Agriwealth Pty Ltd v Gordon

[2016] NSWSC 824

Supreme Court

New South Wales

Medium Neutral Citation:	Agriwealth Pty Ltd v Gordon [2016] NSWSC 824
Hearing dates:	22 April 2016
Decision date:	22 June 2016
Jurisdiction:	Equity
Before:	Robb J
Decision:	See pars 28 and 29
Catchwords:	PRACTICE AND PROCEDURE – joinder application – plaintiffs bring application for joinder of third party and for leave to amend statement of claim to make claim against third party – plaintiffs assert that if their claim against the defendant fails they will be entitled to succeed in the alternative against third party – plaintiffs assert they only became aware of alternative claim by reason of assertions made in recent affidavit of defendant – whether there is sufficient factual overlap between the claim against the defendant in the statement of claim and the proposed claim against the third party to justify the making of the orders sought so that the two claims will be heard in the same proceeding – HELD current lack of specificity in the identification of the factual overlap between the two claims precludes orders sought being made at this time – invitation to plaintiffs to provide further and better particulars or evidence to make good their assertion that the degree of factual overlap between the two claims warrants them being determined in the one proceeding – no issue of principle
Legislation Cited:	Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Category:	Procedural and other rulings
Parties:	Agriwealth Pty Ltd (first plaintiff/first applicant) Agriwealth Management Pty Ltd (second plaintiff/second applicant) Malcom Gordon (defendant/respondent)
Representation:	Counsel: J M Ireland (plaintiffs/applicants) A Vernier (defendant/respondent)   Solicitors: McGirr Lawyers (plaintiffs/applicant) Bateman Legal Pty Ltd (defendant/respondent)
File Number(s):	2015/58580
Publication restriction:	None

Judgment

1. The court is concerned with a notice of motion filed by the plaintiffs, Agriwealth Pty Ltd and Agriwealth Management Pty Ltd (collectively “Agriwealth”), on 12 February 2016.

2. By their notice of motion, Agriwealth seek the following relief:

1.   That the plaintiffs have leave to join Christopher Kinsella as second defendant in the proceedings.

2.   That the plaintiffs have leave to amend their statement of claim in terms of the document which is annexure “A” to the affidavit of Paul McGirr sworn 12 February 2016.

3.   Directions for the further conduct of the proceedings.

3. The application was heard in the Applications List on 22 April 2016, but judgment could not be given on that day.

4. Agriwealth’s statement of claim was filed on 25 February 2015. The sole defendant is Mr Malcolm Gordon. In essence, Agriwealth plead that, between May 2006 and September 2008, Mr Gordon was employed by the first plaintiff as its general manager and as general manager of the Agriwealth group of companies. Agriwealth allege that, in his capacity as general manager, Mr Gordon acquired knowledge of Agriwealth’s confidential information. Agriwealth allege that, in breach of Mr Gordon’s contractual and equitable duties of confidence, he made copies of confidential information, removed confidential information from Agriwealth’s office, and, in particular, “provided copies of documents containing the Plaintiffs’ Confidential Information to David and Carmen Findlay or alternatively to their solicitors Maddocks Lawyers”. Agriwealth seek declarations and orders to protect their confidential information, as well as equitable compensation and damages.

5. Agriwealth wish to allege, by their amended statement of claim, that Mr Gordon provided their confidential information to Mr Kinsella, as well as to David and Carmen Findlay or Maddocks Lawyers. They wish to allege that Mr Kinsella made copies of their confidential information, provided that information to Maddocks Lawyers, and provided that information to the Australian Taxation Office (ATO), in each case knowing that the information was the confidential information of Agriwealth. Agriwealth wish to allege that they have suffered loss and damage as a result of the disclosure of their confidential information.

6. The pleadings have closed, and the parties have served the substantive affidavits in chief in the proceedings. Agriwealth have not yet served their evidence in reply. The case has not yet been set down for trial.

7. Agriwealth say that the present motion to amend the statement of claim is prompted by admissions made by Mr Gordon on affidavit that he made available certain business documents to Mr Kinsella. Agriwealth apply under the Uniform Civil Procedure Rules 2005 (NSW) r 6.24, when read with r 19.2. They say that the guiding principle is found in s 64(2) of the Civil Procedure Act 2005 (NSW), which provides that all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any error or defect in the proceedings and avoiding a multiplicity of proceedings.

8. Section 64(2) of the Civil Procedure Act is expressly made subject to the application of s 58 of the same Act, which requires the court to act in accordance with the dictates of justice, which in turn, among other things, requires the court to have regard to the provisions of ss 56 and 57 of the Civil Procedure Act.

