Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8)
[2022] FCA 1404
•24 November 2022
FEDERAL COURT OF AUSTRALIA
Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404
File number: VID 1157 of 2017 Judgment of: BEACH J Date of judgment: 24 November 2022 Catchwords: CORPORATIONS – fiduciary relationship – contractual relationship – South Korean manufacturer and supplier of audio-visual units – supply to Australian entity – on-supply by Australian entity to original equipment vehicle manufacturers (OEMs) – employees of Australian entity assisting South Korean manufacturer to set up Australian rival to supply OEMs – diversion of business opportunities – misappropriation of business providing in-vehicle electronic products – audio-visual units – telematic devices and telemetry services – breach of contract – exclusivity in distribution arrangements – breach of fiduciary duties – misuse of confidential information – infringement of copyright – former employees’ fiduciary and contractual obligations – breaches of ss 182 and 183 of Corporations Act 2001 (Cth) – accessorial liability – knowing involvement in breach of statutory duties – claims under second limb of Barnes v Addy – dishonest conduct by former employees – participation of other entities – constructive knowledge – secret commissions Legislation: Corporations Act 2001 (Cth) ss 182, 183 Cases cited: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26
Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1
Baden v Société Généralepour Favoriser le Développement du Commerce et de l’Industrie en France SA [1993] 1 WLR 509
Barnes v Addy (1874) LR 9 Ch App 244
Beam v Stewart 833 A 2d 961 (Del Ch, 2003)
Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Briginshaw v Briginshaw (1938) 60 CLR 336
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Canadian Aero Service Ltd v O’Malley (1973) 40 DLR (3d) 371
Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Commonwealth Bank of Australia v Barker (2014) 253 CLR 169
Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Cranleigh Precision Engineering Ltd v Bryant [1964] 3 All ER 289
Crawford Fitting Co v Sydney Valve and Fittings Pty Ltd (1988) 14 NSWLR 438
Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119
Dart Industries Inc v David Bryar & Associates Pty Ltd (1997) 38 IPR 389
Dixon Projects Pty Ltd v Masterton Homes Pty Ltd (1996) 36 IPR 136
Donaldson v Natural Springs Australia Limited [2015] FCA 498
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473
Furs Ltd v Tomkies (1936) 54 CLR 583
Global Brand Marketing Inc v Cube Footwear Pty Ltd (2005) 65 IPR 44
Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) 225 ALR 57
Griggs (R) Group Ltd v Evans [2005] EWCA Civ 11
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296
Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609
Hawkins v Clayton (1988) 164 CLR 539
Heimann v Commonwealth (1938) 38 SR (NSW) 691
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Howard v Federal Commissioner of Taxation (2014) 253 CLR 83
Industries & General Mortgage Co Ltd v Lewis [1949] 2 All ER 57
Jones v Dunkel (1959) 101 CLR 298
Kovan Engineering (Aust) Pty Ltd & Ors v Gold Peg International Pty Ltd (2006) 234 ALR 241
Lumley v Gye (1853) 118 ER 749
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506
Mastec Australia Pty Ltd v Trident Plastics (SA) Pty Ltd (No 2) [2017] FCA 1581
Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1
Mense & Ampere Electrical Manufacturing Co Pty Ltd v Milenkovic [1973] VR 784
OBG Ltd v Allan [2008] AC 1
Pereira v Director of Public Prosecutions (1988) 82 ALR 217
R v Byrnes & Hopwood (1995) 183 CLR 501
Ray v Classic FM Plc (1998) 41 IPR 235
Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134
Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592
Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming [1995] 2 AC 378
Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203
Short v City Bank of Sydney (1912) 15 CLR 148
Short v City Bank of Sydney (1912) 12 SR (NSW) 186
The Moorcock (1889) 14 PD 64
The Zamora (No 2) [1921] 1 AC 801
University of Nottingham v Fishel [2000] ICR 1462
Warman International Ltd v Dwyer (1995) 182 CLR 544
Yorke v Lucas (1985) 158 CLR 661
Zhu v Treasurer (NSW) (2004) 218 CLR 530Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 4003 Date of hearing: 9 to 13, 16 to 20 December 2019
12 to 15, 18 to 22, 25 to 29 May 2020
1 to 4, 9 to 12, 15 to 19 and 22 June 2020
15 February 2021
1 March 2021
6 to 9 April 2021Counsel for the Applicant: Mr C Golvan QC with Mr M Wise QC and Ms N Hickey Solicitor for the Applicant: K & L Gates Counsel for the First and Sixth Respondents:
Mr P Wallis QC with Mr A McRobert and Mr M Tehan Solicitor for the First and Sixth Respondents:
McCluskys Lawyers Counsel for the Second, Third, Fourth, Fifth, Eighth and Twelfth Respondents:
Mr M Osborne QC with Mr H Austin QC and Mr TP Warner Solicitor for the Second, Third, Fourth, Fifth, Eighth and Twelfth Respondents:
Mills Oakley Counsel for the Seventh Respondent:
Mr J Rudd Solicitor for the Seventh Respondent:
Aptum Legal Counsel for the Tenth, Eleventh and Thirteenth Respondents:
Mr A Ryan SC with Mr M Fleming and Mr R Maguire Solicitor for the Tenth, Eleventh and Thirteenth Respondents:
Moray & Agnew ORDERS
VID 1157 of 2017 BETWEEN: DIRECTED ELECTRONICS OE PTY LTD ACN 130 647 737
Applicant
AND: OE SOLUTIONS PTY LTD ACN 119 188 019
First Respondent
HANHWA AUS PTY LTD ACN 614 943 092
Second Respondent
HAN HWA HIGHTECH AUSTRALIA PTY LTD ACN 153 718 435 (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
BEACH J
DATE OF ORDER:
24 NOVEMBER 2022
THE COURT ORDERS THAT:
1.Within 28 days of the date of these orders, each party file and serve proposed minutes of orders and short submissions (limited to 10 pages) to give effect to these reasons.
2.Within 28 days of receipt of any such proposed minutes and submissions from a party, any other party may file responding submissions (limited to 5 pages).
3.Liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BEACH J:
Directed Electronics OE Pty Ltd has made various claims against three sets of respondents.
First, Directed has made claims against two of its former employees, namely, the sixth respondent, John Meneses, and the seventh respondent, Craig Mills, and an entity owned and controlled by Meneses being the first respondent (OE Solutions).
Second, Directed has made claims against its South Korean suppliers and their related entities, being the second, third, fourth, fifth, and twelfth respondents (the Hanhwa parties) and the Hanhwa parties’ managing director who is the eighth respondent, Ryan Lee; I will simply refer to him as Lee. It is convenient to distinguish between the various Hanhwa parties. Claims have been made against the second respondent, Hanhwa Aus Pty Ltd (Hanhwa Aus), the third respondent, Han Hwa Hightech Australia Pty Ltd, the fourth respondent, Leemen Aus Pty Ltd, the fifth respondent, Hanhwa Hightech Co Ltd (Hanhwa Korea), the eighth respondent, Lee and the twelfth respondent Leemen Co Ltd (Leemen Korea); the corporate name for the third respondent uses a modified form of “Hanhwa”.
Third, Directed has made claims against former business associates of Directed and their related entities, being the tenth, eleventh and thirteenth respondents (the Gridtraq parties).
