Godfrey Hirst v Cowes Bay Group
[2025] VSC 349
•17 June 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
INTELLECTUAL PROPERTY LIST
S ECI 2023 03101
| GODFREY HIRST AUSTRALIA PTY LTD (ACN 000 849 758) & ORS (according to the attached Schedule) | Plaintiffs |
| v | |
| COWES BAY GROUP PTY LTD (ACN 635 970 222) & ORS (according to the attached Schedule) | Defendants |
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JUDGE: | Attiwill J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 13 June 2025 |
DATE OF RULING: | 17 June 2025 |
CASE MAY BE CITED AS: | Godfrey Hirst v Cowes Bay Group |
MEDIUM NEUTRAL CITATION: | [2025] VSC 349 |
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PRACTICE AND PROCEDURE – Application to amend a statement of claim – Application also to strike out parts of the statement of claim and for further particulars – Application to amend allowed in part – Application to strike out refused – Application for further particulars allowed in part – Rules 23.02 and 36.01 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), Rule 7.02 of the Supreme Court (Intellectual Property) Rules 2016 applied – Cargill Australia Limited v Viterra Malt Pty Ltd (No 18) [2018] VSC 772; Wheelahan & Anor v City of Casey & Ors (No 12) [2013] VSC 316; Checked-out Pty Ltd v Eagle Eye Inspections Pty Ltd of NSW [1999] FCA 552; Australian Institute of Refrigeration, Air Conditioning and Heating v Smarttrade Limited [2023] FedCFamC2G 855; Harstedt Pty Ltd v Tomanek (2018) 55 VR 158; Chickabo Pty Ltd v Zphere Pty Ltd (2019) 57 VR 406, applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A J L Bannon SC Mr L Merrick KC Ms C Aumann | Herbert Smith Freehills Kramer |
| For the First, Second and Fifth Defendants | Mr P E Anastassiou KC Mr T M Dowling Mr A Middleton | Miltons Lawyers |
| For the Third and Fourth Defendants | Mr G Rinaldi | Rigby Cooke |
| For the Sixth Defendant | Mr B Petrie | K&L Gates |
HIS HONOUR:
INTRODUCTION
The plaintiffs seek leave to amend their statement of claim. The defendants oppose some of the amendments. The first, second and fifth defendants (the McKendrick parties) seek to strike out parts of the statement of claim and also seek further particulars. The third and fourth defendants support the McKendrick parties’ applications. The parties made written and oral submissions at the hearing.
APPLICABLE LAW
The applicable law concerning applications to amend, and to strike out, a pleading is well established and was not in dispute. Rule 23.02 provides:
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c)may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
Rule 36.01(1) provides:
(1) For the purpose of—
(a)determining the real question in controversy between the parties to any proceeding; or
(b) correcting any defect or error in any proceeding; or
(c) avoiding multiplicity of proceedings—
the Court may, at any stage order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding.
In Cargill Australia Limited v Viterra Malt Pty Ltd (No 18),[1] Elliott J said concerning an application to amend pleadings:
31.The principles relating to the granting or refusal of leave to amend pleadings are well established. Rule 36.01(1)(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) empowers the court to grant leave to any party to amend any document for the purpose of “determining the real question in controversy between the parties to any proceeding”. Leave may be granted at any stage of the proceeding.
32.In deciding whether to grant leave to a party to amend its pleadings, the court must consider whether the proposed amendments facilitate the identification of the real issues in dispute and the just resolution of the proceeding.
33.The power to grant leave to a party to amend its pleading to raise an arguable issue is a discretionary power. There is no right or entitlement for a party to amend its pleading subject to the payment of costs referable to the amendment. The nature and importance of the proposed amendments must be considered. This factor must be weighed against case management considerations such as cost, delay and the potential for unfair prejudice to other parties to the proceeding, the court and other litigants that might arise if the proposed amendments are allowed.
34.Further, in exercising the power to grant leave, the court may give any direction or impose any term or condition it thinks fit.[2]
[1][2018] VSC 772.
[2]Ibid [31]-[34] (citations omitted).
In Wheelahan & Anor v City of Casey & Ors (No 12),[3] John Dixon J said concerning the sufficiency and function of pleadings:
[3][2013] VSC 316.
Relevantly:
(a)Order 13 of the Rules set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;
(b)the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;
(c)the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence). The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;
(d)as a corollary, the pleading must be presented in an intelligible form –it must not be vague or ambiguous or inconsistent. Thus a pleading is ‘embarrassing’ within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
(e)the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;
(f)pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);
(g)a pleading which contains unnecessary or irrelevant allegations may be embarrassing – for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;
(h)it is not sufficient to simply plead a conclusion from unstated facts. In this instance, the pleading is embarrassing;
(i)every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));
(j)the effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03);
(k)particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement – namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried;
(l)a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it;
(m)extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible;
(n)in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;
(o)the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown; and
(p)if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.[4]
[4]Ibid [25] (citations omitted).
The Court must have regard to the relevant provisions of the Civil Procedure Act 2010 (Vic) when addressing case management matters, including applications for leave to amend, and to strike out, pleadings.
THE PLAINTIFFS’ CLAIMS
The plaintiffs provided the following convenient summary of their existing claims:
3.To place the proposed amendments in context, it is useful to briefly outline the plaintiffs’ allegations as currently pleaded.
4.The plaintiffs together operate the business known as Mohawk Flooring Oceania (MFO). MFO designs, manufactures and supplies flooring products in Australia and New Zealand.[5]
5.The third defendant (Ms Dupe, a solicitor) held (among others) the roles of General Counsel and HR Director for the first plaintiff (GHA). Ms Dupe was also a company director of the plaintiffs.[6] She held positions of great trust and responsibility with the plaintiffs. During the course of her employment, Ms Dupe had access to a wide range of confidential and commercially sensitive information relating to the business of MFO.[7]
6. The fourth defendant (Mr O’Dwyer) was a senior manager within GHA.[8] During the course of his employment with GHA, Mr O’Dwyer had access to confidential and commercially sensitive information relating to the business of MFO and concerning sales, pricing, costs of production, supplier and customer details and product details.[9] Again, Mr O’Dwyer was a trusted employee of GHA.
7.The first and second defendants are involved in the operation of a flooring business known as Armstrong Flooring. Like MFO, Armstrong Flooring supplies flooring products in Australia and New Zealand.[10] The fifth defendant (Mr McKendrick) ultimately owns and controls the first and second defendants. Mr McKendrick was the former ultimate owner of GHA and a number of the other plaintiffs. The first, second and fifth defendants are referred to below as the McKendrick Parties.[11]
8.Ms Dupe and Mr O’Dwyer have both left their roles at GHA and commenced working for the Armstrong Flooring business.[12]
9. The sixth defendant (Piper Alderman) is a law firm engaged to advise the first defendant in relation to the Armstrong Flooring business.[13] Piper Alderman had previously been an advisor to GHA.
10.The gravamen of the plaintiffs’ case is that Ms Dupe and Mr O’Dwyer have improperly taken, retained and used for the benefit of their new employer confidential and commercial sensitive information relating to the business of MFO.[14] The scope of the allegations is very substantial – for Ms Dupe, it is alleged that she downloaded and retained thousands of documents[15] and in the case of Mr O’Dwyer it is hundreds of documents.[16] Further, in respect of Ms Dupe, it is alleged that, prior to her departure from GHA, she commenced performing services for the Armstrong Flooring business, including HR and legal services.[17] The alleged conduct of Ms Dupe is particularly startling, given her role as a solicitor and the duties that entails.
11.The plaintiffs allege that the McKendrick Parties induced or procured Ms Dupe to engage in the conduct referred to above, with knowledge of her role at GHA.[18] The plaintiffs allege that the first and second defendants have received (from both Ms Dupe and Mr O’Dwyer) documents relating to the business of MFO which they ought to have known were confidential and commercially sensitive.[19] The plaintiffs also allege that the first and second defendants have engaged in copyright infringement in respect of a small number of terms and conditions and policy documents.[20]
12.The plaintiffs allege that Piper Alderman was knowingly involved in some aspects of the impugned conduct of Ms Dupe.[21]
[5]Statement of Claim dated 13 July 2023 (SOC), [11] and [12].
