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Berg Engineering Pty Ltd v Tivity Solutions Pty Ltd

 

[2019] QCA 305

SUPREME COURT OF QUEENSLAND

CITATION:

Berg Engineering Pty Ltd v Tivity Solutions Pty Ltd & Ors [2019] QCA 305

PARTIES:

BERG ENGINEERING PTY LTD

ACN 050 400 505

(appellant)

v

TIVITY SOLUTIONS PTY LTD

ACN 623 215 092

(first respondent)

BEN NATHAN GABLONSKI

(second respondent)

CRAIG VINCENT BOLAND

(third respondent)

FILE NO/S:

Appeal No 4301 of 2019

SC No 4730 of 2018

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2019] QSC 68 (Jackson J)

DELIVERED ON:

20 December 2019

DELIVERED AT:

Brisbane

HEARING DATE:

29 August 2019

JUDGES:

Gotterson and McMurdo JJA and Flanagan J

ORDERS:

  1. The appeal is dismissed.
  2. The appellant pay the respondents’ costs of the appeal.

CATCHWORDS:

EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – INTERLOCUTORY INJUNCTIONS – EX PARTE APPLICATIONS – NON-DISCLOSURE OR MISREPRESENTATION – where the appellant commenced proceedings against the respondents for misuse of confidential information – where a search order was executed on the first and second respondents’ premises – where the appellant had made material non-disclosures at the hearing of the ex parte application for the search order – where the primary judge set aside the search order and ordered the return of the seized documents to the respondents’ solicitor – where the primary judge considered that the seized material did not justify the preservation of the search order – where the appellant submits that the primary judge erroneously declined to consider the seized material, failed to take into account relevant matters, and exercised his discretion on the basis of incorrect findings of fact – whether the primary judge erred in exercising his discretion to set aside the search order

Uniform Civil Procedure Rules 1999 (Qld), r 261B

Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers [2003] 1 Qd R 683; [2002] QSC 400, cited

International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319; [2009] HCA 49, cited

Palaris Mining Pty Ltd v Short [2012] QSC 224, cited

Re Divoca Pty Ltd’s Caveat [1991] 2 Qd R 121, cited

Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd & Ors [2019] QCA 160, cited

Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639; [2005] VSCA 213, cited

Thomas A Edison Ltd v Bullock (1912) 15 CLR 679; [1912] HCA 72, cited

COUNSEL:

D Kelly QC, with D Clarry, for the appellant

S Couper QC for the respondents

SOLICITORS:

Russells for the appellant

Carter Newell for the respondents

  1. [1]
    GOTTERSON JA:  I agree with the orders proposed by Flanagan J and with the reasons given by his Honour.
  2. [2]
    McMURDO JA:  I agree with Flanagan J.
  3. [3]
    FLANAGAN J:  This is an appeal from an exercise of discretion by the learned primary judge in relation to a matter of practice and procedure concerning the discharge of a search order.
  4. [4]
    This Court will only interfere with such an exercise of discretion in the limited circumstances recently stated by McMurdo JA in Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd & Ors:[1]

“The appellants have the formidable task of persuading this Court to reverse a discretionary judgment, and on a matter of practice and procedure.[2]  Nevertheless, each case must be considered in the light of its own particular circumstances, and, if there is a demonstrated basis, according to House v The King,[3] for interfering with the decision, this Court should do what is necessary to avoid a substantial injustice.[4]

  1. [5]
    For the reasons that follow the appellant has, in my view, failed to establish any error in the exercise of discretion by the primary judge that would warrant appellate intervention.

Background

  1. [6]
    The primary judge was dealing with an application by the first, second and third respondents to set aside a search order made ex parte on 20 September 2018 and executed on 21 September 2018.  The search order was sought to be set aside on the ground of material non-disclosure.[5]
  2. [7]
    The background to that application was set out in the primary judge’s Reasons:

[4] The plaintiff is an Australian engineering company established 45 years ago that provides engineering design and manufacturing services. It manufactures or repairs products including pumps and rotatable assets and has technical engineering capability in precision machining, large capacity machining, valve asset management, pump asset management, gearbox asset management, specialist fabrication, exotic welding and exotic hard facing. It has centres of operation in Brisbane and in Gladstone and alleges that it has had operations in New Caledonia and Indonesia, although the defendants say that the latter offices are closed. It supplies services and manufactures products to resource and industrial companies including a number of major mining companies and construction companies.

[5] The plaintiff employed the third defendant as an engineering manager and the second defendant as its group sales manager, both based in Brisbane. In each case, the employment was under a written contract for a period of approximately five years.

[6] On 10 November 2017, the plaintiff terminated the third defendant’s employment. He says that he was unfairly dismissed and peremptorily marched out of the building.

[7] On 22 December 2017, the second defendant terminated his employment with the plaintiff on the ground of an alleged repudiation by the plaintiff in failing to pay him his entitlement to bonuses on his remuneration.

[8] On 8 January 2018, the second defendant started a proceeding in the District Court at Brisbane claiming the alleged amounts of the unpaid bonuses.

[9] In January or February 2018, the second and third defendant combined to start the business of the first defendant, including publishing a brochure on a website of the first defendant. The brochure made representations, inter alia, as to the first defendant’s client experience.

[10] On 2 May 2018, the plaintiff started this proceeding by originating application claiming a large variety of final relief by way of injunctions under statute and in equity, damages under statute, damages at common law, equitable compensation and other relief.

[11] On 8 June 2018, the court:

  1. (a)
     granted an interlocutory injunction restraining the defendants from publishing the part of the brochure containing the alleged client experience as misleading or deceptive or likely to mislead or deceive;[6]
  1. (b)
     ordered the proceeding to continue as if started by claim; and
  1. (c)
     directed that the statement of claim be filed and served by 29 June 2018.

[12] On 16 August 2018, the plaintiff filed the statement of claim.

[13] On 24 August 2018, the court ordered that the second defendant’s District Court claim be transferred to the Supreme Court and be continued in this proceeding by way of counterclaim and ordered that the parties make disclosure by lists of documents by 22 October 2018.

[14] On 5 September 2018, the defendants filed and served the defence and counterclaim.”

  1. [8]
    The brochure referred in [9] of the Reasons contained statements to the effect that the first respondent was involved in tailoring engineering solutions, including manufacturing, for various clients.[7]  The brochure also listed a number of large corporations under the heading “CLIENT EXPERIENCE”.[8]

The Reasons of the Primary Judge

  1. [9]
    Having outlined the relevant background, his Honour considered in more detail the course of the proceedings and the correspondence that preceded the application for the search order.
  2. [10]
    As to the application for an interlocutory injunction heard 8 June 2018,[9] his Honour noted:

[36] Affidavits on both sides were prepared for the hearing on 8 June 2018. One of the plaintiff’s contentions, made then and still now, is that the defendants misused the plaintiff’s confidential information to contact a customer, Koniambo Nickel, to compete successfully for a job. Significantly, that was the only instance of actual alleged loss in the plaintiff’s affidavit material on the hearing of the applications for both the first search order and the second search order, notwithstanding that the first defendant’s business was alleged to have been operating since January 2018.

