Federal Court of Australia

Transportable Shade Sheds Australia Pty Ltd v Aussie Shade Sheds Pty Ltd [2024] FCA 584

ORDERS

PENAL NOTICE

TO: THE FIRST PROSPECTIVE RESPONDENT (BY ITS DIRECTOR BRIAN HARRISON), THE SECOND PROSPECTIVE RESPONDENT, THE THIRD PROSPECTIVE RESPONDENT, THE FOURTH PROSPECTIVE RESPONDENT,

THE FIFTH PROSPECTIVE RESPONDENT, THE SIXTH PROSPECTIVE RESPONDENT AND THE SEVENTH PROSPECTIVE RESPONDENT.

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A)     REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B)     DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

UNDERTAKINGS TO THE COURT:

1.    The Prospective Applicant by its Counsel, undertakes to the Court:

(a)    that the Prospective Applicant will start a proceeding in relation to the subject matter of this application within 14 days after this application has been determined.

(b)    to submit to such order (if any) as the Court may consider to be just for the payment of compensation, (to be assessed by the Court or as it may direct), to any person, (whether or not that person is a party), affected by the operation of the order or undertaking or any continuation (with or without variation) of the order or undertaking; and

(c)    to pay the compensation referred to in (b) to the person affected by the operation of the order or undertaking.

(d)    to serve upon the Prospective Respondents a copy of the application and a sealed copy of this order (bearing the penalty notice) and copies of each affidavit filed before the making of this order and the several exhibits to it (save for any confidential exhibits) by 4.00pm on 5 June 2024.

(e)    to use any documents, information or things disclosed or obtained as a result of executing this order only for the purposes of this proceeding and not to use such documents, information or things for any other or collateral purpose without first obtaining the leave of the Court.

(f)    to instruct the Prospective Applicant’s solicitor to explain to the Prospective Respondents and any person upon whom this order is served the nature and effect of this order.

(g)    to pay the reasonable costs, charges and expenses of any person other than the Prospective Respondents upon whom this order is served or to whom notice of this order is given incurred by him/her in complying with the terms of this order.

(h)    to instruct the Prospective Applicant’s solicitor to notify the Prospective Respondents and any person upon whom this order is served of his/her/its or their right, if so advised, to apply to discharge or vary this order.

THE COURT ORDERS THAT:

1.    Until further order of the Court, the Prospective Respondents (or any of them), whether by themselves, their servants or agents, be restrained, without the licence of the Prospective Applicant, from making, selling, supplying or otherwise disposing of, offering to make, sell or otherwise dispose of, or using the:

(a)    “Assets” as that term is defined in the Schedule: Part 1 of the “Agreement for Sale of Business Assets and Intellectual Property Rights” (the Sale Agreement), annexed to the affidavit of James Gavin Mogford filed 1 June 2024 (Mogford affidavit) as Annexure “JGM-5”, which includes the database of clients assigned by the Sale Agreement (the TSS database).

(b)    Any product derived, created or made from the intellectual property Assets.

2.    Until further order of the Court, the Prospective Respondents (or any of them), whether by themselves, their servants or agents, be restrained from:

(a)    concealing or destroying any computer hard drive, computer disks or storage device containing the Assets or information about the Assets referred to in Order 1 of these Orders;

(b)    erasing any part of the contents of any computer hard drive, computer disk or storage device which relate to the Assets or information about the Assets referred to in Order 1 of these Orders; or

(c)    destroying or parting with possession of any documents, information, articles or things of the kind referred to in Order 1 of these Orders, whether the documents, information, articles or things are located on, in or at the premises or the vehicles or elsewhere.

3.    Until further order of the Court and pursuant to sections 37AF and 37AG(1)(a) and (c) of the Federal Court of Australia Act 1976 (Cth):

(a)    the affidavit of Matthew James Sulman filed 31 May 2024; and

(b)    Annexure JGM-17 of the Mogford affidavit,

be suppressed.

4.    The Orders carry the endorsement of a Penal Notice in accordance with r 41.06 of the Federal Court Rules 2011 (Cth).

5.    There be liberty to apply on one day’s written notice.

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

REASONS FOR JUDGMENT

COLLIER J

1    Before the Court is an Urgent Application Before Start of a Proceeding filed on 1 June 2024 (Urgent Application) by the Prospective Applicant, Transportable Shade Sheds Australia Pty Ltd ACN 673 434 350 (TSS). This Urgent Application has been brought ex parte.

