Destec Pty Ltd v De Haas
[2025] WASC 5
•15 JANUARY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: DESTEC PTY LTD -v- DE HAAS [2025] WASC 5
CORAM: HILL J
HEARD: 30 JANUARY 2024
DELIVERED : 15 JANUARY 2025
FILE NO/S: CIV 1968 of 2023
BETWEEN: DESTEC PTY LTD
First Plaintiff
WYATT TECHNOLOGIES PTY LTD
Second Plaintiff
AND
DAVID DE HAAS
Defendant
Catchwords:
Practice and procedure - Application to strike out paragraphs alternatively whole of amended statement of claim - Claim that defendant's use of information is a breach of his duties under s 183 of Corporations Act 2001 (Cth) - Whether information sufficiently identified in statement of claim - Whether alleged improper use of information adequately pleaded - Turns on own facts
Legislation:
Corporations Act 2001 (Cth) s 183
Rules of the Supreme Court 1971 (WA) O 20 r 19(1)
Result:
Application allowed in part
Category: B
Representation:
Counsel:
| First Plaintiff | : | MD Cuerden SC & P Sadler |
| Second Plaintiff | : | MD Cuerden SC & P Sadler |
| Defendant | : | J Taylor SC & J Nagle |
Solicitors:
| First Plaintiff | : | HFW Australia (Perth) |
| Second Plaintiff | : | HFW Australia (Perth) |
| Defendant | : | King & Wood Mallesons |
Cases referred to in decision:
ACN 656 077 020 Pty Ltd v Li (No 2) [2024] FCA 964
Andrews Advertising Pty Ltd v Andrews [2014] NSWSC 318; (2014) 99 ACSR 164
Australian Securities and Investments Commission v Somerville [2009] NSWSC 934; (2009) 77 NSWLR 110
Chaffey Services Pty Ltd (atf Cataby Services Trust t/a Cataby Services v Doble [No 4] [2023] WASC 361
Dalgety Australia Ltd v Rubin (Unreported, WASCFC, Library No 5485, 24 August 1984)
Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172
Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 2; (2009) 81 IPR 1
McNamara v Flavel (1988) 13 ACLR 619
Metaxas v Legal Profession Complaints Committee [2020] WASCA 27
Mineral Resources Ltd v Destec Pty Ltd [No 5] [2024] WASC 449
Niven v Grant (1903) 29 VLR 102; (1903) 9 ALR 122
Plus One International Pty Ltd v Ching (No 3) [2020] NSWSC 1598
Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779
SBA Music Pty Ltd v Hall (No 3) [2015] FCA 1079
Trackem Pty Ltd v Revenue Partners (A Partnership) [2021] WASC 245
United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2018] VSC 347; (2018) 128 ACSR 324
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
HILL J:
The defendant, Mr de Haas, is an engineer who, until 30 January 2018, was employed by the first plaintiff (Destec). In January 2018, Mr de Haas resigned as an employee of Destec and took up a role at Mineral Resources Ltd (MRL).
The dispute between the parties arises out of the competing developments of bulk ore shuttle systems by Destec and MRL. There are several proceedings between these parties in this court arising out of this dispute, including CIV 1465 and 1466 of 2020. In those proceedings, MRL contended that Destec had used its confidential information to develop a bulk ore shuttle system. Destec complained that MRL had not adequately identified the confidential information that was the subject of those proceedings and sought to strike out MRL's claim. In December 2024, I upheld Destec's contention and ordered certain paragraphs of the statement of claim to be struck out.[1]
[1] Mineral Resources Ltd v Destec Pty Ltd [No 5] [2024] WASC 449.
A similar complaint is made by Mr de Haas in these proceedings. He submits that the plaintiffs have not properly particularised the information that he is said to have used improperly, meaning that is he is left to guess as to what is being alleged against him. On 1 December 2023, he applied to strike out the plaintiffs' amended statement of claim dated 24 November 2023 (statement of claim). Specifically, Mr de Haas seeks an order that [6], [22] - [29], [30.2] and [30.3] of the statement of claim, alternatively the entirety of the statement of claim, be struck out on the grounds that these paragraphs:
(a)disclose no reasonable cause of action (O 20 r 19(1)(a) of the Rules of the Supreme Court 1971 (WA) (Rules)); alternatively
(b)may prejudice, embarrass, or delay the fair trial of the action (O 20 r 19(1)(c) of the Rules).