[37] On the hearing on 8 June 2018, the defendants read an affidavit from the second defendant sworn on 1 June 2018 denying any misuse of confidential material, and specifically stating in relation to Koniambo that the defendants did not contact Koniambo, because Koniambo had contacted the defendants. In support of that contention, the defendants also read an affidavit of Vincent Baert sworn 28 May 2018 who said that it was he, on behalf of Koniambo, who contacted the second defendant via his LinkedIn profile.

[39] On 8 June 2018, as previously stated, the court made a limited order to restrain the defendants from using part of the brochure, ordered that the proceeding continue as if started by claim and directed that a statement of claim be filed and served by 29 June 2018.”

  1. [11]
    His Honour identified that the appellant’s statement of claim included causes of action for the misuse of confidential information:

[16] …  The plaintiff alleges that the second and third defendants copied and removed from the plaintiff’s systems a substantial amount of information which was by its nature confidential to the plaintiff and agreed to be confidential information under their written employment agreements.  The particulars of the information and alleged copying are summarised as follows from paragraph 20 of the statement of claim:

  1. (a)
     information from the plaintiff’s computer system copied on dates which included 16, 20 and 31 October, 23 and 28 November, 5, 6, 14, 17, 21 and 22 December 2018;
  1. (b)
     information from the plaintiff’s computer system copied onto a Seagate Backup Plus drive, a LaCie drive and other devices;
  1. (c)
     the copied information comprised at the least:
  1. (i)
     all emails held on their email accounts at Berg Engineering and all documents attached to such emails;
  1. (ii)
     the contents of the drives and folders identified in two reports of Vincents Forensic Services dated 10 August 2018 (‘VFS first report’) and 14 August 2018 (‘VFS second report’);
  1. (iii)
     lists and contact details of customers or potential customers of the plaintiff;
  1. (iv)
     the entire contents of a folder entitled ‘AAAAA TBQ’ containing analyses of potential new work for the plaintiff, covering many years of work and including sensitive details about customers, supplies, supplier pricing information, tenders, offers and margins and details of all of the plaintiff’s future work;
  1. (d)
     information copied to or from files on a Microsoft ‘OneDrive’ account using computers in the possession of the defendants.

[17] The plaintiff identifies that information as ‘springboard data’ and alleges that it has been used for the following purposes:

  1. (a)
     to establish the new business of the first defendant;
  1. (b)
     to approach customers of the plaintiff and potential customers of the plaintiff identified in the springboard data and otherwise known to them by reason of their employment by the plaintiff;
  1. (c)
     to compete with the plaintiff, including by undercutting it on price (known to the defendants from the springboard data and by reason of the second and third defendants’ employments by the plaintiff); and
  1. (d)
     to secure contracts and work for the first defendant.

[18] The plaintiff alleges that misuse of the springboard data was a breach of contractual and equitable duties of confidence owed by the second and third defendants to the plaintiff and that it has suffered loss and damage as a result of those breaches of contract and duty.

[19] The plaintiff claims injunctive orders that the defendants deliver up to the plaintiff all and any documents and materials in whatever form and on whatever media they have been removed or kept from the plaintiff’s systems or premises, make affidavits as to having done so and to restrain them from further misuse of confidential information.”

  1. [12]
    As to the defence and counterclaim filed by the respondents on 5 September 2018, his Honour noted:

[20] The defence and counterclaim responds, inter alia, to the allegation in the statement of claim that the second and third defendants had copied documents of the plaintiff prior to leaving their employments.  By paragraph 21 of the defence the defendants:

  1. (a)
     admit that the second and third defendants copied or backed up certain electronic files throughout the course of their employments with the plaintiff;
  1. (b)
     allege that such conduct was sanctioned and expected by the plaintiff pursuant to cl 7 of their employment agreements which provided with respect to the issue of computer use that you must back up your files in accordance with the procedures outlined in the policy document attached;
  1. (c)
     allege, however, that there was no policy document attached;
  1. (d)
     allege that the copying and backing up of files to external storage devices was undertaken as a matter of course throughout their employments with the plaintiff in order to achieve the expectations imposed on them as to the minimum work required;
  1. (e)
     allege that they each were required to work remotely and whilst travelling domestically and internationally and that whilst doing so they backed up files to external storage devices to discharge their duties;
  1. (f)
     allege that on 6 July 2018, through its solicitors, the plaintiff made demand upon the second and third defendants for the return of the data which had been backed up onto external storage devices;
  1. (g)
     allege that on 17 July 2018, in response to that demand, a USB device was delivered to the plaintiff’s solicitors containing a copy of the entirety of the data which had been held by the second and third defendants;
  1. (h)
     allege that a copy of the USB device containing the data had been retained by the defendants’ solicitors on the basis of an undertaking given to access that material only for the purpose of litigation between the parties;
  1. (i)
     otherwise, allege the data so backed up by the second and third defendants throughout the course of their employment is no longer held by the defendants or any of them and has not been utilised by the defendants or any of them in the establishment or conduct of the business of the first defendant or at all.”
  1. [13]
    In relation to relevant correspondence preceding the applications for the search order, his Honour referred to letters dated 6 July, 17 July, 23 July and 26 July 2018:

[41] On 6 July 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors, attaching lists (described as ‘spreadsheets’) of computer operating system target and source file paths said to relate to the third and second defendants’ work computers, asserting that:

‘We are instructed that neither Mr Gablonski nor Mr Boland delivered up to Berg Engineering on termination of their respective employment (sic), any USB or other devices whatsoever.  Accordingly, they retain property of Berg Engineering which obviously contains copies of confidential information, unlawfully taken away by your clients from Berg Engineering.’

[47] … on 17 July 2018 the defendants’ solicitors responded to the plaintiff’s solicitor’s demand for the return of any copied emails and delivery up of any devices on which they were copied.  As to the spreadsheets, they said that the second and third defendants ‘do not refute the proposition that, during their employment with [the plaintiff] they used external storage devices and backed up their work files, namely their work emails; … they did so in the course of the discharge of their duties in accordance with… their respective contracts…’  They continued that ‘[o]ur clients concede that some of the content of their former work email accounts constitutes [the plaintiff’s] confidential information.  However, our clients have not made any use of [the plaintiff’s] emails since their departure from the employment…’.  The letter attached a USB which the defendants’ solicitors said ‘contains the entirety of the [plaintiff’s emails] retained by [the defendants], and gave an undertaking that the solicitors would only use the copy of the USB that they had for the purpose of the litigation.

[48] On 23 July 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors, alleging impropriety in retaining the emails and by statements made in the third defendant’s affidavit sworn 28 May 2018 and demanding further explanation of the circumstances of copying onto devices.

[49] On 26 July 2018, the defendants’ solicitors wrote to the plaintiff’s solicitors, responding in some detail.  Most of the response does not need to be set out.  However, the defendants’ solicitors said two things of subsequent importance.  First, that their clients did not retain any devices on which the plaintiff’s confidential information was still stored.  Second, that the defendants no longer retained any documents the property of the plaintiff or information which was confidential to it.”

  1. [14]
    His Honour noted that the appellant applied ex parte for and obtained the first search order on 16 August 2018.[10]  At the time of obtaining this order the appellant had filed the statement of claim and was armed with the VFS first report and the VFS second report and other affidavit material.  The first search order expired on 24 August 2018 without being executed.
  2. [15]
    The appellant applied to the same judge who had made the first search order for a second search order on 20 September 2018.  The primary judge noted in relation to the application for the second search order:

[30] The plaintiff advanced the application for the second search order on the footing, submitted expressly in writing, that so far as it was aware there was no relevant change in any of the circumstances or evidence which led to the first search order being made.  The plaintiff relied on the same affidavit material as for the first search order as well as a further affidavit of the plaintiff's solicitor sworn 19 September 2018.”

