Federal Court of Australia

Dreamstreet Lending Pty Ltd v Weiss [2022] FCA 1179

ORDERS

THE COURT ORDERS THAT:

1.    The second and third respondents’ interlocutory application dated 19 November 2021 be allowed in part.

2.    The claim made in paragraphs 51 and 52 of the statement of claim dated 24 December 2020 be dismissed.

3.    The interlocutory application otherwise be dismissed.

4.    The costs of the interlocutory application be costs in the proceeding.

5.    The proceeding be listed for a case management hearing at 9:30am on 14 October 2022.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

Introduction

1    By interlocutory application dated 19 November 2021, Gremarc Pty Ltd (the second respondent) and Mr Mark Attard (the third respondent) seek an order pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) and/or r 26.01 of the Federal Court Rules 2011 (Cth) dismissing the applicant’s (Dreamstreet) claims against them, on the ground that Dreamstreet has no reasonable prospect of successfully prosecuting its claims against them.

2    The second and third respondents are the partners of Financepath (collectively Financepath or FinancePath).

3    Each of the parties has filed all of the evidence they seek to rely on at the trial of the proceeding.

4    Financepath relies on the following affidavits in support of its application:

(a)    affidavit of Amy Marie La Verde sworn 19 November 2021, which exhibits (among others) the following earlier affidavits filed on behalf of Financepath in the proceeding:

(i)    affidavit of Christopher James Collard affirmed 31 March 2021 (first Collard affidavit);

(ii)    affidavit of Gabriel Mardegan affirmed 31 March 2021 (Mardegan affidavit);

(iii)    affidavit of Mark Darren Attard affirmed 1 April 2021 (first Attard affidavit);

(iv)    affidavit of Amy Marie La Verde sworn 6 April 2021;

(b)    affidavit of Christopher James Collard affirmed 19 November 2021 (second Collard affidavit);

(c)    affidavit of Mark Darren Attard affirmed 6 December 2021 (second Attard affidavit);

(d)    affidavit of Andrew Le affirmed 7 December 2021 (Le affidavit); and

(e)    affidavit of Amy Marie La Verde sworn 28 January 2022.

Section 31A principles

5    There was no dispute that the court may give judgment for a defending party in relation to the whole or any part of a proceeding where it is satisfied that the applicant has no reasonable prospect of successfully prosecuting the proceeding or a part of the proceeding.

6    Section 31A of the Federal Court Act provides:

31A    Summary judgment

(1)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is prosecuting the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

(2)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)    For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)    hopeless; or

(b)    bound to fail;

for it to have no reasonable prospect of success.

(4)    This section does not limit any powers that the Court has apart from this section.

(5)    This section does not apply to criminal proceedings.

7    Rule 26.01 of the Federal Court Rules provides:

26.01    Summary judgment

(1)    A party may apply to the Court for an order that judgment be given against another party because:

(a)    the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or

(b)    the proceeding is frivolous or vexatious; or

(c)    no reasonable cause of action is disclosed; or

(d)    the proceeding is an abuse of the process of the Court; or

(e)    the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.

(2)    The application must be accompanied by an affidavit stating:

(a)    the grounds of the application; and

(b)    the facts and circumstances relied on to support those grounds.

(3)    The application and the accompanying affidavit must be served on the party against whom the order is sought at least 14 days before the hearing of the application.

(4)    If an order is made under subrule (1) dismissing part of the proceeding, the proceeding may be continued for that part of the proceeding not disposed of by the order.

(5)    If an order is made under subrule (1) giving judgment for the applicant against the respondent for the whole or part of the applicant’s claim, a respondent who has a cross‑claim against the applicant or some other party may:

(a)    continue to prosecute the cross‑claim against the applicant or other party; and

(b)    apply to the Court for an order staying execution on or enforcement of the judgment until the respondent’s cross‑claim is determined.

8    In Spencer v Commonwealth (2010) 241 CLR 118 at 139-141 [52], [53], [56], [58] and [60], Hayne, Crennan, Kiefel and Bell JJ said this about s 31A:

52.    Second, effect must be given to the negative admonition in sub-s (3) that a defence, a proceeding, or a part of a proceeding may be found to have no reasonable prospect of successful prosecution even if it cannot be said that it is “hopeless” or “bound to fail”. It will be necessary to examine further the notion of “no reasonable prospect”. But before undertaking that task, it is important to begin by recognising that the combined effect of sub-ss (2) and (3) is that the inquiry required in this case is whether there is a “reasonable” prospect of prosecuting the proceeding, not an inquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.

53.    In this respect, s 31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. Those earlier provisions were understood as requiring formation of a certain and concluded determination that a proceeding would necessarily fail. That this was the basis of earlier decisions may be illustrated by reference to two decisions of this Court often cited in connection with questions of summary judgment: Dey v Victorian Railways Commissioners [(1949) 78 CLR 62] and General Steel Industries Inc v Commissioner for Railways (NSW) [(1964) 112 CLR 125].

…

56.    Because s 31A(3) provides that certainty of failure (“hopeless” or “bound to fail”) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different inquiry from that which had to be made under earlier procedural regimes. It follows, of course, that it is dangerous to seek to elucidate the meaning of the statutory expression “no reasonable prospect of successfully prosecuting the proceeding” by reference to what is said in those earlier cases.

…

58.    How then should the expression “no reasonable prospect” be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is “no reasonable prospect”. The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like “no reasonable prospect” is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes, as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt.

…

60.    Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.

(Footnotes omitted.)

9    In the same case, French CJ and Gummow J explained at 130-132 [22] and [24]:

22.    In the Federal Court … the criterion of a “reasonable prospect” of success has been understood in analogous statutory settings to mean a “real” rather than “fanciful” prospect. This exegesis adds little to the words of s 31A. The section authorises summary disposition of proceedings on a variety of bases under its general rubric. It will apply to the case in which the pleadings disclose no reasonable cause of action and their deficiency is incurable. It will include the case in which there is unanswerable or unanswered evidence of a fact fatal to the pleaded case and any case which might be propounded by permissible amendment. It will include the class of case in the longstanding category of cases which are “frivolous or vexatious or an abuse of process”. The application of s 31A is not, in terms, limited to those categories.

