Climate Change Technologies P/L v Glynn
[2017] SASC 60
•1 May 2017
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CLIMATE CHANGE TECHNOLOGIES P/L v GLYNN & ORS
[2017] SASC 60
Judgment of The Honourable Justice Nicholson
1 May 2017
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - SERIOUS QUESTION TO BE TRIED
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - RELEVANT CONSIDERATIONS - BALANCE OF CONVENIENCE GENERALLY
The plaintiff is a research and development company and over a number of years has taken steps to design and develop and commercially exploit what it understands to be a unique thermal energy storage system or thermal energy device (TED) together with its application in other associated technologies such as waste heat recovery, concentrated solar collection and heliostat reflected heat (Associated Technology).
The first defendant is in his late 60s and is a highly qualified, highly experienced and, by all accounts, successful research scientist in these and related fields. From 2011 until October 2016, the first defendant provided consulting services for and was for a time employed by the plaintiff. He was its Principal Research Officer. The first defendant was employed by the plaintiff in the role of Chief Executive Officer from 1 February 2016 until about 4 July 2016. The first defendant resigned his employment and severed his involvement with the plaintiff with effect from 14 October 2016. During the period of his involvement with the plaintiff, the first defendant was also a director of the plaintiff and he resigned from this position as a result of giving notice of resignation on 22 October 2016.
The plaintiff contends, in brief, that the first defendant (together with the second and third defendants) after severing his relationship with the plaintiff retained intellectual property and confidential information in relation to the TED and Associated Technology belonging to the plaintiff. It is also contended that the defendants have already commenced, and intend to continue, to exploit, further develop and commercialise the plaintiff’s intellectual property and confidential information for themselves. It is the plaintiff’s case that the second defendant has been incorporated as the research and development vehicle with the third defendant to be an “umbrella” company for the purposes of attracting investment funds.
In addition, it is contended that the defendants have been dealing and negotiating with third parties being persons or entities with whom the first defendant initially dealt when he was representing the plaintiff. It is alleged that the defendants intend, in effect, improperly to divert material business opportunities acquired by the plaintiff during the period that the first defendant was a director of the plaintiff.
The plaintiff seeks interlocutory injunctive relief.
Held:
1. Subject to paragraph (2), the plaintiff is entitled to an interlocutory injunction in the terms identified in the reasons which differ from those propounded by the plaintiff.
2. The granting of an interlocutory injunction is subject to hearing further submissions from the parties about and resolving the question of the adequacy of the plaintiff’s undertaking as to damages as presently offered.
Australian Broadcasting Corporation v O’Neill [2006] HCA 46, (2006) 227 CLR 57; Organic Marketing Australia Pty Ltd v Woolworths Ltd [2011] FCA 279; AA Shi Pty Ltd v Avbar Pty Ltd (No 2) [2010] FCA 427, (2010) 186 FCR 148; Caravelle Investments Ltd v Martaban Ltd (1999) 95 FCR 85; Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1, (1968) 118 CLR 618; Edenham Pty Ltd v Meares [2016] WASC 301; Custom Credit Corporation v Whitehall Holdings Pty Ltd (Unreported, Supreme Court of Western Australia, Ipp J, 7 April 1992), considered.
CLIMATE CHANGE TECHNOLOGIES P/L v GLYNN & ORS
[2017] SASC 60NICHOLSON J.
Introduction
On 14 March 2017 and for reasons provided on that date, I granted the plaintiff interim injunctive relief until further order and pending full argument on the plaintiff’s claim for interlocutory injunctive relief in this matter.
The plaintiff in its originally filed interlocutory application sought injunctive relief in a particular form. The interim relief granted was in a different, arguably less restrictive, form. The defendants opposed any form of interim relief. However, as an alternative, and in the event that interim relief were to be granted, they propounded the form that I ultimately adopted.
When the matter returned for further argument on 23 March, the plaintiff put forward a modified version of the relief it was seeking. It was said by counsel for the plaintiff that this modified version represented a refined version of the interim orders, narrower in scope and in an attempt to take account of some of the defendants’ complaints. The defendants continued to oppose interlocutory relief of any type, including in the form of the interim relief as originally propounded by them. As at 23 March, the defendants had offered to provide undertakings in the nature of preservation orders.
At the hearing of the argument for interlocutory relief, on 23 March 2017, the following affidavits were read.
(i)The plaintiff read one affidavit by its solicitor, Bernard James Andary affirmed 6 March 2017 and two affidavits by its director and chief operating officer, Graham Thomas Warburton sworn 7 March 2017 and 15 March 2017.
(ii)The defendants read affidavits by their solicitor, Alexander Xavier Moriarty sworn 9 March 2017, 13 March 2017 and 22 March 2017 and by the first defendant, Patrick Joseph Glynn affirmed on 9 March 2017 (two such affidavits) and 20 March 2017.
The hearing was adjourned part heard to 30 March 2017. However, on that day and prior to the hearing, the matter was further adjourned, administratively and by consent, to 13 April 2017. At the resumption on 13 April the following further affidavits were read as relevant to the plaintiff’s application for an interlocutory injunction.
(i)The plaintiff read the fourth affidavit of Mr Andary affirmed 5 April 2017 and the third and fourth affidavits of Mr Warburton sworn on 7 April 2017 and 11 April 2017 respectively.
(ii)The defendants read the fourth and fifth affidavits of Dr Glynn affirmed 29 March 2017 and 13 April 2017 respectively, the fifth affidavit of Mr Moriarty sworn on 12 April 2017 and an affidavit by Bhaskarabhitla Venkata Surya Prakash sworn 28 March 2017.
As at 13 April I also had in the order of four formal interlocutory applications before me in addition to the plaintiff’s application for an interlocutory injunction. Two of the applications, one by the defendants for security for costs and one by the plaintiff seeking disclosure by the defendants of an identified class of documents on oath, I stood over for later consideration. On the basis of the other applications, I made a series of procedural orders all, but one, by consent,[1] in order to assist with the further conduct of the litigation. At the conclusion of the hearing on 13 April, I reserved my decision on the interlocutory injunction.
[1] The one contested order concerned which party was to pay, in the first instance, the costs of an independent solicitor engaged to hold and preserve certain property on behalf of the parties. I exercised the wisdom of Solomon. Ultimately, these costs as between the parties were reserved.
Background to the dispute
Some matters by way of general background to the dispute are briefly canvassed in my ruling for interim relief provided to the parties on 14 March 2017. Further background to the dispute is as follows.
The plaintiff is a research and development company and over a number of years has taken steps to design, develop and commercially exploit what it understands to be a unique thermal energy storage system or thermal energy device (TED), together with its application in other associated technologies such as waste heat recovery, concentrated solar collection and heliostat reflected heat (Associated Technology).