[6]SOC, [18].
[7]SOC, [26].
[8]SOC, [19].
[9]SOC, [27].
[10]SOC, [13] – [17].
[11]SOC, [20].
[12]SOC, [18] and [19].
[13]SOC, [21].
[14]The claims against Ms Dupe comprise breach of solicitor’s duties, breach of the Corporations Act 2001 (Cth), breach of fiduciary duty, breach of contract, breach of confidence and copyright infringement – see SOC, [42]–[65]. The claims against Mr O’Dwyer comprise breach of the Corporations Act, breach of fiduciary duty, breach of contract, breach of contract and copyright infringement – see SOC, [66]–[82].
[15]SOC, [29] and [30].
[16]SOC, [31] and [32].
[17]SOC, [28].
[18]SOC, [33]–[36]. The claims against the McKendrick Parties comprise involvement in breaches of the Corporations Act, involvement in breach of fiduciary duty, inducing breach of contract, breach of confidence – see SOC, [83]–[110]. In respect of the first and second defendants, copyright infringement is also alleged – see SOC, [111]–[116].
[19]SOC, [37] and [38].
[20]SOC, [111]–[116].
[21]SOC, [39]–[41], [117]–[122]. The claims against Piper Alderman comprise involvement in breach of the Corporations Act, involvement in breach of fiduciary duty and breach of confidence. No copyright claim is made against Piper Alderman.
ANALYSIS
It is convenient to address the parties’ applications by reference to the impugned paragraphs of the plaintiffs’ pleading, including the plaintiffs’ proposed amended statement of claim. I have included headings below that substantially accord with the headings in the plaintiffs’ pleading for convenience. This ruling assumes knowledge of the pleadings, including the plaintiffs’ proposed amended statement of claim, and also with the parties’ written and oral submissions.
Parties
Paragraph 11
The McKendrick parties’ summons sought to strike out this paragraph. But this application was abandoned because the McKendrick parties did not address it. As a result, I dismiss the application to strike out paragraph 11.
Ownership of copyright works
Paragraph 24 and 25
Paragraphs 24 and 25 concern alleged ownership of copyright works and also an exclusive licence of copyright works.
The plaintiffs seek leave to amend these paragraphs. The McKendrick parties and the third and fourth defendants seek to strike them out, alternatively, seek further particulars. The McKendrick parties’ defences to these pleas do not admit them. The third and fourth defendants also seek to impugn the plaintiffs’ pleas to paragraphs 24 and 25 even though in each of their defences they expressly state that they do not plead to the paragraphs as they make no material allegations against them.
Paragraph 24 has some minor typographical errors. The reference in particular (ii) should be a reference to particulars (v) to (vii) and not to particulars (vi) to (vii).
The plaintiffs made the following key submissions:
(a) the issue of copyright ownership and subsistence in the documents ought not be controversial. Paragraph 24 is a conventional plea which sets out the material facts required to support the subsistence of copyright and GHA’s standing to claim for breach of copyright;
(b) the GHA Works documents ‘clearly involve original expression and are works which on their face qualify for copyright protection and that the successive version of the work are not slavish copies’;
(c) the McKendrick parties’ submissions concerning ‘foreign employees’ and joint authors have no merit.
The McKendrick parties and the third and fourth defendants submitted:
(a) the plaintiffs have identified in broad terms works in which they say copyright exists and who they say are authors of those works;
(b) the particular contribution the authors have made to the particular GHA Works and the MFA Documents (incorrectly referred to as the ‘MFA Works’ in the McKendrick parties’ submissions) must be pleaded as a material fact;
(c) how the GHA Works and MFA Documents have originated (that is, made for the first time and not copied) by the author is not addressed;
(d) how it is said that foreign employees of the fifth to tenth plaintiffs and the entities described in paragraph 25 are ‘qualified persons’ for the purposes of s 32 of the Copyright Act 1968 (Cth) is not addressed.
In Checked-out Pty Ltd v Eagle Eye Inspections Pty Ltd of NSW,[22] a decision relied upon the plaintiffs and the McKendrick parties, Lehane J said:
The material facts necessary to be pleaded, in respect of breach of copyright, may be stated in this way. Facts must be pleaded which indicate the existence of copyright in something identifiable which is a proper subject of copyright, for example, a literary or artistic work. Those of course are only examples. One would therefore ordinarily expect to see an allegation of the way in which the particular work came into existence, of its authorship and, for the purpose of establishing ownership, of the circumstances in which the work was created: for example, whether the author was an employee of the applicant acting in the ordinary course of employment; or, it may be, an assignment from the author to the applicant. But what is required is an allegation of facts giving rise to the existence of copyright in an identifiable subject and supporting the conclusion, to which that part of the claim is directed, that the applicant is the owner of the copyright.[23]
[22][1999] FCA 552 (‘Checked-out’).
[23]Ibid [8] (emphasis added).
The McKendrick parties also relied upon Australian Institute of Refrigeration, Air Conditioning and Heating v Smarttrade Limited,[24] in which Manousaridis J said:
[24][2023] FedCFamC2G 855.
The facts that must be pleaded in a statement on cause of action for infringement of copyright in a work based on the unauthorised reproduction of the work, therefore, are as follows:
(a)First, the applicant must state facts that identify the work and the author or authors of the work, and facts on which the applicant relies for alleging that the work is an original work. These requirements will ordinarily be satisfied by the applicant stating facts that specify when, where, and the circumstances in which what is alleged to be an original work came into being. The importance of pleading these facts was emphasised by Gummow, Hayne, and Heydon JJ in IceTV Pty Limited v Nine Network Australia Pty Limited:
To proceed without identifying the work in suit and without informing the enquiry by identifying the author and the relevant time of making or first publication, may cause the formulation of the issues presented to the court to go awry.
…
The statement of claims pleads the following matters in relation to the creation and authorship of copyright in the third and fourth editions of the D19 Manual:
7.The DA19 Manual Third Edition and DA19 Manual Fourth Edition were created and edited by Vincent Aherne.
…
Paragraph 7 makes a conclusory allegation that Mr Aherne “created and edited” the third and fourth editions of the D19 Manual without identifying the underlying facts on which such conclusory allegations are based. It does not identify the effort AIRAH alleges Mr Aherne undertook, and the relationship between such effort and the creation of the third and fourth editions of the DA19 Manual. For this reason, paragraph 7 of the statement of claim is defective.[25]
[25]Ibid [71], [74]–[75] (citations omitted).
As to originality in the context of subsistence of copyright, the plurality of the High Court in IceTV Pty Ltd v Nine Network Pty Ltd[26] said:
The requirement for copyright subsistence that a literary work be “original” was first introduced into the Copyright Act 1911 (Imp), although it had already been recognised at common law. Originality for this purpose requires that the literary work in question originated with the author and that it was not merely copied from another work. It is the author or joint authors who bring into existence the work protected by the Act. In that context, originality means that the creation (ie the production) of the work required some independent intellectual effort, but neither literary merit nor novelty or inventiveness as required in patent law.[27]
[26](2009) 239 CLR 458 (French CJ, Crennan and Kiefel JJ).
[27]Ibid [33] (citations omitted).
In Telstra v Phone Directories Company,[28] Perram J said:
On the question of what is “original” some propositions are well-established. First, although the Act does not define “original” it is accepted that it means “originated” (ie made for the first time and not copied) by an “author” (IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458 at [33] (IceTV)); secondly, leaving aside the position of photographs, for which separate provision is made, the “author” must be an actual person (for reasons including, inter alia, the fixing of the duration of the monopoly by reference to the author’s life: s 33 of the Act) (IceTV at [97]); thirdly, to qualify as an author that person must bring to bear some “independent intellectual effort” (IceTV at [33]) or “sufficient effort of a literary nature” (IceTV at [99]); fourthly, the effort called for by the Act falls well short of requiring either the fashioning of works of literary merit (in the traditional sense obtaining to literature) (IceTV at [33]) or the inception of those exhibiting inventiveness (IceTV at [33]). The point of the copyright monopoly is the encouragement of new works not good works.[29]
[28](2010) 194 FCR 142.
[29]Ibid [100].
