EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd

[2017] NSWSC 1310

Supreme Court

New South Wales

Medium Neutral Citation:	EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310
Hearing dates:	03/07/2017, 04/07/2017, 05/07/2017, 06/07/2017, 07/07/2017, 10/07/2017, 11/07/2017, 12/07/2017, 13/07/2017, 14/07/2017, 17/07/2017, 18/07/2017, 19/07/2017, 20/07/2017, 21/07/2017, 31/07/2017, 01/08/2017, 02/08/2017; 03/08/2017; 04/08/2017; further written submissions 04/08/2017 and 18/08/2017
Date of orders:	28 September 2017
Decision date:	28 September 2017
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Judgment in favour of all defendants. Costs to be dealt with on the papers.
Catchwords:	EVIDENCE – affidavit evidence – contents of documents – where admission into evidence would be unfair to the defendants – Evidence Act 1995 (NSW) s 135 – EVIDENCE – expert evidence – whether opinion wholly or substantially based on specialised knowledge – Evidence Act 1995 s 79(1) –EVIDENCE — course of evidence — evidence in reply – re-opening case – where admission into evidence would be unfair to the defendants – Evidence Act 1995 (NSW) s 135 – CIVIL PROCEDURE — pleadings — amendment — late application for amendment – where leave to amend would be unfair to the defendants and cause undue expense and delay – CONTRACT – the nature and extent of the contractual duties owed to the plaintiff – whether the defendants breached one or more of these duties – EQUITY – the nature and extent of the equitable and fiduciary duties owed to the plaintiff – the nature and extent of the duty of confidence – whether the defendants breached one or more of these duties – CONSUMER LAW – whether the defendants engaged in misleading and deceptive conduct – INTELLECTUAL PROPERTY – the nature and extent of the plaintiff’s copyright protection in the various elements of an online system – whether the defendants breached the plaintiff’s copyright protection
Legislation Cited:	Competition and Consumer Act 2010 (Cth) Copyright Act of 1976, 17 USC §§ 101 – 810 (2016) Copyright Act 1968 (Cth) Evidence Act 1995 (NSW) Work Health and Safety Regulation 2011 (NSW)
Cases Cited:	Amway Corporation v Eurway International Ltd [1974] RPC 82 A-One Accessory Imports Pty Ltd v Off Road Imports Pty Ltd & King (1996) 65 FCR 478 Artedomus (Aust) Pty Ltd v Del Casale 68 ISR 577 Autodesk Inc v Dyason (No.2) At [86] (1993) 176 CLR 300 Bates and Partners Pty Ltd v The Law Book Company (1994) 29 IPR 11 Brand v Monks [2009] NSWSC 1454 Briginshaw v Briginshaw (1938) 60 CLR 336 Coco v AN Clarke (Engineers) Ltd [1969] RPC 41 Corrs Pavey Whiting and Byrne v Collector of Customs for Victoria (1987) 14 FCR 434 Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 Designers Guild Ltd v Russell Williams (Textiles) [2000] 1 WLR 2416 Exchange Telegraph v Central News [1897] 2 Ch 48 Gibson Motorsport Merchandise Pty Ltd v Forbes (2006) 149 FCR 569 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 Honeysett v The Queen (2014) 253 CLR 122 Insight SRC IP Holdings Pty Ltd v Australian Council for Educational Research Ltd (No 2) (2012) 211 FCR 563 at [105] John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Media.net advertising FZ – LLC v Netseer Inc 156 F Supp 3d 1052 (2016) Navitaire Inc v Easyjet Airline Co [2004] EWHC 1725 (Ch) Nova Productions Ltd v Mazooma Games Ltd [2007] EWCA Civ 219 O’Brien v Komesaroff (1982) 150 CLR 310 Rolleston v Insurance Australia Ltd [2017] NSWCA 168 SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch) StatusCard Australia Pty Ltd v Rotondo [2009] 1 Qd R 559 Tetris Holding LLC v Xio Interactive Inc 863 F Supp 2d 394 (2012) United Dominions Corporation Ltd v Brian (1985) 157 CLR 1 Watson v Foxman (2000) 49 NSWLR 315 Whelan Associates Inc v Jaslow Dental Laboratory, Inc 797 F 2d 1222 (1986)
Category:	Principal judgment
Parties:	EIFY Systems Pty Ltd (Plaintiff) 3D Safety Services Pty Ltd (First Defendant) Anthony Ian Conacher (Second Defendant) Simon Paul Morrow (Third Defendant) 3D Safety Systems Pty Ltd (Fourth Defendant) Wishbone Consulting Pty Ltd (Fifth Defendant)
Representation:	Counsel: F Corsaro SC / S Baron-Levi (Plaintiff) K Andronos SC / S Keizer (Defendants)   Solicitors: Proctor Phair Lawyers (Plaintiff) Henry Davis York (Defendants)
File Number(s):	2012/323876

Judgment

1. HIS HONOUR:   The plaintiff (EIFY) provides web-based services to the construction industry and other areas of trade and commerce. Those services include online induction services, the purpose of which is to qualify a person to work either for a particular employer or (in the construction industry) at a particular construction site. There is a statutory obligation to provide site induction for those working in the construction industry. See regulation 316 of the Work Health and Safety Regulation 2011 (NSW).

2. EIFY says that its web-based system has other “functionality”, including personnel management, access control and plant management. It is not necessary, at present, to give further details. In what follows, I shall generally refer simply to “the e-Induct System”, on the basis that this phase embraces all relevant aspects of its functionality.

3. The first defendant (Services) and the fourth defendant (Systems) offer web-based safety management systems and other services (the 3D system) to contractors in the building, infrastructure and mining industries. The second defendant (Mr Conacher) is a director of and principal shareholder in those companies, and of the fifth defendant (Wishbone), and effectively controls their operations. In general, I shall refer to Mr Conacher’s companies collectively as “3D Safety”.

4. The third defendant (Mr Morrow) was, but no longer is, a director of Services and Systems. He has a small indirect shareholding, and has been closely involved in their activities over a number of years.

5. In 2011, EIFY (then known as e-Induct), Services and Systems decided to work together to integrate the e-Induct system with the 3D system. They hoped to present the integrated whole as an attractive proposition to contractors in the construction industry. A company called 3D Safety Group Pty Ltd (Group), of which EIFY’s managing director, Mr Culbert, and Messrs Conacher and Morrow were directors, was incorporated to be the vehicle for this venture.

6. The joint venture came apart by the end of 2011. Since then, with the exception of some work for existing customers of the joint venture, EIFY and the defendants have gone their separate ways.

7. EIFY claims that Services and Systems have misappropriated what EIFY says is its copyright and confidential information, comprised in the web pages that constitute the e-Induct System. EIFY says that Mr Conacher, Mr Morrow and Wishbone are liable as accessories for those alleged wrongs.

