Plus One International Pty Ltd v Ching (No 3)

HIS HONOUR: These proceedings involve claims by two companies for what is said to have been the improper taking, and use, of confidential information, by two former employees, whilst still employed, and thereafter, contrary to their unwritten contracts of employment. There were a multitude of issues litigated including the employers’ assertion that the employees’ conduct constituted breaches of confidence, a breach of the implied terms of their employment contracts, a breach of fiduciary duties, and a breach of their civil obligations, as employees, under ss 182 and 183 of the Corporations Act 2001 (Cth). The companies relied upon equitable and statutory remedies that were said to be available to them as a result of the taking, and the use of, that information. They sought an injunction, as well as other remedies, including an account of profits and damages for breach of contract in respect of the breaches, from each of the employees.

This was not a case in which the enforcement of restraint of trade provisions was, or could have been, sought. There was no restraint of trade binding the employees following termination of his, or her, employment with the employers. There was no such claim made in the pleadings and it was not suggested that any such term could be implied into the unwritten contracts of employment. It was also not a case in which any interlocutory relief had been sought at the time the companies learned of the matters about which each now complains.

The matter was heard, for three days, commencing on 25 August 2020. For the most part, it was a live hearing. However, belatedly, on the day before the hearing was to commence, the Court was informed that one of the Plaintiffs’ witnesses had recently had a baby, and as she was required for cross-examination, her evidence was sought to be given using Microsoft Teams. The legal representatives, and the Court, co-operated in finding a time that was suitable to that witness so that her involvement would not interrupt her attending to the needs of her newborn baby.

Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 31.3 provides that if the court so orders, evidence and submissions may be received by telephone, video link or other form of communication. At the commencement of the hearing, without opposition from the Defendants, the Court made the following direction (Tcpt, 25 August 2020, p 2(32–38)):

Having now concluded that part of the hearing, my view that the cross-examination could be undertaken fairly, in a forensically sound, thorough, and just, manner was confirmed. I am also satisfied that notwithstanding the circumstances, there was an effective cross-examination. No complaint was made about the manner in which the cross-examination was conducted.

The matter did not conclude within the three days and it was necessary to limit the oral submissions. However, directions were made to enable any further submissions, considered to be necessary, to be made in writing. Counsel provided the further written submissions, which were very detailed and which have been of assistance.

The proceedings focussed, significantly, on which, if any, of the Plaintiffs’ clients had become clients of the Defendants. In what is written below, I have referred to those clients by their initials, in order to preserve their privacy.

The Plaintiffs commenced the proceedings by Statement of Claim filed on 17 December 2018. The Defendants did not file a Defence until 11 March 2019, and only after the Plaintiffs had applied for default judgment. There was no Cross-Claim filed, at any time, by either, or both, of the Defendants.

In the Statement of Claim, the Plaintiffs asserted that both of the Defendants, in the course of their employment, had access to confidential information created by, and belonging to, the Plaintiffs, and that they had wrongfully used that confidential information in circumstances where each ought to have appreciated that it was confidential.

In his written opening submissions, counsel for the Defendants pointed out that because there was no written contract of employment “it is difficult for the Court to ascertain critical issues such as which of the plaintiffs employed [Mr Ching], what the precise nature of his role was, the nature of the employment relationship, and what the terms of the relationship were”. He repeated that submission in respect of the second Defendant. However, as the case progressed, nothing else was said in support of this submission.

Neither party pleaded, or led any evidence, as to what terms of employment, if any, had been agreed. Indeed, the role played by each of the Defendants in the business of one, or both, of the Plaintiffs was completely undocumented, and remained somewhat opaque. It was not suggested, however, by any of the parties, that any post-employment restrictive covenants had been agreed.

However, as earlier referred to, as part of their case, the Plaintiffs relied upon the duties of employees implied into a contract of employment at common law and also under ss 182 to 183 of the Corporations Act. They also asserted that each of the Defendants owed to them, as employers, equitable duties of confidence, and fiduciary duties, which the Defendants had breached.

An allegation that former employees have stolen confidential information is of the “utmost seriousness” — as a matter of fairness, the identification of the alleged confidential information “must be in more than general terms”: Liberty Financial Pty Ltd v Scott (No 2) (2005) 11 VR 629 at 634 [13]; [2005] VSC 26 at [13] (Harper J). As will be read, on the evidence advanced by the Plaintiffs, it is clear that access to all of the Confidential Information, as defined, was not granted to either, or both, of the Defendants. It will be necessary to return to this aspect later in these reasons.

Thus, there is a requirement in this type of case, that the alleged confidential information be identified with precision: O’Brien v Komesaroff (1982) 150 CLR 310 at 326–328 (Mason J, Murphy, Aickin, Wilson and Brennan JJ agreeing); [1982] HCA 33; Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443 (Gummow J, albeit in dissent in the result); [1987] FCA 266.

In the Statement of Claim, at par 10, the Plaintiffs identified the information that was defined the “Confidential Information” used for the purposes of providing advisory and consultancy services in education and migration, as:

The Plaintiffs also pleaded that their business relied heavily on client leads and referrals from previous clients. They asserted that the Confidential Information, including the referral leads from previous clients, was valuable information, which, if released, or accessed, outside their business, would permit competitors to anticipate, and understand, each client’s education and visa requirements, with the consequence that those competitors would be able to identify target clients and client leads, provide relevant contact details, and timing, for those competitors to undercut the Plaintiffs’ pricing structure. Presumably, it was this matter that made the client contact details important.

In par 19 of the Statement of Claim, the Plaintiffs asserted that they “provided access to the Confidential Information to each of the Defendants for the sole purpose of fulfilling their duties as employees”.

The Plaintiffs sought an order that the Defendants “return to the Plaintiffs all of the Plaintiffs’ Confidential Information remaining in their possession or control”; they sought an “injunction to restrain the Defendants and their servants or agents, from using the Plaintiffs’ Confidential Information for any purpose, and from contacting, or communicating, with the individuals named in the Confidential Information, or providing them with services”. They also sought an account of profits, damages, interest and costs.

In their Defence, the Defendants pleaded that they did not know, and could not admit, the collection, or retention, of the information asserted by the Plaintiffs to be confidential. They denied that the Confidential Information was not in the public domain, or otherwise unavailable outside the Plaintiffs’ business. They asserted that, on occasions, Danniel Bo Lin Lee, also known as Danniel Lee (Mr Lee), the sole director of one of the Plaintiffs would “request the Defendants to bring their cases home to work on”. They asserted that they had not been instructed “not to copy the required Confidential Information to complete the cases” and, in the case, of the second Defendant, that Mr Lee “knew the Second Defendant required the alleged Confidential Information to complete her task and impliedly authorised her to take the confidential information home to perform the task”. They also disputed the improper use of any confidential information.

(Again, it is clear that the reference to Confidential Information must have been to such parts of the Confidential Information, as defined, to which they had access.)

In their Defence, the Defendants also stated that they “admit paragraph 19 of the Claim and say that the Defendants do not know the login and password of the Google Drive”. They also pleaded that the Plaintiffs’ business relied upon, and obtained, “leads and [referrals] from the network of the agents or staff”.

Counsel for the Defendants also relied, in submissions, on an apparent concession made by counsel for the Plaintiffs at Tcpt, 27 August 2020, p 314(18–41):

Counsel for the Plaintiffs, apparently by way of explanation, then added “[b]ecause the defendants have not disclosed that to the plaintiffs”. For reasons to which I shall return, the explanation is not an adequate one.

Although the Defendants did not file, or serve, any Cross-Claim, in their Defence, they made a claim for commission ($11,400), which was said to be due to one of them. It was asserted that “[i]f the First Defendant is found liable to pay any monies pursuant to the Plaintiffs’ claim (which is denied), then he says that he is entitled to a set-off in the sum of $11,400”.

Counsel for the Defendants placed reliance on the Civil Procedure Act 2005 (NSW), s 21(1), which permits a defendant, if there are mutual debts between a plaintiff and a defendant in any proceedings, by way of defence, to set off, against a plaintiff’s claim, any debt that is owed by the plaintiff to the defendant and that was due and payable at the time the defence of set-off was filed, whether or not the mutual debts are different in nature: Tcpt, 25 August 2020, p 28(48) – p 29(12).

Despite all of the other disputed issues of fact, it was common ground that each of the Defendants owed a duty of confidence to the Plaintiffs and that they were subject to implied obligations, as part of the employment contract with the Plaintiffs, to protect and maintain the confidentiality of the Plaintiffs’ confidential information, not to use that information other than in the legitimate exercise of their duties as employees of the Plaintiffs and to return all confidential information to the Plaintiffs on ceasing employment with the Plaintiffs.

It was also common ground that if the Plaintiffs had provided the Defendants with access to any confidential information, it was for the sole purpose of the Defendants carrying out their duties as employees of the Plaintiffs.

At this early stage, it should be noted that although counsel for the Plaintiffs stated in her opening that “these proceedings have been brought primarily to injunct the defendants from continuing to use, or benefit from, any of the confidential information that they obtained whilst employed by the plaintiffs” (Tcpt, 25 August 2020, p 40(43–47)), at no time prior to the hearing, had the Plaintiffs sought an interlocutory injunction in the terms sought in the Statement of Claim or otherwise. The final hearing occurred about three weeks before the two year anniversary of the Defendants leaving the employ of the Plaintiffs.

Nor had the Plaintiffs, at any time, sought an Anton Piller order, which is “an order which the Court makes in personam, against the defendant … directing the defendant to permit identified people to enter the defendant’s premises, and to carry out the activities of searching for, and retaining the items which are identified”: PMSI Group v Wilson [2003] NSWSC 263 at [7] (Campbell J); UCPR, r 25.19. (I accept that such an order is one which the Court makes only in exceptional circumstances because of its invasive nature.)

Nor had the Plaintiffs sought any order for discovery under r 21.2 of the UCPR or, as often happens in these types of case, an order permitting the computers, or any other electronic storage devices, including the mobile phones, belonging to, or used by, the Defendants, inspected, and copied, by a forensic expert, in order to ascertain whether any of the information said to be confidential to the Plaintiffs’ business, had been stored on any of them, under r 23.8 of the UCPR: Automotive Dealer Administration Services Pty Ltd v Kulik [2010] VSC 293; and by way of other example, Huang v Union Standard International Group Pty Ltd [2020] NSWSC 400. In order to avoid other information, said to be confidential to the Plaintiffs, being disclosed, the appointment of an expert for that purpose could have been sought: James v Faddoul [2006] NSWSC 1330 at [8] (Brereton J).

Nor had the Plaintiffs sought an order for expert evidence going to the inspection of their own Google drive for the forensic purpose of establishing the dates when, and the circumstances in which, the Defendants caused any information or electronic folders contained thereon to be copied.

To have done so may have provided the answer to the question posed concerning what information had truly been obtained from sources which the law would regard as confidential. Such expert evidence, also, may well have resulted in the ascertainment of facts which corroborated the case of one side or the other.

Nor had the Plaintiffs made any attempt made to demonstrate, in relation to any student, the courses undertaken by that student. There was no evidence of the duration of contact between that student and either Plaintiff. The frequency with which students would refer potential clients to either Plaintiff was also not the subject of any evidence. For example, there was no evidence that showed how many of the total students assisted by either Plaintiff in any given year were referred to the Plaintiffs by existing clients.

These are matters that the Court must consider in determining whether the Plaintiffs had established their case made against the Defendants and the nature of the discretionary relief, if any, that should be granted.

At the Court’s request, the legal representatives of the parties provided the following agreed Statement of Issues:

Whilst the Statement of Issues was agreed, there is a need to comment, briefly, on the issues in the proceedings.

First, the Statement of Issues referred to s 181 of the Corporations Act, and asked whether it had been breached. In spite of that issue being “agreed”, it is not one that is open on the facts. The Plaintiffs’ claim is described in the introduction to the Statement of Claim as one in “Equity, Fiduciary Duties, ss 180–183 of the Corporations Act 2001 (Cth)” (adding, as well, s 180). The duty to exercise powers and discharge duties in good faith and for a proper purpose, as contained in s 181, applies only to “[a] director or other officer of a corporation”. (The same can be said of the duty of care and diligence expressed in s 180.)

It was not, and could not be, suggested on the evidence, that either of the Defendants was a “director or other officer” of one, or both, of the Plaintiffs. Relevantly, neither was a person (i) who made, or participated in making, decisions that affected the whole, or a substantial part, of the business of the Plaintiffs; or (ii) who had the capacity to affect significantly the Plaintiffs’ financial standing; or (iii) in accordance with whose instructions or wishes the directors of the corporation were accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation): Corporations Act, s 9 (definition of “officer”).

Perhaps, counsel for the Plaintiffs appreciated the problem, as in her written submissions she only pressed for declarations of contravention of ss 182(1) and 183(1). In the circumstances, it is only necessary to address whether ss 182–183 of the Corporations Act were contravened. (Section 185 of the Corporations Act provides that ss 180–184 have effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office (or employment) in relation to a corporation and those sections do not prevent civil proceedings being commenced for breach of such a duty or liability.)

Second, in respect of the last paragraph of the Statement of Issues, by way of example, the Plaintiffs would need to establish a causal relationship between the damages, or equitable compensation, sought, and the Defendants’ alleged breach of their contractual or equitable duties: J D Heydon, Heydon on Contract (2019, Lawbook Co) at 937 [26.140].

The Plaintiffs would also need to establish that, but for the alleged breaches, the Plaintiffs would have earned profits from the persons referred to: J & E Vella Pty Ltd v Hobson [2020] NSWCA 188 at [40] (The Court). There was scant evidence of these matters, including evidence going to the damages said to have been suffered. The evidence that was led was only referable to the payments made by the 17 persons said to be clients of the Plaintiffs (to whom I shall return later). Otherwise, it is difficult to glean what damage, if any, the Plaintiffs suffered.

There was an additional issue, not agreed by the Defendants beyond what was pleaded in the Statement of Claim at par [18(b)], which was:

The implied contract referred to was, in the case of each Defendant, his, or her, employment contract with one, or both, of the Plaintiffs. The Defendants admitted that they were subject to implied obligations as part of those contracts. However, they contended that those obligations were restricted to those implied by law.

Finally, although not specifically identified as an issue, the question of the set-off, raised by the Defendants, to which reference has earlier been made, also needs to be considered.

With that somewhat lengthy introduction, I turn to the facts of the case that I am satisfied have been established.

Broadly speaking, I was satisfied that part of the account that each of the witnesses gave in relation to his, or her, actions, and the events that had occurred, was accurate and credible. However, there were other parts of the evidence which, in my view, clearly demonstrated that the Court was not told the whole, or even most, of the story and that other parts thereof were simply not plausible.

I shall deal, first, with the following facts as established, either by admissions in the pleadings, by evidence not the subject of dispute, or by evidence that I accept as truthful. Only some parts of the mosaic of facts can be stated under that umbrella.

The Plaintiffs, Plus One International Pty Ltd (to which I shall refer as POI) and Plus One Migration Pty Ltd (to which I shall refer as POM), or together, as the Plaintiffs, were jointly engaged in the provision of advisory and consultancy services in education and migration, principally to international students. POI traded as “Plus One Advisory” and “Plus One Education”.

Each of the Plaintiffs is a corporation registered in New South Wales. Their business was conducted from premises situated at Sussex Street, in the central business district of Sydney.

POI was registered in New South Wales in November 2014. It is an Australian proprietary company limited by shares. It has 100 issued ordinary shares with a share capital of $1,000, which shares are beneficially owned by Yin Teang Siew, also known as Charlotte Siew (Ms Siew).

POM was registered in New South Wales in September 2016. It is an Australian proprietary company limited by shares. It has 100 issued ordinary shares with a share capital of $100, which shares are beneficially owned by Mr Lee. Mr Lee was the Director of Operations and the Manager of the Plaintiffs’ business.

At all relevant times, the sole director of POM was Mr Lee. At all relevant times, the director of POI was Ms Siew. Ms Siew described herself as the Director of Operations of POI.

Although not specifically disclosed in the evidence, the Court was informed from the Bar table, without objection, that “[Mr Lee and Ms Siew] are husband and wife; they’re business partners”: Tcpt, 25 August 2020, p 42(35–36). Each gave evidence and was cross-examined. As stated, it was Ms Siew who gave her oral evidence by audio-visual means.

In November 2016, the first Defendant, Yiu Tung Ching (Mr Ching), also known as “Paris”, began working for one, or both, of the Plaintiffs. Mr Lee and Mr Ching both stated that POI employed him: Affidavit, Danniel Bo Lin Lee, 19 August 2019 at par 4; Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at par 7.

Whilst there is a dispute about the scope of the role, and the duties, of Mr Ching, because of the absence of a written contract of employment, and because he only admitted being employed as a marketing officer, it appears that his duties included those of an education counsellor and marketing officer. He would prepare and collate clients’ student applications for college, clients’ visa applications, students’ insurance applications; would promote and market the Plaintiffs’ business to its target audience; and would train new staff.

In about April 2017, the second Defendant, Jieyi Lu (Ms Lu), also known as “Joy”, who is Mr Ching’s partner, also began working for one, or both, of the Plaintiffs. Whilst there is a dispute about her role in the business, the Defence asserting that she had no official title and job scope, there is no dispute that it included, at least, preparing and collating client’s student applications for colleges, and making visa, and student insurance applications.

It appears that, for at least some time, Mr Ching had received a fortnightly wage of $942.14: Tcpt, 26 August 2020, p 204(30–46). Whilst Ms Lu acknowledged that she received a fortnightly salary also, she was uncertain of the precise amount of her salary. There was some evidence that during 2018 her salary was typically $928 per fortnight: Tcpt, 26 August 2020, p 114(10–35).

Employees of the Plaintiffs, including Mr Ching, were also entitled to commission for referring prospective clients to the Plaintiffs. An employee was entitled to $300 for referring a client enrolling in a VET (Vocational Education Training) course and $600 for a client enrolling in a Bachelor degree or higher qualification. If, however, the prospective client had been referred to the employee by an existing client, then the employee was only entitled to $50. The remaining $250 was paid to the existing client who had facilitated the introduction.

As has been stated, there was no written contract of employment between the Plaintiffs, or either of them, and either, or both, of the Defendants. Mr Lee confirmed that neither of the Defendants had signed a written employment contract. In addition, neither of the Defendants had provided any written letter of resignation, when each of them left the employ of the Plaintiffs.

I am satisfied that, whatever was the role of each of the Defendants in the operation of the Plaintiffs’ business, neither was employed in a managerial, or strategic, role with either Plaintiff. However, each of the Defendants had some personal contact with the clients with whom he, or she, dealt as evidenced by the WeChat contact details to which reference will next be made. For the same reason, there was some element in the employee-student relationship which caused the relevant client to contact him, or her, to the exclusion of Mr Lee or Ms Siew.

Because it was referred to as an important aspect of the case, it is necessary to refer to what was described by counsel for the Defendants as the “WeChat App”. As I understand it, it is a software application and, predominantly, a Chinese social media platform, which enables instant text messaging, hold-to-talk voice messaging, broadcast (one-to-many) messaging, video calls and conferencing.

WeChat, if not the primary, was, at least, a frequent, means, of communication between the Plaintiffs’ employees and the clients. Other means of communication with clients included by telephone, email, or using WhatsApp (another communication app).

The Plaintiffs’ employees were not given a business mobile phone, or mobile phone number, referable only to the Plaintiffs’ business. An employee, including each of the Defendants, would use his, or her, personal mobile phone in the course of the work being done as an employee, and would communicate with clients of the Plaintiffs using the WeChat application on his, or her, personal mobile phone.

There was no evidence that one, or other, of the Plaintiffs paid for the mobile phone, or other, charges of each of the Defendants.

A client would contact an employee using the employee’s personal mobile phone number, or his, or her, personal WeChat ID. One consequence of this practice was that Mr Lee was not, automatically, privy to conversations that occurred between the Plaintiffs’ employees and the clients. Unless he was added to a “group chat”, or he himself started a group chat, clients would communicate with an employee directly: Tcpt, 25 August 2020, p 61(42–46). In this way, it may have been possible for one of the Defendants to form a personal relationship, or at least a rapport, with the client.

Mr Lee accepted, in cross-examination, that the Plaintiffs’ client list did not contain the WeChat contact details of clients. Those details remained with the employee who was dealing with that particular client. Unless the employee, including each of the Defendants, provided Mr Lee with the WeChat details, he (or anyone else employed by the Plaintiffs) would not be able to contact the client directly: Tcpt, 25 August 2020, p 61(48) – p 62(20), p 62(40) – p 63(09). Indeed, the only people who would know whether the WeChat contacts on the mobile phone of each of the Defendants were clients, potential clients, or personal associates of either of the Plaintiffs, would be likely to be the Defendants: Tcpt, 25 August 2020, p 64(44) – p 65(01).