I will not strike out paragraphs 24 and 25. I will allow the application to amend those paragraphs. But I will order the plaintiffs provide further particulars.
First, the matters set out in the particulars in each of paragraphs 24 and 25 are material facts which should have been pleaded and not set out in particulars. But I do not consider striking out the paragraphs and giving a right to replead will facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. This may be achieved by the giving of particulars. In addition, the McKendrick parties submitted that the matters they raise to impugn the plea may be addressed by further particulars.
Second, paragraphs 24 and 25 largely give adequate notice of the claims against the defendants. This is because:
(a) the author(s) are identified with respect to many of the documents;
(b) the plaintiffs’ case is that the author’s contribution was the creation of the documents themselves. The plaintiffs’ case is where there is more than one author, they all were involved in creating the documents;
(c) the ‘author’ of many of the documents is stated to be the third defendant;
(d) the works are identified;
(e) the works are alleged to be original works (i.e. not copies);
(f) the McKendrick parties have already pleaded to these claims by not admitting them.
However, an order for further particulars is appropriate. First, the works are stated to be ‘created’ by the authors during the course of their employment. The plaintiffs submitted that the documents themselves evidence, in effect, the independent intellectual effort involved in their creation. They submitted that they ‘clearly involve original expression and are works which on their face qualify for copyright protection’. But to plead that a document was ‘created’ by someone is insufficiently precise, even though it is also said that the works are original. The pleading as a whole does not identify ‘the way in which the particular work came into existence’.[30] These deficiencies should be addressed by way of further particulars as to the way in which the particular work came into existence. This concerns, most importantly, the identification of the intellectual effort involved in the creation of the GHA Works and the MFO Works. If the plaintiffs’ case is that they were ‘drafted’ by the authors (ie that is the intellectual effort) and they rely upon the contents of the documents themselves (ie ‘are works which on their face qualify for copyright protection’) without anything else, then this should be clearly stated in the particulars. Such particulars will be, in the circumstances of this case, especially given the matters set out in paragraph [21] above, sufficient. This will then frame, for example, the relevance of evidence at the trial. The provision of such particulars will facilitate the just, efficient and costs effective resolution of the dispute concerning these pleas. If there remains particular matters that are unclear then this may be further addressed by the precise identification of the matter that requires further clarification by particulars. I expect that the parties should be able to address any such matter without recourse to the Court. Second, in circumstances where works take the form of an electronic document and may not bear a date on their face, an allegation that that ‘creation’ took place at some undefined time in the course of a person’s employment is also insufficiently precise. The date of creation is important as the plaintiffs claim that the documents were created when the third defendant, and certain other persons, were the plaintiffs’ employees. The plaintiffs should identify when the works were created and do so in the pleading by particulars. Again, in my view, this should be able to be readily attended to by the plaintiffs. Indeed the plaintiffs submitted that this information was already included in the affidavit of an expert witness filed in September 2024.
[30]Checked-out, [8].
Finally, the third and fourth defendants also submitted that the plaintiffs do not prioritise which documents are said to cause or likely to cause significant commercial loss. This is no basis, in the present circumstances, to strike out the pleading. In addition, the plaintiffs have not yet filed expert evidence. This may assist in identifying which documents are said to cause or likely to cause significant commercial loss.
As a result, I will allow the application to amend, refuse the application to strike out and allow the application for further particulars.
Access to copyright works and confidential and commercially sensitive business information of the plaintiffs
Paragraphs 26 and 27
Paragraphs 26 and 27 concern allegations of the third and fourth defendants’ access to information and documents of ‘MFO’. It is also alleged that certain information and documents are ‘confidential and commercially sensitive’.
The plaintiffs seek leave to amend these paragraphs. The McKendrick parties and the third and fourth defendants seek to strike out these paragraphs, or alternatively, seek further particulars. The McKendrick parties’ defences to these pleas, inter alia, allege that they are embarrassing and ought to be struck out.
The plaintiffs submitted that their claims with respect to the confidential and commercially sensitive information taken by the third and fourth defendants are clear, specific and exhaustive. The plaintiffs submitted that on the face of many of these documents it is apparent that they contain or comprise information which by its nature is confidential or commercially sensitive. The McKendrick parties and the third and fourth defendants dispute this and submit that the plaintiffs have failed to adequately identify why the information is alleged to be commercially sensitive and confidential.
The applicable law concerning the requirements in alleging a breach of confidence are well established and were not in dispute. A statement of claim must specify and identify, with particularity:
(a) what information is the subject of complaint and how it properly attracts the protection of confidentiality;[31] and
(b) the disclosure or use which is alleged against the defendants.[32]
[31]Liberty Financial Pty Ltd v Scott (No 3) (2004) 11 VR 621, [16].
[32]Pioneer Concrete Services Limited v Galli (1985) VR 675, 711.
I will not strike out paragraph 26. I will allow the application to amend. But I will order the plaintiffs to provide further particulars. This is because:
(a) the McKendrick parties submitted that the matters they raise to impugn the plea may be addressed by further particulars;
(b) the plaintiffs seek to make a case that the documents referred to in the particulars to paragraph 26 are confidential and commercially sensitive but this should be particularised. At present, it is a mere assertion in particulars. The pleading does not contain any particulars as to why the information is confidential and commercially sensitive. In addition, paragraph 26 only alleges access and the statement that the information is confidential and commercially sensitive information is set out in the particulars without any further particulars. The plea does not give proper notice to the defendants of the case they are to meet. The defendants should not be left to guess why the documents contain confidential and commercially sensitive information. The plaintiffs must give particulars of what information is commercially sensitive and what information is confidential. The plaintiffs submitted that all of the information is both commercially sensitive and confidential. This should be set out in the particulars. In addition, the plaintiffs should provide particulars as to why the information is confidential and why it is commercially sensitive;
(c) I refer to the plaintiffs’ submissions on the strike out and in reply on the amendment at Section B. The plaintiffs have elected to make a claim that documents are ‘confidential and commercially sensitive’. They explain that this language ‘denotes that the plaintiffs primary claim is that the information in question would be protected by equity as confidential’. They further submit that the ‘plaintiffs are entitled to seek to prevent dissemination of their confidential and commercially sensitive information to their competitors and its use by the their competitors’. None of this means that the plaintiffs should not be required to provide adequate particulars in support of their claims that the information is, in fact, ‘confidential and commercially sensitive’.
I will also not strike out paragraph 27. I will allow the application to amend. But I will order the plaintiffs to provide further particulars. This is because the matters I have set out in relation to paragraph 26 apply also to paragraph 27.
As a result, I will allow the application to amend, refuse the application to strike out and allow the application for further particulars.
The impugned conduct of the third defendant
Paragraph 28
Paragraph 28 concerns the alleged conduct of the third defendant in, inter alia, performing work for the first and second defendants.
The plaintiffs seek leave to amend this paragraph by adding particular (vi) and deleting a particular. The McKendrick parties and the third and fourth defendants oppose the amendment and submitted that this approach to pleading is inappropriate and effectively amounts to evidence and that the reference to a document does not inform the defendants or the Court what particular conduct or fact the plaintiffs rely upon. They also sought further particulars. I will not allow this amendment and order the plaintiffs to provide particulars of any work and services relied upon. In addition, as to particular (iii) this also refers to work and services and then examples of this in documents. The plaintiffs should identify the work and services and not leave the defendants to try to determine these matters from the documents. As a result, I will not allow the amendment and order the plaintiffs to provide particulars of any work and services relied upon. This may reference documents but the actual work and services must be identified.
As a result, I will not allow the application to amend by including particular (vi) and allow the application for further particulars.
Paragraph 29
Paragraph 29 concerns the alleged conduct of the third defendant in making and retaining copies of GHA Works and other documents containing the plaintiffs’ alleged confidential and commercially sensitive information. The documents are defined as the Dupe Downloaded Documents and the Dupe USB Documents.
The plaintiffs seek leave to amend this paragraph by deleting a particular. The McKendrick parties and the third and fourth defendants do not oppose the amendment but seek further particulars. They submitted that it does not particularise the relevant conduct relied upon but rather makes references to documents. I do not accept this submission. This is because the pleas in sub-paragraphs 29(a) and (b) identify the alleged conduct with precision. The particulars also identify the documents the subject of the conduct. No further particulars are required of the conduct.
