidential information by Mr Saye.
70 Fifth, the belief that either or both GDP Group or GDP Qld have a possible claim against Mr Saye and Allied for statutory compensation is not reasonable.
71 As to this, the applicants relied upon a proposed claim against Mr Saye pursuant to ss 182 and 183 Corporations Act 2001 (Cth) which provide as follows:
182 Use of position – civil obligations
Use of position – directors, other officers and employees
(1) A director, secretary, other officer or employee of a corporation must not improperly use their position to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
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.
72 The applicants’ claimed right to statutory compensation was premised by them upon an alleged improper use by Mr Saye of information which he acquired during his employment. The applicants’ submissions described it as a statutory duty of confidence.
73 It appeared to be common ground that, generally, there can be no improper use of information within the meaning of s 183 Corporations Act if there has been no improper use of the information under the general rules of equity, which is consistent with the authorities: Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74;  NSWSC 979 at –; see also Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (2009) 81 IPR 1;  FCAFC 2 at –.
74 For the same reasons that the applicants have failed to demonstrate any reasonable belief in a right to relief premised on a misuse of confidential information, they have also failed to demonstrate any reasonable belief in a right to relief premised on a breach of s 182 or s 183 Corporations Act, whether against Mr Saye or against Allied (for being involved in Mr Saye’s conduct). In addition, for the reasons explained below, the applicants have failed to demonstrate any reasonable belief in relation to any conduct of Mr Saye while he was an employee of the business.
75 Finally, in paragraphs 1(a), 1(b), 1(d) and 1(f) of the draft orders, the applicants seek documents by reference to the relevant period (as defined) being 1 September 2020 and 29 July 2021. Paragraphs 1(c) and 1(e) of the draft orders contain no temporal limits. This means that all of the proposed orders encompass (at least) the period between 1 September 2020 and 29 January 2021, being when Mr Saye was an employee.
76 However, other than identifying that Mr Saye incorporated a company in September 2020 with Mr Naughton (an employee of Glaziers) as co-director, there is a paucity of evidence to support any belief by the applicants that they may have a right to relief connected with the period between 1 September 2020 and 29 January 2021, when Mr Saye departed, or at any time while Mr Saye was employed in the business.
77 That Mr Saye approached Mr Tisdall to discuss Mr Naughton being employed in the business does not provide objective support for any belief that there was unlawful conduct by Mr Saye. Nor does the fact that Mr Saye requested a salary increase on 3 November 2020 (and had requested such increases previously).
78 Indeed, the manner of Mr Saye’s departure (including that he gave one month’s notice and the content of his 30 December 2020 email) and Mr Arnup’s statement to Mr Tisdall that he had no knowledge that Mr Saye was competing against the applicants prior to June 2021 support an inference that Mr Saye did not engage in unlawful conduct while employed in the business.
79 Further, there is no evidence of any decline in work received from the applicants’ clients during the period that Mr Saye was employed. At best for the applicants, the evidence shows that Glaziers ceased to refer work to GDP Group and GDP Qld in December 2020. However, this is insufficient to incline the mind towards the notion that the applicants may have a right to relief in relation to other clients during the period that Mr Saye was an employee, whether against Mr Saye or against Allied.
80 Due to the inadequate evidence, it follows that there is no basis for any reasonable belief by the prospective applicants in a right to relief associated with any conduct by Mr Saye or Allied during the period between 1 September 2020 and 29 January 2021 or any other period when Mr Saye was an employee in the business.
81 To obtain preliminary discovery, the applicants must demonstrate that they have made reasonable inquiries with a view to obtaining sufficient information to decide whether to start a proceeding in the Court to obtain the relief identified by them: r 7.23(1)(b).
82 An assessment of sufficiency of information directs attention to all relevant information that the prospective applicant has, and what further information, if any, is necessary in order for a prospective applicant to decide whether to start a proceeding in the Court: see Allphones Retail Pty Ltd v Optus Networks Pty Limited  FCA 1233 at –.