…

24.    The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd [(1983) 154 CLR 87 at 99] said:

“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried”.

More recently, in Batistatos v Roads and Traffic Authority (NSW) [(2006) 226 CLR 256 at 275 [46]] Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde [(2000) 201 CLR 552 at 575-576 [57]] which included the following:

“Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way”.

There would seem to be little distinction between those approaches and the requirement of a “real” as distinct from “fanciful” prospect of success contemplated by s 31A. That proposition, however, is not inconsistent with the proposition that the criterion in s 31A may be satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions.

(Footnotes omitted.)

The pleaded case

10    It is necessary to summarise the relevant parts of the case pleaded against the first respondent, Mr Moishe Weiss, to understand the case pleaded against Financepath.

11    Omitting formal pleas about the identity and role of the parties, and allegations made against Mr Weiss which have no bearing on the pleaded case against Financepath, the statement of claim is in these terms:

B.    The Weiss Services Agreement

5.    Under clause 2 of the Weiss Services Agreement [being the written services agreement dated 13 March 2018 pursuant to which Mr Weiss was engaged by Dreamstreet]:

(a)    Mr Weiss was appointed by Dreamstreet as a Conultant [sic];

(b)    Mr Weiss agreed that during the term of the Weiss Services Agreement;

(i)    he would provide a client, customer or patron of Dreamstreet customers of Dreamstreet or Mr Weiss [sic] who wished to apply for credit through and with the assistance of Dreamstreet or Mr Weiss (Customer) the Services [as defined] …

…

6.    Under clause 5 of the Weiss Services Agreement:

(a)    The Weiss Services Agreement was able to be terminated by Mr Weiss for whatever reason by providing Dreamstreet with not less than three months’ written notice; and

(b)    On termination Mr Weiss was required to return all Confidential Information to Dreamstreet.

Confidential Information included information concerning Dreamstreet’s business, clients and Customer information as disclosed in or with their credit application to Dreamstreet which is not in the public domain.

7.    Under clause 7 of the Weiss Services Agreement:

(c)    [sic] Mr Weiss agreed to:

(i)    keep the Confidential Information of Dreamstreet and its Customers who disclosed Confidential Information to Mr Weiss confidential;

(ii)    to only use the Confidential Information in relation to the performance of the Services under the Agreement;

(iii)    not copy the Confidential Information or any part of it other than as strictly necessary for the purposes of this Agreement;

(iv)    to implement security practices against any unauthorised copying, use, disclosure (whether that disclosure is oral, in writing or in any other form), access, damage or destruction of the Confidential Information;

(v)    to immediately notify Dreamstreet if he suspects or becomes aware of any unauthorised copying, use, or disclosure in any form of the Confidential Information;

(vi)    to return all the Confidential Information in his possession on termination of this Agreement;

(vii)    to protect the privacy of Customers and any personal information disclosed to him as part of providing the Services;

(viii)    to not use any personal information of the Customer for any other purpose except for the purpose of providing the Services;

(ix)    to not store any personal information of the Customer on his computer systems except as required under this Agreement; and

(x)    to protect from any unauthorised use any personal information of the Customer stored stored [sic] on his computer system.

(d)    [sic] Mr Weiss agreed that his obligations in relation to Confidential Information and any personal information of the Customer received by him in the performance of the Services continued indefinitely, even if the Weiss Services Agreement expired or was terminated.

8.    Under clause 13 of the Weiss Services Agreement:

(a)    Mr Weiss agreed that following termination of the Weiss Services Agreement and during the Restraint Period [as defined] and within the Restraint Area [as defined], he would not:

(i)    solicit, canvass, approach any person or entity who was during the term of this Agreement a client, customer or patron of Dreamstreet, with a view to establishing a relationship with or obtaining the custom of that person or entity in a business which carries on the business of a similar or related nature to Dreamstreet;

(ii)    interfere or seek to interfere, directly or indirectly, with the relationship between Dreamstreet and its clients, customers or patrons;

…

9.    Special Conditions 2.3(g) and (h) of the Weiss Services Agreement provide that if a Lender requires repayment of commissions that the Lender paid to Dreamstreet (Clawback), then Mr Weiss must pay to Dreamstreet on demand the amount of commission that he received in relation of such loan. Further, if there is a Clawback by any Lender as a result of a client discharging their loan within 3 years, then Mr Weiss must repay a percentage of any commissions that he received in respect of such loans. The formula for Clawback is 100% if the client discharges within the first 12 months and on a sliding scale if later into the loan.

C    FinancePath’s knowledge of Mr Weiss’ obligations to Dreamstreet

10.    In the period from 1 June 2020 to date, FinancePath knew of:

(a)    The prohibitions and restrictions on Mr Weiss contained in Clause 13 of the Weiss Services Agreement (Weiss Restraints); and

(b)    Mr Weiss’ obligations concerning the Confidential Information of Dreamstreet and its Customers who disclosed Confidential Information to Mr Weiss (Weiss Confidentiality Obligations).

Particulars

(i)    FinancePath should be taken to have been notice [sic] that, in accordance with industry practice, Mr Weiss would have restraints upon him from interfering or seeking to interfere, directly or indirectly, with the relationship between Dreamstreet and its Customers.

(ii)    FinancePath knew or ought to have known that Mr Weiss owed such obligations to Dreamstreet;

(iii)    FinancePath had constructive knowledge of the Weiss Restraints in that it would have gained actual knowledge had it made the reasonable and proper inquiries that would ordinarily have been made by an honest and prudent person in its situation;

(iv)    On 25 September 2020, Mr Attard and Mr Collard of FinancePath were served with the Affidavit of John Hronis dated 24 September 2020 which detailed the Weiss Restraints and annexed a copy of the Weiss Services Agreement; and

(v)    These are the best particulars that Dreamstreet is presently able to give. Further particulars may be provided prior to trial.

D.    Wrongful Conduct of Mr Weiss prior to his purported termination of the Weiss Services Agreement

11.    Pursuant to clause 2 of the Weiss Services Agreement, Mr Weiss agreed to provide the Services for and on behalf of Dreamstreet on an exclusive basis until the Services Agreement was terminated.

12.    On 19 May 2020, Mr Weiss signed an employment agreement with FinancePath (FinancePath Employment Agreement) which specified that his employment by FinancePath would commence on 1 June 2020.

