Chaffey Services Pty Ltd as trustee for Cataby Services Trust, T/A Cataby Services v Doble [No 4]
[2023] WASC 361
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CHAFFEY SERVICES PTY LTD AS TRUSTEE FOR CATABY SERVICES TRUST, T/A CATABY SERVICES -v- DOBLE [No 4] [2023] WASC 361
CORAM: TOTTLE J
HEARD: 20, 21, 24, 26, 27, 28 APRIL, 1, 2, 3 & 4 MAY 2023
DELIVERED : 22 SEPTEMBER 2023
FILE NO/S: CIV 1854 of 2020
BETWEEN: CHAFFEY SERVICES PTY LTD AS TRUSTEE FOR CATABY SERVICES TRUST, T/A CATABY SERVICES
Plaintiff
AND
MICHAEL PAUL DOBLE
First Defendant
KIRAHNLEY PTY LTD T/A KTR SERVICES
Second Defendant
Catchwords:
Employment law - Where employee takes preparatory steps to compete with employer - Where employee negotiated the acquisition by own company of a third party's contract with employer's major customer - Where employee's duties included the provision of quotes to employer's major customer - Where no reliance placed on common law duty of fidelity - Whether employee owed fiduciary duties to employer - No fiduciary duty restricting employee's freedom to negotiate acquisition of third party contract - Fiduciary duties owed in relation to the provision of quotes - Breach of fiduciary duty to employee diverting work to own company - Employee entitled to equitable compensation
Corporations - Whether employee an officer of employer - Whether employee's conduct in taking preparatory steps constituted a breach of duties owed under s 182 and s 183 of Corporations Act 2001 (Cth) - Diversion of work to own company constituted breach of duties owed under s 182 and s 183 of Corporations Act (Cth) - Use of employer's information for employee's purpose of establishing own business constituted breach of duties owed under s 183 of Corporations Act - Employer entitled to compensation order
Equity - Equitable obligations of confidence - Employee using employer's confidential information for purpose of establishing own business - Application of springboard doctrine - Employer entitled to equitable compensation
Practice and procedure - Pleading - Adequacy of pleading of knowing assistance in a dishonest and fraudulent breach of fiduciary duty - Knowing assistance claim not open on the pleadings
Legislation:
Corporations Act 2001 (Cth) s 182; s 183; s 9; s 79; s 83; s 105; s 108; s 180; s 181; s 182; s 183; s 1317DA, s 1317E; s 1317S; s 1317H; s 1318
Result:
Plaintiff's claim allowed in part
Category: B
Representation:
Counsel:
Plaintiff : Ms R C Young SC First Defendant : Mr D H Solomon Second Defendant : Mr D H Solomon Solicitors:
Plaintiff : Bennett First Defendant : Solomon Brothers Second Defendant : Solomon Brothers Cases referred to in decision:
Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1
Anderson v Canaccord Genuity Financial Ltd [2022] NSWSC 58
ASIC v ActiveSuper Pty Ltd (in liq) [2015] FCA 342; (2015) 235 FCR 181
Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253
Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; 160 FCR 35; 241 ALR 705; 62 ACSR 427
Balston v Headline Filters Ltd (1990) FSR 385
Barnes v Addy (1874) LR 9 Ch App 244
Birtchnell v Equity Trustees, Executors and Agency Company Ltd (1929) 42 CLR 384
Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66
Breen v Williams (1996) 186 CLR 71
Buzzle Operations Pty Ltd (in liquidation) v Apple Computer Australia Pty Ltd [2010] NSWSC 233; (2010) 77 ACSR 410
Commissioner for Corporate Affairs v Bracht [1989] VR 821
Concut Pty Ltd v Worrell [2000] HCA 64, (2000) 176 ALR 693
Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266 (1987); 14 FCR 434
Deeson Heavy Haulage Pty Ltd v Cox [2009] QSC 277; (2009) 82 IPR 521
Dreamtime Supply Company Pty Ltd v Steadfast ICT Security Pty Ltd (No 2) [2022] ACTCA 57
Edmonds v Donovan [2005] VSCA 27; (2005) 12 VR 513
Elecon Australia Pty Ltd v PIV Drives GmbH [2010] FCAFC 56; (2010) 93 IPR 174
Farah Construction Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Forkserve Pty Ltd v Jack [2000] NSWSC 1064; (2000) 19 ACLC 299
GlaxoSmithKline Australia Pty Ltd v Ritchier (2008) 77 IPR 306
Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1
Hodgson v Amcor Ltd [2012] VSC 93; (2012) 264 FLR 1
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
In re Coomber v Coomber 1911 1 Ch 723
Mandrilla Laboratories v Campbell [2009] NSWSC 987
Nexgen Sydney Pty Ltd v Barakat [2022] NSWSC 312
Nottingham University v Fishel [2000] IRLR 471
R v Byrnes & Hopwood (1995) 183 CLR 501
Robb v Green [1895] 2 QB 1
Searle & Co Ltd v Celltech [1982] FSR 82
Weldon & Co Services Pty Ltd v Harbinson [2000] NSWSC 272
Woolworths Ltd v Olson (2004) 184 FLR 121
Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317
Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23; (2005) 219 ALR 112
Yorke v Lucas (1985) 158 CLR 661
Table of Contents
Overview
The evidence
The facts
Mr Chaffey establishes Cataby General Services
Mr Doble's work history
Mr Doble joins Cataby General Services
Mr Doble's responsibilities
The negotiations between Mr Chaffey and Mr Doble
Negotiations between Mr Chaffey and Mr McGregor
The sale agreement
Mr Doble meets Mr McGregor
Mr McGregor meets Mr Hardingham
Mr McGregor's site visit
Meeting at Mr McGregor's farm
Roles of Mr Chaffey and Mr Doble in Cataby Services
Mr Doble prepares to compete
Credit issue
Offer of finance
Mr Doble resigns
Mr Chaffey resigns as a director of the plaintiff
Mr Doble diverts work to Tronox
Mr Doble final preparatory steps
The pleading of the duties
Fiduciary duties
Principles
Consideration
Corporations Act duties
Statutory provisions and principles
Consideration
Equitable duty of confidence
Principles
Consideration
Defences of consent, acquiescence and estoppel
The alleged breaches and findings
General preparatory work – statement of claim pars 10.1, 10.2, 10.12, 10.5 10.10, 10.11, 10.13, 10.24 10.25
Acquisition and novation of the VMS contract - statement of claim - pars 10.3, 10.9, 10.17, 10.18 and 10.26.
Applying for and obtaining finance - statement of claim - pars 10.7, 10.8, 10.15, 10.16, 17 and 26
Soliciting the plaintiff's employees - statement of claim - pars 10.6 and 10.27
Soliciting and undertaking mine site maintenance work - statement of claim 10.14, 10.20, 10.22, 10.23, 10.28, and 13.
Kirahnley's liability
Corporations Act claim
Knowing assistance claim
Corporations Act defences
Relief
Work diverted to Kirahnley while Mr Doble employed by the plaintiff
Misuse of the plaintiff's turnover information
Misuse of the induction information in the 4 November 2019 email
No recoup of Mr Doble's salary
Conclusion
Appendix
Table of invoices and purchase orders
TOTTLE J:
Overview
1This action involves a dispute between the plaintiff and its former employee, Mr Mick Doble (the first defendant), and his company Kirahnley Pty Ltd (the second defendant). The dispute raises the question of where the line is to be drawn between the activities an employee is permitted to undertake in preparation for future competition with an employer and those that are not permitted and whether, in the circumstances of this case, Mr Doble crossed that line.
2The essential facts are as follows. The plaintiff was incorporated by Mr Iain McGregor in April 2019 to purchase a business that provided mine site maintenance services on a mine site in the mid-west of Western Australia. The vendor of the business was a company, Chafco Pty Ltd, which was controlled by Mr David Chaffey. Chafco employed Mr Doble as its site supervisor. Between 2016 and late 2018 Mr Chaffey and Mr Doble discussed the possibility of Mr Doble purchasing the business but they were unable to agree terms. Following completion of the sale to the plaintiff in July 2019 the plaintiff employed Mr Doble as its site supervisor. In late 2019, while still employed by the plaintiff, Mr Doble took steps to set up a business with a view to providing both mine site maintenance and mine rehabilitation services to the mine owner, Tronox Management Pty Ltd. Those steps included incorporating Kirahnley, negotiating the purchase by Kirahnley of a contract for mine rehabilitation services from another contractor, arranging finance (for which purpose the plaintiff alleges Mr Doble used its confidential information), and purchasing equipment. Kirahnley began providing services to Tronox some weeks before Mr Doble's employment with the plaintiff came to an end on 31 March 2020 and continued to do so thereafter.
3The plaintiff alleges Mr Doble's activities constituted breaches of fiduciary duties, breaches of statutory duties and breaches of an equitable obligation of confidence. It alleges that Kirahnley was knowingly concerned in those breaches and that Kirahnley is liable both under the Corporations Act 2001 (Cth) and in equity. The amount claimed by the plaintiff ranges between $1.5 million and $6.5 million depending on the approach taken to quantification. The quantum of the plaintiff's claims was heavily dependent on the success of its contentions in relation to the rehabilitation services contract ('the VMS contract').
4The plaintiff seeks equitable compensation for breach of fiduciary duty, equitable compensation for breach of the equitable duty of confidence and statutory compensation. Alternatively, it seeks an account of profits both in equity and under the Corporations Act.
5The plaintiff included in its writ of summons and in the version of the statement of claim current at the time of the trial (the third further re‑amended statement of claim filed on 2 March 2023 - 'the statement of claim') a claim for common law damages, but in both opening and closing written submissions disavowed any claim for common law damages.[1]
[1] Plaintiff's outline of opening submissions filed 3 April 2023 [49], plaintiff's outline of closing submissions filed 4 May 2023 [32].
6The action has given rise to numerous factual and legal issues. The principal issues may be stated as follows:
(a)Did Mr Doble owe duties in equity and under the Corporations Act 2001 to the plaintiff, and if so, what were those duties?
(b)Did Mr Doble's conduct in establishing Kirahnley's business constitute a breach of any equitable or statutory duties?
(c)If Mr Doble's conduct constituted breaches of any equitable or statutory duties, does Kirahnley have any liability to the plaintiff?
(d)Has Mr Doble made out any of the positive defences pleaded by him?
(e)If no defence is established, what loss or damage, if any, has the plaintiff suffered, or what gains have Mr Doble and Kirahnley made, as a result of any breaches, and what, if any, remedy should be ordered?
7In summary the defendants' position on each of the issues is as follows:
(a)Mr Doble did not owe the plaintiff fiduciary duties of the nature alleged by the plaintiff.
(b)Mr Doble was not an 'officer' of the plaintiff within the meaning of s 9 of the Corporations Act and thus did not owe statutory duties pursuant to s 180 or s 181 of the Corporations Act.
(c)In any event Mr Doble's conduct did not constitute a breach of any equitable or statutory duties.
(d)The information used by Mr Doble for the purposes of obtaining finance was not confidential information and Mr Doble was not the subject of any equitable obligation of confidence in respect of that information.
(e)The plaintiff has not pleaded a Barnes v Addy knowing assistance case against Kirahnley and should not be permitted to advance such a claim at trial.
(f)Kirahnley's acquisition of the VMS contract did not cause the plaintiff any loss because it would never have succeeded in acquiring that contract.
(g)Mr Doble had informed both Mr Chaffey and Mr McGregor of his intention to incorporate Kirahnley, acquire the VMS contract and perform site rehabilitation and other related work on the Tronox site. Mr McGregor was a director of the plaintiff and controlled its activities and Mr Chaffey was a director of the plaintiff until March 2020. Consequently, the defendants contend the plaintiff consented to the establishment of the Kirahnley business or that the plaintiff acquiesced in it and is now estopped from denying that consent.
(h)Alternatively, the defendants acted honestly and should be relieved of liability pursuant to s 1318(1) or s 1317S(2) of the Corporations Act.
8I have concluded:
(a)Mr Doble owed fiduciary obligations in respect of one aspect of his responsibilities, that is, the preparation of quotes and invoices for Tronox and that he breached those obligations by causing Kirahnley to quote for work instead of submitting quotes on the plaintiff's behalf. In effect, while still employed by the plaintiff he diverted work away from it to Kirahnley.
(b)Mr Doble was not an officer of the plaintiff within the meaning of that term in the Corporations Act but that the diversion of work to Kirahnley was a contravention of the duties owed under s 182 and s 183 of the Corporations Act and Kirahnley was involved in that contravention.
(c) Mr Doble misused confidential information about the plaintiff's turnover for the purposes of his application for finance and in so doing breached the equitable duty of confidence he owed to the plaintiff. This breach enabled Mr Doble to obtain finance six weeks sooner than would have been the case had he not misused the confidential information.
(d)Mr Doble's misuse of the plaintiff's confidential information also constituted breaches of the duties owed by him under s 182 and s 183 of the Corporations Act. Kirahnley was involved in that contravention.
(e)Mr Doble did not owe the plaintiff any fiduciary duty or any statutory duty that restricted his freedom to cause Kirahnley to secure the VMS contract.
(f)The plaintiff's claim against Kirahnley on the basis that it knowingly assisted in Mr Doble's breach of fiduciary duty is not open on the pleadings.
(g)None of the positive defences have been established.
(h)The plaintiff is entitled to equitable compensation, alternatively statutory compensation orders, in respect of the losses flowing from breaches of duty referred to in (a) - (d) as quantified in the final section of these reasons. The amounts so quantified are modest in comparison to the amounts claimed by the plaintiff. This is largely because I have held that Mr Doble did not owe any duty that restricted his freedom to secure the VMS contract.
The evidence
9A substantial volume of documentary evidence was received. Wherever possible I have relied on the contemporaneous documents and inferences drawn from those documents for the purposes of making factual findings.
10In assessing the evidence of all witnesses I take into account the corrosive effect of the passage of time on human memory. The relevant events occurred principally between late 2018 and early 2020 and, when they occurred, they would not have seemed significant or particularly memorable. I also take account of the ever-present risk that recollections may be impaired by the intrusion of false memories generated (consciously or otherwise) by self-interest in the outcome of the litigation or a sense of loyalty by a non‑party witness to one side or the other. These factors led me to examine the evidence of all witnesses in this trial with caution.
11Mr McGregor and Mr Chaffey gave evidence about their dealings with Mr Doble and with each other. The defendants' counsel, Mr Solomon, submitted that the evidence of each of Mr McGregor and Mr Chaffey was unreliable except in so far as it was corroborated or amounted to admissions. Mr Solomon supported that submission with references to the transcript.[2]
[2] Defendants' closing submissions filed 2 May 2023 [28] and [29].
12I have considered the evidence relied on by Mr Solomon for his submission in respect of Mr McGregor's evidence. In my assessment, those passages of Mr McGregor's evidence, and indeed his evidence generally, show him to be a cautious witness who was perhaps overly defensive at times. I do not accept, however, that the matters relied on by Mr Solomon are sufficient to support the conclusion that Mr McGregor's evidence was unreliable except to the extent to which it was corroborated or amounted to admissions. To the contrary, my assessment was that Mr McGregor was a truthful witness whose evidence was generally reliable but, for the reasons I have mentioned, his evidence like that of all of the witnesses required careful consideration. In general, where there was a conflict between Mr McGregor's evidence and that of Mr Doble there were objective factors that supported Mr McGregor's account and I refer to these as I set out the facts.
13Mr Chaffey presented as a forthright witness who gave his evidence in an open and direct manner. Notwithstanding this I have more significant reservations about the reliability of his evidence. My impression was that he and Mr Doble had been friends and that the failure of the negotiations between them for the sale of Chafco's business to Mr Doble, the subsequent sale to the plaintiff and the dispute that had arisen presented Mr Chaffey with a number of conflicts both personally and financially and these affected the reliability of his evidence. A more specific basis for regarding his evidence generally with caution was his own evidence to the effect that statements made by him in one of his emails to Mr Doble in October 2018 were false. I refer to this evidence at [51].