2    The Prospective Respondents named in the Urgent Application are:

(1)    Aussie Shade Sheds Pty Ltd ACN 667 931 722, a company which is allegedly using, in trade, assets in respect of which TSS has an exclusive licence (Aussie Shade Sheds) (the First Prospective Respondent);

(2)    Mr Jason Diprose, a director of Aussie Shade Sheds (the Second Prospective Respondent);

(3)    Mr Brian Harrison, a director of Aussie Shade Sheds (the Third Prospective Respondent);

(4)    Ms Sarah Leftwich, a director of Aussie Shade Sheds (the Fourth Prospective Respondent);

(5)    Mr Ryan Roberts, a former employee of a group of companies in the business of designing, making, selling and delivering pre-engineered but unconstructed shade sheds (vendor companies), who apparently went on to be a sales representative of Aussie Shade Sheds (The Fifth Prospective Respondent);

(6)    Mr Danny Keys, a former employee of the vendor companies, who apparently went on to be a a sales representative of Aussie Shade Sheds (Sixth Prospective Respondent);

(7)    Mr Zach Grassi, a former employee of the vendor companies, who apparently went on to be a sales representative of Aussie Shade Sheds (Seventh Prospective Respondent); and

(8)    Esheds Pty Ltd ACN 641 594 078, a company which is a member of a group of companies known as the “Moggy’s Group” of which Mr James Mogford is the director, and which granted TSS an exclusive licence to use the intellectual property rights and associated rights the subject of these proceedings (Eighth Prospective Respondent).

3    The Eighth Prospective Respondent, by its lawyers, filed a submitting notice save as for costs.

4    Pending further order, TSS seeks orders restraining the Prospective Respondents from, inter alia, using:

(a)     “Assets” as that term is defined in the Schedule: Part I of the “Agreement for Sale of Business Assets and Intellectual Property Rights” (the Sale Agreement), which is annexed to the affidavit of James Gavin Mogford (Mogford affidavit) as Annexure “JGM-5” which includes the database of clients assigned by the Sale Agreement (the TSS database), and

(b)     Any product derived, created or made from the intellectual property Assets (Products).

5    TSS seeks a further order that the prospective respondents be restrained from

(a)    concealing or destroying any computer hard drive, computer disks or storage device containing the Assets or information about the Assets;

(b)    erasing any part of the contents of any computer hard drive, computer disk or storage device which relate to the Assets or information about the Assets;

(c)    destroying or parting with possession of any documents, information, articles, Assets or Products whether the documents, information, articles or things are located on, in or at the premises or the vehicles or elsewhere;

(d)    making a copy of any document which relates to the Assets or information about the Assets and/or TSS database.

6    TSS also seeks, inter alia, disclosure of relevant information, documents, and instruments. It also seeks in proposed orders 3 and 4 orders which appear to be by way of informal discovery.

7    Finally, TSS seeks suppression of certain evidence. I shall return to this issue later in the judgment.

BACKGROUND

8    For the purposes of the present application TSS relies primarily on the affidavit of James Gavin Mogford filed on 31 May 2024 (Mogford Affidavit). Mr Mogford deposed that he was the sole director of TSS and the Eighth Prospective Respondent. In summary, he further deposed as follows.

9    In or about April 2023 he discovered that the vendor companies were about to go into liquidation. Those companies included Transportable Shade Sheds Pty Ltd. Around that time Mr Mogford commenced discussions with the liquidator in relation to acquiring the assets, including the intellectual property and associated rights of the vendor companies.

10    Mr Mogford was the successful bidder on 28 April 2023 on behalf of the Eighth Prospective Respondent. On 28 June Mr Mogford, as director of the Eighth Prospective Respondent, entered into an agreement with the liquidator of the vendor companies. That agreement was entitled “Agreement for Sale of Business Assets and Intellectual Property Rights” (sale agreement). Materially, the sale agreement identified in the Schedule Part 1 the assets being sold.

