Federal Court of Australia

EV20 Consulting Group Pty Ltd v Paperless Warehousing Pty Ltd [2025] FCA 328

ORDERS

THE COURT ORDERS THAT:

1.    The cross-claimant, Paperless Warehousing Pty Ltd, is to supply draft short minutes of order to chambers by 5pm on 15 April 2025, in accordance with the reasons of this judgment.

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

REASONS FOR JUDGMENT

BURLEY J:

1    INTRODUCTION

1.1    The interlocutory application

1    By interlocutory application dated 7 November 2024, the respondent/cross-claimant, Paperless Warehousing Pty Ltd, seeks orders pursuant to r 5.23 of the Federal Court Rules 2011 (Cth) (FCR) for the dismissal of a claim brought against it by the applicant/first cross-respondent, EV20 Consulting Group Pty Ltd, and default judgment on its cross-claim against EV20 and three other cross-respondents, Scott William Symons, Peter Donald McKerrell and Christopher Stephen Pearce (collectively, including EV20, the defaulting cross-respondents).

2    Paperless appeared at the hearing of the application, represented by Michael Green SC and Wen Wu, of counsel. The defaulting cross-respondents did not appear or file any submissions in answer.

3    In support of its application, Paperless relies on the affidavits of:

(1)    Katrina May Crooks, a Principal of Spruson & Ferguson Lawyers, solicitors for the respondent/cross-claimant, affirmed 9 October 2024, 7 November 2024, 4 December 2024 and 17 December 2024;

(2)    Kim Galpin, General Counsel for Paperless, affirmed 19 June 2024;

(3)    Mark Lofthouse, General Manager of Paperless, affirmed 7 November 2024;

(4)    Hannah Elizabeth Margrethe Lowe, a paralegal at Spruson & Ferguson, sworn 8 October 2024, 30 October 2024, 16 December 2024 and 17 December 2024; and

(5)    Michael Guest, Licenced Process Server, sworn 17 December 2024.

4    The proceedings were commenced by an originating application filed on behalf of EV20 on 2 March 2021. A cross-claim was filed on 20 July 2021 (2021 cross-claim). After numerous interlocutory skirmishes, the outcome of which involved several partially successful applications to strike out the Statement of Cross-Claim, a Third Further Amended Statement of Cross-Claim (cross-claim) was filed pursuant to orders made by the Court on 22 May 2024. The defaulting cross-respondents filed defences to various versions of the cross-claim.

5    In summary, the claim brought by EV20 concerns allegations of misrepresentation and wrongful threats of copyright infringement made against it and a number of its clients by Paperless, in respect of the use of some computer programs or compilations of computer programs. The cross-claim alleges, amongst other things, that EV20 had been established by a number of its former employees of Paperless, who proceeded to provide software maintenance services in respect of software developed and authored by Paperless as a warehouse management software system (WMS) and provided by Paperless to its customers. It alleges infringement of copyright in the software owned by Paperless, breach of confidentiality, breach of employment contracts, and breach of licences by former customers of Paperless who had subsequently engaged EV20 to perform services in respect of its software. The cross-claim is complex and the cross-respondents includes a number of former employees of Paperless and former clients of Paperless.

6    Each of the defaulting cross-respondents was initially represented in the proceedings by Gillis Delaney, solicitors, and also counsel who appeared on their behalf. On 29 November 2023, Gillis Delaney filed a notice of ceasing to act for Mr Symons. On 9 October 2024, Gillis Delaney filed a notice of ceasing to act for each of EV20, Mr McKerrell and Mr Pearce.

7    FCR r 4.05(2) requires that a person whose lawyer has filed a notice of ceasing to act must file a notice of address for service within 5 days after the notice is filed. None of the defaulting cross-respondents have filed a notice of address for service.

8    As set out in section 3 below, EV20 was placed in receivership on 1 May 2024. Despite Gillis Delaney remaining on the record for EV20 at that time, the solicitors for Paperless were not informed of this fact until 17 June 2024. On 6 November 2024, EV20 was placed under administration pursuant to s 436C of the Corporations Act 2001 (Cth). On 11 December 2024, the administration ceased.

9    Amidst this flurry of activity, Paperless endeavoured to proceed with the litigation. At a case management hearing conducted on 31 October 2024, I made directions requiring Paperless to file its foreshadowed interlocutory application seeking default judgment together with any supporting affidavits by 7 November 2024 and any submissions in support of its application by 4 December 2024. I also ordered those cross-respondents who had not filed an address for service, including the defaulting cross-respondents, to do so by 14 November 2024 as well as submissions in answer by 11 December 2024. The interlocutory application was set down for hearing on 18 December 2024.

10    The affidavits of Ms Lowe demonstrate that each of EV20, Mr McKerrell and Mr Pearce were served with the present interlocutory application and the affidavits in support on 7 November 2024. By an apparent oversight, Mr Symons was not served at that time, but was later served those documents, by process server, on 16 December 2024. On 6 December 2024, all of the defaulting cross-respondents, including Mr Symons, were served with the affidavit of Ms Crooks affirmed 4 December 2024 and Paperless’ outline of submissions for default judgment application, filed 4 December 2024.

11    None of the defaulting cross-respondents appeared at the hearing conducted on 18 December 2024 or have since filed a notice of address for service.

1.2    The relevant law

12    FCR r 5.23 provides:

Orders on default

(1)    If an applicant is in default, a respondent may apply to the Court for an order that:

(a)    a step in the proceeding be taken within a specified time; or

(b)    the proceeding be stayed or dismissed for the whole or any part of the relief claimed by the applicant:

(i)    immediately; or

(ii)    on conditions specified in the order.