As a result, I will allow the application to amend and dismiss the application for further particulars.
Paragraph 30
Paragraph 30 concerns the alleged conduct of the third defendant in retaining, copying, distributing and using the plaintiffs’ confidential and commercially sensitive information contained in the Dupe Downloaded Documents and the Dupe USB Documents.
The plaintiffs seek to amend this paragraph to delete a particular and to state at particular (v) that ‘The Plaintiffs rely on the documents set out in the Plaintiffs’ proposed interim tender list which are marked as relevant to this paragraph’. The McKendrick parties and the third and fourth defendants oppose the amendment for the inclusion of particular (v) and seek further particulars. They submitted that this approach to pleading is inappropriate and effectively amounts to pleading evidence and that the reference to a document does not inform the defendants or the Court what particular conduct or fact the plaintiffs rely upon. I agree. Particular (v) is manifestly defective. It does not identify how any of the documents are relevant.
As a result, I will not allow the application to amend to include particular (v) and also I will not allow the application for further particulars.
Paragraph 30A
Paragraph 30A is a new plea and concerns the alleged conduct of the third defendant from 12 October 2022 in continuing to facilitate the development of the Armstrong Flooring business.
The third and fourth defendants oppose the amendment and submitted that the current pleading already makes this allegation against the third defendant. I will allow the amendment. I do not accept the submission that this allegation is already made. The plea in paragraph 30A is clearly an additional claim. It not only concerns a period from 12 October 2022 but specifically concerns the facilitation of the development of the Armstrong Flooring business.
As a result, I will allow the application to amend.
The Impugned conduct of the fourth defendant
Paragraph 31
Paragraph 31 concerns the alleged conduct of the fourth defendant in making and retaining documents of the plaintiffs that are alleged to be confidential and commercially sensitive.
The plaintiffs seek leave to amend this paragraph by deleting a particular. The McKendrick parties and the third and fourth defendants do not oppose the amendment but seek further particulars. They submitted that it does not particularise the relevant conduct relied upon but rather makes references to documents. I do not accept this submission. This is because the pleas in sub-paragraphs 31(a) and (b) identify the alleged conduct with precision. Particulars are provided. No further particulars are required of the conduct.
As a result, I will allow the application to amend and dismiss the application for further particulars.
Paragraph 32
Paragraph 32 concerns the alleged conduct of the fourth defendant in retaining, copying, distributing and using the plaintiffs’ alleged confidential and commercially sensitive information.
The plaintiffs seek leave to amend this paragraph by deleting a particular and adding a further particular (iii). The McKendrick parties and the third and fourth defendants oppose the amendment of the inclusion of particular (iii) and also seek further particulars. They submitted that it does not particularise the relevant conduct relied upon but rather makes references to documents. I do not accept this submission. This is because the pleas in sub-paragraphs 32(a) and (b) identify the alleged conduct with precision. Particulars are provided. The reference to the documents in this paragraph is very limited and confined. No further particulars are required of the conduct. In addition, the proposed new particular (iii) refers to documents that are directly relevant to the pleas in paragraphs 32(b) and (c).
As a result, I will allow the application to amend and dismiss the application for further particulars.
Paragraph 32A and 32B
Paragraph is 32A new. It concerns the alleged conduct of the fourth defendant in performing work for and providing services to the first and second defendants without the plaintiffs’ licence or authority. Paragraph 32B is also new. It concerns the alleged conduct of the fourth defendant in contacting suppliers of GHA without the plaintiffs’ licence or authority.
The third and fourth defendants oppose the amendments to paragraph 32A and submitted that they are unnecessary as the current pleading already makes clear allegations against the fourth defendant. I will allow the amendments. The pleas in paragraph 32A, and also paragraph 32B, are not made presently made against the fourth defendant. They are new pleas.
As a result, I will allow the application to amend.
The impugned conduct of the McKendrick parties
Paragraph 33
Paragraph 33 concerns the allegation that the fifth defendant was on notice of certain matters concerning the employment and capacity of the third defendant.
The plaintiffs seek leave to amend this paragraph by deleting a particular and adding new particular (ii). The McKendrick parties and the third and fourth defendants object to particular (ii) on the basis that it is a reference to the evidence and does not inform them or the Court as to what particular conduct or fact the plaintiffs rely upon to support the pleaded assertion. The McKendrick parties and the third and fourth defendants also seek further particulars. I will allow the amendment and dismiss the application for particulars. This is because the particulars are adequate given the confined extent of the allegations in this paragraph. The reference to the documents in new paragraph (ii) is limited to particular documents, being emails to which the fifth defendant was a party and only insofar they reference ‘Ms Dupe’s employment’. This is adequate to put the fifth defendant on notice of the claims.
As a result, I will allow the application to amend and dismiss the application for further particulars.
Paragraph 34
Paragraph 34 concerns the alleged conduct of the fifth defendant in inducing, procuring and or instructing certain conduct of the third defendant.
The plaintiffs seek leave to amend this paragraph by deleting a particular and adding new particular (ii). The McKendrick parties and the third and fourth defendants object to particular (ii) on the basis that it is a reference to the evidence and does not inform them or the Court as to what particular conduct or fact the plaintiffs rely upon to support the pleaded assertion. The McKendrick parties and the third and fourth defendants also seek further particulars. I will not allow the amendment and order the plaintiffs to provide particulars. This is because the particulars, including by proposed new particular (ii), are inadequate. Mr McKendrick should not be left to read the documents in paragraphs (i) and (ii) and attempt to determine in what respect he induced, procured and/or instructed the third defendant. The plaintiff should clearly set this out in particulars, supported by reference to the relevant documents. See for example the manner in which this is attended to in particulars (iii) and (iv) to paragraph 35.
As a result, I will not allow the amendment to paragraph 34 by the inclusion of particular (ii) and allow the application for particulars.
Paragraph 35
Paragraph 35 concerns the allegation that the first and second defendant were on notice of certain matters concerning the employment and capacity of the third defendant.
The plaintiffs seek leave to amend this paragraph by making amendments to the plea and also deleting a particular and adding new particulars (iii) and (iv). The McKendrick parties and the third and fourth defendants object to particular (iv) of paragraph 35 on the basis that it is a reference to the evidence and does not inform them or the Court as to what particular conduct or fact the plaintiffs rely upon to support the pleaded assertion. The McKendrick parties and the third and fourth defendants also seek further particulars. I will allow the amendment and dismiss the application for particulars. This is because the particulars are adequate given the confined extent of the allegations in this paragraph. The reference to the documents in new paragraph (iv) is limited to particular documents and the conduct is identified in the particulars.
As a result, I will allow the application to amend and dismiss the application for further particulars.
Paragraph 36
Paragraph 36 concerns the alleged conduct of the first and second defendant in inducing, procuring and or instructing certain conduct of the third defendant.
The plaintiffs seek leave to amend this paragraph by making a minor amendment to the plea and by deleting a particular and adding new particular (ii). The McKendrick parties and the third and fourth defendants object to particular (ii) on the basis that it is a reference to the evidence and does not inform them or the Court as to what particular conduct or fact the plaintiffs rely upon to support the pleaded assertion. The McKendrick parties and the third and fourth defendants also seek further particulars. I will not allow the amendment and order the plaintiffs to provide particulars. This is because the amendment and the particulars are inadequate. The reference to the documents in new paragraph (ii) is limited to particular documents but the conduct is not adequately identified. In addition, as to particular (i) this states that the plaintiffs rely upon documents. The first and second defendant should not be left to read the documents in particular (i) and proposed new particular (ii) and attempt to determine in what respect they induced, procured and/or instructed the third defendant. The plaintiffs should clearly set this out in particulars.
As a result, I will not allow the application to amend to include particular (ii) and allow the application for further particulars.
Paragraph 39
Paragraph 39 concerns the allegation that the sixth defendant was on notice of certain matters concerning the employment and capacity of the third defendant.
The plaintiffs seek leave to amend this paragraph by deleting a particular and adding new particular (iii). The McKendrick parties and the third and fourth defendants object to the amendment by the inclusion of particular (iii) and seek further particulars. The McKendrick parties and the third and further defendants submitted that the particulars refer to documents and not conduct. I do not accept this submission. This is because the plaintiffs identify the relevant documents and the conduct relied upon. The particulars are adequate given the confined extent of the allegations in this paragraph. I also note that this plea is made directly against the sixth defendant and it makes no objection to this plea.