11    At this point I note that Schedule Part 1 provided:

The Assets being sold are the:

(a)    Website including the domain name www.shadesheds.com.au and agreement with the Webhost;

(b)     lnstagram Account;

(c)     Telephone Number and any contracts or agreements with any telecommunications companies with regards to the supply of that telephone number to anyone of the Vendors, should they come into the Vendors' or the Liquidator's possession;

(d)     Business Names;

(e)     Any Intellectual Property (including available designs, plans and engineering drawings as inspected by the Purchaser);

(f)     The registered Trademarks (namely 2117812, 2117813 and 2117814);

(g)     The registered design rights (namely 202116751, 202116750, 202116749, 202116748, 202016631, 202016630, 202016585, 202015137, 202014149, 202014148, 202014147, 202014146 and 202014145);

(h)     The expired Patents (namely 2002100036 and 2001100106); Client database;

(i)     Supplier Information;

(j)     All the Vendors' policies and procedures which are held by the Liquidator in electronic format as at the date of Completion; and

(k)     All other documentation (but excluding financial information, private or confidential information, or documents subject to legal professional privilege) of the Vendors used in the ordinary course of operating the business of the Vendors which are held by the Liquidator in electronic format as at the date of Completion

(tracked change in original)

12    Mr Mogford deposed that the words “Client database” were deleted from Schedule Part 1 item (h) because the liquidator had concerns with privacy issues, nonetheless the Fourth Respondent was given the client database of the vendor companies because they were used by them in the ordinary course of operating the vendor companies. The client database was also given to the Eighth Prospective Respondent by the liquidator in electronic format on 28 April 2023. Mr Mogford deposed that the database held 50 customer details per page, that there were a total of 56,081 pages, and accordingly a total of 2,804,050 contacts as clients in the database as or about completion of the sale agreement.

13    TSS was incorporated on 5 December 2023 as the licensee of the assets, intellectual property rights and associated rights from the Eighth Prospective respondent. At that time TSS began using and commercialising in trade this property under its name Transportable Shade Sheds Australia Pty Ltd. Pursuant to a Deed of Grant of Exclusive Licence executed 30 May 2024 (exclusive licence), the Eighth Prospective Respondent granted TSS an exclusive licence to use the intellectual property and associated rights, and authorised its use of trademarks.

14    During December 2023 and early January 2024 Mr Mogford became aware that the First Prospective Respondent (Aussie Shade Sheds) was competing with TSS, using one or more of the Assets, intellectual property and associated rights purchased from the vendor companies. Mr Mogford became aware of this because of information passed on to him from his suppliers. In particular Infrabuild Sunshine Coast branch, Digital Nomads, and shade sails suppliers told Mr Mogford that officers of the First Prospective Respondent stated:

    they were previous employees of the vendor companies,

    they had copied and were continuing to copy the business documents of the vendor companies, and

    the vendor companies were moving forward with that documentation under the name "Aussie Shade Sheds".

15    Staff members of TSS subsequently discovered that the First Prospective Respondent was:

    using a quoting tool identical to that used by the TSS business,

    using engineering drawings and plans identical to those used by the TSS business,

    using words and images on the Aussie Shade Sheds website https://aussieshadesheds.com/ copied from the words and images used on the TSS website at https://shadesheds.com.au/,

    using identical bends on aluminium support members identical to those used by the TSS business, and which were the subject of patents acquired by the Eighth Prospective Respondent under the sale agreement,

    using the same spigots as those used by the TSS business.

16    On or about 23 February 2024 TSS received, in error, a quote for rackets and bracing meant for Aussie Shade Sheds. Mr Mogford stated it was clear to him from that quote that Aussie Shade Sheds was manufacturing and selling brackets the subject of TSS’ Australian Design Registration No. 202015137.

17    On or about 8 March 2024 Mr Mogford attended the premises of Aussie Shade Sheds, and while there he had a conversation with Mr Ryan Roberts (the Fifth Prospective Respondent) who stated (in summary) that:

    He was a former employee of the vendor companies;

    Aussie Shade Sheds intended to and did engage in the use of the Assets, intellectual property rights and associated rights which TSS acquired from the liquidator without the authorisation of TSS or the Eighth Prospective Respondent.

    Mr Brian Harrison, the Third Prospective Respondent, had been requested by the "owner" of Aussie Shade Sheds to copy the vendor companies' database of customers and work orders in progress.

    By reason of and responding to the request, Mr Roberts copied the customer database of the vendor companies for Aussie Shade Sheds when it appeared to Mr Harrison and the Aussie Shade Sheds that the liquidation of the vendor companies was imminent.

    Aussie Shade Sheds had used the database and other Assets, intellectual property rights and associated rights, in the conduct of its business activities.