(2)    If a respondent is in default, an applicant may apply to the Court for:

…

(c)    if the proceeding was started by an originating application supported by a statement of claim, or if the Court has ordered that the proceeding continue on pleadings – an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled; or

(d)    an order giving judgment against the respondent for damages to be assessed, or any other order; or

(e)    an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order.

Note 1:    The Court may make any order that the Court considers appropriate in the interests of justice – see rule 1.32.

Note 2:    An order or judgment under this Division may be set aside or varied.

13    Paperless seeks an order in accordance with FCR r 5.23(1) that the proceeding brought by EV20 against it be dismissed. It also seeks orders – summarised in more detail below – that it be given judgment in its favour on the cross-claim as against the defaulting cross-respondents, as well as various declarations and orders being made in its favour.

14    The principles relevant to the exercise of discretion under FCR r 5.23 may be summarised as follows:

(1)    the power invoked by the Applicants is discretionary, it should be exercised cautiously;

(2)    the discretion to enter a default judgment is enlivened when an applicant or cross-claimant applies to the Court for such an order and where a respondent is in default;

(3)    the rule must be administered sensibly and with an appreciation both of the fact that some delays are unavoidable, and unpredictable, by even the most conscientious parties and their lawyers, and of the likely serious consequences to an applicant of staying or dismissing a claim;

(4)    cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to cooperate with the Court and the other party or parties in having the matter ready for trial within an acceptable period provide an example where the exercise of the discretion may be appropriate;

(5)    the requirement imposed by FCR r 5.23 is not that an applicant prove by way of evidence the claim sought to be advanced; the requirement is that the Court needs to be satisfied on the face of the statement of claim that the applicant is entitled to the relief claimed. In this regard, FCR r 5.23 will be met upon the Court being satisfied that relief could be granted on the face of the pleading;

(6)    in addition to the facts alleged in the statement of claim, the Court may permit recourse to further limited evidence but may not admit evidence that would alter the case as pleaded;

see Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [20]–[25] (Flick J); Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 at [13]–[14] (Yates J); Secretary, Department of Health v Evolution Supplements Australia Pty Ltd [2021] FCA 74 at [10]–[15] (Burley J); Hugo Boss AG v Hardge [2024] FCA 1325 at [20] (Neskovcin J).

2    THE PAPERLESS SUBMISSIONS

15    Paperless submits that the discretion to make the orders sought is enlivened by the fact that each of the defaulting cross-respondents has intentionally failed to cooperate with the court and the other parties by failing to file notices of address for service or otherwise complying with the directions of the court.

16    Paperless seeks orders that the claim advanced by EV20 be dismissed together with costs on an indemnity basis.

17    In relation to the cross-claim, Paperless seeks as against the defaulting cross-respondents:

(1)     judgment in its favour on the cross-claim;

(2)    declarations that EV20 has reproduced and also communicated to the public each Computer Program Work (as that term is defined in the cross-claim and set out below at [63]) without the licence of Paperless in breach of the copyright in the Computer Program Work owned by Paperless, from about 2020 until at least June 2023;

(3)    declarations that all of the defaulting cross-respondents have authorised EV20’s customers to reproduce, or communicate to the public, in Australia the whole or a substantial part of each Computer Program Work in material form without licence, from late 2020 until at least June 2023;

(4)    declarations that each of Mr Symons, McKerrell and Mr Pearce have authorised EV20 to engage in the acts in (2);

(5)    declarations that EV20 and Mr Symons misused the Paperless Confidential Information (as that term is defined in the cross-claim and is set out below at [86]);

(6)    a declaration that from about May 2020 onwards, Mr Symons acted in breach of the term of his employment agreement with Paperless, by directly or indirectly disclosing the Paperless Confidential Information without consent;

(7)    declarations that from May 2020 onwards, EV20 and Mr Symons procured or induced EV20 customers, being former Paperless customers, to act in breach of their licence agreements with Paperless, to keep the Paperless Confidential Information confidential;

(8)    injunctions restraining all of the defaulting cross-respondents from reproducing, or communicating in Australia the whole or a substantial part of any Computer Program Work in material form;

(9)    injunctions restraining all of the defaulting cross-respondents from authorising any of the doing of the acts in (8);

(10)    injunctions restraining each of EV20 and Mr Symons from using any of the Paperless Confidential Information without consent;

(11)    an inquiry as to Paperless’ damages (including additional or exemplary damages) or an account of the defaulting cross-respondent’s profits, at the election of Paperless;

(12)    other relief in the form of delivery up or destruction of reproductions and copies of the Computer Program Work and embodiments of the Paperless Confidential Information;

(13)    costs; and

(14)    leave to file any interlocutory application seeking an order for costs against any non-party.

18    Paperless submits that the Court can be satisfied pursuant to FCR r 5.23(2)(c) that on the face of the statement of cross-claim it is entitled to the relief sought, the facts as alleged in it being deemed to have been admitted; Speedo at [23] citing Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 (Dataline Appeal Judgment) at [42] (Moore, Dowsett and Greenwood JJ). It also relies on a chronology of events concerning the operation of EV20 in support of its contention that the discretion should be exercised in favour of the orders. Below I set out a chronology, based substantially upon the affidavits of Ms Galpin and Mr Lofthouse and documents annexed thereto.

3    BACKGROUND CHRONOLOGY

19    EV20 was registered on 27 May 2020. Mr McKerrell was appointed as its sole director and secretary on that day.

20    By a loan agreement dated 8 June 2020 (June 2020 loan agreement), EV20 purported to grant a security interest to Roderick Andrew Peters over all of EV20’s present and after acquired property pursuant to a loan agreement dated 8 June 2020.