The real issues in dispute

8. Mr Corsaro of Senior Counsel, who appeared with Mr Baron-Levi of Counsel for EIFY, submitted that the real issues for decision were:

(a)   Having regard to the terms of the joint venture, and the basis on which the first and fourth defendants obtained access to the e-Induct System:

(i)   the nature and extent of the contractual duties owed to the plaintiff; and

(ii)   the nature and extent of the equitable and fiduciary duties owed to the plaintiff, and in particular the nature and extent of the duty of confidence in respect of the use of information obtained about the e-Induct System;

(b)   in the circumstances that have occurred, whether the first and fourth defendants breached any one or more of the duties owed to the plaintiff;

(c)   in the circumstances that occurred, whether the first and fourth defendants engaged in conduct that was misleading and deceptive, or acted unconscionably in contravention of the Australian Consumer Law;

(d)   the nature and extent of the plaintiff’s copyright protection in the various elements of the eInduct System, and whether the defendants breached the plaintiff’s copyright in developing the 3D System;

(e)   what remedies are appropriate in the circumstances.

9. Mr Andronos of Senior Counsel, who appeared with Mr Keizer of Counsel for the defendants, did not suggest that this statement of the issues was inappropriate. I propose to adopt Mr Corsaro’s stated issues, although I should make it clear that, taking into account the way the defendants’ case was run, each broad issue is underlain by a plethora of sub-issues.

Web-based induction systems

10. It is necessary to give some detail of the operation of the e-Induct system. Because confidentiality is claimed, and to avoid risking any substantiated confidentiality (and I should note that confidentiality was very hotly in dispute), what follows is a general outline. I propose to give only so much detail as is necessary to facilitate understanding of these reasons.

11. The e-Induct online induction system (and, as I understand it, other online induction systems that are available to employers) comprises a number of web pages. A worker (for example, a sub-contractor) who has been engaged to work on a particular project must go through a site induction process. Traditionally, that was done face-to-face, with a representative of the contractor providing instruction to the worker, and the worker completing a series of tests to ensure that the information had been absorbed and understood. The web-based systems offer an alternative.

12. In essence, the worker goes to the home page of the induction system and completes the registration process. Once that is done, the worker is able to proceed through each of the web pages which, between them, set out all matters relevant to the site. Either at the end, or sequentially along the way, there is a test or series of tests that the worker is required to complete. Once the worker completes the process (and answers all the questions accurately), he or she receives a system-generated temporary “induction card”. A permanent card is issued thereafter.

13. The induction process for each contractor is specific to it, and incorporates a lot of material, including both text and images, that the contractor provides. Although each program is unique in that sense, there are obvious similarities between different programs offered to different contractors. EIFY says that the material used by it to create its induction system for a particular contractor includes not only material supplied by the contractor, but its own material, or material that it has obtained from other sources.

14. EIFY says, further, that its arrangement of all the accumulated material into the web pages that comprise a particular contractor’s induction system is its confidential property. Alternatively, it says, each of those pages is something in which it has copyright. The copyright claim is based not so much on individual text and images (because in many cases, EIFY was not the creator of that text or those images) but on the overall arrangement of text and images, wherever sourced, into each webpage. I shall have to return to the pleaded basis of that claimed copyright when considering EIFY’s application for leave further to amend its Commercial List Statement.

15. Mr Corsaro accepted that, substantially at least, each web page was a derivative work. However, he submitted, considered as a whole, each webpage involved EIFY’s independent creative, technical or intellectual effort in its creation. Mr Corsaro submitted, alternatively, that the “look and feel” of each web page had copyright protection.

Web page design

16. Professor Braun, an expert called by EIFY, gave an explanation of the operation of computers, and of the process of web page design, that (in its technical elements at least) is both helpful and uncontroversial. He said that the process of designing a web page comprises a number of steps. They include:

1. identifying and describing the function of the web system;

2. gathering together the textual and visual components required to build the web system;

3. designing the individual web pages (often done as an iterative process in conjunction with the preceding step); and

4. coding the design of each page into scripts or other sources that the computer could execute.

17. Computer code is a set of instructions given to and (ultimately) executable by the computer. The starting point (logically at least) is what is known as source code. That is code created and readable by human beings. It cannot directly cause the computer to perform the required tasks.

18. Object code is code that is readable by the computer and that causes the computer to perform the desired operation. Source code must be converted (an inexact but sufficient expression) into object code before it can be executed by the computer. That may be achieved by a process known as “compilation”, whereby source code is converted directly into object code and then linked to existing “libraries” of standard functions. Alternatively source code may be converted into “byte code” by an “interpreter” (which is itself an executable object code) that has its own “library” of standard functions.

19. Whilst a computer is using executable object code in the performance of a task, that code is stored in the computer’s random access memory (RAM), which also contains other data. That other data may include text, source code, and other object codes.

20. Images are stored in video RAM. They comprise object code that is effectively a pixel map of the display that is to be seen. The computer’s hardware converts that pixel map into the display that the user sees on the computer’s screen.

21. Thus, source code written by a human may be used, either by compilation into object code or by interpretation through an interpreter, to produce a display that includes both text and graphic (or image) components.

Evidentiary rulings

22. There were numerous objections to EIFY’s evidence. For the most part, the rulings on those objections were non-controversial (in the sense that the defect was so obvious that no reasons for those rulings were required). It is unfortunately not at all uncommon that, as seems to have happened in this case, affidavits are drafted with what appears to be wholesale ignorance of, or disregard for, the requirements of admissibility. The inevitable result is that a lot of time is wasted on the preparation of objections, and submissions and rulings on them.

23. The rulings that I gave on some of the objections were likely to have had a substantial impact on EIFY’s case. I indicated that I would give my reasons at a later time. What follows are my reasons for ruling on objections to particular aspects of EIFY’s evidence.

The report of Professor Braun

24. Professor Braun, whose qualifications and experience are beyond question (and to the extent that Mr Andronos suggested otherwise, I do not agree), was asked to consider screenshots of selected EIFY web pages with screenshots of what was said to be “matched” Systems webpages, and to compare them with a view to expressing an opinion:

[I]n respect of whether by substantial copying, either by reproduction or by adaptation, the [Systems’] Induction System has resulted in four possible copyright infringements, arising by virtue of the execution of the source code via the object code which manifests in the [Systems’] screen [1] .

1. Report dated 4 November 2016, para 72.

25. The “four possible copyright infringements” were stated to be:

1. whether the Systems screens have infringed the EIFY screens by a substantial copying;

2. whether the Systems screens have infringed the EIFY source code;

3. whether the Systems screens’ source code infringed the EIFY screens; and

4. whether the System screens’ source codes (or structures) infringed the EIFY source codes (or structures).

26. There were three specific aspects of Professor Braun’s report to which objection was taken. The first was a table that set out the results of Professor Braun’s comparison of web pages from EIFY’s induction system with equivalent web pages from Systems’ induction system. The table included a column that indicated Professor Braun’s deductions as to the relative contributions of source code and object code to the web pages in question.

27. The second aspect of the report to which objection was taken comprised a number of paragraphs in which Professor Braun, having studied matched pairs of web pages, identified what he saw as being similarities, and constructed a “similarity index”.

28. The third aspect to which objection was taken were summaries of Professor Braun’s conclusions, necessarily embodying the results of the analyses in the two sections of the report to which I have just referred.

29. Professor Braun had access to EIFY’s source code. He did not have access to Systems’ source code. His opinion was, relevantly, based on his examination of 30 selected “matching” screens produced by each system. It is important to note that Professor Braun said (and was not challenged on this) that “in cases where the screens are very similar, the underlying Object Code in the Video RAM is also very similar” [2] .