The first defendant is in his late 60s and is a highly qualified, highly experienced and, by all accounts, successful research scientist in these and related fields. From 2011 until October 2016, the first defendant provided consulting services for and was for a time employed by the plaintiff. He was its Principal Research Officer. The first defendant was employed by the plaintiff in the role of Chief Executive Officer from 1 February 2016 until about 4 July 2016. The first defendant resigned his employment and severed his involvement with the plaintiff with effect from 14 October 2016. During the period of his involvement with the plaintiff, the first defendant was also a director of the plaintiff and he resigned from this position as a result of giving notice of resignation on 22 October 2016.
The first defendant, at or about the time of severing his involvement with the plaintiff, caused the second defendant to be incorporated as a research and development vehicle through which the first defendant could continue to exploit his own research and development expertise. The first defendant is a director, secretary and majority shareholder of the second defendant. The other director of the second defendant is Mr John Thomas, who is also the sole director and secretary of the third defendant. Another company (Toddstead Pty Ltd) of which Mr Thomas is a director and majority shareholder, holds the remaining shares in the second defendant.
As part of his work with the plaintiff, the first defendant, together with a Mr Neil Parkinson, invented a particular TED which subsequently obtained Australian patent application no. 2012292959. By deeds of assignment dated 30 September 2011, the first defendant and Mr Parkinson assigned the provisional patent and related international patent applications to the plaintiff for nil consideration.
On 30 September 2011, the first defendant and Mr Parkinson executed a document entitled “Intellectual Property Agreement” which is in evidence. This would appear to be the only express written agreement potentially relevant to the parties’ relationship. No written employment agreement, no deed of confidentiality or restraint of trade regulating the parties’ relationship or the first defendant’s post-employment obligations with respect to the plaintiff is in evidence.
The plaintiff contends, in brief, that the first defendant (together with the second and third defendants) after severing his relationship with the plaintiff retained intellectual property and confidential information in relation to the TED and Associated Technology belonging to the plaintiff. It is also contended that the defendants have already commenced, and intend to continue, to exploit, further develop and commercialise the plaintiff’s intellectual property and confidential information for themselves. It is the plaintiff’s case that the second defendant has been incorporated as the research and development vehicle with the third defendant to be an “umbrella” company for the purposes of attracting investment funds.
In addition, it is contended that the defendants have been dealing and negotiating with third parties, being persons or entities with whom the first defendant initially dealt when he was representing the plaintiff. It is alleged that the defendants intend, in effect, improperly to divert material business opportunities acquired by the plaintiff during the period that the first defendant was a director of the plaintiff.
Interlocutory injunctions – the legal test
The matters that a court must consider when deciding whether to grant interlocutory injunctive relief are:
(i)whether the applicant for relief has shown a prima facie case for the grant of final relief;
(ii)whether the balance of convenience including, as an element, the adequacy of damages as a remedy for any breach, favours the grant of interlocutory injunctive relief; and
(iii)whether there are any discretionary considerations that tend for or against the grant of relief.
In Australian Broadcasting Corporation v O’Neill,[2] in a passage that has been generally accepted as authoritative, Gummow and Hayne JJ expanded on the meaning of “prima facie case” for this purpose.
[2] [2006] HCA 46; (2006) 227 CLR 57 at [65].
The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:
“The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.”
By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:
“How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”
[citations omitted]
The matter has been argued before me essentially on the basis of (i) (prima facie case) and (ii) (balance of convenience factors) above. Whilst the defendants’ contention that the undertaking as to damages offered by the plaintiff is inadequate, bearing in mind the plaintiff’s financial circumstances, raises discretionary considerations, no argument has been put that conventional equitable discretionary factors such as laches or bad faith operate in this case. There is the suggestion by the defendants that third party interests may be adversely affected by the grant of an interlocutory injunction in the terms sought but this issue was argued within the balance of convenience framework.
The legal bases relied on by the plaintiff for its claim for final relief
In paragraphs 10 and 11 of the plaintiff’s written submission for the hearing on 23 March 2017, the plaintiff has identified the causes of action it relies on.
10.[The plaintiff] advances three distinct species of equitable claims against the first defendant:
(a) Misuse of confidential information (which is also a claim that [the plaintiff] advances as breach of an implied contractual term);
(b) Breach of fiduciary duty; and
(c) Breach of the “business opportunity rule”, a particular body or principles that have developed around the use by directors, or former directors, of opportunities that have come to them in the course of, or in connection with, the director’s role.
11.[The plaintiff] advances separate equitable claims against the second and third defendants.
(a) As equity acts on the conscience of a person, a third party recipient of confidential information (whether it be confidential pursuant to a contract or confidential in equity) cannot escape liability if, knowing the information to be confidential (constructive knowledge being sufficient), they make unauthorised disclosure or use of that information.
(b) Under the first limb of Barnes v Addy as knowing recipient of property or confidential information of the plaintiff;
(c) Under the second limb of Barnes v Addy as a knowing participant in the breach of fiduciary duty of the first defendant;
(d) As a third party who knowingly induces or procures a breach of fiduciary duty whether for his or her own, or for another person’s, benefit;
(e) In the case of the second defendant, as the alter ego of a wrongdoing fiduciary.
[citations omitted]
The parties provided extensive and helpful submissions as to the law governing these various causes of action.
The factual basis, in brief, said to support the plaintiff’s claims
I start with the assumption that the plaintiff’s affidavit evidence were to remain as it is and were to be accepted at trial. I also note that whilst the plaintiff’s ultimate contentions are strongly contested by the defendants, aspects of the plaintiff’s evidence which concern intermediate facts do find some support in the defendants’ evidence. Having reviewed all of the affidavit evidence and the submissions of the parties, I am satisfied (but without finally deciding) that there is direct evidence or evidence from which inferences would be open that would support findings in the nature of the following.
The plaintiff is the owner of the intellectual property in the project described above as the TED and Associated Technology.
The first defendant worked, effectively full time, as Chief Scientist for the plaintiff and devoted many thousands of hours to the plaintiff’s project, performing the necessary engineering, scientific and mathematical work with respect to the plaintiff’s TED and Associated Technology. In so doing, the first defendant created and came into possession of a significant quantity of confidential information concerning intellectual property owned by the plaintiff, in particular, the TED and Associated Technology (the plaintiff’s confidential information). In this respect, the distinction between information retained by the first defendant’s mental processes (which does not form part of the plaintiff’s “property”) and the generated physical manifestation of that information, such as drawings, blueprints, charts, performance calculations and the like which can, in appropriate circumstances, be characterised as the plaintiff’s confidential information, must be kept in mind.
