Prestige Lifting Services Pty Ltd v Williams
[2015] FCA 1063
•30 September 2015
FEDERAL COURT OF AUSTRALIA
Prestige Lifting Services Pty Ltd v Williams [2015] FCA 1063
Citation: Prestige Lifting Services Pty Ltd v Williams [2015] FCA 1063 Parties: PRESTIGE LIFTING SERVICES PTY LTD (ACN 005 697 665) v DALE AARON WILLIAMS, TAG CRANES PTY LTD (ACN 152 979 818), ANTHONY ROBERT GARDINER and PAUL HOFFMAN File number: VID 413 of 2012 Judge: BEACH J Date of judgment: 30 September 2015 Catchwords: CORPORATIONS – breaches of statutory duties of director and senior employee – ss 181, 182, 183 of the Corporations Act 2001 (Cth) – involvement in breaches – s 79
CONTRACTS – employment contract – breaches of terms implied in law – duty of fidelity and good faith – duty not to misuse confidential information – duty not to misuse position – setting up of business in competition – confidential information as to customers, suppliers and business projects
EQUITY – fiduciary duties – duty of confidence – breaches of fiduciary duties – misuse of position – misuse of confidential information – diversion of business opportunities – knowing assistance – second limb of Barnes v Addy
Legislation: Corporations Act 2001 (Cth) ss 79, 181, 182, 183, 1317H
Evidence Act 1995 (Cth) s 140(2)(c)Cases cited: Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd (2006) 57 ACSR 553
Baden v Société Générale [1993] 1 WLR 509
Barnes v Addy (1874) LR 9 Ch App 244
Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66
Briginshaw v Briginshaw (1938) 60 CLR 336
Canadian Aero Service Ltd v O’Malley (1973) 40 DLR (3d) 371
Commonwealth Bank of Australia v Barker (2014) 253 CLR 169
Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Co-ordinated Industries Pty Ltd v Elliott (1998) 43 NSWLR 282
Cranleigh Precision Engineering Ltd v Bryant [1964] 3 All ER 289
Dart Industries Inc v David Bryar & Associates Pty Ltd (1997) 38 IPR 389
Digital Cinema Network Pty Ltd v Omnilab Media Pty Ltd (No 2) [2011] FCA 509
Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Investa Properties Pty Ltd v Nankervis (No 7) [2015] FCA 1004
Mense & Ampere Electrical Manufacturing Co Pty Ltd v Milenkovic [1973] VR 784
R v Byrnes & Hopwood (1995) 183 CLR 501
Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134
Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming [1995] 2 AC 378
Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203
University of Nottingham v Fishel [2000] ICR 1462
Warman International Ltd v Dwyer (1995) 182 CLR 544
Weldon and Co v Harbinson [2000] NSWSC 272Date of hearing: 16 March 2015 Date of last submissions: 7 April 2015 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 280 Counsel for the Applicant: Mr R T Wodak Solicitors for the Applicant: Foster Nicholson Jones Lawyers Counsel for the First, Second and Third Respondents: The First, Second and Third Respondents did not appear Counsel for the Fourth Respondent: Mr T G Moloney Solicitors for the Fourth Respondent: Business Support Services (Legal)
Table of Corrections 1 October 2015 In the fourth sentence of paragraph 244, “Williams’ state of mind” has been replaced with “Gardiner’s state of mind”.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 413 of 2012
BETWEEN: PRESTIGE LIFTING SERVICES PTY LTD (ACN 005 697 665)
ApplicantAND: DALE AARON WILLIAMS
First RespondentTAG CRANES PTY LTD (ACN 152 979 818)
Second RespondentANTHONY ROBERT GARDINER
Third RespondentPAUL HOFFMAN
Fourth Respondent
JUDGE:
BEACH J
DATE OF ORDER:
30 SEPTEMBER 2015
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.Within 21 days of the date hereof, the parties file and serve proposed minutes of orders and short submissions in support thereof (no more than five pages) to give effect to these reasons including as to the form of relief, interest and costs.
2.Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 413 of 2012
BETWEEN: PRESTIGE LIFTING SERVICES PTY LTD (ACN 005 697 665)
ApplicantAND: DALE AARON WILLIAMS
First RespondentTAG CRANES PTY LTD (ACN 152 979 818)
Second RespondentANTHONY ROBERT GARDINER
Third RespondentPAUL HOFFMAN
Fourth Respondent
JUDGE:
BEACH J
DATE:
30 SEPTEMBER 2015
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
The applicant (PLS) has carried on a business of installing and maintaining elevators. By this proceeding it makes claims against:
(a)its former executive director, the first respondent (Williams);
(b)its former employee, the fourth respondent (Hoffman);
(c)a competitor of PLS, TAG Cranes Pty Ltd (TAG), the second respondent; and
(d)a director of TAG, the third respondent (Gardiner).
PLS claims that Williams and Hoffman breached various fiduciary, contractual and statutory duties and also breached duties of confidence. A further claim is made against Williams in respect of funds of PLS used by him to meet unauthorised personal expenses and obligations. PLS has also claimed against TAG and Gardiner for knowing assistance in respect of Williams’ and Hoffman’s breaches of fiduciary duty under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 and as persons involved in the breaches of statutory duty by Williams and Hoffman.
The claims of PLS involve the following elements:
(a)Williams and Hoffman worked with PLS in senior roles. They had access to PLS’ confidential information in relation to customers and suppliers.
(b)There was a falling out among the shareholders of PLS. Between October 2011 and January 2012 Williams assumed de facto control of PLS and involved Gardiner in the operations of PLS.
(c)In February 2012 Williams and Hoffman left PLS and in March 2012 went to work at TAG Lifts, a competing business established by Gardiner through the corporate vehicle of TAG. The business of TAG Lifts was owned and operated by TAG. The business name “TAG Lifts” had been registered as a business name on 27 February 2012. TAG had been incorporated on 31 August 2011. The sole director and secretary was Gardiner; he was also the sole shareholder.
(d)As officers and/or employees of TAG, Williams, Hoffman and Gardiner used PLS’ confidential information to compete with PLS. In particular, four PLS client projects were diverted away from PLS and undertaken by TAG. TAG was only able to obtain and undertake these projects by using PLS’ confidential information.
(e)Further, whilst at PLS, Williams spent its funds without authority and not for the benefit of PLS.
TAG has been wound up and was deregistered on 7 March 2014. PLS has not proceeded with its claim against TAG. Williams was not represented at trial. Gardiner was also not represented at trial. Accordingly, the trial proceeded as an unopposed matter concerning Williams and Gardiner. Hoffman has actively defended the proceeding and was represented at trial. The trial of this matter had been postponed by the previous docket judge and more recently by me due to recent health issues of Hoffman.
In summary, and for the reasons set out below, PLS has established its claims against Williams, Gardiner and Hoffman.
THE PLS PROJECTS
There were four proposed projects to be undertaken by PLS that were side-streamed to TAG. It is convenient to set out a description of these projects at the outset.
As at February 2012, PLS had agreed to supply and install lifts at four sites; I should say however that the “firmness” of the Dorcas St Job (as later described) was more problematic than for the other projects. Negotiations for these agreements had commenced in 2011 and included PLS providing ongoing maintenance and service at these sites. The sites were:
·1 lift at Central Schule, Chabad Synagogue at 4 Maple Street, Caulfield South (the Synagogue Job);
·2 lifts at 211 Dorcas St, South Melbourne (the Dorcas St Job);
·3 lifts at 1142 Nepean Hwy, Highett (the Nepean Hwy Job); and
·1 lift at 218–224 High St, Ashburton (the High St Job).
None of these projects proceeded under the auspices of PLS. Had they proceeded, the customers at each job would have paid fees to PLS for the supply and installation of lifts at each site. Further, PLS would have received ongoing revenue by way of service and maintenance fees on a quarterly basis in connection with these jobs.
Valeo Construction Pty Ltd (Valeo Construction) was the customer (and builder) for the Nepean Hwy Job, the High St Job and the Dorcas St Job. Valeo Construction had accepted PLS’s offers to supply and install lifts at the Nepean Hwy Job and the High St Job and was likely to accept the Dorcas St Job. Valeo Construction had been in negotiations with PLS regarding the Dorcas St Job since June 2011 when PLS submitted a quotation for the Dorcas St Job. PLS had also created drawings for the Dorcas St Job and had been in communication with Valeo Construction about amending the drawings to meet the required specifications for the lifts.
Behmer & Wright Pty Ltd (Behmer & Wright) was the customer (and builder) for the Synagogue Job.
Williams and Hoffman had been involved in all of these jobs on behalf of PLS. Since 2008, Hoffman had been the sales manager at PLS and responsible for sourcing and securing various jobs to be undertaken by PLS. His role was to manage the sales process on behalf of PLS, to negotiate prices and terms and to create quotations for customers. Hoffman created and submitted all PLS quotations for the jobs and was in communication with employees of Valeo Construction and Behmer & Wright. Williams was also in communication with Valeo Construction and Behmer & Wright in relation to the jobs. Both Williams and Hoffman were in communication with PLS’ Spanish lift supplier, ORONA Group (ORONA), regarding the purchase of the lifts by PLS for these jobs.
PLS intended to carry out all of these jobs. It is convenient to elaborate on the detail of each project in turn.
(a) Nepean Hwy Job: 3 Lifts
On 3 May 2011, PLS submitted a quotation to Valeo Construction, as requested by Valeo Construction, for the supply and installation of three (3) ORONA MRL passenger lifts for the total installed price of $207,383.50+GST at 1142 Nepean Highway, Highett. The details of the lifts are set out in the quotation and are as follows:
Lift A: ORONA 1000kg 6 Stop MRLG Passenger Lift, car 1100w x 2100d
(lift number EXAS03270PP)Lift B: ORONA 800kg 5 Stop MRLG Passenger Lift, car 1250w x 1450d
(lift number EXAS03271PP)Lift C: ORONA 800kg 5 Stop MRLG Passenger Lift, car 1250w x 1450d
(lift number EXAS03272PP)The quotation was prepared and sent by Hoffman. The payment terms set out in the quotation required Valeo Construction to pay PLS a 10% deposit with the order, 30% of the cost payable at receipt of approved drawings, 40% of the cost payable at receipt of Bill of Lading and the final payment within 14 days of hand over.
On 11 May and 17 May 2011 PLS created drawings for the Nepean Hwy Job.
On 13 May 2011, PLS received order confirmations from ORONA for the three (3) lifts required for the job. The order confirmations were marked “Att: Dale Williams”. The ORONA lift codes were as follows:
EXAS03270PP
EXAS03271PP
EXAS03272PP
Around this time, PLS and Valeo Construction appear to have entered into a trade contract for the Nepean Hwy job. There was in evidence an unexecuted copy of that contract which appeared to be a standard form contract used by Valeo Construction with its suppliers. The uncontested evidence of PLS was that this had been agreed to. The PLS representative stipulated on this contract was Hoffman.
On 27 July 2011, PLS issued three tax invoices to Valeo Construction for the deposits of 20% of the contract value for each of the lifts. The invoices were issued after the lift order had been placed by Valeo Construction:
Lift A: the supply and installation at Building A, 1142 Nepean Hwy, Highett, $14,377.48 payable (total contract value $65,352.19+GST)
Lift B: the supply and installation at Building B, 1142 Nepean Hwy, Highett, $12,811.26 payable (total contract value $58,233.00+GST)
Lift C: the supply and installation at Building B, 1142 Nepean Hwy, Highett, $12,811.26 payable (total contract value $58,233.00+GST)
An ORONA document produced on 16 September 2011 titled “Next Dispatch Dates” showed that three (3) lifts were to be delivered to and for the Nepean Hwy Job and one (1) lift was to be delivered to and for the High St Job for PLS.
On 8 November 2011, Damien Collins from Valeo Construction sent an email to Williams at his PLS email account requesting confirmation of the date the lifts would be arriving for the Nepean Hwy Job.
On 9 November 2011, Williams, using his PLS email account, sent an email to Damien Collins confirming that the lifts would be arriving as per the “construction program”. In a subsequent email on 1 February 2012 Damien Collins set out the dates of the construction program as follows:
Lift A: Sat 18/02/12 – Wed 21/03/12
Lift B: Thur 22/03/12 – Mond 30/04/12
Lift C Tue 1/05/12 – Thu 31/05/12
On 15 November 2011, Guy Walker from PLS emailed Leon Stewart from Valeo Construction (with Williams copied as a recipient) seeking confirmation in relation to drawings prepared by PLS for the Nepean Hwy Job.
On 28 November 2011, Guy Walker emailed Leon Stewart in which he stated that Lift A for the Nepean Hwy Job had been confirmed by Valeo Construction, and requested confirmation for Lift B and Lift C.
On 16 January 2012 Leon Stewart sent an email to Williams and Guy Walker at PLS confirming in relation to the Nepean Hwy Job that buildings B and C were ready for lift installation and that building B would be ready within two weeks maximum and requested that PLS prepare all necessary paperwork.
On 18 January 2012 Leon Stewart sent an email to Williams and Guy Walker requesting confirmation from PLS of the delivery dates for the three (3) lifts for the Nepean Hwy Job.
The Nepean Hwy Job never proceeded with PLS. It was effectively side-streamed to TAG as I detail below.
(b) High Street Job: 1 Lift
On 15 April 2011, PLS submitted a quotation, as requested by Valeo Construction, for the supply and installation of one (1) ORONA MRL passenger lift for the total of $81,300.00+GST at 218–224 High Street, Ashburton. The details of the lift are set out in the quotation and are as follows:
ORONA 1000kg 5 Stop MRL Electric Passenger Lift (lift number EXAS05058PP)
The quotation was prepared and sent by Hoffman. The payment terms set out in the quotation required Valeo Construction to pay PLS a 10% deposit with the order, 30% of the cost of the lift payable at receipt of approved drawings, 40% of the cost of the lift payable at receipt of Bill of Lading and the final payment within 14 days of hand over.
On 25 July 2011 Williams sent an email to Moffat Wananani of Valeo Construction requesting verification of the specific dimensions of the lift for the High St Job.
On 26 July 2011, PLS issued a tax invoice to Valeo Construction for the deposit of 20% of the total contract value of the lift. The invoice was issued after the lift order had been made by Valeo Construction in accordance with the quotation:
Supply and installation at 218-224 High Street, Ashburton, $14,520.00 payable.
On 27 July 2011 PLS received an order confirmation from ORONA for the lift. The lift code is as follows:
EXAS05058PP.
On 28 July 2011, PLS created drawings for the High St Job. These drawings were checked by Williams, as indicated on the drawings. The drawings were approved by Point Architects on 28 November 2011.
On 5 September 2011 Williams sent an email to Moffat Wananani informing him that drawings and a copy of the contract for the lift at the High St Job would be mailed to Valeo Construction. Williams also requested that Moffat discuss payment terms with Jim Tzouvelis at Valeo Construction and informed him that a 20% deposit was due.
On 27 September 2011 Moffat Wananani sent an email to Williams in which he stated that payment terms had been agreed prior to PLS being awarded contracts for the four lifts (being the lifts at the Nepean Hwy Job and the High St Job). Moffat also told Williams that he was still waiting for a signed copy of the contract to be returned with drawings.
On 30 September 2011 Williams sent an email to Moffat Wananani and Jim Tzouvelis from Valeo Construction in which he said that the drawings for the High St Job were completed and attached to the email and that they needed to be signed and returned to PLS by the following week for late January delivery.
The High St Job never proceeded with PLS. It was effectively side-streamed to TAG as I detail below.
(c) Dorcas St Job: 2 Lifts
On 16 June 2011 PLS submitted a quotation, as requested by Valeo Construction, for the supply and installation of one (1) MRL lift for the total of $80,910.00+GST at 211 Dorcas Street, South Melbourne, and one (1) passenger compliant car lift for the total of $103,986.65+GST. The quotation was prepared and sent by Hoffman.
On 12 August 2011 Tom Tziouvelis from Valeo Construction sent an email to Hoffman asking for more information regarding PLS’s drawings for the car lift. Hoffman then forwarded the email to Williams on 15 August 2011.
On 28 November 2011 Tom Tziouvelis sent an email to Hoffman requesting that he revise a new quote for the Dorcas St Job prior to meeting on Wednesday (30 November 2011).
On 30 November 2011 PLS received a modified ORONA costing sheet for the lift showing the total price of 21,727.92 EUR.
The cost of the lift is shown on a generic Hidral costing sheet. The cost for the basic lift plus all extras and necessary features was to be 29,849.98 EUR.
On 1 December 2011 PLS submitted a new quotation for the supply and installation of a basic car lift for the total contract value of $83,729.00+GST. The quotation was prepared and sent by Hoffman. The price for the normal lift remained the same as provided in the original quotation of 16 June 2011 ($80,910.00+GST).
On 2 December 2011 PLS created drawings for the Dorcas St Job.
On 19 December 2011 Hoffman received an email from Tom Tziouvelis requesting information from PLS regarding the Dorcas St Job. Hoffman then forwarded that email to Williams and Guy Walker.
On 21 December 2011, Guy Walker of PLS emailed Tom Tziouvelis the drawings for the Dorcas St Job based on the specifications provided by Valeo Construction.
On 25 January 2012, Guy Walker of PLS emailed more draft drawings for the Dorcas St Job to Tziouvelis.
On 30 January 2012 Tom Tziouvelis sent a further email to Hoffman and Guy Walker of PLS requesting more information on the Dorcas St Job. Hoffman was the main point of contact within PLS for Valeo Construction.
The Dorcas St Job never proceeded with PLS. It was effectively side-streamed to TAG as I detail below.
(d) Synagogue Job: 1 Lift
On 11 August 2011 PLS submitted a quotation, as requested by Behmer & Wright, for the supply and installation of one (1) ORONA passenger lift for the total of $58,352.00+GST at 4 Maple Street, Caulfield South. The details of the lift are set out in the quotation and are as follows:
ORONA 630kg 2 Stop MRLG Passenger Lift
The quotation was prepared and sent by Hoffman. The payment terms set out in the quotation required Behmer & Wright to pay PLS a 10% deposit with the order, 30% of the cost of the lift payable at receipt of approved drawings, 40% of the cost of the lift payable at receipt of Bill of Lading and the final payment within 14 days of hand over. I should note that prior to this time (18 July 2011), PLS had received from ORONA a costing sheet (requested by PLS) in relation to such a lift.
On 12 October 2011 PLS issued a tax invoice to Behmer & Wright for the deposit of 20% of the total contract value of the lift. The invoice was issued after the lift order had been made by Behmer & Wright:
Supply and installation at Central Schule Chabad Synagogue, 4 Maple Street, Caulfield South, $12,837.44 payable (total contract value $58,352.00+GST)
On the same day, 12 October 2011, Williams sent a letter with draft drawings attached to Trenton Dalvean of Behmer & Wright for approval. The letter reads as follows:
Thank you very much for your order look forward to completing another quality project
Yours faithfully
Prestige Lifting Services Pty Ltd
Dale WilliamsOn 13 October 2011 at 12.14pm, Trenton Dalvean sent an email to Hoffman stating that Behmer & Wright’s client had asked it to “put a hold on the lift until further notice”. The email requested Hoffman to advise of the latest date when a decision needed to be made to put the lift in to production if the relevant project was to be finished by the middle of March 2012. On the same day at 3.48 pm, Hoffman sent an email to Leo John of Behmer & Wright stating:
Leo as discussed the lift is not in production, however it is reported as a sale to ORONA, who have allocated a position within the production schedule. The as built drawings were posted yesterday.
To allow installation to be completed in March of 2012. Order confirmation is required no later than close of business 18–10–2011. We lose production during Christmas Holiday period. If this is not confirmed by then, installation will be April or May 2012.
Please note to date 10 to 15% of contract works has been completed.
On 9 February 2012, Leo John sent an email to Hoffman referring to Hoffman’s email of 13 October 2011 stating:
Further to the e-mail below re production of the lift for the above project, could you advise on latest date to place an order if we need the lift to be in operation by the middle of August 2012?
Hoffman forwarded this email to Williams.
The Synagogue Job was never proceeded with by PLS. It was taken over by TAG as I detail below.
EVENTS FROM OCTOBER 2011 TO DECEMBER 2012
In 2011, Ronald Van Munnen (Van Munnen) and Williams were shareholders of PLS and, through associated entities, the owner of units in the PLS Unit Trust of which PLS was trustee. Each was a director of PLS (Williams until late February 2012) and each was involved in the management of PLS. Williams was the technical director of PLS. His main duties were to create drawings for PLS projects and to liaise with lift suppliers and customers of PLS. Van Munnen was the managing director. The third director and part-owner of PLS was Geoff Williams (the father of Williams). He was not involved in the management of PLS.
In 2011, there was a falling out between Van Munnen and Williams.
In late October 2011 Van Munnen was injured. As a result of his injuries he was unable to work for an extended period. While Van Munnen was absent, Williams assumed practical control of PLS. Van Munnen has said that he was then excluded from the business, evidence which I accept. While Van Munnen was excluded from the business, Williams introduced Gardiner to the business with the apparent intention that he would acquire Van Munnen’s interest in PLS and become involved in the management of PLS. The dispute between Van Munnen and Williams regarding control of PLS was resolved on 8 February 2012. Van Munnen then regained day-to-day control of the business of PLS.
(a) Events of February 2012
As I say, from late 2011, Williams had introduced Gardiner to PLS and involved him in the conduct of the PLS business. This was without Van Munnen’s approval or input. Gardiner was presented to Van Munnen by Williams as “his new partner” who conducted a crane company and who Williams wished to become involved in PLS in Van Munnen’s place.
TAG issued invoices to PLS for $36,736.19 for labour and staff hire between 28 November 2011 and 23 February 2012 without Van Munnen’s knowledge or involvement.
On 6 February 2012, Van Munnen sent an email to Justine Martin, another employee of PLS, in which he informed her that he had become aware that she had backed up all PLS data at the request of Gardiner. Van Munnen informed her that she could not pass the confidential PLS data to a third party and asked her to confirm that she would not provide Gardiner with the information.
On 8 February 2012, Williams, Geoff Williams and Van Munnen held a directors’ meeting in which it was resolved that Williams would provide Geoff Williams and Van Munnen with keys to the PLS premises and computer passwords. It was also resolved that Geoff Williams and Van Munnen would be immediately made authorised signatories to all the company’s banking accounts.
Also on 8 February 2012, Gardiner circulated a document with the heading “PRESTIGE LIFTING SERVICES PTY LTD DIRECTORS MEETING”. In the document, Gardiner made a number of assertions about the performance of PLS and proposed that he “would be prepared to purchase the existing shares as part of an exit strategy”.
On 15 February 2012, Hoffman ceased work with PLS.
On 23 February 2012, Williams resigned as a director of PLS and then commenced employment or other paid engagement with TAG.
On or around 23 February 2012, Van Munnen observed that Williams had:
(a)removed a desktop computer from PLS which contained a copy of all electronic data recording the current work, future orders and other intellectual property of PLS; and
(b)removed a backup drive containing details of all pending jobs and quotations.
Around the same time Van Munnen became aware that Hoffman had in his possession a Toshiba laptop computer owned by PLS which contained quotes issued by PLS.
Each of Williams and Hoffman also had in their possession mobile phones in PLS’s company name, the invoices for use of which were sent to PLS.
The information on the computers and drives in the possession of these individuals was confidential to PLS and contained, among other things, all details of pending work. It was of considerable value to the business. This information was valuable to any competitor as it identified all of PLS’ customers and their contact details and requirements, and provided detailed costs and specifications that PLS had submitted for many jobs for which PLS had then quoted but which had not yet been awarded as well as for the specific jobs referred to in these reasons. The information on these computers and drives also included other confidential information, including:
(a)The detailed financial records of PLS. This information was of considerable value to a competitor to PLS. It would enable a competitor to know PLS’ costs and profit margins and would assist a competitor in competing with PLS.
(b)Emails disclosing the history of dealings between PLS and its principal suppliers (particularly ORONA, the lift supplier) and customers.
(c)Details of the outstanding orders PLS had placed with ORONA for lifts and which had yet to be fulfilled by ORONA.
On 29 February 2012, Van Munnen emailed Williams reminding him of his obligations as a director of PLS. Van Munnen informed Williams that he needed to return PLS company information and equipment immediately.
Around the same time Van Munnen asked Hoffman to return the company car he had driven while he was employed with PLS. However, Hoffman refused to return it until he was paid money by PLS. He said that the money was owed to him by PLS for annual leave.
By the end of February 2012, Hoffman and Justine Martin (another employee) had resigned from PLS and in March 2012 had commenced working at TAG.
(b) Termination of specific PLS jobs
On 6 February 2012, Damien Collins from Valeo Construction sent an email to Williams stating that Williams was needed for an urgent meeting on site to discuss the delivery dates for the Nepean Hwy Job.
On 8 February 2012 at 5.32pm, Damien Collins sent an email to Williams and Guy Walker expressing dissatisfaction with Williams’ communication regarding the project. The email reads as follows:
Despite multiple emails and phone calls from both Leon and I over the past month, you have not once replied or returned our calls. Jim has requested a meeting on site so you can explain why you have not yet commenced the installation of the lifts. Please advise URGENTLY of your first available time to meet.
On 8 February 2012 at 7.31pm, Williams, using his PLS email account, sent an email to Joseph Perez from ORONA asking what the earliest dispatch date for the Nepean Hwy and High St Jobs would be if payment was organised. This was in response to an earlier email from ORONA stating that the relevant lifts were ready “to be launched into production but we can’t launch them without payment”; the relevant lifts referred to were for the Nepean Hwy Job and High St Job.
On 9 February 2012, Williams, using his PLS email account, sent an email to Damien Collins, Leon Stewart and Jim Tzouvelis from Valeo Construction. The email reads as follows:
Jim Please call me to discuss the current projects at your earliest convenience.
On 13 February 2012, Williams, using his PLS email account, sent an email to Jim Tzouvelis from Valeo Construction in which he made representations that PLS would not be able to complete the contract with Valeo Construction and that he understood Valeo Construction would terminate the agreement. The email reads as follows:
Good afternoon Jim
As per our conversations PLS is not currently in a position to meet your expected delivery times and unfortunately we have no resolution likely to occur in the immediate future.
We therefore regrettably understand your position in cancelling our order based on clause 19.1 Termination by Valeo Construction in our signed agreement.
Williams caused the Nepean Hwy Job and the High St Job with Valeo Construction to be terminated. Valeo Construction then engaged TAG to complete each of those jobs. Valeo Construction made no further communications to PLS about the confirmed jobs after receipt of this 13 February 2012 email from Williams. TAG was also subsequently engaged by Valeo Construction to carry out the Dorcas St Job.
(c) March — December 2012 (TAG involvement)
On 1 March 2012 Williams, using his PLS email account, sent an email to Inigo Epelde Garin from ORONA in which he said he was starting a new lift company. In the email, Williams outlined that most staff from PLS would move to TAG, and that TAG had already procured sales for ORONA. The email reads in part as follows:
Good morning Inigo
As I stated in my brief email yesterday I have started a new lift company.
Paul, Justine, Trevor have come on board and where (sic) now part of the TAG group, we have a new 2500sqm manufacturing facility in the heavy industry part of Melbourne.
Most of the guys will come across as soon as I have set up the lift side of the company. We already have 5 sales for orona lifts and large No. of goods and car lifts and a large No. of service contact. Next week TAG will buy out another lift company which will majorly increases (sic) our sale and service. Or (sic) customer web based service will be going on line in the next (sic), this will give our customer access to their job file with all the information from quotes invoices time line test certificates and a whole lot more.
The reason for me to resign as a director from PLS was due to the conflict, and inability to make decision in regards to the financial position of the company.
In my view the other directors where holding the company back as you may have noticed with the money situation being unable to pay its accounts.
Please can you organise new log in details to the CCO for Paul and myself ASAP
Regards.
Dale Williams
Technical Director
TAG LiftsAlthough the email was sent from Williams’ PLS email account, the email featured the TAG Lifts logo and TAG Lifts contact details in the signature. Hoffman and Martin were copied as recipients of the email. Hoffman gave evidence that the reference to “Paul” was not to him but Paul Hart. I will deal with this later.
As I have said, each of Hoffman and Martin had ceased their employment with PLS by the end of February 2012. Hoffman has asserted that he then only started employment with TAG on 19 March 2012; he produced a PAYG payment summary in support of that assertion. I do not accept that evidence for reasons that I will come to. In my view it is more probable that he started in early March even if the formal records show mid-March.
In response to that email, on the same day Inigo Epelde Garin from ORONA sent an email to Williams in which he said that he would like to meet Williams on 21 or 22 March to fully understand the situation between PLS and TAG.
In response to that email, again on the same day, Williams using his PLS email account sent an email to Inigo Epelde Garin in which he made representations that Van Munnen was still running PLS, but that Williams did not expect that Van Munnen would be able to continue running the business. The email stated:
Inigo
Ron is still running PLS, trying to finish all outstanding jobs. I but don’t think he will be able to continue selling, installing and installing the orona product with no product experience and or lack of trained labour. I have been heavily involved in all aspects of the orona product from the mechanical and electrical design registration though (sic) to the australian testing procedures. I’m not sure how a company can operate without skilled people in these areas, we aren’t selling televisions anyway that is something your company needs to decide if you chose to stay involved with PLS.
Ron is accountable for all outstanding accounts. Try sending them to [email protected] and personally I wouldn’t give him credit he is at very high risk.
