FEDERAL COURT OF AUSTRALIA
Alpha Energy Pty Ltd v Violi [2010] FCA 1210
Citation: Alpha Energy Pty Ltd v Violi [2010] FCA 1210 Parties: ALPHA ENERGY PTY LTD (ACN 073 737 578) v ANTHONY PAUL VIOLI and DELTA V PTY LTD (ACN 140 685 007) File number: VID 248 of 2010 Judge: DODDS-STREETON J Date of judgment: 5 November 2010 Catchwords: CONTEMPT OF COURT – whether contempt by applicant company, a director and employee by breach of Harman obligation – whether used respondents’ discovered documents for collateral purpose of soliciting business from respondents’ customers – whether the applicant should be compelled to produce further documents and swear affidavit in relation to contempt – discussion of nature of contempt proceedings and standard of proof – evidence insufficient to satisfy relevant standard of proof – notice of motion dismissed Legislation: Evidence Act 1995 (Cth), ss 128, 187
Federal Court of Australia Act 1976 (Cth), s 31
Federal Court Rules (Cth), O 33 r 11, O 33 r 12; O 40
Judiciary Act 1903 (Cth), s 24Cases cited: Australian Securities and Investments Commission v Reid [2005] FCA 1274
Barca v R (1975) 133 CLR 82
CCOM Pty Ltd v Jiejing Pty Ltd (1992) 37 FCR 1
Harman v Home Department State Secretary [1983] 1 AC 280
Hearne v Street (2008) 235 CLR 125
McLeod v Henty (1900) 25 VLR 648
Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372
Refrigerated Express Lines A/asia Pty Ltd v Australian Meat & Livestock Corp (1979) 42 FLR 204
Sharpe v Deputy Commissioner of Taxation (NSW) (1998) 20 ATR 164
Television Broadcasts Ltd v Choi Wan Cheung T/A ABM Video [1998] FCA 1318
Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96
WR Carpenter & Co Pty Ltd v Wollongong Instant Scaffolds Pty Ltd (1992) 36 FCR 10Date of hearing: 27 October 2010 Date of last submissions: 27 October 2010 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 113 Counsel for the Applicant: Mr D Collins SC with Mr T Scotter Solicitor for the Applicant: McDonald Slater & Lay Counsel for the Respondents: Mr A Rodbard-Bean Solicitor for the Respondents: Moores Legal
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 248 of 2010
BETWEEN: ALPHA ENERGY PTY LTD (ACN 073 737 578)
ApplicantAND: ANTHONY PAUL VIOLI
First RespondentDELTA V PTY LTD (ACN 140 685 007)
Second Respondent
JUDGE:
DODDS-STREETON J
DATE OF ORDER:
5 NOVEMBER 2010
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The notice of motion dated 15 October 2010 be dismissed.
2.That the respondents pay the costs of Alpha Energy Pty Ltd, Bretislav James Jilich and Corey Jamieson Roberts of the notice of motion dated 15 October 2010, such costs to be paid forthwith.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT…
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Details
- AGLC
- Alpha Energy Pty Ltd v Violi [2010] FCA 1210
- Case
- [2010] FCA 1210
- Decision Date
CaseChat Overview and Summary
In the Federal Court of Australia, Alpha Energy Pty Ltd filed an application against Violi and Delta V, alleging misuse of confidential corporate information, breach of fiduciary duties, and other related claims. Alpha claimed that Violi, its former general manager, misused confidential and corporate information, diverted business, and breached his fiduciary duties. The case involved complex allegations of misuse of proprietary information, including customer lists and financial data, and breaches of fiduciary obligations. The court was tasked with determining whether the respondents had misused discovered documents in breach of an implied obligation not to do so, as recognised in Harman J & Co Pty Ltd v European Community Support Ltd for the Disabled. The primary issue was whether the respondents had breached the implied obligation by improperly using the discovered documents. The court examined the evidence provided by both parties and considered the credibility of the explanations given. The court found that the explanation provided by Mr Roberts, despite being imprecise and contradicted by the respondents' witnesses, was plausible. The court concluded that it was not proved beyond reasonable doubt that any of the persons charged had breached the Harman obligation by making improper use of the respondents' discovered documents. Consequently, the charges of contempt were not made out, and the relief sought in the notice of motion should be refused. The court dismissed the notice of motion, finding that the alleged misuse of discovered documents had not been proven.