The plaintiff, during the period the first defendant was one of its directors and largely with the assistance of the first defendant in that capacity, negotiated with and arrived at preliminary arrangements with third party entities in India and Malaysia with respect to the commercial exploitation of the plaintiff’s TED and Associated Technology. Further, the first defendant, after severing his ties with the plaintiff in October 2016, has continued and wishes in the future to continue to work collaboratively with those third party entities with a view to exploiting his own expertise in thermal energy storage devices and related technology.
A significant quantity of the plaintiff’s confidential information, generated by the work of the first defendant and/or other persons, was stored on various computer devices[3] owned by the plaintiff but made available to the first defendant during his period of employment to enable him to perform his work for the plaintiff.
[3] Either consisting of or including: one Dell XPS13 laptop computer; three Brix PCs; one Samsung Galaxy S5 mobile telephone; one Seagate 4TB hard drive; and one Silicon Power 1TB hard drive.
After severing his involvement with the plaintiff in October 2016, the first defendant retained the computer devices containing the plaintiff’s confidential information. The devices were returned to the plaintiff, following the plaintiff’s request, on or about 4 January 2017.
A significant quantity of the plaintiff’s confidential information that found its way on to the computer devices had not been uploaded by the plaintiff or any other person on to a central server or other storage platform available to the plaintiff. As a consequence, an unascertainable amount, likely to be substantial, of this confidential information may not have been in the possession or control of the plaintiff once the first defendant left, taking the computer devices with him. This is the genesis of the problem confronting the plaintiff in being able to identify with precision all of its confidential information said to have been generated, taken and retained by the first defendant. In this respect, Mr Warburton in his affidavit sworn 7 March 2017 at [56] has deposed as follows.
It is difficult to say with certainty precisely what intellectual property of the Plaintiff that the First Defendant took and continues to hold, but I am of the opinion that it would be very significant given the work that he was doing. Given his role as principal scientist and, for a period, as Chief Executive Officer of the Plaintiff, the First Defendant had access over many years to the technical data, research and information with respect to the TED and its potential applications. Prior to commencing employment with the Plaintiff in early 2016, the First Defendant had been providing consulting services on an unpaid basis to the Plaintiff since 2011. Those services were supplied pursuant to the agreement at GTW 11. Throughout this period the First Defendant was closely involved in the design, development and the potential commercial use of the technology, and had access to the Plaintiff’s confidential information for those purposes. In particular I consider it very likely that the First Defendant had access to and continues to have access to the following categories of the Plaintiff’s intellectual property and confidential information:
56.1Research and development information for the TED including:
56.1.1Drawings/Blueprints;
56.1.2Performance calculations;
56.1.3Performance data; and
56.1.4Performance modelling.
56.2Research and development information for Stirling Engines including:
56.2.1Efficiency calculations;
56.2.2Energy inputs/outputs;
56.2.3Cycle improvements;
56.2.4Performance calculations; and
56.2.5Performance data.
Stirling engines are an engine that the Plaintiff proposed to use in connection with the TED in order to extract energy from the TED.
56.3Commercial application concepts of the TED including:
56.3.1Solar/windfarm connection criteria;
56.3.2Waste recovery connection criteria;
56.3.3Competitor analysis;
56.3.4Levelised Cost of Energy calculations;
56.3.5Sales business case/return of investment models;
56.3.6Sales leads including partnering opportunities; and
56.4The First Defendant was also intimately involved in dealings with third parties on behalf of the Plaintiff including Sea Transport Corporation Limited, Inresol AB, Resortium International, CCT Energy Storage Private Limited (India), Mr Prakash and Mr Maddali.
56.5Patents:
56.5.1Scientific data to support and defend the existing patents; and
56.5.2Scientific details of proposed new patents that the Plaintiff was considering to further protect the Plaintiff’s intellectual property.
Following their return to the plaintiff and upon examination, three Brix PCs and a Dell XPS13 laptop were observed to have certain identified functions enabled which can prevent the identification and recovery of any deleted files.
Following the return to the plaintiff and upon an examination of the Dell XPS13 laptop, a program called “WinZip” was observed to have been installed on or about 13 October 2016. WinZip is a program used to compress large files. Compression can permit or assist in the transfer of a file from one computer data storage device to another data storage device.
During the period between the first defendant having severed his association with the plaintiff and his returning of the plaintiff’s computer devices, a substantial number of files were deleted from a Silicon Power 1TB hard drive. According to the schedule in evidence[4] in the order of 1,500 or more files (excluding clearly irrelevant personal files) appear to have been deleted on or after 14 October 2016, being the date the first defendant resigned from his employment. By reference to the names of the deleted files, many would appear to relate to the plaintiff’s business including its TED and the plaintiff’s development thereof. Further, many such files may have been deleted in December 2016, shortly prior to the return of the plaintiff’s computer devices. A number of these files had been compressed.
[4] Exhibit BJA7 to Mr Andary’s first affidavit affirmed 6 March 2017.
Following an operation aimed at recovering the deleted files, approximately 10 per cent of the deleted files have become accessible to the plaintiff. Most comprise Excel spreadsheets which relate to the plaintiff’s TED technology. In the order of 90 per cent of the plaintiff’s files may have been lost at least from the plaintiff’s computer devices that had been made available to the first defendant.
Following the return of the plaintiff’s computer devices, certain files described as “link files” were identified on the Dell XPS13 laptop and the three Brix PCs. The link files serve, inter alia, to indicate that other devices such as universal serial BUS (USB) sticks have been connected.
Further analysis on behalf of the plaintiff indicates that external data storage devices (other than those returned to the plaintiff) were connected to the Dell XPS13 and the Brix PCs in the period between October to December 2016.[5] These devices are not in, and have not been delivered by the first defendant into, the possession of the plaintiff.
[5] The plaintiff contends and there is evidence to support the contention, that the following devices were at some time attached: Imation Classic USB Device, Kingston DataTraveler 3.0 USB Device, Kingston DT MicroDuo 3.0 USB Device, PHD 3.0 Silicon-Power USB Device, Samsung Flash Drive Device, SanDisk Cruzer Blade USB Device, SanDisk Cruzer Facet USB Device, SanDisk Cruzer Fit USB Device, SanDisk Cruzer Force USB Device, SanDisk Cruzer Force USB Device, SanDisk Cruzer Force USB Device, SanDisk Cruzer Force USB Device, SanDisk Cruzer Force USB Device, SanDisk Ultra Fit USB Device, SMI USB Disc USB Device and UFD 3.0 Silicon-Power 8G USB Device.
Some of these external data storage devices, at the time they were connected, contained files which appear to relate to the plaintiff’s TED technology and its development.