18    On 8 March 2024 Mr Mogford received from Mr Ryan two quotes for shade sheds which contained photographic images that were part of the assets, intellectual property rights and other associated rights purchased from the liquidator.

19    On 13 March 2024 Mr Mogford’s then solicitor sent a letter of demand to Aussie Shade Sheds. In that letter Mr Mogford’s solicitor claimed, inter alia:

    a former employee or employees of the vendor companies had fraudulently extracted a substantial amount of documentation and sensitive commercial and proprietary data/information, most of which formed part of the intellectual property purchased by TSS;

    sensitive commercial and proprietary information/data that was stolen, including supplier details and pricing files, was being openly utilised by Aussie Shade Sheds;

    Aussie Shade Sheds had openly admitted to clients what had occurred;

    Consumers were being mislead and were actively questioning whether Aussie Shade Sheds was one and the same as Transportable Shade Sheds contrary to the Competition & Consumer Act 2010 (Cth) and/or section 38 of the Fair Trading Act 1989 (Qld);

    Aussie Shade Sheds Pty Ltd was manufacturing, selling and offering for sale a bracket embodying Australian Design Registration No. 202015137 in Australia without the authorisation of TSS, in contravention of s 71 of the Designs Act 2003 (Cth);

    Copyright existed in the written materials and literature purchased by TSS, TSS had the exclusive rights to use it, and could take legal action for infringement against others using their copyright material without permission;

    It was unlawful at common law for a person to pass off their products, goods or business as the products, goods or business of another person; and

    The conduct of Aussie Shade Sheds:

1.     amounts to an infringement of our client’s copyright and intellectual property rights, including infringing on the Design pursuant to section 71 of the Designs Act 2003;

2.     contravenes the provisions of ss 52 of the TPA and s 38 of the FTA, as misleading and deceptive conduct in the course of trade, or conduct in the course of trade which is likely to mislead or deceive; and

3.     constitute the tort of passing off of your business as that of our client, or is affiliated or connected with our client.

(errors in original)

20    Further, in that letter the then lawyer for TSS demanded that Aussie Shade Sheds:

1.    immediately cease and desist from manufacturing, advertising and selling the Aussie Shade Bracket;

2.     immediately remove all posts on your website, social media and other forms of advertisement regarding the Aussie Shade Bracket;

3.     immediately cease and desist from using, and ensure all its employees, contractors and the like cease and desist from using, all information and documents illegally extracted from the Business – including but not limited to:

(a)     technical information and/or data;

(b)     trade secrets;

(c)     designs, drawings and plans (including construction plans and concept plans);

(d)     techniques, procedures, business and marketing plans;

(e)     contracts, arrangements and agreements with third parties;

(f)     customer/client information, information proprietary to customers/clients and customer/client lists;

(g)     manufacturing information;

(h)     financial data, accounting records (including but not limited to profit and loss statements and balance sheets);

(i)     pricing lists, invoicing, quotes and fee schedules; and

(j)     all other forms of Intellectual Property,

in whatever form that they are in and howsoever so embodied or recorded (“Relevant Information”);

4.     within fourteen (14) days from the date of this letter you:

4.1.     return to our client, and ensure all its employees, contractors and the like return to our client, all originals and copies of Relevant Information; and

4.2.     permanently delete, erase and/ or otherwise destroy all electronic records (including computer and software files) containing or comprising any Relevant Information (including copies thereof);

5.     within fourteen (14) days from the date of this letter, you provide our client with a written statement signed by an authorised representative of Aussie Shade Sheds that the abovementioned demands (numbered 1-4) have been complied with.

For clarity, we require the abovementioned demands to be complied with and the written statement provided to us (in original or emailed form), by no later than 5pm on 27 March, 2024.

If you fail to comply with this letter of demand and to provide the written statement within the abovementioned timeframe:

1.     our client will instruct us to promptly seek remedies under the Designs Act 2003 in relation to the above breaches, including filing an application for an injunction and compensatory damages or an account of profits. We reserve our client’s rights to seek an order for costs (incurred in making such an application) against you; and

2.     we will obtain our client’s instructions in respect of commencing legal proceedings for relief against your past and continuing actions in respect of all other actions and infringement of our client’s intellectual property rights, which may include injunctive relief, declaratory relief, delivery up, compensatory damages and legal costs.

(emphasis in original)

21    A subsequent email from TSS’ then lawyer to Mr Mark Sanders of Aussie Shade Sheds extended the date of compliance with TSS’ demands to 2 April 2024.