  1. [16]
    By 20 September 2018, however, the respondents had filed and served the defence and counterclaim.[11]  His Honour noted that on the hearing of the application for the second search order no reference was made to the defence and counterclaim that had been filed and served, or the order made on 24 August 2018 that the parties make disclosure of documents by 22 October 2018.[12]
  2. [17]
    The second search order was executed on 21 September 2018 and on 2 October 2018 the respondents applied to set aside the second search order.[13]
  3. [18]
    Having considered the authorities concerning the duty to disclose material facts applicable to a party applying ex parte for a search order, his Honour identified three material non-disclosures by the appellant in obtaining the second search order:

[86] The points of possible non-disclosure in applying for the second search order argued by the defendants included that:

  1. (a)
     the expert evidence of the VFS first report proved access by the user of the second defendant’s work computer to an external device or devices and the names of the files or documents on the external device or devices referred to in Table 2, but did not prove copying by the second defendant of any of those files in the days before he left the plaintiff’s employment;
  1. (b)
     the defendants had positively alleged in correspondence and in the defence and counterclaim that the plaintiff authorised the backup copying of files; and
  1. (c)
     there was at least prima facie evidence adduced on the hearing of the interlocutory injunction application that the ‘Koniambo transaction’ referred to in the statement of claim was not brought about as a result of contact made by the defendants with Koniambo by the misuse of confidential information but as a result of a representative of Koniambo contacting the second defendant.

[87] In my view, these were facts that should have been disclosed. On 16 August 2018, the court expressly raised the question to the plaintiff whether the other side might have ‘overlooked something’. The plaintiff did not disclose anything along the lines of what, in my view, the second and third defendants would have said had they been present.”

  1. [19]
    Having found that there was material non-disclosure, his Honour expressly proceeded on the basis that the Court retained a discretion as to whether to set aside the search order.[14]
  2. [20]
    His Honour did not generally accept the appellant’s submission made below, namely “that it is important for the Court to take into account material that the execution of the search order has brought to light and subsequent evidence as bearing on whether it was appropriate for the search order to be made with the benefit of hindsight”.[15]  His Honour did, however, consider the documents obtained pursuant to the search order.[16]  His Honour concluded that the positions of the parties were not clearly established as to the significance of the documents which were produced as a result of the execution of the search order.  It followed, according to his Honour, that the application to discharge the search order should not be dismissed as a matter of discretion because of what was seized on the execution of the order.[17]
  3. [21]
    Having determined that the search order should be set aside, the primary judge, rather than returning the seized documents to the respondents, considered it appropriate that the documents be returned by the independent solicitor to the respondents’ solicitor.[18]

Grounds of appeal

  1. [22]
    While the notice of appeal identifies five grounds of appeal, there are, in effect, three.
  2. [23]
    The first concerns the primary judge’s rejection of the appellant’s submission that it was important for the Court to have regard to the fruits of the search order and subsequent evidence as bearing on whether it was appropriate for the order to be made with the benefit of hindsight.  The second ground is that in exercising the discretion whether to set aside the search order, his Honour should have had regard to all of the circumstances of the case but failed to have regard to a number of material circumstances.  The third ground is that his Honour made incorrect findings of fact.  Had his Honour not had regard to these incorrect factual findings, the proper exercise of discretion would have involved deciding not to set aside the search order.
  3. [24]
    For the purposes of this appeal, the appellant concedes that there were material non-disclosures on the ex parte application for the search order.[19]  The respondents accept that they were neither deliberate nor calculated to mislead the Court.[20]

Ground 1

  1. [25]
    The appellant challenges the following passage of the primary judge’s Reasons:

“[93] The applicant submits that it is important for the Court to take into account material that the execution of the search order has brought to light and subsequent evidence as bearing on whether it was appropriate for the search order to be made with the benefit of hindsight.  I do not accept that submission, in general terms, else a party in default on the obligation of disclosure of material fats will be relieved from non-disclosure if the search produces something useful.  If that were the law, parties and the Court would be dragged more frequently into significant collateral disputes about whether what is produced on the search is significant enough, as has occurred in this case.”

  1. [26]
    The appellant submits that the primary judge “seems to have considered that, from a legal perspective, the fruits of the search order and subsequent evidence ought not be referred to when exercising the discretion in cases of material non-disclosure”.[21]
  2. [27]
    I do not accept this submission.  His Honour’s observation that he did not accept the appellant’s submission “in general terms” must be considered in context.  First, at [90] of the Reasons, the primary judge accepted that the discharge of an ex parte order for material non-disclosure was not automatic, and that regard was to be had to all the circumstances of the case.[22]
  3. [28]
    Secondly, it is evident from [96]-[104] that the primary judge considered the fruits of the search.  Having considered a number of categories of documents, his Honour concluded:

[102] Summarising, the plaintiff’s position is that if the execution of the search order produced documents to which it was entitled as its property or physical or electronic documents which it was entitled to have removed from any of the defendants’ electronic devices, that is a sufficient reason to refuse the application to set aside a second search order on the ground of material nondisclosure, in the exercise of discretion.  In my view, that conclusion does not follow as of course, and is not measured in the way that the plaintiff seeks to do so by identifying the number of documents or the number of pages of those documents, without establishing the significance of the documents in terms of their misuse and the risk of destruction in the absence of the challenged search order.  On the hearing of this application, I am not generally satisfied that the significance of the documents is such that I am in a position to make findings of the kind sought by the plaintiff that would lead to the dismissal of the application in the exercise of the Court’s discretion because of what the search has produced.

[103] In short, on the hearing of this application, the positions of the parties are not clearly established as to the significance of the documents which were produced as a result of the execution of the second search order.  For the plaintiffs, the contention is not established that it can be shown that the defendants would not have produced or removed from their computer devices documents of real significance, or that any failure to do so was not inadvertent.  For the defendants, it is not established that documents of the plaintiffs that were retained were of no real significance or that any failure on their part to produce or remove such documents was inadvertent.”

  1. [29]
    The conclusion at [102] reflects a consideration by his Honour of the requirements for the grant of a search order in r 261B of the Uniform Civil Procedure Rules 1999 in relation to the documents that had been seized:

“The court may make a search order if the court is satisfied that—

  1. (a)
     the applicant has a strong prima facie case on an accrued cause of action; and
  1. (b)
     the potential or actual loss or damage to the applicant will be serious if the search order is not made; and
  1. (c)
     there is sufficient evidence in relation to a respondent that—
  1. (i)
     the respondent possesses important evidentiary material; and
  1. (ii)
     there is a real possibility that the respondent might destroy the material or cause it to be unavailable for use in evidence in a proceeding or anticipated proceeding before the court.”
  1. [30]
    Accordingly, while the primary judge’s comments at [93] might in isolation be viewed as disavowing a consideration of the material obtained upon execution of the search order, when the Reasons are read as a whole, it cannot be said that the primary judge refused to take into account the obtained material and the subsequent evidence.  Rather, having considered the material, his Honour found that it could not justify the dismissal of the respondents’ application because the appellant had failed to establish the material’s significance and the reason why it had not been previously produced by the respondents.
  2. [31]
    In my view, when read in its context, [93] of the primary judge’s Reasons is instead reflective of a legitimate concern that too great an emphasis on the material seized in execution of a search order can detract from the rigour of the duty to disclose material facts.  A similar concern was expressed by Applegarth J in Palaris Mining Pty Ltd v Short,[23] where his Honour identified as a relevant consideration that a party “should not enjoy the benefit of documents that were obtained pursuant to an order that was obtained following a serious failure to fulfil its duty to make full disclosure.”
  3. [32]
    Ground 1 fails.