It is appropriate to say at the outset that Directed’s case against Meneses, Mills and OE Solutions has largely succeeded. Each of them were involved in conduct that could only be described as reprehensible in terms of appropriating the confidential information and customers of Directed, ultimately to the benefit of the Hanhwa parties. Moreover, Meneses’ behaviour was in part encouraged by the payment of secret commissions from Hanhwa Korea or its predecessor to Meneses and/or OE Solutions. Hanhwa Korea or its predecessor from at least 21 July 2009 to 20 November 2017 regularly paid secret commissions to Meneses or OE Solutions. This was over the period of Meneses’ employment at Directed.
It is also appropriate to say that Directed’s case against most of the Hanhwa parties has also largely succeeded in terms of their knowing involvement and assistance in the wrongful conduct of Meneses and Mills, the Hanhwa parties’ misuse of the confidential information of Directed and the Hanhwa parties’ appropriation of the customers and products of Directed. But it is apparent that Directed has no sustainable case against the third and fourth respondents. It has only succeeded against Hanhwa Aus, Hanhwa Korea, Leemen Korea and Lee.
But let me say at the outset that Directed’s claims against the Gridtraq parties have largely failed. In this respect, many of Directed’s allegations were simply unfounded. They proceeded on a mischaracterisation of the relevant facts. They were replete with exaggerations. Moreover, many of Directed’s submissions were tainted with mere suspicions, conjectures or were coloured with little more than unsustainable theories. There is only one narrow part of Directed’s case that has succeeded concerning the use of confidential information. But on that aspect I am not convinced that Directed is entitled to any substantive relief against the Gridtraq parties. But I will hear the parties further on that aspect.
Now the extensive trial before me has proceeded on questions of liability, injunctive and declaratory relief, together with limited issues of quantum concerning the secret commissions. Numerous causes of action have been alleged by Directed. The final version of the statement of claim, which was filed on the last day of oral closing submissions, was the third further amended statement of claim (3FASOC). This ran to some 185 pages with a further 140 pages of particulars. Further aides memoire and other material, some of which I requested, were filed over the following month.
The present matter and indeed the present trial has had a protracted history, including sporadic and lengthy delays brought about by the COVID-19 episode and external restrictions disproportionately burdening my conduct of the matter sitting in Melbourne. Not only has this affected the time frame, but it has also affected the mode of trial. In that latter respect, special procedures were put in place by me after detailed consultation with the parties to have substantial parts of the evidence taken in mid-2020 by video deposition at a time when the necessary compatible technology was not available to conduct proceedings before me particularly involving South Korean based witnesses with interpreters. I should say that by March 2020 I had heard several weeks of evidence that had involved an electronic trial involving a third-party service provider providing access to documents and the like. But given that no in person hearings could take place, given that the external service provider was off-site and could not continue on-site, given the nature of the technology already in place, and given that for an electronic trial to continue by video, facilities for split screening (five or more images) and calling up documents were required, the proceedings in Court could not continue for what was an indeterminate period. Moreover, none of the embryonic steps that were then being investigated within the Court for remote but simple or short hearings could address the complexity and the technology then being used including BlueJeans. I did not have the advantage of a clean “green-fields” technical solution. Hence the video depositions mode. For that purpose, and with the acquiescence of all parties, I appointed Mr Edward Heerey QC as a special examiner to undertake the necessary video depositions. If I might say so he did a commendable job and I am grateful for his assistance. I have set out the protocol dealing with his appointment and the technology used in annexure A to these reasons and my underlying authorising orders in annexure B.
Now I have had the advantage of reviewing those depositions in relation to the significant aspects that I have had drawn to my attention. Of course, I have also had and reviewed the hard-copy affidavits and complete transcripts of cross-examinations of all relevant witnesses, which I had my chambers put together and consisting of some 13 volumes, but not including hard copy form primary documents. I was also provided with a 30 volume court book at the start of the trial consisting of what were said to be the most pertinent documents, including 4 volumes of what were said to be the copyright documents. I also requested that for closing addresses each party provide to me a set of the relevant significant documents that they wished me to particularly consider. In that respect I was provided with another 9 volumes of material. I should also say that during oral openings, reference was made to other material in electronic form that I compiled in a further 5 volumes of material that was not otherwise in the court book. In addition, there was an electronic data base for all other evidentiary material.
I have considered all of this material to the extent that it was part of and referenced in the parties’ written closing submissions and other aides-memoire totalling well over 1000 pages or drawn to my attention during oral openings and closings. Further, to the extent that some of the references were not in a hard copy form of the type that I have identified, as I say I had access to an electronic data base.
Before proceeding further, let me say something about the mode of trial in terms of assessing the credibility of witnesses. There were some witnesses who gave evidence before me, including concerning Directed’s application to re-open its case. But for the video depositions taken before Mr Heerey QC I could only review the video recordings. But in assessing the reliability of the video evidence of a particular witness, all of this was readily assessable based upon reviewing the precise contents of the narratives, the transcripts, the contemporaneous documents and independently and objectively considering the various plausibilities and probabilities of the contestable and competing narratives. And it could not seriously be suggested that the apparent demeanour of a witness as he appeared in a video recording could carry the day or be substantially influential in my assessment of credibility.
Let me deal with another preliminary matter. Some years after Directed brought the present proceeding, it commenced in August 2020 a related proceeding against Isuzu Australia Ltd (IAL), being proceeding VID 547 of 2020. Now it should be apparent from what I have said that IAL is not a party to the proceeding before me and so will not be bound by any of my findings. Moreover, as will become apparent from other parts of my reasons, no officer, employee or any other person associated with IAL has been called as a witness before me. IAL’s only involvement in the proceeding before me has involved the production of documents as a subpoenaed party. Further, it should be noted that Directed commenced this separate proceeding after I had commenced the present trial and I had heard some weeks of evidence. On 4 June 2021 it became necessary for me to order that another docket judge be allocated to that separate proceeding so that there was no risk of being contaminated by either any material further used or produced in that separate proceeding or the conduct of the parties in that separate proceeding prior to my delivery of judgment in the present matter.
Now before proceeding further, let me say something further about the parties.
Directed is an Australian automotive electronics products and solutions developer specialising in the distribution of in-vehicle electronics, hardware, telematics and related technologies. It designs, markets and sells audio visual products (AV units) and associated accessories and component parts, devices which operate with the AV units (telematics units) and associated telematics services.
AV units have a head unit and a touch screen user interface. The head unit typically allows users to listen to the radio and CDs, connect to mobile devices so that the user can make phone calls, and also offers navigation. The touch screen allows the driver to operate the head unit.
A telematics unit is a wireless device. It records and transmits data in real time on how a vehicle is performing, the speed and distance it has travelled and how the driver is operating it. Warnings can be triggered, for example, in relation to oil temperature or pressure. They can be fitted to trucks to wirelessly communicate with a remote computer. They can also display this information to the driver on the AV unit. At head office, telematics can help a fleet manager to monitor vehicle and driver performance. Now to enable telematics, encrypted information collected from a network of sensors and devices that form part of the vehicle, known as the Controller Area Network or CAN network, is transmitted via the telematics unit to the cloud where it is stored. A truck can have multiple CAN networks, hence the term CAN Bus, which carries signals from multiple sources simultaneously.
For those who have an interest in such matters, I have included as annexure C to these reasons a pictorial representation of the flow of data between the various units and devices.
Now I should also note that from 2009 to the present, a Hungarian company has been Directed’s navigation software supplier. Further, a German company has inter-alia provided Directed’s underlying map data. Directed employees worked with those companies to customise navigation related information so that it was suitable for trucks.
