FEDERAL COURT OF AUSTRALIA

Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404

ORDERS

THE COURT ORDERS THAT:

1.    Within 28 days of the date of these orders, each party file and serve proposed minutes of orders and short submissions (limited to 10 pages) to give effect to these reasons.

2.    Within 28 days of receipt of any such proposed minutes and submissions from a party, any other party may file responding submissions (limited to 5 pages).

3.    Liberty to apply.

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

REASONS FOR JUDGMENT

BEACH J:

1    Directed Electronics OE Pty Ltd has made various claims against three sets of respondents.

2    First, Directed has made claims against two of its former employees, namely, the sixth respondent, John Meneses, and the seventh respondent, Craig Mills, and an entity owned and controlled by Meneses being the first respondent (OE Solutions).

3    Second, Directed has made claims against its South Korean suppliers and their related entities, being the second, third, fourth, fifth, and twelfth respondents (the Hanhwa parties) and the Hanhwa parties’ managing director who is the eighth respondent, Ryan Lee; I will simply refer to him as Lee. It is convenient to distinguish between the various Hanhwa parties. Claims have been made against the second respondent, Hanhwa Aus Pty Ltd (Hanhwa Aus), the third respondent, Han Hwa Hightech Australia Pty Ltd, the fourth respondent, Leemen Aus Pty Ltd, the fifth respondent, Hanhwa Hightech Co Ltd (Hanhwa Korea), the eighth respondent, Lee and the twelfth respondent Leemen Co Ltd (Leemen Korea); the corporate name for the third respondent uses a modified form of “Hanhwa”.

4    Third, Directed has made claims against former business associates of Directed and their related entities, being the tenth, eleventh and thirteenth respondents (the Gridtraq parties).

5    It is appropriate to say at the outset that Directed’s case against Meneses, Mills and OE Solutions has largely succeeded. Each of them were involved in conduct that could only be described as reprehensible in terms of appropriating the confidential information and customers of Directed, ultimately to the benefit of the Hanhwa parties. Moreover, Meneses’ behaviour was in part encouraged by the payment of secret commissions from Hanhwa Korea or its predecessor to Meneses and/or OE Solutions. Hanhwa Korea or its predecessor from at least 21 July 2009 to 20 November 2017 regularly paid secret commissions to Meneses or OE Solutions. This was over the period of Meneses’ employment at Directed.

6    It is also appropriate to say that Directed’s case against most of the Hanhwa parties has also largely succeeded in terms of their knowing involvement and assistance in the wrongful conduct of Meneses and Mills, the Hanhwa parties’ misuse of the confidential information of Directed and the Hanhwa parties’ appropriation of the customers and products of Directed. But it is apparent that Directed has no sustainable case against the third and fourth respondents. It has only succeeded against Hanhwa Aus, Hanhwa Korea, Leemen Korea and Lee.

7    But let me say at the outset that Directed’s claims against the Gridtraq parties have largely failed. In this respect, many of Directed’s allegations were simply unfounded. They proceeded on a mischaracterisation of the relevant facts. They were replete with exaggerations. Moreover, many of Directed’s submissions were tainted with mere suspicions, conjectures or were coloured with little more than unsustainable theories. There is only one narrow part of Directed’s case that has succeeded concerning the use of confidential information. But on that aspect I am not convinced that Directed is entitled to any substantive relief against the Gridtraq parties. But I will hear the parties further on that aspect.

8    Now the extensive trial before me has proceeded on questions of liability, injunctive and declaratory relief, together with limited issues of quantum concerning the secret commissions. Numerous causes of action have been alleged by Directed. The final version of the statement of claim, which was filed on the last day of oral closing submissions, was the third further amended statement of claim (3FASOC). This ran to some 185 pages with a further 140 pages of particulars. Further aides memoire and other material, some of which I requested, were filed over the following month.

9    The present matter and indeed the present trial has had a protracted history, including sporadic and lengthy delays brought about by the COVID-19 episode and external restrictions disproportionately burdening my conduct of the matter sitting in Melbourne. Not only has this affected the time frame, but it has also affected the mode of trial. In that latter respect, special procedures were put in place by me after detailed consultation with the parties to have substantial parts of the evidence taken in mid-2020 by video deposition at a time when the necessary compatible technology was not available to conduct proceedings before me particularly involving South Korean based witnesses with interpreters. I should say that by March 2020 I had heard several weeks of evidence that had involved an electronic trial involving a third-party service provider providing access to documents and the like. But given that no in person hearings could take place, given that the external service provider was off-site and could not continue on-site, given the nature of the technology already in place, and given that for an electronic trial to continue by video, facilities for split screening (five or more images) and calling up documents were required, the proceedings in Court could not continue for what was an indeterminate period. Moreover, none of the embryonic steps that were then being investigated within the Court for remote but simple or short hearings could address the complexity and the technology then being used including BlueJeans. I did not have the advantage of a clean “green-fields” technical solution. Hence the video depositions mode. For that purpose, and with the acquiescence of all parties, I appointed Mr Edward Heerey QC as a special examiner to undertake the necessary video depositions. If I might say so he did a commendable job and I am grateful for his assistance. I have set out the protocol dealing with his appointment and the technology used in annexure A to these reasons and my underlying authorising orders in annexure B.

10    Now I have had the advantage of reviewing those depositions in relation to the significant aspects that I have had drawn to my attention. Of course, I have also had and reviewed the hard-copy affidavits and complete transcripts of cross-examinations of all relevant witnesses, which I had my chambers put together and consisting of some 13 volumes, but not including hard copy form primary documents. I was also provided with a 30 volume court book at the start of the trial consisting of what were said to be the most pertinent documents, including 4 volumes of what were said to be the copyright documents. I also requested that for closing addresses each party provide to me a set of the relevant significant documents that they wished me to particularly consider. In that respect I was provided with another 9 volumes of material. I should also say that during oral openings, reference was made to other material in electronic form that I compiled in a further 5 volumes of material that was not otherwise in the court book. In addition, there was an electronic data base for all other evidentiary material.

11    I have considered all of this material to the extent that it was part of and referenced in the parties’ written closing submissions and other aides-memoire totalling well over 1000 pages or drawn to my attention during oral openings and closings. Further, to the extent that some of the references were not in a hard copy form of the type that I have identified, as I say I had access to an electronic data base.

12    Before proceeding further, let me say something about the mode of trial in terms of assessing the credibility of witnesses. There were some witnesses who gave evidence before me, including concerning Directed’s application to re-open its case. But for the video depositions taken before Mr Heerey QC I could only review the video recordings. But in assessing the reliability of the video evidence of a particular witness, all of this was readily assessable based upon reviewing the precise contents of the narratives, the transcripts, the contemporaneous documents and independently and objectively considering the various plausibilities and probabilities of the contestable and competing narratives. And it could not seriously be suggested that the apparent demeanour of a witness as he appeared in a video recording could carry the day or be substantially influential in my assessment of credibility.

13    Let me deal with another preliminary matter. Some years after Directed brought the present proceeding, it commenced in August 2020 a related proceeding against Isuzu Australia Ltd (IAL), being proceeding VID 547 of 2020. Now it should be apparent from what I have said that IAL is not a party to the proceeding before me and so will not be bound by any of my findings. Moreover, as will become apparent from other parts of my reasons, no officer, employee or any other person associated with IAL has been called as a witness before me. IAL’s only involvement in the proceeding before me has involved the production of documents as a subpoenaed party. Further, it should be noted that Directed commenced this separate proceeding after I had commenced the present trial and I had heard some weeks of evidence. On 4 June 2021 it became necessary for me to order that another docket judge be allocated to that separate proceeding so that there was no risk of being contaminated by either any material further used or produced in that separate proceeding or the conduct of the parties in that separate proceeding prior to my delivery of judgment in the present matter.

14    Now before proceeding further, let me say something further about the parties.

15    Directed is an Australian automotive electronics products and solutions developer specialising in the distribution of in-vehicle electronics, hardware, telematics and related technologies. It designs, markets and sells audio visual products (AV units) and associated accessories and component parts, devices which operate with the AV units (telematics units) and associated telematics services.

16    AV units have a head unit and a touch screen user interface. The head unit typically allows users to listen to the radio and CDs, connect to mobile devices so that the user can make phone calls, and also offers navigation. The touch screen allows the driver to operate the head unit.

17    A telematics unit is a wireless device. It records and transmits data in real time on how a vehicle is performing, the speed and distance it has travelled and how the driver is operating it. Warnings can be triggered, for example, in relation to oil temperature or pressure. They can be fitted to trucks to wirelessly communicate with a remote computer. They can also display this information to the driver on the AV unit. At head office, telematics can help a fleet manager to monitor vehicle and driver performance. Now to enable telematics, encrypted information collected from a network of sensors and devices that form part of the vehicle, known as the Controller Area Network or CAN network, is transmitted via the telematics unit to the cloud where it is stored. A truck can have multiple CAN networks, hence the term CAN Bus, which carries signals from multiple sources simultaneously.

18    For those who have an interest in such matters, I have included as annexure C to these reasons a pictorial representation of the flow of data between the various units and devices.

19    Now I should also note that from 2009 to the present, a Hungarian company has been Directed’s navigation software supplier. Further, a German company has inter-alia provided Directed’s underlying map data. Directed employees worked with those companies to customise navigation related information so that it was suitable for trucks.

20    Now Directed’s products and components are primarily directed towards truck manufacturers and suppliers. It has original equipment manufacturer (OEM) customers in Australia and New Zealand. From 2009 to November 2017, its largest and most important customers included IAL, companies in the Daimler group such as Fuso and Mercedes Benz Australia Pty Ltd (Mercedes), Hino Motor Sales Australia Pty Ltd (Hino) and UD Trucks (UD), a division of Volvo Group Business Services Australia Pty Ltd.

21    Directed’s premises at all relevant times had its own research and development centre and in-house R&D team that designed, developed and tested telematics units and telematics services. Its engineers worked with OEM customers to develop telematics solutions. As part of that process they gathered and built up vehicle parameters and CAN Bus data on the different vehicles supplied by OEM customers. They also designed circuit boards, harnesses, software and technical manuals.

22    Meneses is the sole shareholder and director of OE Solutions. He was employed by Directed from around mid-2009 under a written employment agreement dated 1 June 2009, holding the positions of Business Development Manager and OEM Director; he was not though formally a director of Directed, although at times he seems to have represented himself as such. He was entrusted with and granted autonomy. His role had an important marketing and client-relationship function. This included visits several times a week to IAL. He was entrusted with most of the direct dealings with IAL, Mercedes, Fuso, Hino and UD. Meneses ordered and sourced products from Hanhwa Korea and negotiated prices.

23    Now Meneses’ employment end date is controversial. He claims that he tendered his notice of resignation on 17 July 2017. Clearly, Meneses then met with Stavros Siolis, a director of Directed, and handed him a purported letter of resignation. Meneses told Siolis and Anthony Tselepis, another director of Directed, that he was having difficulty with the amount of work he had to do and also raised other issues concerning his health. He also said that he was interested in pursuing other business opportunities. He also told Siolis and Tselepis that he was considering working for Hanhwa but only in relation to projects outside Australia. Siolis told Meneses not to resign, that Directed would support him in whatever way possible to lighten his load and that he could work part time. Meneses agreed. On 26 July 2017 Meneses emailed Siolis, Tselepis and Kon Floudas, Directed’s Chief Financial Officer, that due to a medical condition requiring major surgery he would be unfit to perform work for Directed from 20 July 2017 to 8 September 2017. But as far as Directed was aware, Meneses continued to perform his duties as an employee, including using his security card to access the premises, up until 23 October 2017. I should say now that I accept Directed’s case that he ceased his employment on 7 November 2017.

24    Let me say something about Mills. Mills was employed by Directed as Project and Production Manager from 1 June 2009 to about March 2017 pursuant to a written employment agreement dated 1 June 2009. The relevant terms of the Mills employment agreement were similar to those of the Meneses employment agreement. Mills reported directly to Meneses. He helped Meneses with the production and supply chain, accounts, document creation and management, and scheduling and forecasting. He helped source and supply products for Directed to sell. Mills resigned by letter dated 22 February 2017. He told Siolis that he intended to start working in his wife’s business. He was paid by Directed until 13 March 2017 and his last day of work at Directed was 8 March 2017. There is no dispute between the parties as to Mills’ end date.

25    Let me turn to the Hanhwa parties and Lee.

26    From 2009 to October 2018, various of the Hanhwa parties, leaving to one side the precise entity for the moment, manufactured and supplied to Directed the majority of AV units and accessories for Directed’s customers. They did not manufacture Directed’s telematics units, which Directed manufactured itself or separately arranged. Directed and various of the Hanhwa parties worked closely together in relation to the AV units and accessories. Directed ascertained the functionality requirements of each customer, worked with the customer on new designs and improvements, and determined cost and pricing. Directed employees undertook many hours obtaining, testing, approving and revising samples. They made drawings and created documents necessary to enable supply.

27    Now Directed originally contended in this proceeding that the supply from Hanhwa Korea and Leemen Korea was by an agreement constituted predominantly by conduct over an extended period. But on 21 June 2019, after Directed’s evidence in chief had been filed, Tselepis located a signed manufacturing and supply agreement dated 27 July 2010 (the Hanhwa Enterprise Agreement) between Directed and Han Hwa Enterprise Co (Hanhwa Enterprise), a non-party.

28    Now Hanhwa Korea was registered on 7 February 2012. It manufactures and supplies in-vehicle electronic components and products. It carries on the business formerly carried on by Hanhwa Enterprise. Directed says that it is to be inferred that Hanhwa Korea assumed the assets and liabilities of Hanhwa Enterprise from 7 February 2012 from notifications sent to Directed advising of the incorporation of its business, the fact that business otherwise continued as before and what it asserts to be the retrospective operation of the 2012 secret commissions agreement to 2009. There was an earlier secret commissions agreement made on 1 July 2009 in identical terms. I will return to these matters later.

29    Directed also says that on an objective assessment based on the conduct of the parties, the Hanhwa Enterprise Agreement was novated. It says that the relationship between the parties, with Hanhwa Korea as successor to Hanhwa Enterprise, continued unabated on terms consistent with the Hanhwa Enterprise Agreement. Alternatively, it says that there was a new agreement entered into on substantially similar terms between Directed and Hanhwa Korea (the Hanhwa Korea Agreement). I will return to this aspect later.

30    Now since approximately 2015, the accessory side of the business previously carried on by Hanhwa Korea has been carried on by Leemen Korea who then became subject to the Hanhwa Korea Agreement. Directed continued to trade with Hanhwa Korea and Leemen Korea as it had done previously, except that Directed dealt with the two different entities in relation to specific types of products.

31    Now Lee is a shareholder of Hanhwa Korea; he graduated in law in South Korea. Since 2015 he has also acted in the role of its managing director. YS Lee, his father, is the sole actual director of Hanhwa Korea; he is also the chairman. Directed’s primary contacts at Hanhwa Korea have always been YS Lee and Lee. In 2012 Lee moved to Australia. He worked out of Directed’s premises, and was provided with a dedicated desk and an access pass which he used until 27 April 2017. Other employees of Hanhwa Korea also worked from Directed’s premises, including Irene Oh and Thomas Shin.

32    Finally, let me say something about the Gridtraq parties. The Gridtraq parties specialise in telematics. Allen Hartley and Jeremy Davidson own and manage the tenth respondent (Gridtraq) and the eleventh respondent (Webhouse) either in their own right or via their private entities. Their related company is the thirteenth respondent (Quantam) whose directors include Allen Hartley and Davidson; to be clear, “Quantam” is the spelling of that company’s name rather than “Quantum”. I should also note that at all relevant times, the Gridtraq parties have been based in Brooklyn, Victoria, at premises co-owned by Allen Hartley via a trust.

33    Now from February 2010 to March 2016, Directed and its directors and shareholders were involved in a joint venture with Allen Hartley and Davidson, either personally or through entities owned and controlled by them (the Directed/Gridtraq JV). The Directed/Gridtraq JV involved selling and supplying GPS based telematics systems to truck owners and OEMs. The Directed/Gridtraq JV was conducted through a company now called ACN 139 732 951 Pty Ltd, previously Gridtraq Pty Ltd (JV Vehicle). For the purposes of the Directed/Gridtraq JV, Allen Hartley, Davidson and/or Dylan Hartley, the son of Allen Hartley, received and provided technical information regarding AV units. This included telematics integration information. Dylan Hartley worked full time as an employee of the JV Vehicle.

34    I should note at this point that this relationship ended in dispute. On 19 January 2016, Allen Hartley and Davidson through a related entity commenced an oppression proceeding against Siolis Holdings Pty Ltd and Tselepis Holdings Pty Ltd. They sought to wind up the JV Vehicle. On 27 January 2016 the JV Vehicle was placed into voluntary administration.

35    In that context, a Deed of Agreement and Release (Deed of Release) and a Deed of Company Arrangement (DOCA) were executed on 29 March 2016. 100% control of the JV Vehicle was transferred to Siolis and Tselepis. Allen Hartley and Davidson also agreed to a 90 day restraint with respect to pursuing IAL, UD and Hino as customers.

36    Let me now descend into the detail. For that purpose, my reasons have for convenience been divided into the following sections:

(a)    Directed’s case concept ([37] to [129]).

(b)    The various witnesses ([130] to [187]).

(c)    Some legal principles ([188] to [309]).

(d)    Detailed factual chronology ([310] to [863]).

(e)    The relevant units – similarities and differences ([864] to [1158]).

(f)    The case against Meneses and OE Solutions ([1159] to [1664]).

(g)    The case against Mills ([1665] to [1894]).

(h)    The case against the Hanhwa parties ([1895] to [3221]).

(i)    The case against the Gridtraq parties ([3222 ] to [3990]).

(j)    Conclusion ([3991] to [4003]).

Directed’s case concept

37    It is convenient at this point to give a brief description of Directed’s case thesis and what aspects I generally accept. How closely Directed’s case thesis correlates with the evidence is something that I will address in later sections.

38    I accept that from the outset of his employment, Meneses had two masters, namely, Directed and Hanhwa Korea or its predecessor. As I have said, he was employed by Directed from mid-2009, holding the positions of Business Development Manager and OEM Director until 7 November 2017. He was entrusted with and granted autonomy. His role had an important marketing and client-relationship function. He was entrusted with most of the direct dealings with Directed’s major customers being OEMs such as IAL, Mercedes, Fuso, Hino and UD.

39    But at the same time, as Directed has said, Meneses was in essence a salesman in Australia for Hanhwa Korea or its predecessor, entitled to be paid commission of 3% of all purchases by Directed from Hanhwa Korea or its predecessor. He was required under his agreement with Hanhwa Korea or its predecessor to be involved in developing new business for it. Further, Meneses was contractually and financially bound to maintain and grow Hanhwa Korea’s or its predecessor’s business.

40    Now it is not in dispute that from 2009 to late 2017, the relevant Hanhwa entity manufactured and supplied to Directed 95% of the required AV units and accessories for Directed’s customers. Meneses ordered and sourced the products supplied by Directed to these customers from Hanhwa Korea or its predecessor and negotiated the prices Directed paid to that entity. Directed was an important customer of Hanhwa Korea and its predecessor.

41    It is also not in dispute that on 27 July 2010, the Hanhwa Enterprise Agreement was executed with Directed. The supply agreement was an umbrella agreement between the parties, by which Directed engaged Hanhwa Enterprise to provide manufacturing services to Directed for their specific products. Hanhwa Enterprise agreed to manufacture products in accordance with the specifications of Directed and to supply them to Directed. Directed asserts that these were exclusive arrangements, an issue that I will return to later.

42    Now it is not in doubt that at the end of 2012, Directed was Hanhwa Korea’s most important and largest customer overall. Sales by Hanhwa Korea to Directed represented about 80% of Hanhwa Korea’s global business. Sales via Directed included IAL (45%), Hino (16%), UD (9%) and Orion for the aftermarket (8%). The only items not supplied to Directed were to Toyota, with some accessories.

43    It is also not in doubt that by August 2013, Lee was head of the sales and marketing division of Hanhwa Korea, but based in Australia. He was responsible for its development planning team, the international sales team, and the design team.

44    Now I accept that Directed and Hanhwa Korea (and its predecessor) worked closely together in relation to the design and development of the AV units and accessories which Directed supplied to the OEMs. Directed ascertained the functionality requirements of each customer, worked with the customer on new designs and improvements, and determined and negotiated cost and pricing. It is not in doubt that in the course of this design and development, Directed entrusted various of the Hanhwa parties and Lee with confidential information about its business, customer relationships and customer requirements. Further, Lee had a dedicated desk at the Directed premises after his move to Australia. He attended internal meetings of Directed employees. Because of this he became aware of commercial business opportunities that Directed was trying to exploit. He was also invited to and did attend meetings between Directed and IAL, at times. He was provided by Meneses with minutes of meetings with IAL which Lee would pass on to Hanhwa’s engineering people. None of these matters were seriously contested in my view.

45    Further, in my view Directed employees provided substantial and significant input on the design and development of the products Hanhwa Korea or its predecessor produced for it. This included identifying the opportunities, negotiating with the OEMs their requirements, reviewing and amending documents, obtaining, testing, approving and revising samples of products. Directed made drawings, created documents and provided information to Hanhwa Korea or its predecessor necessary to enable the supply of the products by Directed to the OEMs.

46    Further, it is not in doubt that the Hanhwa parties from at least 21 July 2009 to about 20 November 2017 regularly paid commissions to Meneses, or his wholly owned and controlled company OE Solutions. Commissions were calculated based on Directed’s purchases from Hanhwa Korea or its predecessor.

47    Directed’s case, which I accept, is that Meneses had a conflict of interest during the period from June 2009 to November 2017, and that he was under a contractual obligation to disclose this conflict to Directed but did not do so.

48    Further, it is also not in doubt that in the period 2009 to 2017 Meneses, through his company OE Solutions, on-sold electronic harness products to Directed after marking up the product prices from the original supplier, Kenmarco Industries Pty. Ltd. In the period 31 July 2009 to 21 April 2017 Directed purchased from OE Solutions 108,795 harness products and paid AUD 1,710,126 to OE Solutions. The total mark-up that OE Solutions charged to Directed across all products was AUD 665,400. I also accept that Meneses’ relationship with this company was undisclosed to Directed.

49    Further, Directed’s case is that during the period in which Mills was employed by Directed as Project and Production Manager from 1 June 2009 to about March 2017, Mills knew of, and assisted Meneses and the Hanhwa parties in their wrongful conduct. He failed to report it to Directed, as he was obliged to do under his employment agreement. Mills may have been influenced by Meneses or motivated by personal gain. I have also largely accepted Directed’s case against Mills, and I will discuss the details of this later.

50    Now it is also not in contest that from 2012 to 2018, Directed supplied to IAL an AV unit called the DIR6200 or “DAVE” and accessories, which were manufactured or assembled and supplied by Hanhwa. Further, from 2014 to 2018, Directed also supplied IAL with its telematics units. Hanhwa Korea did not manufacture Directed’s telematics units. Directed manufactured these units through its related company STI Technologies Pty Ltd.

51    Now it is common ground that in the period 2009 to 2017 Directed and the Gridtraq parties specialised in telematics.

52    Further, from February 2010 to March 2016, and as I have said, Directed and its directors and shareholders were involved in the Directed/Gridtraq JV through the JV Vehicle with Allen Hartley and Davidson to sell and supply GPS based telematics systems to OEMs and truck owners. The JV Vehicle also provided the on-line portal through which telematics services were provided to truck owners and OEMs.

