Austin Engineering Ltd v Podulova (No 3)

Case [2024] FCA 1001

FEDERAL COURT OF AUSTRALIA

Austin Engineering Ltd v Podulova (No 3) [2024] FCA 1001 

File number: WAD 83 of 2023
Judgment of: FEUTRILL J
Date of judgment: 2 September 2024
Catchwords:

PRACTICE AND PROCEDURE – application to vary interlocutory consent orders - whether the interests of justice require variation of orders

PRACTICE AND PROCEDURE - application for further and better particulars – application to strike-out paragraphs of statement of claim – whether adequate particulars given

Legislation:

Federal Court of Australia Act 1976 (Cth) s 37M

Federal Court Rules 2011 (Cth) r 39.05(c)

Cases cited:

Allstate Life Insurance Co v Australian & New Zealand Banking Group Ltd (1995) 57 FCR 360

Austin Engineering Pty Ltd v Podulova [2023] FCA 419

Bell Group Ltd (in liq) v Westpac Banking Corporation [2001] WASC 315

Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44

Civic Video Pty Ltd v Paterson [2013] WASCA 107

Commissioner of Taxation v Iannuzzi (No 3) [2024] FCA 45

Deputy Commissioner of Taxation v Huang (No 4)  [2022] FCA 618

Fewin Pty Ltd v Prentice (No 2) [2019] FCA 53

Hearne v Street [2008] HCA 36; 235 CLR 125

Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3; 218 ALR 283

Luo v Zhai (No 6) [2016] FCA 805

Mann v Medical Defence Union Ltd [1997] FCA 45

Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34

Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133

NT Power Generation Pty Ltd v Power & Water Authority [1999] FCA 1669

P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) [2009] FCA 413; 255 ALR 466

RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389

Sybron Corporation v Barclays Bank Plc [1985] 1 Ch 299

Waters v Commonwealth of Australia (Australian Taxation Office) [2017] FCA 312

Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 70
Date of hearing: 13 March 2024
Counsel for the Applicant: Mr J Cooke with Mr S Hallahan
Solicitor for the Applicant: HWL Ebsworth Lawyers
Counsel for the First Respondent: The First Respondent appeared in person
Counsel for the Second to Seventh Respondents: Mr TC Russell with Mr TP O’Leary
Solicitor for the Second to Seventh Respondents: Gilbert + Tobin

ORDERS

WAD 83 of 2023
BETWEEN:

AUSTIN ENGINEERING LTD (ACN 078 480 136)

Applicant
AND:

ANASTASIA PODULOVA

First Respondent

SCHLAM ENGINEERING PTY LTD (ACN 145 218 944)

Second Respondent

SCHLAM GROUP PTY LTD (ACN 616 770 122) (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

FEUTRILL J

DATE OF ORDER:

2 SEPTEMBER 2024

THE COURT ORDERS THAT:

1.The applicant have leave to amend its interlocutory application filed 12 December 2023 in terms of the proposed amended interlocutory application lodged 14 February 2024.

2.Paragraph 2 of the Orders made on 25 May 2023 and the confidentiality undertakings signed…

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Details
AGLC
Austin Engineering Ltd v Podulova (No 3) [2024] FCA 1001
Case
[2024] FCA 1001
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Austin Engineering Ltd has brought a proceeding against Ms Podulova and six other respondents, collectively referred to as Schlam. Austin alleges that Ms Podulova, a former employee, breached confidentiality obligations and infringed copyright by misusing confidential and commercially sensitive information belonging to Austin (Austin information). Austin further alleges that Ms Podulova began working for Schlam, a competitor, shortly after leaving Austin’s employment. The Court issued Norwich Pharmacal orders restraining Ms Podulova from using the Austin information and requiring Schlam to disclose information about the storage and handling of this information.

The legal issues before the Court were whether the Court should vary interlocutory consent orders to allow certain documents to be disclosed to specific individuals within Austin and whether further and better particulars should be provided to the second to seventh respondents regarding the nature of the alleged damage, loss, and the conduct causing such damage or loss. The Court also considered an application to strike out certain paragraphs of the statement of claim.

The Court allowed the application to amend the interlocutory application, varying the confidentiality undertakings to permit disclosure of certain documents to Ms Kirsten Cadle and Mr David Singleton of Austin, subject to them signing confidentiality undertakings. The Court dismissed the application for further and better particulars, finding that the existing particulars were sufficient. It also dismissed the application to strike out certain paragraphs of the statement of claim. The Court found that the particulars provided were adequate and that the allegations were sufficiently specific to allow the respondents to respond effectively.

The final orders of the Court included permission for Austin to amend its interlocutory application, variations to the confidentiality undertakings to allow certain documents to be disclosed to Ms Cadle and Mr Singleton, and dismissal of the respondents' applications for further and better particulars and to strike out certain paragraphs of the statement of claim, with costs reserved.

Orders

Orders of the court

1. The applicant have leave to amend its interlocutory application filed 12 December 2023 in terms of the proposed amended interlocutory application lodged 14 February 2024.