It would also seem that the number of WeChat contacts possessed by each employee would vary. As will be read below, Mr Ching possessed a large number, about 361, WeChat contacts of the Plaintiffs’ clients. Ms Lu denied that it was her usual practice to add contacts of the Plaintiffs’ clients to her WeChat contacts on her mobile phone. She would only do so when Mr Lee asked her to, which was said to be on about ten occasions: Tcpt, 26 August 2020, p 122(11–19).

The Plaintiffs retained files and records relevant to their business in both hard, and soft, copy. Any physical copies of files and documents were kept, securely, at the Plaintiffs’ business premises. Electronic copies of files and documents were, by and large, stored in the Plaintiffs’ Google Drive. (As I understand it, Google Drive is a file storage and synchronization service that enables a user to store files (data) on its servers, synchronize files across devices, and share files.)

The Plaintiffs kept two separate Google Drives, or as stated in the written submissions, kept two separate sections of one Google Drive. The first, the subject of these proceedings, was described as the “student” or “client” Google Drive. This was the Drive containing the details of clients and related documents.

Mr Lee outlined that this section contained the following information on it, namely, a processing folder that contained all of the clients’ private information, and clients’ visa information; an institutional information folder containing marketing materials from educational institutions, application forms, and some information regarding pricing; and miscellaneous folders that contained company templates such as acknowledgement templates, and a template on how employees should issue a reply in certain circumstances: Tcpt, 25 August 2020, p 78(03–18).

The other Google Drive, or section of the Google Drive, stored, amongst other things, information relating to the finances of the Plaintiffs. It also included, for example, the contracts that had been entered into between one, other, or both, of the Plaintiffs and the educational institutions with which each did business. Mr Lee made it clear that no other person, apart from Ms Siew, had access to that Drive.

Each Google Drive, or section thereof, was password protected. Only Mr Lee and Ms Siew possessed the password for both sections. There was evidence of one occasion when another employee of the Plaintiffs possessed a temporary password for 24 hours in order to set up some new computers: Affidavit, Arniawan, 19 August 2019 at pars 5–6. However, it was not suggested that either of the Defendants had possession of either password, at any time.

The Plaintiffs’ employees, including each of the Defendants, required access to clients’ files and documents in order to complete various tasks. To facilitate this access, Mr Lee and Ms Siew would share, with the employees, certain folders in the “student” or “client” section of the Google Drive. Access to these shared folders was only possible on the computers located at the Plaintiffs’ business premises, as those were the only ones on which the password for access was pre-set.

There was, initially, some dispute about whether, and to what extent, the Defendants were permitted, or instructed, to take work (including the client or student files from the Google Drive) home with them. Ultimately, Mr Lee accepted, in cross-examination, that employees did perform some work from home, although these occasions were “rare”. On such occasions, the employees were provided with the information they needed either on an external drive (such as a USB), in an email, or as a hard copy. His evidence was that he would trust his employees to return the information they had taken: Tcpt, 25 August 2020, p 78(26) – p 79(13).

Nothing much turns on the regularity of the work performed at home, or the manner in which information needed was obtained, as there was no dispute that any access to files, and to documents, provided to each of the Defendants was for the sole purpose of allowing him, and her, to fulfil his, and her, duties as an employee.

On 16 May 2018, Mr Ching registered in New South Wales a business under the entity name “Ching, Yiu Tung” as an “Individual/Sole Trader” and received an official Australian Business Number (ABN). On 20 May 2018, Ms Lu registered the business name “JP International Consultancy” with ASIC as associated with that ABN.

On 24 May 2018, Mr Ching opened a bank account (ending 9252) with the Commonwealth Bank of Australia, which was held in his name trading as JP International Consultancy: Exs P1/20; P2/8.

On 17 July 2018, the Defendants opened another two accounts, in Mr Ching’s name, trading as JP International Consultancy (ending 1104 and 1083): Ex P2/2, 5. There was some evidence that the account ending 1083 was the trust account of the business: Tcpt, 26 August 2020, p 109(07–22).

Between late July 2018 and 13 September 2018, the Defendants (through JP International Consultancy) began to enter into agreements with educational institutions. It appears that these agreements allowed the Defendants to act as agents for the institutions when dealing with current, or prospective, students. The following agreements were entered into:

At least by 19 July 2018, the Defendants had set up a dedicated accounts email address for JP International Consultancy: Ex P12/23–24. (I observe that the document is dated 19 July 2017. Ms Lu was unable to recall if this was an error: Tcpt, 26 August 2020, p 142(22–26). However, I infer from the surrounding circumstances, that the year meant to be recorded was 2018.)

On 21 July 2018, the Defendants provided JP International Consultancy’s bank account details to Sunshine Coast International College: Ex P12/13; Tcpt, 26 August 2020, p 139(23–25).

In July 2018, the Defendants saw an advertisement for a lease on office space on Sussex Street in Sydney. Ms Lu gave evidence that she was attracted to the space due its location and the “very cheap” rent. Notably, the space was within a city block of the Plaintiffs’ business premises.

Ms Lu prepared a Commercial Tenancy Application for the premises. On that application, which was undated, Ms Lu listed the company name as “JP International Consultancy” and the type of business as “Education & Migration Consultancy”: Ex P10/4. (In cross-examination, on this topic, Ms Lu’s evidence was equivocal and contradictory. She went back and forth between accepting that the form was correct and denying its accuracy: Tcpt, 26 August 2020, p 136(44) – p 138(20).)

On 26 July 2018, Mr Ching, as principal of JP International Consultancy, entered into a license agreement for the occupation of that office space (although the agreement was witnessed on 27 July): Ex P10. The keys for premises were collected by Mr Ching on 1 August 2018: Ex P10/5.

In late July 2018, the Defendants began paying incidental expenses for JP International Consultancy’s offices, including for an internet connection: Ex P1/22; Tcpt, 26 August 2020, p 226(26–28). The Defendants paid the first rental payment ($4,546.34) on 27 July 2018: Tcpt, 26 August 2020, p 226(16–24); Ex P2/15.

Mr Ching accepted that, by 27 July, he and Ms Lu had set up JP International Consultancy and that it operated as an education consultancy: Tcpt, 26 August 2020, p 227(17–50).

By 2 August 2018, the Defendants had set up a dedicated administrative email address for their business: Ex P9/8.

On 4 August 2018, the Defendants began paying for a subscription with Google: Ex P1/22. Mr Ching was unable to recall whether this was for Google Drive storage, for email, or for some other Google product: Tcpt, 26 August 2020, p 226(30) – p 227(15).

On 8 August 2020, the Defendants physically entered occupation of the premises.

On about 20 August 2018, a conversation occurred between Mr Lee and Mr Ching. The precise terms of the conversation were in dispute. However, it was accepted by each that Mr Ching communicated his intention to Mr Lee to resign from the Plaintiffs’ business, so it was said, having received an offer of employment from a factory in China.

(It is clear that the reason given to Mr Lee by Mr Ching was no more than a subterfuge. There is no evidence of any such offer in fact having been made.)

By 3 September 2018, JP International Consultancy had a landline telephone number, for the property rented.

There was some dispute about when, precisely, the Defendants began contacting prospective clients and when they began providing education consulting services to them. The Plaintiffs tendered a Training Masters’ International Student Enrolment Form for WX dated 31 August 2018: Ex P8/3–3B. Nothing on the form itself indicates that it was completed by one, or both, of the Defendants. Further, as identified above, the Defendants only entered into an agent agreement with Training Masters on 4 September 2018. However, it seems likely that one or both of the Defendants prepared the application form dated 31 August 2018 as there is a payment made by a student, WX, into JP International Consultancy’s bank account (ending 1083) dated 17 September 2018: Ex P2/14. There does not appear to be any explanation for the payment having been made on 17 September 2018 other than that it was for services rendered at, or prior to, that date.

Also on 3 September 2018, JP International Consultancy received a payment from AHM (the private health insurance provider): Ex P1/23. It was accepted, in cross-examination, that this payment was a referral fee for obtaining students’ international health insurance: Tcpt, 26 August 2020, p 225(18–34).

Mr Ching accepted that he was applying for health insurance for international students on behalf of JP International Consultancy whilst he was employed by the Plaintiffs.

In August, or early September, 2018, the Defendants began receiving payments from at least one student for enrolment fees: Ex P1/58; Ex P2/15. An “Application Form for Enrolment” for JZ, a student, for Australian Ideal College, signed by JZ, on 3 September 2018, bears a stamp for JP International Consultancy containing its ABN, the Sussex Street address and landline telephone number. (It is unclear, but may be inferred, that the stamp was placed on the document on 3 September 2018: Ex P5/7.)

An ASIC Current Extract dated 8 October 2018 showed that the address for service of JP International Consultancy was an address in Sussex Street, Sydney. Ms Lu accepted that, by then, the Defendants had met with clients, or prospective clients, in the offices of JP International Consultancy. She also accepted that the Defendants had started making applications to educational institutions and health insurance providers on behalf of students by then: Tcpt, 26 August 2020, p 178(42) – p 179(15).

The employment of both Defendants ceased on about 13 September 2018. It was common ground that the Defendants met with Mr Lee and Ms Siew, at a bar, after work. Again, the precise terms of the conversation that occurred were in dispute. The Defendants told Mr Lee and Ms Siew that they wished to resign in order to commence the JP International Consultancy business, which, they admitted, had already been registered. The Defendants also stated that they had rented premises across the road from the Plaintiffs’ premises.

On Mr Ching’s account of the conversation, Mr Lee voiced no opposition to the Defendants starting their own business. Indeed, Mr Lee said that they could co-operate in the future. Ms Lu gave similar evidence of the conversation. Both maintained their version of events in cross-examination: Tcpt, 26 August 2020, p 180(04–25), p 233(41) – p 234(16).

Neither Mr Lee nor Ms Siew gave evidence of that part of the conversation having occurred, and neither was cross-examined on the topic.

The resignation of each Defendant became effective on 14 September 2018.

Despite Mr Ching’s protestations to the contrary, there can be little dispute that the business commenced by the Defendants was the same type of business as that being conducted by Plaintiffs: Tcpt, 26 August 2020, p 228(13) – p 231(46). Both businesses involved dealing with overseas students, predominantly, if not only, from China; and both required communication with, and referral to, the same, or similar, educational institutions to obtain student visas for their clients.

I am satisfied, following the cross-examination of each of the Defendants, and otherwise, that the Defendants, or one of them, had copied, or retained, what were described as “WeChat Personal Contact” details prior to ceasing employment with the Plaintiffs. In addition, Mr Ching admitted that he had retained some of the files on his personal laptop at home and did not tell Mr Lee that he done so. This included Plus One files which were then used by JP International Consultancy: Tcpt, 26 August 2020, p 235(10–14), p 238(38–46). He also admitted that whilst he had returned the hard copy files, he had retained the electronic files: Tcpt, 26 August 2020, p 235(26) – p 236(20). He did not tell Mr Lee that he had done so.

Ms Lu also admitted that she did not delete any of her WeChat contacts: Tcpt, 26 August 2020, p 182(18–22), p 183(04–05).

On 15 September 2018, Mr Ching visited the Plaintiffs’ office. There he met Mr Lee and he passed back to Mr Lee, at least some WeChat contacts of the Plaintiffs’ clients. Messages between Mr Ching and Mr Lee on this date show that some 81 contacts were passed back. Nine of those appear to be duplicates of other contacts. It follows that Mr Ching identified, and passed back, 72 contacts to the Plaintiffs.

It is clear from a comparison with Ex P11 (a confidential exhibit containing the Plaintiffs’ client list), that each of those 72 contacts was a client of the Plaintiffs.

Whilst Mr Ching identified, and passed back those contact details, he did not delete the contact details from his WeChat account. However, there was a dispute about whether Mr Lee had, in fact, requested that he do so.

In the days following that exchange, Mr Lee became increasingly concerned that Mr Ching had not handed back all of the Plaintiffs’ clients’ information: Affidavit, Danniel Bo Lin Lee, 19 August 2019 at pars 26–29. Consequently, he arranged another meeting at the Plaintiffs’ offices.

On 26 September 2018, Mr Lee, Mr Ching and Ms Lu met at the Plaintiffs’ offices. The precise scope and content of the meeting, and what was said thereat, remained in dispute at the hearing. In substance, however, Mr Lee drew attention to six clients, or potential clients, of the Plaintiffs, who he suspected had been approached by the Defendants. Mr Lee demanded that the Defendants send a message to all of the Plaintiffs’ former clients, the identity of whom was known to the Defendants, informing each that Mr Ching and Ms Lu were no longer employed by the Plaintiffs.

Mr Ching then drafted, and sent a message, in the Chinese language, to 414 of his WeChat contacts. A translated version of that message, in the following form, was annexed to Mr Ching’s affidavit:

In the afternoon of the same day, Mr Lee and Mr Ching had a further conversation by telephone. Following the conversation, Mr Ching sent the WeChat contacts for two referred clients, KCT and MZ, to Mr Lee.

Later in the evening of the same day, the Defendants returned to the Plaintiffs’ offices. Mr Ching sent Mr Lee a copy of the message that had been sent to the WeChat contacts and a list of the contacts to whom the message had been sent. That list of contacts formed annexure “K” to Mr Lee’s affidavit affirmed 19 August 2019 (whilst a version, with the names in alphabetical order, later became Ex P17).

Mr Ching accepted that each of the names in Annexure “K” represented contacts that he had obtained during his employment with the Plaintiffs: Tcpt, 27 August 2020, p 280(39) – p 281(08), 287(25–26). Yet, despite his acceptance of that assertion, an actual examination of Ex P17 reveals that the message was sent to 412 contacts, of which only about 361 appear to be clients of the Plaintiffs (as shown in Ex P11, the Plaintiffs’ confidential client list).

Having received a copy of the message and the list of recipients. Mr Lee also asked for the WeChat contacts and associated documents of two further persons being XEF and KTL. It was unclear who these two persons were. They were not shown as clients of the Plaintiffs (as they did not appear in Ex P11). Nonetheless, Mr Ching provided the contacts and documents to Mr Lee.

Thereafter, the dispute between the parties seemed to escalate. Mr Lee became increasingly concerned about the Defendants having retained the Plaintiffs’ clients. Another meeting was arranged for 28 September 2018, this time at the offices of JP International Consultancy. Once again, the precise conversations that occurred were in dispute.

Mr Lee demanded that both Defendants return all WeChat contacts of the Plaintiffs’ clients and added that it was their “last chance” to do so. He made a further demand, on this occasion, that the Defendants delete the contacts from their personal WeChat accounts and demanded that the Defendants show him JP International Consultancy’s business emails and bank transactions.

A private conversation then occurred between Mr Lee and Mr Ching away from the others. Each gave conflicting accounts of what was said. Mr Lee gave evidence that Mr Ching pleaded with him to allow the Defendants to keep all of the WeChat contacts. Mr Lee refused this request. Conversely, on Mr Ching’s account, Mr Lee had agreed to Mr Ching keeping his “friends’ contact details and the contact details of the students in [his] List”. Mr Ching maintained his version of the conversation in cross-examination: Tcpt, 27 August 2020, p 286(26–28).

Mr Lee and Ms Siew returned to JP International Consultancy’s offices that afternoon. At that time, Mr Ching acceded to Mr Lee’s demand to see the business’ emails. Photographs appear to show Mr Lee looking at a computer screen (which was JP International Consultancy’s business computer): Ex D3. Regrettably, none of those photographs were shown to Mr Lee during cross-examination.

The basis of the tender, so it was said by counsel for the Defendants at Tcpt, 27 August 2020, p 292(13–14), was:

It is appropriate, at this point, to digress from the narrative, to mention a submission made by counsel for the Plaintiffs in her written closing submissions headed “Procedural fairness issues”.

Counsel for the Plaintiffs submitted that the tender of six exhibits (Exs D3–D8) over objection was:

She added:

To consider the submission made, it is necessary to say something about the relevant exhibits, which were not extensive.

Ex D4 was a screenshot of WeChat conversations between Mr Ching and LC in September 2016, that is to say, before Mr Ching commenced employment with the Plaintiffs, or one of them: Tcpt, 27 August 2020, p 298(01) – p 299(01). Similarly, Ex D6 was a screenshot of WeChat conversations between Mr Ching and WC in September 2016, that is to say, before Mr Ching commenced employment with the Plaintiffs, or one of them: Tcpt, 27 August 2020, p 299(45) – p 300(15).

Ex D5 was a screenshot of WeChat conversations dated 1 and 2 October 2018 between YHK and Mr Ching, the content of which suggests that YHK, who was a client of one, or both, of the Plaintiffs, followed the first Defendant to JP International Consultancy, not because of anything other than that he was unhappy with the service provided by the Plaintiffs: Tcpt, 27 August 2020, p 299(25–30).

Ex D7 was a screenshot of WeChat conversations occurring throughout October and November 2018 between JS and Mr Ching. The conversation shows JS adding Mr Ching as a friend on WeChat in October 2018, that is, after the termination of his employment with the Plaintiffs, or one of them. It then shows JS making an enquiry, in November 2018, about where Mr Ching now worked: Tcpt, 27 August 2020, p 300(17–31).

Ex D8 was a screenshot of WeChat conversations dated 10 and 11 October 2018 between YH and Mr Ching. The screenshot shows YH messaging Mr Ching on 10 October 2018, and Mr Ching replying, asking who YH was. YH then enquired of Mr Ching how much he charged for his services: Tcpt, 27 August 2020, p 302(45) – p 303(04).

At the time Mr Ching identified the three photographs that formed Ex D3, Ms Dinnen objected to the tender saying:

No submission had been made, at the time of the objection, that “a case in reply would likely require subpoenas”.

Whilst it is true that the exhibits were admitted over counsel’s objection, she had objected to the tender, for the most part, upon the basis that she had not been given an opportunity to cross-examine either of the Defendants on any of those documents, and that she had not previously seen those documents.

Whilst it was not suggested that the documents the subject of tender had been provided to the legal representatives of the Plaintiffs prior to the hearing, (in accordance with UCPR r 31.10(1)), in relation to each of Ex D4 and Ex D6, it is highly unlikely that either Mr Lee, or Ms Siew, would have been able to give evidence about the assertion that the two persons had been friends of Mr Ching prior to the commencement of his employment with one, or both, of the Plaintiffs.

In relation to Exs D3, D5, D7 and D8, and implicitly in relation to Exs D4 and D6, counsel was given the opportunity to present a case in reply. In this way, Mr Lee would have had the opportunity to squarely confront the proposition that the photographs depicted what was suggested by Mr Ching, and to respond to the contents of the WeChat conversations (if he was able to).

As importantly, initially, counsel sought leave to recall Mr Lee in reply (which, had it been done, presumably, would have avoided the part of the complaint that further evidence was required). Mr Lee was not, at the time that the issue arose, present in Court, and was at his home in Miranda. It was suggested that the documents tendered could be photographed and sent to him “within two minutes via email or via messenger”: Tcpt, 27 August 2020, p 304(01–41). Therefore, it was suggested that Mr Lee could be recalled at 2:00 p.m., and that, in the meantime, counsel could begin her submissions.

It was then ascertained that Mr Lee had some family commitments that made it difficult for him to leave his home to return to Court. It was then suggested, and I agreed, that his evidence in reply could be given by way of Microsoft Teams. Over the luncheon adjournment, my Associate, at my request, sent a Microsoft Teams invitation to the relevant persons to enable the evidence to be given.

About 20 minutes later, the Court received an email from the solicitors for the Plaintiffs in the following terms:

I also remember the purpose of the tender of the Exhibits, namely to show “that Danniel was, at least, taking an active role in the process”. Overall, I do not think that there was any real dispute that he and Ms Siew were (as will be demonstrated by what follows when returning to the narrative). Accordingly, the Court effectively excused the Defendants from complying with the provisions of UCPR r 31.10(1).

Consequently, the case proceeded, after the long adjournment, with the submissions made by Ms Dinnen and Mr Hopkins.

Where a plaintiff has been taken by surprise by matters arising out of a defendant’s case, there may be a proper occasion for a case in reply: see Bigsby v Dickinson (1876) 4 Ch D 24 at 26–28 (James LJ). The evidence in reply is given to answer any evidence that may have been called by that party’s opponents. Evidence in reply, normally, must be confined to rebutting the other party’s case rather than merely confirming the evidence of a party.

The principles governing what evidence may be called in reply are well understood and are set out in J D Heydon, Cross on Evidence (2020, LexisNexis) at [17720]. See also, in the context of civil penalty proceedings, ASIC v Rich (2006) 235 ALR 587 at 593 [18]; [2006] NSWSC 826 at [18] (Austin J).

