All K9 Industrial Security Pty Ltd v Turner - [2015] WASC 266

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ALL K9 INDUSTRIAL SECURITY PTY LTD -v- TURNER [2015] WASC 266

CORAM: CHANEY J

HEARD: 27 & 28 JANUARY 2015

DELIVERED : 24 JULY 2015

FILE NO/S: CIV 2807 of 2013

BETWEEN: ALL K9 INDUSTRIAL SECURITY PTY LTD
Plaintiff
AND
DAVID WILSON BRIAN TURNER
First Defendant
FORESIGHT SECURITY PLANNING PTY LTD
Second Defendant

Catchwords:

Fiduciary duties - Opportunity to obtain benefit of contract - Fully informed consent - Turns on own facts

Legislation:

Nil

Result:

Action dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr M D Cuerden SC
First Defendant            :     In person
Second Defendant        :     No appearance

Solicitors:

Plaintiff:     Macdonald Rudder
First Defendant            :     In person
Second Defendant        :     No appearance

Case(s) referred to in judgment(s):

Green and Clara Pty Ltd v Bestobell Industries Pty Ltd (1982) WAR 1
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449
Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17; (2011) 278 ALR 291

CHANEY J: The plaintiff, All K9 Industrial Security Pty Ltd (All K9) carried on, at all times relevant to these proceedings, a business of providing security services including the provision of security guards and guard dogs. It traded under the name 'Adopt Security and Training' (ADOPT). The first defendant, Mr David Turner, at all relevant times carried on business as a provider of security advice and services trading under the name Foresight Security Planning. In November 2011, the second defendant (FSP) was incorporated with Mr Turner as the sole director, company secretary and shareholder of the company. These proceedings concern a claim by the plaintiff for an account of profits said to have been made by Mr Turner and FSP as a result of what is alleged to have been a breach of fiduciary duties owed to the plaintiff by each of the first and second defendants.

The background

Mr Dennis Gallacher is the sole director of All K9. He is a breeder of dogs used mainly for police, military and security purposes.
In October 2010, Mr Gallacher was introduced to Mr Turner.
Mr Turner had worked in the security industry for 14 years after leaving the Australian Army in 2000. After leaving the army, Mr Turner became involved in various activities related to security risk management and provided advice on those matters to various organisations.
Mr Gallacher and Mr Turner were introduced by a mutual business acquaintance. Mr Gallacher had also been in military service with the British Army. It is apparent that that common connection provided a source of the relationship between them which subsequently developed. According to Mr Turner, he considered Mr Gallacher as someone in need of assistance with his business, and, because of their previous military connection, Mr Turner wished to provide that assistance to him. For Mr Gallacher's part, he considered that Mr Turner appeared to have a better understanding than Mr Gallacher of regulatory and business requirements for running a security business, an advantage which Mr Turner also undoubtedly considered that he had. From October 2010 till around the middle of 2011, Mr Turner and Mr Gallacher had many communications in relation to the development of Mr Gallacher's business and an ongoing relationship between Mr Gallacher and Mr Turner and the entities associated with them. Ultimately, those communications led to the transactions which form the subject matter of these proceedings.
Although this action originally involved questions surrounding provision of security services at the Fiona Stanley Hospital (FSH) and the Midland Hospital, the claim in relation to the Midland Hospital was abandoned shortly before trial. A claim based upon a profit sharing agreement said to have been made between Mr Turner and Mr Gallacher was also abandoned shortly before trial. The remaining claim concerns an account of profits in relation to a contract entered into by FSP with Brookfield Multiplex FSH Contractor Pty Ltd (BMX) for the provision of security services at the FSH construction site.
In order to consider the plaintiff's claim, it is necessary to examine in detail the course of events which led to the making of the BMX contract and its subsequent performance.

The initial dealings

Mr Turner said that he spent approximately 500 hours between November 2010 and February 2011 endeavouring to develop strategies for the plaintiff, motivated by his desire to assist Mr Gallacher, for which he received no remuneration.
On 29 October 2010, Mr Turner sent Mr Gallacher a document entitled 'Strategy Brief'. The covering email described the document as 'a brief outline of the proposed ADOPT/FSP plan'. The enclosed document commences 'Strategy brief: ADOPT + Foresight Security Planning ‑ Working together'. It refers to 'ADOPT/FSP' having the 'opportunity to increase turnover, expand [its] current workforce, and win more contracts in today's security market'. The document then canvasses a range of suggestions for business development. Generally the suggestions were couched in terms of what 'we' might do. It concludes:
Dennis, I can work with you and Paul to manage every area of this brief.
Mr Gallacher described that document as 'Mr Turner's idea as to how I could build my business'.
On 19 November 2010, Mr Turner sent an email to Mr Gallacher enclosing a draft agreement for a 'working partnership' between FSP and ADOPT. The document proposed a six month arrangement for sharing profits in relation to new work introduced by either party. The document was apparently prepared in light of an impending prospect of work being referred by an organisation known as the 'Corps de Commissionaires'. That work did not ultimately eventuate, and the draft agreement does not appear ever to have been concluded.
Although Mr Turner maintained that the work which he did between October 2010 and February 2011 was undertaken solely to assist Mr Gallacher in his business, I find that Mr Turner was also motivated by a desire to develop his own business. Mr Turner accepted in cross‑examination that FSP's business at that time was limited to 'ad hoc' work comprising 'maybe two or three little risk assessments' per month and that Mr Gallacher had 'a big client base'.[1] It is clear from the documents referred to above that Mr Turner had in mind applying his expertise to Mr Gallacher's business for their mutual benefit.
[1] ts 108.

Mr Turner's consultancy

In February 2011, Mr Turner and Mr Gallacher met at Mr Gallacher's home. They agreed that Mr Turner should act as a consultant to ADOPT, and agreed that Mr Turner would be paid $2,000 per month for that work. On 22 February 2011, FSP rendered an invoice for what were described as 'various GM duties' for one month in the sum of $2,000. He continued to render monthly accounts on that basis until June 2011 when he ceased doing so in circumstances which will be dealt with below.
The terms of the 'consultancy' were not reduced to writing. Mr Gallacher's evidence was simply that Mr Turner said 'he could act as a consultant to me to better my business'.[2] Mr Turner agreed in cross‑examination that he agreed to 'provide assistance and training and advice' in consideration for the payment of the monthly fee.[3]
[2] Exhibit 3 [14].
[3] ts 112.