22    Mr Mogford deposed that on or about 9 April 2024, TSS engaged its current lawyers and commenced gathering additional evidence to support the present Urgent Application.

23    Annexed to the Mogford affidavit was a table which comprised four columns:

(a)    Column 1, the numbered items for comparison.

(b)    Column 2, the TSS’ Assets, intellectual property rights and associated rights purchased and used by TSS under the sale agreement.

(c)    Column 3, the alleged equivalent or copy of TSS’ Assets, intellectual property rights and associated rights as used by Aussie Shade Sheds.

(d)    Column 4, being Mr Mogford’s comments arising from his comparison of Columns 2 and 3.

24    Mr Mogford further annexed copies of social media posts in which Aussie Shade Sheds had admitted to use of TSS’ Assets, intellectual property rights and associated rights.

25    Mr Mogford deposed that Aussie Shade Sheds had contacted former clients of the vendor companies, which clients were named in the client database provided to the Eighth Prospective Respondent, offering to sell them shade sheds manufactured using the materials and methods which form part of the assets, intellectual property rights and associated rights TSS had acquired in the sale agreement.

26    Mr Mogford deposed to his belief that Aussie Shade Sheds, through one of its officers or employees, had copied the computer database of the vendor companies and was using it to compete in business with TSS. Mr Mogford’s evidence for this belief included:

    TSS had no access to a customer relationship management software program and database called “Pipedrive” which it had purchased as part of the sales agreement. The technical support staff at Pipedrive had informed TSS staff that the administration address for the relevant Pipedrive account was dkey@shadesheds.com and former employees were listed as users on the Pipedrive account.

    On 14 May 2024 he had a conversation with a former employee of Aussie Shade Sheds (Person A) who confirmed that Aussie Shade Sheds were making unauthorised use of the assets, intellectual property rights and associated rights of TSS. Person A also sent to Mr Mogford copies of designs which bore the name of one of the vendor companies, which were in the possession of Aussie Shade Sheds.

    The sole shareholder of Aussie Shade Sheds is a company, of which the sole director is Mr Diprose (the Second Prospective Respondent).

    Engineering drawings and specification sheets used by Aussie Shade Sheds were almost identical to engineering plans formerly produced by a member of the vendor companies, which were purchased by the Eighth Prospective Respondent.

SUBMISSIONS OF TSS

27    Submissions of TSS detailed factual allegations on which TSS relied, as set out primarily in the Mogford affidavit. Additionally, it submitted (in summary):

    The intellectual property assets of greatest concern to TSS were the copyright in the database, the plans and drawings of shed parts and the registered design rights. The trademark rights did not appear to be in issue.

    Mr Mogford obtained extraordinary corroborating evidence through a conversation with Mr Roberts, who indicated that the “owner” of Aussie Shade Sheds had suggested he make copies of the customer records with a view to taking over those jobs.

    A suppression order was sought in respect of an affidavit of the lawyer for TSS, Mr Matthew Sulman, filed 1 June 2024, and an annexure the Mogford affidavit, in order to protect the identity of Person A, as that person feared reprisal by Mr Diprose.

    A comparison of the intellectual property assets the subject of this Urgent Application and the products of Aussie Shade Sheds indicated the use of a substantial part of the assets of TSS.

28    At the hearing before me yesterday, Dr Eliades for TSS orally submitted that the Urgent Application had been made ex parte, because TSS was concerned that one or more of the Prospective Respondents could make secret copies of material, the intellectual property of which was owned by or exclusively licensed to TSS, and otherwise destroy available copies which could indicate infringement of TSS’ property rights. Dr Eliades further submitted that the Urgent Application had been brought to “stop the rot”.

29    I also note the submission by Dr Eliades that any delay in bringing the Urgent Application was attributable to the need for TSS to produce to the Court appropriate evidence in support of the application, and that it took time for TSS to collate that evidence (particularly as it changed its lawyers earlier this year).

30    This morning Dr Eliades forwarded supplementary written submissions relating to the assignment of copyright under the sales agreement to the Eighth Prospective Respondent. Insofar as I was aware, there was no real issue at this stage concerning the assignment of copyright pursuant to the sales agreement.

