Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor

[2019] NSWSC 786

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor [2019] NSWSC 786
Hearing dates:	14, 15, 16, 17, 29, 30, 31 August, 30 November 2018 7, 8, 27 March, 31 May 2019, Defendants submissions 21 May 2019, Plaintiff further submissions 11 June 2019
Date of orders:	04 December 2019
Decision date:	28 June 2019
Jurisdiction:	Equity - Expedition List
Before:	Sackar J
Decision:	See para [439]-[441]
Catchwords:	EQUITY – restraint of trade – covenants in restraint of trade – breach of confidence – whether breach established – necessary quality of confidence – whether material in public domain – whether reading affidavit made information in public domain – utility of making order restricting use of confidential information
Legislation Cited:	Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Court Suppression and Non-Publication Orders Act 2010 (NSW) Restraints of Trade Act 1976 (NSW)
Cases Cited:	Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; [1973] HCA 40 Australian Broadcasting Commission v Australasian Performing Right Association (1973) 129 CLR 99; [1973] HCA 36 Brand v Monks [2009] NSWSC 1454 Bridge v Deacons [1984] 1 AC 705 Broad Construction Services (WA) Pty Ltd v the Construction, Forestry, Mining and Energy Union of Workers [2007] WASC 133 Buckley v Tutty (1971) 125 CLR 353; [1971] HCA 71 Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 Geraghty v Minter (1979) 142 CLR 177; [1979] HCA 42 Hammond v Scheinberg [2001] NSWSC 568 Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 HIH Casualty & General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ 735 Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 Idameneo (No 123) Pty Ltd v Angel-Honnibal [2002] NSWSC 1214 Isaac v Dargan Financial Pty Ltd atf The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of Home Loan Experts) [2018] NSWCA 163 Jardin and Jardin Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409 Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Lindner v Murdock’s Garage (1950) 83 CLR 628; [1950] HCA 48 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 Missingham v Shamin [2012] NSWSC 288 Nordenfelt v The Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 78 Orton v Melman [1981] 1 NSWLR 583 Re Media Entertainment & Arts Alliance; Ex Parte Hoyts Corporation Pty Ltd (No 1) (1993) 178 CLR 379; [1993] HCA 40 RWE npower Renewables Ltd v JN Bentley Ltd [2014] EQCA Civ 150 Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 Taouk v Assure (NSW) Pty Ltd [2017] NSWCA 227 Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; (2008) 175 IR 414 Veda Advantage (Australia) Pty Ltd v De Beer [2016] NSWSC 37 Woolworths Limited v Olson [2004] NSWCA 372 Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317
Texts Cited:	The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis Butterworths)
Category:	Principal judgment
Parties:	Devine Real Estate Concord Pty Ltd (first plaintiff) Devine Real Estate Drummoyne Pty Ltd (second plaintiff) Steven Devine (third plaintiff) EMC Just Holdings Pty Ltd (fourth plaintiff) Wajih Agha (aka Roger Agha) (first defendant) Lewis Coombe (second defendant)
Representation:	Counsel: V Heath (plaintiffs) P Doyle-Gray, A Djurdjevic (defendants)   Solicitors: Jemmeson & Fisher Solicitors (plaintiffs) Baybridge Lawyers (defendants)
File Number(s):	2018/87652

Judgment

Proceedings

Reasons for delay: no further reason for expedition

Background facts

Parties’ submissions

Plaintiffs

Construction

Breach

Confidentiality

Defendants

Plaintiffs’ lay evidence

Mr Steven James Devine

Ms xxxxxxxxxxxx McGeady

Ms xxxxxxxxxx Mylott

Ms xxxx Mazzei

Ms xxxxxx Touma

Ms xxxxxxxx Jadhav

Ms xxxxxxxxx Harris

Ms xxxxxxxxxxxx Nguyen

Mr xxxxxxxxxxxxxxxxxx Ruwanpathirana

Plaintiffs’ expert evidence

Mr Michael Khoury

Defendants’ lay evidence

Mr Blake Benjamin Peter Palmer

Ms xxxxxx Verdino

Mr xxxxxxxxx Moses

Mr xxxxxx Veitch

Ms xxxxxxxxxx Li (Ms Li)

Mr xxxxxx Furnari

Mr xxxxx Boumelhem

Mr xxxx Curic

Consideration

Construction

Breach

Impression of the witnesses

Factual findings on breach: confidential client lists

Factual findings on breach: sabotage of telephone numbers

Factual findings on breach: diversion of properties

xxxxxxxxxxxxxxx, Underwood Rd, Homebush

xxxxxxxxxx Judd: xxxxxxx Burns Bay Rd, Lane Cove

xxxx Curic and xxxxxx Curic: 16/47-49 Gipps St, Concord

xxxxxxxxx Li: xxxxxxx Station St, Homebush

xxxxxxx Buzdon and xxx (Sargent) xxx Buzdon and Sargent: xxx Concord Rd, Concord West

xxxxxxx Frede: x Llewellyn St, Rhodes

xxxxx Oustambasidis: x South St, Drummoyne

xxxxxxxxxxxx D’Aspromonte, xx Station St, Concord

xxxxxxxxxxxxx Moses and xxxxxxxxxxxxxx Moses (nee Romanski): xx Queen St, Concord West, xxxx Thorpe Avenue Liberty Grove

xxxxxxxxxxxx McCormick: xxxxx Burton St, Concord

xxxxxxxx Sartour: xxxx Courallie Ave, Homebush West

xxx Macri: xx Archer St, Concord

xxxxxxxxxx Morris: xx Links Ave, Concord

xxxxxxxxxxxxxxxx McMaster: xx Argonne St North Strathfield

xxxxxxxxxxx Xu: xx Admiralty Dr, Breakfast Point

xxxxxxxxxxxxxxx Bhujel: xxxxx Station St, Homebush

xxxxxxxxxxxxxxx Kana: xxxxxxx Woodlands Ave, Breakfast Point

xxxxxx Jamwal: x Hewin Cl, Liberty Grove

xxxxxxxx Darwon: xxxxxx William St Five Dock

Other properties not identified as Plaintiffs’ customers

Procedural fairness

Second Defendant’s position

Breaches of the Corporations Act 2001 (Cth) and equitable duties

Restraint of trade: applicable principles

Restraint of trade: onus of proof

Reasonableness of restraint

Loss of confidentiality

Precise scope of the Defendants’ submissions

Consideration

Conclusion

Judgment

Proceedings

1. These proceedings concern a restraint of trade and alleged misuse of confidential information in the real estate agency industry.

2. The Plaintiffs are two real estate agencies Devine Real Estate Concord Pty Ltd (First Plaintiff or Concord Office) and Devine Real Estate Drummoyne Pty Ltd (Second Plaintiff or Drummoyne Office), their majority shareholder and managing director Mr Steven Devine (Third Plaintiff) and his family trust company EMC Just Holdings Pty Ltd (Fourth Plaintiff). The real estate agencies are part of the Third Plaintiff’s family real estate business which has five offices in New South Wales and one in the Philippines (the Devine Group).

3. The Plaintiffs make a restraint of trade case against Wajih Agha (or Roger Agha) (First Defendant) and Lewis Coombe (Second Defendant). The First Defendant was a minority shareholder and director of the Concord and Drummoyne Devine Real Estate agencies and an employee at the Concord Office. The Second Defendant was an employee of the Concord Office. The Defendants have subsequently stopped working for the Devine Group.

4. The Plaintiffs seek to enforce restraint on the use of confidential information and trade against both the Defendants (SOC [1]-[9], [13]-[19]).

5. On 15 and 16 August 2018 I indicated I was willing to make an interim court suppression and non-publication order pursuant to s 10 of the Court Suppression and Non-Publication Orders Act 2010 (NSW) with respect to the evidence before me including those materials in the Court Book or as detailed by the Plaintiffs.

6. An initial confidential version of this judgment was provided to both sides to allow them to review the materials referred to in the judgment, and note any confidential material included in the judgment which they wished to argue should be redacted. This judgment is a redacted version to take into account issues of confidentiality as agreed by the parties.

Reasons for delay: no further reason for expedition

7. Prior to resorting to the issues in this case, it is important to make some preliminary remarks about the conduct of the litigation.

8. The hearing for this matter was conducted initially during August 2018 on an expedited basis. Due to the large bulk of evidence served by the Plaintiffs totalling approximately between 8,000 and 10,000 pages of materials, the hearing dates set down for August 2018 were insufficient to dispose of the matter entirely, although the evidence was concluded, and further hearing dates were required for submissions.

9. However due to the ill health of counsel for the Plaintiffs, Ms Heath, the further hearing of the matter was postponed until a planned final hearing on 4 and 5 December 2018.

10. On 19 November 2018 the Plaintiffs filed submissions in chief. These were filed late and were extremely extensive, totalling 186 pages including a substantial chronology.

11. In a directions hearing on 30 November 2018 counsel for the Defendants Mr Doyle-Gray indicated that he needed further time to digest these lengthy submissions, and the 4 and 5 December 2018 hearing dates were vacated.

12. The Defendants filed their submissions in chief on 21 December 2018, prompting the Plaintiffs to again file late their submissions in reply on 4 March 2019 which were extensive totalling 26 pages. The Plaintiffs filed further submissions on 15 March 2019.

13. The oral submissions for this matter therefore occurred on 7, 8 and 27 March 2019. During these final days of hearing I expressed my concerns over the length of this expedited hearing. Whilst counsel for the Plaintiffs is in no way to blame for delays attributable to ill health, the fact is this hearing has been yet further delayed by the copious and prolix materials filed belatedly by the Plaintiffs. This has not only caused delay, it has made the adjudication of this case even on liability an extremely difficult and time consuming task for all concerned. It has had the effect of defeating the spirit and intent of sections 56-60 of the Civil Procedure Act 2005 (NSW).

14. Further, on 7 March 2019 I noted that the Plaintiffs had not in their submissions precisely articulated how the facts and inferences central to their case matched up to the points of pleading in their Statements of Claim. None of the Plaintiffs’ submissions adequately cross-referenced allegations of fact or pleadings in the Statement of Claim. I directed the Plaintiffs to produce a table which provided these cross-references. However, even when this table was produced, on more than one occasion when the submissions produced by the Plaintiffs were looked at in the context of the underlying documents and pleadings, there was no clear link between the submission and the underlying document. This required the Plaintiffs to provide further documents which corrected numerous referencing errors within the submissions and the underlying documents in the Court Book.

15. There have been further delays in the first half of 2019, elongating even further the resolution of the real issues in dispute in these proceedings.

16. Leaving aside ill health of any individuals aside, there has nevertheless been significant inadequacies in the ways in which this case has been run by the parties. I have indicated to both sides that in my view the case for expedition of the matter has all but disappeared, a fact accepted for example by counsel for the Plaintiffs (T291/26-34). I propose as planned therefore to address only the issue of liability in this judgment and afterwards remove the question of damages in this matter from the expedition list.

17. Given the time that has elapsed in my view there is no further case for expedition.

Background facts

18. Before joining the Devine Group, the First Defendant was a minority shareholder and employee of the Richard Stefani First National (RSFN) Real Estate Agency at Concord. He worked as a real estate agent. When the Devine Group began to purchase the assets of RSFN to take over control of the company, the Third Plaintiff invited the First Defendant to join the new Concord Office of Devine Real Estate.

19. On 1 August 2008 the Concord Office was registered with ASIC (CB 969). The Concord Office issued 70% of its shares to the Third Plaintiff, 20% of its shares to the First Defendant and 10% of its shares to Mr Nick Xenos.

20. On 8 August 2008 the RSFN business was sold (CB 446) and the Concord Office, the Third Plaintiff, the First Defendant and Mr Xenos entered a shareholders agreement (2008 Shareholders Agreement). The 2008 Shareholders Agreement set out obligations for the term of the agreement including fidelity, non-competition and non-disclosure of confidential information (CB 438-441). The First Defendant under the 2008 Shareholders Agreement was an employee of the Concord office and the agreement set out provisions for restraint of trade and confidentiality. These restraints were limited by time and to post code areas.