53    Further, it is not in doubt that in the period January to July 2015 Gridtraq and Hanhwa Korea negotiated and entered into a Heads of Agreement concerning combining Hanhwa’s AV head units and Gridtraq’s telematics hardware, firmware and online back end portal software. They agreed to collaborate and look for new markets for AV units, telematics units and telematics services. Now Directed asserts that the agreement placed Hanhwa Korea and the Gridtraq parties into significant conflict with the agreements they had with Directed. For example, pursuant to the Heads of Agreement, both parties were to do all that was necessary, including new hardware and firmware design to convert their individual product offerings into an integrated product design in order to offer new and existing products to current clients and new clients introduced on a consumer scale basis and to any potential markets. Such products would be directly competitive with Directed’s AV units, marketed in AUS/NZ and potentially throughout other markets. I will discuss this aspect of Directed’s case later.

54    Directed says that the Hartleys, Davidson and the Gridtraq parties also knew from their work in the venture undertaken by the JV Vehicle that Hanhwa Korea had an ongoing and longstanding relationship with Directed. They knew that it had collaborated with Directed for the manufacture, distribution and supply of AV units, including the DAVE units supplied by Directed to IAL since 2009.

55    Directed asserts that the Gridtraq parties ought to have known that their contractual arrangements with the Hanhwa parties entered into in July 2015 would bring the Hanhwa parties into conflict with their contractual arrangements with Directed.

56    Directed says that even though Allen Hartley came to Directed, at a minimum, once or twice a week inter alia to have a meeting with Siolis and Tselepis, he did not give notice of his new business arrangements with the Hanhwa parties. He did not seek Tselepis’ or Siolis’ consent to engage in direct competition with the business carried on by the JV Vehicle. Rather, they kept it private. Allen Hartley refused to recognise that his and Davidson’s conduct was in breach of the JV Vehicle Shareholders Agreement. Further, he and Davidson ignored the role the Gridtraq parties were playing in assisting and supporting Hanhwa Korea to engage in conduct at odds with its development and supply of AV units it had developed in conjunction with Directed.

57    I will deal with all of these assertions by Directed later, although it is convenient to now say that its case against the Gridtraq parties relying upon these assertions has failed.

58    Now it is not in doubt that from late 2014 extending through 2017, Directed pursued a confidential project to supply the “SuperDAVE” unit, which had the product code DIR8000, to IAL. This was a new AV unit and accessories range. The SuperDAVE was intended to replace the DAVE.

59    It is also not in doubt that in August 2014 Directed involved Hanhwa Korea in the project for it to be the supplier of the SuperDAVE to Directed. The project involved extensive communications between Directed, IAL and Hanhwa Korea over more than two years on all issues necessary to bring the product to market. Directed employees were heavily involved. Samples of the DIR8000 were sent by Hanhwa Korea from South Korea to Directed throughout 2015 and 2016. They were extensively tested and changes requested by Directed. They were shown to IAL and its feedback provided to Hanhwa Korea.

60    Now Directed’s case, which I accept, is that unknown to it, from a date in late 2015, Meneses and Mills began secretly assisting Hanhwa Korea to set up a competitive business in Australia, which involved significant breaches of their fiduciary duties, breaches of confidence and copyright owned by Directed or which it was entitled to enforce. The work involved matters necessary to commence a start-up such as Hanhwa email addresses, a corporate logo, business cards, social media pages, promotional videos, marketing materials, and corporate uniforms.

61    It is not in doubt that in early July 2016 Meneses participated in the negotiation of the lease for Hanhwa Aus of new premises in the same building as occupied by the Gridtraq parties. They purchased office equipment. Meneses bought, registered and insured an Isuzu truck for and on behalf of Hanhwa Aus which was then used to test the SuperDAVE and the Gridtraq parties’ telematics units. Meneses looked after the incorporation of Hanhwa Aus, and was later reimbursed by Hanhwa Korea. He was provided with a laptop computer paid for by Hanhwa Aus, and a credit card issued to him by Hanhwa Korea. Meneses had his own office at the Brooklyn premises. Between 30 June 2016 and 24 October 2017 Meneses made 124 telephone calls or text messages from Brooklyn.

62    Further, Directed says that from at least late 2015, Meneses and Lee had agreed to go into business together as partners in the establishment of Hanhwa Korea’s business in Australia, and that Meneses was to hold 40% of the shares in the company(s) ultimately established to exploit the venture. I accept that there were some discussions along these lines and I will return to the 40% question later.

63    Now in mid-2016, according to Directed’s case, which I accept, the Hanhwa parties resolved to supply the DIR8000/SuperDAVE directly to IAL. The new product code that the Hanhwa parties intended to use was HAU8000.

64    It is apparent in my view that Hanhwa internally renamed the DIR8000 as the HAU8000 in September 2016. By 11 November 2016, Hanhwa had established a new team to exploit the HAU8000 because Directed was no longer involved. The aim was to do this quickly, ready to show a working sample to IAL in December 2016 or January 2017. Meneses then secured the deal for the Hanhwa parties to supply the SuperDAVE directly to IAL on 18 November 2016.

65    Now it is convenient to note at this point my view that many of the Hanhwa parties’ witnesses gave problematic evidence to the effect that the HAU8000 was a “new unit” designed from scratch and that it was not the DIR8000 with minor enhancements. They claimed that the HAU8000 was not in any material respect, based upon or derived from the DIR8000/SuperDAVE as it existed in July 2016 or at all. They suggested that Directed had no involvement in the design or development of the HAU8000. But this position is negated by Hanhwa’s contemporaneous documents. Oh accepted that as at 2 September 2016 Hanhwa decided not to design a new unit from the beginning, but to change the model number to HAU8000 and then supply that unit to IAL directly. The HAU8000 as ultimately supplied to IAL was the DIR8000 with minor evolutionary developments and the accessories for both units were the same. I will discuss in a later section of my reasons the evidence of Directed’s independent expert Mr Peter Girgis, an expert in the relevant technology at issue in these proceedings including telematics, navigation and mapping software and the relevant AV units and telematics units, concerning the various unit comparisons at issue in these proceedings.

66    The Hanhwa parties assert that they were entitled to exploit the SuperDAVE opportunity because Directed had not paid it for the tooling costs it incurred to manufacture the AV unit. They further say they inferred from this that Directed did not want to buy the SuperDAVE. However, to the knowledge of Lee, IAL had not yet committed with Directed to proceed and Directed was continuing right up until the end of 2016 to attempt to win the contract to supply it to IAL. I reject the Hanhwa parties’ case that they were entitled to exploit the SuperDAVE opportunity.

67    Directed says that there was no obligation on it to pay for the tooling at that point in the design process. There is no evidence of any invoice sent from Hanhwa Korea to Directed, nor demand for such payment. Until such time as Directed issued a purchase order for the tooling, Directed had no obligation to pay for it. Lee acknowledged there never was an obligation on Directed to pay for the tooling for the DIR8000 as Directed never issued a purchase order to Hanhwa Korea which was required for such an obligation to arise. Lee ultimately conceded that Directed was never liable to pay for tooling in relation to the SuperDAVE. I accept Directed’s case on this aspect.

68    In any event Directed says that there was no entitlement for the Hanhwa parties to use the confidential information it had been provided by Directed in relation to the SuperDAVE opportunity for itself. I also agree with Directed’s case on this aspect.

69    Now it is clear in my view that on 14 July 2016, Meneses instructed Lee to “slow down” in relation to the renting of large premises for the Hanhwa business in Australia. He noted in an email that they needed a contract with an OEM customer first and in the meantime “that Directed still needs to keep ordering ALL of our current products until we start to move them after one year”. In my view this email reveals Lee’s and Meneses’ deception and their plan to strip Directed’s business, and of the need for secrecy until the very last moment.

70    Now Hanhwa Korea’s business plan dated 15 December 2016 (for 2017) records that its Australian implementation plan was that sales, logistics and after sales would all be performed directly in Australia. They would start “self-supply” from “HAU-8000 (ISUZU), HAU-8100 (D-MAX) model”. They would “continue to work with Directed on the current AVN products until discontinuation”. According to Directed this makes manifest the secret plan expressed between Meneses and Lee in July 2016 to strip Directed’s business. I agree.

71    Directed says that in June 2016 Lee and Meneses let the Gridtraq parties in on their plan. I disagree.

72    Directed says that from their 6 year relationship in the JV Vehicle, the Gridtraq parties well knew that Meneses was a senior and trusted full-time employee of Directed. They must have known that he could not also act to assist Hanhwa in any commercial activities that might be in competition with Directed whilst at the same time be employed by Directed. This necessarily includes the cooperative endeavour that then ensued between Hanhwa and Gridtraq to exploit the SuperDAVE opportunity with Meneses’ involvement and assistance.

73    Directed says that the Gridtraq parties knew Meneses was a longstanding employee or, as Gridtraq would have it, a director of Directed, and therefore owed duties to Directed in either case. The Gridtraq parties knew, or ought to have known, that the Hanhwa parties and Meneses should not have been working with the Hanhwa parties and the Gridtraq parties on projects in competition with Directed if he remained an employee or director of Directed. Yet, so Directed says, from at least June 2016 the Gridtraq parties, and the Hanhwa parties and Meneses worked on projects to develop and supply products in direct competition with Directed when they knew he remained an employee or director of Directed.

74    At the very least, Directed says that the conduct of the Gridtraq parties involved such a calculated abstention from inquiry as would disentitle them to rely upon lack of actual knowledge.

75    I should say here that I reject Directed’s case against the Gridtraq parties concerning knowing involvement and will dispose of the detail later.

76    Further, Directed says that in the process of the Gridtraq parties pursuing projects with the Hanhwa parties to develop and supply products in direct competition with Directed, they used and reproduced confidential information and copyright works of Directed and the JV Vehicle without their authority. The JV Vehicle’s confidential information was protected by an express term of the JV Vehicle Shareholders Agreement for the JV Vehicle dated February 2010 binding Allen Hartley and Davidson and their entities. It has post-contractual effect. I will return to this aspect of the case later.

77    Directed says that co-operation between the Hanhwa parties and the Gridtraq parties with Meneses’ involvement to exploit the SuperDAVE opportunity and telematics opportunities with IAL proceeded in earnest in the period from November 2016 through to September 2017. I accept its case concerning Meneses and the Hanhwa parties, but not the Gridtraq parties.

78    It is apparent that on 20 November 2016, Lee informed Hanhwa Korea employees that a field test was to be conducted in December 2016 fitted onto a truck and presented in the “Dealer working presentation”, which was to occur in front of all Australian dealers. Lee proposed to submit this sample to IAL for approval. A field test took place in Australia from 12 to 17 December 2016, with an HAU8000 fitted to an Isuzu truck with inter-alia a wireless charger and a digital camera. A second field test was scheduled in the fourth week of January 2017.

79    Further, it is apparent that Directed continued to work on the DIR8000 and its accessories right up until March 2017, ignorant of the conduct of various respondents to exploit the SuperDAVE opportunity and telematics opportunities with IAL. Meneses then took active steps to ensure that Directed ceased work on the DIR8000 and its accessories and restricted communication by its employees with IAL. On 16 March 2017, he told Mark Summers that the DIR8000 project was not going ahead. Summers was told to box up all the materials and prototype units and accessories and give them to Meneses, which he did. They were delivered to Lee at Hanwa Aus at the Brooklyn premises. On 28 July 2017, Meneses told Steve Reidie of Directed NZ, following an enquiry from Isuzu NZ, that the SuperDAVE project was on hold until further notice and that Directed will only go ahead with this project if IAL gives the go ahead. I accept all of these aspects of Directed’s case.

80    Now on Directed’s case, in November 2016 the Hanhwa parties and the Gridtraq parties did not yet possess all the documents and information they required to exploit the SuperDAVE opportunity and telematics opportunities with IAL within the required timeframe. On Directed’s case, they needed, and the Hanhwa parties provided to the Gridtraq parties, a radio protocol for communications (the Directed Specification) which enabled the AV units to communicate with the telematics units.

81    Now David Vardon, a firmware engineer, created the Directed Specification in early 2014. I will deal with the capacity in which he created this later. Vardon created various versions in the period 2014 to 2016 which were provided to Hanhwa Korea to enable it to develop AV units for Directed. It was implemented for communication between all of Directed’s AV units and its telematics units, including those supplied to IAL between 2014 and 2018.

82    It is not in doubt that in the event that the purchasers of the Isuzu trucks installed with the Directed telematics units wished to have telematics features displayed through the AV unit installed in the vehicle, such as driver identification, two way messaging, CAN diagnostic data and driver violation features, then the relevant Hanhwa AV unit installed in those trucks needed to communicate with the Directed telematics unit. The Directed Specification could facilitate this.

83    I accept that Directed’s portal/platform software facilitating the portal used by the OEMs, including importantly IAL, utilised the Directed Specification to pass on communications and commands between the portal/platform and the Directed telematics unit and Directed AV units installed in customer vehicles. Directed’s AV units supplied to OEMs who required telematics functionality, including the DAVE units, had software libraries that enabled them to communicate with the Directed telematics platform using the Directed Specification.

84    I accept that the Directed Specification was a proven protocol for communications between a telematics unit and an AV unit. The software and hardware of the DIR8000 was significantly advanced to the point of operating working samples which could and had always been required to have telematics connectivity and functionality with the Directed telematics unit.

85    Now if the HAU8000 carried forward that same software and hardware and it was then intended to connect another telematics unit, such as the RA7000 telematics unit, Directed says that it was of assistance to the Gridtraq parties to simply be provided the Directed Specification.

86    Directed say that it was possible that the Hanhwa parties and/or Gridtraq parties could have written a specification to enable communication between the HAU8000 and the RA7000 telematics unit from scratch. However, this would have been a complicated task and would have taken at least 6 to 12 months. Directed says that Hanhwa and Gridtraq did not have that time to demonstrate telematics functionality of the HAU8000 which was required quickly. Instead, so Directed says, the Hanhwa parties supplied the Gridtraq parties with the Directed Specification which they then reproduced and used without Directed’s authority in the period November 2016 to December 2017.

87    Directed says that the Gridtraq parties used the Directed Specification over a period of 5 months from November 2016 to connect the RA7000 telematics unit to an Isuzu AV unit. Directed’s case is that the Directed Specification was used to successfully connect the RA7000 telematics unit to the DAVE and the HAU8000. I will return to this aspect of the case later which is contentious.

88    Further, Directed says, which I accept, that in about February or March 2017, prior to Mills’ departure to Hanhwa Aus, Mills and Meneses engaged in wholesale downloads of Directed’s confidential information and copyright works which were then provided to and used by the Hanhwa parties.

89    I accept that Meneses asked Mills to copy electronic files from Directed’s server onto a hard drive (red hard drive), which he then did. In March 2017, and as a new employee of Hanhwa Aus, Mills took the red hard drive to Hanhwa Aus’ office at the Brooklyn premises. He then uploaded the electronic files stored on the red hard drive to storage locations owned by Hanhwa Aus. He also uploaded Directed’s electronic files stored on the red hard drive to Microsoft Groups, a cloud based file sharing system within Outlook under the names “HANHWA AUS” and “HAU8000 Project”. That they were uploaded to an HAU8000 group is telling. The files extracted included 41,965 emails, 20,535 PDF files, 4,043 Microsoft Excel files, and 392 Microsoft Word files.

90    I also accept that in about April or May 2017 Meneses, whilst still employed by Directed, handed a USB to Mills, who was by then an employee of Hanhwa Aus. It contained approximately 10Mb of data. He asked Mills to upload the contents to Mills’ Hanhwa Aus PC, which he then did. Mills saved the files in a folder labelled “Directed” on the desktop.

91    Further, I also accept that in May 2017, Meneses instructed Summers to provide him with a complete copy of everything in the K drive, which he did. The DAVE Production Part Approval Process (PPAP), which was important to the supply of an AV unit to IAL, was on the K drive. Directed says that in the period May to September 2017 Hanhwa used the DAVE PPAP to create Hanhwa’s PPAP for the HAU8000. I should say now that in my view that is clear.

92    Directed says, which I accept, that on 6 July 2017, at the request of Shin, Summers sent him CAN Bus data compiled by Directed by many hours of reverse engineering for Isuzu N, F, FX and FY Series trucks.

93    Directed says that in the period May to August 2017, Dylan Hartley emailed Davidson and Allen Hartley CAN Bus information and parameters for IAL, Hino, Mercedes and UD and an IAL telematics master feature list and specification and an IAL telematics data collect proposal. It says that these documents were taken from the period in which Dylan Hartley worked as an employee of the JV Vehicle, a number of which he had marked as confidential. He claimed to have an entitlement to these documents under the DOCA between the JV Vehicle and Directed, but Directed says that no such documents were specified as being transferred to the Gridtraq parties.

94    Directed says that Allen Hartley and Davidson and their controlled entities, which includes the Gridtraq parties, were subject to clauses 15.1 to 15.3 of the JV Vehicle Shareholders Agreement which restrained them from using the JV Vehicle’s confidential information, and which had post-contractual effect. It says that Dylan Hartley owed duties of confidence as an implied term of his employment agreement with the JV Vehicle. It says that the Gridtraq parties were not free to deal with the CAN information or the materials Directed and the JV Vehicle exchanged with IAL as their own, as they did.

95    I will deal with these assertions later.

96    Directed’s case is that the Hanhwa parties and the Gridtraq parties used the documents and information they wrongfully retained and obtained to successfully connect the RA7000 telematics unit to the DAVE and the HAU8000 and to develop and promote the HAU8000 and the RA7000 telematics units and their telematics services to IAL. I will deal with these matters later.

97    Directed says, which I accept, that the Hanhwa parties also worked with Polstar Technologies Inc (Polstar) on navigation software for use in the HAU8000 between April 2017 and October 2017. Much of this work was done in consultation with Meneses, and by Meneses involving other employees of Directed. I agree.

98    On 27 April 2017, Lee informed Zoltan Mohos of Polstar that he should not speak to Siolis about Polstar’s engagement with Hanhwa. Mohos acknowledged he would not discuss it with anyone from Directed other than Meneses. Further, during April to June 2017, Meneses and Summers, whilst employed by Directed reviewed and provided information and advice to Mohos of Polstar about what was required to enable the Polstar software being developed for use with the HAU8000 to be suitable for Australian roads, conditions, legislation and Directed customer requirements. Summers, employed by Directed, and Mohos undertook a three-hour drive in an Isuzu truck around Melbourne to evaluate and provide detailed feedback on the Polstar navigation software. Specific changes to make it suitable for IAL were recommended. All of this work was done by Directed’s employee, at the direction of Meneses. Plainly, this work was not for the benefit of Directed. I accept Directed’s case on this aspect.

99    Now Directed says that the Gridtraq parties’ assertion that they never proceeded to assist Hanhwa with the demonstration of telematics functionality of the HAU8000 is contradicted by the evidence. I disagree. Now Directed has pointed to the following matters.

100    It says that Shin accepted that in March 2017 he and other Korean engineers connected an HAU8000 installed in an Isuzu vehicle with the RA7000 telematics unit to see whether they communicated. An attempt to detect CAN Bus data on an Isuzu vehicle was also made. It says that in March and April 2017 the Gridtraq parties and the Hanhwa parties prepared hardware and exchanged extensive correspondence in relation to debugging tools to be used to check the communication between the RA7000 telematics unit and the DAVE unit and the HAU8000.

101    Directed says that on 11 August 2017, Oh attended a meeting with personnel of the Gridtraq parties. It says that the work by the Gridtraq parties to connect or to integrate the RA7000 telematics unit with the HAU8000 unit can clearly be inferred from her notes. It can be inferred from the reference to, “Isuzu truck found CAN not speed”, that an HAU8000 and an RA7000 telematics unit had been installed in an Isuzu truck, with the Gridtraq parties successfully achieving a connection and obtaining certain CAN Bus data, although this was not conceded by Oh. Oh did concede that there was a reference to gathering telematics or CAN Bus data from the Isuzu truck. It says that on 21 August 2017, Dylan Hartley asked to meet with Oh by an email with the subject “Meeting - RA7000 and Isuzu Screen Integration”. His agenda referred to: “Isuzu Screen Integration”.

102    Further, Directed says that on 23 August 2017 the relevant Gridtraq party sought from the relevant Hanhwa entity a sample HAU8000.

103    Further, Directed says that in a written presentation made to IAL on 25 September 2017 to supply telematics units and telematics services, the relevant Gridtraq party represented to IAL that the RA7000 telematics unit connected to and operated in conjunction with the HAU8000. According to Directed, the relevant Gridtraq party had tested and satisfied itself of this fact. Further, there was outlined telematics features that rely upon the interoperability of a telematics unit and an AV unit. Further, according to Directed, the relevant Gridtraq party represented that it had developed a specification for communication between the RA7000 telematics unit so it could connect to and operate in conjunction with the HAU8000.

104    Directed says that it should be inferred that the Gridtraq parties used the Directed Specification to connect the RA7000 telematics unit with the HAU8000. Directed says that it should also be inferred that the specification for communication between the RA7000 telematics unit and the HAU8000 referred to in the Gridtraq presentation to IAL is the Directed Specification or a specification created by reference to the Directed Specification. Directed says that a similar presentation to that made to IAL was made by the Hanhwa parties and the Gridtraq parties to the Daimler group (Mercedes and Fuso) in 2018.

105    I should say now that I do not accept Directed’s case against the Gridtraq parties on this aspect and will discuss the detail later.

106    Now shortly after this proceeding commenced, IAL ceased ordering the HAU8000 due to legal issues. But Hanhwa then supplied to IAL the HAU8000 with a new fascia and the same accessories as had been approved for the DIR8000 and the HAU8000: the unit is called the LM18I. None of this is in dispute.

107    Directed says that the LM18I and its accessories comprised the HAU8000 with a 6.2 inch screen and the same accessories. It is said that the LM18I is the HAU8000 with cosmetic changes. It has been supplied to IAL since and continues to be supplied by Hanhwa Aus. It has been supplied with the Polstar software. I accept this.

108    Directed says that thereafter, the Hanhwa parties marketed the HAU8000 with different fascias to Mercedes, Fuso, UD and Hino. The HAU8000 was given the following product codes for supply to these customers: Mercedes/Fuso - LM19M/LM19F; UD - LM19U; and Hino - LM18H. I accept this.

109    Directed says that the LM19M/LM19F - Mercedes/Fuso is virtually the same as the LM18I. It has been supplied to Mercedes/Fuso since and continues to be supplied by Hanhwa Aus. It has been supplied with the Polstar software. I accept this.

110    Directed says that the LM19U is the same as the LM18I with minor changes. It has been supplied to UD since and continues to be supplied by Hanhwa Aus. It has been supplied with the Polstar software. I accept this.

111    Further, Directed says that Meneses, Mills, the Hanhwa parties and the Gridtraq parties attempted to divert a range of other opportunities in addition to the SuperDAVE opportunity. This involved a range of wrongful conduct, including the misuse of Directed’s confidential information. I largely accept Directed’s case against Meneses and the Hanhwa parties and in summary accept the following conclusions on the evidence.

112    First, in 2017 Meneses and the Hanhwa parties attempted to divert and exploit an opportunity from Mercedes inviting Directed to submit a proposed design for a standalone AV unit to be fitted to its Sprinter buses.

113    Second, in 2016 and 2017 Meneses and the Hanhwa parties attempted to divert and exploit an opportunity for an AV unit to be fitted to Isuzu D-MAX utes to Isuzu Utes.

114    Third, in 2016 and 2017 Meneses and the Hanhwa parties attempted to divert and exploit an opportunity to supply a new AV unit with a bigger screen to Hino.

115    Fourth, in 2016 and 2017 Meneses and the Hanhwa parties attempted to divert and exploit an opportunity to supply AV units and accessories through Isuzu Company Limited in Japan (ICL). In the period September 2016 to July 2017, Meneses with his “Hanhwa hat” on, and Hanhwa pursued the ICL opportunity for the Hanhwa parties’ benefit and sought to supply ICL with the HAU8000 and its accessories including those supplied with the DAVE.