Destec and the second plaintiff (Wyatt Technologies) deny that their statement of claim is defective, and say that they have sufficiently identified the information said to comprise what is described in the statement of claim as the 'BOSS Confidential Information'.
I do not agree.
For the reasons that follow, it is my view that [6], [25] - [28], [29.2], [30.2], and [30.3] of the statement of claim should be struck out pursuant to O 20 r 19(1)(c) of the Rules.
Principles governing the strike out application
The principles which govern this application were not in dispute between the parties. These principles were summarised by Smith J in Vantage Holdings Group Pty Ltd v Donnelly [No 4].[2] Without repeating her Honour's summary, I have applied these principles in this decision.
[2] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60]. This summary was approved by the Court of Appeal on the appeal from her Honour's decision: English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [55] ‑ [56] (Murphy & Vaughan JJA).
As a preliminary observation, the court generally discourages pleadings disputes. This is primarily because modern case management enables various procedural steps to be taken to ensure that by the time of the trial, there is no uncertainty as to what is precisely in issue between the parties.
As a general rule, a party is entitled to have its case heard, facts found, and be provided with the opportunity to make submissions in relation to any issues of law that arise. On an application to strike out a pleading, all of the facts alleged in the pleading must be accepted as true.[3] It is only where there is no basis for the legal conclusion contended for (even if the facts are found as pleaded by a party) that a pleading should be struck out.[4]
[3] Niven v Grant (1903) 29 VLR 102; (1903) 9 ALR 122, 124 (Holroyd J, Madden CJ agreeing).
[4] Dalgety Australia Ltd v Rubin (Unreported, WASCFC, Library No 5485, 24 August 1984) 3 (Burt CJ).
Where one party knows the facts and the other does not, a party may be permitted to obtain discovery of relevant documents and information before providing particulars. However, a party's inability to obtain discovery before providing particulars does not mean that allegations may be pleaded without a proper factual foundation.[5] What constitutes a proper factual foundation varies with the circumstances of each case.[6]
[5] Trackem Pty Ltd v Revenue Partners(A Partnership) [2021] WASC 245 [34] - [35] (Archer J).
[6] Metaxas v Legal Profession Complaints Committee [2020] WASCA 27 [69] (Quinlan CJ & Pritchard JA).
Statement of claim
The plaintiffs' claims against Mr de Haas arise from an alleged misuse of the plaintiffs' information concerning the development of a bulk ore shuttle system. This misuse of information is pleaded to be a breach of a share sale agreement dated 7 February 2018 as well as a breach of s 183 of the Corporations Act 2001 (Cth) (Act).
Mr de Haas was employed as a senior design and engineering manager by Destec from on or about 1 March 2015 until 30 January 2018. Mr de Haas was also a director and a 40% shareholder of Destec from 10 March 2015 until 7 February 2018. Over this period, the only other shareholder of Destec was the Wyatt Technologies.
During the time of his employment with Destec, Mr de Haas, together with Mr Stephen Wyatt, was responsible for the design, engineering, and development of what is pleaded in the statement of claim as 'innovative methods for the transportation of mineral ores from mine sites', including a 'bulk ore shuttle system'. This is defined in the statement of claim as the 'BOSS Concept' and is specifically described as being 'an innovative transport system that utilises either individual or a series of connected, self‑powered or idling, carrying vessels to transport bulk commodities along a rail‑line over short to medium distances'.
In the course of his work and because he was a director, alternatively an officer or employee, of Destec, Mr de Hass is pleaded to have come into possession of what is defined in the statement of claim as 'BOSS Confidential Information'. Given that this aspect of the pleading is at the heart of Mr de Haas' complaint, I have set out the relevant detail of this pleading below.
On or about 31 August 2017, a separate company, Bulk Ore Shuttle System Pty Ltd (BOSS) was incorporated by Destec. Mr de Haas was a director of BOSS from 31 August 2017 until 15 February 2018.
On 19 September 2017, shortly after the incorporation of BOSS, Destec and MRL entered into a shareholders agreement (Shareholders Agreement) in relation to BOSS. Under the Shareholders Agreement, MRL acquired a 50% equity interest in BOSS, Destec assigned its intellectual property in the 'BOSS Concept' to BOSS, and Destec agreed with work with MRL to develop the 'BOSS Concept'.
Following entry into the Shareholders Agreement, Mr de Hass continued to provide professional engineering services to BOSS (through Destec). He is pleaded to have obtained 'BOSS Confidential Information' from doing this work.