21. The key provisions of the 2008 Shareholders Agreement are as follows (CB 437-445) (noting clause 6(c) should read “shall not” which is evidently a typographical error):

This Agreement is made the 8th day of August 2008

Between: Devine Real Estate Concord Pty Ltd CAN 132 522 671 of 105 Liverpool Road, Enfield 2136 (Company)

AND: Steven Devine of xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (Devine)

AND: Nick Xenos of xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (Xenos)

AND: Roger (Wajih) Agha of xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (Agha)

Whereas:

A. Each party named in Schedule 1 is the holder of a number of Shares in the Company set out opposite its name in Schedule 1.

B. The parties wish by this document to record their agreement as to how the Company will be owned and operated.

Now this deed witnesses the parties have agreed:

Paramountcy over articles

1. The parties shall comply with the provisions of this agreement notwithstanding anything to the contrary in the Constitution of the company and shall so far as is lawful exercise their rights as directors and shareholders of the company in accordance with the provisions of this agreement.

Principal purpose

2. The parties agree that the Company is constituted for the principal purpose of carrying out the business of real estate property management and sales and unless otherwise expressly agreed in writing by all the parties, the parties agree to ensure that the activities of the Company will be limited to the purpose described herein.

…

Personal commitments

6. (a) Excepting for Devine and Xenos, the parties shall each devote the whole of their time and attention to the interests of the company and shall serve and be employed as full-time working employees during the continuance of this agreement. Contracts of employment with the company shall be entered into by the other parties.

(b) The parties each undertake with the other that they will use their best endeavours to promote the interests and welfare of the company.

(c) Excepting for Devine and Xenos, the parties shall [not] (except as representative of the company or with the consent of the other) whilst a director or shareholder be directly or indirectly engaged concerned or interested in any other business competing in any respect with the business of the company whatsoever and shall be accountable to the company for any profits fees or other sums derived from any interest which he may have in breach of this provision PROVIDED THAT either party may hold shares or securities listed on a recognised stock exchange not exceeding one per cent of any class of shares or securities in any one company or concern.

(d) Neither party shall at any time whilst a shareholder or director or after he ceases to be a shareholder or director disclose to any person firm or company whomsoever any trade secrets or other confidential information relating to the company or its customers or suppliers save as necessary in the course of the company’s business.

…

Actions prohibited without consent

8. Without the consent of the other neither party shall do or acquiesce in the doing of any of the following in relation to the company:

(a) Signing of any cheque or authority on the company’s bank account save in accordance with the present mandate or as otherwise agreed.

(b) Pledging of the company’s credit or entry into any contract (save in the ordinary course of business) for a period in excess of three months or a value involving a liability of over $5000 or acquisition or sale of any assets worth over $5000.

(c) Any borrowing in excess of $5000.

(d) Any issue of further shares, reduction of capital or changing of the capital structure of the relevant company.

(e) Any substantial diminution of the business of the company or the sale of the same or any part thereof or any substantial asset thereof.

(f) Any delegation of directors’ powers.

(g) The giving of any guarantee or any security.

(h) The alteration of the memorandum or articles of association of the company.

(i) Appointment of further directors or the holding of a directors’ or committee of directors or shareholders’ meeting at which each party or his alternate or proxy (as the case may be) is not present.

(j) Winding up the company.

(k) Transfer or transmission of any shares in the company save as herein provided.

(l) The carrying on or acquisition by the company of any business other than that carried on by it at the date hereof.

(m) The acquisition by the company of any share in any other company.

(n) Any arrangement whereby the business of the company or any part thereof would be controlled otherwise than by the directors of that company (save as herein provided).

(o) Change in or appointment of new auditors, managing director, chairman, secretary, bankers, solicitors or registered office of the company.

(p) The payment of any remuneration or salary to a director or officer of the company (including remuneration for services) or to any relative of either party or any remuneration or salary.

(q) Hiring or dismissal of staff and general salary reviews.

(r) The grant of any pension annuity or other allowance or the authorisation of any similar payment as is authorised by the Constitution of the company.

(s) Any other act outside the usual course of business of the company.

Exit provisions

…

9.3 (d) In the event that Agha wishes to dispose of all of his shares within twelve months of the date of this Agreement then Devine or his nominee shall purchase the said shares in accordance with clause 9.1 and the Constitution on terms that that payment for the said shares is required within 28 days of Agha giving Devine notice that he is required to acquire the said shares under this clause.

…

Restraints after sale of shares

10. Except for Steven Devine and Nick Xenos, each party undertakes with the other that if he shall dispose of his shareholding to the other he will not for a period of three (3) years after the date of disposal within the following postcodes: 2046, 2127, 2131, 2132, 2134, 2135, 2136, 2137, 2138, 2140. from the company’s business or the business of any subsidiary at the date of disposal:

(i) on his own account or for any other person firm or company solicit interfere with or endeavour to entice away from the company any person firm or company who or which at the date of disposal is an employee or regular customer of or supplier to or otherwise in the habit of dealing with the company (or who shall approach or shall have been approached by the company with a view to dealing either as such customer or as such supplier such approach not having been rejected by the other party); “regular customer” or “regular supplier” meaning having entered into not less than [three] transactions in the [six months] immediately prior to the date when this undertaking takes effect;

(ii) directly or indirectly engage or offer any employment to any person who at any time during the term of this agreement shall have been an officer or employee or agent of the company with access to confidential information relating to any of its suppliers’ products or customers;

(iii) be or become in any capacity whatsoever engaged or concerned or interested in any business which is or is to his knowledge about to be engaged in competition with any business carried on by the company at the date of disposal PROVIDED THAT this restriction shall not prevent him from holding (directly or through nominees) by way of investment only shares or securities in respect of which listing or permission to deal has been granted by any stock exchange or any shares or securities in respect of which written consent has been given by the other party so long as he does not hold more than [one] per centum of the shares or securities of any class in any one company or concern.

PROVIDED THAT:

1. Each of the obligations and restrictions in this clause shall be a separate distinct and severable obligation;

2. It is agreed that the said obligations or restrictions are only such as are reasonably necessary for the protection of the company’s business but should any of the same be held void voidable illegal or otherwise unenforceable the same shall be deemed to be re-written with such maximum restrictions as are compatible with the same being enforceable.

…

Binding effect

16. This agreement is not personal to the parties but shall mutatis mutandis be binding upon their personal or other representatives and their permitted successors and assigns.

Termination

17. This Agreement will continue in effect until terminated automatically if:

(a) one party acquires all the shares in the Company;

(b) all the parties agree to terminate the Agreement; or

(c) the Company is would up.

22. In February 2009 the First Defendant loaned the Concord Office $229,043.80 being an amount equal to 20% of the purchase price of RSFN. The Concord Office repaid the First Defendant this loan over time by 2013 (CB 6377-6378).

23. In May 2009 Mr Xenos’ employment with the Concord Office was terminated (CB 6378).

24. In mid-2009 the Third Plaintiff assigned a 31% share of the Concord Office to his father Mr George Devine, resulting in an ownership of the Concord Office at that time as follows: Third Plaintiff owning 49%, First Defendant owning 20% and Mr George Devine owning 31% (CB 464).

25. In December 2009 the First Defendant acquired a further 10% shareholding in the Concord Office (CB 489).

26. In early 2011 the Drummoyne Office purchased a rent roll and issued 70% of its shares to the Third Plaintiff and 10% of its shares to the First Defendant (CB 196). On or about 19 April 2011 the First Defendant signed an updated employment agreement with the Concord Office (CB 466, 477-488) (First Defendant’s Employment Agreement). This was a standard form contract provided by the Real Estate Employers Federation and included provisions for confidential information and restraint of trade.

27. The key provisions of the First Defendant’s Employment Agreement are as follows (CB 466-488):

1.1. Definitions

…

(f) Confidential Information means all information, except to the extent that it is generally available to the public (other than due to a breach of this Agreement), of which You become aware or generate in the course of, or in connection with, employment with the Employer, of a commercial, operational, technical or financial type relating to:

(1) The Employer or a related entity (as that term is used in the Corporations Act 2001) to the Employer; and

(2) any customer or client of the Employer,

and includes, without limitation, each of the following:

A. information which the Employer identifies as confidential;

B. information which a reasonable person in your position should understand is confidential;

C. trade secrets and intellectual property;

D. agreements, arrangements or terms of trade with clients, customers and suppliers or prospective clients, customers or suppliers;

E. names, addresses (including email addresses), phone numbers and all other contact information of sellers, buyers, prospective sellers and buyers, any property owner (including their employees, contractors and representatives) on whose behalf a property is managed by the Employer;

F. contractual and technical information;

G. marketing plans and marketing and sales techniques;

H. business plans and forecasts;

I. business systems and procedures;

J. financial records; reports and accounts;

K. business proposals;

L. manuals;

M. operational materials;

N. details concerning the Employer’s business affairs;

O. customer/client lists;

P. customer/client details and records including, but not limited to, all personal and financial information revealed by customers/clients; and

Q. employee information’

…

5. Undertakings

5.1 You agree during your employment with the Employer to:

(a) not during the Term, be engaged, concerned or interested in any business that competes with the Employer’s business without the prior written consent of the Employer;

(b) not accept any payment or any other benefit in money or in kind from any person as an inducement or reward for any act without the prior written approval of the Employer;

(c) keep current at all times your registration or licence as a real estate agent in your Position under the provisions of the Real Estate Law that applies to You and, in this regard, satisfy all continuing professional development, further education and training requirements of your registration or licence at your expense;

(d) perform your Duties as directed by the Employer in a diligent, professional and ethical manner and refrain from doing anything that may adversely affect or reflect upon the Employer;

…

14. Confidential Information

14.1 You agree that You will, at all times both during and after your employment with the Employer, and for all reasons:

(a) use Confidential Information for the sole purpose of performing your Duties with the Employer;

(b) keep confidential all Confidential Information, other than Confidential Information You are required to disclose in the course of your normal Duties, that is or has become public knowledge (other than as a result of a breach of confidentiality by you), or that You are required by law to disclose;

(c) immediately notify the Employer of any suspected or actual unauthorised use, copying or disclosure of Confidential Information;

(d) provide assistance reasonably requested by the Employer in relation to any proceedings the Employer may take against any person for unauthorised use, copying or disclosure of Confidential Information.

14.2 You agree that You will not, at any time or for any reason:

(a) use any Confidential information to your own advantage or to the advantage of any other person, firm or company without the period written consent of the Employer;

(b) disclose any Confidential Information to any other person, firm or company without the prior written consent of the Employer;

(c) use or attempt to use any Confidential Information which You may acquire in the course of your employment for any speculative purposes.

…

19. Restriction on Post-Employment Activities.

19.1 Item 9 of the Reference Schedule will state whether this paragraph 19 applies to your employment.

19.1 Without the Employer’s prior consent, from the Termination Date, You are not to:

(a) solicit, attempt to solicit, or accept any instructions to perform any work from any Client for the Restraint Period;

(b) carry on or be engaged, concerned interested directly or indirectly whether as a shareholder, director, employee, partner, joint venture participant, principal, agent, trustee, unitholder or otherwise, in carrying on any business for a Competitor for the Restraint Period;

(c) solicit, attempt to solicit, entice or encourage any Employer Representative to leave their engagement with the Employer for the Restraint Period;

(d) encourage, condone or entice any other person or entity, in which You are interested or by which You are engaged, to engage in conduct which, if You engaged in such conduct personally, would cause You to breach this paragraph 19.

19.2 In this paragraph 19:

(a) Restraint Period means:

(1) 12 months;

(2) 9 months;

(3) 6 months;

(4) 3 months.

