Industrial Workwear Pty Ltd v Ryan - [2022] WASC 287

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   INDUSTRIAL WORKWEAR PTY LTD -v- RYAN [2022] WASC 287
CORAM:   CURTHOYS J
HEARD:   27 APRIL 2021
DELIVERED          :   31 AUGUST 2022
FILE NO/S:   CIV 3020 of 2018
BETWEEN:   INDUSTRIAL WORKWEAR PTY LTD
Plaintiff
AND
MADISON ANN RYAN
First Defendant
AQUA TERRA OIL AND MINERAL SERVICE AND SUPPLY COMPANY PTY. LTD.
Second Defendant
NOGARD AUSTRALIA PTY LTD
Third Defendant

Catchwords:

Practice and procedure - Application by third defendant for strike out or summary judgment - Application by second and third defendants for security for costs

Legislation:

Corporations Act 2001 (Cth), s 131(1), s 1335(1)
Rules of the Supreme Court 1971 (WA), O 16 r 1, O 20 r 19(1), O 25 r 1

Result:

Summary judgment granted for third defendant
Application for security for costs adjourned

Category: B

Representation:

Counsel:

Plaintiff	:	C Slater
First Defendant	:	No appearance
Second Defendant	:	T J Carmady
Third Defendant	:	T J Carmady

Solicitors:

Plaintiff	:	Aherns Lawyers
First Defendant	:	MDC Legal
Second Defendant	:	Williams & Hughes
Third Defendant	:	Williams & Hughes

Cases referred to in decision:

Cockman v Gorman [2022] WASC 125
El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Gerovich v Maxwell John Gerovich as executor of the estate of Anthony Gerovich [2018] WASC 153
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398

CURTHOYS J:

Introduction

The third defendant, Nogard Australia Pty Ltd (Nogard Australia), applies to strike out certain paragraphs of the reamended statement of claim filed by the plaintiff, Industrial Workwear Pty Ltd (Industrial Workwear) and for the action to be dismissed as against Nogard Australia pursuant to O 20 r 19(1)(a) and (c) of the Rules of the Supreme Court 1971 (WA) (Rules), or alternatively for summary judgment to be entered for Nogard Australia pursuant to O 16 r 1 of the Rules.
Further, Nogard Australia and the second defendant, Aqua Terra Oil and Mineral Service and Supply Company Pty Ltd (ATOM), apply for security for costs by payment into court, pursuant to s 1335(1) Corporations Act 2001 (Cth) and O 25 r 1 of the Rules.
The fundamental basis of the applications is that Industrial Workwear has not pleaded material facts to establish that Nogard Australia received certain confidential information nor to establish that the knowledge of ATOM's directors is to be imputed to Nogard Australia.
For the reasons that follow, I have ordered summary judgment for the third defendant. In the event that the application for summary judgment had not been successful I would have struck out those parts of the statement of claim relating to Nogard Australia.