14Mr Doble gave his evidence carefully. In answering questions in cross-examination on topics about which he appeared confident or secure Mr Doble was precise in his answers. When asked questions on topics about which he appeared vulnerable, Mr Doble frequently gave the answer 'I guess so' which I took as an indication of a level of evasiveness.
15Further, Mr Doble's credit was undermined to a very significant degree by evidence that was elicited in cross-examination about alterations made by him to a document submitted in support of his application for finance. I refer to this evidence in detail at [166] to [174]. Mr Doble admitted in effect dishonest conduct constituted by altering a discovered document knowing that it was likely to be adduced in evidence.[3]
[3] ts 557 - 559.
16I have not rejected Mr Doble's evidence in its entirety but when I have accepted it, it is because it is supported by the objective facts or I have found it to be inherently plausible.
17Six other witnesses gave evidence. When necessary to do so I have commented on the reliability of the evidence of the other witnesses as I set out the facts.
The facts
Mr Chaffey establishes Cataby General Services
18Mr Chaffey established Cataby General Services in 1995 to provide mine site maintenance services on the Tronox site. Before he commenced trading as Cataby General Services Mr Chaffey was employed by Tiwest Pty Ltd which later changed its name to Tronox Management Pty Ltd. In April 2004 Mr Chaffey incorporated Chafco Pty Ltd and thereafter Chafco owned and operated Cataby General Services. Mr Chaffey is Chafco's sole director, secretary and shareholder.
19As the expression suggests, mine site maintenance services are the services required to keep a mine site running. They are ancillary to the activities of mining and rehabilitation. At the Tronox site Cataby General Services undertook road maintenance, wet hire of machinery (most commonly involving the hire of machinery with fuel and an operator), vehicle hire, bore removal and servicing, building maintenance, minor civil works and waste removal. Mining was undertaken by a mining contractor, Piacentini & Son, and site rehabilitation was undertaken by VMS Contractors.
20Mr Todd Johnson of VMS Contractors described the work undertaken by his business as follows:[4]
The core of our work was rehab. So we used to harvest the bush ahead of the mine site. The mine site would move along like a big hole in the ground. We would take everything from the front of the mine site, put it at the back of the mine site and use that to rehab with. So seeds, bushes, everything. We would try to make the back look like the front, if that made any sense. That was our main work.
[4] ts 688.
21The VMS contract was originally for a contract period of 24 months with two 12 month extension options but further extensions were granted and relevantly, in 2019 it was extended until 2023. The scope of the contract was set out in Schedule 2 and specified in some detail the nature of the rehabilitation work to be undertaken. In overview the work included pasture rehabilitation, native rehabilitation and 'other duties'. The other duties were related to rehabilitation but included 'Adhock [sic] Services'. These were defined as including mechanical maintenance of equipment, fencing and installation of rehabilitation signage, water monitoring and sample gathering and 'other adhock works as directed from time to time by the Works Supervisor'.[5] Cataby General Services did not undertake any rehabilitation work.
[5] Exhibit 1, schedule 2, cl 3.8.1.
22Until early 2017 Tronox was Cataby General Services' main client. In 2017 Cataby General Services started providing services to Iluka Resources Ltd (Iluka). Iluka had begun the development of a mine site close to Mr Chaffey's home near the Cataby town site. The services provided by Cataby General Services to Iluka were fuel supply, road construction, minor civil works, waste removal, dust suppression and road maintenance.
23Mr Chaffey's involvement with Cataby General Services was 'hands‑on' in that he undertook much of the work himself. It was not until 2005 that the business started to employ others.[6] By early 2016 there were four people working in the business, Mr Geoff Sawyer, Mr Phil Martin, Mr Gregory Wood and Mr Mark Doble. Mr Mark Doble was Mr Doble's brother.
[6] ts 248.
24When Tronox wanted Cataby General Services to undertake work it asked for a quote. If the quote was accepted Tronox issued a purchase order. When the work was completed an invoice was issued. Cataby General Services had standard rates that had been agreed with Tronox. There were specific rates for the hire of each item of machinery, rates for labour hire and for the hire of facilities such as crib rooms, toilets and lighting towers.[7]
[7] Exhibit D2.
Mr Doble's work history
25Mr Doble had started work in the mining industry in 1986. He had experience in a number of different roles including machinery operator, supervisor and scheduler.[8] In 1999 he started work on the Tronox site as the site supervisor for an earthworks contractor and he met Mr Chaffey not long thereafter. Subsequently, between 2001 and 2015 Mr Doble was employed by Tronox. When he was working for Tronox one of Mr Doble's responsibilities was giving directions to VMS Contractors. Mr Johnson of VMS described him as 'our boss for a long time'.[9] In 2015 Mr Doble was made redundant by Tronox.
[8] Exhibit 416.
[9] ts 687.
Mr Doble joins Cataby General Services
26In late 2015 and early 2016 Mr Chaffey started to think about 'wind[ing] it back a bit'.[10] Around that time Mr Mark Doble resigned from Cataby General Services and Mr Chaffey was looking for someone to replace him.
[10] ts 252 - 253.
27In about April 2016 Mr Doble and Mr Chaffey travelled to Perth together in Mr Doble's car. During the journey the two men discussed the possibility of Mr Doble working for Cataby General Services with a view to ultimately buying the business. They discussed some terms and MrChaffey proposed that Mr Doble would be paid a salary of $130,000 per annum. In addition, they discussed the price at which the machinery then used on the Tronox site might be sold. The figure mentioned was $650,000.
28Following those discussions in mid‑2016 Mr Chaffey employed Mr Doble to supervise the day to day running of Cataby General Services on the Tronox site. There was no written contract of employment. Mr Doble's family home was in Geraldton and during the working week Mr Doble lived in an accommodation unit on the Tronox site.
Mr Doble's responsibilities
29When Mr Doble first started working for Cataby General Services he and Mr Chaffey discussed the pricing of work for the purposes of submitting quotes to Tronox but, as Mr Chaffey put it, Mr Doble 'cottoned on pretty quick'.[11] Much of the quoting involved applying Cataby General Services' standard rates to the estimated duration of the period of hire of equipment or the estimated duration of the work to be undertaken.[12] When Cataby General Services was asked to quote for a larger job, or where 'major costs [were] involved' Mr Doble discussed the amount to quote with Mr Chaffey,[13] but otherwise quoting was Mr Doble's responsibility. By about September 2016 Mr Doble had taken over the task of preparing invoices. This was not complex. Using his laptop computer Mr Doble prepared invoices that corresponded with the quotes, sent the invoices to Tronox and provided Mr Chaffey with copies. Remittance advices were issued by Tronox (and later Iluka). Mr Doble checked the remittance advices against the invoices to which they related.[14]
[11] ts 250.
[12] ts 251.
[13] ts 264.
[14] ts 251.
30On occasions Cataby General Services was asked to provide quotes for labour or machinery to an electrical contractor, Curtis Electrical, which provided services to Tronox, and in those instances invoices were rendered to Curtis Electrical rather than Tronox.
31Cataby General Services was a small business with no more than four full time employees providing a limited range of services to two mine sites. There was no requirement for an elaborate management structure and relations between Mr Chaffey, Mr Doble and other employees were informal and, I infer, generally cordial.[15]
[15] ts 396.
32By mid-2018 in addition to the four full time employees there were two casual employees.[16] In his capacity as site supervisor the other employees reported to Mr Doble but Mr Chaffey also had 'hands on' involvement.[17] When Cataby General Services required casual employees they were found either by Mr Doble or by Mr Chaffey.[18]
[16] ts 261.
[17] ts 313.
[18] ts 252.
33Mr Doble did not make any decisions independently of Mr Chaffey in relation to the hiring of employees. [19] The circumstances in which Mr Gregory Wood was employed by Cataby General Services in about 2019 provides a useful illustration of the way in which Mr Doble and Mr Chaffey worked together in relation to employees. Mr Wood knew Mr Doble through their shared interest in motorsports and he asked Mr Doble whether there were any positions available at Cataby General Services. Mr Doble spoke to Mr Chaffey about Mr Wood and subsequently they met with Mr Wood and he was offered a job.[20] No employees were dismissed while Mr Doble worked for Cataby General Services and, having regard to all the evidence of Mr Doble's role, I find that Mr Doble's authority did not extend to either employing or dismissing employees. Further, the limited nature of the dealings between Mr Doble and Mr Chaffey regarding the recruitment of new employees was insufficient to establish a course of conduct from which it is possible to infer an agreement that imposed a contractual obligation on Mr Doble to make recommendations about the hiring and dismissal of employees.
[19] ts 267
[20] ts 381.
34Mr Chaffey's evidence was that Mr Doble, 'virtually ran the day-to-day workings of the business'.[21] He described Mr Doble's role as follows:[22]
[L]iais[ing] with people at Tronox, people that want to work - jobs done, and then Mick would go out and organise to get those jobs done.
…
- he had the use of the gear, the machinery, and he deployed it where he thought it was necessary with the blokes that were there.
[21] ts 249.
[22] ts 250.
35I find that from late 2016 Mr Doble was responsible for providing quotes to Tronox, scheduling and supervising the work that was the subject of Tronox purchase orders and rendering invoices. I find that in so doing he ran the day-to-day operation of the Cataby General Services business on the Tronox site.
36As will be seen later in these reasons, the description of his role given by Mr Doble to his bank, although expressed in language both self‑serving and self‑aggrandising, did not differ materially from Mr Chaffey's evidence that Mr Doble 'virtually ran the day-to-day workings of the business'.[23]
[23] ts 232 - 233; 249; exhibit 198.
37Mr Doble had authority to use a Cataby General Services credit card to purchase materials for the business up to the credit limit of $10,000 and used the card from time to time to buy materials for the business and pay other routine expenses, 'the day-to-day stuff'.[24]
[24] ts 267.
38Beyond his responsibilities for quoting and invoicing Mr Doble had no role in the financial management of Cataby General Services. Indeed in 2018 Mr Chaffey expressed some frustration with what he viewed as Mr Doble's failure to observe instructions in relation to the timing of the rendering of invoices designed to assist in financial management.[25] Mr Doble was not involved in arranging or managing the business's working capital requirements, monitoring its cashflow (other than checking that invoices were paid), or in the acquisition and financing of equipment. He had no responsibility for administering the payroll of the business. He had no responsibility for the lodging of business activity statements. Mr Doble was a salaried employee with no entitlement to any share in the profits of the business.
[25] Exhibit 19.
39The volume of work undertaken by Cataby General Services increased between 2016 and 2019 and I find that this was due in part to Mr Doble's efforts. I accept, however, Mr Chaffey's evidence that the number of employees had increased because there was an increase in profitable work and this was attributable to 'everyone's quality of work' rather than solely Mr Doble's quality of work.[26] Mr Chaffey did not suggest that Mr Doble's duties extended to developing the business by finding new customers.
[26] ts 262.
40Mr Chaffey, Mr Doble and the other Cataby General Services' employees, Mr Sawyer, Mr Wood and Mr Martin, often gathered at Mr Chaffey's farm for drinks after work. On many of those occasions Mr Chaffey and Mr Doble discussed the purchase by Mr Doble of Cataby General Services in the presence of the other employees.[27] Nothing was reduced to writing until emails were exchanged in 2018 as described in the following paragraphs.
[27] ts 383, 396.
41By mid‑2018 some tension, caused by various operational issues, had arisen in the relationship between Mr Chaffey and Mr Doble. The tension was evidenced by the content of emails exchanged between them in which they discussed the terms of Mr Doble's potential purchase of the business and to which I refer in more detail below.
The negotiations between Mr Chaffey and Mr Doble
42The defences of consent, acquiescence and estoppel require the negotiations between Mr Chaffey and Mr Doble and the subsequent negotiations between Mr Chaffey and Mr McGregor to be recounted in some detail.
43Mr Doble sent Mr Chaffey an email on 9 July 2018. In the introductory paragraphs to that email Mr Doble wrote that he was finding it increasingly difficult to speak to Mr Chaffey about matters and that he wanted to put things on the table without getting heated. He said, 'over the last few months it has become increasingly difficult to continue working for Cataby General Services'. Mr Doble raised various operational issues and continued as follows:[28]
When we drove to Perth you made me an offer. The day I started you told me you could not afford to pay me that much and drastically reduced my wage. You have since increased it by $10,000 and it is still $10,000 below what your original offer was. You have told me I can buy whatever I want on the credit card but I would not of spent $15,000 on personal stuff since I started. Of late there seems to be no credit on it as three times I have gone to use it for work including the roller hire and to get the ute serviced on Friday to be told its declined due to insufficient funds
We spoke about you wanting to retire and I was to start taking the business over within 2 years and you would set up a payment plan of somewhere around $50-$60,000 per year for 10 years to pay for it.
In March when things started to come to a head you then offered a profit share deal. 4 months later that also has not eventuated.
The last offer you said was to work out what equipment I wanted and you would work out a price for it, your suggestion was that if I could not afford it maybe I could find a silent partner to buy in. Very different to any previous discussions. With this offer less than a few days old you took the blue drop deck to Perth and a few days later Greg tells me you had sold it. I would have thought maybe if you were asking me what gear I wanted maybe I would have been asked if that was something I would be interested in or even told that it had been sold.
When I started it all sounded good and things were going well, I was working to build your business and increase your profit with the aim of the business eventually becoming mine this is looking less and less likely. The way I feel at the moment I have worked my arse off over the last 2 years to increase turn over and set your business up where it has a great name for supplying a service no matter when we are called on.
I don't know what the answer is, I can not continue to try and run things only to find out you have done or set up things that I don't know about. Maybe the answer is I just hand all the book work etc back to you and all jobs just go through you. I enjoy the work just not the hurdles that continue to be put in front of us.
[28] Exhibit 18. The parties' documents are reproduced in these reasons as they appear in their original form. No spelling or typographical corrections have been made.
44Mr Chaffey responded to Mr Doble by email sent on 30 July 2018 and stated:[29]
When I talked to you about you buying the business was when all that existed was Tronox, and it was for the gear that is mainly at Tronox and that was what it was based on with a smidgen of goodwill. I also said that any extra equipment etc would of course have to be added to the payout or we could go until it was payed for as not to leave you with to much of a burden later and i remember saying that at the end of our chats. Then came lluka and off course the extra gear and with all sorts·of equipment, bores etc. Hence i asked you for a list of the equipment you wanted because it all has a price and remembering some of the gear is my private stuff I noticed you wanting to have access to everything, and once again when i questioned something going you would get irate so it is best to work out what you want and if I will part with it.
…
I have spent the last 15 years talking with lluka people and have been nurturing that side of things along, i also have some contacts in lluka a little higher up in lluka than you think and i for one have not wanted to disappoint them. The simple things like the invoicing although not big to you is big to them and myself. Even now i have not received a copy of the invoices that have been sent up till the end of June. Those are the things that can ruin business relations as all paper work has to be tidied up in case an audit needs to be done (all about the money and tax).
It does worry me that you became flippant about the invoicing and where the money came from and that was why I am thinking you may either want to get someone else or yourself to front up with the money to buy the business, as i don't feel comfortable doing the vendor finance. Otherwise we do the share arrangement and work some way of buying into it with shares. It is not easy setting these things up and they have to be done through the legal channels and also my will has to reflect some of those things. This gear is for me to live off later (my super so to speak) and i am surprised if you thought I would fire sale it all to you and then end up with nothing later on to live on.
Having said what i have said if there is constant bitterness about everything then the show is not going to work well, so if you want to give me that list of gear you require so we can start sorting out or if you want out of it, will be up to you. I really can't add much more than what has been said and I hope that clears the air.
[29] Exhibit 19.
45Mr Doble responded by email later the same day, 30 July 2018.[30] In response to Mr Chaffey's invitation for Mr Doble to prepare 'a list of gear' Mr Doble said:
I will do a list up and I guess we will discuss it, I would like to look at the option of maybe buying the Tronox part of the business and some of the equipment that you have that is required to operate this. In the mean time I am happy to hand you back all of the invoicing etc and that should make it easier for you to plan how the money comes in. An option is that maybe I concentrate on running the Tronox side of the business and you run the Iluka work for the time being.
