Advanced Fuels Technology Pty Ltd v Blythe

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST

S CI 2015 05119

ADVANCED FUELS TECHNOLOGY PTY LTD

(ACN 079 473 699)

Plaintiff

SEAN DARRELL BLYTHE & ORS
(According to the attached schedule)

Defendants

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JUDGE:	Macaulay J
WHERE HELD:	Melbourne
DATE OF HEARING:	24, 26- 28 April 2017 &, 1- 4 & 9- 11 May 2017
DATE OF JUDGMENT:	30 May 2018
CASE MAY BE CITED AS:	Advanced Fuels Technology v Blythe & Ors
MEDIUM NEUTRAL CITATION:	[2018] VSC 286

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EQUITY – Fiduciary duty – Whether a former company director misused his position by usurping maturing business opportunities for himself and related entities – Effect and circumstances of resignation – Scope of fiduciary obligations that survive termination of fiduciary office – Factors to be considered – Chan v Zacharia (1984) 154 CLR 178, applied – Canadian Aero Service Limited v O’Malley [1974] RCS 592, applied – Courtney Polymers v Deang [2005] VSC 318, applied – No breach of fiduciary duty – No dishonest and fraudulent design.

CORPORATIONS – Statutory duties of directors, other officers and employees – Whether an employee sending to himself a mixed list of business and personal contacts constitutes a misuse of confidential information - Whether a mixed list of personal and business contacts developed by an employee in the course of his employment possessed the necessary quality of confidence – Del Casale & Ors v Artedomus (Aust) Pty Ltd [2007] NSWCA 172, applied – No contravention – Whether an employee retaining company documents and later using them in an unrelated business venture contravened any statutory obligation – Contravention established – Corporations Act 2001 (Cth), ss 181, 182 and 183.

EVIDENCE – Inferences – Where defendants elected not to lead any evidence at trial – Distinction between an inference that may help to reach a finding that is open on the evidence and one that is sought to be used to resolve pure conjecture – Jones v Dunkel (1959) 101 CLR 298, applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr I Percy	McKean Park
For the First, Third, Fourth and Fifth Defendants	Mr C Northrop	Harwood Andrews
For the Second Defendant	Mr A Schlicht	Metaxas & Hager

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Issues.................................................................................................................................................... 4

Mr Blythe........................................................................................................................................ 4
Mr Wilson....................................................................................................................................... 5
Dishonest or fraudulent design.................................................................................................. 5
Damages or other relief................................................................................................................ 6
Core principles.............................................................................................................................. 6

Background......................................................................................................................................... 9

Incorporation of AFT and its shareholders............................................................................... 9
General nature of AFT’s business............................................................................................. 10
February 2011 meeting............................................................................................................... 12
Tension develops over the Altona station.............................................................................. 22
Mr Blythe’s offer to buy Mrs Thompson’s shares.................................................................. 28
Negotiations through solicitors................................................................................................ 31
Two final meetings and Mr Blythe’s resignation................................................................... 38
Mr Wilson..................................................................................................................................... 43

Nature of employment and duties owed (Blythe and Wilson)................................................ 44

Retention or misuse of confidential information (Blythe and Wilson)................................. 45

Computers.................................................................................................................................... 46
SkyDrive....................................................................................................................................... 54
Contact details............................................................................................................................. 58

The eight businesses....................................................................................................................... 62

ATCO Structures......................................................................................................................... 63
Tas Gas.......................................................................................................................................... 69
Coca-Cola Amatil........................................................................................................................ 76
Brookfield Cogen (Energy for the Regions)............................................................................ 81
Brookfield…

CaseChat Overview and Summary

Advanced Fuels Technology Pty Ltd initiated legal proceedings against Blythe, a former director of the company, alleging misuse of his position by usurping business opportunities for personal gain. The case was heard in the Supreme Court of Victoria. The primary issues for the court to determine were whether Blythe had breached his fiduciary duties by exploiting company opportunities for himself and related entities and whether he had misused confidential information by retaining and using company documents in an unrelated business venture.

The court examined the nature and scope of fiduciary duties that persist post-termination of a director’s office, referencing cases such as Chan v Zacharia and Canadian Aero Service Limited v O’Malley. It found that Blythe's conduct did not involve any dishonest or fraudulent intent, thus ruling that there was no breach of fiduciary duty. In relation to the misuse of confidential information, the court considered whether a list of business and personal contacts compiled by Blythe during his employment qualified as confidential information. Applying principles from Del Casale & Ors v Artedomus (Aust) Pty Ltd, the court concluded that the list did not possess the requisite quality of confidence. However, it was determined that Blythe contravened statutory obligations under the Corporations Act by retaining and using company documents in his subsequent business ventures.

The court held that Blythe was not liable for breaching fiduciary duties but was liable for contravening statutory obligations under the Corporations Act. The defendants' decision not to present evidence was considered, and the court drew a distinction between permissible inferences and those that would merely speculate, in line with the principles from Jones v Dunkel.

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CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established