21    On 2 March 2021, EV20 commenced the current proceedings against Paperless, alleging misleading or deceptive conduct and wrongful threats of copyright infringement.

22    On 20 July 2021, Paperless filed its 2021 cross-claim alleging, inter alia, infringement of copyright by EV20 and former customers of Paperless, alleging that former employees of Paperless had been knowingly involved in the alleged infringements. Twenty-three cross-respondents were named.

23    On 26 July 2021, Gillis Delaney Lawyers filed notices of acting for the first to eighteenth cross-respondents, which relevantly included all of the defaulting cross-respondents.

24    On 1 September 2021:

(a)     David Lopez was appointed a director of EV20, although this appointment was not notified to ASIC until 9 December 2023;

(b)    Zoran Markovic was apparently also appointed as a director and as company secretary of EV20, although this appointment was not notified to ASIC until 9 December 2023; and

(c)    Mr Markovic became the sole shareholder of all of the ordinary shares in EV20 for the consideration of $1,000.

25    On 13 December 2022, the respondent’s 2021 cross-claim was struck out with liberty to replead.

26    On 20 February 2023, orders were made providing for the respondent to file an Amended Notice of Cross-Claim (cross-claim).

27    By a deed of assignment dated 23 February 2023 (February 2023 Deed of Assignment), signed by Mr McKerrell as “Director/Secretary” of EV20 and Mr Peters, EV20 assigned all of its rights in the intellectual property owned by it in various items of software, management program tools, trade marks, internal servers, information stored on internal and external servers and customer supply agreements and contracts to Mr Peters. The agreement includes terms keeping Mr Peters indemnified against all actions and proceedings, damages and penalties, costs claims or demands made in relation to the intellectual property.

28    Warehouse Management Software Pty Ltd (WMS P/L) was incorporated on 27 February 2023. Mr Peters is the sole director and company secretary of WMS P/L. On LinkedIn, Mr Peters identifies himself as “Executive Officer at EV20 Consulting Group”.

29    On 25 May 2023, Gordon Murdoch became a director of EV20, ceasing one month later on 25 June 2023.

30    An “ASIC Form 484 – Change to company details” filed on 22 August 2023 notified changes to WMS P/L’s share structure such that:

(a)    Mr Peters;

(b)    Campo Consultancy Pty Ltd (a company of which Brian Campbell, the 8th cross-respondent is its sole shareholder);

(c)    Jonathan Fielder (the 10th cross-respondent under the 2021 cross-claim);

(d)    Franjo Solutions Pty Ltd (a company controlled by Frank Ivankovic, the 11th cross-respondent under the 2021 cross-claim and his wife);

(e)    21Biz Pty Ltd (a company of which William Lee, the 13th cross-respondent under the 2021 cross-claim, is a director and sole shareholder);

(f)    Dallas Scott (the 17th cross-respondent under the 2021 cross-claim);

(g)    Dimitris Lafazanos;

(h)    Katumatiyawe Patabendigedara Anjana Premaratne;

(i)    Sydney Mark Robin Singh;

(j)    Robert Mumford;

(k)    Jeff Taff; and

(l)    Peter Nguyen;

became shareholders.

31    Each of the individuals named, except for Mr Peters and Mr Fielder, are alleged by Paperless to be its former employees who left to work with EV20.

32    On 29 October 2023, Mr McKerrell ceased to be a director and secretary of EV20.

33    A PPSR Registration certificate shows that on 20 November 2023, EV20 and the Trustee for an entity called the “EV20 Consulting Group Trust” granted a security interest to BizcapAU Pty Ltd over all of their “present and after-acquired property” of EV20. Receivers were appointed pursuant to this registration.

34    On 28 November 2023, Mr Lopez ceased to be a director of EV20. Following his resignation, Mr Markovic became the sole director and company secretary of EV20.

35    On 29 November 2023, Gillis Delaney, Lawyers, filed a notice of ceasing to act for Mr Symons. The last pleaded defence by Mr Symons was filed 11 October 2023 (2023 defence) in response to a cross-claim dated 17 May 2023.

36    On 1 May 2024, Shaun Matthews and Daniel Juratowitch of Cor Cordis were appointed receivers of EV20. This was not drawn to the attention of Paperless until 17 June 2024.

37    On 9 May 2024, just over a week after the receivers were appointed to EV20, WMS P/L registered the business name “EV20 Consultant Group”.

38    On 16 May 2024, WMS P/L registered the business name “EV20 Consulting”.

39    On 25 July 2024, EV20 ceased to be under receivership.

40    On 8 October 2024, Mr Campbell returned to work for Paperless. Mr Campbell informed Mr Lofthouse that he believes that EV20 continues to have support agreements with at least seven companies, including the former 22nd and 23rd cross-respondents. It is unclear whether the reference to “EV20” is to WMS P/L or EV20.

41    On 9 October 2024, Gillis Delaney Lawyers filed notices of ceasing to act for EV20, Mr McKerrell and Mr Pearce.

42    Upon review of a computer program titled “@AUSPOST.API.SHIPMENT”, which is a program within the Paperless WMS source code (forming part of the Paperless Confidential Information as defined below at [86]), Paperless infers that EV20 staff were still compiling Paperless WMS source code, or copying the source code to object code, as recently as 28 October 2024.

43    On 5 November 2024, Mr Lofthouse, the General Manager for Paperless, interviewed Keiron Elmes (the 9th cross-respondent under the 2021 cross-claim). As part of this interview Mr Elmes disclosed that he “continues to be employed by EV20 as a software developer, to provide support services to customers using Paperless WMS”. Again, it is not clear whether this reference to “EV20” is to WMS P/L or EV20, although the former would appear to be more likely.