Ground 2

  1. [33]
    In its notice of appeal, the appellant identifies 22 matters that the primary judge ought to have taken into account.  For clarity, this ground will be considered in the way that it was addressed by the parties’ submissions.
  2. [34]
    Much of the oral and written submissions of the parties addressed whether the nondisclosures identified in [86] of the Reasons were serious non-disclosures.  The appellant submits that not only was the conduct neither deliberate nor intentional, but that there were ameliorating aspects to the omissions,[24] taking the case “outside of the type of case where setting aside orders were most likely”.[25]
  3. [35]
    The appellant, in support of this submission, refers to Savcor Pty Ltd v Cathodic Protection International APS (Savcor), where Gillard AJA stated:[26]

“In my opinion a court does have a discretion to not set aside an order despite a material non-disclosure or misrepresentation of law or fact.  Setting aside does not follow as a matter of course.  Relevant to the discretion is whether the material non-disclosure was serious or otherwise the importance or weight that should be attached to the omitted fact in the decision making process and also any hardship if the order was set aside.  The approach is different if the plaintiff has acted culpably in the sense that the omission to disclose relevant matters was done deliberately to mislead the court.  The most likely result in those circumstances would be that the order would be vacated.”

  1. [36]
    While it may be accepted that a search order is more likely to be set aside in circumstances where a party has deliberately misled the Court, the above passage should not be understood as making it unlikely that a search order will be set aside where there has been serious material non-disclosure.  This is evident from Gillard AJA’s reference in Savcor to Brink’s Mat Ltd v Elcombe:[27]

“In Brink’s Mat Ltd v Elcombe, Ralph Gibson LJ conveniently summarised the principles.  His Lordship noted that ‘the material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers.’  His Lordship observed that the applicant must make proper enquiries before making an application.  If a material non-disclosure is established the court would be astute to ensure that the plaintiff obtained an ex parte order without full disclosure is deprived of any advantage he may have derived, and further that whether a fact not disclosed ‘is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the facts to the issues which were to be decided by the judge on the application’.  His Lordship pointed out that the innocence or otherwise of the non-disclosure and the failure to understand its relevance are important factors to take into account.”[28]

  1. [37]
    This passage was referred to by the primary judge.[29]  His Honour also referred to the decision of Isaacs J in Thomas A Edison Ltd v Bullock where his Honour stated:[30]

“[T]he party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application.  Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fall.”

  1. [38]
    Justice Isaacs’s observations were approved by Hayne, Crennan and Kiefel JJ in International Finance Trust Co Ltd v New South Wales Crime Commission,[31] with their Honours further observing:[32]

“Unless a party moving a court to make orders in the absence of parties having an interest to oppose their making is obliged to make proper disclosure of all relevant materials, hearings will be needlessly multiplied and prolonged.  Courts should not be asked to make orders in the absence of opposing interest on material that is or should be known to be deficient.  If an order is made in those circumstances, the consequences identified by Isaacs J in Edison should follow: ‘the order so obtained must almost invariably fall.’”

  1. [39]
    Turning then to the three material non-disclosures.  The first is that the VFS first report did not prove copying by the second respondent of any of the files in the days before he left the appellant’s employment.  The factual context of this non-disclosure was identified by the primary judge under the heading “Risk of destruction in this case”:[33]

[68] The VFS first report stated that there were no records that directly indicated that data was copied from the second defendant’s work computer to any relevant USB device. That is, the records did not provide direct evidence of copying to any external drive, during the period of about two months before termination of the second and third defendants’ employments.

[69] On 16 August 2018, on the hearing of the application for the first search order, the plaintiff’s written submissions stated:

“It has very recently emerged, from the evidence of Mr Hains, that in the days leading up to electing to leave his employment on 22 December 2017 [the second defendant] copied a variety of confidential documents to external drives connected to his laptop.” (emphasis added)

[70] The written submission also attached a chronology that stated:

19-Dec-17 Gablonski copies confidential documents relating to Vale expansion to a Seagate backup plus drive”

[71] The latter statement was said to be supported by paragraph 3.16 of the VFS first report.

[72]  On 16 August 2018, the plaintiff also orally submitted to the court in support of the application for the first search order, that:

“the Hains report… proves that one or other of the respondents copied documents, other than simply emails, confidential to Berg, to USB drives during the last weeks of their employment” (emphasis added).

[73] However, the VFS reports did not prove any of those matters in relation to the documents listed in Table 2 of the VFS first report.  They proved that files or documents located on an external USB drive or drives (but created and last modified at times before the end of October 2017) had been accessed by the user (presumably  the second defendant) of the second defendant’s work computer during the last days of his employment.

[74] The shade of colour that attaches to evidence that an employee copied an employer’s documents in making preparations to leave during the last days of their employment for a competitive position is quite different from evidence that an employee may have copied work documents to a backup device in the course of the employment from time to time over a period of previous years.  That is more so when the employee expressly alleges (as the second and third defendants did here) that they were required to backup documents as part of their employment.”

  1. [40]
    The appellant submits that the primary judge did not have regard to the important ameliorating fact that the appellant’s counsel had made oral submissions that expressly disclosed uncertainty as to whether data had in fact been accessed or copied.  These oral submissions included words such as “although we can’t precisely know what he did”,[34] and “[t]he question is whether the material AAA Berg project was copied, viewed, moved or whatever.  We don’t know.”[35]  The difficulty with this submission is that, as correctly identified by the primary judge, the appellant’s written submissions in obtaining the search order specifically referred to the second respondent copying documents “in the days leading up to electing to leave his employment on 22 December 2017.”[36]  In addition, paragraph 2 of the appellant’s written submissions stated:[37]

“By reason of forensic IT advice obtained on 10 and 14 August 2018, the applicant has now been able to file a statement of claim in which it alleges that the second and third respondents:

  1. (a)
     copied many documents confidential to Berg (to USB drives) in the last weeks of their employment; and
  1. (b)
     presently retained such documents in their possession and power.”
  1. [41]
    This submission was made as an introductory written submission and was read by the judge prior to hearing oral submissions in support of the application for the first search order.  Further, at the commencement of oral submissions counsel stated:[38]

“[I]t’s not in issue on the material that these two ex-employees, in December of 2017, left in disputatious circumstances.  It’s not in issue that prior to when they left they backed up an email archive and we’ve been provided with a – in effect, a zip drive containing that material and it’s said by their solicitor that that’s the – a hundred per cent of that which they’ve copied.”