The introduction to BMX

In March 2011, Mr Gallacher was introduced by a friend to Mr Pat Joyce who was working for a company selling signage at the FSH building site. According to Mr Gallacher, Mr Joyce told him that he had previously worked as a dog handler in the police.
On 26 March 2011, Mr Gallacher emailed Mr Turner advising of a telephone conversation he had just had with Mr Joyce in which Mr Joyce mentioned the possibility of introducing Mr Gallacher to 'someone who has very valuable equipment in a large complex and needs high end guards for a two year contract'. The email concluded that '[h]e wants to have a chat with us next week'. Mr Joyce subsequently told Mr Gallacher that the person concerned was a Mr David Callcott of BMX, who were the contract builders for the FSH building site. Mr Joyce told Mr Gallacher that the then current security providers were not performing very well, that BMX were interested in an 'add‑on K9 component' (meaning guard dogs) at the FSH construction site, and that Mr Joyce would arrange a meeting onsite with Mr Callcott.
Eventually a meeting was arranged for 11 April 2011. It is apparent from the string of emails preceding that meeting that Mr Gallacher, Mr Joyce and Mr Turner all intended attending the meeting with Mr Callcott. Reference was made in those exchanges of emails to having a preliminary meeting between Mr Joyce, Mr Gallacher and Mr Turner, which Mr Turner agreed was in order to 'discuss the opportunity'.[4]
[4] ts 118.
There is little evidence as to what transpired at the meeting of 11 April. Mr Gallacher did not address that meeting in detail in evidence, and was not cross‑examined in relation to it. Mr Turner gave no evidence‑in‑chief in relation to that meeting, and in cross‑examination said that he had little recollection of the meeting other than that there was some discussion of an interim arrangement for security as a result of problems that BMX had encountered with its existing contractor on site.
On 3 May 2011, Mr Gallacher emailed Mr Turner asking the latter to call him because he wanted to 'push on with' the FSH proposal. Mr Turner said that he responded to that request and that Mr Gallacher told him that he really needed the work and that Mr Turner was 'the only one who could make that happen'.[5]
[5] Exhibit 6 [11].
On 6 May 2011, Mr Hudson Lun of BMX emailed Deborah Simpson, the office manager for ADOPT. He asked that someone contact him to arrange a meeting at the FSH construction site 'to discuss a 3 year 24/7 security opportunity inclusive of guards, dogs and mobile patrols'.
In the meantime, Mr Turner had been having discussions, from sometime around March 2011, with Mr Justin Long, whom Mr Turner described as 'a security head hunter '. Those discussions related to a 'more advanced security technology idea' that Mr Long's client, XStream Security Solutions (XStream) was developing at its Kewdale base. Mr Turner described XStream as a company which had been operating for a few years developing a mobile electronic security monitoring system. He said that by May 2011, XStream was looking to move from research and development into getting its products onto sites, and in particular 'high end, high risk' sites such as construction sites. The discussions with Mr Long led to Mr Turner becoming a fulltime employee of XStream commencing in that position on 16 May 2011.
On 11 May 2011, Mr Turner advised Mr Gallacher that he had accepted a role with XStream. Mr Turner, who was aware that Mr Gallacher was shortly due to travel overseas, advised that he would be able to continue to assist All K9 with various matters, including working with Deborah Simpson and another employee of All K9 to assist in putting a plan together for the FSH proposal. He described the assistance he would provide as 'purely advice and support as a helping hand'.
On 12 May 2011, Mr Gallacher, Mr Turner and possibly Mr Joyce attended a meeting with Mr Callcott of BMX. Mr Callcott attended on BMX's behalf in place of Mr Lun who was apparently unavailable. At that meeting, Mr Callcott expressed dissatisfaction with the then existing security provider's performance and indicated that BMX were considering terminating that provider's contract. There was discussion at the meeting as to what Mr Turner described as 'an emergency stop gap measure' which consisted of ADOPT bringing guards and dogs onto site to complement the work of the existing security provider. Mr Gallacher said that, at one point during the meeting, Mr Callcott said words to the effect that 'if you do a good job with the [a]dd‑on you stand a decent chance of getting the main contract', which Mr Gallacher understood to be a reference to the three year contract mentioned by Mr Lun in his email of 6 May 2011. In cross‑examination, Mr Turner agreed that words to that effect were said.

Proposal for FSH contract

Mr Turner and Mr Joyce then compiled a proposal for the FSH security work which was forwarded by Mr Turner to Mr Gallacher under cover of an email dated 20 May 2011. The proposal did not include ADOPT's costings, which were to be inserted by Mr Gallacher. The proposal made reference to an 'Additional Supporting Technical Option' which was a reference to video monitoring of the type developed by XStream.
The draft proposal which had been prepared by Mr Turner and Mr Joyce was further developed over the following week and was finally submitted to BMX on 27 May 2011. The final proposal consisted of 14 pages as compared to the seven page draft document. Mr Turner said, and I accept, that the draft was subject to a number of discussions between Mr Gallacher, Mr Joyce and Mr Turner directed to making the proposal as strong as possible. The reference to 'Additional Supporting Technical Option' was amended, but remained in the document. The heading of that section of the document became 'Optional Additional Supporting Technical Options'. In place of the reference in the draft to ADOPT having 'a contact in the industry who [specialises] in discreet and people friendly site video monitoring' the proposal read 'ADOPT are able to provide you with discreet site video monitoring services as an after hours security backup'. A photograph of video monitoring equipment was inserted.
The final proposal also included a reference, under the heading 'ADOPT Management Team Profile', to Mr Joyce who had not been included in that section of the original draft. Both the draft and the final version referred to 'Foresight Risk Management ‑ ADOPT Partner' as part of the ADOPT management team. Foresight Risk Management was described as 'a risk management wing which organises our training, compliance, high level of awareness, and observation and public relations skills'. ADOPT's rates were inserted, no doubt by Mr Gallacher. Contact details for each of Mr Gallacher, Mr Turner and Mr Joyce were included at the end of the final version of the document.

Mr Gallacher's knowledge of XStream

It is clear that Mr Gallacher was fully aware of Mr Turner's involvement with XStream shortly before 10 May 2011, and I find that he was fully aware of, and consented to, the inclusion of the 'optional additional support in technical options' in the final proposal to BMX, and of the fact that the document was a reference to XStream's technology and Mr Turner's involvement with XStream. On 10 May 2011, Mr Gallacher sent an email to Mr Andrew Herrmann, the managing director of a business known as Access1 Security Systems (Access1). Access1 was also in the business of providing electronic security systems. The email simply consisted of XStream's web address. The subject line of the email was 'Have a surf around'. On 12 May, Mr Herrmann responded to that email saying 'Nothing really super special there, it's basically what we do but he's made it portable'. Those emails demonstrate Mr Gallacher's awareness of XStream, and are consistent with Mr Turner's evidence that he had let Mr Gallacher know of his discussions with XStream prior to 11 May 2011.[6]
[6] ts 136.

XStream's knowledge of the FSH proposal

Mr Gallacher travelled to the United Kingdom on 25 May 2011 and returned about 25 June 2011.
It is clear that Mr Turner made XStream aware, through its manager, Mr Shane Wormall, about the FSH proposal. In an email to Mr Wormall dated 26 May 2011, Mr Turner told Mr Wormall that he would be out of the office on the following day doing certain things including 'handing the guard proposal to Fiona Stanley with what we can offer as an attachment'.

Mr Joyce's role

On 29 May 2011, Mr Joyce sent an email to Mr Gallacher. He said:
I know that you, hopefully more than anyone, [realise] the time and both mental and physical effort I have expended to firstly, get us an opening into this job and, this weekend, getting us embedded onto the site.
The reference to being 'embedded onto the site' was a reference to the fact that, on the same day that the final proposal was delivered to BMX, BMX requested ADOPT to place guards onsite at FSH.
In his email, Mr Joyce requested that there be some interim agreement to recompense him for his efforts, and suggested a consultancy fee of $750 per week. Mr Gallacher agreed with that proposal, and Mr Joyce was paid at that rate by ADOPT until 15 December 2011. Mr Gallacher agreed in evidence that, throughout that period, Mr Joyce acted as his (that is to say ADOPT's) representative.[7] Between 16 December 2011 and 31 January 2012, Mr Joyce's remuneration was increased to $1,000 per week.
[7] ts 47 ‑ 48.