116    Fifth, in 2017 Meneses and the Hanhwa parties attempted to supply a new AV unit to Mercedes to replace Directed’s DIR6160. The Hanhwa parties worked on extracting CAN Bus data in order to provide telematics functionality for its proposed AV unit, including by Shin and one of its other employees extracting CAN Bus data on a Mercedes truck at Directed’s premises.

117    I should deal with another aspect at this point.

118    It is not in doubt that each of the Meneses employment agreement and the Mills employment agreement contained a post-employment non-competition clause. The restraint was for 6 months and within the State of Victoria. It prevented them from being directly or indirectly involved with a competitor business, from soliciting employees, from divulging Directed’s confidential information, and from interfering to the detriment of Directed with the relationship between it and any of its clients, customers, employees or suppliers. Meneses and Mills were also restrained from attempting to entice away or enticing away any of Directed’s customers with whom Meneses and Mills had direct dealings in the previous 12 months. None of this could seriously be in contest.

119    Now according to Directed, neither Meneses or Mills regarded the restraint as a contractual obligation they needed to abide by, and they pressed ahead attempting to entice away Directed’s customers with whom they had direct dealings in the previous 12 months. I agree.

120    Further, Directed’s case is that the Hanhwa parties were at all material times aware of the restraint and they induced Meneses and Mills to breach the restraint to further the business interests of the Hanhwa parties. I agree with this to a large extent so long as one is clear concerning the relevant time frame. I will return to this question later.

121    Further, according to Directed, in addition to already having had Directed employees Mills, Summers and Marcus Palone working on tasks for Hanhwa’s benefit since late 2015, from February 2017, Meneses and Lee started soliciting these and other Directed employees to resign from Directed and to work for Hanhwa Aus at the Brooklyn premises. The first employee formally recruited was Mills: Meneses gave him a proposed salary package on 3 February 2017; Lee provided the letter of offer which Meneses signed on behalf of Hanhwa Aus. The next employee recruited was Palone, Directed’s Product Development Engineer, adopting a similar method. Attempts were also made to solicit Summers (Directed’s Senior Product Development Engineer), Julyus Dane (Directed’s Service and QA Manager), Andrew Calleja (Directed’s Customer Service and Technical Support Division), Ashan Pieries (Mechanical Engineer employed by Directed), Mayouf Hashim (Directed’s Product Development Division), and Barry Slade (Telematics Trainer). I accept this aspect of Directed’s case.

122    Further, according to Directed, which I accept, Meneses made various misrepresentations to Directed’s employees about Directed, its business and its directors in order to entice them to leave Directed to work for Hanhwa Aus. He told them variously words to the effect: “Directed is going broke”, “Directed isn’t holding enough stock”, “The directors are trying to sell the business”, “Steve and Anthony are retiring and getting out of the OE business. This is confidential and will be announced to staff shortly”, “Steve and Anthony want to sell or close the OEM business within 3 years”, “I am not going to go after any of the existing business of Directed. I am only going to target potential new business from Directed’s customers”, and “There is no long-term future for you if you keep working for Directed.”

123    Generally, according to Directed, as a direct result of the various respondents’ actions, Directed has lost to Hanhwa Aus the business of supplying the AV units and accessories to IAL, Fuso and Mercedes and UD. I agree with Directed’s case on this aspect except so far as the Gridtraq parties are concerned.

124    Further, according to Directed, had the various respondents not acted wrongfully, the DIR8000 may have been supplied to IAL for between 3 to 5 years, resulting in lost revenue to Directed for sales of that unit alone to a single customer, plus accessories. It says that there has also been a substantial loss of revenue from Fuso, Mercedes and UD which have been supplied versions of the DIR8000 by Hanhwa Aus. I will address such matters later.

125    Further, Directed says that Meneses and the Hanhwa parties have been instrumental in this substantial loss of business, guiding and directing all key aspects of the offending conduct. The conduct enabled the manufacture and sale of the HAU8000 and associated AV units to the OEMs. I largely agree with Directed on this aspect of the case.

126    Further, Directed says that with knowledge of the relevant background facts, the Gridtraq parties as knowing participants facilitated the wrongdoing of the Hanhwa parties and Meneses. They enabled the Hanhwa parties in conjunction with Meneses to pursue competitive opportunities. Those opportunities were with the Gridtraq parties. And this was done without Directed’s knowledge. I should say now that I reject this aspect of the case.

127    Directed says that the Gridtraq parties also misused Directed’s intellectual property and confidential information. I will return to this aspect of the case later.

128    Generally, as I have said, Directed’s case against Meneses, OE Solutions, Mills and the Hanhwa parties has largely been made out. But its case against the Gridtraq parties largely fails. I will discuss the detail of this later.

129    It is now convenient for me to say something concerning the various witnesses and the various legal principles. Further, it is also convenient to then set out a detailed factual narrative and a comparison of the various units before turning to the claims against the respondents.

The various witnesses

130    Let me at this point say something about the various witnesses and my views concerning their reliability.

Directed

131    Siolis’ extensive evidence concerned the nature of Directed’s business, customer base, customer relationships and his dealings with Meneses and Mills. He gave evidence concerning Directed’s relationships with representatives of the Hanhwa parties and the Gridtraq parties. He gave evidence concerning his instructions to Meneses to pursue various opportunities, the discovery of Meneses’ wrongdoing, and the loss of Directed’s business relationships with customers. He also responded to Meneses’ cross-claim.

132    The Hanhwa parties cross-examined Siolis on matters such as tooling and the level of Directed’s involvement in its projects with Hanhwa. His evidence as to the existence of the Hanhwa Enterprise Agreement was also tested. The Gridtraq parties’ challenge primarily concerned matters towards the end of the Directed/Gridtraq JV, including the Gridtraq parties’ purported entitlement to remove confidential information of the JV from Directed’s premises. The Meneses parties also cross-examined Siolis in furtherance of Meneses’ cross-claim.

133    I had the advantage of hearing Siolis’ evidence in person. Generally speaking his evidence was reliable save for aspects of his evidence concerning the Gridtraq parties. But Siolis and also Tselepis occasionally exaggerated the work and effort that Directed had put into the various units and/or documents.

134    Tselepis also gave extensive evidence. Now whereas Siolis focused more on the business-side, Tselepis focused more on issues concerning telematics, the importance of CAN information and vehicle parameters, and the fact that Hanhwa Korea did not manufacture the telematics units. He also gave evidence concerning what were asserted to be Directed’s documents and confidential information including the Master Feature List (MFL), K drive, Directed Specification, CAN Bus data and CAN software and the PPAP, and the systems in place to manage their confidentiality.

135    The Hanwha parties cross-examined Tselepis as to Directed’s discovery of the Hanhwa Enterprise Agreement after Directed’s evidence in chief was filed. There was an attempt to explore whether the document was fabricated, however, this line of cross-examination ceased once I drew their attention to their own defence, in which YS Lee had confirmed his execution of that agreement. YS Lee’s written evidence in chief and subsequent cross-examination made it clear that the agreement had been appropriately executed by the Hanhwa parties.

136    The Gridtraq parties also cross-examined Tselepis on his provision to Lee of the Directed Specification with an express confidentiality warning. He was also cross-examined in relation to a number of documents, including vehicle parameters that had been obtained/created during the Directed/Gridtraq JV. In his written evidence in chief he had said they were created by Directed. It became clear that he was partially mistaken. He had sought to discern authorship of some of the documents from the document’s meta-data properties. On some occasions, his conclusions were incorrect.

137    Again, I had the advantage of seeing Tselepis’ evidence in person. It was generally reliable save concerning some aspects dealing with the Gridtraq parties, but subject to the caveat that I referred to earlier concerning the evidence of both Tselepis and Siolis.

138    Floudas was the Chief Financial Officer of Directed. He provided evidence as to the OE Solutions’ conduct, and to the size of the payments made by Directed to Hanhwa Korea and Leemen Korea over the years. As with other Directed witnesses, much of Floudas’ evidence was not challenged. The Hanhwa parties sought to cross-examine him on the payment of tooling charges.

139    Vardon was a firmware engineer and consultant to Directed. He was the author of the Directed Specification, and a number of other specifications. He gave evidence confirming that the Directed Specification was necessary to enable communications to a telematics unit, and that it was not shared with the Gridtraq parties. He also gave evidence as to whether an adaptor could overcome some issues raised by the Gridtraq parties concerning the utility of the Directed Specification. I will discuss aspects of Vardon’s evidence later.

140    Girgis was the only independent expert called in the case. None of the respondents called any independent expert. Girgis made three affidavits that embodied his opinions including his responses to the technical evidence of other witnesses.

141    The Hanhwa parties’ cross-examination of Girgis did not touch in detail the substance of Girgis’ opinions concerning the technical comparisons. Rather, the principal attack was on the reliability of his evidence given how it was prepared in conjunction with Directed’s solicitors. The Hanhwa parties’ counsel cross-examined only for 2.25 hours and it was essentially focused on such a process question. Having reviewed the video deposition, in my view Girgis adequately met this attack. I have also looked at the solicitors’ time sheets, emails with Girgis and relevant calendar notifications, but they do not carry the Hanhwa parties far on this line of attack.

142    The effect of the Hanhwa parties’ approach is that many of Girgis’ conclusions, which were to the effect that the HAU8000 was derived from the SuperDAVE, and the LM series AV units were in turn derived from the HAU8000, went substantively unchallenged. Similarly his evidence about the accessories to the HAU8000 and the LM18I being the same as those for the DIR6200 and the DIR8000 and about the Polstar software supplied in relation to the LM units also went substantively unchallenged. I will elaborate in detail on such evidence later.

143    Contrastingly though, I should say that the Gridtraq parties’ cross-examination over just more than a day in total by Mr Adrian Ryan SC was more substantial. Indeed it demonstrated to me that some of Girgis’ opinions concerning the Gridtraq parties were over-stated and amounted in some respects to conjecture. Further, some of the opinions bordered more on purely factual questions rather than truly s 79 opinion evidence. I viewed the video deposition of Girgis’ cross-examination and he was fairly and convincingly challenged if I might say so by Mr Ryan SC.

144    I will discuss Girgis’ evidence in more detail later, first, in the section dealing with the technical comparison of the various units and accessories and, second, when dealing with the specific case against the Gridtraq parties.

145    Dane was a service and QA manager employed by Directed. He gave evidence concerning his background before joining Directed, his knowledge of the Hanhwa parties and the Gridtraq parties, and his role in creating various documents. He referred to the mechanisms at Directed to maintain document security. Much of his evidence was not challenged. In particular, he was not cross-examined in relation to his authorship of PPAP components. He was asked questions about the origins of some documents identified on the Seagate 2TB drive. He agreed that the source was Hanhwa.

146    It is convenient to note here that during the latter part of 2017, Meneses and Lee offered Dane a job at the Brooklyn premises. Dane initially agreed and even signed an employment agreement. However, he then sought advice from his accountant which led him to change his mind. Dane explained to his accountant the series of events, telling him that he “was a little bit concerned about the coincidence of Gridtraq being with Hanhwa”. Acting on the accountant’s advice, Dane did not pursue his notice of resignation. He remained with Directed, warning off a colleague who had likely received a similar form of solicitation. Directed sought to use Dane’s reaction and state of mind collaterally against the Hanhwa parties and the Gridtraq parties, but in terms of evidentiary value this went nowhere.

147    Summers was a senior product development engineer employed by Directed. He also came across from TechAudio with his supervisor, Meneses. He deposed to this background, that Palone reported to him when at Directed, and his dealings with YS Lee and Lee. Under cross-examination, he explained in detail his visit to Hanhwa Korea in April 2016 to undertake an audit of the premises. His evidence about the input he and other Directed employees provided to the development of the DIR8000 and its accessories was unchallenged. He also gave responses about his own role in bench testing and in-vehicle testing of products developed with Hanhwa Korea. Under cross-examination he gave responses about the importance of the tear down procedure to test reliability of the unit, which would then be reported back to Lee. This included looking at the individual components to see if they were automotive grade, and whether they could improve the circuit board and the like. His concern was reliability, not pricing.

148    Summers conceded that he knew about some of Meneses’ wrongful activities. He knew about the OE Solutions’ conduct. In the second half of 2016, Meneses told Summers that Hanhwa was setting up business in the same building as Gridtraq. Meneses also told him in early 2017 that Phil Taylor of IAL was happy with the idea of Hanhwa supplying directly to IAL to get the price down. It was Meneses who also told him that the SuperDAVE was not going ahead and to box up all the materials. This was corroborated by a later email dated 27 July 2017 from Meneses to Bruce Clarke of Isuzu in New Zealand, informing him of this. He also knew about the D-MAX conduct.

149    Summers acknowledged that he could sometimes get it wrong. He also clarified some confusing evidence from Shin. Summers clarified that Shin had merged two distinct events into one.

150    Calleja was a telematics specialist employed by Directed. Meneses was his supervisor. He deposed to Meneses asking him to provide the logins for a range of portals which Calleja provided to him by an email dated 17 May 2017. He was confident on this when tested. Calleja had also been approached to work at Hanhwa but had second thoughts after a discussion with Dane. When pressed as to why he felt uneasy about seeing samples of the SuperDAVE at the Hanhwa Aus premises, he said that it was because he thought that IAL had scrapped that project, and that it was no longer going forward. When asked why he had formed the view that they were to be supplied to IAL, Calleja said that it was an IAL bespoke AV unit.

151    Pieries was a product manager employed by Directed. His evidence about the input he and other Directed employees provided to the development of the DIR8000 and its accessories was unchallenged. He deposed to his dealings with Lee. Under cross-examination, he explained that he often communicated to Hanhwa the mechanical engineering changes required. He referred to an all-day meeting regarding the development of the DIR8000. He deposed to his preparation of drawings, and gave oral evidence as to his role in modifying them.

152    Alexi Andrea was a senior hardware engineer employed by Directed. He was involved in the disassembly of a working sample of the DIR8000 to test reliability of the unit and to see if they were automotive grade. This included looking at each of the individual components and the circuit board. He prepared a written report in that regard, which was provided to Lee. He also gave evidence as to whether an adaptor could overcome some issues raised by the Gridtraq parties concerning the utility of the Directed Specification.

153    Arthur Proghios was a management accountant employed by Directed. He observed Meneses at Directed’s premises from August 2017 to October 2017 after Meneses’ purported resignation date. He was not challenged on this. He gave evidence relevant to OE Solutions’ conduct in his capacity as a purchasing officer. He refuted the Lee assertions that Directed’s confidential stock information was provided to Hanhwa by way of ordering forecasting.

154    Damien Jaffe was a business development manager employed by Directed. Jaffe was challenged on a range of matters suggesting he lacked an independent recollection of events.

155    Slade was a telematics trainer employed by Directed. He gave evidence concerning his role in “cleaning up” the K drive, for example, located on the Seagate 2TB drive. He was cross-examined briefly. He confirmed that unless you had a log-in to Directed’s network you could not access the K drive. He confirmed his role in creating line drawings, as well as Meneses’ solicitation of him to join Hanhwa Aus in October 2017.

156    Brent Stafford was an executive director employed by Directed since Meneses’ departure. He provided evidence about Directed’s failure to win the 2018 IAL tender. His evidence relevant to the importance of the input Directed’s employees wrongfully provided during the development of the Polstar Software was unchallenged.

157    Directed also relied on the reports of Mark Schofield, Kenneth Chai, Justin Geri, Andrew Goatcher, and Bianca Quan, being independent experts who supervised the execution of search orders of the respondents’ various premises on 27 October 2017 and/or assisted in the analysis of documents obtained therefrom. They were not required for cross-examination. Further, various lawyers for Directed who gave affidavits were not cross-examined.

OE Solutions and Meneses

158    Meneses filed two affidavits for the purpose of his cross-claim, both in his capacity as the sixth respondent and the sole director of OE Solutions. However, those affidavits were not read. Meneses did not give oral evidence.

Mills

159    Mills did not give oral evidence nor did he file any evidence in chief to be relied on at trial. However, Mills did file two confidential affidavits in support of his application for a privilege certificate pursuant to s 128A of the Evidence Act 1995 (Cth). These were subsequently made available for inspection. At trial Directed tendered parts of those affidavits without objection, save as to the belatedness of the timing of the tender, although of course such material could only be evidence against Mills.

Hanhwa parties

160    Lee was the sole director of Hanhwa Aus and also the third and fourth respondents, holding the title of Managing Director of Hanhwa Korea. Lee initially made one affidavit for trial. After sitting through Directed’s opening submissions, he filed three correcting affidavits, one in April 2020 and two in May 2020. Then, when presented with documentary evidence under cross-examination which parties would normally regard as uncontentious, he gave evidence contrary to their contents. He tried to explain their effect away on the basis that he told untruths to his staff. He claimed that he made up things that were not true to motivate them. Lee admitted to lying on various occasions. His evidence was unreliable. And as Directed pointed out, if documents were inconvenient, he said they did not mean what was apparent on their face.

161    Lee was cross-examined over many days. In my view Lee was not a reliable witness.

162    First, in addition to viewing his video deposition, I had the benefit of observing him when giving evidence on Directed’s application to re-open. I thought his evidence on certain aspects was dissembling or evasive. Let me explain.

163    On 23 February 2021 I gave Directed leave to re-open its case on liability concerning the supply by Hanhwa Aus to IAL of HAU8000 units and accessories in 2020 and any proposed further supply in 2021.

164    In that respect, Directed made further pleading amendments and tendered further documentation. I also permitted the Hanhwa parties to file further affidavit material and I required Lee to attend for further cross-examination.

165    On 1 March 2021 I heard further evidence from Lee who was cross-examined by Mr Michael Wise QC for Directed.

166    Although Lee had a good knowledge of the detail, some of his evidence and explanations before me were unsatisfactory. So for example, he was questioned as follows:

WISE QC:    Now, you made two correcting affidavits to your October 2019 affidavit. You made them on 11 and 19 of May 2020?

LEE:    That’s correct.

…

HIS HONOUR:    There was an affidavit of 27 April. I’m not saying it’s a correcting affidavit but it’s a further affidavit of 27 April, which is obviously 10 days after the 17 April.

WISE QC:    Yes. So his Honour is pointing at that you also made a further affidavit on 27 April 2020. Do you agree with – you understand that, correct?

A:    Yes.

Q:    So what I want to suggest to you, Sir: in none of those affidavits have you made any reference to the fact that Isuzu was – had asked you to rework the HAU8000s that they had in their position. You did not – you didn’t make any reference to that, correct?

A:    That’s correct.

Q:     And you also did not make any reference to the fact that you had discussed, with them, the possibility of them purchasing more HAU8000s, correct?

A:    That is correct.

Q:    I want to suggest to you that in light of all of that, by not having corrected or made reference to those matters that had occurred in 2020 in your affidavits made in April of May 2020 you were intentionally leaving the court with the wrong impression that the HAU8000 supply was dead; you do you agree with that?

A:    No, it’s not. It’s not. They didn’t actually order to Hanhwa ..... order to Hanhwa to, you know – to – to – to supply ..... We didn’t actually make, you know, like, transaction between Isuzu in – in ..... and 380 that we sold in 2017, that was my affidavits. And this is ..... this is my – my last conversation with Isuzu people. They may look at ..... 1000 ..... from Hanhwa stocks. So this not going to form the proceeding because this is the true facts that they just purchased a – 388 unit, that’s all.

HIS HONOUR:    Mr Lee, can I just take you back to page 82 of the Directed materials and paragraph 365?

Lee:    Yes.

Q:    You’re there saying in your October 2019 affidavit?

A:    Yes.

Q:    That Isuzu was effectively walking away from the HAU8000 agreement. That’s what you’re intending to convey there, wasn’t it?

A:    Yes, I was.

Q:    Yes. And yet if we go to page 13 of that same bundle, you’re agreeing on 17 May 2020 to amend the HAU8000 agreement; is that right?

A:    Sorry, your Honour.

Q:    Have you got page 12 of that same bundle as a letter of 7 May of Isuzu?

A:    Yes, your Honour.

Q:    And if you go over the page, page 13, there’s your signature agreeing to modify the HAU8000 agreement on 17 May 2000; is that right?

A:    Yes, your Honour.

Q:    Well, that’s inconsistent with what you said in your October 2019 affidavit – that Isuzu was walking away from the HAU8000 agreement?

A:    Yes, your Honour.

Q:    So why didn’t you correct that?

A:    I thought that was the – because – because – reworked ..... unit that conformed, and this is, like – we didn’t – we didn’t actually sell the back stocks to Isuzu, and this is, like – due to the global pandemic issue which is on – impact the situation in global – it was 2019, they just walked away from HAU8000 supply, but this is, like, a special promotion to supply Hanhwa – sorry – the – the clients that they have to reworked. So I didn’t actually care of – of that agreement or care of that affidavit because that was – I thought that was true fact.

167    This was a good example of Lee playing “fast and loose” so to speak.

168    Second, he conceded during cross-examination the subject of the video depositions that he had misled others.

169    Third, much of his evidence in the contentious areas seemed to be at odds with the contemporaneous documents.

170    More generally, there was considerable force in the criticisms of his evidence made by Directed.

171    YS Lee was the sole director of Hanhwa Korea and the father of Lee, based in South Korea. His evidence in chief failed to address the secret commission conduct, the exclusive manufacturing agreement or the diversion of the SuperDAVE opportunity. Under cross-examination, and from my review of his video deposition, he was a forthright witness.

172    Shin was an electronics engineer employed by Hanhwa Aus in the role of Technical Manager. Between 2012 and September 2016 he held the same position employed by Hanhwa Hightech Australia, based in Australia. In my view he attempted to give truthful evidence. In relation to planned HAU8000 field testing in December 2016, he accepted some testing of it was done by him with Palone in an Isuzu truck at the time. His evidence in relation to a March 2017 four-day CAN Bus data testing process conducted with two Hanhwa Korea engineers confirmed that the HAU8000 was tested connected with an RA7000 telematics unit in an Isuzu truck.

173    Oh gave extensive evidence. She had significant involvement in the relevant conduct, including the misuse of confidential information, the diversion of opportunities, and copyright infringements. She is a sales and marketing manager working for Hanhwa Korea. She moved to Australia from South Korea for a period of time in March 2017, after visiting Australia twice in about 2016. When she moved to Australia, she did not work out of Directed’s offices. She primarily worked from Hanhwa’s premises at Brooklyn. She now lives again in South Korea. She reports to Lee. Oh was naturally reluctant to say anything contradicting her employer. I agree with Directed that she was given to making speeches putting forward the untenable case advanced by Hanhwa. However, when pressed on particular issues by reference to the contents of documents she made appropriate concessions. I did review her video deposition and for the most part she endeavoured to give truthful evidence, albeit that some of it was unreliable.

174    Palone gave evidence. He now works at the Brooklyn premises reporting to Meneses, for a company owned by Lee. Meneses is his friend. He previously worked at Directed for about eight years, commencing his apprenticeship there in 2010, and finishing up in December 2018. Palone made Directed’s installation instructions, line drawings and other materials for the DIR6200 PPAP. He helped prepare units received from Hanhwa Korea to make them suitable to be fitted into Australian-delivered vehicles. He communicated with Hanhwa Korea in relation to the development of the DIR8000 through an “open/close list”. He appeared keen to support the Hanhwa parties’ case. He professed to have a good recollection of historical matters. But his evidence was compromised with his assertions of lack of recollection. Frankly, his evidence was not that reliable.

175    Jonghwa Han was a mechanical engineer employed in the role of Manager of the Mechanical Team by Hanhwa Korea. He was a reasonable witness, making a number of significant concessions. Han accepted he had no knowledge of the instructions or input Directed gave to Lee in relation to the creation or modification of renderings, MFLs, or prototypes and samples. His affidavit evidence stated that Directed never had any input into the mechanical design and development of a product. But he sought to amend this under cross-examination. He indicated that his intention was to suggest that Directed never had any input into the initial proposals of products made by Hanhwa Korea to Directed. However, he later conceded that because he did not know the discussions between Lee and Directed, he could not form such a judgment. Han further conceded that Hanhwa Korea sent samples to Directed for testing and feedback which was incorporated into a further sample. He accepted that Directed did contribute to the development of AV units. Further, Han conceded that he did not know much about the CPU aspect of AV products. This undermined aspects of his evidence concerning a purported difference between the CPU in the HAU8000 and the DIR8000.