The judicial obligation relating to procedural fairness is concerned with a reasonable opportunity to present, or meet, a case. It is essentially practical. The concern of the law is to avoid practical injustice. As was written in Stokes v Ragless [2019] SASCFC 31 at [18] (Lovell J, Blue and Parker JJ agreeing):

Counsel for the Plaintiffs was given a reasonable opportunity to lead evidence to meet this aspect of the Defendants’ case, and to have Mr Lee give evidence in reply. Indeed, arrangements were made to facilitate that opportunity. It was not suggested, when it was given, that the opportunity could not, or would not, be availed of. Then, no explanation was given for not taking up the opportunity and the Plaintiffs were not deprived of anything.

Ordinarily, there can be no denial of procedural fairness where a deliberate forensic decision is made to not call evidence in reply when given an opportunity to do so. The adversarial system of justice involves making forensic decisions. In this case, such a decision appears to have been made by the legal representatives of the Plaintiffs.

The Court does not know whether any evidence, given on behalf of the Plaintiffs, would possibly have made any difference. It can only infer, since counsel chose not to call the evidence in reply, that it would not have. There was no procedural unfairness.

In any event, I shall address the complaint made, by reminding myself that Mr Lee, during cross-examination, did not have the opportunity to respond to the Exhibits because he had not been shown them. In that way, if there is any unfairness, it can be mitigated to the point of extinction.

Returning then, to the narrative, in addition to examining the business’ emails, Mr Lee and Ms Siew repeated their demand that the Defendants delete the WeChat contacts. Interestingly, their demand appeared to narrow from what it had been previously. Where it had previously been to delete the WeChat contacts of all of the Plaintiffs’ clients, Mr Lee’s demand, made that afternoon, was in the following terms:

Whether or not that narrowing was intentional, it was, on the Plaintiffs’ evidence, what was communicated to the Defendants.

Mr Ching disputed Mr Lee’s account of what had occurred. Mr Ching maintained that Mr Lee had accepted that the Defendants were able to retain the WeChat contacts of their personal friends and the clients with whom they had dealt whilst employed by the Plaintiffs: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at par 57.

Irrespective of what was said, there was no dispute that Mr Ching then deleted some of his WeChat contacts. Mr Lee was unable to recall whether he saw the Defendants delete all of the contacts: Tcpt, 25 August 2020, p 79(50) – p 80(49). Mr Ching stated that he had deleted the WeChat contact for each of the 414 contacts to whom he had sent his message, although he accepted that he had provided no proof of his having done so: Tcpt, 27 August 2020, p 288(42–50). It was unclear how many of the contacts he deleted.

Ms Lu accepted that she did not delete any WeChat contacts of the Plaintiffs’ clients after leaving their employ: Tcpt, 26 August 2020, p 187(25–39). She considered that Mr Lee’s demands for deletion were only addressed to Mr Ching. However, it was put to her, in light of her view of events (Tcpt, 26 August 2020, p 182(47–48)):

As has been stated, it was unclear how many WeChat contacts Ms Lu possessed. It had only been established that she had entered contacts into her personal mobile phone, at Mr Lee’s request, on ten occasions: Tcpt, 26 August 2020, p 122(11–19).

Returning to the events of 28 September 2018, Mr Lee also obtained a copy of some, but not all, of the documents on Mr Ching’s computer which had been copied onto an external hard drive: Tcpt, 26 August 2020, p 189(24–47). There was some confusion about whether it was Mr Ching or Mr Lee who copied the documents onto the external hard drive. Ultimately, it matters little who copied the documents.

More important, is the information that was copied. Upon examining the external hard drive, Mr Lee realised that some of the documents in the Defendants’ possession had been taken from the Plaintiffs’ client Google Drive: Affidavit, Danniel Bo Lin Lee, 19 August 2019 at pars 54–55.

In his affidavit, Mr Lee annexed (Annexure “Q”) a copy of a screenshot showing files said to have been found in the Plaintiffs’ client folder for CCK. It was Mr Lee’s evidence that some of the files that were copied onto the external hard drive were identical to the documents found in that client folder.

Other than Annexure “Q”, which Mr Lee asserted was taken from it, there was no evidence of what the external hard drive otherwise contained. Surprisingly, the Plaintiffs did not tender an index of the documents contained on the external hard drive, or otherwise provide evidence of details of its contents. Nor did they tender any expert evidence that analysed the external hard drive for the purpose of determining its contents.

Consequently, it remained unclear the extent to which the Defendants had copied documents from the client Google Drive.

Nevertheless, the concern led to a further meeting at JP International Consultancy’s offices on 1 October 2018. Mr Lee, Ms Siew, Mr Ching and Ms Lu were all in attendance at this meeting.

There are slight differences in the accounts of the Plaintiffs’ witnesses and the Defendants. Those differences aside, the Defendants admitted, on that occasion, to Mr Lee, to having copied certain documents from the client Google Drive: see also, Tcpt, 27 August 2020, p 289(01–24). That evidence is consistent with the admission contained in the pleadings.

Mr Ching’s position was that the copying of documents was limited to documents relating to clients with whom he, or Ms Lu, had dealt during their employment with the Plaintiffs. In cross-examination, Mr Ching explained that on the occasions he had worked from home, he would not return any of the files that he had taken with him. This, it seems, was his reason why the documents remained on his personal laptop.

Ms Lu’s account was in similar terms. Whilst accepting that she had not informed Mr Lee, at the time of her resignation, that she had copied files from the client section of the Google Drive, she stated that Mr Lee was aware that she had taken documents to work on from home: Tcpt, 26 August 2020, p 183(12) – p 184(16).

It was her evidence, therefore, that the “relevant files” that she copied were only those files that she had required when working from home: Tcpt, 26 August 2020, p 190(18) – p 191(14).

The issue in this aspect of the case was the lack of evidence of what documents, precisely, the Defendants had copied. Aside from one admission by Mr Ching that he had copied documents relating to KHT, he denied, otherwise, that he had selected clients to take with him to JP International Consultancy and that he had copied their files: Tcpt, 27 August 2020, p 263(47) – p 264(02), p 279(37) – p 280(31).

There was some additional confusion regarding the Plaintiffs’ client spreadsheet contained in the Google Drive. Mr Ching denied that he could have taken, or copied, the spreadsheet through any number of means including copying the spreadsheet to a USB drive; printing a hard copy; or capturing a screenshot of the spreadsheet when it was open on his computer. That denial notwithstanding, Mr Ching admitted that he possessed some of the information described by Mr Lee in par 11 of his affidavit affirmed 19 August 2019. The information described in par 11 is contained in the client spreadsheet.

The Defendants pleaded in the Defence, at par 23, that, following the meeting on 1 October 2018 and the demands of Mr Lee and Ms Siew, they returned any confidential information that they had and deleted any records from their computer. There was little evidence to support these assertions. Mr Ching gave some evidence in his affidavit of having returned the documents for two clients of the Plaintiffs: CYW and ECN. In cross-examination, Mr Ching asserted that he had deleted any information that he had on the computer in front of Mr Lee: Tcpt, 26 August 2020, p 238(14–32); Tcpt, 27 August 2020, p 289(19–47).

Nothing had been said by Mr Lee, in his affidavit, regarding those matters. The assertions were not put to him in cross-examination. However, he was cross-examined on his supervision of the deletion of the WeChat contacts: Tcpt, 25 August 2020, p 79(50) – p 81(05).

It is useful to refer, specifically, to his evidence.

On 2 October 2018, Mr Ching met with Mr Lee at the Plaintiffs’ offices to discuss the payment of referral fees. Mr Ching requested Mr Lee to pay what were said to be outstanding fees for clients that Mr Ching had referred to the Plaintiffs during his employment.

In the Defence, it was asserted that referral fees for 44 clients (amounting to $11,400) remained outstanding.

There was also evidence that Mr Ching had returned six clients to the Plaintiffs. This began with Ms Siew sending a WeChat message to Mr Ching on 2 October 2018. She asked that he send her all of the invoices JP International Consultancy had issued in relation to six students, being WX, KCT, CCK, THW, ECN and CYW.

Mr Ching sent Ms Siew five invoices (given that CYW had not provided him with any commission).

The next day, POI issued invoices to JP International Consultancy for the amount of commission received for those five clients. A further invoice was issued by POM directly to the sixth client, CYW. Those invoices were duly paid: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 75, 79.

On 4 October 2018, another conversation occurred between Mr Ching and Mr Lee about referral fees. It was not apparent whether this conversation was in person or by telephone. Once again, the precise content of the conversation was in dispute. It was nevertheless clear that Mr Lee refused to pay any referral fees until he had an opportunity to review the Plaintiffs’ client list.

On 5 October 2018, Mr Ching sent via WeChat message a draft declaration which he requested that Mr Lee sign. The declaration was in the following terms:

In his message, Mr Ching also requested a promise from Mr Lee that he would pay the commission after he had sorted everything out.

Later that day, Mr Ching rang Mr Lee and Ms Siew to discuss the referral fees. However, it was in dispute whether those calls were answered.

The amounts continue to be claimed in the Defence (by way of set-off).

In cross-examination, Mr Lee denied that his refusal to pay the referral fees to Mr Ching had anything to do with the instant dispute: Tcpt, 25 August 2020, p 68(28) – p 69(33).

One of the key factual issues in this case is whether the Defendants used the confidential information held by the Plaintiffs to contact, or solicit, the business of their clients.

During the course of the hearing, counsel for the Plaintiffs provided, by way of an aide memoire, a document which identified 17 persons said to have been clients of the Plaintiffs who later became clients of JP International Consultancy. The aide memoire provided a reference to the following evidence.

The persons were identified as clients of JP International Consultancy by reference to Exs P1 and P2. Ex P1 comprised a number of documents, produced by the Defendants, in response to a Notice to Produce. This included copies of bank statements for two accounts held by Mr Ching trading as JP International Consultancy (ending 9252 and 1104). Ex P2 comprised documents produced in answer to a subpoena to produce by the Commonwealth Bank of Australia. This included bank statements for another account, held by Mr Ching trading as JP International Consultancy (ending 1083). There was some evidence that this account was JP International Consultancy’s trust account: Tcpt, 26 August 2020, p 109(04–22).

Despite his asserted lack of recollection, or his denials, that certain of the 17 clients were clients of the Plaintiffs, Mr Ching later accepted that they were (Tcpt, 27 August 2020, p 263(24–27)):

He also accepted that he had a business relationship with each of those clients: Tcpt, 27 August 2020, p 264(04–28). However, he was unable to recall who of those 17 persons had contacted him, as opposed to him having contacted each, prior to them becoming clients of JP International Consultancy.

The documentary evidence reveals that 4 of the 17 were clients of one, or both, of the Plaintiffs (YH, YHK, EKT and CYY). It was suggested to Mr Ching that he had, in some way, used confidential information to obtain their business. A further 7 of the 17 were clients of one, or both, of the Plaintiffs, but it was not put to Mr Ching that he had misused confidential information to obtain the business of each of them (LC, WC, MEK, JS, WqC, ZW and JZ). Another 5 of the 17 were clients that were “returned” to the Plaintiffs by Mr Ching (WX, KCT, CCK, THW and ECN). Mr Ching was not cross-examined on the last of the 17 persons (MYN).

Mr Ching accepted that YH was a client of the Plaintiffs and that he had become a client of JP International Consultancy: Tcpt, 26 August 2020, p 216(03–19).

When asked how YH had become a client of JP International Consultancy, he replied that the student had added him on WeChat: Tcpt, 26 August 2020, p 217(21–28).

He was then taken to documents in Ex P1 that showed four commission payments, each in the amount of $495, having been paid by YH into one of the bank accounts of JP International Consultancy: Ex P1/61, 63, 68, 70.

In re-examination, a series of WeChat conversations between Mr Ching and YH were tendered: Ex D8. The conversation, which occurred on 10 October 2018 was in the following terms (accounting for translation and omitting emojis):

The conversation resumed on 11 October 2018:

The message indicates that after Mr Ching sent out the message informing YH of Mr Lee’s contact details, the client, of his own volition, sought out Mr Ching.

Similar questions were put to Mr Ching in relation to YHK. Mr Ching accepted that he had YHK’s details in his WeChat contacts, but he did not recall whether YHK was a client of the Plaintiffs, or whether he had the WeChat contact prior to the cessation of his employment: Tcpt, 26 August 2020, p 218(33) – p 219(28). He accepted that this was also a case where he received multiple payments of commission: Ex P1/63, 67, 69.

However, a series of WeChat messages between Mr Ching and YHK was tendered through Mr Ching during his re-examination: Ex D5. Ex D5 shows the message sent by Mr Ching on 1 October 2018, in which he informed YHK of having left the Plaintiffs’ employ and that provided Mr Lee’s contact details.

A further series of messages, on 2 October 2018, was in the following terms (accounting for translation into English):

This conversation suggests that, perhaps, YHK’s decision to remain with JP International Consultancy was as a result of some dissatisfaction with the Plaintiffs.

It should be observed that all of the commission payments that Mr Ching received from YHK, were received after those messages on 2 October 2018.

For the next client, EKT, Mr Ching was taken to an entry in JP International Consultancy’s trust account which showed a payment from that client: Ex P2/53. Mr Ching accepted, when it was put to him, that EKT had been referred to him by another client: KWC. It was not disputed that KWC was a client of the Plaintiffs. The evidence in Mr Ching’s affidavit, which he repeated in cross-examination, was that he had informed KWC of his resignation from the Plaintiffs. It was after that time, on 6 February 2019, that KWC referred EKT to Mr Ching: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 83–86. That was several months after he had left the employ of the Plaintiffs.

Mr Ching accepted that CYY was a client of the Plaintiffs. Somewhat incongruously, Mr Ching, initially, stated that CYY was not one of his clients whilst he had been employed by the Plaintiffs. This was despite his earlier evidence that each of the 17 clients identified in the aide memoire were clients of his. He later admitted that CYY was, in fact, his client.

Mr Ching denied, when it was put to him, that CYY became his client at JP International Consultancy because he had kept records of the Plaintiffs: Tcpt, 27 August 2020, p 270(19–30).

There were then the seven persons referred to, each of whom was admitted to be a client of the Plaintiffs. However, it was not specifically put to Mr Ching (or, indeed, Ms Lu) that he (or she) had used either the client documents of the Plaintiffs, or the WeChat contacts, to secure their business as clients for JP International Consultancy. Those persons were LC, WC, MEK, JS, WqC, ZW, and JZ.

For these clients, the cross-examination went no further than establishing that each was a client of the Plaintiffs, and that each had made payments to JP International Consultancy. It was not put, for example, that Mr Ching had obtained those clients using documents he had copied from the client Google Drive or through using WeChat contacts that he had retained.

The necessary link establishing that those clients had been obtained through the misuse of confidential information, seemingly, was left to be deduced as a matter of inference.

It was accepted that LC was a client of the Plaintiffs and became a client of JP International Consultancy, making payments into its account: Ex P1/47, 70. The WeChat messages tendered in evidence (Ex D4) indicate that there was an existing personal relationship between LC and Mr Ching prior to his employment with the Plaintiffs. LC was not, however, one of the 412 recipients of Mr Ching’s message informing the recipients of his resignation and the contact details for Mr Lee.

Consequently, it may well be that LC was unaware of the circumstances of, or even the fact of, Mr Ching’s departure from the Plaintiffs.

Similarly, it was accepted that WC was a client of the Plaintiffs and later made payments to JP International Consultancy: Ex P1/61. WC did not receive the message sent by Mr Ching to the 412 recipients. However, he was in receipt of the earlier message sent to 72 contacts. (Much like LC, WC and Mr Ching appeared to have had a pre-existing personal relationship prior to November 2016: Ex D6.)

Mr Ching, with the aid of an email sent by him, was able to recall that MEK was a client of the Plaintiffs: Tcpt, 27 August 2020, p 249(03–31); Ex P13. MEK also became a client of JP International Consultancy and made payments into its bank account: Ex P1/63, 65. MEK received neither of the bulk WeChat messages that Mr Ching had sent. Once again, it may well follow that MEK was unaware of Mr Ching’s departure from the Plaintiffs’ employ.

JS, like the others, became a client of JP International Consultancy and made payments to its account: Ex P1/66, 72. JS was, however, in receipt of the WeChat message sent to the 412 recipients.

In re-examination, a series of WeChat messages between JS and Mr Ching was tendered as Ex D7. The messages show that JS added Mr Ching as a contact on WeChat on 8 October 2018. A further conversation occurred on 28 November 2018 (accounting for translation):

The messages seem to indicate that, whilst Mr Ching had sent JS the message informing her of Mr Lee’s contact details, she then had re-added Mr Ching as a contact and inquired about his new business.

WqC became a client of JP International Consultancy and made payments into its account: Ex P1/59–60. WqC had received the WeChat message sent to the 412 recipients.

ZW was a client of the Plaintiffs, and a client that was looked after by Mr Ching during his employment with the Plaintiffs: Tcpt, 27 August 2020, p 261(50) – p 262(37). ZW later became a client of JP International Consultancy and multiple payments were made to its accounts: Exs P1/64, 68, 72; P2/52, 54. ZW did not receive either of the bulk WeChat messages sent by Mr Ching.

Mr Ching denied that, whilst he was employed, he revised ZW’s intake date into an educational institution such that he could take advantage of the business once he had commenced trading as JP International Consultancy. There was no evidence to suggest that he had done so.

The final person was JZ (who did not receive either of the bulk WeChat messages sent by Mr Ching). Mr Ching eventually agreed that JZ had been JP International Consultancy’s client, at least until 26 February 2019: Tcpt, 27 August 2020, p 272(12–17). The amount paid by JZ was later refunded to him, given his application was unsuccessful: Ex P1/34, 58.

Turning then to the five clients returned by Mr Ching to the Plaintiffs. In fact, there were six clients returned, but the last of whom was not included in the aide memoire. Those six clients were WX, KCT, CCK, THW, ECN and CYW.

It was not in dispute that Mr Ching had notionally returned those clients upon Ms Siew’s request. What was in dispute, was whether Mr Ching had repaid all of the money that he had received from each of those clients.

In relation to WX, Mr Ching accepted that JP International Consultancy had received one payment from that client. However he denied it was possible for more payments to have been received: Tcpt, 27 August 2020, p 269(08–27). There was no evidence that it had.

In relation to the second of those clients, KCT, on 26 September 2018 following the meeting with Mr Lee and Ms Siew, Mr Ching and Ms Lu had an appointment to work on KCT’s file: Tcpt, 27 August 2020, p 277(42) – p 280(31). In cross-examination, Mr Ching admitted that he returned KCT, along with CCK and ECN, because they were clients of the Plaintiffs: Tcpt, 26 August 2020, p 223(23) – p 224(07). The payments received from each of them, were repaid to the Plaintiffs: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 72–73, 75, 79, annexures Q, R, S.

CCK was the only client in respect of whom the Plaintiffs tendered specific evidence of the Defendants having copied his documents from the client Google Drive. Annexure “Q” to Mr Lee’s primary affidavit, as discussed above, showed some of CCK’s documents having been found on JP International Consultancy’s computer. Annexure “Q” showed a series of files, the titles of which suggested that many were relevant to CCK. However, it is impossible, on the face of the annexure, to determine how many, if any, of those files were duplicates of those found in the client Google Drive. The only evidence was Mr Lee’s evidence, as deposed in his affidavit, that the documents were duplicates and, therefore, had been copied.

This evidence was not responded to by either Mr Ching or Ms Lu.

Mr Ching accepted that THW was a client of the Plaintiffs and explained that he had contacted this client through WeChat. THW’s WeChat contact was one of the contacts that Mr Ching deleted following the demands from Mr Lee: Tcpt, 27 August 2020, p 259(48) – p 261(48). Mr Ching further accepted that he met with THW prior to the cessation of his employment with the Plaintiffs.

Finally, Mr Ching was not taken to the last client on the aide memoire: MYN. MYN did not receive either of the bulk WeChat messages sent out by Mr Ching. Nor does MYN appear on Ex P11, the Plaintiffs’ client spreadsheet. It is unclear, therefore, whether MYN was even a client of the Plaintiffs. The aide memoire directed attention to a transaction on 7 May 2019: Ex P1/39. That transaction was, in fact, a debit of $550 from the account of JP International Consultancy. It is unclear why a payment was made by the business to a purported client.

More generally, aside from the 17 clients identified in the aide memoire, it was put to Mr Ching that, prior to his resignation he had gone through the client spreadsheet on the Google drive, to identify which clients he could take to JP International Consultancy. Mr Ching denied that allegation: Tcpt, 27 August 2020, p 262(44) – p 264(02).

In cross-examination, Ms Lu accepted that JP International Consultancy was offering education consultancy services much like the Plaintiffs. However, when it was put to her that she had engaged with the Plaintiffs’ contacts in offering those services, she replied: “I wasn’t sure”: Tcpt, 26 August 2020, p 180(35) – p 181(06). She repeatedly denied, however, that she had taken any clients from the Plaintiffs. In her view, as the clients of JP International Consultancy were different, the business was not in competition with the Plaintiffs.