Now Directed’s products and components are primarily directed towards truck manufacturers and suppliers. It has original equipment manufacturer (OEM) customers in Australia and New Zealand. From 2009 to November 2017, its largest and most important customers included IAL, companies in the Daimler group such as Fuso and Mercedes Benz Australia Pty Ltd (Mercedes), Hino Motor Sales Australia Pty Ltd (Hino) and UD Trucks (UD), a division of Volvo Group Business Services Australia Pty Ltd.
Directed’s premises at all relevant times had its own research and development centre and in-house R&D team that designed, developed and tested telematics units and telematics services. Its engineers worked with OEM customers to develop telematics solutions. As part of that process they gathered and built up vehicle parameters and CAN Bus data on the different vehicles supplied by OEM customers. They also designed circuit boards, harnesses, software and technical manuals.
Meneses is the sole shareholder and director of OE Solutions. He was employed by Directed from around mid-2009 under a written employment agreement dated 1 June 2009, holding the positions of Business Development Manager and OEM Director; he was not though formally a director of Directed, although at times he seems to have represented himself as such. He was entrusted with and granted autonomy. His role had an important marketing and client-relationship function. This included visits several times a week to IAL. He was entrusted with most of the direct dealings with IAL, Mercedes, Fuso, Hino and UD. Meneses ordered and sourced products from Hanhwa Korea and negotiated prices.
Now Meneses’ employment end date is controversial. He claims that he tendered his notice of resignation on 17 July 2017. Clearly, Meneses then met with Stavros Siolis, a director of Directed, and handed him a purported letter of resignation. Meneses told Siolis and Anthony Tselepis, another director of Directed, that he was having difficulty with the amount of work he had to do and also raised other issues concerning his health. He also said that he was interested in pursuing other business opportunities. He also told Siolis and Tselepis that he was considering working for Hanhwa but only in relation to projects outside Australia. Siolis told Meneses not to resign, that Directed would support him in whatever way possible to lighten his load and that he could work part time. Meneses agreed. On 26 July 2017 Meneses emailed Siolis, Tselepis and Kon Floudas, Directed’s Chief Financial Officer, that due to a medical condition requiring major surgery he would be unfit to perform work for Directed from 20 July 2017 to 8 September 2017. But as far as Directed was aware, Meneses continued to perform his duties as an employee, including using his security card to access the premises, up until 23 October 2017. I should say now that I accept Directed’s case that he ceased his employment on 7 November 2017.
Let me say something about Mills. Mills was employed by Directed as Project and Production Manager from 1 June 2009 to about March 2017 pursuant to a written employment agreement dated 1 June 2009. The relevant terms of the Mills employment agreement were similar to those of the Meneses employment agreement. Mills reported directly to Meneses. He helped Meneses with the production and supply chain, accounts, document creation and management, and scheduling and forecasting. He helped source and supply products for Directed to sell. Mills resigned by letter dated 22 February 2017. He told Siolis that he intended to start working in his wife’s business. He was paid by Directed until 13 March 2017 and his last day of work at Directed was 8 March 2017. There is no dispute between the parties as to Mills’ end date.
Let me turn to the Hanhwa parties and Lee.
From 2009 to October 2018, various of the Hanhwa parties, leaving to one side the precise entity for the moment, manufactured and supplied to Directed the majority of AV units and accessories for Directed’s customers. They did not manufacture Directed’s telematics units, which Directed manufactured itself or separately arranged. Directed and various of the Hanhwa parties worked closely together in relation to the AV units and accessories. Directed ascertained the functionality requirements of each customer, worked with the customer on new designs and improvements, and determined cost and pricing. Directed employees undertook many hours obtaining, testing, approving and revising samples. They made drawings and created documents necessary to enable supply.
Now Directed originally contended in this proceeding that the supply from Hanhwa Korea and Leemen Korea was by an agreement constituted predominantly by conduct over an extended period. But on 21 June 2019, after Directed’s evidence in chief had been filed, Tselepis located a signed manufacturing and supply agreement dated 27 July 2010 (the Hanhwa Enterprise Agreement) between Directed and Han Hwa Enterprise Co (Hanhwa Enterprise), a non-party.
Now Hanhwa Korea was registered on 7 February 2012. It manufactures and supplies in-vehicle electronic components and products. It carries on the business formerly carried on by Hanhwa Enterprise. Directed says that it is to be inferred that Hanhwa Korea assumed the assets and liabilities of Hanhwa Enterprise from 7 February 2012 from notifications sent to Directed advising of the incorporation of its business, the fact that business otherwise continued as before and what it asserts to be the retrospective operation of the 2012 secret commissions agreement to 2009. There was an earlier secret commissions agreement made on 1 July 2009 in identical terms. I will return to these matters later.
Directed also says that on an objective assessment based on the conduct of the parties, the Hanhwa Enterprise Agreement was novated. It says that the relationship between the parties, with Hanhwa Korea as successor to Hanhwa Enterprise, continued unabated on terms consistent with the Hanhwa Enterprise Agreement. Alternatively, it says that there was a new agreement entered into on substantially similar terms between Directed and Hanhwa Korea (the Hanhwa Korea Agreement). I will return to this aspect later.
Now since approximately 2015, the accessory side of the business previously carried on by Hanhwa Korea has been carried on by Leemen Korea who then became subject to the Hanhwa Korea Agreement. Directed continued to trade with Hanhwa Korea and Leemen Korea as it had done previously, except that Directed dealt with the two different entities in relation to specific types of products.
Now Lee is a shareholder of Hanhwa Korea; he graduated in law in South Korea. Since 2015 he has also acted in the role of its managing director. YS Lee, his father, is the sole actual director of Hanhwa Korea; he is also the chairman. Directed’s primary contacts at Hanhwa Korea have always been YS Lee and Lee. In 2012 Lee moved to Australia. He worked out of Directed’s premises, and was provided with a dedicated desk and an access pass which he used until 27 April 2017. Other employees of Hanhwa Korea also worked from Directed’s premises, including Irene Oh and Thomas Shin.
Finally, let me say something about the Gridtraq parties. The Gridtraq parties specialise in telematics. Allen Hartley and Jeremy Davidson own and manage the tenth respondent (Gridtraq) and the eleventh respondent (Webhouse) either in their own right or via their private entities. Their related company is the thirteenth respondent (Quantam) whose directors include Allen Hartley and Davidson; to be clear, “Quantam” is the spelling of that company’s name rather than “Quantum”. I should also note that at all relevant times, the Gridtraq parties have been based in Brooklyn, Victoria, at premises co-owned by Allen Hartley via a trust.
Now from February 2010 to March 2016, Directed and its directors and shareholders were involved in a joint venture with Allen Hartley and Davidson, either personally or through entities owned and controlled by them (the Directed/Gridtraq JV). The Directed/Gridtraq JV involved selling and supplying GPS based telematics systems to truck owners and OEMs. The Directed/Gridtraq JV was conducted through a company now called ACN 139 732 951 Pty Ltd, previously Gridtraq Pty Ltd (JV Vehicle). For the purposes of the Directed/Gridtraq JV, Allen Hartley, Davidson and/or Dylan Hartley, the son of Allen Hartley, received and provided technical information regarding AV units. This included telematics integration information. Dylan Hartley worked full time as an employee of the JV Vehicle.