…

(c) Competitor means any business engaged in providing real estate agency services within a radius of:

(1) 6 kilometres from the office of the Employer in which You were employed;

(2) 5 kilometres from the office of the Employer in which You were employed;

(3) 4 kilometres from the office of the Employer in which You were employed;

(4) 3 kilometres from the office of the Employer in which You were employed.

28. In approximately March 2012 the Second Defendant commenced employment with the Devine Group (CB 223). It is contested whether the Second Defendant ever signed an employment agreement with the Concord Office of the Devine Group.

29. On June 2013, Mr George Devine transferred some of his shares and rights to the Fourth Plaintiff (CB 238,539-540).

30. In October 2013, the Second Defendant became a sales assistant to the First Defendant. It was in this way that the First and Second Defendants continued to be employed as part of the Devine Group up until late 2017, when the relationship between the Plaintiffs and Defendants evidently broke down.

31. On 23 March 2017 xxxxxxxxxxxxxxxxxxxxxxxxxxx entered into an agency agreement with the Concord Office for a property at 32-36 Underwood Road Homebush (Underwood Road Property) (CB 548).

32. On 3 November 2017, the First Defendant’s calendar showed a “listing appointment” with the owner of xxxxxx Burns Bay Road Lane Cove (Burns Bay Property) (CB 560).

33. In November 2017 the contract for the sale of the Burns Bay Property was compiled with the Concord Office listed as the vendor’s agent (CB 1140).

34. On 15 November 2017 at 4:43pm the First Defendant (on one view) emailed from his work email to his personal email address four excel spreadsheets with titles such as "Corporate Event ID1” (CB 561). At 5:08pm he emailed a further two excel spreadsheets to his personal email address titled “xxxx Coombe ID1” and “xxxxx Touma ID1” (CB 921). At 5:51pm he emailed one further excel spreadsheet to his personal email address titled “xxxxxxxxx sales” (CB 960). However it is contested between the parties as to the import and nature of these emails.

35. On 23 November 2017 at 4:34pm Ms xxxxxxxx Nguyen an employee of the Concord Office emailed to the First Defendant’s personal email address one spreadsheet titled “ROGE BDM List 25 01 2017 – Separate First Name & Last Name” with the subject line “xooxo” (CB 1006).

36. On 23 November 2017 4:48pm the Second Defendant (on one view) emailed his personal email address two excel spreadsheets containing contact lists for himself and Ms xxxxxx Touma (CB 938, 6259). This was in response to the First Defendant emailing him on 15 November 2017:

“Lew, can you please print these so we can go through which contacts are yours and mine?”

37. However it is contested whether the Second Defendant himself caused these emails to be sent.

38. On 28 November 2017 at 9:42am the First Defendant emailed his personal email address attaching a .zip file of documents titled “RA’s spreadsheets-documents.zip” (CB 1007).

39. On 4 December 2017 at 9:39am the First Defendant emailed his personal email address with one excel spreadsheet which outlined which clients had selected “YES” or “NO” to corporate events. The document was titled “YES AND NO Corporate Events.xls” (CB 1141). At 2:30pm he emailed his personal email address with two excel spreadsheets “MP ID1” and “MP ID2” (CB 1158).

40. On 8 December 2017 the First Defendant provided to the Third Plaintiff a letter advising him he wished to sell his shares in the Concord Office and Drummoyne Office to the Third Plaintiff (CB 1198-1199):

Dear Steven,

I write to you as a Director and Shareholder of Devine Real Estate Concord Pty Ltd and Devine Real Estate Drummoyne Pty Ltd (the Companies).

This letter is written notice under clause 9 of the Concord Shareholders’ Agreement dated 8 August 2008 that I wish to exit the business and sell my shares. I note there is no shareholders’ agreement for the Drummoyne company, but this is also written notice that I wish to exit the business and sell my shares in that company too.

I am assuming that you (the other Concord shareholder) and/or Fayez Yammine (the other Drummoyne shareholder) will want to purchase my shares.

…

We also need to discuss what restraint, if any, I am subject to after the sale of my shares. Without waiving the privilege that attaches to it, I can say that I have received legal advice that the current restriction in clause 10 of the Concord Shareholders’ Agreement (a 3 year restraint spreading over numerous local post codes) would be unenforceable at law because it is unreasonable oppressive. Therefore, I would like to agree with you on a reasonable restriction of my trade prior to my share sale completing.

41. It is alleged that on 8 December 2017 changes were made to 905 client contact details in the Devine Group’s electronic database (CB 1637-1646). The Plaintiffs allege it was the First Defendant’s log-in that made these changes by altering the telephone numbers by one digit.

42. On 8 December 2017 at 5:41pm the First Defendant emailed his personal email address attaching certain documents which included “After Sale checklist”, “compulsory sales checklist”, “Open home cover document”, “Sales Compliance Checklist” (CB 1190).

43. On 11 December 2017 it is alleged that the First Defendant, Third Plaintiff and the accountant Mr Carlos Uribe, met where the First Defendant said that he did not think the restraints in the 2008 Shareholders Agreement were enforceable (CB 200).

44. On 12 December 2017 Ms xxxxx Salmon from Belle Property Australasia emailed the First Defendant with a draft franchise agreement and franchise application form (CB 1214):

Evening Roger

Hope all is well with you, so lovely to meet you the other day!

I believe you have done the hard part – resignation. Congrats … Looking forward to having you on board.

Just a few things as promised in soft copy:

• Franchise Agreement – template

• Disclosure Document – current

• Franchise Application

45. The Third Plaintiff and Ms xxxxxxx Yammine gave the First Defendant notice regarding the purchase of the First Defendant’s shares in the Concord Office and Drummoyne Office (CB 1215-1217):

We refer to your letter of 8 December 2017 in which you offered to sell your shares in Devine Real Estate Drummoyne Pty Ltd … We accept your offer to sell your shares, being 5 ordinary class shares, at the rate set out above.

46. On 13 December 2017 the First Defendant’s employment with the Devine Group was terminated (CB 201-202).

47. On 13 December 2017 Ms xxxxxx Salmon emailed the First Defendant (CN 1230):

“All approved!!! Let’s celebrate J”

48. On the same day Ms Salmon emailed Mr xxxxx Kuchta of Kelly Partners Pty Ltd (CB 1232):

Hi xxxxx

Me again!

I have referred another new franchisee to you – xxxxxx Agha

He has called and left you a message, he will be opening our Belle Property Concord office.

This one is pretty urgent, we want to get the Franchise Agreement signed this side of 2017 if possible if you could help him setup.

49. On 14 December 2017 the First Defendant posted on Facebook (CB 1250):

I would like to thank the wonderful team at Devine Real Estate. As a Director of the Concord and Drummoyne offices, I have worked with some amazing people, many of whom I can call family. Moving into my 11th year in Real Estate, a great opportunity has come about to take me to the next level, owning and running my own office in 2018. I look forward to not only helping my clients buy, sell and rent their most important asset, but also mentor and help others forge a successful Real Estate career. Bring on 2018!

50. On 19 December 2017 it is alleged Devine Group employees discovered changes to 905 client contact details in the Devine Group’s email database, with Ms Catherine Harris investigating the cause of the changes (CB 1637-1646).

51. On this same date the First Defendant sent an email to Ms xxxxxx Bedzis of Belle Property Neutral Bay attaching a document which was apparently a Marketing Book of the Devine Group and a marketing price list (CB 1651):

Hi xxxxxxx

Thought id [sic] send you the old Devine Marketing book which I used when presenting to my vendors. It would be great to see the Belle equivalent. Also attached is a marketing price list. It would be great to have one of these but specific to my market.

52. On this same date the First Defendant provided Belle Property Neutral Bay with a ‘bio’ outlining his background and specialty areas of real estate being Concord, Concord West, Cabarita, Breakfast Point, Mortlake, Sydney Olympic Park, Wentworth Point, Newington and Liberty Grove (CB 1670-1671).

53. On 20 December 2017 the Second Defendant resigned from the Concord Office (CB 223). On 21 December 2017 the First Defendant signed an employment agreement with Premprop Sales Neutral Bay Pty Ltd trading as Belle Property Neutral Bay (Belle Property) (CB 2151).

54. On 21 December 2017 Ms Salmon emailed the First Defendant an updated franchise agreement and on this date he signed an employment agreement with Belle Property (CB 2151). During this time Belle Property and the First Defendant corresponded to establish the various technical aspects of his employment with the real estate agency company, including the First Defendant’s “Electronic Direct Marketing” and “Business Development Area”.

55. On 22 December 2017 Blake Palmer solicitor of Baybridge Lawyers sent an email to the Third Plaintiff on behalf of the First Defendant. This letter stated that the Devine Group had already provided the First Defendant with financial records for both the Concord Office and Drummoyne Office of the Devine Group, but requested further financial records of the Devine Group so as to allow a proper valuation of the First Defendant’s shares in the Concord Office and Drummoyne Office (CB 2181).

56. On the same date the First Defendant emailed the solicitor for the vendor of the Burns Bay Property that had previously nominated the Concord Office of the Devine Group as its agent. The First Defendant advised the solicitor he was intending to begin “signing up” the vendor and requested a contract of sale be forwarded to his personal email address (CB 2191).

57. From January 2018 the First Defendant began to be advertised as a sales agent as part of Belle Property real estate agency. The First Defendant and Second Defendants were advertised as agents for Belle Property, including for the Burns Bay Property (CB 2316).

58. On 18 January 2018 the Second Defendant sent photographs of the Underwood Property to Ms xxxxx Bedzis of Belle Property (CB 2215). Ms xxxxxxxx Bechtold of Belle Property sent an email to the solicitors for the vendor of the Underwood Property requesting them to change the vendor listed on the contract for the sale of the property from “Devine Real Estate” to “Belle Property Neutral Bay” (CB 2224-2225):

Would you please be able to amend the front page of the attached contract to include our office details.

‘Vendor’s agent’ details should read: Belle Property Neutral Bay / 1 Young Street, Neutral Bay NSW 2089

…

Your prompt attention in this matter is greatly appreciated.

59. Solicitors for the vendor of the Underwood Property subsequently amended the contract for sale to list the First Defendant and Belle Property as the agent (CB 2254-2257). The Underwood Property units were advertised online by Belle Property (CB 2260).

60. On 19 January 2018 the First Defendant emailed the vendors of a property at xxxxxx Station Street Homebush (Station Street Property), previous customers of the Concord Office of the Devine Group. He said (CB 2242):

So good to catch up with you and David last night.

Your loyalty is greatly appreciated and I promise Lewis and I will get you the best result in the market.

Please don’t forget to send through the Council and Strata rates and contact your solicitor for the Contract.

61. This Station Street Property was subsequently advertised as listed for sale by Belle Property, with both the First and Second Defendants as the agents (CB 2321).

62. On 24 January 2018, the Second Defendant emailed Belle Property with marketing instructions for the Burns Bay Property (CB 2190) a property which had previously been nominated as being sold by the Concord Office of Devine Real Estate (CB 980, 1140).

63. On 27 January 2018 the First Defendant advertised on Facebook that Belle Property would be offering inspection times for the Underwood Property and the Burns Bay Property:

Goodmorning [sic] Sydney!

See today’s inspection times below:

1. 10:00am – 10:40am 15/32-36 Underwood Road, Homebush

2. 2:00pm – 2:40am [sic] 13/240 Burns Bay Road, Lane Cove

64. The Burns Bay Property was subsequently sold by Belle Property (CB 2188).

65. On 1 February 2018 the First Defendant sent an email to Ms xxxxxxxx Bechtold of Belle Property (CB 2333):

Good morning xxxxxx,

Thanks for sending this. In future, please leave Neutral Bay out of the opening sentence as I’m trying to dance around the issue that I’m out of area at the moment and don’t want to Flagg [sic] it too much.