Although she accepted that she had met with some clients prior to the cessation of her employment with the Plaintiffs, Ms Lu maintained that she did not know that any of these were the Plaintiffs’ clients. It is difficult to accept this evidence.

There were several other factual matters and admissions that became apparent during the course of the hearing.

Although by no means determinative, there is some relevance to the perception of the Defendants going to whether the information held by the Plaintiffs in the client Google Drive was confidential. Mr Ching initially denied that the information in the client Google Drive was confidential. However, as will be discussed further when addressing his credit below, he accepted that he would not be prepared to disclose any information in JP International Consultancy’s Google Drive to the Plaintiffs because that information was confidential. The same reasoning applies, as a matter of logic, to the Plaintiffs’ client Google Drive: Tcpt, 26 August 2020, p 232(36) – p 233(14).

Ms Lu, initially, denied that the information described as such was confidential. For example, in response to questioning about the password on the client Google Drive (Tcpt, 26 August 2020, p 124(37–40)):

Eventually, she accepted that there was no information in the client spreadsheet that could either be provided to the public, or to a competitor of the Plaintiffs. She also accepted that the sub-folders for each student within the client Google Drive, and the information contained therein, were also confidential: Tcpt, 26 August 2020, p 126(11–46), p 177(28–47).

One issue that remained unresolved during the cross-examination was whether the Defendants had taken template documents and other precedents from the Plaintiffs.

Counsel cross-examined Mr Ching on the provenance of invoice templates used by JP International Consultancy. He gave evidence that he found an invoice template online. He said that the template guided him as to what information was necessary to include on the document. This included the ABN of JP International Consultancy and bank account details. He also asserted that he received some guidance as to the necessary information from the educational institutions with which JP International Consultancy was dealing. The balance of the document was information that he himself desired to include: Tcpt, 26 August 2020, p 211(33) – p 212(29).

Implicitly, Mr Ching was denying that the invoices he used were based on, or were copies of, the templates of the Plaintiffs. Rather, the form of invoice was said to be an amalgam of information that he had obtained from different sources.

Counsel for the Plaintiffs called for the invoice template said to have been relied upon and the call was answered on the morning of the third day of the hearing. Initially, counsel for the Defendants produced a USB drive containing, it was said, four invoice documents corresponding to different educational institutions. That USB drive was provided to counsel for the Plaintiff and her instructing solicitor to examine. Ultimately, no documents from that USB drive, or any other purported invoice template, were tendered by counsel for the Plaintiffs. The Court can only conclude that the Plaintiffs’ legal representatives must have been satisfied that the information on the USB drive that had been provided in answer to the call, corroborated the evidence of Mr Ching as to the manner in which the invoice template was created.

The issue was raised also with Ms Lu, who was taken, in cross-examination, to an invoice issued by JP International Consultancy to Australian Ideal College: Ex P5/5. The invoice was dated 10 September 2018. It was therefore, purportedly, issued four days prior to the cessation of the Defendants’ employment. Counsel put to Ms Lu, and she denied, that she had taken the invoice template from the Plaintiffs: Tcpt, 26 August 2020, p 161(28) – p 162(02).

There were other invoices issued by JP International Consultancy where the date of the invoice was purportedly 10 September 2018. These invoices included those issued to: Sunshine Coast International College (Ex P4/3) and Australian Vocational Training Institute (Ex P9/10–11, 22).

In re-examination, Ms Lu clarified that the date on each of those invoices was a mistake. With reference to the invoice issued to Australian Ideal College (Ex P5/5), she explained that the invoice could not have been issued prior to the date of the Agent Agreement with the College, being 12 September 2019 (Ex P5/3): Tcpt, 26 August 2020, p 194(30) – p 195(08). She gave similar explanations in respect of the invoice issued to Sunshine Coast International College (Tcpt, 26 August 2020, p 191(26) – p 194(26); Ex D2).

Putting to one side the date of those invoices, each of the invoices referred to above was in a form substantially different from the form of invoice used by the Plaintiffs. An example of an invoice issued by POI to Scots English College was tendered in Ex P6/11.

However, there were a number of invoices issued by JP International Consultancy to Australian Vocational Training Institute that are in substantially similar form to that used by the Plaintiffs: Ex P9. Those invoices were dated, respectively, 14 November 2018, 11 February 2019, 13 May 2019, 11 November 2019, 8 January 2019, 22 April 2019, 22 July 2019, 22 October 2019 and 18 December 2018: Ex P9/14–21, 23. The core elements are identical to the one used by the Plaintiffs: Ex P6/11. The only relevant differences are where the details of JP International Consultancy are substituted for those of POI.

Based upon all of the evidence, I cannot be affirmatively satisfied that the Defendants copied the invoice template from the Plaintiffs.

Apart from the documents on the Google Drive, much of the Plaintiffs’ case focussed on the WeChat contacts and whether they were retained, or copied, by the Defendants. Mr Lee gave evidence that it was not only the WeChat contact details themselves that were of value. He explained that clients, or potential clients, would sometimes send passport, or visa details, through WeChat: Tcpt, 25 August 2020, p 79(50) – p 80(05). He explained in respect of some of those details (which would also have been present in the client Google Drive) (Tcpt, 25 August 2020, p 79(39–48)):

As would be clear from the factual framework set out above, Mr Ching and Ms Lu admitted to having retained the WeChat contacts. Mr Ching, clearly, had in his possession, the 412 WeChat contacts (361 of whom can be identified as clients of the Plaintiffs) to whom he sent the bulk WeChat message: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 38–40, 62, annexure “E”. On his evidence he deleted some, but not all, of these contacts after sending the message. As will be recalled, his evidence was that Mr Lee permitted him to retain the WeChat contacts of his friends and those clients whom he handled whilst employed by the Plaintiffs. The logical consequence of his evidence, in that regard, is that he admits to continuing to possess, at the very least, those WeChat contacts.

This consequence is supported by his oral evidence where he admitted that those contacts were clients of the Plaintiffs that he came to possess through his employment with the Plaintiffs (Tcpt, 27 August 2020, p 280(45) – p 281(08)):

There were a further six WeChat contacts that Mr Ching gave evidence of having returned to Mr Lee on 28 September 2018: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at par 58, annexure “J”. The identity of those contacts is not ascertainable on the evidence. However, it can be inferred, given that Mr Ching saw fit to return those contacts, that they were either clients, or prospective clients, of the Plaintiffs.

There was also evidence that Mr Ching returned the WeChat contact for KCT to Mr Lee on 26 September 2018: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 37, 41, annexure “F”. KCT was not one of the recipients of the bulk WeChat message, and can therefore be considered separately. Although the contact was returned, there was no evidence that Mr Ching deleted the contact.

In his oral evidence, Mr Ching admitted to possessing WeChat contacts for specific clients of the Plaintiffs including YH (Tcpt, 26 August 2020, p 215(50) – p 216(19), p 217(07–15)) and YHK (Tcpt, 26 August 2020, p 218(45–46).

Ms Lu admitted that she had, in her possession, WeChat contacts and did not delete them: Tcpt, 26 August 2020, p 182(15–22). It became clear, from an exchange later in her evidence, that some of those contacts were clients of the Plaintiffs (Tcpt, 26 August 2020, p 187(25–39)):

That conclusion is strengthened by Ms Lu’s acknowledgement that she was not entitled to keep the WeChat contacts: Tcpt, 26 August 2020, p 182(47–48).

Of course, it remains unclear just how many WeChat contacts Ms Lu possessed, and the identity of those contacts. She was not cross-examined, in any way that enables me to express a conclusion on this topic.

In respect of the documents, Mr Ching admitted to having in his possession a number of documents that related to particular clients of the Plaintiffs and other persons. He only, however, admitted to having possession of those documents. He did not admit to having taken, copied, or retained, those documents from the Plaintiffs’ Google Drive (or otherwise from the Plaintiffs’ business premises). However, there was no other evidence given explaining how those documents came to be in his possession.

It is useful to consider the documents in Mr Ching’s possession by reference to what, in the Statement of Claim, is said to be confidential information. In what follows, the persons to whom the documents relate are identified as clients of the Plaintiffs, or not, depending on their inclusion or otherwise in the Plaintiffs’ confidential client spreadsheet: Ex P11.

Mr Ching admitted to having in his possession the offer letters from education providers for three persons (XEF, KTL and ECN), none of whom were clients of the Plaintiffs: Statement of Claim at par 10(a)(iv); Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 43–44, 71, annexures “G”, “O”. Of those three, it will be recalled that ECN was one of the six returned clients.

Mr Ching also admitted to having in his possession the passports for nine persons (XEF, KTL, CCK, ECN, KCT, THW, WX, JZK and CYW), three of whom were the Plaintiffs’ clients (CCK, KCT and THW): Statement of Claim at par 10(a)(v); Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 43–44, 64, 71, annexures “G”, “L”, “O”. It will be recalled that ECN, WX, CYW, CCK, KCT and THW were the six clients Mr Ching returned to the Plaintiffs.

Furthermore, he admitted to having in his possession:

There were a number of other admissions made where it was not entirely clear what the document referred to was. Mr Ching admitted to having a file entitled “Personal Details” for XEF, grant letters for JZK and CYW, documents entitled “GTE” for JZK and ECN, a number of documents apparently referable to the relationship and marriage between JZK and CYW (perhaps for Visa purposes), and a high school certificate and Australian Vocational Training Institute application and placement forms for ECN.

Both Defendants, more generally, admitted in his and her affidavits, and in the oral evidence, to having retained certain digital files obtained during the course of their employment with the Plaintiffs: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at par 69; Affidavit, (Joy) Jieyi Lu, 28 October 2019 at par 54; Tcpt, 26 August 2020, p 235(10–14). However, that admission only ever reached that high level of generality.

That reflected a similar admission contained in the pleadings, where at par 29 of the Statement of Claim it was pleaded:

The Defendants admitted that paragraph in the following terms at par 23 of the Defence:

In her oral evidence, Ms Lu clarified that the extent of her retention of files was for those files on which she had worked from home during her employment. It was put to her that such an assertion was false; an allegation that she denied: Tcpt, 26 August 2020, p 191(01–14). She denied that she was required to delete the files she had taken home to work on after the termination of her employment with the Plaintiffs: Tcpt, 26 August 2020, p 191(16–20). Mr Ching’s evidence was to a similar effect, that he did not think that he was required to return any files he took home to work on: Tcpt, 26 August 2020, p 234(38–45). One can only infer that each did not delete those files. In any event, he stated that he had later deleted any documents he had in front of Mr Lee. That evidence has already been referenced above.

The Plaintiffs read the affidavits of five witnesses other than Mr Lee and Ms Siew. None of those witnesses was cross-examined.

Wen Fu Ten (known as Mark) was an employee of POI, and had been since January 2018. He gave evidence that corroborated Mr Lee’s, and Ms Siew’s, evidence concerning the confidential nature of the information in the client Google Drive.

In or around August 2018, Mr Ten, like Mr Lee, was told by Mr Ching that he had received an employment offer from a factory in China. As stated above, this was no more than a subterfuge.

Mr Ten also gave evidence of several conversations between himself and prospective, or existing, clients of the Plaintiffs. Through these conversations, Mr Ten learnt of the Defendants’ new business. This included conversations with the prospective clients KTL and XEF. Ultimately, KTL and XEF engaged the Plaintiffs to provide necessary services.

Arniawan was another employee of POI, having commenced working for it in November 2017. He gave evidence of the confidential nature of the information in the client Google Drive, and he confirmed that there was one occasion when he was provided with a temporary password for the Drive.

As with Mr Lee, and Mr Ten, Arniawan had a conversation with Mr Ching during which he was told of the employment offer said to have been made to Mr Ching by a factory in China.

Sim Lam Yuen (known as Stephanie) was a former employee of POI. Ms Yuen gave evidence of one of the Plaintiffs’ clients (JYL) having contacted her on 5 October 2018. She annexed to her affidavit a letter of offer dated 4 October 2018 from Australian Vocational Training Institute to JYL. Ms Yuen’s evidence was that it appeared that Mr Ching had prepared JYL’s application. Her basis for that conclusion was not disclosed and there was nothing on the face of the document that would suggest he had done so or when it had been done.

Ms Yuen also gave evidence that another referred client, SCH, had added Mr Ching on WeChat on 19 August 2018, whilst he was still employed by the Plaintiffs. Mr Ching continued to be in contact with SCH after he left the employment of the Plaintiffs. This client had not been included as one of the Plaintiffs’ clients. It is not known whether SCH engaged the services provided by the Defendants.

Ms Yuen also gave evidence corroborating the other evidence regarding the clients, KCT and WX, to whom reference has been made. Both were clients that Mr Ching returned to the Plaintiffs.

SSN was another client of POI. She recounted the circumstances surrounding the referral of her friend (KHC) to the Plaintiffs. She gave evidence that KHC had a meeting set with Mr Ching for 24 September 2018. She did not know that he had left the employ of the Plaintiffs. SSN brought KHC to the offices of the Plaintiffs. SSN was said to be “… shocked to hear from [Mr Ten] that Paris no longer worked at Plus One.”

KYP was another client of POI who gave evidence of having referred two of his friends, XEF and KTL, to the Plaintiffs. He recalled that he gave Mr Ching’s WeChat details to XEF and KTL on 7 September 2018. On 26 September 2018, KYP received a message from XEF stating that Mr Ching had asked XEF to make a payment to the account of JP International Consultancy. This prompted KYP to contact Mr Ten and explain what had occurred.

Whilst what occurred raised Mr Ten’s, and Mr Lee’s, suspicions as to the Defendants’ conduct, KYP also gave evidence that XEF and KTL decided to retain the Plaintiffs’ services and not have dealings with Mr Ching.

The final affidavit relied upon by the Plaintiffs was an affidavit of Irene Tang, a certified translator. Ms Tang annexed to her affidavits a number of translations of WeChat conversations that were otherwise in evidence and to which reference has been made.

A key issue for the Court to address is the question whether the Plaintiffs’ witnesses and each of the Defendants were truthful in the evidence that he and she gave. Both counsel attacked the other’s principal witnesses, vigorously, on matters of credit, and, in each case, with some justification.

In determining issues of credit, I remember what was said by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56 at 69 [48]; [2011] FCA 1123 at [48]:

I next repeat part of what I wrote in Fulton v Fulton [2014] NSWSC 619 at [120]–[122]:

In John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451, Hammerschlag J wrote at [94]:

In Camden v McKenzie [2008] 1 Qd R 39 at 48 [34]; [2007] QCA 136, Keane JA (as his Honour then was) (McMurdo and Douglas JJ agreeing) had observed, at [34], that:

His Honour’s observation was cited, with approval, by Leeming JA (Barrett JA and Tobias AJA agreeing) in State of New South Wales v Hunt (2014) 86 NSWLR 226 at 237 [56]; [2014] NSWCA 47 at [56].

I also refer to what was written in Sangha v Baxter (2009) 52 MVR 492 at 526; [2009] NSWCA 78, by Basten JA (Handley AJA agreeing), at [155]–[156]:

I have had occasion in the past, in Papas v Co [2018] NSWSC 1404 at [63]–[65], to consider the approach to be followed when some, but not all, aspects of a witness’ evidence are proven to be false or otherwise unreliable. Those remarks are particularly apposite here:

Finally, I remember, in determining credit issues, what was recently written in Megerditchian v Khatchadourian [2020] NSWCA 229 at [36] by Payne JA (Macfarlan JA and Emmett AJA agreeing):

The matter of credit of the principal protagonists was somewhat complicated as it was accepted that most of the oral conversations between them had taken place in either the Cantonese dialect (as between Mr Lee, Ms Siew and Mr Ching) or in the Mandarin dialect (as between Ms Siew, Mr Lee and Ms Lu). It was also accepted that those conversations had been translated into the English language in each of his, or her, respective affidavits. (Mr Lee did not specifically accept that the conversations were held in Cantonese/Mandarin and then translated.)

The Court had the benefit of seeing and hearing each of Mr Lee, Ms Siew, Mr Ching and Ms Lu. They were the most important witnesses in determining the claims and the defences raised. In addition, the Court had the written evidence of a number of witnesses, called on behalf of the Plaintiffs, who were not cross-examined.

I have borne in mind that discrepancies in written and oral evidence, and an imprecise recollection of what had occurred, are explained by the witnesses’ difficulties translating conversations into, and then writing down, the conversations in English. This provides an explanation for some, but far from all, of the challenged evidence.

In relation to the evidence of Mr Lee and Ms Siew, the major, if not the only, criticism made by counsel for the Defendants, was that parts of their substantive affidavits were in identical form. This was an important, and valid, criticism. He submitted that:

In cross-examination, Mr Lee denied that he and Ms Siew had sat down and agreed on the content of the conversations to be deposed: Tcpt, 25 August 2020, p 75(29) – p 77(01). Ms Siew, on the other hand, accepted that she and Mr Lee had agreed on the terms of the conversations, but this, she said, was for the purposes of translating the conversations into English: Tcpt, 25 August 2020, p 84(03–33). Neither suggested that the solicitor preparing the affidavits had “cut and pasted” the evidence from one affidavit to the other.

Counsel for the Defendants submitted that this affected the veracity of each of them as it was suggestive of either collusion between them, or that the person drafting the affidavit, had not used the actual words of one, or both, of the deponents: Defendants’ Closing Submissions at pars 76–85.

Palmer J in Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674 at [89]–[90], wrote that in considering the weight to be attributed to two affidavits dealing with critical discussions in virtually identical terms, in circumstances where the evidence was that the solicitor who prepared the affidavits had “copied and pasted” portions from each. His Honour noted that:

In Dentown Pty Ltd v PWI Group Pty Ltd as trustee of The Australia No 1 Group Trust (2019) 141 ACSR 330 at 334–336 [15]–[19]; [2019] NSWSC 1032 at [15]–[19], Rees J repeated that the contents of identical affidavits are devalued by reason of them being identical and a judge will approach the contents with caution. Her Honour added that oral evidence is likely to be more indicative of what actually happened than events described in their duplicated affidavits.

As in Dentown Pty Ltd v PWI Group Pty Ltd as trustee of The Australia No 1 Group Trust, at [18], whilst I accept that Ms Siew’s evidence was plausible, it is clear that she and Mr Lee “wrote their affidavits together and both contributed to a combined product. This has the consequence that I cannot be confident that their affidavits contain the actual recollection of either of them. Rather, their affidavits contain a combined version”. To the extent that parts of the affidavits are identical, “neither’s affidavit evidence could be treated as reflecting a genuine individual recollection of events as distinct from a collective reconstruction”.

Whilst this is a significant finding, counsel for the Defendants did not, otherwise, make any submissions concerning the veracity of Mr Lee’s and Ms Siew’s evidence. Indeed, he did not cross-examine either for very long.

Counsel did, however, point to another aspect of the Plaintiffs’ evidence that had not been properly explained. Following the meeting of 28 September 2018, Mr Lee had in his possession an external hard drive containing copies of some of the documents from JP International Consultancy’s computer. The external hard drive was not produced, nor was any expert evidence adduced going to an analysis of its contents.

Counsel for the Defendants did not cross-examine Mr Lee on the failure to lead evidence relating to the external hard drive. Rather, he submitted that the failure to lead evidence of the contents of the external hard drive, and a failure to adequately explain the failure to do so, ought to lead the Court to infer that such evidence would not have assisted the Plaintiffs’ case. He also submitted that in light of the Plaintiffs’ failure to lead evidence on the issue, the Court ought not to draw any adverse inferences from the Defendants’ failure to lead evidence of the contents of their computers: Defendants’ Closing Submissions at pars 27–32. There is merit in this submission.

The Plaintiffs’ witnesses, who were not cross examined, gave consistent, coherent and credible affidavit evidence. There is no reason not to accept his, and her, evidence.

Overall, and subject to what has been written above, and also subject to the matters to which I have, or shall refer, I found that each of Mr Lee and Ms Siew was endeavouring to tell the truth.

In her written closing, counsel for the Plaintiffs made forceful submissions challenging the credit of the Defendants, describing their evidence as “implausible, self-serving, evasive, vague and unhelpful”: Plaintiffs’ Closing Submissions at par 38.

Relevantly, their own counsel made some concessions in his closing oral submissions as to the credibility of the Defendants. It was a concession that he maintained in his written closing submissions. He said (Tcpt, 27 August 2020, p 329(14–22)):

I found each of the Defendants to be somewhat commercially unsophisticated. Neither accepted that he, or she, had any responsibility for what had occurred and neither recognised that he, or she, had committed any fundamental errors of judgement.

There was evidence that prior to the commencement of the proceedings, however, Mr Ching had seemed to do so, having “wanted to settle the issue and make [Mr Lee] happy”. He thought he needed to “convince Joy”, although he said he could not remember what it was that he had to convince her to do: Tcpt, 27 August 2020, p 286(30–45); Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at par 55.