    2. Report dated 4 November 2016, para 61.

30. Along the way to expressing his opinions, Professor Braun considered “whether the graphical and textual content of the [EIFY] web pages may have been re-used in the [Systems] web pages”. He inspected the 30 screens, listing what he considered to be their salient parts, and considered (on a scale of 0 – “not at all” – to 10 – “very”) how similar they were. He then constructed a “similarity index” for each pair of pages.

31. Mr Andronos objected to the relevant passages [3] in Professor Braun’s report. He submitted that the exercise that Professor Braun said he carried out, leading to the opinions that he sought to express, did not involve the application of specialised knowledge to proved or assumed facts. Mr Andronos relied on the decision of the High Court in Honeysett v The Queen [4] .

    3. Paras 64 to 69 and Figure 6.

    4. (2014) 253 CLR 122.

32. Mr Corsaro submitted that Professor Braun was an expert in, among other things, systems and software engineering. It followed, Mr Corsaro submitted, that the opinions expressed by Professor Braun were based on his specialised knowledge, and capable of assisting the court to understand the evidence and draw inferences from it.

33. The starting point is to be found in ss 76(1) and 79(1) of the Evidence Act1995 (NSW). Those subsections provide, respectively:

76 The opinion rule

(1)    Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.

…

79 Exception: opinions based on specialised knowledge

(1)    If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.

…

34. It is clear, as s 79(1) says, that before an opinion can be admissible as an expert opinion, there must be shown first, “specialised knowledge” based on “training, study or experience” and, next, an opinion based “wholly or substantially… on that knowledge”. As I have said, I have no doubt that Professor Braun amply meets the first of those requirements in a way that is relevant to the technical issues in this case.

35. Once the qualifications set out in s 79(1) are met, the expert opinion may be admissible if it is capable of proving, or helping to prove, a fact or facts in issue. It follows (although a number of expert reports appear to disregard this obvious requirement) that unless the relevant fact or facts in issue can be identified, an expert report, no matter how highly qualified the expert may be and how cogent his or her reasoning process, is irrelevant. In the present case, the opinions expressed by Professor Braun, if admissible, were capable of proving or assisting in the proof of facts in issue.

36. I start with the objection to the table. It purported to compare EIFY’s and Systems’ web-based induction systems “in the way that the web systems are created and deployed”. It was this table that, among other things, identified the steps to which I have referred [5] .

    5. At [16] above.

34. The table included a column headed “Indicator of Source Code to Object Code Mix”. When describing the way in which the designs had been coded and in which they were executed, Professor Braun expressed opinions that “the mix [of source and object codes] may be” varying percentages of one and the other: 50% each, 10% one, 90% the other, or entirely and only one.

35. The repeated statement that, for a particular step, the mix of source and object codes “may be” the stated percentage is entirely unhelpful. It could be entirely speculative. It could have been an unfortunate way of expressing a definite and precise conclusion. The reader does not know.

36. Mr Corsaro submitted that this was something that could be clarified in examination in chief (by leave), or that could be explored in cross-examination. Of course, either (or both) of those courses could have been taken. However, in my view, it would have been extremely unfair, and highly prejudicial, to permit the first of those courses to be taken, or to put Mr Andronos to the risk of taking the second. In my view, both the imprecision of the language used and the risk of prejudice that would follow if the material were admitted required that I reject the tender of that particular column, in the exercise of the discretion contained in s 135 of the Evidence Act.

37. There was a further problem with that column. Professor Braun’s report gives no indication of the basis for his opinions as to what, in any case, “the mix may be”. There is no way of telling, from his report, what (if anything) it was in the material submitted to him for his opinion that led to the conclusion that, for any particular step, the outcome might represent X percent application of source code and Y percent application of object code. In that respect, the opinions are entirely unreasoned. There is no way of assessing their validity. Professor Brown’s methodology cannot be checked or replicated.

38. It follows, in my view, that the column was inadmissible on that basis also, for the reasons given by the High Court in Dasreef Pty Ltd v Hawchar [6] . The majority (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) stated [7] , applying what Heydon JA had said in Makita (Australia) Pty Ltd v Sprowles [8] , that the expert’s evidence must explain how his or her specialised knowledge has been applied to the assumed or observed facts so as to ground the opinion. Thus, their Honours said [9]

“[a] failure to demonstrate that an opinion expressed by a witness is based on the witness’s specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight”.

6. (2011) 243 CLR 588.

7. At [37].

8. (2001) 52 NSWLR 705 at [85].

9. At [42].

42. The absence of any stated or discernible reasoning to support the allocation between source code and object code in the relevant column of Figure 3 rendered that opinion (if it were opinion and not merely speculation) inadmissible. See also Emmett AJA (with whom Beazley P and Meagher JA agreed) in Rolleston v Insurance Australia Ltd [10] .

    10. [2017] NSWCA 168 at [34].

43. Had the column not been inadmissible for that reason, I would have excluded it in any event, under s 135, were it necessary to do so. I repeat that to admit it in the absence of any apparent reasoning to support it would have put Mr Andronos in the untenable position of being required to cross-examine upon it (and perhaps establish a basis of reasoning) or to leave it unchallenged (and run the risk – even if small – that I might accept it). That is not a position in which a party to litigation should be placed.

44. I turn to Professor Braun’s comparison of web pages, and his “similarity index”. In my view, there is nothing in this part of Professor Braun’s report to suggest that his analysis of the similarities that he perceived involved any application of his undoubted expertise in the fields of electronic engineering, network engineering, computer systems engineering and software engineering. He could not, and therefore did not, compare the source code created for EIFY with the source code created for Systems. Nor did he compare the respective object codes of the two web-based induction systems. On the contrary, his opinions in the passages of his report with which I am presently dealing [11] were based wholly on his visual inspection of the output of those systems: screenshots of particular web pages.

    11. See at [26] and following above.

45. There is no reason to think that Professor Braun’s years of study and experience in the fields to which I have referred have given him any specialised knowledge in the observation, analysis and comparison of visual images. I accept that what he was comparing were visual images produced by a computer. But that is incidental. There is nothing in the process of production of those images, as opposed to their visual appearance, that was the subject of this aspect of Professor Braun’s analysis.

46. In my view, as was the case in Honeysett, those passages of Professor Braun’s opinion are based not on his specialised knowledge but on his “subjective impression of what he saw when he looked at the images” [12] .

    12. Honeysett at [43].

47. Professor Braun’s exercise of “listing their salient parts with a similarity index from 0 to 10” and then creating “a similarity index for [a] particular pair of pages” does not appear to me to be anything more than an attempt to colour with quasi-scientific terminology his views as to what he saw and how, subjectively, he analysed it. It is no more persuasive than “the use of technical terms to describe [physical] characteristics”, and no more apt to suggest “more telling similarity” than by saying that the images look similar [13] . It has the effect of giving a “spurious appearance of authority” to something that is outside the expert’s field of expertise [14] .

    13. Compare Honeysett at [45].

    14. Compare Rolleston at [36].

48. Accordingly, I rejected the relevant passages in Professor Braun’s report.

49. Next, I turn to the third aspect of the report to which objection was taken: Professor Braun’s conclusions. They were set out in two places: a paragraph titled “Headline Opinions” [15] close to the beginning of his report, and an expression of “Overall Opinion” at the end of his report [16] .

    15. At para 11.

    16. At para 72.

50. I start with Professor Braun’s “overall opinion”, in which he expressed his views on the four questions that I have identified [17] . There were two problems with this part of his report.