I should note at this point that this relationship ended in dispute. On 19 January 2016, Allen Hartley and Davidson through a related entity commenced an oppression proceeding against Siolis Holdings Pty Ltd and Tselepis Holdings Pty Ltd. They sought to wind up the JV Vehicle. On 27 January 2016 the JV Vehicle was placed into voluntary administration.
In that context, a Deed of Agreement and Release (Deed of Release) and a Deed of Company Arrangement (DOCA) were executed on 29 March 2016. 100% control of the JV Vehicle was transferred to Siolis and Tselepis. Allen Hartley and Davidson also agreed to a 90 day restraint with respect to pursuing IAL, UD and Hino as customers.
Let me now descend into the detail. For that purpose, my reasons have for convenience been divided into the following sections:
(a)Directed’s case concept ([37] to [129]).
(b)The various witnesses ([130] to [187]).
(c)Some legal principles ([188] to [309]).
(d)Detailed factual chronology ([310] to [863]).
(e)The relevant units – similarities and differences ([864] to [1158]).
(f)The case against Meneses and OE Solutions ([1159] to [1664]).
(g)The case against Mills ([1665] to [1894]).
(h)The case against the Hanhwa parties ([1895] to [3221]).
(i)The case against the Gridtraq parties ([3222 ] to [3990]).
(j)Conclusion ([3991] to [4003]).
Directed’s case concept
It is convenient at this point to give a brief description of Directed’s case thesis and what aspects I generally accept. How closely Directed’s case thesis correlates with the evidence is something that I will address in later sections.
I accept that from the outset of his employment, Meneses had two masters, namely, Directed and Hanhwa Korea or its predecessor. As I have said, he was employed by Directed from mid-2009, holding the positions of Business Development Manager and OEM Director until 7 November 2017. He was entrusted with and granted autonomy. His role had an important marketing and client-relationship function. He was entrusted with most of the direct dealings with Directed’s major customers being OEMs such as IAL, Mercedes, Fuso, Hino and UD.
But at the same time, as Directed has said, Meneses was in essence a salesman in Australia for Hanhwa Korea or its predecessor, entitled to be paid commission of 3% of all purchases by Directed from Hanhwa Korea or its predecessor. He was required under his agreement with Hanhwa Korea or its predecessor to be involved in developing new business for it. Further, Meneses was contractually and financially bound to maintain and grow Hanhwa Korea’s or its predecessor’s business.
Now it is not in dispute that from 2009 to late 2017, the relevant Hanhwa entity manufactured and supplied to Directed 95% of the required AV units and accessories for Directed’s customers. Meneses ordered and sourced the products supplied by Directed to these customers from Hanhwa Korea or its predecessor and negotiated the prices Directed paid to that entity. Directed was an important customer of Hanhwa Korea and its predecessor.
It is also not in dispute that on 27 July 2010, the Hanhwa Enterprise Agreement was executed with Directed. The supply agreement was an umbrella agreement between the parties, by which Directed engaged Hanhwa Enterprise to provide manufacturing services to Directed for their specific products. Hanhwa Enterprise agreed to manufacture products in accordance with the specifications of Directed and to supply them to Directed. Directed asserts that these were exclusive arrangements, an issue that I will return to later.
Now it is not in doubt that at the end of 2012, Directed was Hanhwa Korea’s most important and largest customer overall. Sales by Hanhwa Korea to Directed represented about 80% of Hanhwa Korea’s global business. Sales via Directed included IAL (45%), Hino (16%), UD (9%) and Orion for the aftermarket (8%). The only items not supplied to Directed were to Toyota, with some accessories.
It is also not in doubt that by August 2013, Lee was head of the sales and marketing division of Hanhwa Korea, but based in Australia. He was responsible for its development planning team, the international sales team, and the design team.
Now I accept that Directed and Hanhwa Korea (and its predecessor) worked closely together in relation to the design and development of the AV units and accessories which Directed supplied to the OEMs. Directed ascertained the functionality requirements of each customer, worked with the customer on new designs and improvements, and determined and negotiated cost and pricing. It is not in doubt that in the course of this design and development, Directed entrusted various of the Hanhwa parties and Lee with confidential information about its business, customer relationships and customer requirements. Further, Lee had a dedicated desk at the Directed premises after his move to Australia. He attended internal meetings of Directed employees. Because of this he became aware of commercial business opportunities that Directed was trying to exploit. He was also invited to and did attend meetings between Directed and IAL, at times. He was provided by Meneses with minutes of meetings with IAL which Lee would pass on to Hanhwa’s engineering people. None of these matters were seriously contested in my view.
Further, in my view Directed employees provided substantial and significant input on the design and development of the products Hanhwa Korea or its predecessor produced for it. This included identifying the opportunities, negotiating with the OEMs their requirements, reviewing and amending documents, obtaining, testing, approving and revising samples of products. Directed made drawings, created documents and provided information to Hanhwa Korea or its predecessor necessary to enable the supply of the products by Directed to the OEMs.
Further, it is not in doubt that the Hanhwa parties from at least 21 July 2009 to about 20 November 2017 regularly paid commissions to Meneses, or his wholly owned and controlled company OE Solutions. Commissions were calculated based on Directed’s purchases from Hanhwa Korea or its predecessor.
Directed’s case, which I accept, is that Meneses had a conflict of interest during the period from June 2009 to November 2017, and that he was under a contractual obligation to disclose this conflict to Directed but did not do so.
Further, it is also not in doubt that in the period 2009 to 2017 Meneses, through his company OE Solutions, on-sold electronic harness products to Directed after marking up the product prices from the original supplier, Kenmarco Industries Pty. Ltd. In the period 31 July 2009 to 21 April 2017 Directed purchased from OE Solutions 108,795 harness products and paid AUD 1,710,126 to OE Solutions. The total mark-up that OE Solutions charged to Directed across all products was AUD 665,400. I also accept that Meneses’ relationship with this company was undisclosed to Directed.
Further, Directed’s case is that during the period in which Mills was employed by Directed as Project and Production Manager from 1 June 2009 to about March 2017, Mills knew of, and assisted Meneses and the Hanhwa parties in their wrongful conduct. He failed to report it to Directed, as he was obliged to do under his employment agreement. Mills may have been influenced by Meneses or motivated by personal gain. I have also largely accepted Directed’s case against Mills, and I will discuss the details of this later.
Now it is also not in contest that from 2012 to 2018, Directed supplied to IAL an AV unit called the DIR6200 or “DAVE” and accessories, which were manufactured or assembled and supplied by Hanhwa. Further, from 2014 to 2018, Directed also supplied IAL with its telematics units. Hanhwa Korea did not manufacture Directed’s telematics units. Directed manufactured these units through its related company STI Technologies Pty Ltd.
Now it is common ground that in the period 2009 to 2017 Directed and the Gridtraq parties specialised in telematics.
Further, from February 2010 to March 2016, and as I have said, Directed and its directors and shareholders were involved in the Directed/Gridtraq JV through the JV Vehicle with Allen Hartley and Davidson to sell and supply GPS based telematics systems to OEMs and truck owners. The JV Vehicle also provided the on-line portal through which telematics services were provided to truck owners and OEMs.