Background

On 23 November 2018, Industrial Workwear issued a writ of summons against the first defendant, its former employee, Madison Ann Ryan.
Ryan was employed by Industrial Workwear from 1 November 2015 to 21 September 2018. Ryan was then employed by ATOM from 3 October 2018.
The statement of claim attached to the writ essentially alleged that Ryan had provided confidential information that she had obtained as an employee of Industrial Workwear to ATOM.
Industrial Workwear sought the return of the confidential information allegedly taken by Ryan, injunctive relief and damages.[1]
[1] Statement of claim filed 23 November 2018, 15.
On 23 November 2018, Industrial Workwear filed a chamber summons seeking interlocutory injunctive relief against Ryan.
On 14 December 2018, Ryan gave an undertaking to the court which obviated the need for interlocutory injunctive relief.
Ryan filed a defence on 15 March 2019.
On 14 July 2020, Industrial Workwear filed a chamber summons seeking to join ATOM and Nogard Australia to their claim. An amended writ of summons and amended statement of claim were attached to the chamber summons.
On 24 August 2020, orders were made by consent amending the writ.
A further reamended statement of claim was filed on 12 October 2020 (Statement of Claim).
In the Statement of Claim, Industrial Workwear alleges that ATOM and Nogard Australia are associates of each other.[2] It alleges that when Industrial Workwear dealt with representatives of ATOM, it was told that the same representatives were or would also represent Nogard Australia.[3]
[2] Statement of claim filed 12 October 2020 [3B] (Statement of Claim).
[3] Statement of Claim [27].
Industrial Workwear's claim against Ryan is that she wrongfully accessed, copied and removed Industrial Workwear's confidential information which she disclosed or provided to ATOM and Nogard Australia and in doing so breached:
(a)her employment contract with Industrial Workwear;
(b)s 182 and s 183 of the Corporations Act; and
(c)the fiduciary obligations she owed to Industrial Workwear.[4]
[4] Statement of Claim [4] - [18].
Industrial Workwear's claim against ATOM and Nogard Australia is that:
(a)ATOM received from Ryan and used Industrial Workwear's 'Logo Files' and 'Notebooks' to its benefit and to the detriment of Industrial Workwear;
(b)Nogard Australia received and used the Notebooks to its benefit and to the detriment of Industrial Workwear;
(c)ATOM and Nogard Australia received possession of and used to their benefit confidential information of Industrial Workwear, with knowledge that such information was transferred in breach of Ryan's fiduciary duty, to Industrial Workwear;
(d)Nogard Australia was involved in Ryan's contravention of s 182 and s 183 of the Corporations Act;
(e)ATOM has misused Industrial Workwear's 'Plot Charts' by giving them to a third party for ATOM's benefit and to Industrial Workwear's detriment; and
(f)Ryan, ATOM and Nogard Australia agreed to obtain an advantage for themselves to the detriment of Industrial Workwear.[5]
[5] Statement of Claim [19] - [46].

The application

On 9 November 2020, ATOM and Nogard Australia filed a chamber summons relevantly seeking:
(a)to strike out paragraphs 3A, 3B, 3C, 27, 28, 29, 30, 31, 32, 33, 34, 36, 37, 38, 45 and 46 of the statement of claim and for the action to be dismissed as against Nogard Australia pursuant to O 20 r 19(1)(a) and (c) of the Rules;
(b)further or alternatively, for summary judgment to be entered for Nogard Australia against Industrial Workwear and the action be dismissed as against Nogard Australia pursuant to O 16 r 1 of the Rules;
(c)Industrial Workwear to provide security for costs in the amount of $175,000 by payment into court pursuant to s 1335(1) Corporations Act 2001 (Cth) and O 25 r 1 of the Rules; and
(d)Industrial Workwear to pay Nogard Australia's costs of the action including the costs of the application, to be taxed if not agreed.
ATOM and Nogard Australia require an extension of time to bring this application. An application to strike out a pleading must be made within 21 days of service of the pleading.[6] An application for summary judgment must be made within 21 days after an appearance is entered.[7] The last day to file and serve the summary judgment application was 21 September 2020, and the last day to file and serve the strike out application was 2 November 2020.
[6] Rules of the Supreme Court 1971 (WA) O 20 r 19(3) (Rules).
[7] Rules O 16 r 1.
In the context of the short delay in filing, I am satisfied that it is appropriate to grant an extension of time both for the application for summary judgment and the strike out application.
ATOM and Nogard Australia's chamber summons was supported by an affidavit of Mr Tassone sworn 9 November 2020.
The affidavit in support of Nogard Australia's application was sworn by its solicitor. No explanation was offered as to why it was not sworn by an officer of Nogard Australia.
It is undesirable for such affidavits to be sworn by a party's solicitor. If nothing else, it exposes the solicitor to being cross‑examined on the contents of the affidavit and the risk that as a witness they can no longer represent the client.
Nogard Australia's affidavit contained more submissions than facts. Further, an affidavit should depose to matters of fact. It is not appropriate to set out a party's submissions in an affidavit.
Industrial Workwear relied on three affidavits of Denis Mirovic, sworn 16 November 2020, 17 December 2020 and 12 April 2021, in opposition to ATOM and Nogard Australia's application.
Industrial Workwear also relied on an affidavit sworn by Mirovic on 28 November 2019 in CIV 3041 of 2019.