176    Sanggyu Park was a hardware engineer employed in the role of Head of Development by Hanhwa Korea. Park never dealt with Directed or IAL in relation to the DIR8000 and all instructions came from Lee. He had no knowledge of the instructions provided by Directed to Hanhwa in relation to the design of the DIR8000 in the 12 months prior to August 2015. On more than one occasion, Park avoided answering questions regarding the similarities between the DIR8000 and HAU8000 in relation to the physical units and their MFLs. Instead, he claimed that as the tooling for the DIR8000 belonged to Hanhwa, it was entitled to develop it for the HAU8000.

177    Seyoon Kim was a software engineer employed by Hanhwa Korea and the head of design. He was reluctant to resile from his position even when confronted with conflicting documentary evidence. He did accept that Directed was the client of Hanhwa in respect of the DIR8000, and that ultimately Directed would decide whether the project would go ahead or not. He confirmed that he received all his instructions for the DIR8000 from Lee. He had no actual knowledge of what instructions or input Directed may have given to Lee in relation to the development of the DIR8000 or in relation to the creation or modification of different renderings. He did not know what design changes were requested by Directed to Lee, what instructions or input were given by Directed to the creation or modification of MFLs, prototypes and samples, or what feedback or instructions were given by Directed employees that arose as a result of their testing on prototypes and samples.

178    Chongwoon Kang, an engineer employed by Hanhwa Korea as Hardware Manager, made one affidavit but failed to attend for cross-examination. Gyeong Soo Jung, an electrical engineer employed in the role of Head of Production and Quality Assurance by Hanhwa Korea, also did not attend. He had made one affidavit. Both were required to attend for cross-examination. But they were not available for cross-examination and I have put their evidence to one side.

179    Nan-Shik Min, a proprietor of Hanhwa Enterprise, was the sole director of Leemen Korea and the mother of Lee. She personally paid commissions to Meneses on behalf of Hanhwa Enterprise. She did not give evidence. Sungmin Bin, a Hanhwa Korea employee, did not give evidence notwithstanding substantial involvement in the relevant alleged conduct, as evidenced by various documents. I was invited by Directed to accordingly draw Jones v Dunkel (1959) 101 CLR 298 inferences, but these did not seem to go anywhere in my view.

Gridtraq parties

180    Both Allen Hartley and Dylan Harley gave evidence.

181    Allen Hartley moved to Australia from South Africa in about 2009. He was a director of Gridtraq, Webhouse and Quantam. Over a period of six years, Allen Hartley frequently attended and worked from Directed’s premises concerning work on the Directed/Gridtraq JV. Initially, he was there on almost a daily basis, but later as the business became established he came in once or twice a week to meet with his son, Dylan Hartley, and with Siolis and Tselepis. He regularly attended meetings with Siolis, Tselepis and Dylan Hartley. Directed introduced Allen Hartley to Lee and to Meneses. Directed also introduced Hartley to IAL. He also received introductions to Mercedes and Daimler group representatives as part of the Directed/Gridtraq JV.

182    Directed said that Allen Hartley was an unsatisfactory witness. It said that he was argumentative, non-responsive and inclined to speeches to advance the Gridtraq parties’ case. I disagree. I viewed his video deposition and in my view Directed’s criticisms lacked substance.

183    Dylan Hartley was the operations manager of Gridtraq and is the son of Allen Hartley. He also moved to Australia from South Africa in September 2009 with his family. He was employed by the JV Vehicle from February 2010 until December 2015; it paid his salary. He had a dedicated desk at Directed’s premises. He was responsible for the business operations, sales and supply of telematics units and services on behalf of the JV Vehicle. Directed said that Dylan Hartley’s evidence was obfuscatory. It was said that he was inclined to lengthy answers intended to deflect. Directed said that he pursued a constructed narrative. I disagree. Again I viewed his video deposition and I thought he gave reliable evidence.

184    Generally, I viewed the video depositions and read the transcripts of cross-examination of both of the Hartleys. In my view both gave reliable evidence. There is no substance to Directed’s criticisms which seem to have been refracted through Directed’s distorted lens concerning the involvement of the Gridtraq parties.

185    Davidson also gave evidence. He was a director of Gridtraq, Webhouse and Quantam. He travelled frequently to Australia from South Africa as required to support the Directed/Gridtraq JV. He moved to Australia from South Africa in about April or May 2017.

186    Directed complained that Davidson’s evidence in chief failed to address the work he undertook with Dylan Hartley in the testing of the CPU connected to both the DAVE and the HAU8000 AV units and the use of the Directed Specification in that regard. This was so, even though his attempts to work with Dylan Hartley to establish connectivity between the DAVE and the CPU and the use of the Directed Specification in that regard were dealt with by Allen and Dylan Hartley. Directed commented on his failure to refer to them at all. It is said that under cross-examination, he was difficult and unresponsive. Directed says that his evidence should generally not be accepted. I disagree. In my view these criticisms lacked substance. I viewed his video deposition and he came across as commercial, smart and direct.

187    Hugh Thibaud, the engineering director of Quantam, was not required for cross-examination. Thibaud received information and updates from his business partners, Davidson and Allen Hartley, but was otherwise not involved in the relevant events. He gave evidence to the effect that connection of the CPU to the HAU8000 would not have been possible as the CPU used RS232 and the HAU8000 used RS485 serial communication. Now I note for convenience at this point that Directed says that this was at odds with the representations in the 25 September 2017 Gridtraq presentation to IAL that connection had been achieved and Dylan Hartley's evidence that it was something that Gridtraq’s engineers could easily overcome and develop a solution for and it promoted the CPU for use with the HAU8000. Directed says that his evidence as to why connectivity would not have been able to be achieved due to the lack of a suitable adaptor should be dismissed. It says that Girgis, Tselepis and Vardon said such a problem could cheaply be overcome by the use of a suitable adaptor. I will return to this dispute and resolve it later.

Some legal principles

188    Before proceeding further, it is convenient to set out some legal principles relevant to the causes of action alleged. Let me begin with some contractual aspects.

Implied terms in fact

189    Now I am here dealing with the question of implying a term into a contract rather than inferring the existence of a term. There was no dispute as to the applicable principles.

190    First, whether a term is to be implied is dependent upon the ascertained objective intention of the parties at the time of the agreement.

191    Second, the implication of a term in fact is required to satisfy the five conditions identified by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283, viz:

…[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

192    Third, courts are generally slow to imply a term into an agreement (Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 346 per Mason J).

193    Fourth, Directed carries the onus of proving that such a term should be implied. And in the case of detailed commercial contracts which were the product of extensive negotiations and in which legal advisers were heavily involved, such an onus is more difficult to discharge.

194    Fifth, the test of whether the particular term “is necessary for the reasonable or effective operation” of the agreement of that nature enunciated in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422 per Brennan CJ, Dawson and Toohey JJ, which applies the observations of Deane J in Hawkins v Clayton (1988) 164 CLR 539 at 573, deals with the context where there is no formal contract complete on its face. But that is not the present case concerning the Hanhwa Enterprise Agreement, given that the written form has now been located. The test in BP Refinery, rather than that referred to in Byrne or Hawkins, is the applicable test for the Hanhwa Enterprise Agreement. But the Byrne test does apply to the Hanhwa Korea Agreement.

195    Sixth, in terms of the necessity to give business efficacy, as Bowen LJ in The Moorcock (1889) 14 PD 64 at 68 made clear, one is seeking to identify “an implication from the presumed intention of the parties with the object of giving to the transaction such efficacy as both parties must have intended that at all events it should have”. It must be “clearly necessary” in the context of the terms and circumstances of the particular contract and the particular relationship between the specific parties to the contract (Heimann v Commonwealth (1938) 38 SR (NSW) 691 at 695 per Jordan CJ); a broader context of necessity is applied when dealing with terms implied in or by law (see Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at [28] per French CJ, Bell and Keane JJ).

196    Moreover, this “business efficacy” condition overlaps with the “so obvious” condition. In Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592 at 605, Scrutton LJ said:

A term can only be implied if it is necessary in the business sense to give efficacy to the contract; that is, if it is such a term that it can confidently be said that if at the time the contract was being negotiated some one had said to the parties, “What will happen in such a case,” they would both have replied, “Of course, so and so will happen; we did not trouble to say that; it is too clear.”

197    Seventh, the implication of a term in fact, as distinct from a term implied in law or a term implied from custom or usage, is an exercise in interpretation or construction, although not an orthodox one.

198    Eighth, whether one is interpreting the express terms or identifying and then filling any gaps between the express terms, one is seeking through an objective exercise to identify the presumed intention of the parties. After all, one is seeking to give effect to the objectively ascertained meaning or intention of the parties. The output of that exercise may, in one context, result in a particular construction of an express term. In another context, it may result in the implication of a term to fill such a space. Spaces inevitably arise, if only because of Wittgenstein’s “language games” or because of the limitations on human foresight or the drafter’s ingenuity.

Implied terms in law

199    A term is implied in law in employment contracts that obliges employees to render faithful and loyal service to their employer, and to avoid conduct incompatible with the continuing relationship of trust and confidence between them (Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81 per Dixon and McTiernan JJ). This contractual duty of fidelity and good faith is implied as a term of all contracts of that class. It may derive from the fiduciary obligations which employees may owe to their employers, although such fiduciary obligations have different conceptual foundations (see Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at [30] per French CJ, Bell and Keane JJ); I have expressed myself in doubly qualified terms because an employment relationship does not necessarily entail or give rise to fiduciary obligations (University of Nottingham v Fishel [2000] ICR 1462 at 1490 to 1493 per Elias J).

200    An employee will contravene such an implied term if he engages in activities which are incompatible with the fulfilment of his duty or involve an opposition or conflict between his interest and his duty to his employer (Blyth Chemicals at 81 and 82 per Dixon and McTiernan JJ).

201    The scope of the contractual duty of fidelity owed by senior employees may be more extensive and exacting than that owed by more junior employees.

202    The contractual duty also operates to preclude employees from disclosing or using their employer’s confidential information. The scope of this contractual duty in this dimension can be seen for practical purposes as co-extensive with any equitable duty of confidence that might arise by reason of the circumstances in which particular information was imparted.

203    In considering whether an item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment ceases, it is necessary to consider all the circumstances of the case.

204    Further, there was no doubt that both Meneses and Mills by reason of their employment with Directed:

(a)    were under an obligation during the term of their employment, and after termination of their employment, to keep confidential information provided to them by Directed;

(b)    owed a duty to Directed to maintain trust and confidence with Directed and not to do anything likely to destroy or damage such a relationship of trust and confidence; and

(c)    owed a duty to render faithful and loyal service to Directed and not to do anything in conflict between their interest and their duty to Directed.

205    These implied contractual duties of fidelity and good faith were implied by the employment relationship and the underlying fiduciary relationship.

Interference with contractual relations

206    It is convenient to begin by referring to Donaldson v Natural Springs Australia Limited [2015] FCA 498 at [202] to [220] where I made the following points.

207    There are various dimensions to the economic tort of interference with contractual relations. So, it is appropriate to be clear on the categories.

208    The relevant interference must be deliberate. But it can be direct or indirect. Where the interference is direct, the relevant act of persuasion, inducement or procurement is treated as being unlawful in and of itself. But where the interference is indirect, an independent unlawful act is required.

209    The paradigm case of interference concerns direct interference which amounts to procuring or inducing a breach of contract (Lumley v Gye (1853) 118 ER 749).

210    The various elements of the classic Lumley v Gye tort are not in doubt. First, there must be a contract. Second, the respondent must know that such a contract exists. Third, the respondent must know that if one of the contracting parties does or fails to do a particular act, that conduct would be a breach of the contract. Fourth, the respondent must intend to and in fact induce or procure that contracting party to breach the contract by doing or failing to do that particular act. Fifth, the breach must cause loss or damage to the applicant. Sixth, no defence of honest and reasonable belief should be applicable.

211    Now it is not in doubt that the gravamen of the tort is intention to induce or procure breach, with knowledge that such a breach will interfere with contractual rights (Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43 per Lindgren J). And wilful blindness or reckless indifference can constitute knowledge for this purpose. Further, knowledge of the contract may provide a sufficient basis for inferring the necessary intent. In other words, a person’s knowledge that he is by his conduct inducing a breach of contract may be sufficient to establish the required intention (see Allstate Life Insurance at 37). Questions of knowledge and intention are interrelated. However, a bona fide belief reasonably entertained that so to act would not result in a breach of contract might negate the requisite intent (see Short v City Bank of Sydney (1912) 15 CLR 148 at 160 per Isaacs J).

212    Now as I have said, from knowledge one may be able to infer intention. But it is intention that must be shown. So, for example, merely to show that the tortfeasor could or did foresee the consequence of tortious conduct is not sufficient.

213    Further, let me say something more on the question of knowledge of the contract, if it be said that that is the foundation from which intention can be established by inference. In some cases, where the contract is of a standard type or a standard class of contract, it may not be necessary for the tortfeasor to have precise knowledge of its terms for intention to be inferred. But where one is not dealing with such standard scenarios, in order for the claimant to establish intention by inference from knowledge, it may be necessary to establish knowledge of more precise aspects or terms of the contract. This will all depend on the nature of the case being advanced and the type of breach being asserted. So, in the present case, being a case dealing with a non-standard or bespoke contract scenario, for Directed to establish the tort, it needed to show that the alleged tortfeasor had knowledge of the relevant terms of the agreement.

214    Further, for the tort of inducing breach of contract, a distinction should be made between “procuring” or “inducing” on the one hand, and “advising” on the other hand. The former may be actionable. The latter is not. To induce a breach is to create a reason for breaking it. To advise a breach is to point out that a reason already exists.

215    So, even if the requisite knowledge is established, the inducing or procuring conduct must itself be proved. In Allstate Life Insurance, Lindgren J cited with approval what was said by Street J in Short v City Bank of Sydney (1912) 12 SR (NSW) 186 at 202 to 203 that:

The words “induce” and “procure” in their ordinary significance, I think, convey the idea of persuasion or contrivance, and I think that a person complaining of a breach of contractual relations brought about by these means must show that the person whose actions are complained of did something in the nature of effectually persuading or prevailing upon the other party to the contract to violate his obligations under it. The persuasion may take the form of advice or friendly solicitation, or it may take the form of intimidation or molestation, but in every case I think that it must be shown that the defendant deliberately intervened between the contracting parties, either with the express design of depriving the plaintiff of the benefit of his contract, or under such circumstances that he must have known that the effect of his intervention would be to deprive the plaintiff of that benefit.

216    Merely facilitating a breach, or entering into a transaction that is inconsistent with the contracting party’s obligations, is insufficient. It must be established that the relevant impugned conduct operated on the will of the contracting party. If the contracting party has already decided to commit a breach, no liability attaches to the mere acceptance of the benefit of that breach.

217    The element of inducement or procurement represents a high bar. It is not enough for the alleged wrongdoer to know that a breach may well happen or is the natural and probable consequence of the alleged wrongdoer’s activities; he must take some step which manifests an intention to induce the breach. What must be shown is some persuasion, encouragement, assistance or pressure that is aimed at the contract such that there is a clear causal link between the respondent’s conduct and the breach.

218    Before discussing indirect interference, I should note that direct interference can extend to conduct that prevents or hinders a party’s contractual performance or encourages the same even though this may not amount to procuring or inducing a breach of contract as such.

219    Now in addition to direct interference, the tort may also be established by an indirect interference with contractual relations. But if indirect interference is relied upon, then unlawful conduct or means must be established as part of the interference. To appreciate why this is necessary, it is important to be clear about what is meant by indirect as compared with direct interference. Direct interference occurs where the respondent’s act or omission, whether as intervener or persuader, acts on the mind or position of one of the parties to the contract. Indirect interference occurs where the respondent’s act or omission acts on the mind or position of a third party (for example an employee or officer of a contracting party) which causes that third party to take or not take a step which then acts on the mind or position of one of the contracting parties. So expressed, one can appreciate why unlawful means are imposed as a requirement for indirect interference. The direct interference is prima facie unlawful because it directly touches one of the contracting parties and their contractual rights. But the same cannot be said where the respondent’s conduct acts first on a third party who is not a contracting party. Some other element of unlawfulness needs to be added beyond the ultimate intention of the respondent in seeking to interfere with the contract. The question is whether the action of the respondent on the third party involves an unlawful or wrongful act. Has the respondent persuaded or caused the third party to do an unlawful or wrongful act?

220    Whether the tort can be established by indirect interference is not beyond controversy. The High Court has not dealt with this directly. In Zhu v Treasurer (NSW) (2004) 218 CLR 530 the Court expressed the tort in broader terms than inducing a breach of contract. First, it referred to the tort in terms of an interference with contractual relations, connoting that something short of causing a breach may be sufficient to establish the tort. Second, in the proceedings at first instance, a claim for indirect interference was made. The High Court referred to this indirect interference claim (at [38]) without exception; it was not said that indirect interference could not in appropriate circumstances constitute the tort. Although Zhu principally turned upon the defence of justification, it provides implicit support for a tort of interference with contractual relations, embracing both direct and indirect interference.

221    Lord Hoffmann in OBG Ltd v Allan [2008] AC 1 distinguished the different genesis of the tort of inducing breach of contract as compared with the English tort of causing loss by unlawful means. Further conceptual divisions were made categorising the former tort as one of accessorial liability and the latter tort as one of primary liability. He rejected a unified tort theory embracing both torts, but he did accept a Venn diagram type description. Now in 1995 the High Court rejected a more general economic tort of causing loss by unlawful means. And it has also been lukewarm about a slightly narrower economic tort in theory of interference with trade or business interests by unlawful means. I do not need to trouble myself further at that conceptual level.

222    But there is one aspect of Lord Hoffmann’s discussion concerning direct and indirect interference with contractual relations that is worth mentioning. His Lordship expressed doubt as to the tort of indirect interference with contractual relations. Rather, he preferred to put such conduct into the broader category of the tort of causing loss by unlawful means.

223    Lord Hoffmann said (at [38]):

In my opinion, therefore, the distinction between direct and indirect interference is unsatisfactory and it is time for the unnatural union between the Lumley v Gye tort and the tort of causing loss by unlawful means to be dissolved. They should be restored to the independence which they enjoyed at the time of Allen v Flood. I shall therefore proceed to discuss separately the essential elements of each.

224    His Lordship addressed what he considered to be an unsatisfactory distinction by making two related moves. First, he took indirect interference and put it into the broader category of the tort of causing loss by unlawful means. That move is not available to me. Second, by doing so, he confined Lumley v Gye to its plain vanilla application. But again, I do not consider that the tort of interference with contractual relations is so restricted.

225    His Lordship suggested that Lumley v Gye created accessorial liability, dependent upon the primary wrongful act of the contracting party, whereas indirect interference, which required unlawful means, was a tort of primary liability. So he considered that blending indirect and direct interference into the one tort was inappropriately blending primary and accessorial liability. Now whether that is so does not affect the approach I am required to take. But this primary and accessorial liability distinction may not be all that clear or clean. Accepting that indirect interference involves a tort of primary liability, so too may be the case with direct interference. Direct interference may involve, in some cases, not inducing a breach as such. It may involve preventing or hindering a contracting party’s performance which does not involve or produce a breach. In such a case, such conduct of the respondent would not amount to accessorial liability, for there would be no “primary wrongful act of the contracting party” [my emphasis]. In such a situation of direct interference the respondent would have primary liability.

226    In my view, the tort of indirect interference with contractual relations is available under Australian law. But both the relevant intention as well as the separate unlawful conduct or means must be established as being involved in the interference. Now there is an issue as to what “unlawful” entails or embraces. But much depends on the context of the particular economic tort being discussed. To describe it as the infringement of some right may be useful, but not sufficient. I do not need to elaborate further as this is not the case advanced by Directed.

227    Let me at this point say something concerning the relevant defence to a tort of this nature.

228    In Short v City Bank of Sydney, Isaacs J held that to constitute a good defence to the tort, there must be a relevant belief on reasonable grounds. He observed (at 160):

A bona fide belief reasonably entertained that it was not a breach of contract would be fatal to the claim. If the defendant did not know of the existence of the contract, he could not induce its breach; if he reasonably believed it did not require a certain act to be performed, his inducing a party to the contract to do something inconsistent with it could not be regarded as an inducement or procurement knowingly to break the contract; if he believed on reasonable grounds that the contract had been rescinded, or performance waived, when in fact it had not, he could not be said to knowingly procure its breach.

Fiduciary duties

229    Let me turn to the question of fiduciary duties. There is little doubt that the employer-employee relationship is an established category of fiduciary relationship, although the scope of any fiduciary duty must be moulded to the nature of the particular relationship and the facts of the case.

230    At one level of generality, the employer-employee relationship is an established category of fiduciary relationship (Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96 and 97 per Mason J). But the scope of the duty has to be moulded to the nature of the particular relationship and the facts of the case (Hospital Products at 102 per Mason J). It is inappropriate to take a “one size fits all” approach to whether an employee owes fiduciary duties to an employer (University of Nottingham at 1490 to 1493 per Elias J).

231    In my view, fiduciary duties arose in the context of the relationship between Directed and each of Meneses and Mills given their level of seniority, their positions of responsibility and the relevant circumstances. In particular, Meneses and Mills were subject to a duty not to use their position with Directed, or information obtained by virtue of their position with Directed, for their own benefit or for the benefit of another including setting themselves up in a rival or competing enterprise. Generally, a fiduciary is under “an obligation not to promote his personal interest by making or pursuing a gain in circumstances in which there is a conflict or a real or substantial possibility of a conflict between his personal interests and those of the persons whom he is bound to protect” (Hospital Products at 103 per Mason J).

232    Directors and senior employees are precluded from obtaining for themselves or another any property or business advantage belonging to their employer, or for which it has been negotiating. They are not entitled to appropriate for themselves or divert to another with whom they are or may be associated a maturing business opportunity which the employer is actively pursuing. This is particularly so where the director or senior employee has been a participant in the negotiations on behalf of the employer (Canadian Aero Service Ltd v O’Malley (1973) 40 DLR (3d) 371 at 381 and 382 per Laskin J).

233    As a consequence of their employment with Directed, Meneses and Mills owed fiduciary duties to Directed not to place themselves in a position where their interest or duty to someone else conflicted with their duty, when acting within the scope of their employment, to act in the best interests of Directed, and not to take advantage of their position as an employee for the benefit of a person other than their employer.

234    Moreover, the scope of Meneses’ duties in particular is informed by the fact that at the time he engaged in the impugned conduct, he held a relatively senior position at Directed, which involved a degree of autonomy and required him to engage directly with Directed’s clients. Moreover, in his role, Meneses had full access to Directed’s computer systems, emails, information about current and potential customers, and customer relationship management software.

235    Let me make some general observations.

236    In Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1 at [67] to [70], Gageler J stated in the context of a fiduciary duty, and particularly the duty of loyalty, the following:

[The] duty of loyalty is imposed in equity by means of two overlapping “proscriptive obligations”. Each proscriptive obligation, or “theme”, is “descriptive of circumstances in which equity will regard conduct of a particular kind as unconscionable and consequently attracting equitable remedies”.

“The first”, often referred to as the “conflict rule”, “is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest.” The unconscionability which attracts equitable remedies in circumstances where the conflict rule alone is invoked lies not so much in receipt by the fiduciary of the benefit or gain (over which the fiduciary need not have control) as in retention by the fiduciary of the benefit or gain which in conscience ought to be disgorged to the principal.