Xo

Kind regards,

Roger Agha

66. The Plaintiffs’ case is that in the balance of February 2018 the First Defendant, with the assistance of the Second Defendant, continued to trade in respect of properties in the Concord area via Belle Property in Neutral Bay (CB 2459-2850). The Plaintiffs suggest that the arrangement with Belle Property in Neutral Bay was a “fig leaf” to cover the fact that the First Defendant was actually operating in the Concord area despite contractual restraints.

67. On 2-3 February 2018, the First Defendant sent an excel spreadsheet of contacts titled “Michael Poynting List ID 2” to Zenu Realestate Pty Ltd (Zenu), a real estate software company (CB 2356-2357):

Hi Evan,

Appreciate the effort.

Please find attached an example of how the records are saved.

They are basically an excel spreadsheet of all my contacts as you can see.

Look forward to hearing from you in relation to next steps.

68. On 5 February 2018 the Second Defendant sent to Belle Property a Dropbox link containing “our property files and marketing items from the ‘N’ drive” (CB 2364).

69. On 19 February 2018, the First Defendant sent a variety of spreadsheets of customer contacts obtained (on one view) from his work at the Devine Group to the support team at Zenu (CB 2572-2582).

70. On 19 February 2018 the Second Defendant signed an employment agreement with Belle Property (CB 2632).

71. On 23 February 2018 Mr Palmer solicitor sent a further email to solicitors for the Plaintiffs requesting financial information (CB 2661):

Dear Alexandra,

I wrote a letter to your client in December 2017, and it is now almost March 2018 and I have not had a response and, consequently, this deal has not moved at all.

This staggering delay cannot continue. I shall be applying to the duty judge for orders for specific performance next week unless I hear from you today.

I shall rely on this email (and earlier correspondence) to support an indemnity costs order as well.

72. On 27 February 2018 solicitors for the Plaintiffs replied to Mr Palmer alleging that the First Defendant’s employment was terminated on 13 December 2017 for serious misconduct and seeking to enforce restraints of trade and use of confidential information (CB 2713-2716). Solicitors for both parties engaged in correspondence and on 12 March 2018 the First Defendant gave undertakings not to use confidential information of the Devine Group (CB 3039).

73. On 16 March 2018 the Support Team at Zenu advised the First Defendant his contacts had now been imported into his office account (CB 3147-3154).

74. On 19 March 2018 proceedings were commenced between the parties and on 5 April 2018 the First Defendant resigned from his directorships of the Concord Office and Drummoyne Office of the Devine Group. On 21 April 2018 the First Defendant resigned from Belle Property (CB 6061).

75. The sale of shares between the parties was settled on or about 24 April 2018 resulting in payment of $774,058.04 and $151,860.65 being made to the First Defendant from the Devine Group for the value of his shares in the two Concord and Drummoyne offices.

76. On 5 April 2018 this matter came before Parker J as part of an interlocutory. The transcript recorded the following exchange (CB 6472-6488):

His Honour: We have got that affidavit. Next we have got Ms McGeady’s affidavit, which is read without objection. Which is the next affidavit?

Heath: Mr Stephen Devine, which is a principal affidavit in the proceedings dated 16 March 2018 with three volumes of exhibits.

His Honour: I have that. What are the objections related to this affidavit?

AFFIDAVIT OF STEPHEN DEVINE DATED 16/03/18 TOGETHER WITH THREE VOLUMES OF EXHIBITS READ. PARAGRAPH 131 OBJECTED TO ADMITTED

THREE VOLUMES OF EXHIBITS TENDERED, ADMITTED AND MARKED A1, A2 AND A3.

AFFIDAVIT OF OLIVIA TOUMA DATED 18/03/18 READ WITHOUT OBJECTION

AFFIDAVIT OF TARA MAZZEI DATED 18/03/18 FILED IN COURT AND READ. PARAGRAPHS 27. 28, 29 AND 30 READ SUBJECT TO OBJECTION

Heath: The additional document is a document referred to in the affidavit of Ms Jadhav but not exhibited to Ms Jadhav’s affidavit.

The relevant paragraphs of Ms Jadhav’s affidavit are paras 15—

Doyle Gray: I object to that.

His Honour: Ms Heath, how are you trying to use this material. What do you say it proves?

Heath: It proves that Mr Agha is continuing to breach his undertakings and obligations by condoning, cooperating or otherwise dealing with Mr Coomb and that Mr Coomb is likewise continuing to breach the previous undertakings given in the material.

Parties’ submissions

Plaintiffs

77. The Plaintiffs seek to claim contractual, statutory and equitable obligations of confidence and enforcement of contractual restraints on the Defendants (outline submissions [1], submissions in reply [69]-[78]).

78. In relation to the Court Book provided by the parties the Plaintiffs submit that a confidentiality order should be made in relation to the customer information and financial documents of the Plaintiffs as set out in a table provided to the Court (outline submissions [2]-[5]).

Construction

79. After outlining in detail the background facts of this case (outline submissions [6]-[102], submissions [1]-[487]) and relevant legal principles (outline submissions [103]-[115], submissions [488]-[596]) the Plaintiffs submit that the Defendants operated as integral parts of the Devine Group and both its Concord Office and Drummoyne Office (outline submissions [116]-[117]).

80. The Plaintiffs submit that the First Defendant by virtue of his general law obligations, statutory obligations and contractual obligations (including the 2008 Shareholders Agreement and First Defendant’s Employment Agreement) owed duties to the Plaintiffs not to misuse confidential information (outline submissions [118]-[122]).

81. The Plaintiffs assert that the First Defendant acted in breach of his duties by (outline submissions [123]):

1. Emailing confidential client lists from 15 November 2017 to 8 December 2017 to his personal email address;

2. Sabotaging the client lists of the Devine Group by changing phone numbers;

3. Removing sales agency agreements and correspondences;

4. Accepting instructions from at least 6 clients of the Devine Group;

5. Disclosing confidential information to Belle Property;

6. Enticing the Second Defendant to leave his employment with the Plaintiffs;

7. Competing with the Devine Group and diverting business from the Devine Group for approximately 3 months after termination of his employment with the Plaintiffs; and

8. Continuing to request and encourage the Second Defendant to use confidential information taken from the Devine Group.

82. With respect to the construction of the Shareholders Agreement and Employment Agreement, the Plaintiffs submit that they should operate synchronously such that they apply obligations that are independent and cumulative, necessarily meaning that the maximum restraint period of 3 years applies (submissions [597]-[635]).

83. The Plaintiffs reject the argument that Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72, is the relevant case to determine the interrelationship between the Employment Agreement and Shareholders Agreement (submissions in reply [1]-[9]) and assert there is no basal inconsistency between the two agreements (submissions in reply [10]-[21]).

Breach

84. The Plaintiffs likewise assert the Second Defendant owes obligations of confidentiality to the First Plaintiff, derived from the general law, statute and post-termination restraints to be implied into his employment with the Devine Group (outline submissions [124]-[125]). Particularly, the Plaintiffs focus on clause 6 of the Shareholders Agreement and clause 14 of the Employment Agreement as providing contractual obligations of confidentiality which they allege the First Defendant breached by disclosing client lists (submissions [636]-[658]).

85. The Plaintiffs also seek to impose competition restrictions upon the First Defendant (submissions [659]-[673]). They seek final injunctions against further breaches by the First Defendant of his ongoing obligations under the Shareholders Agreement and Employment Agreement, but also broadly framed injunctions against breach of “equitable duties” and duties under the Corporations Act 2001 (Cth) (submissions [674]-[692]).

86. The Plaintiffs claim the Second Defendant breached the Employment Agreement, his duties under the Corporations Act 2001 (Cth) and his equitable duties, including by sending a customer list to his personal email address (submissions [694]-[716]).

87. The Plaintiffs assert further hearing as to damages and compensation are necessary (submissions [717]-[718]). They deny there was any contracting out of the effect of the Corporations Act 2001 (Cth) (submissions in reply [22]-[23]).

88. The Plaintiffs, in further submissions in reply dated 11 June 2019, reject any assertion that they have inadequately demonstrated that the properties referred to in their evidence were not owned or sold by “customers” of the Defendants (further submissions in reply [3]-[4]). They make concessions or further arguments, of a sort, with respect to four properties (see further submissions in reply table):

1. Xxxxxx Curic and xxxxxxxxx Curic, xxxxxxx Gipps St, Concord: they were customers of the Plaintiffs, with the Devine Group investing in maintaining their customer connection;

2. Xxxxxxxxxxxx Li, xxxxxxx Station St, Homebush: the Court should take judicial notice that husbands and wives often identify as a party not separately;

3. Xxxxxxxx Satour, xxxx Courallie Ave, Homebush West: Mr Sartour is a customer of the Plaintiffs, as he was a landlord of the Devine Group that purchased the property through Devine Concord; and

4. xxxxxxxxxxx Morris, xx Links Ave, Concord: they are still customers of the Plaintiffs and in are the shared database.

89. They deny there was any lack of procedural fairness in the trial, noting that it was open to the Defendant to call witnesses responsive to the Plaintiffs’ case before the closing of evidence (further submissions in reply [5]).

Confidentiality

90. The Plaintiffs also seek confidentiality or suppression orders in respect of their confidential information (submissions [719]-[731]). They submit that the confidentiality of their client lists and related information was not destroyed either by the filing of summons or the disclosure of the material before Parker J (submissions in reply [24]-[60]). The Plaintiffs seek to distinguish Isaac v Dargan Financial Pty Ltd atf The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of Home Loan Experts) [2018] NSWCA 163 (“Dargan Financial”) as decided in unique circumstances quite different to the matter before me, which relates to disclosure of confidential materials in an interlocutory application before Parker J. The Plaintiffs otherwise reserve their position as to that decision (submissions in reply [61]-[68]).

91. The Plaintiffs reject there is any legitimate “unclean hands” or duress argument that can be raised by the Defendants, largely rejecting the Defendants’ interpretation of the evidence (submissions in reply [69]-[96]).

Defendants

92. The Defendants submit that the duties under the Shareholders Agreement and Employment Agreement are inconsistent, and that consistent with the second category of Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72, a correct analysis of the clauses in the agreements is “to elevate the shareholders’ agreement to the supreme statement of the rights and liabilities” of the parties (submissions [1]-[26], [41]-[106]).

93. The Defendants’ case also relies on the submission that the Plaintiffs have lost confidentiality over the information subject to these proceedings by tendering confidential client lists and confidential information before the Court (outline submissions [1]-[5]).

94. The Defendants draw attention to the fact that on 19 March 2018 solicitors for the Plaintiffs sought to read: the affidavit of the Third Plaintiff sworn 16 March 2018; the affidavit of Ms xxxxx Touma sworn 18 March 2018; and the affidavit of Ms xxxx Mazzei sworn 18 March 2018 before Hallen J. The Plaintiffs also filed a Summons which stated:

On the grounds set out in the Affidavit of Steven James Devine made 16 March 2018 the plaintiffs claim the following relief.

95. The Summons and three affidavits were served on Mr Palmer solicitor for the Defendants, and no orders were sought restricting access to any of those documents. The Defendants submit upon service on Mr Palmer these four documents entered the public domain, thereby freeing the Defendants from any obligation of confidentiality (outline submissions [6]-[8]).

96. I note in August 2018 I indicated I was willing to make court suppression and non-publication orders pursuant to s 10 of the Court Suppression and Non-Publication Orders Act 2010 (NSW) with respect to the evidence before me including those materials in the Court Book (see for example T5/18-22 of 15 August 2018 transcript, T76/16-21).

97. The Defendants also draw attention to the fact that in April 2018 the abovementioned three affidavits and Summons were read in open court and admitted into evidence before Parker J whereby the information included in those affidavit entered the public domain (outline submissions [9]-[11]).

98. The Defendants submit absent confidentiality, there is now neither any proper basis nor utility in ordering injunctions against the Defendants (outline submissions [12], submissions [107]-[179]).

99. The Defendants further allege that the restraints of trade sought by the Plaintiffs are invalid or unenforceable as they protect no legitimate interest (outline submissions [13]-[14]).