Yet, I am satisfied that some of the evidence of the Defendants demonstrated a willingness to give evidence that was unreliable. Furthermore, as counsel for the Plaintiffs correctly observed, each of them utilised the phrase “I do not recall”, or “I do not remember”, many, many, times during his, and her, cross-examination. Most of the criticisms were warranted.

It is hard to believe (when one considers how often each said that he, or she, did not recall something) that his, and her, recollection was as bad as it appeared to be. On a number of occasions, I did not consider the answers to be genuine, but rather intentionally evasive.

By way of an obvious example, Mr Ching was cross-examined about the manner in which the Plaintiffs would pay referral fees to existing clients who had referred new clients to them. The exchange was in the following terms (Tcpt, 26 August 2020, p 231(09–37)):

Those assertions are revealed to be wholly disingenuous when one considers his own affidavit evidence. His account of conversations that occurred with Mr Lee regarding his own entitlement to commission included the following passages (Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at pars 74, 76):

Counsel identified the following other matters in respect of which an unhelpful response had been given:

Counsel for the Plaintiffs also, referred to Mr Ching’s inability to recall whether the following persons were clients of the Plaintiffs:

(The criticism of Mr Ching, in relation to EKT, was unwarranted as he had never been a client of the Plaintiffs. As described above, EKT had been referred to Mr Ching by an existing client of the Plaintiffs. Similarly, ECN did not appear, as a client, in Ex P11, the Plaintiffs’ confidential client spreadsheet. There was no direct evidence that ECN had ever been a client of the Plaintiffs, only that Mr Ching returned ECN’s contact and documents to the Plaintiffs on 2 October 2018. In relation to Ms Lu, who could not recall whether MZ was a client of the Plaintiffs: Tcpt, 26 August 2020, p 146(31–36), again, I do not accept the criticism of Ms Lu on this basis given that MZ was never a client of the Plaintiffs. MZ was referred to JP International Consultancy by an existing client of the Plaintiffs.)

The criticism made of Mr Ching in being unable to recall whether, having set up JP International Consultancy, he contacted clients first, or they contacted him: Tcpt, 27 August 2020, p 264(49) – p 265(10), also, was not entirely justified. The cross-examination was in the following terms:

Those examples aside, there is force in Ms Dinnen’s criticism of the Defendants on this basis.

In addition to the examples referred to by Ms Dinnen, there were other examples where the memory of each of the Defendants seemed to be selective until confronted with documentary evidence or unassailable logic. One example occurred in the cross-examination of Ms Lu in relation to a transaction with her personal bank account (Tcpt, 26 August 2020, p 116(50) – p 117(30)):

Another example occurred when Ms Lu was asked whether, when JP International Consultancy first rented its offices, she had told the landlord that she and Mr Ching were establishing an education and migration consultancy. She replied that she was unable to recall: Tcpt, 26 August 2020, p 136(36–38). She was then shown a copy of the commercial tenancy application which clearly set out the type of business as “Education & Migration Consultancy”: Ex P10/4.

Ultimately, counsel for the Plaintiffs put to each of the Defendants that he, and she, respectively, was unable to recall certain facts when the answer did not suit their case. Both Defendants denied that allegation: Tcpt, 26 August 2020, p 153(28–35); Tcpt, 27 August 2020, p 272(25–27). I tend to the view that the criticism was, at least in part, justified.

In addition, I did not think either of them was frank with the Court about certain matters. By way of example, there were passages of evidence that were indicative of an unwillingness to provide a complete, or a transparent, account of factual matters upon being asked by counsel about such matters. On some occasions, when the question was repeated, for clarification, by the Court, each of the Defendants seemed to be able to recall events, or accept propositions, which, just moments before, they had been seemingly unable to do.

Perhaps, the most obvious example, is to be found in the evidence of Mr Ching in relation to whether the information on the Google Drive to which he had access was confidential (Tcpt, 26 August 2020, p 232(30) – p 233(14)):

Another example of Mr Ching telling a lie to Mr Lee (and others), related to his explanation for leaving the employment of the Plaintiffs, earlier referred to and which I have described as a subterfuge. It was clear that there had not been any such offer made and the real reason for the resignation of the Defendants was as they admitted on 13 September 2018.

On the same issue, Ms Lu, initially, maintained that she did not think any of the client information was confidential. She denied that either of Mr Lee or Ms Siew ever communicated to her that the information was confidential. Nor did she see the presence of password on documents (such as the spreadsheet) outside of the office, as being indicative of the information being confidential: Tcpt, 26 August 2020, p 122(48) – p 124(40).

Whilst she may not have been specifically told that the information was confidential, it is hard to accept that she did not have some appreciation of its importance to the Plaintiffs. This is demonstrated by her answers when pressed further, as she accepted that there was no information in the spreadsheet that could either be provided to the public, or provided to a competitor of the Plaintiffs. It was also put to her that within the Plaintiffs’ client Google Drive, there were sub-folders for each student. Ms Lu accepted that these sub-folders, and the information contained therein, were confidential: Tcpt, 26 August 2020, p 126(11–46), p 177(28–47).

Another telling example prompting criticism occurred during the cross-examination of Ms Lu (Tcpt, 26 August 2020, p 111(34) – p 112(09)):

Ms Lu later gave different, inconsistent, evidence (Tcpt, 26 August 2020, p 116(19–24)):

In another example in Ms Lu’s cross-examination (Tcpt, 26 August 2020, p 161(43) – p 162(02)):

At other times, her evidence was inherently implausible. For example, the following passage from Ms Lu’s cross-examination is telling (Tcpt, 26 August 2020, p 173(07) – p 174(34)):

The “spreadsheet” referred to was the client spreadsheet contained in the Plaintiffs’ Google Drive. They kept a record of certain client information in that spreadsheet. Both Defendants, as part of their role, updated the spreadsheet with information for new clients: Tcpt, 26 August 2020, p 236(34) – p 237(12); Affidavit, (Joy) Jieyi Lu, 28 October 2019 at pars 11–13.

Mr Ching’s evidence was that he accessed the spreadsheet through a web browser, rather than by opening a specific file. There appears to have been some confusion in Mr Ching’s evidence about whether he had the ability to download or copy the spreadsheet from the Google Drive.

Mr Ching was cross-examined on whether he was able to download, or copy, the spreadsheet from the Google Drive, and he denied having an ability to do so: Tcpt, 26 August 2020, p 236(34) – p 237(30). His evidence on this topic is discussed above.

In cross-examination, counsel for the Plaintiffs took Ms Lu to a checklist schedule to the Agency Agreement between JP International Consultancy and Sunshine Coast International College: Ex P12/15. The schedule, which was signed by Ms Lu, required the signatory to make certain acknowledgements and to give certain undertakings pursuant to the requirements of the Education Services for Overseas Students Act 2000 (Cth) (ESOS Act). Ms Lu accepted that, despite her signature on the schedule, she did not know what the ESOS Act was. Nor did she have any knowledge of the requirements under the ESOS Act not to ask students to change courses, nor the prohibition on taking money from students having made certain representations: Tcpt, 26 August 2020, p 139(27) – p 140(47).

Counsel also submitted that “[o]n occasion the Defendants’ oral evidence was clearly and deliberately untruthful, or at the very least, deliberately misleading”. I have already addressed, above, some of the aspects of the Defendants’ evidence to which she referred in support of this submission. She made an additional submission in the following terms:

Although counsel criticised Mr Ching’s evidence in answering “not true” to the statement that Mr Lee had asked him to return of the Plaintiffs’ client’s WeChat contacts to Mr Lee, I am satisfied that the criticism was unjustified. Whilst Mr Ching did give that answer: Tcpt, 27 August 2020, p 281(47) – p 282(36), I am unable to conclude that his evidence was “clearly and deliberately untruthful, or at the very least, deliberately misleading”. The premise of the question was that Mr Lee had asked for all of the Plaintiffs’ clients’ WeChat contacts to be returned which, on the evidence overall, I am not satisfied was sought.

At par 20 of his affidavit in chief, Mr Lee described a conversation on 14 September 2018:

Mr Ching’s account was slightly different, but nonetheless consistent with the idea that Mr Lee had not asked for all of the WeChat contacts, only those clients handled by the Defendants. Mr Ching deposed to Mr Lee saying: “Paris, come back tomorrow to Plus One office and pass the WeChat contacts of those clients to me”. What “those clients” means is not entirely clear from the context of the conversation deposed to. In any event, it does not appear to mean all of the clients.

On 15 September, the next day, Mr Ching came to hand over the WeChat contacts. Mr Lee did not provide, in his affidavit, any details of any conversations that then occurred. The extent of his evidence was:

On the basis of the above, I am unable to accept counsel’s criticism in the terms put.

As would be seen in the factual framework described above, there were a number of steps that the Defendants took to establish JP International Consultancy well prior to the termination of their employment. Many, if not most, of these steps were not identified, or otherwise referred to, in either Mr Ching’s or Ms Lu’s affidavit evidence. That does not assist the credit of either.

Ms Lu accepted when it was put to her that her affidavit did not include the whole truth: Tcpt, 26 August 2020, p 179(17–18). The same proposition was not put to Mr Ching but I am satisfied that had it been, the answer could only have been the same.

The reasons why the complete facts had not been included were not explained, and their omission is a matter to be borne in mind, particularly when there was no assertion of any implied term preventing them from engaging in competition with the Plaintiffs. One reason may be consciousness of improper conduct but this was not suggested to either of the Defendants so I ignore it as a matter of speculation.

Another aspect of her evidence that does Ms Lu no credit was the evidence that she gave in relation to the application forms she had submitted to educational institutions on behalf of JP International Consultancy. Ms Lu admitted to having provided false answers to questions on the forms. For example, she admitted to having included three persons as referees on an agent application form for Australian Vocational Training Institute (AVTI) whom she did not ask to be references for her: Ex P12/49; Tcpt, 26 August 2020, p 154(23) – p 155(14).

In another example, Ms Lu was taken to an agent application form she completed, on behalf of JP International Consultancy, for Australian Ideal College. In that form she answered that JP International Consultancy predominantly recruited students from China, Hong Kong, Taiwan and Malaysia; that it most heavily promoted ELICOS (English Language Intensive Courses for Overseas Students) and VET (Vocational Education and Training) courses; that it had recruited 100 students in the previous 12 months; and that it had recruited from the education institutions AVTI, TM, Glen Institute, Queens College and SIBC within the last 12 months. Ms Lu admitted that each of those answers was a lie: Tcpt, 26 August 2020, p 150(12) – p 152(20).

She also admitted that she had provided those false answers in the application form so that she could enter into an agency agreement with Australian Ideal College: Tcpt, 26 August 2020, p 152(26–28).

By way of introduction to this topic, and as already stated, the Plaintiffs made no application for preliminary discovery in respect of the confidential information allegations. Nor did they seek discovery after the proceedings had been commenced.

An explanation for not seeking an interlocutory injunction was given in counsel’s closing written submissions as being first, that the final relief sought in the Statement of Claim would sufficiently cure “the inequity and the losses suffered”; secondly, that there was no reason or urgency to do so; and thirdly, that the Defendants did not respond to the Statement of Claim for some time, during which time the Plaintiffs sought default judgment.

As previously stated, no explanation was given for not taking steps to obtain disclosure, preliminary discovery or any of the other interlocutory processes that were not pursued. I do not accept that any of the reasons given, even if established by evidence, properly explain the failure to do so.

A significant amount of time, both in cross-examination and in submissions, was spent on the Defendants’ failure to comply with notices to produce that had been served by the Plaintiffs prior to the hearing.

The first Notice to Produce was served on 15 November 2019 and was returnable on 20 November 2019.

On 9 December 2019, the Defendants filed a notice of motion seeking, inter alia, to set aside certain categories of documents sought to be produced in that notice to produce. An amended Notice of Motion, filed on 17 February 2020, sought the same relief in respect of the notice to produce.

The amended notice of motion was listed for hearing before the Registrar in Equity. On 29 May 2020, the learned Registrar declined to set aside the categories of documents sought in the notice to produce. However, the Registrar did set aside a number of the subpoenas that had been issued by the Plaintiffs.

A number of interlocutory stoushes followed in relation to the learned Registrar’s decision to set aside the subpoenas. That culminated in Williams J reviewing certain orders made by the Registrar: Plus One International Pty Ltd v Ching [2020] NSWSC 939. However, no review was sought in respect of the learned Registrar’s decision to decline to set aside the categories of production within the Notice to Produce.

As such, the Defendants were required to comply with the notice to produce. They responded to the notice to produce on 30 June 2020: Ex P1.

Counsel spent some time cross-examining Ms Lu on when she had provided the documents to her solicitor in order to comply with the notice to produce. It did not seem that Ms Lu had an understanding of what interlocutory applications had been heard and determined in relation to the notice to produce or an appreciation of when, precisely, she had provided documents to her solicitor. The best she was able to say was that she provided the documents in 2020: Tcpt, 25 August 2020, p 91(01–14).

In consequence of the delay, counsel submitted that the Court should infer that the Defendants had deliberately delayed in producing the documents for the purpose of restricting the Plaintiffs’ access to the information sought: Plaintiffs’ Closing Submissions at par 31 and also that what had been produced was incomplete.

Ms Lu accepted that she and Mr Ching had failed to produce JP International Consultancy’s client files in respect of YZ and WqC: Notice to Produce at pars 1–2; Tcpt, 25 August 2020, p 89(08–25).

Counsel for the Defendants, for his part, submitted at par 87(f) of his written closing:

To an extent, counsel is correct in that submission. The relevant paragraphs of the Plaintiffs’ Notice to Produce were in the following terms:

A notice to produce issued pursuant to r 34.1 of the UCPR is akin to a subpoena for production. It is not an order for discovery: Norris v Kandiah [2007] NSWSC 1296 at [3] (Brereton J). There is no sub-rule in Pt 34 of the UCPR that is the equivalent of the provision in r 21.6 for ongoing discovery.

If the notice to produce was treated as providing an ongoing obligation of production it would, to use the words of Stevenson J, “subvert the intended operation of [Practice Note SC Eq 11] if parties could avoid its operation by adopting the expedient of serving a Notice to Produce, rather than seeking an order for disclosure”: The Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd [2012] NSWSC 502 at [23]; see also Re Octaviar Limited (receivers and managers appointed) (in liq) [2012] NSWSC 1027 at [18]–[19] (Black J).

The words “to the present” must be taken to have meant to the date of the notice to produce, being 15 November 2019. The obligation on the Defendants, therefore, was to produce the documents described in the notice to produce up until the date of the Notice. As stated in the Notice, the time for production was 9:00 a.m. on 20 November 2019.

Of course, the Defendants did not comply with the Notice. Clearly, although there was some compliance with the Notice to Produce, there was substantial non-compliance both in substance and in timing. Even when documents were produced, in counsel’s submission, the production was deficient. The Defendants failed to produce any balance sheets or profit and loss statements for the financial years ending 2018 and 2019. Nor did they produce any taxation returns for the required period.

Yet, the Defendants did disclose the balance sheet and profit and loss statement as at 30 June 2020 (Ex P1/4–5). They also produced bank statements for two of JP International Consultancy’s bank accounts (those ending 9252 and 1104). They failed to produce any statements for the account ending 1083, being the trust account. Ms Lu gave evidence that she did not produce the statements for the account given it was “just a trust account, but doesn’t belong to the business account”: Tcpt, 26 August 2020, p 109(20–22). She denied that she had failed to produce the statements because she did not want to disclose JP International Consultancy’s clients to the Plaintiffs or to the Court: Tcpt, 26 August 2020, p 109(28–37). The Defendants did produce the Business Activity Statements for the required period.

Complaint was made by counsel that the Defendants, in relation to two clients, YZ and WqC, had failed to produce the full client file: Tcpt, 25 August 2020, p 89(08–25). In respect of YZ, counsel expanded on this complaint in the following terms:

A translation of WeChat messages between Mr Ching and YZ show that contact began on 22 September 2018. YZ was seeking assistance in preparing applications on behalf of his son, JZ. It was Mr Lee’s evidence that an existing client of the Plaintiffs, EZ, had referred YZ to Mr Ching: Tcpt, 25 August 2020, p 50(30–33).

A payment of $1,700 was made on JZ’s behalf on 26 September 2018: Ex P1/58.

It would appear that on 27 September 2018, YZ became aware that Mr Ching was no longer associated with the Plaintiffs. It is difficult to determine precisely what was said as YZ’s half of the WeChat conversations consists of audio messages that were not transcribed. However, it is clear that Mr Ching offered on several occasions for the “old company” to handle JZ’s application.

On 16 January 2019, YZ contacted Mr Lee to assist in JZ’s application: Affidavit, Danniel Bo Lin Lee, 19 August 2019 at pars 74–76. He explained to Mr Lee that he had previously engaged Mr Ching: Tcpt, 25 August 2020, p 50(05–26).

On 26 February 2019, Mr Ching refunded the $1,700 paid on behalf of JZ given that his application was unsuccessful: Ex P1/34; Tcpt, 27 August 2020, p 271(35–36).

These matters demonstrate that the criticism was unfounded.

Perhaps in response to the non-compliance, the Plaintiffs served another Notice to Produce on 19 August 2020, that is less than one week prior to the hearing. At the commencement of the hearing, counsel made a call on the Notice to Produce.

After some argument, I came to the view that the Notice to Produce was too broad in its terms and that, in any event, it had been served too late. I declined to allow counsel to call on the Notice to Produce, although I made it plain that this would not prevent counsel from asking each of the Defendants about the failure to produce documents.

Counsel for the Plaintiffs submitted, at par 37 of her written closing submissions:

There is some merit in the submissions made by counsel for the Plaintiffs. However, it is to be noted that the matter was listed for hearing by Registrar Walton on 20 November 2019. If the need for the documents the subject of the Notice to Produce was as critical as was suggested by counsel, the matter should not have been set down for hearing five days after the date of the Notice to Produce had been served.

Overall, there was a basis for not being satisfied about the veracity of the evidence of each of the principal witnesses called in each party’s case. It is impossible to do more than set out as I have done, the findings that I have made in respect of factual matters.

However, doing the best I can, in answer to the issues posed by the parties, I am satisfied that the Defendants did retain, immediately after leaving the employ of the Plaintiffs, the WeChat contacts, some of which contacts, as detailed above, were clients of the Plaintiffs. It is true that some of the contacts were acquired during each Defendant’s employment. However, there was no evidence that either Defendant was specifically instructed to guard, or preserve, any confidentiality surrounding the WeChat list of contacts with whom he, or she, dealt whilst employed by the Plaintiffs.

Yet, there is no evidence that the contact details for those people could be readily acquired or duplicated by others. The manner of the creation of some of the WeChat client information, however, on balance, points to it having the character of confidential information. Having the WeChat contact details may have provided an easier, and quicker means of reaching the clients than had the Defendants not retained the WeChat details. For reasons to which I shall come, I am also satisfied that the Defendants retained some confidential information but not as much as seemed to be suggested by the Plaintiffs. The more difficult question may be whether there is evidence of them having actually made use of the data.

Ideally, the opening written outlines would have been supplemented and expanded upon by oral submissions at the conclusion of the hearing. However, in the events that occurred, the hearing was not able to be concluded within the allotted time. The oral submissions of counsel were necessarily truncated.

In those circumstances, and in view of the complexity of the issues involved in this case, I allowed both counsel an opportunity to provide written submissions in chief and in reply after the conclusion of the hearing. Naturally, I have had regard to the submissions made by counsel. Yet, given that each set of closing submissions approached 40 pages in length, I only propose to refer to some of the submissions made, by way of emphasis.

In her written closing, counsel for the Plaintiffs, helpfully, summarised the relevant evidence appearing in the affidavits, exhibits and the transcript. I have referred to much of the evidence to which she referred when setting out the factual framework.

Counsel then turned to the significance of the Defendants’ conduct in establishing JP International Consultancy prior to the termination of their employment with the Plaintiffs. She submitted that it went far beyond the taking of mere preparatory steps. Rather, it reflected that the Defendants had commenced the running of their business. In particular, she emphasised that the Defendants had entered into agency agreements and had begun targeting the Plaintiffs’ clients.

At par 23 of her written closing submissions, counsel wrote:

Counsel then took issue with the Defendants’ submission that the Plaintiffs’ client list could not be classified as a “springboard”. She drew attention to the decision of Peter Smith J in First Conferences Services Ltd v Bracchi [2009] EWHC 2176 (Ch), who had written:

That passage was referred to by Bergin CJ in Eq in Helensburgh Property Management Pty Ltd v Brady [2015] NSWSC 1861 at [45].

I will return to the relevance of what has been described as the “springboard doctrine” below.

Counsel then submitted that the Defendants had not returned all of the Plaintiffs’ confidential information and had continued to wrongfully use that information to advance the business of JP International Consultancy.