13.    On 1 June 2020, Mr Weiss commenced employment with and performed the Services for FinancePath on and from 1 June 2020 in breach of clause 2 of the Weiss Services Agreement.

Particulars

(i)    Dreamstreet refers to paragraphs 11, 12, 23 and 24 of this Statement of Claim; and

(ii)    Dreamstreet refers to the Particulars in Section A of the Confidential Schedule of Particulars annexed to this Statement of Claim.

…

17.    At 11.23AM on Monday, 11 May 2020, Mr Weiss downloaded from [Dreamstreet’s Customer Relationship Management system, the CRM] into an Excel spreadsheet the Person Records in respect of 459 of Dreamstreet’s Customers (First Download).

18.    The First Download was made without the knowledge or authorisation of Dreamstreet.

19.    On 20 May 2020, Mr Weiss saved and/or otherwise amended a copy of the First Download on one of his personal electronic devices (DST.001.00001) (20 May 2020 Version of the First Download).

20.    At 12.06PM on Thursday, 11 June 2020, Mr Weiss made two further downloads from Dreamstreet’s CRM into Excel spreadsheets of the Opportunity Records in respect of 102 of Dreamstreet’s Customers [defined as the Second Download and the Third Download] …

21.    The Second Download and the Third Download were made without the knowledge or authorisation of Dreamstreet.

22.    At 12.07PM on 11 June 2020, Mr Weiss sent an email from his Dreamstreet email address to his personal Gmail email address attaching the Third Download together with a softcopy of Dreamstreet’s letterhead (DST.001.10104). This was done without the knowledge or authorisation of Dreamstreet.

E.    Wrongful Conduct of Mr Weiss after his purported termination of the Weiss Services Agreement

23.    Pursuant to clause 5 of the Weiss Services Agreement, Mr Weiss was obliged to provide three months’ notice of termination (Termination Notice Period).

24.    At 3.56PM on On [sic] 11 June 2020, Mr Weiss purported to terminate the Weiss Services Agreement with immediate effect by an email sent to Mr John Hronis and Mr Matthew Hall of Dreamstreet (Termination Email).

25.    In the period since 11 June 2020, Mr Weiss has solicited, canvassed of approached, or interfered or sought to interfere, directly or indirectly, with the relationship between Dreamstreet and certain of its Customers in breach of the Weiss Restraints.

Particulars

(i)    Dreamstreet refers to the Particulars in Section A of the Confidential Schedule of Particulars annexed to this Statement of Claim.

26.    On 17 September 2020, Mr Weiss uploaded, saved and/or otherwise amended a copy of the Second Download on one of his personal electronic devices (DST.001.00106) (17 September 2020 Version of the Second Download).

27.    On 25 September 2020, the Search Order made by Justice O’Callaghan in this proceeding on 24 September 2020 was executed (Search). During the Search, the 20 May 2020 Version of the First Download was located on one of Mr Weiss’ personal electronic devices at his home (DST.001.00001).

28.    During the Search, the 17 September 2020 Version of the Second Download was located on one of Mr Weiss’ personal electronic devices at his home (DST.001.00106).

29.    During the Search, Mr Weiss had at his home hard copy Dreamstreet notepads which included Confidential Information obtained by him during the course of the Weiss Services Agreement relating to many Dreamstreet Customers including their contact details, finance plans, assets and liabilities and expenses and current interest rates. There is information of this type for about 100 Dreamstreet Customers including but not limited to the following Customers: [names omitted.]

30.    During the Search, it was identified that Mr Weiss had saved on one of his personal electronic devices a very large number of documents containing personal and private information of Dreamstreet’s Customers obtained by him during the course of the Weiss Services Agreement. These are documents provided by Customers to Dreamstreet so that Mr Weiss could prepare and submit the required documentation for new loans. Such documents include the information obtained by Mr Weiss from Dreamstreet’s Customers such as their: contact details, finance plans, assets and liabilities and expenses and current interest rates, bank statements, credit card statements, home loan statements, payslips, group certificates, tax returns, notices of assessment, copies of driver’s licences and passports, employee payment summaries, PAYG annual payment summaries, letters from employers confirming employment status of clients and credit checks conducted by Dreamstreet on each of those Customers.

31.    During the Search, it was identified that Mr Weiss had saved on one of his personal electronic devices calendar invitations/meeting appointments he had received during the course of the Weiss Services Agreement in respect of loans referred to Dreamstreet through the CFMEU (for example, DST.001.00172 and DST.001.00179). These invitations include names of Dreamstreet Customers and their contact details. Since June 2013, Dreamstreet is the preferred funder for the CMFEU, featuring prominently on the CMFEU website. Dreamstreet has invested substantial time and money into this relationship. The CMFEU is a substantial referrer base for Dreamstreet.

F    Breaches of Contract

…

34.    By permitting Mr Weiss to engage in the conduct in paragraphs 12, 13 and 24 above with the intention and in the knowledge that it would cause a breach of contract, FinancePath induced Mr Weiss’ breaches of the Weiss Services Agreement.

…

36.    By permitting Mr Weiss to engage in the conduct in paragraph 25 above with the intention and in the knowledge that it would cause a breach of contract, FinancePath induced Mr Weiss’ breaches of the Weiss Services Agreement.

…

40.    By permitting Mr Weiss to engage in the conduct in paragraphs 17 to 22, 25 to 31 with the intention and in the knowledge that it would cause a breach of contract, FinancePath induced Mr Weiss’ breaches of the Weiss Services Agreement.

…

42.    Dreamstreet is entitled to:

(a)    …

(b)    …

(c)    an injunction restraining FinancePath until 11 June 2022 from seeking to induce Mr Weiss to solicit any Customer of Dreamstreet to refinance their loan with another lender or to interfere, directly or indirectly, with the relationship between Dreamstreet and its Customers;

(d)    an injunction restraining the Respondents from using or making copies of any of the documents referred to in paragraphs 17 to 22, 26 to 31 unless they were obtained by Mr Weiss other than during the provision of the Services under the Weiss Services Agreement;

(e)    orders requiring the Respondents to destroy all copies of any of the documents referred to in paragraphs 17 to 22, 26 to 31 unless they were obtained by Mr Weiss other than during the provision of the Services under the Weiss Services Agreement;

(f)    …

(g)    damages and/or compensation pursuant to statute and/or equitable compensation and/or an account of profits from FinancePath for inducing Mr Weiss to breach the Weiss Services Agreement;

(h)    damages and/or compensation pursuant to statute and/or equitable compensation and/or an account of profits from the Respondents’ use of the Dreamstreet Confidential Information.