I do not want any ill feeling between us, we have been friends for a long time and I hope this continues. Yes there is a lot of pressure with the work load I have taken on. But at the end of the day I have been doing it for your business with the hope eventually I would also benefit out of all the work. I do not expect instant reward and in my previous email I had only stated the offers you had made.
[30] Exhibit 20.
46Mr Doble sent Mr Chaffey a list of the equipment he was interested in buying on 15 August 2018.[31]
[31] Exhibit 21.
47On 9 October 2018 Mr Chaffey sent Mr Doble an email in which he wrote:[32]
Mick, can you send through the trading entity that you want to operate Cataby General Services under. Also when all the vehicles get signed over there will be stamp duty but if we cut the value of the gear and add more good will it will cut that back and also gst, if any but hopefully will not have any if done right. Chaf.
[32] Exhibit 24.
48Mr Doble responded:[33]
I will get back to you on the name.
Have you come up with a figure you are after for the equipment and business? Also a time frame on handover?
Mick
[33] Exhibit 24.
49Later on 9 October 2018 Mr Chaffey replied:[34]
Have already had a draft agreement done but it was a bit rigid in legality so am working on another draft. Supposedly 1/1/19 would be yours but may work some money into your business December to give you carry on funds. Will talk money next week if they have sorted.
[34] Exhibit 23.
50In cross-examination Mr Chaffey accepted the statement to the effect that he had prepared a draft agreement already and was working on another draft was 'probably' untrue and 'must have been' untrue.[35] He accepted it 'must have been' untrue because in answer to a subpoena seeking production of any such draft agreements Chafco's solicitors had written to the court stating Chafco had no such draft agreements in its possession. The plaintiff submitted that Mr Chaffey's evidence needed to be understood in its full context which was that he could not remember what had happened some four and a half years earlier and could not find any documents that were required to be produced in answer to the second subpoena. The cross‑examination was as follows:[36]
[35] ts 281 - 282.
[36] ts 281 - 282.
And your statement in exhibit 23 that you had already had a draft agreement prepared and were working on another draft was untrue, wasn't it?---Probably. I can't - I can't recall that. It - why that - why that came in.
You instructed lawyers for CHAFCO, Rowe Bristol Lawyers, to inform the court by a letter dated 13 April 2023 responding to a subpoena that CHAFCO Pty Ltd had no draft agreement or draft agreements with Mr Doble or an entity associated with Doble in its possession, didn't you?---Yes.
And that - that's a letter on the court - in the court records?---Yes.
You recall instructing your lawyers to - - -?---Well, yes, because I couldn't find anything. I have nothing and I can't remember why - yes, don't - don't recall what happened there.
Well, it was - - - ?---No, I certainly don't have anything at home. I had stuff scribbled on paper and whatever, but that got thrown out. So I couldn't find anything.
And in truth, Mr Chaffey, with the very early stage that your negotiations with Mr Doble was at, you hadn't had a draft legal agreement drawn up at all, had you?---Well, it depends what you call a draft. I'm thinking about scribbling on paper.
No, no, I'm talking about what you spoke about in exhibit 23, your email of 9 October 2018 at 3.37 pm, exhibit 23:
Have already had a draft agreement done, but it was a bit rigid in legality.
?---Yes. Well, obviously I didn't. Obviously I didn't.
No. So it was untrue, wasn't it?---Yes. it must have been.
51While I accept that Mr Chaffey was giving evidence about events that had occurred four and a half years earlier, I do find his evidence troubling. It strikes me as odd that Mr Chaffey would have written that he 'already had a draft agreement done but it was a bit rigid in legality' and 'Will talk money next week if they have sorted', if he did not wish to convey to Mr Doble that he had taken the step of having an agreement prepared by a third party. Further, having an agreement prepared by a third party is something that I would expect Mr Chaffey to have remembered if 'it was a bit rigid in legality' and he was working on another draft. Finally, Mr Chaffey's apparent readiness to accept that he had made a statement to Mr Doble, someone who he had known for a long time and with whom he was generally on friendly terms, was untrue was rather surprising. It is difficult to know what to make of this evidence but, as I have said, it causes me to have reservations about the reliability of Mr Chaffey's evidence generally.
52On 1 November 2018 Mr Chaffey sent an email to Mr Doble in which he wrote:[37]
Well here it is Mick. The price for the business is $930000.00. I will be splitting into two components $465000 good will, and $465000 equipment.
As far as i know there is no GST on the sale, there will however be stamp duty. There will be an interest component of 4.5% for 5 years rising to commercial bank rate after 5 years. There will be a PPR put on the equipment.
Obviously you will need to organise an overdraft facility and your business entity you wish to transfer Cataby General Services into.
I hope this will be done and dusted by 30/12/18, we may work around that one, as depends on lawyers and as i will be helping with finance for the first 6 weeks or so as the accounts are sorted. If all ok with you and of course the accountants and lawyers I will carry on with the change over.
[37] Exhibit 25.
53Mr Chaffey was cross-examined about the apportionment of the purchase price he proposed to Mr Doble, that is $465,000 for the equipment and $465,000 for goodwill. He explained what he was trying to do by that apportionment as follows:[38]
What I was trying to do was - I was under the assumption if you can bring the goodwill into it and get the price of the equipment down, you can work stuff around the equipment. It might have saved stamp duty or something for Mick paying on the vehicles.
[38] ts 284.
54I accept that Mr Chaffey's concern to apportion the purchase price between the equipment to be sold and goodwill was based on an understanding held by him that the apportionment might have beneficial tax consequences, and that he genuinely held that view, whether or not there were, in fact, any such beneficial tax consequences.
55Mr Doble replied to Mr Chaffey's email of 1 November 2018 by email sent on 5 November 2018 in which he wrote:[39]
Before I agree to any price I will need to get my accountant to look at the any financial records etc (Preferably 5 years but a minimum of 3 years). I would also need a breakdown and valuation of what plant and equipment I am receiving for the figure you have stated and proof of contracts/ ongoing work with Tronox and Iluka.
The concerns that I have is that once the Iluka construction is finished there is no certainty that there will be any ongoing work and to date we have not done any work for operations, it has all been for the construction department and contractors that will mostly be finished by the end of the year. Iluka have given many jobs to other contractors on site that we had been told we had and only time will tell if this will continue. Yes we are also busy with Tronox at the moment but they are also in a construction/transition phase with moving to the north and also with the regular work on the dredges while they are in hard digging. (This is expected to be over within the next 12 months). As we both know Tronox and Iluka have both shut down or significantly cut spending numerous times in the last few years and this can happen again at any time. You have said to me many times that just when you think things are going good they always seem to find a way to throw a spanner in the works.
Your business has grown significantly over the last 2 years and I feel that a large part of this has been due to my determination to build the business with the aim of hopefully purchasing it from you. I understand you have been dealing with Iluka for many years to secure work with them, however you stated many times that you only wanted to do the small jobs around the edges. I was the person that continued to push for more work at both the Tronox and Iluka sites and I was the one that did what ever it took to get these jobs done.
I understand that things have changed, and I realise the amount you want for your business would need to change accordingly. However, when I started to work for you, the figure of 50 to 60K per year for 10 years was what you stated, you did say that any additional equipment would need to be added. I feel that $930,000 an increase of $330,000 seems excessive and is a big risk for me to take with little certainty that work will continue. There is no guarantee that any business will continue as previously when they change hands but to commit to $930,000 + 4.5% interest is more than I feel comfortable with.
But in saying that if you can get me the paperwork that I asked for above I will take it to my accountant and let him decide whether I should proceed or not.
[39] Exhibit 26.
56On 9 November 2018 Mr Chaffey responded to Mr Doble's email of 5 November 2018 and explained his position in relation to the value of the business and the price he was seeking for it.[40] Under cover of a further email sent on 9 November 2018 Mr Chaffey sent Mr Doble a summary of Cataby General Services profit and loss figures for the financial years of 2014, 2015, 2016, 2017 and 2018.[41]
[40] Exhibit 28.
[41] Exhibit 29
57Mr Chaffey's evidence was to the effect that he did not give Mr Doble permission to use the financial documents provided to him other than for the purpose of discussions with his accountant but he accepted that he had not told Mr Doble that the documents were being provided to him in confidence.[42]
[42] ts 286.
58On 13 November 2018 Mr Chaffey forwarded Mr Doble an email he had received from his accountant which contained details of wages paid in the first quarter of the 2018/2019 financial year.[43]
[43] Exhibit 32.
59On 3 December 2018 Mr Chaffey forwarded to Mr Doble an email he had received from his accountant attaching a 'Sale of Equipment List' which in two columns ascribed two values to each item of equipment to be sold.[44] One column was entitled 'Sale Proceeds' and gave a lower value that the other column entitled 'Fair Value per David'. The total of the 'Fair Value per David' column was $916,000 to which the figure of $14,000 was added to bring the 'Total Proceeds Required to purchase Business & Equipment' to $930,000. The total in the 'Sale Proceeds' column was $430,000. This was a revised version of an earlier list prepared by Mr Chaffey's accountant.
[44] Exhibit 38.
60On 12 December 2018 Mr Chaffey sent an email to Mr Doble. It was apparent from this email that Mr Doble and Mr Chaffey had reached a stalemate in their negotiations. Mr Chaffey wrote:[45]
Hello Mick. There are a couple of questions.
If I put the business on the market would you be willing to work for someone else if sells. I was assuming the other day that you wanted all the gear for $200 k less or did you mean the water cart, Hino crane, grader etc was not worth having as there would probably be no work later for them or crane to slow.
I got a phone call last night to do the potable water at grounded. I did it Saturday for commissioning crew but will have to check with Mick M.
Can you also work out the holidays etc I will owe you, do you have a gst registered business.
Would you be able to stay till the end of January and see what happens if I put the business on open market. I will talk to you later on. Chaffey
[45] Exhibit 41.
61Mr Doble replied to Mr Chaffey on the same day. It was evident from the content and tone of Mr Doble's response that he was disappointed that he had not been able to reach an agreement with Mr Chaffey and that he had told Mr Chaffey that he would be leaving Cataby General Services. In answer to Mr Chaffey's question as to whether he would work for someone else if the Cataby General Services business was sold Mr Doble responded:[46]
I don't think I will be staying to work for someone else when you sell the business. Effectively you would be selling the rapport and knowledge I have built up with these sites over a long time. If that was the case, I would be better off starting my own business and doing the work direct. This is something I do not want to do but looking forward anything can happen.
[46] Exhibit 41.
62Mr Doble added:[47]
What I said the other day was that with all the equipment I do not think it is worth $930,000 and I am thinking around $200,000 less. Honestly $700,000 would even be stretching it in my opinion.
I have sacrificed a lot of time and effort to continue to build your business over the last couple of years when I was given the impression that I was working towards a goal. I do appreciate your generosity over a lot of years and I feel that has been a two-way street with the amount of work I have helped you with as NCH and also sent your way when I worked for Tiwest/Tronox.
I understand that you have put a lot of time, effort and money into setting up your business with Tronox and Iluka and without this effort there would be no business. But I am the person that pushed to do most of the work on the Iluka site even after you said all you wanted to do was the little things like fencing around the outside. I feel without the effort I put in CGS would not have had the rapport it has with Iluka and its contractors. (emphasis added)
[47] Exhibit 41.
63In evidence Mr Doble said that the reference in his email to 'what I said the other day' was a reference to a face-to-face conversation with Mr Chaffey.[48] Mr Doble's evidence was to the effect the conversation occurred at Mr Chaffey's property some days earlier. He said he and Mr Chaffey were standing around Mr Chaffey's grader. He had said that the most he was willing to offer Mr Chaffey was $700,000 and Mr Chaffey said he would not accept that offer and that he needed $930,000 because the sale proceeds were to be his superannuation. Mr Doble's evidence as to his response was as follows:[49]
I said to him that I couldn't make a deal, and I would look at putting my own equipment on there and starting my own business.
Did you say whether or not you would do that if you didn't purchase the business?---That's what I said I was intending to do. Yes
…
And did Mr Chaffey say anything in response to that?---He said, 'If that's what you want to do.'
[48] ts 407, 409, 492.
[49] ts 408.
64In cross-examination Mr Doble's evidence about starting his own business was as follows:[50]
And you told him - do you say what you told Mr Chaffey was that you wanted to start a new business on the site?---I said to him that if we couldn't come to an arrangement with his business, I would look at starting my own business.
[50] ts 491.
65Mr Chaffey denied that the conversation described by Mr Doble occurred. His evidence was to the effect that the negotiations were conducted by email and they involved no face-to-face communication.[51]
[51] ts 299 - 300.
66In his defence Mr Doble pleaded that the conversation to which reference has just been made occurred between 13 and 25 December 2018.[52] In his evidence-in-chief Mr Doble said that the meeting occurred in 'early December, I would say, I don't know, 15/16 December, somewhere in that ballpark' but he was clear that the discussion preceded the email exchange of 12 December 2018.[53] In cross-examination Mr Doble's evidence that the grader conversation occurred before the email exchange of 12 December 2018 was not challenged and the inconsistency between the pleading of the date of the conversation in his defence and his evidence was not drawn to his attention.[54]
[52] First defendant's and second defendant's fifth further re-amended defence filed 27 September 2022 par 37, particular A.
[53] ts 407.
[54] ts 491.
67I find that there was a face-to-face conversation between Mr Doble and Mr Chaffey at Mr Chaffey's property shortly before the exchange of emails between them on 12 December 2018. During that conversation they discussed the price sought by Mr Chaffey for Cataby General Services' machinery. When it was clear that they could not reach agreement on the price Mr Doble said that he intended to leave Cataby General Services. These findings are based substantially on the emails exchanged on 12 December 2018 from which it is clear that the negotiations between the two men had broken down and that Mr Doble had made a statement to the effect that he intended to leave Cataby General Services. That is, he had made such a statement to Mr Chaffey before Mr Chaffey sent his email of 12 December 2018 asking whether Mr Doble would be willing to work for someone else. This is apparent from Mr Chaffey asking Mr Doble whether he would 'work out' his holidays. Further, a statement to the effect that Mr Doble intended to leave Cataby General Services does not appear in any email preceding the 12 December 2018 email. I find the statement that Mr Doble intended to leave Cataby General Services was made in the grader conversation. The reference to 'what I said the other day' in Mr Doble's email also supports the finding that there had been a conversation between the two men. Further, there is no reference in emails exchanged before 12 December 2018 to Mr Doble being prepared to offer $700,000, the figure to which implicit reference was made in Mr Chaffey's email (Mr Doble 'wanted all the gear for $200 k less) and which was referred to expressly in Mr Doble's reply.
68I do not accept, however, that Mr Doble said to Mr Chaffey that he was intending to start a business and would put his own equipment on the Tronox site and it follows that I do not accept that Mr Chaffey responded by saying 'if that's what you want to do'. My reasons are as follows. First, if Mr Doble had said that he intended to start up his own business and put his equipment on the Tronox site, it is unlikely that Mr Chaffey would have asked him if he would continue working for Cataby General Services if he was able to sell it to someone else. Secondly, what Mr Doble wrote in his email to Mr Chaffey of 12 December 2018 is inconsistent with his having told Mr Chaffey that he intended to start his own business and would put his equipment on the Tronox site. In his email Mr Doble said 'I don't think I will be staying to work for someone else when you sell the business … I would be better off starting my own business and doing the work direct. This is something I do not want to do but looking forward anything can happen'. The italicised words are inconsistent with Mr Doble having a settled intention to start his own business on site and inconsistent with him having told Mr Chaffey of that intention when they spoke a few days earlier. Thirdly, for reasons to be explained in more detail, I have reservations about Mr Doble's evidence on critical issues.
69In late December 2018, by agreement with Mr Chaffey, Mr Doble stopped preparing invoices for Cataby General Services and thereafter the invoicing task was undertaken by Mr Chaffey.[55]
[55] ts 307, 430.
Negotiations between Mr Chaffey and Mr McGregor
70Mr McGregor has been involved in the mining industry for 21 years. He operates a civil earthmoving business known as Breakaway Earthmoving. He is also involved in farming. He is the sole director, secretary and shareholder of the plaintiff.