Further, it is not in doubt that in the period January to July 2015 Gridtraq and Hanhwa Korea negotiated and entered into a Heads of Agreement concerning combining Hanhwa’s AV head units and Gridtraq’s telematics hardware, firmware and online back end portal software. They agreed to collaborate and look for new markets for AV units, telematics units and telematics services. Now Directed asserts that the agreement placed Hanhwa Korea and the Gridtraq parties into significant conflict with the agreements they had with Directed. For example, pursuant to the Heads of Agreement, both parties were to do all that was necessary, including new hardware and firmware design to convert their individual product offerings into an integrated product design in order to offer new and existing products to current clients and new clients introduced on a consumer scale basis and to any potential markets. Such products would be directly competitive with Directed’s AV units, marketed in AUS/NZ and potentially throughout other markets. I will discuss this aspect of Directed’s case later.
Directed says that the Hartleys, Davidson and the Gridtraq parties also knew from their work in the venture undertaken by the JV Vehicle that Hanhwa Korea had an ongoing and longstanding relationship with Directed. They knew that it had collaborated with Directed for the manufacture, distribution and supply of AV units, including the DAVE units supplied by Directed to IAL since 2009.
Directed asserts that the Gridtraq parties ought to have known that their contractual arrangements with the Hanhwa parties entered into in July 2015 would bring the Hanhwa parties into conflict with their contractual arrangements with Directed.
Directed says that even though Allen Hartley came to Directed, at a minimum, once or twice a week inter alia to have a meeting with Siolis and Tselepis, he did not give notice of his new business arrangements with the Hanhwa parties. He did not seek Tselepis’ or Siolis’ consent to engage in direct competition with the business carried on by the JV Vehicle. Rather, they kept it private. Allen Hartley refused to recognise that his and Davidson’s conduct was in breach of the JV Vehicle Shareholders Agreement. Further, he and Davidson ignored the role the Gridtraq parties were playing in assisting and supporting Hanhwa Korea to engage in conduct at odds with its development and supply of AV units it had developed in conjunction with Directed.
I will deal with all of these assertions by Directed later, although it is convenient to now say that its case against the Gridtraq parties relying upon these assertions has failed.
Now it is not in doubt that from late 2014 extending through 2017, Directed pursued a confidential project to supply the “SuperDAVE” unit, which had the product code DIR8000, to IAL. This was a new AV unit and accessories range. The SuperDAVE was intended to replace the DAVE.
It is also not in doubt that in August 2014 Directed involved Hanhwa Korea in the project for it to be the supplier of the SuperDAVE to Directed. The project involved extensive communications between Directed, IAL and Hanhwa Korea over more than two years on all issues necessary to bring the product to market. Directed employees were heavily involved. Samples of the DIR8000 were sent by Hanhwa Korea from South Korea to Directed throughout 2015 and 2016. They were extensively tested and changes requested by Directed. They were shown to IAL and its feedback provided to Hanhwa Korea.
Now Directed’s case, which I accept, is that unknown to it, from a date in late 2015, Meneses and Mills began secretly assisting Hanhwa Korea to set up a competitive business in Australia, which involved significant breaches of their fiduciary duties, breaches of confidence and copyright owned by Directed or which it was entitled to enforce. The work involved matters necessary to commence a start-up such as Hanhwa email addresses, a corporate logo, business cards, social media pages, promotional videos, marketing materials, and corporate uniforms.
It is not in doubt that in early July 2016 Meneses participated in the negotiation of the lease for Hanhwa Aus of new premises in the same building as occupied by the Gridtraq parties. They purchased office equipment. Meneses bought, registered and insured an Isuzu truck for and on behalf of Hanhwa Aus which was then used to test the SuperDAVE and the Gridtraq parties’ telematics units. Meneses looked after the incorporation of Hanhwa Aus, and was later reimbursed by Hanhwa Korea. He was provided with a laptop computer paid for by Hanhwa Aus, and a credit card issued to him by Hanhwa Korea. Meneses had his own office at the Brooklyn premises. Between 30 June 2016 and 24 October 2017 Meneses made 124 telephone calls or text messages from Brooklyn.
Further, Directed says that from at least late 2015, Meneses and Lee had agreed to go into business together as partners in the establishment of Hanhwa Korea’s business in Australia, and that Meneses was to hold 40% of the shares in the company(s) ultimately established to exploit the venture. I accept that there were some discussions along these lines and I will return to the 40% question later.
Now in mid-2016, according to Directed’s case, which I accept, the Hanhwa parties resolved to supply the DIR8000/SuperDAVE directly to IAL. The new product code that the Hanhwa parties intended to use was HAU8000.
It is apparent in my view that Hanhwa internally renamed the DIR8000 as the HAU8000 in September 2016. By 11 November 2016, Hanhwa had established a new team to exploit the HAU8000 because Directed was no longer involved. The aim was to do this quickly, ready to show a working sample to IAL in December 2016 or January 2017. Meneses then secured the deal for the Hanhwa parties to supply the SuperDAVE directly to IAL on 18 November 2016.
Now it is convenient to note at this point my view that many of the Hanhwa parties’ witnesses gave problematic evidence to the effect that the HAU8000 was a “new unit” designed from scratch and that it was not the DIR8000 with minor enhancements. They claimed that the HAU8000 was not in any material respect, based upon or derived from the DIR8000/SuperDAVE as it existed in July 2016 or at all. They suggested that Directed had no involvement in the design or development of the HAU8000. But this position is negated by Hanhwa’s contemporaneous documents. Oh accepted that as at 2 September 2016 Hanhwa decided not to design a new unit from the beginning, but to change the model number to HAU8000 and then supply that unit to IAL directly. The HAU8000 as ultimately supplied to IAL was the DIR8000 with minor evolutionary developments and the accessories for both units were the same. I will discuss in a later section of my reasons the evidence of Directed’s independent expert Mr Peter Girgis, an expert in the relevant technology at issue in these proceedings including telematics, navigation and mapping software and the relevant AV units and telematics units, concerning the various unit comparisons at issue in these proceedings.
The Hanhwa parties assert that they were entitled to exploit the SuperDAVE opportunity because Directed had not paid it for the tooling costs it incurred to manufacture the AV unit. They further say they inferred from this that Directed did not want to buy the SuperDAVE. However, to the knowledge of Lee, IAL had not yet committed with Directed to proceed and Directed was continuing right up until the end of 2016 to attempt to win the contract to supply it to IAL. I reject the Hanhwa parties’ case that they were entitled to exploit the SuperDAVE opportunity.
Directed says that there was no obligation on it to pay for the tooling at that point in the design process. There is no evidence of any invoice sent from Hanhwa Korea to Directed, nor demand for such payment. Until such time as Directed issued a purchase order for the tooling, Directed had no obligation to pay for it. Lee acknowledged there never was an obligation on Directed to pay for the tooling for the DIR8000 as Directed never issued a purchase order to Hanhwa Korea which was required for such an obligation to arise. Lee ultimately conceded that Directed was never liable to pay for tooling in relation to the SuperDAVE. I accept Directed’s case on this aspect.
In any event Directed says that there was no entitlement for the Hanhwa parties to use the confidential information it had been provided by Directed in relation to the SuperDAVE opportunity for itself. I also agree with Directed’s case on this aspect.
Now it is clear in my view that on 14 July 2016, Meneses instructed Lee to “slow down” in relation to the renting of large premises for the Hanhwa business in Australia. He noted in an email that they needed a contract with an OEM customer first and in the meantime “that Directed still needs to keep ordering ALL of our current products until we start to move them after one year”. In my view this email reveals Lee’s and Meneses’ deception and their plan to strip Directed’s business, and of the need for secrecy until the very last moment.