Particulars

[Omitted.]

(a)    [sic] Insofar as they are liable for the tort of inducing breach of contract, the conduct of [FinancePath] is such as to entitle Dreamstreet to an order for exemplary damages.

Particulars

…

(vi)    [FinancePath’s] conduct in all the circumstances has been flagrant;

…

M.    Copyright Infringement Conduct

43.    The contents of the CRM which was comprised in the:

(c)     [sic] First Download;

(d)    [sic] Second Download;

(e)    [sic] Third Download;

(f)    [sic] 20 May 2020 Version of the First Download; and

(g)    [sic] 17 September 2020 Version of the Third Download,

(collectively Dreamstreet Spreadsheets)

were created by employees and consultants of Dreamstreet in the course of their employment by Dreamstreet or in the course of their provision of services to Dreamstreet.

44.    Each of those authors who were employees of Dreamstreet created the Dreamstreet Spreadsheets in the course of their employment and were qualified persons within the meaning of s32 of the Copyright Act at all relevant times as Australian citizens/resident in Australia.

45.    The Service Agreements of consultants of Dreamstreet provide that all copyright works created by consultants during the provision of their services for Dreamstreet are owned by Dreamstreet.

46.    Each of the the [sic] Dreamstreet Spreadsheets is a copyright work pursuant to the Copyright Act 1968 (Cth) (Copyright Act) as a literary work, within the meaning in section 10 of the Copyright Act.

47.    Dreamstreet the owner [sic] of the copyright in the the [sic] Dreamstreet Spreadsheets and all rights to sue in respect of infringement of such works.

48.    Mr Weiss and FinancePath without the licence of Dreamstreet, reproduced the whole of the Dreamstreet Spreadsheets, and thereby infringed Dreamstreet’s copyright in the WP Documents pursuant to section 36 of the Copyright Act.

Particulars

(i)    Dreamstreet refers to and relies upon the matters in paragraphs 17 to 22, and 26 to 28 above.

…

49.    Arising from the conduct set out above, Dreamstreet is entitled to:

(a)    declarations as set out in paragraph 48 above;

(a)    [sic] an injunction restraining the Respondents from infringing the copyright of Dreamstreet in the the [sic] Dreamstreet Spreadsheets; and

(b)    an account of profits and/or an award of damages from or against the Respondents.

50.    Furthermore, the Respondents’ conduct is such as to entitle Dreamstreet to an order for additional damages pursuant to section 115(4) of the Copyright Act from or against the Respondents.

…

12    In her written submissions in support of the application for summary judgment, Ms HA Tiplady of counsel, who appeared for Financepath, therefore correctly summarised the pleaded case against her clients as follows:

Dreamstreet’s complaints, as detailed in its Statement of Claim, are principally concerned with Mr Weiss. That said, Dreamstreet seeks to prosecute [two] causes of action against Financepath:

(a)    That by “permitting” Mr Weiss to:

(i)    sign an employment contract with Financepath;

(ii)    purport to terminate the Weiss Services Agreement;

(iii)    solicit, canvas, approach, interfere or seek to interfere with the relationship between Dreamstreet and certain of its customers;

(iv)    make the First, Second and Third Download and/or upload, save or otherwise amend those downloads;

with the intention and in the knowledge that it would cause a breach of contract, Financepath induced Mr Weiss’ breaches of the Weiss Services Agreement (Statement of Claim, [34], [36], [40]).

(b)    That Financepath, without the licence of Dreamstreet, reproduced the whole of the First Download, the Second Download and the Third Download (and the alternate pleaded versions of those downloads), and thereby infringed Dreamstreet’s copyright pursuant to section 36 of the Copyright Act 1986 (Cth) (Statement of Claim, [48]).

13    I was told at the hearing of the application that Dreamstreet intends to apply to amend its statement of claim by adding a claim that Mr Weiss infringed Dreamstreet’s copyright by “substantially reproducing a loan serviceability document created by Mr Weiss during performance of his duties under the Weiss Services Agreement in relation to a potential residential property loan for [ML, a customer]”. A further claim is also proposed that Financepath is also liable to Dreamstreet for “the making of the substantial reproduction of the loan serviceability document created by Mr Weiss during performance of his duties under the Weiss Services Agreement in relation to a potential residential property loan for [ML] after he left Dreamstreet and whilst he was and in the performance of his duties as an employee of FinancePath”.

Vicarious liability

14    The statement of claim also pleaded a case against Financepath founded on an allegation of vicarious liability. During the course of his oral submissions, Mr P Wallis QC, who appeared for Dreamstreet, quite rightly conceded that the vicarious liability plea was defective and should be struck out. He did not seek leave to re-plead the claim, so no more need be said about it.

Financepath’s contentions

15    Financepath relies on the following factual background.

16    It is admitted in the pleadings that Dreamstreet and Financepath are engaged in the same type of business, viz sourcing loan products from wholesale funders and providing mortgage administration services on behalf of those funders.

17    It is also established on the pleadings that on 13 March 2018, Mr Weiss was engaged by Dreamstreet as an authorised credit representative pursuant to a written services agreement (the Weiss Services Agreement). That agreement contained terms imposing obligations on Mr Weiss with respect to confidential information (clauses 5(e) and 7) (the Weiss Confidentiality Obligations) and restricting Mr Weiss’ ability to solicit, canvass, approach, interfere or seek to interfere with the relationship between Dreamstreet and its clients following termination of the Weiss Services Agreement (clause 13) (the Weiss Restraints).

18    In April 2020, Financepath engaged a recruiter to assist it in recruiting a credit advisor. See first Attard affidavit at [5]; first Collard affidavit at [6].