In February 2018, Mr de Haas and Wyatt Technologies entered into a share sale agreement (Share Sale Agreement), pursuant to which Wyatt Technologies purchased Mr de Haas' shares in Destec. A copy of the Share Sale Agreement was in evidence before me. Under the Share Sale Agreement, Mr de Haas agreed not to compete with Wyatt Technologies in relation to any business that is involved in the design, manufacture, service and/or supply of driverless bulk ore rail based transport systems for a period of one year. The clause expressly provides that the restraint does not apply to 'Mineral Resources Ltd or Bulk Ore shuttle System' (sic).[7]
[7] Affidavit of Samuel James Dundas filed 1 December 2023, 'SJD-1' cl 5.1.
On or about 17 January 2018, Mr de Haas entered into a contract of employment with MRL, which commenced on 22 January 2018. Since at least February 2018, MRL has been developing a bulk ore shuttle system, which is pleaded to have the same characteristics as the 'BOSS Concept' (MRL bulk ore shuttle system). The MRL bulk ore shuttle system is pleaded to be intended by MRL and known by Mr de Haas to be a system which would enable MRL (or any subsidiary) to conduct a business in competition with BOSS, contrary to the objectives of the Shareholders Agreement, and which uses the intellectual property of BOSS (or its shareholders in connection with BOSS).
The statement of claim pleads that Mr de Haas, in his capacity as an employee of MRL, developed the design documents and technical specifications for the MRL bulk ore shuttle system; negotiated the procurement of engineering, design, and technical services; negotiated with vendors of components for the construction of the MRL bulk ore shuttle system; and reported to the managing director and board of MRL on the progress of the MRL bulk ore shuttle system.
The statement of claim then pleads (excluding the mark‑ups of the amendments that have been made by the plaintiffs) that:
25By his conduct pleaded in paragraph 22 above, and in the circumstances pleaded in paragraphs 6 [sic], de Haas used BOSS Confidential Information obtained by him because he had been a director or other officer or employee of Destec:
25.1 to gain an advantage for himself or for MRL or a subsidiary of MRL; or
25.2 to cause a detriment to Destec.
26[The text of this clause was deleted by the statement of claim.]
27 The use by de Haas of information pleaded in paragraph 25 above was, in the circumstances pleaded in paragraphs 7 to 11 improper.
28 In the premises pleaded in paragraphs 25 to 27 de Haas contravened section 183 of the Corporations Act 2001.
These breaches are pleaded to have caused Destec and Wyatt Technologies loss and damage (the expense of enforcing the restraint and the loss of the benefit from any release of the restraint) and profits for Mr de Haas (which are particularised as his remuneration from MRL).
By way of relief, the plaintiffs seek declarations as to the breach of the Share Sale Agreement and s 183 of the Act, as well as orders for compensation.[8]
[8] The statement of claim also seeks an injunction and delivery up of all of Destec's confidential information. At the hearing, senior counsel for the plaintiffs accepted this cannot be maintained (ts 10). On this basis, I have not referred to or dealt with this aspect of the statement of claim on the understanding that it will be deleted.
Elements of a cause of action under s 183 of the Act
Section 183 of the Act provides that:
Use of information - civil obligations
Use of information - directors, other officers and employees
(1)A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:
(a)gain an advantage for themselves or someone else; or
(b)cause detriment to the corporation.
The elements of a contravention of s 183(1) of the Act are as follows:[9]
(a)a person was at the relevant time a director, officer, or employee of the corporation;
(b)they acquired the relevant information by virtue of their position as a director, officer, or employee of the corporation; and
(c)they made improper use of that information in order to gain directly or indirectly an advantage for themselves or for some other person, or to cause detriment to the corporation.
[9] ACN 656 077 020 Pty Ltd v Li (No 2) [2024] FCA 964 [21] (Dowling J).
The duties owed under s 183 of the Act continue even after a person ceases to be an officer or employee of the corporation.[10] These duties reflect the fiduciary obligations owed at law[11] and overlap with the equitable duty of confidence.[12]
[10] Chaffey Services Pty Ltd (atf Cataby Services Trust t/a Cataby Services v Doble [No 4] [2023] WASC 361 [233] (Tottle J). See also s 183(1) of the Corporations Act 2001 (Cth) Note 1.
