Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor

These proceedings concern a restraint of trade and alleged misuse of confidential information in the real estate agency industry.

The Plaintiffs are two real estate agencies Devine Real Estate Concord Pty Ltd (First Plaintiff or Concord Office) and Devine Real Estate Drummoyne Pty Ltd (Second Plaintiff or Drummoyne Office), their majority shareholder and managing director Mr Steven Devine (Third Plaintiff) and his family trust company EMC Just Holdings Pty Ltd (Fourth Plaintiff). The real estate agencies are part of the Third Plaintiff’s family real estate business which has five offices in New South Wales and one in the Philippines (the Devine Group).

The Plaintiffs make a restraint of trade case against Wajih Agha (or Roger Agha) (First Defendant) and Lewis Coombe (Second Defendant). The First Defendant was a minority shareholder and director of the Concord and Drummoyne Devine Real Estate agencies and an employee at the Concord Office. The Second Defendant was an employee of the Concord Office. The Defendants have subsequently stopped working for the Devine Group.

The Plaintiffs seek to enforce restraint on the use of confidential information and trade against both the Defendants (SOC [1]-[9], [13]-[19]).

On 15 and 16 August 2018 I indicated I was willing to make an interim court suppression and non-publication order pursuant to s 10 of the Court Suppression and Non-Publication Orders Act 2010 (NSW) with respect to the evidence before me including those materials in the Court Book or as detailed by the Plaintiffs.

An initial confidential version of this judgment was provided to both sides to allow them to review the materials referred to in the judgment, and note any confidential material included in the judgment which they wished to argue should be redacted. This judgment is a redacted version to take into account issues of confidentiality as agreed by the parties.

Prior to resorting to the issues in this case, it is important to make some preliminary remarks about the conduct of the litigation.

The hearing for this matter was conducted initially during August 2018 on an expedited basis. Due to the large bulk of evidence served by the Plaintiffs totalling approximately between 8,000 and 10,000 pages of materials, the hearing dates set down for August 2018 were insufficient to dispose of the matter entirely, although the evidence was concluded, and further hearing dates were required for submissions.

However due to the ill health of counsel for the Plaintiffs, Ms Heath, the further hearing of the matter was postponed until a planned final hearing on 4 and 5 December 2018.

On 19 November 2018 the Plaintiffs filed submissions in chief. These were filed late and were extremely extensive, totalling 186 pages including a substantial chronology.

In a directions hearing on 30 November 2018 counsel for the Defendants Mr Doyle-Gray indicated that he needed further time to digest these lengthy submissions, and the 4 and 5 December 2018 hearing dates were vacated.

The Defendants filed their submissions in chief on 21 December 2018, prompting the Plaintiffs to again file late their submissions in reply on 4 March 2019 which were extensive totalling 26 pages. The Plaintiffs filed further submissions on 15 March 2019.

The oral submissions for this matter therefore occurred on 7, 8 and 27 March 2019. During these final days of hearing I expressed my concerns over the length of this expedited hearing. Whilst counsel for the Plaintiffs is in no way to blame for delays attributable to ill health, the fact is this hearing has been yet further delayed by the copious and prolix materials filed belatedly by the Plaintiffs. This has not only caused delay, it has made the adjudication of this case even on liability an extremely difficult and time consuming task for all concerned. It has had the effect of defeating the spirit and intent of sections 56-60 of the Civil Procedure Act 2005 (NSW).

Further, on 7 March 2019 I noted that the Plaintiffs had not in their submissions precisely articulated how the facts and inferences central to their case matched up to the points of pleading in their Statements of Claim. None of the Plaintiffs’ submissions adequately cross-referenced allegations of fact or pleadings in the Statement of Claim. I directed the Plaintiffs to produce a table which provided these cross-references. However, even when this table was produced, on more than one occasion when the submissions produced by the Plaintiffs were looked at in the context of the underlying documents and pleadings, there was no clear link between the submission and the underlying document. This required the Plaintiffs to provide further documents which corrected numerous referencing errors within the submissions and the underlying documents in the Court Book.

There have been further delays in the first half of 2019, elongating even further the resolution of the real issues in dispute in these proceedings.

Leaving aside ill health of any individuals aside, there has nevertheless been significant inadequacies in the ways in which this case has been run by the parties. I have indicated to both sides that in my view the case for expedition of the matter has all but disappeared, a fact accepted for example by counsel for the Plaintiffs (T291/26-34). I propose as planned therefore to address only the issue of liability in this judgment and afterwards remove the question of damages in this matter from the expedition list.

Given the time that has elapsed in my view there is no further case for expedition.

Before joining the Devine Group, the First Defendant was a minority shareholder and employee of the Richard Stefani First National (RSFN) Real Estate Agency at Concord. He worked as a real estate agent. When the Devine Group began to purchase the assets of RSFN to take over control of the company, the Third Plaintiff invited the First Defendant to join the new Concord Office of Devine Real Estate.

On 1 August 2008 the Concord Office was registered with ASIC (CB 969). The Concord Office issued 70% of its shares to the Third Plaintiff, 20% of its shares to the First Defendant and 10% of its shares to Mr Nick Xenos.

On 8 August 2008 the RSFN business was sold (CB 446) and the Concord Office, the Third Plaintiff, the First Defendant and Mr Xenos entered a shareholders agreement (2008 Shareholders Agreement). The 2008 Shareholders Agreement set out obligations for the term of the agreement including fidelity, non-competition and non-disclosure of confidential information (CB 438-441). The First Defendant under the 2008 Shareholders Agreement was an employee of the Concord office and the agreement set out provisions for restraint of trade and confidentiality. These restraints were limited by time and to post code areas.

The key provisions of the 2008 Shareholders Agreement are as follows (CB 437-445) (noting clause 6(c) should read “shall not” which is evidently a typographical error):

In February 2009 the First Defendant loaned the Concord Office $229,043.80 being an amount equal to 20% of the purchase price of RSFN. The Concord Office repaid the First Defendant this loan over time by 2013 (CB 6377-6378).

In May 2009 Mr Xenos’ employment with the Concord Office was terminated (CB 6378).

In mid-2009 the Third Plaintiff assigned a 31% share of the Concord Office to his father Mr George Devine, resulting in an ownership of the Concord Office at that time as follows: Third Plaintiff owning 49%, First Defendant owning 20% and Mr George Devine owning 31% (CB 464).

In December 2009 the First Defendant acquired a further 10% shareholding in the Concord Office (CB 489).

In early 2011 the Drummoyne Office purchased a rent roll and issued 70% of its shares to the Third Plaintiff and 10% of its shares to the First Defendant (CB 196). On or about 19 April 2011 the First Defendant signed an updated employment agreement with the Concord Office (CB 466, 477-488) (First Defendant’s Employment Agreement). This was a standard form contract provided by the Real Estate Employers Federation and included provisions for confidential information and restraint of trade.

The key provisions of the First Defendant’s Employment Agreement are as follows (CB 466-488):

In approximately March 2012 the Second Defendant commenced employment with the Devine Group (CB 223). It is contested whether the Second Defendant ever signed an employment agreement with the Concord Office of the Devine Group.

On June 2013, Mr George Devine transferred some of his shares and rights to the Fourth Plaintiff (CB 238,539-540).

In October 2013, the Second Defendant became a sales assistant to the First Defendant. It was in this way that the First and Second Defendants continued to be employed as part of the Devine Group up until late 2017, when the relationship between the Plaintiffs and Defendants evidently broke down.

On 23 March 2017 xxxxxxxxxxxxxxxxxxxxxxxxxxx entered into an agency agreement with the Concord Office for a property at 32-36 Underwood Road Homebush (Underwood Road Property) (CB 548).

On 3 November 2017, the First Defendant’s calendar showed a “listing appointment” with the owner of xxxxxx Burns Bay Road Lane Cove (Burns Bay Property) (CB 560).

In November 2017 the contract for the sale of the Burns Bay Property was compiled with the Concord Office listed as the vendor’s agent (CB 1140).

On 15 November 2017 at 4:43pm the First Defendant (on one view) emailed from his work email to his personal email address four excel spreadsheets with titles such as "Corporate Event ID1” (CB 561). At 5:08pm he emailed a further two excel spreadsheets to his personal email address titled “xxxx Coombe ID1” and “xxxxx Touma ID1” (CB 921). At 5:51pm he emailed one further excel spreadsheet to his personal email address titled “xxxxxxxxx sales” (CB 960). However it is contested between the parties as to the import and nature of these emails.

On 23 November 2017 at 4:34pm Ms xxxxxxxx Nguyen an employee of the Concord Office emailed to the First Defendant’s personal email address one spreadsheet titled “ROGE BDM List 25 01 2017 – Separate First Name & Last Name” with the subject line “xooxo” (CB 1006).

On 23 November 2017 4:48pm the Second Defendant (on one view) emailed his personal email address two excel spreadsheets containing contact lists for himself and Ms xxxxxx Touma (CB 938, 6259). This was in response to the First Defendant emailing him on 15 November 2017:

However it is contested whether the Second Defendant himself caused these emails to be sent.

On 28 November 2017 at 9:42am the First Defendant emailed his personal email address attaching a .zip file of documents titled “RA’s spreadsheets-documents.zip” (CB 1007).

On 4 December 2017 at 9:39am the First Defendant emailed his personal email address with one excel spreadsheet which outlined which clients had selected “YES” or “NO” to corporate events. The document was titled “YES AND NO Corporate Events.xls” (CB 1141). At 2:30pm he emailed his personal email address with two excel spreadsheets “MP ID1” and “MP ID2” (CB 1158).

On 8 December 2017 the First Defendant provided to the Third Plaintiff a letter advising him he wished to sell his shares in the Concord Office and Drummoyne Office to the Third Plaintiff (CB 1198-1199):

It is alleged that on 8 December 2017 changes were made to 905 client contact details in the Devine Group’s electronic database (CB 1637-1646). The Plaintiffs allege it was the First Defendant’s log-in that made these changes by altering the telephone numbers by one digit.

On 8 December 2017 at 5:41pm the First Defendant emailed his personal email address attaching certain documents which included “After Sale checklist”, “compulsory sales checklist”, “Open home cover document”, “Sales Compliance Checklist” (CB 1190).

On 11 December 2017 it is alleged that the First Defendant, Third Plaintiff and the accountant Mr Carlos Uribe, met where the First Defendant said that he did not think the restraints in the 2008 Shareholders Agreement were enforceable (CB 200).

On 12 December 2017 Ms xxxxx Salmon from Belle Property Australasia emailed the First Defendant with a draft franchise agreement and franchise application form (CB 1214):

The Third Plaintiff and Ms xxxxxxx Yammine gave the First Defendant notice regarding the purchase of the First Defendant’s shares in the Concord Office and Drummoyne Office (CB 1215-1217):

On 13 December 2017 the First Defendant’s employment with the Devine Group was terminated (CB 201-202).

On 13 December 2017 Ms xxxxxx Salmon emailed the First Defendant (CN 1230):

On the same day Ms Salmon emailed Mr xxxxx Kuchta of Kelly Partners Pty Ltd (CB 1232):

On 14 December 2017 the First Defendant posted on Facebook (CB 1250):

On 19 December 2017 it is alleged Devine Group employees discovered changes to 905 client contact details in the Devine Group’s email database, with Ms Catherine Harris investigating the cause of the changes (CB 1637-1646).

On this same date the First Defendant sent an email to Ms xxxxxx Bedzis of Belle Property Neutral Bay attaching a document which was apparently a Marketing Book of the Devine Group and a marketing price list (CB 1651):

On this same date the First Defendant provided Belle Property Neutral Bay with a ‘bio’ outlining his background and specialty areas of real estate being Concord, Concord West, Cabarita, Breakfast Point, Mortlake, Sydney Olympic Park, Wentworth Point, Newington and Liberty Grove (CB 1670-1671).

On 20 December 2017 the Second Defendant resigned from the Concord Office (CB 223). On 21 December 2017 the First Defendant signed an employment agreement with Premprop Sales Neutral Bay Pty Ltd trading as Belle Property Neutral Bay (Belle Property) (CB 2151).

On 21 December 2017 Ms Salmon emailed the First Defendant an updated franchise agreement and on this date he signed an employment agreement with Belle Property (CB 2151). During this time Belle Property and the First Defendant corresponded to establish the various technical aspects of his employment with the real estate agency company, including the First Defendant’s “Electronic Direct Marketing” and “Business Development Area”.

On 22 December 2017 Blake Palmer solicitor of Baybridge Lawyers sent an email to the Third Plaintiff on behalf of the First Defendant. This letter stated that the Devine Group had already provided the First Defendant with financial records for both the Concord Office and Drummoyne Office of the Devine Group, but requested further financial records of the Devine Group so as to allow a proper valuation of the First Defendant’s shares in the Concord Office and Drummoyne Office (CB 2181).

On the same date the First Defendant emailed the solicitor for the vendor of the Burns Bay Property that had previously nominated the Concord Office of the Devine Group as its agent. The First Defendant advised the solicitor he was intending to begin “signing up” the vendor and requested a contract of sale be forwarded to his personal email address (CB 2191).

From January 2018 the First Defendant began to be advertised as a sales agent as part of Belle Property real estate agency. The First Defendant and Second Defendants were advertised as agents for Belle Property, including for the Burns Bay Property (CB 2316).

On 18 January 2018 the Second Defendant sent photographs of the Underwood Property to Ms xxxxx Bedzis of Belle Property (CB 2215). Ms xxxxxxxx Bechtold of Belle Property sent an email to the solicitors for the vendor of the Underwood Property requesting them to change the vendor listed on the contract for the sale of the property from “Devine Real Estate” to “Belle Property Neutral Bay” (CB 2224-2225):

Solicitors for the vendor of the Underwood Property subsequently amended the contract for sale to list the First Defendant and Belle Property as the agent (CB 2254-2257). The Underwood Property units were advertised online by Belle Property (CB 2260).

On 19 January 2018 the First Defendant emailed the vendors of a property at xxxxxx Station Street Homebush (Station Street Property), previous customers of the Concord Office of the Devine Group. He said (CB 2242):

This Station Street Property was subsequently advertised as listed for sale by Belle Property, with both the First and Second Defendants as the agents (CB 2321).

On 24 January 2018, the Second Defendant emailed Belle Property with marketing instructions for the Burns Bay Property (CB 2190) a property which had previously been nominated as being sold by the Concord Office of Devine Real Estate (CB 980, 1140).

On 27 January 2018 the First Defendant advertised on Facebook that Belle Property would be offering inspection times for the Underwood Property and the Burns Bay Property:

The Burns Bay Property was subsequently sold by Belle Property (CB 2188).

On 1 February 2018 the First Defendant sent an email to Ms xxxxxxxx Bechtold of Belle Property (CB 2333):

The Plaintiffs’ case is that in the balance of February 2018 the First Defendant, with the assistance of the Second Defendant, continued to trade in respect of properties in the Concord area via Belle Property in Neutral Bay (CB 2459-2850). The Plaintiffs suggest that the arrangement with Belle Property in Neutral Bay was a “fig leaf” to cover the fact that the First Defendant was actually operating in the Concord area despite contractual restraints.

On 2-3 February 2018, the First Defendant sent an excel spreadsheet of contacts titled “Michael Poynting List ID 2” to Zenu Realestate Pty Ltd (Zenu), a real estate software company (CB 2356-2357):

On 5 February 2018 the Second Defendant sent to Belle Property a Dropbox link containing “our property files and marketing items from the ‘N’ drive” (CB 2364).

On 19 February 2018, the First Defendant sent a variety of spreadsheets of customer contacts obtained (on one view) from his work at the Devine Group to the support team at Zenu (CB 2572-2582).

On 19 February 2018 the Second Defendant signed an employment agreement with Belle Property (CB 2632).

On 23 February 2018 Mr Palmer solicitor sent a further email to solicitors for the Plaintiffs requesting financial information (CB 2661):

On 27 February 2018 solicitors for the Plaintiffs replied to Mr Palmer alleging that the First Defendant’s employment was terminated on 13 December 2017 for serious misconduct and seeking to enforce restraints of trade and use of confidential information (CB 2713-2716). Solicitors for both parties engaged in correspondence and on 12 March 2018 the First Defendant gave undertakings not to use confidential information of the Devine Group (CB 3039).

On 16 March 2018 the Support Team at Zenu advised the First Defendant his contacts had now been imported into his office account (CB 3147-3154).

On 19 March 2018 proceedings were commenced between the parties and on 5 April 2018 the First Defendant resigned from his directorships of the Concord Office and Drummoyne Office of the Devine Group. On 21 April 2018 the First Defendant resigned from Belle Property (CB 6061).

The sale of shares between the parties was settled on or about 24 April 2018 resulting in payment of $774,058.04 and $151,860.65 being made to the First Defendant from the Devine Group for the value of his shares in the two Concord and Drummoyne offices.

On 5 April 2018 this matter came before Parker J as part of an interlocutory. The transcript recorded the following exchange (CB 6472-6488):

The Plaintiffs seek to claim contractual, statutory and equitable obligations of confidence and enforcement of contractual restraints on the Defendants (outline submissions [1], submissions in reply [69]-[78]).

In relation to the Court Book provided by the parties the Plaintiffs submit that a confidentiality order should be made in relation to the customer information and financial documents of the Plaintiffs as set out in a table provided to the Court (outline submissions [2]-[5]).

After outlining in detail the background facts of this case (outline submissions [6]-[102], submissions [1]-[487]) and relevant legal principles (outline submissions [103]-[115], submissions [488]-[596]) the Plaintiffs submit that the Defendants operated as integral parts of the Devine Group and both its Concord Office and Drummoyne Office (outline submissions [116]-[117]).

The Plaintiffs submit that the First Defendant by virtue of his general law obligations, statutory obligations and contractual obligations (including the 2008 Shareholders Agreement and First Defendant’s Employment Agreement) owed duties to the Plaintiffs not to misuse confidential information (outline submissions [118]-[122]).

The Plaintiffs assert that the First Defendant acted in breach of his duties by (outline submissions [123]):

With respect to the construction of the Shareholders Agreement and Employment Agreement, the Plaintiffs submit that they should operate synchronously such that they apply obligations that are independent and cumulative, necessarily meaning that the maximum restraint period of 3 years applies (submissions [597]-[635]).

The Plaintiffs reject the argument that Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72, is the relevant case to determine the interrelationship between the Employment Agreement and Shareholders Agreement (submissions in reply [1]-[9]) and assert there is no basal inconsistency between the two agreements (submissions in reply [10]-[21]).

The Plaintiffs likewise assert the Second Defendant owes obligations of confidentiality to the First Plaintiff, derived from the general law, statute and post-termination restraints to be implied into his employment with the Devine Group (outline submissions [124]-[125]). Particularly, the Plaintiffs focus on clause 6 of the Shareholders Agreement and clause 14 of the Employment Agreement as providing contractual obligations of confidentiality which they allege the First Defendant breached by disclosing client lists (submissions [636]-[658]).

The Plaintiffs also seek to impose competition restrictions upon the First Defendant (submissions [659]-[673]). They seek final injunctions against further breaches by the First Defendant of his ongoing obligations under the Shareholders Agreement and Employment Agreement, but also broadly framed injunctions against breach of “equitable duties” and duties under the Corporations Act 2001 (Cth) (submissions [674]-[692]).

The Plaintiffs claim the Second Defendant breached the Employment Agreement, his duties under the Corporations Act 2001 (Cth) and his equitable duties, including by sending a customer list to his personal email address (submissions [694]-[716]).

The Plaintiffs assert further hearing as to damages and compensation are necessary (submissions [717]-[718]). They deny there was any contracting out of the effect of the Corporations Act 2001 (Cth) (submissions in reply [22]-[23]).

The Plaintiffs, in further submissions in reply dated 11 June 2019, reject any assertion that they have inadequately demonstrated that the properties referred to in their evidence were not owned or sold by “customers” of the Defendants (further submissions in reply [3]-[4]). They make concessions or further arguments, of a sort, with respect to four properties (see further submissions in reply table):

They deny there was any lack of procedural fairness in the trial, noting that it was open to the Defendant to call witnesses responsive to the Plaintiffs’ case before the closing of evidence (further submissions in reply [5]).

The Plaintiffs also seek confidentiality or suppression orders in respect of their confidential information (submissions [719]-[731]). They submit that the confidentiality of their client lists and related information was not destroyed either by the filing of summons or the disclosure of the material before Parker J (submissions in reply [24]-[60]). The Plaintiffs seek to distinguish Isaac v Dargan Financial Pty Ltd atf The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of Home Loan Experts) [2018] NSWCA 163 (“Dargan Financial”) as decided in unique circumstances quite different to the matter before me, which relates to disclosure of confidential materials in an interlocutory application before Parker J. The Plaintiffs otherwise reserve their position as to that decision (submissions in reply [61]-[68]).

The Plaintiffs reject there is any legitimate “unclean hands” or duress argument that can be raised by the Defendants, largely rejecting the Defendants’ interpretation of the evidence (submissions in reply [69]-[96]).

The Defendants submit that the duties under the Shareholders Agreement and Employment Agreement are inconsistent, and that consistent with the second category of Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72, a correct analysis of the clauses in the agreements is “to elevate the shareholders’ agreement to the supreme statement of the rights and liabilities” of the parties (submissions [1]-[26], [41]-[106]).

The Defendants’ case also relies on the submission that the Plaintiffs have lost confidentiality over the information subject to these proceedings by tendering confidential client lists and confidential information before the Court (outline submissions [1]-[5]).

The Defendants draw attention to the fact that on 19 March 2018 solicitors for the Plaintiffs sought to read: the affidavit of the Third Plaintiff sworn 16 March 2018; the affidavit of Ms xxxxx Touma sworn 18 March 2018; and the affidavit of Ms xxxx Mazzei sworn 18 March 2018 before Hallen J. The Plaintiffs also filed a Summons which stated:

The Summons and three affidavits were served on Mr Palmer solicitor for the Defendants, and no orders were sought restricting access to any of those documents. The Defendants submit upon service on Mr Palmer these four documents entered the public domain, thereby freeing the Defendants from any obligation of confidentiality (outline submissions [6]-[8]).

I note in August 2018 I indicated I was willing to make court suppression and non-publication orders pursuant to s 10 of the Court Suppression and Non-Publication Orders Act 2010 (NSW) with respect to the evidence before me including those materials in the Court Book (see for example T5/18-22 of 15 August 2018 transcript, T76/16-21).

The Defendants also draw attention to the fact that in April 2018 the abovementioned three affidavits and Summons were read in open court and admitted into evidence before Parker J whereby the information included in those affidavit entered the public domain (outline submissions [9]-[11]).

The Defendants submit absent confidentiality, there is now neither any proper basis nor utility in ordering injunctions against the Defendants (outline submissions [12], submissions [107]-[179]).

The Defendants further allege that the restraints of trade sought by the Plaintiffs are invalid or unenforceable as they protect no legitimate interest (outline submissions [13]-[14]).

The Defendants deny that the Plaintiffs are entitled to damages, as they themselves have failed to “do equity” and are thereby not entitled to be compensation by a court sitting in equity (outline submissions [15]-[24], submissions [203]-[261]).

The Defendants further deny that the Fourth Plaintiffs has any cause of action or equity against them (outline submissions [25], submissions [27]-[40]). They submit the Plaintiffs have failed to establish grounds for relief against the First Defendant with respect to non-competition and that there should be no restraint after the First Defendant has ceased to be a shareholder (submissions [180]-[201]). The Defendants assert the Plaintiffs have failed to establish the First Defendant has committed a serious criminal offence (submission [262]-[292]).

The Second Defendant also denies entering into an employment contract on the terms alleged by the Plaintiffs, and reject any suggestion that he has breached his duties, committed a serious criminal offence or contravened the Corporations Act 2001 (Cth) (submissions [293]-[351]). The Defendants submit that there has also been a contracting out of the Corporations Act 2001 (Cth) (submissions [93]-[99]).

The First Defendant submits that it would have been impossible for him to have changed 905 phone numbers within the time asserted by the Plaintiffs, and that the evidence of Ms Harris and Mr Khoury on this point does not establish the sabotage of the phone numbers (submissions [268]-[280]). The Defendants further submit that there was dual record keeping at the Devine Group officers, and the Plaintiffs must prove that the First Defendant destroyed both paper and electronic records to make good their allegations against him (further submissions dated 21 May 2019 [13]).

The Defendants also assert that there has been a lack of procedural fairness in the trial, because the significance of the various properties referred to by the Plaintiffs only emerged after the closing of evidence, denying the Defendants the opportunity to call witnesses responsive to the Plaintiffs’ case (further submissions [14]).

One final argument that the Defendants raise, in their submissions dated 21 May 2019, is that the Plaintiffs have failed to establish the relevant properties were owned or sold by “customers” of the Plaintiffs (further submissions [8]-[10]). They assert that the evidence tendered by the Plaintiffs, save for the properties at The Greenwood, Underwood Rd, Homebush (Jaycorp Group) and at xxxxxx Burns Bay Rd, Lane Cove (Vaughan Anthony Judd), is of insufficient quality to prove that the properties were owned or sold by “customers” of the Devine Group (see table attached to further submissions).

Mr Devine or the Third Plaintiff swore four affidavits in these proceedings on 16 March 2018, 19 June 2018, 25 July 2018 and 9 August 2018. Those paragraphs over which confidentiality was sought by the Plaintiffs have not been disclosed in this judgment.

In his first affidavit (16 March 2018) the Third Plaintiff described how he registered the Concord Office and Drummoyne Office of the Devine Group on 1 August 2008 and 30 May 2011 respectively. He has been continuously a director and shareholder of the Concord Office and Drummoyne Office since their registration.

The Third Plaintiff also described the general history of the Devine Group which was started in 1965 by his father in Strathfield and has since expanded to five offices in New South Wales and one office in the Philippines. He described how he purchased shares in the real estate group started by his father and changed its name to “Devine Real Estate”. Growing the Devine Group has been his life’s work.

In or around early 2008 the Third Plaintiff became interested in purchasing the “Richard Stefani First National” or RSFN real estate agency in Strathfield and started to enter negotiations to purchase the agency. He discovered that the First Defendant was an employee and 40% shareholder of this agency. He decided to ask the First Defendant and Nick Xenos (his then general manager of the Devine Group office at Strathfield) to be business partners in the purchase of the RSFN agency.

On or about 8 August 2008 the Third Plaintiff described how the First Defendant, the First Defendant’s lawyer, Mr Xenos, himself, and his lawyer had a lengthy meeting to discuss the terms of a draft shareholders agreement for this venture. He asserted every person had a copy of the document and had a conversation to the effect:

The parties then signed this 2008 Shareholders Agreement. The Third Plaintiff said when he signed this document he did not see any typographical errors in it, however has since noticed there is a typographical error in clause 6(c) and has always intended no shareholder would be able to compete with the Concord Office whilst they were a shareholder, except for himself and Mr Xenos.

From around August 2008 the First Defendant was then employed at the Concord Office as a full-time sale agent providing real estate agency services.

In 2011 the Third Plaintiff asserted he updated the employment agreements of the Devine Group as a part of a general review, and that the First Defendant signed this latest employment agreement.

The Third Plaintiff further outlined how in or around 2011 he decided he wanted to further expand the Devine Group. As the First Defendant had previously mentioned to him that he wanted a larger shareholding in the Concord Office, as an alternative the Third Plaintiff offered the First Defendant a 10% shareholding in a new Drummoyne Office of the Devine Group.

The Third Plaintiff claimed that the First Defendant never paid for this share allocation, nor did he contribute financially to the repayment of three loans used to purchase a rent roll for the Drummoyne Office.

Furthermore, he asserted that he had a shareholders agreement drafted and circulated between himself, the First Defendant and Ms Fayez who were directors of the Drummoyne Office. However he said they did not end up signing that document. The First Defendant is said to have had very little involvement in the management of the Drummoyne Office.

Up until mid-2017 the Third Plaintiff asserted he had a relatively good relationship with the First Defendant. He felt that the First Defendant was a good agent and an asset for the Devine Group.

However on or about 8 December 2017 he received a letter from the First Defendant advising him that he wanted to sell his shares in the businesses. However this letter said that the restrictive covenants in the 2008 Shareholders Agreement would not be enforceable. On 11 December 2017 the Third Plaintiff spoke to the First Defendant, where he said “Roger it’s a three-year restraint … you know I wouldn’t have signed the shareholders agreement with you without it … look if you confirm you won’t compete for the three years … I’ll pay you a higher multiplier for your shares”. The First Defendant did not agree.

The Third Plaintiff described how in or around early December 2017 he accessed the First Defendant’s email address, and discovered that he had been sending emails to his personal email address attaching excel spreadsheets containing client details for thousands of clients. On or about 13 December 2017 he arranged Ms xxxx Mazzei and himself to meet the First Defendant at a café outside the Concord Office. When confronted with copies of the emails, the Third Plaintiff asserted the First Defendant replied “I can do what I want as a director” and “I wouldn’t use it”. The Third Plaintiff terminated the First Defendant’s employment, sending a letter on 16 December 2017 to him enclosing the proposed share repurchase.

The Third Plaintiff asserted that upon returning from holiday on or about 12 January 2018 he checked the internet and discovered that the First Defendant was now working for Belle Property and was selling or advertising properties that were the clients of the Concord Office of the Devine Group, including the Burns Bay Property, the Underwood Property and the Station Street Property.

The Third Plaintiff also described how the Second Defendant started employment at the Concord Office in or around March 2012, and signed an employment agreement at this time. On or about 15 December 2017 he met with the Second Defendant at the Concord Office where he told him “look mate, we let Roger go because he stole confidential information … I wanted to let you know that we all want you here … you’ve always been in Roger’s shadow, now you have the chance to step up”.

On 20 December 2017 the Second Defendant resigned from the Concord Office, and in or around mid-January the Third Plaintiff said he discovered he had been engaged by Belle Property. He noticed that he was included as a contact agent for properties including the Burns Bay Property, the Underwood Property and others. In or around mid-January the Third Plaintiff said he obtained access to the Second Defendant’s work email at the Concord Office.

The Third Plaintiff described how the Devine Group is concerned the Defendants will continue to use confidential information to their commercial advantage at the expense of the goodwill and commission of the Plaintiffs.

In his second affidavit (19 June 2018) the Third Plaintiff clarified some typographical errors and described precisely how the shareholding arrangements of the Devine Group and Concord Office were arranged. He also noted that the Second Defendant was remunerated with a salary in accordance with the real estate agency industry award and commission. He noted he could not locate a copy of the Second Defendant’s employment agreement.

He also described how on 14 June 2018 he met with Ms Jeanette Nguyen, who was the business development manager of the Devine Group until 12 January 2018. When he asked her why she sent client lists to the First Defendant she replied “I see that now … I’m sorry … Roger was in a hurry so the quickest way was from my personal email … I’m sorry … yeah he did offer me a job earlier this year”.

In his third affidavit (25 July 2018) described how on 21 July 2018 he noticed there was signage at the Underwood Property with the First Defendant’s details, and instructed his solicitors to write letters to the First Defendant and solicitors for Belle Property in relation to this signage.

In his fourth affidavit (9 August 2018) the Third Plaintiff largely clarified the loan arrangements and share arrangements of the Devine Group and in relation to the First Defendant.

In cross-examination Mr Devine accepted the Devine Group has a website with contact details available to the public so that members of the public may contact members of the real estate business (T93/25-50). He accepted that nowhere in the evidence was there a copy of an employment contract signed by the Second Defendant (T94/20-23). He said he inferred that it had been stolen (T94/25-49). He admitted he did not have any personal evidence himself it had been stolen (T96/19-23).

When shown a screenshot of the Devine Group’s website of the Underwood Property, the Third Plaintiff accepted displayed on the property was a board with the contact details of the First Defendant (T98/28-30). He however said he did not know when this screenshot was taken and could not therefore answer whether his company’s website was advertising the First Defendant (T99/1-16). He said he generally checked the website once or twice a week (T100/9-12).

The Third Plaintiff accepted that when from time to time he passed the Underwood Property he had seen signage advertising the First Defendant (T101/33-39). Upon re-examination however he said that this advertisement was not that of Devine Real Estate but Belle Property (T102/1-5).

The Third Plaintiff was recalled to demonstrate how to enlarge the photos of Devine Group’s website, and to demonstrate that on a phone, laptop and tablet it would be difficult to read or ascertain the signage (T150/8-50).

Ms McGeady swore two affidavits in these proceedings on 21 March 2018 and 5 June 2018.

In her first affidavit (21 March 2018) stated on 20 March 2018 she entered the words “lewis coombe belle property neutral bay” into Google and discovered that the Second Defendant was advertised as a real estate agent working for Belle Property and was advertised for properties. On 20 March she carried out internet searches and Instagram searches on the First Defendant but could not locate certain webpages. She asserted she had not received from the Defendants any copies of any confidential information in their control or custody and has not received any written confirmation that they have destroyed any confidential information.

In her second affidavit (5 June 2018) Ms McGeady stated she did further internet searches on 25 May 2018 and observed that the Underwood Property and Station Street Property for example were listed for sale on the Belle Property website. She also described the results of her LinkedIn search of the First Defendant.

Ms McGeady was not required for cross examination.

Ms Mylott swore two affidavits on 29 May 2018 and 18 June 2018.

In her first affidavit (29 May 2018) Ms Mylott said she did an internet search on 14 May 2018 on the First Defendant and saw that he was advertised as a real estate agent for Belle Property working in the following post codes: 2137, 2134, 2138, 2127, 2161 and 2046. She saw he was advertised as having sold the Burns Bay Property.

In her second affidavit (18 June 2018) Ms Mylott further described her internet search results.

Ms Mylott was not required for cross-examination.

Ms Mazzei swore one affidavit on 18 March 2018.

In this affidavit Ms Mazzei described how she started working in the Devine Group in March 2016 as a human resources manager for all five offices. One of the companies of the Devine Group is a member of the “Real Estate Employers’ Federation” which provides templates for employment agreements such as a “REEF Contract”. Her office is located at the Strathfield office of the Devine Group and in it she keeps a filing cabinet storing employment agreements. The Devine Group’s chief financial officer Mr Carlos Uribe is located next to her office and he likewise has a filing cabinet of employment agreements.

She said her filing cabinet is usually locked, and the key is usually placed in a secret location which only she, Mr Uribe and Ms Anita Wang know. Her usual practice is to keep a signed employment agreement for all employees in a folder marked with their name and a scanned copy on the “HR Drive” of the Devine Group.

She described the termination of the employment of the First Defendant on 13 December 2017 and the resignation of the Second Defendant on 20 December. The Second Defendant met her at a café nearby the Strathfield office on this date and resigned, wherein he said “do you have a copy of my employment contract?” They left the café and walked back to the Strathfield office and her room and she opened her filing cabinet and located the folder she believed contained the Second Defendant’s employment records. She opened the folder in front of him and notice a copy of the employment agreement was missing:

After the Second Defendant she could not find an electronic copy of his employment agreement. She looked in the filing cabinet of Mr Uribe’s room and did not see the employment agreement.

In examination-in-chief Ms Mazzei confirmed she started her employment with the Devine Group in March 2016 (T114/25-26).

She described how for all personnel of the group she would keep a manila folder with their employment paperwork (including employment contracts) in each folder (T114/34-T115/10). She said in her work she referred to files that were older than March 2016 (T115/15-17).

With respect to the locked file cabinet under her desk, Ms Mazzei asserted it was kept locked with the key hidden elsewhere, with two other people who knew where the key was; Carlos Uribe the Chief Financial Officer and Anita Weng (T116/35-38). When Ms Mazzei opened the Second Defendant’s file on 20 December 2017, she asserted the manila folder had little paperwork in it and did not include any letters about terms of employment. She said it was not what she expected to see, as she expected his file to have further documents in it (T117/14-41).

In cross-examination Ms Mazzei confirmed the Devine office in Strathfield in which she worked had CCTV including a camera that can see into her office and Mr Uribe’s office (T118/35-49).

She accepted outside the offices, there is a live feed of those CCTV cameras in the common area of level 3 of the office (T119/4-9).

Ms Touma swore one affidavit on 18 March 2018.

In this affidavit she described how she started working with the Devine Group in January 2017 as a sales assistant to the First Defendant.

On or about 14 December 2017 the Third Plaintiff said to her “we let Roger go today as he was unlawfully taking Devine’s confidential information”. A few days later Ms Touma said she received a call from the First Defendant where he asked her to come to work with him for the same salary. She declined. She said she told the Second Defendant this a few days later.

Ms Touma described the various software programs called “Complete Data”, “Citrix”, “Inspect Real Estate” and “REST” at the Devine Group.

In cross-examination Ms Touma said she is still employed by the Devine Group and has signed a written contract of employment concerning her current position (T122/28-33). She said she signed a “REEF” contract in respect of her current position and this would have been in early 2018 (T122/42-28). She said she first started working for the Devine Group in January 2017 (T122/50-T123/1).

In re-examination Ms Touma confirmed her position with the Devine Group in January 2017 was an assistant to the First Defendant and in relation to that position she was given a REEF contract to sign (T123/5-12).

Ms Jadhav swore two affidavits on 4 April 2018 and on 9 August 2018.

In her first affidavit (4 April 2018) she described how the Third Plaintiff proposed to the First Defendant that the price for his shares in the Concord Office and Drummoyne Office was $925,918.69, and that he was ready willing and able to pay that amount. She said the full amount of the Plaintiffs’ claim was unknown until the Defendants had given discovery and the First Defendant had given an account. She also described how she visited the webpages of Belle Property on 3 April 2018.

In her second affidavit (9 August 2018) Ms Jadhav said she was present in court over the 8 days of interlocutory hearings in this matter. She said:

On 22 March 2018 the affidavit of the Third Plaintiff of 16 March 2017 and its exhibit SD-1 was not read before Hallen J, nor on 4 April 2018 and their contents were not discussed in open court.

However on 5 April 2018 before Parker J the affidavit and exhibit were “taken as read” although not read aloud or discussed in open court or displayed in a way that would make their contents “substantially known to or accessible by the public, either to persons sitting in court or more generally”. Ms Jadhav said the duty list on that day was relatively quiet and at most times the only persons in court were those engaged in this matter.

On 12 April 2018 Ms Jadhav said the matter was before Parker J in the duty list. She did not recall seeing anyone sitting in the public gallery of the courtroom. Counsel for the Plaintiffs stated one name included in Exhibit SD-1 during argument, and the same name was said by counsel for the Defendants.

After outlining the orders made by Parker J, Ms Jadhav said on 8 August 2018 she phoned the Supreme Court Registry and provided the Plaintiff’s case details, where she was told that there was no note on their electronic file recording access to the Court file “but notes are not always recorded”.

In cross-examination Ms Jadhav accepted that she was not aware of the Court Suppression and Non-Publication Orders Act 2010 (NSW) until April 2018 (T64/23-40). She accepted when her firm produced documents in response to a notice to produce on 10 August 2018, that none of the documents produced contained any document either in draft or in final form which was prepared for use in relation to the aforementioned Act or to preserve confidentiality (T66/22-T67/16).

Ms Harris swore one affidavit on 19 June 2018. Counsel for the Plaintiffs sought confidentiality over the exhibits and annexures to her affidavit (T120/19-33).

Her affidavit outlines her employment as a senior IT support person for the software system Complete Data, a system with which she has 11 years’ experience.

On or about 19 December 2017 an employee of the Devine Group Mr xxxxxxxxx Melotti emailed her regarding an alleged interference with the Devine Group’s Complete Data software.

Upon receiving this request, Ms Harris logged into the Plaintiffs’ database remotely and conducted a “find on a field” search within the database. This search captures modifications made to the record of the database, and when a change is made it dates and time-stamps when the field was changed, the username who changed it along with the data that was in the field prior to and after the change was made.

Although confidentiality was sought over these documents, it is uncontroversial to reproduce Ms Harris’ findings as they do not identify any clients (CB 3017):

On 19 December 2017, Ms Harris supplied 2 excel spreadsheets of her findings to Mr Melotti, Mr Devine and Ms Mazzei. These were screenshots which demonstrated that the username associated with the First Defendant had changed one digit of the phone number of 905 contact records.

She was able to fix these changes by 18 January 2018.

Attached to her affidavit was Exhibit CH-1 which provided extensive screenshots of data demonstrating the username associated with the First Defendant altered the database phone records of the Plaintiffs.

Ms Harris compiled a report on her findings as detailed above and provided it to the Third Plaintiff on about 9 March 2018.

Ms Harris was not required for cross-examination.

Ms Nguyen swore one affidavit on 8 August 2018.

In this affidavit she described how she was employed by the Devine Group as the business development manager during the period from around August 2015 to 12 January 2018.

On or about 23 November 2017, the First Defendant asked her to email a spreadsheet to his personal email account called “ROGE BDM List -25 01 2017- Separate First Name & Last Name.xlsx”. She did so from her personal email account.

On or about 14 June 2018 she met with the Third Plaintiff and Ms Kim Forwood (an employee of the Devine Group) at a café in West Ryde. When asked why she sent the email she replied “… look I never thought about it … I’m sorry … I understand …” and when asked whether the First Defendant has asked her to work for him she replied “… um earlier this year, he said, would you want to work for me…”.

She has deleted the email from her Hotmail account and no longer has a copy of the email and attachment.

In examination-in-chief Ms Nguyen said that the email she sent on 23 November 2017 was sent at the request of the First Defendant and she simply made up the subject line “xooxo” as she was in a rush (T146/12-19).

She said this email attached a list of the clients the First Defendant and she had dealt with or spoken to (T146/25-29). She said she sent the list to the First Defendant’s personal account as opposed to his work account because that was the email account he provided to her (T147/5-7). She did not ask him why and he did not tell her why (T147/9-13).

In cross-examination Ms Nguyen confirmed that it was normal for Devine Real Estate employees to transmit information for their work using personal email addresses because the work email server sometimes made it a bit difficult but not impossible (T148/1-7).

Mr Ruwanpathirana appeared on subpoena to give evidence.

He said he was an employee of Nexon Asia Pacific Australia Pty Ltd as a senior tech lead (T104/18-26). He said this company offered mainly IT services for the Devine Group including private cloud-based “Citrix” services (T104/42-T105/9). He said that this service required log-in credentials and offered an email service to the Devine Group (T105/24-41). He said from the “Citrix” server he had produced copies of data relating to the Second Defendant to Ferrier Hodgson (T105/46-T106/31).

In cross-examination Mr Ruwanpathirana confirmed that what Nexon did in relation to this matter was look at two different repositories of information: data from “Citrix” and data from “Microsoft Exchange” (T108/18-32). He said he was assisted by a Mr Shahad Raza who produced a .pst file for Ferrier Hodgson on 22 July (T108/34-40; T112/15-17).

Mr Khoury swore one affidavit 16 July 2018 that attached his expert report dated 16 July 2018 and his curriculum vitae.

After outlining various technical matters, Mr Khoury concluded:

Mr Khoury was cross-examined in closed court, although I do note (as I did at T143/40-47) that his evidence could have been given in open court as his evidence from the witness box did not touch upon anything that was confidential to the Plaintiffs. For the sake of completeness I will therefore summarise his cross-examination.

In cross-examination Mr Khoury explained how the “Citrix” system used by the Plaintiffs is a type of virtual computer or emulator and described in general terms how electronic emails were sent and received in this system (T136/44-T137/44). He accepted that to identify electronic information and extract records from email servers in this system would require specialist IT knowledge (T138/28-46).

He accepted that neither he nor anyone at Ferrier Hodgson created the PST file which they had been asked to examine (T139/46-49).

Mr Khoury said his analysis of the metadata of the emails of the Second Defendant could exclude the possibility of a “spoof” email (T141/38-T142/5). However he accepted no part of his report addressed the question of whether the email of 23 November 2017 was actually received (T142/15-18).

Mr Palmer swore four affidavits on 22 March 2018, on 29 March 2018, 5 April 2018 and 13 August 2018.

In his first affidavit (22 March 2018) Mr Palmer outlined how he is a partner of Baybridge Lawyers solicitors for the defendants in these proceedings. He outlined the nature and history of the dispute. He described the settlement conference of 12 March 2018 describing it as “a farce” and asserted that the Plaintiffs had not paid the First Defendant $876,000 as the buy-out amount.

In his second affidavit (29 March 2018) Mr Palmer corrected his previous affidavit.

In his third affidavit (5 April 2018) Mr Palmer asserted that the letter he drafted of 28 March 2018 was sent to solicitors to the Plaintiffs on 4 April 2018.

In his fourth affidavit (13 August 2018) Mr Palmer described how on 13 August 2018 he performed a Google search online for “xxxxxxx Underwood Road, Homebush for rent” and attached the results of that search.

The cross-examination of Mr Palmer was unresponsive to the issues of the case.

Ms Verdino swore one affidavit on 5 April 2018.

In this affidavit Ms Verdino said between 2009 and 2011 she worked for the Third Plaintiff. She left when her manager xxxxxxxxxxx terminated her employment after a complaint from a tenant about her. Since 2011 she said she had been practising as a real estate agent.

On 17 March 2018 she conducted an open house inspection at xxxxx Underwood Rd Homebush with Ms xxxx Taylor. It is a development still under construction. In this inspected she was assigned to the name registration book whilst Ms Taylor showed prospective buyers through the development. She said one prospective buyer introduced himself as xxxxxxxxxxx to her. She spoke with him and recorded his details in the register.

On 24 March 2018 Ms Verdino said she conducted an open house inspection at 32-36 Underwood Rd arriving at 9:50am for a 10:00am start. At about 10:15am the Second Defendant arrived and handed her a green bag which contained a door stop, keys and information packs. She said she met xxxxxxxxxxxx again wherein he said “my parents are looking to purchase an investment property close by, because they live in Strathfield. It’s something I’m looking to move into”. She let him out of the foyer and through 2 of the 2-bedroom properties before leading him to the foyer. She grabbed an information pack and provided it to xxxxxxxxxx containing four documents which were guides on the property development. She said she wrote her name and mobile on the brochure and said to him “get your father to call me to arrange an alternative viewing time”.

In cross-examination Ms Verdino said as at March 2018 and presently she was employed by Move Property Agents in Camperdown (T160/27-33). She said she did about four or five opens for inspection at a unit block on the corner of Underwood Street at Homebush in March 2018 (T160/38-43). She did not accept she did these inspections on behalf of the First Defendant. She said it was on behalf of Belle Neutral Bay (T161/11-14). She said she was not paid for her time at these inspections, but denied this was as a favour to the First Defendant (T162/20-40). She did not accept she did this to provide the First Defendant cover so that he could continue to market the property but not be seen at it (T162/38-40).

In re-examination Ms Verdino was shown Exhibit P3, and asked whether those brochures bundled in the exhibit were the brochures she handed out on the day referred to in her affidavit (T166/1-3). She said she could not tell whether Exhibit P3 was different or the same as the brochures she handed out, because she did not look at the back of the brochures (T166/10-16). She said “to the best of my knowledge, from the front cover it appears that it is, from the back I couldn’t tell you” (T169/47-49).

In further cross-examination Ms Verdino said she did not make a close inspection of the information packs she handed out (T170/49-50).

Mr Moses swore one affidavit on 30 July 2018.

In this affidavit Mr Moses said he first met the First Defendant in 2008 and since then regularly has met him at their gym, over coffee and for social occasions. He said he considered him a close friend.

In 2013 he wanted to sell his unit at xxxxxx Crane Street Homebush. He engaged the First Defendant as real estate agent and within 4 days the unit was sold. Since then he has been recommending him to his family.

In February 2018 he and his wife were thinking about selling their home and potentially buying at the same time. They wanted to test the market. So he approached the First Defendant who said “sure, we can put your home on the market and see if there are any offers”. On 2 February 2018 he signed an agency agreement appointing the First Defendant as agent. Next month Mr Moses and his wife changed minds, and told the First Defendant who said “no worries mate, that’s fine”. Mr Moses said he does not have any intention at the moment to sell their home.

Mr Moses was not required for cross-examination.

Mr Veitch swore one affidavit on 6 August 2018.

In this affidavit he said he is a private inquiry agent employed by Polo CPI Pty Ltd and was previously a police officer for 10 years. He was directed to investigate the circumstances surrounding certain stickers being applied to and removed from premises at 32-36 Underwood Rd Homebush.

Upon close examination of various stickers at this property Mr Veitch said he concluded (1) a sticker, covering the window below the horizontal line had been fitted, (2) later cement overspray had fallen onto and stuck to the window and (3) later the sticker which had protected the class window from the overspray had been removed. Over the course of 28 July 2018 he canvassed the area and the next two days and was unable to locate any witnesses however observed CCTV cameras pointing in the direction of the corner of Underwood Road and Pomeroy Street.

Mr Veitch was not required for cross-examination.

Ms Li swore one affidavit on 6 August 2018.

In this affidavit Ms Li said in May 2017 her husband decided to sell his property in North Strathfield and engaged the First Defendant as his real estate agent. She helped her husband sell his property and had regular contact with the First Defendant over the phone and in person about 3 times a week. On 27 June 2017 her husband’s property sold.

In January 2018 she wanted to sell her property at 70/14-15 Station Street and reached out to the First Defendant as she wanted to engage him as her real estate agent. On 18 January 2018 she signed an agency agreement appointing the First Defendant as her agent. On about late March 2018 the First Defendant telephoned her and said “Devine is going ahead with the law suit against me. Unfortunately, I cannot represent you anymore. I will organise another agent for you.”

She said her property has not sold.

In cross-examination Ms Li said in January 2018 she tried to phone the First Defendant and texted him, with the First Defendant texting back (T156/26-35).

She said that after exchanging text messages she talked to the First Defendant, where he said he was opening a new real estate business himself, which would be in Concord but he was currently with Belle Neutral Bay (T157/20-25).

She said she when she was told later that the First Defendant could no longer act as her real estate agent, he helped her transfer her listing to Belle Property at Strathfield (T157/43-45). She confirmed that her arrangement with the First Defendant had been that marketing costs would be taken out of the deposit on settlement of the property (T158/21-23). She said she had not been in contact with the First Defendant at all since her property was transferred to the Strathfield office (T158/35-37).

Mr Furnari swore one affidavit on 7 August 2018.

In this affidavit Mr Furnari outlined how he is a real estate agent at Belle Property Strathfield.

He said on about 25 April 2018 he was appointed as the agent to sell unit in a development at 32-36 Underwood Rd Homebush. From about 5 May 2018 to 5 July 2018 he visited the Underwood Road Property and saw signs used by Belle Property Strathfield on that property. On 23 July 2018 the First Defendant called him and told him the stickers overlaying his details on the windows on the property had been removed, and asked sold stickers to be placed over the details. Mr Furnari said at 6:00pm he went to the property and saw that stickers with his name and details and Norman So’s name and details had been removed from the signage. He stuck “sold” stickers to the outside of the windows.

On 24 July 2018 at about 9:30am he returned to the Underwood Road Property and photographed the signs with the sold stickers.

On 28 July 2018 Mr Furnari said Mr Blake Palmer solicitor phoned him and told him someone had taken off the signs to display the First Defendant’s name and number again at the Underwood Property. At about 10:00pm Mr Furnari returned again and saw one sold sticker had been removed and a second sold sticker had been partially peeled off. He stuck another sold sticker and re-stuck the partially peeled off sticker to the signs.

Mr Furnari’s cross-examination occurred in closed court. However the below does not in my view relate to confidential information sought by the Plaintiffs.

In cross-examination Mr Furnari accepted the conjunction agency agreement between his company and Belle Property Neutral Bay was prompted by his discussions with the First Defendant (T225/31-34). He confirmed he had entered into conjunction arrangements in relation to the Underwood Road Property and the Station Street Property (T225/41-T226/3). He was not too sure of the splitting arrangements of the commission (T227/40-43). He insisted he did not know of compensation arrangements for the First Defendant, asserting he had a good friendship with the First Defendant beyond work (T229/16-T230/2).

Mr Furnari denied his answers were trying to assist the First Defendant (T230/21-22). He accepted that the First Defendant’s referrals to his company potentially were going to cement his hopes to be a franchisee of the Belle Property brand (T230/29-46)

Mr Boumelhem swore an affidavit on 6 August 2018, with a draft of this affidavit appearing in the court book (T175/50-T176/2).

He said he was a director of xxxxxxxxxxxxxxxx and at all material times this company was the owner of units located at 32-36 Underwood Rd Homebush NSW 2140.

On 12 December 2017 he met with the First Defendant, where he said he had decided to leave the Devine Group. Mr Boumelhem replied “I don’t even know who he is. Wherever you go, I’m coming … I’m coming with you”.

On 17 January 2018 he signed an agency agreement appointing the First Defendant as his agent. He terminated his agency agreement with Devine Concord.

In cross-examination Mr Boumelhem outlined how he had property developments in Croydon, Marrickville and at Underwood Street Homebush, with expected value of about $24,000,000 to be received for the whole Underwood Street project (T178/8-15). He accepted tentatively, that approximately in January 2017 he began using the real estate services of the Devine Group however said he could not recall exactly when (T178/22-26). He could not recall whether the First Defendant had paid for an upgrade of his marketing campaign for the Underwood Property (T179/33-36). He however accepted that the Devine Group had upgraded his website listings on “realestate.com” and “domain.com” and that this was a good service that made him happy (T181/3-6).

Mr Boumelhem accepted the first time he arranged to leave the Devine Group was when the First Defendant told him that he himself had left (T181/16-19). He said he was not aware he had signed an exclusive agency agreement with the Devine Group, and was curious when he was provided with an exclusive agency agreement signed by him as “I don’t normally sign exclusives” (T183/30-36).

When cross-examined with a document (Exhibit P4) that the Plaintiffs asserted was concocted as a notice to cease exclusive agency dated 1 October 2017, appearing as though he had terminated his agency agreement with Devine Group, Mr Boumelhem said he may have signed this document as late as December 2017 (T186/17-32). He said he did not himself send this document to the Devine Group in January 2017 (T187/37-38). After the court proceedings of the Defendants commenced, Mr Boumelhem said he started to deal with different agents from Belle Neutral Bay (T188/4-5). He was not aware that the First Defendant was to continue to receive commission on any sales (T188/24-29).

Mr Curic swore one affidavit on 6 August 2018.

In this affidavit Mr Curic said on or about 25 February 2012 he first met the First Defendant when he was the real estate agent at a property in Concord. He considered him to be professional, approachable and friendly, and within thirty minutes he and his wife had agreed to purchase the property.

In December 2017 he and his wife decided to sell, and sometime between 26 December 2017 and 3 January 2018 Mr Curic telephoned the First Defendant. However he did not answer.

In early January 2018 he approached Devine Real Estate Concord to engage them to sell his and his wife’s property, if they would give them a really good deal by charging low commission. Mr Curic said he did not remember who he spoke to, but the end result was the Devine agents were not prepared to offer the deal he was looking for. He therefore engaged with the First Defendant at a higher rate and on 17 January 2018 signed an agency agreement with the First Defendant.

In cross-examination Mr Curic confirmed he had contacted the Devine Group on 16 January 2018 about a proposal to sell the property he owned jointly at that time with his wife and spoke to Ms xxxxxx Swadling (T220/27-37). He accepted he told her he wanted to sell the property, as well as build and rent out a duplex site in Concord, although asserted this was an ambition and nothing “concrete” (T221/1-8).

He confirmed he met a woman at the Devine Group on 18 January 2018 (T222/5-8).

Mr Curic denied he cancelled the proposal for sale with Devine Group because the First Defendant had called his wife (T222/38-40). He denied the First Defendant had persuaded his wife to sign a sales agency agreement with him (T224/6-9).

The basis of any restraint of trade case against the Defendants must lie in the construction of the contracts they entered into.

This necessarily requires an analysis of the two agreements the First Defendant entered into: the 2008 Shareholders Agreement he executed on 8 August 2008 and the 2011 Employment Agreement he executed on 19 April 2011. How are these two agreements to be construed, particularly with regard to the restraint clauses included in each?

It is my view that the Shareholders Agreement and Employment Agreement are clearly and objectively intended to co-exist together. This is demonstrated in clause 6(a) of the Shareholders Agreement which states “[c]ontracts of employment with the company shall be entered into by the other parties”. The Shareholders Agreement therefore demonstrates that the parties explicitly contemplated that the First Defendant would sign a form of employment agreement, which he did so on 19 April 2011. In this sense I accept the Plaintiffs submissions on this point.

This construction also accords with Rix LJ’s analysis in HIH Casualty & General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ 735 at [84]-[84]. His Honour noted that if it is clear that a later contract is not intended to supersede an earlier contract, “I do not see how it can ever be permissible to exclude reference to the earlier contract. I do not see how the relationship of the two contracts can be decided without considering both of them”. His Honour’s analysis was quoted with approval in Taouk v Assure (NSW) Pty Ltd [2017] NSWCA 227 by Sackville AJA (Beazley P and White JA agreeing) at [104]. See also RWE npower Renewables Ltd v JN Bentley Ltd [2014] EQCA Civ 150 per Moore-Bick LJ at [15].

I reject the Defendants’ analysis of the Employment Agreement and Shareholders Agreement as untenable. The Defendants submit that the two agreements operate such that the agreement earlier in time is intended to take precedence over the later agreement by reason of an application of the second class of agreements referred to in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72. That is, somehow, the earlier Shareholders Agreement operated as the complete agreement between the parties and to the extent that the Employment Agreement purports to add to, subtract from, or modify the Shareholders Agreement it is void. I reject this argument. It is not supported by the clear wording of the two agreements which demonstrates in my view they were intended to be read as co-existing together.

However, the fact that the Shareholders Agreement and Employment Agreement were meant to co-exist does not immediately resolve any internal consistencies between the two agreements.

Namely, the Shareholders Agreement includes clause 10 that provides in effect that the First Defendant undertakes that “he will not for a period of three (3) years after the date of disposal within the following post codes: 2046, 2127, 2131, 2134, 2135, 2136, 2137, 2138, 2140” solicit clients away from the First Plaintiff, attempt to employ the employees of the First Plaintiff or become engaged in any business in competition with the First Plaintiff.

Clause 10 also has the proviso that each of the obligations and restrictions in the clause are severable, and the proviso that the “said obligations or restrictions are only such as a reasonably necessary … but should any of the same be held void, voidable, illegal or otherwise unenforceable the same shall be deemed to be re-written with such maximum restrictions as are compatible with the same being enforceable”.

On the other hand, the Employment Agreement has clause 1.1 which provides a definition of “Confidential Information” for the purposes of the Employment Agreement which includes “trade secrets and intellectual property”, “names, addresses (including email addresses), phone numbers and all other contact information of sellers, buyers, prospective sellers and buyers” and importantly “customer/client lists”.

The Employment Agreement includes clause 5 which provides a number of undertakings the First Defendant agreed to be bound by, including not engaging in “any business that competes with the Employer’s business” during the course of his employment.

The Employment Agreement also includes clause 14.1 which provides that “at all times both during and after your employment” the First Defendant agrees not to use for personal advantage or disclose any confidential information (as defined in clause 1.1).

The Employment Agreement provides for a restriction on post-employment activities in clause 19. This clause prevents the First Defendant from soliciting any work from any client during the restraint period, engaging or being concerned in any business for a competitor during the restraint period and soliciting any employees to leave the First Plaintiff.

The “restraint period” as defined in the Employment Agreement in clause 19.2(a) is a cascading period of 12 months; or 9 months; or 6 months; or 3 months. “Competitor” is defined in the cascading clause 19.2(c) as any business engaged in providing real estate agency services within a radius of 6 kilometres; or 5 kilometres; or 4 kilometres; or 3 kilometres of the First Plaintiff.

On 13 December 2017 the First Defendant’s employment with the Devine Group was terminated hence ending the Employment Agreement (CB 201-202). It was not until April 2018 that the Shareholders Agreement came to an end for the First Defendant, when his shares were sold for $774,058.04 and $151,860.65.

How is it possible to reconcile the differing approaches towards restraint area (Shareholders Agreement with post codes, Employment Agreement with kilometre radiuses) and restraint time (Shareholders Agreement with 3 years, Employment Agreement cascading down from 12 months)?

In my view, the fact that the two agreements are clearly intended to be read together as co-existing agreements makes it clear that the 3 year restraint period should operate and the combination of a radius restraint and post-code restraint should apply. That is, the First Defendant is restrained from working in areas that fall within either the 6km radius mentioned in the Employment Agreement or the post codes mentioned in the Shareholders Agreement.

This is in my view the proper construction of these two documents that achieves most harmoniously the objective intention of the parties that entered into the Shareholders Agreement and Employment Agreement. It is trite law that within a contract the clauses must be considered in the context of the whole document: Australian Broadcasting Commission v Australasian Performing Right Association (1973) 129 CLR 99; [1973] HCA 36. In this sense within a contractual document it should be read as a whole and read harmoniously.

Furthermore, in my view although the Shareholders Agreement and Employment Agreement are different contracts, and were executed at different times, the same broad principles of construction apply, particularly because clause 6(a) of the Shareholders Agreement explicitly contemplates the later existence of an Employment Agreement. This links the two contractual documents and suggests objectively it was intended these two contractual documents should be read together.

In my view a harmonious approach to construction in both agreements is to construe the restraint obligations of the two agreements as cumulative. The Shareholders Agreement was intended to provide a range of short and long term contingencies for the First Defendant’s time as a shareholder. He could have decided to have sold his shares and yet have remained an employee of the Devine Group. The Shareholders Agreement and Employment Agreement therefore needed to be flexible enough to provide for a range of events, and were intended to operate alongside each other. It follows that the restraint provisions should likewise operate alongside each other, and should not be read down to achieve an artificial relationship of ascendancy/subordination between either of the two agreements. To give both restraints meaning and effect accords with the High Court’s analysis of resolving inconsistent provisions in a contractual instrument: Re Media Entertainment & Arts Alliance; Ex Parte Hoyts Corporation Pty Ltd (No 1) (1993) 178 CLR 379; [1993] HCA 40.

To give effect to the Shareholders Agreement period of 3 years also reflects the seniority of the First Defendant as both a shareholder and senior employee in the Devine Group.

With this being said, however, the restraints should only operate to the extent that they are “reasonably necessary” as contemplated in clause 10 of the Shareholders Agreement. However, as will be clear below, in my view the 3 year period and combination of both post codes and a 6 kilometre radius is reasonably necessary in all the circumstances.

The separate question of the construction of the Second Defendant’s employment agreement and the restraint to be imposed will be considered below.

Given the serious nature of the allegations involved in this case and the contemporaneous materials involved, in my view, the failure to call both the Defendants in this case acts as a very strong indicator of the outcome of this case. That is, in the face of the expert evidence of Mr xxxxxx Khoury and the evidence of Ms xxxxxxxxx Harris (for the Plaintiffs) that both Defendants emailed confidential client lists to their personal email addresses, the failure to call the Defendants to counteract these allegations speaks volumes.

The failure to call these witnesses and expose them to cross-examination indicates to me that the most natural inference is that at the very least the Defendants could not add anything positive to their case by giving evidence. This is consistent with the principles expressed in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 and Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389.

Significantly, on the face of the evidence it was the Defendants themselves who sent the confidential client lists to their personal email addresses. The failure of both Defendants to give evidence on this issue leads me to comfortably find that they did steal confidential client lists and further decided to conduct business not just in breach but in direct competition with the Plaintiffs, hence contravening their respective agreements. Importantly in the case of the First Defendant the allegation that he attempted to sabotage the Plaintiffs’ business by changing its client telephone numbers is a serious one, which he could have answered had he been able to but did not. The Defendants in the pleadings even admit the First Defendant’s taking of the customer lists, business documents and financial information that he emailed to himself (SOC [93], Defence [93])

On the other hand, my impression of the witnesses called by the Plaintiffs was that in general all those who were cross-examined gave their evidence truthfully.

On one view the most significant of the witnesses called for the Plaintiffs were Ms xxxxxxxxxx Harris and Mr xxxxxxx Khoury. Ms Harris, who was not required for cross-examination, provided a telling report to the Third Plaintiff on about 9 March 2018 which concluded that on 8 December 2017 “the username of Roger Agha changed 905 contact records over a period of approximately 1.5 hours”. Mr Khoury provided an expert report stating that in his assessment the email account linked to the Second Defendant was most likely achieved via an authenticated mobile device or computer.

In addition, Ms vvvvvvvvvvvv Nguyen was called for the Plaintiffs and described how the First Defendant asked her to email a spreadsheet of client lists to his personal email account on or about 23 November 2017. She was likewise not cross-examined with any serious suggestion that she was being untruthful or did not send such an email. Her evidence further provides corroboration of the actions of the Defendants.

Mr xxxxxx Boumelhem, who was called for the Defendants, admitted under some sufferance that a document dated 1 October 2017 (Exhibit P4) purporting to be a termination of exclusive agency was in fact signed by him as late as December 2017 (T186/17-32). I am satisfied he was quite candid and truthful in his evidence. This conduct on the part of the First Defendant was an attempt falsely to allege the particular agreement with Boumelhem was terminated at an earlier time to when in fact it was.

I am satisfied both the Defendants engaged in breaches of confidential information by sending confidential client lists to their personal email addresses prior to terminating their employment with the Plaintiffs.

This conduct is expressly prohibited by the Employment Agreement. At clause 1.1 of the Employment Agreement, “Confidential Information” is defined as specifically including (at subsection E) “names, addresses (including email addresses), phone numbers and all other contact information of sellers, buyers, prospective sellers and buyers, any property owner (including their employees, contractors and representatives) on whose behalf a property is managed by the Employer” as well as (at subsection O) “customer/client lists”. Clause 14 of the Employment Agreement explicitly creates an obligation to “keep confidential all Confidential Information” as defined at clause 1.1 and prohibits (at clause 14.2(a)) any use of Confidential Information to one’s own advantage or to the advantage of any other person.

Clause 6(d) of the Shareholders Agreement likewise prohibits either parties disclosing “to any person firm or company whomsoever any trade secrets or other confidential information relating to the company or its customers or suppliers save as necessary in the course of the company’s business”.

Furthermore, the information taken from the Plaintiffs by the Defendants was in my view innately confidential, absent any provisions of the Shareholders Agreement and Employment Agreement. It is patent on the face of the materials, that client lists and client details are crucial to the profitable conduct of a real estate business.

From as early as 15 November 2017 the contemporaneous documents show the First Defendant emailed to his personal email address excel spreadsheets and client lists (CB 561). This occurred further on 16 November, 23 November, 28 November and 4 December 2017 for example. On 8 December he provided to the Third Plaintiff a letter advising him he wished to sell his shares. Clearly, the sending of these client lists occurred in the context of the First Defendant desiring to leave the Devine Group.

On 23 November 2017 the Second Defendant likewise emailed two excel spreadsheets to his personal email address (CB 938, 6259).

In my view, there can be no serious suggestion that these emails were not sent by the Defendants and there is no real prospect that any of them were somehow ‘spoofed’. The timing of the emails places them squarely at a point when the Defendants desired to leave the Devine Group and were communicating with each other and other employees about contact lists. The expert report of Mr Khoury in my view provides persuasive, but not definitive, evidence that the email of 23 November 2017 was sent by the Second Defendant.

Therefore, I am more than satisfied that the Defendants engaged in breach of the Plaintiffs’ confidential information and both sent confidential client lists to their personal email addresses in breach of the above sections of the Employment Agreement. To suggest otherwise is contrary to the contemporaneous materials. Further, to suggest somehow some other person sent these emails using the Defendants’ accounts defies logic and is highly unlikely, as it was only the Defendants who would have any motivation to send contact lists to them.

This finding is, in my view, further reinforced by the failure to call the Defendants which adds further to the inference that they did indeed engage in this particular breach of confidential information.

There is no sensible suggestion that can be made that the client lists and business information sent by the Defendants should not be characterised as “confidential information”. This is expressly contrary to the definition of “Confidential Information” in the Employment Agreement and also the inherently sensitive and confidential nature of client lists, business information and similar private information used by the Plaintiffs to develop their business. In my view the Defendants’ suggestion that none of the information sought to be protected by the Plaintiffs was/is confidential is misguided and contrary to the express terms of the Employment Agreement and Shareholders Agreement.

I am satisfied the First Defendant engaged in the systematic and repeated sabotage of the Plaintiffs’ client contact numbers by changing one number only in 905 files on 8 December 2017. To suggest otherwise is likewise contrary to common sense.

This much was demonstrated by Ms Harris for the Plaintiffs who was not required for cross-examination, and provided persuasive evidence that the First Defendant had engaged in this sabotage.

Ms Harris’ report suggests that on the 8 December 2017 the username of the First Defendant changed 905 contact records over a period of approximately 1.5 hours. According to Ms Harris’ report, the username went through and randomly changed 1 number from the contact record mobile number, home number and work number so that these phone numbers were no longer correct. The user commenced changing these records at 8:52am and the last record changed was at 10:23am.

Attached to Ms Harris’ affidavit was Exhibit CH-1, which provided extensive screenshots of data demonstrating the username associated with the First Defendant altered the database phone records of the Plaintiffs.

In the absence of explaining who else did this, in the absence of evidence of self-sabotage by any of the other employees of the Plaintiffs, and further in the absence of cross-examination of Ms Harris, there is a clear suggestion that it was indeed the First Defendant who, through his username, changed the phone records.

Further, the 8 December 2017 was the very same day that the First Defendant’s employment in the Devine Group was terminated. There was only one person at that time that could have had access to the phone lists and a motive to obstruct the Devine Group: the First Defendant. To suggest the First Defendant did not change the phone numbers is also contrary to the evidence that his log-in was used to gain access to the complete data database of the Plaintiffs from 8:52am and 10:23am (CB 2050, 3017-3020).

Although there is no direct evidence of the First Defendant’s behaviour, in my view this plainly was an act of seeking maliciously to disadvantage and obstruct the Plaintiffs from doing business and maintaining contact with their clients. Had it not been rectified it was likely to have wreaked havoc and caused a great deal of time to reconstruct the client contact details. The evidence of Ms Harris provides ample material to suggest the First Defendant in fact accessed the system of the Plaintiff’s for 91 minutes on 8 December 2017 in order to change the telephone numbers. No one else relevantly would conceivably have had a motive to perpetrate this activity. It was not suggested the Plaintiffs had themselves done this for good reason.

This act indicates a degree of malevolence directed to harming the Plaintiffs’ business. This is also to be seen alongside the First Defendant’s clear attempt to contrive an early termination of exclusive agency with Mr Boumelhem, by asking him to sign a notice of termination as late as December 2017 despite the document purporting to be dated 1 October 2017.

The effect of this act was to breach the Shareholders Agreement entered into by the First Defendant particularly clause 6(a) requiring devotion to “the interests of the company”, clause 6(b) requiring “best endeavours” and clause 8(e) prohibiting an act that would diminish the business of the company. This also breached clause 5.1(d) of the Employment Agreement requiring the First Defendant to perform his duties in a “diligent, professional and ethical manner and refrain from doing anything that may adversely affect or reflect” upon his employer.

Leaving aside the taking of the client lists, a number of particular findings of breach are sought by the Plaintiffs in respect of particular properties.

Generally, I am satisfied that the Defendants engaged in breach by siphoning customers from the Devine Group to their new employer Belle Property. The clearest indication of this is the trail of contemporaneous materials that demonstrate that a property owned by a Devine Group client would come in and do some business with the First Defendant and/or become a contact of the Plaintiffs, and then come out again and follow the Defendants into the Belle Property group.

This constitutes breach of the restraints of trade mandated by clause 10 of the Shareholders Agreement and clause 19 of the Employment Agreement. By developing these properties for Belle Property, the Defendants exploited the confidential client lists of the Plaintiffs to their personal advantage and not to the advantage of the Plaintiffs, again also in breach of the confidentiality requirements of the Shareholders Agreement (for the First Defendant) and the Employment Agreement (for both Defendants).

As this judgment is intended to determine the precise issues of liability (not damages) in my view it is appropriate to set out the particular properties identified by the Plaintiffs and make findings in respect of each as to breach.

For the below listed properties (excluding those not identified as customers of the Plaintiffs) in my view there is a compelling inference that in each and every case the Defendants systematically went about diverting existing clients of the Devine group to Belle Property in breach of their obligations to the Plaintiffs, and I am satisfied I should find accordingly. With respect to the Corporations Act 2001 (Cth) and equitable duties referred to with respect to the properties, I will address those later in the judgment. I do not propose to make findings as to breach of undertaking as this was not adequately ventilated by the parties at the trial.

The vendor of the Underwood Property (at 32-36 Underwood Rd, Homebush) was a customer of Devine Concord (CB 218, 3183) within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants concede the vendor was a customer.

Whilst employed at the Devine Group the Defendants had provided services to the vendor, Mr Boumelhem, who is the director of Jaycar Group. Mr Boumelhem had signed an exclusive agency agreement on behalf of the Underwood Property with Devine Concord on 23 March 2017, with a commission on the various units in the property of 2% plus GST, with 3% plus GST if the full list price was achieved (CB 542-553). As at January 2018 there were six units as part of the property that were remaining unsold.

I am satisfied that Mr Boumelhem had no intention of leaving Devine Concord or terminating his exclusive agency agreement with Devine Concord, until after the First Defendant informed him that he was leaving Devine Concord around 12 December 2017. Whilst still a director and shareholder of Devine Concord, the First Defendant actively solicited Mr Boumelhem and presented him with a backdated letter of termination (backdated to 1 October 2018) for the Jaycar Group to pass off on Devine Concord in January 2018 (CB 2893-2895). This was grudgingly accepted by Mr Boumelhem in cross-examination (T186/17-32).

On 17 January 2018, Jaycorp Group thereby entered into an agency agreement with Belle Property Neutral Bay (CB 2226-2234, 7018). The new agency agreement noted there were six units for sale at list prices totalling $4,710,000 for which commission would be $141,300 (CB 2234). Both Defendants then began to assist in providing services to Jaycorp Group for the sale of the Underwood Property from 18 January 2018 onwards (CB 2215). On 22 January 2018, Belle Property Neutral Bay received an amended contract of sale, changing the agent from Devine Concord to Belle Property (CB 2255). On 27 January 2018 the First Defendant advertised an open for inspection of the property on his Facebook page (CB 2290).

I am willing to find that the Defendants deliberately contrived to change the agent for the sale of the property from Devine Concord to Belle Property Neutral Bay. The property was subsequently advertised by Belle Property Neutral Bay (CB 2260). It was subsequently changed to a listing with Belle Property Strathfield under a conjunction agency arrangement with Belle Property Neutral Bay (CB 6077).

In my view this constituted a breach by the Defendants by diverting a client of the Plaintiffs away to Belle Property. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendors of the Burns Bay Property were customers of Devine Concord (CB 559). This property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants concede Mr Judd was a customer.

The Defendants made attendances on the vendors and the property was at first recorded as “listed” on 3 November 2017 by the Plaintiffs (CB 5920). There were a total of 21 attendances on the vendors in the second half of 2017, the last being on 4 December 2017 (CB 559, 5920). The First Defendant had an appointment for a walk-through of the property as it was on sale on 30 October 2017 (CB 557).

On 24 November 2017, the First Defendant received the contract of sale from the vendors’ solicitors with Devine Concord nominated as the vendor’s agent (CB 980-983, 1140). However, when the Third Plaintiff searched Devine Concord’s hard copy and electronic copies of the agency agreement, it could not be found (CB 216).

Subsequently, the First Defendant (whilst still a director and shareholder of Devine Concord) signed the vendors to an agency agreement on 22 December 2017 with Belle Property (CB 3191). I infer that the First Defendant removed any agency agreement for the property with the Plaintiffs from the records of Devine Concord, or in any case, diverted the client to Belle Property.

The property was subsequently diverted to Belle Property Neutral Bay, with the contract of sale listing Belle Property Neutral Bay as the agent and the contract referring to the First Defendant as reference (CB 2199, 2314). Specifically, on 15 January 2018, Ms Bechtold of Belle Property Neutral Bay requested the vendor’s solicitor to amend the contract of sale to list the agent as Belle Property (CB 2200-2204). On 24 January 2018, the Second Defendant provided marketing information on the property to Belle Property Neutral Bay for the purposes of selling the property (CB 2190). On 27 January 2018, the First Defendant advertised an open inspection for the property on his Facebook page (CB 2290). The sale of the property was settled on 6 March 2018 for $820,000 (CB 2527, 2548-2549, 2930, 2999). The First Defendant’s company, Premium Property Sales Pty Ltd, paid and was invoiced by Belle Property Neutral bay for the 5% commission payable to the Second Defendant on this sale (CB 2931).

In my view this constitutes breach by the Defendants by diverting a client of the Plaintiffs away to Belle Property. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendors of this property were customers of Devine Concord (CB 2879) and the property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit that Mr and Ms Curic are not customers of the Plaintiffs, as they were a patron of the Plaintiffs in 2013, with no further contact until early January 2018. The Plaintiffs assert that they are customers, and have maintained a customer connection with them.

In my opinion, in the balance of probabilities, it is appropriate to consider these vendors as clients and/or customers of the Plaintiffs. Their prior contact with the Plaintiffs was clearly the basis for their relationship with the First Defendant, and there was clearly a customer connection between them and the Plaintiffs.

The evidence of Mr Curic, who is one of the vendors of this property, is that he tried to contract the First Defendant in the Christmas to New Year period between 2017 and 2018, and was unable to reach him as the First Defendant was overseas (T223/4-43). When the First Defendant returned, Mr Curic decided to not use Devine Concord as the agent for his property as he had done in the past, but to engage the First Defendant at a higher rate, wherein the First Defendant accepted instructions to act for Mr Curic (CB 6782).

On 17 January 2018 the First Defendant whilst still a director and shareholder of Devine Concord signed the vendors to an exclusive agency agreement with Belle Property Neutral Bay (CB 2207). The Defendants were subsequently advertised as agents for the property under the Belle Property moniker (CB 2318).

On 22 January 2018, Belle Property Neutral Bay confirmed the First Defendant as the listing agent for the property (CB 2253), and the contract of sale was received on 30 January 2018 (CB 2294-2304) and amended to specify the First Defendant and Belle Property Neutral Bay as the agents for the property sale (CB 2336-2338).

Contracts were exchanged for the property on 9 March 2018 and it was sold for $987,500 (CB 2525-2526).

In my view this constitutes further breach by diverting a client of the Plaintiffs away to Belle Property. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor of this property was a customer of Devine Concord (CB 5936). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit Ms Li was not a customer, as it was her husband on the Plaintiffs’ database. The Plaintiffs assert the Court should take judicial notice and recognise husbands and wives often identify as a party, not separately.

In my view it is appropriate to treat Ms Li as a customer of the Plaintiffs. The mere fact that her husband was identified as a point of contact with the Plaintiffs does not overcome the fact that the evidence establishes a prior customer connection between Ms Li and the Plaintiffs that was diverted away by the First Defendant.

The Defendants and another Devine Concord sales assistant (Mr Guerrero) had made approximately 20 attendances on the vendor between May and September 2017 (CB 5936), and the vendor’s details were included in the database the First Defendant emailed to himself (CB 208, 690). The vendor knew the First Defendant whilst he was at Devine Concord, and they communicated to the effect that the First Defendant informed the vendor that he would be starting a new real estate business himself but would currently be at Belle Property Neutral Bay (T156/15-T157/33).

The First Defendant subsequently met with the vendor on 18 January 2018 and signed her to an exclusive agency agreement with Belle Property Neutral Bay (CB 2243). The Defendants were advertised as the agents for the property under the Belle Property moniker (CB 2323). The First Defendant was confirmed as agent for the property including after he gave an undertaking to desist from utilising the information of the Devine Group on 12 March 2018.

In my view this constitutes further breach by diverting a client of the Plaintiffs away to Belle Property. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendors of this property were customers of Devine Concord included in the database the First Defendant emailed to himself (CB 675). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish the vendors of this property were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The First Defendant signed the vendors to an exclusive agency agreement on 17 February 2018 with Belle Property Neutral Bay (CB 2558) with the assistance of the Second Defendant (CB 2606, 2645). The marketing campaign was sent to the Second Defendant for approval on 23 January 2018 (CB 2262). The Plaintiffs submit that inferentially, this property was one of the files the First Defendant took with him when he left the Plaintiffs.

In my view I am willing to draw his inference. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor of this property was a customer of Devine Concord included in the database the First Defendant emailed to himself (CB 690). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Ms Frede was a customer of the Plaintiffs. I reject this, and am satisfied the inclusion of her details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Defendants assisted in advertising the property under the Belle Property moniker (CB 2271-2272). The First Defendant had a listing appointment with the vendor on 1 February 2019 (Exhibit P9, diary 30). I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The owners of this property were Devine Concord customers included in the database the First Defendant emailed to himself (CB 932). With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr and Ms Oustambasidis were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Defendants also submit their property is outside the post code area of restraint. I accept this, however, note that if the 6 South St, Drummoyne property is within the 6 kilometres radius mentioned in the Employment Agreement (which it appears to be) it will be covered by the restraint.

The owners’ details were included in the database prepared by the First Defendant for his work with Belle Property (CB 5902). I infer this were further owners the Defendants took with them when they left the Plaintiffs to join Belle Property Neutral Bay. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendors were customers of Devine Concord included in the database the First Defendant emailed to himself (CB 932). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr & Mrs D’Aspromonte were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The First Defendant signed the vendors to an exclusive agency agreement on 30 January 2018 with Belle Property Neutral Bay (CB 2305). The Second Defendant assisted in developing the sale of the property (CB 2533). I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendors of these two properties were customers of Devine Concord (CB 2880) and both are in the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr and Ms Moses were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database and evidence establishes a prior customer connection which was specifically exploited by the First Defendant.

An agency agreement was signed by the vendors on 8 February 2018 with Belle Property Neutral Bay (CB 2452-2458). I infer both properties were files that the First Defendant took with him when he left the Plaintiffs, constituting a breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendors were Devine Concord customers (CB 6208). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr and Ms McCormick were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The First Defendant made marketing arrangements with Belle Property Neutral Bay for the sale of the property (CB 2292-2293). However by the time the vendors were ready to proceed Parker J had delivered judgment and the property was diverted to Belle Property Strathfield (CB 6012).

I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent to himself (CB 687). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr Sartour was a customer of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Second Defendant made marketing arrangements with Belle Property Neutral Bay on 8 February 2018 for the sale of the property (CB 2459-2460). I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent to himself (CB 5149). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr Macri was a customer of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Second Defendant made marketing arrangements with belle Property Neutral Bay on 12 February 2018 for the sale of the property (CB 2514-2515). I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent to himself (CB 211). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit Kevin and Chris Morris are not customers, but rather were customers of Strathfield Real Estate (Management) Pty Ltd. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Second Defendant arranged a marketing budget for this property on 19 February 2018 (CB 2596-2597). The vendor signed an exclusive agency agreement with belle Property Neutral Bay on 21 February 2018 (CB 2646-2652). I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent himself (CB 3318). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Candice and Shannon McMaster were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Second Defendant made marketing arrangements with Belle Property Neutral Bay on 1 March 2018 for the property (CB 2851). I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent himself (CB 681). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr and Ms Xu were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Second Defendant made marketing arrangements with Belle Property Neutral Bay on 1 March 2018 (CB 2855-2856). I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendors were Devine Concord customers included in the database the First Defendant sent himself (CB 689). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr and Ms Bhujel were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The vendors signed an exclusive agency agreement with Belle Property Neutral Bay on 10 March 2018 (CB 6291-6297). Despite giving undertakings to cease acting on the Plaintiffs’ clients the Plaintiffs submit that the First Defendant confirmed his appointment as agent of the property with Belle Neutral Bay on 12 March 2018 (CB 3048, 3051, 3101-3102).

I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent himself (CB 692). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Mr & Mrs Kana were customers of the Plaintiffs. I reject this, and am satisfied the inclusion of their details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The vendors signed an exclusive agency agreement with Belle Property Neutral Bay on 7 March 2018).

The First Defendant had a meeting regarding the property on 15 March 2018 (Exhibit P9, diary 9) despite the undertaking of the Defendants on 12 March 2018.

I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent himself (CB 572). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish xxxxx Jamwal was a customer of the Plaintiffs. I reject this, and am satisfied the inclusion of xxxxxx Jamwal’s details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Second Defendant made marketing arrangements with Belle Property Neutral Bay on 8 March 2018 (CB 2989-2990). The First Defendant had a listing appointment with the vendor on 10 March 2018 (Exhibit P9, diary 11).

I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

The vendor was a Devine Concord customer included in the database the First Defendant sent himself (CB 677). The property is within the restraint area. With respect to this property, the Plaintiffs submit there has been breach of:

The Defendants submit the quality of evidence does not establish Ms Darwon was a customer of the Plaintiffs. I reject this, and am satisfied the inclusion of her details in the database establishes a prior customer connection which was specifically exploited by the First Defendant.

The Second Defendant made marketing arrangements with Belle Property Neutral Bay on 8 March 2018 (CB 2987-2988). The First Defendant had a listing appointment with the vendor on 14 March 2018, despite his undertaking of 12 March 2019 (Exhibit P9, diary 10).

I infer this was a further property the Defendants diverted from the Plaintiffs to Belle Property Neutral Bay in breach. I am willing to find the contractual breaches sought by the Plaintiffs.

There are a number of appointments and listings within the restraint area that the Plaintiffs indicate they have been unable to link to any database of the Plaintiffs or otherwise find evidence that were past customers of the Plaintiffs (submissions [424]):

The Defendants assert they are not customers, highlighting that the Plaintiffs concede a lack of direct evidence.

The Plaintiffs suggest that at least some of these listings must have been obtained by virtue of breach of the confidential client lists. With respect to these specific properties I am not inclined to make findings of breach because there is little if any evidence that these properties were obtained from the client lists of the Plaintiffs. That is, I am not inclined to make findings of breach with respect to these properties on the basis of what I regard as speculation rather than reasonable inference.

Finally, I note that the Defendants raised an argument on the grounds of procedural fairness, asserting that the significance of many of the above properties only first became clear when reference was made to them in the Plaintiffs’ written submissions dated 19 November 2019, after evidence had closed. They assert this denied them the opportunity of calling more customers as witnesses to combat the substance of the Plaintiffs’ case (further submissions [14]).

I do not accept this argument regarding procedural fairness. The Defendants were clearly put on notice on the case they needed to meet well before the closing of evidence. This case was subject to numerous interlocutory disputes and expansively ventilated between the parties before the closing of evidence in this trial. I accordingly reject the Defendants’ argument on this point.

It is an admitted fact that the Second Defendant was under an obligation of faithfulness to Devine Group while he was an employee (SOC [97(1)], Defence [97]).

In my view, the Second Defendant is bound by the same Employment Agreement entered into by the First Defendant. The evidence of Ms xxxx Mazzei called for the Plaintiffs was to the effect that it was the usual practice of her office to ensure new employees entered into an employment agreement. When it came time for her to retrieve the Second Defendant’s agreement from the office it was missing. Her evidence which I accept is that such an agreement was executed by the Second Defendant but removed from the Plaintiffs’ files in all likelihood.

It was not suggested, nor is there any evidence, that the Devine offices are conducted in a shambolic fashion. The evidence is that employees are allocated specific employment documents. They are routinely and systematically executed and filed in an orderly way. There is no reason to suppose this did not occur with the Second Defendant’s employment contract. There is no suggestion on the evidence that the Plaintiffs employed persons on the basis of an oral agreement followed by a handshake.

Given my above factual findings as to the seriousness of the breach of the Defendants and the systematic way in which they went about disrupting the Devine Group including the sabotage of the telephone numbers, I consider I am able to draw the inference that the Second Defendant did execute a version of the Employment Agreement that protected against breach of confidential information (including client lists and business information) and effected a restraint period of 12 months.

Whilst this is not a conspiracy case, the overwhelming inference is that the First Defendant and Second Defendant were working assiduously together to divert as much business as possible from the Plaintiffs towards themselves. In this context I infer that that the version of the Employment Agreement executed by the Second Defendant was taken from the Devine offices, again to pursue this aim of diverting business and subverting the interests of the Plaintiffs.

This is again in the light of the Defendants not being called to refute these suggestions and the evidential inferences I make in accordance with Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 and Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389.

In my view on the evidence available I consider the Second Defendant should be bound by the Employment Agreement in terms relevantly identical to those entered into by the First Defendant. In my view therefore the lack of the existence of a signed version his employment contract does not preclude him being bound by the restraints sought by the Plaintiffs.

The Plaintiffs also seek remedies against the Defendants for breach of equitable duties and their duties under ss 181-183 of the Corporations Act 2001 (Cth) including an order for compensation under s 1317H of the Corporations Act 2001 (Cth) (submissions [675], [714] SOC [22]-[23]). The Defendants did not clearly deal with this issue in their submissions save to suggest that the Plaintiffs have failed to establish either of the Defendants committed a serious criminal offence.

Some reference was made in submissions to a declaration made pursuant to s 1317E of the Corporations Act 2001 (Cth) (submissions [677], [715]) and also final injunctions against further breaches of ss 181-183 of the Corporations Act 2001 (Cth) (submissions [675], [714]).

Whilst there was no reference to s 1317E of the Corporations Act 2001 (Cth) in the Plaintiffs’ Statement of Claim, if a Court is satisfied that a person has contravened a civil penalty provision it must make a declaration of contravention.

In my view the question of compensation under s 1317H of the Corporations Act 2001 (Cth) goes to damages not liability. I do not propose to deal with it in this judgment, particularly as it was not the subject of substantial analysis by either of the parties.

In my view it is hard to see how the invocation of the Corporations Act 2001 (Cth) adds further depth to the Plaintiffs’ argument, particularly as it was not developed in any detail in oral argument. However, given my findings above, and the clear wording of s 183 of the Corporations Act, it is clear that both Defendants did obtain information which they used “improperly” to both “gain an advantage for themselves or someone else” and also “cause detriment to the corporation”. I propose to make a finding of breach of s 183 of the Corporations Act 2001 (Cth) and a resulting declaration under s 1317E. Again, although I do not see how it adds further to the Plaintiffs’ case on restraint of trade, I am willing to find both Defendants breached ss 181 and 182 of the Corporations Act 2001 (Cth) relating to good faith and misuse of position given the egregious conduct of both and declare in the appropriate form accordingly.

As to the opaque reference to breach of “equitable duties” I do not propose to make any finding or grant any final injunction or declaration to the effect of protecting against breach of equitable duties. My findings as to breach have already been sufficiently identified above, and any reference to imprecisely framed “equitable duties” has not been sufficiently identified by the Plaintiffs.

I likewise do not propose to make findings as to any “serious criminal offences” committed by the Defendants, as this issue was inadequately ventilated by the parties at trial and does not go to resolve the real issues in the proceedings.

Drawing closely on Gleeson J’s comprehensive analysis of the applicable principles of restraints of trade in Dargan Financial (at [58]-[74]) in my view it is appropriate briefly to quote and summarise his Honour’s overview of the key tenets of restraints of trade and the onus of proof.

At common law a restraint of trade is contrary to public policy and void unless justified by the special circumstances of the particular case. A restraint may be enforced if the restraint is reasonably necessary for the protection of the parties concerned and reasonable in the interests of the public: Nordenfelt v The Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 at 565 (Lord Macnaghten); Lindner v Murdock’s Garage (1950) 83 CLR 628; [1950] HCA 48 at 633 (Latham CJ); Buckley v Tutty (1971) 125 CLR 353; [1971] HCA 71 at 376, 379-380.

In New South Wales, s 4 of the Restraints of Trade Act 1976 (NSW) provides:

The correct approach to the application of s 4(1) of the Restraints of Trade Act 1976 (NSW) is well settled. In Orton v Melman [1981] 1 NSWLR 583 at 587 McLelland J (as his Honour then was) explained that first, the Court determines whether the alleged breach (independently of public policy considerations) does or will infringe the terms of the restraint properly construed. Next, the Court determines whether the restraint, so far as it applies to that breach, is contrary to public policy. If it is not, the restraint is valid, subject to any order which may be made under s 4(3). These principles have been approved in later cases: Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 328; Woolworths Limited v Olson [2004] NSWCA 372 at [42]-[44]; Jardin and Jardin Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409 at [87].

The effect of s 4(1) of the Restraints of Trade Act 1976 (NSW) is to require, for the purpose of determining the validity of a restraint, that attention be focused on the actual or apprehended breach, rather than on imaginary or potential breaches: Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 at [10] (Brereton J).

The validity of a covenant in restraint of trade is to be judged at the date of its creation: Lindner v Murdock’s Garage (1950) 83 CLR 628 at 653; [1950] HCA 48 (Kitto J); Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 318; [1973] HCA 40 at 318 (Gibbs J); Geraghty v Minter (1979) 142 CLR 177 at 181; [1979] HCA 42 (Barwick CJ). Nonetheless, the Court may take into account future events that could have been foreseen: Lindner v Murdock’s Garage at 653. Hence, when exercising its discretion whether or not to grant relief, the Court considers matters as at the date of the hearing: Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [70] (Young JA, Beazley and Basten JJA agreeing); Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852 at [88]; (2008) 175 IR 414 at 440 (Brereton J).

The nature of the interest meriting protection under a covenant in restraint of trade will differ according to the type of restraint under consideration.

Generally, a stricter and less favourable view is taken of covenants in restraint of trade between employer and employee than in commercial agreements. As Mason P explained in Woolworths Limited v Olson [2004] NSWCA 372 at [38]:

The same point is made by JD Heydon in the most recent edition of The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis Butterworths) at 96-97, where four main reasons are given for the Court’s approach in employment cases. First, the inequality of bargaining power between the parties. Second, the employee may be giving up that employee’s only asset, which depends on specialised training and which may not be at all negotiable. Third, when labour is hired it remains valuable whether or not the employee later competes. Fourth, once the employee accepts the post-employment restraints, the employer’s power during the contract is much increased by reason of the inhibition on the employee’s ability to threaten to leave and seek work elsewhere.

In Bridge v Deacons [1984] 1 AC 705, doubt was expressed as to whether the legitimate interests can be necessarily ascertained by placing the relevant agreement in a particular category and then trying to align that category with existing cases, such as employment cases or sale of business agreements. Bridge v Deacons [1984] 1 AC 705 involved a restraint clause in a partnership agreement. Lord Fraser, delivering judgment of the Privy Council on behalf of the other Lordships, observed at 714 that:

There has also recently been judicial discussion concerning whether s 4 of the Restraint of Trade Act 1976 (NSW) alters the common law position as to the onus of proof of unreasonableness at common law with respect to restraints of trade.

In Idameneo (No 123) Pty Ltd v Angel-Honnibal [2002] NSWSC 1214 Palmer J expressed the view that s 4(1) did not alter the common law position. His Honour remarked at [45]-[48]:

The remarks by Palmer J were referred to by Young JA with apparent approval in Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [82].

A similar view has been taken in other first instance authorities that under the Restraints of Trade Act 1976 (NSW) the person seeking to enforce the restraint has the onus to prove the circumstances from which reasonableness can, as a matter of law, be inferred: OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 at [69]-[70] (Hammerschlag J); Veda Advantage (Australia) Pty Ltd v De Beer [2016] NSWSC 37 at [48] (Black J).

Given the above principles, and given my above findings as to construction and to breach, in my view the maximum restraint period and geography should apply in all the circumstances.

The maliciousness, blatancy and extensiveness of the breach demonstrates to me that the First Defendant should be restrained for 3 years in both the maximum 6 kilometre radius area of the Employment Agreement and all post code areas of the Shareholders Agreement. This conclusion is furthered by the seniority of the First Defendant as both a past shareholder and employee of the Devine Group.

The Second Defendant should be restrained for 12 months in the maximum 6 kilometre radius mentioned in the Employment Agreement. He is not nor could he be bound by the Shareholders Agreement.

Whilst I have previously summarised the broad scope of the Defendants’ arguments as to loss of confidentiality, I believe it is now appropriate to examine in a more detailed way the arguments of the Defendants on confidentiality. The main thrust of the Defendants argument is that there is no longer (and to an extent never was) any confidential information for the Defendants to have stolen from the Plaintiffs. Therefore, the Defendants submit, there is no utility in the Court granting relief. This broad argument is buttressed by a number of cascading submissions made to me by counsel on 27 March 2019.

First, the Defendants submit that whilst the duties of confidentiality and secrecy arising out of the Employment Agreement and Shareholders Agreement are inconsistent, to the extent that I am against the Defendants on this point, only those documents that have an “element of secrecy” within them are to be protected by any restraint of trade or provision of the two agreements (T433/18-26) (submissions [114]-[125]).

In support of this first argument the Defendants place particular emphasis on Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 and Dargan Financial (at 137])-[140]):

The Defendants submit that like in Dargan Financial the Employment Agreement and Shareholders Agreement lack sufficient precision or “explicit intent” as to their provisions defining and protecting what is “confidential information”, to the extent that they only protect information which has a necessary “quality of confidentiality”. They therefore submit it excludes materials such as training manuals and external resources, which are documents which do not have any inherent quality of confidentiality (T435/34-38).

Secondly, the Defendants submit that there has been disclosure of information of the Plaintiffs to the extent that it has lost this necessary quality of confidence or secrecy, thereby making relief futile (submissions [166]-[179]).

On 19 March 2019, the Plaintiffs made application before Hallen J as Duty Judge, seeking an order for short service on the Defendants with respect to three crucial (as the Defendants argue) documents: a Summons, which referred to an affidavit of the Third Plaintiff dated 16 March 2018, and an exhibit to that affidavit which contained the confidential client lists of the Plaintiffs. The Defendants submit that upon the filing of these materials before Hallen J, no orders were made restricting access to any of the documents.

The Defendants refer to Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 (at [96]-[98]) to assert that the entering of such materials into evidence brought them into the public domain, exploding their confidentiality, notwithstanding any implied undertaking of confidentiality or practice notes within the Supreme Court that allow the Court to restrict access to court files on a discretionary basis:

The Defendants suggest that the implicit assumption behind Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 is that the practice notes restricting access to a court file do not protect the confidentiality of documents entered into evidence in the court file, as the “practice note is not an independent source of right” but merely a buttressing of general law protections (T443/45-46).

Before Parker J on 5 April 2018, in a further interlocutory hearing, the Plaintiffs filed with the Court as “taken as read” three affidavits and three volumes of exhibits that likewise contained confidential information (CB 6472-6488).

The Defendants again emphasise that from the moment that this material was tendered into evidence without any restriction on confidentiality, it entered the “public domain” and lost any inherent quality of confidentiality, as per Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56 and Dargan Financial (at [166]-[174]):

The Defendants invite me to conclude that as in Dargan Financial both the equitable right and contractual rights to any confidential material held by the Plaintiffs have now, as a matter of fact, entered the public domain and are accessible to the public. As an all or nothing proposition, the Defendants argue that as soon as material is read into evidence, it loses entirely and irrevocably its confidential character.

Thirdly and finally, the Defendants submit that the information the Plaintiffs are seeking to protect was actually never secret, and had no quality of confidentiality, even before the proceedings were heard at interlocutory stages before Hallen J and Parker J (submissions [126]-[145]).

The Defendants suggest that the information treated as “secret” by the Plaintiffs was not in fact secret, because it was routinely downloaded onto personal email accounts and was accessible on mobile phones. Drawing on the evidence of Ms Nguyen, the Defendants invite me to draw the inference that within the Devine offices none of the clients lists, business templates, financial information and market research was treated with any system or policy of confidentiality or protection, and was “never secret in the first place” by virtue of the wide disclosure of the material amongst the employees of the office (submissions [126]-[145]).

Broadly, the Defendants rely on an argument that by virtue of its disclosure in open court, the Plaintiffs’ confidential information has lost its confidential character, and therefore there is no basis for granting relief protecting the confidential information including the client lists, business templates and procedural documents, private financial information and market research.

I note that this point does not assist the Defendants in respect of their breaches conducted by diverting properties away from the Devine Group to Belle Property. This was contrary to the restraints imposed upon the Defendants by the Employment Agreement and/or Shareholders Agreement, irrespective of disclosure of information before Parker J.

There is clearly much force behind the proposition that what material is ventilated in open court is to be taken as occurring in the public domain. The question is whether this deprives the material of its quality of confidentiality and therefore prevents the Plaintiffs claim for breach of confidential information.

In support of this proposition are the authorities that suggest that evidence tendered in open court is evidence tendered in the public domain: Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56; Dargan Financial. In Dargan Financial at [174] Gleeson JA concluded that information tendered in open court entered the public domain and was further accessible to members of the public who wished to inspect the material. His Honour therefore concluded the basis upon which a claim for confidentiality might be made has been foregone by tender in open court, noting however that this is a question of fact (at [91]). See also Brand v Monks [2009] NSWSC 1454 where Ward J (as Her Honour then was) at [180]-[184] emphasised that the loss of confidentiality of material by disclosure “is a question of fact and degree”.

In Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 French CJ, Gummow, Hayne, Heydon and Kiefel JJ said (at [41]) “[h]owever, if the file material has been admitted into evidence the interests of open justice are engaged”.

It is clear that the act of tendering affidavits as “taken as read” in court should not allow parties to avoid the important interest courts have in upholding the principles of open justice. This means that if affidavit and videos are received in evidence they are to be treated to some extent as if they had been read in their entirety in open court: Broad Construction Services (WA) Pty Ltd v the Construction, Forestry, Mining and Energy Union of Workers [2007] WASC 133 at [36] per Le Mier J (see also Hammond v Scheinberg [2001] NSWSC 568 on the meaning of “taken as read”). The effect of “taken as read” is precisely that. The material in the affidavit is taken as if it has been read aloud in its entirety as was the case historically.

However importantly, as is further clear on the authorities, whether material has lost its quality of confidentiality is foremost a question of fact.

What this means is whether information has entered the public domain to such an extent as to permit its disclosure in the face of a contractual prohibition against disclosure is a question of fact and degree, taking into account the precise circumstances and the extent of any existing publication of the information. If only limited publication has occurred, and if relative secrecy remains, then the information may well retain its confidential character.

The Plaintiffs have reserved their position as to suggesting Dargan Financial was decided incorrectly. I do not intend to express an opinion on these legal issues, save to state that I am bound to follow the Court of Appeal in Dargan Financial.

Applying the principles of Dargan Financial, in my view it is a question of fact and degree as to determining whether the tending of material robs it of its confidential character.

In my view, given the shortcuts which necessarily occur in interlocutory applications such as those before Parker J, and the subsequent seeking of an interim court suppression and non-publication of the Plaintiffs, the information tendered by the Plaintiffs before Parker J has not lost its necessary degree of confidentiality, even if it was “taken as read” in open Court.

The error of counsel in tendering confidential information in an interlocutory hearing was limited and subsequently rectified by the placing of an interim court suppression and non-publication order upon the materials. There is no evidence of any substantial disclosure of the material tendered by Parker J by virtue of its being “taken as read” and admitted into the court file. As a pure question of fact and degree, in my view the material has not lost its necessary quality of confidentiality and there is still utility in granting relief in favour of the Plaintiffs.

Analogy can be drawn to the judgment of Ward J (as her Honour then was) in Missingham v Shamin [2012] NSWSC 288 who concluded (at [68]-[69]) that the inclusion of some terms of a settlement deed in an ex termpore judgment posted on the Court’s website was at most a limited publication, and did not necessarily deprive a confidential obligation of any utility.

Therefore I reject the Defendants’ arguments on this issue, and propose to grant the relief sought by the Plaintiffs.

I am inclined to make the orders sought by the Plaintiffs against the First and Second Defendants stemming from my findings above as to liability. However given the significant lapse of time I will hear all parties as to precisely which orders can as a matter of practical reality be made. I will also make directions to the progress of any hearing on damages.

I invite the parties to address me on the precise form of orders that are sought which accord with my reasons and further to relist the matter further if there is any dispute about the release of this judgment to the public or the form of any orders sought.

I also invite the parties to address me on costs.

I also confirm I will for the moment in accordance with [6] restrict publication of the Judgment to legal advisors in the first instance until the parties have had an opportunity to read my reasons and obtain instructions.