ADOPT's promotion of Access1 Security Systems

It was apparent that Mr Joyce and Mr Gallacher continued to have discussions with Mr Herrmann concerning possible work as a provider of electronic systems in relation to FSH. On 2 June 2011, Mr Joyce emailed Mr Gallacher reporting on a lengthy discussion that Mr Joyce had had with Mr Herrmann, and suggesting that Mr Herrmann would provide prices which could then be presented to BMX. Mr Turner was not copied into that email.
On 6 June 2011, Mr Joyce sent an email to Mr Gallacher. Again, it was not copied to Mr Turner. It contained a proposed email to Mr Lun of BMX. The proposed email referred to the reference in ADOPT's proposal of 27 May to ADOPT's ability to incorporate technical support into their operational planning. The draft, which Mr Joyce proposed Mr Gallacher should send continued:
Apparently David Turner has discussed the provision of technical support with yourselves. David is a trusted ADOPT partner in his role as a risk management specialist. However, from the outset of my dealings with yourselves, I had a particular provider in mind for the technical support if it were to be requested.
The email then introduced Andrew Herrmann from Access1 and suggested that he had the technical capabilities to tailor make a system to suit BMX's needs. The email suggested that Mr Herrmann 'actually designs, builds and installs his own products', that his knowledge 'is second to none', and that using him would involve 'an additional direct cost benefit'. The email referred to discussions which Mr Joyce had had with BMX about Mr Herrmann. It continued:
Please accept my apologies if there appears to have been a degree of miscommunication with David Turner, I will be speaking with him directly regarding this. However, if you wish to consider the package that David is proposing then that is, of course, your prerogative.
Later on 6 June 2011, Mr Joyce sent a further email to Mr Gallacher. Again, Mr Turner was not copied into the email. Mr Joyce's email included an amended proposed email from Mr Gallacher to Mr Hudson and Mr Callcott. After setting out that proposed email, Mr Joyce said:
As discussed - Have a read through this, make any changes you want. I've trimmed the bit about what Dave T has offered as we don't really know what he has offered, so it's a bit difficult to criticise it - don't want to shoot ourselves in the foot by later offering the exact system we've just discredited!
Copy and paste this email and send to Hudson and Dave Callcott using the email addresses that I sent you earlier ‑ please cc me too!
Happy hunting!
The proposed email was to similar effect as the earlier proposal. It commenced with apologies for some communication difficulties resulting from Mr Gallacher being in 'outback Wales'. It made reference to Mr Joyce having 'taken over the day‑to‑day management and liaison' with BMX and the other security provider on the FSH site. The reference to Mr Turner's proposals in relation to technical support was changed so that it read:
I understand from Dave Turner and Pat that the issue of electronic technical support has now become more pressing than I had initially envisaged. You will note from page six of ADOPT's proposal that we are able to incorporated technical support into our Operational Planning. From the first site assessment, I firmly believe that this was something that FSH needed and, as such in the first instance, I asked Dave Turner if he could step outside of his normal consultancy to us as our Risk Management specialist and tee‑up a meeting with yourself to see what top shelf or stand alone electronic equipment would be available. Apparently David T has done so and has discussed the provision of technical support with yourselves.
On reflection and talking to Dave T, I'm somewhat concerned that a system provider that David T is suggesting is both new to the market, and may be overkill in terms of costs system requirements. Also from my experience, newer systems are apt to numerous teething problems and break down, until they are fully tested.

The proposed email then proceeded to introduce and recommend Mr Herrmann in similar terms to the earlier draft.
Although Mr Gallacher made reference to these emails in his witness statement, he gave no evidence as to whether or not he sent the draft to Mr Hudson and Mr Callcott. He was not cross‑examined on the point.
I find that Mr Gallacher did send the email proposed by Mr Joyce to Mr Hudson and/or Mr Callcott around 6 or 7 June 2011. He did not deny that he did so. Mr Gallacher's only reference in his evidence‑in‑chief to Mr Joyce's emails of 6 June 2011 was to say that they 'remind me that Mr Joyce informed BMX about Mr Hermann and Access 1'.[8] It is not apparent to me how the emails support that conclusion. The draft emails are clearly designed to 'introduce' Access1 to BMX. There is nothing in the text, drafted by Mr Joyce, that suggests that Mr Joyce had already introduced Access1 to BMX. Indeed they support the inference that he had not. The issue of whether or not the email was actually sent was clearly one to which the plaintiff's legal advisers were alive. That is because they objected to a passage in Mr Turner's witness statement in which he asserted that Mr Gallacher did send the email of 6 June 2011. That objection was upheld on the basis that Mr Turner had no personal knowledge of that fact, and the documents produced at trial did not include an email from Mr Gallacher to BMX in those terms. If Mr Gallacher did not send the email, he could have given evidence of that fact. The sending of the email is clearly a matter contrary to Mr Gallacher's interest. Furthermore, on 8 June 2011, Mr Joyce emailed Mr Gallacher enquiring whether Mr Gallacher had spoken to either Mr Herrmann or Mr Turner and continued:
Dave Callcott tells me that he's had Dave Turner contact him about bringing tech guys onto site at 3pm tomorrow and thinks that it may be Andrew from Access 1, though he wasn't sure ‑ do you know anything about this ‑ I can't get hold of Andrew at the moment.
[8] Exhibit 3 [38].
Mr Gallacher said in evidence that that email confirmed that Mr Joyce had informed BMX about Mr Hermann and Access1. That is not what the email says. All that can be drawn from the email is that BMX had, by 8 June, learned of Access1. The most likely inference from the chain of emails in the preceding days is that BMX learned of Access1 because Mr Gallacher sent them an email as Mr Joyce told him to do. That conclusion is also consistent with what Mr Turner understood the position to be, as revealed in the first sentence of his email to Mr Gallacher on 9 June 2011, the contents of which are set out below.
The fact that Mr Callcott might have thought that Mr Turner was bringing Mr Herrmann to site is consistent with the passage in the proposed email to BMX, in which it is said that Mr Gallacher would be speaking directly with Mr Turner in relation to the 'degree of miscommunication'. The clear inference is that Mr Gallacher would be speaking to Mr Turner about his preferred electronic support provider. If that had occurred, Mr Callcott would be more liable to think, as he indicated to Mr Joyce, that Mr Turner might be bringing Mr Herrmann to site.