19    The recruiter presented Mr Attard (the Managing Director of Financepath) and Mr Christopher Collard (the General Manager of Financepath) with Mr W eiss’ resume, and told them that Mr Weiss was self-employed and currently consulting to Dreamstreet. See first Attard affidavit at [6]; first Collard affidavit at [7]; second Collard affidavit at [6].

20    Mr Collard met with Mr Weiss in late April 2020, and both Mr Collard and Mr Attard met with Mr Weiss in May 2020. During those meetings, Mr Weiss said that he was self-employed and currently consulting to Dreamstreet. See second Collard affidavit at [7]; second Attard affidavit at [5]-[6].

21    Neither during those two meetings, nor at any other time, did Mr Weiss disclose to Mr Attard or Mr Collard that he was subject to any restraint or restriction which might affect his employment with Financepath, including any restraint or restriction in connection with his role at Dreamstreet. See second Collard affidavit at [10]; second Attard affidavit at [7].

22    On 11 May 2020, Mr Weiss made the “First Download” from Dreamstreet’s customer relationship management system, and saved or copied a version of it on one of his personal devices. See statement of claim [17] and [19].

23    On 19 May 2020, Mr Weiss entered into a written employment contract with Financepath which provided for Mr Weiss to commence full time employment as a credit advisor on 1 June 2020 (the Financepath Employment Contract). See first Attard affidavit at [8] (a copy of the Financepath Employment Contract is at Annexure MA1 to that affidavit).

24    By clause 3.1(b) of the Financepath Employment Contract, Mr Weiss warranted to Financepath that he had disclosed to Financepath the particulars of any restraint or restriction which may affect his performance of the Financepath Employment Contract.

25    On 1 June 2020, Mr Weiss commenced employment with Financepath. See first Attard affidavit at [8].

26    For the first month of his employment at Financepath, Mr Weiss was engaged in training. He did not conduct any advisory work or act as an authorised representative of Financepath under its credit licence during this time. See affidavit of Moishe Weiss affirmed 15 October 2021 (Weiss affidavit) at [55].

27    On 11 June 2020, Mr Weiss made the “Second Download” and “Third Download” from Dreamstreet’s customer relationship management system, and emailed a copy of the Third Download to his personal email address. See statement of claim [20] and [22].

28    Later that day, Mr Weiss terminated the Weiss Services Agreement in person, and subsequently by email. See statement of claim [24].

29    From 11 June 2020 onwards, Dreamstreet alleges that Mr Weiss has dealt with certain of its customers in breach of the Weiss Restraints. The particulars of those alleged dealings are set out in Section A of the Confidential Schedule of Particulars dated 23 December 2020.

30    On 24 September 2020, Dreamstreet commenced this proceeding. Following an ex parte hearing that day, search orders were executed at Mr Weiss’ premises. During that ex parte hearing, counsel for Dreamstreet stated (in the context of an exchange regarding Mr Weiss’ alleged wrongdoing with respect to Dreamstreet’s confidential information):

We don’t know whether FinancePath, as represented by the second and third respondents, even know about what Mr Weiss has done. They might not. But as your Honour will understand, I expect, we still say there’s a reason for them to be a party because no matter what, if Mr Weiss has taken this information wrongfully, they shouldn’t be allowed to use it.

See transcript of the hearing on 24 September 2020 at T7:31-35.

31    On 25 September 2020, Financepath was served with a copy of the affidavit of Mr John Hronis (Dreamstreet’s director) dated 24 September 2020. When Mr Attard and Mr Collard read Mr Hronis’ affidavit, they (and therefore Financepath) became aware of the terms of the Weiss Services Agreement for the first time. See first Attard affidavit at [11]; first Collard affidavit at [9]; second Collard affidavit at [11].

The parties’ submissions on the two remaining causes of action pleaded against Financepath

Inducing breach of contract

32    It was not disputed that the tort of inducing a breach of contract consists of the following elements:

(1)    there must be a contract between the applicant and a third party;

(2)    the respondent must know that such a contract exists;

(3)    the respondent must know that if the third party does, or fails to do, a particular act, that conduct of the third party would be a breach of the contract;

(4)    the respondent must intend to induce or procure the third party to breach the contract by doing or failing to do that particular act; and

(5)    the breach must cause loss or damage to the applicant.

33    As the Full Court explained in Daebo Shipping Company Ltd v The Ship Go Star (2012) 207 FCR 220 at 240 [89]:

The gravamen of the tort is the defendant’s intention to induce or procure the breach in the knowledge that such a breach will interfere with the plaintiff’s contractual rights … [T]he defendant must have “a fairly good idea” that the contract benefits another person in the relevant respect … [K]nowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights, even though the defendant does not know the precise term that will be breached. Reckless indifference or wilful blindness can amount to knowledge for this purpose …

(Citations omitted.)

34    Financepath contended that on the evidence filed in the proceeding (and noting that the parties have now filed all of the evidence they seek to rely on at trial and that Dreamstreet bears the burden of proof), the action for inducing breach of contract has no reasonable prospect of successfully being prosecuted for the following reasons.

35    First, it was contended that Financepath’s uncontradicted evidence establishes (and the statement of claim does not dispute) that it did not have actual knowledge that the Weiss Services Agreement existed until 25 September 2020. Dreamstreet has not filed any evidence to establish that Financepath had actual knowledge of the contract prior to this date. Save for a small number of alleged communications between Mr Weiss and certain of Dreamstreet’s customers (as particularised in the Confidential Schedule of Particulars dated 23 December 2020), Financepath contended that the date on which it became aware of the Weiss Services Agreement was after the dates of the actions alleged to constitute breaches of the Weiss Services Agreement. It contended therefore that its lack of knowledge of the contract prior to 25 September 2020 is fatal to the majority of Dreamstreet’s claim.