44    On 6 November 2024, Simon Nelson of BPS Reconstruction and Recovery was appointed administrator to EV20 by Mr Peters in respect of the June 2020 loan agreement.

45    The minutes of the first meeting of creditors of EV20, conducted on 18 November 2024, notes that a secured creditor appointed the Administrator pursuant to s 436C of the Corporations Act. The minutes noted that “[t]here is significant IP formerly owned by the Company” and the understanding of the Chairperson was that the intellectual property was assigned to the secured creditor “who is currently using the IP” pursuant to February 2023 Deed of Assignment. The minutes further recorded that EV20 was not operating, but that it was the understanding of the Chairperson that Mr Peters was “using the IP in his own operation” which Mr Peters is recorded as confirming. The operations of EV20 were said to have ceased in around June 2023.

46    On 11 December 2024, EV20 ceased to be under administration.

47    The foregoing relevantly suggests that since around June 2023, EV20 has ceased to operate as a business concerned with the WMS the subject of the proceedings and suggests that WMS P/L or Mr Peters have taken over its operations.

4    THE ISSUES

48    Three issues arise in the current application:

(1)    whether the claim advanced by EV20 against Paperless should be dismissed pursuant to FCR r 5.23(1)(b);

(2)    whether the cross-claim and the evidence relied upon establish the causes of action alleged pursuant to FCR r 5.23(2); and

(3)    the form of orders to be made.

49    For the reasons given below I conclude that the claim advanced by EV20 should be dismissed pursuant to FCR r 5.23(1). I have also found that default judgment as against EV20 and Mr Symons should be entered in respect of infringement of copyright and breach of confidential information, with appropriate orders made pursuant to FCR rr 5.23(2)(c) and 5.23(2)(d). I will make no orders in relation to Mr McKerrell or Mr Pearce.

5    DISMISSAL OF EV20’s CLAIM

50    EV20 is the moving party on the Originating Application. It ceased to be represented by lawyers on 9 October 2024. By the time of the hearing of the interlocutory application, it was over 60 days since EV20 was obliged pursuant to FCR r 4.05(2) to file an address for service. It has not engaged with either Paperless or the court in that time. The evidence outlined in section 3 above suggests, but does not confirm, that EV20 is no longer engaged in business associated with the provision of the software, the subject of the proceedings.

51    I am satisfied, having regard to the affidavits of service that have been filed, that EV20 has been properly served with notice of the current application. It did not attend the hearing or provide any notice to the court of its position. Notwithstanding any communication difficulties that may have arisen during the period when it was under receivership and under administration, I consider that it has demonstrated an inability or unwillingness to conduct its case. Accordingly, in my view EV20 is in default as contemplated by FCR r 5.23(1); Chamberlain at [13].

52    In these circumstances, it is appropriate to order that the claim advanced by EV20 in its Originating Application be dismissed and that EV20 pay the costs of the claim. Although Paperless seeks indemnity costs as part of a costs order in its favour, it puts forward no basis upon which such an order should be made.

6    DEFAULT JUDGMENT ON THE CROSS-CLAIM

6.1    Introduction

53    Paperless seeks judgment against the defaulting cross-respondents for the relief claimed. It submits that it is entitled to declarations of infringement of copyright, misuse of confidential information, inducement of breach of contract, injunctions restraining further breaches, orders for pecuniary relief and relief in the form of delivery up and destruction of materials that are reproductions of copyright works owned by Paperless or that embody confidential information owned by Paperless.

54    In an application such as the present, the Court must be satisfied on the face of the statement of cross-claim that the applicant is entitled to the relief claimed on the face of the case as pleaded in the cross-claim, although some limited further evidence may be adduced. As Flick J said in Speedo at [23]–[25] in relation to the requirements applicable to FCR 5.23(2)(c):

[23]    … the requirement imposed is not that an applicant prove by way of evidence the claim sought to be advanced; the requirement is that the Court needs to be “satisfied” on the face of the statement of claim that the applicant is entitled to the “relief” claimed: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3] per Heerey J; Australian Competition and Consumer Commission v 1Cellnet LLC [2005] FCA 856 at [14] per Nicholson J; Bucketts Road Business Services Pty Ltd v Phalona Pty Ltd [2008] FCA 57 at [12] per Sackville J; Microsoft Corporation v Short [2011] FCA 247 at [7] per Stone J; Australian Building and Construction Commissioner v Abbott (No 3) [2011] FCA 340 at [11] per Gilmour J; Rathner v Bendigo Skyrider Pty Ltd [2011] FCA 626 at [9] per Gordon J. The facts as alleged in the statement of claim are deemed to have been admitted by a respondent: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2007] FCAFC 146 at [42], 161 FCR 513 at 523 per Moore, Dowsett and Greenwood JJ. Perram J in CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 referred to some of the former authorities dealing with the former Order 35A and similarly concluded in respect to the current r 5.23(2)(c) as follows:

[18] … However, since the introduction of Order 35A of the former Federal Court Rules 1979, it has been clear that the present default rule will be satisfied simply on the Court being satisfied that relief could be granted on the face the pleading. …

[19] …     Accordingly, the requirements of present Rule 5.32(2)(c) will be met if upon an inspection of the applicant’s pleading I am satisfied that the applicants would be entitled to the two permanent injunctions that are now sought.

[25].    Fifth, in addition to the facts alleged in a statement of claim, the Court may permit recourse to limited further evidence. But it may not admit evidence which would alter the case as pleaded.

