Matter Technology Ltd v Mrakas; Mrakas v Matter Technology Ltd

1. [1]

   The first plaintiff, Matter Technology Ltd, is an unlisted public company and the parent of a group of companies that includes the second plaintiff, Matter IP Pty Ltd.

2. [2]

   Matter carries on a technology business. That business focuses on the provision of installation, metering, billing and repayment services for rooftop solar panels and the development and exploitation of new business concepts and technologies associated with such services.

3. [3]

   The co-founders of Matter are Mr Simon Barnes, who is now the sole director of Matter, and the first defendant Mr Christopher Mrakas.

4. [4]

   Between 5 July 2010 and 17 January 2018, Mr Mrakas was employed by Matter as its Chief Executive Officer (CEO); first by a contract dated 29 June 2010 between Matter (then known as GreenBox Group Pty Ltd) and a company associated with Mr Mrakas, Netfusion Pty Ltd, and later by contract made directly between Matter and Mr Mrakas dated 7 January 2015.

5. [5]

   Those contracts contained promises by Mr Mrakas to use “Confidential Information” solely for the use of Matter and an assignment to Matter of all “Inventions” discovered by Mr Mrakas in the course of his employment and “Intellectual Property” associated with such “Inventions”. I will return to these provisions below.

6. [6]

   Mr Mrakas was a director of Matter from 16 December 2010 to 30 January 2018. Mr Mrakas’s wife, Ms Marie Taylor, was a director of Matter from 11 May 2017 until her resignation as director on 31 January 2018. Ms Taylor was also Chief Financial Officer and Chief Operations Officer of Matter from July 2010 until 29 January 2018.

7. [7]

   By 17 January 2018 Mr Barnes had formed the view that in circumstances surrounding the promotion by Mr Mrakas of “Project Platipus” (with an “i”), to which I will return, Mr Mrakas had engaged in breaches of his employment contract, his statutory duties as director and his equitable duties of confidence.

8. [8]

   Accordingly on 17 January 2018 the board of Matter (comprising Mr Barnes, with Ms Taylor abstaining) resolved that Mr Mrakas’s employment be terminated. On 30 January 2018 Mr Mrakas, by his attorney Mr Barnes, resigned as director.

9. [9]

   These proceedings concern the circumstances leading to these events.

10. [10]

    The evidence establishes overwhelmingly that Mr Mrakas has engaged in breaches of contract and duty such that his dismissal as an employee and forced resignation as a director are justified. Indeed by the conclusion of Mr Mrakas’s cross-examination, he virtually conceded as much. He agreed he had made “mistakes” and had “lost perspective”.

11. [11]

    Before turning to the events leading to January 2018 and the development of Project Platipus, I will briefly outline the nature of Matter’s business and the confidential information associated with it.

12. [12]

    Much of what follows is drawn, with gratitude, from the submissions of Mr Hutton who appeared for Matter.

The nature of Matter’s business

1. [13]

   In December 2008, Mr Barnes, Mr Mrakas and two others assigned to Matter intellectual property that they then owned in a smart energy business model that they had developed. That model was said to involve “a method to optimise the purchase and consumption of energy for small retail energy customers”.

2. [14]

   Matter’s business has since been funded by, amongst other things, an investment made by AGL Energy Ltd of $5 million in January 2015. AGL now holds 19.88% of the shares in Matter. Matter’s other major shareholders are companies associated with Mr Mrakas and Ms Taylor (together 19.74%), Mr Barnes (10.23%) and two private investors, Mr Greg Martin (11.77%) and Mr Ronald Langley (9.09%). Together these six entities own or control over 70% of the shares in Matter.

3. [15]

   The creation, protection and exploitation of intellectual property is an essential aspect of Matter’s business. Matter required its employees, including Mr Mrakas, to enter into standard form contracts with clear and widely drafted provisions for the assignment of any confidential information or intellectual property to Matter.

4. [16]

   Matter developed a number of business concepts relating to the installation, metering, billing and payment services for rooftop solar panels.

5. [17]

   The relevant concepts are “Project Vespa”, “Project Uno”, “Project Billabong” (which became known as “Project Platipus”) and “Project Eagle”. Project Platipus is at the heart of the dispute.

6. [18]

   Matter commenced working on Project Vespa in October 2014. Project Vespa is a service that is proposed to enable owners of solar panels to monetise their solar panel systems. It encourages the installation of new solar panel systems by providing software that will allow third parties to invest or “rent” solar panel systems located across the world.