General principles

Applications for summary judgment by a defendant

Order 16 r 1 of the Rules provides that if the court is satisfied that an action is frivolous or vexatious, the defendant has a good defence on the merits, or that the action should be disposed of summarily without pleadings, the court may order:
(a)that judgment be entered for the defendant with or without costs; or
(b)that the plaintiff shall proceed to trial without pleading.
I have previously set out the general principles relating to a defendant's application for summary judgment in Cockman v Gorman:[8]
An application for summary judgment faces a high hurdle to succeed. The general principles applicable to an application of this nature were summarised in Sutton Investments Pty Ltd v Realistic Investments Pty Ltd:
Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46]; Spencer v The Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 [24], [53] ‑ [55].
A summary judgment application focuses on the plaintiff's pleading … [M]atters of fact which are in the statement of claim must be accepted for the purposes of the summary judgment application. The defendant bringing the application bears the legal onus of establishing that there is no real question to be tried, or that the case is bound to fail, sufficient to warrant the grant of summary judgment
However, once it appears that there is a real question either of fact or of law, an application for summary judgment must fail. As the High Court held in Spencer v The Commonwealth of Australia:
Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. (footnotes omitted)
[8] Cockman v Gorman [2022] WASC 125 [21] - [23].
Nogard Australia bears the legal onus of establishing that there is no serious question to be tried on any cause of action raised by Industrial Workwear.[9]

Strike out applications

[9] Gerovich v Maxwell John Gerovich as executor of the estate of Anthony Gerovich[2018] WASC 153 [29].

In English v Vantage Holdings Group Pty Ltd,[10] the Court of Appeal approved of the principles relating to striking out pleadings as set out by Smith J in Vantage Holdings Group Pty Ltd v Donnelly[No 4]:[11]
[10] English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [55].
[11] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60].
The principles relevant to the strike out application are as follows:
(a)the essential functions of a pleading are to define and limit the issues for decision, to provide the basis for determining discovery and the admissibility of evidence for trial, and to ensure a fair trial by putting the other side on notice of the case it must meet;
(b)a statement of claim must not plead allegations at too high a level of generality. A pleading must be sufficiently particular to conform with one of the primary objects of pleadings, to inform the opposing party of the case that it must meet;
(c)a statement of claim must state specifically the relief or remedy claimed;
(d)the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action. While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial;
(e)in alleging no reasonable cause of action:
(i)the question to be decided is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action. Rather, the question is whether it would be open to the party (on its pleadings) to prove facts at the trial which would constitute a cause of action; and
(ii)'reasonable' means reasonable according to law. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable;
(f)the mere fact that a case appears weak is not of itself sufficient to strike out the action;
(g)in considering a strike out application, it is now necessary to consider the role of pleadings in the context of case management techniques. Case management considerations are not, however, necessarily antithetical to the observance of pleading rules. The objects of O 1 r 4A and 4B of the Rules of the Supreme Court 1971 (WA) are often promoted by a clear and precise statement of the issues for decision;
(h)provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action (or defence), and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in, and derive from, a very different case management environment;
(i)pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general; and
(j)irrelevant or unnecessary pleas in a statement of claim will be struck out on the grounds that they will prejudice, embarrass or delay the fair trial of the action where the defendant must traverse the allegations and, thereby, raise false issues.

Industrial Workwear's pleaded case against Nogard Australia

The relationship between ATOM and Nogard Australia

A critical aspect of Industrial Workwear's claim against Nogard Australia is the contention pleaded in par 3B of the Statement of Claim that ATOM and Nogard Australia are in business together and share common officers or directors. Specifically, it is pleaded that:
(a)Nogard Australia supplies the workwear and products manufactured by Nogard Australia to ATOM for distribution by ATOM in Australia;[12]
(b)a director of Nogard Australia is also a director, or alternatively an officer, of ATOM;[13] and
(c)the directors of ATOM are also directors, or alternatively officers, of Nogard Australia.[14]

The Embroidery Agreement

[12] Statement of Claim [3B.1].