100. The Defendants deny that the Plaintiffs are entitled to damages, as they themselves have failed to “do equity” and are thereby not entitled to be compensation by a court sitting in equity (outline submissions [15]-[24], submissions [203]-[261]).

101. The Defendants further deny that the Fourth Plaintiffs has any cause of action or equity against them (outline submissions [25], submissions [27]-[40]). They submit the Plaintiffs have failed to establish grounds for relief against the First Defendant with respect to non-competition and that there should be no restraint after the First Defendant has ceased to be a shareholder (submissions [180]-[201]). The Defendants assert the Plaintiffs have failed to establish the First Defendant has committed a serious criminal offence (submission [262]-[292]).

102. The Second Defendant also denies entering into an employment contract on the terms alleged by the Plaintiffs, and reject any suggestion that he has breached his duties, committed a serious criminal offence or contravened the Corporations Act 2001 (Cth) (submissions [293]-[351]). The Defendants submit that there has also been a contracting out of the Corporations Act 2001 (Cth) (submissions [93]-[99]).

103. The First Defendant submits that it would have been impossible for him to have changed 905 phone numbers within the time asserted by the Plaintiffs, and that the evidence of Ms Harris and Mr Khoury on this point does not establish the sabotage of the phone numbers (submissions [268]-[280]). The Defendants further submit that there was dual record keeping at the Devine Group officers, and the Plaintiffs must prove that the First Defendant destroyed both paper and electronic records to make good their allegations against him (further submissions dated 21 May 2019 [13]).

104. The Defendants also assert that there has been a lack of procedural fairness in the trial, because the significance of the various properties referred to by the Plaintiffs only emerged after the closing of evidence, denying the Defendants the opportunity to call witnesses responsive to the Plaintiffs’ case (further submissions [14]).

105. One final argument that the Defendants raise, in their submissions dated 21 May 2019, is that the Plaintiffs have failed to establish the relevant properties were owned or sold by “customers” of the Plaintiffs (further submissions [8]-[10]). They assert that the evidence tendered by the Plaintiffs, save for the properties at The Greenwood, Underwood Rd, Homebush (Jaycorp Group) and at xxxxxx Burns Bay Rd, Lane Cove (Vaughan Anthony Judd), is of insufficient quality to prove that the properties were owned or sold by “customers” of the Devine Group (see table attached to further submissions).

Plaintiffs’ lay evidence

Mr Steven James Devine

106. Mr Devine or the Third Plaintiff swore four affidavits in these proceedings on 16 March 2018, 19 June 2018, 25 July 2018 and 9 August 2018. Those paragraphs over which confidentiality was sought by the Plaintiffs have not been disclosed in this judgment.

107. In his first affidavit (16 March 2018) the Third Plaintiff described how he registered the Concord Office and Drummoyne Office of the Devine Group on 1 August 2008 and 30 May 2011 respectively. He has been continuously a director and shareholder of the Concord Office and Drummoyne Office since their registration.

108. The Third Plaintiff also described the general history of the Devine Group which was started in 1965 by his father in Strathfield and has since expanded to five offices in New South Wales and one office in the Philippines. He described how he purchased shares in the real estate group started by his father and changed its name to “Devine Real Estate”. Growing the Devine Group has been his life’s work.

109. In or around early 2008 the Third Plaintiff became interested in purchasing the “Richard Stefani First National” or RSFN real estate agency in Strathfield and started to enter negotiations to purchase the agency. He discovered that the First Defendant was an employee and 40% shareholder of this agency. He decided to ask the First Defendant and Nick Xenos (his then general manager of the Devine Group office at Strathfield) to be business partners in the purchase of the RSFN agency.

110. On or about 8 August 2008 the Third Plaintiff described how the First Defendant, the First Defendant’s lawyer, Mr Xenos, himself, and his lawyer had a lengthy meeting to discuss the terms of a draft shareholders agreement for this venture. He asserted every person had a copy of the document and had a conversation to the effect:

Third Plaintiff: … I don’t want you competing with Concord while you’re a shareholder …

First Defendant: … okay …

Third Plaintiff: … I don’t know you … if it doesn’t work out I want to be able to buy your shares out … also you can get out within twelve months …

First Defendant’s lawyer: … I don’t recommend Roger that you sign this agreement …

First Defendant: … I understand … I’m agreeable to move forward on those terms …

111. The parties then signed this 2008 Shareholders Agreement. The Third Plaintiff said when he signed this document he did not see any typographical errors in it, however has since noticed there is a typographical error in clause 6(c) and has always intended no shareholder would be able to compete with the Concord Office whilst they were a shareholder, except for himself and Mr Xenos.

112. From around August 2008 the First Defendant was then employed at the Concord Office as a full-time sale agent providing real estate agency services.

113. In 2011 the Third Plaintiff asserted he updated the employment agreements of the Devine Group as a part of a general review, and that the First Defendant signed this latest employment agreement.

114. The Third Plaintiff further outlined how in or around 2011 he decided he wanted to further expand the Devine Group. As the First Defendant had previously mentioned to him that he wanted a larger shareholding in the Concord Office, as an alternative the Third Plaintiff offered the First Defendant a 10% shareholding in a new Drummoyne Office of the Devine Group.

115. The Third Plaintiff claimed that the First Defendant never paid for this share allocation, nor did he contribute financially to the repayment of three loans used to purchase a rent roll for the Drummoyne Office.

111. Furthermore, he asserted that he had a shareholders agreement drafted and circulated between himself, the First Defendant and Ms Fayez who were directors of the Drummoyne Office. However he said they did not end up signing that document. The First Defendant is said to have had very little involvement in the management of the Drummoyne Office.

112. Up until mid-2017 the Third Plaintiff asserted he had a relatively good relationship with the First Defendant. He felt that the First Defendant was a good agent and an asset for the Devine Group.

113. However on or about 8 December 2017 he received a letter from the First Defendant advising him that he wanted to sell his shares in the businesses. However this letter said that the restrictive covenants in the 2008 Shareholders Agreement would not be enforceable. On 11 December 2017 the Third Plaintiff spoke to the First Defendant, where he said “Roger it’s a three-year restraint … you know I wouldn’t have signed the shareholders agreement with you without it … look if you confirm you won’t compete for the three years … I’ll pay you a higher multiplier for your shares”. The First Defendant did not agree.

114. The Third Plaintiff described how in or around early December 2017 he accessed the First Defendant’s email address, and discovered that he had been sending emails to his personal email address attaching excel spreadsheets containing client details for thousands of clients. On or about 13 December 2017 he arranged Ms xxxx Mazzei and himself to meet the First Defendant at a café outside the Concord Office. When confronted with copies of the emails, the Third Plaintiff asserted the First Defendant replied “I can do what I want as a director” and “I wouldn’t use it”. The Third Plaintiff terminated the First Defendant’s employment, sending a letter on 16 December 2017 to him enclosing the proposed share repurchase.

115. The Third Plaintiff asserted that upon returning from holiday on or about 12 January 2018 he checked the internet and discovered that the First Defendant was now working for Belle Property and was selling or advertising properties that were the clients of the Concord Office of the Devine Group, including the Burns Bay Property, the Underwood Property and the Station Street Property.

116. The Third Plaintiff also described how the Second Defendant started employment at the Concord Office in or around March 2012, and signed an employment agreement at this time. On or about 15 December 2017 he met with the Second Defendant at the Concord Office where he told him “look mate, we let Roger go because he stole confidential information … I wanted to let you know that we all want you here … you’ve always been in Roger’s shadow, now you have the chance to step up”.

117. On 20 December 2017 the Second Defendant resigned from the Concord Office, and in or around mid-January the Third Plaintiff said he discovered he had been engaged by Belle Property. He noticed that he was included as a contact agent for properties including the Burns Bay Property, the Underwood Property and others. In or around mid-January the Third Plaintiff said he obtained access to the Second Defendant’s work email at the Concord Office.

118. The Third Plaintiff described how the Devine Group is concerned the Defendants will continue to use confidential information to their commercial advantage at the expense of the goodwill and commission of the Plaintiffs.

119. In his second affidavit (19 June 2018) the Third Plaintiff clarified some typographical errors and described precisely how the shareholding arrangements of the Devine Group and Concord Office were arranged. He also noted that the Second Defendant was remunerated with a salary in accordance with the real estate agency industry award and commission. He noted he could not locate a copy of the Second Defendant’s employment agreement.

120. He also described how on 14 June 2018 he met with Ms Jeanette Nguyen, who was the business development manager of the Devine Group until 12 January 2018. When he asked her why she sent client lists to the First Defendant she replied “I see that now … I’m sorry … Roger was in a hurry so the quickest way was from my personal email … I’m sorry … yeah he did offer me a job earlier this year”.

121. In his third affidavit (25 July 2018) described how on 21 July 2018 he noticed there was signage at the Underwood Property with the First Defendant’s details, and instructed his solicitors to write letters to the First Defendant and solicitors for Belle Property in relation to this signage.

122. In his fourth affidavit (9 August 2018) the Third Plaintiff largely clarified the loan arrangements and share arrangements of the Devine Group and in relation to the First Defendant.

123. In cross-examination Mr Devine accepted the Devine Group has a website with contact details available to the public so that members of the public may contact members of the real estate business (T93/25-50). He accepted that nowhere in the evidence was there a copy of an employment contract signed by the Second Defendant (T94/20-23). He said he inferred that it had been stolen (T94/25-49). He admitted he did not have any personal evidence himself it had been stolen (T96/19-23).

124. When shown a screenshot of the Devine Group’s website of the Underwood Property, the Third Plaintiff accepted displayed on the property was a board with the contact details of the First Defendant (T98/28-30). He however said he did not know when this screenshot was taken and could not therefore answer whether his company’s website was advertising the First Defendant (T99/1-16). He said he generally checked the website once or twice a week (T100/9-12).

125. The Third Plaintiff accepted that when from time to time he passed the Underwood Property he had seen signage advertising the First Defendant (T101/33-39). Upon re-examination however he said that this advertisement was not that of Devine Real Estate but Belle Property (T102/1-5).

126. The Third Plaintiff was recalled to demonstrate how to enlarge the photos of Devine Group’s website, and to demonstrate that on a phone, laptop and tablet it would be difficult to read or ascertain the signage (T150/8-50).

Ms xxxxxxxxxxxx McGeady

132. Ms McGeady swore two affidavits in these proceedings on 21 March 2018 and 5 June 2018.

133. In her first affidavit (21 March 2018) stated on 20 March 2018 she entered the words “lewis coombe belle property neutral bay” into Google and discovered that the Second Defendant was advertised as a real estate agent working for Belle Property and was advertised for properties. On 20 March she carried out internet searches and Instagram searches on the First Defendant but could not locate certain webpages. She asserted she had not received from the Defendants any copies of any confidential information in their control or custody and has not received any written confirmation that they have destroyed any confidential information.

134. In her second affidavit (5 June 2018) Ms McGeady stated she did further internet searches on 25 May 2018 and observed that the Underwood Property and Station Street Property for example were listed for sale on the Belle Property website. She also described the results of her LinkedIn search of the First Defendant.

135. Ms McGeady was not required for cross examination.

Ms xxxxxxxxxx Mylott

136. Ms Mylott swore two affidavits on 29 May 2018 and 18 June 2018.

137. In her first affidavit (29 May 2018) Ms Mylott said she did an internet search on 14 May 2018 on the First Defendant and saw that he was advertised as a real estate agent for Belle Property working in the following post codes: 2137, 2134, 2138, 2127, 2161 and 2046. She saw he was advertised as having sold the Burns Bay Property.