I have referred, earlier, to the oral submissions when I asked counsel whether she could take me to evidence of what specific information the Defendants had taken, with reference to what had been written in the pleadings. I have referred to the exchange with counsel.

Of course, counsel had referred to Annexure “Q” to Mr Lee’s affidavit, to which I have already referred. The screenshot found in that annexure showed some documents, in the Plaintiffs’ client folder, for CCK, one of the Plaintiffs’ clients. It was Mr Lee’s evidence that identical documents were copied onto his external hard drive from JP International Consultancy’s computer.

Bearing in mind the above, it is relevant that no evidence was given of the contents of the USB hard drive to which reference had been made. No explanation for the failure to produce the USB hard drive, or summarise its contents, was given. Nor was any evidence given by the Plaintiffs of having retained an expert to compare the contents of the hard drive with the part of the Plaintiffs’ Google Drive to which the Defendants had access.

I raised this matter with counsel in her closing oral submissions at Tcpt, 27 August 2020, p 338(38) – p 339(39) onwards :

For the most part, counsel supported her case by inviting the Court to draw a number of inferences adverse to the Defendants. As to whether the Defendants continued to retain confidential information, she submitted that Mr Ching had refused to show Mr Lee the business emails and bank transactions for JP International Consultancy; that the Defendants had refused to allow independent verification of information retained or deleted; and that the Defendants had not provided evidence, which would be within their knowledge, regarding what client files were on JP International Consultancy’s computer.

With respect, there are some difficulties with that submission. It is true that Mr Ching initially refused to show Mr Lee the business emails and bank transactions: Tcpt, 27 August 2020, p 285(46) – p 286(04). However, Mr Lee’s own evidence was that he was later shown the email accounts for JP International Consultancy: Affidavit, Danniel Bo Lin Lee, 19 August 2019 at par 49. He wrote:

This evidence is relevant as in the Defence at par 23, the Defendants had pleaded: “… upon the demand of both directors being Mr Danniel Lee and Ms Charlotte Siew, the Defendants returned the requested alleged confidential information and deleted any records of the information from their business’ Google Drive”.

Counsel then turned to the use of the confidential information by the Defendants. Again, her submissions seemed to invite the Court to draw a number of inferences adverse to the Defendants based on their conduct.

First, she submitted that there was only evidence of Mr Ching having informed one client that the Plaintiffs would be taking over their case. Secondly, she highlighted the discrepancy between Mr Ching having forwarded 72 WeChat contacts to Mr Lee and the 412 contacts he later sent the bulk WeChat message to. Finally, she submitted that the Defendants have continued to receive payments from the Plaintiffs’ former clients until October 2019. She noted that it was possible that more payments had been made between 1 January 2020 and the date of the hearing, but that it was unclear given the lack of documentary evidence.

I have already referred above to counsel’s submissions on the inferences to be drawn in light of the failure to fully comply with the notices to produce that were served.

As has also been referred to above, counsel took issue with the credit of the Defendants. In her submission, the evidence of the Plaintiffs’ witnesses should be preferred to that of the Defendants. In addition, she invited the Court to draw the following inferences based upon the Defendants’ evidence:

Counsel also submitted that the breaches of confidence that followed from the evidence included the following four contraventions:

In respect of the first point, it should be observed that Ms Lu did not admit to retaining a “contact list”, but rather to retaining the WeChat contacts of the Plaintiffs’ clients. The reference to the “contact list” should not be misunderstood as suggesting that Ms Lu had obtained or retained a copy of the Plaintiffs’ client spreadsheet.

On the breaches of implied employment obligations, counsel drew an analogy with what had been written by Rein J in Clear Wealth Pty Ltd v Kwong (No 2) [2012] NSWSC 1233, at [28]. In that case, which I note concerned an express contractual obligation of confidence, his Honour found that the Defendant had copied client lists from his employer’s computer onto an external USB drive with the intention of using that list in his new business. She submitted that the same finding should be made in these proceedings.

Counsel also submitted that the Defendants had breached their fiduciary obligations as employees. She submitted that employee-employer is a well-recognised category of fiduciary relation, and submitted that the Defendants breached their fiduciary obligations by:

In her oral submissions, counsel acknowledged the higher bar to finding a breach of fiduciary obligation. Nonetheless she submitted (Tcpt, 27 August 2020, p 319(02–11)):

Counsel also submitted, on similar factual grounds, that the Defendants had contravened ss 182–183 of the Corporations Act.

Counsel’s submissions then turned to the remedies sought. She began by outlining that that the Plaintiffs do not need to demonstrate that any loss that has been suffered in order to be entitled to equitable relief. In support, she cited a passage from Gummow J’s (as his Honour then was) judgment in Smith Kline & French Laboratories (Aust) Limited v Secretary, Department of Community Services and Health (1990) 22 FCR 73 at 112. His Honour wrote in that case:

His Honour was there discussing whether “detriment” was a requisite element in an action for breach of confidence.

As will be read, it remains an open question whether “detriment” is an element of an equitable breach of confidence. Nevertheless, that is a separate question from whether the Plaintiffs need to demonstrate loss at the remedy stage. The answer to that question depends upon the particular remedy sought.

As above, counsel submitted that there was evidence of damage having been suffered by the Plaintiffs. However, her submission was that awarding damages is an insufficient remedy in the circumstances of this case. Her primary position, therefore, was to seek both an injunction and a pecuniary remedy: Plaintiffs’ Closing Submissions at par 86.

Counsel submitted that an injunction was the usual remedy for equitable breaches of confidence. She submitted:

As to the form of the injunction, at pars 93–94, counsel submitted:

In view of those submissions, counsel proposed the following form of the injunctions:

Counsel also submitted that an account of profits should be ordered. It appeared from the Statement of Claim and her submissions that an account had been sought in addition to the other relief, as well as being pressed in the alternative. Counsel explained the rationale for seeking an account of profits:

The account was sought for the entire profits of JP International Consultancy, including any future profits: Plaintiffs’ Closing Submissions at par 103. Counsel submitted that the business would not exist but for the breaches of confidence or breaches of fiduciary duty. It was clear, in her submission, that the Defendants had no knowledge, or experience, gained other than from their employment:

Counsel mentioned s 1317H of the Corporations Act when discussing an account of profits. However, as was raised at the hearing, an order pursuant to s 1317H had not been sought in the Statement of Claim.

I turn next to the Defendants’ submissions.

Counsel for the Defendants submitted, at the beginning of his written closing, that there were only two ways in which the Plaintiffs might succeed. First, if it could be found that the Defendants diverted business opportunities during the course of their employment. This, he qualified, was other than those six clients that Mr Ching had returned. Secondly, if it could be found that they stole confidential information and used that information in their new business.

His submission was that the Plaintiffs had failed to discharge their onus in respect of either scenario and consequently, the proceedings should be dismissed (by which I take him to mean the Statement of Claim should be dismissed).

Counsel conceded that the Defendants had breached their obligations prior to the termination of their employment by dealing with those six clients. He stated that any gain made from those students, had already been accounted for, and repaid, to the Plaintiffs. He submitted that no other diversion of clients had been established on the evidence.

It is not inapt to say that a key plank in the Defendants’ case was counsel’s submission on the ability of an employee, post-employment, to compete with his, or her, former employer, absent any contractual restraint of trade. He submitted at par 11 of his written closing submissions:

As such, in his submission, after the employment of the Defendants had ceased they were only restrained from misusing confidential information obtained during their employment. They were not prevented from competing more generally with the Plaintiffs.

Counsel specifically disputed the confidential nature of certain items of information said by the Plaintiffs to be confidential. He submitted that the mere identity of clients was not confidential. In support of that submission, he referred to the fact that the Plaintiffs had disclosed, in the course of the proceedings, a list of 1,658 names of their clients. He also submitted that the identity of the educational institutions with which the Plaintiffs and the Defendants dealt, was a matter of public record and not confidential.

Similarly, he disputed that the WeChat contacts were confidential information. He did so upon the basis that the contacts were not the property of the Plaintiff. The contacts were contained on mobile phones owned by the Defendants and used by them on a daily basis. He referred to Mr Lee’s evidence that the Plaintiffs did not collect any WeChat contacts for the purpose of inclusion on the client list spreadsheet.

In broad summary, on the breach of confidence case, he submitted that to the extent any confidential information was taken from the Plaintiffs, that information was returned, or deleted, under the supervision of Mr Lee. In this way, the Defendants could not have used any confidential information after their final meeting with Mr Lee.

Counsel relied on the Plaintiffs’ failure to prove what, precisely, was the confidential information taken by the Defendants. Thus he submitted, referring to s 140(2) of the Evidence Act 1995 (NSW), the Plaintiffs had failed to discharge the onus of proof.

In his oral submissions, counsel briefly addressed the relevance of Annexure “Q” to Mr Lee’s affidavit, being the screenshot of the Plaintiffs’ client folder for CCK. Counsel submitted that the screenshot only showed the documents, or at least some of the documents, in the Plaintiffs’ folder. It did not show the documents on JP International Consultancy’s computer. As such, he submitted, the Annexure did not take the Plaintiffs’ case very far: Tcpt, 27 August 2020, p 320(49) – p 321(15).

Counsel then turned to the well-known principle expressed in Blatch v Archer (1774) 98 ER 969. In that case, Lord Mansfield wrote at 970:

It was submitted that there was no occasion to draw a Blatch v Archer inference against the Defendants, when Mr Lee had been given, and had taken, the opportunity to copy documents from Mr Ching’s computer onto an external hard drive. Mr Lee did not include a copy of the external hard drive in evidence; nor did he adduce any expert evidence relating to its contents.

Counsel submitted that unless the Court found that the Defendants had lied about deleting the documents, then they were not in any position to adduce evidence of those documents. As such, Mr Lee was the only person capable of giving that evidence.

Not only did counsel rely on this submission to avoid any inferences being drawn against the Defendants, but he went one step further in inviting the Court to draw a Jones v Dunkel (1959) 101 CLR 298 inference against the Plaintiffs. He submitted that “the failure to lead evidence/tender this material must be assumed to be due to such material being incapable of advancing their case”: Defendants’ Closing Submissions at par 29(b).

Counsel submitted that there was no evidence led demonstrating that the Defendants had not deleted the relevant information from their computer. He referred to Mr Lee’s evidence, in cross-examination, that he had supervised at least some of the deletion. The following passage from Mr Lee’s evidence is relevant at Tcpt, 25 August 2020, p 79(50) – p 81(05):

It was not clear from counsel’s questions, on their face, whether the questions related to the WeChat contacts or whether they related to the client Google Drive documents. However, I think that it is clear that Mr Lee’s answers were referable to the WeChat contacts. This is because, first, the context of the questions asked by the Court related to the WeChat contacts. Secondly, Mr Lee referred to an event on 28 September in his answer to counsel’s question. It was on 28 September that Mr Lee had received the external hard drive with a copy of some of the documents on JP International Consultancy’s computer. Therefore, it was only after that date that he could have checked the hard drive and realised that some of the documents were copies. He could not have supervised any deletion of Google Drive documents from JP International Consultancy’s computer on 28 September; he could only have supervised deletion of WeChat contacts (which by that stage he knew that the Defendants had).

By the same reasoning, counsel’s reliance on Ex D3 is misplaced. That exhibit comprises photographs of Mr Lee looking at JP International Consultancy’s computer on 28 September 2018.

Assuming that these conclusions are correct, and that counsel’s submissions proceeded on a misapprehension of the evidence, the position is as follows. The deletion of the WeChat contacts, or some of them, occurred on 28 September 2018. Mr Lee saw the deletion of at least some of the contacts, but he could not recall whether he saw all of them. As for the deletion of documents, there was no evidence, apart from Mr Ching’s assertion that the documents were deleted. However, as stated, evidence of the contents of the USB hard drive might have revealed the nature and extent of the documents that had been copied.

Moreover, counsel submitted that it would seem unlikely that Mr Lee would not have satisfied himself, at the time, that the documents had been deleted. There is merit in this submission.

Another submission in the Defendants’ case was that it was necessary for the Plaintiffs to show that the Defendants had used the confidential information. He submitted at par 48:

Partly on this basis, counsel disputed that any analogy should be drawn with Rein J’s decision in Clear Wealth Pty Ltd v Kwong (No 2). He submitted that there was no evidence, in this case, that the Plaintiffs’ client list had been taken by the Defendants. Even if it had been, it would have been of no utility. As Mr Lee accepted in cross-examination, the WeChat contact details of clients were not included in the client list. There would be no way for any person in possession of the client list, without other information, to use that list to contact all of the Plaintiffs’ clients. They would only have been able to contact the clients identified in the WeChat contacts that they had.

In respect of the use of the WeChat contacts, counsel submitted at par 62:

Counsel then turned to the allegation, made by the Plaintiffs, that the Defendants had gone beyond mere preparatory steps and had actively operated JP International Consultancy in breach of duty. He submitted that the Defendants were not senior employees and, thus, any obligation that they had to not do so, was diminished. Whilst his primary submission was that the steps taken were merely preparatory, he offered, in the alternative, that there was no proof of what loss the Plaintiffs had suffered as a result of any conduct in breach of duty.

I have already referred to the issue of Mr Lee’s and Ms Siew’s identical affidavits and the corresponding effect on the weight to be given to their evidence. I have also referred to counsel’s submissions generally on the credibility of the Defendants.

Turning to the issue of remedies, counsel for the Defendants noted that the granting of an injunction, as with all equitable relief, is a matter of discretion. He submitted that the following factors militated against the exercise of that discretion:

Moreover, he submitted, the granting of an injunction was precluded in circumstances where the Plaintiffs were unable to identify the confidential information said to have been taken.

In his oral submissions, counsel had emphasised that the injunction sought by the Plaintiffs would cover approximately 1,600 clients or former clients of the Plaintiffs. He submitted that such an injunction would be excessive. That was especially so given the relative position of the Defendants as employees: Tcpt, 27 August 2020, p 337(17–43).

He additionally relied on the doctrine of laches and pointed to the delay by the Plaintiffs in seeking an injunction.

Finally, counsel submitted that there was no occasion here for an account of profits over the entirety of JP International Consultancy’s profits. He emphasised his earlier submission that the only breach that could be established was in respect of the six returned clients. He submitted there could be no causal link between profits derived from later clients and those six returned clients:

In any event, he submitted, the Plaintiffs had received more than their due entitlement in respect of those six clients:

The state of the evidence was such that, in his submission, a further hearing would be required to determined what profits were referable to the breaches established by the Plaintiffs.

As to damages, counsel for the Defendants referred to the annexure provided by counsel for the Plaintiff in her submissions. He submitted that the annexure was incapable of identifying the proper quantum of damages. There was no break-down of what, of the amounts disclosed, were tuition fees and what was profit received by the Defendants.

Counsel, very briefly, addressed s 1317H of the Corporations Act. He simply submitted that no evidence had been led satisfying the requirements for the making of an award of compensation under that section.

Finally, counsel referred to the issue of set-off. He submitted that Mr Ching’s evidence of the amounts owing had not been responded to adequately. He submitted that a Blatch v Archer inference ought to be drawn against the Plaintiffs given that Mr Lee was the only person capable of leading evidence on the issue. Therefore, he submitted that any liability of Mr Ching ought to be set-off against the amount of $11,400 owing. Presumably, that would not apply to any liability of Ms Lu.

If there is a contract of employment between employer and employee, the obligations one owed to the other will be determined by reference to that contract.

As stated, there was no written contract of employment in existence between the Plaintiffs and the Defendants. There are no allegations, in the pleadings, as to the terms of the contract of employment, including with which of the Plaintiffs each Defendant was employed, the date when the contract of employment between the parties had been formed, or any conditions of employment. Nor were there any documents relied upon by either party that were said to have contractual force, or which set out the terms of any employment award that owed its existence to statutory authority, which would apply.

Ascertaining the terms of an oral contract is a question of fact: Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at 402 [90]; [2009] NSWCA 234 at [90] (Campbell JA, Allsop P and Basten JA agreeing); Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd [2018] NSWCA 213 at [191] (McColl AP, Macfarlan and Leeming JJA agreeing).

In Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1 at 77 [245]; [2016] HCA 26 at [245], Gordon J explained:

However, whilst the Defendants denied the Plaintiffs’ assertions in Paragraphs 16 and 17 of the Statement of Claim, as to the precise role which each of the Defendants played as an employee, in relation to Mr Ching, it was not disputed that he was employed on a casual part-time basis as a marketing officer and that Ms Su was employed on a part-time basis as a staff member, with no specific title or job scope.

Ordinarily, an employee’s duties to his, or her, employer under the contract of employment may be broadly expressed as duties of fidelity and good faith. Those duties include duties of confidence: Blyth Chemical Limited v Bushnell (1933) 49 CLR 66 at 81 (Dixon and McTiernan JJ); [1933] HCA 8; Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 448–449 [336]–[337]; [2016] FCA 248 at [336]–[337] (Besanko J). A similar duty arises in equity: Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 46–48 (Megarry J).

In par 18 of the Statement of Claim, the Plaintiffs asserted that, as employees, each of the Defendants:

The Plaintiffs did not state whether the duties were imposed as an express term or were implied as a matter of fact or law. I tend to the view that they advanced the duties as being implied by law, as part of the standardised contractual relationship of employment, and operated as “default rules”: Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at 215 [113]; [2014] HCA 32 at [113] (Gageler J), rather than terms implied in fact which should only be implied where the well-known conditions set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 (Lord Simon for the Board) are met, including that the term is “necessary” to give “business efficacy” to the particular contract, and that the term to be implied is not inconsistent with any express term of the contract.

Ultimately the terms of the employment contract and the scope of the Defendants’ duty imposed are questions to be answered by considering all the circumstances of the instant case.

In any event, the Defendants admitted the allegations pleaded in pars 18(a) and (b), but denied the allegations pleaded in pars 18(c) and (d). Thus, they admitted that at least the terms in par 18(a) and (b) were terms implied into the unwritten employment contracts between the Plaintiffs, or either of them, and the Defendants as a matter of law.

The concession regarding the inclusion of an implied term in the contract of employment that imposed an obligation of confidence was appropriately made: Robb v Green [1895] 2 QB 315 at 317 (Lord Esher MR); Faccenda Chicken Ltd v Fowler [1987] Ch 117 at 135–136 (Neill LJ).

As to the terms asserted said to have been incorporated by implication, I am satisfied that the duties owed by an employee, broadly characterised as duties of fidelity and good faith, include a duty of confidence: Lifeplan Australia Friendly Society Ltd v Woff at [336]–[337] (Besanko J); Freedom Motors Australia Pty Limited v Vaupotic [2003] NSWSC 506 at [13] (Davies AJ).

More generally, the scope of the duty of fidelity, again, may be more extensive or onerous in the case of senior employees as compared to more junior employees: Prestige Lifting Services Pty Ltd v Williams (2015) 333 ALR 674 at 701 [198]; [2015] FCA 1063 at [198] (Beach J). It is therefore an inquiry into all of the circumstances of the case, including the nature of the business, the position of the employee in it and the actual or potential impact of what the employee does on the employer’s interests.

The content of the duty to not divulge confidential information is also not static. It will vary according to the position of the employee, such that more senior employees, having greater access to confidential information, will be subject to greater restraint than more junior employees: Del Casale v Artedomus (Aust) Pty Limited (2007) 73 IPR 326 at 333 [32]; [2007] NSWCA 172 at [32] (Hodgson JA, McColl JA agreeing).

The cases in this area demonstrate the wide gamut of results that may arise upon such an inquiry. The obligations of an employee in a clerical position may vary drastically from those of a professional with direct contact with clients without supervision: compare The Change Group International PLC v City Exchange Mart Pty Ltd [2013] FCA 1048 at [219] (Edmonds J); and Weldon & Co v Harbinson [2000] NSWSC 272 at [27] (Bryson J).

For present purposes, it is useful to recall what Bryson J (as his Honour then was) wrote in Weldon & Co v Harbinson at [10]:

At [26], his Honour added that the circumstances as a whole must be examined to determine the content and scope of a contractual obligation of fidelity, in particular:

I am also supported in these conclusions by what Hodgson JA wrote in Del Casale v Artedomus (Aust) Pty Limited at [32], namely that the obligation requires the employee to refrain both from divulging confidential information and from utilising it in a way that could be detrimental to the employer:

Similarly, support is also to be found in what was stated by Campbell JA (McColl JA agreeing) in Del Casale v Artedomus (Aust) Pty Limited at [76]–[77].

I stated, earlier, that a similar duty arose in equity. In Lord Ashburton v Pape [1913] 2 Ch 469, Swinfen Eady LJ (as his Lordship then was) stated at 475:

The law relating to the protection in equity of confidential information is well established. In Corrs Pavey Whiting & Byrne v Collector of Customs (Vic), Gummow J wrote at 443:

There are, as expounded by the Full Court of the Federal Court in Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281 at 290 [39]; [2010] FCAFC 21 at [39], four elements to a claim for breach of confidence in equity:

What is alleged in the present case, is what has been described by Lord Neuberger PSC as the “classic case of breach of confidence” involving “the claimant’s confidential information, such as a trade secret, being used inconsistently with its confidential nature by a defendant, who received it in circumstances where she had agreed, or ought to have appreciated, that it was confidential”: Vestergaard Frandsen A/S v Bestnet Europe Limited [2013] 1 WLR 1556 at 1562 [23]; [2013] UKSC 31 at [23].