It is important to note that the first defendant, in his affidavit evidence, has provided explanations for the apparent compression and deletion of material and the attachment from time to time of various of the external data storage devices. The first defendant denies wittingly transferring to devices under his control any of the plaintiff’s confidential information. The explanations provided on oath by the first defendant respond to many but not all of the plaintiff’s concerns. However, if ultimately accepted, they would tend to demonstrate innocent possession and the absence of any attempt to make improper use of the plaintiff’s confidential information.
I am not in a position, nor would it be appropriate for me, to determine in these interlocutory proceedings where the truth lies. I am satisfied that there is support in the evidence for a finding that a transfer of files containing data falling within the plaintiff’s claim has been undertaken by or on behalf of the first defendant at a time after the first defendant severed his association with the plaintiff. Further, it presently is open to infer that the first defendant continues to possess intellectual property and confidential information belonging to the plaintiff.
Email correspondence to and from a Gmail account in the name of the first defendant access to which has been obtained by the plaintiff, discloses a number of pre and post-resignation matters of planning by the first defendant to make use on behalf of himself and the second and third defendants of aspects of the plaintiff’s intellectual property and confidential information developed whilst the first defendant was engaged by the plaintiff. There is also email correspondence which on one view, presently open, discloses the intention of the first defendant and Mr Thomas to incorporate and deploy the second and third defendants for the purpose of participating in the exploitation of the plaintiff’s intellectual property and confidential information developed by the first defendant.
Also open to be discerned from the Gmail correspondence is an awareness in the defendants that the plaintiff does have intellectual property rights with respect to its TED and Associated Technology and other confidential information which rights would need to be managed by the defendants.
It is also open to be discerned from the Gmail correspondence that the defendants have been engaged and propose to engage in the future in dealings concerning the commercialisation of thermal energy storage devices and related technology with certain third parties with whom the first defendant had earlier dealt on behalf of and as a director of the plaintiff.
Conclusion as to a prima facie case
I am satisfied that on the evidence as presently available, the plaintiff has established a prima facie case for final injunctive relief, as that notion is to be understood following Australian Broadcasting Corporation v O’Neill,[6] on the basis of one or more of the causes of action respectively asserted against the first defendant, the second defendant and the third defendant as identified earlier. This is subject to the qualification I later express concerning the claim relating to the wrongful diversion of a business opportunity.
[6] [2006] HCA 46; (2006) 227 CLR 57.
Balance of convenience
What follows is, in summary form, a number of contentions pressed by the plaintiff in support of its submission that the balance of convenience favours the granting of interlocutory injunctive relief. I am satisfied that the evidence available to this point lends support to each of these contentions.
(i)The plaintiff is a research and development company and the intellectual property and confidential information which it claims to protect is fundamental to its business. The success of its business depends on the future commercial exploitation of the technology such that without protection the business would be at serious risk of failure.
(ii)The plaintiff has spent approximately $5 million over the last six years or so on research and development into its TED and Associated Technology. It has built prototypes and liaised with potential investors and partners with a view to commercialisation.
(iii)The intellectual property and confidential information to which the plaintiff remains entitled is potentially valuable. Whilst the first defendant has deposed to matters in his affidavit evidence which tend to challenge this, his evidence in this respect is conflicting. The first defendant has asserted that the value of his 20 per cent shareholding in the plaintiff is approximately $2.4 million. If correct, this would suggest an enterprise value of $12 million or so. Of course, any research and development enterprise, as at the early stage of its development, is difficult if not impossible to value with any precision. It may all come to nothing or it may have extraordinary success. What is important at the moment is that a number of persons have been prepared to invest $5 million or so and to expend labour and expertise for six years or so into a research and development exercise that would appear to be at the forefront of a significant technological environment with substantial commercial exploitation possibilities.
(iv)The plaintiff is at a relatively advanced stage in respect of commercialisation of its research and development work. It has produced pre-production TED units understood to be suitable for demonstration use in potential customer installations. The pre-production models will be used to establish proof of technology which, if successful, should assist to attract further investment.
(v)The plaintiff has been developing contacts and negotiating in a number of markets including in India and Malaysia.
(vi)The plaintiff seeks only to prevent any misuse and dissemination of its intellectual property and confidential information; to have its intellectual property and confidential information returned to it; and to prevent the defendants from seeking to exploit business opportunities that arose in favour of the plaintiff at a time when the first defendant was a director and representative of the plaintiff. Save in these respects, the plaintiff does not seek to prevent the first defendant from working in his chosen field or exploiting his own expertise.
The plaintiff contends that damages will not be an adequate remedy in the event that its intellectual property and confidential information were not to be protected. It has been submitted that damages would not adequately compensate the plaintiff for the potential future loss of business opportunities, investments and development projects that might arise.
The defendants contend that the plaintiff has not demonstrated any cogent reason why damages would not be an adequate remedy and there is no evidence that the plaintiff will suffer irreparable injury not adequately compensable by damages.
In the case of a dispute like the present one, the task for the parties of demonstrating that any future damages award, were it to be made, is likely to be adequate on the one hand or inadequate on the other presents real difficulties. Ultimately, it will be a question of judgment and degree for the Court based on all of the evidence presently available.
Given the nature of the work undertaken by the plaintiff and the nature of the expertise and work undertaken and proposed by the first defendant, I am satisfied that, in the event that the first defendant were to wrongfully make use of the plaintiff’s intellectual property and confidential information so as to incorporate such into his own research and development projects, the identification of any damage caused thereby and the proper assessment thereof are likely to be problematic at best. I am satisfied, at least at the stage of considering the question of interlocutory injunctive relief, that there is a real likelihood that damages would not be an adequate remedy.
The question of whether damages or an account of profits would be an inadequate remedy were the defendants to wrongfully take advantage of the plaintiff’s commercial opportunities in India and Malaysia acquired whilst the first defendant was a director of the plaintiff raises different considerations to which I will return.
The plaintiff has proffered the usual undertaking as to damages. The defendants contend that the undertaking offers little comfort given that the plaintiff is still in a research and development stage and has limited prospects of commercialising its work in such a way as to return substantial income or acquire further investment in the near future. Further, on the present evidence, the plaintiff has cash in the bank of only something in the order of $350,000. The defendants are also concerned that the trial of this matter is likely to be relatively lengthy and likely to result in substantial legal costs for both parties. Such funds as may be available to the plaintiff at this stage or as may become available in the near to medium future may well be exhausted by legal costs prior to any opportunity the defendants may have to call on the undertaking as to damages.
Further points concerning the undertaking as advanced by the defendants include the following.
Relevant to the question of the adequacy or otherwise of the undertaking as to damages is the fact that the plaintiff is seeking to protect its own commercial interests rather than, for example, the public interest or the interest of another class of persons. As such, any demonstrated inadequacy will carry more weight than it might otherwise.[7]
[7] Organic Marketing Australia Pty Ltd v Woolworths Ltd [2011] FCA 279 at [69].