138. In her second affidavit (18 June 2018) Ms Mylott further described her internet search results.

139. Ms Mylott was not required for cross-examination.

Ms xxxx Mazzei

140. Ms Mazzei swore one affidavit on 18 March 2018.

141. In this affidavit Ms Mazzei described how she started working in the Devine Group in March 2016 as a human resources manager for all five offices. One of the companies of the Devine Group is a member of the “Real Estate Employers’ Federation” which provides templates for employment agreements such as a “REEF Contract”. Her office is located at the Strathfield office of the Devine Group and in it she keeps a filing cabinet storing employment agreements. The Devine Group’s chief financial officer Mr Carlos Uribe is located next to her office and he likewise has a filing cabinet of employment agreements.

142. She said her filing cabinet is usually locked, and the key is usually placed in a secret location which only she, Mr Uribe and Ms Anita Wang know. Her usual practice is to keep a signed employment agreement for all employees in a folder marked with their name and a scanned copy on the “HR Drive” of the Devine Group.

143. She described the termination of the employment of the First Defendant on 13 December 2017 and the resignation of the Second Defendant on 20 December. The Second Defendant met her at a café nearby the Strathfield office on this date and resigned, wherein he said “do you have a copy of my employment contract?” They left the café and walked back to the Strathfield office and her room and she opened her filing cabinet and located the folder she believed contained the Second Defendant’s employment records. She opened the folder in front of him and notice a copy of the employment agreement was missing:

Ms Mazzei: … actually I’ll have a look in the system … I’m sure we will find a copy there … why are you asking anyways?

Second Defendant: … if you don’t have my contract, does that mean that I am not going to be restrained … are there are no restraints on me?

Ms Mazzei: … there are restraints on you … remember, do not breach you employment contract or your obligations in any way … especially if you work with Roger …

Second Defendant: … okay …

144. After the Second Defendant she could not find an electronic copy of his employment agreement. She looked in the filing cabinet of Mr Uribe’s room and did not see the employment agreement.

145. In examination-in-chief Ms Mazzei confirmed she started her employment with the Devine Group in March 2016 (T114/25-26).

146. She described how for all personnel of the group she would keep a manila folder with their employment paperwork (including employment contracts) in each folder (T114/34-T115/10). She said in her work she referred to files that were older than March 2016 (T115/15-17).

147. With respect to the locked file cabinet under her desk, Ms Mazzei asserted it was kept locked with the key hidden elsewhere, with two other people who knew where the key was; Carlos Uribe the Chief Financial Officer and Anita Weng (T116/35-38). When Ms Mazzei opened the Second Defendant’s file on 20 December 2017, she asserted the manila folder had little paperwork in it and did not include any letters about terms of employment. She said it was not what she expected to see, as she expected his file to have further documents in it (T117/14-41).

148. In cross-examination Ms Mazzei confirmed the Devine office in Strathfield in which she worked had CCTV including a camera that can see into her office and Mr Uribe’s office (T118/35-49).

149. She accepted outside the offices, there is a live feed of those CCTV cameras in the common area of level 3 of the office (T119/4-9).

Ms xxxxxx Touma

150. Ms Touma swore one affidavit on 18 March 2018.

151. In this affidavit she described how she started working with the Devine Group in January 2017 as a sales assistant to the First Defendant.

152. On or about 14 December 2017 the Third Plaintiff said to her “we let Roger go today as he was unlawfully taking Devine’s confidential information”. A few days later Ms Touma said she received a call from the First Defendant where he asked her to come to work with him for the same salary. She declined. She said she told the Second Defendant this a few days later.

153. Ms Touma described the various software programs called “Complete Data”, “Citrix”, “Inspect Real Estate” and “REST” at the Devine Group.

154. In cross-examination Ms Touma said she is still employed by the Devine Group and has signed a written contract of employment concerning her current position (T122/28-33). She said she signed a “REEF” contract in respect of her current position and this would have been in early 2018 (T122/42-28). She said she first started working for the Devine Group in January 2017 (T122/50-T123/1).

155. In re-examination Ms Touma confirmed her position with the Devine Group in January 2017 was an assistant to the First Defendant and in relation to that position she was given a REEF contract to sign (T123/5-12).

Ms xxxxxxxx Jadhav

156. Ms Jadhav swore two affidavits on 4 April 2018 and on 9 August 2018.

157. In her first affidavit (4 April 2018) she described how the Third Plaintiff proposed to the First Defendant that the price for his shares in the Concord Office and Drummoyne Office was $925,918.69, and that he was ready willing and able to pay that amount. She said the full amount of the Plaintiffs’ claim was unknown until the Defendants had given discovery and the First Defendant had given an account. She also described how she visited the webpages of Belle Property on 3 April 2018.

158. In her second affidavit (9 August 2018) Ms Jadhav said she was present in court over the 8 days of interlocutory hearings in this matter. She said:

As the solicitor for the plaintiffs, I was not instructed by the plaintiffs to:

(a) not apply for a confidentiality order over the Affidavit and Exhibit SD-1; or

(b) to waive any confidentiality of the Affidavit or Exhibit SD-1.

I did not instruct counsel to waive any confidentiality of the Affidavit or Exhibit SD-1.

159. On 22 March 2018 the affidavit of the Third Plaintiff of 16 March 2017 and its exhibit SD-1 was not read before Hallen J, nor on 4 April 2018 and their contents were not discussed in open court.

160. However on 5 April 2018 before Parker J the affidavit and exhibit were “taken as read” although not read aloud or discussed in open court or displayed in a way that would make their contents “substantially known to or accessible by the public, either to persons sitting in court or more generally”. Ms Jadhav said the duty list on that day was relatively quiet and at most times the only persons in court were those engaged in this matter.

161. On 12 April 2018 Ms Jadhav said the matter was before Parker J in the duty list. She did not recall seeing anyone sitting in the public gallery of the courtroom. Counsel for the Plaintiffs stated one name included in Exhibit SD-1 during argument, and the same name was said by counsel for the Defendants.

162. After outlining the orders made by Parker J, Ms Jadhav said on 8 August 2018 she phoned the Supreme Court Registry and provided the Plaintiff’s case details, where she was told that there was no note on their electronic file recording access to the Court file “but notes are not always recorded”.

163. In cross-examination Ms Jadhav accepted that she was not aware of the Court Suppression and Non-Publication Orders Act 2010 (NSW) until April 2018 (T64/23-40). She accepted when her firm produced documents in response to a notice to produce on 10 August 2018, that none of the documents produced contained any document either in draft or in final form which was prepared for use in relation to the aforementioned Act or to preserve confidentiality (T66/22-T67/16).

Ms xxxxxxxxx Harris

164. Ms Harris swore one affidavit on 19 June 2018. Counsel for the Plaintiffs sought confidentiality over the exhibits and annexures to her affidavit (T120/19-33).

165. Her affidavit outlines her employment as a senior IT support person for the software system Complete Data, a system with which she has 11 years’ experience.

166. On or about 19 December 2017 an employee of the Devine Group Mr xxxxxxxxx Melotti emailed her regarding an alleged interference with the Devine Group’s Complete Data software.

167. Upon receiving this request, Ms Harris logged into the Plaintiffs’ database remotely and conducted a “find on a field” search within the database. This search captures modifications made to the record of the database, and when a change is made it dates and time-stamps when the field was changed, the username who changed it along with the data that was in the field prior to and after the change was made.

168. Although confidentiality was sought over these documents, it is uncontroversial to reproduce Ms Harris’ findings as they do not identify any clients (CB 3017):

My findings found that on the 8th December 2017 the username of Roger Agha changed 905 contact records over a period of approximately 1.5 hours. The user went through and randomly changed 1 number from the contacts mobile number, home number and work number so that these phone numbers were no longer correct. The user commenced changing these records at 8:52am and the last record he changed was at 10:23am.

169. On 19 December 2017, Ms Harris supplied 2 excel spreadsheets of her findings to Mr Melotti, Mr Devine and Ms Mazzei. These were screenshots which demonstrated that the username associated with the First Defendant had changed one digit of the phone number of 905 contact records.

170. She was able to fix these changes by 18 January 2018.

171. Attached to her affidavit was Exhibit CH-1 which provided extensive screenshots of data demonstrating the username associated with the First Defendant altered the database phone records of the Plaintiffs.

172. Ms Harris compiled a report on her findings as detailed above and provided it to the Third Plaintiff on about 9 March 2018.

173. Ms Harris was not required for cross-examination.

Ms xxxxxxxxxxxx Nguyen

174. Ms Nguyen swore one affidavit on 8 August 2018.

175. In this affidavit she described how she was employed by the Devine Group as the business development manager during the period from around August 2015 to 12 January 2018.

176. On or about 23 November 2017, the First Defendant asked her to email a spreadsheet to his personal email account called “ROGE BDM List -25 01 2017- Separate First Name & Last Name.xlsx”. She did so from her personal email account.

177. On or about 14 June 2018 she met with the Third Plaintiff and Ms Kim Forwood (an employee of the Devine Group) at a café in West Ryde. When asked why she sent the email she replied “… look I never thought about it … I’m sorry … I understand …” and when asked whether the First Defendant has asked her to work for him she replied “… um earlier this year, he said, would you want to work for me…”.

178. She has deleted the email from her Hotmail account and no longer has a copy of the email and attachment.

179. In examination-in-chief Ms Nguyen said that the email she sent on 23 November 2017 was sent at the request of the First Defendant and she simply made up the subject line “xooxo” as she was in a rush (T146/12-19).

180. She said this email attached a list of the clients the First Defendant and she had dealt with or spoken to (T146/25-29). She said she sent the list to the First Defendant’s personal account as opposed to his work account because that was the email account he provided to her (T147/5-7). She did not ask him why and he did not tell her why (T147/9-13).

181. In cross-examination Ms Nguyen confirmed that it was normal for Devine Real Estate employees to transmit information for their work using personal email addresses because the work email server sometimes made it a bit difficult but not impossible (T148/1-7).

Mr xxxxxxxxxxxxxxxxxx Ruwanpathirana

182. Mr Ruwanpathirana appeared on subpoena to give evidence.

183. He said he was an employee of Nexon Asia Pacific Australia Pty Ltd as a senior tech lead (T104/18-26). He said this company offered mainly IT services for the Devine Group including private cloud-based “Citrix” services (T104/42-T105/9). He said that this service required log-in credentials and offered an email service to the Devine Group (T105/24-41). He said from the “Citrix” server he had produced copies of data relating to the Second Defendant to Ferrier Hodgson (T105/46-T106/31).

398. The correct approach to the application of s 4(1) of the Restraints of Trade Act 1976 (NSW) is well settled. In Orton v Melman [1981] 1 NSWLR 583 at 587 McLelland J (as his Honour then was) explained that first, the Court determines whether the alleged breach (independently of public policy considerations) does or will infringe the terms of the restraint properly construed. Next, the Court determines whether the restraint, so far as it applies to that breach, is contrary to public policy. If it is not, the restraint is valid, subject to any order which may be made under s 4(3). These principles have been approved in later cases: Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 328; WoolworthsLimited v Olson [2004] NSWCA 372 at [42]-[44]; Jardin and Jardin Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409 at [87].

399. The effect of s 4(1) of the Restraints of Trade Act 1976 (NSW) is to require, for the purpose of determining the validity of a restraint, that attention be focused on the actual or apprehended breach, rather than on imaginary or potential breaches: Cactus Imaging PtyLtd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 at [10] (Brereton J).

400. The validity of a covenant in restraint of trade is to be judged at the date of its creation: Lindner v Murdock’s Garage (1950) 83 CLR 628 at 653; [1950] HCA 48 (Kitto J); Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 318; [1973] HCA 40 at 318 (Gibbs J); Geraghty v Minter (1979) 142 CLR 177 at 181; [1979] HCA 42 (Barwick CJ). Nonetheless, the Court may take into account future events that could have been foreseen: Lindner v Murdock’s Garage at 653. Hence, when exercising its discretion whether or not to grant relief, the Court considers matters as at the date of the hearing: Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [70] (Young JA, Beazley and Basten JJA agreeing); Tullett Prebon (Australia) Pty Ltdv Purcell [2008] NSWSC 852 at [88]; (2008) 175 IR 414 at 440 (Brereton J).