In Marshall v Prescott, Beazley P set out the principles relating to an equitable obligation of confidence at [53]–[55]:

I am satisfied that the Defendants had a duty to not take and misuse the Plaintiffs’ confidential information both whilst each was employed and after the cessation of his, and her, employment.

Counsel for the Plaintiffs tended to use potentially ambiguous terminology in describing the Defendants’ obligations, failing to recognise what had been written by Elias J in Nottingham University v Fishel [2000] IRLR 471 at 483 [92]; [2000] EWHC 2221 (QB):

His Lordship added at 483–484 [96]:

The latter passage is one that has been quoted with apparent approval in Australian Courts: see, eg, Woolworths Ltd v Olson (2004) 184 FLR 121 at 185–188 [214]; [2004] NSWSC 849 at [214] (Einstein J); Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2013] FCA 1341 at [235] (Foster J). See also Victoria University of Technology v Wilson [2004] VSC 33 at [145] (Nettle J); Francis v South Sydney District Rugby League Football Club Ltd [2002] FCA 1306 at [267] (Lindgren J).

However, counsel for the Plaintiffs did recognise in her written opening, that the Full Court of the Federal Court (Lindgren, Finn and Bennett JJ) observed that the scope of the duty of confidence, whether contractual, or equitable, will be the same: University of Western Australia v Gray (2009) 179 FCR 346 at 382 [161]; [2009] FCAFC 116 at [161] (The Court).

It is next necessary to consider whether the obligation of an employee continues after the cessation of the employment relationship where there is no term of restraint.

As there is no suggestion of a term that would constitute a restraint of trade, I am not satisfied that this duty continued after the Defendants’ employment with the Plaintiffs ceased. As was written by Palmer J in Digital Pulse Pty Limited v Harris (2002) 166 FLR 421 at 425 [23]; [2002] NSWSC 33 at [23] (overturned on different grounds):

Hodgson JA considered in Del Casale at [33]–[35], referring to the employee’s obligation of fidelity and good faith:

A similar view was expressed by Campbell JA at [76]–[77]:

A similar view had been expressed by Tipping J (as his Honour then was) in Peninsular Real Estate Ltd v Harris [1992] 2 NZLR 216 at 220–221:

Campbell JA in Del Casale, also saw “room to doubt that prior authority provides strong support for the duty of good faith continuing to operate after the termination of the employment contract”: at [79]. After a detailed examination of the authorities, his Honour concluded there was little basis therein to suggest that the implied duty of good faith continues post-employment: at [91].

However, that did not conclude Campbell JA’s analysis. His Honour turned to whether there was a basis in principle for implying a duty that continued post-termination. His Honour considered the question at [100], referring to what was said by Gummow and McHugh JJ in Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 450; [1995] HCA 24:

His Honour concluded at [137]:

His Honour continued to reason that the test of necessity, to which he referred, applies not only in determining the existence of the implied obligation but also to the circumstances that would breach it. Thus, he added, at [144]:

Campbell JA’s view that the implied obligation of good faith did continue, at least so far as such an obligation was necessary, has not received subsequent judicial consideration. (McDougall J acknowledged the existence of that view, but did not find occasion to consider it further: Manildra Laboratories v Campbell [2009] NSWSC 987 at [64].)

Whatever one’s view of Campbell JA’s judgment in Del Casale, I am not satisfied that the implied obligation of good faith continued past the termination of the Defendants’ employment. As was made clear by both Hodgson JA and Campbell JA, the authorities do not support the proposition that such an obligation persists as a matter of law. Moreover, I am not satisfied that such a term meets the required test of necessity in all the circumstances of the present case.

In this case, the position held by each of the Defendants is also a relevant matter. Neither occupied a senior position in either Plaintiff and each had limited responsibilities that verified his, and her, status within the Plaintiffs’ organisations, which was, essentially, no more than a clerical position.

As was written by Edmonds J in The Change Group International PLC v City Exchange Mart Pty Ltd at [219]:

It is also necessary to delineate what the contractual duty of an employee does not require in these circumstances. The Statement of Claim, at par 27, made a number of allegations that would be more appropriate in a restraint of trade case. Those allegations included: the making of false representations to the Plaintiffs’ clients; failing to inform individuals that JP International Consultancy was not associated with the Plaintiffs; contacting, communicating with, enticing and encouraging the Plaintiffs’ clients to move to JP International Consultancy and contracting with those clients.

As I repeatedly pointed out to counsel during the hearing, this was not a case involving an express restraint of trade clause. However, that is not to say that the above factual allegations, if they be proved, are irrelevant.

To repeat what was written by Campbell JA in Del Casale at [77]:

The undertaking of preparatory steps will breach the duty of fidelity where those preparatory steps would result in damage to the employer if they were successful: Helensburgh Property Management Pty Ltd v Brady at [42] (Bergin CJ in Eq), citing Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 at 303 (Pincus J).

Ball J wrote in SWM Financial Services Pty Ltd v Lloyd [2011] NSWSC 1108 at [84]:

As was written by Edmonds J, albeit under the heading “Breach of Fiduciary Duty”, in The Change Group International PLC v City Exchange Mart Pty Ltd at [236]:

Having established the nature of the implied contractual duty, it is important, then, to identify, with some precision, whether that contractual duty has been breached. Moreover, it is necessary to identify where that contractual duty diverges from the similar obligation of confidence in equity, that similar obligation also being relied upon by the Plaintiffs.

In this case there are two important distinctions between the differing duties that must be recognised. The first is whether, and to what extent, each duty persists following the cessation of the employment relationship. Secondly, to what remedies does a breach of each duty, respectively, entitle the Plaintiffs?

However, at the breach stage, as distinct from the remedy stage, it is not necessary, to debate any distinction between the implied contractual duties and the equitable fiduciary duty with respect to confidential information: Lifeplan Australia Friendly Society Ltd v Woff at [341] (Besanko J).

In respect of the duty of fidelity, the Plaintiffs must establish that that the duty was breached prior to the termination of the Defendants employment. Once that employment relationship was severed, the Defendants were free to establish a competing business as they saw fit. Subject, of course, to any obligations in equity or under statute.

To the extent that either or both of the Defendants attempted to, or did, solicit clients whilst they were still employed by the Plaintiffs, the Defendants committed a clear and flagrant breach of their duty of fidelity. That much was accepted by counsel for the Defendants and is consistent with authority of long-standing: see Wessex Dairies Limited v Smith [1935] 2 KB 80 at 85 (Greer LJ), 89–90 (Maugham LJ).

In Streetscape Projects (Australia) Pty Ltd v City of Sydney (2013) 295 ALR 760 at 788 [159]; [2013] NSWCA 2, Barrett JA (Meagher and Ward JJA agreeing) wrote at [159]:

The first issue noted by the legal representatives of the parties was “Whether the Plaintiff’s ‘Confidential Information’ was/is confidential”. In this regard, it is important to remember what had been defined in the Statement of Claim as the “Confidential Information” as set out previously. To succeed, the identified information must not only have the necessary quality of confidence but there must be circumstances which import an obligation of confidentiality. This may arise, as stated, either through a term of the employment agreement or from an objective appreciation where a reasonable person in the position of the recipient would have recognised that the information was given to him or her in confidence: Vasco Investment Managers Ltd v Morgan Stanley Australia Ltd (2014) 108 IPR 52 at 86 [276], 88 [286]; [2014] VSC 455 at [276], [286] (Vickery J).

In Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All ER 413 at 415; [1948] 65 RPC 203 at 215, the Court of Appeal wrote (Lord Greene MR, Somervell LJ and Cohen J agreeing):

In Del Casale v Artedomus (Aust) Pty Limited, Hodgson JA, at [40], set out factors that may assist the Court in determining whether information is confidential. His Honour wrote:

The fact that the information was obtained in a surreptitious, or covert, manner may be relevant to the characterisation of it as confidential. Ward J (as her Honour then was) explained in AIIB Pty Limited v Beard [2009] NSWSC 1001 at [157]:

It has been said that, normally, lists of customers and their requirements may constitute confidential information. Rein J in Clear Wealth Pty Ltd v Kwong (No 2), wrote at [33]:

Henry J has recently observed in Smartways Logistics Holdings Pty Ltd v O’Sullivan [2020] NSWSC 189 at [89], that:

In the present case, there was a significant focus on the WeChat contacts. Yet, little, although some, attention was given to whether there is any difference in the retention of WeChat contacts, even a large number of them, on a mobile phone owned by the employee, compared with the collation of client information in a “client list” from the computer of the employer.

Counsel for the Defendants, however, did submit that the mobile telephone of each of the Defendants was not the property of the Plaintiffs, but the personal property of each of the Defendants: Tcpt, 25 August 2020, p 60(25) – p 61(11); Defendants’ Closing Submissions at pars 59–60. He referred to Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74; [2000] NSWSC 979, in which the defendants were mechanics, and their employer had provided them with notebooks to record certain information. As part of their duties, the employees would attend jobs and would record the contact details of the client in the notebooks. It was alleged that the defendants retained the notebooks to assist in the conduct of their new business.

Young J (as his Honour then was) summarised the applicable law at [19]–[20]:

In Face It Ltd v Luk [2019] HKCFI 1416, the plaintiff sought an interim injunction requiring four of the eight defendants (former employees) to deliver up information comprising: “the name, ID number and/or contact details of FIT’s customers (including their telephone number, address, email address, Facebook/WeChat/WhatsApp profile (‘Customers Information’) and all communications or messages with FIT’s customers using those communication channels (‘Communication Records’)”.

In respect of the contact details of clients, Coleman J said of the evidence at [39]–[43]:

It was also a case where the defendants’ employment contracts contained an express clause that characterised certain information as confidential. In concluding that the information was confidential, Coleman J wrote at [59]–[62]:

That is not to say that WeChat contacts can never be, or always are, confidential. It is an inquiry that depends wholly on the circumstances of the case. In this case, the evidence reveals that the details of WeChat contacts were obtained by the Defendants in the course of, and for use as part of, their employment with one or other of the Plaintiffs. That some of that information was kept on their mobile phones is not inconsistent with the information being imparted in circumstances giving rise to an obligation of confidence: Isaac v Dargan Financial Pty Ltd atf The Dargan Financial Discretionary Trust (2018) 98 NSWLR 343 at 372 [153]; [2018] NSWCA 163 at [153] (Gleeson JA, Bathurst CJ and Beazley P agreeing).

The Plaintiffs submit that the relationship of employer and employee is an established category of legal relationship which attracts fiduciary obligations.

A person can be a fiduciary in relation to another party with whom he has a contractual relationship in respect of some only of his contractual obligations: see, for example, F & C Alternative Investments (Holdings) Ltd v Barthelemy (No 2) [2012] Ch 613 at 647–649 [212]–[216], 650 [223] (Sales J); Lehtimäki v Cooper [2020] UKSC 33 at [51] (Lady Arden).

The critical feature of these relationships is that “the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense”: Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 96–97; [1984] HCA 64.

Mason J (as his Honour then was) also noted, at 97, that:

But as was observed by Gibbs CJ in Hospital Products Limited v United States Surgical Corporation, at 68:

A useful summary of principles is found in G E Dal Pont, Equity and Trusts in Australia (7th ed, 2019, Lawbook Co) at [4.285]:

In EagleBurgmann Australia Pty Ltd v Leabeater (2012) 219 IR 449 at 461–462 [64]–[65]; [2012] NSWSC 573, Nicholas J observed at [64]–[65]:

In Bayley & Associates Pty Ltd v DBR Australia Pty Ltd, Foster J observed at [229]–[232]:

As Sales J (as his Lordship then was) pointed out in F & C Alternative Investments (Holdings) Ltd v Barthelemy (No 2) at 650 [223]:

Counsel referred to the High Court’s decision in Concut Pty Ltd v Worrell (2000) 176 ALR 693 at 700–701 [26]; [2000] HCA 64, where the majority (Gleeson CJ, Gaudron and Gummow JJ) said at [26]:

Counsel added a reference to University of Western Australia v Gray, in which the Full Court of the Federal Court wrote at [161]:

But as Campbell JA wrote in Del Casale v Artedomus (Aust) Pty Limited at [118], referring to the observations of Megarry J (as his Lordship then was) in Coco v AN Clark (Engineers) Ltd at 47:

Gordon J (as her Honour then was) in Coles Supermarkets Australia Pty Ltd v FKP Limited [2008] FCA 1915 at [63], adopted and applied what was said by Campbell JA in Del Casale. The question considered by her Honour was whether, as a consequence of breaches of an express contractual confidentiality provision (in circumstances where the plaintiff relied upon the same conduct to make a claim for a breach of the equitable duty of confidence), the equitable obligation of confidence still existed.

The view adopted by their Honours was one that received the approval, albeit in obiter, of Barrett JA (Meagher and Ward JJA agreeing) in Streetscape Projects (Australia) Pty Ltd v City of Sydney at [150]. His Honour wrote:

Stevenson J in Gold and Copper Resources Pty Ltd v Newcrest Operations Ltd [2013] NSWSC 281 considered a claim for damages for breach of a confidentiality agreement and in doing so considered whether the evidence established a breach of the equitable duty of confidence.

His Honour concluded, at [97] that the obiter observations in Streetscape Projects (Australia) Pty Ltd v City of Sydney should be followed and the words of Campbell JA in Del Casale that where “there is a contractual obligation covering the topic there is no occasion for equity to intervene to impose its own obligation” should be adopted.

In Antony Leslie John Woodings as liquidator of the Bell Group Ltd and the Bell Group Finance Pty Ltd v WA Glendinning and Associates Pty Ltd [2019] WASC 54, Smith J, considered all of the authorities and stated at [64]–[65], that she did “not agree that if a contractual provision deals with the subject matter of confidentiality, that an equitable duty of confidence is inevitably ousted and that “the approach taken by Stevenson J in Gold & Copper Resources; Gordon J in Coles Supermarkets; and Campbell JA in Del Casale should be approached with some caution in this matter”.

Despite her Honour’s expression of opinion, I do not think, in truth, that Smith J’s approach is significantly different from the authorities mentioned. Her Honour wrote at [68], referencing Barrett JA’s judgment in Streetscape:

Her Honour’s approach is, therefore, one of contractual interpretation to ascertain whether the term excludes the application of the equitable duty. I do not take Stevenson J in Gold & Copper Resources or Campbell JA in Del Casale as suggesting any different approach.

It follows, on my view of the authorities in this jurisdiction, that the task before the Court in this case is, first, to ascertain the ambit of any implied contractual duties of confidence and whether those duties have been breached, and secondly, if necessary to do so, to determine whether any equitable duty of confidence has been breached.

As stated above, the Plaintiffs contended that the Defendants had breached ss 182–183 of the Corporations Act.

Section 182(1) provides:

The learned editors of R P Austin and I M Ramsay, Ford, Austin & Ramsay’s Principles of Corporations Law (2020, LexisNexis) at [9.282.3] set out the four elements required to be established to demonstrate a contravention of s 182. In the context of the present case, those elements are:

Impropriety, in this context, involves an objective inquiry. As the plurality of the High Court (Brennan, Deane, Toohey and Gaudron JJ) wrote in R v Byrnes (1995) 183 CLR 501 at 514–515; [1995] HCA 1:

Most recently, that formulation has been approved by the High Court in Australian Securities & Investments Commission v Lewski (2018) 266 CLR 173 at 203–204 [75]; [2018] HCA 63 at [75] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ).

In In the matter of Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233 at 368 [432]; [2014] NSWSC 789, Black J summarised the applicable principles at [432]:

There is also an element of purpose in s 182. It must be established that the employee’s purpose was to gain a relevant advantage or cause detriment. It follows that an accrual of an advantage or the suffering of a detriment is not required to make out a contravention of the provision: Chew v The Queen (1992) 173 CLR 626 at 632–633 (Mason CJ, Brennan, Gaudron and McHugh JJ); [1992] HCA 18; Hart Security Australia Pty Ltd v Boucousis (2016) 339 ALR 659 at 679 [85]; [2016] NSWCA 307 at [85] (Meagher JA, Bathurst CJ and Beazley P agreeing).

There is nothing in the section that limits it from applying to every employee, no matter how low in the corporate structure.

Section 183(1) provides:

Relevantly, a note following the subsection provides that “[t]his duty continues after the person stops being an officer or employee of the corporation”.

Based upon Commissioner for Corporate Affairs v Green [1978] VR 505 at 510 (McInerney J); Forkserve Pty Limited v Jack (2001) 19 ACLC 299 at 322 [114]; [2000] NSWSC 1064 at [114] (Santow J), to establish a contravention of the section, it is necessary for the Plaintiffs to establish that one or both of the Defendants:

There is a question as to what information s 183 applies.

In Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779 at 783, Young J (as his Honour then was) limited the information to which the predecessor to s 183 applied to “that type of information which equity would restrict the director from using to his personal profit”. That is, “the sort of information which equity would protect by injunction if a director used it in breach of his fiduciary duties”: at 784.

Young J repeated this limitation in his Honour subsequent decision in Forkserve Pty Ltd v Pacchiarotta at [28]. His Honour explained:

His Honour added at [29]: “Thus it follows that as there is no breach under the general rules of equity, there is no breach under s 232”.

His Honour’s view has been since adopted by other judges of this Court. For example, in Nuera (Australia) Pty Ltd v Bain [2005] NSWSC 24 at [39], Brownie AJ noted that no issue had been raised as to the correctness of those authorities, but nevertheless considered the reasoning therein to be persuasive.

Young CJ in Eq (as his Honour had by then become) repeated his view in Landmark Underwriting Agency Pty Ltd v Kilborn [2006] NSWSC 1108 at [71].

His Honour’s reasoning has received further approval in other jurisdictions: see, for example, Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd [2007] FCA 1621 at [159] (Besanko J); Deeson Heavy Haulage Pty Ltd v Cox (2009) 82 IPR 521 at 545 [134]–[135]; [2009] QSC 277 at [134]–[135] (McMeekin J).

However, in ASIC v Somerville (2009) 77 NSWLR 110 at 124 [39]; [2009] NSWSC 934, Windeyer AJ took a different view. His Honour said at [39]:

The view expressed by Windeyer AJ has seemingly found favour in Victoria. In United Petroleum Australia Pty Ltd v Herbert Smith Freehills (a firm) (2018) 128 ACSR 324 at 451 [649]; [2018] VSC 347 at [649], Elliott J cited ASIC v Somerville and said:

Other authorities have also cited Windeyer AJ’s judgment without embarking on any consideration of how it differs from Young J’s earlier decisions: see Digital Cinema Network Pty Ltd v Omnilab Media Pty Limited (No 2) [2011] FCA 509 at [163] (Gordon J).

The learned authors of R P Austin, H A J Ford and I M Ramsay, Company Directors: Principles of Law & Corporate Governance (2005, LexisNexis) at 389 attempt to explain away Young J’s view in the following way:

In SBA Music Pty Ltd v Hall (No 3) [2015] FCA 1079, Wigney J wrote, at [28]:

Much like s 182, s 183 requires an element of impropriety. The formulation of the plurality in R v Byrnes, as set out above, is equally applicable to s 183: Leica Geosystems Pty Ltd v Koudstaal (No 3) (2014) 109 IPR 1 at 16 [64]; [2014] FCA 1129 at [64] (Collier J); AG Australia Holdings Limited v Burton (2002) 58 NSWLR 464 at 500 [124]–[125]; [2002] NSWSC 170 at [124]–[125] (Campbell J).

There is a substantial overlap between the content of an employee’s contractual duties, the equitable duty of confidence, any fiduciary duties and the statutory duty in s 183. Thus, it has been said that “[t]here will be an improper use of such information where its use would be a breach of an equitable obligation of confidence, or breach of a contractual obligation”: Andrews Advertising Pty Ltd v Andrews (2014) 99 ACSR 164 at 196 [180]; [2014] NSWSC 318 at [180] (Darke J); Del Casale v Artedomus (Aust) Pty Limited at [59]–[60] (Hodgson JA).

From the authorities referred to, there are a number of steps which are necessary to be taken for the Plaintiffs to succeed in their claim for breach of confidence. First, they must establish that there existed from the relationship between the parties an obligation of confidence regarding the information which had been imparted. Then, they must establish whether the information which was communicated could properly be regarded as confidential. If the Court is satisfied that it had been established that an obligation of confidence existed and that the information was confidential, then the Court proceeds on the basis that the Defendants, as the persons to whom the information was given, had a duty to only use the information for the purpose for which it was imparted to each of them and could not use it to the detriment of the Plaintiffs. Information communicated by the Plaintiffs to their then employees during the course of their employment can, generally be taken to have been provided upon the basis that the Defendants would use that information, for the purposes on which it was imparted to them.