9. Agriwealth say that aspects of the confidential information acquired by Mr Gordon were used detrimentally to Agriwealth in two principal ways. First, in 2013, Mr and Mrs Findlay, who were minority shareholders in the Agriwealth group, and who were represented by a legal firm at which Mr Kinsella worked, launched proceedings in the Federal Court of Australia against Agriwealth and other parties. Agriwealth’s confidential documents found their way into the hands of Maddocks Lawyers, the legal firm acting for the Findlays, and were referred to and used for the purposes of those proceedings. The information included at least one letter containing sensitive commercial material which had been addressed directly to Mr Gordon and received by him while working for the Agriwealth group.

10. Secondly, material to which Mr Gordon had access whilst working for Agriwealth found its way into the hands of the ATO, which had the function of giving annual rulings upon the forestry projects that Agriwealth marketed from 2006 onwards.

11. Agriwealth say that they were entirely unaware until 2013, at the earliest, that these disclosures of their confidential information had occurred.

12. Agriwealth also say that they were prompted to make the present application by Mr Gordon’s denials raised in his 23 December 2015 affidavit. Essentially, Mr Gordon said words to the effect that he gave nothing directly to the Findlays or, by inference, the ATO, and revealed in detail, for the first time, the extent of the material that he took with him after the termination of his employment with Agriwealth, which he retains to this day. Further, say Agriwealth, Mr Gordon has admitted in his affidavit that he gave some documents sourced from Agriwealth’s offices to Mr Kinsella, who was closely connected with the Findlays’ solicitors.

13. Agriwealth tendered on the application a number of paragraphs of Mr Gordon’s 23 December 2015 affidavit, which are listed in Exhibit A. (I have read the reference to par 111 as being a typographical error for 121, by reason of the numerical context of the paragraphs listed, and the contents of the comment). There is a detailed list, in par 112, of further information that Mr Gordon admits that he copied. In par 152, Mr Gordon admits that he provided a copy of what he describes as “the Aspiring Documents” to Mr Kinsella. He says that he did so on instruction from his wife, Kirsty. In par 155, Mr Gordon gives evidence that suggests that he knew that Mr Kinsella was intending to sue Mr Jones of Agriwealth when he gave Mr Kinsella the documents.

14. I find that the level of detail in the evidence tendered by Agriwealth on the application is not sufficient to link any particular documents that Mr Gordon admits that he retained after the cessation of his employment by Agriwealth, which he accepts he provided to Mr Kinsella on the one hand, with the documents used in the Federal Court proceedings, or which were given to the ATO, on the other.

15. The draft amended statement of claim does not contain particulars that identify clearly the documents that Agriwealth allege were provided to the Findlays or to the ATO, so that it is not possible to match the evidence given by Mr Gordon in his affidavit concerning the documents that he gave to Mr Kinsella, with the documents that were alleged to have been given to the Findlays or to the ATO.

16. In response, Mr Gordon read a number of additional paragraphs of his 23 December 2015 affidavit, which are not listed in Exhibit A; being pars 62 to 69, 71 to 75, and 163. Agriwealth tendered par 61, but when pars 62 to 66 are added, the evidence supports the conclusion that Agriwealth gave the Aspiring Documents to Mr Gordon to give to his wife, on a basis that would take those documents outside the ambit of the confidential information of Agriwealth.

17. Mr Gordon also read an affidavit of Clare Diane Bateman, who is the solicitor for Mr Gordon, sworn 24 February 2016. Ms Bateman annexed a letter dated 18 November 2013 from Agriwealth’s former solicitors to the former solicitors for Mr Gordon, which referred to alleged admissions made by Mr Gordon in a discussion between Mr Gordon and Mr Jones of Agriwealth on 30 October 2013. The letter says:

In particular, those admissions were that your client had breached his obligation to keep, maintain and not disclose Confidential Information and that, in breach of that contractual duty (and equitable duties), he disclosed Confidential Information, including documents to Mr Timothy Atkin and Mr Chris Kinsella of Maddocks.

18. This letter suggests that Agriwealth were aware that Mr Gordon had disclosed the confidential information of Agriwealth to Mr Kinsella from no later than 30 October 2013. Presumably, Mr Jones understood whatever it is that Mr Gordon is alleged to have admitted to him. The letter does not identify the documents that were the subject of the alleged admission with any clarity.

19. Mr Gordon resists Agriwealth’s application on the ground that the matter is ready to receive a hearing date. That may be not quite true, if there is evidence of Agriwealth in reply outstanding. Agriwealth has not asserted positively whether there will be evidence in reply, or identified its nature.