“The second”, often referred to as the “profit rule”, “is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of [the] fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing [the fiduciary’s] position for [the fiduciary’s] personal advantage.” The unconscionability which attracts equitable remedies in such circumstances lies in pursuit by the fiduciary of self-interest, or, more precisely, in pursuit of an interest other than the exclusive interest of the principal.

Consistently with the objective of imposing each obligation, in neither case does the benefit or gain to the fiduciary need to be at the expense of the principal, though it may be. And in neither case does the fiduciary need to act dishonestly or fraudulently, or otherwise than in good faith, though again the fiduciary may do so…

(Footnotes omitted.)

237    Further, at [85] he said:

The benefit or gain for which a fiduciary or knowing participant is liable to be ordered to account must, as a baseline requirement, have a causal connection to the fiduciary’s breach of equitable obligation. The requisite causal connection was explained in Warman to exist if the benefit or gain has been obtained “by reason of” the fiduciary position, where the relevant breach is of the conflict rule, or if the benefit or gain has been obtained “by reason of” the fiduciary taking advantage of an opportunity or knowledge derived from the fiduciary position, where the relevant breach is of the profit rule.

(Footnotes omitted.)

238    Generally, when a senior officer or employee of a company diverts an opportunity obtained by reason or by use of his fiduciary position, the benefits of taking that opportunity belong in equity to the company, irrespective of whether the company could have availed itself of the opportunity (Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558).

239    And as also said in Furs Ltd v Tomkies (1936) 54 CLR 583 at 592 per Rich, Dixon and Evatt JJ:

It is no answer to the application of the rule that the profit is of a kind which the company could not itself have obtained, or that no loss is caused to the company by the gain of the director. It is a principle resting upon the impossibility of allowing the conflict of duty and interest which is involved in the pursuit of private advantage in the course of dealing in a fiduciary capacity with the affairs of the company. If, when it is his duty to safeguard and further the interests of the company, he uses the occasion as a means of profit to himself, he raises an opposition between the duty he has undertaken and his own self interest, beyond which it is neither wise nor practicable for the law to look for a criterion of liability. The consequences of such a conflict are not discoverable. Both justice and policy are against their investigation...

240    Now the scope of a fiduciary duty must be tailored to the nature of the relationship between the parties and the facts of the case. In terms particularly of Meneses’ functions and responsibilities as they concerned Directed, I would express his fiduciary duty relating thereto in terms used in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 by Finn, Stone and Perram JJ at [177] that he was a person that:

…has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other’s interest to the exclusion of his or her own or a third party’s interest…

241    The essence of a fiduciary relationship is that one party exercises power or discharges their duties on behalf of another and pledges himself to act in the best interests of the other.

242    Generally, a fiduciary is under an obligation not to promote his personal interest by making or pursuing a gain in circumstances where there is an actual conflict, or a real or substantial possibility of a conflict, between his personal interests and those of the persons whom he is bound to protect. Senior employees are precluded from obtaining for themselves or another any property or business advantage belonging to their employer. They are not entitled to appropriate for themselves or divert to another with whom they are or may be associated a maturing business opportunity, particularly one which the employer is actively pursuing.

243    A fiduciary’s position inhibits him not only in respect of business opportunities that the company is actively pursuing, but also opportunities in which the company might reasonably be expected to be interested, given its current line of business. It is not necessary to show that the opportunity taken by the fiduciary is one that could have been exploited by the company. That is, the pursuit of the opportunity by the fiduciary gives rise to a possible conflict between the fiduciary’s personal interest and ongoing duty, which is unacceptable.

Statutory duties

244    Let me turn then to Meneses’ and Mills’ statutory duties.

245    Section 182(1) of the Corporations Act 2001 (Cth) provides that:

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.

246    Impropriety for these purposes consists of a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers, and authority of the position and the circumstances of the case (R v Byrnes & Hopwood (1995) 183 CLR 501 at 514 and 515 per Brennan, Deane, Toohey and Gaudron JJ). Impropriety is to be determined objectively; it does not depend upon the officer’s or employee’s consciousness of impropriety.

247    Section 183(1) provides that:

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.

248    “Information” in s 183(1) covers any information that a person may have acquired because of their position in the company.

249    The duty owed under s 183(1) continues after a person ceases to be an officer or employee of the company.

250    Meneses and Mills owed statutory duties to Directed pursuant to s 182(1), during the term of their employment by Directed, not to improperly use their position as an employee to gain an advantage for themselves or someone else or to cause detriment to Directed, and pursuant to s 183(1), during and after their employment by Directed, not to improperly use information which they obtained because they were an employee to gain an advantage for themselves or someone else or to cause detriment to Directed.

251    And again, impropriety for present purposes consists of a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers, and authority of the position and the circumstances of the case.

252    For the purposes of s 183, “information” covers any information that a person may have acquired because of their position in the company. Moreover, that information need not be confidential. Further, the duties owed under s 183 continue after a person ceases to be an employee of the company.

253    Further, I should also say at this point that the accrual of an advantage or the suffering of detriment is not necessary to establish a breach of the statutory duties. It is sufficient to establish that the conduct was carried out in order to gain an advantage, not that the advantage was actually achieved.

Confidential information

254    The elements of an action for breach of an equitable duty of confidence are the following.

255    First, the information the subject of the claim must have the necessary attribution or quality of confidence and have been identified with specificity rather than generally or globally.

256    Second, the information has to be obtained or imparted in circumstances identifying or importing an obligation of confidence; this could arise by reason of the nature of the relationship between the parties or the circumstances applying to the particular occasion when the information was obtained or imparted.

257    Third, there has been an unauthorised use or threatened use of that information (Dart Industries Inc v David Bryar & Associates Pty Ltd (1997) 38 IPR 389 at 405 and 406 per Goldberg J; Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50 and 51 per Mason J).

258    As I have said, the information must have the necessary quality of confidence (Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215 per Lord Greene MR). That is, it must be something not within the public knowledge. There are various indicia of whether information is confidential (see the six indicia identified in Mense & Ampere Electrical Manufacturing Co Pty Ltd v Milenkovic [1973] VR 784 at 796 to 798 per McInerney J). It is a question of fact in all the circumstances.

259    It is unnecessary that the recipient of the alleged confidential information appreciated that the circumstances imported an obligation of confidence; it is sufficient that a reasonable man would have so appreciated.

260    Moreover, where a party has applied skill and ingenuity to produce a compilation, equity may treat the entire compilation of information as confidential, even where some of that information is publicly available.

261    I should also note that a fiduciary may breach both fiduciary obligations and obligations of confidence by the same conduct where, for example, an employee takes confidential information of his employer without consent and uses it to further a scheme which is contrary to the employer’s interests. The equitable duty of confidence may also be coextensive with an implied duty of fidelity owed by an employee to his employer. Further, such equitable duties survive the termination of the employment relationship.

262    Relatedly in the present context, the implied contractual duty of fidelity owed by an employee to his employer, which prevents an employee from acting to the detriment of his employer, includes not disclosing confidential information to an unauthorised third party or using it to his own advantage. That duty survives the cessation of employment (Cranleigh Precision Engineering Ltd v Bryant [1964] 3 All ER 289 at 296 per Roskill J); but even if the contractual duty did not survive termination, the equitable duty would.

Accessorial liability

263    The claims made against the Hanhwa parties and others include claims of accessorial liability. It is said that they aided or abetted or have been directly or indirectly involved or knowingly concerned in Meneses’ and Mills’ breaches of their statutory duties to Directed. Further, it is said that they knowingly assisted in Meneses’ and Mills’ breaches of their equitable duty of confidence and their breaches of fiduciary duties.

264    Let me set out briefly some relevant principles.

265    First, in terms of the ss 182 and 183 breaches, a person is “involved” in a contravention if the person has aided, abetted, counselled or procured the contravention or has induced the contravention, or has been in any way directly or indirectly, knowingly concerned in, or party to, the contravention.

266    For Directed to succeed on the accessorial claims, it is necessary to prove that the Hanhwa parties had actual knowledge of the essential facts constituting the contravention (Yorke v Lucas (1985) 158 CLR 661 at 670 per Mason ACJ, Wilson, Deane and Dawson JJ); but it is not necessary to show that they knew that the relevant conduct contravened the statute. Now strictly Directed must show more than that the Hanhwa parties, if it be the case, wilfully and recklessly failed to make such inquiries as an honest and reasonable man would make or had knowledge of circumstances which would indicate the facts to an honest and reasonable man. Concepts of constructive knowledge in the context of a claim under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 have no direct relevance to accessorial claims concerning statutory breaches. However, such concepts may be relevant to the question of any inference to be drawn.

267    Now Directed seemed to rely upon what was said by Leeming JA in Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 at [140], but those propositions have little direct bearing on the present context. I am at this point dealing with accessorial liability where actual knowledge or as good as actual knowledge must be demonstrated.

268    But I accept of course that awareness of suspicious circumstances and the failure to make inquiry may sustain an inference of actual knowledge (Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 220). So too, wilful blindness may sustain such an inference. But I do not consider that in the present case from what was known by the relevant respondents that such an inference should be drawn. The inference that Directed seeks me to draw is not the only rational inference. Further, if the facts known to the alleged accessory demonstrate an apparently innocent act or, at least, as equally demonstrate that as not, then no finding of actual knowledge or an inference drawn as to actual knowledge can be made.

269    Let me also say something further concerning ignorance by setting out the classic statement of Lord Sumner tendering the advice of the Privy Council in The Zamora (No 2) [1921] 1 AC 801 at 812 in the following terms:

…It may be that in his anxiety not to state more than he found against Mr Banck, the learned President appeared to state something less, but there are two senses in which a man is said not to know something because he does not want to know it. A thing may be troublesome to learn, and the knowledge of it, when acquired, may be uninteresting or distasteful. To refuse to know any more about the subject or anything at all is then a wilful but a real ignorance. On the other hand, a man is said not to know because he does not want to know, where the substance of the thing is borne in upon his mind with a conviction that full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests. In such a case he flatters himself that where ignorance is safe, ‘tis folly to be wise, but there he is wrong, for he has been put upon notice and his further ignorance, even though actual and complete, is a mere affectation and disguise…

270    Let me also refer to Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [15] where Moore J said (Mansfield J agreeing):

I should add that, in my opinion, liability as an accessory (in circumstances where the contravening conduct of the principal was making false or misleading representations) does not depend on an affirmative answer to the question whether the alleged accessory knew the representations were false or misleading. All that would be necessary would be for the accessory to know of the matters that enabled the representations to be characterised in that way. In a comparatively simple situation, such as the situation considered in Yorke v Lucas, where particular representations were being made to individuals or groups of individuals, knowledge of those matters would almost inevitably result in the alleged accessory also knowing the representations were false or misleading. Had Lucas known of the real turnover figures, then it is difficult to imagine that he would not have appreciated, additionally, that what he was saying about the business was false and misleading.

271    This observation was made in the context of Moore J’s observations at [12] where he said:

The majority [in Yorke v Lucas] used two expressions in these passages. One is “essential matters” making up the offence and the other is “essential elements” of the contravention. It is relatively clear from the example used in the first passage, that the expression “essential matters” comprehends matters of fact which must be known to the alleged accessory before liability arises. The example given (from the facts in Giorgianni v The Queen (1985) 156 CLR 473) was knowledge of the condition of the brakes. On any view of what was held by the High Court, accessorial liability only arises in the present matter if it is at least demonstrated that the alleged accessory knew of the facts which constituted the conduct of MBF which contravened the ASIC Act.

272    Now Directed has proved the underlying contraventions by Meneses and Mills. But it must prove that the Hanhwa parties knowingly participated, that is, that they had actual knowledge at the relevant time of each essential matter going to make up the contraventions. Moreover, actual knowledge may be inferred where there is a combination of suspicious circumstances and a wilful failure to make inquiry. I should say now that I am satisfied that Lee had the relevant knowledge and that his state of mind can be attributed to Hanhwa Korea, Leemen Korea and Hanhwa Aus. For relevant purposes he was the relevant directing mind and will given his conduct and his responsibilities.

273    Second, Directed has made a claim under the second limb of Barnes v Addy. As to the claim of knowing assistance concerning breach of fiduciary duties, the relevant principles are not in doubt concerning the knowledge requirement.

274    The relevant knowledge must be established at one of the following four descending but ever expanding levels explicated by Peter Gibson J in Baden v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1993] 1 WLR 509 (at 575 and 576) some decades ago, being: (a) actual knowledge; (b) wilfully shutting one’s eyes to the obvious; (c) wilfully or recklessly failing to make such enquiries as an honest and reasonable man would make; and (d) knowledge of circumstances that would indicate the facts to an honest man.

275    The fifth level, namely, knowledge of circumstances that would put an honest and reasonable man on enquiry is not part of Australian law (see Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 398 and 399 per Gibbs J and at 412 per Stephen J). Indeed to use that fifth level would be to disregard equity’s concern for the state of conscience of the defendant; see also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [171] to [178].

276    But to establish such knowledge is not in and of itself sufficient. The relevant breach of fiduciary duty must have a particular characterisation in terms of the conduct of the principal actor, which is said to have been knowingly assisted by the secondary actor. The relevant breach of fiduciary duty must be dishonest and fraudulent. Mere breach of fiduciary duty without dishonesty and fraud is not sufficient to establish accessorial liability. Dishonesty in this context may be established by conscious impropriety including knowingly appropriating another’s property or information, whether or not the wrongdoer sees nothing wrong in his behaviour. And in terms of explaining what dishonesty is not, it may be said that an honest person does not intentionally deceive others to their detriment, does not knowingly take others’ property and does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of beneficiaries.

277    Further, it may be queried whether it needs to be shown that the person who is alleged to have given assistance had the intention of furthering the dishonest and fraudulent breach of fiduciary duty as distinct from just having the relevant knowledge. I am inclined to the view that the preponderance of authority that binds me does not go that far.

278    Further, as this is a serious allegation, it has to be assessed in accordance with principles of the type set out in Briginshaw v Briginshaw (1938) 60 CLR 336 (see s 140(2)(c) of the Evidence Act).

279    For completeness, although I have discussed the second limb of Barnes v Addy only, there are other categories of liability for third party participation in another’s breach of fiduciary duty not involving a dishonest and fraudulent design on the part of the fiduciary (see the useful observations in Grimaldi at [242] to [247]). The present case is not a suitable vehicle for any further disquisition on that aspect.

280    Third, as to the claim of knowing assistance in terms of a breach of an equitable duty of confidence, although the relevant cascading levels of knowledge that I have just discussed may still apply, nevertheless it is not necessary to characterise the breach in the same way as one might for a claim concerning knowing assistance in a breach of fiduciary duty.

Diversion of business opportunity

281    Let me say something concerning the diversion of a business opportunity and make reference to three authorities.

282    In Beam v Stewart 833 A 2d 961 (Del Ch, 2003), Chancellor Chandler dealt with a derivative action brought by a shareholder (Beam) on behalf of a company (MSO) against, inter-alia, Martha Stewart (Stewart) a director and L. John Doerr (Doerr) a former director. One of the counts in the complaint concerned the sale of Stewart’s and Doerr’s shares in MSO to entities designated as “ValueAct”. Before the Chancellor was a summary motion to dismiss the complaint. For present purposes, I need to discuss only Count III, which alleged that Stewart and Doerr had breached their fiduciary duty of loyalty by usurping a corporate opportunity by selling large blocks of MSO shares to ValueAct.

283    Now the Chancellor referred to a four pronged test in the following terms (at [3] and [4]):

The basic requirements for establishing usurpation of a corporate opportunity were articulated by the Delaware Supreme Court in Broz v. Cellular Information Systems, Inc.:

[A] corporate officer or director may not take a business opportunity for his own if: (1) the corporation is financially able to exploit the opportunity; (2) the opportunity is within the corporation’s line of business; (3) the corporation has an interest or expectancy in the opportunity; and (4) by taking the opportunity for his own, the corporate fiduciary will thereby be placed in a position [inimical] to his duties to the corporation.

(Citation omitted.)

284    As to the first limb, he said (at [5]):

The amended complaint asserts that MSO was able to exploit this opportunity because the Company’s certificate of incorporation had sufficient authorized, yet unissued, shares of Class A common stock to cover the sale to ValueAct. Defendants do not deny that the Company could have sold previously unissued shares to ValueAct. I therefore conclude that the first factor has been met.

285    Equally that may be said to be the case before me in relation to many of the so-called diverted opportunities.

286    As to the second limb, he said at [6] and [7]:

An opportunity is within a corporation’s line of business if it is “an activity as to which [the corporation] has fundamental knowledge, practical experience and ability to pursue.” Because I have already determined that MSO had sufficient authorized but unissued shares available and because no special expertise is required to issue stock, I find that the “ability to pursue” prong is met. The question then becomes whether selling its own stock is an activity as to which the Company has fundamental knowledge and practical experience.

Plaintiff states that the Company’s line of business is “creat[ing] ‘how-to’ content and domestic merchandise for home-makers and other consumers.” Nevertheless, the Court recognizes that raising capital is a fundamental activity in which businesses are often engaged. MSO made its initial public offering in October 1999. Therefore, in a strictly literal sense, the Company, like any stock corporation, “has fundamental knowledge and practical experience” in the activity of selling its stock in exchange for capital contributions. This conclusion, however, does not help plaintiff in this instance. MSO is a consumer products company, not an investment company. Simply stated, selling stock is not the same line of business as selling advice to homemakers. Further, I would presume that a company’s “line of business” is one that is intended to be profitable. By definition, a company’s issuance of its stock does not generate income. For the foregoing reasons, I therefore conclude that the sale of stock by Stewart and Doerr was not within MSO’s line of business.

(Citations omitted.)

287    Now as to this second limb, under Australian law the formulation is not so narrow. Applying Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 at 143 to 148 per Lord Russell of Killowen and cases which have followed these principles ever since, I do not think that any narrow approach needs to be taken to “line of business”. But in any event it is satisfied in the case before me.

288    As to the third limb, the Chancellor said the following (at [8] and [9]):

A corporation has an interest or expectancy in an opportunity if there is “some tie between that property and the nature of the corporate business.” Requiring a tie to the “nature of the corporate business” implicates many of the issues discussed above regarding MSO’s line of business. The Broz Court found that the company in that case, CIS (a company in the business of providing cellular phone service to the Midwest), had no interest or expectancy in the Michigan-2 license in question because CIS was divesting its cellular license holdings and its business plan did not contemplate any new acquisitions. Here, plaintiff does not allege any facts that would imply that MSO was in need of additional capital, seeking additional capital, or even remotely interested in finding new investors. Had MSO wished to do so, it had a readily available, liquid market in which to accomplish that aim, as MSO’s Class A stock is traded on the New York Stock Exchange.

I fail to see any connection between the potential sale of stock to ValueAct and the nature of MSO’s business. Further, issuance of new shares without a need or desire for new capital is perceived to have negative effects on preexisting shareholders, as the new capital may not be effectively used to increase earnings at the same time that the preexisting shareholders’ proportionate interests in the corporation have decreased. Plaintiff presents no indication that MSO had any expectation, interest, or necessity to raise capital through new issuances of stock, nor can I reasonably infer such from the amended complaint. In the absence of specific allegations indicative of corporate interest or expectancy, I must conclude that this factor of the Broz test has not been met.

(Citation omitted.)

289    That third limb is also satisfied in the case before me.

290    As to the fourth limb, the Chancellor said (at [10] and [11]) the following:

[T]he corporate opportunity doctrine is implicated only in cases where the fiduciary’s seizure of an opportunity results in a conflict between the fiduciary’s duties to the corporation and the self-interest of the director as actualized by the exploitation of the opportunity.” Given that I have concluded that MSO had no interest or expectancy in the issuance of new stock to ValueAct, I fail to see, based on the allegations before me, how Stewart and Doerr’s sales placed them in a position inimical to their duties to the Company. Were I to decide otherwise, directors of every Delaware corporation would be faced with the ever-present specter of suit for breach of their duty of loyalty if they sold stock in the company on whose Board they sit.

Additionally, Delaware courts have recognized a policy that allows officers and directors of corporations to buy and sell shares of that corporation at will so long as they act in good faith. A corporation generally “has no interest in its outstanding stock or in dealing in its shares among its stockholders.” Plaintiff cites only one case purported to be to the contrary – Thorpe v. CERBCO, Inc. Thorpe involved a bidder who approached the management of Insituform East, Inc. desirous to purchase the company. In bad faith, management withheld this information from the outside directors, lied by saying that the bidder had not expressed interest in purchasing the company, threatened to block any sale of the entire company, and simply informed the board a bidder wished to buy the inside directors’ controlling interest. I would attempt to compare the well-pled facts in this case to those in Thorpe, but I am unable to do so because the amended complaint fails to provide any factual detail about the circumstances surrounding the stock sales, alleging only that the transactions occurred.

Delaware jurisprudence favors certainty and predictability. Directors must “make decisions based on the situation as it exists at the time a given opportunity is presented.” In the absence of allegations based on well-pled facts that call into question the propriety of Stewart and Doerr’s sales at the time they made them, it is impossible to infer that they acted in bad faith in selling their shares or placed themselves in a position inimical to their duties to MSO. Given the allegations before me, the fourth factor of the Broz test is not met.

On balancing the four factors, I conclude that plaintiff has failed to plead facts sufficient to state a claim that Stewart and Doerr usurped a corporate opportunity for themselves in violation of their fiduciary duty of loyalty to MSO. Count III is dismissed in its entirety under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

(Citations omitted; original emphasis.)

291    As to the fourth limb, that has been satisfied by what Meneses in particular facilitated through the Hanhwa parties.

292    In my view, Meneses’ conduct facilitated through the Hanhwa parties is generally speaking captured by Lord Russell’s observations in Regal (Hastings) Ltd at 144 and 145 in the following terms:

My Lords, with all respect I think there is a misapprehension here. The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well-intentioned, cannot escape the risk of being called upon to account.

293    But it is convenient to make one other observation concerning Regal (Hastings) Ltd at this point. Lord Russell went on to conclude in the following terms (at 149):

In the result, I am of opinion that the directors standing in a fiduciary relationship to Regal in regard to the exercise of their powers as directors, and having obtained these shares by reason and only by reason of the fact that they were directors of Regal and in the course of the execution of that office, are accountable for the profits which they have made out of them.

294    Now Lord Russell’s lens, explicable on the facts before him, was that the directors obtained the relevant shares “by reason and only by reason of the fact that they were directors of Regal and in the course of the execution of that office”. If Lord Russell’s observation is limited only to explaining the facts before him, I have no difficulty with it. But if it is to be construed as imposing a necessary condition in all cases of such a narrow nexus, I would prefer the more flexible formulation in Howard v Federal Commissioner of Taxation (2014) 253 CLR 83 at [63] and [64] where Hayne and Crennan JJ described the matter in the following terms:

…A director’s diversion of the company’s business opportunity will also commonly (perhaps inevitably) engage the director’s obligation not to be in a position of conflict. But regardless of whether the obligation to avoid conflicts is engaged, a critical question presented for consideration in relation to the obligation not to obtain unauthorised benefits will be whether the director has obtained a benefit by reason or by use of the relationship between that director and the company.

That question requires careful attention to how and why it is said that the director obtained a benefit by reason or by use of the relationship. And as Regal (Hastings) Ltd v Gulliver demonstrates, if the opportunity came to the director in the course or as a result of holding office as a director, it is not to the point to establish that the company could not or would not have exploited the opportunity. In Regal (Hastings), the directors of the company were held bound to account to the company for their profit despite the company’s inability to raise the capital necessary to undertake the venture from which the directors made their profit.

(Citations omitted; original emphasis.)

295    They then went on to say at [86] as follows:

…Instead, it is necessary to ask whether the identified gain or profit was obtained or received by reason or by use of the appellant’s position as a director of Disctronics or by reason or by use of any opportunity or knowledge resulting from that position. …

(Citation omitted; original emphasis.)