[13] Statement of Claim [3B.2].

[14] Statement of Claim [3B.3].

The claim against Nogard Australia principally arises from an agreement defined in par 27 as the Embroidery Agreement. That agreement is pleaded to involve the provision of services by Industrial Workwear to ATOM and Nogard Australia in return for ATOM and Nogard Australia providing Industrial Workwear with embroidery work.
The Embroidery Agreement is pleaded to have been entered into orally on 16 March 2016 between the director of Industrial Workwear, Denis Mirovic, and Mark Bishop and Scott Bishop, who were directors of ATOM and directors, or alternatively officers, of Nogard Australia.[15]
[15] Statement of Claim [27(a)].
It is accepted by all parties that Nogard Australia was not registered at the time the Embroidery Agreement was entered into.[16]
[16] Statement of Claim [27(j)]; Affidavit of Daniel Tassone sworn 9 November 2020, 32 - 33, annexures DT‑09 - DT-10 (Tassone Affidavit).
It is pleaded that in the context of dealing with the directors of ATOM, Industrial Workwear was introduced to and dealt with an entity trading under the business name 'Nogard Trading'.[17] That business name was not registered.[18]
[17] Statement of Claim [27(b)].
[18] Statement of Claim [27(c)].
The substance of the conversation of 16 March 2016 is particularised as follows:[19]
[19] Statement of Claim [27(d)].
iScott Bishop handed his business card to the director of Industrial Workwear, which business card:
(1)Stated on it Scott Bishop's name and the business name "Nogard Trading"';
(2)Stated on it that Scott Bishop was the "manager" of 'Nogard Trading'; and
(3)Stated on it that "Nogard Trading" was a "Purchasing Representative for" the second defendant and the Bishop Brothers (a business operated by Mark Bishop and Scott Bishop in Papua New Guinea selling safety and industrial goods);
iiScott Bishop told Mr Mirovic words to the effect of "I'm the owner of Nogard Trading"; and
iiiMark Bishop and Scott Bishop told Mr Mirovic words to the effect of:
(1)"We are the owners of ATOM in Australia and 'the Bishop Brothers' in Papua New Guinea"; and
(2)"in the near future, ATOM and the Bishop Brothers will be sold and Nogard will be our family business to procure products and services for ATOM and the Bishop Brothers".
It is pleaded that when dealing with 'Nogard Trading':
(a)Industrial Workwear received emails from representatives of that entity which stated that its office was located at 11-15 Mackay Street, Kewdale, Western Australia. Nogard Australia's registered office address was 11 Mackay Street, Kewdale;
(b)Industrial Workwear communicated with employees of the Nogard entity who appeared to Industrial Workwear to be taking instructions from Mark Bishop and Scott Bishop as if Mark Bishop and Scott Bishop owned the business name 'Nogard Trading'; and
(c)Industrial Workwear communicated with Scott Bishop as if he owned or partially owned the business name 'Nogard Trading'.[20]
[20] Statement of Claim [27(e)]
'Nogard Trading Pte Ltd', a corporation incorporated in Singapore, is pleaded to have been the manufacturer of ATOM and Nogard Australia's brand of workwear, Endurite workwear.[21] Mark Bishop, the director of ATOM, is pleaded to have been the director of Nogard Trading Pte Ltd at the time the Embroidery Agreement was entered into.[22]
[21] Statement of Claim [27(f) - (g)].
[22] Statement of Claim [27(h)(ii)].
Nogard Australia was registered on 6 September 2018.[23] That is some 2 and a half years after the alleged agreement. It is pleaded that at the time of registration, Mark Bishop and Scott Bishop were the directors of ATOM and Nogard Australia.[24]
[23] Statement of Claim [27(j)]; Tassone Affidavit, 32 - 33, annexures DT‑09 - D-10.
[24] Statement of Claim [27(k)].
It is pleaded that Nogard Australia adopted and ratified the Embroidery Agreement following its registration.[25]
[25] Statement of Claim [27(l)].