    17. At [24], [25] above.

51. The first problem is that they were based on his visual observation and subjective impressions of the thirty sets of matched screens that were provided to him. Because those opinions were inadmissible, conclusions founded (in whole or in part) upon them go nowhere.

52. The second problem is, quite clearly (and despite Mr Corsaro’s valiant submission to the contrary), that in his answers to each of the four questions now under consideration, Professor Braun purported to express an opinion on the application of his observations to a particular legal issue: namely, whether Product A in some way “infringed” copyright in identified aspects of Product B. That is not the function of an expert – at least, an expert possessing Professor Braun’s qualifications.

53. I turn to the “Headline Opinions”. As Professor Braun stated, they were presented early on “for convenience only”. It was clear that they were entirely based on the observations and analysis set out in the succeeding paragraphs of his report. To the extent that those paragraphs have been rejected, the headline opinions cannot stand as independently reasoned conclusions. I add that to the extent that they were intended to summarise Professor Braun’s “overall opinion”, the rejection of that part of the report is capable independently of sealing the fate of the “headline opinions”.

54. Accordingly, I rejected both summaries of Professor Braun’s opinions.

55. I add that the defects in Professor Braun’s report to which I have referred should have been apparent to the lawyers on whose instructions the report was prepared. Whilst I accept entirely that an expert report must express the true and complete opinions of the expert, and that it is inappropriate for a party or its lawyers to suggest to the expert that he or she revise, amend or change any opinion, there is nothing to prevent the lawyers from assisting the expert in matter of form. Provided that the integrity of the expert and the views expressed by the expert are maintained absolutely, it is not just desirable, but in my view essential, that lawyers do what they can to ensure that the report meets the legal criteria for admissibility. That does not appear to have happened in this case.

Mr Culbert’s non-confidential affidavit affirmed 21 December 2012

56. As I have said, Mr (Patrick) Culbert is the managing director of EIFY. Another company, of which Mr Culbert is the sole director and shareholder, holds (as trustee for a family trust) all the issued shares in EIFY.

57. Mr Culbert’s father Mr Robert Culbert was a director of EIFY. Although he gave evidence, it was very limited in extent compared to his son’s. For convenience, I shall refer to the son simply as “Mr Culbert”. Where it is necessary to refer to the father, I shall call him “Mr Robert Culbert”.

58. In a number of places in his affidavit affirmed 21 December 2012, Mr Culbert sought to give evidence of the contents of what he called EIFY’s “activity web log”, or its “database records”, or its “activity logs and data base records”. The effect of that evidence was to refer to electronic records maintained in EIFY’s computer system that showed, by reference to IP (Internet Protocol) addresses, who had registered on to and thereafter accessed EIFY’s system at various times. The underlying records were not proved.

59. From paras 50 to 57, Mr Culbert sought to give evidence of a registration that, he said was created by Mr Morrow, using a particular IP address. Mr Culbert said that Mr Morrow had registered twice, giving different account names. At paras 58 to 62, Mr Culbert sought to give evidence in relation to a registration said to have been created by Mr Conacher. Mr Culbert said that Mr Conacher also created two accounts using different user names.

60. Thereafter, at paras 63 and 64, Mr Culbert sought to give evidence of other accounts created by people who had a “3dss.com.au” email address (for example, “[email protected]”).

61. Mr Andronos objected to most of those paragraphs. Because there was some dispute as to whether the underlying records had been produced to the defendants to enable them to assess and test what was said, I reserved ruling on the objection until that dispute could be resolved.

62. Later in the same affidavit, from paras 169 to 179, Mr Culbert sought to give further evidence of matters revealed by EIFY’s web server logs (which he called “Web Logs”), Event Log, and User Register, all of which he called “Log Data”. They were all records maintained as part of EIFY’s system.

63. At para 173, Mr Culbert identified what he said was “a summary of parts of the Log Data”, which he said he had “extracted from” the Log Data. The purport of that evidence was to identify “the total number of URLs accessed by [what he called] the “‘Shayda Fanaeyan’ account” between 8 December 2011 and 29 September 2012”, and certain other data for a similar but not identical period. Ms Fanaeyan was then, but for some time has not been, an employee of 3D Safety. The expression “Shayda Fanaeyan account” does not appear to have been defined in the affidavit.

64. In subsequent paragraphs, Mr Culbert purported to identify features of the usage of the Shayda Fanaeyan account that, he said, were in some way abnormal.

65. Again, objection was taken to many of the paragraphs in question. Again, I reserved ruling on the objection until the position, with relation to production of the underlying data or records, had been clarified.

66. In the result, Mr Andronos maintained his objections to paras 57, 58, 173, 174 (in part), 175, 176 and 179. I shall refer to those paragraphs as “the reserved paragraphs”.

67. Looking ahead for a moment, objections on similar grounds were taken to a number of paragraphs of Mr Culbert’s reply affidavit affirmed 19 June 2017. To the extent that they were maintained, those objections related to part of para 39 and to paras 42 and 43. I include those paragraphs also in the category of “reserved paragraphs”.

68. Mr Culbert’s cross-examination could not be completed until I had ruled on the objections to the reserved paragraphs. The parties agreed that it would be convenient to interrupt his cross-examination and exchange affidavit evidence and submissions on the objections. This they did overnight on 13 July 2017 and during the morning of 14 July 2017. I heard argument on the reserved paragraphs on the afternoon of 14 July 2017, and on 17 July 2017. At the conclusion of the argument, I rejected the reserved paragraphs, and said that I would give reasons at a later time.

69. For convenience, I shall give those reasons when I come to consider objections to the further evidence on which EIFY sought to rely [18] .

    18. At [102] and following below.

Mr Culbert’s “reply” affidavit affirmed 19 June 2017

70. Mr Culbert affirmed in all 10 affidavits, of which nine were read. Why it was necessary for his evidence to be spread across so many affidavits is a mystery. The fact that it was so spread did not make it any easier to gain an overall appreciation of Mr Culbert’s testimony.

71. A particular problem arose with Mr Culbert’s “reply” affidavit affirmed 19 June 2017. That was an affidavit purporting to reply to affidavit evidence for the defendants. It could only have been read on that basis, because it was affirmed some 96 days after the expiry of the time finally limited for service of EIFY’s evidence in chief. By “guillotine” orders of the court made on 3 March 2017, service of evidence in chief (leaving aside expert evidence) was to be completed by 15 March 2017, and EIFY was not to rely on lay evidence in chief served after that date without the leave of the court. No application for leave was made.

72. The particular passage of Mr Culbert’s reply affidavit (I shall call it that for convenience) with which I am presently concerned is paras 102 to 198, comprising 57 pages in all. In those paragraphs, Mr Culbert sought to give evidence of:

1. the design of various web pages in induction systems prepared for various customers of EIFY; and

2. a comparison of those web pages with web pages prepared by Systems or Services (to whom, with Messrs Conacher and Morrow, Mr Culbert referred, collectively and unhelpfully, as “3D Safety”).

73. Mr Andronos objected to that evidence on the ground that it was evidence in chief. He submitted that EIFY was splitting its case.

74. Mr Corsaro submitted that the paragraphs in question were evidence in reply, because the whole affidavit replied to affidavits sworn by Messrs Conacher and Morrow. Mr Corsaro submitted that Messrs Conacher and Morrow had denied that they, Services or Systems had copied any of EIFY’s material, and that Mr Culbert was entitled to reply to those paragraphs.