  1. [42]
    It follows that the primary judge’s observation at [74] was accurate, as was his Honour’s description of the effect of the expert evidence of the VFS first report.  The mere fact that counsel before the original judge recognised an ambiguity as to the effect of the expert evidence does not detract from there having been a material non-disclosure.  A party’s duty of disclosure goes well beyond simply recognising an ambiguity.  As observed by the primary judge, “[i]t is an obligation to disclose ‘all the material facts which [the unrepresented] party would presumably have brought forward in his defence’.”[39]  The primary judge referred to the observations of Allsop J in Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd:[40]

“That does not mean stating matters obliquely, including documents in voluminous exhibits, and merely not mis-stating the position. It means squarely putting the other side’s case, if there is one, by coherently expressing the known facts in a way such that the Court can understand, in the urgent context in which the application is brought forward, what might be said against the making of the orders. It is not for the Court to search out, organise and bring together what can be said on the respondents’ behalf. That is the responsibility of the applicant, through its representatives.”

  1. [43]
    The second material non-disclosure accepted by his Honour was that the respondents had positively alleged in correspondence and in the defence and counterclaim that the appellant had authorised the backup copying of files.[41]
  2. [44]
    The factual background to this non-disclosure was outlined by the primary judge at [41][49]:

[41] On 6 July 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors, attaching lists (described as “spreadsheets”) of computer operating system target and source file paths said to relate to the third and second defendants’ work computers, asserting that:

‘We are instructed that neither Mr Gablonski nor Mr Boland delivered up to Berg Engineering on termination of their respective employment (sic), any USB or other devices whatsoever. Accordingly, they retain property of Berg Engineering which obviously contains copies of confidential information, unlawfully taken away by your clients from Berg Engineering.’

[42] On the evidence, this was the plaintiff’s first demand for the delivery up of any USB or other devices. I note that they were alleged to be the property of the plaintiff although there was and is no evidence that there was any such device that was the plaintiff’s property. In fact, the evidence is that any relevant devices were the property of the first or second defendants.

[43] The 6 July 2018 letter also referred to work emails (from some years prior) exhibited to the second defendant’s affidavit sworn 1 June 2018 upon the hearing of the injunction application, and alleged that the emails had been unlawfully copied and retained and demanded the delivery up of any copies thereof.

[44] On the hearing of this application, the plaintiff submitted that it was ‘uncontroversial’ that the second defendant’s affidavit sworn 1 June 2018 exhibited ‘confidential and commercially sensitive information of the plaintiff and its dealings with one of its customers which information had not previously been disclosed by him.’ I consider the submission to be framed in a way that is apt to mislead. It is necessary, therefore, to explain why.

[45] The submission refers to a footnote that cross refers to two parts of the second defendant’s affidavit sworn 1 June 2018. The first reference is to paragraphs where the second defendant denies the misuse of any confidential information in securing the first defendant’s contract with Koniambo and exhibits emails between the second defendant and Mr Baert. There is no confidential information of the plaintiff in that exchange.

[46] The second reference is to a paragraph exhibiting an email exchange between the third defendant and the plaintiff’s director, Mr Berg, on 22 and 23 November 2014, relating to an allegation made in an affidavit of the plaintiff’s director of poor work performance by the second defendant in relation to an order for a client of the plaintiff, Vale. The exchange is not apparently ‘commercially sensitive’ as that expression is commonly used to justify the confidentiality of documents, namely that it would advantage a commercial rival, except in the sense that it contained feedback as to the client’s reasons for not continuing the order and tended to reflect poorly on the plaintiff’s director, not the second defendant, as alleged by the plaintiff’s director in the latter’s affidavit.

[47] Putting those matters to one side, however, on 17 July 2018 the defendants’ solicitors responded to the plaintiff’s solicitor’s demand for the return of any copied emails and delivery up of any devices on which they were copied. As to the spreadsheets, they said that the second and third defendants ‘do not refute the proposition that, during their employment with [the plaintiff] they used external storage devices and backed up their work files, namely their work emails; … they did so in the course of the discharge of their duties in accordance with… their respective contracts…’ They continued that ‘[o]ur clients concede that some of the content of their former work email accounts constitutes [the plaintiff’s] confidential information. However, our clients have not made any use of [the plaintiff’s] emails since their departure from the employment…’. The letter attached a USB which the defendants’ solicitors said ‘contains the entirety of the [plaintiff’s emails] retained by [the defendants], and gave an undertaking that the solicitors would only use the copy of the USB that they had for the purpose of the litigation.

[48] On 23 July 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors, alleging impropriety in retaining the emails and by statements made in the third defendant’s affidavit sworn 28 May 2018 and demanding further explanation of the circumstances of copying onto devices.

[49] On 26 July 2018, the defendants’ solicitors wrote to the plaintiff’s solicitors, responding in some detail. Most of the response does not need to be set out. However, the defendants’ solicitors said two things of subsequent importance. First, that their clients did not retain any devices on which the plaintiff’s confidential information was still stored. Second, that the defendants no longer retained any documents the property of the plaintiff or information which was confidential to it.”

  1. [45]
    In the letter of 6 July 2018 referred to at [43] of the excerpt above, the appellant demanded that the second and third respondents:[42]

“1. Deliver up to it, care of our firm, all of the USB and other devices by which they made copies of any data whatsoever from either of the laptops formally in their custody;

  1. 2.
    Also deliver up to it, care of our firm, all printed, electronic or other documents, being copies of any other data from any such devices or either of those laptops.”
  1. [46]
    The letter further stated:

“The forensic evidence is that your clients have taken copies of material from the laptop of Berg Engineering prior to the termination of their employment, that they retain the USB devices (or other storage devices) on which this material was unlawfully copied and that the material, having been taken from the computer system of Berg Engineering, was both inherently confidential, and confidential within the meaning of their respective contracts of employment.”

  1. [47]
    The letter of 17 July 2018 referred to at [47] relevantly stated:[43]

“Insofar as you have produced spreadsheets purporting to evidence the data accessed by Mr Gablonski and Mr Boland from Berg Engineering, we are instructed that:

  1. (a)
     Mr Gablonski and Mr Boland do not refute the proposition that, during their employment with Berg Engineering, they used external storage devices and backed up files, namely their work emails;
  1. (b)
     they did so in the course of the discharge of their duties in accordance with paragraph 7 of schedule 3 of their respective contracts of employment (copy attached);
  1. (c)
     insofar as you contend that Mr Boland has accessed ‘files on his laptop computer of Berg Engineering’ since he left the employment of Berg Engineering, Mr Boland denies that proposition.”
  1. [48]
    The letter continued:[44]

“Our clients concede that some content of their former work email accounts constitute Berg Engineering’s confidential information.  However, our clients have not made any use of their Berg Engineering emails, since their departure from the employment of Berg Engineering, for the purpose of furthering the business interests of Tivity.”