Now Hanhwa Korea’s business plan dated 15 December 2016 (for 2017) records that its Australian implementation plan was that sales, logistics and after sales would all be performed directly in Australia. They would start “self-supply” from “HAU-8000 (ISUZU), HAU-8100 (D-MAX) model”. They would “continue to work with Directed on the current AVN products until discontinuation”. According to Directed this makes manifest the secret plan expressed between Meneses and Lee in July 2016 to strip Directed’s business. I agree.
Directed says that in June 2016 Lee and Meneses let the Gridtraq parties in on their plan. I disagree.
Directed says that from their 6 year relationship in the JV Vehicle, the Gridtraq parties well knew that Meneses was a senior and trusted full-time employee of Directed. They must have known that he could not also act to assist Hanhwa in any commercial activities that might be in competition with Directed whilst at the same time be employed by Directed. This necessarily includes the cooperative endeavour that then ensued between Hanhwa and Gridtraq to exploit the SuperDAVE opportunity with Meneses’ involvement and assistance.
Directed says that the Gridtraq parties knew Meneses was a longstanding employee or, as Gridtraq would have it, a director of Directed, and therefore owed duties to Directed in either case. The Gridtraq parties knew, or ought to have known, that the Hanhwa parties and Meneses should not have been working with the Hanhwa parties and the Gridtraq parties on projects in competition with Directed if he remained an employee or director of Directed. Yet, so Directed says, from at least June 2016 the Gridtraq parties, and the Hanhwa parties and Meneses worked on projects to develop and supply products in direct competition with Directed when they knew he remained an employee or director of Directed.
At the very least, Directed says that the conduct of the Gridtraq parties involved such a calculated abstention from inquiry as would disentitle them to rely upon lack of actual knowledge.
I should say here that I reject Directed’s case against the Gridtraq parties concerning knowing involvement and will dispose of the detail later.
Further, Directed says that in the process of the Gridtraq parties pursuing projects with the Hanhwa parties to develop and supply products in direct competition with Directed, they used and reproduced confidential information and copyright works of Directed and the JV Vehicle without their authority. The JV Vehicle’s confidential information was protected by an express term of the JV Vehicle Shareholders Agreement for the JV Vehicle dated February 2010 binding Allen Hartley and Davidson and their entities. It has post-contractual effect. I will return to this aspect of the case later.
Directed says that co-operation between the Hanhwa parties and the Gridtraq parties with Meneses’ involvement to exploit the SuperDAVE opportunity and telematics opportunities with IAL proceeded in earnest in the period from November 2016 through to September 2017. I accept its case concerning Meneses and the Hanhwa parties, but not the Gridtraq parties.
It is apparent that on 20 November 2016, Lee informed Hanhwa Korea employees that a field test was to be conducted in December 2016 fitted onto a truck and presented in the “Dealer working presentation”, which was to occur in front of all Australian dealers. Lee proposed to submit this sample to IAL for approval. A field test took place in Australia from 12 to 17 December 2016, with an HAU8000 fitted to an Isuzu truck with inter-alia a wireless charger and a digital camera. A second field test was scheduled in the fourth week of January 2017.
Further, it is apparent that Directed continued to work on the DIR8000 and its accessories right up until March 2017, ignorant of the conduct of various respondents to exploit the SuperDAVE opportunity and telematics opportunities with IAL. Meneses then took active steps to ensure that Directed ceased work on the DIR8000 and its accessories and restricted communication by its employees with IAL. On 16 March 2017, he told Mark Summers that the DIR8000 project was not going ahead. Summers was told to box up all the materials and prototype units and accessories and give them to Meneses, which he did. They were delivered to Lee at Hanwa Aus at the Brooklyn premises. On 28 July 2017, Meneses told Steve Reidie of Directed NZ, following an enquiry from Isuzu NZ, that the SuperDAVE project was on hold until further notice and that Directed will only go ahead with this project if IAL gives the go ahead. I accept all of these aspects of Directed’s case.
Now on Directed’s case, in November 2016 the Hanhwa parties and the Gridtraq parties did not yet possess all the documents and information they required to exploit the SuperDAVE opportunity and telematics opportunities with IAL within the required timeframe. On Directed’s case, they needed, and the Hanhwa parties provided to the Gridtraq parties, a radio protocol for communications (the Directed Specification) which enabled the AV units to communicate with the telematics units.
Now David Vardon, a firmware engineer, created the Directed Specification in early 2014. I will deal with the capacity in which he created this later. Vardon created various versions in the period 2014 to 2016 which were provided to Hanhwa Korea to enable it to develop AV units for Directed. It was implemented for communication between all of Directed’s AV units and its telematics units, including those supplied to IAL between 2014 and 2018.
It is not in doubt that in the event that the purchasers of the Isuzu trucks installed with the Directed telematics units wished to have telematics features displayed through the AV unit installed in the vehicle, such as driver identification, two way messaging, CAN diagnostic data and driver violation features, then the relevant Hanhwa AV unit installed in those trucks needed to communicate with the Directed telematics unit. The Directed Specification could facilitate this.
I accept that Directed’s portal/platform software facilitating the portal used by the OEMs, including importantly IAL, utilised the Directed Specification to pass on communications and commands between the portal/platform and the Directed telematics unit and Directed AV units installed in customer vehicles. Directed’s AV units supplied to OEMs who required telematics functionality, including the DAVE units, had software libraries that enabled them to communicate with the Directed telematics platform using the Directed Specification.
I accept that the Directed Specification was a proven protocol for communications between a telematics unit and an AV unit. The software and hardware of the DIR8000 was significantly advanced to the point of operating working samples which could and had always been required to have telematics connectivity and functionality with the Directed telematics unit.
Now if the HAU8000 carried forward that same software and hardware and it was then intended to connect another telematics unit, such as the RA7000 telematics unit, Directed says that it was of assistance to the Gridtraq parties to simply be provided the Directed Specification.
Directed say that it was possible that the Hanhwa parties and/or Gridtraq parties could have written a specification to enable communication between the HAU8000 and the RA7000 telematics unit from scratch. However, this would have been a complicated task and would have taken at least 6 to 12 months. Directed says that Hanhwa and Gridtraq did not have that time to demonstrate telematics functionality of the HAU8000 which was required quickly. Instead, so Directed says, the Hanhwa parties supplied the Gridtraq parties with the Directed Specification which they then reproduced and used without Directed’s authority in the period November 2016 to December 2017.
Directed says that the Gridtraq parties used the Directed Specification over a period of 5 months from November 2016 to connect the RA7000 telematics unit to an Isuzu AV unit. Directed’s case is that the Directed Specification was used to successfully connect the RA7000 telematics unit to the DAVE and the HAU8000. I will return to this aspect of the case later which is contentious.
Further, Directed says, which I accept, that in about February or March 2017, prior to Mills’ departure to Hanhwa Aus, Mills and Meneses engaged in wholesale downloads of Directed’s confidential information and copyright works which were then provided to and used by the Hanhwa parties.
I accept that Meneses asked Mills to copy electronic files from Directed’s server onto a hard drive (red hard drive), which he then did. In March 2017, and as a new employee of Hanhwa Aus, Mills took the red hard drive to Hanhwa Aus’ office at the Brooklyn premises. He then uploaded the electronic files stored on the red hard drive to storage locations owned by Hanhwa Aus. He also uploaded Directed’s electronic files stored on the red hard drive to Microsoft Groups, a cloud based file sharing system within Outlook under the names “HANHWA AUS” and “HAU8000 Project”. That they were uploaded to an HAU8000 group is telling. The files extracted included 41,965 emails, 20,535 PDF files, 4,043 Microsoft Excel files, and 392 Microsoft Word files.