7. [19]

   Matter commenced working on Project Uno in 2017. Project Uno is a proposed online trade matching and auction platform for the supply, installation and commissioning of solar panels.

8. [20]

   Ms Rawlings, who appeared for Mr Mrakas, submits that the “underlying information” to both Project Vespa and Project Uno is “now in the public domain…because of the prior disclosure by Mr Mrakas and the use of similar business concepts by third parties” and had thereby “lost the requisite quality of confidence”.

9. [21]

   However Ms Rawlings accepted that Project Platipus, although containing elements of both Projects Vespa and Uno, was not itself in the public domain.

10. [22]

    Accordingly, and this is common ground, it matters not so whether or not Projects Vespa and Uno themselves remained confidential to Matter.

The Employment Contracts

1. [23]

   The employment contracts between Matter and Mr Mrakas are dated 29 June 2010 and 7 January 2015.

2. [24]

   The 29 June 2010 contract is a services agreement between Matter and Netfusion in which Netfusion agreed to make Mr Mrakas available as a “key person”.

3. [25]

   Clause 13.2(b) of the contract provided that “Inventions” conceived of or developed by Mr Mrakas “in the course of or substantially in the course of [his] engagement with [Matter]” or “as a result of or aided by [his] engagement with [Matter]”, were automatically assigned to Matter.

4. [26]

   The 7 January 2015 employment contract has a provision in substantially the same terms.

5. [27]

   Under both agreements, Mr Mrakas’s employment could be terminated without notice for “serious misconduct”.

6. [28]

   The 29 June 2010 employment contract had an expiry date of 5 July 2014. The 7 January 2015 employment contract had a commencement date of 1 January 2015.

7. [29]

   In her opening submissions Ms Rawlings suggested that during the lacuna between 5 July 2014 and 31 December 2014 Mr Mrakas owed no duty to Matter “to act in good faith and fidelity”. That contention was only faintly maintained in final submissions. There is no substance to it. The evidence is overwhelming that during this period Mr Mrakas continued to act in his role as CEO of Matter in the same manner he had since the commencement of his employment. Mr Mrakas readily accepted during cross-examination that his conduct as CEO did not change as a result of the expiry date of the 29 June 2010 contract. It is also clear that the parties proceeded upon the basis that the assignment clause in the 29 June 2010 agreement continued to operate during the second half of 2010 and, in particular, operated to assign to Matter all rights in relation to Project Vespa.

8. [30]

   In any event, the point is now moot. That is because the point was only relevant to the question of who owned the intellectual property and confidential information in Project Vespa, which was developed during the lacuna. In his Commercial List Response, Mr Mrakas asserted that he, and not Matter, was the owner of that intellectual property and confidential information. That position was abandoned during the hearing. In closing submissions, Ms Rawlings accepted that Mr Mrakas had “effectively conceded that Matter IP owns Vespa”.

9. [31]

   In October 2017, Mr Barnes and Mr Mrakas agreed to investigate a buyout or trade sale arrangement with an established energy company which would, amongst other things, enable Matter to raise funds to commercialise products it had developed. The project was named “Project Eagle”.

Project Platipus

1. [32]

   Between late November 2017 and 19 December 2017, Mr Mrakas and other Matter employees worked on what became known as Project Platipus.

2. [33]

   On 30 November 2017 Mr Mrakas sent an email to Mr Barnes and others stating:

3. [34]

   In that email, Mr Mrakas made reference to an Initial Coin Offering, or ICO.

4. [35]

   ICOs are a relatively recent development in the cryptocurrency world. A useful summary of the nature of ICOs, which may assist an understanding of what follows, is contained in this extract from D Rountree, E Adams, S Meacher and A Cook, “A security by any other name: initial coin offerings and legal issues around blockchain fund raisings” (2017) 21(6) IHC 126:

5. [36]

   On 4 December 2017, Mr Mrakas briefed engineers employed by Matter in Melbourne about Project Billabong.

6. [37]

   On 7 December 2017, Mr Mrakas flew to Sydney to meet with Mr Barnes, amongst other people, and to present what he described as a “Project Billabong staff workshop”.

7. [38]

   Mr Mrakas claims during this visit, he spoke privately to Mr Barnes and said:

8. [39]

   Mr Mrakas says that, during this conversation, Mr Barnes said something to the effect:

9. [40]

   Mr Barnes denies that any of these matters were said on 7 December 2017.