Mr Turner's email of 9 June 2011

In fact Mr Gallacher did not discuss Mr Herrmann and Access1 with Mr Turner before Mr Turner learnt from BMX of Mr Gallacher's proposal to use Access1. That is evident from an email which Mr Turner sent to Mr Gallacher on 9 June 2011. That is a communication on which Mr Gallacher relied heavily in these proceedings. For that reason, I set out its contents in full. The email read:
Hello Dennis,
BMX has informed me that you prescribed another systems company to quote on site.
I am a little confused here as when you asked if there would be a joint venture with regard to systems, I said it was on very much on the cards but not at the 'moment' being ‑ lets not scare this company away by appearing too pushy to soon.
Because of your phone call to BMX, much trouble has now been raised with regard to consistency of the ADOPT proposal. This tech side was always explained as 'an extra ‑ from a supplier I know' even though it was in the ADOPT proposal.
We will be visiting site today to do a final confirmation with Dave C who we respect & get on rather well with.
I know the industry well enough to say that no other systems company can provide what we / my contacts can, as it is very complex and diverse in terms of delivery, any thing else could be wasting BMX valuable time, and that may reflect on ADOPT.
This systems company have been working on this project all week with time and money, and would not appreciate a third party advising against them as it were.
I also asked you what involvement you would like from me, meaning that I don't want to step on Pats toes here and muddy waters ‑ thats all.
I have been working quite hard with Pat and Sarah to make sure your potential contract is keep up and sound, that is much of my time, phone calls, efforts which can be proven.
Without the risk management promise and 'correct' training for your guards from FSP as you have stated in the proposal, you will not be delivering what you have outlined, that may put your future on site at risk. How would you like to proceed? either working alongside one another, or I leave ADOPT completely and inform BMX of this change to their security service with the reasons why?
Regards,
David
It is apparent from the emails referred to above that Mr Gallacher and Mr Joyce together planned to introduce Access1 as the technical service provider for BMX, and did so without Mr Turner's knowledge or involvement. It is also apparent from the contents of the emails that BMX had pursued the question of electronic technical support in a 'more pressing' way than Mr Gallacher and Mr Joyce had initially envisaged. The correspondence also reveals that Mr Joyce was taking on the primary role as ADOPT's representative in relation to dealings with BMX.
That Mr Joyce was principally dealing with BMX is illustrated by an email which he sent to Mr Gallacher on 13 June 2011. The email appears to relate to a problem which had occurred onsite. Mr Joyce said that Mr Callcott was being very supportive of ADOPT, but urged Mr Gallacher to ensure that he got 'some decent half‑awake people' onsite to assist in successfully gaining the longer term contract. The tenor of the email suggests that, despite Mr Callcott's support, others in BMX had concerns with ADOPT's performance on site.
On 15 June 2011, ADOPT were requested by BMX to register with a website, referred to as ACONEX, for the purpose of submitting a tender for security work.

The July tender and XStream's involvement

In the meantime, in early June 2011, Mr Turner was endeavouring to assist XStream to become involved in the FSH site. On 3 June 2011, he emailed Mr Wormall and Mr John Walton, another XStream employee, about matters to be discussed in relation to the FSH prospect, and he communicated with a Mr Jurd who worked with an organisation referred to as Protection 1 which was carrying out some technical work in relation to the XStream product. Mr Turner said that, at that point in time, he was working for the benefit of XStream with a view to getting its product onto the FSH site, with ADOPT being the manpower provider.[9]
[9] ts 160.
On 8 June 2011, Mr Jurd provided Mr Turner with a proposal for use in relation to the FSH site.
Those communications were not copied to Mr Gallacher or Mr Joyce. Mr Turner explained that that was because the emails concerned systems and he did not consider that Mr Gallacher expected to be copied into communications about systems.[10]
[10] ts 163, 172.
On 12 June 2011, Mr Turner sent an email to Mr Wormall and Mr Walton advising that he had a draft proposal ready to be handed to BMX. Mr Turner was unable to produce a copy of that proposal in the course of these proceedings. He explained in his evidence-in-chief that the proposal involved a 'triangle idea' with ADOPT being the manpower provider, XStream being the overall manager, and Mr Turner providing 'a presence with risk management'.[11]
[11] Exhibit 6 [19].
On 19 June 2011, Mr Turner emailed Mr Gallacher, Mr Joyce and Ms Sarah Fyffe, another ADOPT employee. The email reported that Ms Turner and XStream representatives had met with Mr Callcott on the previous Friday, 17 June 2011. It said that Mr Callcott had 'continued to request that there is only one business to interface with'.
The email continued:
After some discussion concerning the past 3 weeks, and on the best overall security way to proceed, Dave asked me to design and submit a further proposal for consideration to our camera and detection proposal.
BMX want one provider, XStream/me will become the overall BMX security management and consultancy service/provider.
We have the Risk Management, training, OHS, systems, back up and support contacts.
XStream, me, ADOPT can then partner to get this done.
Mr Turner requested the recipients of the email to let him know what they thought. He suggested that some detailed administration between the different businesses needed to be worked out, and then provided some detail as to the differing responsibilities of ADOPT, Mr Turner and XStream.
On 20 June 2011, Mr Turner provided his last invoice to ADOPT, being for his monthly fee of $2,000, this time described as being for 'various support duties'.
On the same day, Mr Joyce emailed Mr Gallacher advising that Mr Hermann was not interested in being involved in the FSH proposal. He also reported that he had spoken to Mr Turner, as Mr Turner had called him 'a number of times' and so he 'couldn't just ignore him'. He continued:
He seems to be saying that ADOPT will still get Table A rates from the original proposal, so even though it's not ideal ‑ it may not be all doom and gloom either?
What do you think?
Mr Gallacher replied later that evening saying that Mr Turner had rung him and that he 'kind of got the same feeling'.
On 20 June 2011, the tender documents were made available to ADOPT through the ACONEX system.
On 21 June 2011, Mr Turner sent an email to Mr Wormall attaching a document entitled 'Hourly Guard Rate Comparisons.doc' which was said to be the result of Mr Turner and Mr Joyce 'going through numbers'. That email was not copied to Mr Gallacher. However, Mr Joyce's involvement in it is significant. Mr Joyce was, at that stage, acting as ADOPT's representative, and the correspondence reveals that he was primarily responsible for the conduct of discussions in relation to contracts for work at the FSH site.
On 26 June 2011, Mr Turner emailed Mr Wormall and Mr Walton advising that BMX appeared to be rushing the security tender through and that he needed to meet with ADOPT and contact BMX to ascertain who BMX wanted to 'write the tender' being either XStream as the overall security managers or ADOPT.
On 27 June 2011, Mr Turner emailed Mr Wormall and Mr Walton confirming a meeting with Mr Gallacher at the FSH site for the purpose of discussing the FSH proposal and other opportunities. On the same day, Mr Turner emailed Mr Callcott saying that he had spoken to Mr Gallacher that day and that Mr Gallacher was happy with the arrangement that Mr Turner, through XStream, be responsible for the management of the FSH contract, with ADOPT to provide the guards and dogs. The email continued:
He can see that it actually takes some headaches away from his business and gives him more free time.
And also the prospects of being the first to create a properly combined systems and guard service are attractive to him.
Mr Gallacher did not address that assertion in his evidence‑in‑chief, and it was not put to him in cross‑examination. Mr Turner was not challenged on that assertion when cross-examined about the email.[12] There is no reason to conclude that what Mr Turner told Mr Callcott in the email of 27 June 2011 was not true.
[12] ts 181 - 182.
On 28 June 2011, Mr Callcott responded to Mr Turner saying that the proposal was 'the best solution to our situation at FSH'.
On 4 July 2011, Mr Turner emailed Mr Callcott advising that he had 'had another chat' with Mr Gallacher, that they would 'all write the tender together next week' and that Mr Gallacher had asked that Mr Turner take over the 'upper management' of the guards with Mr Joyce managing 'as he is doing now but with more support'.
In the early morning of 8 July 2011, Mr Turner emailed Mr Wormall, Mr Walton and Mr Clint Dees, all of XStream, copying in Mr Gallacher and Mr Joyce, advising of a proposed meeting for Monday 11 July 'to decide on the tender which ADOPT have recently received from FS'. The email continued:
We will need to decide if we can work together, how, if viable, and who is going to be accountable - for up to 3x years. XStream still have a small window to be the lead tenderer if they choose and it is agreed upon.
After some further discussion of the proposal the email concluded:
Dennis, just an idea to insure yourself: if XStream do find that this is not viable when we meet on Monday, then ADOPT will need to submit the tender on time, I would say with Pats help and if I can offer any help to Pat, so I suggest you have that plan in place. After all you still have the best, tried and tested guard and dog service available, so they will need you.
Later on 8 July 2011, Mr Turner emailed Mr Gallacher and Mr Joyce saying:
After some discussion today I am happy to say that XStream will now be the overall tenderer for FS (with me in close support).
Alfred has been informed and he has sent all the relevant documentation. This documentation will be started this weekend so we can discuss details on Monday ‑ your rates with ours etc and how the management plan will work.
I take it you agree with this approach, and we can talk more on Monday.
The reference to Alfred is to an accountant with BMX.
As it happened, the XStream representatives did not attend because they 'were called away for something else'.[13] Mr Gallacher and Mr Turner did attend. Mr Turner was obviously displeased, and sent an email to the XStream representatives noting that Mr Gallacher had made time to attend, and saying that Mr Turner needed:
to know if XStream is serious about this FS tender, or should Dennis look elsewhere (as he probably will do shortly) and probably with my help as I don't like letting people down.
[13] ts 190.
On 12 July 2011, Mr Turner emailed Mr Gallacher in relation to a proposed meeting on 14 July and asked for Mr Gallacher to provide rates which he was considering charging in relation to the FSH contract, and certain other information. It is apparent that Mr Gallacher did provide his proposed rates to Mr Turner, because on Wednesday 13 July 2011, Mr Walton emailed Mr Turner attaching a spreadsheet detailing hours and guard quantities which appeared to be required for the tender. Reference was made to information provided by Mr Gallacher on the previous Monday. Mr Walton indicated that he needed certain further information from Mr Gallacher as to various rates and guard numbers. He also foreshadowed the need to discuss various other matters with Mr Gallacher. Mr Turner recalled that there was discussion with Mr Gallacher about those matters.[14]
[14] ts 194.
It was apparent that Mr Joyce and Mr Gallacher were involved in the preparation of tender information. On 14 July 2011, Mr Turner emailed Mr Joyce and Mr Gallacher providing certain information and foreshadowing a discussion with Mr Gallacher the following day to bring him 'up to speed' with Mr Turner and XStream's 'findings'. An email of 15 July 2011 from Mr Turner to XStream representatives foreshadowed discussions with Mr Gallacher on the following Monday with respect to certain matters related to the FSH proposal. On 18 July 2011, Mr Turner emailed Mr Gallacher, Mr Wormall, Mr Jurd and Mr Walton proposing a tender meeting for 21 July 2011 to finalise the tender document.
Mr Gallacher and Mr Joyce having worked with Mr Turner and Mr Walton to provide guard rate information, the tender was lodged by XStream on 26 July 2011.

Events following the tender

On 1 August 2011, Mr Joyce emailed Mr Gallacher advising that Mr Turner had had a meeting with BMX that day and that the formal tender interview would be at the end of the week. Mr Joyce said that he had 'offered any assistance that he might need' and that Mr Callcott 'still wants ADOPT for guards and Dave T for management'.
On 9 August 2011, Mr Joyce emailed Mr Turner saying:
Hi Dave,
I think that this might be an opportune moment, with the tender process temporarily on hold, for you and I to get together and have a talk about where we see all this going long term. What do you think?
I'll be having a meet-up with [Mr Callcott], hopefully off site, tomorrow as I have a couple of minor issues to sort out and to catch up generally.
He's already asked if I've been in contact with you as he's keen to see that we're all working closely together to get the security arrangement that they want on site.
Hopefully I'll have more to tell you tomorrow - but it would be good to meet up properly for a chat some time soon. (emphasis in original)
Mr Turner explained the context of that email. He confirmed that the tender process had been put on hold. He said that BMX 'were so frustrating' and 'were changeable'. He continued:
They wanted this, they wanted that. They were having everyone run around in circles for many months. And that's where the frustration came from. And so when he says it's on hold, I would say that it was one of the times when he said, 'Hold on. We don't know what we want to do at the moment. We'll re-evaluate.'[15]
[15] ts 199.
Mr Turner forwarded the email to Mr Gallacher within two minutes of its receipt.
During August and early September, there was a series of meetings and communications between BMX, Mr Turner, XStream representatives and Mr Gallacher and Mr Joyce concerning the FSH contract.
In early September 2011, BMX decided to utilise another contractor, Downer, in relation to security systems. According to Mr Turner, BMX had had a long relationship with Downer. Accordingly, BMX wished to separately consider a tender for guards and dogs from a tender for security systems. Mr Turner described that information as disappointing to XStream. On 20 September 2011, Mr Turner's employment with XStream was terminated.
After BMX determined that it wanted to deal with guards and dogs separately from security systems, Mr Gallacher, Mr Turner and Mr Joyce exchanged emails in relation to management of a contract for guards and dogs. On 10 September 2011, Mr Turner, in an email exchange with Mr Gallacher and Mr Joyce, said that BMX were 'absolutely demanding that there is one point of management contact (should we win this, and leading up to this) this would be me at this tender time, as FSP would be the management business if won'.
In reply, Mr Gallacher said:
I don't know why they keep mentioning the point of management, I've no idea how many different ways we can put that across to them that we don't have an issue with that.
Mr Turner said that around early October, he had a conversation with Mr Gallacher in which they discussed ADOPT being the manpower provider if FSP were to provide a fresh tender on the FSH site as BMX had requested. Mr Turner's evidence was that Mr Gallacher responded with words to the effect that 'as long as FSP ran the tender and he remained a subcontractor on a simple hourly rate' he was interested in proceeding in that way. Mr Turner was challenged in cross-examination about that conversation.[16] Mr Gallacher gave no evidence-in-chief in relation to the alleged conversation, but was cross‑examined about his reasons for ADOPT not tendering in October 2011. His response was to the effect that he felt threatened, by the email of 9 June 2011, that he might lose any benefit from the FSH proposed contract if he did not co‑operate with Mr Turner, and that he had no choice but to agree so as to get the maximum possible benefit from the contract.[17] Mr Turner asserted during cross-examination, however, that ADOPT could have tendered in October 2011 on its own account, 'especially with Pat Joyce as their key man'.[18] Mr Turner maintained that Mr Gallacher had been content to be involved in the FSH contract as a subcontractor at all times from when XStream presented its tender in July 2011, and that that remained the position thereafter.[19]
[16] ts 209 ‑ 214.
[17] ts 66 - 67.
[18] ts 212.
[19] ts 216.

Mr Turner lodged a tender on behalf of FSP on 12 October 2011. On the previous day, he emailed Mr Gallacher asking for certain pricing information because he needed to upload all documents to ACONEX by the following day. Mr Gallacher provided the requested information by email later that day.