75. I accept that Mr Culbert was entitled to reply. I do not accept that the evidence in question is evidence in reply.

76. Up to the commencement of the relevant paragraphs (that is to say, in paras 6 to 101), Mr Culbert referred to specific paragraphs of the affidavits sworn by Mr Conacher or Mr Morrow (or by another witness, Mr Cook), and said what he wished to say in answer. There was no such preface to the paragraphs to which objection was taken on the basis with which I am presently dealing. On the contrary, as Mr Culbert made clear at para 102, “[t]he information and exhibits below detail the creation of the e-Induct Systems’ induction slides, showing” material provided by the customer and the slides (ie, screen shots of web pages) produced from that material. As I have said, the paragraphs in question in fact went further, because they sought to compare slides prepared by EIFY for a particular customer with equivalent slides prepared by “3D Safety” for that same customer.

77. It is, if I may say so, self-evident that in a case based on misuse of confidential information or breach of copyright, the plaintiff must prove, in chief, that the material in question does possess the necessary qualities. It must prove that the material was produced and used (by or for it) in such a way that it can be classified as confidential, in the sense of being entitled to protection in equity. Alternatively, it must be shown that it was produced (by or for it) in such a way as to be capable of protection under the Copyright Act 1968 (Cth). The paragraphs in question were relevant to proving those matters. To the extent that they were otherwise admissible, the material in them should have comprised part of EIFY’s evidence in chief.

78. Again, the case being that the defendants have infringed EIFY’s rights in its confidential information or copyright, EIFY was required to prove that infringement as part of its case in chief. To the extent that the paragraphs in question, having set out how and from what sources EIFY prepared the web pages in question, sought to compare and contrast them with equivalent web pages prepared by “3D Safety”, that was evidence in chief.

79. An available, and in my view correct, inference is that EIFY, recognising a significant defect in its case in chief, sought to rectify this under the guise of replying to the defendants’ affidavit evidence. That is not an appropriate use of evidence in reply; a fortiori, where further evidence in chief is not available without the leave of the court.

80. Since the evidence in question was evidence in chief, then having regard to the court’s “guillotine order” made on 3 March 2017, it could not be relied upon without leave. No application for leave having been made, it followed that the material should be rejected.

81. To the extent that Mr Andronos’ objection was based upon the (correct) proposition that EIFY was splitting its case, it is unnecessary to express a view. I note that in the current era, where (generally at least) all testimonial evidence is adduced through affidavits or statements that are served before the hearing, the real (as opposed to notional) detriment to a defendant that could arise where a plaintiff splits its case is probably not as significant as it was in the days of oral evidence and trial by jury.

82. However, it should also be noted that in this case, even if the defendants were minded to seek to reply to the paragraphs in question, they would have been forced to do so in the limited time (about two weeks) that remained between the service of the reply affidavit and the commencement of the hearing. It is not difficult to understand the disruptive impact of that exercise on the defendants’ preparation for hearing.

Mr Quicke’s reply affidavit

83. Mr Quicke is a graphic designer, and the sole director and shareholder of a company known as Clearsite Pty Ltd. Through that company, he provides “3D graphic design, presentations and web design services” to various customers [19] . Mr Quicke (through Clearsite) performed design work for EIFY, including work on the e-Induct system, and for Group.

    19. Affidavit made on 2 July 2015, para 2.

84. Mr Quicke’s affidavit in reply purported to comment on paragraphs of Mr Morrow’s affidavit. Mr Quicke referred in particular to paragraphs in which Mr Morrow gave evidence as to a series of images of web pages. EIFY had identified those pages, in effect by way of particulars, as being the subject of its claims for copyright or confidentiality. Mr Morrow gave evidence of what he said was material, including text and graphics, from other sources that had been provided to Mr Culbert in 2011 or earlier.

85. Mr Quicke’s reply referred to each of those paragraphs and purported to “respond” to it by a number of bullet points. I say “purported” because it is not at all clear that what he said was in any way responsive. The proposition that it was depended on what was in my view an untenable reading of the relevant paragraphs of Mr Morrow’s affidavit [20] .

    20. That reading appears at T617-619, and is summarised at [97] below.

83. It is not clear whether Mr Quicke was commenting on Mr Morrow’s identification of the source material, or giving evidence of work that he (Mr Quicke) had done in the preparation of the relevant web pages, or indeed giving evidence of something entirely different. The bullet points look like notes prepared, with a view to expansion into an affidavit. They may well have been meaningful to Mr Quicke. They were not meaningful to me.

84. Further, two of the bullet points included comments suggesting some degree of doubt on Mr Quicke’s part. The third bullet point for para 7 included the words “(don’t think any of them are from non-stock sources)”. The second bullet point for para 24 stated “not sure whose decision it was… it may have been my choice” (Mr Quicke’s italics).

85. For Mr Quicke’s evidence in reply (assuming it to have been such) to have had any value, it would have been necessary for him to give oral evidence explaining what he meant by the cryptic comments contained in his bullet points. But to permit the matter to proceed in that way would have been extremely unfair to the defendants. Had Mr Quicke’s reply affidavit set out the evidence that he wished to give (as opposed to Delphic hints of what that evidence may have been), the defendants could have analysed it and given appropriate instructions for Mr Quicke’s cross-examination. Permitting the matter to proceed by way of oral evidence explaining the bullet points would have deprived the defendants of the opportunity to consider the substance of what it was that Mr Quicke wished to say.

86. Accordingly, the affidavit being in such a form that it was meaningless without explanation, I rejected it. I relied on s 135 of the Evidence Act, because to permit the affidavit to be read and explained would have been highly prejudicial to the defendants for the reason just given. I note that there was no explanation as to why Mr Quicke’s affidavit in reply had not been completed (that is to say, in a form which permitted his evidence to be absorbed without the need for explanation) and filed by the due date.

87. I add that in the course of Mr Quicke’s re-examination, Mr Corsaro sought to have Mr Quicke give evidence of what it was that he had done in the creation of each of the images that was the subject of the commentary in his reply affidavit. Mr Corsaro submitted that this was justifiable in re-examination, because Mr Quicke had given some evidence of that in the course of his cross-examination. Mr Andronos objected. He submitted that the line of re-examination did not arise from his cross-examination of Mr Quicke. I rejected the specific question on that basis. Mr Corsaro accepted that the ruling would apply to similar questions on the same topic.

88. To explain this specific ruling, it is necessary to pay a little more attention to what Mr Morrow said in his affidavit, and to see how this was handled in Mr Quicke’s cross-examination.

89. In the relevant paragraphs of his affidavit, Mr Morrow referred to the 34 images that had been specified by EIFY as being the subject of its claim for copyright. For convenience, I shall refer to them as “the 34 images” in these reasons. For each image, Mr Morrow identified:

1. the particular image;

2. material from other sources that (although Mr Morrow did not say it) appeared on inspection to contain similar visual or textual material [21] ;

3. from time to time, that the material had been discussed with others, including Mr Culbert; and

4. from time to time, that a particular image had been “developed” by Mr Andrew Quicke for an online induction that was prepared for Mirvac in 2011.

   21. I accept that, at the linguistic and philosophical levels, a “text” may include (although it need not be limited to) both images and words. For convenience, and reflecting the usage commonly adopted in the course of the evidence in this case, I shall use the word “images” to denote pictorial material and the word “text” to denote written language.