2. Paragraph 2 of the Orders made on 25 May 2023 and the confidentiality undertakings signed by the applicant’s external legal representatives referred to in paragraph 2(b) of the Orders be varied such that:

(a) the document identified in Confidential Annexure CB-31 to the affidavit of Clancy Calder Bennett affirmed on 12 December 2023, and any information contained in that document;

(b) the email chain referred to in Confidential Annexure CB-31 to the affidavit of Clancy Calder Bennett affirmed on 12 December 2023, and any information contained in that email chain; and

(c) paragraphs 6-15 and 17, and Annexure BJB-1, of the affidavit of Benjamin James Baker affirmed on 14 August 2023,

may be disclosed to Ms Kirsten Cadle (General Counsel of the applicant) and Mr David Singleton (CEO and Managing Director of the applicant), subject to Ms Cadle and Mr Singleton each providing to the second to seventh respondents a signed confidentiality undertaking in the form annexed to the orders made on 25 May 2023 (as amended pursuant to this order), and, otherwise, there be no orders in terms of paragraphs 1A or 2 of the applicant’s interlocutory application, as amended, and the costs of that application be reserved.

3. By 16 September 2024 the applicant provide the second to seventh respondents with the following further and better particulars of the statement of claim and otherwise, the second to seventh respondents’ interlocutory application filed 13 December 2023 be dismissed with costs reserved.

(a) As to paragraph 67:

(i) the standard practice in the industry and usual terms of contracts of employment in the industry of which it is alleged that the fifth respondent knew;

(ii) the grounds upon which it is alleged that it was ‘standard practice’ in the industry;

(iii) the grounds upon which it is alleged that the terms of contracts of employment in the industry were ‘usual’; and

(iv) the grounds upon which it is alleged that the fifth respondent ‘knew’ of the ‘standard practice’ and ‘usual terms’.

(b) As to paragraph 70:

(i) the nature of the damage alleged;

(ii) the manner in which it is alleged that the applicant has sustained the damage alleged; and

(iii) the grounds upon which it is alleged that the alleged breaches pleaded in that paragraph caused the damage alleged.

(c) As to paragraph 73:

(i) the nature of the loss or damage it is alleged the applicant has suffered and will continue to suffer;

(ii) the manner in which it is alleged the applicant has suffered and will continue to suffer loss or damage of that nature;

(iii) the alleged wrongful conduct of the first respondent for which it is alleged the fifth respondent is vicariously liable, if any, that is alleged to have caused the applicant to suffer and continue to suffer loss or damage;

(iv) the alleged wrongful conduct of each of the second to seventh respondents, if any, that is alleged to have caused the applicant to suffer and continue to suffer loss or damage; and

(v) the grounds upon which it is alleged that the applicant’s alleged loss or damage was and will be caused by any alleged wrongful conduct identified in the particulars given in response to paragraph (c)(iii) and (or) (c)(iv) of these orders.

4. The second to seventh respondents’ interlocutory application filed 15 February 2024 be dismissed with costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Otherwise, on the remaining issues on the applications the applicant and the second to seventh respondents relied on written submissions filed in the Court and, in substance, contained in exchanges of letters between their legal representatives and made oral submissions. The first respondent appeared at the hearing and is self-represented. She made no submissions on the applications.Background The proceeding was commenced by an originating process filed on 19 April 2023. The applicant (Austin) alleges that the first respondent (Ms Podulova) breached confidentiality obligations and infringed copyright in relation to certain confidential and commercially sensitive information relating to Austin’s business (Austin information). Ms Podulova was employed by Austin until 13 January 2023. Austin alleges that shortly after her employment ended Ms Podulova commenced employment with one of the other respondents (collectively, Schlam). Schlam is a competitor of Austin. At that time, the applicant made no positive allegations of wrongdoing on the part of Schlam. On 20 April 2023 the Court made orders on an ex-parte application restraining Ms Podulova from doing certain things with the Austin information in so far as it was stored in digital form in certain places and requiring her to produce that information to the Court. There was an inter‑partes hearing on 1 May 2023. None of the respondents opposed a continuation of the orders relating to Ms Podulova, but Schlam opposed orders requiring it to disclose details that were potentially relevant to the misuse of information by Ms Podulova. After a contested hearing, the Court ordered Schlam to file and serve an affidavit attesting to certain information, broadly, identifying the places where Austin information could be stored and the employer of Ms Podulova: Austin Engineering Pty Ltd v Podulova [2023] FCA 419. The orders the Court made on 20 April 2023 and 1 May 2023 are commonly referred to as ‘Norwich Pharmacal orders’ after the authority associated with formulating the principles upon which orders of that nature are made. In Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133 at 175 Lord Reid described the principle as follows:… a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. As Jackson J explained in Podulova at [12]-[13], the principle is based on equity’s jurisdiction to order discovery. It is not necessary for the applicant to have a cause of action against the person from whom the discovery is sought provided that the person is ‘mixed up’ in the wrongful acts of a wrongdoer. As formulated in Norwich Pharmacal, the principle was directed to identification of the wrongdoers otherwise known to the applicant, but it has been extended to apply to require disclosure of other information about wrongs allegedly committed. It was in the application of these principles to the facts before the Court that Jackson J made orders for Schlam to file and serve an affidavit of disclosure: Podulova at [14]-[42].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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