In reaching conclusions, the Court must examine all the evidence relating to the nature of the employment, the character of the information, the restrictions, if any, imposed on its dissemination, how it was disseminated, the extent of use in the public domain and the damage likely to be caused by its use and disclosure in competition to the Plaintiffs.

Counsel for the Plaintiffs submitted:

Based upon the evidence:

It is convenient to repeat here the form of injunctions which the Plaintiffs sought:

In John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 at [19], Brereton J (as his Honour then was) observed that:

In O’Brien v Komesaroff at 327–328, Mason J referred to the judgment of Brightman J (as his Lordship then was) in Amway Corporation v Eurway International Limited [1973] FSR 213, in which his Lordship had noted at 219 problems that could arise if information said to be confidential were not described with sufficient specificity:

At 328, Mason J added:

It also necessary at this stage to refer to what has been described as “springboard relief”.

The term “springboard” is frequently found in the authorities, used in its ordinary meaning, to describe the misuse of confidential information to obtain an advantage or head start in establishing a business or product.

In Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1967] RPC 375 Roxburgh J wrote at 391:

The term “springboard relief” refers to the ability of the Court to mould relief to fit all the circumstances of the case. In United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 233 (reversed on appeal but not on this point), the Court of Appeal referred to the “head start approach” and observed that:

The doctrine was discussed by Gordon J (as her Honour then was) in Zomojo Pty Ltd v Hurd (No 2) (2012) 299 ALR 621 at 679 [201]–[202]; [2012] FCA 1458. Her Honour wrote at [201]–[202]:

In Faccenda Chicken Ltd v Fowler [1985] 1 All ER 724 at 731, Goulding J accepted that the springboard principle could apply in a case between employer and employee, but also observed that:

For a useful summary of the principles (at least in the United Kingdom): see QBE Management Services (UK) Ltd v Dymoke [2012] EWHC 80 (QB) at [239]–[247] (Haddon-Cave J).

An issue which also arises is whether any “springboard” has caused detriment to the Plaintiffs, a relevant consideration in awarding damages or equitable compensation for breach of confidential information being whether detriment or prejudice has been caused to the applicant: see NRMA v Geeson (2001) 40 ACSR 1 at 10–11 [58]; [2001] NSWCA 343 at [58] (Ipp AJA, Mason P and Giles JA agreeing); Smartways Logistics Holdings Pty Ltd v O’Sullivan at [172] (Henry J), citing NRMA v Geeson.

The Plaintiffs led no evidence on this issue.

One of the issues with the second injunction sought by the Plaintiff in the present case, is that it is framed as a permanent injunction of indefinite duration. This is not, ordinarily, the appropriate relief in a “springboard” case. Nourse LJ in Roger Bullivant Ltd v Ellis [1987] IRLR 491 considered the case where an injunction was granted to prevent the defendants from misusing a card index containing the names and contact details of engineers, local authorities and architects who referred work to the plaintiffs. His Lordship described the purpose of a springboard injunction at 496:

His Lordship concluded:

His Lordship acknowledged that there will be some difficulty in determining precisely when the advantage generated by a springboard will cease.

Whilst Roger Bullivant Ltd v Ellis was a case involving an interlocutory injunction, Nourse LJ’s observations apply equally where a springboard injunction is sought by way of final relief: IPC Global Pty Ltd v Pavetest Pty Ltd (No 4) (2017) 124 IPR 101 at 103 [22]–[23]; [2017] FCA 260 at [22]–[23] (Moshinsky J); Mastec Australia Pty Ltd v Trident Plastics (SA) Pty Ltd (No 3) [2018] FCA 99 at [19] (White J).

In IPC Global Pty Ltd, Moshinsky J quoted, with approval, a statement in G E Dal Pont, Law of Confidentiality (2014, LexisNexis) at [15.9]. Professor Dal Pont wrote:

Similar considerations guided Hodgson JA’s conclusion in Del Casale v Artedomus (Aust) Pty Limited. His Honour held that the granting by the primary judge of a permanent injunction against the use of the confidential information was excessive in the circumstances. His Honour explained at [61]:

Certainly, it is not the case here that the information has been fully disclosed by virtue of these proceedings as it was in Del Casale v Artedomus (Aust) Pty Limited.

In other cases, there will no occasion to grant an injunction at all, even one of limited duration. The decision of Barlow QC DCJ in Champions Ride Days Pty Ltd v McFarlane [2019] QDC 236 is supportive of this view. In that case, the plaintiff sought a permanent injunction restraining the defendants from using confidential information, as well as orders for the delivery up and destruction of the information. It was a case where an interlocutory injunction had been granted to restrain the defendants from using the information. In the circumstances, his Honour concluded at [149]:

Bearing in mind the length of time that has passed since the Defendants ceased their employment, and the failure by the Plaintiffs, when it first came to their attention that the Defendants may have misused confidential information, to seek any interlocutory injunction, I would not, as a matter of discretion grant a permanent injunction in the terms that the Plaintiffs seek, even though I am satisfied that there remains a potential risk of misuse of any such information. An order for the return of the WeChat contacts, and the supervised deletion of those contacts on any device on which they may be stored, will minimise the potential for any misuse, more than two years after the Defendants have ceased to be employees of the Plaintiffs.

Where confidential information has been misused, the appropriate remedy, when the cause of action relied upon is equitable, is that a successful plaintiff should make an election between equitable compensation and an account of profits as the two are inconsistent remedies: Vasco Investment Managers Limited v Morgan Stanley Australia Limited at [294]–[295] (Vickery J). In this case, equitable compensation has not been sought.

Palmer J in Digital Pulse Pty Limited v Harris at [20]–[25], wrote:

An account of profits is a gain-stripping remedy. It does not, therefore, give any regard to the loss of the wronged party.

Rothman J explained the nature of an account of profits in Phillips v Robab Pty Limited (2014) 110 IPR 184 at 206 [175]–[176]; [2014] NSWSC 1520 at [175]–[176]:

The distinction between an account of profits and damages is crucial for the reasons expounded by Windeyer J in Colbeam Palmer Limited v Stock Affiliates Pty Limited (1968) 122 CLR 25. His Honour considered at 32:

Recently, in Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited (2018) 265 CLR 1; [2018] HCA 43, the High Court had occasion to consider the remedy of an account of profits. Gageler J, delivering a separate judgment, wrote at [75], relevantly to the present case:

In this case, as has been stated, the Plaintiffs seek an account of profits of the entirety of the Defendants’ business, including all future profits. True it is that an account of profits may include as yet unrealised profits: Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited at [24] (Kiefel CJ, Keane and Edelman JJ).

In Vasco Investment Managers Limited v Morgan Stanley Australia Limited, Vickery J noted, at [303]:

Black J, recently, had occasion to consider the remedy in Mudgee Dolomite & Lime Pty Ltd v Murdoch; In the matter of Mudgee Dolomite & Lime Pty Ltd [2020] NSWSC 1510. His Honour wrote at [170]–[173], albeit in relation to a claim for breach of fiduciary duty:

In the Statement of Claim, the Plaintiffs did not plead, or particularise, any statutory remedy under the Corporations Act.

In her written opening, counsel for the Plaintiffs sought a declaration of contravention pursuant to s 1317E of the Corporations Act, sub-s (1) of which is in the following terms:

However, by the operation of s 1317J, only ASIC has standing to apply for a declaration of contravention: Corporations Act, ss 1317J(1), 1317J(4).

It follows that the only order that the Plaintiffs have standing to seek, although not pleaded, or referred to in the written opening submissions, was a compensation order pursuant to s 1317H.

Section 1317H(1) is in the following terms:

Section 1317H(2), relevantly, provides:

As a preliminary matter, the Plaintiffs have standing to apply for a compensation order: Corporations Act, s 1317J(2). Further, both ss 182(1) and 183(1) are civil penalty provisions.

Section 1317H(1)(b) mandates that the damage must have “resulted from” the contravention. It is well established that the test of causation that those words require should not be equated with that required for equitable compensation. In Adler v Australian Securities and Investments Commission (2003) 179 FLR 1 at 156 [709]; [2003] NSWCA 131 at [709], Giles JA (Mason P and Beazley JA agreeing) concluded:

The onus in establishing that causal link rests on the Plaintiffs: KRM (Vic) Pty Ltd v Classicbet Pty Ltd [2019] NSWSC 1773 at [84] (Rein J).

Other decisions have applied common law notions of causation to s 1317H. This includes the application of “common sense” to questions of causation: see, for example, Termite Resources NL (in liq) v Meadows (No 2) (2019) 370 ALR 191 at 328 [729]; [2019] FCA 354 at [729] (White J); Hydrocool Pty Limited v Hepburn (No 4) (2011) 279 ALR 646 at 716 [476]; [2011] FCA 495 at [476] (Siopis J).

However, the cautionary notes expressed by Edelman J (as his Honour then was) and Jackson J on the appropriateness of “common sense” as a legal norm should be remembered: Agricultural Land Management Ltd v Jackson (No 2) (2014) 48 WAR 1 at 74–75 [392]–[394]; [2014] WASC 102 at [392]–[394] (Edelman J); LM Investment Management Ltd (receiver apptd) (in liq) v Drake [2019] QSC 281 at [145]–[147] (Jackson J).

There could be, and was, no dispute that the Plaintiffs had the onus of establishing both the fact, and the amount, of loss suffered: Commonwealth of Australia v Amann Aviation Pty Limited (1991) 174 CLR 64 at 80 (Mason CJ and Dawson J); [1991] HCA 54. Generally, mere difficulty does not relieve a court from estimating damages as best it can: see the review of authorities in JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 at 241–246 (Brooking J); see also Paino v Paino (2008) 40 Fam LR 96 at 113 [76]; [2008] NSWCA 276 at [76] (Hodgson and McColl JJA).

However, as Hayne J explained in Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at 266 [37]–[38]; [2003] HCA 10, in the case of a claim for damages for breach of contract, at [37]–[38]:

Thus, there is a difference between cases where a plaintiff cannot adduce precise evidence of loss and those where the plaintiff was able to do so, but did not.

In Longden v Kenalda Nominees Pty Ltd [2003] VSCA 128, Chernov JA (Buchanan JA agreeing) wrote at [33]:

Furthermore, where damages are uncertain because of a lack of evidence, difficulties of assessment are in general resolved against the party who could or should have provided the evidence: LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 at [12] (Hodgson JA).

Counsel for the Plaintiffs referred to evidence of damage in an annexure to her closing submissions, which included an updated copy of the aide memoire of the 17 clients. The annexure referred to payments in the bank statements. Subject to what is set out below, the payments referred to appear to be a correct summary of the bank records.

In assessing the damage suffered by the Plaintiffs, I have had regard to the aide memoire, the evidence of the entries in the bank statements referred to therein, the cross-examination, and any submissions made by either counsel. I have not, however, undertaken an independent examination of the bank records to which the Court’s attention was not taken through the witnesses in cross-examination. Nor have I done so where the reference to those bank statements was not referred to in submissions.

I should also observe that the Plaintiffs did not seek that the question of damages be resolved after the determination of liability by a separate assessment of damages hearing.

The aide memoire identified, in relation to the 17 clients, 34 different payments in JP International Consultancy’s bank records. In total, the amount said to have been paid to the Defendants, by those 17 clients, was $44,793.30.

However, that is not the end of the matter in relation to ascertaining damages. It is to be remembered that six clients were returned by the Defendants to the Plaintiffs. As was averred to above, POI issued a number of invoices to the Defendants to recoup the commission received by them in respect of five of those six clients. In all cases, bar one, POI sent an invoice for a greater amount than the amount received by the Defendants (except for WX, where the amount invoiced equalled the amount received). Those invoices were duly repaid by Mr Ching to the Plaintiffs: Affidavit, (Paris) Yiu Tung Ching, 17 October 2019 at par 79, annexure S, a matter on which he was not cross-examined.

There was some suggestion, in cross-examination, that Mr Ching had received, and not returned, funds received from private health insurers in respect of those students: Tcpt, 26 August 2020, p 222(37) – p 225(02). He was taken to some entries in the bank statements showing payments from private health insurers and he agreed that it was likely that they were referable to four of the returned clients. These amounts did not make their way into the aide memoire, nor were they the subject of any submissions.

It follows that any loss suffered by the Plaintiffs in respect of those five clients has already been recovered. The payments attributed to those clients total $3,675. There is, therefore, at its highest, an amount of $41,118.30 being the loss alleged to have been suffered by the Plaintiffs.

In addition, counsel for the Defendants made some submissions at the conclusion of the hearing in respect of particular amounts. It should be observed that he (and the Court and counsel for the Plaintiffs) were using the original aide memoire at this time, not the updated annexure in the Plaintiffs’ counsel’s written closing.

Counsel submitted that the Defendants had refunded any commission paid to them by WqC. He directed the Court to three entries in the bank statements (Ex P1/59–60): a credit to the account of $675.20 on 28 September 2018, a debit from the account of $1,640.00 on 1 October 2018 and a further credit of $964.80 on 3 October 2018. The first two of those payments were included in the aide memoire.

He made a similar submission in respect of the payments made by JZ. On 26 September 2018, JZ made a payment of $1,700.00 into JP International Consultancy’s account ending 1104: Ex P1/58. On 26 February 2019, an amount of $1,700.00 was transferred from that account into JP International Consultancy’s account ending 9252. From there, an identical payment was made to JZ described in the statement as “refund”: Ex P1/34. Mr Ching gave evidence that he had provided JZ with a refund because his application to an educational institution was unsuccessful: Tcpt, 27 August 2020, p 271(19–36). Two of those payments of $1,700 were included in the aide memoire.

However even if all of those payments were, indeed, refunds, that does not necessarily change the position. The mere fact that the Defendants have not received any gain does not mean that the Plaintiffs have not suffered any loss.

Another issue arose with two payments made to JP International Consultancy on behalf of the client ZW. Two amounts of $11,600 and $2,840 were paid into JP International Consultancy’s account on 25 February 2019: Ex P2/54. Mr Ching gave evidence that these amounts were paid as the tuition fees for ZW and were not, therefore, commission paid by the client: Tcpt, 27 August 2020, p 266(06–34).

It is difficult to confirm whether this is so. Certainly, the $11,600 was transferred out of JP International Consultancy’s account on 26 February 2019. However, the identity of the recipient was not made clear on the evidence.

As for the other payment of $2,840, two payments were made out of JP International Consultancy’s account on 26 February 2019 ($1,768.80 and $1,071.20) which total that amount. As counsel for the Plaintiffs rightly pointed out, the $1,071.20 was transferred to another account held by the Defendants where it appears to have remained. Mr Ching gave evidence that the $1,768.80 was transferred to the educational institution: Tcpt, 27 August 2020, p 266(50) – p 267(08). Mr Ching was not cross-examined on these entries and there is no reason to reject his evidence on this topic, especially as there are transfers out of those amounts in the bank records.

The tuition fees represent a slightly different issue to the amounts received by the Defendants, but then refunded. Whereas the refunded amounts may be indicative of the loss suffered by the Plaintiffs (that is, the commission they could have received but for the breach), on no view can the receipt of tuition fees reflect any loss suffered. If the Plaintiffs had retained ZW, they would not have received any benefit from those moneys. They would have, as the Defendants did, received the tuition fees and duly transferred them to the relevant educational institution.

A final issue arises with the payment said to have been made to MYN. It appears that the payment referred to was actually a debit from the account of JP International Consultancy: Ex P1/39. Accounting for that leaves the total loss claimable as $27,199.50.

As stated, the first Defendant claimed a set-off in the amount of $11,400 reflecting, it was said, the unpaid commission for 44 students referred by the first Defendant to the Plaintiffs. Whilst the Plaintiffs did not file a Reply, they are taken to have denied the allegation of the debt: UCPR, r 14.27.

In support of this claim, Mr Ching annexed to his affidavit affirmed 17 October 2019, a list of 128 client names that, he claimed, he had referred to the Plaintiffs. Of those 128 clients, Mr Ching asserted that he had not received the commission to which he was entitled in respect of 44 of them.

It is not apparent, on the face of that annexure, who the 44 clients are, and in respect of whom, commission, allegedly, has not been paid. Nor was there anything in the body of Mr Ching’s affidavit that explained how the annexure was to be read.

Ultimately, Mr Ching’s evidence rose to no more than a bare assertion that moneys were owed. Mr Ching was not cross-examined on his evidence in relation to the amounts alleging owing.

Furthermore, Mr Lee never proffered an express denial that the moneys were owed. Rather, his evidence was to the effect that (Tcpt, 25 August 2020, p 70(08–16):

Mr Lee asserted that he had undertaken some investigation into the matter, but admitted that he had not detailed the nature or result of those investigations in his evidence. It is difficult to accept his evidence in this regard.

Counsel for the Defendants in his closing submissions relied, in respect of the claim for set-off, on s 21 of the Civil Procedure Act. Section 21(1) provides:

For the purposes of s 21, “debt” means any liquidated claim: Civil Procedure Act, s 21(6).

Importantly, s 21 requires that there be “mutual debts between a plaintiff and a defendant”. The claim by the Plaintiffs for damages for breach of contract is plainly an unliquidated claim and, therefore, falls outside the definition of “debt” in s 21(6): see Arnold v Forsythe [2012] NSWCA 18 at [44]–[47] (Sackville AJA, McColl and Young JJA agreeing).

In those circumstances, the right of set-off under s 21 is not available to the first Defendant.

The first Defendant did not purport to rely on any other right of set-off at law or in equity. In all the circumstances, I am not satisfied that a right of set-off presently exists.

Whilst, therefore, the amount cannot strictly be claimed as a set-off against the award of damages in the Plaintiffs’ favour, I urge the parties in attempting to reach agreement on the quantum (as discussed below) to have regard to s 60 of the Civil Procedure Act and consider the inclusion of the $11,400, or some part of it, by way of compromise, in any discussions, in order to avoid further litigation, in the Local Court, for this amount.

In this case, I have been unable to find, in the Plaintiffs’ evidence, any causal link between the misuse of any confidential information and any profits derived as a result of that conduct by the Defendants. To the extent that they have derived any profit, it must be limited to that part of the amount of $44,793.30 claimed by counsel for the Plaintiffs can be shown to be profits received by the Defendants.

By way of a preliminary calculation, accepting that the Defendants already accounted for the $3,675 received in respect of the five returned clients; that $5,715.20, being what had been received was refunded to the clients in various circumstances; that $13,368.80 was not commission received by the Defendants, but rather tuition fees passed onto the educational institutions; and that $550 for MYN was an error in the calculations, that leaves only $21,484.30 as may be regarded as gross profit.

Again, doing the best I can, that is the amount, subject to what is said below, by way of profit that should be recovered by them in the alternative.

I shall allow the parties an opportunity to consider the calculations, and, if possible reach agreement on the amounts as they are modest. If agreement cannot be reached, it will be necessary to consider how to deal with the quantum.

On balance, despite the submissions made by counsel for the Plaintiffs, I am not satisfied that an injunction to restrain the Defendants from providing the individuals named in the Client List with education or migration services is appropriate.

In part, that is due to the failure of the Plaintiffs to establish that the Defendants have retained in their possession of documents that were taken from the client Google Drive.

However, more importantly, I remain unsatisfied that an injunction is an appropriate remedy, bearing in mind the passing of two years since the Defendants left the employ of the Plaintiffs. The authorities on “springboard injunctions” make it plain that such injunctions are not to be of indefinite duration.

In the circumstances, after this length of time, it would not be appropriate to restrain the Defendants from dealing with any of those individuals.

However, it is appropriate, in my opinion, to order, by way of mandatory injunction, that the Defendants, within 14 days of the making of the orders, return any WeChat contacts of the Plaintiffs’ clients that remain in their possession without retaining a copy thereof.

The Plaintiffs have also established that breaches of contract have occurred. Both in respect of the breaches of the duty of fidelity in soliciting those six clients prior to the termination of their employment, and the breach of the duty of confidentiality in the retention and use (or threatened use) of the WeChat contacts.

Consequently, the Plaintiffs are entitled to damages for those breaches of contract. I have referred to the evidence of the damage suffered above, and the evidence available as to the quantum of a damages order.

On the question of costs, subject to any evidence of matters that may be relevant, such as an offer of compromise, or a Calderbank offer, in view of the result of the case and the lack of evidence on many of the claims made, my present tentative view is that there should be no order as to costs of either party, to the intent that each party is to bear its, his or her, own costs, respectively, of the proceedings.

Subject to hearing from the parties, each has had only partial success, and in the case of the Plaintiffs, the success is economically tiny.

In summary, and for the assistance of the parties, the principal findings of the Court are:

The Court: