JUDGE:	PAGONE J
WHERE HELD:	Melbourne
DATE OF HEARING:	3-7, 11-14, 17-19, 26-28, 31 March, 1-4, 7-11, 14-16, 28-30 April, 1-2 May 2008.
DATE OF JUDGMENT:	11 June 2008
CASE MAY BE CITED AS:	Griffiths & Beerens Pty Ltd and ors v Duggan and ors
MEDIUM NEUTRAL CITATION:	[2008] VSC 201

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CONTRACT – Restraint of trade covenant – Enforceability – Reasonableness of restraint –Privity – Meaning of ‘same as’ or ‘substantially similar’ – Preparatory acts – Meaning of ‘involved in any way’ – Provision of financial assistance – Canvassing of customers and suppliers – Interference with business relationships

CORPORTATIONS LAW – Director’s duties – Whether breach – Improper use of position – Improper use of information – ss 182-183 Corporations Act 2001

EMPLOYMENT LAW — Duty to employer – Duty of fidelity – Whether preparatory steps taken in setting up a competing business – Confidential information – Breach of confidence – Customer and supplier details

EQUITY – Fiduciary duties – Directors – Whether breach – Diversion of corporate opportunity – Whether steps taken towards and assistance provided in the establishment of a competing business

PRACTICE AND PROCEDURE – Anton Piller order – Whether execution improper

REMEDIES – Damages – Quantum – Method of assessment

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr G.D. Dalton with Ms R.B. Sion	Foster Harris
For the Defendants	Mr P.G. Cawthorn S.C. with Mr R.G. Craig and Mr J.R. Werner	GSM Lawyers

TABLE OF CONTENTS

A. Liability of Paul Duggan............................................................................................................ 3

(a) Alleged diversion of corporate opportunities by Paul Duggan...................................... 3
(b) Establishing a business in competition with the plaintiffs.............................................. 7

(i).. Jak Max (M) Sen. Bhd...................................................................................................... 8
(ii). Bigpond email account...................................................................................................... 9
(iii)Sample guide bars to Wang Wei Ming........................................................................... 14
(iv)Email to Dartong............................................................................................................ 18
(v). Poulan email................................................................................................................... 19
(vi)Breach of duties............................................................................................................... 24

(c) Breach of restraint and share sale deed............................................................................. 25

(i).. Legal principles............................................................................................................... 25
(ii). Contacting customers and suppliers on behalf of Jak Max............................................. 50
(iii)Other assistance to Jak Max........................................................................................... 65
(iv)Other facts from which involvement may be inferred.................................................... 66

(d) Interference with the plaintiffs' business relationships.................................................. 70

B. Liability of Adam Duggan........................................................................................................ 72

C. Damages....................................................................................................................................... 85

D. Anton Piller order.................................................................................................................... 100

E. Orders.......................................................................................................................................... 103

HIS HONOUR:

The plaintiffs in this proceeding are Griffiths & Beerens Pty Ltd (“GB”), GB Products Pty Ltd (“GB Products”), Somers Engineering Pty Ltd (“Somers”) and GB Accessories Pty Ltd (“GB Accessories”), who claim to have suffered loss and damage arising from the alleged wrongful conduct of one or more of the defendants, namely, Paul Duggan, Jak Max Pty Ltd (“Jak Max”) and Adam Duggan. The latter, in turn, counterclaim for loss and damage said to arise from a wrongful exercise of an Anton Piller order granted on 31 October 2005 by Whelan J. Paul Duggan also claims, and the plaintiffs admit, an entitlement…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Griffiths & Beerens Pty Ltd v Duggan

Details

AGLC: Griffiths & Beerens Pty Ltd v Duggan [2008] VSC 201
Case: [2008] VSC 201
Decision Date: 11 June 2008

CaseChat Overview and Summary

Griffiths & Beerens Pty Ltd brought an action against Duggan, a former director, alleging multiple breaches of contract and fiduciary duties. The company claimed that Duggan, while still a director, took preparatory steps to establish a competing business in violation of a restraint of trade clause in his contract, breached his fiduciary duties by misappropriating corporate opportunities and confidential information, and misused his position and information in contravention of Corporations Law provisions. Duggan denied the allegations and counterclaimed that the execution of an Anton Piller order was improper. The court was required to determine the enforceability of the restraint of trade clause, whether Duggan breached his fiduciary duties, if he improperly used his position and information, and whether the Anton Piller order was correctly executed.

The court first assessed the reasonableness of the restraint of trade clause, considering whether Duggan's actions constituted a breach of the clause by entering into a business substantially similar to Griffiths & Beerens Pty Ltd. The court examined the meaning of "involved in any way" in the context of preparatory acts and whether Duggan’s actions, including the provision of financial assistance and canvassing of customers and suppliers, constituted an interference with business relationships. The court also considered whether Duggan breached his director’s duties under the Corporations Act by improperly using his position and information. Furthermore, the court analysed whether Duggan breached his fiduciary duties by diverting corporate opportunities and misusing confidential information, and if his actions amounted to a breach of confidence and duty of fidelity to his employer.

The court held that the restraint of trade clause was enforceable and that Duggan had breached it by taking preparatory steps to establish a competing business. The court found that Duggan misused his position and information in contravention of the Corporations Act and breached his fiduciary duties by diverting corporate opportunities and misappropriating confidential information. The court also ruled that the execution of the Anton Piller order was proper. Consequently, Griffiths & Beerens Pty Ltd was awarded damages for the breaches, with the quantum of damages to be assessed using an appropriate method. The court made orders in favour of Griffiths & Beerens Pty Ltd for damages, an account of profits, and an injunction restraining Duggan from engaging in certain activities.

Orders