10. [41]

    I think it unlikely they were.

11. [42]

    The next day, 8 December 2017, Mr Barnes sent a detailed email to Matter’s solicitor referring to the proposed ICO and raising a number of concerns that he had as to the legalities of the proposal.

12. [43]

    For example, Mr Barnes sought advice about the following matters:

13. [44]

    These enquiries, which were directed to the legalities of the proposed ICO, suggest that it is unlikely that, the previous day, Mr Barnes told Mr Mrakas that there was no need to be “concerned about legals” concerning Project Platipus.

14. [45]

    Mr Barnes also made no reference to any suggestion by Mr Mrakas that any work he did on the Platipus ICO would be his “own IP”. Nor did he refer to Mr Mrakas taking leave from Matter “to conduct the Platipus business”. It seems highly unlikely, in light of the other matters for which Mr Barnes sought advice, that he would not have mentioned these matters had they been raised the day before.

15. [46]

    A further email that Mr Barnes sent Matter’s solicitors on 18 December 2017 (see [58] below), confirms the unlikelihood of Mr Mrakas asserting ownership in any work done by him “on the Platipus ICO” on 7 December 2017.

The 18 December 2017 Discussion Paper and White Paper

1. [47]

   By 18 December 2017 a meeting of the board of Matter had been scheduled to take place at 10am on 19 December 2017.

2. [48]

   At around 3pm on 18 December 2017 Mr Mrakas sent to Mr Barnes and Ms Taylor a document called “Matter Discussion Paper on Platipus ICO”.

3. [49]

   The document stated:

4. [50]

   The document continued:

5. [51]

   Mr Mrakas sent a copy of the draft White Paper to Mr Barnes and Ms Taylor at around 6.30pm on 18 December 2017. To distinguish this document from a White Paper that Mr Mrakas published on the Platipus website on 9 January 2018, which I will call “the Final White Paper”, I will call this document “the Draft White Paper”.

6. [52]

   The Discussion Paper and the Draft White Paper stated that:

7. [53]

   Mr Mrakas also stated that Platipus was “highly confidential” and of “significant importance to the future of Matter and society”.

8. [54]

   Until the commencement of the hearing, Mr Mrakas continued to assert that he owned all the rights to the “Platipus concept”. He also asserted ownership over the copyright to the Draft White Paper, the Final White Paper and other associated documents that Mr Mrakas published on the Platipus website on 9 January 2018.

9. [55]

   Mr Mrakas abandoned both those positions during the hearing. He now accepts that Matter was the owner of all intellectual property and other rights concerning the “Platipus concept” and the owner of the copyright in the relevant documents.

10. [56]

    There was never any basis for Mr Mrakas to assert that he owned any “rights” or “copyright” concerning the Platipus proposal. The proposal was one that Mr Mrakas, along with other employees of Matter, had developed whilst an employee and the CEO of Matter.

11. [57]

    Further, by the terms of Mr Mrakas’s current employment agreement with Matter (that of 7 January 2015), and in any event as a matter of general law, any rights associated with the Platipus concept belonged to Matter; not to Mr Mrakas.

12. [58]

    Shortly after he received the Discussion Paper but before he received the Draft White Paper, Mr Barnes sent an email to Matter’s solicitors stating:

13. [59]

    That email suggests very strongly that Mr Barnes had not, prior to reading the Discussion Paper, heard of any suggestion by Mr Mrakas that Mr Mrakas “owns all rights to the Platipus concept”. I see this as a further reason to prefer Mr Barnes’s evidence to that of Mr Mrakas concerning the conversation Mr Mrakas claims he had with Mr Barnes on 7 December 2017.

The 19 December 2017 board meeting

1. [60]

   An issue arises as to whether Mr Mrakas obtained the fully informed consent of the board on 19 December 2017 to proceed with the pre-sale phase of the Platipus ICO, provided that he fund it himself.

2. [61]

   Ms Rawlings accepted that either Mr Mrakas had such authority or he did not, and that the outcome of this “binary decision” would determine whether Mr Mrakas:

3. [62]

   Ms Rawlings thus accepted that if the correct conclusion is that Mr Mrakas did not have “authority” from the board (by which I understand Ms Rawlings to refer to the informed consent of the board, and thus of Matter) Matter’s case against him was made out.

4. [63]

   Mr Mrakas’s proposal to the board was contained in the Discussion Paper and Draft White Paper circulated the night before the meeting. By the time of the meeting, Mr Barnes and Ms Taylor had read the Discussion Paper but had not read the Draft White Paper which was over 50 pages long and, as Mr Mrakas said in his email of 18 December 2017:

5. [64]

   The board minutes record, relevantly:

6. [65]

   There is no dispute that the board did not pass any resolution permitting Mr Mrakas to proceed with the Platipus project.

7. [66]

   Mr Barnes, Mr Mrakas and Ms Taylor have differing recollections as to what was said at the board meeting, although all agree that both Mr Barnes and Ms Taylor were adamant that Matter could not afford to contribute the $20,000 that Mr Mrakas proposed in the Discussion Paper (see [52(j)] above).

8. [67]

   Mr Barnes’s recollection was that the board meeting concluded with the following exchange:

9. [68]

   In his affidavit, Mr Mrakas said:

10. [69]

    In her affidavit, Ms Taylor did not say that she had said at the meeting “Chris, you need to fund it yourself” as Mr Mrakas stated. Ms Taylor also said she did not recall Mr Mrakas saying that “[m]aybe I will do the project on my own” (as Mr Barnes stated) but did recall Mr Mrakas saying “if Matter doesn’t do this and fails then I can buy its assets”.

11. [70]

    In cross-examination Ms Taylor gave this evidence:

12. [71]

    Thus Ms Taylor’s recollection of what Mr Mrakas said was to the same effect as Mr Barnes’s recollection.

13. [72]

    Ms Taylor agreed that she was adamant that Matter could not afford to contribute the $20,000 sought by Mr Mrakas for development expenses. She said that Mr Mrakas was angry with her because of the stand she took about that matter.

14. [73]

    It was in that context that Ms Taylor gave the following further evidence as to what she recalled Mr Mrakas had said at the meeting:

15. [74]

    Mr Barnes’s and Ms Taylor’s recollection of what Mr Mrakas said does suggest that Mr Mrakas asserted that he might proceed with Project Platipus himself; albeit, as Ms Taylor understood him, rhetorically (“there was absolutely no intention to do that”) and in angered frustration that his co-directors would not commit $20,000 of Matter’s funds to the project.

16. [75]

    But Mr Mrakas could not possibly have understood from what was said that he had the informed consent of the board “to do the project on my own”.

17. [76]

    His conduct after the meeting makes clear that he formed no such view.

Events after the board meeting

1. [77]

   Mr Mrakas had no doubt that the board had not approved the project.

2. [78]

   Within minutes of the end of the meeting Mr Mrakas sent an email to Mr Sheldon Dyer, the Head of Engineering at Matter:

3. [79]

   Although Mr Mrakas sought in cross-examination to suggest that the only decision made by the board on 19 December 2017 was to refuse his request for $20,000 for marketing costs, his email to Mr Dyer makes clear that he understood that the board had “not approved” the project at all.

4. [80]

   Thus, in the second paragraph of his email, Mr Mrakas suggested to Mr Dyer that there would be no need for the allocation of engineering resources to the project over the Christmas break. In effect Mr Mrakas told Mr Dyer to “down tools”.

5. [81]

   As I have mentioned, during the board meeting, Ms Taylor was adamant that Matter could not afford to spend the $20,000 that Mr Mrakas had sought for “marketing expenses”.

6. [82]

   Nonetheless during the evening on 19 December 2017 she sent an email to Mr Barnes:

The events of 20 December 2017

1. [83]

   On the morning of 20 December 2017, Mr Barnes sent Mr Mrakas and Ms Taylor and email saying that he would not be able to attend a meeting as his wife had been called urgently to hospital.

2. [84]

   He continued:

3. [85]

   Mr Barnes made himself perfectly clear. The proposal needed to be considered “properly”. For that to occur, Mr Barnes, as one of the directors, required the information he specified; especially “a legal review of Matter’s involvement and rights in relation to Platipus”. Until that information was to hand “we should not be proceeding”. Nothing further was to occur concerning Project Platipus until it was further considered by the board; and no earlier than 7 January 2018.

4. [86]

   Mr Mrakas understood that this was what Mr Barnes was saying.

5. [87]

   Thus he replied:

6. [88]

   This email is the best evidence of what Mr Mrakas understood to be the result of the 19 December 2017 meeting. He understood that his proposal had been “clearly rejected” with the result that there was “another opportunity lost” to Matter.

7. [89]

   Despite these matters, Mr Mrakas then decided to go it alone.

8. [90]

   In his affidavit he said:

9. [91]

   Contrary to this quite extraordinary evidence, it was not “clear” from what had been said at the 19 December 2017 board meeting that Mr Mrakas could, at his own cost, undertake the Platipus ICO. It appears that he asserted, in a rhetorical flourish, that this was something he might do. But he could not possibly have thought that he had board approval.

10. [92]

    Mr Barnes’s 20 December 2017 email makes this quite clear. Contrary to Mr Mrakas’s assertion, there was most certainly something “to discuss”.

11. [93]

    Mr Mrakas had no authority to proceed with Project Platipus. Nonetheless, as I discuss below, he purported to do so.

12. [94]

    As Ms Rawlings’s submissions accept, it follows that Mr Mrakas’s conduct thereafter was in breach of his contractual and statutory duties to Matter.

Work over the Christmas break

1. [95]

   Between 20 December 2017 and 9 January 2018 Mr Mrakas used Matter resources, including the time of Mr Dyer and other Matter employees, to develop:

2. [96]

   In the Objectives and Ambitions document Mr Mrakas repeated much of the material that was in the Draft White Paper including:

3. [97]

   In this document Mr Mrakas asserted that:

The pre-sale launch

1. [98]

   On 9 January 2018 Mr Mrakas launched the pre-sale stage of the Platipus ICO which involved him:

2. [99]

   Each of those documents bears the notice “© 2018 Chris Mrakas”.

3. [100]

   Evidently this was an attempt to invoke the prima facie presumption of copyright ownership in s 126B of the Copyright Act 1968 (Cth).

4. [101]

   However, before me, Ms Rawlings accepted that Matter, not Mr Mrakas, owned the copyright in each of the documents. In cross-examination Mr Mrakas accepted that it had been a “mistake” on his part to have asserted that he was the copyright owner.

5. [102]

   Mr Mrakas made no attempt to contact Mr Barnes during that time to let him know what he was proposing to do.

6. [103]

   Both Mr Mrakas and Ms Taylor, in cross-examination, attempted to justify not informing Mr Barnes of these matters by their professed tenderness for Mr Barnes’s privacy while on leave, and their apprehension that Mr Barnes would not have responded to attempts of contact over this period. I do not accept that evidence. Either one of them could have contacted Mr Barnes if they had wished to.

7. [104]

   In any event Mr Mrakas knew from Mr Barnes’s 20 December 2017 email that he was available to attend a further board meeting on 8 January 2018.

8. [105]

   I am satisfied that Mr Mrakas wished to keep his activities secret from Mr Barnes.

9. [106]

   On 9 January 2018 Mr Mrakas sent this email to Mr Barnes:

10. [107]

    This is the first Mr Barnes had heard of Mr Mrakas’s activities over the Christmas break.

11. [108]

    Although Mr Mrakas said he had launched the Platipus website “as a community project” he had, in substance, launched it as his own project but on the basis that the door remained “open” to Matter “to become a Strategic Partner” in that venture.

12. [109]

    By this point, Mr Mrakas had lost his way. He was hopelessly conflicted and oblivious to the contractual and statutory duties he owed to Matter as one of its directors and as its CEO.

13. [110]

    His email to Mr Barnes makes clear that he thought the Platipus project was his property that he could share with Matter, a company of which he was a director and the CEO, as he saw fit.

14. [111]

    In cross-examination he gave this evidence:

15. [112]

    And later:

16. [113]

    Mr Mrakas said that he realised he was mistaken “on re-reading my employment contract”, although he was not able to say when that occurred.

17. [114]

    Mr Mrakas then solicited investment in Platipus (by the purchase of tokens) from all of Matter’s major shareholders.

18. [115]

    In his emails, Mr Mrakas referred to Platipus as “my” project and “my idea” rather than Matter’s.

19. [116]

    For example, he emailed a link to the Platipus website (and thus the Final White Paper) to Mr Martin (an 11.77% shareholder; see [14] above) on 11 January 2018 with the words “happy New Year Greg…see my latest idea…let me know if you want to play”.

20. [117]

    On the same day he sent an email to Mr Langley (a 9.09% shareholder: see [14] above) in which he described, in positive terms, the progress of Project Eagle but then added:

21. [118]

    In cross-examination, Mr Mrakas said that he always thought that, ultimately, the Platipus ICO would require Matter’s board approval.