55    The point at paragraph [25] in this quotation arises from the reasoning of Kiefel J in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2006] FCA 1427; 236 ALR 665 (Dataline Primary Judgment) where at [47]–[50], her Honour surveyed the authorities, as they related to Order 35A of the superseded Federal Court Rules 1979 (Cth), and noted that they support the view that there is no rigid rule that the application must be determined solely on the face of the pleaded case. At [47] she noted that a relevant factor can be the cognisance of a respondent to the prospect of such orders being made against them.

56    In the present case, the proceedings have advanced to the point that the defaulting cross-respondents have filed defences to the cross-claim. I consider that, in addition to the case as advanced on the face of the cross-claim it is appropriate to have regard to admissions made by the defaulting cross-respondents, where they elucidate or develop the case as pleaded in the cross-claim.

6.2    The pleaded copyright infringement case

57    The case as pleaded in the cross claim against the defaulting respondents may be summarised as follows.

58    Since about 1988, Paperless had developed a WMS that it defines as “Paperless WMS” that is used in its “customers’ warehousing, logistics and supply chain management activities”. It has released three versions of Paperless WMS since 1989. Paperless licences its customers to use the software and provides various ongoing support, training and installation services to customers using it.

59    Mr Symons was employed by Paperless from about May 1988 until November 2019 and was engaged as its General Manager from about 2007 until his departure.

60    Mr McKerrell was from 27 May 2020 a director, company secretary and shareholder of EV20, although as noted in section 3 above, he ceased those roles on 29 October 2023 and Mr Markovic became the sole shareholder of EV20 from 1 September 2022.

61    Mr Pearce was from 27 May 2020 the Executive Chairman of EV20 although he appears to have ceased to have a formal role in the company from in or around December 2021.

62    Section D of the cross-claim addresses the question of copyright infringement. It first identifies the copyright works in suit. The Paperless WMS is said to consist of two parts:

(a)    “back-end” server-based software called PWS Server; and

(b)     “front-end” client software called PWS. NET Client.

63    PWS Server is described as comprising a number of computer programs, including some 11 computer programs which are specifically identified and defined collectively as PWSS Programs. Each individually listed PWSS Program is pleaded to be a computer program or collectively they are pleaded to be a compilation of computer programs, within the meaning of s 10(1) of the Copyright Act 1968 (Cth) and accordingly a literary work. PWS. NET Client is likewise described as comprising a number of computer programs that separately or combined amount to a computer program and accordingly is a literary work. Each of these items of software: the PWS Server, the individual PWSS Programs and the PWS. NET Client, are defined as Computer Program Works.

64    The cross-claim pleads: that each Computer Program Work is an original literary work within the meaning of s 32 of the Copyright Act; that each was made by a human author who was a “qualified person” within the meaning of s 32(4) of the Copyright Act and that each was first published in Australia within the meaning of s 29 of the Copyright Act. By reason of these matters, the cross-claim pleads that copyright subsists in each Computer Program Work.

65    I am satisfied that the pleading adequately addresses subsistence of copyright in each Computer Program Work.

66    The cross-claim pleads that each of the authors of the Computer Program Works was employed by Paperless, or engaged by Paperless, to create that work such that Paperless is the owner of the copyright in it. Particulars of employment contracts are given, including by reference to a letter from Gillis Delaney, dated 15 January 2021, to the effect that ownership by Paperless of the Computer Program Works is accepted. I am satisfied that this element of the copyright subsistence case is established on the pleading.

67    In relation to copyright infringement, the cross-claim pleads in [40] seven different acts said to have been done by EV20 since about September 2020. For the purpose of considering the relief to be granted, it is necessary to address only five.

68    First, that EV20 reproduced the whole or a substantial part of one or more of the Computer Program Works in Australia on EV20’s own computers for the purposes of either developing its own WMS (defined as the impugned WMS) based on the Paperless WMS, granting its customers licences to use the impugned WMS or the Paperless WMS and offering to provide support and installation services in relation to that software. Notably, in its Defence to the Third Further Amended Statement of Cross-Claim, filed 7 March 2024 (2024 defence), EV20 admits to downloading onto a server a copy of the PWS. NET Client, installing this on the server of a computer, without encryption or password protection, and using this until January 2021 as a testing environment to develop a new graphical user interface to the Paperless WMS for use by EV20.

69    Secondly, that EV20 reproduced the whole or a substantial part of one or more Computer Program Works in Australia on computers controlled by EV20 customers for, inter alia, the purpose of granting customers licence to use either the impugned WMS or the Paperless WMS and providing services in relation to that software. This pleading is supported by particulars that include cross-references to affidavits filed in the proceedings. EV20 in its 2024 defence admits to granting access to customers to, in effect, the Computer Program Works and also to making changes to the source code of that software by writing new lines of code for it or modifying existing lines of code.

70    Thirdly, that EV20 reproduced the whole or a substantial part of one or more Computer Program Works in Australia on cloud-based computers that EV20 or its customers controlled for, inter alia, the purpose of granting customers licence to use either the impugned WMS or the Paperless WMS and providing services in relation to that software. EV20 admits this activity in its 2024 defence.

71    Fourthly, that EV20 reproduced the whole or a substantial part of one or more of the Computer Program Works on computers that EV20 or its customers controlled in circumstances where the customer did not have an existing licence to use or reproduce the works or such licence had expired or been terminated by Paperless. Particulars are given of businesses that were formerly customers of Paperless whose licences to use the Computer Program Works had been terminated. In its 2024 defence, EV20 admits that it continued to provide services in respect of the Computer Program Works after Paperless purported to terminate the licences.

72    Fifthly, that EV20 communicated to the public the whole or a substantial part of one or more of the Computer Program Works by downloading the Paperless WMS to various customers of EV20. In its pleading, Paperless relies on various admissions in EV20’s 2024 defence, as well as the Defence to Cross-Claim, filed 26 November 2021 (2021 defence) and affidavits filed on behalf of EV20.

73    The cross-claim pleads that each of the acts of infringement alleged was done without the licence or approval of Paperless.

74    I am satisfied on the basis of five of the instances of copyright set out in the cross-claim that Paperless has pleaded all of the elements necessary to establish copyright infringement by EV20 in the Computer Program Works. I am fortified in my view that the pleading provides a satisfactory basis for the relief claimed by the admissions made in the defences filed on behalf of the defaulting cross-respondents.

75    The cross-claim next pleads that EV20 is liable for ongoing use of the Paperless WMS or the impugned WMS by Paperless customers who have, following the termination of their licences, continued to use that software. The pleading alleges that EV20 has either authorised the infringing acts of the customers or directed, procured, engaged in a common design or is otherwise liable as a joint tortfeasor for the doing of those acts by granting or purporting to grant to its customers the right to use the Paperless WMS or the impugned WMS.

76    Section 36 of the Copyright Act provides that a person may be liable for copyright infringement if they “authorise” the doing of any act comprised in the copyright. That term is to be understood to mean “sanction, approve, countenance”; Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16; 248 CLR 42 at [125] (Gummow and Hayne JJ). It is to be understood by reference to section 36(1A) which provides:

In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:

(a)    the extent (if any) of the person's power to prevent the doing of the act concerned;

(b)    the nature of any relationship existing between the person and the person who did the act concerned;

(c)    whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

77    In Real Estate Tool Box Pty Ltd v Campaigntrack Pty Ltd [2023] HCA 38; 278 CLR 240, the High Court (Gageler CJ, Gordon, Edelman, Steward and Jagot JJ) observed:

63.    In Roadshow Films Pty Ltd v iiNet Ltd [No 2],17 Gummow and Hayne JJ comprehensively traced the history of the concept of authorisation in s 36(1). Importantly, that history reveals that for at least a century it has been recognised that authorisation extends beyond its conventional meaning commonly associated with agency, by which one person's acts are attributed to the "authorising" person.

64.    Authorisation also includes circumstances in which one person is so involved in the infringement that the infringer can be said to act with the "permission" of the authorising person or to have been "sanction[ed], approve[d], [and] countenance[d]" by the authorising person. But, as Gummow and Hayne JJ emphasised in Roadshow Films Pty Ltd [No 2], beyond the conventional cases involving acting with authority, the conduct of a person that will amount to sufficient involvement in the infringement so as to amount to authorisation is not to be identified by deconstructing the dictionary definitions of notions such as "sanction", "approve" and "countenance". The sufficiency of involvement in the infringement so as to amount to authorisation requires close focus upon all the facts. As Gibbs J said in University of New South Wales v Moorhouse:

"[W]hether one person authorizes another to commit an infringement depends upon all the facts of the case so that a decision on a particular set of circumstances may be of no assistance in other cases."

65.    This question of fact as to whether a person's involvement in an infringement amounts to authorising the doing by another of any act comprised in a copyright work owned by a third party is decided with regard to the factors mandated by s 36(1A) of the Copyright Act. The types of language used in other cases to describe conduct that might constitute such authorisation, such as the words "permission" or "sanction, approve, countenance", are therefore just verbal descriptions of types of conduct that fall within the reach of s 36(1).

(footnotes omitted)

78    I am satisfied that each of the five instances of copyright infringement pleaded as described above at [68]–[72], are sufficient to establish that EV20 either directly engaged in acts of infringement of the Computer Program Works or authorised its customers to do so.

79    The pleaded case of copyright infringement against the remaining defaulting cross-respondents is less clear.

80    In relation to each, the cross-claim contends that since dates unknown, they have authorised or “directed, procured, induced or engaged” each of the pleaded acts of primary infringement, five of which are enumerated above. The generic particulars provided contend that by reason of each of their senior roles in EV20 it may be inferred that each of (relevantly) Mr Symons, Mr McKerrell and Mr Pearce authorised, engaged in, directed or procured the pleaded activities. The pleading alone provides necessary, but not sufficient description of the matters relevant to the test of authoring copyright infringement. However, as noted above it is also appropriate to have regard to admissions made by these respondents in considering the default judgment application.

81    Mr Symons was General Manager of Paperless for over 10 years until he left and joined EV20. In his 2023 defence, filed on his behalf before Gillis Delaney ceased to act for him, Mr Symons admits that he was Executive General Manager of EV20 until October 2021, with day to day responsibility for the operations of EV20 until September 2021.

82    In the 2023 defence, in response to the Second Further Amended Statement of Cross-Claim filed 26 July 2023, Mr Symons admits that he directed and supervised the following acts:

(1)    In September 2020, the provision by EV20 of support and software development services to a client, Laverton Cold Storage;

(2)    In about November 2020, the reproduction by EV20 of the whole of a former Paperless Customer’s (Laverton Cold Storage) PWS Server (defined as the Laverton PWS Server) on to a cloud based server controlled by EV20 that was subsequently used by EV20 on computers in Australia as a testing environment to store changes made to a customer copy of the PWS Server and to develop enhancements from it;

(3)    In September 2020, offering to licence a copy of the reproduced Laverton PWS Server to another customer, Fernhurst Cold Stores and to customise that software to meet the requirements of that customer;

(4)    Copying and creating further copies of the PWS. NET Client with customer specific branding to be sent to at least seven named EV20 customers; and

(5)    Copying code from an EV20’s customer’s WMS and using this in another customer’s WMS to fix bugs in the second WMS, from around September 2020 to February 2021.