As a result, I will allow the application to amend and dismiss the application for further particulars.
Paragraph 41
Paragraph 41 concerns the alleged conduct of the sixth defendant in receiving, accepting and following instructions given by the third defendant.
The plaintiffs seek leave to amend this paragraph by deleting a particular and adding new particular (ii). The McKendrick parties and the third and fourth defendants oppose the amendment by the inclusion of new particular (ii) and submitted that this approach to pleading is inappropriate and effectively amounts to evidence and that the reference to a document does not inform the defendants or the Court what particular conduct or fact the plaintiffs rely upon. They also sought further particulars. I will allow this amendment. The amendment identifies the documents and the conduct. But I will also order the plaintiffs to provide particulars of the conduct relied upon as particular (i) as this just provides a list of documents. The plaintiffs should identify the conduct and not leave the defendants to try to determine these matters from the documents.
As a result, I will allow the application to amend and order the plaintiffs to provide further particulars.
Additional impugned conduct of first, second, third, fifth and sixth defendants
Paragraph 41A
The plaintiffs seek leave to amend to include new paragraph 41A. It was a substantial focus of the parties’ submissions. The original proposed new paragraph 41A, upon which the parties made their written submissions, states:
41A. By the conduct referred to:
(a)in the case of Ms Dupe, in paragraphs 28 to 30 above and 51 below;
(b)in the case of Cowes Bay and Armstrong, in paragraphs 35 to 37 above;
(c) in the case of Mr McKendrick, in paragraphs 33 and 34 above; and
(d) in the case of Piper Alderman, in paragraphs 39 to 41 above,
each of these parties has joined in a dishonest and fraudulent design to:
(e)use the Plaintiffs’ confidential and commercially sensitive information;
(f)use the Plaintiffs’ copyright works without the licence or authority of the Plaintiffs; and
(g)procure Ms Dupe’s assistance for the benefit of Cowes Bay and Armstrong while she remained an employee, director and solicitor for the Plaintiffs.
During the hearing the plaintiffs provided a number of further versions and ultimately sought leave to amend to include a new paragraphs 41A in the following terms:
41A. By the matters referred to:
(a) in the case of Ms Dupe, paragraphs 28 to 30 above and 51 below;
(b)in the case of Cowes Bay and Armstrong, paragraphs 35 to 37 above;
(c) in the case of Mr McKendrick, paragraphs 33 and 34 above; and
(d) in the case of Piper Alderman, paragraphs 39 to 41 above,
each of these parties, in the case of Ms Dupe engaged in, and in the case of the first, second, fifth and sixth defendants, knowingly assisted in, the dishonest and fraudulent design of Ms Dupe to:
(e)use the Plaintiffs’ confidential and commercially sensitive information;
(f)use the Plaintiffs’ copyright works without the licence or authority of the Plaintiffs; and
(g) provide Ms Dupe’s services,
for the benefit of Cowes Bay and Armstrong while she remained an employee, director and solicitor for the Plaintiffs.
No particulars are provided. The amendment is opposed by all of the defendants.
In Harstedt Pty Ltd v Tomanek,[33] the Court of Appeal stated:
[33](2018) 55 VR 158.
70.Turning then to the second limb of Barnes v Addy, the necessary elements of liability under that limb, as conventionally understood in Australia, are:
(a)the existence of a fiduciary duty owed by the fiduciary (as trustee or otherwise);
(b) a ‘dishonest and fraudulent design’ on the part of the fiduciary;
(c) assistance by the third party in that design; and
(d)knowledge on the part of the third party of the circumstances constituting that design.
…
81.The requirement that there be a ‘dishonest and fraudulent design’ on the part of the fiduciary means that the breach of fiduciary duty itself must be dishonest and fraudulent. The meaning of ‘dishonest and fraudulent’ in this context was considered in Westpac Banking Corp v The Bell Group Ltd (in liq) (No 3) and Hasler. These cases reveal a difference in opinion as to what constitutes a dishonest and fraudulent breach of trust. In the present case, nobody has impeached the trial judge’s conclusion that Apollo’s breach of trust had been dishonest and fraudulent. The parties’ submissions do not disclose any difference in opinion on the meaning of the term ‘dishonest and fraudulent design’. It is therefore unnecessary to consider this element any further.
…
84.The applicable principles may be stated briefly. A third party will not be liable for knowing assistance unless he or she knew, or had reason to know, of the dishonest and fraudulent design on the part of the fiduciary. It is not necessary to show that the third party acted dishonestly. Such liability is distinct from the liability of a third party who procures or induces a breach of fiduciary duty.
85.It has been customary, though not without some controversy, to analyse the requirement of knowledge for accessorial liability for breach of fiduciary duty by reference to the following five categories set out by Peter Gibson J, acting on an agreement between counsel, in Baden v Société Générale pour Favoriser le Dévelopment du Commerce et de l'Industrie en France SA:
(a)actual knowledge;
(b)wilfully shutting one’s eyes to the obvious;
(c)wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make;
(d)knowledge of circumstances which would indicate the facts to an honest and reasonable person;
(e)knowledge of circumstances which would put an honest and reasonable person on inquiry.
86.Each of the first two categories speaks for itself. The third category ‘involves such a calculated abstention from inquiry as would disentitle the third party to rely upon lack of actual knowledge of the trustee’s or fiduciary’s wrongdoing’. The fourth category is ‘designed to prevent a third party setting up his or her own “moral obtuseness” as the reason for not recognising an impropriety that would have been apparent to an ordinary person’. The fifth category derives from the doctrine of bona fide purchaser for value without notice.
87. The High Court in Farah endorsed the Baden scale and indicated that knowledge falling within any of the first four categories, but not the fifth, represents the law in Australia.
…
117.First, there will be assistance where, but for the action or inaction of the third party, the breach of fiduciary duty would not have occurred. A common example is the role of a bank or other financial intermediary the function of which is essential to effect a transaction that amounts to a breach of trust.
118.Secondly, there may also be assistance where the third party has facilitated a breach of fiduciary duty that would have occurred in any event. It is difficult to see how, in view of equity’s broad concern with preventing unconscionability, a third party in these circumstances could not be liable under the second limb of Barnes v Addy, even if there is evidence to suggest that the commission of the primary breach was a foregone conclusion.[34]
[34]Ibid [70], [81], [81]–[87], [117]–[118] (citations omitted).
In Chickabo Pty Ltd v Zphere Pty Ltd,[35] Sifris J said:
The breach of fiduciary duty itself must be “dishonest and fraudulent” in order to satisfy the second limb of Barnes v Addy. It is clear that this requirement excludes “well-intentioned” or “trivial” breaches of trust or fiduciary duty from the scope of “knowing assistance”, and something more than a mere breach of trust or fiduciary duty will be required to establish liability.[36]
[35](2019) 57 VR 406.
[36]Ibid [188] (citations omitted).
The plaintiffs submitted, inter alia:
23.The submissions of the defendants in reply to the plaintiffs’ amendment application confuse or obscure the test for knowing assistance in a breach of fiduciary duty. As set out at [35] of the plaintiffs’ submissions in support of that application, the authorities are clear that it is the dishonest and fraudulent conduct of Ms Dupe (the fiduciary) which is central to the enquiry. With respect to the parties against whom knowing assistance is alleged, the question is one of knowledge.
…
26.The ASOC squarely pleads the integers of knowledge relied upon by the plaintiffs in respect of each of the first, second, fifth and sixth defendants.
I will refuse leave to make the amendment with leave to replead. The allegations in paragraph 41A are rolled up, vague and lacking in particulars.
First, the plea is a rolled up plea in which the critical elements of the cause of action are not adequately identified and not particularised with any precision. It does not give proper notice to the defendants of the case they are to meet. I am not satisfied, at present, that the claims sought to be made are untenable. But I am satisfied that the claims are not properly pleaded.