22. [119]

    His conduct during January 2018 is hard to reconcile with him genuinely holding that view.

23. [120]

    On 12 January 2018 Mr Mrakas caused the second defendant, Platipus Foundation Pty Ltd, to be incorporated. Mr Mrakas and Ms Taylor were the only two directors and shareholders of that company. Mr Barnes was not a shareholder or director.

24. [121]

    This suggests that Mr Mrakas was proposing, at least at that time, to proceed with Platipus without Matter board approval.

25. [122]

    Mr Mrakas also caused a bank account to be opened at Westpac Banking Corporation in the name of Platipus Foundation Pty Ltd.

26. [123]

    From about 12 January 2018:

27. [124]

    During cross-examination, I asked Mr Mrakas who he thought were the vendors of the tokens offered during the pre-sale phase of the proposed venture. Mr Mrakas suggested the vendor was “the computer” that processed the transactions. However, as the Platipus website directed subscribers for tokens either to pay cash into the Platipus Foundation Westpac account or deposit Litecoin into Mr Mrakas’s virtual wallet, it seems clear that the vendors of the tokens were either Platipus Foundation or Mr Mrakas himself.

28. [125]

    Mr Mrakas says he thought that the funds thus received were held by Platipus Foundation and him “in trust” but appeared to have little, if any, idea of how any such trust had been established or could be administered.

29. [126]

    In the result, the cash and Litecoin deposited to the Westpac account and Mr Mrakas’s virtual wallet were refunded. The pre-sale failed and the ICO did not proceed.

17 January 2018 board meeting

1. [127]

   On 17 January 2018 a meeting of directors of Matter took place. Only Mr Barnes and Ms Taylor attended. A resolution terminating Mr Mrakas’s employment was passed with Mr Barnes voting in favour and Ms Taylor abstaining. There is no suggestion that Ms Taylor played any role in conduct leading to the launch by Mr Mrakas of the Platipus proposal. There is thus no suggestion that Ms Taylor had any interest in the question of Mr Mrakas’s continued employment as CEO that would have disqualified her from participating in the 17 January 2018 meeting, had she chosen to do so.

2. [128]

   At the same meeting, Mr Barnes was appointed CEO of Matter.

3. [129]

   Ms Rawlings did not suggest in closing submissions that these resolutions were not effective to terminate Mr Mrakas’s employment with Matter. Indeed, she submitted that “the employment of Mr Mrakas was terminated by a resolution passed at a board Meeting on 17 January 2018”.

The purported 24 January 2018 board meeting

1. [130]

   On 24 January 2018, Mr Mrakas convened a purported board meeting with Ms Taylor at which resolutions purporting to reinstate him as CEO and terminating Mr Barnes’s employment with Matter were purportedly passed.

2. [131]

   In closing submissions, Ms Rawlings made some attempt to justify these purported resolutions.

3. [132]

   However, the purported resolutions were clearly retaliatory to the 17 January 2018 decision by Matter’s board to dismiss Mr Mrakas as CEO. Mr Mrakas had a material personal interest in the purported resolutions and by reason of Art 26.6 of Matter’s Constitution and s 195(1) of the Corporations Act, was not entitled to vote.

4. [133]

   Accordingly, no valid resolution was passed on 24 January 2019.

Ms Taylor and Mr Mrakas cease to be directors

1. [134]

   As I have mentioned, on 31 January 2018 Ms Taylor resigned as a director of Matter.

2. [135]

   Clauses 14.7 and 14.8 of the 7 January 2015 employment agreement between Matter and Mr Mrakas provide:

3. [136]

   On 30 January 2018 Mr Barnes was the CEO of Matter. On that date, as Mr Mrakas’s attorney, he caused Mr Mrakas to resign as director of Matter.

Mr Mrakas remained unrepentant

1. [137]

   On 31 January 2018 Mr Mrakas instructed his solicitors to send this email to Matter’s solicitors:

2. [138]

   Each of the propositions in pars 1, 2, 5, 7, and 8 of that letter was abandoned before me.

Mr Mrakas’ breaches of contract and duty

1. [139]

   In those circumstances, my conclusion is that Mr Mrakas has breached his employment agreement, ss 182 and 183 of the Corporations Act and his equitable duty of confidence.