There is no reliable evidence as to the value of the plaintiff’s undertaking and notwithstanding that the plaintiff has, on more than one occasion, been requested by the defendants to proffer such evidence.
The evidence also tends to suggest that the plaintiff’s liabilities exceed its assets as things presently stand and that its only liquid asset would appear to be cash at bank in an amount in the order of $350,000 which has been acquired by way of loans. However, there is no evidence as to the nature of, parties to and terms of the loans.
The plaintiff does not own any real estate or other valuable assets and does not, at this stage, generate revenue or free cash flow.
In short, the defendants contend that the plaintiff’s business is not, at this stage, a valuable going concern but rather a technology start-up company heavily reliant on loans and fresh capital to survive.
The defendants contend that should, ultimately, they have been wrongly deprived of opportunities to exploit relevant intellectual property and confidential information falling within any interlocutory injunctive relief, such would give rise to substantial losses. According to the first defendant, he anticipates his future consulting opportunities in his various fields of endeavour, including those over which the plaintiff asserts its intellectual property and confidential information rights, to be worth up to $350,000 a year.
By way of response, the plaintiff has submitted that there is little by way of “meaningful evidence” before the Court as to the nature of any damage the defendants would suffer should inappropriate interlocutory relief be granted and that this is highly relevant to the weight to be given to a submission that an undertaking as to damages gives inadequate protection.[8] Further, the fact that an undertaking as to damages may have little or no value[9] is not necessarily conclusive but rather is only a factor to be borne in mind (albeit an important one) on an application for an interlocutory injunction.[10] In any event, on the first defendant’s own assertion the plaintiff has an enterprise value in the order of $12 million.
[8] See for example, AA Shi Pty Ltd v Avbar Pty Ltd (No 2) [2010] FCA 427; (2010) 186 FCR 148 at [62].
[9] Although this is not conceded.
[10] See for example, Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd (Unreported, Supreme Court of Western Australia, Ipp J, 7 April 1992) 23-25. See also, Caravelle Investments Ltd v Martaban Ltd (1999) 95 FCR 85 at [25] and Organic Marketing Australia Pty Ltd v Woolworths Ltd [2001] FCA 279 at [69].
An additional consideration in this respect, according to the plaintiff, is that any interlocutory injunction granted would only be in place for a relatively short period until final resolution of the parties’ dispute at trial. The commercialisation of the plaintiff’s intellectual property and confidential information most likely would take longer than this, as would any exploitation thereof by the defendants. The real financial risk to the first defendant is the loss or deferral for a relatively short time of a proportion, only, of his anticipated and self-estimated consulting income.
What follows is a brief summary of additional issues raised by the defendants in support of their contention that the balance of convenience favours a refusal of the application for interlocutory injunctive relief on any terms.
(i)The defendants contend that certain third party commercial interests involving entities in India and in Malaysia will have the pursuit of their own projects and intellectual property development impeded if the first defendant is enjoined from continuing to consult with them. There is a public interest in not allowing this to occur to which weight should be given. The plaintiff has responded with the argument that the Court should not countenance the very real risk of such third parties being knowingly involved in a breach of fiduciary obligation owed by the first defendant.
(ii)Further, the defendants contend that to permit the first defendant to continue to consult with respect to these third parties will not, of itself, interfere with the plaintiff’s capacity to pursue such business opportunities as may be available to it from the same entities. Furthermore, to deny the first defendant in this way would operate as an unfair restraint of trade. In this respect, the defendants have put the following written submissions:
62. [The first defendant] explains in his first affidavit that:
a. he has committed a lifetime’s work researching and developing inventions in the scientific field of thermodynamics, which he says captures practical applications of the science including thermal energy storage, extraction of stored energy, waste heat recovery, concentrated solar collection and heliostat reflected heat;
b. he describes 5 patents granted to him as inventor in the field of thermal energy storage, one of which is the Patent belonging to the Plaintiff and the other to [x Ltd], the Plaintiff’s apparent, major competitor seeking to bring thermal energy storage devices to market.
63. [The first defendant] emphasises:
a. the impracticality and undesirability of restraining him from any further scientific research in what he broadly describes as the field of thermodynamics, saying that it would be “an impossible and futile exercise for me to attempt to delineate the knowledge in my head between one technology or another, one patent or another”;
b. that restraining him from practising in this field of science would not only deprive him of the means to earn an income but could also be to the greater detriment of this field of science, which he describes as an emerging field.
64. He is consulting in this field to large corporations on significant projects (second affidavit of [the first defendant]) and has expressed a desire to consult to the Indian Government in this field and in November 2016 has already travelled to India to apparently explore opportunities there
[footnotes omitted]
(iii)The evidence of the first defendant corroborated by that of Mr Prakash in India is to the effect that the relationship between the Indian connection and the plaintiff has broken down, perhaps irretrievably, and independently of any conduct by the first defendant after severing his relationship with the plaintiff.
(iv)A consideration strongly relied on by the defendants is to the effect that the form of injunctive relief sought by the plaintiff is too wide and too non-specific. The defendants submit that the subject material of the proposed interlocutory injunction is defined by way of class rather than by an adequately identified and/or specified list of documents or materials. As such, there is a real risk that the class will capture material that does not form part of the plaintiff’s intellectual property or confidential information such that protection might not be justified. In addition, an unfair burden will be placed on the defendants to identify for themselves and ascertain the ambit of the injunction in order for the first defendant, when going about his ordinary research, development and business activities, to readily be able to ascertain whether or not he will transgress the terms of the injunction.
This last matter is an important consideration and one which deserves to be given significant weight. However, there are in this case countervailing considerations.
First, on the evidence presently available and given the factual basis for the prima facie case established, it is readily understandable why the plaintiff does not have access to or is not in a position sufficient to be able to identify the full extent of the confidential information that, on the plaintiff’s case, is in the defendants’ possession. Rather, and for the same reasons, the first defendant is best placed to know (with appropriate legal assistance, if necessary) what file data, originally generated during the period he was in the service of the plaintiff and which he has retained, comprises intellectual property and/or confidential information belonging to the plaintiff. There is much to be said for the submission that the first defendant ought not be the beneficiary of any wrongful conduct engaged in.
Second, in any event the sheer quantity of documentary material likely to fall within the plaintiff’s claim renders itemisation document by document impractical.
Third, the description of the class of material the subject of any injunction can be crafted with a view to limiting the risk to the defendants as identified.
Fourth, at least insofar as any future consulting work to be undertaken by the first defendant is concerned, the defendants may be able to seek agreement from the plaintiff that any such work does not fall within the enjoinder or, if agreement cannot be reached, exercise liberty to apply on short notice to argue for a variation of the terms of any injunction granted.