Paragraph 28 pleads that the Embroidery Agreement included terms that:
(a)Industrial Workwear would provide services in relation to Endurite Workwear which was said to be manufactured by Nogard Trading Pte Ltd and Nogard Australia and imported by or handled within Australia by Nogard Australia and distributed by ATOM;[26] and
(b)in return for these services, ATOM represented to Industrial Workwear that it would provide it with all of the embroidery work that it and Nogard Australia required to be done in Western Australia.[27]
[26] Statement of Claim [28.1].
[27] Statement of Claim [28.2].
Paragraph 29 pleads that in the course of Ryan's employment with Industrial Workwear she had access to information in relation to the Endurite Workwear and its compliance with Australian Safety Standards, and she compiled that information in the Notebooks.
Paragraph 30 pleads that Ryan removed the Notebooks from Industrial Workwear's premises when her employment with Industrial Workwear ended on 13 September 2018.
Paragraph 31 pleads that Ryan commenced employment with ATOM on 3 October 2018.
Paragraph 32 pleads that ATOM terminated the Embroidery Agreement on or around 11 October 2018.

Imputed knowledge

Paragraphs 33 and 34 plead that notwithstanding the fact the Embroidery Agreement was terminated by ATOM and that Industrial Workwear no longer provided services to ATOM under the Embroidery Agreement, ATOM and Nogard Australia were able to ensure the Endurite Workwear's compliance with Australian Safety Standards and that they used the Notebooks to do so.
Paragraph 35 is directed to the knowledge of ATOM in relation to Ryan's breaches of fiduciary duty.
Paragraph 36 pleads that by reason of the matters pleaded in par 3B, namely, the fact that ATOM and Nogard Australia are in business together and share common officers or directors, ATOM's knowledge is imputed to Nogard Australia.

Recipient liability

Paragraph 37 pleads that by reason of the matters pleaded in pars 35 and 36:
(a)ATOM and/or Nogard Australia received possession of confidential information of Industrial Workwear, for the benefit of ATOM and/or Nogard Australia, with knowledge that such information was transferred in breach of the Ryan's fiduciary duty to Industrial Workwear;[28] and
(b)ATOM and/or Nogard Australia have used Industrial Workwear's confidential information that it received from Ryan in breach of her fiduciary duty for the benefit of ATOM and/or Nogard Australia and to the detriment of Industrial Workwear.[29]
[28] Statement of Claim [37.1].
[29] Statement of Claim [37.2].
Paragraph 38 pleads that by reason of the matters pleaded in par 37, ATOM and Nogard Australia are liable to Industrial Workwear as constructive trustees in respect of the said confidential information.

Conspiracy

Paragraphs 45 and 46 are directed to the allegation of conspiracy between the defendants.
In par 45 it is pleaded that Ryan, ATOM and Nogard Australia agreed to obtain an advantage for themselves to the detriment of Industrial Workwear by misappropriating Industrial Workwear's confidential information.
In par 46 it is pleaded that in obtaining an advantage, the intention of Ryan, ATOM and Nogard Australia was to injure Industrial Workwear by misappropriating its confidential information and to obtain a benefit for themselves.

