Canview Pty Ltd v Gilmore

Case [2024] FCA 551

FEDERAL COURT OF AUSTRALIA

Canview Pty Ltd v Gilmore [2024] FCA 551   

File number(s): QUD 232 of 2024
Judgment of: MEAGHER J
Date of judgment: 22 May 2024
Catchwords: PRACTICE AND PROCEDURE – Application for interlocutory injunction – where the applicants contend that the respondent has misused confidential information and infringed copyright – where prima facie case established – whether balance of convenience favoured the grant of an injunction – where the form of interlocutory orders in contention – injunction granted
Legislation: Federal Court of Australia Act 1976 (Cth) s 23
Cases cited:

Directed Electronic OE v OE Solutions Pty Ltd [2018] FCA 142

Karas v LK Law Pty Ltd (2023) 296 FCR 39

Norwich Pharmacal Co v Commissioners of Customs and Excise [1974] AC 133; [1973] 2 All ER 943
Division: General Division
Registry: Queensland
National Practice Area: Intellectual Property
Sub-area: Copyright and Industrial Designs
Number of paragraphs: 60
Date of last submission/s: 21 May 2024
Date of hearing: 22 May 2024
Counsel for the Applicants: Mr A Crowe KC with Mr M Walker
Solicitor for the Applicants: Gilbert and Tobin
Counsel for the Respondent: Mr D de Jersey KC with Mr MWP Ziebell
Solicitor for the Respondent: Cowen Schwarz Marschke Lawyers

ORDERS

QUD 232 of 2024
BETWEEN:

CANVIEW PTY LTD

First Applicant

VITURA HEALTH LTD

Second Applicant

VITURA HEALTH OPERATIONS PTY LTD

Third Applicant
AND:

ADAM ZACHARY GILMORE

Respondent

ORDER MADE BY:

MEAGHER J

DATE OF ORDER:

22 MAY 2024

THE COURT NOTES THAT:

1.In these orders:

(a)Vitura Group has the meaning set out in paragraph 10 of the affidavit of Guy Headley sworn on 15 May 2024.

(b)Vitura System means the IT system described in paragraph 16 of the affidavit of Guy Headley sworn on 15 May 2024.

(c)Services Agreement means the Services Agreement between CanView Pty Ltd and Code4 Cannabis Pty Ltd (C4C) dated 18 August 2022.

UPON THE APPLICANTS, THROUGH THEIR COUNSEL, GIVING THE USUAL UNDERTAKING AS TO DAMAGES, THE COURT ORDERS THAT:

1.Subject to these orders, the Respondent will not access the Vitura System or instruct or permit any third party to do so, until further order, other than for the express purpose of carrying out the Services as contemplated by clause 6.3 of the Services Agreement (the Services).

2.Subject to order 3 or to further order, in carrying out the Services on the Vitura System, the Respondent must not access any of the following:

(a)documents including but not limited to any emails, email accounts, text messages and communications via any platform or app or messaging system whatsoever;

(b)calendars and/or any information within or associated with any scheduling apps and/or platforms whatsoever;

(c)documents relating to or containing strategies of any company, entity or business whatsoever;

(d)human resources files whatsoever including but not limited to documents relating to the hiring, review, assessment, promotion or termination of employees or consultants within the Vitura Group;

(e)documents whatsoever relating to marketing;

(f)documents relating to cyber security whatsoever including but not limited to cyber…

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AGLC
Canview Pty Ltd v Gilmore [2024] FCA 551
Case
[2024] FCA 551
Decision Date

CaseChat Overview and Summary

The case of Canview Pty Ltd v Gilmore involves the applicants, Canview and Vitura Health, seeking interlocutory injunctions against the respondent, Mr Gilmore, who is the director of Code4 Cannabis Pty Ltd. The applicants allege that Mr Gilmore has misused confidential information and infringed their copyright through unauthorised access and downloads from their systems. The Supreme Court of Queensland is the relevant court, where the applicants filed proceedings against Code4 Cannabis Pty Ltd seeking a declaration that a termination notice was invalid and a counterclaim by Code4 Cannabis that the termination was justified. The legal issues at hand include whether the applicants have established a prima facie case, if damages would be an inadequate remedy, and if the balance of convenience favours granting the injunction. The applicants must demonstrate a serious question to be tried, likely irreparable injury, and a balance of convenience in their favour. The court assessed the strength of the prima facie case and the inconvenience to both parties if the injunction were granted or refused.

The court granted the interlocutory injunctions largely as proposed by the applicants, with some amendments. The court was satisfied that the applicants had established a prima facie case, damages would not be an adequate remedy, and the balance of convenience favoured the grant of the injunction. The court considered the interdependencies between the various orders and the nature of the Vitura System. The court also found that the definition proposed by the applicants was appropriate for the scope of the Services Agreement and the services provided by Code4 Cannabis Pty Ltd. The court ordered that the respondent must not access or use the Vitura System for purposes outside of the Services, and must not access, copy, download, or disclose any information from the system without the applicants' consent. The court also required the respondent to file an affidavit detailing the copied documents, accessed information, and any third parties involved.