83    The matters referred to above including the admissions made by him, are sufficient to enable me to conclude that the pleaded case against Mr Symons for authorising the infringing activities of EV20 is made out such that it can be concluded that he authorised EV20 to reproduce each Computer Program Work, communicate the Computer Program Work to the public and authorise EV20 customers to do the same.

84    In relation to Mr McKerrell, the case for indirect copyright infringement is that by reason of his position as a director, shareholder and company secretary of EV20 he was involved in the activities of the company. Leaving aside the February 2023 Deed of Assignment to which I have referred in section 3 above, there is no pleading or material before me to indicate the degree of involvement of the alleged infringing conduct. There is insufficient material to base a conclusion on the present application that he is liable either for authorising infringement or engaging in infringing conduct as a joint tortfeasor.

85    A similar position applies to Mr Pearce, the pleading of his title as executive chairman of EV20 does not provide sufficient information to warrant a conclusion that he authorised or was a joint tortfeasor of the copyright infringements of EV20.

6.3    Breach of confidence

86    The cross-claim pleads that the source code for the PWS Server, each PWSS Program and PWS. NET Client is confidential information belonging to Paperless, as is the password to decrypt encrypted copies of the source code of PWS Server and the PWSS Programs, and the means by which the PWS Server measured and controlled the number of concurrent users under licences granted by Paperless to its customers. This is defined as the Paperless Confidential Information.

87    The cross-claim pleads that Mr Symons received this confidential information in circumstances importing an obligation upon him to maintain it as confidential during the course of his employment. In the alternative, the cross-claim alleges that the terms of Mr Symon’s contract of employment obliged him to maintain the confidential information as confidential. I accept that the pleading adequately sets out the common law cause of action for breach of confidence (see Dart Industries Inc v David Bryar & Associates Pty Ltd [1997] FCA 481; 38 IPR 389 at 406–7 (Goldberg J)) and under contract.

88    The cross-claim alleges that EV20 misused the Paperless Confidential Information by the same seven matters pleaded as infringement of copyright, five examples of which I have extracted at [68]–[72] above. I have set out the positive averments made by Mr Symons in response to the 26 July 2023 cross-claim. I am satisfied that each of the acts sufficiently pleads the conveying by EV20 to third parties of confidential information in the form of the source code of the Computer Program Works. The position in relation to Mr Symons is more complicated, because the cross-claim does not plead specific acts by him. However, in the 2023 defence, he makes admissions as to specific conduct that he engaged in to authorise EV20 to facilitate the breaches of confidence pleaded. Some of those are set out at [82] above. These matters, taken together, satisfy me that default judgment against Mr Symons, in respect of the pleaded acts, is appropriate.

6.4    Inducement of breach of contract

89    The cross-claim alleges that Mr Symons, and through him, EV20, knew that there were contracts in place between Paperless and each EV20 customer (being former customers of Paperless) and that by making available the source code of Paperless WMS to EV20 for the purpose of its provision of services to its customers, Mr Symons and EV20 knew that each EV20 customer would breach a contractual term of their licence agreement with Paperless not to use confidential information, other than in performing the obligations under the licence granted by Paperless.

90    The difficulty with this pleading is the generality in which it is expressed. The pleading does not address particular customers or particular contracts between Paperless and particular customers. It identifies that inferences will be sought to be drawn between the role of Mr Symons at Paperless and his subsequent conduct at EV20. I am not satisfied that the pleaded case is sufficiently set out to warrant the grant of relief pursuant to FCR r 5.23(2).

6.5    Conclusion in relation to the cross-claim

91    I am satisfied that on the face of the cross-claim and the admissions to which I have referred above that Paperless is entitled to orders addressing the infringement of copyright by EV20 and authorising infringement by Mr Symons. I am also satisfied that orders addressing breach of confidence by both EV20 and Mr Symons. I do not consider that the pleaded case sufficiently established that orders should be made in respect of Mr McKerrell or Mr Pearce. Nor do I consider that orders are warranted against either EV20 or Mr Symons for inducement of breach of contract.

6.6    Default

92    None of the defaulting cross-respondents have taken a step in these proceedings since their solicitors ceased to act for them. With the exception of Mr Symons, they were served with notice of the present application and the affidavit evidence in support on 7 November 2024. On 6 December 2024, all of the defaulting cross respondents, including Mr Symons, were served with the affidavit of Ms Crooks filed on 4 December 2024 and the Paperless outline of submissions. Despite this notice, neither Mr Symons nor the other defaulting respondents appeared at the hearing of the interlocutory application. Mr Symons has not since filed a notice of address for service.

93    It may be inferred, and I do infer, that such conduct is deliberate and reflects an intention on the part of each defaulting respondent not to cooperate in the conduct of the cross-claim. Having regard to the matters referred to in section 3 above, it may be inferred, and I do infer, that one reason for the lack of engagement in the proceedings is that EV20 is not at this time involved in the provision of software that is the subject of the proceedings. Another is that Messrs Symons, McKerrell and Pearce have divested themselves of any ostensible interest or position within EV20 and may perceive themselves to have no commercial interest in the litigation. There is no evidence before the court to suggest that any of Mr Symons, Mr McKerrell and Mr Pearce is involved in the operation of WMS P/L, but their failure to engage with the processes of the Court is sufficient to lead me to conclude that they do not intend to take any further steps in defending the cross-claim.

6.7    The appropriate relief

94    FCR r 5.23 relevantly provides that if a respondent is in default, the applicant may apply to the Court for an order giving judgment “for the relief claimed in the [statement of cross-claim] … to which the Court is satisfied that the applicant is entitled”.