401. The nature of the interest meriting protection under a covenant in restraint of trade will differ according to the type of restraint under consideration.

402. Generally, a stricter and less favourable view is taken of covenants in restraint of trade between employer and employee than in commercial agreements. As Mason P explained in WoolworthsLimited v Olson [2004] NSWCA 372 at [38]:

The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between employer and employee than of similar covenants in commercial agreements (Geraghty v Minter (1979) 142 CLR 177 at 185). The reasons are explained in J D Heydon, The Restraint of Trade Doctrine (2nd ed., 1999) at pp 68-69. It is nevertheless well established that an employer may have interests capable of protection by a restraint covenant. These interests go beyond protection of goodwill and retention of customers and extend to trade secrets …

403. The same point is made by JD Heydon in the most recent edition of The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis Butterworths) at 96-97, where four main reasons are given for the Court’s approach in employment cases. First, the inequality of bargaining power between the parties. Second, the employee may be giving up that employee’s only asset, which depends on specialised training and which may not be at all negotiable. Third, when labour is hired it remains valuable whether or not the employee later competes. Fourth, once the employee accepts the post-employment restraints, the employer’s power during the contract is much increased by reason of the inhibition on the employee’s ability to threaten to leave and seek work elsewhere.

404. In Bridge v Deacons [1984] 1 AC 705, doubt was expressed as to whether the legitimate interests can be necessarily ascertained by placing the relevant agreement in a particular category and then trying to align that category with existing cases, such as employment cases or sale of business agreements. Bridge v Deacons [1984] 1 AC 705 involved a restraint clause in a partnership agreement. Lord Fraser, delivering judgment of the Privy Council on behalf of the other Lordships, observed at 714 that:

The agreement in the present case, being one between partners, does not conform exactly to either of the types to which reference has just been made, although it had some resemblance to both. Their Lordships are of the opinion that a decision on whether the restrictions in this agreement are enforceable or not cannot be reached by attempting to place the agreement in any particular category, or by seeking for the category to which it is most closely analogous. The proper approach is that adopted by Lord Reid in the Esso Petroleumcase [1968] A.C. 269, where he said, at p. 301:

I think it better to ascertain what were the legitimate interests of the appellants which they were entitled to protect and then to see whether these restraints were more than adequate for that purpose.

Restraint of trade: onus of proof

405. There has also recently been judicial discussion concerning whether s 4 of the Restraint of Trade Act 1976 (NSW) alters the common law position as to the onus of proof of unreasonableness at common law with respect to restraints of trade.

406. In Idameneo (No123) Pty Ltd v Angel-Honnibal [2002] NSWSC 1214 Palmer J expressed the view that s 4(1) did not alter the common law position. His Honour remarked at [45]-[48]:

In Herbert Morris Ltd v Saxelby [1916] 1 AC 688, it was held by Lord Atkinson (at 700) and by Lord Parker (at 707-8) that the onus of establishing that the restraint is reasonable as between the parties lies on the person seeking to enforce the restraint, while the onus of establishing that the restraint is contrary to the public interest lies on the person seeking to invalidate the restraint. That proposition has been widely accepted although it has been observed that the reason for apportioning onus in this way is somewhat obscure: see per Lord Hodson in Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269, at 319E. The proposition seems to have been accepted without the necessity for comment by the High Court in Buckley v Tutty at 337.

These cases, however, were concerned with common law principles, unaffected by statute. In New South Wales, whether or not a restraint of trade is valid in any particular case is now determined by reference to the common law principles as modified by the operation of s.4(1) of the Restraints of Trade Act, 1976 (NSW).

…

Other than to enable the Court to “read down” the restraint of trade covenant to the particular breach alleged, s.4(1) adds nothing to the common law rules as to the validity of a restraint of trade clause. In particular, the section says nothing about who is to bear the onus of establishing reasonableness as between the parties and as to whether the restraint is in the public interest. I can see no reason why the apportionment of the onus of proof on these two issues, as laid down in Herbert Morris Ltd v Saxelby, should be regarded as altered in any way by the Restraints of Trade Act. This seems to have been accepted by the majority of the Full Court in Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157, at 181, where the majority acted on a concession from Counsel to this effect; it seems also to have been accepted by the Court of Appeal in Curro and Anor v Beyond Productions Pty Ltd (1993) 30 NSWLR 337, at 344C.

407. The remarks by Palmer J were referred to by Young JA with apparent approval in Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [82].

408. A similar view has been taken in other first instance authorities that under the RestraintsofTrade Act 1976 (NSW) the person seeking to enforce the restraint has the onus to prove the circumstances from which reasonableness can, as a matter of law, be inferred: OAMPS Insurance BrokersLtdv Hanna [2010] NSWSC 781 at [69]-[70] (Hammerschlag J); Veda Advantage (Australia) Pty Ltd v De Beer [2016] NSWSC 37 at [48] (Black J).

Reasonableness of restraint

409. Given the above principles, and given my above findings as to construction and to breach, in my view the maximum restraint period and geography should apply in all the circumstances.

410. The maliciousness, blatancy and extensiveness of the breach demonstrates to me that the First Defendant should be restrained for 3 years in both the maximum 6 kilometre radius area of the Employment Agreement and all post code areas of the Shareholders Agreement. This conclusion is furthered by the seniority of the First Defendant as both a past shareholder and employee of the Devine Group.

411. The Second Defendant should be restrained for 12 months in the maximum 6 kilometre radius mentioned in the Employment Agreement. He is not nor could he be bound by the Shareholders Agreement.

Loss of confidentiality

Precise scope of the Defendants’ submissions

412. Whilst I have previously summarised the broad scope of the Defendants’ arguments as to loss of confidentiality, I believe it is now appropriate to examine in a more detailed way the arguments of the Defendants on confidentiality. The main thrust of the Defendants argument is that there is no longer (and to an extent never was) any confidential information for the Defendants to have stolen from the Plaintiffs. Therefore, the Defendants submit, there is no utility in the Court granting relief. This broad argument is buttressed by a number of cascading submissions made to me by counsel on 27 March 2019.

413. First, the Defendants submit that whilst the duties of confidentiality and secrecy arising out of the Employment Agreement and Shareholders Agreement are inconsistent, to the extent that I am against the Defendants on this point, only those documents that have an “element of secrecy” within them are to be protected by any restraint of trade or provision of the two agreements (T433/18-26) (submissions [114]-[125]).

414. In support of this first argument the Defendants place particular emphasis on Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 and Dargan Financial (at 137])-[140]):

The terms of cls 7.4 and 7.5(v) of the Agreement are set out at [19] above. Absent a provision to the contrary, a contractual confidentiality provision will generally be construed as limited only to information which is confidential in character. In Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 (Maggbury) at [45], Gleeson CJ, Gummow and Hayne JJ said in relation to a case where the expression “Information” was defined in the contract:

Ordinarily, the obligations relating to the use and disclosure of the Information would be construed as limited to subject-matter which retained the quality of confidentiality at the time of breach or threatened breach of those obligations. An expression of a contrary intent should, as Judge Learned Hand put it in Picard v United Aircraft Corporation (1942) 128 F 2d 632, be explicit. This is because (Picard (1942) 128 F 2d 632 at 637):

the applicant is proposing to broadcast the invention to the world at large, reserving as his protection only the claims which he may secure; and there is ordinarily no reason to suppose that he means to exact any greater protection against the promisor than he will have against others. At any rate, if he does, he should say so.

The same judge later expressed the point slightly differently in Conmar Products Corporation v Universal Slide Fastener Co (1949) 172 F 2d 150. Speaking of the relationship between employer and employee, his Honour said (Conmar Products (1949) 172 F 2d 150 at 156):

Conceivably an employer might exact from his employees a contract not to disclose the information even after the patent issued. Of what possible value such a contract could be, we find it hard to conceive; but, if an employer did exact it, others would perhaps be obliged to turn to the specifications, if they would use the information. Be that as it may, we should not so construe any secrecy contract unless the intent were put in the most inescapable terms; and the plaintiff's contract had none such.

It should be observed that Maggbury was not drawn to the primary judge’s attention by the parties, nor referred to by the parties on appeal.

Here, Mr Isaac agreed to “keep” confidential information described non-exhaustively as “Confidential Information” through the classes of information in sub-pars (i)-(vi) of cl 7.4. The contractual obligation in cl 7.4 and the acknowledgement in cl 7.5(v) are not in terms confined to information relating to Dargan or its clients which, by its nature, is confidential.

It might be said that the use of the verb “keep” in cl 7.4 imports the notion of maintaining as confidential something which was itself confidential in the first place: Brand v Monks [2009] NSWSC 1454 at [176] (Ward J). However, I do not consider that much indication of the parties’ intention can be gathered from the verb used in the Agreement. Nor do I consider, as Mr Isaac submitted, that the use of the capitalised words “Confidential Information” without defining them, indicates an intention to use those words in the sense of information which, of its nature, is confidential.

It seems to me, following the reasoning in Maggbury, that in the absence of an explicit intent that the confidentiality obligations should be construed as extending the obligation of confidentiality to information not in its nature confidential, that the expression “Confidential Information” is confined in the manner suggested by Mr Isaac. The obligation in cl 7.4 relating to use and disclosure of “Confidential Information” is to be construed as limited to subject matter which retained the quality of confidentiality at the time of breach or threatened breach of those obligations: Maggbury at [45].

415. The Defendants submit that like in Dargan Financial the Employment Agreement and Shareholders Agreement lack sufficient precision or “explicit intent” as to their provisions defining and protecting what is “confidential information”, to the extent that they only protect information which has a necessary “quality of confidentiality”. They therefore submit it excludes materials such as training manuals and external resources, which are documents which do not have any inherent quality of confidentiality (T435/34-38).

416. Secondly, the Defendants submit that there has been disclosure of information of the Plaintiffs to the extent that it has lost this necessary quality of confidence or secrecy, thereby making relief futile (submissions [166]-[179]).

417. On 19 March 2019, the Plaintiffs made application before Hallen J as Duty Judge, seeking an order for short service on the Defendants with respect to three crucial (as the Defendants argue) documents: a Summons, which referred to an affidavit of the Third Plaintiff dated 16 March 2018, and an exhibit to that affidavit which contained the confidential client lists of the Plaintiffs. The Defendants submit that upon the filing of these materials before Hallen J, no orders were made restricting access to any of the documents.

418. The Defendants refer to Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 (at [96]-[98]) to assert that the entering of such materials into evidence brought them into the public domain, exploding their confidentiality, notwithstanding any implied undertaking of confidentiality or practice notes within the Supreme Court that allow the Court to restrict access to court files on a discretionary basis:

Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery, answers to interrogatories, documents produced on subpoena, documents produced for the purposes of taxation of costs, documents produced pursuant to a direction from an arbitrator, documents seized pursuant to an Anton Piller order, witness statements served pursuant to a judicial direction and affidavits. The appellants did not dispute the existence of this principle, and in particular did not dispute its potential application to the affidavit of Mrs Hesse and the witness statement of Dr Tonin.

It is common to speak of the relevant obligation as flowing from an “implied undertaking”.

It may be noted that the general law protection is often buttressed by protection from rules of court. Thus until 15 August 2005, the New South Wales Supreme Court Rules 1970, Pt 65, r 7, prevented strangers to litigation from having access to documents or things on the court file without the leave of the Court: see also Practice Note No 97. From 1 March 2006, Practice Note SC Gen 2 prescribed procedures in relation to access to Supreme Court files. The most important paragraphs are:

“6. Access to material in any proceedings is restricted to parties, except with the leave of the Court.