71Mr McGregor met Mr Chaffey at a funeral of a mutual acquaintance in about 2016 and they discussed their respective businesses.[56] Mr McGregor told Mr Chaffey that he would be interested in having a look at his business if he ever tired of it.[57] Mr Chaffey said that he had someone in mind to take the business on being the person who had been running it for him, Mr Doble. Based on what Mr Chaffey had told him Mr McGregor understood that the business was doing 'small-scale ancillary works' and was 'under management from Mr Doble'.[58] Mr McGregor thought nothing further about the matter until Mr Chaffey spoke to him in 2019 and asked whether Mr McGregor was still interested in the business and, if so, he should come and have a chat.[59]
[56] ts 256.
[57] ts 170.
[58] ts 170.
[59] ts 170.
72In March 2019 Mr McGregor went to Mr Chaffey's farm to discuss the possible acquisition of Cataby General Services. Mr Chaffey told Mr McGregor that Mr Doble was no longer interested in the business and that he would offer the business to Mr McGregor on the same terms that had been offered to Mr Doble. They discussed the business and at the end of the discussion Mr McGregor said that he was interested.
73Mr McGregor telephoned Mr Chaffey the following day and said that he was very interested and that he 'better have a look at the equipment'.[60] Mr McGregor had seen some of the equipment because it was on Mr Chaffey's farm but the majority of the equipment was on the Tronox site. Mr Chaffey and Mr McGregor visited the Tronox site the following Saturday to look at the equipment. On that visit they had a further discussion about the work undertaken by Cataby General Services.
[60] ts 171.
74At the conclusion of the visit to the Tronox site Mr McGregor thought that, although some of the equipment was in poor repair, the business was 'a good buy' given the price and the terms of sale (Mr Chaffey was offering vendor finance).[61] Mr McGregor's evidence was to the effect that the positive attributes of the business included that Mr Doble was running the business, it had a fairly stable workforce and the business had no competitors. At that stage Mr McGregor knew that VMS Contractors undertook rehabilitation work on the Tronox site but he did not view VMS Contractors as a competitor because his experience was that mining companies did not prioritise rehabilitation work.[62]
[61] ts 173.
[62] ts 173.
75Mr McGregor's understanding of the work Cataby General Services undertook on the Iluka site was that it was involved in 'start up' activities, such as making access tracks, because the mine site was in its infancy.[63]
[63] ts 173.
76Mr McGregor made a final decision to purchase Cataby General Services shortly after inspecting the equipment on the Tronox mine site. He and Mr Chaffey reached agreement on the price of $971,500. Mr McGregor said that there was no negotiation over price.[64] Mr McGregor said that he wanted the business and although there was some equipment that was not 'as flash as it could have been' he was happy to pay the price sought by Mr Chaffey.[65] He said that Mr Chaffey gave him the number and he thought about it and agreed to it. Between them they worked out the split between equipment and goodwill.
[64] ts 191.
[65] ts 190.
77Mr Chaffey suggested that the apportionment of the price paid by the plaintiff, between equipment and goodwill, was a consequence of 'accountants and things'.[66] I infer from this evidence coupled with Mr Chaffey's insistence that $971,500 was a figure that represented the fair value of the equipment that the apportionment between equipment and goodwill in the agreement reflected some accounting or legal advice received by the parties.
[66] ts 299.
78Mr Doble's counsel contended that the negotiations proceeded otherwise than as described by Mr McGregor. He contended that Mr Chaffey and Mr McGregor had reached agreement in relation to the price of the equipment, $471,500 and that thereafter they negotiated on the amount to be paid for goodwill. This contention was based in part on an email sent by Mr Chaffey to Mr McGregor on 25 April 2019 to which reference is made later. I do not accept that contention. Not only is it inconsistent with Mr McGregor's evidence that he was happy to pay the price asked by Mr Chaffey but it would be unusual for a business person negotiating the acquisition of a business to commit to a price for any assets of the business before agreeing to a price for the entire business. I accept Mr McGregor's evidence and find that the negotiations for the purchase of Cataby General Services occurred in the manner he described.
79On the advice of his accountant Mr McGregor arranged for the plaintiff to be incorporated on 2 April 2019. On incorporation Mr McGregor and Mr Chaffey were appointed directors of the plaintiff and one share in the capital of the company was issued to each of them. The share registered in Mr Chaffey's name was held on trust for Mr McGregor.[67]
[67] ts 221.
80Mr McGregor explained that the plaintiff's name incorporated Mr Chaffey's surname because the connection with Mr Chaffey was helpful with maintaining the relationship with Iluka. I accept Mr McGregor's evidence in that respect.
81On 25 April 2019 Mr Chaffey forwarded Mr McGregor an email that Mr Chaffey had received from Mr Doble on 5 November 2018. In the 5 November 2018 email Mr Doble had written:[68]
Your business has grown significantly over the last 2 years and I feel that a large part of this has been due to my determination to build the business with the aim of hopefully purchasing it from you. I understand you have been dealing with Iluka for many years to secure work with them, however you stated many times that you only wanted to do the small jobs around the edges. I was the person that continued to push for more work at both the Tronox and Iluka sites and I was the one that did what ever it took to get these jobs done.
[68] Exhibit 46.
82Mr Doble's email of 5 November 2018 was part of an email chain that began with an email from Mr Chaffey to Mr Doble sent on 1 November 2018 in which Mr Chaffey had stated that the price for the Cataby General Services business was $930,000.
83When he forwarded Mr Doble's 5 November 2018 email to Mr McGregor on 25 April 2019 Mr Chaffey attached to it the summary of Chafco's profit and loss figures for the years 30 June 2014 to 30 June 2018 that he had provided to Mr Doble in November 2018. In the version of the email forwarded to Mr McGregor the first sentence in the paragraph quoted above was highlighted green.
84Mr Chaffey's evidence was to the effect that he sent the email of 25 April 2019 to Mr McGregor because he knew that Mr McGregor wanted someone to supervise the business and he wanted him to see Mr Doble's email and make sure that he was happy with the people running the business.[69] The effect of Mr Chaffey's evidence was that he had highlighted the first sentence of the extracted passage to make sure that Mr McGregor knew that 'Mick wasn't happy with - he was a bit grumpy about running the business'.[70] Mr Chaffey denied that he sent the email to persuade Mr McGregor to pay the goodwill component of $500,000 of the purchase price and for the reasons I have given above I accept Mr Chaffey's evidence in this respect.
[69] ts 319 - 320.
[70] ts 321 - 322.
85Mr McGregor could not remember why Mr Chaffey had forwarded him the email exchange with Mr Doble from November 2019. He thought that Mr Chaffey had sent it to be 'clear and upfront with [him] on the sale'.[71]
[71] ts 190.
86Mr McGregor was cross-examined about whether, after the email of 25 April 2019 was sent to him, he was told by Mr Chaffey that there was a possibility that Mr Doble might not continue as an employee if the business was sold to someone other than Mr Doble. The general effect of Mr McGregor's evidence was that he had no recollection of any such discussion and he did not believe there was such a discussion. Mr Chaffey, however, said that he did discuss with Mr McGregor the possibility that Mr Doble would not stay on and run the business and he had told Mr McGregor that if Mr Doble left, he would run the business until Mr McGregor found someone else.[72] Mr McGregor denied that Mr Chaffey had said to him that if Mr Doble resigned, he, Mr Chaffey, would step in and take over Mr Doble's job. Mr McGregor said that he would not have wanted that to happen.[73] It is unnecessary to resolve this conflict in the evidence.
[72] ts 322.
[73] ts 206.
87While Mr McGregor could not remember the title given to the role played by Mr Doble in Cataby General Services he accepted that Mr Doble's role was discussed before the agreement was completed. In cross-examination he accepted that the role was that of site supervisor.[74]
[74] ts 202.
88It is difficult to make a finding about why Mr Chaffey forwarded Mr Doble's email of 5 November 2018 to Mr McGregor. I think Mr McGregor's explanation is the most likely - Mr Chaffey was being 'up front' with him. I think it unlikely that Mr Chaffey sent Mr McGregor this email because he wanted him to know that Mr Doble was not happy because that it is not something that emerges clearly from the email. Rather what the email conveys is that Mr Doble considered that he had played an important part in the recent success of Cataby General Services. It is possible that Mr Chaffey told Mr McGregor that Mr Doble was not happy but I find Mr Chaffey did not tell Mr McGregor that Mr Doble had told him that he would not work for anyone who purchased the business and that he was going to leave Cataby General Services. I think that Mr McGregor would have remembered if he had been told those matters. It follows from my earlier findings about the grader conversation that Mr Chaffey did not tell Mr McGregor that Mr Doble had said to him that if he (Mr Doble) did not buy Cataby General Services he was going set up a business and run his own equipment on the Tronox site because Mr Doble had not made such a statement to Mr Chaffey.
The sale agreement
89An agreement was prepared recording the terms of the sale by Chafco to the plaintiff. The agreement was prepared by lawyers instructed by Mr McGregor, Mount Barker Legal. The agreement included provisions to the effect that Mr Chaffey would continue to serve as a director after completion and would be available to be consulted about the business.[75] Mr McGregor was unable to recall who proposed those provisions be included in the agreement. Ultimately it is a matter of little consequence but I find it is likely that the proposal that Mr Chaffey have some ongoing involvement with the business came from Mr McGregor.
[75] Exhibit 2506.
90Mr McGregor denied that he had caused clauses to be included in the agreement that required Mr Chaffey to have continuing involvement in the business because he was concerned about the possibility that Mr Doble might leave shortly after the agreement. Mr McGregor explained that he thought there was no point in including a condition of the agreement that Mr Doble stay on with the plaintiff after the sale. Mr McGregor explained that if Mr Doble was not happy in the job then he should leave. I accept Mr McGregor's evidence.[76]
[76] ts 207.
91The agreement provided for vendor finance. The whole of the purchase price was to be paid by monthly instalments of $18,500 per month.[77] Parenthetically I record that Mr Chaffey agreed with the proposition that because he was still receiving payment for the business he had a financial interest in the outcome of the litigation.[78]
[77] ts 194 - 195.
[78] ts 332.
92The agreement for the sale and purchase of Cataby General Services was not dated.[79] Neither Mr McGregor nor Mr Chaffey had a reliable recollection of when it was executed. Against that background all that can be found is that the parties entered the agreement sometime between April and mid to late June 2019.
[79] Exhibit 2506.
Mr Doble meets Mr McGregor
93In mid-June 2019 Mr Chaffey told Mr Doble about Mr McGregor's interest in Cataby General Services. He did so when he and Mr Doble were sitting in a vehicle in the driveway to Mr Chaffey's house having a conversation about problems that arisen with the invoicing of work to Tronox. Mr Chaffey's evidence was that he told Mr Doble that 'I've sold the business and that the new bloke would like to meet you' and he asked Mr Doble whether he could organise a meeting. Mr Chaffey said that Mr Doble said 'well, I'm not sure what I will be doing'.[80]
[80] ts 308.
94Mr Doble's evidence about that conversation was that Mr Chaffey said he may have found a 'prospective buyer' and asked if he would like to meet him.[81] Mr Doble said that he told Mr Chaffey he would not guarantee that he would stay and work for another owner. Mr Doble said that he told Mr Chaffey that 'it was not what I came down here for after our agreement with taking over the business, that was still what I had come down for'.[82] In cross-examination Mr Doble said that he told Mr Chaffey that he 'still intended to start [his] own business' but he accepted that this was different from his reference in evidence‑in‑chief to taking over Mr Chaffey's business.[83]
[81] ts 411.
[82] ts 411.
[83] ts 493 - 494.
95Mr Doble did not plead that he had told Mr Chaffey in mid‑June 2019 that he would not guarantee that he would stay and work with another owner and that he intended to start his own business. That is a surprising omission from the defence given the reliance placed by Mr Doble on his version of the grader conversation in December 2018 and that by mid‑June 2019 Mr Chaffey was a director of the plaintiff.
96While I think it is possible that Mr Doble told Mr Chaffey that he would not guarantee that he would stay and work for another owner, I am not satisfied that he told Mr Chaffey that he intended to start his own business. This is a gloss that Mr Doble has placed on his conversation with Mr Chaffey. By that observation I do not mean that Mr Doble was knowingly giving untruthful evidence. Rather by the time of the trial he had convinced himself that his version of the conversation was correct.
97Mr McGregor's evidence was to the effect that Mr Doble's continued involvement was 'very important' because of the role played by Mr Doble in hiring staff, maintaining the existing staff, receiving purchase orders, seeking out work, and getting paid for work.[84] I accept Mr McGregor's evidence that he regarded Mr Doble's continued involvement in the business as very important. In this respect Mr McGregor's evidence is consistent with Mr Chaffey's evidence that 'the new bloke', Mr McGregor, wanted to meet Mr Doble. Although Mr McGregor referred to Mr Doble's role as one that involved 'seeking out work', I do not accept that Mr Doble had any contractual obligation to 'seek out work' beyond providing quotes to Tronox. Indeed the plaintiff did not plead that Mr Doble had any such responsibilities.
[84] ts 175.
98Mr McGregor was 'pretty sure' that Mr Chaffey and Mr Doble met with him at his farm before the agreement was signed.[85] Mr Chaffey's recollection was that the meeting took place 'a fortnight before the end of June'.[86] I think it is likely that the agreement for the sale and purchase of the business had been executed by the time this meeting was held. In his evidence Mr Doble made a point of saying that at the meeting it was clear that Mr McGregor was not merely a 'prospective buyer', as he says Mr Chaffey described him when asking him to attend the meeting, but that the business had been sold. The conflict in the evidence of Mr Chaffey and Mr Doble about whether Mr Chaffey described Mr McGregor as a prospective buyer or a buyer is not material.
[85] ts 174.
[86] ts 257.
99It is common ground that a meeting took place at Mr McGregor's farm at the kitchen table. Mr McGregor's wife, Ms Anna McGregor, was present. Mr McGregor's evidence was that he posed the question to Mr Doble whether he would be happy to keep running the business and Mr Doble said that he would.[87] Mr McGregor said that Mr Doble mentioned that he had a trip to the United States booked and asked whether that would be a problem to which Mr McGregor said Mr Doble should 'go ahead with it'.[88] Mr McGregor's evidence was that that Mr Doble did say that he intended to start a competitor business.[89]
[87] ts 174.
[88] ts 174.
[89] ts 174.
100Mr Chaffey's evidence was:[90]
Ian said to Mick he wanted him to run the business as it is and carry on and Mick's comments is - Mick's comment was, 'Yes, but I'm not sure what I will be doing.'
[90] ts 258.
101Mr Chaffey said he was sure that at the meeting Mr Doble did not say that he wanted to establish a competitor business. Mr Chaffey said that Mr Doble had never expressed any intent to commence a 'competitor business'.[91]
[91] ts 258.
102Mr Doble's evidence was as follows:[92]
Did Mr McGregor ask you anything at that meeting?---He asked me if I was willing to stay and work for him. I told him that it wasn't what I came down for. I said that I was happy to talk to him and see what he offered, but I wouldn't guarantee that I would stay and work for him.
Did you tell him what you had come down to do?---I told him I had come down to own a business.
Did he ask you that once or more than once?---More than once.
And was your response any different on either occasion?---No. The second time I told him, look, you know, I'm happy to talk to him, I just wasn't going to guarantee I would stay and work for him.
And did he react to what you said?---He looked surprised.
Did he ask you anything?---He - look, somewhere along the line he asked me why not, but - yes. And that was because it wasn't what I came down for.
[92] ts 412.
103I infer that Mr Doble used the expressions 'come down' and 'came down' to refer to the fact that his home was in Geraldton and the Tronox mine site is situated south of Geraldton.
104In a subsequent passage of his evidence-in-chief Mr Doble said that following the kitchen table meeting he told his work colleagues Mr Sawyer, Mr Wood and Mr Martin about his conversation with Mr McGregor and Mr Chaffey. His evidence was as follows:[93]
[93] ts 413 - 414.