The summary judgment application

Nogard Australia was not registered until 6 September 2018, some two and a half years after the Embroidery Agreement was said to have been formed on 16 March 2016.
Thus, for Industrial Workwear's claim to succeed against Nogard Australia, it must satisfy the requirements relating to pre-registration contracts provided in s 131(1) of the Corporations Act. That provision provides:
If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a company before it is registered, the company becomes bound by the contract and entitled to its benefit if the company, or a company that is reasonably identifiable with it, is registered and ratifies the contract:
(a)within the time agreed to by the parties to the contract; or
(b)if there is no agreed time - within a reasonable time after the contract is entered into.
For s 131(1) to apply, Industrial Workwear must therefore demonstrate that:
(a)at the time the Embroidery Agreement was entered into, the parties to the contract entered into it for the benefit of Nogard Australia, or a company reasonably identifiable with Nogard Australia; and
(b)Nogard Australia ratified the Embroidery Agreement within the time period specifically agreed to by the parties, or a reasonable period.
Industrial Workwear submitted that the above matters are questions of fact to be addressed at trial and not by Nogard Australia's application.[30] I agree that the issue of whether the dealings between the parties satisfy the requirements of s 131(1) of the Corporations Act is to be determined at trial; it is not for this court to determine whether the facts pleaded are in themselves sufficient to give rise to a cause of action. However, I find that it is not open on the pleadings for Industrial Workwear to prove the relevant facts at trial that support the claim relating to the Embroidery Agreement.
[30] Plaintiff's submissions in opposition to the application filed 25 January 2021 [26] (Plaintiff's Submissions).
Paragraph 27 of the statement of claim pleads matters relating to Industrial Workwear's dealings with ATOM and 'Nogard Trading' in the context of the Embroidery Agreement.
'Nogard Trading' is not simply an unregistered business name; it was at the relevant time the name of a corporation incorporated in Singapore, namely, Nogard Trading Pte Ltd. Industrial Workwear pleads that at the time of the Embroidery Agreement, Mark Bishop was a director of ATOM and of Nogard Trading Pte Ltd.[31]
[31] See Statement of Claim [27(h)(ii)].
Industrial Workwear particularises the conversation that took place between the parties' representatives on 16 March 2016 in par 27(d). There is no express reference to 'Nogard Australia' in that paragraph. In the context of par 27(d), the references to the Nogard 'entity' and 'Nogard Business' elsewhere in the statement of claim can only refer to 'Nogard Trading'.
Put at its highest, the Embroidery Agreement:
(a)can only be said to have been entered into on behalf of 'Nogard Trading' not Nogard Australia; and
(b)was for the benefit of 'Nogard Trading' not Nogard Australia.
I find it impossible to comprehend how one could possibly submit that the particulars in par 27(d) could lead to a conclusion that Nogard Australia was a party to the Embroidery Agreement or that it was for the benefit of Nogard Australia.
There is no basis in the pleadings to conclude that the Embroidery Agreement was entered into for Nogard Australia's benefit or a company reasonably identifiable with it. The pleaded facts lead at best to the conclusion that the Embroidery Agreement was entered into with, or for the benefit of, Nogard Trading Pte Ltd, not Nogard Australia.
Given Industrial Workwear cannot establish that the Embroidery Agreement was for the benefit of Nogard Australia, issues relating to the time for ratification under s 131(1) of the Corporations Act do not arise. I note that there is no authority for the proposition that two and a half years is or could be a reasonable time within which to ratify, particularly when regard is had to the fact that services were being provided by Industrial Workwear to ATOM and Nogard Trading during this period.
In any event, on the facts pleaded in par 27(d), the principal for the purposes of ratification was Nogard Trading not Nogard Australia.
Common registered offices and directors do not provide a basis for concluding that Industrial Workwear was dealing with an entity with a different name. Many companies have common directors and registered offices; it does not mean that they are the same company.
Mirovic's stated belief is that he was dealing with Nogard Australia.[32] This stated belief does not stand up to objective examination. The objective evidence as pleaded by Industrial Workwear simply does not support a finding that Mirovic was dealing with Nogard Australia. The only belief that could be reached objectively was that the directors of ATOM were acting on behalf of ATOM and at best Nogard Training. Mirovic's misguided belief does not provide a basis for a finding that Industrial Workwear was dealing with Nogard Australia.
[32] Affidavit of Denis Mirovic sworn16 November 2020 [10] - [19].
Industrial Workwear further pleads in par 36 that ATOM's knowledge of Ryan's breaches of fiduciary duty was imputed to Nogard Australia by reason of ATOM and Nogard Australia being in business together and sharing common officers or directors.
That ATOM and Nogard Australia have common directors or officers is insufficient to impute knowledge from ATOM to Nogard Australia. The knowledge of a person who acquires it as a director of one company will ordinarily not be imputed to another company of which they are also director unless they owe:
(1)a duty to the second company to receive that knowledge; and
(2)a duty to the first company to communicate it.[33]
[33] El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685, 698.
The pleas in relation to the imputed knowledge are insufficient to impute knowledge from ATOM to Nogard Australia. Industrial Workwear has not pleaded facts that leave it open to it to prove at trial that the shared directors had a duty in their capacity as directors of Nogard Australia to receive knowledge of Industrial Workwear's confidential information and a duty to ATOM to communicate that knowledge.
Accordingly, I am satisfied that Nogard Australia was not a party to the Embroidery Agreement and that the Embroidery Agreement was not for the benefit of Nogard Australia. I am satisfied that there is no real question to be tried.
Nogard Australia is entitled to summary judgment on the Embroidery Agreement. Industrial Workwear should pay Nogard Australia's costs of that part of the summary judgment application to be taxed if not agreed.
The granting of summary judgment on the Embroidery Agreement to Nogard Australia has the effect that those parts of par 16.13, par 27 and par 28 of the statement of claim referring to Nogard Australia merge into the judgment in favour of Nogard Australia.