CONSIDERATION

31    Before turning to the key issues before the Court, I note the submission of TSS concerning suppression of material which could potentially identify Person A, and the reasons for that submission. In light of that submission, and other material before the Court regarding the concerns expressed by Person A in the event of identification, I am prepared to make a suppression order in the terms sought, pursuant to ss 37AF and 37AG(1)(a) and (c) of the Federal Court of Australia Act 1976 (Cth).

32    The Urgent Application before the Court seeks restraining orders, in the nature of interlocutory injunctive relief. TSS, through its Counsel, has offered the usual undertakings as to damages in respect of the orders sought. It also seeks orders similar to discovery.

33    Ordinarily an application ex parte is made in circumstances of urgency. Given that Mr Mogford and TSS have been aware of the present circumstances for several months, it is difficult to accept that the Urgent Application is, in fact, urgent. However I do note the submission by Dr Eliades that it has taken some time for TSS to accumulate evidence which could support the Urgent Application.

34    I further note a letter sent by Mr Sulman to the Court dated 31 May 2024, explaining the reason for the urgency of the Urgent Application and the fact that the application is ex parte. Relevantly Mr Sulman wrote:

The application is sought urgently upon an ex-parte basis as a result of the Applicant’s perception that the Prospective Respondents (excluding the Eighth Prospective Respondent) are likely to destroy important evidence including electronic and hard copy business records in the case that they are notified of the Application being made.

35    As Isaacs J observed in Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679 at 681-682:

There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard in defence. But instances occur where justice could not be done unless the subject matter of the suit were preserved, and, if that is in danger of destruction by one party, or if irremediable or serious damage be imminent, the other may come to the Court, and ask for its interposition even in the absence of his opponent, on the ground that delay would involve greater injustice than instant action. But, when he does so, and the Court is asked to disregard the usual requirement of hearing the other side, the party moving incurs a most serious responsibility.

(emphasis added)

36    As I have noted, there is extensive evidence before the Court adduced by TSS, in particular that deposed to in the Mogford affidavit. An applicant for an ex parte order is under a heavy burden to disclose all relevant facts (Bullock; Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd [1988] 97 ALR 315 at 317; P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) [2009] 255 ALR 466 at [137]-[138]). The level of detail in the Mogford affidavit, in particular the annexures, supports a finding that all relevant facts to the knowledge of TSS have been disclosed.

37    In the circumstances, at this interlocutory level, I accept the rationale behind the ex parte application, and consider it proper to proceed to consider the appropriateness of the draft orders proposed.

Interlocutory restraining orders

38    The first question for the Court is whether TSS has demonstrated a case supporting the grant of interlocutory injunctive relief.

39    As was explained by Gleeson CJ and Crennan J in Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 at [19], an applicant seeking interlocutory injunctive relief must demonstrate that:

    there is a serious question to be tried as to the applicant’s entitlement to relief;

    the applicant is likely to suffer injury for which damages will not be an adequate remedy; and

    the balance of convenience favours the granting of an interlocutory injunction.

(see also Gummow and Hayne JJ in O’Neill at [65])

40    On the basis of the evidence before me, I am satisfied that TSS has an exclusive licence to the assets and intellectual property rights identified by Mr Mogford, which were acquired pursuant to the sale agreement. At this stage, I am also satisfied that none of the Second to Seventh Prospective Respondents have any legal rights to those assets or intellectual property rights.

41    TSS relies in particular on s 71 of the Designs Act, which relevantly provides:

(1)     A person infringes a registered design if, during the term of registration of the design, and without the licence or authority of the registered owner of the design or an exclusive licensee, the person:

…

(a)    makes or offers to make a product, in relation to which the design is registered, which embodies a design that is identical to, or substantially similar in overall impression to, the registered design; or

…

(c)    sells, hires or otherwise disposes of, or offers to sell, hire or otherwise dispose of, such a product; or

(d)    uses such a product in any way for the purposes of any trade or business; or

42    I am further satisfied that TSS has demonstrated that there is a serious question to be tried that, at the very least, Aussie Shade Sheds has infringed intellectual property rights of TSS (including s 71 of the Designs Act), that Aussie Shade Sheds has used confidential information acquired by TSS pursuant to the sale agreement, and that the Second to Seventh Prospective Respondents have been parties at various stages to those infringements or use.