I also accept that in about April or May 2017 Meneses, whilst still employed by Directed, handed a USB to Mills, who was by then an employee of Hanhwa Aus. It contained approximately 10Mb of data. He asked Mills to upload the contents to Mills’ Hanhwa Aus PC, which he then did. Mills saved the files in a folder labelled “Directed” on the desktop.
Further, I also accept that in May 2017, Meneses instructed Summers to provide him with a complete copy of everything in the K drive, which he did. The DAVE Production Part Approval Process (PPAP), which was important to the supply of an AV unit to IAL, was on the K drive. Directed says that in the period May to September 2017 Hanhwa used the DAVE PPAP to create Hanhwa’s PPAP for the HAU8000. I should say now that in my view that is clear.
Directed says, which I accept, that on 6 July 2017, at the request of Shin, Summers sent him CAN Bus data compiled by Directed by many hours of reverse engineering for Isuzu N, F, FX and FY Series trucks.
Directed says that in the period May to August 2017, Dylan Hartley emailed Davidson and Allen Hartley CAN Bus information and parameters for IAL, Hino, Mercedes and UD and an IAL telematics master feature list and specification and an IAL telematics data collect proposal. It says that these documents were taken from the period in which Dylan Hartley worked as an employee of the JV Vehicle, a number of which he had marked as confidential. He claimed to have an entitlement to these documents under the DOCA between the JV Vehicle and Directed, but Directed says that no such documents were specified as being transferred to the Gridtraq parties.
Directed says that Allen Hartley and Davidson and their controlled entities, which includes the Gridtraq parties, were subject to clauses 15.1 to 15.3 of the JV Vehicle Shareholders Agreement which restrained them from using the JV Vehicle’s confidential information, and which had post-contractual effect. It says that Dylan Hartley owed duties of confidence as an implied term of his employment agreement with the JV Vehicle. It says that the Gridtraq parties were not free to deal with the CAN information or the materials Directed and the JV Vehicle exchanged with IAL as their own, as they did.
I will deal with these assertions later.
Directed’s case is that the Hanhwa parties and the Gridtraq parties used the documents and information they wrongfully retained and obtained to successfully connect the RA7000 telematics unit to the DAVE and the HAU8000 and to develop and promote the HAU8000 and the RA7000 telematics units and their telematics services to IAL. I will deal with these matters later.
Directed says, which I accept, that the Hanhwa parties also worked with Polstar Technologies Inc (Polstar) on navigation software for use in the HAU8000 between April 2017 and October 2017. Much of this work was done in consultation with Meneses, and by Meneses involving other employees of Directed. I agree.
On 27 April 2017, Lee informed Zoltan Mohos of Polstar that he should not speak to Siolis about Polstar’s engagement with Hanhwa. Mohos acknowledged he would not discuss it with anyone from Directed other than Meneses. Further, during April to June 2017, Meneses and Summers, whilst employed by Directed reviewed and provided information and advice to Mohos of Polstar about what was required to enable the Polstar software being developed for use with the HAU8000 to be suitable for Australian roads, conditions, legislation and Directed customer requirements. Summers, employed by Directed, and Mohos undertook a three-hour drive in an Isuzu truck around Melbourne to evaluate and provide detailed feedback on the Polstar navigation software. Specific changes to make it suitable for IAL were recommended. All of this work was done by Directed’s employee, at the direction of Meneses. Plainly, this work was not for the benefit of Directed. I accept Directed’s case on this aspect.
Now Directed says that the Gridtraq parties’ assertion that they never proceeded to assist Hanhwa with the demonstration of telematics functionality of the HAU8000 is contradicted by the evidence. I disagree. Now Directed has pointed to the following matters.
It says that Shin accepted that in March 2017 he and other Korean engineers connected an HAU8000 installed in an Isuzu vehicle with the RA7000 telematics unit to see whether they communicated. An attempt to detect CAN Bus data on an Isuzu vehicle was also made. It says that in March and April 2017 the Gridtraq parties and the Hanhwa parties prepared hardware and exchanged extensive correspondence in relation to debugging tools to be used to check the communication between the RA7000 telematics unit and the DAVE unit and the HAU8000.
Directed says that on 11 August 2017, Oh attended a meeting with personnel of the Gridtraq parties. It says that the work by the Gridtraq parties to connect or to integrate the RA7000 telematics unit with the HAU8000 unit can clearly be inferred from her notes. It can be inferred from the reference to, “Isuzu truck found CAN not speed”, that an HAU8000 and an RA7000 telematics unit had been installed in an Isuzu truck, with the Gridtraq parties successfully achieving a connection and obtaining certain CAN Bus data, although this was not conceded by Oh. Oh did concede that there was a reference to gathering telematics or CAN Bus data from the Isuzu truck. It says that on 21 August 2017, Dylan Hartley asked to meet with Oh by an email with the subject “Meeting - RA7000 and Isuzu Screen Integration”. His agenda referred to: “Isuzu Screen Integration”.
Further, Directed says that on 23 August 2017 the relevant Gridtraq party sought from the relevant Hanhwa entity a sample HAU8000.
Further, Directed says that in a written presentation made to IAL on 25 September 2017 to supply telematics units and telematics services, the relevant Gridtraq party represented to IAL that the RA7000 telematics unit connected to and operated in conjunction with the HAU8000. According to Directed, the relevant Gridtraq party had tested and satisfied itself of this fact. Further, there was outlined telematics features that rely upon the interoperability of a telematics unit and an AV unit. Further, according to Directed, the relevant Gridtraq party represented that it had developed a specification for communication between the RA7000 telematics unit so it could connect to and operate in conjunction with the HAU8000.
6.2: Financial and sales information
Item Doc ID Confidential information Some details of misuse 6.2.1 Directed’s documents including:
· historical, current and forecast sales, pricing and costing and profit information for its products and services supplied to Mercedes, Daimler, Hino, Volvo, Fuso, Isuzu, UD and Caterpillar
· Directed’s sales information by (a) product category from January 2017 to October 2017; (b) customer from November 2016 to October 2017; (c) customer from 2009 to 2017;
· A stock listing of all current Directed stock exported from Directed’s SAP system
Use is to be inferred from:
· Location of documents at premises of Meneses, Mills and Hanhwa parties and/or express exchange of information;
· The requirement that Hanhwa Aus submit to Isuzu a competitive price for the supply of navigation software in the HAU8000;
· The requirement that Hanhwa Aus set up its start-up operations;
· The fact that the information was not in the public domain and was Directed’s internal information
(a) HAN.001.023.1015 Directed's calculation of its gross profit on the SuperDAVE 17 August 2016: Sent by Mills to Meneses – discovered by the Hanhwa parties when it should never have been in their possession. Clearly of use for developing the HAU8000.
(b) REL0000060981 and attached Excel (Mills discovery)
OES.0002.0031.5750 (Meneses discovery)
Directed’s spreadsheet detailing Directed's costs, gross profit and mark up on DIR8000 and accessories, and amortisation of tooling costs. 21 November 2016: Sent by Mills (Directed email address) to Meneses (Directed email address) cc Mills’ personal email address, saying, ‘Johnny, Latest update’.
Important to Hanhwa parties for their pursuit of the SuperDAVE Opportunity.