The drawing of inferences

296    A finding may be made in the absence of direct evidence. All that is necessary is to demonstrate the more probable inference from the circumstances. “More probable” means no more than that upon a balance of probabilities, such an inference might reasonably be considered to have some greater degree of likelihood. A party who relies on circumstantial evidence to prove a fact must show that the circumstances raise the more probable inference in favour of what is alleged.

297    It is not sufficient that the circumstances give rise to conflicting inferences of an equal degree of probability or plausibility or that the choice between them can only be made by conjecture. I accept though that the process of inference may involve an intuitive element that is not susceptible to detailed support or explanation.

298    There is a distinction between inference and conjecture even if the reasoning process occurs on a continuum in which there is no bright line division. A conjecture, even though plausible, is no more than a guess, whereas an inference is a deduction from the evidence. If the deduction is reasonable, the inference may rise to legal proof. But there must be objective facts from which the inference could be drawn, otherwise what is left is mere speculation or conjecture (Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 at 169 and 170 per Lord Wright).

299    Generally, the proper inference to be drawn on the balance of probabilities depends upon a practical and reasonable assessment of the evidence as a whole.

The question of factual causation

300    Factual causation is generally resolved through an application of the “but for” test. The “but for” test entails a determination on the balance of probabilities that the particular harm that in fact occurred would not have occurred absent the conduct of the party in breach. The question is whether a particular act or condition was one of the conditions or relations necessary to complete the set of conditions which represent the cause posited. This is the basis of the “but for” test of causation. But the “but for” test is not the exclusive test of factual causation.

301    Further, it is not enough to demonstrate that the relevant breach materially increased the risk of harm or loss. The breach must be the or a cause including a material contribution. Nevertheless, a breach causing a material increase in risk may provide, together with other circumstances, a foundation for inferring causation, including a material contribution to the loss, in the absence of any sufficient reason to the contrary.

302    Further, it is irrelevant to inquire whether the breach was the dominant, effective or real cause of the loss. If the evidence is suggestive of multiple causes, the inquiry to be made is whether the breach was a cause of the loss.

303    It has been said that the question whether a breach of contract has caused a loss is a question of fact applying common sense principles. It is said that the common law applies the ordinary man’s notion of causation instead of theories espoused by philosophers and scientists. Clearly, the object of the common law theory of causation is not the same as that of a philosophical or scientific inquiry into causation. But the conceptually elusive if not inutile phrase “common sense”, when discussing questions of causation in the present context, adds little to the problem solving task.

304    Before proceeding further, it is necessary to be clear about the following three different levels of analysis that need to be undertaken.

305    First, what is the context within which and why is the question of causation being posed? In the present context one of the perspectives being addressed is an alleged breach of contract. Another perspective is a breach of fiduciary duty. What is then being considered is whether that breach was a or the cause of the relevant damage or loss. So, the lens through which causation is to be assessed starts from the proper identification of the relevant perspective for why the inquiry is being undertaken. The perspective from which causation is then to be addressed is not some diffuse or decontextualised inquiry. The lens through which causation is to be assessed must identify the act, omission, state of affairs or circumstance said to constitute the breach of the relevant normative standard. That identification is not to be described in the language of “common sense”. Further, questions of causation require identification of the particular harm that was suffered. Identification of the damage sustained by a claimant will assist in identifying the acts or omissions that were its cause.

306    Second, once that contextual lens has been identified, the question then arises as to whether factual causation has been established in terms of the usual “but for” or necessary condition test by reference to linking the act, omission, state of affairs or circumstance referred to with the alleged damage or loss. But even here, to use the vernacular of “common sense” is conceptually unhelpful in a case involving forensic complexity. Moreover, it is otiose in a case where the facts are simple and factual causation obvious.

307    Third, once that factual question has been analysed, the legal question arises, if factual causation has been established, as to whether the relevant party should be held legally responsible for that loss or damage. Alternatively expressed, is the damage within the relevant scope of liability? But this is a legal question depending in part upon the nature of both the breach and the damage alleged. It is difficult to see how the vernacular of “common sense” has utility for this third level of analysis. One is not talking of the common sense of the layman. Moreover, one is not truly talking of the “common sense” of the lawyer, but rather a conceptual and evaluative legal question upon which reasonable minds might differ. Indeed, lawyers have struggled with this conceptual question and have sought refuge in adjectives such as “direct”, “natural and probable”, “direct and natural”, “proximate”, “real effective” and so on to categorise potential cause(s) to address the legal question. And even where they have agreed on the label, differences have arisen in their application. Further, other problems have arisen with scenarios that have had to deal with concurrent sufficient causes, causes that are neither necessary nor sufficient conditions with or without other elements, and novus actus interveniens questions. March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 515 per Mason CJ is authority for a common sense test or a common sense value judgment, but it was a tort case not a contract case. The value of such a test in my context may be doubted. Finally, on one view, this third level of analysis is not a causation question at all, but rather a legal responsibility question once factual causation has been answered (the second level of analysis) through the relevant lens (the first level of analysis). It has been suggested that the substantive meaning of causation has been inappropriately comingled with this latter question of legal responsibility or the associated phrase “scope of liability”, as Professor Jane Stapleton in “Cause-in-Fact and the Scope of Liability for Consequences” (2003) 119 Law Quarterly Review 388 explains. Her views may be said to resonate with those of trial judges mining facts from the coal face of forensic inquiry.

308    There are several other preliminary observations that should be made. One can understand some jurists using the language of “common sense”. If one was instructing a jury, such simplistic language has an attraction. Further, many scenarios involving causation are straightforward with the answer being intuitively clear without further factual reflection at least. Further, some jurists are understandably keen by the use of the vernacular of “common sense” to distinguish the lawyer’s use and context of causation from that of the scientist or the philosopher. But to so distinguish does not entail that the only contrast is with a “common sense” test. Moreover, although that distinction from other fields of discourse is correct when looking at the first and third levels of analysis referred to above, the line is not so brightly drawn for the second level of analysis, where concepts from one context can assist in the conceptualisation of another.

309    I do not need to develop these matters further at this stage. Let me now turn to the detailed factual chronology.

Detailed factual chronology

310    It is convenient at this point to set out a detailed chronology of various factual findings, interspersed with some commentary in relation to some aspects that I will return to later. These findings are based on the evidence adduced or inferences therefrom. This section of my reasons contains a detailed chronology over an expansive period referable to the claims against all parties. It will be necessary to later set out more tailored chronologies referable to specific claims against specific parties.

311    In March 2009, Meneses told Lee, who he had met some years earlier, that TechAudio where he had previously worked was going bankrupt and that he was taking his business to a new organization operated by the Directed group of companies.

312    Between 2009 and 2011, YS Lee met Siolis at Directed’s premises, and also on occasions when he visited Hanhwa’s premises in Korea, and at trade fairs in Hong Kong. Meneses was present on some occasions. Lee met Siolis and Tselepis in 2009.

313    In mid-2009, Meneses commenced employment at Directed in the role of Business Development Manager pursuant to his employment agreement entered into on 11 May 2009.

314    Mills also commenced employment at Directed in the role of Project Manager pursuant to his employment agreement entered into on 1 June 2009. He reported to Meneses.

315    On 1 July 2009, the 2009 secret commissions agreement was made between Hanhwa Enterprise and Meneses through his company, OE Solutions, by which a service charge equating to 3% of the shipped order amount was to be paid to Meneses’ Westpac bank account in exchange for services he rendered to Hanhwa Enterprise. The agreement was signed by YS Lee and Meneses. Pursuant to its terms, Meneses was to co-ordinate the on-going business between Directed and Hanhwa and control and develop new business for Hanhwa.

316    Now Hanhwa Enterprise had commenced paying commissions to Meneses from 2005, prior to him joining Directed. In fact there was an agreement made on 1 August 2005 between Hanhwa Enterprise and OE Solutions in almost identical terms to the 2009 secret commissions agreement signed by the same parties. Now pursuant to the 2009 secret commissions agreement, money was paid into Meneses’ personal bank account. Contrastingly, in the 2005 version it was paid into an OE Solutions’ account.

317    This conduct was kept secret. YS Lee confirmed that he did not disclose the existence of the 2009 secret commissions agreement to Siolis.

318    According to Lee, his father told him around 2009 that Meneses was Hanhwa’s salesman in Australia. YS Lee said that the moneys paid under the agreement were commissions on sales. Lee says he also understood Meneses to be a director of Directed.

319    Hanhwa Enterprise started supplying products to Directed in 2009. The first unit that Hanhwa and Directed worked on together was the DIR4800. Hanhwa required Directed to pay for the tooling up front.

320    In 2009, Lee relocated to Australia, working for Hanhwa Enterprise at that time. He worked out of Directed’s premises from about 2013, for two to three days a week.

321    Let me digress for a moment and deal with another topic.

322    As I have said earlier, Directed and its directors and shareholders were involved in a joint venture through the JV Vehicle with Allen Hartley and Davidson to sell and supply GPS based telematics systems to OEMs and truck owners. The JV Vehicle provided the on-line portal through which telematics services were provided to truck owners and OEMs.

323    From the commencement of the Directed/Gridtraq JV, Dylan Hartley was employed by the JV Vehicle, but based at Directed.

324    In 2009, Lee and Dylan Hartley met each other for the first time at Directed’s premises. Dylan Hartley also met Meneses when he started working at Directed’s premises.

325    In February 2010, documents were exchanged and signed in relation to the JV Vehicle. The JV Vehicle planned to distribute Bandit technology through Siolis’ and Tselepis’ established relationships. This technology was owned by Davidson’s company.

326    In that month, a shareholders’ agreement, which I have previously referred to as the JV Vehicle Shareholders Agreement, was made between the interests of Siolis, Tselepis, Davidson and Allen Hartley which formalised the arrangements. It contained terms including the following restraints:

15.1    No shareholder shall at any time, while he is a shareholder or thereafter, directly or indirectly, use for his own benefit or the benefit of any other person, and shall keep confidential and not disclose to third parties, any trade secrets or confidential information of GH, its trading company and or its subsidiaries as applicable.

15.2    The restraints set out in clause 15.1 shall endure permanently.

15.3    For the purpose of this clause, the expression “trade secrets and confidential information of GH” shall mean all information pertaining to GH and its business which is not available on request to a member of the general public, including but not limited to the technical detail, techniques, know-how, methods of operating, costs, pricing, licensing, names of customers and potential customers of GH and details of their businesses.

…

15.5    The parties record that, as shareholders of GH, each shareholder will acquire confidential information and trade secrets relating to GH its trading company and or its subsidiaries as applicable. In the circumstances each shareholder agrees that it is fair and reasonably necessary for the protection of GH’s business and proprietary interests that it should be restrained from competing with GH for a reasonable period.

15.6    Each shareholder accordingly undertakes not, without GH’s prior written consent, to be interested or engaged, whether directly or indirectly and whether as proprietor, partner, shareholder, director, member of a close corporation, employee, agent, consultant or otherwise, in any firm, business or undertaking which carries on any activity, either solely or in conjunction with any other person, in direct competition with the business carried on by GH at the date on which he ceases to be a shareholder.

…

15.8    The restraints set out in clauses 15.4.1, 15.4.2 and 15.6 shall apply in every state of Australia and every other country where GH carries on business or is likely to carry on business, and shall endure while the shareholder is a shareholder and for a period of 2 years after it ceases for any reason to be a shareholder.

…

15.14    Each shareholder shall ensure that its members, employees and consultants, and each director appointed by it adhere to the provisions of this clause 15 as if each such person were that shareholder.

327    Entities associated with each of Siolis, Tselepis, Davidson and Allen Hartley were each to hold 25% of the issued share capital of the JV Vehicle. For present purposes the only relevant clause is clause 15 which embodies various restraints. There is a question as to the extent to which these restraints were later released under a Deed of Agreement and Release on 29 March 2016, which I have previously referred to as the Deed of Release. Further, it should be noted that clause 15 is not directed to the position of Dylan Hartley as an employee or former employee.

328    From about February 2010 until December 2015, Dylan Hartley, as a full time employee of the JV Vehicle, ran the day-to-day operations of the Directed/Gridtraq JV. The JV Vehicle sold a telematics unit which was manufactured by STI, a company owned by Tselepis, which was also sold by Directed to OEMs.

329    Let me return to the Hanhwa – Directed relationship.

330    By mid-2010 Hanhwa Enterprise regarded Directed as a large and important customer. Moreover, Hanhwa Enterprise had the DIR4850 in development. This was an AV unit to be supplied by Directed to UD.

331    By July 2010 Directed had spent approximately AUD 2 million in setting up the Directed business and developing, testing and marketing the DIR4800, DIR4850 and the Orion. It had paid to Hanhwa Enterprise AUD 227,143 in advance of supply for the tooling for the DIR4800 for supply by Directed to IAL in April 2009. It purchased approximately AUD 6 million of products from Hanhwa Enterprise.

332    On 27 July 2010, the Hanhwa Enterprise Agreement was executed with Directed. The supply agreement was an express written “umbrella” agreement between the parties. Directed engaged Hanhwa Enterprise to provide manufacturing services to Directed for their specific products. Hanhwa Enterprise agreed to manufacture products in accordance with the specifications of Directed and to supply them to Directed.

333    In October 2010, Hanhwa Enterprise invoiced Directed for a tooling charge for the DIR4850, which Directed paid. Tooling costs are not significant having regard to the prospect of earning millions of dollars in sales. The typical life of an AV unit is four to five years.

334    In December 2010, Hanhwa Enterprise and Directed worked on another AV unit being the Orion. This was the first unit developed by Hanhwa Enterprise from scratch with Directed. Directed was required to and did pay for the tooling costs.

335    A further AV unit called the DIR6100 supplied by Directed to Hino was based on the design of the Orion. The cost of the tooling for this was less, and the development took less time being based on an earlier existing unit. This tooling was also used for Hino, and for other models.

336    Notwithstanding this relationship between Hanhwa Enterprise and Directed, YS Lee continued to pay commissions to Meneses. YS Lee distinguished between Meneses’ work and personal email addresses, sending the remittances of commission to his personal email address. He did not discuss it with Siolis and Tselepis. YS Lee confirmed that all amounts of commission paid by Hanhwa Enterprise and later Hanhwa Korea were calculated on the basis of purchases made by Directed from Hanhwa Enterprise or Hanhwa Korea. This was also the case in relation to Directed’s later purchases from Leemen Korea. Sometimes commission was based on 3% of sale price; other times a fixed dollar amount per unit was paid.

337    In 2012, Allen Hartley was introduced to YS Lee at Directed’s premises. Later the Gridtraq parties engaged with Hanhwa to pursue business opportunities.

338    In 2012, Tselepis, Siolis and Meneses introduced Lee and YS Lee to various representatives of IAL.

339    On 7 February 2012, Hanhwa Korea was registered and commenced to carry on the business formerly carried on by Hanhwa Enterprise.

340    On 17 May 2012, the 2012 secret commissions agreement was made between Hanhwa Korea and the Meneses parties. Apparently, the reason for the agreement was the change in entity carrying on the business from Hanhwa Enterprise to Hanhwa Korea. Lee says this was when he first became aware that Meneses was being paid sales commissions. Yet in 2009 Lee understood that Meneses was Hanhwa’s salesman in Australia and also a director of Directed. YS Lee confirmed that he never disclosed the existence of this agreement to Siolis or Tselepis.

341    Part of Meneses’ role under that agreement was to ensure that Directed continued to purchase product from Hanhwa Korea, and to promote new business. After Lee forwarded the 2012 secret commissions agreement to Meneses, Lee received an email from Meneses stating, “please ONLY send this info to my home email ONLY!!!!!”. Lee did not contest that there was a need for secrecy, but attributed this need not to the fact of the bribes, but to their size. His evidence was that Meneses feared that Siolis and Tselepis might become jealous if they had highlighted to them the size of commissions.

342    Let me now say something concerning the genesis of the DIR6200 unit.

343    By 2012, Hanhwa Korea or its predecessor had been developing products in conjunction with Directed for about three years. In 2012, Directed commenced supplying to IAL an AV unit called the DIR6200 or DAVE (Digital Audio Visual Entertainment), which was manufactured from scratch for Directed by Hanhwa Korea. Its development took about 14 months. Directed paid Hanhwa Korea for the tooling. Directed also sold to IAL accessories and navigation licences for the DAVE.

344    Now an issue between the parties is the level of Directed’s involvement in the development process for the DAVE or DIR6200. Directed’s position is that the AV units were automobile parts which had to be tested to an exacting standard. The work involved was more than doing final quality control before passing on the unit to IAL or other customers. Directed’s employees were heavily involved in this development process. This included meeting with customers and discussing their requirements, bench testing, testing in trucks, pulling units apart and assessing their quality and requesting changes, and making AV units suitable for fitting. Further, there was the necessary document preparation. But Lee asserted that Directed was no more than a middle man or a mere distributor. But the fact that Directed paid for the tooling is inconsistent with this, as is the extensive testing of multiple samples of each unit and the evolution of the product based on Directed’s feedback and requirements. Directed’s characterisation of its involvement is more accurate.

345    At the end of 2012, Directed was Hanhwa Korea’s largest customer overall. Sales by Hanhwa Korea to Directed represented about 80% of Hanhwa Korea’s global business. Sales via Directed included IAL (45%), Hino (16%), UD (9%) and Orion (8%). The only items not supplied to Directed were to Toyota, with some accessories. I should also note that all of the products Hanhwa Korea designed and supplied to Directed had a DIR prefix.

346    By August 2013, Lee was head of the sales and marketing division of Hanhwa Korea, but based in Australia. He was responsible for its development planning team, the international sales team and the design team. Directed remained Hanhwa Korea’s largest customer by way of sales.

347    Now as I have indicated, Lee had started working from Directed’s premises by then. He had his own desk, and he attended internal meetings of Directed employees. Because of his attendance at meetings and at Directed’s offices, he became aware of commercial business opportunities that Directed was trying to exploit. He was also invited to and did attend some meetings between Directed and IAL. He was also provided by Meneses with minutes of meetings with IAL which Lee passed on to Hanhwa’s engineering people.

348    From at least 2013 until at least 2016, Meneses regularly put Lee on notice concerning aspects of the commissions, the method of calculation and payment and asked him to follow up. From 2013 Lee was the main Hanhwa Korea person to talk to Meneses about the commissions. Meneses would follow up with Lee, who in turn telephoned his father to follow up.

349    On 25 December 2013, the business name LEEMEN was registered in Australia in the name of the Meneses family trust, with the organisational representative being OE Solutions and with the email address being that of Meneses.

350    In 2013, Hanhwa also developed, together with Directed, daytime running lights (DRLs) for supply by Directed to IAL. Directed paid Hanhwa for the tooling.

351    In 2014, Directed commenced supplying IAL with telematics units. Directed also provided telematics services to fleet operators who had trucks fitted with telematics units. Now for the DAVE (DIR6200) to operate with Directed’s telematics unit, what was required was a suitable communication interface, a harness, and a software communications protocol; for convenience, and as Directed has done, I will refer to this as the Directed Specification.

352    Now from 2014, payment for tooling was not made as an upfront amount but was made as an agreed amount per unit amortised over a certain number of units. In Lee’s original evidence, he suggested that there was no agreement from 2014 for Hanhwa Korea to incur the cost of tooling in the first instance and to amortise it into the supply of products going forward. But he modified this evidence to maintain that tooling was to be upfront for AV products but not small accessories.

353    Let me now say something concerning the genesis of the SuperDAVE project.

354    In August 2014 Directed told Hanhwa Korea about a new supply opportunity to IAL. Meneses contacted Lee and told him that IAL would be launching a new model truck which would be coming to Australia the following year. It would be ready for launch in about August 2015. In those circumstances Directed was looking for a new AV unit.

355    Now Lee recognised the confidentiality of Hanhwa Korea’s own business information. But he refused to recognise that new product opportunities could be confidential information of Directed. He regarded them as open. In his evidence he distinguished between the Hanhwa perspective and the Directed perspective. This is to be contrasted with YS Lee who for example recognised that the ICL opportunity was confidential as Directed and Hanhwa Korea were working together. This was the correct perspective. In my view YS Lee’s position on confidentiality also applied to the analogous disclosure by Directed of what has come to be described in this proceeding as the SuperDAVE opportunity.

356    In late 2014, Directed commenced the SuperDAVE project for IAL with a product code DIR8000. This was a new AV unit and accessories range. The SuperDAVE was intended to replace the DAVE. The project was initiated following a meeting between Ian Shanks of IAL, Siolis and Meneses in late 2014. The project involved extensive communications between the parties on all issues necessary to bring the product to market. Directed employees were heavily involved.

357    In 2015 there was continuing work on the SuperDAVE project. Key features of the proposed AV unit at this stage were the following: the Android OS 4.2; an 8-inch capacitive touch screen; a remote control; reversing cameras; four camera connections; four-way split mode screen; TPMS (tyre pressure monitoring system) as an accessory; rear parking sensor as an accessory; and ADAS (advanced driver-assistance system).

358    There was further work on an MFL, which is a comprehensive list of all the features of the AV unit, for the customer to see and understand. The MFL had to be approved by Directed. Further, there were two other documents that had to be approved by the customer concerning the design process. These were the rendering and the GUI (graphical user interface). If any of these three documents were not approved by the customer, the further development of the product could not proceed.

359    Meneses continued to keep Lee up to date on the IAL new audio unit. The design was not yet fixed. Hanhwa responded to requests by Directed for changes. Lee said that they needed to have feedback from Directed.

360    Further, when Directed told Hanhwa that it had an issue or a problem, Hanhwa was responsive to the request. Hanhwa had to work out from a mechanical or an electronics perspective how to fix it. Changes occurred over the course of the next two years by a process of input from Directed to Hanhwa. Directed as Hanhwa’s customer gave Hanhwa suggestions or requests for changes to be made, and Hanhwa made those changes. Some of these reflected input from IAL to Directed which then made the request of Hanhwa.

361    On 12 March 2015, Lee shipped three design mock-up samples to Meneses being a 6.5 inch design, a 7-inch design, and an 8-inch design for Directed to liaise with IAL and then nominate which size it wanted.

362    In April 2015, there was a schedule change with a shipment of samples to Directed to be postponed until November 2015. As to the design of the SuperDAVE, this had not yet been fixed.

363    On 20 May 2015, Lee notified Meneses that they would send a new design. Directed makes the point that if the design had not been settled, tooling costs could not yet have been fixed. Now a quote had been included for tooling costs. The purpose was to obtain Meneses’ opinion on the tooling costs. But there was no request to pay. As at 15 June 2015, tooling costs had not been confirmed.

364    On 23 July 2015, Meneses sent IAL a presentation and MFL for the SuperDAVE. The MFL described the telematics system and that an RS485 chip would be built into the hardware. The proposal was for the new unit to have in built telematics capability.

365    On 27 August 2015, IAL conveyed concerns to Meneses about the costs of the SuperDAVE, and sought modifications to keep costs down.

366    To address IAL’s concerns, on the same day Meneses asked Lee if he could supply the proposed AV unit to Directed for USD 650. I note that later, Hanhwa Korea ultimately supplied the AV units to Hanhwa Aus for USD 650.

367    Further, Meneses informed Lee that total landed cost would be AUD 1,067.86 plus tooling amortization of AUD 30.00 per unit over 10,000 units. Lee accepted that Meneses was adding an amount of tooling amortised per unit over 10,000 units. But he claimed that the amortization arrangement was not between Directed and Hanhwa Korea, but between Directed and IAL. But Lee later acknowledged that the email suggested that Meneses was trying to persuade him to provide the unit at USD 650 and inter-alia AUD 30 per unit amortised over 10,000 units for tooling. Meneses also informed Lee that based on this, which included the reference to tooling amortization, Directed would charge IAL AUD 1290, so Directed could achieve a profit of AUD 192.40 per unit. Later, when Hanhwa Aus ultimately provided the HAU8000 to IAL, it waived the tooling charge.