43    Further, I accept that the injury to its business likely to be suffered by TSS should any infringements of its assets or intellectual property rights by any of the respondents take place or continue, would not be compensable by damages. The evidence before me was that TSS, through its lawyers, previously demanded that Aussie Shade Sheds cease any infringement of TSS’ property rights, and that there has either been denial of such infringement or no response from Aussie Shade Sheds. I am satisfied that it is likely that any infringement of property rights of TSS by Aussie Shade Sheds and/or other Prospective Respondents will continue unless restraining orders are made (cf observations of Bromberg J in TV Plus Broadcasting Co Pty Ltd v United Broadcasting International Pty Ltd [2012] FCA 565 at [13]).

44    Finally, it is necessary that an applicant for interlocutory injunctive relief satisfy the Court that the balance of convenience favours the grant of the orders sought. The relief sought by TSS in this case is broad, however the evidence of Mr Mogford demonstrates at this interlocutory stage that TSS will continue to suffer prejudice to its business from ongoing conduct of the respondents unless the restraining orders TSS seeks are made. I note the evidence supporting a finding that Aussie Shade Sheds has in its possession, and continues to use, confidential and other material acquired by TSS pursuant to an exclusive licence. The balance of convenience in such circumstances favours TSS.

Proposed Orders 3 and 4 by way of informal discovery

45    The draft orders proposed included the following:

3.    Upon service of a sealed copy of this order upon the First, Second and Third Prospective Respondents, they shall:

(a)    immediately, if requested by the solicitor for the Applicant so to do truthfully state the identities and places of business of any and all persons or companies by whom or to whom any documents, information or things referred to in Order 1 of these Orders were supplied.

(b)    immediately, if requested by the solicitor for the Applicant so to do provide copies to the lawyer for the Prospective Applicant any documents or instruments evidencing the purchase products made, sold or offered to be sold relating to the Assets and/or the TSS database.

(c)    within seven (7) days from the date of this order, the First Prospective Respondent deliver up on oath by the Second Prospective Respondent, to the Prospective Applicant’s lawyer, a copy of all documents (electronic or otherwise), which relate to the:

(i)    Assets, and

(ii)    the TSS database,

     in a numbered schedule listing the documents.

(d)    immediately, in respect of the Third Prospective Respondent, disclose:

(i)    his full name, address and period of employ with the First Prospective Respondent or his employer if another party.

(ii)    the full name of the person to whom he referred to as the “owner” in the following extract from the transcript in the Annexure marked “JGM-10” in the Mogford affidavit:

ASS: So we ended up … when I spoke to these guys the owner said “mate, if you can try to get hold of all that all those customer records. Reach out to every one of them customers and whatever they paid in deposit I'll wear it on materials. I’ll match the price of what they got sold for to them and we'll get the sheds delivered.”

4.    In compliance with the Undertaking 1(a) of this application, the Prospective Applicant and its lawyer shall have access to, and make copies of, any documents delivered up by the Prospective Respondents pursuant to Order 3 of these Orders.

46    I am not prepared to make these Orders on an ex parte basis, where:

    TSS has provided no submissions or any explanation at all as to why it would be desirable, much less necessary, for proposed Orders 3 and 4 to be made at this point.

    Notwithstanding the assertion of the lawyer for TSS in correspondence to the Court concerning the urgency of the hearing, no assertions were made concerning the contents of proposed Orders 3 and 4 and how those Orders would provide any safeguard to the interests of TSS or its property rights.

    Proposed Orders 3 and 4 require significant cooperation by the First, Second and Third Prospective Respondents – as I have already stated, in the nature of discovery. Those respondents should be given an opportunity to be heard before being imposed with such obligations.

    The Orders bear the endorsement of a Penal Notice, which is a very serious matter. The Court must be satisfied that such Orders are appropriate. I am not satisfied of the appropriateness of proposed Orders 3 and 4.

47    I further note that r 7.23 of the Federal Court Rules 2011 (Cth) make specific provision for discovery from prospective respondents. While the cooperation of the relevant respondents sought in proposed Orders 3 and 4 is in the nature of discovery, such cooperation does not appear to sit squarely with the provisions of r 7.23. In any event, no submission or application in terms of r 7.23 have been made.

CONCLUSION

48    In conclusion I am prepared to make the interlocutory restraining orders and the suppression order sought.

49    It is appropriate that there be liberty to apply, in order to protect the position of the Prospective Respondents. Accordingly, I will also order that there be liberty to apply on one day’s written notice.

50    Given that TSS has sought no orders in respect of costs, I make no costs orders.

Associate:

Dated:    4 June 2024

SCHEDULE OF PARTIES