[11] SBA Music Pty Ltd v Hall (No 3) [2015] FCA 1079 [28] (Wigney J).
[12] Plus One International Pty Ltd v Ching (No 3) [2020] NSWSC 1598 [547] (Hallen J); Andrews Advertising Pty Ltd v Andrews [2014] NSWSC 318; (2014) 99 ACSR 164 [180] (Darke J); Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172 [59] ‑ [60] (Hodgson JA).
The issue under s 183 of the Act is not whether the information is confidential (which is not an element of the cause of action) but whether the information was acquired as a consequence of the person being a director, officer, or employee of the company.[13] In the context of this section, 'information' means 'the sort of information which equity would protect by injunction if a director used it in breach of his fiduciary duties'.[14]
[13] United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2018] VSC 347; (2018) 128 ACSR 324 [649] (Elliott J); Australian Securities and Investments Commission v Somerville [2009] NSWSC 934; (2009) 77 NSWLR 110 [39] (Windeyer AJ); McNamara v Flavel (1988) 13 ACLR 619, 625 (Millhouse J, King CJ agreeing).
[14] Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779, 784 (Young J), cited with approval by the Full Court of the Federal Court in Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 2; (2009) 81 IPR 1 [44] (Tamberlin, Finn & Sundberg JJ).
In establishing a breach of s 183 of the Act, it is not necessary to prove that an advantage has been obtained or that detriment has been suffered by the improper use of the information. It is sufficient to establish that the conduct was carried out in order to gain an advantage, regardless of whether it was actually achieved.[15]
[15] Chaffey Services Pty Ltd as trustee for Cataby Services Trust t/a Academy Services v Doble [No 4] [235] (Tottle J), citing with approval Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404 [253] (Beach J).
Should any paragraphs of the statement of claim be struck out?
Mr de Haas' complaints in relation to the statement of claim arise primarily in respect of the alleged breach of s 183 of the Act. Mr de Haas raises several complaints in relation to this aspect of the pleading. First, the statement of claim does not particularise what the plaintiffs contend is the 'BOSS Confidential Information', or how this has been used improperly by him. Second, the statement of claim fails to plead relevant material facts constituting the breach, meaning that 'he is left to guess' as to what is alleged by the plaintiffs. Third, the statement of claim does not plead any causal connection between the alleged contravention of s 183 of the Act and the relief sought, or the necessary material facts to make this out.
The plaintiffs deny that there is any defect in their pleading. They say that each of the elements of the cause of action for breach of s 183 of the Act has been sufficiently particularised and that Mr de Haas can understand the case he must meet.
The statement of claim pleads that the 'BOSS Confidential Information' comprises:
(a)the design principles underpinning the 'BOSS Concept';
(b)Destec's drawings of the 'BOSS Concept' and data sheets for the components of the transport systems which embody the 'BOSS Concept'; and
(c)Destec's estimated costs of the procurement, construction, and operation of the 'BOSS Concept'.
The particulars of the design principles are set out in Schedule 1 of the statement of claim, which is reproduced at Annexure 'A' to these reasons. Particulars are provided of the drawings and data sheets, as well as the estimated costs, by reference to emails sent by Mr de Haas to Mr Wyatt and Mr Morné Van Zyl in December 2017. These emails are pleaded to be examples of the drawings and data sheets only, and not a definitive list of these matters.
In respect of the period between August 2017 and January 2018, after BOSS was incorporated, no particulars are provided of the 'Boss Confidential Information' said to have been obtained by Mr de Haas.
For the following reasons, it is my view that the statement of claim does not adequately particularise the information which is said to have been obtained by Mr de Haas in his capacity as a director, officer, or employee of Destec, or how this information is said to have been used improperly by him.
First, on the present pleading, the plaintiffs have identified the broad categories of information which comprise the 'BOSS Confidential Information'. However, it is not possible to identify with any precision the specific information that is the subject of the plaintiffs' complaint. This is particularly the case in relation to the drawings, data sheets, and costs estimates, which are particularised only by reference to certain emails, and not by the actual information on which reliance is placed.