93. Mr Morrow did not say that the material in any of the 34 images was only, or no more than, the other graphic and textual material that he identified in respect of it. Nor did he say, as to any image that he identified as having been developed by Mr Culbert, that it was only and no more than a compilation of that other material.

94. The cross-examination of Mr Quicke on this topic commenced at T604.11. He gave the following evidence [22] :

Q.    No?    You created a number of specific images for inclusion in these induction applications; do you recall that?

A.    Yes.

Q.    Each image that you created was a modification of an

existing image, wasn't it?

A.    No, no, I will do illustration if there's reason for it. Like, I'll do 3D illustration, 3D modelling, I'll do 2D illustration, paint stuff. 2D illustration, like - sorry, I said paint stuff, but like Photoshop type work, illustration like line drawing type of illustration 3D illustration, making a three dimensional model and rendering.

Q.    Do you recall whether you created any completely new images for the Mirvac or Thiess inductions in 2011?

A.    It's a long time, but I can't imagine I wouldn't have because I pretty much always do. So, I mean, if we could see it, I could point to you and say it's that one, that one and that one, or whatever.

22. T604.18-.38.

95. Mr Quicke was then shown a number of pages that were said to be copies of the 34 images. For some reason, he was shown black and white copies and not colour copies. Mr Quicke was asked whether he could identify “any of those images which [he said he] designed from scratch” [23] . Mr Quicke responded (and I omit interjections by Counsel and by me) [24] :

    23. T604.40-.44.

    24. T605.6-.37.

THE WITNESS: When you say designed from scratch, are you talking about all source imagery like from - as in a drawing, from a blank piece of paper?

MR ANDRONOS: Yes.

….

THE WITNESS: I can say that I don't think any of these

are a completely from scratch drawing.

HIS HONOUR: Q. Do you mean your completely from scratch

drawing?

A. I don't think any of these would be something where

I started with a blank piece of paper and drew the whole

thing. These are mostly things which may have been

modified considerably from the original, or they are

assemblies that use imagery such as lots of stock imagery,

compiled to make a graphic design, or they are things where

photographs have been, you know, cut out, re-coloured,

tinted, positioned with other objects from other photos

and, you know, labels and things attached. This is normal

graphic design work, it's not illustration work. For

instance, this thing here --

96. Mr Quicke then, and non-responsively (I am not being critical of Mr Quicke in saying this; I am quite satisfied that he thought that he was assisting the court by giving as full an account as possible of what it was that he had done) started to describe, by reference to several images, what he had done to prepare it. That cross-examination then continued until it was summarised in the following way [25] :

Q.    If this is a fair summary of what you did: by way of graphic design, you modified those images in such a way as to conform with the overall design that you had in mind for the pages?

A.    Yes, modified or re-touched or - I mean, I can't tell you the exact story for each of those without looking up what it was.

HIS HONOUR: Q. In some cases did you go back to the source and replace them with better qualities of the same images?

A.    Definitely I would go back to the source and replace them. Photos generally I would do something to every time, because most of these sort of photos supplied by clients of work sites, and those sorts of things, are very low quality. You may be doing a bit of just, you know, adjusting the brightness or the contrast or the colour levels, or maybe painting out bits of dirt or something, even adjusting perspectives. So if you look at a building shot that someone has taken on a camera phone or something, you might just adjust the perspective to make it all straight lines, so that all the lines look vertical, and soon. It's hard to tell without checking each one, saying what happened to it.

25. T607.19-.42.

97. Mr Corsaro submitted that the evidence that Mr Quicke could have given, in accordance with his bullet points, in his reply affidavit, was responsive to the relevant paragraphs of Mr Morrow’s affidavit. That was so, Mr Corsaro submitted [26] , because Mr Morrow was purporting to indicate the origin of the material comprising or included in each of the 34 images over which copyright was claimed. However, Mr Morrow was doing no such thing. He identified a particular image. He identified images from other sources. Where relevant, he pointed out how those images (or other material) from other sources had been given to Mr Culbert. Again where relevant, he noted that Mr Quicke had “developed” the image. Mr Morrow did not say (nor was he qualified to say) that the slides had been prepared from that material.

    26. T618.7-.9.

98. Whether the images were prepared from material that was not “original”, in the sense that it had been developed solely and exclusively by EIFY (or by Clearsite or Mr Quicke for EIFY) was, no doubt, a legitimate topic to be covered in evidence in chief. It was not a legitimate topic for evidence in reply. Further, unless the subject matter had been clearly broached in cross-examination, and the evidence left in such a state that a full understanding of it could not be obtained without some elucidation in re-examination, it was not a proper topic for re-examination.

99. The questions that were put to Mr Quicke in cross-examination were carefully framed. To the extent that they sought to gain an understanding of what it was that Mr Quicke had done, the answers were complete and comprehensible in themselves. It was not legitimate to use those answers as some sought of trigger for the explication of the topics that, apparently, Mr Quicke had wished to cover in his affidavit in reply.

100. Further, and to the extent that the re-examination was sought to be justified by reference to answers given by Mr Quicke which on any view went further than was responsive to the questions asked, that could not justify re-examination. The proposition, that it is legitimate to re-examine a witness based on, or to expand on, non-responsive answers given in cross-examination, so as to broach evidentiary topics that could and should have been dealt with in chief, need only be stated to be rejected.

101. Again, and underlying all this, there is the proposition that to permit evidence on a very important topic to proceed in the way that I have outlined would be fundamentally unfair to the party against whom that evidence was sought to be tendered.

The reserved paragraphs and the further affidavit evidence of Messrs Culbert and Birmingham

102. Mr Birmingham is a senior and experienced programmer employed by EIFY. He worked on EIFY’s system, and on the attempt to integrate that system with the 3D system. Mr Birmingham affirmed affidavits on 10 July 2015 and 22 June 2017. In the course of the hearing (which commenced on 3 July 2017), EIFY filed and served a third affidavit affirmed by Mr Birmingham, on 13 July 2017. Mr Andronos objected to paragraphs 10 to 42 of the third affidavit. At the conclusion of the argument, I rejected those paragraphs.

103. In preparation for the argument on the reserved paragraphs, Mr Birmingham affirmed two further affidavits, on 14 July 2017. I permitted those affidavits to be filed and read in effect on the voir dire – that is to say, on the argument as to the admissibility of the reserved paragraphs. Mr Corsaro sought to rely on them also on the substantive issues. I rejected them on that basis.

104. The clear and obvious inference from Mr Culbert’s affidavits of 21 December 2012 and 19 June 2017 is that originally, the exercise of searching EIFY’s computer records to find out who had registered and who had accessed the e-Induct system during the period in question was based on the IP address from or by reference to which, originally, registration had been effected.

105. On 13 July 2017, Mr Andronos submitted that on his instructions, analysis of data by reference to the IP address of the person who accessed the e-Induct system would not give a complete understanding of the number of times that that person, or the entity for which he or she worked, had done so. The data would show, at most, the times that the person or entity had accessed the e-Induct system from a computer having, or using, the IP address in question. Where access was obtained from a different computer, or from a tablet or other mobile device, a different IP address would show.