The defence and counterclaim expressed the obligation to backup files in terms different from the correspondence.  Paragraph 21 of the defence and counterclaim pleads:

“21. In relation to paragraph 21 of the statement of claim, the second and third defendants:

  1. (a)
     do not admit the allegations made therein because they do not truly, or accurately, recount the conduct engaged in by the second and third defendants during the course of their employment with the plaintiff;
  1. (b)
     admit that they ‘copied’ or ‘backed up’ certain electronic files throughout the course of their employment with the plaintiff;
  1. (c)
     say that such conduct was sanctioned and expected by the plaintiff, pursuant to clause 7 of their employment agreements, which provided, with respect to the issue of computer use, that ‘you must back up your files in accordance with procedures outlined in the policy document attached’;
  1. (d)
     say, however, that there was no ‘policy document’ attached to the second and third defendants’ employment contracts concerning the ‘backing up’ of files;
  1. (e)
     say that, nevertheless, the ‘copying’ or ‘backing up’ of files to external storage devices was undertaken as a matter of course throughout their employment with the plaintiff in order to achieve the expectations imposed upon them by Berg on behalf of the plaintiff, namely his expectation that the second and third defendants must work a minimum of 60 hours per week;
  1. (f)
     say that the second and third defendants were required to work remotely and whilst travelling domestically and internationally and that, in order to work remotely, and whilst travelling domestically and internationally, the second and third defendants ‘backed up’ files to external storage devices to discharge their duties, facilitate research, conduct analysis and maintain a true and accurate record of all relevant data, which required to be accessed;
  1. (g)
     say that, on 6 July 2018, the plaintiff, through its solicitors, made demand upon the second and third defendants for the return of that data which had been so ‘backed up’ onto external storage devices;
  1. (h)
     say that, in response to that demand by the plaintiff’s solicitors, on 17 July 2018, a USB device containing the entirely of the data which had been held by the second and third defendants was delivered to the plaintiff’s solicitors;
  1. (i)
     say that the copy of the USB device containing data has been retained by the defendants’ solicitors on the basis of the undertaking given by their solicitor to access that material only for the purpose of litigation between the parties; and
  1. (j)
     say that, otherwise, the data so ‘backed up’ by the second and third defendants throughout the course of their employment with the plaintiff, is no longer held by the defendants, or any of them, and has not been utilised by the defendants, or any of them, in the establishment, or conduct, of the business of the first defendant, or at all.”[45]
  1. [49]
    The appellant accepts that the defence and counterclaim, which included the above allegations, was not brought to the attention of the original judge.  Submissions were made concerning the proper context of the letter of 17 July 2018.  Paragraph 21 of the written submissions referred to the 17 July 2018 letter in the following terms:[46]

“The 17 July 2018 letter implied that the emails and attachments contained on the USB stick comprehended the totality of the material in the possession of either the second or third respondents.  However the letter was ambiguous in that respect.”

  1. [50]
    This written submission was supplemented by the following oral submission:[47]

“Your Honour, we need to demonstrate that the respondents are not within the overwhelming majority of people who will produce and deliver up documents without having a search order executed at their premises.  And the reason we say that there is sufficient evidence in the nature of, shall we say, concealment or deception or impropriety to justify the conclusion that that benchmark has been reached, is that while when asked to explain themselves, after an initial analysis by Mr Haines of their material, while there was some disclosure that confidential material had been retained – and that, you will have seen, I submit, in a letter from the respondent’s solicitors of the 17th of July – there was not full disclosure.  So the initial response by Mr Heath was, yes, they used external storage devices.  They backed up files.  Quote, ‘namely the emails’ to those devices.  No contention that anything else was backed up.”

  1. [51]
    Neither the written or oral submissions made in relation to the 17 July 2018 letter ameliorated what was a serious material non-disclosure.  Paragraph 21 of the defence and counterclaim constitutes a detailed explanation as to why the second and third respondents “copied” or “backed up” files.  The reference in paragraph 21(b) is to “certain electronic files” and is not in terms restricted to emails.  Subparagraphs 21(e) and (f) explain why the second and third respondents were required to copy or backup files to external storage devices.  The import of the material non-disclosures outlined at [86(a)] and [86(b)] of the Reasons should be considered cumulatively.  The inference that the original judge was invited to draw was that there had been extensive copying of files just prior to the second respondent leaving his employment with the appellant in circumstances where there was no other explanation for the copying other than unlawful copying for a proposed misuse of confidential information.
  2. [52]
    The appellant, both before the primary judge and this Court, submitted that when the material is considered as a whole “the appellant’s case remained strong even when regard was had to the matters not disclosed.”[48]  The appellant submits that while the matters not disclosed were material in the sense of being relevant and reflective of what the respondents might have said, the primary judge was not obliged to take what the respondents might have said at face value and there were “incontrovertible and uncontradicted objective facts which significantly undermine the respondent’s position”.[49]
  3. [53]
    The primary judge was, of course, dealing with an interlocutory application to set aside the search order.  Both the solicitor for the appellant and the second respondent were cross-examined.  As the application was interlocutory, the primary judge did not make any findings of credit.  The appellant, however, by reference to the decision of Connolly J in Re Divoca Pty Ltd’s Caveat submits that when regard is had to the material as a whole, any denial of unlawful copying by the second respondent is “inherently improbable”.[50]  This submission cannot be accepted.
  4. [54]
    First, as discussed above, the VFS first report did not prove copying by the second respondent of any of the files in the days before he left the appellant’s employment.[51]  Secondly, Mr Haines, in the VFS first report at paragraph 3.7, stated that there were no records available that directly indicate the copying of data to or from L1 (the second respondent’s laptop) to any of the USB devices.[52]  Thirdly, by reference to Annexure 3 to the VFS first report, it is not at all apparent that any unlawful copying took place on 19, 21 and 22 December 2017.  Fifty-nine of the files that were accessed by the second respondent on 22 December 2017 were largely music download files, which existed on the backup drive.[53]  Fourthly, the effect of the second respondent’s evidence in cross-examination before the primary judge was that he denied copying on 22 December 2017.[54]  Fifthly, the fact that the devices that had been used by the second and third respondents to backup data while employed by the appellant were wiped prior to the execution of the search order is, in my view, equivocal.  It may be accepted that the second and third respondents failed to explain when or why the data was wiped.  There is, however, no evidence that either the second or third respondents were aware of the search order having been made prior to it being executed.  Sixthly, as to the fact that documents were found when the search order was executed, the second respondent deposed as to the circumstances of the documents being in his possession.  These documents included one entitled “Pipeline/Opportunity Summary” and a spreadsheet printout of contacts for customers of the appellant identifying the contact name, the organisation, the contact’s title and the contact’s email address and phone numbers.  The primary judge dealt with these documents at [100]-[101] of the Reasons.  His Honour accepted that prima facie the spreadsheet was a significant document.  His Honour, however, had due regard to the sworn evidence of the second respondent.  As certain factual errors are alleged in ground 3, it is necessary to set out the relevant parts of the second respondent’s affidavit sworn 2 October 2018:[55]

“3. Insofar as paragraph 20(a) of the order requires that I provide an affidavit setting out the location of certain ‘listed things’, which are defined in Schedule A of the order, I say as follows, namely:

  1. (a)
     with respect to paragraph 20(a) of the order, directed to any documents which were taken or copied from the computer system of the plaintiff, or that I removed from its premises, I note that the search party which attended at my residence on 21 September 2018, headed by one Mr Gregory Litster, who had been appointed by this Honourable Court as the ‘independent solicitor’ to conduct that search, seized a number of documents which were stored in a box in a suitcase in a cupboard in my apartment which I share with three other people;
  1. (b)
     some of those documents were taken by me from the offices of the plaintiff;
  1. (c)
     those documents are now in the possession of the independent solicitor;
  1. (d)
     on 17 July 2018, I instructed by solicitors to deliver to the plaintiff’s solicitors a USB device containing what I believed, at that time, to be the entirety of the data held by myself and my colleague, Mr Boland, which we had ‘backed up’ to external storage devices during the course of our employment with the plaintiff.  As traversed in the correspondence from my solicitors to the plaintiff, and in the defence filed by the defendants to the plaintiff’s claim in this Honourable Court, the ‘backing up’ of files to external storage devices was undertaken by Mr Boland, myself and other employees of the plaintiff, on a regular basis, because of the necessity to work long hours, and to work remotely, throughout the course of our employment with the plaintiff;
  1. (e)
     when I gave instructions to my solicitors to forward that USB device to the plaintiff’s solicitors – which contained some 87,000 files which had been ‘backed up’ to an external storage device during the course of my employment with the plaintiff – I honestly believe that that constituted the entirety of the plaintiff’s documentation that I had backed up and held;
  1. (f)
     I now know my instructions to my solicitors were mistaken.  The explanation for my mistake is that, on 2 June 2018, I moved from my former apartment to my present apartment.  In undertaking that move, I packed hastily.  In the process of moving, I piled together bundles of paperwork from around the apartment and placed them into a box and into a small suitcase.  Whilst doing so, I did not inspect the paperwork I was packing; however, I estimate that there was in excess of 2,000 individual pieces of paper which I assembled and packed;
  1. (g)
     on moving into my apartment, I placed the box and the suitcase containing that paperwork into a cupboard in my bedroom for storage.  I placed other documents, the property of Tivity Solutions Pty Ltd, into the box on occasion.  I did not look at that material again until 21 September 2018;
  1. (h)
     on the day of the search, namely 21 September 2018, I complied with the request of the search party and afforded them access to my computer, my laptop, my iPhone and, also, produced to the search party the box of documents in the suitcase of documents which had been stored in the cupboard in my bedroom.  When the search party undertook the review of the documents, I noticed that I had retained some of the plaintiff’s documents, which I had forgotten to give to my solicitors when I delivered the USB device to my solicitors to give to the plaintiff’s solicitors;
  1. (i)
     if I had sorted through my paperwork when leaving my former apartment, or when providing the USB device to my solicitors in July 2018, I would have discovered that documentation at that time, whereupon I would have provided that documentation to my solicitors to provide to the plaintiff, in accordance with the plaintiff’s request.”
  1. [55]
    The primary judge, correctly in my view, made no findings as to credit in relation to the second respondent.  The second respondent’s explanation for why further documents were in his possession is not so inherently improbable as to permit a finding that the appellant’s case was of such strength that the discretion to set aside the search order ought not have been exercised.
  2. [56]
    The third material non-disclosure identified by the primary judge at [86(c)] of the Reasons concerns the alleged misuse of confidential information by the respondents in relation to the Koniambo transaction.  The appellant accepts as factually accurate the primary judge’s description of this material non-disclosure.[56]  The appellant therefore accepts that it should have disclosed as a material fact that the contact that led to the Koniambo transaction did not emanate from the respondents.[57]
  3. [57]
    The appellant, however, relies on the affidavit of Mr Goeldner, who is the Chief Financial Officer of the appellant.  By reference to the documents uncovered by the search order, including a document entitled “AAAA TBQ”, which is an acronym for “jobs to be quoted”, Mr Goeldner asserts that the respondents were in possession of information that was commercially sensitive and confidential.  He states that this information would give the respondents “a significant advantage in quoting prices for clients which are competitive with Berg”.[58]
  4. [58]
    The Koniambo transaction was the only transaction relied on by the appellant for the purposes of proving any loss of business.  It was the only example of alleged misuse of confidential information.  It is apparent from [37] and [77]-[78] of the Reasons that the primary judge appreciated that the Koniambo transaction was the only instance referred to by the appellant in the statement of claim as constituting loss arising from misuse of confidential information.  In such circumstances the evidence of Mr Goeldner does not ameliorate the seriousness of this non-disclosure.
  5. [59]
    The appellant raises two further issues in relation to ground 2.  The first concerns the issue of delay/acquiescence.  By reference to the order of 4 October 2018,[59] the appellant submits that the respondents consented to orders that adjourned the application to set aside the search order and directed the parties to participate in a process by which the documents seized under the search order could be reviewed and classified.  This process contemplated the respondents’ agreement to the appellant inspecting and taking copies of certain documents seized during the search.  Thereafter, the respondents consented to four further orders by which additional time was given to the respondents and the independent solicitor to engage in steps contemplated by the 4 October 2018 order.  In the course of undertaking the process the respondents withdrew objections to the appellant inspecting and copying approximately 32 documents found in the possession of the second respondent during the search.  The appellant submits that these are matters of acquiescence under the search order, which militate against it being set aside.[60]
  6. [60]
    The second issue, which is related to the first issue, is described by the appellant as “utility considerations”.  The appellant submits that the primary judge did not give adequate consideration to the practical consequences of setting aside the search order in circumstances where it had been acted upon by the parties for some months in a consensual process involving the services of an independent solicitor.  The appellant submits:[61]

“[T]he primary judge appears to have decided to set aside the orders not because what was occurring lacked utility but because his Honour wished to sanction non-compliance with the duty of disclosure.”

  1. [61]
    Neither of these submissions can be accepted.  As to delay/acquiescence, the respondents submit that this issue was not raised before the primary judge.  The appellant points to parts of its written submissions before the primary judge that it alleges “fairly raised” the issue.[62]  An examination of the written submissions, however, does not reveal that the issue was squarely raised with his Honour.  The paragraphs of the written submissions relied upon by the appellant[63] are simply a recitation of previous orders.  Paragraph 4(i) identifies the following legal principle:

“[L]ack of expedience and/or utility of an interlocutory application to set aside an order is relevant to whether an earlier order ought to be set aside, especially where the order has already been executed and documents obtained of relevance to the proceeding.”

  1. [62]
    This principle concerns issues of expedience and/or utility, not ones of delay and acquiescence.  Paragraph 45(c) of the written submissions refers to the fact that the parties were liaising with one another to take appropriate steps to deal with the information obtained, including returning personal and other irrelevant information.[64]  This statement does not raise any issues relevant to delay and acquiescence.
  2. [63]
    As to utility, the primary judge did consider this issue at [109]-[110] of the Reasons.  His Honour considered it appropriate that the seized documents be delivered to the respondents’ solicitor for the purposes of considering the respondents’ disclosure obligations.  This was in circumstances where the appellant was already aware of the relevance and significance of the seized documents.  The arrangement structured by his Honour in returning the documents to the respondents’ solicitor ensured not only that the respondents would discharge their disclosure obligations, but also avoided any possibility of the documents being destroyed.
  3. [64]
    Ground 2 fails.

Ground 3

  1. [65]
    As stated above, by ground 3 the appellant asserts that the primary judge made incorrect findings of fact that were decisive in the exercise of discretion.  These may be dealt with briefly.
  2. [66]
    The first factual error is the finding that the second respondent “by his affidavit said that the [appellant’s client contact list] was a document that had been overlooked by him as being among other documents in the relevant box”[65] when in fact the list was stored electronically on a USB described as “AS5”.  Nothing turns on this discrepancy.
  3. [67]
    The second factual error concerns 25 physical documents seized during the execution of the second search order where his Honour noted:[66]

“Those physical documents were located mostly among documents in archive or document storage boxes at the second defendant’s residence during the search.”