Second, it is also unclear how paragraph 41A relates to the present causes of action in other parts of the pleading. I refer to paragraphs 85, 95 and 119 in which paragraph 41A is sought to be relied upon in claims against the McKendrick parties and the sixth defendants respectively for, inter alia, knowingly being a party to the third defendant’s breach of her fiduciary duties. But it is only referred to in particulars. This is unclear and confusing as these paragraphs do not expressly plead that these defendants were a knowing participant to the third defendant’s dishonest conduct and fraudulent design. The reference in particulars to paragraph 41A compounds the lack of clarity and confusing nature of the case. If the matters in paragraph 41A only concern these other pleas then the plaintiffs may wish to simply further amend these other pleas and make the claims in the one section of the pleading.
Third, the plaintiffs should advance a pleading that clearly identifies the elements of the cause of action against the McKendrick parties, the third defendant and the sixth defendant as follows:
(a) the relevant fiduciary duty should be identified;
(b) the dishonest and fraudulent design should be separately pleaded with particulars;
(c) the assistance in the design should be separately pleaded with particulars against each of the relevant defendants;
(d) knowledge on the part of each of the relevant defendants should be separately pleaded with particulars.
This will facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute. The present proposed plea will not.
Finally, the plaintiffs allege that while they consider the present pleading to be clear the proposed inclusion of paragraph 41A is made for the avoidance of doubt. I do not accept this submission. The plaintiffs have elected to plead accessorial liability based upon a dishonest and fraudulent design. They should do so by pleading the material facts supports supported by adequate particulars.
As a result, I will also not allow the other consequential amendments to paragraphs 85, 95 and 119.
Paragraphs 83 and 84
Paragraph 83 concerns the alleged conduct of the fifth defendant in, inter alia, aiding, abetting, counselling or procuring certain conduct of the third defendant. Paragraph 84 concerns the alleged contravention by the fifth defendant of sections of the Corporations Act.
The plaintiffs do not seek leave to amend these paragraphs. The McKendrick parties and the third and fourth defendants seek to strike them out. They submit that it is insufficient to refer to the generalised claims made in paragraphs 33 and 34 of the statement of claim to support the allegations in paragraphs 83 and 84. I will refuse the application but order further particulars in relation to paragraph 84. This is because:
(a) the plea in paragraph 83 is based upon the pleas in paragraphs 33 and 34. I refer to my ruling above in relation to these paragraphs. As I have said, I will allow the application for further particulars of paragraph 34. The provision of adequate particulars will likely address the complaints of the McKendrick parties and the third and fourth defendants concerning paragraph 83. If it does not then the McKendrick parties will be at liberty to renew their application;
(b) the plea in paragraph 84 follows from the plea in paragraph 83. It is clear and adequately pleaded. But no particulars are provided. Particulars should be provided identifying how the conduct breached each of the sections.
As a result, I will not allow the application to strike out but I will order particulars of paragraph 84.
Paragraph 85
Paragraph 85 concerns, inter alia, the alleged knowledge of the fifth defendant that by certain conduct the third defendant would breach her fiduciary duties to the plaintiffs.
The plaintiffs seek leave to amend this paragraph by deleting a particular and adding new particular (v). The McKendrick parties and the third and fourth defendants oppose the amendment by the inclusion of particular (v) and also seek to strike out this paragraph, alternatively, further particulars. I have already said that I will not allow the amendment by the inclusion of particular (v) as it refers to paragraph 41A. Paragraph 85 refers to paragraphs 28 to 30 and 51. As I have said, I will allow the application for further particulars of paragraph 28. But the pleading also does not provide any particulars of knowledge of the third defendant’s conduct (see how paragraph 85 is relied upon in paragraph 86, being the fifth defendant’s knowledge of, inter alia, the third defendant’s conduct). Particulars of knowledge must be provided. The present pleading is inadequate as it does not put the fifth defendant on notice of the claims about knowledge of the third defendant’s conduct. The provision of adequate particulars will likely address the complaints of the McKendrick parties and the third and fourth defendants. If it does not then the McKendrick parties will be at liberty to renew their application.
As a result, I will not allow the application to amend to include particular (v) and otherwise allow the application to amend and not allow the application to strike out but allow the application for further particulars.
Paragraphs 87 and 89
Paragraph 87 concerns, inter alia, the alleged knowledge of the fifth defendant that by certain conduct the third defendant would breach her contractual duties to the plaintiffs. Paragraph 89 concerns a claim for loss and damage.
The plaintiffs seek leave to amend paragraphs 87 and 89. The amendments are not opposed. The McKendrick parties and the third and fourth defendants seek further particulars.
Subject to adequate particulars being provided to paragraph 85, the particulars to paragraph 87 are adequate. This is because the gist of the plea is the fifth defendant’s knowledge or being on notice of the contractual obligations in paragraphs 54 and 56. The particulars to paragraph 87 refer to and repeat the particulars to paragraph 85. I otherwise refer to my ruling in relation to paragraph 85 above.
As a result, I will allow the application to amend and dismiss the application for further particulars.
The particulars to paragraph 89 are inadequate. This is because:
(a) the plaintiffs state that they may provide further particulars after discovery and the filing of affidavit evidence but these particulars has a number of clear vices. First, the plaintiffs do not commit to providing any particulars. Second, the defendants have made discovery. Third, the parties have filed witness outlines. Finally, the Court has not ordered that any evidence be given by affidavit;
(b) loss and damage is an element of the tort and the fifth defendant is entitled to know the case he must meet. The case remains unclear at present;
(c) detailed particulars of the actual loss and damage may be provided with the plaintiffs’ expert reports on quantum. I refer to the matters I have set out below with respect to paragraphs 123 and 124.
As a result, I will allow the application for further particulars.
Paragraph 88
Paragraph 88 concerns an allegation the fifth defendant intentionally instructed, encouraged and/or assisted the third defendant to engage in certain conduct.
The plaintiffs seek to delete a paragraph number. The McKendrick parties and the third and fourth do not oppose the amendment but seek to strike out this paragraph. Paragraph 88 alleges that from at least 4 July 2022, the fifth defendant intentionally instructed, encouraged and/or assisted the third defendant to engage in the conduct set out in paragraphs 28 to 30A, 54 and 56. I will not strike it out but I will order the plaintiffs to provide particulars. This is because:
(a) the plea is not based upon other allegations. For example, it does not plead ‘By reason of’ and then identify any previous pleas;
(b) no particulars are provided;
(c) I will afford the plaintiffs an opportunity to provide particulars. This is because this will facilitate the just, efficient and costs effective resolution of the dispute concerning this plea;
(d) in the absence of any particulars, or any adequate particulars, the McKendrick parties will be at liberty to renew their application.
As a result, I will allow the amendment, refuse the application to strike out but order the plaintiffs to provide particulars of paragraph 88.
Paragraph 95
Paragraph 95 concerns, inter alia, the alleged knowledge of the first and second defendants that by certain conduct the third defendant would breach her fiduciary duties to the plaintiffs.
The plaintiffs seek leave to amend this paragraph by deleting a particular and adding new particular (vi). The McKendrick parties and the third and fourth defendants oppose new particular (vi) and seek further particulars. I have already said that I will not allow this amendment by the inclusion of new particular (vi) as it refers to paragraph 41A. The particulars to paragraph 95 are inadequate. This is because the particulars do not provide any particulars that the first and second defendants knew of the third defendant’s conduct set out in paragraphs 28 to 30 and 51. The particulars are confined to knowledge of the third defendant’s contractual and fiduciary duties. Knowledge of the third defendant’s conduct is an element of the cause of action against the first and second defendants and they are entitled to know the case they must meet. This is unclear at present.
As a result, I will refuse the application to amend to include particular (vi) and otherwise allow the application to amend and allow the application for further particulars.
Paragraph 97
Paragraph 97 concerns, inter alia, the alleged knowledge of the first and second defendants that by certain conduct the third defendant would breach her contractual duties to the plaintiffs.
The plaintiffs seeks leave to delete matters from this paragraph. The McKendrick parties and the third and further defendants do not oppose the amendments but seek further particulars. The particulars to paragraph 97 refer to the particulars to paragraph 95. This will be addressed by the provision of adequate particulars to paragraph 95 which I have said I will order.
As a result, I will allow the application to amend and refuse the application for further particulars.