106. Further, if access were obtained other than from the premises of Services and Systems, using a different wifi network, a different IP address might be shown. The defendants’ evidence was, in effect, that in the course of their duties, employees of Services or Systems routinely (and, the defendants said, legitimately) accessed the e-Induct system from devices and premises other than those of Systems or Services.

107. The instructions referred to in the two preceding paragraphs were proved, on information and belief, for the purposes of the voir dire [27] .

     27. See at [129] below.

108. Those matters attained some significance. One of the points made by (in particular) Mr Morrow in his affidavit was that the defendants had legitimately accessed the e-Induct system for the purpose of assisting subcontractors and others to register. Mr Culbert sought to rebut that evidence by saying, in effect, that only a very small number and percentage of registrations had been effected from a computer having Systems’ or Services’ IP address.

109. Mr Birmingham’s two further affidavits were intended to deal with this point. The effect of those was to show that although the analysis could be conducted by reference to the IP addresses of the computer from which access had been obtained, he had in fact analysed the data using different queries. That was inconsistent with what Mr Culbert had said in his affidavits of 21 December 2012 and 19 June 2017. It was also inconsistent with the way in which the issue had been debated up to then.

110. Further, in his affidavit affirmed on 13 July 2017, Mr Birmingham sought to give evidence (in the paragraphs, 10 to 42, to which objection was taken) of further analysis that he had undertaken, and tables that he had created.

111. There were numerous factual problems in this aspect of the evidence. One problem related to Mr Culbert’s first affidavit (the one affirmed 21 December 2012). He purported to give evidence, in the two places to which I have referred, of information garnered from EIFY’s electronic records. The affidavit was served under cover of a letter (from EIFY’s then lawyers) that noted that the affidavit referred “to our client’s activity logs”. The letter said that “these… have not been included as part of the exhibits”, but that EIFY was prepared to make them available, “preferably in the form of electronic information saved onto a USB key”. The letter added that “these logs are unlikely to be of any value… solely due to the amount of data contained in them”. They were said to “comprise roughly 14 gigabytes of electronic data … printing [of which] would require millions of sheets of paper”.

112. A few months later, EIFY’s then lawyers did provide the defendants’ lawyers with what was called “a USB key which contains the e-Induct activity logs” to which Mr Culbert had referred.

113. Whatever might have been the correct description of the data comprised in that USB key, it was not the whole of the “activity logs”. On examination, it was found to contain only 80 megabytes of data; a minuscule amount of information (at least, compared to the 14GBs of data to which reference had been made). Further, on analysis, it contained no reference whatsoever to the particular IP address that Mr Culbert had identified as the one from which Mr Conacher had effected registration.

114. There was no explanation of this extraordinary and unsatisfactory situation; no explanation as to why (as it now appears) the defendants and their lawyers had been misled, no doubt innocently, in a very serious way.

115. The debate over the reserved paragraphs ranged far and wide. Mr Andronos submitted that what was said in the reserved paragraphs, as to the contents of the records, was hearsay. Mr Corsaro submitted that the reserved paragraphs were admissible as summaries pursuant to s 50 of the Evidence Act. It should be noted, firstly, that no formal application was made, as s 50 contemplates. Secondly, and more significantly, because of the misleading way in which the USB key was provided and the misleading representation as to its contents, it could not be said that EIFY had given the defendants “a reasonable opportunity to examine or copy” the underlying computer records (as required by s 50(2)(b)).

116. Mr Corsaro noted that printouts of extracts from what were said to be EIFY’s computer records appeared in various parts of the court book. He submitted that those extracts were documents produced by a device or process, and were admissible pursuant to s 146 of the Evidence Act. If I may say so, the question is not so much one of admissibility of screeds of printouts of the computer records in question. It is one of the admissibility of the opinions expressed by Mr Culbert as to the content and effect of those records.

117. A recurrent theme in Mr Andronos’ objections was that the evidence in question was evidence in chief, and that EIFY could not rely upon it except with the leave of the court (because of the guillotine order to which I referred earlier in these reasons [28] ). He submitted that it was unfair in the extreme, and thus prejudicial, for his client to be faced, in the course of the trial, with fresh evidence: evidence intended to prove not merely in a formal way matters that had been adequately but informally flagged in preceding evidence, but an important part of the case on a different factual basis.

     28. At [71] above.

118. I start with those of the reserved paragraphs that are found in Mr Culbert’s affidavit affirmed 21 December 2012. Paragraph 57, which seems to be some sort of summary of what precedes it, says that EIFY’s database records would demonstrate that when a certain account was created (by Mr Morrow), “the user created a company account for” Services. The difficulty with that paragraph is that nothing in what precedes it justifies the conclusion that is expressed. Nor do the documents actually identified in any of those paragraphs do so. Paragraph 57 appears to reflect no more than some conclusion by Mr Culbert that when a person who is a director or employee of a company creates an account with EIFY, what is created is “a company account”. To the extent that, in the preceding paragraphs, Mr Culbert gives evidence of what information was provided at registration, it cannot provide an evidentiary foundation for the conclusion expressed in para 57.

119. Accordingly, I rejected para 57.

120. Paragraph 58 refers to certain pages printed from what is said to be EIFY’s “activity web log”. Those pages were said to prove the fact that someone using a specified IP address registered with EIFY on a particular date. The difficulty with that is that the information contained in the USB key that was provided by EIFY to the defendants back in 2013, which was said to constitute the “activity logs” in question, shows no such thing.

121. Mr Corsaro submitted that the material in question was proved by other evidence: presumably, some scattered pages printed from the 14GBs of data comprising the totality of the various activity log records of EIFY. That material had not been provided to the defendants. Mr Corsaro submitted that this did not matter, because the records in question had been proved, and pages of their output had been printed, identified and put into evidence.

122. In my view, having regard to the way in which this aspect of the evidence developed, and leaving to one side the question, whether what was stated in the relevant pages was hearsay, to permit the fact to be proved in the manner that I have outlined would have been unfairly prejudicial to the defendants. That in my view is axiomatic, given the way that the defendants were misled as to the relevant records. It would also be likely to cause or result in an undue waste of time, because, the apparent true source of the fact (or of the primary facts leading to the relevant inference of fact) having been proved only in the course of the hearing, it would be reasonable for the defendants to seek to investigate it by the use of expert evidence. That would have necessitated an adjournment of the hearing whilst this was done.

437. Such services as Clearsite provided for the Thiess and Mirvac inductions were provided, as directed by Mr Culbert, to Group. I repeat that Clearsite invoiced Group (after an initial mistaken invoice to EIFY, which was cancelled at Mr Culbert’s direction) and was paid by Group. Mr Culbert must have been acting as a director of Group when he instructed Clearsite to provide those services, and directed it to invoice Group.

438. In those circumstances, the work done by Mr Quicke on the Thiess and Mirvac inductions cannot be regarded as falling within the scope of the “Consultancy Services” from time to time provided by Clearsite to EIFY. Thus, to the extent that there is any copyright in those works (that is to say, in so much of the 34 images as were the subject of Mr Quicke’s creative labours), it is not vested in EIFY by virtue of the deed of assignment.

439. In those circumstances, there is no point seeking to disentangle further the confusing and inconsistent evidence, and the submissions based upon it.