  1. [68]
    I have quoted above the relevant evidence of the second respondent.[67]  The documents were not, in fact, kept in archive or document storage boxes.  The evidence was that the documents were kept in a “box” and “suitcase” in a wardrobe in the second respondent’s bedroom, together with “a bundle of loose documents on the floor beside his bed”.  I accept the respondents’ submission that this factual error is of no consequence.[68]
  2. [69]
    The third alleged factual error concerns the primary judge’s finding that the “Pipeline/Opportunity Summary” was information that the second respondent “would be likely to remember to a significant extent”.[69]  The appellant submits that there was no evidence as to the ability of the second respondent to remember this document in his head and, looking at the document, it was objectively unlikely that such information would be retained in one’s head.[70]  The finding was, in my view, open on the evidence.  As noted by his Honour, the document was prepared by the second respondent at the request of the appellant’s director shortly prior to the termination of the second respondent’s employment.  The document is four pages and in the form of dot points, set out under a number of subheadings.  It is also evident from [100] of the Reasons that his Honour had read the document himself and formed the view that it was probably not highly commercially sensitive information.
  3. [70]
    Ground 3 fails.

Disposition

  1. [71]
    The appeal should be dismissed and the appellant ordered to pay the respondents’ costs of the appeal.

Footnotes

[1]  [2019] QCA 160, [2] (Bradley J agreeing).

[2]Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177; [1981] HCA 39 citing the statement of Jordan CJ in In re the Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318, 323; [1946] NSWStRp 24.

[3]  (1936) 55 CLR 499, 505; [1936] HCA 40.

[4]Just GI Pty Ltd & Ors v Pig Improvement Co Australia Pty Ltd [2001] QCA 48, [14].

[5]Berg Engineering Pty Ltd v Tivity Solutions Pty Ltd & Ors [2019] QSC 68 (Reasons), [1].

[6]Australian Consumer Law, ss 18, 29(1)(d), (g) or (h).

[7]  RB, Vol 2, p 0257-8.

[8]  RB, Vol 2, p 0262.

[9]  Reasons, [11].

[10]  Reasons, [21].

[11]  The defence and counterclaim was filed on 5 September 2018.

[12]  Reasons, [84].

[13]  Reasons, [32]-[33].

[14]  Reasons, [88]-[90], referring to Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers [2003] 1 Qd R 683, 694-5, [51]-[54] per Holmes J; [2002] QSC 400 and Palaris Mining Pty Ltd v Short [2012] QSC 224, [19], [37]-[39] per Applegarth J.

[15]  Reasons, [93].

[16]  Reasons, [96]-[104].

[17]  Reasons, [103]-[104].

[18]  Reasons, [110]-[111].

[19]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 2.

[20]  Respondents’ Amended Outline of Argument filed 12 August 2019, paragraph 13.

[21]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 36.

[22]  Citing Palaris Mining Pty Ltd v Short [2012] QSC 224, [39], where Applegarth J in turn followed the principles discussed by Holmes J (as her Honour then was) in Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers [2003] 1 Qd R 683; [2002] QSC 400.

[23]  [2012] QSC 224, [47].

[24]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 40.

[25]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 39.

[26]  (2005) 12 VR 639, 650 (Ormiston and Buchanan JJA agreeing).

[27]  [1988] 1 WLR 1350.

[28]Savcor (2005) 12 VR 639, 650.

[29]  Reasons, [63].

[30]  (1912) 15 CLR 679, 682; [1912] HCA 72; Reasons, [58].

[31]  (2009) 240 CLR 319, 377 [131]; [2009] HCA 49.

[32]  At [133].

[33]  Reasons, [68]-[74].

[34]  RB, Vol 5, p 1520: Transcript of Proceedings on 16 August 2018, 1-7 l 12.

[35]  RB, Vol 5, p 1520: Transcript of Proceedings on 16 August 2018, 1-7 ll 41-2.

[36]  Reasons, [69].

[37]  RB, Vol 2, p 0106.

[38]  RB, Vol 5, p 1516: Transcript of Proceedings on 16 August 2018, 1-3 ll 4-9.

[39]  Reasons, [62].

[40]  [2005] FCA 955, [38].

[41]  Reasons, [86(b)].

[42]  SRB, Vol 6, p 1739.

[43]  SRB, Vol 6, p 1752.

[44]  SRB, Vol 6, p 1752.

[45]  RB, Vol 1, p 0062-3.

[46]  RB, Vol 2, p 0109.

[47]  RB, Vol 5, p 1522: Transcript of Proceedings on 16 August 2018, 1-9 ll 12-23.

[48]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 43(a).

[49]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 43(a).

[50]  [1991] 2 Qd R 121, 127.

[51]  See above at [37]-[40].

[52]  SRB, Vol 6, p 1656: paragraph 3.7.

[53]  SRB, Vol 6, pp 1673-4: Transcript of Proceedings on 29 August 2019, 1-26 ll 40‑47.

[54]  RB, Vol 5, p 1560: Transcript of Proceedings on 12 February 2019, 1-27 ll 28-46.

[55]  RB, Vol 2, pp 0483-8.

[56]  Transcript of Proceedings on 29 August 2019, 1-21 ll 1-7.

[57]  Transcript of Proceedings on 29 August 2019, 1-21 ll 25-8.

[58]  SRB, Vol 6, p 1698: Affidavit of Peter Leslie Goeldner sworn 16 August 2018, paragraphs 22-3.

[59]  SRB, Vol 7, p 1869.

[60]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 44.

[61]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 49.

[62]  Appellant’s Amended Outline of Argument in Reply filed 7 August 2019, paragraph 8(b).

[63]  RB, Vol 2, pp 0193-4: paragraphs 2(t), 2(x) and 2(aa) to 2(cc).

[64]  RB, Vol 2, p 0217.

[65]  Reasons, [101].

[66]  Reasons, [97].

[67]  See [52] above.

[68]  Amended Respondent’s Outline of Argument filed 12 August 2019, paragraph 32.

[69]  Reasons, [100].

[70]  Appellant’s Amended Outline of Argument filed 26 August 2019, paragraph 50.

Close

Editorial Notes

  • Published Case Name:

    Berg Engineering Pty Ltd v Tivity Solutions Pty Ltd & Ors

  • Shortened Case Name:

    Berg Engineering Pty Ltd v Tivity Solutions Pty Ltd

  • MNC:

    [2019] QCA 305

  • Court:

    QCA

  • Judge(s):

    Gotterson JA, McMurdo JA, Flanagan J

  • Date:

    20 Dec 2019

Litigation History

Event Citation or File Date Notes
Primary Judgment [2019] QSC 68 26 Mar 2019 Application to set aside a search order made ex parte on 20 September 2018 and executed on 21 September 2018 on the ground of material non-disclosure granted; search order set aside (with other ancillary orders): Jackson J.
Primary Judgment [2019] QSC 224 13 Sep 2019 Costs judgment: Jackson J.
Appeal Determined (QCA) [2019] QCA 305 20 Dec 2019 Appeal dismissed: Gotterson and McMurdo JJA and Flanagan J.

Appeal Status

{solid} Appeal Determined (QCA)