FSP's successful tender

FSP's tender was successful and the letter awarding the contract dated 16 December 2011 was accepted by Mr Turner on behalf of FSP on 28 December 2011. It was apparent that, during December, whilst ADOPT continued to provide guard services at the FSH site pending the awarding of the contract, problems with the guard services had occurred on site, and there were strains in the relationship between FSP and ADOPT. During the period leading up to FSP commencing to provide services on site, Mr Joyce continued to be employed by ADOPT and was overseeing the provision of ADOPT's guards and dogs under the interim arrangement. FSP took over responsibility for the provision of guards and dogs on site from mid-January 2012. It continued to utilise ADOPT's guards and dogs on a subcontract basis. Around that time, FSP took over Mr Joyce's engagement, although ADOPT and FSP jointly contributed to Mr Joyce's payments for a transition period of approximately two months. During that period, there appears to have been tensions in relation to the performance of ADOPT's guards on site, as evidenced by various email exchanges between January and early March 2012.
The plaintiff objected to those portions of Mr Turner's witness statement ([34] ‑ [58] of exhibit 6) which deal primarily with email correspondence concerning ADOPT's performance of security services on the FSH site after January 2012. The objection was as to relevance on the basis that no issue was raised on the pleadings as to ADOPT's performance. I do not accept that objection and would admit those paragraphs (as they were amended as a result of certain specific objections which I upheld at trial). They provide a context of the whole relationship between the parties and the circumstances in which the arrangements between them came to an end. Whilst not probative on any issue directly arising on the pleadings, the emails referred to in the paragraphs objected to are relevant to those matters of context against which the earlier conduct of the parties can be viewed. I am reinforced in that view by the fact that Mr Gallacher refers to and discusses many of the same events and emails which are the subject of objection in Mr Turner's statement in his witness statement.[20]
[20] Exhibit 3.
It is apparent that the difficulties referred to in the email exchange led to Mr Turner writing to Mr Gallacher on 20 March 2012 reviewing the first three months of the FSH contract and proposing that FSP would take over various services which had been provided by ADOPT up to that point, including the payment of wages of administration and uniform costs. The letter proposed that FSP would be paid a fixed fee of $7,000 per month for a role as 'manpower provider and K9 power provider', with provision for a further interim payment during the transition to the new arrangement. Mr Gallacher responded on 21 March 2012 querying certain aspects of FSP's proposal, but otherwise saying that 'the rest as said is fine'. Mr Gallacher then proposed that there should be a formal agreement drawn up to reflect the terms of FSP's proposal, but that was never completed.
ADOPT continued to provide guards and dogs to FSP until a dispute over invoices developed during May 2012 leading to a refusal by FSP to pay the balance of invoices rendered by ADOPT under the agreement that had been reached in March. Those disputes led to the institution of proceedings commenced by ADOPT in the District Court of Western Australia against FSP. Those proceedings were subsequently resolved by agreement on 8 January 2013. In September 2013 the plaintiff served Mr Turner with a letter of demand in relation to the matters the subject of these proceedings, and the proceedings were commenced on 2 December 2013.

Fiduciary duty

The plaintiff claims that Mr Turner owed it fiduciary duties in respect of the opportunity to obtain the FSH contract, being duties to give undivided loyalty to the plaintiff, not to promote his personal interests by taking or retaining a profit or benefit in circumstances of a conflict or possibility of conflict of those interests and the interests of the plaintiff, and not to take or retain a profit or benefit by reason of the use of his fiduciary position or by taking advantage of opportunity or knowledge derived or resulting from his fiduciary position.[21]
[21] Statement of claim [25].
The fiduciary relationship is said to have arisen from:
(i)the consultancy agreement between Mr Turner and ADOPT in February 2011;[22]
(ii)the availability of an opportunity for the plaintiff to enter into a contract with BMX to provide security services at the FSH site for a term of two to three years;[23]
(iii)the fact that Mr Gallacher informed Mr Turner of that opportunity in Mr Turner's capacity as consultant and for the purpose of Mr Turner assisting the plaintiff to pursue the opportunity for its benefit, which Mr Turner knew or ought to have known;[24]
(iv)Mr Turner, at Mr Gallacher's request, attending a meeting on 11 April 2011 with Mr Gallacher and Mr Callcott of BMX and Mr Joyce for the purpose of assisting the plaintiff to pursue the opportunity;[25]
(v)Mr Gallacher informing Mr Turner of the email from Mr Lun of BMX of 6 May 2011 in which Mr Lun requested a meeting to discuss a '3 x year, 24/7 security opportunity inclusive of guards, dogs and mobile patrols', and did so, to Mr Turner's knowledge, in Mr Turner's capacity as consultant for the purpose of Mr Turner assisting the plaintiff to pursue the opportunity for the plaintiff's benefit;[26]
(vi)Mr Turner attending a meeting on 12 May 2011 at Mr Gallacher's request with Mr Gallacher and Mr Callcott for the purpose of assisting the plaintiff to pursue the opportunity to obtain the FSH contract;[27]
(vii)Mr Turner assisting the plaintiff to prepare a proposal for the FSH contract, presenting the proposal to BMX on 27 May 2011, assisting the plaintiff to pursue the opportunity to obtain the FSH contract for its benefit by visiting the FSH site with Mr Gallacher and meeting with representatives of BMX, and receiving information from the plaintiff as to information relevant to the opportunity to obtain the FSH contract;[28]
(viii)Mr Turner assisting the plaintiff in the provision of security guards and dogs on an interim basis pending the outcome of the tender process for the FSH contract from on or about 27 May 2011;[29]
(ix)BMX inviting the plaintiff to tender for the FSH contract and the plaintiff giving Mr Turner access to all documents received from BMX concerning the invitation to tender in Mr Turner's capacity as the plaintiff's consultant and for the purpose of Mr Turner assisting the plaintiff to pursue the opportunity for its benefit, to Mr Turner's knowledge.[30]
[22] Statement of claim [10].
[23] Statement of claim [11].
[24] Statement of claim [12], [13].
[25] Statement of claim [14].
[26] Statement of claim [15], [16], [17].
[27] Statement of claim [18].
[28] Statement of claim [19].
[29] Statement of claim [20], [21].
[30] Statement of claim [22] ‑ [24].
Mr Turner denies that he owed the plaintiff the fiduciary duties pleaded. He pleads that the tender documents were provided to him in circumstances where Mr Gallacher had stated in substance, that he did not want the liabilities associated with being the head contractor and wanted to limit his involvement in the supply of guards and dogs as a 'second tier subcontractor', and further that if XStream 'was interested in taking on the head contractor then the plaintiff would be happy to provide guards and dogs as a contractor to [XStream] under any head agreement between [XStream] and BMX'.[31] It is also pleaded that the documents received by Mr Turner concerning the invitation to tender were received after he was no longer engaged by the plaintiff, and was, to the plaintiff's knowledge, employed by XStream.[32]
[31] Defence [18].
[32] Defence [17].
The critical feature of fiduciary relationships 'is that the fiduciary undertakes or agrees to act for or on behalf of in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense'.[33]
[33] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 96 - 97 (Mason J).
It is clear that the opportunity of a contract with BMX for the provision of security services at the FSH site was introduced to Mr Turner by the plaintiff. It is also clear that it was introduced to Mr Turner by reason of Mr Turner's role under the consultancy agreement entered into in February 2011. The consultancy agreement necessarily required Mr Turner to act in the plaintiff's interests. The provision of knowledge of the opportunity, and the information relating to the plaintiff's business necessary to pursue that opportunity, to Mr Turner in his capacity as consultant to the plaintiff gave rise to a fiduciary duty not to promote Mr Turner's personal interests contrary to the interests of the plaintiff and not to take advantage of any opportunity or knowledge derived from the plaintiff to the plaintiff's detriment.
The fiduciary duties owed by Mr Turner to the plaintiff did not cease upon Mr Turner's engagement by XStream, nor upon Mr Turner ceasing to be paid in relation to his consultancy.[34]
[34] See Green and Clara Pty Ltd v Bestobell Industries Pty Ltd (1982) WAR 1, 6 (Burt J) 19 (Kennedy J); Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17; (2011) 278 ALR 291 [370], [371] (Murphy JA).