95    I have found that each of the defaulting cross-respondents is in default and that the claim advanced by Paperless against each of EV20 and Mr Symons for infringement of copyright has been sufficiently established to warrant consideration of the grant of relief. I have rejected the contention that Mr McKerrell or Mr Pearce are liable for under any cause of action pleaded.

96    Section 21 of the Federal Court of Australia Act 1976 (Cth) provides that the Court may make binding declarations of right. This is a wide discretionary power, but it must be exercised in a manner that reflects the final outcome of a case with certainty and precision; Australian Competition and Consumer Commission v Cambur Industries Pty Ltd [2006] FCA 1027; ATPR ¶42–127 at [96] (Besanko J); see also the inherent discretionary power in Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 at 581–2 (Mason CJ, Dawson, Toohey and Gaudron JJ) and 596–7 (Brennan J).

97    In the past, courts have doubted that it is appropriate to make declarations of right on the basis of an application for default judgment because they would be based, in effect, upon deemed admissions and the courts have expressed reluctance to do so where the effect is to make points res judicata without having heard argument; see Dataline Primary Judgment at [54]–[56]. They have also been concerned that a declaration is a judicial act which should only be made if the Court is satisfied by evidence; Dataline Primary Judgment citing Inland Revenue Commissioners v McGuckian [1974] 1 WLR 991 at 1029 (Buckley LJ). In Dataline Primary Judgment, Kiefel J, as she then was, observed that the power to grant declarations is unconfined and that the equivalent of FCR r 5.23 (Order 35A of the Federal Court Rules 1979 (Cth)) imposed no constraints upon the relief sought. She set aside concerns of the older cases on the basis that more recent concerns expressed by the courts as to the costs of unnecessary litigation, the management of cases and efficiency overall tend in favour of permitting such relief in appropriate circumstances. In the case before her, she noted the public interest in the grant of declarations of right, where there are regulatory proceedings designed for the protection of consumers and proceeded to make declarations on the proviso that the Orders were endorsed with a note to say that they were made consequent on non-compliance with orders of the Court; Dataline Primary Judgment (Orders [1]–[12], [13]–[15], [16]–[18]). On the other hand, at [59] she expressed some doubt as to whether a declaratory order of right as between private parties would attract declaratory relief. This aspect of the decision was not the subject of appeal and the Full Court in Dataline Appeal Judgment at [92] deemed the declarations “entirely appropriate”.

98    In the present case, the declaratory orders sought by Paperless are very broad. As framed in the Amended Notice of Cross-Claim, filed 17 May 2023, a declaration is sought against each defaulting cross-respondent that they have infringed the copyright in one or more of the Computer Program Works (as defined in the cross-claim) by doing one or more of the following acts:

(a)    reproducing the whole or a substantial part of the work in material form;

(b)    communicating the whole or a substantial part of the work to the public; or

(c)    authorising the doing of the act in paragraph (a) or (b).

99    A similarly broad declaration is sought in respect of the misuse of the Paperless Confidential Information.

100    Having regard to the generality in which the declarations are drafted and the fact that they sought on the basis of the pleaded case, I am not satisfied that it is necessary or appropriate to make them. I consider that the injunctions that I will grant are sufficient.

101    The injunctions sought in the Notice of Cross-Claim are relevantly that each of EV20 and Mr Symons:

…be permanently restrained from doing any of the following acts (whether by themselves, their servants, agents or otherwise), without the licence of the copyright owner:

(a)    reproducing the whole or a substantial part of any Computer Program Work in material form;

(b)    communicating the whole or a substantial part of any Computer Program Work to the public;

(c)    authorising the doing of the act in paragraph (a) or (b).

102    There is a need to make orders restraining each of EV20 and Mr Symons.

103    Although it would appear that EV20 has ceased to be engaged in the activities concerning the use of the software that is the subject of the present litigation, no officer of the company came forward to give evidence that this is so. Mr Markovic, who appears from the records to be the sole director and shareholder, did not choose to come forward and has apparently elected not to file a notice of address for service. There is a prospect that the company will recommence the conduct that is the subject of the proceedings which is sufficient to warrant orders restraining EV20. However, I do not consider it to be satisfactory that the form of the injunction simply refer to the “Computer Program Work” and cross-reference be made to the definition in the cross-claim. The precise form of injucted conduct must be included in the orders made. This is a drafting task that I will direct Paperless to perform.

104    I will make similar orders to restrain EV20 from engaging in misuse of the Paperless Confidential Information (as defined in the cross-claim).

105    I have concluded that Mr Symons is also liable for infringement of copyright and authorising infringement of copyright. In the absence of further information regarding his activities, I am not sufficiently satisfied that he no longer has any role to play in EV20 or will not in the future have any such role. I am also not satisfied that he no longer has in his possession or control copies of the confidential information that I have found that he misused. Accordingly, I will make injunctive orders to restrain any further infringement of copyright or misuse of confidential information.

106    For similar reasons I will also make orders that each of EV20 and Mr Symons deliver up any Computer Program Work (as defined at [63]) in accordance with orders sought in the Notice of Cross-Claim and that those parties be required to pay Paperless’ costs of the proceedings. Although orders for indemnity costs are sought, no submissions were made to support that contention.

107    I will also order that pursuant to FCR r 5.23(2)(d) there be an inquiry as to Paperless’ damages or an account of EV20 and Mr Symons’ profits, at the election of Paperless. The case pleaded sufficiently sets out heads of liability for additional or exemplary damages in respect of the copyright infringement and misuse of confidential information that a basis is established, although only in respect of the conduct of EV20.

108    The only order I make is that Paperless is to supply draft short minutes of order within seven days in accordance with these reasons.

Associate:

Dated:    8 April 2025

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