The final orders include prohibitions on the respondent accessing the Vitura System for purposes outside of the Services, making copies or downloads of any documents, using or disclosing copied documents or accessed information, and deleting or destroying any documents. The respondent must also file an affidavit specifying the copied documents, accessed information, and any actions taken with the documents or information. The applicants have leave to amend their application and file their outline of submissions. The costs are reserved. The case is adjourned to a date to be fixed, and the parties have liberty to apply on three days' notice. Vitura Health Operations Pty Ltd is joined as the third applicant in the proceeding.

Orders

Orders of the court

1. Subject to these orders, the Respondent will not access the Vitura System or instruct or permit any third party to do so, until further order, other than for the express purpose of carrying out the Services as contemplated by clause 6.3 of the Services Agreement (the Services).

2. Subject to order 3 or to further order, in carrying out the Services on the Vitura System, the Respondent must not access any of the following:

(a) documents including but not limited to any emails, email accounts, text messages and communications via any platform or app or messaging system whatsoever;

(b) calendars and/or any information within or associated with any scheduling apps and/or platforms whatsoever;

(c) documents relating to or containing strategies of any company, entity or business whatsoever;

(d) human resources files whatsoever including but not limited to documents relating to the hiring, review, assessment, promotion or termination of employees or consultants within the Vitura Group;

(e) documents whatsoever relating to marketing;

(f) documents relating to cyber security whatsoever including but not limited to cyber penetration testing;

(g) video recordings or sound recordings whatsoever; and

(h) any stored data or stored information whatsoever other than data or information generated by the CanView Software in order to carry out the Services

(i) on the Vitura System.

3. If the Respondent believes he will need to access anything referred to in paragraph 2(a) to 2(h) above for the purpose of carrying out the Services, he will not do so unless he:

(a) makes a written request to the First Applicant setting out in reasonable detail the reason for the request and the date and timeframe on that date that he wishes to access the document(s); and

(b) receives from the First Respondent its express consent in writing to the request and the proposed date and timeframe for access to the document which shall not be unreasonably withheld.

4. The Respondent will not make copies of or download any documents from or via the Vitura System whatsoever or instruct or permit any third party to do so.

5. The Respondent will not access, use or disclose any documents (or parts thereof) which have been copied, reproduced or downloaded from or via the Vitura System or any copies thereof (Copied Documents) or instruct or permit any third party to do so, save for the sole purpose of obtaining legal advice in respect of this proceeding and proceeding numbered 5036 of 2024 in the Supreme Court of Queensland, until further order.

6. The Respondent will not access, use or disclose any information from the Copied Documents or any copies thereof (Accessed Information) or instruct or permit any third party to do so, save for the sole purpose of obtaining legal advice in respect of this proceeding and proceeding numbered 5036 of 2024 in the Supreme Court of Queensland, until further order.

7. The Respondent will not delete or destroy the Copied Documents or any copies thereof, or documents containing Accessed Information, in his possession or control or instruct or permit any third party to do so, until further order.

8. The Respondent will within 7 days of the making of this order, file and serve on the Applicants an affidavit which deposes to the following matters subject to any claim made in the affidavit to privilege:

(a) specifying the Copied Documents and any copies thereof;

(b) specifying the Accessed Information;

(c) detailing what the Respondent has done with the Copied Documents and/or the Accessed Information, including providing details of any third parties to whom Copied Documents or any copies thereof and/or Accessed Information have been provided and/or with whom the contents have been shared.

9. The First Applicant will file within 7 days of the provision of the affidavit referred to at 8 above an application in the Supreme Court of Queensland Proceeding BS5036/24 (“Supreme Court Proceeding”) relating to the use of the Copied Documents and Accessed Information in that proceeding.

10. The Application is adjourned to a date to be fixed.

11. The parties have liberty to apply on three days’ notice.

12. Pursuant to Rule 9.05 of the Federal Court Rules 2011 (Cth), Vitura Health Operations Pty Ltd is joined to the proceeding as the third applicant.

13. The Applicants have leave to amend the Originating Application so that references to the Applicants’ Microsoft 365 Account are amended to refer to the Vitura System.