Conclusion – balance of convenience
When considering the balance of convenience the enquiry to be undertaken is:[11]
Whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.
Having reviewed the evidence as it presently stands and the various competing positions contended for by the parties, I am satisfied that the balance of convenience is in favour of granting a form of interlocutory injunctive relief to the plaintiff. However, this satisfaction is subject to and will be further informed by the appropriate form of the relief that is still to be determined. In addition, it remains necessary to determine whether or not further steps should be taken by the plaintiff to ameliorate the defendants’ concerns with respect to the adequacy of the undertaking as to damages presently offered. This latter issue also will be informed, in part, by the form of the relief ultimately decided upon.
[11] Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 at [5] (Kitto, Taylor, Menzies and Owen JJ).
The plaintiff’s proposed form of relief
The plaintiff, in a document headed “Interlocutory Injunction”, being the proposed orders handed up by the plaintiff at the argument on 23 March 2017, sought an interlocutory injunction in terms that modified the form of injunction that had hitherto been sought. In so doing, the plaintiff expressed an intention to attempt to narrow its scope so as to accommodate some of the criticisms that had been raised by the defendants. When the matter came before the Court for further argument on the next occasion (13 April) the plaintiff pressed another, further modified, version this time in an endeavour to accommodate some of the matters raised during the hearing on 23 March. The final form of injunction pressed by the plaintiff is in these terms:
Recitals:
Undertaking: The Plaintiff by its counsel undertakes to:
(a) submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person (whether or not a party) affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) of the order or undertaking; and
(b) pay the compensation referred to in (a) to the person or persons referred to in this order.
In this order:
“the TED Project” means any research into and development activity that has been carried out by or on behalf of the Plaintiff (including by the First Defendant or any other officer, contractor or employee) in the period 30 September 2011 to 14 October 2016, including any improvements, in respect of or relating to:
(a)the thermal energy storage device described in International Patent Cooperation Treaty patent application number PCT/AU2012/000938;
(b)for the avoidance of doubt, paragraph (a) of this definition of ‘the TED Project’ includes reference to the thermal energy storage device, and any improvements to that device, shown on the Current TED Design Blueprints, and bearing the drawing numbers CCT-IND-GB-001, CCT-IND-GB-001a and CCT-TED-005-7KWe-GB (RevA), which comprise Exhibit GTW 49 to the Fourth Affidavit of Graham Thomas Warburton sworn on 11 April 2017;
(c)the extraction of stored energy from the thermal energy storage device described in paragraphs (a) and (b) of this definition of ‘the TED Project’ by a heat engine;
(d)the use of a closed cycle turbine, supplemented by a falling film evaporator, instead of a heat engine, in association with a thermal energy storage device;
(e) the use of an elevated thermal energy storage device, heated by concentrated heliostat solar energy, with the concentrated solar energy being directed to the thermal energy storage device through an aperture, comprised of Sapphire glass.
“the Project Intellectual Property and Confidential Information” means all information, scientific protocols, data test and laboratory results, results of all experiments, results of testing, readings, reports, graphs, notes, diagrams, charts, and all other data or any reproduction or restatement thereof, in whatever format, including in electronic format, created by or on behalf of the Plaintiff (including by the First Defendant or any other officer, contractor or employee) in the period 30 September 2011 to 14 October 2016, relating to the TED Project.
THE COURT ORDERS that:
1. Until further order, but subject to paragraph 2 of these orders, the Defendants, and each of them, together with their servants, contractors or agents be and are hereby restrained from:
1.1 using, or commercially exploiting, in any way the Project Intellectual Property and Confidential Information;
1.2 publishing, reproducing or disclosing the Project Intellectual Property and Confidential Information or any part of that to any other person;
1.3 deleting, destroying, tampering with or compromising the security or reproductivity of the Project Intellectual Property and Confidential Information or any part of it;
1.4 having any dealing relating to a thermal energy storage device with Mr Bhaskarabhitla V S Prakash (or any entities associated with Mr Prakash), Energy Storage Techniques India Pvt Ltd, Sea Transport Corporation Ltd, Mr Robert Wong (or any entity associated with Mr Wong) and Resourtium International; and
1.5 representing in any way that they have authority to represent the Plaintiff, or any related entity of the Plaintiff, or have any authority at all with respect to the TED Project.
2. For the avoidance of doubt, the First Defendant is not prohibited by the restraining order in paragraph 1 from undertaking a feasibility study on waste heat recovery devices invented by Innovative Technologies Pty Ltd, provided that the said feasibility study does not involve any use of the Project Intellectual Property and Confidential Information.
[obligatory endorsements according to the rules of Court omitted]
The defendants, whilst maintaining opposition to any form of interlocutory relief, proposed the following by way of alternative.
Upon the Plaintiff undertaking to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the orders made herein (Undertaking):
The COURT ORDERS that:
1.Orders 1 & 2 made on 14 March 2017 be discharged.
2.Subject to order 3 herein, the Defendants and each of them, together with their servants or agents be restrained, until further order, from:
2.1. publishing, reproducing or disclosing to any other person the:
a. design depicted in the 2 drawings exhibited and marked ‘GTW-49’ to the affidavit of Graham Thomas Warburton sworn on 11 April 2017 dated 16 May 2016 and entitled ‘CCT-IND-GB-001’ & ‘CCT-IND-GB-001a’ (the Relevant Design);
b. results of testing, or running or experimenting on, the prototype based on the Relevant Design (whether the results take the form of notes, graphs, diagrams or numerical data) created between May 2016 and 13 October 2016;
2.2. taking steps to commercially exploit or commercially exploiting the Relevant Design;
2.3 inspecting the Results for the purpose of taking steps to commercially exploit the Relevant Design.[12]
3.Order 2 is subject to the Plaintiff paying an amount of [ ] into Court as security for the Undertaking and in the event that the stated amount is not paid into Court by 28 April 2017 Order 2 is automatically discharged and with the effect that it is to be treated as never having been made.
[12] This paragraph was added by the defendants when they provided a further form of proposed orders after I reserved my decision.
In my view, the form of injunction provided by the defendants is too narrow and would provide insufficient protection to the plaintiff. However, the form pressed by the plaintiff is, in some respects, inappropriately wide.
The key to understanding the breadth of the plaintiff’s proposed injunction and the extent to which the defendants would be restrained, if at all, from engaging in the research, development and exploitation of the first defendant’s expertise, acquired over decades, in thermal energy storage devices and related technology, lies in the definitions of “the TED Project” and “the Project Intellectual Property and Confidential Information” propounded by the plaintiff. These definitions form the anchor points to which the restrictions in proposed subparagraphs 1.1 to 1.3 and 1.5 are tied.[13]
[13] Proposed subparagraph 1.4 calls for separate consideration.