Now, after that meeting at the McGregor's, did you later that day have any discussions with other employees of Cataby General Services?---Yes. I talked to all of the guys.
All right. And what took place in those discussions?---I basically told them that, you know - - -
Well, who did you speak to?---I spoke to Jeff Sawyer, Greg Wood, and Phil Martin.
Okay. Together or individually?---Separately at that stage. They were - - -
Separately?--- - - - all off on different jobs.
Okay. And do you recall the effect of what you said to each of them?---Basically, it was that, you know, there was no chance of me buying the business. It had all fallen over. Iain McGregor was the new owner and taking it over on 1 July, and that I told them that I wouldn't guarantee I would stay and work for them.
Did you tell them what you might do instead?---I told them that I was continuing looking at starting my own business up now.
…
Did Phil ask you anything about the response of David Chaffey and Iain McGregor when you told them you wouldn't guarantee you would continue working for them?---Yes, he did. He just asked something along the lines of that.
Did you reply?---I – I did. I replied that they seemed surprised.
105Mr Wood's evidence of what Mr Doble told him that after the kitchen table meeting was as follows:[94]
If my memory recalls, I think Mick said to me he actually mentioned that he couldn't be positive of how long he would stay around.
[94] ts 383.
106Mr Doble did not plead that he told Mr McGregor that he had said that he intended to start up his own business on the Tronox site at the kitchen table meeting. In the paragraphs of his witness outline that dealt with the kitchen table meeting Mr Doble did not record either that he said he intended to start his own business on the Tronox site or he had 'come down' to own a business. When cross-examined about these discrepancies (with leave in respect of the witness outline) Mr Doble maintained that his evidence to the court was correct.[95]
[95] ts 499 - 503.
107I find that Mr Doble did not say to Mr McGregor that he would not guarantee that he would continue to work for the business when Mr McGregor bought it because he had 'come down' to own a business. Further, I find that Mr Doble did not say that he intended to start his own business on the Tronox site. I prefer the evidence of Mr McGregor and Mr Chaffey of what was said at the kitchen table meeting. Had Mr Doble told Mr McGregor and Mr Chaffey that he was intending to start his own business on the Tronox site it is not only likely that this would have been remembered by them but that Mr McGregor would not have entrusted the ongoing supervision of the work at the Tronox site to Mr Doble. I think it is also unlikely that Mr McGregor would have said that Mr Doble should go ahead with the holiday that he had booked.
108Settlement of the sale and purchase of the business took place on 1 July 2019. The name of the business was changed to Cataby Services. For a period after settlement Chafco continued to invoice Iluka under the business name Cataby General Services for work done on the Iluka site. Mr Chaffey's explanation of why this occurred was to the effect that it took some time for the plaintiff to be registered as a supplier of Iluka.[96] I accept this explanation.
[96] ts 325.
109It was a term of the agreement that the plaintiff was obliged to offer all the employees of Cataby General Services an offer of employment. There is no evidence of any formal offer of employment was made to Mr Doble and no written contract of employment was prepared.
110In the period following settlement of the purchase three meetings occurred that were the subject of evidence. A meeting between Mr McGregor, Mr Chaffey and Mr Mike Hardingham of Tronox; a meeting between Mr McGregor, Mr Doble and the other Cataby Services employees working on the Tronox site; and a further meeting between Mr McGregor and Mr Doble at Mr McGregor's farm. I will deal with the meetings in that order because it is the order in which I find the meetings occurred.
Mr McGregor meets Mr Hardingham
111Mr Hardingham was Tronox's contracts manager on site. Mr McGregor and Mr Chaffey met with him on site. Mr Doble was not invited to attend the meeting. Mr Chaffey's evidence was to the effect that the intention behind meeting Mr Hardingham was to let the Tronox contracts department know that Mr Chaffey had sold the business and to introduce Mr McGregor as the buyer. It was suggested to each of Mr McGregor and Mr Chaffey in cross-examination that Mr Doble was not invited to the meeting because Mr McGregor and Mr Chaffey knew that Mr Doble was intending to start up his own business on the site and they did not want Mr Doble to hear about Tronox's plans.[97] Both Mr McGregor and Mr Chaffey denied that was the reason why Mr Doble was not invited to the meeting. I accept the evidence given by Mr McGregor and Mr Chaffey about the reason why they met Mr Hardingham. Their evidence in this respect was plausible and there was no reason for Mr Doble to be present at a meeting the primary purpose was to introduce Mr McGregor to Mr Hardingham.
[97] ts 201, 305.
112On 27 June 2019 Mr Hardingham had sent an email to Mr Doble asking him for a copy of Cataby General Services' rate card.[98] Mr Doble sent Mr Hardingham the schedule of rates under cover of an email on 1 July 2019 and stated, '[p]lease keep in mind that with the change of ownership these may be updated'. I infer from Mr Doble's reference to the change of ownership that Mr Hardingham knew about the sale and purchase of Cataby General Services and that the meeting with Mr McGregor and Mr Chaffey took place around the time these emails were exchanged.
[98] Exhibit D2.
Mr McGregor's site visit
113Mr McGregor visited the Tronox site shortly after 1 July 2019 to meet the 'crew on the site'.[99] Mr Doble drove Mr McGregor around the site and introduced the other employees to him,[100] and a meeting was held in the crib room.[101] In his evidence-in-chief about the meeting Mr Wood said that at the meeting Mr Doble said he could not be certain 'how long he would be hanging around' and 'he still had intentions to start his own business'.[102] Leave was given for Mr Wood to be cross‑examined on the witness outline that had been prepared on his behalf and which referred to the crib room meeting and recorded Mr Wood's recollection that Mr Doble had said that 'he wasn't sure how long he would stay working for Cataby Services' but did not make any reference to Mr Doble having said that he intended to start his own business.[103] I am not persuaded that Mr Doble said anything about starting his own business at the meeting in the crib room. Mr Wood's evidence was to the effect that Mr Doble often spoke to him and the other employees about his intention to start his own business and I think that he had conflated his general recollection of these conversations with his recollection of what was said in the crib room meeting. In reaching this conclusion I attach some weight to the inconsistency between Mr Wood's witness outline and his evidence‑in‑chief. Further, had Mr Doble said anything to the effect that he was intending to start his own business this would have caused Mr McGregor to ask Mr Doble about his intentions.
[99] ts 227.
[100] ts 227.
[101] ts 384.
[102] ts 384.
[103] Exhibit P5.
114After meeting the employees Mr McGregor and Mr Doble spoke to each other on their own. Among the matters discussed between them were which suppliers Mr Doble used and what accounts with suppliers needed to be set up.
115Mr Doble's evidence about this conversation included the following:[104]
I asked Iain if Chaffey had told him that I was starting up my own business. He told me that he didn't know that. I said, 'Well, that's exactly what I'm going to do,' and his reply was, 'Okay.'
So when you asked him that - what he had been told, that you were starting up your own business, did you mention what that business was going to be?---I said that I was going to start up a business on site.
So when he said to you that he didn't know that, how did you respond?
---I told him that that's exactly what I was going to do.And did he respond to you when - - - ?---He said - - -
- - - you said that?---He said, 'Okay.'
[104] ts 417.
116Mr McGregor denied that a conversation along the lines recounted by Mr Doble took place. Mr McGregor's evidence was to the effect if he had been told by Mr Doble that he was going to start up a business on site '[Mr Doble] wouldn't have had a job'.[105] I do not accept Mr Doble's evidence of this conversation. It is highly unlikely that Mr McGregor would have reacted with such a lack of concern to a disclosure that Mr Doble was going to leave Cataby Services and start up his own business on the Tronox site. I accept Mr McGregor's evidence that if Mr Doble had told him that he intended to start up a business on site, Mr Doble would have been out of a job.
[105] ts 228.
117Mr Doble sought to rebut any suggestion that his evidence that he had told Mr McGregor on this visit to the Tronox site that he intended to start up his own business on site was not fabricated after the dispute had arisen by adducing evidence from Mr Wood about a conversation he said he had with Mr Doble. Mr Wood said that on the day on which Mr McGregor visited the site, Mr Doble told him that he, Mr Doble, had told Mr McGregor that he intended to start his own business and that Mr McGregor had responded 'well, okay'.[106] Mr Doble's counsel made it clear that the statement attributed by Mr Wood to Mr Doble was not relied on for the truth of its contents but simply for the fact it was made.[107]
[106] ts 385.
[107] ts 383.
118Without suggesting that Mr Wood was giving evidence which he knew to be untrue, given Mr Wood's evidence that Mr Doble's intentions to start his own business were a regular subject of discussion between Mr Doble and the other employees, I have significant reservations about the reliability of Mr Wood's evidence of what Mr Doble told him and when this occurred. Further, when weighed against the manifest improbability that Mr McGregor would simply have said 'well, okay' if told by Mr Doble that he intended to start up his own business on site Mr Wood's evidence does not persuade me to accept Mr Doble's version of his conversation with Mr McGregor.
119There is a further reason why I do not accept Mr Doble's evidence that he told Mr McGregor that he 'was starting up [his] own business' on this occasion and that is because there is no evidence that as at that date Mr Doble had taken any steps towards starting up his own business. In my view it is unlikely that Mr Doble would have disclosed any plans he had to start up his own business before he had taken any steps to do so, especially when Mr Doble was going on a six week overseas holiday shortly. It would have been inherently risky for Mr Doble to disclose his plans to Mr McGregor until he was confident that he could bring those plans to fruition. There was no evidence that in July 2019 Mr Doble had firm grounds for confidence that he would be able to establish his own business. He had not taken any of the preparatory steps that he took in the period between October 2019 and February 2020.
Meeting at Mr McGregor's farm
120Mr Doble gave evidence that after the change of ownership he called in at Mr McGregor's property when he was returning from a trip to Morawa having picked up some fencing equipment. Mr Doble said that Mr McGregor drove him around his property and in the course of their conversation Mr Doble asked Mr McGregor 'what [his] conditions would be' to which Mr McGregor responded by saying nothing had changed and that his salary was $130,000.[108] Mr Doble said that he told Mr McGregor that he had been paid $175,000 the previous year and that Mr McGregor then agreed to pay him a bonus of $3,000 per quarter.[109] Mr McGregor had no recollection of that conversation but did recall that there had been a discussion with Mr Doble about a bonus.[110]
[108] ts 421.
[109] ts 421.
[110] ts 209.
121I find that Mr Doble and Mr McGregor had a conversation about Mr Doble's pay as described by Mr Doble. I find that this conversation took place after Mr McGregor's visit to the Tronox site at which he had met Mr Doble and the other employees. That Mr Doble raised the issue of his conditions with Mr McGregor after Mr Doble claims that he had told Mr McGregor of his intention to start up his own business on site and, that Mr McGregor agreed to pay Mr Doble a bonus, points to the inherent improbability of Mr Doble's account that he had, in fact, told Mr McGregor that he intended to start up his own business.
Roles of Mr Chaffey and Mr Doble in Cataby Services
122Mr McGregor said that after the change in ownership Mr Doble reported to him in relation to everything concerning the Tronox site and to Mr Chaffey in relation to 'some things' on the Iluka site.[111] Mr McGregor said it was not entirely correct to describe him (that is Mr McGregor) as the manager of Cataby Services because he was not directly involved in management because that responsibility was that of Mr Doble.[112] He accepted, however, that Mr Doble was referred to in the statement of claim as the 'site supervisor'.[113]
[111] ts 203.
[112] ts 203.
[113] ts 202.
123Mr Chaffey described his role in Cataby Services as follows:[114]
I continued to liaise with Iluka and - to try and get the business established there because it was still very early days and there was a lot of Iluka people all - everyone was new. So you really had to go along and sell everything and try and, yes, get the business established there even though we had done all the project work or done work there on projects.
And how long did your liaison role with Iluka continue?---Well, it was maybe, you know, probably six months that it - a bit longer. So, yes, I probably went for year. Yes, I'm still talking to them anyway. So - - -
Did you have any involvement on the Tronox site after 1 July 2019?---I had none.
[114] ts 258.
124I accept Mr Chaffey's description of his role in Cataby Services. I find that Mr Chaffey had primary responsibility for the relationship with Iluka.
125Save for some relatively minor organisational changes I find that Mr Doble performed the same role with Cataby Services as he had performed with Cataby General Services and that Cataby Services undertook the same scope of work for Tronox as Cataby General Services had done. Mr Doble continued to provide quotes to Tronox and Iluka. Mr Doble worked with Mr Chaffey in relation to Iluka and he provided quotes to Iluka. He resumed responsibility for preparing invoices. He sent copies of the invoices to Mr McGregor's secretary, Ms Whitney Perret, who together with Mrs McGregor, kept the books of Cataby Services. He also completed electronic time sheets recording the hours worked by each employee and sent the time sheets to Ms Perrett and Mrs McGregor so that the employees could be paid. This was a procedure that had not been necessary when Chafco owned the business because, the employees had been paid a fixed wage rather than wages based on hourly rates and the number of hours worked.[115]
[115] ts 267.
126Mr McGregor attended the Tronox site once or twice after the change in ownership. Generally, Mr McGregor and Mr Doble communicated by telephone and by text message. From time‑to‑time Mr Doble consulted Mr McGregor in relation to the pricing of work and materials and about the availability of machinery but generally Mr Doble managed the work undertaken by Cataby Services for Tronox in the manner he had done for Cataby General Services. Mr McGregor's evidence was that to the effect that the standard rates covered between 85 to 90% of the work.[116]
[116] ts 234.
127Some of the equipment on the Tronox site was in poor condition and Mr McGregor and Mr Doble discussed replacing certain items of machinery. Some new machinery was purchased. This new machinery included a loader, a telehandler and some light vehicles.[117]
[117] ts 177.
128Arrangements were made for a Cataby Services credit card with a credit limit of $5,000 to be issued to Mr Doble but the card was not in fact issued because Mr Doble did not complete the necessary paperwork.[118] Mr Doble had authority to buy materials or otherwise incur expenditure with suppliers with whom Cataby Services held accounts.
[118] ts 204, 473 - 474.
129Following the change of ownership Mr Doble's responsibilities in relation to employees did not change other than that he was required to complete time sheets recording hours worked. As he had done previously Mr Doble supervised the employees' work.
130There was a conflict in the evidence about the role played by Mr Doble in the recruitment of two employees for Cataby Services. The employees were Mr Doble's son, Riley, and Mr Caleb Furness. Mr McGregor's evidence was that Mr Doble employed each of them without reference to him. Mr Doble says that he recommended to Mr McGregor that they be employed. I think it very unlikely that Mr Doble employed his son and Mr Furness without any discussion with Mr McGregor given that all matters related to pay‑roll were dealt with by Mrs McGregor. The discussions were likely to have taken place over the telephone and been informal in nature and they were not the kind of discussions Mr\ McGregor would recall. No‑one was dismissed from Cataby Services. One casual employee resigned. That employee telephoned Mrs McGregor to inform her of her resignation and Mr McGregor informed Mr Doble.
131Mr Doble's involvement in the recruitment of Riley and Mr Furness is insufficient to establish a course of conduct from which it may be inferred that there was an agreement between Mr Doble and the plaintiff that imposed a contractual obligation on Mr Doble to make recommendations about the hiring and dismissal of employees.
132In August and September 2019 Mr Doble took the six-week holiday to which he had referred when he met with Mr McGregor and Mr Chaffey at Mr McGregor's farm in June 2019.[119]
[119] ts 422.
Mr Doble prepares to compete
133In late October 2019 Mr Doble had discussions with his accountant, Mr Kim Hunter, about setting up a business.[120] Mr Doble also spoke with Ms Danniele Sweetman of the National Australia Bank about the possibility of obtaining a business loan. In an email sent to Ms Sweetman on 1 November 2019 Mr Doble wrote:[121]
I have spoken to the Tronox contracts manager and they are happy to set us up as a supplier and he has given me all the information I will need to supply to them.
…
We have also spoken to our accountant and he is in the process of setting up our business name etc.
[120] ts 507 - 508.
[121] Exhibit 161.