2. [140]

   Clause 7.1 of the 7 January 2015 employment contract between Mr Mrakas and Matter required that Mr Mrakas “act honestly and always in the interest of [Matter]” and to “professionally, faithfully and diligently perform the duties and exercise the powers consistent with [being CEO of Matter]” and to “promote the interests of the Group”.

3. [141]

   In any event it was an implied term of Mr Mrakas’s employment as a CEO of Matter that he render faithful and loyal service to Matter, and avoid conduct incompatible with the continual relationship of trust and confidence between them: Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21 at 372; Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66; [1933] HCA 8 at 81-82.

4. [142]

   Further cll 12.2(a), 12.6, 13.1 and 13.2 of the 7 January 2015 employment contract imposed on Mr Mrakas an obligation not to infringe Matter’s “intellectual property rights”, to use “confidential information solely for the benefit of and as directed by [Matter]”, and not to use confidential information for personal gain.

5. [143]

   Further, by ss 182 and 183 of the Corporations Act Mr Mrakas was obliged not improperly to use his position as a director or employee to gain an advantage for himself or to cause detriment to Matter, and not improperly to use information obtained from his position as a director or employee to gain advantage for himself or to cause detriment to Matter.

6. [144]

   Further, Mr Mrakas owed Matter equitable obligations of confidence in respect of the concepts and documents comprising Projects Vespa, Uno and Billabong/Platipus.

7. [145]

   Further, as Mr Mrakas now accepts, Matter was the owner of the copyright in the Final White Paper, the Objectives and Ambitions document and in the Platipus Explainer document.

8. [146]

   Adopting, again with gratitude, the summary set out in Mr Hutton’s final submissions, and including some details of Mr Mrakas’s proposal in the ICO that I have not set out earlier, I find Mr Mrakas has breached each of these obligations by:

   1. (1)

      making, and maintaining until trial, the unjustified assertion that the Platipus concept and the Platipus project were owned by him personally rather than Matter;

   2. (2)

      making, and maintaining until trial, the equally unjustified assertion that he was the owner of the copyright in the Final White Paper, the Objectives and Ambitions document and the Platipus Explainer document;

   3. (3)

      directing employees of Matter to continue to work on the Platipus project over the Christmas break after the board had declined to approve it, in circumstances where Mr Mrakas understood the board to have “clearly rejected” it (see [87] above) and after Mr Barnes raised numerous and well-founded objections to proceeding with it without further consideration and review (see [84] above);

   4. (4)

      concealing from Mr Barnes that he was working on the Project Platipus notwithstanding Mr Barnes's stated objections;

   5. (5)

      on 9 January 2018 launching the pre-sale stage of the Platipus ICO, which involved him:

Serious misconduct

1. [147]

   In these circumstances, I am also satisfied that Mr Mrakas has engaged in “serious misconduct” for the purposes of the 7 January 2015 employment contract.

2. [148]

   In order that conduct be “serious misconduct” it must “be of a serious nature”, involve “a repudiation of the essential obligations under the contract” or be “repugnant to the relationship of employee and employer”: see Rankin v Marine Power International Pty Ltd [2001] VSC 150 at [250] (Gillard J) and see generally Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37 at [139]-[140].

3. [149]

   In my opinion, Mr Mrakas’s conduct was a repudiation of his obligations to Matter as its CEO and was repugnant to that relationship.

Mr Mrakas’s cross-claim

1. [150]

   By his cross-claim Mr Mrakas asserted that his employment had been wrongly terminated and sought payment in lieu of the three month’s written notice required by cl 14.1 of the 7 January 2015 employment contract.

2. [151]

   I have concluded that Mr Mrakas engaged in serious misconduct. Accordingly Matter was entitled to terminate his employment under cl 14.2 without notice.

3. [152]

   It follows that Mr Mrakas is not entitled to payment in lieu of notice.

4. [153]

   Mr Mrakas also claimed some $6,000 being the amount that he claimed he paid in respect of the ICO pre-sale.

5. [154]

   There are two reasons why Mr Mrakas is not entitled to this sum.

6. [155]

   First, the amount was expended by Mr Mrakas at a time when he was engaging in serious misconduct under the 7 January 2015 employment contract.

7. [156]

   Second, there is no evidence that Matter obtained any benefit from the payments. The overwhelming probability is that it did not.

Relief

1. [157]

   I will now receive submissions as to the relief that should be granted to Matter in light of these reasons, including any relief that should be granted against Platipus Foundation.