(c) DIR.BROO.0262.0001 – pp 0007 – 0011 Directed’s sales information by (a) product category from January 2017 to September 2017; (b) customer from November 2016 to September 2017; (c) customer from 2009 to 2017 There is no reason for Hanhwa ever to have had such information yet it was seized from Hanhwa Aus premises pursuant to search order.
The date range (until September 2017) leads to the inference that Meneses was provided with them or made copies of the documents at about that time, and provided them to Hanhwa Aus.
(d) DIR.BROO.0262.0001 – pp 0006, 0013-0014, 0016, 0018-0021, 0029, 0031-0033, 0046, 0052, 0057, 0059-0073 Directed’s historical, current and forecast sales, pricing and costing and profit information for its products and services supplied to Mercedes, Daimler, Hino, Volvo, Fuso, Isuzu, UD and Caterpillar There is no reason for Hanhwa ever to have had such information yet it was seized from Hanhwa Aus premises pursuant to search order. (e) DIR.ASPE.0256.0001 (CB.10.29.B6066)
HAN.004.005.0311
A stock listing of all (then) current Directed stock exported from Directed's SAP system This was seized from Meneses’ house and also discovered by the Hanhwa parties. That there are multiple copies signifies its importance to the start-up. 6.2.2 Directed’s documents including:
· forecast information including future purchase orders for products from Hanhwa Korea and Leemen Korea;
· all of Directed’s stock per item including whether in stock, committed, ordered or available
· Directed’s stock of products in NZ, including details of products in stock, committed, incoming and available
(f) HAN.004.006.0405
November 2016 document showing Directed’s sales forecasts for the period Oct 2016 to June 2017 Document seized at Brooklyn (DIR.BROO.0257.0001) – contains highlights by hand and on computer.
(g) REL0000086316 – Mills discovery
HAN.001.029.1889 – Hanhwa parties’ discovery
Directed’s forecast – Excel spreadsheet. It contains all of Directed’s stock items sold since 2009 to date, detailing all of its historical sales of these products by customer, year and includes future projections of ordering by customers. It details sales price, total sales, growth in sale and stock holdings. 8 February 2017: last printed on 8 February 2017, Mills' last day in the office at Directed (refer properties)
4 April 2017: last modified by Mills (refer properties of the copy discovered by the Hanhwa parties - Mills had officially joined Hanhwa Aus by then).
4 April 2017: Shared by Mills (from his Hanhwa email address after his departure from Directed) with Oh via OneDrive.
11 April 2017: Forwarded by Oh to Hanhwa Korea employees: HAN.001.030.4320_addtl_ENG_checked.
(The properties of the 11 April 2017 version reveal it was modified by Oh on that day. The 2 Excel spreadsheets discovered by Hanhwa are identical.)
The importance of the document to the Hanhwa parties is evident from Oh’s 11 April email: She referred to “up-to-date information” in relation to the “forecast on the Australian market for the April-August 2017 period.
(h) Cover email is REL0000086259 – The Excel has the same DocID and the extension .0001 – Mills discovery
REL0000086259.0001
Directed’s foreshadowed purchase orders for products from Hanhwa Korea and Leemen Korea.
April 2017: The misconduct is apparent from Meneses’ use of his Hanhwa email address to send this material to Mills.
The properties of the Excel spreadsheet record that it was created on 12 April 2017 by Arthur Proghios, who was Directed's Purchasing Officer who replaced Mills.
(i) REL0000086260 for cover email; Excel has same DocID with extension .0001 – Mills discovery All of Directed’s stock per item including whether in stock, committed, ordered or available (1200 items)
12 April 2017: Forwarded by Meneses via his Hanhwa email address to Mills who was by then employed by Hanhwa Aus. (j) REL0000086185 for cover email; Excel has same DocID with extension .0001 – Mills discovery Directed’s stock of products in NZ, including details of products in stock, committed, incoming and available. 21 April 2017: Forwarded by Meneses via his Hanhwa email address to Mills who was by then employed by Hanhwa Aus. (k) REL0000097950.XLSX Directed’s cost-breakdown sheet: sent to Isuzu when making quotations Discovered by Mills. 6.2.3 Directed’s documents including:
· a list of all stock items supplied by Directed to all of its customers which records the numbers of each item in stock, incoming number and available numbers of each stock item exported from Directed’s SAP system;
· a Directed stock list exported from Directed’s SAP system containing details of all stock items on hand for its customers: the numbers of each item in stock, incoming number, available numbers of each stock item and Directed’s sell price are all recorded.
(l) HAN.004.003.0009 A stock listing of all current Directed stock exported from Directed’s SAP system
A copy of this list was discovered by the Hanhwa parties, together with handwriting. (m) HAN.001.026.7187 -confidential A Directed stock list dated 31 January 2017 (19 pages; 1200 items) exported from Directed’s SAP system. Recorded are details of all stock items on hand for its customers: the numbers of each item in stock, incoming number, available numbers of each stock item and Directed’s sell price. A copy of this list was discovered by the Hanhwa parties. Important for a start-up. (n) DIR.DIRS.0254.0001 The statements for Directed's major accounts for the month of August 2017 1 September 2017: Forwarded by Meneses from his Directed email address to his personal email address. The information included details of customers and amounts owing to Directed as at August 2017. 9: Salary and employee information
Item Doc ID Confidential information Some details of misuse 9.1 Salary package and related information for all Directed employees Obtained by Meneses and provided to Lee: On 16 December 2016, Meneses, from the Meneses Directed Email Address, asked Floudas for all salary package information for all Directed employees as at that date. This was provided to him at the Meneses Directed Email Address. The evidence shows Meneses then provided this information to Lee, or used it himself, to solicit Directed employees to Hanhwa Aus. 9.1.1 DIR.DIRS.0531.0001 Offer of employment made by Directed to Paul Lim Obtained by Meneses and provided to Lee 9.1.2 DIR.DIRS.0307.0001 A copy of Ashan Pieries’ employment contract – attached to an email dated 3 December 2013 from Siolis to Floudas attaching same Forwarded by Meneses to his personal email address on 6 February 2017. 9.1.3 DIR.DIRS.0234.0001 Salary package including increase for Marcus Palone Obtained by Meneses and provided to Lee 9.1.4 DIR.DIRS.0531.0001 18 July 2016 email to Paul Lim with attached Directed employment contract of Paul Lim Forwarded by Meneses from his Directed email address, to his personal email address, on 1 February 2017. 9.1.5 HAN.001.027.4343 Directed's new starter pro forma sheet Used by Hanhwa to create its own form. SCHEDULE OF PARTIES
VID 1157 of 2017 Respondents
Fourth Respondent:
LEEMEN AUS PTY LTD ACN 621 821 190
Fifth Respondent:
HANHWA HIGHTECH CO., LTD
Sixth Respondent:
JOHNNY MENESES
Seventh Respondent:
CRAIG MILLS
Eighth Respondent:
KICHANG (RYAN) LEE
Ninth Respondent:
NATHAN MENESES
Tenth Respondent:
GRIDTRAQ AUSTRALIA PTY LTD ACN 154 515 394
Eleventh Respondent:
WEBHOUSE SOFTWARE SOLUTIONS PTY LTD ACN 152 567 416
Twelfth Respondent:
LEEMEN CO. LTD
Thirteenth Respondent:
QUANTAM TELEMATICS PTY LTD ACN 159 485 051
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