134The reference in that email to the 'Tronox contracts manager' was a reference to Mr Hardingham. Mr Doble had asked Mr Hardingham whether it would be possible for a business he proposed establishing to supply ancillary services on the Tronox site and Mr Hardingham had said 'yes'.[122]
[122] ts 507.
135On 2 November 2019 Ms Sweetman sent Mr Doble an email setting out the information the NAB required for the purposes of considering any application for finance.[123] Among other matters the NAB required copies of contracts with major customers or suppliers. Mr Doble could not provide contracts with major customers but he could provide the NAB with a letter from Tronox saying that he would be the new supplier of services to Tronox.[124]
[123] Exhibit 163.
[124] ts 509 - 510.
136On 4 November 2019 Mr Doble received an email at his work email address from Ms Faye Lamb, of Tronox about a Tronox Online Induction program. Mr Doble forwarded the email to his personal email address. Although the email was sent to Mr Doble by Ms Lamb it was in fact a generic email apparently authored by Ms Amanda Fletcher, Tronox's Learning & Development Coordinator'. It was addressed 'To whom it may concern' and set out in tabular form the training requirements for each of Tronox's sites in Western Australia and contained instructions as to how to access the training modules completion of which was required for access to each site. It was clear from the opening paragraph of the email (and its contents generally) that all employees and contractors were required to complete the induction process and that it was a pro-forma email sent to all prospective employees or contractors. The opening paragraph read:[125]
On behalf of Tronox, I welcome you as a new employee / contractor of Tronox Management.
[125] Exhibit 169.
137Although Mr Doble's evidence was initially to the effect that he could not understand why Ms Lamb had sent him this email,[126] he subsequently said that the induction materials had been sent to him to enable his son Riley to complete the induction process so that Riley could work for Cataby Services on the Tronox site.[127] He explained that 'induction' was a process undertaken by individuals to be able to work on the site and obtain a 'swipe card'.[128] He distinguished the induction process from the process of a business registering to provide services to Tronox.[129] Mr Doble's explanation of the reason he received the induction materials was plausible and I am not satisfied that he received the email from Ms Lamb as a consequence of his inquiries about becoming a Tronox supplier or that it was one of the steps taken by him to set up Kirahnley's business. Not only was Mr Doble's explanation plausible but by 4 November 2019, Mr Doble had not incorporated Kirahnley, he had only made initial inquiries about finance, he was a long way from being in a position to need to make arrangements for anyone to complete onsite other than as an employee of Cataby Services. In any event, it is not alleged that Mr Doble did anything in relation to the email in November 2019 that constituted a breach of any duty owed by him. An allegation of breach is made in respect of his sending the email to himself on 15 March 2020.
[126] ts 511.
[127] ts 512 - 513.
[128] ts 574.
[129] ts 573.
138At the beginning of November 2019 Mr Doble spoke to Mr Todd Johnson of VMS and asked him whether he would be interested in selling the VMS contract to him. Mr Doble's evidence‑in‑chief about how he came to know Mr Johnson was as follows:[130]
From working with him on the Tronox site. I had a lot of dealings with Todd in my role as a mining contract supervisor at Tronox. We dealt quite regularly.
[130] ts 444.
139Mr Johnson said that he was not interested but that he would think about it. In his evidence Mr Johnson explained that he did not want to do anything that would damage VMS Contractors' reputation with Tronox because he wanted to be in a position to explore the opportunity of obtaining work from Tronox on another of its mine sites in the south‑west of Western Australia. For that reason, it was important to Mr Johnson that a purchaser of the VMS contract was someone who was trusted by Tronox. He considered Mr Doble was a suitable purchaser because, as he put it:[131]
[Mr Doble's] probably one of the few people that knew inside what we do just because he had been our boss for a long time, I guess, from the mining side of what we do.
[131] ts 687.
140Mr Johnson's evidence was that when VMS started work on the site he understood Mr Doble to be:[132]
[A] high ranking person on the site and he knew what was going on all over the site at all times. I don't think he was the mine manager but he kind of knew what was going on, what everybody was doing.
…
That was when he was working for Tronox or Tiwest.
[132] ts 689.
141Mr Johnson contacted Mr Doble three days after Mr Doble's telephone call and gave Mr Doble a price at which he was willing to sell the contract. He said that the price was based on the length of the contract and explained that the contract had recently been renewed for another three years.[133]
[133] ts 698. See Exhibit 209, in May 2019 the VMS contract period had been extended to 31 August 2022.
142Mr Johnson telephoned Mr Hardingham at Tronox and asked him whether 'hypothetically' Tronox would have any difficulty if VMS was to transfer its contract with Tronox to Mr Doble. Mr Hardingham said that 'hypothetically' it would be 'okay' for VMS Contractors to sell its contract to Mr Doble.[134]
[134] ts 695.
143Mr Johnson's evidence was to the effect that he did not take any steps to investigate the market for the potential sale of VMS Contractors' contract with Tronox.[135] He did not know Mr McGregor and he had met Mr Chaffey only on a few occasions. His evidence was to the effect that if he had been approached to sell the VMS contract to Mr McGregor or Mr Chaffey he would have proceeded 'with caution' because of his concern about preserving his business's reputation with Tronox.[136]
[135] ts 697.
[136] ts 687.
144Mr Johnson said that he did not regard Cataby General Services as a competitor of VMS Contractors. Although VMS Contractors main work was rehabilitation work as described earlier in these reasons, VMS had been asked to do 'extras' but it had not taken on 'extras' in 'the last couple of years' because it was too busy and there was a shortage of people to do the work.[137] The effect of Mr Johnson's evidence was that the 'extras' were any jobs, ancillary to mining itself, which Tronox wanted undertaken and which VMS had the capacity to undertake.[138]
[137] ts 688.
[138] ts 690.
145On 8 November 2019 Kirahnley was registered. Mr Doble and his then wife, Ms Kim Doble, were appointed directors and one share was issued to each of them. Ms Doble was appointed the company secretary.
146In an email sent to Ms Jo Gardiner of the NAB on 8 November 2019 Mr Doble discussed his plans to acquire the VMS contract. He stated:[139]
[139] Exhibit 178.
I have spoken to Danniele about a potential small business loan. Originally we were looking at starting a small mining contract business doing the work I am currently doing for another company.
…
I have now been offered a small mine sit rehabilitation company that has been operating onsite for over 11 years and has just renewed a two year contract. The offer is all plant and equipment including offices etc for $350,000. The mine is happy for us to continue with the current contract with the intention to continue beyond the current contract.
I am still looking at purchasing additional equipment to fulfill the works I had spoken to Danniele about, however I will not be needing the full amount for that equipment.
Is it possible to borrow $350,000 for the business and $300,000 for the purchase of the additional equipment?
…
What I am asking is what guarantees do I need? I am adjusting the business plan I have been working on and all the other forms I have been sent.
Is it possible to borrow $350,000 for the business and $300,000 for the purchase of the additional equipment? How would the loan be set up, would it be two loans or one loan.
Sorry to bombard you with questions, the timing isn't great with Danniele and my accountant both being away.
Is it possible to give you a call sometime or if you can call me on the number below.
147Mr Doble also made inquiries with the Bendigo Bank about the possibility of obtaining finance.[140] For this purpose he prepared a monthly cash flow forecast using a pro-forma template provided by the NAB. The template was divided into rows for 'receipts' and 'payments' and columns comprising 'cells' for each month of the financial year starting with July. The first row of the receipts section was described as follows: 'Kirahnley. Based on previouse [sic] 3 years turnover'. In the cell for each month Mr Doble had inserted a figure for turnover that he had derived from the amounts Cataby General Services and Cataby Services had invoiced Tronox.[141]
[140] Exhibit 180.
[141] ts 520 - 522.
148On 20 November 2019 Mr Doble sent an email to Ms Gardiner of the NAB attaching various documents that constituted Kirahnley's application for finance. The documents were entitled, 'Application for Business Finance', a 'Statement of Position', a 'Conceptual Rehab Plan', a 'LOM Rehab forcast', a 'start‑up‑costs-calculator', a 'CGS turn over' spreadsheet and a 'Business Plan'. In the email Mr Doble wrote:[142]
The start up cost calculator I can not get to work as we really only have 1 customer at the moment (Tronox). I have put in the expected turnover etc, however it doesn't look right to me.
…
I have also attached the turnover for the company I am working for with the old and new owners.
[142] Exhibit 191.
149The 'start up costs calculator' to which Mr Doble referred in his email was an excel spreadsheet template with various sections that required completion by an applicant for finance.[143] It was divided into sections: an introductory section, a capital costs section, a monthly costs section, a revenue calculator and a summary section. The summary section consisted of two parts entitled 'Concept' and 'Description'. Mr Doble completed these parts as follows:
Concept
Purchase existing business and equipment to fullfill curent work
Description
Purchase of existing business with a 2 year contract as well as additional equipment to carryout work I am currently doing with another company. With contracted and expected workload the business stands to have over $1,000,000.00 turn over with in the first 2 years. There will be additional scope to increase further with expected planned work.
[143] Exhibit 196.
150The 'Business Plan' attachment to the email of 20 November 2019 consisted of a NAB online template that was completed by Mr Doble.[144] The online template was made up of various sections with pre-printed questions designed to elicit relevant information.[145] One section was entitled 'Business summary' and required certain information of a formal nature and a description of the products and services that were to be offered by the business and its target market. Mr Doble completed those sections as follows:[146]
Products and services offered:
Wet hire of earthmoving and construction equipment. Mine site rehabilitation, mine site maintenance services and labor hire.
Target market:
Mineral sands mining and construction projects with in the midwest region.
[144] Exhibit 198.
[145] In the extracts from the business plan template that follow the headings and pre-printed questions are reproduced in bold typeface.
[146] Exhibit 198, p 4.
151The next section of the Business Plan template required more detail of the business plan under various subject headings: 'Background', 'SWOT analysis', 'Market overview', 'Business structure', 'Staff', and 'Operational factors'. Mr Doble completed those sections as follows:
Background
I have worked in this industry for over 32 years with the majority being within the mineral sands and construction sector. I started working on the Tronox site, formally Tiwest, in 1999 as the site supervisor for an earthmoving contract company. After 2 years I was offered a contract supervisory position with Tiwest looking after the day to day runnings of their mining contractors. After this contract I received an offer to join the Tiwest team as the Mining contracts supervisor, a roll I held for 12 years. I have currently been running a small mine services company on the Tronox and Iluka site's for the last 3 and a half years. In this time I have taken the business from 1 full time and 1 part time employees to 4 full time and 1 permanent casual employees with the scope for further expansion over the next 24 months as projects come to fruition.
I am in a great position to be able to continue to grow this business with my vast experience within the mineral sands mining and construction industries. I have demonstrated to the management within Tronox that I am committed to providing a value adding service and that we can provide a wide range of services that can be completed safely, in a timely manner and to the standard our clients expect.
Over the past 3 and a half years Tronox has invested in my development by way of on site and external training to ensure we are both equipped to be able work towards a common goal.
SWOT analysis
Strengths
Industry knowledge
Site knowledge with safety, expectations and work criteria
Range of experience with in mining and construction
Ability to work as part of a team and encourage others to strive to succeed
Willingness to adapt to change in a dynamic work environment.
My rapport with all Tronox, Iluka and other site contractors.
Having a great team of employees that are happy in their roles and are willing to except any challenge put to them.
Weaknesses
Lack of skilled personnel with in the local area. The need to train younger people will take time however will be beneficial.
Opportunities
To continue to expand into additional roles on the Tronox site.
The potential to expand to the Tronox Dongara site due to commence late 2020
The ability to expand to the Iluka site and establish similar works contracts.
The opportunity to establish partnerships throughout the district with ongoing construction projects such as the Yandin wind farm.
To provide employment and training to local youth
Threats
Competition from the company that I am currently managing on site.
Ability to hire and retain staff for future expansion
Market overview
The opportunity
Currently Tronox is going through a period of growth with the acquisition of Cristal and they are looking to expand further in the Midwest with all indicators pointing towards Tronox establishing a second mine site south of Dongara late in 2020. With my experience, knowledge and the rapport I have with management on the Cataby site I am in a great position to expand the current scope of works as well as potential to expand to Dongara with a second operation. Tronox, like many other companies, have gone down the line of utilizing more contract labor to complete works to keep their overall head count down. This giving the opportunity for our proposed and the existing company (VMS) to expand.
Market structure
I am looking at targeting the Midwest area concentrating on the mineral sands mine in Cataby and then expanding to Dongara. I intend to also target the construction projects currently in progress and planned for the future around Cataby, Dandaragan and Badgingarra.
…
Customers
Our key customers will be Tronox to get the business established and then move towards securing mine site services with Iluka on their Cataby site as well as the promotion to all projects existing and planned with in the area.
Tronox have always had a need to have 2 smaller contract business performing smaller tasks onsite. They have a major contractor for the mining contract. However they do not have the capacity to complete the smaller more technical tasks. Tronox also have small contract companies coming to site on a semi regular basis to preform tasks. I have given them the ability to have one company complete the majority of these tasks, saving Tronox time and money at the same time expanding and diversifying the business.
•On what basis do they choose suppliers?
They choose suppliers based on safety, quality, cost and availability. We have an excellent safety record and have demonstrated we can carry out any given task to a high standard within budget. With a majority of local work force this gives our clients the flexibility of having resources on call 24/7
Competitors
•Who are the key competitors in the market?
The main competitor in the market I am targeting is the company I currently work for. I am currently running every aspect of the business from quoting, organizing, purchasing, ensuring tasks are completed to expected KPI's through to invoicing. The owner of the current company does not at this stage have a relationship with the key stakeholders on site and has no experience within the mineral sands mining industry.
•What are their strengths and weaknesses?
Their strength is that they are a larger company with extensive earthmoving equipment based in Kalgoorlie.
Their weaknesses are that they bought into this business recently and have not been able to follow through with the commitments made to stakeholders and employees. All current employees are willing to transfer to our new venture.
Business structure
Ownership
•Who will be the owner/s of your business and what organisational structure will you have?
The owners of the business will be Michael and Kim Doble
The manager will be Michael Doble
Staff
•Will you be recruiting staff for your business?
All the staff currently working with myself are willing to transfer to the new business. I have also approached local people that are willing to take up trainee positions as the company grows
•How will you recruit your staff?
Utilizing existing staff on site working under me as well as attracting experienced staff members and trainees from the local area by offering them a safe, rewarding and enjoyable work environment
…
Operational factors
Business location and premises
•Where will your business be located?
The business will be based on the Tronox mine site 12 kilometers north of Cataby. VMS currently have an administration building on site and storage and maintenance areas. Tronox's intention is to have us set up in a larger area they have allocated and are in the process of allocating funds to build a new facility to house the rehab equipment (VMS).
•Will you be buying or leasing?
There is currently an administration building and storage with the business I am looking to purchase, I also have aditional transportable buildings I intend to utilize as needed. We have the availability of on site infrastructure like workshops to use as needed.
Equipment
•What equipment will you need for your business?
The established business has all equipment needed to carryout the rehabilitation side of the business plus some equipment we intend to use with in the side of the business I currently manage. I will need to purchase an 18 ton loader, 3.5 ton excavator Truck and flat top trailer 2 light vehicles and a crane truck.
•How are you planning to use it?
The equipment will be used for wet hire to carry out day works, shut downs and projects as set out by the clients
152The 'CGS turn over' was a further spreadsheet completed by Mr Doble and attached to his email to the NAB of 20 November 2019.[147] It contained three workbooks one for each of the 2017/18, 2018/19 and 2019/20 financial years. Mr Doble had completed this spreadsheet by recording the monthly turnover (exclusive of GST) for each Cataby General Services and Cataby Services customer for each of the 2017/18 and 2018/19 financial years and for the first four months of the 2019/20 financial year using information derived from the invoices rendered by the two businesses.[148]
[147] Exhibit 197.
[148] ts 522 - 527.
153The statement of position document which was attached to Mr Doble's email of 20 November 2019 to the NAB set out the assets and liabilities of both Mr Doble and Mrs Kim Doble.[149] Mrs Doble was responsible for providing Mr Doble with the figures required to complete this statement of position.[150]
[149] Exhibit 193.