20. Mr Gordon also submits that Agriwealth have failed to comply on time with any direction made by the court. It appears from the court’s records of proceedings that a Registrar made standard directions on 25 March 2015 for the preparation of the matter for hearing, starting with a direction that Agriwealth respond to Mr Gordon’s request for particulars of the statement of claim by 27 March 2015. Almost identical directions were made by the Registrar on 10 June 2015 once again, including that the particulars be supplied by 17 June 2015. The court had made directions that Agriwealth file their affidavits in chief by 1 May 2015, and this direction was first extended to 8 July 2015 and then, on 2 September 2015, to 30 September 2015. That direction was apparently complied with by 16 December 2015, as on that date, a Registrar directed Mr Gordon to serve his affidavits by 23 December 2015. Mr Gordon complied with that direction. While the reasons for Agriwealth’s earlier non-compliance with directions are unknown, and such failures are always unsatisfactory, it does not appear to me that Agriwealth’s dilatoriness is sufficient to disentitle them to the relief they seek on this application, if they are otherwise entitled to that relief.

21. Mr Gordon puts a more telling argument that there is no evidence that he has provided Agriwealth’s confidential information to third parties; and in particular, the evidence in his own affidavit that is before the court on this application is that he provided copies of documents belonging to his wife, which did not fall within the ambit of Agriwealth’s confidential information, to Mr Kinsella.

22. There is force in that argument, insofar as it is based upon the concessions made by Mr Gordon in his affidavit.

23. The essence of Agriwealth’s argument in support of its application to join Mr Kinsella to the proceedings, and to make the necessary amendments to its statement of claim, is that, by his 23 December 2015 affidavit, Mr Gordon has denied that he disclosed any confidential information of Agriwealth to the Findlays, or to the ATO, but that he did admit that he provided such information to Mr Kinsella, in circumstances that Mr Kinsella may have forwarded that information to the Findlays and the ATO, if Mr Gordon did not do so directly.

24. If Agriwealth could make out that argument, at least sufficiently to have made it proper for Agriwealth to plead that claim against Mr Gordon, and Mr Kinsella in the alternative, in the original statement of claim, I would have been inclined to grant the relief sought in Agriwealth’s notice of motion. The reason would be that there would be sufficient factual overlap between the two claims to justify the claims being pursued in the same proceedings. Assuming the absence of any limitation problem (the contrary of which has not been suggested by Mr Gordon), Agriwealth would be entitled to commence new proceedings against Mr Kinsella, and there is a strong appearance that it would be appropriate for the court to determine both claims at the same time. Additionally, if the claims were not pursued in the one proceedings, there would be a real risk of inconsistent findings being made in respect of each claim.

25. However, for the argument to be made good it requires some specificity, starting with an identification of the documents that Agriwealth alleges were given to the Findlays and to the ATO, as well as an identification by Agriwealth of the documents that it alleges were held by Mr Gordon, and then given to Mr Kinsella.

26. This consideration is made more significant by the fact that, taking the parts of Mr Gordon’s affidavit that have been put before the court on this application, there is some evidence that both Mr Kinsella and Mr Findlay had a significant association with Agriwealth, which gives rise to the possibility in principle that they could have had access to Agriwealth’s confidential information, in a manner that was not dependent upon receiving any of that information from Mr Gordon: see pars 55, 118 and 128 of the affidavit.

27. I infer from my discussion of the procedural history of the proceedings above, that Agriwealth have provided particulars of the statement of claim to Mr Gordon. If so, those particulars are not in evidence on the present application.

28. On the present state of the evidence, I am not satisfied that Agriwealth have made out their case that there is the overlap, so to speak, between the claims that Agriwealth wish to make against Mr Gordon and Mr Kinsella to justify the court making the orders sought in the notice of motion. That is because, if there is no properly pleaded claim that Mr Gordon was in possession of identified documents, which he gave to Mr Kinsella, and which were the documents provided to the Findlays and the ATO, there would be insufficient justification for the court to permit Agriwealth to join Mr Kinsella at this late stage in the present proceedings, and given the contents of the letter referred to in [17] above.

29. I will not, however, dismiss Agriwealth’s notice of motion at this stage. When I deliver these reasons for judgment, I will give Agriwealth an opportunity to consider whether, by means of the provision of additional particulars, evidence or submissions, they can make good their contention that their claims against Mr Gordon and Mr Kinsella ought properly be determined in the one proceedings; and will make appropriate directions. I have decided to take that course because, if the necessary overlap, as I have described it, can properly be alleged on the pleadings, I would be of the positive view that the claims ought to be determined in the one proceeding.

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Decision last updated: 23 June 2016