7. Access will normally be granted to non-parties in respect of:

• pleadings and judgments in proceedings that have been concluded, except in so far as an order has been made that they or portions of them be kept confidential;

• documents that record what was said or done in open court;

• material that was admitted into evidence; and

• information that would have been heard or seen by any person present in open court,

unless the Judge or registrar dealing with the application considers that the material or portions of it should be kept confidential. Access to other material will not be allowed unless a registrar or Judge is satisfied that exceptional circumstances exist.”

419. The Defendants suggest that the implicit assumption behind Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 is that the practice notes restricting access to a court file do not protect the confidentiality of documents entered into evidence in the court file, as the “practice note is not an independent source of right” but merely a buttressing of general law protections (T443/45-46).

420. Before Parker J on 5 April 2018, in a further interlocutory hearing, the Plaintiffs filed with the Court as “taken as read” three affidavits and three volumes of exhibits that likewise contained confidential information (CB 6472-6488).

421. The Defendants again emphasise that from the moment that this material was tendered into evidence without any restriction on confidentiality, it entered the “public domain” and lost any inherent quality of confidentiality, as per Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56 and Dargan Financial (at [166]-[174]):

In considering the significance of the disclosure of information and whether it has entered the public domain, it is necessary to distinguish between cases where there is an equitable obligation of confidence (the retention of the quality of confidence being necessary to sustain relief in equity) and cases where the obligation of confidence is imposed by way of contract (and may involve use or disclosure of information which is not, in its nature, confidential).

As to the position in equity, once information becomes public knowledge or is in “the public domain” equity will refuse to intervene to protect the information because the information has lost its confidentiality: Johns v Australian Securities Commission (1993) 178 CLR 408 at 475 (McHugh J), 432 (Brennan J), 438 (Dawson J) and 460-461 (Gaudron J); [1993] HCA 56. The question whether information is in the public domain is largely one of fact:Johns v ASC at 461 (Gaudron J). Whether information has entered the public domain, requires consideration of the accessibility to the information should members of the public wish to do so: GE Dal Pont, Law of Confidentiality (1st ed, 2015, LexisNexis Butterworths) at 195.

Johns v ASC involved the confidentiality (either in equity or under the Australian Securities Commission Act 1989 (Cth)) of transcripts of private examinations conducted by the ASC in the exercise of its statutory powers which had been disclosed to a State Royal Commission with authorisation to use them in public hearings. Copies of the transcripts were tendered in evidence in public hearings, and the Royal Commission made copies available to journalists and information in the transcripts was published to the media. Brennan J, with whom Dawson J generally agreed, said at 432-433:

A defendant who, having received information in circumstances which impose a duty of confidence, makes a limited publication in breach of that duty, can be restrained from further breaching the duty by making a wider publication. But that is not the present case. … When the proceedings of a court, tribunal or commission created by statute or in exercise of the prerogative are open to the public and a fair report of the proceedings can lawfully be published generally, it is not possible to regard information published in those proceedings as outside the public domain (Home Office v Harman, [1983] AC 280, at pp 303, 312). Information published in those circumstances enters the public domain by a lawful gate. Once in the public domain, it can be freely used or disseminated. Information obtained by the media in this way is not "imparted so as to import an obligation of confidence": The Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR, at p 51, per Mason J. In such a case, the public domain is not measured by the extent of media reporting. If media reporting were the measure of the public domain in relation to information published in such proceedings, the defamation laws would have to be reformulated. It is unnecessary to consider the question whether a defendant to whom information was imparted in circumstances which imposed an obligation of confidence can, by a wide publication of the information in breach of that obligation, avail himself of a defence that the information is thereafter in the public domain (Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987), 8 NSWLR, at p 374; Attorney-General v Guardian Newspapers Ltd [No 2], [1990] 1 AC, at pp 271, 286-288, 293). This case concerns information which was already in the public domain at the time when HWT and the ABC acquired it.

In Marcel v Commissioner of Police of the Metropolis, Browne-Wilkinson V-C said ([1992] Ch, at p 237; see also Attorney-General v Guardian Newspapers Ltd [No 2], [1990] 1 AC, at pp 215, 268, 282):

"there can be no breach of the duty of confidence once the information or documents are in the public domain and the confidentiality has therefore disappeared. In the case of the ... documents which have been read in open court, they have now lost their confidentiality by disclosure in open court."

Dawson J added at 438:

…. the material was introduced into the public domain when it was tendered at a public hearing. There is no breach of confidential information if the information does not have the "quality of confidence". Information which is on the public record cannot have that quality. (Footnotes omitted)

In the present case, the information containing details of Dargan’s client list was tendered in evidence in open court by the party now asserting an entitlement to injunctive relief to restrain use or disclosure of the information. Insofar as the relationship between Dargan and Mr Isaac is equitable, the conduct of Dargan may be taken to have implicitly released Mr Isaac from his obligation of confidentiality: Maggbury at [48] (Gleeson CJ, Gummow and Hayne JJ), citing the remarks of Lord Goff in Attorney-General v Guardian Newspapers Ltd [No 2] [1990] 1 AC 109 at 285:

… that a case where the confider himself publishes the information might be distinguished from other cases on the basis that the confider, by publishing the information, may have implicitly released the confidant from his obligation.

As to the contractual obligation imposed by the Agreement, Dargan did not contend that only a limited publication of the information has occurred, or that the relative secrecy of the information remains, or that the information is not accessible to the public.

With regard to the last matter, reference should be made to Practice Note SC Gen 2 which deals with access to court files. SC Gen 2 provides that access to material in any proceedings is restricted to parties, except with leave of the Court (par 6) and that access will normally be granted to non-parties in respect of, among others, material that was admitted into evidence, unless the Judge or Registrar dealing with the application considers that the material or portions of it should be kept confidential (par 7).

There was no evidence on appeal as to whether any person has sought access to the February 2017 commission statement or the Retained List that were tendered in evidence by Dargan. Nor was it suggested that Dargan has not taken any steps since the trial to seek a confidentiality order in relation to that material.

I would conclude that the information tendered by Dargan in open court entered the public domain. It is accessible to members of the public who wish to inspect such material, unless the court dealing with the application considers that the material or portions of it should be kept confidential. The basis upon which a claim for confidentiality might be made by Dargan has been foregone by Dargan’s tender of the material in open court.

422. The Defendants invite me to conclude that as in Dargan Financial both the equitable right and contractual rights to any confidential material held by the Plaintiffs have now, as a matter of fact, entered the public domain and are accessible to the public. As an all or nothing proposition, the Defendants argue that as soon as material is read into evidence, it loses entirely and irrevocably its confidential character.

423. Thirdly and finally, the Defendants submit that the information the Plaintiffs are seeking to protect was actually never secret, and had no quality of confidentiality, even before the proceedings were heard at interlocutory stages before Hallen J and Parker J (submissions [126]-[145]).

424. The Defendants suggest that the information treated as “secret” by the Plaintiffs was not in fact secret, because it was routinely downloaded onto personal email accounts and was accessible on mobile phones. Drawing on the evidence of Ms Nguyen, the Defendants invite me to draw the inference that within the Devine offices none of the clients lists, business templates, financial information and market research was treated with any system or policy of confidentiality or protection, and was “never secret in the first place” by virtue of the wide disclosure of the material amongst the employees of the office (submissions [126]-[145]).

Consideration

425. Broadly, the Defendants rely on an argument that by virtue of its disclosure in open court, the Plaintiffs’ confidential information has lost its confidential character, and therefore there is no basis for granting relief protecting the confidential information including the client lists, business templates and procedural documents, private financial information and market research.

426. I note that this point does not assist the Defendants in respect of their breaches conducted by diverting properties away from the Devine Group to Belle Property. This was contrary to the restraints imposed upon the Defendants by the Employment Agreement and/or Shareholders Agreement, irrespective of disclosure of information before Parker J.

427. There is clearly much force behind the proposition that what material is ventilated in open court is to be taken as occurring in the public domain. The question is whether this deprives the material of its quality of confidentiality and therefore prevents the Plaintiffs claim for breach of confidential information.

428. In support of this proposition are the authorities that suggest that evidence tendered in open court is evidence tendered in the public domain: Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56; Dargan Financial. In Dargan Financial at [174] Gleeson JA concluded that information tendered in open court entered the public domain and was further accessible to members of the public who wished to inspect the material. His Honour therefore concluded the basis upon which a claim for confidentiality might be made has been foregone by tender in open court, noting however that this is a question of fact (at [91]). See also Brand v Monks [2009] NSWSC 1454 where Ward J (as Her Honour then was) at [180]-[184] emphasised that the loss of confidentiality of material by disclosure “is a question of fact and degree”.

429. In Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 French CJ, Gummow, Hayne, Heydon and Kiefel JJ said (at [41]) “[h]owever, if the file material has been admitted into evidence the interests of open justice are engaged”.

430. It is clear that the act of tendering affidavits as “taken as read” in court should not allow parties to avoid the important interest courts have in upholding the principles of open justice. This means that if affidavit and videos are received in evidence they are to be treated to some extent as if they had been read in their entirety in open court: Broad Construction Services (WA) Pty Ltd v the Construction, Forestry, Mining and Energy Union of Workers [2007] WASC 133 at [36] per Le Mier J (see also Hammond v Scheinberg [2001] NSWSC 568 on the meaning of “taken as read”). The effect of “taken as read” is precisely that. The material in the affidavit is taken as if it has been read aloud in its entirety as was the case historically.

431. However importantly, as is further clear on the authorities, whether material has lost its quality of confidentiality is foremost a question of fact.

432. What this means is whether information has entered the public domain to such an extent as to permit its disclosure in the face of a contractual prohibition against disclosure is a question of fact and degree, taking into account the precise circumstances and the extent of any existing publication of the information. If only limited publication has occurred, and if relative secrecy remains, then the information may well retain its confidential character.

433. The Plaintiffs have reserved their position as to suggesting Dargan Financial was decided incorrectly. I do not intend to express an opinion on these legal issues, save to state that I am bound to follow the Court of Appeal in Dargan Financial.

434. Applying the principles of Dargan Financial, in my view it is a question of fact and degree as to determining whether the tending of material robs it of its confidential character.

435. In my view, given the shortcuts which necessarily occur in interlocutory applications such as those before Parker J, and the subsequent seeking of an interim court suppression and non-publication of the Plaintiffs, the information tendered by the Plaintiffs before Parker J has not lost its necessary degree of confidentiality, even if it was “taken as read” in open Court.

436. The error of counsel in tendering confidential information in an interlocutory hearing was limited and subsequently rectified by the placing of an interim court suppression and non-publication order upon the materials. There is no evidence of any substantial disclosure of the material tendered by Parker J by virtue of its being “taken as read” and admitted into the court file. As a pure question of fact and degree, in my view the material has not lost its necessary quality of confidentiality and there is still utility in granting relief in favour of the Plaintiffs.

437. Analogy can be drawn to the judgment of Ward J (as her Honour then was) in Missingham v Shamin [2012] NSWSC 288 who concluded (at [68]-[69]) that the inclusion of some terms of a settlement deed in an ex termpore judgment posted on the Court’s website was at most a limited publication, and did not necessarily deprive a confidential obligation of any utility.

438. Therefore I reject the Defendants’ arguments on this issue, and propose to grant the relief sought by the Plaintiffs.

Conclusion

439. I am inclined to make the orders sought by the Plaintiffs against the First and Second Defendants stemming from my findings above as to liability. However given the significant lapse of time I will hear all parties as to precisely which orders can as a matter of practical reality be made. I will also make directions to the progress of any hearing on damages.

440. I invite the parties to address me on the precise form of orders that are sought which accord with my reasons and further to relist the matter further if there is any dispute about the release of this judgment to the public or the form of any orders sought.

441. I also invite the parties to address me on costs.

442. I also confirm I will for the moment in accordance with [6] restrict publication of the Judgment to legal advisors in the first instance until the parties have had an opportunity to read my reasons and obtain instructions.

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Amendments

13 February 2020 - further redactions to addresses

Decision last updated: 13 February 2020