[150] ts 653.
154Finally, in relation to the application for finance I infer that the document bearing the description 'LOM Rehab forcast' was a schedule disclosing Tronox's planned schedule for rehabilitation works over the length of the life of the mine. There was no evidence as to how Mr Doble obtained this document but the plaintiff did not allege that the document was obtained from it.
155On 25 November 2019 Mr Doble sent an email to Ms Gardiner of the NAB[151] attaching a copy of the VMS Contract and a copy of a letter dated 21 May 2019 from Tronox to Mr Johnson of VMS Contractors extending the 'completion date' of the VMS contract to 31 August 2022.[152]
[151] Exhibit 208.
[152] Exhibit 209.
156In November and December 2019 Mr Doble purchased a prime mover and a truck for use in the business.[153] In January 2020 Mr Doble obtained public liability insurance cover for a business described in the policy as undertaking 'site preparation services/ earthmoving/ excavation / land clearing & levelling/ trench digging'.[154] In cross‑examination Mr Doble said that these were the insurance brokers' terms for describing the business but agreed that they described the business of Cataby Services.[155]
[153] Exhibit 212 and 240.
[154] Exhibit 301.
[155] ts 547.
157In January 2020 Mr Doble told Mr Jason Curtis, the managing director of Curtis Electrical, that he was starting up his own business that would be doing the same work as Cataby Services and asked Mr Curtis to keep him in mind if Curtis Electrical needed assistance on the Tronox site.[156]
[156] ts 375.
158While still employed by Cataby Services Mr Doble informed Mr Aidan Freight, a senior planner in Tronox's maintenance department, that he was starting his own business.[157]
[157] ts 683.
159In the Business Plan submitted to the NAB Mr Doble said, 'All the staff currently working with myself are willing to transfer to the new business'. Mr Doble's evidence was to the effect that he had discussed his plans to establish his own business with the other Cataby Services employees.[158] They had all expressed an interest in being employed in the new business. Mr Doble said that he was not always the person who initiated these conversations and sometimes he was asked by the other employees whether they could 'come with him'. Mr Doble's evidence was that he did not make any offers of employment to other Cataby Services employees. Mr Wood said that when he knew that Mr Doble was setting up his own business. He asked Mr Doble if he had any work and Mr Doble said to him that if work came up in the future he would let him know. I find that Mr Doble had spoken to all the other Cataby Services employees about the possibility of them working for the business he wanted to establish. I find that Mr Doble encouraged the other employees to the view that he would employ them and they encouraged him to the view that they would join him but that no offers of employment were made by Mr Doble. He was not in a position to make offers until Kirahnley had obtained finance.
[158] ts 531.
160On 31 January 2021 Mr Doble sent an email to Ms Sweetman at the NAB in which he said:
I am looking at opening a business account today so I can finish the registration on the Tronox system.
I have a couple of questions, the first is what is the best account to open and also what is the best way to open it?
I am guessing I will need to bring in the registration certificate for the business and Kim and I will need to come in to the bank. Do we need to book an appointment and do we just ring the bank to do this?
161On 4 February 2020 Mr Doble sent an email to Ms Sweetman at the NAB expressing frustration at the delays in processing the application for finance. In that email Mr Doble said:[159]
Thank you again for getting this application moving. I am just so disappointed and frustrated that we are just now starting to get to this stage, from the emails that I received from Jo I was under the impression that all the valuations had been done and it was just a case of making the changes and submitting it for approval. We are now at 11 weeks and still no indication when or even if it will be approved.
The worst thing for me is that I am sitting here quoting on work through to the end of March that we (if the loan gets approved) will never see and March is one of the biggest months for turn over we have. I have also missed out on some equipment that was perfect for what we are doing and at great prices while the application has been stalled.
291Mr Doble had no contractual duties or responsibilities in relation to the hiring of employees to which fiduciary obligations could attach. Consequently, Mr Doble's discussions with employees before he made the application for finance did not constitute a breach of fiduciary duty. Arguably, his discussions with the other employees may have involved a breach of Mr Doble's common law duty of fidelity but that is not the case the plaintiff has advanced.
292Applying the same reasoning, Mr Doble's offer of employment to Mr Sawyer did not involve a breach of any fiduciary duty though, in my view, it most certainly amounted to a breach of Mr Doble's common law duty of fidelity.
293Mr Doble's relationship with the plaintiff's employees commenced before he and they were employed by the plaintiff. Discussing his plans with them and conveying to them that he would like them to join his new business and making the offer of employment to Mr Sawyer did not involve him in using his position as an employee of the plaintiff or using information he had derived from his employment. His conduct did not amount to a breach of the duties owed pursuant to s 182(1) or s 183(1) of the Corporations Act.
294In any event, even if contrary to the conclusions I have reached in relation to whether Mr Doble owed fiduciary duties of the nature the plaintiff alleges or statutory duties, and whether he breached those duties by soliciting the plaintiff's employees, the plaintiff's allegation that those breaches enabled Kirahnley to undertake work that the plaintiff would or could have undertaken is not made out because none of its employees, other than Mr Doble's son, Riley, actually became employees of Kirahnley. It is manifestly unlikely that would have remained employed by the plaintiff once Mr Doble left.
Soliciting and undertaking mine site maintenance work - statement of claim 10.14, 10.20, 10.22, 10.23, 10.28, and 13
295Mr Doble's conduct that forms the basis of these allegations of breach involved obtaining a quote for equipment for use in bore servicing for the purposes of Kirahnley's business,[294] causing Kirahnley to receive purchase orders from Tronox in direct competition with the plaintiff,[295] improperly using the plaintiff's confidential information concerning charge out rates and tendering practices,[296] and undertaking work in direct competition with the plaintiff.[297] The period over which the impugned conduct is alleged to have taken place began in February 2020 and is continuing.
[294] Statement of claim 10.14
[295] Statement of claim 10.20.
[296] Statement of claim 13.
[297] Statement of claim 10.23.
296The work which was the subject of the quotes that Mr Doble issued in Kirahnley's name before his employment came to an end was work that was ordinarily undertaken by the plaintiff. As I have found Mr Doble's duties included the preparation of quotes for the plaintiff in respect of mine site maintenance work that Tronox wanted undertaken. In respect of this obligation Mr Doble owed fiduciary obligations. Essentially by not providing quotes in the plaintiff's name as he was obliged to do and instead providing quotes in Kirahnley's name Mr Doble diverted work from the plaintiff to Kirahnley. By doing so he breached his fiduciary obligation by preferring his own interests over those of the plaintiff. Mr Doble's conduct also involved a breach of the duties owed by him pursuant to s 182(1) and s 183(1) of the Corporations Act. He used his position as site supervisor to gain advantage for Kirahnley and he improperly used information as to the work Tronox wanted done obtained by him because of his position as an employee to obtain an advantage for the plaintiff.
297Further, I find that Mr Doble's conduct in diverting work from the plaintiff to Kirahnley was dishonest.
298As recorded earlier Mr Doble's knowledge of the plaintiff's standard rates and its approach to tendering formed part of the know‑how accumulated by him over the years in which he worked on the Tronox site and did not constitute the confidential information in respect of which the plaintiff could invoke equity's assistance. Other than in that respect I find that the breaches alleged by the plaintiff in relation to the solicitation of the Tronox's work before Mr Doble's employment came to an end are established.
299To the extent to which the plaintiff alleges that Mr Doble's conduct in causing Kirahnley to undertake work for Tronox after his employment with the plaintiff came to an end is alleged to constitute a breach of duties owed by Mr Doble (and this is not entirely clear because although par 10.22 of the statement of claim refers to purchase orders received from 8 April 2020 onwards the receipt of these purchase orders is not alleged to be a breach of any duty) those breaches are not established. Any duties owed by Mr Doble other than in respect of the duties I have found he owed in respect of the plaintiff's confidential information, came to an end on the termination of his employment.
Kirahnley's liability
300The plaintiff's case is that Kirahnley is liable to it both under the Corporations Act and in equity. First, the plaintiff contends Kirahnley was a person involved in Mr Doble's contraventions of his statutory duties and thus it is a person against whom a compensation order under s 1317H of the Corporations Act may be made. Secondly, the plaintiff contends that Kirahnley is liable under the second limb of Barnes v Addy as a person who knowingly assisted Mr Doble to breach his fiduciary duties. [298]
[298] Barnes v Addy (1874) LR 9 Ch App 244.
Corporations Act claim
301Section 182(2) provides:
A person who is involved in a contravention of subsection (1) contravenes this subsection.
302Section 183(2) is in identical terms to s 182(2).
303Section 79 specifies when a person is involved in a contravention and, relevantly by s 79(c), provides that a person is involved in a contravention if that person has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention.
304A person is a party to a contravention if the person is an intentional participant, the necessary intent being based on knowledge of the essential elements of the contravention.[299] In Australian Securities and Investments Commission v Adler,[300] Santow J said that the knowledge required by s 79(c) is:[301]
… knowledge not merely of some potential occurrence, constituting the offence, but of the actual events, though only the essential ones, which constitute that offence. That knowledge must embrace all essential material factual ingredients of a contravention … Knowledge may be inferred from the fact of exposure to the obvious, though that does not obviate the need for actual knowledge of the essential facts constituting the contravention.
[299] Yorke v Lucas (1985) 158 CLR 661, 670 (Mason ACJ, Wilson, Deane and Dawson JJ).
[300] Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253.
[301] Australian Securities and Investments Commission v Adler at [209].
305When a company is said to be the participant, its intention and knowledge can be imputed from the intention and knowledge of the directing or governing mind and will.[302]
[302] ASIC v ActiveSuper Pty Ltd (in liq) [2015] FCA 342; (2015) 235 FCR 181, [406] (White J).
306Sections 182 and 183 are civil penalty provisions.[303]
[303] Corporations Act 2001 (Cth) s 1317DA, s 1317E.
307Relevantly, s 1317H provides:
1317H(1) Compensation for damages suffered. A Court may order a person to compensate a corporation or registered scheme for damage suffered by the corporation or scheme if:
(a)the person has contravened a corporation/scheme civil penalty provision in relation to the corporation or scheme; and
(b)the damage resulted from the contravention.
The order must specify the amount of the compensation.
1317H(2) Damage includes profits. In determining the damage suffered by the corporation or scheme for the purposes of making a compensation order, include profits made by any person resulting from the contravention or the offence.
…
1317H(5) Recovery of damage. A compensation order may be enforced as if it were a judgment of the Court.
308In the prayer for relief in the statement of claim included 'an order for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) or an order for an account of profits pursuant to s 1317H(2) of the Act'. This does not accurately reflect the structure of s 1317H(2) that, as can be seen from its terms, does not provide for an account of profits as an alternative to a compensation order. Rather, it provides for a compensation order that may include the profits made by a person resulting from the contravention.
309The plaintiff contends that as Kirahnley acted through Mr Doble and because Mr Doble knew of the breaches, Kirahnley must have been a party to the contravention and thus a person involved in the contravention.
310I accept that contention and I find that Kirahnley was a party to Mr Doble's contraventions of s 182(1) and s 183(1) and thus was itself a person involved in those contraventions.
Knowing assistance claim
311A person who assists a fiduciary to breach his or her fiduciary duties, with knowledge of a dishonest and fraudulent design on the part of the fiduciary, is liable as though that person were the fiduciary.[304] Such a claim is commonly referred to as a claim under the second limb of Barnes v Addy.
[304] Farah Construction Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, [160].
312The elements of a claim based on the second limb of Barnes v Addy are as follows: the existence of a fiduciary duty owed by the fiduciary; a dishonest and fraudulent design on the part of the fiduciary; assistance by the third party in that design; and knowledge on the part of the third party of the circumstances constituting that design.[305]
[305] Farah Construction Pty Ltd v Say-Dee Pty Ltd.
313For the purpose of the second limb of Barnes v Addy a dishonest and fraudulent design can include not only breaches of trust but also breaches of fiduciary duty but any breach of trust or breach of fiduciary duty relied on must be dishonest and fraudulent.[306]
[306] Farah Construction Pty Ltd v Say-Dee Pty Ltd [179].
314Allegations of participation in a dishonest and fraudulent design is a serious allegation that must be specifically pleaded and particularised.[307] In Yeshiva Properties No 1 Pty Ltd v Marshall, [308] the Court of Appeal in New South Wales (Mason P, Beazley and Bryson JJA) stated:[309]
Where an equitable claim is based on alleged dishonesty, or otherwise on Barnes v Addy (1874) LR 9 Ch App 244, it is inappropriate that there should be anything less than a fully distinct statement in the pleading of what it is in substance that is charged against the alleged accessary.
[307] Farah Construction Pty Ltd v Say-Dee Pty Ltd [170].
[308] Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23; (2005) 219 ALR 112.
[309] Yeshiva Properties No 1 Pty Ltd v Marshall [14].
315The only claim against Kirahnley referred to in the writ of summons was based on Kirahnley having been knowingly concerned in, or a party, to Mr Doble's alleged breaches of statutory duty. No reference was made to a claim under the second limb in Barnes v Addy.
316In par 3.3 of the statement of claim the plaintiff pleads that Kirahnley was under the control of Mr Doble and was used by him in furtherance of his activities 'set out in paragraphs 10.4 and 10.7 to 10.28'. Otherwise, the plaintiff's case against Kirahnley is confined to the pleading in par 27 of the statement of claim that is as follows:
By reason of the matters set out in paragraphs 3.3 and 10 above, the second defendant was, from the date of its registration, knowingly concerned with, or a party to, the first defendant's breaches set out in paragraphs 11 to 26 above pursuant to section 79 of the Corporations Act 2001 (Cth), as a person involved in terms of sections 181(2), 182(2) and 1317(4)(b) [sic] of that Act, and in equity. (emphasis supplied)
317In its written outline of opening submissions the plaintiff outlined a claim against Kirahnley on the basis that 'a party may be held to be liable as an accessory if it assisted in a dishonest and fraudulent design on the part of the fiduciary with notice'.[310] In the defendants' outline of opening submissions they contended that the trial must be limited to the pleaded issues and stated that they would not accede to the determination of any issue that was not open on the pleadings.[311] The defendants argued that adding the words 'and in equity' onto the end of par 27 of the statement of claim was insufficient to plead a case of accessorial liability under the second limb in Barnes v Addy.
[310] Plaintiff's outline of opening submissions filed 3 April 2023 at par 45.
[311] Defendants' outline of opening submissions filed 4 April 2023 at par 4.
318In my view the plaintiff's attempted pleading of a case of accessorial liability under the second limb of Barnes v Addy is inadequate and inconsistent with the requirement that allegations of participation in a dishonest and fraudulent design must be the subject of a separate plea that is distinct from other matters pleaded and must be adequately particularised. Adding the words 'and in equity' to par 27 falls a long way short of what is required. Moreover, a claim under the second limb of Barnes v Addy was not included in the indorsement on the writ of summons.
319In my judgment it is not open on the pleadings for the plaintiff to advance a knowing assistance claim against Kirahnley. Ultimately, this is not a matter of consequence because, on the facts of this case, an order under s 1317H of the Corporations Act will provide compensation equivalent to the equitable compensation that that would have been available had a knowing assistance claim been open.
Corporations Act defences
320Section 1317S provides, in effect, that in proceedings brought for a contravention of a civil penalty provision a court may relieve a person wholly or partly from a liability to which the person would otherwise be subject if it appears to the court that the person has acted honestly and having regard to the circumstances of the case the person ought fairly to be excused from the contravention.
321Section 1318(1) provides:
If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach but that the person has acted honestly and that, having regard to all the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit.
322I have found that Mr Doble's conduct in using the plaintiff's turnover information for the purposes of his application for finance and separately his conduct in diverting work from the plaintiff to Kirahnley were contraventions of civil penalty provisions that involved dishonest conduct. Consequently, the defences under s 1317S and s 1318(1) of the Corporations Act are not open to him.