Informed consent

A defendant can avoid an adverse finding of breach of fiduciary duty, and the consequent remedies, if it establishes, by way of defence, informed consent of the person to whom the fiduciary duty is owed.[35] In Maguire v Makaronis,[36] the plurality said that '[w]hat is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given'.[37]
[35] Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449, 466.
[36] Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449.
[37] Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449, 466
As noted above, the defendant contends that Mr Gallacher, on behalf of the plaintiff, indicated that he was content to limit the plaintiff's involvement to the supply of guards and dogs as a subcontractor and to do so under a subcontract to XStream if it were to become the head contractor. In the plaintiff's opening submissions, it was said that that plea may be understood to be a plea of fully informed consent. I agree with that construction of the pleading, and it is clear that Mr Turner, who represented himself in the proceedings, presented his case on the basis that Mr Gallacher was informed of, and consented to, the submission of a tender initially by XStream in July 2011 and subsequently by FSP in October 2011.
In order to consider whether a defence of fully informed consent is made out, it is necessary first to identify what is said to constitute the breaches of fiduciary duty by the first defendant. The breaches are pleaded at [26] of the statement of claim which provides:
26.In fact, the first defendant:
(a)on a date presently unknown to the plaintiff, but no later than on or about 17 June 2011, and in anticipation of the plaintiff being invited to tender for the FSH Contract, informed XStream of the opportunity to tender;
(b)on or about 17 June 2011, met with representatives of BMX together with representatives of XStream for the purpose of pursuing the opportunity to obtain the FSH Contract on behalf of XStream or himself;
(c)did not inform the plaintiff of that meeting held on or about 17 June 2011 prior to the meeting taking place;
(d)from on or about 17 June 2011 pursued the opportunity to obtain the FSH Contract on behalf of XStream until on or about 21 September 2011 when he ended his relationship with XStream;
(e)thereafter pursued that opportunity on behalf of himself;
(f)tendered for the FSH Contract on or about 12 October 2011;
(g)on or about 7 November 2011 registered the second defendant for the sole purpose of the second defendant being the contracting party to the FSH Contract in lieu of himself should his tender be successful.
In the plaintiff's written closing submissions, it accepted that, after receipt of Mr Turner's email to him on 8 July 2011 informing him that XStream would 'now be the overall tenderer for FS[H] (with me in close support)', Mr Gallacher acquiesced in that situation.[38] It is said, however, that at that time, Mr Gallacher remained under Mr Turner's threat in his email of 9 June 2011, and needed to agree to what Mr Turner wanted in order to get anything out of the opportunity.
[38] Plaintiff's outline of closing submissions [64].
Mr Gallacher's evidence was that, after reading that email, he decided that he had to do what Mr Turner said or he would lose the contract.[39]
[39] Exhibit 3 [37].
In relation to the October tender, Mr Gallacher said that he accepted that Mr Turner would submit the tender, and he accepted the hourly rate proposed because 'Mr Turner had a better understanding and grasp of the current security award and requirements with all the occupational health and safety procedures [and was] up‑to‑date with all the laws that had to be complied with in providing security'. Mr Gallacher said that he did not 'think I could do it all on my own'. He then made reference to Mr Turner's email of 9 June 2011 which he characterised as a threat by Mr Turner to walk away and leave him to tender on his own.[40]
[40] Exhibit 3 [60].
During cross‑examination, Mr Gallacher said that the email of 9 June 2011 was in the back of his mind 'all the way through a lot of the negotiations from that time' and that if he 'didn't do what was said or go with the flow' then he would lose everything.[41]
[41] ts 50.
In closing submissions, Senior Counsel for the plaintiff referred to the email of 9 June 2011 as a threat 'to walk away and undermine the plaintiff's efforts to obtain the contract'.[42] In my view, that overstates the nature and effect of the email of 9 June 2011.
[42] Plaintiff's outline of closing submissions [60].
The email must be read in its context. It is quite apparent that it was written following Mr Turner discovering, through his discussions with BMX, that Mr Gallacher had been in discussions with an alternative provider of security systems behind Mr Turner's back. That was being undertaken against a background where, to Mr Gallacher's knowledge, Mr Turner had been progressing discussions with BMX on the basis that the security systems provider that was contemplated in the proposal submitted to BMX on 27 May 2011 was XStream. It is to be remembered that that proposal resulted from the collaborative efforts of Mr Turner, Mr Gallacher and Mr Joyce. Mr Turner had quite openly revealed his discussions with XStream in the early part of 2011 and his employment with XStream which had commenced on 16 May 2011. The promotion by ADOPT of an alternative systems provider obviously put Mr Turner in a difficult position, and that must have been known to Mr Gallacher. It was plainly untenable for Mr Turner to continue to assist ADOPT with its proposal for the FHS contract if the proposal involved the provision of security systems by a company effectively in opposition to Mr Turner's employer. It was in that context that Mr Turner, quite reasonably in my view, made it clear that he could not continue to assist ADOPT if an alternative security service provider was to be utilised. His email concluded with the question 'how would you like to proceed? Either working alongside one another, or I leave ADOPT completely and inform BMX of this change to their security service and the reasons why?' Had Mr Gallacher decided to dispense with Mr Turner's services, as one of the alternatives presented to him enabled him to do, it was entirely reasonable that Mr Turner should then inform BMX, with whom he had dealing for some months, of the fact that he had ceased involvement and the reasons why. That is because the proposal which had been put on 27 May 2011 by ADOPT specifically provided for Mr Turner's involvement and, while not naming XStream, suggested the potential 'add on' of security system by 'a contact in the industry' which, were Mr Turner and XStream to cease to be involved, would no longer be accurate. Properly construed, the email was not a 'threat to undermine' ADOPT. Reference was made to 'much trouble' that had been 'raised with regard to consistency of the ADOPT proposal' but that was not a threat by Mr Turner. Rather it was a statement as to Mr Turner's view of the consequences of Mr Gallacher's introduction of a different supplier.
Any fiduciary duty owed by Mr Turner to the plaintiff did not require him to continue to represent ADOPT in relation to ongoing negotiations with BMX. It was entirely open to him to give the plaintiff the option which he did in the email of 9 June 2011. Mr Gallacher was then faced with a choice. He made the choice to continue to utilise Mr Turner's assistance, knowing that, in doing so, he would be promoting XStream as the provider of security systems in the event that BMX wished to pursue that option. That he made that choice did not vitiate his consent to Mr Turner acting in that way.

Was the consent fully informed?