The strike out application

As to the pleas of imputed knowledge, for the reasons set out above Industrial Workwear has not pleaded sufficient facts to establish that the knowledge of ATOM's directors can be imputed to Nogard Australia. The fact they may share common directors or officers is insufficient. Accordingly, the claims pleaded by Industrial Workwear.
Industrial Workwear contends that even if Nogard Australia is entitled to summary judgment in relation to the Embroidery Agreement, the issues pleaded against Nogard in relation to the Notebooks and conspiracy remain.
Industrial Workwear submitted that its claim against Nogard Australia in relation to its receipt of the Notebooks does not depend upon it being a party to the Embroidery Agreement, given its claim that Nogard Australia nonetheless obtained the benefit of the Notebooks, as pleaded in pars 33 and 34.[34]
[34] Plaintiff's Submissions [23].
In that regard, Nogard Australia submitted that in the absence of it being a party to the Embroidery Agreement, there are no material facts pleaded capable of supporting a finding that Nogard Australia, and not some other company, received the Notebooks.[35] I agree with that submission. It is not possible to conclude that the pleadings in pars 33 and 34 are capable of supporting a finding that Nogard Australia received the Notebooks.
[35] Second and third defendants' submissions in support of the third defendant's application filed 19 January 2021 [27].
Industrial Workwear pleads at par 28 some of the terms of the Embroidery Agreement. Since Nogard Australia was not a party to the Embroidery Agreement, the terms of the Embroidery Agreement are irrelevant to the plea against Nogard Australia and par 28 should be struck out.
Industrial Workwear's pleas in relation to Nogard Australia and the Embroidery Agreement are interwoven with the pleas in relation to the Notebooks and the conspiracy plea. In addition, the plea in relation to the imputed knowledge is insufficient requiring that the pleas in relation to the imputed knowledge be struck out.
Once those pleas relating to the Embroidery Agreement merge into judgment and those relating to the imputed knowledge are struck out the pleadings are insufficient to identify the issues between the parties and to disclose an arguable cause of action against Norgard Australia.
The issues relating to the Notebooks and conspiracy will need to be repleaded. Industrial Workwear has leave to replead its statement of claim bearing in mind the success of summary judgment application.
Nogard Australia is entitled to the costs of its summary judgment application and its strike out application.

The security for costs application

I have concluded that it is premature to make an order security for costs at this point and that that part of the application should be adjourned. Because of its success in the summary judgment application and the strike out application, Nogard Australia will largely have covered its costs to date.
The Statement of Claim will need to be replaced with consequential amendments to the defence. The court will be in a better position to determine the application for security for costs once the pleadings have closed.

Orders

The parties should prepare a minute to give effect to these reasons. If they agree they should file a minute of consent and further attendance will not be required. If the parties are unable to agree on the appropriate orders, they should file their competing minutes and request a directions hearing.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SB
Associate to the Honourable Justice Curthoys
31 AUGUST 2022