83 The statement in HQ Insurance Pty Ltd v Stonehatch Risk Solutions Ltd (No 2) (2020) 146 ACSR 159;  FCA 1010 is apposite to the facts of this case. In that case, Thawley J stated at :
The fact that r 7.23(1)(b) requires, in effect as a precondition to the exercise of the discretion under r 7.23(2) to order discovery, that a prospective applicant has first made reasonable inquiries, reflects the common sense position that a prospective respondent should not be put to the expense and inconvenience of formal discovery unless a prospective applicant has first taken reasonable steps to inform themselves about whether to start proceeding. As Yates J observed in Reeve, an order for preliminary discovery under r 7.23 is intrusive. Ordinarily, a person is not entitled to access another person’s documents to facilitate the former making a decision as to whether to commence proceedings against the latter. The appropriateness of the matters or conditions in r 7.23(1) is made particularly obvious in a context, such as exists here, where the parties are competitors and the material which the prospective applicant wishes to access are likely to contain commercially sensitive information.
84 Having regard to the evidence adduced in this application, the applicants have failed to demonstrate that they have made reasonable inquiries as required by r 7.23(1)(b) for the following reasons.
85 First, there is no evidence that Mr Tisdall or anyone from the applicants has conducted any search of Mr Saye’s GDP email account or of their business records to investigate Mr Saye’s conduct while he was in the role of Queensland Manager of the business. This is a reasonable and indeed an obvious inquiry to make, especially as the documents sought by the applicants relate to a period commencing on 1 September 2020, being four months prior to Mr Saye’s departure on 29 January 2021. Such investigations would include (for example) whether there were any communications between Mr Saye and Mr Naughton (as sought by the applicants in the draft order), or between Mr Saye and any customer of the kind which shows that Mr Saye was misusing his position to compete with the applicants, which is Mr Tisdall’s stated belief.
86 Second, leaving aside Mr Ecija and Mr Briffa (whose information was discounted by Mr Tisdall), Mr Tisdall has only spoken to one employee in the business about Mr Saye (being Mr Arnup). Mr Tisdall deposes that this employee is the only staff member who he “reasonably” believes might know any details about Mr Saye’s activities in Queensland but the facts upon which he relies to depose this are not identified.
87 This evidence cannot be accepted because, as his email of 30 December 2020 shows, Mr Saye worked with numerous other employees in the business in Queensland. At the least, this includes Mr Woollen who ran the day to day operation of the business in Queensland while Mr Saye worked there. However, there is no explanation in the evidence as to why Mr Woollen has not been contacted, which is a reasonable inquiry which should have been undertaken if, as the applicants propose, they believe that they have right to relief against Mr Saye for the period while he was employed.
88 Third, there is no evidence that Mr Tisdall conducted a LinkedIn search, and no search results are before the Court, even though Mr Ecija advised him that Mr Saye was “advertising” on LinkedIn. This is another reasonable and indeed obvious inquiry to make which should have been performed, especially after receipt of the email showing that Allied had performed work for Glaziers.
89 Another equally reasonable and obvious inquiry to make is to conduct a google search, especially after discovering the existence of Allied. Such an inquiry could have revealed the existence of a website which in turn could have revealed the identity of Allied’s customers and their location, or the locations where Allied was offering its services, as well as what those services were.
90 Fourth, there is no evidence that the applicants have reviewed their records and identified any clients of the Queensland business which have ceased to use, or reduced their use of, the applicants’ services (other than, on the applicants’ evidence, Glaziers and ABS Façade). This is another reasonable and, indeed, obvious inquiry to make which should have been undertaken by the applicants.
Whether r 7.23(1)(c) has been satisfied
91 Pursuant to r 7.23(1)(c), a prospective applicant must demonstrate that it has a reasonable belief that, amongst other things, inspection of the documents sought by it will assist in making the decision whether to start a proceeding in the Court. Those documents must be directly relevant to the question whether the prospective applicant has a right to obtain the relief referred to in r 7.23(1)(a).
92 In this case, the orders sought at the hearing replaced the form of order sought in the schedules to the originating application.
93 In his first affidavit, Mr Tisdall deposed to the need for discovery of the documents referred to in the schedules to the originating application. He stated that:
In order to be able to make a properly informed decision as to whether a prospective proceeding is warranted against the prospective respondents, discovery is required of two categories of documents that are set out at Schedule A and Schedule B of the Originating Application. Those documents are required to show the extent of the breaches, the value of those breaches, and the involvement of Allied’s involvement in Julian’s breaches.
94 However, there was no evidence adduced by the applicants which demonstrated the applicants’ belief in relation to the documents sought in the proposed new orders. Categories 1(a)(i), 1(c)(i) and 1(e)(i) were not referred to in the schedules to the originating application. As a consequence, there is no evidence by the prospective applicants which demonstrates that they hold the belief required by r 7.23(1)(c) in relation to these categories. The application for preliminary discovery of documents in these categories must fail for this reason.