Relief
Work diverted to Kirahnley while Mr Doble employed by the plaintiff
323I have found that while still employed by the plaintiff Mr Doble submitted quotes to Tronox on Kirahnley's behalf and that thereafter Kirahnley completed the work and rendered invoices in accordance with the quotes. The work was work that the plaintiff could and would have undertaken had Mr Doble not submitted quotes on Kirahnley's behalf. The plaintiff has lost the profits that it would have derived from that work and Kirahnley has derived profits that it would otherwise not have made. The total value of the relevant Kirahnley invoices was $35,525 excluding GST.[312]
[312] Exhibits 346, 350, 358 and 361.
324The plaintiff retained Mr Barry Honey, a chartered accountant with long and extensive experience, to give opinion evidence on various issues including the question of what profits were derived by Kirahnley from the work that Mr Doble diverted to it while he was employed by the plaintiff. Mr Honey calculated the profits by deducting his estimate of the direct costs of the work from the amount of each invoice. He explained why he did not deduct indirect costs, that is, because they are generally incurred regardless of whether the works are undertaken. Mr Honey explained that in the absence of detailed wages and job cost records he assessed the direct costs attributable to undertaking the work by establishing an average rate of direct costs by reference to special purpose financial statements for Kirahnley covering the period between the start of its business and 30 June 2021. Using this approach Mr Honey calculated that direct costs (the cost of wages, superannuation, materials and supplies) amounted to 52% of Kirahnley's turnover yielding an estimated gross profit figure of 48%. On that basis the gross profits derived by Kirahnley from the relevant invoices amounted to $15,132.
325In my view Mr Honey's approach to calculating Kirahnley's gross profit was both valid and entirely conventional. The only respect in which I will diverge from Mr Honey's approach is in respect of the invoice rendered for the tagging of lifting equipment, invoice 1004.[313] Mr Doble's evidence was that he undertook this work while employed by the plaintiff. That being so, in my view no allowance for costs should be made against this invoice. I find that Kirahnley made a gross profit of $13,500 in respect of the work that was the subject of invoices 1002, 1003 and 1005 (total value of invoices - $28,125 x 48% = $13,500). The full value of invoice numbered 1004 ($3,400) should be added to this figure making a total gross profit figure of $16,900.
[313] Exhibit 358.
326Mr Honey was not provided with the information about the plaintiff's financial performance required to undertake a similar 'direct costs' calculation of the nature he had completed in respect of Kirahnley and to which I have referred in the preceding paragraphs. Mr Honey expressed an opinion to the effect that the benefit gained by Kirahnley equated to the loss suffered by the plaintiff. I have reservations about that opinion because it assumes that the plaintiff's expenditure on wages as a percentage of turnover was the same as that of Kirahnley. That said, given the nature of the enterprises it is unlikely that any difference in direct costs would be material in the context of the present exercise and I would assess the plaintiff's loss using the 48% figure. This produces a loss of profit of $15,132.
327Taking the figures discussed in the preceding paragraphs I have concluded:
(a)The plaintiff is entitled to equitable compensation from Mr Doble for breach of his fiduciary duties in diverting work away from the plaintiff to Kirahnley in the sum of $15,132.
(b)The plaintiff is entitled to a compensation order against Mr Doble and Kirahnley in respect of the damage resulting from the contraventions of statutory duties constituted by the diversion of work away from the plaintiff to Kirahnley in the sum of $16,900.
328There is no evidence that Mr Doble, as opposed to Kirahnley, received any profits from his breach of fiduciary duty so there is nothing for which he personally may be liable to account.
Misuse of the plaintiff's turnover information
329Assessing the financial consequences of the misuse of confidential information is invariably difficult. The difficulty is compounded where, as in this case, the confidential information has no intrinsic value. Unlike trade secrets or information of that nature, the plaintiff's turnover information was not of itself valuable, which is not to say, of course, that there were not legitimate reasons for the plaintiff to keep the turnover information confidential.
330In par 27 of the statement of claim the plaintiff pleads:
In engaging in the conduct set out in paragraph 10 and by reason of the breaches set out in paragraphs 11 - 26 above, [Mr Doble] gained an advantage of approximately at least 5 months to springboard into the business of [Kirahnley].
331In Meagher, Gummow and Lehane's Equity Doctrines and Remedies the learned editors comment on the springboard doctrine in the context of the equitable obligation of confidence as follows (footnotes omitted):[314]
The 'doctrine' is attributed to Roxburgh J in Terrapin Ltd v Builders Supply Co (Hayes) Ltd. The Court of Appeal in the same case expressed the principle as forbidding use of information by a defendant 'as a springboard' for activities detrimental to the plaintiff, even when all the information has otherwise reached the public domain; because of the headstart over other members of the public, the defendant must be placed under a special disability in the field of competition. The defendant may therefore be restrained from use for that period which competitors would need to put their product on the market by, for example, 'tooling-up' and organising production and distribution. If the defendant has only known of and has not wrongly used the information before it became public, then the doctrine does not apply and no special restraint will be ordered.
The authorities on this subject were reviewed by the New South Wales Court of Appeal in the United States Surgical Corporation v Hospital Products International Pty Ltd. The court concluded that the 'springboard doctrine' was 'not based on some artificial or arbitrary doctrine to be applied regardless of the facts of the case' and concluded:
It is a principle to be applied in conformity with the more generally principle that a person misusing confidential information must answer for his default according to his gain. A headstart may often be the gain in these cases. If it is the gain, damages will be assessed accordingly and any other relief, such as an injunction, will be moulded. If it is not the gain the method of assessing damages or the appropriateness of some other remedy has to be considered in the light of what that gain is.
[314] Meagher, Gummow and Lehane's Equity: Doctrines and Remedies [42 - 125].
332The facts of this case differ from the facts of the cases for which the springboard doctrine was originally developed but the general principle that a person misusing confidential information must answer for his default in accordance with this gain applies.
333The plaintiff's pleaded claim that Mr Doble gained a springboard into the establishment of Kirahnley's business of at least five months is based on all of the breaches of duties alleged by it being made good. What falls to be assessed, however, is what gain was made by Mr Doble by using the turnover information in support of the original application for finance and again in answer to the query raised by 'credit' on 12 February 2020.
334Objectively, Mr Doble's use of the plaintiff's turnover information in support of his application for finance strengthened the application because it created the impression of an established trading record. That Mr Doble used the plaintiff's turnover information evidences its importance to the success of the application as does the request made by the NAB on 12 February 2020 asking for 'the Vendors Financials for a 2 year period' and 'an amended Cash Flow forecast that is in line with the vendors financials'. The use of the plaintiff's turnover information conferred a significant advantage on Mr Doble in relation to the application for finance. If he had not used the plaintiff's turnover information the only actual trading figures available to Mr Doble to support the application for finance were those of VMS but its turnover was significantly lower than that of the plaintiff. I infer that if Mr Doble had been confined to the use of VMS's figures this would have reduced the amount he could have borrowed. I am satisfied that Mr Doble would have obtained finance for the acquisition of the VMS contract without using the plaintiff's turnover figures but it would have taken him longer to do so.
335The application for finance was made on 20 November 2019 and an offer of finance was received on 21 February 2020, 12 weeks later. I infer from the NAB's request for financial information from the vendor that had Mr Doble been unable to provide figures that established an historical trading record it would have been more difficult for Mr Doble to obtain finance and the process would have taken longer. The evidence provides little assistance in terms of establishing objective criteria that may be used to determine how long it would have taken Mr Doble to obtain finance had he not used the plaintiff's turnover information. My assessment, however, is that having regard to the time it took to process the application relying on the plaintiff's turnover information and the importance of that information, without the information, it would have taken up to a further six weeks for Mr Doble to obtain an offer of finance, that is he would not have received an offer of finance until 3 April 2020. It took Mr Doble just over five weeks from receiving the NAB's offer to receive the finance and be in a position to cause Kirahnley to start trading. Making an allowance of a further five weeks from 3 April 2020 Kirahnley would not have been in a position to start trading until 8 May 2020.
336On the particular facts of this case, the gain flowing from Mr Doble's default that falls to be measured is the benefit derived by Kirahnley trading between 25 March 2020 and 8 May 2020. In that period Kirahnley rendered invoices with a total value of $98,000.10. A number of the invoices rendered after 8 May 2020 were in respect of work for which Tronox had issued purchase orders prior to 8 May 2020 and, inferentially, Kirahnley must have quoted for that work before the purchase orders were received. The value of those invoices was $106,221.18. The combined value of invoices for work undertaken in response to purchase orders received before 8 May 2020 was $204,221.28. The details of the invoices and purchase orders to which I have referred are set out in the table in the Appendix to these reasons.
337Adopting the approach used by Mr Honey the direct cost of undertaking this work was $106,195.07 (total value of invoices - $204,221.28 x 52% = $106,195.07) and the gross profit was $98,026.21 (total value of invoices - $204,221.28 x 48% = $98,026.21). This is the financial measure of the gain derived from Mr Doble's default in respect of the turnover information and it serves also as a measure of the plaintiff's loss.
338The defendants maintained that the plaintiff had not included a claim for equitable compensation for breach of the equitable obligation of confidence in the writ or in the statement of claim. While that is correct the statement of claim pleaded the breach of the equitable duty of confidence claims and there can have been no misunderstanding on the defendants' part of the claim against them. The prayer for relief includes a prayer for 'Such other order or further relief as this Honourable Court sees fit'. In the particular circumstances of this case where the claims have been clearly pleaded and articulated in submissions, the claim for equitable compensation for breach of the equitable obligation of confidence is embraced by this 'catch-all' plea.
339Accordingly, the plaintiff is entitled to equitable compensation from Mr Doble for breach of the equitable duty of confidence owed in respect of the turnover information in the sum of $98,026.21.
340The plaintiff is entitled to a compensation order against Mr Doble and Kirahnley in respect of the contraventions of the statutory duties constituted by Mr Doble's use of the plaintiff's turnover information in the sum of $98,026.21.
341The turnover figure from which the amount of $98,026.21 is derived includes the invoices rendered in respect of work diverted to Kirahnley and care will be required in formulating final orders to avoid double recovery by the plaintiff.
Misuse of the induction information in the 4 November 2019 email
342I have found that Mr Doble received the email containing information about Tronox's online learning module in the course of his employment and that he used it to gain an advantage for Kirahnley. The information in the email related to the Tronox online management system that was made available by Tronox to all contractors and employees who wished to work on its sites. Mr Doble may have saved a short amount of time by sending himself the email rather than arranging for Tronox to send it to him again but any such saving was subsumed in the time saved by him in using the plaintiff's turnover information and did not give rise to a separate gain by Kirahnley or loss by the plaintiff.
No recoup of Mr Doble's salary
343The plaintiff's claim included a claim for repayment of the salary paid to Mr Doble between 1 November 2019 and 31 March 2020. The plaintiff cited no authority to support the validity of such a claim and I have been unable to find any authority. I do not accept that such a claim has a sound basis in legal principle and, in any event, as I have found earlier there is no evidence to suggest that, leaving to one side the diversion of work to Kirahnley, Mr Doble's effectiveness as site supervisor was diminished by the preparatory steps taken by him to establish Kirahnley's business.
Conclusion
344The plaintiff is entitled to the relief set out in the preceding section of these reasons and is entitled to elect between the alternate forms of relief available to it. I will hear from the plaintiff as to its election and to the parties as to the terms of the final orders and costs.
Appendix
Table of invoices and purchase orders
| Invoice Date | Invoice | Exhibit Number of Invoice | Purchase Order Date | Purchase Order Number | Exhibit Number of Purchase Order | Amount |
| 25 March 2020 | 1002 | 346 | 12 March 2020 | D19846-S | Not in evidence | $21,490.00 |
| 26 March 2020 | 1003 | 350 | NA | D19728-G | Not in evidence | $283.00 |
| 27 March 2020 | 1004 | 358 | 27 March 2020 | D20077-S | 357 | $3,400.00 |
| 31 March 2020 | 1005 | 361 | 8 April 2020 | B67111-S | 456 | $6,352.50 |
| 14 April 2020 | 1006 | 459 | 8 April 2020 | B67111 | 456 | $7,260.00 |
| 14 April 2020 | 1007 | 460 | 3 April 2020 | D20189 | 452 | $1,450.00 |
| 16 April 2020 | 1008 | 472 | 16 April 2020 | D20354 | 464 | $18,090.76 |
| 17 April 2020 | 1009 | 466 | 1 April 2020 | D20138 | 447 | $2,488.00 |
| 21 April 2020 | 1010 | 475 | 18 April 2020 | D20402 | 471 | $280.00 |
| 23 April 2020 | 1011 | 478 | 23 April 2020 | D20450 | 477 | $505.00 |
| 23 April 2020 | 1012 | 479 | 21 April 2020 | D20418 | 473 | $4,200.00 |
| 24 April 2020 | 1013 | 485 | 21 April 2020 | D20419 | 474 | $3,744.00 |
| 29 April 2020 | 1014 | 490 | 29 April 2020 | D20538 | 489 | $984.00 |
| 29 April 2020 | 1015 | 491 | 29 April 2020 | D20539 | 488 | $173.00 |
| 29 April 2020 | 1016 | 492 | 8 April 2020 | B67111 | 456 | $4,620.00 |
| 30 April 2020 | 1017 | 495 | 9 April 2020 | D20292 | 458 | $9,000.00 |
| 30 April 2020 | 1018 | 496 | 8 April 2020 | D20246 | 457 | $748.00 |
| 30 April 2020 | 1019 | 497 | 7 April 2020 | D20235 | 454 | $3,420.00 |
| 30 April 2020 | 1020 | 498 | 18 April 2020 | D20407 | 468 | $952.00 |
| 30 April 2020 | 1021 | 499 | Not in evidence | D20627 | Not in evidence | $544.00 |
| 30 April 2020 | 1022 | 500 | 5 May 2020 | D20601 | 509 | $240.00 |
| 30 April 2020 | 1023 | 501 | 16 April 2020 | D20357 | 465 | $4,937.42 |
| 30 April 2020 | 1024 | 502 | Not in evidence | D20671 | Not in evidence | $2,464.42 |
| 30 April 2020 | 1025 | 503 | 18 April 2020 | D20405 | 470 | $374.00 |
| 13 May 2020 | 1026 | 516 | Not disclosed | D20620 | $440.00 | |
| 14 May 2020 | 1028 | 522 | 14 May 2020 | D20754 | 518 | $150.00 |
| 14 May 2020 | 1029 | 523 | 14 May 2020 | D20752 | 520 | $750.00 |
| 14 May 2020 | 1030 | 524 | 14 May 2020 | D20753 | 519 | $177.00 |
| 14 May 2020 | 1031 | 525 | 25 March 2020 | D20033 | 345, 407 | $18,850.00 |
| 26 May 2020 | 1032 | 528 | 9 April 2020 | D20292 | 458 | $7,087.50 |
| 26 May 2020 | 1033 | 529 | 7 April 2020 | D20235 | 454 | $900.00 |
| 29 May 2020 | 1038 | 535 | 30 March 2020 | D20108 | 360 | $4,230.00 |
| 31 May 2020 | 1039 | 536 | 23 April 2020 | D20457 | 476 | $1,675.42 |
| 31 May 2020 | 1040 | 537 | 16 April 2020 | D20357 | 465 | $22,455.50 |
| 31 May 2020 | 1042 | 539 | 18 April 2020 | D20405 | 470 | $2,440.42 |
| 12 June 2020 | 1050 | 552 | 18 April 2020 | D20406 | 469 | $1,392.00 |
| 30 June 2020 | 1058 | 577 | 16 April 2020 | D20357 | 465 | $23,280.42 |
| 30 June 2020 | 1059 | 578 | 18 April 2020 | D20405 | 470 | $1,385.00 |
| 23 July 2020 | 1074 | 620 | 16 April 2020 | D20357 | 465 | $20,191.92 |
| 30 July 2020 | 1082 | 628 | 8 April 2020 | D20246 | 457 | $816.00 |
| TOTAL | $204,221.28 | |||||
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JM
Associate to the Judge
21 SEPTEMBER 2023
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