Text

450. EIFY’s particulars asserted that the text [120] on one page taken from an induction prepared by 3D Safety for Thiess breached EIFY’s copyright in the text of two or three slides forming part of the induction that EIFY prepared for LORAC. It is not clear whether this claim was pressed. It does not appear to have been addressed separately in EIFY’s closing submissions (written or oral, or in reply). Perhaps it is a chunk of EIFY’s case that fell between the gaps [121] .

     120. Meaning words.

     121. See at [253] above.

451. The short answer (if answer be required) is that although the text of the allegedly offending slide expresses the same idea as did the allegedly copyright text in the LORAC slides, the language is not the same. In the absence of submissions from EIFY on this aspect of its case, I do not propose to say anything more.

Conclusion on copyright case

452. However it is put, EIFY’s case based on breach of copyright must fail.

Misleading or deceptive conduct

453. EIFY’s case to misleading or deceptive conduct appears to be another chunk that has fallen between the gaps. I address it only because it is pleaded (and included in the stated issues) and has not been expressly withdrawn.

The pleaded case

454. The pleaded case as to misleading or deceptive conduct is stated at paras 14 to 19 of the list statement. I set out those paragraphs:

14.   Between February 2011 and May 2011, the first and/or fourth defendants made representations to the plaintiff that it would not develop software having the same or similar functionality to the software or systems of the plaintiff (“Pre-commencement Representations”).

Particulars

The Pre-commencement Representations were made during discussions between Mr Culbert of the plaintiff and the second defendant on behalf of the first and fourth defendants which occurred in the first half of 2011.

15.   The Pre-commencement Representations were made in trade and commerce.

16.   The Pre-commencement Representations were made in connection with the supply or possible supply of goods or services to others.

17. The Pre-commencement Representations were misleading and deceptive within the meaning of section 18 of the Australian Consumer Law.

Particulars

The Pre-commencement Representations were made either knowing them to be false or were not made on reasonable grounds, and the plaintiff in this respect relies upon section 4 of the Australian Consumer Law. The representations were promissory in quality and were unqualified, and the true position was that the first and/or fourth defendants might develop software having the same or similar functionality to the software or systems of the plaintiff.

18.   The plaintiff relied upon the Pre-commencement Representations.

Particulars

But for the Pre-commencement Representations, the plaintiff would not have:

(a)   proceeded with the joint venture or, alternatively, have allowed it to continue; or

(b)   given the defendants the level of access they were given (they already had access, just to the level that the plaintiff subsequently provided) to the eInduct System and confidential information.

19.   Further or in the alternative, it was misleading and deceptive for the first and fourth defendants to proceed with the joint venture in circumstances where they knew that the plaintiff believed that the defendants would not develop software having the same or similar functionality to the software or systems of the plaintiff, notwithstanding the first and/or fourth defendant’s intention to do so.

The parties’ submissions

455. The topic was not addressed (in terms, at least) in the closing oral submissions for EIFY. It was referred to briefly in EIFY’s closing written submissions, and in EIFY’s closing written submissions in reply. Those submissions stated, at paras 75 and 68 respectively:

MISLEADING & DECEPTIVE CONDUCT

[75] The evidence shows that prior to the commencement of the joint venture, Mr Anthony Conacher, on behalf of the first and fourth defendants, represented to the plaintiff that the defendants would not develop software having the same or similar functionality to the software or systems of the plaintiff. The plaintiff relied upon those representations in proceeding with the joint venture and giving the defendants a level of access to its software or systems. The plaintiff will assert that the representations were made either knowing them to be false, or were not made on reasonable grounds, and that they were accordingly misleading and deceptive within the meaning of section 18 of the Australian Consumer Law.

Misleading or deceptive conduct

[68]   The defendants’ assertion in relation to the plaintiff’s case for misleading or deceptive conduct is that it depends on an oral representation which Mr Culbert asserts Mr Conacher made and which Mr Conacher denies. The plaintiff asserts that if there is any contest between the truthfulness of Mr Conacher and Mr Culbert, the Court would comfortably accept Mr Culbert’s evidence.

456. The defendants’ submissions were that:

1. there was no evidence at all of any representation made (as the pleading asserted) between February and May 2011;

2. although Mr Culbert gave evidence of a representation said to have been made in July 2011, that evidence was uncorroborated and should be rejected; and

3. there was ample evidence that Mr Culbert had been told from time to time during the life of the joint venture that if the two systems could not be integrated, 3D Safety would develop its own online induction system.

Decision

457. The first submission put for the defendants is correct. There is no evidence of any representation made between February and May 2011. On that basis, the pleaded case based on misleading or deceptive conduct must fail.

458. As to the conversation that Mr Culbert alleged took place on 25 July 2011, there is no corroboration. Mr Conacher denies that the conversation took place. Although I put no more weight on Mr Conacher’s denial than I do on Mr Culbert’s assertion, the inevitable outcome, bearing in mind my view as to Mr Culbert’s credibility and the absence of corroboration, is that I am not satisfied, let alone actually persuaded, on the balance of probabilities that the alleged representation was made.

459. Even if the alleged representation were made, it is difficult to see how Mr Culbert could have placed any reliance on it. He had been told 20 days earlier, in an email of 5 July 2011, that if the integrated system could not be completed in time, 3D Safety might implement its own online induction system. The point was essentially repeated in an email from Mr Conacher to Culbert dated 13 July 2011, and again in the “Schedule Three” document signed by Messrs Conacher and Culbert on 20 July 2011.

460. As to this last document (signed five days before the date of the alleged representation), Mr Culbert accepted that it suggested to him that Mr Conacher might be intending or desiring to develop a competing product [122] .

     122. Affidavit affirmed 21 December 2012, para 114.

461. The case based on misleading or deceptive conduct is not made out on the evidence.

Remedies

462. EIFY has failed. It has not made good any claim to relief. I see no point in assessing what remedies (whether by way of damages, account of profits, equitable compensation or otherwise) might have been available. Any attempt to decide the question of remedies would require very different factual findings from those I have made. In effect, the exercise would require alternative hypothetical factual findings, and consideration of the results that, based on those hypothetical findings, might follow.

463. I add that even with the extended time allowed for the hearing, there was not enough time to consider the expert evidence on question of damages and other monetary relief. For those reasons, upon the defendants’ accepting (as they did) that if the plaintiff succeeded, it had suffered some loss (to the extent necessary to perfect its cause of action), I directed that all questions of quantification of loss and other monetary remedies be dealt with separately from and after the determination of all other issues in the proceedings.

Conclusion and orders

464. However it is put, EIFY’s case fails. The result is that there should be judgment for the defendants.

1. Since there will no doubt be an argument as to the costs orders that should be made, I propose to direct that the parties provide written submissions (and with them any evidence on which they intend to rely as to costs), and written submissions in reply. Unless the parties persuade me otherwise, I propose to deal with the questions of costs on the papers once submissions are complete.

465. I make the following orders:

1. direct entry of judgment for the defendants on the plaintiff’s claim.

2. Direct the parties, by 19 October 2017, to serve on each other and deliver to my Associate a draft of the costs orders that each seeks, any evidence in support of those orders, and written submissions not exceeding 10 pages in length in support of such orders.

3. Direct the parties, by 16 November 2017, to serve on each other and deliver to my Associate any evidence in reply on costs, and written submissions in reply not exceeding ten pages in length.

4. Unless the court otherwise orders, direct that the question of costs be dealt with on the papers.

5. Direct that the exhibits be handed out.

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Endnotes

Decision last updated: 28 September 2017