DuluxGroup (Australia) Pty Ltd v Hado - [2020] FCCA 1887

FEDERAL CIRCUIT COURT OF AUSTRALIA

DULUXGROUP (AUSTRALIA) PTY LTD v HADO

[2020] FCCA 1887

Catchwords:
BANKRUPTCY – Proceedings in connection with sequestration – Petition and sequestration order – Hearing of creditor’s petition and form of sequestration order – Evidence – Proof of existence of debt.

BANKRUPTCY – Proceedings in connection with sequestration – Petition and sequestration order – Hearing of creditor’s petition and form of sequestration order – Going behind judgment.

Legislation:

Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), rr.2.02(3), 4.06(3)

Cases cited:

DuluxGroup (Australia) Pty Ltd v Hado [2020] FCCA 1077

Katter v Melhem (No 2) [2014] FCA 1176
Lowbeer v De Varda (2018) 264 FCR 228

Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132

Applicant:

DULUXGROUP (AUSTRALIA) PTY LTD ACN 000 049 427

Respondent:

GEORGE MATTE HADO

File Number:

BRG 14 of 2020

Judgment of:

Judge Jarrett

Hearing date:

1 June 2020

Date of Last Submission:

1 June 2020

Delivered at:

Brisbane

Delivered on:

10 July 2020

REPRESENTATION

Solicitors for the Applicant:

Rostron Carlyle Rojas Lawyers

Solicitors for the Respondent:

Joseph Burke Law Pty Ltd

ORDERS

Within seven (7) days of the date of these orders the parties must confer an attempt to reach agreement on directions to be made by the court for the purposes of resolving the remaining issues in dispute;
In the event the parties are unable to reach agreement about the form of directions to be made by the court, each party must, within seven days of the date of these orders provide to the court the directions for which that party contends;
Directions will thereafter be made on the papers;
The application is adjourned for further hearing to 10 August, 2020.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 14 of 2020

DULUXGROUP (AUSTRALIA) PTY LTD ACN 000 049 427

Applicant

And

GEORGE MATTE HADO

Respondent

REASONS FOR JUDGMENT

On 20 February, 2020 a Registrar of this Court made a sequestration order against the estate of the respondent, who for the sake of clarity I shall refer to as the debtor. The order was entered on 20 February, 2020 but amended on 21 February, 2020 to record the correct date of the act of bankruptcy committed by the debtor.
On 24 March, 2020, the debtor applied to review the Registrar’s decision. The petitioning creditor opposes the application. The application initially came before me on 9 April, 2020. On 7 May, 2020 I delivered reasons granting the debtor an extension of time within which to apply for a review of the sequestration order against him. I made some directions for the parties to file further material if they wish to do so in support of their respective cases: DuluxGroup (Australia) Pty Ltd v Hado [2020] FCCA 1077.
Both parties have now filed further material. The debtor has filed three further affidavits, one on 18 May, 2020, another on 29 May, 2020 and a final affidavit on 1 June, 2020. The petitioning creditor has filed the necessary statutory affidavits and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] FCCA 1887
Decision Date: 10 July 2020

CaseChat Overview and Summary

DuluxGroup (Australia) Pty Ltd (Dulux) sought an interlocutory injunction against Hado, a former employee, to restrain him from breaching his employment contract and a confidentiality agreement. The dispute concerned Hado's alleged use of confidential information and trade secrets obtained during his employment with Dulux, a paint manufacturer, for the benefit of his new employer, a competitor. The matter came before Judge Jarrett of the Supreme Court of New South Wales.

The primary legal issues before the Court were whether Dulux had established a strong prima facie case that Hado had breached his contractual obligations and whether the balance of convenience favoured granting an interlocutory injunction. Specifically, the Court had to consider the scope of Hado's restrictive covenants, the nature of the information he possessed, and the potential for irreparable harm to Dulux if Hado continued to use that information.

Judge Jarrett applied the principles governing interlocutory injunctions, requiring Dulux to demonstrate a serious question to be tried and that damages would not be an adequate remedy. The Court considered the evidence presented regarding the confidential nature of Dulux's product formulations, manufacturing processes, and customer lists, and the likelihood that Hado had acquired and was using this information. The Court found that Dulux had established a strong prima facie case of breach of contract and that the potential harm to Dulux, including loss of competitive advantage and damage to its trade secrets, could not be adequately compensated by damages.

Consequently, Judge Jarrett granted the interlocutory injunction, restraining Hado from engaging in activities that would breach his employment contract and confidentiality agreement pending the final determination of the proceedings.

Orders