Paragraph 98
Paragraph 98 concerns an allegation the first and second defendants intentionally instructed, encouraged and/or assisted the third defendant to engage in certain conduct. That is, that from at least 4 July 2022, first and second defendants intentionally instructed, encouraged and/or assisted the third defendant to engage in the conduct set out in paragraphs 28 to 30A, 54 and 56.
The plaintiffs seeks leave to delete a number from this paragraph. The McKendrick parties and the third and further defendants do not oppose the amendment but seek to strike out this paragraph. I will not strike it out but I will order the plaintiffs to provide further particulars. This is because:
(a) the plea is not based upon other allegations. For example, it does not plead ‘By reason of’ and then identify any previous pleas;
(b) no particulars are provided;
(c) I will afford the plaintiffs an opportunity to provide particulars. This is because this will facilitate the just, efficient and costs effective resolution of the dispute concerning this plea;
(d) in the absence of any particulars, or any adequate particulars, the McKendrick parties will be at liberty to renew their application.
As a result, I will allow the application to amend, refuse the application to strike out but order the plaintiffs to provide particulars of paragraph 98.
Paragraph 99
Paragraph 99 concerns alleged loss and damage.
The plaintiffs seeks leave to delete a number from this paragraph. The McKendrick parties’ summons sought further particulars of this paragraph. But this application was abandoned. The McKendrick parties did not address it. As a result, I dismiss the application. In any event, the particulars to paragraph 99 refer to the particulars to paragraph 89. This will be addressed by the provision of adequate particulars to paragraph 89 which I have said I will order.
Paragraphs 111, 114 and 116
Paragraphs 111 and 114 concern allegations that the first and second defendants infringed the plaintiffs’ copyright. Paragraph 116 concerns loss and damage.
The McKendrick parties and the third and further defendants seek to strike out paragraphs 111 and 116, alternatively, seek further particulars and also seek particulars of paragraph 114. The McKendrick parties also relied upon r 7.02 of the Supreme Court (Intellectual Property) Rules 2016 (Intellectual Property Rules) which provide:
7.02 Particulars of infringement
In a proceeding for infringement of copyright, particulars of the infringement shall—
(a)specify the manner in which the copyright is alleged to have been infringed;
(b)give at least one instance of each type of infringement alleged; and
(c)specify whether the whole or some part and, if so, which part of the work or other subject matter is alleged to have been infringed.
The plaintiffs do not seek to amend paragraph 111. I will not strike out paragraph 111 but I will order further particulars. This is because:
(a) the plaintiffs identify paragraphs 30, 37(b) and 60 in paragraph 111 as being the relevant paragraphs as to why the first and second defendants have reproduced, published and communicated a substantial part of the MFO T&C Documents. The plaintiffs submitted that the reference to paragraph 37(b) is an error;
(b) the plaintiffs have provided adequate particulars in accordance with r 7.02(a) and (b) of the Intellectual Property Rules. This is because:
(i) paragraph 30 (particular ii) identifies the relevant MFO Documents as being those documents listed in Annexures B and G from which the third defendant made reproductions and adaptations. Annexure G identifies the relevant MFO Document and matches it to the relevant Armstrong T&C Documents and relevant Armstrong Policy & Procedure Documents. This adequately identifies the infringement;
(ii) paragraph 30 (particular iii) identifies that the Armstrong T&C Documents identified in Annexure G were, inter alia, published on a website operated by Armstrong. Annexure G identifies the Armstrong T&C Documents. This adequately identifies the infringement;
(iii) paragraph 60 alleges that each Armstrong Copied Document is a reproduction in material form and/or an adaptation of a substantial part of the corresponding MFO Document(s) identified in Annexure G. Armstrong Copies Document is defined as including the Armstrong T&C Documents and the Armstrong Policy & Procedure Documents. The McKendrick parties and the third and fourth defendants submit that paragraph 60 is confusing because there do not appear to be corresponding MFO Documents as alleged in Annexure G. I do not accept this submission. The corresponding MFO Document is clearly identified and set out in Annexure G. This adequately identifies the infringement;
(c) but the plaintiffs have not provided adequate particulars pursuant to r 7.02(c) of the Intellectual Property Rules. The plaintiffs submitted during the hearing that the whole of the work has been infringed. This should be addressed in particulars. As a result, the plaintiffs should provide further particulars specifying whether the whole or some part and, if so, which part of the work or other subject matter is alleged to have been infringed. Given the plaintiffs’ case is that the whole work has been infringed these particulars may be readily provided.
As a result, as to paragraph 111, I will refuse the application to strike out and allow the application for further particulars.
The plaintiffs seek leave to amend paragraph 114 by deleting a particular and adding in new particulars (i)(c) and (ii). The McKendrick parties and the third and further defendants object to particular (ii) of paragraph 114 and seek further particulars. The McKendrick parties and the third and further defendants object to particular (ii) on the basis that it is a reference to the evidence and does not inform them or the Court as to what particular conduct or fact the plaintiffs rely upon to support the pleaded assertion. I do not accept this submission. This is because the plaintiffs identify the relevant documents (i.e. by reference to a tender list) and the conduct relied upon. The conduct is confined to communication of the information. As a result, I will allow the amendment to the particulars to paragraph 114. But I will order further particulars as:
(a) the plaintiffs have not provided adequate particulars in accordance with order 7.02(a) and (b) of the Intellectual Property Rules:
(iv) no particulars are provided that identify how any of the Armstrong Policy & Procedure Documents and the Armstrong T&C Documents are the reproduction of the MFO Policy & Procedure Documents. This appears to be set out in Annexure G but the plaintiffs do not presently rely upon Annexure G at paragraph 114. This should be clarified;
(v) no particulars are provided that identify how any of the publication or communication of any of the Armstrong Policy & Procedure Documents and the Armstrong T&C Documents are publication and communication of the MFO Policy & Procedure Documents. This appears to be set out in Annexure G but the plaintiffs do not presently rely upon Annexure G at paragraph 114. This should be clarified;
(vi) the plaintiffs submitted that this is evident from an examination of the relevant documents and is a matter for evidence and not pleading. I do not accept this submissions. The plaintiffs have made an allegation of reproduction, publication and communication without providing any reason why the reproduction, publication and communication of the Armstrong Policy & Procedure Documents and the Armstrong T&C Documents was a reproduction, publication and communication of the MFO Policy & Procedure Documents. This must be identified. In addition, it appears that these particulars may be readily provided.
(b) the plaintiffs have not provided adequate particulars in accordance with order 7.02(c) of the Intellectual Property Rules. The plaintiffs submitted during the hearing that the whole of the work has been infringed. This should be addressed in particulars. Given the plaintiffs’ case is that the whole work has been infringed these particulars may be readily provided.
This provision of particulars in accordance with r 7.02 will facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute
As a result, as to paragraph 114, I will allow the application to amend and allow the application for further particulars.
The provision of adequate particulars in relation to paragraph 114 will address the complaints in relation to paragraph 116. As a result, I will refuse the application to strike out and for further particulars.
Paragraph 119
Paragraph 119 concerns, inter alia, the alleged knowledge of the sixth defendant that by certain conduct the third defendant would breach her fiduciary duties to the plaintiffs.
The plaintiffs seek to amend this paragraph to refer to paragraph 41A. I have already said that I will not allow the amendment to the pleading to include paragraph 41A. As a result, I will refuse the application to amend.
Paragraphs 123 and 124
Paragraph 123 concerns an allegation that by reason of the defendants’ alleged unlawful conduct the plaintiffs have suffered loss and damage. Paragraph 124 concerns an allegation of lost profits.
The plaintiffs do not seek leave to amend these paragraphs. The McKendrick parties and the third and further defendants seek to strike out these paragraphs, alternatively, further particulars. The plaintiffs submitted:
27.By letter dated 27 February 2025, the plaintiffs requested that the defendants discover categories of documents which have been identified by Ms Dawna Wright of FTI Consulting (the plaintiff’s expert) as relevant to an assessment of: (1) the profits made by each defendant as a result of their conduct pleaded in the ASOC; (2) the loss and damage suffered by the plaintiffs as a result of the defendants’ conduct; and (3) the increase in value of the Armstrong Flooring business. The McKendrick Parties have resisted, and in many respects continue to resist, that request. While the plaintiffs accept that there has been substantial discovery in this case, the discovery ordered to date has not been directed to matters relevant to quantification of loss and damage.