Orders
Orders of the court
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Background
Background to the litigation
The respondents contended that, as the representatives of Q Video Systems testified that they did not inform Mr Roberts that Delta V’s quote was $100,000 or that Delta V’s quote was successful, Mr Roberts’ explanation was not credible. The only possible inference was, in the respondents’ submission, that the persons charged had misused the discovered documents in breach of the “implied undertaking”.BACKGROUND TO APPLICATION In the primary proceeding, Alpha, as applicant, alleges that the respondents misused its corporate and confidential information (including financial information and customer lists) and diverted its business; and that the first respondent, Mr Violi, breached his fiduciary duties owed as an officer and employee of Alpha. By an amended application filed on 20 April 2010, Alpha alleges: breaches of ss 181, 182 and 183 of the Corporations Act 2001 (Cth) (“the Act”); breaches of implied terms of employment, the duty of good faith and the obligation to maintain confidentiality; and money had and received, detinue and conversion of goods. Alpha alleges that in mid‑November 2009, Mr Violi, who was its general manager from late 2003 to 2004, offered to buy Alpha’s business for a derisory price. Further, on 20 November 2009, Mr Violi established Delta V (of which he is the sole director and shareholder) and on 23 December 2009, resigned from Alpha. Alpha alleges that Mr Violi emailed its data to himself, on 25 November 2009 created two sets of data from Alpha’s Net Suite database, and accessed the Net Suite database many times after his resignation. Alpha alleges that while managing director of Alpha, Mr Violi used his position to cause it to pay his personal expenses and to make unexplained payments. Alpha further alleges that Mr Violi diverted its business opportunities, recruited its staff prior to his resignation and effected a wholesale appropriation of its business. Alpha applied for delivery up, damages and injunctions against Anthony Violi and Delta V. Alpha also sought a permanent injunction restraining the respondents from disclosing, copying, using or exploiting information contained in a number of databases including XFH018, Net Suite, and in specified documents. The first respondent, Paul Violi, is a holder of 50 of the 200 shares in Alpha who, as a minority shareholder, has commenced an oppression proceeding in this court against Alpha and another company controlled by Bretislav Jilich, B.J Communications Services Pty Ltd. By a notice of motion dated 9 April 2010 in the primary proceeding, Alpha applied for a search order under O 25 r 2 of the Federal Court Rules.On 12 April 2010, Finkelstein J made an Anton Piller order permitting a search of the premises of Mr Violi and Delta V. By an affidavit affirmed on 20 April 2010, James Ormond, an independent solicitor, deposed to his service of the Anton Piller order on 14 April 2010. On the execution of the Anton Piller order, confidential material, including Alpha’s customer list (which included Q Video Systems), was found. Other property of Alpha was recovered from the premises of Delta V. Interim orders were subsequently made restraining Mr Violi and Delta V from using the confidential information.
Evidence
Evidence Before The Court
I refused that application, as there was no explanation for the failure to take adequate measures to obtain the evidence in time for the fixed hearing date and nothing to indicate that the relevant persons were unavailable to give evidence on that date. Ultimately, Messrs Theissen and Komala were located in Sydney during the course of the day, and gave evidence by videolink.EVIDENCE IN SUPPORT The notice of motion was supported by the affidavits of the director of the first respondent, Anthony Violi, sworn 15 October 2010 and 27 October 2010. In his first affidavit, Mr Violi deposed to the orders made on 22 June 2010 requiring Delta V, a company he controlled, to make discovery and inspection of:(a)all invoices and receipts issued by the Second Respondent since its incorporation to customers of the Applicant identified in the customer list provided to the Respondents' solicitor by the Applicant's solicitor; and(b)all orders currently held (but not yet invoiced) by the Second Respondent from customers of the Applicant identified in the customer list provided to the Respondents' solicitor by the Applicant's solicitor. Mr Violi deposed that on 29 June 2010, pursuant to the above order, his solicitors, Moores Legal, provided to Alpha’s solicitors, in a first tranche, tax invoices and open sales orders in relation to customers of Alpha identified on the customer list. The documents, which are exhibited to Mr Violi’s affidavit, comprise a number of tax invoices and sales invoices under the second respondent’s business name, Fusion Power Systems, all bearing dates during 2010, which identify the party to be billed and the party to whom the order is to be shipped. Mr Violi deposed that, after the first tranche of discovered documents was provided:(a)By a letter dated 21 September 2010, Alpha’s solicitors, McDonald Slater & Lay, sought further discovery.(b)By a letter dated 29 September 2010, Mr Violi’s solicitors responded that pursuant to the order for discovery made on 22 June 2010, the respondents would discover invoices and open orders issued after 29 June 2010 to clients on the list of clients provided by the applicant on 22 June 2010. The letter also alleged that the respondents had become aware that Alpha had used the first tranche of discovered documents to approach customers and disparage the respondents, contrary to the obligations recognised in Harman.(c)Alpha’s solicitors responded by letter dated 29 September 2010, acknowledging that Alpha was bound by the implied undertaking in Harman and denying the allegations of misuse. The letter sought further discovery.(d)On 12 October 2010, the respondents’ solicitors electronically provided a second tranche of documents, comprising tax invoices and open orders held by Delta V, directed to customers on Alpha’s customer list, while reiterating that the documents were provided on the basis that Alpha would comply with Harman obligations. Mr Violi exhibited the transcript of a directions hearing on 12 October 2010, which indicated that after the respondents’ counsel complained of an alleged breach of Harman principles, a short discussion of contempt ensued. When subsequently requested by counsel for the respondents to remind all present of the Harman obligation, his Honour stated that the parties should be shown the relevant transcript.
Decision
Reasons for decision
In the circumstances, I cannot be satisfied according to the requisite standard that the relevant references in Mr Roberts’ emails were based on the discovered documents or information included therein. Mr Roberts’ explanation, although imprecise and contradicted in some aspects by that of the respondents’ witnesses, is plausible. It follows, in my opinion, that it is not proved beyond reasonable doubt that any of the persons charged breached the Harman obligation by making improper use of the respondents’ discovered documents. The charges of contempt are not made out and the relief sought in the notice of motion dated 15 October 2010 should be refused.CONCLUSION In my opinion, the notice of motion dated 15 October 2010 should be dismissed.
Ratio Decidendi
Legal Principle Established
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