In particular, the restrictions to be imposed all relate back to the chapeau to the definition of the “TED Project”. This identifies, as the ultimate anchor point, research and development activity carried out:
(i)by or on behalf of the plaintiff;
(ii)including by the first defendant, or any other officer, contractor or employee of the plaintiff;
(iii)in the period from when the plaintiff commenced such activities, that is, 30 September 2011 and ending when the first defendant effectively severed his relationship with the plaintiff, that is, 14 October 2016; and
(iv)“in respect of or relating to” the various projects described or identified in paragraphs (a) to (e) of the definition.
It is important to note that not all research and development activity “in respect of or relating to” the projects described or identified in paragraphs (a) to (e) is captured by the definition. The definition captures only research and development of that nature carried out by or on behalf of the plaintiff during the nominated period. I have given consideration to whether the phrase “in respect of or relating to” in this context is unnecessarily or inappropriately wide. In my view, it is not. The legitimate intention is for the definition to capture any research and development of the plaintiff’s that has a connection with the projects described or identified in paragraphs (a) to (e).
In addition, the enjoinder as ultimately contended for by the plaintiff is further qualified or limited by the definition of “Project Intellectual Property and Confidential Information”. It is only that which falls within this definition that falls within the enjoining subparagraphs 1.1 to 1.3. This definition focuses solely on matters that exist in some representational form, be it by way of hard copy or saved electronic format. Having said that, the word “information” where it occurs in the second line of the definition should be excised. It is too non-specific and is capable of capturing information in a non-representational form beyond that of the type thereafter identified.
Again, the representational data thus captured by this definition is confined to that:
(i)created by or on behalf of the plaintiff;
(ii)including by the first defendant or any other officer, contractor or employee;
(iii)during the relevant period, that is, 30 September 2011 to 14 October 2016; and
(iv)relating to the TED Project (as defined).
Thus, in short, the definition of the “TED Project” informs the content of the “Project Intellectual Property and Confidential Information” and the representational material captured thereby. It is this representational material with respect to which the activities to be enjoined, in accordance with paragraphs 1.1 to 1.3, are to be confined.
I am satisfied that an interlocutory injunction in the terms of paragraphs 1.1 to 1.3 together with the definitions identified (subject to the deletion of the word “information” as earlier referred to) will not unfairly or inappropriately limit the first defendant’s research and consulting work and any commercial exploitation thereof which is otherwise legitimately available to him.
The plaintiff has included, as a specific protection for the defendants, paragraph 2 of its propounded form of interlocutory injunction. However, the plaintiff’s paragraph 2 does no more than identify a single area of future involvement by the first defendant provided that in so conducting himself he does not infringe the primary enjoinder. An issue arises as to whether the protection provided to the defendants in proposed order 2 might be more broadly expressed. An alternative approach would be one adapted from paragraph 2 of the interim injunction granted on 14 March 2017. A new paragraph 2 (adjusted to take account of the different definitions employed above) would be in these terms.
2.For the avoidance of doubt, the first defendant is not prohibited by the restraining order in paragraph 1 from consulting to third parties on any or all thermal energy devices, extraction of stored energy from thermal energy storage devices by heat engines, waste heat recovery, concentrated solar collection, and heliostat reflected heat and all associate technology, provided that such consulting does not involve any use, commercial exploitation, publishing, reproducing or disclosing of the Project Intellectual Property and Confidential Information.
However, either approach achieves very little in practical terms. The terms of the enjoinder in paragraph 1 would remain in full force. The specific protection, in either form, would do no more than confirm that the first defendant can still conduct himself in ways that do not infringe the enjoinder, which he can do in any event. Further, such an approach would lead to a risk of conflict between what is not allowed by paragraph 1 and what is to be allowed by paragraph 2, either in fact or as perceived. I take the view that paragraph 1 ought be sufficient, by its own terms, to identify what is and what is not enjoined. I would not include a specific protection in the form of paragraph 2 in either form.
I turn to consider paragraph 1.5 of the form of interlocutory injunction pressed by the plaintiff. The evidence in support of the plaintiff’s contention that the first defendant so represented, and improperly, on one or more occasions in the past is scant. The first defendant has offered a fuller explanation of and context for what took place and denies acting improperly in this respect. There is little or no evidence from which it might be inferred that the first defendant intends in the future to represent that he has the plaintiff’s authority to represent it or any continuing authority with respect to the “TED Project”. It would be surprising if it were otherwise. I am not satisfied that the plaintiff has established the requisite prima facie case for an interlocutory injunction here.
Further, the law relating to deceit and misleading or deceptive conduct provides an array of usually adequate remedies in the event of such future conduct, whether or not it were to cause loss. I would be loath in the circumstances to add contempt of court to the remedial regime by imposing an injunction. I am not satisfied that damages would not be an adequate remedy for breach of such a proscription. Ultimately the balance of convenience militates against an interlocutory injunction in terms of paragraph 1.5.
I turn now to consider paragraph 1.4. A difficulty for the plaintiff with paragraph 1.4 is that it is expressed to capture any dealings (with the Indian and Malaysian connections) “relating to a thermal energy storage device” (my emphasis). Unlike paragraphs 1.1 to 1.3, the enjoiner in paragraph 1.4 is not tied back to the definitions which are anchored to the plaintiff’s “TED Project”. The concern this raises for the defendants is, to a degree, to be discerned from the summary of the first defendant’s affidavit evidence set out earlier at [55(ii)].
I am satisfied that this concern has been adequately ameliorated with respect to paragraphs 1.1 to 1.3 when regard is had to the anchoring definitions. However, paragraph 1.4 as drafted would prohibit the defendants from any dealing with the Indian and Malaysian connections relating to any thermal energy storage device. As such, it risks precluding the defendants from dealing with these entities in the vast area of research and development which has been the major focus of the first defendant’s lifetime work.
The plaintiff counters by pointing out that it is only with respect to the identified Indian and Malaysian connections that the defendants would be so restricted. Further, it has been submitted that the “rule” against diverting business opportunities rendered available while acting as a director of a plaintiff company is strict. In the circumstances of this case it should be seen as embracing not just dealings in connection with the plaintiff’s “TED Project” but in connection with all thermal energy storage devices, essentially because the opportunity acquired on behalf of the plaintiff would be nullified if an alternative but competing opportunity were to be pursued by the defendants.