368    There were subsequent discussions between Directed and Hanhwa Korea on price.

369    Now I note that in October 2015, a Hanhwa current outstanding remittance report referred to outstanding amounts payable by Directed. But there was nothing indicating an outstanding amount for the DIR8000 tooling. Lee said that this was because they had no purchase order.

370    Late in October 2015 a working sample of the SuperDAVE was received by Directed. Directed personnel performed tests on it.

371    On 13 November 2015, Summers sent Lee an open and close list for the SuperDAVE. The open and close list was a method by which Directed and Hanhwa raised issues that needed to be resolved. This might go back and forth between the parties. Hanhwa would then attempt to resolve issues or offer a solution.

372    By November 2015, NavNGo, who was the navigation supplier for Directed, had been provided with a sample of the SuperDAVE for implementation of the mapping solution. The NavNGo representatives sought direction from Directed about how to deal with the navigation solution.

373    On 18 November 2015, Summers conveyed a significant issue being that the sample unit had failed a heat test. On 19 November 2015, Pieries of Directed commented to Lee on tests Hanhwa had conducted to ensure that the unit met Australian design regulations, but which had failed the requirements.

374    By December 2015, Directed’s code for the SuperDAVE had been changed to DIR8000 from DIR6500. This reflected IAL’s choice of an 8-inch design, which had been conveyed to Lee via Meneses.

375    On 9 December 2015, Summers provided Meneses and Lee with a tear down report. This involved pulling apart a sample of the DIR8000 to examine the parts and make comments, which were sent to Lee for his consideration, comment or changes. An outcome of the report was that the CPU was to be changed. In response to a query about the Exynox CPU, Hanhwa stated that they would change it to the Nexell S5P6818 octa-core CPU. Had the DIR8000 gone into production, this is the CPU that would have been used.

376    The DIR8000 was designed to work with Directed’s telematics unit. The MFL specified it and the GUI of the DIR8000 contained telematics icons. The software and hardware of the DIR8000 operating working samples were required to have telematics connectivity and functionality with the Directed telematics unit.

377    Let me just digress in the chronology at this point and deal with two topics.

378    First, in 2015 the accessory side of the Hanhwa business previously carried on by Hanhwa Korea commenced to be carried on by Leemen Korea, which was a company then recently incorporated. The parties continued their supply arrangements as before.

379    Second, let me say something about an opportunity that arose concerning ICL. ICL is a division of IAL’s parent entity in Japan. It is a global distributor of IAL parts and accessories.

380    In January 2015, Yuji Tsukano of ICL contacted Meneses by email at Directed, expressing interest in the DAVE. ICL requested sales history, specifications and other information. This was a business opportunity for Directed to supply the products that it was then supplying to IAL more widely than in Australia and New Zealand.

381    Meneses forwarded the ICL email to YS Lee. When YS Lee received the email, it was clear to him that ICL in Japan had contacted Directed expressing interest in the DAVE unit, that Meneses had arranged to visit ICL in Japan in response to the request, and that Meneses had discussed the matter with IAL. YS Lee recognised that this was a confidential business opportunity for Directed. Meneses’ email to YS Lee told him not to contact ICL at that stage. YS Lee understood this to mean that Directed did not want Hanhwa Korea to contact ICL about it without Directed’s approval.

382    Between February and May 2015, ICL and Meneses continued to exchange emails including plans for the proposed trip. During the course of this correspondence, Meneses attached a copy of a presentation concerning Directed and the DAVE unit.

383    At this point, let me digress and deal with another relevant topic.

384    On 11 August 2015, Heads of Agreement were executed by Hanhwa Korea and Quantam.

385    Clause 1 contained relevant introductory sub-paragraphs and provided:

Quantam owns and controls certain Intellectual Property relating to Telematics Hardware Design, Firmware, manufacture and online Portal Backend Software Design;

Hanhwa owns and controls certain Intellectual Property relating to In-Vehicle Head Unit Hardware Design, Firmware and owns a manufacturing and hardware testing infrastructure;

Quantam wishes to have their telematics hardware design embedded in a screen and head unit reporting back to their Portal Back end software application in order to make telematics as a large scale commercial product available to the market;

Hanhwa wishes to embed telematics in a screen and in their head unit reporting back to the Quantam Telematics portal in order to embed telematics in their head unit in order to make it available included with a telematics offering as a large scale commercial product available to the market;

Quantam and Hanhwa wish to collaborate and look for new markets for telematics, screen hardware and head units;

Neither Party is certain of the commercial success of offering the new product, and or the integrated product to the market as standalone hardware or as integrated hardware with telematics reporting back through to the Quantam Telematics Portal yet each believes that there is potential commercial success, to their mutual benefit, in doing so; and

Neither Party wishes to relinquish ownership or control of their respective Intellectual Property nor, to acquire ownership in the Intellectual Property of the other, at this time.

386    Clause 2.1 provided:

The parties will collaborate in a proof of concept to establish the market viability of offering the integrated product to the market as standalone hardware and as an integrated hardware with telematics reporting back through to the Quantam Telematics Portal on the following basis:

2.1.1    Each Party will retain full ownership and control of their respective Intellectual Property, protected under the Non-Disclosure Agreement (NDA) entered into between the Parties on 20 July 2015 and as attached;

2.1.2    Both Parties will do all that is necessary, including new hardware and firmware design to convert their individual product offerings into an integrated product design in order to offer the new and existing product to current clients and new clients introduced on a consumer scale basis and to any potential markets (the market);

…

2.1.12    It is specifically recorded that nothing in the Agreement binds either party to the other exclusively. Either party is free to enter into similar or different agreements with any third party provided that rights accorded to a third party are not in conflict with this Agreement.

387    At the same time as the Heads of Agreement being entered into, the parties also entered into a reciprocal confidentiality and non-disclosure agreement, facilitating the disclosure to each other of a broad range of information of a “confidential and proprietary nature”.

388    The use to which such information could be put was only for the purpose set out in clause 2 of Schedule A, being stipulated in the following terms:

The parties will collaborate in a proof of concept to establish the market viability of;

2.1    Developing a new Fleet Management screen with integrated telematics design.

2.2    Offering the current head-unit products manufactured with a telematics capability.

2.3    Offer the current Quantam Fleet Management CPU product to Hirschman.

2.4    Develop and Hirschman specific hardware unit.

2.5    Offer Telematics communication and Portal Software.

2.6    Manufacture new designed and existing Quantam telematics and electronic products in the Hanhwa manufacturing facility.

2.7    Develop and manufacture the Quantam asset monitoring and tracking Tags in various forms and functionality.

2.8    Quantam distributing Hanhwa products and head units into markets as mutually agreed by both parties.

389    Allen Hartley did not give notice to Directed of this new business arrangements with the Hanhwa parties. Directed says that there was a risk of a breach of the JV Vehicle Shareholders Agreement. In my view that assertion was not made good.

390    One of the early collaborative projects between Quantam and Hanhwa Korea was to seek to supply a telematics solution to a German concern, Hirschmann, which was a Hanhwa customer. Discussions had commenced about this project by 23 January 2015. Further to a discussion between Allen Hartley and Lee, Dylan Hartley emailed Lee, which was copied to Allen Hartley and Davidson, a presentation entitled “Hirschmann collaboration: Hanhwa/Quantam Telematics – vehicle tracking and fleet management”. Lee responded that he was “very impressed looks very professional”. Dylan Hartley responded that “Allen or I will call you about coffee on Monday to confirm an arrangement”. Directed says that the device depicted was the DIR6200.

391    One of the other projects involving Hanhwa Korea and some of the Gridtraq parties was the safety screen project.

392    The Gridtraq parties accept that in March 2015 they commenced working with Hanhwa Korea on a joint project known as the safety screen project. The safety screen was a screen with plastic surroundings. This unit was designed to have telematics and tyre pressure monitoring functionality. At all relevant times thereafter they were engaged in that project with Hanhwa Korea. I should say that since October 2016, the safety screen was designed to be capable of being mounted on the dashboard of vehicles. Further, between March 2016 and March 2018, the safety screen was referred to by reference to the model number “RA7000”. The Gridtraq parties did not work with Meneses and/or Mills on the safety screen project.

393    The Gridtraq parties had helped determine the safety screen’s specifications and functionality, as well as developing the protocol interface between the safety screen and its telematics unit (RA7000 telematics unit). This unit is variously referred to as the “CPU” by Gridtraq and the “Gridtraq Telematics Unit” or “Telematics Box” (by Oh).

394    On 28 April 2015, Hanhwa and Gridtraq made a joint presentation for the supply of a telematics unit to Hirschmann in Germany. Lee attended for Hanhwa accompanied by another Hanhwa representative, Paul Miller. Allen Hartley and Davidson attended for Gridtraq. They pitched to supply a safety screen together with a telematics unit and telematics services. At the meeting, they presented a safety screen and a basic telematics module. After the meeting, Miller asked Hartley by email to send a copy of the technical report and information on the comparison between the telematics module brought to the meeting, and the Hirschmann telematics concept.

395    Notwithstanding that the Directed/Gridtraq JV was on foot, Allen Hartley did not inform Siolis or Tselepis about the Hirschmann proposal or meeting. Directed says that the Hirschmann opportunity was something Siolis would have been interested to pursue through the JV Vehicle had he been made aware of it.

396    On 18 September 2015, Dylan Hartley caused the JV Vehicle to enter into an agreement with IAL for supply and support services in relation to telematics data.

397    The initial term of the agreement was for a period of 5 years. The agreement was signed by Dylan Hartley on behalf of the JV Vehicle and by Simon Humphries on behalf of IAL.

398    Under this agreement, the JV Vehicle agreed to provide what was known as “Supply and Support Services”. Essentially this related to telematics data which was defined to mean all data and any other type of information created or collected concerning vehicles under arrangements between IAL and a customer.

399    Clauses 4.1 to 4.3 provided the following:

The Parties agree that they jointly and severally own all data comprising the Telematics Data collected at first instance by Gridtraq.

Either Party has the right to assign its right title and interest in the Telematics Data to the other only, unless both Parties have previously agreed in writing to assign a Party's rights to a third party.

Subject to clause 4.5, Gridtraq will do all things necessary to ensure that:

(a)    IAL can discharge its obligations to a Customer in respect of a Vehicle under an SSA, without IAL being in breach of the SSA;

(b)    if asked by IAL, it assists IAL in the commissioning of all hardware, equipment, etc., that is installed in any Vehicle;

(c)    if asked by IAL, it assists IAL in the maintenance and upgrade of any hardware, equipment, etc., whether or not it is installed in any Vehicle;

(d)    it receives, stores, maintains and keeps safe all Telematics Data for the duration of the agreement and for an agreed period of 12 months following the termination of this agreement;

(e)    it provides all Telematics Data in whatever form, and as and when required by IAL;

(f)    where requested by IAL, to provided (stet) any reasonable assistance, input or information to allow IAL to maintain its websites and any form of on-line activity;

(g)    to assist IAL, as and when requested, in communicating or liaising with Customers in relation to Telematics Data;

(h)    it will not, without IAL's prior written consent utilise the Telematics Data in any way, that may allow it to be used, whether directly or indirectly by any third party, unless such use is compelled by law;

(i)    in collecting, retaining, disseminating and utilising Telematics Data in any form, the Parties agree to observe and comply with all laws in relation to privacy, to the extent that such laws may apply to this agreement; and

(j)    generally, to comply with any reasonable request by IAL in relation to the Telematics Data.

400    On 18 to 20 October 2015 Meneses travelled to Japan where he met with IAL and ICL representatives. He told them that there appeared to be opportunities for the sale of IAL products in the UK market. Meneses further shared the opportunity with YS Lee, forwarding relevant emails to him.

401    On 19 November 2015, Hanhwa Korea filed with IP Australia a design application in respect of the SuperDAVE which named Se Yoon Kim as the sole designer. This was registered on 15 December 2015.

402    Let me at this point say something more about the Gridtraq-Directed relationship around this time.

403    On 27 November 2015, Meneses wearing his Directed hat informed Dylan Hartley by email, copying in Davidson, Siolis, Allen Hartley and Tselepis, of his disappointment that Hartley had caused the JV Vehicle to enter into a direct agreement with IAL.

404    On 29 November 2015, Allen Hartley emailed Siolis and Tselepis claiming that they had breached their obligations under the JV Vehicle Shareholders Agreement. On 8 December 2015, solicitors’ correspondence ensued, but no detailed particulars were provided of any of the Gridtraq parties’ allegations. The Gridtraq parties switched off Directed’s access to the telematics portal.

405    On 16 December 2015, Dylan Hartley was told by Tselepis to leave the premises. He left the Keilor premises soon after that conversation.

406    Let me move to another matter. The time when Hanhwa Korea commenced setting up its competing business in Australia with the assistance of Meneses and Mills can be traced back to at least 4 December 2015.

407    Sue Mills, the wife of Mills, was engaged through her business Sassy Marketing, to help with Hanhwa Korea’s brand presence and advertising collateral. On 4 December 2015, Mills sent an email to Sue Mills under “Email to deal with Johnny”:

can you please only use jm@oesolutions.net.au to reply to Johnny.

this will keep discussions off of directed’s servers.

He works best when he doesn’t have to type anyway cause i reckon he is a bit meh with typing / grammar etc.

his phone is [XXXX] – best cornering him on that or keep discussions vague if using emails

408    The subterfuge associated with the establishment of Hanhwa Aus, and Mills’ open acknowledgement of the need to keep it secret from Directed was manifest from this early date.

409    On 15 January 2016, Allen Hartley and Davidson through a related entity commenced an oppression proceeding in the Supreme Court of Victoria against the JV Vehicle and the Siolis and Tselepis entities.

410    On 27 January 2016, the JV Vehicle was placed into voluntary administration.

411    On 29 March 2016, the Deed of Release and the DOCA concerning the JV Vehicle, as I have previously identified, were executed. The relationship between the JV Vehicle shareholders came to an end. Pursuant to these agreements, 100% control of the JV Vehicle went to the Siolis and Tselepis entities. Pursuant to the Deed of Release, Allen Hartley, Dylan Hartley and Davidson agreed to a 90-day restraint with respect to pursuing IAL, UD, and Hino as customers.

412    The parties to the DOCA included the Deed Administrators, Directed, Tselepis, Siolis, the Hartleys, Davidson and their respective entities.

413    Clause 14.3 provided:

(a)    The Deed Administrators and the parties to this Deed will use their best endeavours to facilitate the transfer of the items as set out in Schedules D, E and F herein to specified members of the DOE Group or the Hartley Group at Completion.

(b)    The Deed Administrators, the Hartley Group and the DOE Group must, by no later than 4 April 2016 agree to a list of documents that are required to be provided by the parties at Completion in order to facilitate the transfers set out in paragraph (a).

(c)    In the event that the Deed Administrators do not have the requisite legal title, control or possession of the items listed in Schedules D, E and F herein, the obligation to facilitate the transfer or assignment will rest with the other parties to this Deed and the Deed of Release.

(d)    The Deed Administrators will determine in their absolute discretion whether a transfer under paragraph (a), and all other terms of this Deed, have been satisfactorily effectuated.

(e)    Without limiting the power of the Deed Administrators referred to in paragraph (d) above, in the event that the Deed Administrators form the opinion that some of the assets in clause 14 or Annexures D, E and F are unable to be transferred at Completion, and the receiving party does not waive the requirement for the transfer of the asset prior to the Completion Date, the Deed Administrators may, in their absolute sole discretion:

(i)    terminate the Deed and cause the Company to be placed into liquidation; or

(ii)    convene a meeting of creditors to pass a resolution to either terminate this Deed or implement a Deed of Variation under clause 18.2 herein.

414    Relevantly, Schedule D provided:

415    The Deed of Release was entered into between the same parties as the DOCA, other than the Deed Administrators.

416    Clause 2 provided for releases and said:

Subject to and conditional upon Completion occurring under the DOCA and this Deed on the Settlement Date and to receipt in full of all payments due at Completion:

(a)    Siolis Holdings, Tselepis Holdings and the DOE Group and their directors each release and forever discharge the Company, Hartley, Bandit, Davidson, Dylan Hartley, Webhouse Group, Webhouse Software and their directors, employees, servants, agents, contractors and related bodies corporate from and against any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had arising out of their agreement to form the Company and to operate its business, the conduct of the affairs of the Company or the services provided by the Company, including but not limited to the claims made in the Proceeding and in relation to the provision of goods and services to the Company by Webhouse Group and Webhouse Software.

(b)    The Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors each release and forever discharge Hartley, Bandit and Davidson from any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had in respect of the loans made by Siolis Holdings and Tselepis Holdings to the Company or from any further claim for compensation or return of monies they may have but for this Deed from the Company, Hartley, Dylan Hartley, Bandit or Davidson.

(c)    The Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors and each of them will not make any claim in respect of the assets to be transferred by the Company to Hartley, Bandit, Davidson or Dylan Hartley pursuant to the DOCA.

(d)    Hartley, Bandit, Davidson, Dylan Hartley, Webhouse Group and Webhouse Software and each of them release and forever discharge the Siolis Holdings, Tselepis Holdings, the DOE Group and the Company and their directors, employees, servants, agents, contractors and related bodies corporate from and against any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had arising out of their agreement to form the Company and to operate its business, the conduct of the affairs of the Company or the services provided by the Company including but not limited to the claims made in the Proceeding or the provision of goods and services to the Company by DOE Group and in any way related to the employment by or the services provided by Dylan Hartley to the Company.

(e)    Hartley, Bandit and Davidson and each of them release and forever discharge the Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors from any claim, cause of action, liability, suit or demand which they had or but for this Deed may have had against for or in respect of their loans made by Hartley and Bandit to the Company or from any further claim for compensation or return of monies they may have but for this Deed from the Company, Siolis Holdings, Tselepis Holdings, the DOE Group and their directors.

(f)    Hartley, Bandit and Davidson, Webhouse Group and Webhouse Software and each of them agree not to make any claims against any customers of the DOE Group or the Company in respect of any matter the subject of the conduct of the business of the Company prior to the execution of this Deed or their disputes the subject of this settlement, except in respect of the collection of the remaining unpaid book debts of the Company to be assigned to Hartley and Bandit pursuant to the terms of the DOCA, which may be pursued by Hartley and Bandit.

(g)    Following Completion Hartley, Bandit, Davidson, Dylan Hartley, Webhouse Group and Webhouse Software and their directors and each of them will not make any claim in respect of the assets to be transferred by the Company to Siolis Holdings, Tselepis Holdings or the DOE Group pursuant to the DOCA.

(h)    For the purpose of this clause 2, claim(s) includes (as the context permits) a claim, notice, demand, action, proceeding, litigation, investigation, judgment, award, damage, loss (including economic loss), cost, expense or liability however arising, whether present, unascertained, immediate, future or contingent, whether based in contract, tort or statute and whether involving a third party or a Party to this Deed or otherwise.

417    Clause 3 contained relevant restraints and provided:

Subject to and conditional upon Completion occurring under the DOCA and this Deed on the Settlement Date and to receipt in full of all payments due at Completion:

(a)    and subject to sub-paragraph 3(b), Siolis Holdings, Tselepis Holdings, Hartley and Bandit release and discharge each other from any all restraints that may exist on their ability to pursue in the future any business the same as or similar to the Company’s business and acknowledge and agree that any restraints that may presently exist will be of no further force or effect.

(b)    Notwithstanding sub-paragraph 3(b), Hartley, Bandit and Davidson agree not to, for a period of 90 days from the date of execution of this Deed, approach offering to provide or to provide vehicle tracking/telematics services or any other services the same as were provided by the Company to the following entities:

(i)    Isuzu Australia Limited and Isuzu dealers;

(ii)    Volvo Group Australia Pty Ltd (ACN 000 761 259) (including its business trading as UD Trucks) and dealers; and

(iii)    Hino Motor Sales Australia Pty Ltd (ACN 064 989 724) and dealers.

(c)    The Parties acknowledge and agree that:

(i)    the restraints in sub-paragraph 3(b) above are reasonable both in terms of scope and term and no greater than reasonably necessary to protect the respective legitimate business interests of the Parties;

(ii)    is reasonable in terms of the amounts paid and terms generally by way of settlement under the DOCA and this Deed;

(iii)    they will not in the future seek to assert that the restraint is unreasonable or for any reason unenforceable; and

(iv)    that should any Party seek to enforce the restraint, they acknowledge damages would not be an adequate remedy as opposed to an interlocutory injunction, and will not seek to submit to such effect in opposition to the granting of an injunction restraining them from acting contrary to the restraint.

418    I will return later to the question of how some of these clauses operate concerning the use of the JV Vehicle’s confidential information and the case against the Gridtraq parties.

419    Let me return to what has been described as the RA7000 project.

420    In February 2016, further attempts were made to consummate a deal with Hirschmann. Some of the Gridtraq parties provided Hirschmann with an updated sample of a telematics unit.

421    On 29 February 2016, Lee emailed Allen Hartley what were described as “Meeting Minutes” which recorded the parties’ objective of setting up a new joint company. But such a company was not incorporated.

422    On 2 March 2016 the results of a second sample test of the safety screen were recorded, which identified and described each function and its performance at that time.

423    On 29 March 2016, Oh emailed Allen Hartley, copied to Dylan Hartley and Davidson, in relation to the “GUI Design & Information of RA7000”. She stated, “We currently have no idea about your telematics module, so could you please pass the connector specification/drawing and pin map of your module to us?”. She also referred to the fact that the “Interface for UART will be RS232”.

424    On 1 April 2016, a Skype meeting was held between Oh and Allen Hartley. Oh noted in a follow up email:

RA7000 is being developed smoothly, but we would like to request further information of the connector for communication with a telematics module and 7” screen unit.

…we currently have no information or data of your telematics module,

so we are a bit hard up at the moment to design the wire for connection.

Could you please provide a connector specification/drawing and pin map of your module?

425    Let me move to another matter.

426    From at least February 2016, Meneses used “leemen” and “hanhwa” email addresses in addition to his Directed email address. I agree with Directed that the different email addresses were an important internal mechanism used to differentiate which hat Meneses was wearing.

427    On 16 February 2016, Lee emailed Meneses at his optusnet address, attaching a Hino presentation for the new Hino project. Meneses responded, “Send it to my Directed email … Isuzu DMax was for me.”.

428    The D-MAX opportunity originated from Siolis who had identified that D-MAX utility vehicles were increasingly popular with customers. He had asked Meneses to travel to Brisbane to pursue the opportunity with Isuzu D-MAX. Meneses told Siolis a few weeks later that he had done this without interest. But he pursued it through Hanhwa to the exclusion of Directed.

429    Let me continue with the chronology on work on the SuperDAVE.

430    In January 2016, the latest information from IAL was that the new model vehicle from Japan was delayed. They did not think it would be in the market by August 2016. This allowed Directed and the Hanhwa parties more time to improve it.

431    On 18 February 2016, an all-day meeting took place between Summers, Palone, Jaffe, Meneses and Lee. There was discussion about the DIR8000. New samples were to arrive the next week with shielding or grounding to protect any noise from trucks. Further, a new GUI was to arrive with the samples. Work also needed to be done on the digital rear camera. Further, a waterproof connector was required. And other issues needed to be resolved.

432    On 31 March 2016, Summers instructed Lee to begin work combining the audio and navigation manuals together for the DIR8000.

433    In April 2016, Summers and Meneses travelled to Korea to discuss the development of the DIR8000 and to review the Hanhwa design process. Summers sought to and did discuss a range of improvements, including to the user interface, the backside, inside and outside inputs, and other matters including the teardown report of the unit conducted by Andrea, one of Directed’s engineers. Summers also sought to ensure that Hanhwa met certain international standards for quality certification and environmental management, that the choice of components of the DIR8000 were automotive grade, and that tests across a large range of issues had been performed satisfactorily.