Second, it is not clear as to the basis on which the plaintiffs say that the categories of information relied upon are Destec's information, as opposed to BOSS's information. This is because, as pleaded in the statement of claim, Destec assigned its intellectual property in the 'BOSS Concept' to BOSS and was subsequently required to provide services to BOSS for the further development of the 'BOSS Concept'. Senior counsel for the plaintiffs sought to minimise the significance of the incorporation of BOSS as a company. It was submitted that it was a company carrying out the same work, in which Destec's interest was halved.[16] This characterisation does not address the fact that BOSS is a separate corporate entity, which is not a subsidiary of Destec. It also failed to address the effect of the Shareholders Agreement, the assignment of Destec's intellectual property in the 'BOSS Concept' to BOSS, or the ownership of any information after this date.
[16] ts 24 - 25.
In my view, it is necessary for the following matters to be clearly pleaded:
(a)the specific information relied upon by the plaintiffs as comprising the 'BOSS Confidential Information';
(b)in the period between August 2017 and January 2018, the basis on which it is contended any information was acquired by Mr de Haas as an employee of Destec and not a director of BOSS, and
(c)the basis on which it is said that any use of the 'Boss Confidential Information' by Mr de Haas after the date of the Shareholders Agreement is an improper use of Destec's information.
Third, while the statement of claims pleads with significant particularity the work that has been done by Mr de Haas for MRL (or a subsidiary) as an employee of MRL, it is not clear how any of this work is said to have utilised the 'BOSS Confidential Information'.
Fourth, the statement of claim alleges the 'BOSS Confidential Information' has been used to obtain an advantage for MRL (or its subsidiary), or to cause detriment to Destec. However, no material facts or particulars are provided as to what this advantage or detriment is alleged to be. In my view, these matters must be properly pleaded.
Given these matters, I consider that [6] and [25] - [28] of the statement of claim raise a case which is too general and, accordingly, may prejudice, embarrass, or delay the fair trial of the action. On this basis, I consider I should exercise my discretion to strike out these paragraphs of the statement of claim.
In his application, Mr de Haas also sought to strike out [22] ‑ [24] of the statement of claim. These paragraphs concerned the alleged breach of the Share Sale Agreement. The defendant's submissions did not address the basis on which it was contended that these paragraphs should be struck out. For completeness, I will briefly deal with this.
These paragraphs concern the plaintiffs' claim that Mr de Haas has breached the non-compete clause in the Share Sale Agreement. In my view, the plaintiffs' allegations in relation to this aspect of their claim is sufficiently pleaded. Ultimately, the question as to whether the work that has been done by Mr de Haas for MRL constitutes a breach of the Share Sale Agreement will turn on the proper construction of cl 5.1 of the Share Sale Agreement, and particularly, the meaning of the last sentence of this clause, which states that it does not apply to MRL and BOSS.
I accept the plaintiffs' submission that this issue should not be dealt with on a summary basis but should be the subject of consideration at trial. Given this conclusion, I do not consider these paragraphs should be struck out.
The final aspect of the statement of claim that is challenged by Mr de Haas is the plea of damage and relief. Given my conclusions on the causes of action pleaded in the statement of claim, the reference to [25] in the chapeau of [29] must be struck out, as must the references to [25] - [27] in the particulars to [29.1.1] and [29.1.2].
In relation to [29.1], this paragraph pleads the loss and damage said to have been suffered from the alleged breach of contract. I accept that these paragraphs sufficiently particularise the nature of loss said to have been suffered by these plaintiffs, subject to the following.
The particulars of the loss suffered by Wyatt Technologies is that it lost the benefit that would have been received from Mr de Haas for a release of the covenant under the Share Sale Agreement. At present, the plaintiffs do not plead that Wyatt Technologies would have sought to negotiate a release of the covenant, or that this would have been likely to occur. As presently pleaded, it is not clear how the alleged breach of the Share Sale Agreement caused the claimed loss of Wyatt Technologies, as opposed to simply providing the basis on which the claimed loss might occur.[17] In my view, it is necessary for the plaintiffs to clearly plead the material facts on which they rely.
[17] See English v Vantage Holdings Group Pty Ltd [100] (Murphy & Vaughan JJA).
Conclusion
For the reasons set out above, I consider that [6], [25] - [28], [29.2], [30.2], and [30.3] of the statement of claim should be struck out. Given that this is the first strike out application, my preliminary view is that the plaintiffs should be given leave to replead. As to the costs of the application, my preliminary view is that costs should follow the event, namely, the plaintiffs should pay the defendant's costs of the application to be taxed if not agreed.
However, before making any orders, I will hear from the parties as to the appropriate orders to give effect to these reasons.
Annexure 1
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Associate to the Honourable Justice Hill
15 JANUARY 2025
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