Ultimately, it will be necessary for the precise nature of the business opportunity that was available to the plaintiff to be identified before it could be determined whether or not the defendants will have wrongfully diverted that business opportunity. As Le Miere J observed in Edenham Pty Ltd v Meares:[14]
The decision of the Court of Appeal [in Streeter v Western Areas Exploration Pty Ltd (No 2)[15]] illustrates that cases involving breach of the conflict and profit rules, and in particular cases concerning diversion of corporate opportunities, are very fact dependant.
Further, the law concerning the wrongful diversion of a business opportunity by a fiduciary such as a company director is still not well settled.
[14] [2016] WASC 301 at [32] and see generally at [25]-[32].
[15] [2011] WASCA 17; (2011) 278 ALR 291.
On the evidence presently available I am not persuaded that the plaintiff has made out a prima facie case in the sense understood following Australian Broadcasting Corporation v O’Neill,[16] that is, that if the evidence were to remain as it is there is a probability that at the trial the plaintiff would be held entitled to relief to the full extent provided for in paragraph 1.4.
[16] [2006] HCA 46; (2006) 227 CLR 57.
I am also not persuaded that damages or in the alternative an account of profits would not provide a suitable and adequate remedy in the event that a breach of duty were to be established. I am also troubled that the risk to the defendants of suffering unjustifiable financial losses is significant and which is to be weighed in the context of a real possibility that the business opportunity concerning Mr Prakesh and his associates in India may not proceed in favour of the plaintiff in any event for the reasons he has given in his affidavit.[17]
[17] I accept, for present purposes, the plaintiff’s submission that the fact that a particular business opportunity may not be available to a plaintiff company is, of itself, no defence to a claim that a director has wrongfully diverted that opportunity.
At the end of the day, I am of the view that the inconvenience or injury the plaintiff would be likely to suffer if an injunction in the form of paragraph 1.4 were to be refused is outweighed by the injury which the defendants would be likely to suffer if such an injunction were to be granted.[18] As such, the balance of convenience also militates against an interlocutory injunction in the form of paragraph 1.4.
[18] Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 at [5] (Kitto, Taylor, Menzies and Owen JJ).
During argument, counsel for the plaintiff identified, as an alternative, that paragraph 1.4 could be modified to tie it to the plaintiff’s TED Project as defined. Albeit, counsel did stress that the plaintiff maintained that an entitlement to an interlocutory injunction in the unmodified terms of paragraph 1.4 had been established. It might be thought that paragraph 1.4 so modified would add little protection to that already available under paragraphs 1.1 to 1.3. Nevertheless, out of an abundance of caution I would adopt the alternative as satisfying both the prima facie and balance of convenience requirements. Paragraph 1.4 is to be modified by replacing the phrase “a thermal energy storage device” with the phrase “the TED Project”.
However, in order to provide further protection for the plaintiff, I propose to include an order in the interlocutory relief to be granted by way of new paragraphs 1.5 and 1.6 as follows.
1.5The defendants and each of them until further order, must keep and maintain complete and accurate records of invoices, receipts and any other records of payments or any other consideration received in respect of dealings (including consulting activities), in relation to a thermal energy device by, the defendants and each of them, together with their servants and agents, with any of:
a. Bhaskarabhitla V S Prakash (or any entities associated with Mr Prakash);
b. Energy Storage Techniques India Pvt Ltd;
c. Sea Transport Corporation Ltd;
d. Mr Robert Wong (or any entity associated with Mr Wong including the Restorium Group).
1.6The defendants and each of them until further order, must keep and maintain complete and accurate records of any and all communications in respect of dealings (including consulting activities) in relation to a thermal energy device by the defendants and each of them, together with their servants and agents, with any of:
a. Bhaskarabhitla V S Prakash (or any entities associated with Mr Prakash);
b. Energy Storage Techniques India Pvt Ltd;
c. Sea Transport Corporation Ltd;
d. Mr Robert Wong (or any entity associated with Mr Wong including the Restorium Group).
I still need to finalise the question of the plaintiff’s undertaking. In my view, the risk that the undertaking will be called on or of any damages suffered and recoverable pursuant to the undertaking being beyond the means of the plaintiff to meet, is substantially ameliorated by:
(i)the form and more limited breadth of the interlocutory injunction that I have determined upon; and
(ii) the relatively short period in which it should be in force in the circumstances where significant commercial exploitation by either party is not imminent.
The issue before me is whether the plaintiff’s undertaking, as originally offered, is sufficient in the present circumstances, given that the form of relief has now been defined, or whether the defendants’ concerns should be addressed by those or some of those standing behind the plaintiff also joining in the giving of the undertaking in their personal capacity or in some other way. I will hear the parties further on this issue.
Conclusion
I conclude as follows.
(1)Subject to paragraph (2) hereof the plaintiff is entitled to interlocutory injunctive relief in the terms set out in paragraph [62] of these reasons but amended as follows:
(a)the word “information” is to be deleted from the definition of “the Project Intellectual Property and Confidential Information”;
(b)the phrase “a thermal energy storage device” where it occurs in paragraph 1.4 is to be replaced by the phrase “the TED Project”;
(c)paragraph 1.5, as is, is to be deleted and replaced with a new paragraph 1.5 in these terms:
The defendants and each of them until further order, must keep and maintain complete and accurate records of invoices, receipts and any other records of payments or any other consideration received in respect of dealings (including consulting activities), in relation to a thermal energy device by, the defendants and each of them, together with their servants and agents, with any of:
a.Bhaskarabhitla V S Prakash (or any entities associated with Mr Prakash);
b.Energy Storage Techniques India Pvt Ltd;
c.Sea Transport Corporation Ltd;
d.Mr Robert Wong (or any entity associated with Mr Wong including the Restorium Group).
(d)a new paragraph 1.6 is to be included in these terms:
The defendants and each of them until further order, must keep and maintain complete and accurate records of any and all communications in respect of dealings (including consulting activities) in relation to a thermal energy device by the defendants and each of them, together with their servants and agents, with any of:
a.Bhaskarabhitla V S Prakash (or any entities associated with Mr Prakash);
b.Energy Storage Techniques India Pvt Ltd;
c.Sea Transport Corporation Ltd;
d.Mr Robert Wong (or any entity associated with Mr Wong including the Restorium Group).
(2)The granting of an interlocutory injunction in the terms identified in (1) above is subject to hearing further submissions from the parties about and resolving the question of the adequacy of the plaintiff’s undertaking as to damages as presently offered.
(3)In due course, an order will need to be made vacating or otherwise dealing with the interim injunction granted on 14 March 2017.
(4)In due course, I propose to make orders as to liberty to apply, transferring the proceedings to the Court’s Special Classification List for further management and, after hearing further submissions, as to the costs of the various interlocutory applications that will have been determined by me.
(5)Subject to (2) above, the plaintiff is to prepare minutes of order in terms consistent with these reasons.
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