95 Turning to the balance of the categories now sought, some of these were referred to in the schedules to the originating application and so have a foundation in the evidence. However, for the reasons explained below, the prospective applicants have not satisfied r 7.23(1)(c) in relation to them.
96 Category 1(a)(iv): this category seeks all documents (without limitation) relating to communications between identified persons or parties concerning Mr Naughton having any association with Allied (or any other proposed partnership or entity) for the purpose of conducting the business that is now conducted by Allied including but not limited to communications concerning Mr Naughton as a director of Allied (and his resignation) and the issue of shares to “Patrick Naughton [sic] Pty Ltd” (and the transfer of those shares).
97 Documents concerning the commencement and then cessation of the relationship between Mr Naughton, Mr Naughton’s company and Allied (or any other proposed partnership or entity) have no apparent connection to the proposed relief against the prospective respondents, and there is no evidence which provides an explanation of this connection or any detail as to why the applicants need to see these documents. For this reason, it cannot be accepted that inspection of such documents will assist the prospective applicants to decide whether to commence a proceeding against Mr Saye and Allied for the proposed relief.
98 For this reason, the belief held by the applicants in relation to these documents has not been shown to be a reasonable one. The application for preliminary discovery of documents in these categories must fail for this reason.
99 Categories 1(b), 1(d) and 1(f): these categories seek all documents (without limitation) relating to work performed, or proposed to be performed, for Glaziers, ABS Façade or any “Business Contacts” (as defined) by either of the prospective respondents during the relevant period referred to above (which is a period of about 11 months). Examples given include (but are not limited to) the scope of work to be performed, quotes, purchase orders and invoices.
100 However, there is no explanation in the applicants’ evidence as to why such an extensive range of documents is required by them to make the decision whether to start a proceeding in circumstances where a more limited and targeted range of documents would likely be sufficient to show the extent of the breaches by Mr Saye, the value of those breaches and the extent of Allied’s involvement in those breaches (to adopt the words used by Mr Tisdall).
101 For this reason, the belief held by the applicants in relation to these documents has not been shown to be a reasonable one. The application for preliminary discovery of documents in these categories must fail for this reason.
102 Categories 1(c)(ii) and 1(e)(ii): these categories seek documents connected with the referral of clients, potential clients or work by ABS Façade to the prospective applicants. However, there is no evidence or even a suggestion that ABS Façade has ever referred work to the prospective applicants and so, for this reason, the documents sought have no apparent connection to the proposed relief against the prospective respondents. Further, the evidence does not establish a connection between such documents and the potential relief against the prospective respondents. Therefore, it cannot be accepted that inspection of such documents will assist the prospective applicants to decide whether to commence a proceeding against Mr Saye and Allied for that relief.
103 For this reason, the belief held by the applicants in relation to these documents has not been shown to be a reasonable one. The application for preliminary discovery of documents in these categories must fail for this reason.
104 Categories 1(c)(iii) and 1(e)(iii): these categories seek documents connected with the referral of clients, potential clients or work by ABS Façade to the prospective respondents. However, there is no evidence or even a suggestion that ABS Façade has ever referred work, whether to the prospective applicants or the prospective respondents, and so, for this reason, the documents sought have no apparent connection to the proposed relief against the prospective respondents. Further, the evidence does not establish a connection between such documents and the potential relief against the prospective respondents. Therefore, it cannot be accepted that inspection of such documents will assist the prospective applicants to decide whether to commence a proceeding against Mr Saye and Allied for that relief.
105 For this reason, the belief held by the applicants in relation to these documents has not been shown to be a reasonable one. The application for preliminary discovery of documents in these categories must fail for this reason.
106 Accordingly, because of the failure to satisfy r 7.23(1)(c), the application for the orders sought in paragraphs 1(a)(i), 1(a)(iv), 1(b), 1(c), 1(d), 1(e) and 1(f) of the draft order must fail. This provides an additional reason to dismiss the application in relation to all categories other than those in 1(a)(ii) and 1(a)(iii) of the draft order.
107 The prospective applicants have failed to satisfy rr 7.23(1)(a) and 7.23(1)(b) Federal Court Rules. In addition, the prospective applicants have failed to satisfy r 7.23(1)(c) in relation to almost all of the categories of documents sought by them. It is therefore unnecessary to address the other issues which arise on this application. The orders of the registrar must be set aside and the application brought pursuant to r 7.23 must be dismissed.