28.The disagreement between the parties in respect of discovery is summarised in the table emailed to the Court by the solicitors for the McKendrick Parties on 28 May 2025. By that communication, the McKendrick Parties have agreed to discover certain further documents (although no such documents have been produced to date). The dispute as to discovery is to be referred to an Associate Judge for determination.
29.The plaintiffs will provide particulars to ASOC [123] and [124] concurrently with the provision of their expert evidence on quantum. However, the completion of discovery on the quantum issues is a necessary precursor to that occurring.
I will not strike out these paragraphs but I will order that further particulars be provided together with the plaintiffs’ expert reports on quantum. This is because:
(a) the pleas are not untenable. They are conventional pleas;
(b) the pleas are not adequately particularised;
(c) this course will cause no prejudice to the defendants and, if upon the provision of the expert reports on quantum and the further particulars, the defendants consider that the pleading remains deficient then they are liberty to make a further application to strike it out or to seek particulars.
As a result, I will refuse the application to strike out and I will allow the application for further particulars.
Paragraphs 125 and 126
Paragraph 125 concerns a claim of exemplary damages against the McKendrick parties.
The plaintiffs do not seek leave to amend this paragraph. The McKendrick parties and the third and further defendants seek further particulars. I will order that further particulars be provided. This is because:
(a) the plaintiffs should identify why the unlawful conduct justifies an award of exemplary damages;
(b) it is unclear why the plaintiffs rely upon particulars (ii) to (iv). This is not ‘unlawful conduct’ as alleged in paragraph 125 but appears to be something else.
As a result, I will allow the application for further particulars.
Paragraph 126 concerns a claim for additional damages under s 115(4) of the Copyright Act 1968 (Cth). Section 115(4) provides:
(4) Where, in an action under this section:
(a) an infringement of copyright is established; and
(b) the court is satisfied that it is proper to do so, having regard to:
(i) the flagrancy of the infringement; and
(ia) the need to deter similar infringements of copyright; and
(ib)the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff's copyright; and
(ii) whether the infringement involved the conversion of a work or other subject - matter from hardcopy or analog form into a digital or other electronic machine - readable form; and
(iii)any benefit shown to have accrued to the defendant by reason of the infringement; and
(iv)all other relevant matters;
the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.
The plaintiffs do not seek leave to amend paragraph 126. The McKendrick parties and the third and further defendants seek further particulars. The particulars are adequate and address the matters set out in s 115(4).
As a result, I will not allow the application for further particulars.
Amendments to which no objection made and paragraph not the subject of the strike out application
I will allow the other amendments to the pleading that I have not otherwise addressed as these were not objected to.
CONCLUSION AND ORDERS
In my preliminary view, the following orders are appropriate having regard to my ruling:
(a) The plaintiffs have leave to amend the statement of claim substantially in the form attached to the plaintiffs’ summons filed 2 May 2025 except for those amendments in paragraphs 28 (particular vi), particular 30 (particular v), 34 (particular (ii)), 36 (particular (ii)), 41A, 85 (particular (v)), 95 (particular (vi)) and 119 with the following additional amendments:
(vii) further particulars of 24, 25, 26, 27, 28, 34, 36, 41, 84, 85, 88, 89, 95, 98, 111, 114 and 123 to 125 in accordance with this ruling;
(viii) the typographical errors must be corrected as identified in this ruling.
In my view, it is not appropriate for the amendments to be made by filing an amended statement of claim until all matters are resolved with respect to the plaintiffs’ pleading. In addition, as raised by the Court during the hearing, the plaintiffs should take steps to ensure that the allegations in the statement of claim are appropriately confined. The use of the word ‘including’ in the present statement of claim means that some of the allegations are but mere examples of conduct when they should be the only conduct alleged. See, for example, the use of the word ‘including’ in paragraphs 28 (chapeau), 29 (chapeau), 29(a), 30 (particular (ii)), 31 (chapeau), 31(a), 32 (chapeau), 41 (chapeau) and 126 (particular (ii)). The plaintiffs have already sought to address this matter.
(b) The plaintiffs provide further particulars of paragraphs 24, 25, 26, 27, 28, 34, 36, 41, 84, 85, 88, 89, 95, 98, 111, 114 and 123 to 125 of the statement of claim in accordance with this ruling.
In my view, these should be set out in an amended statement of claim, except for the particulars concerning loss and damage, including in paragraphs 89, 123 and 124. Particulars to paragraph 125 (ie claim for exemplary damages) may be given now.
(c) By 4:00pm on 11 July 2025, the plaintiffs provide a proposed amended statement of claim, including the further and better particulars, that conforms with this ruling. The plaintiffs have liberty to replead the matters the subject of the application to amend that have been refused.
(d) The plaintiffs’ summons is otherwise adjourned sine die.
The plaintiffs may seek leave to amend the summons and rely upon a further version of the amended statement of claim in the event that there remains any dispute. The Court expects the parties to co-operate and considers that there should not be the need for the Court to determine any further pleading issues. Once matters are resolved it will be dismissed.
(e) The McKendrick parties’ summons filed 2 May 2025 is adjourned sine die.
This is appropriate as if the particulars remain inadequate the McKendrick parties are at liberty to renew their applications to strike out those parts of the pleading identified in this ruling. Once matters are resolved it will be dismissed.
(f) The plaintiffs pay the sixth defendant’s costs up to and including today of the plaintiffs’ summons filed 2 May 2025 to be taxed in default of agreement.
The sixth defendant has been wholly successful in its opposition to the plaintiffs’ application to amend.
(g) The costs of the plaintiffs and the first to fifth defendants up to and including today of the plaintiffs’ summons filed 2 May 2025 are their costs in the proceeding.
This is because the parties have had mixed success on that application. It is also appropriate to address the costs up to and including today now as the pleading issues may resolved on the provision of a further pleading and, if not, the plaintiffs’ summons will need to be amended to seek leave in relation to a further version of the proposed amended pleading.
(h) The costs of the plaintiffs and the first to fifth defendants of the summons of the first, second and fifth defendants filed 2 May 2025 are their costs in their proceeding.
This is because the parties have also had mixed success on that application. It is also appropriate to address the costs up to and including today now as the pleading issues may resolved on the provision of a further pleading and, if not, the McKendrick parties’ summons will concern a different pleading.
But I will hear the parties on the precise form of order and also upon the issue of costs.
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SCHEDULE OF PARTIES
S ECI 2023 03101
| GODFREY HIRST AUSTRALIA PTY LTD (ACN 000 849 758) | First Plaintiff |
| PREMIUM FLOORS AUSTRALIA PTY LIMITED (ACN 152 867 984) | Second Plaintiff |
| GODFREY HIRST & CO PROPRIETARY LIMITED (ACN 004 059 125) | Third Plaintiff |
| GODFREY HIRST LOGISTICS PTY LTD (ACN 081 971 495) | Fourth Plaintiff |
| FELTEX CARPETS PTY LTD (ACN 068 166 843) | Fifth Plaintiff |
| FLOORSCAPE LIMITED (COMPANY NUMBER 1496430) | Sixth Plaintiff |
| GODFREY HIRST NZ LIMITED (COMPANY NUMBER 79542) | Seventh Plaintiff |
| FLOORING FOUNDATION LIMITED (COMPANY NUMBER 4013498) | Eighth Plaintiff |
| FELTEX CARPETS LIMITED (COMPANY NUMBER 1905567) | Ninth Plaintiff |
| FELTEX NEW ZEALAND LIMITED (COMPANY NUMBER 1872849) | Tenth Plaintiff |
| - and - | |
| COWES BAY GROUP PTY LTD (ACN 635 970 222) | First Defendant |
| BRAESIDE MILLS OPERATIONS PTY LTD (ACN 659 692 421) | Second Defendant |
| SUSAN ANNE RECHENBERG-DUPE | Third Defendant |
| PAUL O'DWYER | Fourth Defendant |
| RUDYARD GRANT "KIM" MCKENDRICK | Fifth Defendant |
| PIPER ALDERMAN | Sixth Defendant |
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