434    On 26 April 2016, Jaffe, Meneses and Tselepis met with IAL representatives, being Humphries, Shanks and Michael McLean. IAL approved the overall hardware and basic design concept of the DIR8000. The parties agreed to work towards a mid-2017 launch. Item 5 in a draft agenda for the purpose stated:

Item 5: “Super DAVE” Unit

•    Overall hardware/ basic design concept as previously shown is acceptable

•    Standard Master Feature List (mainly software) to be adjusted so new unit can meet IAL cost targets

•    Brainstorm better name than “Super DAVE”

•    SatNav and Telematics integration to be improved vs current DAVE

•    Apple CarPlay & Android Auto: If not at launch, from firmware upgrade in the future

•    Consider best launch timings ...

•    Introduction Strategy: All models standard at once OR staggered introduction OR initially package only with SatNav and Telematics as Option?

•    Pre-Launch Evaluation / durability trial as suggested in 2015?

•    Availability of DVR, forward (and driver?) facing camera from launch.

435    A matter that arose was that Directed needed a truck to test the DIR8000 steering wheel control. Tselepis and Siolis then told Meneses that Directed should buy a second-hand Isuzu truck to test the SuperDAVE. This led to a further exchange of emails.

436    Samples of the DIR8000 were sent by the Hanhwa parties to Directed on 16 March 2015, 27 March 2015, 1 June 2015, 29 October 2015, 4 March 2016, 17 March 2016 and 25 July 2016. The purpose of this was to enable Directed to test and provide feedback, so that the ultimate design and specification of the product could be agreed.

437    Park, the head of research and development for Hanhwa Korea, Han, the head of the mechanical team for Hanhwa Korea and Kim, the head of design for Hanhwa Korea all accepted that Hanhwa Korea manufactured working samples of the DIR8000 for the purpose of sending them to Directed. It was contemplated by the parties that Directed would install them in a vehicle, undertake testing and advise Hanhwa Korea of issues that arose and request changes. Where possible, it was envisaged that Hanhwa Korea would address those issues and make those changes.

438    Directed conducted testing on the working mock-up of the DIR8000 and identified issues in the open and close list. And modifications made in response to the issues raised by Directed contributed to the ultimate design of the DIR8000. Clearly, the evidence discloses that Directed tested samples of the SuperDAVE and its accessories and made requests for changes to those products. Further, those changes were made by Hanhwa Korea.

439    On 21 July 2016, Lee notified Meneses that a further DIR8000 working sample with the latest software was to be sent to Directed by express delivery that day. Now by this time, Hanhwa had approved and incurred tooling costs to manufacture the DIR8000. It is likely that the working sample sent in July 2016 was made with that tooling. Further, this notification also suggests that the working sample sent in July 2016 was made with the operating system and CPU that had been specified for the DIR8000 since at least November 2015.

440    Now Lee’s evidence was that by mid-2016 he believed that Directed was not going to pursue the SuperDAVE opportunity because they had failed to pay the tooling cost. But I do not accept this. At this time Directed was purchasing more than AUD 30 million of product from Hanhwa per annum. Expected revenues for Hanhwa from the DIR8000 AV units excluding accessories to be sold to Directed were anticipated at almost USD 8 million per year. So, the tooling cost was inconsequential in the larger context of Hanhwa’s overall long term and current and future relationship with Directed.

441    On 18 August 2016, Lee provided Meneses with a revised tooling quote of USD 225,300. This was an increase to an earlier quoted tooling cost. Clearly there were design changes to the DIR8000 in the intervening period, with the effect that costings as between Hanhwa Korea and Directed remained a work in progress.

442    Let me at this point say something as to the Hanhwa parties joining the Gridtraq parties at their premises.

443    In June 2016 Meneses and Lee decided to set up business premises for Hanhwa Korea in Melbourne in the same building as the Gridtraq parties. This was unknown to Directed at the time.

444    Allen Hartley’s evidence was that it was in late June 2016 that discussions commenced with Lee to move into Brooklyn. He said that whilst he was showing Lee around, Lee told him that Hanhwa intended to supply a new model of radio directly to IAL, which he understood to be for the Isuzu “N” series.

445    On 28 June 2016, Lee asked Allen Hartley, “Hi Allen, Can Johnny see your office in this week? I spoke with my team that we want to go ahead with you guys. Very happy!!”. Allen Hartley responded by email, “Hi Ryan, That will be fine. Thursday would be best. If you can please ask Johnny to text me a time that suits him and I will meet him at the office”.

446    Allen Hartley says he was told by Lee at some stage between July and December 2016 that Meneses was now employed by Hanhwa. He recalled seeing Meneses at the Brooklyn premises from time to time.

447    In July 2016, Meneses with Lee, met with Gridtraq representatives including Allen Hartley during the negotiation of a lease to share premises with Gridtraq. On 12 July 2016, Dylan Hartley provided Lee with a document and plans for the proposed premises at Brooklyn.

448    On 13 July 2016, Lee forwarded Dylan Hartley’s email to Meneses at his personal email address.

449    On 14 July 2016, Meneses sent an email from his optusnet address to Lee in relation to the proposed lease:

This looks great on this plan!

Let’s see how it looks next week.

I think you need to slow down just a bit, we need to get Isuzu Dmax or another customer before we do anything.

Do [not] sign for a long term lease, we need to do this year by year. We don’t want to be in a place where we get [too] big in 12 months.

When is the new Dmax with Navi ready?? The quicker we do this the quicker we can start our own.

One thing you need to understand is that Directed still needs to keep ordering ALL of our current products until we start to move them after one year..

450    This email reveals Lee’s and Meneses’ plan as at July 2016 to appropriate Directed’s business, and of the need for secrecy until the last moment. The reference to “The quicker we do this the quicker we can start our own” is telling. And by continuing to order “ALL of our current products”, Directed would continue developing and marketing the products to customers, whilst unaware of Meneses’ and Lee’s strategy. And it would be paying ongoing development costs of the DIR8000 and the salaries, travel and other expenses of Meneses, Mills, Summers and Palone, all of whom were engaged in activities to further Hanhwa’s business.

451    On 15 July 2016, Dylan Hartley in an email to Lee referred to the prospect of another interested tenant but stated that they would prefer to have them downstairs so they could work together and help Hanhwa.

452    Now the Brooklyn premises had common areas including a shared entrance, foyer, reception area, boardroom, printer and warehouse. Meneses was given his own office at the Brooklyn premises. Directed says that Meneses spent a lot of time there. And Directed says that Allen and Dylan Hartley are likely to have encountered and spoken with Meneses at the Brooklyn premises on a regular basis from June 2016 onwards.

453    According to Directed, the Gridtraq parties should have been put on enquiry as to Meneses’ presence at Brooklyn and his assistance and involvement with the Hanhwa parties to supply a new AV unit to IAL, whilst at the same being employed by Directed. It says that they ought to have known that he could not assist Hanhwa in any commercial activities that might conflict with, or compete with, Directed, and was in no position to work for both companies. This included any cooperative endeavour between Hanhwa and Gridtraq. I will return to these submissions later, but I should note that Allen Hartley did not accept Directed’s proposition of a conflict of interest.

454    When Directed’s version of Meneses’ apparent conflict of interest was put to Dylan Hartley, he said:

GOLVAN QC:    It’s correct, Mr Hartley, that you knew that Meneses was going to continue working for both Hanwha and Directed and you did nothing to address that arrangement with Hanwha by way of any complaint or issue?

DYLAN HARTLEY:    I don’t – I don’t recall. And, again, our feelings were quite well known. There was – there hasn’t been, you know – I’m struggling to find the words, but in terms of a normal relationship, yes, Johnny is around and, you know, the interaction of such, it happens. But, you know, in terms of a conflict or things like that I don’t really care.

455    As for the continuing relationship between Hanhwa and Directed, Dylan Hartley said when cross-examined about it:

…the knowledge of what Hanhwa and Directed want to do or whether they are competing with each other has got no bearing on me… whether they sold units that were in competition with each other, it has got nothing to do with me.

456    Directed says that this answer should not be believed. It says that these events were a few months after the Gridtraq parties had been in litigation with Directed. They were not an arms-length third party. The Gridtraq parties were working closely with Hanwha. It is said that I should infer that the Gridtraq parties were interested in the relationship between Hanhwa and Directed, but did nothing to verify that Hanhwa Korea or Meneses were free to pursue opportunities with them. But for my part I am not prepared not to accept this evidence.

457    Let me at this point say something concerning the purchase by Meneses of an Isuzu truck for Hanhwa Aus.

458    On 21 July 2016, Meneses entered into a contract for the purchase of an Isuzu truck for Hanhwa Korea after informing Lee, “See emails below. I think this would be great for us to test... I need to let IAL [know] ASAP”. The “emails below” were between Meneses and Siolis about such a truck purchase. Meneses informed Lee that he obtained a discount, and to “Please let me know when you arrange the payment”. Hanhwa Korea paid for the truck. Lee’s evidence was that Meneses bought the truck as a personal favour to him, because Hanhwa Aus could not yet open up a bank account in Australia.

459    It was relayed to Allen Hartley via Dylan Hartley that Lee said Hanhwa was going to buy a truck and keep it at the Brooklyn premises. He said that the Gridtraq parties were happy with this arrangement and they had used it to test Quantam’s telematics units.

460    From August to November 2016, Summers engaged in the road testing of an Isuzu radio unit using that Isuzu truck. Feedback was provided. Clearly this was testing of the DIR8000 later renamed the HAU8000. An Isuzu truck was necessary to ensure that the SuperDAVE or equivalent, with any associated telematics, would work in the real world. Data from a specific Isuzu vehicle that had been operated in a full range of conditions was needed to verify that this could be achieved.

461    Meneses also caused Palone to engage in extensive testing from December 2016, together with Shin of Hanhwa Korea, of the DIR8000/HAU8000 using this vehicle.

462    It is convenient at this point to say something concerning Meneses’ and Mills’ dual employment at Hanhwa Aus.

463    From approximately July 2016, Sue Mills assisted Lee and Hanhwa Aus with marketing services in anticipation of Hanhwa Aus’ registration and commencement of operations. It seems that she commenced her engagement from at least 4 December 2015 as I have indicated earlier.

464    The work included all things necessary to commence a start-up such as a corporate logo, business cards, social media pages, promotional videos, marketing materials, and corporate uniforms. Mills and Meneses sent and received emails for the same purpose, which included the period when they were employees of Directed.

465    On 8 July 2016, Lee asked Meneses via his personal email address whether he would prefer an HSBC or Citibank credit card. In response, Meneses indicated a preference for Citibank.

466    On 2 August 2016, Lee informed Meneses by email, which was copied to Mills, that he had created a “Leemen” email address for Mills. Lee’s email was sent to Meneses’ Leemen address. Mills from his personal email address informed Meneses at his Leemen email address: “This is dangerous setting up this email on my directed phone. I need a personal phone or a leemen phone”. It would seem that the perceived danger was in detection by Directed.

467    Mills’ request for a separate phone was met. On 4 August 2016, Mills informed Lee, “Hi Ryan, this is my (craigs) new (non Directed) mobile number. I am having trouble setting up the email. Can you please check details again? I have details: cm@leemen.net / password: craigmills33 / pop server: mail.leemen.net regards craig mills”. Lee responded a short time later, “Hi Craig. Can you please advise your personal email then I will let you know how to set up”. As Directed rightly contended, that Lee requested Mills’ personal email address, and did not simply email him at Directed, evidences Lee’s knowledge of the need to keep the conduct secret from Directed.

468    Clearly, Meneses and Mills were intimately involved in the establishment of Hanhwa Aus whilst still employed at Directed.

469    On 11 August 2016, Meneses via his Leemen email address instructed Mills to provide him by Monday morning with an “up to date cost for our starting set up”. He added, “Will be discussing this with Ryan before he leaves”. This email was copied to Lee.

470    On 15 August 2016, Meneses via his Directed email address obtained from Floudas Directed’s Certificate of Insurance. Meneses via his Leemen email address then forwarded the email exchange with Floudas to Lee. Lee said that he asked Meneses to obtain Directed’s insurance details for use by Hanhwa Aus as he had no experience in the area. The different email addresses, the fact that Floudas sent the Certificate to Meneses at his Directed email address, and the fact that the Certificate itself was marked to the attention of “Kon Floudas” of “Directed Electronics OE Pty Ltd” were visible to Lee.

471    I would also note that on 23 August 2016, Lee sent to Meneses at his Leemen email address an email concerning an “Isuzu UTE [presentation]” saying “What you think [stet]”. Meneses from his Leemen email address sent it to Mills at his Leemen email address saying “Call me”. This appeared to concern the D-MAX.

472    Let me say something about the HAU8100 (D-MAX) and also the DIR8000 which became the HAU8000.

473    In February 2016, the opportunity concerning the HAU8100 (D-MAX) was being furthered. It was to be Hanhwa Aus’ first opportunity. Lee did not consider this conduct wrongful because he expected Meneses imminently to be coming to Directed. Further, he did not consider it wrongful because so far as he was aware, Directed had never supplied to IAL the D-MAX. Now whether Directed ever supplied to IAL the D-MAX is not the point. It was a commercial opportunity identified by Directed. Meneses during the period of his employment by Directed brought it to Hanhwa Korea. Further, that continuing work on the D-MAX project was for the benefit of Hanhwa Aus is clear from the project name with an “HAU” prefix.

474    Lee conceded that Hanhwa were ready to present the D-MAX product to Isuzu D-MAX by August 2016. Meneses was to make the approach. This was when Hanhwa Korea prepared a presentation to that effect. Lee was listed as the contact for “Head office” (Korea); Meneses for “Australia office” (Brooklyn; Leemen email address). A draft had been provided by Meneses to Mills, both using their Leemen email addresses, for comment.

475    Hanhwa’s plan was for Hanhwa Aus to purchase and send to Korea an Isuzu D-MAX pick-up truck, which was due to arrive in February to March 2017. There were a few issues to work out. Development of the new product was underway at the end of 2016. Surprisingly, Lee brought the unit to Directed for testing, even though it was for the admitted benefit of Hanhwa Aus. Testing of the unit by Directed occurred. Lee confirmed that Meneses presented the unit at a dealer showroom in Brisbane in early 2017.

476    On 26 August 2016, a meeting was held in Hanhwa Korea’s Head Office which concerned changes to the DIR8000, which became the HAU8000, and the HAU8100 (D-MAX) models.

477    On 2 September 2016, Oh emailed the Hanhwa Korea team announcing a “New Part Number for DIR8000”. This was copied inter-alia to YS Lee and Lee. Oh confirmed that she discussed the email with Lee before it was sent. The email said in part:

Products previously shipped to Australia included “DIR” in their Part No. because they were delivered to the end customer through the company Directed.

But as the new projects will not involve an intermediary and delivered directly ISUZU, the part number of the existing DIR8000 (NEW ISUZU/SUPER DAVE) has been changed.

…

1.    DIR8000 model – new part number: HAU8000

    [D-MAX part number: HAU8100]

2.    Confirmation and reply request: Please confirm the changes to rear connector and pin placements of HAU8000 (old DIR8000) etc. discussed during the last meeting on Aug 26 and reply with M/C amendments and possible implementation dates.

478    Oh accepted that at this point in time Hanhwa decided not to design a new unit from the beginning, but to change the model number to HAU8000 and then supply that unit to IAL directly.

479    Now Lee claimed that Directed’s failure to pay for tooling justified his decision to divert the SuperDAVE to his own benefit. But the true position is that in mid-2016, IAL had not yet committed to proceed with the DIR8000 at that time. And there was also no obligation on Directed to pay for the tooling at that point in the design process.

480    According to Directed, the reality is that in August 2016, Hanhwa Korea decided to rename its new AV unit the HAU8000 from the DIR8000, in recognition of its decision to distribute the new unit directly to IAL. Lee decided to keep secret from Directed the fact that the Hanhwa parties were developing the HAU8000 to supply to IAL directly. And from the nature of the proposed field tests, it was apparent that Hanhwa’s software, hardware and circuit design teams were moving forward towards the production of working samples.

481    Let me deal with some other events in September and October 2016.

482    On 10 September 2016, Meneses as “OE Director” and Lee as “Managing Director” of Hanhwa Aus provided Shin with an offer of full time employment as Service and Development General Manager at Hanhwa Aus.

483    On 21 September 2016, Hanhwa Aus was incorporated, which Meneses attended to. He was also provided with a laptop computer. On 30 September 2016, Hanhwa Aus reimbursed Meneses for “Company Setup”, “H Laptop Meneses” and “2014 Isuzu Insuran[ce]”. On 26 September 2016, Meneses asked Lee to add registration for the Isuzu truck in Meneses’ personal name to the list.

484    Further, during September 2016, Lee, Meneses, Mills and Sue Mills collaborated on the branding for Hanhwa Aus to be applied to business cards, letterhead, and a social media banner.

485    On 14 October 2016, Meneses from his Directed email address sent to Lee the email exchanges with ICL representatives that took place in 2015. There was no need for the business purposes of Directed for Meneses to share these emails or the information in them with Lee or Hanhwa Korea at that time.

486    On 16 October 2016, Meneses from his Leemen address emailed Lee at his Leemen address: “Hi, As you know I am in China!!! Thinking about new features that we spoke about two weeks ago!! Shit that long!! Anyway I am in my room doing funny things??? For new Isuzu unit HWA8000…”. Their exchange concerned the HAU8000. Clearly, Meneses was actively engaged with Lee on the development of the HAU8000 and its proposed features at that time. The use of the Leemen addresses is telling albeit that Meneses continued to use the title “OE Director”.

487    On 17 October 2016, Meneses emailed Lee with the subject “Com” stating, “Hi, As per last conversation I would like to clear up outstanding com details before the end of this year”. Meneses was chasing up outstanding commissions.

488    Now Lee’s enthusiasm for their new competitive venture and his recklessness in failing to guard against its establishment becoming known by Directed, tried Meneses’ patience. On 18 October 2016, there was the following exchange in essence via email:

Meneses:     Ryan, You are making my life very difficult! Please slow down!!! I have to explain fucking why!! STOP sending any emails with those contact details.

Lee:     Sorry it was my mistake. Thank you and this is why many people is saying we are the A team.

489    Lee said that he had sent an email to Meneses and another Directed employee using his Hanhwa Aus signature by mistake. Lee said, “Yes. He didn’t want to – them to know first until he said something – he say something to Steve and Anthony”.

490    Let me return to the chronology concerning the diversion of the DIR8000.

491    On 11 November 2016, Hanhwa had established a new team to exploit the HAU8000 because Directed was no longer involved. The aim was to do this quickly, ready to show a working sample to IAL in December 2016 or January 2017.

492    A Hanhwa work report for the period 14 November – 18 November 2016 was headed “Directed Electronics OE Proprietary Australia”. Lee accepted this referred to Hanhwa’s products for Directed. However, one such item concerned the “HAU8000” project. Field testing of the unit and all its accessories was to be conducted at Directed’s premises. That the DIR8000 was the basis for the HAU8000 is apparent from a request for approval from Oh to Lee and other Hanhwa team members: “Hello, In regard to the HAU8000 project, I am requesting your approval for functional additions and changes to GUI”.

493    On 14 November 2016, Lee reported to a Hanhwa Korea team member, Mr Kim: “I have spoken to ISUZU over the phone. I have been reported that testing in January is not feasible. Please proceed as per the existing schedule, but considering our situation, please only consider investing in the Mock up samples”. This evidence is inconsistent with the Hanhwa parties’ oral evidence of the development of the HAU8000 from scratch and dealings with IAL. To try to overcome this, Lee said, “That was a lie to my people”. He said he had not spoken to IAL at all. When asked whether he often lied to his people, Lee said, “Not often. When I push my people, I need more powerful email. I need more motivation to work with R&D people.”. When asked whether it was okay to lie to his people, Lee responded, “Well, if I can get good outcome from them, yes”.

494    On 15 November 2016, Humphries of IAL emailed Meneses complaining that the mid-2017 start date for the SuperDAVE was in jeopardy. Humphries stated, “We are now several months past our preferred decision point for the in-vehicle hardware from Directed OE from mid-2017”. He sought a detailed proposal from Directed that addressed a list of specific requirements. These included:

1.    “Super DAVE” unit latest specifications and features.

2.    Satellite navigation proposal including new features…

3.    Standard fitment of Telematics hardware, with up to 6 months of included subscription.

4.    Cost of ongoing subscription to Telematics after the first six months, with an aim for the subscriptions to subsidise the initial hardware cost.

5.    Accessories / extra cost options available for the above from launch, and their costs.

6.    Cost schedule for all of the above. If some are volume related, please advise the break points for reduced prices.

495    Humphries further disclosed that he was faced with time pressure. The launch timing remained July 2017. This email makes clear that as between Directed and IAL, the DIR8000 project remained alive. This email was forwarded by Meneses to Lee. Lee could have been under no illusion that Directed was going ahead with the project.

496    Further, on 15 November 2016, Oh informed Hanhwa staff, “Thanks for your active cooperation for HAU8000 field testing and sample preparation”. In her email, she wanted an update on the material cost calculation, expecting that the price will go down. Lee accepted that Oh had sought the material cost for the DIR8000 now to be updated for the HAU8000. This is a further indication that the HAU8000 was not designed from scratch.

497    On 18 November 2016 Meneses and Shanks of IAL had a conversation about the SuperDAVE. It was during this call that Shanks informed Meneses that Hanhwa Aus could supply the HAU8000 directly to IAL.

498    On the same day, Lee had the following iOS iMessage/SMS/MMS exchange with Oh:

Lee:        We won ISUZU…

Oh:        Are you talking about 8000, Mr EVP? Or DEMAX????

Lee:        8000 for 1300 dollars

Oh:    Mr EVP!!!!!!!!!!!!!! Units only, right?? Accessories are all separate????????????

Lee:         Of course. Don’t tell anyone.

[About four hours later]

Oh:    Dear Mr EVP, Would it be okay to open our ISUZU protocol information to Dylan??

499    Oh also sent a picture of the rendering, which was of an image of the DIR8000. The reference to Mr EVP (executive vice president) is to Lee. In relation to the case against the Gridtraq parties I note that Oh refers to sharing in essence the Directed Specification concerning the radio communication protocol, which I will define and return to later, with Dylan Hartley. Lee confirmed that the reference in the message to “Would it be okay to open our ISUZU protocol information to Dylan??” meant “Directed Specification”, and that he authorised her to provide a version of the Directed Specification to Dylan Hartley.

500    Lee’s evidence is that he did not tell Oh the truth:

LEE:    That was my second affidavit… I need to make big motivation, because we are very tired of the DIR8000 … 2014, which is no purchase order from them. Then we have announced to all people in Hanhwa Korea that we set up the HAU8000 – sorry – the Hanhwa Aus to supply HAU8000 to Isuzu. But we didn’t, so – but I had to say something to keep the motivation even – Irene is the main person to talk with myself and Korean engineering people. That’s why I said 1300. It was my wish price.

WISE QC:    So this is another lie, is it, that you told Irene Oh at this time. Am I correct?

A:    We can say lie, but to me there was – I had to say something to my people, otherwise they’re going to just …

Q:     Not the truth though, is it?

A:        Not true.

Q:     That’s your evidence, isn’t it?

A:        That’s correct. It’s not true.

501    But I reject Lee’s evidence that his “We won Isuzu – 8000 for $1300” text was an intentionally false statement. Further, it is noted that the price in the text message “1300 dollars” is almost the sum at which Meneses advised Lee on 27 August 2015 that he was seeking to pitch the SuperDAVE to IAL. Further, it was the same figure ultimately presented by Hanhwa Aus at the meeting on 30 June 2017 to IAL for the supply of its HAU8000, to be provided in lieu of the DIR8000 or SuperDAVE. I will discuss that meeting later.