14. The Applicants have leave to file the Outline of Submissions provided to Chambers on 21 May 2024.

15. Costs be reserved.

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

Background

Background to the litigation

In the evening of 22 May 2024, the applicants indicated that they were intending to file an application for leave to appeal orders 5 and 6 and urgently seek a stay of those orders. The parties were advised on 23 May 2024 that written reasons will be provided shortly. What follows are my reasons for making those orders. FACTUAL BACKGROUND Vitura Health, the second applicant, is the holding company of the first applicant, Canview and the proposed third applicant, Vitura Operations. All employees are employed by the second applicant and the proposed third applicant. The applicants are in the business of distributing medical cannabis products. The respondent is the director of a company by the name of Code4 Cannabis Pty Ltd (C4C). C4C is to provide software to the first applicant (Canview Software). Mr Headley, the Chief Commercial Officer and Executive Director of the second applicant deposes that the Canview Software is used to sell and distribute cannabis products by facilitating transactions and interactions between doctors, pharmacies and patients. Pursuant to a software licence agreement between the first applicant and C4C (Services Agreement), the first applicant licences the Canview Software from C4C. Clause 6.3 of the Services Agreement provides: The Supplier agrees and acknowledges that the Customer may grant the Supplier access to its systems, records and internal information (including but not limited to computer files, records, statements and documents) and the Supplier warrants that it will only access those documents for the purpose of carrying out the Services. The applicants allege that the respondent has acquired confidential information and infringed the applicants’ copyright through two incidents, which are referred to in the applicants’ submissions as the ‘Hacking Incident’ and the ‘Unauthorised Access and Download Incident’. The hacking incident occurred on 16 April 2024 and the Unauthorised Access and Download Incident occurred between mid-November 2023 and 13 May 2024. Through those incidents, the applicants allege that the respondent accessed and downloaded many documents and much information without the knowledge or authority of the applicants. Supreme Court Proceedings On 15 April 2024, C4C sent a letter to the applicant stating that it would be terminating the Services Agreement, giving 14 days’ notice. The termination was based on alleged breaches of clause 5.2 of the Services Agreement, which in part provides that the first applicant is not to ‘decompile, disassemble, reverse engineer or otherwise attempt to derive the source code of the Software’. On 22 April 2024, the first applicant filed proceedings against C4C in the Supreme Court of Queensland (Supreme Court Proceedings) seeking, inter alia, a declaration that the Notice of Termination dated 15 April 2024 issued by C4C was invalid and of no effect. On 17 May 2024, C4C filed a defence denying that the Notice of Termination was invalid and bringing a counterclaim seeking declarations to the effect that it was a valid termination on the basis that the applicant had breached parts of the Services Agreement.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

As to whether the respondent should be required to depose as to any claim of privilege in his affidavit, I was satisfied that the form of orders proposed by the applicants was more appropriate to facilitate disclosure at this early stage of the proceeding and make it clear as to which matters are subject to a claim of privilege. CONCLUSION For the aforementioned reasons, I was satisfied that the interlocutory injunction should be granted and the applicants’ proposed orders should be largely allowed, save for some amendments which are outlined above.

Ratio Decidendi

Legal Principle Established

Upon the receipt of the Marked-Up Proposed Orders, it appeared that there was disagreement in the form of the orders sought whereby the applicant sought that the respondent be made to depose as to the matters which are the subject of any claim for privilege. Conversely, the respondent sought that the wording be limited to ‘subject to any claim for privilege’. CONSIDERATION The principles relevant to the granting of interlocutory injunctions are well-settled and were recently summarised in Karas v LK Law Pty Ltd (2023) 296 FCR 39 at [72] as follows: An applicant for an interlocutory injunction must demonstrate that there is a serious question to be tried, the applicant is likely to suffer injury for which damages will not be an adequate remedy and the balance of convenience favours the grant of the relief sought: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 at [19] (Gleeson CJ and Crennan J). As to whether there was a serious question to be tried, [the applicant] had to demonstrate a ‘sufficient colour of right to the final relief’ in order to support interlocutory relief: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 at [11] (Gleeson CJ). If there was a sufficient basis for a claim then an assessment of the strength of the claim was also relevant to the balance of convenience: Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 at [67]. As the respondent accepted that a prima facie case exists and damages may not be an adequate remedy, the question turned on whether the balance of convenience favours the granting of the relevant interlocutory orders. As to what matters are relevant when assessing the balance of convenience, in Directed Electronic OE v OE Solutions Pty Ltd [2018] FCA 142, Beach J stated at [19]: …the balance of convenience looks at what the inconvenience, injury or injustice to [the Applicant] would be if the injunction were refused and seeks to weigh that against the inconvenience, injury or injustice to the [Respondent] if the injunction were granted … . It was submitted before me that I should assess the balance of convenience also in the context of considering the strength of the prima facie case: Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238 at [67]. I agree that the stronger the prima facie case, then the less strong the balance has to weigh in favour of [the Applicant] (and, of course, vice versa). Putting it slightly differently, if the balance is more equally poised, but [the Applicant] has a strong prima facie case, then the interaction between the two limbs may tip the balance in favour of granting an injunction. … Ultimately, the terms of the orders have to be considered as a whole, taking into account the interdependencies between the various orders made. Given the nature of the Vitura System, the definition proposed by the respondent was, in my view, too narrow. It did not capture the extent of the Vitura system, which, according to clause 6.3 the Services Agreement C4C, of which Mr Gilmore is a director, warrants it will only access “for the purposes of carrying out the Services”. Were the definition to be constrained in the way contended for by counsel for the respondent, it would be both difficult to make certain and, to the extent that it could be made certain, contemplate far less than the Vitura System as described in the affidavit of Mr Headley. In light of the clear boundaries as to what the respondent may access to provide the services, and the removal of the reference to servers or devices in paragraph 2(i), the definition proposed by counsel for the applicants is, in my view, the appropriate one.