36    Second, Financepath submitted that it is unclear on what basis Dreamstreet alleges that Financepath had the requisite knowledge of the terms of the Weiss Services Agreement, but regardless of whether the alleged knowledge is said to be actual or constructive, it cannot be established on the evidence because:

(1)    Dreamstreet does not allege that Financepath had actual knowledge of the contractual terms in the statement of claim, and such knowledge could not be established in any event because until receiving a copy of the Weiss Services Agreement on 25 September 2020, Financepath had no knowledge of the existence, or terms, of the contract;

(2)    with respect to the Weiss Restraints only, Dreamstreet alleges that Financepath had constructive knowledge of the contractual terms on the basis of “industry practice”, but has filed no evidence to establish the existence of such “industry practice”, with the consequence that this allegation has no reasonable prospect of success; and

(3)    even if (which Financepath denied) Dreamstreet had adduced evidence in support of the existence of an “industry practice” with respect to the Weiss Restraints sufficient to found an allegation of constructive knowledge, the fact that Financepath held a bona fide belief that Mr Weiss was not subject to any restraints or restrictions that may affect his performance of the Financepath Employment Contract (on the basis of Mr Weiss’ warranty to that effect) is fatal to Dreamstreet’s claim, citing Short v City Bank of Sydney (1912) 15 CLR 148 at 160.

37    Third, Financepath contended that there is no evidence to support an assertion that Financepath intended to induce or procure that Mr Weiss breach the contract by doing or failing to do any particular act. In that regard, Financepath drew particular attention to the fact that by its pleading, Dreamstreet alleges that Financepath induced Mr Weiss to breach the Weiss Services Agreement by “permitting” him to perform certain actions. Financepath said that will not do because intention (and not “permission”) is the gravamen of the tort, citing Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43; Daebo Shipping Company Ltd v The Ship Go Star (2012) 207 FCR 220 at 240 [89]; and OBG Ltd v Allan [2007] UKHL 21; [2007] 2 WLR 920 at 939 [39].

38    In any event, Financepath contended that Dreamstreet has not provided any particulars of the alleged “permitting” in the paragraphs of its pleading where that term is used (see statement of claim [34], [36], [40]), nor has it filed evidence to demonstrate how, in fact, Financepath “permitted” such actions to be performed.

39    Further, it was contended that far from supporting the existence of the requisite intention, the only relevant evidence that has been filed goes against the existence of such intention because:

(1)    by the terms of the Financepath Employment Contract, Financepath required Mr Weiss to warrant that he was not subject to any restraints or restrictions that would affect him in the performance of his new role;

(2)    before becoming aware of the existence of the Weiss Restraints but after Mr Hronis told Mr Mardegan (a Credit Manager at Financepath) to tell Mr Weiss to “be careful” (see [46] below), Mr Attard told Mr Weiss that he could only assist former customers of Dreamstreet who had contacted Mr Weiss (and not vice versa) if they confirmed in writing that they no longer wished to work with Dreamstreet and wished instead to work with Mr Weiss (citing the first Attard affidavit at [20] and the Mardegan affidavit at [11]);

(3)    after becoming aware of the Weiss Restraints, Mr Attard told a former customer of Dreamstreet that Financepath could not finalise the settlement of his loan and directed him back to Dreamstreet (citing the first Attard affidavit at [22]);

(4)    Mr Attard’s uncontradicted evidence is that he has never seen nor used any of Dreamstreet’s confidential information, and has never instructed Mr Weiss to obtain or use any of Dreamstreet’s confidential information (citing the first Attard affidavit at [26]); and

(5)    Financepath’s conduct has, in all of the circumstances, been unexceptional, and far from “flagrant” as Dreamstreet alleges (without supporting evidence) in its pleading, in particular at [42(a)(vi)] of the statement of claim.

40    Fourth, Financepath submitted that the evidence does not support a conclusion that Mr Weiss breached the Weiss Restraints, for the following reasons:

(1)    None of the customers listed in Dreamstreet’s Confidential Schedule of Particulars has ever been a client of Financepath, or been contacted by Financepath, other than customers CL and YL, and CB and TC (citing the first Attard affidavit at [16]-[24]).

(2)    Despite certain of the customers named in the Confidential Schedule of Particulars having contacted Mr Weiss at Financepath to seek his assistance (and not the other way around), Mr Weiss has redirected them back to Dreamstreet (citing the first Attard affidavit at [24]).

(3)    In the case of CL and YL, the evidence demonstrates that they contacted Mr Weiss (and not the other way around) and told Mr Weiss that they were dissatisfied with Dreamstreet and wanted Mr Weiss to assist them in facilitating the refinancing of their loan (citing the first Attard affidavit at [17]). Mr Weiss told CL that he could assist him with a new loan, but that he should deal with Dreamstreet in relation to the existing loan. CL told Mr Weiss that he had already tried to work things out with Dreamstreet and wanted nothing more to do with it or Mr Hronis (citing the affidavit of CL affirmed 30 September 2020).

(4)    In the case of CB and TC, the evidence demonstrates that they contacted Mr Weiss (and not the other way around), and that Mr Weiss directed CB back to Dreamstreet. CB responded, asking Mr Weiss if he was still working in home loan lending, and whether Mr Weiss could assist him or refer him to someone “decent in the industry who can help us out” (citing the first Attard affidavit at [18]-[22]).

41    In her reply submission, Ms Tiplady made the following further submission about CL and YL:

In the case of the customers listed in Dreamstreet’s submissions other than [CL and YL], there is no reasonable prospect that Dreamstreet will establish, at trial, the necessary elements of the tort of inducing a breach of contract (most obviously, the requirement of proving any loss).

With respect to [CL and YL], [CL] has affirmed an affidavit in this proceeding in which he states that:

(a)    Mr Weiss did not initiate contact with him [citing the CL affidavit at [26]];

(b)    Mr Weiss did not take any positive steps to procure that [CL] refinanced his loan with Financepath [ibid];

(c)    when [CL] contacted Mr Weiss, Mr Weiss encouraged [CL] to remain with Dreamstreet and made it clear that he could not assist [CL] with his existing loan [ibid at [27]];

(d)    [CL and YL] elected, of their own accord, to refinance with Financepath for reasons including that they had received “appalling” customer service from Mr Hronis and Dreamstreet and they felt they were overpaying with Dreamstreet and wished to vary the interest payable on their loan [ibid at [24] and [28]].

In the face of this evidence, which is not contradicted by Dreamstreet, there is no reasonable prospect of Dreamstreet establishing that the Weiss Restraints (if valid) were breached, that Financepath intended this result, and that Dreamstreet has suffered any loss.

(Emphasis in original.)

42    During the course of her oral address, Ms Tiplady also submitted, as to the requirement that the breach must cause loss or damage, that “damage is the gist of the action”, and that in this case, there is no actionable damage.