The plaintiff contends that Mr Gallacher's acquiescence in XStream being the overall or lead tenderer was not fully informed because Mr Turner and representatives of XStream attended meetings with BMX, and Mr Turner communicated with XStream representatives in relation to the development of proposals without copying those communications to Mr Gallacher.
I do not accept that those matters affect Mr Gallacher's consent. There are several reasons for that conclusion.
First, Mr Gallacher was fully informed of the proposal to involve XStream in the provision of security systems as part of a proposal submitted to BMX on 27 May 2011. That aspect of the proposal was, to the knowledge of Mr Gallacher and Mr Joyce, directed to making the proposal as strong as possible, which was seen by all concerned to be in ADOPT's interest.
Secondly, because Mr Gallacher was fully aware of Mr Turner's involvement with XStream from mid‑May onwards, it must have been obvious to him that Mr Turner would seek to have BMX accept XStream's technology for use on the FSH site, in conjunction with the provision of guards and dogs by ADOPT. XStream's involvement in that way was not contrary to the interests of ADOPT.
Thirdly, I accept that the reason that Mr Turner did not copy to Mr Gallacher certain communications with his superiors at XStream during May and June 2011, was that he considered that Mr Gallacher was not directly interested in the security systems aspect of any proposal, that not being Mr Gallacher's and ADOPT's area of business. He was not seeking to conceal anything from Mr Gallacher.
Fourthly, I do not consider that the development of a proposal by XStream was contrary to the interests of ADOPT. In May and early June 2011, the proposal was developed as something complementary to ADOPT's proposal and with a view to strengthening it so far as BMX were concerned. The transition whereby XStream eventually became the lead tenderer resulted from the development of BMX's requirements in relation to tender. I accept Mr Turner's evidence that BMX's requirements changed as the tender process progressed. ADOPT's initial proposal of 27 May 2011 comprised several components of service, and in particular the provision of guards and dogs, security systems, and risk management and training services. As Mr Gallacher readily acknowledged, ADOPT was not in a position to provide all of those services itself. The concerns, reported by Mr Turner, as to BMX's requirements for a single point of contact are unsurprising, and there is no reason to conclude that Mr Turner's, and to some extent Mr Joyce's, contemporaneous reports in relation to that question are inaccurate. I am satisfied that Mr Gallacher was aware of those developments from communications from Mr Turner and Mr Joyce, and accept that the developments which led to XStream becoming the lead tenderer occurred in response to BMX's concerns. In essence, therefore, the opportunity for ADOPT in relation to FSH had become, by June 2011, an opportunity to participate effectively as a subcontractor providing guards and dogs.

Fifthly, I accept that Mr Turner's assertion in his email to Mr Callcott of 4 July 2011 that he had spoken with Mr Gallacher who wanted Mr Turner to take over the 'upper management of the guards' is likely to have been a true statement. It is consistent with Mr Turner's evidence and with his email of 8 July 2011, copied to Mr Gallacher and Mr Joyce, foreshadowing a meeting to discuss details of the tender on 11 July.
Sixthly, Mr Gallacher remained closely involved in the preparation of tender information for the tender through XStream. Had Mr Gallacher wished to pursue the alternative course of ADOPT providing a tender, it was open to him to do so. I find that the reason he did not do so was not because he felt threatened by Mr Turner's email of 9 June 2011, but rather because he realised that, as matters had developed, the proposal through XStream best served the potential interests of ADOPT.
As it happened, of course, the tender by XStream fell away when BMX decided to proceed with Downer as its security systems provider and separately called for tenders in relation to the provision of guards and dogs. It follows that even if, up to that point, Mr Turner had been in breach of his fiduciary duties by promoting XStream contrary to the interests of ADOPT (which I find he had not) it did not lead to any loss of opportunities so far as ADOPT was concerned since, in effect, a new opportunity to tender presented itself. The plaintiff contends, however, that after Mr Turner's relationship with XStream terminated on 21 September 2011, he breached his fiduciary obligations by pursuing the opportunity on behalf of himself by tendering for the FSH contract on 12 October 2011 and incorporating FSP for the purpose of that contract.
I find that the course of events leading up to Mr Turner obtaining the FSH contract in December 2011 occurred with the informed consent of Mr Gallacher. There are several reasons for that conclusion.
First, Mr Gallacher was a party to meetings in August and early September 2011 with BMX, Mr Turner, Mr Joyce and XStream representatives which ultimately led to BMX's decision to utilise Downer as its security systems provider, and to obtain a separate contract for guards and dogs. He was thus fully aware of the changing nature of the opportunity presented by the FSH contract.
Secondly, Mr Gallacher was aware of BMX's demands for there to be 'one point of management contact'. That was acknowledged in Mr Gallacher's reply to Mr Turner's email to him of 10 September 2011. His response was that 'we don't have an issue with that'. That response suggests that Mr Gallacher was comfortable with an arrangement whereby Mr Turner would be the one point of management contact.
Thirdly, I do not accept that ADOPT's reason for not tendering in October 2011 was because of the threat contained in the email of 9 June 2011. Much water had passed under the bridge since then. Mr Joyce, who was at all times representing ADOPT, had been responsible for supervision of guards onsite for some months, and clearly had a very good relationship with Mr Callcott. The reason that Mr Gallacher did not tender on behalf of ADOPT was that, to use his words, 'I did not think I could do it all on my own'.[43]
[43] Exhibit 3 [60].

Conclusion as to breach

I find that Mr Turner was not in breach of his fiduciary duties in the manner alleged in the statement of claim, or at all, in relation to the FSH contract. That is because his actions occurred in response to the changing requirements of BMX, and with the knowledge and concurrence of the plaintiff through Mr Gallacher and Mr Joyce. What was perceived to be in the interests of ADOPT was, essentially, the opportunity to provide guards and dogs on the FSH site. The contractual mechanism by which that was to be achieved was the subject of constant discussion, and changed as dealings with BMX developed. While it is clear that Mr Turner sought to promote his own interests, he did not do so at the expense of the plaintiff. The relationship between the plaintiff and Mr Turner was, at all times, one designed for their mutual benefit. That was a matter recognised by Mr Gallacher who clearly was not in a position to provide all of the services required by BMX without external assistance. He thus recognised that Mr Turner would benefit from the provision of his services in conjunction with those of ADOPT. The objective of ADOPT obtaining work on the FSH site was achieved. The contractual arrangement which ultimately was achieved to serve that objective left the plaintiff vulnerable to a termination of its services. That was a position reached with the full concurrence of Mr Gallacher on behalf of the plaintiff. Termination ultimately occurred in circumstances where there were acknowledged tensions and differences in relation to the plaintiff's performance. Whether or not the ultimate termination of those services was or was not justified is not an issue in these proceedings.
It follows that the plaintiff's claim against the first defendant should be dismissed. The claim against the second defendant was premised on a breach of duty by the first defendant. That breach not having been established, the claim against the second defendant must also be dismissed.

Remedy - account of profits

It is not necessary for me to consider the question of remedy having regard to the conclusion which I have reached. The question of relief was not the subject of much attention at trial, but in opening submissions filed prior to trial, the plaintiff suggested that, on the basis of an account contained in the trial bundle[44] it is possible to identify an amount which is at least the amount for which the defendants are liable to account. That document did not receive any attention at trial, and its source and reliability was not revealed. The first defendant did not accept that it could provide a basis of an account of profits in the event that the plaintiff was unsuccessful. For the sake of completeness I would simply observe that, had the plaintiff succeeded in establishing a breach of fiduciary duty, I would have made directions for the taking of an account, and would not, in the absence of consent from the defendants, have simply relied upon the document contained in the trial bundle as a basis to settle on the amount for which the defendants would have been liable to account.
[44] Exhibit 1, page 820.