43    Financepath submitted therefore that Dreamstreet has no reasonable prospect of successfully prosecuting its allegation that Financepath induced Mr Weiss’ breach of contract (and that it thus has no reasonable prospect of establishing an entitlement to an order for exemplary damages).

44    Mr Wallis made the following submissions in support of his client’s pleaded case on inducing breach of contract (I should note that Mr Wallis was not the author of the pleading):

The [Financepath] Submissions, although correctly based on the allegations as pleaded in the Statement of Claim, ignore the evidence filed by Dreamstreet and Mr Weiss as to the dates on which each of the three unauthorised Downloads was made by Mr Weiss. Dreamstreet acknowledges that it will need to amend its Statement of Claim to accord with the evidence.

FinancePath interviewed Mr Weiss on 30 April 2020 and on another unspecified date in May 2020. Dreamstreet expects that at trial it will be elicited that the second interview was before 11 May 2020 and that before 11 May 2020, Mr Weiss resolved to leave Dreamstreet and accept an offer of employment by FinancePath.

…

A matter central to the Application is that FinancePath claims that it was not aware of the restraints on Mr Weiss under his Services Agreement until the commencement of the proceeding on 25 September 2020 and asserts that its uncontradicted evidence establishes that it did not have actual knowledge that the Weiss Services Agreement existed until 25 September 2020. The evidence of Mr Attard and Mr Collard in that regard will be tested at trial and matters will be submitted to the Court at trial based on the matters and the evidence directly below that FinancePath was at all material times aware of the Weiss Restraints.

(Footnotes omitted, emphasis added.)

45    The “matters and the evidence” referred to in the emphasised passage directly above were, in summary, as follows:

(1)    Financepath should be taken to have been on notice that, in accordance with industry practice, Mr Weiss would have had restraints upon him from interfering or seeking to interfere, directly or indirectly, with the relationship between Dreamstreet and its clients. A matter Dreamstreet will seek to investigate at trial is what Financepath’s witnesses knew about such industry practice and what they ought to be taken to have been aware of.

(2)    Mr Mardegan was Dreamstreet’s Senior Credit Manager and then its Operations Manager between 2007 and June 2020. On 28 June 2020, Mr Mardegan commenced employment as the Credit Manager at Financepath. He:

(a)    oversaw and reviewed Mr Weiss’ communications with various borrowers and their loan applications submitted via Dreamstreet in relation to their loans;

(b)    knew about the restraints on Mr Weiss under the Weiss Services Agreement, because during the course of his employment by Dreamstreet he was provided with a copy of what was referred to in written submissions as the “Dreamstreet Services Agreement” many times; and

(c)    was aware (and therefore Financepath was aware) of and on notice since 28 June 2020 that Mr Weiss was subject to restraints in his “Dreamstreet services agreement” against seeking to refinance borrowers out of loans negotiated by Dreamstreet.

46    Dreamstreet also submitted that Mr Mardegan’s role was important, as follows:

… Mr Mardegan in his affidavit sworn on 31 March 2021 has deposed that he was called by Mr Hronis shortly after he commenced at FinancePath (28 June 2021) and told that Mr Hronis was aware that Mr Weiss was working at FinancePath and asked that Mr Mardegan pass on a message to Mr Weiss he “should be careful”. Mr Hronis has deposed that he told Mr Mardegan that as he was aware Mr Weiss had restraints in Services Agreement [sic] and that he asked Mr Mardegan to advise Mr Weiss that he should be very careful not to breach those restraints as Dreamstreet would take action if he did.

… Mr Mardegan clearly oversaw and reviewed Mr Weiss’ communications with potential borrowers and his loan applications submitted at FinancePath in relation to potential loans. In particular he did so in relation to Mr Weiss’ efforts to move borrowers such as [CL and YL, and CB and TC] out of loans negotiated by Dreamstreet to loans negotiated by FinancePath with the same Lender in order that FinancePath and Mr Weiss could earn fresh commissions.

(Citations omitted.)

47    In reply, Financepath submitted that:

(1)    Dreamstreet’s assertion that Financepath interviewed Mr Weiss on 30 April 2020 and on another unspecified date in May 2020, and that it “expects that at trial it will be elicited that the second interview was before 11 May 2020 and that before 11 May 2020, Mr Weiss resolved to leave Dreamstreet and accept an offer of employment by FinancePath” cannot be accepted because “the evidence already filed (by an attendee of that interview) establishes that the second interview occurred on 13 May [2020]” (citing the second Attard affidavit at [7]);

(2)    it is of no avail to Dreamstreet at this stage of the proceeding to say that it “will seek to investigate at trial … what Financepath’s witnesses knew about … industry practice and what they ought to be taken to be aware of” because it “bears the onus of proving the requisite knowledge for the purposes of the tort of inducing a breach of contract (and has filed no evidence to establish an industry practice)” and “[t]rial is not the time for an applicant to start investigating the merits of its pleaded causes of action”; and

(3)    as to the alleged role played by Mr Mardegan:

For completeness, it is noted that in its submissions, Dreamstreet seeks to rely on Mr Mardegan’s alleged knowledge of the Weiss Restraints in order to establish the requisite knowledge on Financepath’s part. By way of response:

(a)    first, there is no evidence that Mr Mardegan was aware of the terms of the Weiss Services Agreement (the only evidence before the Court is Mr Hronis’ evidence that Mr Mardegan was provided with the “Dreamstreet Services Agreement” which Mr Hronis says contained the same restraint clauses as in the Weiss Services Agreement);

(b)    second, there is no legal basis on which to attribute Mr Mardegan’s knowledge (which is not proven in any event) to Financepath.

(Citations omitted.)

Breach of copyright

48    It was not disputed that Financepath’s case on copyright infringement was that Dreamstreet had not alleged any “independent infringing acts” of Financepath as opposed to Mr Weiss.

49    Financepath submitted as follows:

(1)    Dreamstreet’s allegations regarding the reproduction of its data, as pleaded in [17]-[22] and [26]-[28] of the statement of claim, are made against Mr Weiss only, and not against Financepath.

(2)    The First Download (and the alternate version of this download) (see [17] and [19] of the statement of claim) took place before Mr Weiss had been offered a position at Financepath.

(3)    The Second and Third Download (see [20] of the statement of claim) took place after Mr Weiss had commenced employment with Financepath, but while he was in training and before he had commenced any credit advisory work.

(4)    There is no allegation or evidence to the effect that Financepath directed Mr Weiss to perform the downloads, or even knew that he had performed the downloads. On the contrary, the uncontested evidence that has been filed in the proceeding establishes that Financepath did not know that Mr Weiss had performed the downloads, did not direct him to perform them, and did not direct him to use the data that he had downloaded (citing the first Attard affidavit at [26]).

(5)    It is Mr Weiss’ evidence that he performed the downloads in order to retain a record of the work he had done for Dreamstreet so as to determine what amounts were owed to him (citing the Weiss affidavit at [49] and [61]), a matter in respect of which Financepath has no interest.

(6)    There is no evidence that Financepath (as opposed to Mr Weiss) reproduced the data in question, save that one of the files relating to the Second Download was located on the Financepath owned laptop operated by Mr Weiss (citing the affidavit of Justin Geri sworn 10 September 2021 at [16]) in the following location: C:\Users\Moishe Weiss\Downloads\opportunities.xls (citing [40] of Annexure JG-1 to the affidavit of Justin Geri sworn 10 September 2021). It has now been deleted (citing the Le affidavit).

50    For those reasons set out above, Financepath submitted that Dreamstreet has no reasonable prospect of successfully prosecuting its allegation that Financepath infringed its copyright.

51    Dreamstreet’s case in response was that Financepath is liable for the conduct of its employee in reproducing the downloads, citing Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (No 2) [2008] FCA 746; (2008) 76 IPR 763 (Besanko J).

Consideration

Inducing breach of contract

52    Before Dreamstreet can succeed in this cause of action, it must plead and prove an intentional act which induces the breach of contract and which causes damage.

53    In Short v The City Bank (1912) 12 SR (NSW) 186, Street J said at 202:

To make out a cause of action of this kind, it is incumbent upon the plaintiff to establish three things. He must establish in the first place that the defendant in fact induced and procured the breach complained of; in the second place that the breach was procured with the deliberate intention of injuring the plaintiff, or in such circumstances that it must have been obvious to the defendant that the reasonable consequence of what he did would be to injure the plaintiff; and in the third place that what was done did in fact injure him.

See also Short v City Bank of Sydney (1912) 15 CLR 148 (affirming the view of Street J).

54    The relevant principles were reviewed by a Full Court of this court in Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43 and 45, where Lindgren J said:

In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have “sufficient knowledge of the contract” is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights.

…

In my opinion, if an alleged tortfeasor knows of the particular provision which is in fact breached but does not “know” or “intend” (signifying the same thing) that the contract into which he enters with the contract breaker constitutes a breach of that provision, no tort is committed.

55    In this case, it is pleaded against Financepath that:

34    By permitting Mr Weiss to engage in the conduct in paragraphs 12 [signing employment agreement with Financepath on 19 May 2020], 13 [commencing employment with Financepath on 1 June 2020] and 24 [Mr Weiss purporting to terminate the Weiss Services Agreement] above with the intention and in the knowledge that it would cause a breach of contract, Financepath induced Mr Weiss’ breaches of the Weiss Services Agreement.

…

36    By permitting Mr Weiss to engage in the conduct in paragraph 25 [Mr Weiss soliciting etc. certain of Dreamstreet’s customers] above with the intention and in the knowledge that it would cause a breach of contract, Financepath induced Mr Weiss’ breaches of the Weiss Services Agreement.

…

40    By permitting Mr Weiss to engage in the conduct in paragraphs 17 to 22 [First, Second and Third Downloads], 25 to 31 [Mr Weiss soliciting etc. certain of Dreamstreet’s customers, the 27 September 2020 Version of the Second Download, and information obtained as a result of execution of search order] with the intention and in the knowledge that it would cause a breach of contract, Financepath induced Mr Weiss’ breaches of the Weiss Services Agreement.

(See the extracts from the statement of claim set out at [11] above.)

56    In my view, in light of what Mr Wallis said in his submissions about the matters that his client intends to explore at trial, although the case for summary judgment is a borderline one, I cannot ultimately be satisfied that Dreamstreet has no reasonable prospect of successfully prosecuting its inducement to breach contract case.

57    Financepath’s submission was that “the evidence doesn’t bear out the causes of action that are alleged”. Its case focussed on what it said could or could not be established on the affidavit evidence, much of which it submitted was either “uncontradicted” or “uncontested”. However, as Mr Wallis put it in his oral address, “the fact that, in many cases, [Dreamstreet] hasn’t served affidavits in response to Financepath’s evidence … just reflects the fact that that’s purely within [Financepath’s] knowledge”. Such matters include the intention or knowledge of Financepath and its employees from time to time, evidence of which may not be capable of being challenged except through the process cross-examination.

58    Similarly as to damages, on the basis of the parties’ submissions and the evidence before me, I cannot be satisfied that Dreamstreet has no reasonable prospect of successfully establishing that is suffered some loss or damage from the alleged breaches of the Weiss Services Agreement. However, I do have my doubts whether, for reasons I expressed in the course of oral submissions, and which I need not now repeat, the case against Financepath is “worth the candle”, and would result in any significant award of damages for Dreamstreet even in the event that it is successful. But in this case, that is a separate question to the one that I must address under s 31A. There may well, therefore, be serious costs consequences for Dreamstreet if it ultimately proves to be that its case is not “worth the candle”, but they are issues that do not arise on this application.

Breach of copyright

59    Again, I have my doubts about whether the pursuit of the copyright claim, even if made out, will result in significant liability on the part of Financepath. But the issue sought to be raised (whether Financepath is liable for the conduct of Mr Weiss as its employee) is one of mixed fact and law, and in my view it is not an appropriate case to exercise the discretion under s 31A summarily to dismiss the claim.

Disposition

60    Financepath has obtained some degree of success, because the vicarious liability claim was conceded to be defective. In my view, the appropriate order as to costs is that the costs of the application be costs in the proceeding, because the question of who bears them should depend on the ultimate outcome.

Associate:

Dated:    5 October 2022