Are even more so keen to meet up this month now with the restructure.
Still need to put aside a few hours for surfing I have spoken to one of my employees he is a mad surfer and is very keen to take us to the good spots.
In the mean time we still need a new login Paul and I will be quoting the same people as before just a new name and will have a much larger customer base with the buy out of a south Australian company.
On 8 March 2012, Hoffman sent an email from his PLS email account to his TAG email account which contained log-on information for the ORONA extranet. The username to gain access to the extranet was a PLS email account, [email protected].
On 13 March 2012 Leon Stewart of Valeo Construction sent an email to Williams at his TAG email address attaching a contract for the Nepean Hwy Job. In the email, he also requested certificates of public liability and WorkCover insurance from Williams.
On 2 April 2012 Williams, using his TAG email account, sent an email to “undisclosed recipients” requesting the earliest dispatch date for four lifts. These were as follows:
EXAS03270PP
EXAS03271PP
EXAS03272PP
EXAS05058PP
The lift codes show that these lift orders were for the PLS Nepean Hwy Job and the PLS High St Job.
On 3 April 2012, Hoffman, using his TAG email account, forwarded the email referred to to Justine Martin. On the same day Martin sent an email to Inigo Epelde Garin requesting pro forma invoices addressed to TAG for the four lifts.
On 4 April 2012, Inigo Epelde Garin sent an email to Williams, Justine Martin and Hoffman expressing that the lifts for which the invoices had been requested were PLS orders, and that ORONA could not supply these orders to a different company. The email reads in part:
Ÿ“These are PRESTIGE orders. WE cannot simply supply these orders to a different company”
Ÿ“If you have these orders, please send an order document from TAG Lifts”.
On 5 April 2012, Hoffman sent an email to Amaia Elorza from ORONA and Williams. In the email, Hoffman enclosed four new lift orders and requested pro forma invoices to arrange for their payment. These “new” orders were identical in form to what had previously been sent by PLS. On 19 April 2012 Amaia Elorza sent an email to Hoffman confirming the orders.
On 13 April 2012, TAG submitted a quotation to Behmer & Wright for the supply and installation of one passenger lift for the total of $55,235.00+GST at 4 Maple Street, Caulfield South. The quotation was prepared and sent by Hoffman. The details of the lift are identical to those set out in the PLS quotation. The payment terms, maintenance costs, hourly rates and callout fees vary slightly from the PLS quotation on the same job.
On or before 18 April 2012, Hoffman entered information regarding the Nepean Hwy Job and the High St Job on the ORONA extranet on behalf of TAG. On 19 April 2012, an email was sent by ORONA to Hoffman congratulating him on placing orders and referring to delivery dates.
On 23 April 2012, Leon Stewart of Valeo Construction sent an email to Williams at his TAG email address requesting that he sign and return the contract for the Nepean Hwy Job by the end of the week. On 2 May 2012 Williams forwarded the email to Sean Luck of TAG.
On the same day, Leon Stewart sent an email to Justine Martin requesting TAG’s ABN, bank account details, WorkCover insurance and public liability insurance information. On 2 May 2012 Martin responded to the email with all of the requested information and with Williams copied as a recipient.
On 26 April 2012, Behmer & Wright sent an email to Hoffman with attachments concerning the Synagogue Job. The attachments included the previous drawings of PLS and the contract and related documents between PLS and Behmer & Wright.
On 30 April 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright with the revised drawings for the Synagogue job.
On 8 May 2012, TAG created drawings for the Synagogue project.
On 15 May 2012, TAG issued a tax invoice to Behmer & Wright for deposit of 15% of total contract value of the lift, being $9,113.78 payable (total contract value
$55,235.00+GST).
On 16 May 2012, Hoffman confirmed with ORONA the correctness of the drawings for the Nepean Hwy Job and the High St Job.
An ORONA document produced on 18 May 2012 titled “Next Dispatch Dates” showed that three lifts were to be delivered to the Nepean Hwy Job, one lift was to be delivered to the High St Job, and one lift was to be delivered to the Synagogue Job for TAG.
On 28 May 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright confirming that TAG would provide warranties and guarantees for the installation of the lift for the Dorcas St Job.
On 28 May 2012, TAG issued a tax invoice to Valeo Construction for the supply and installation of three passenger lifts at 1142 Nepean Highway, Highett, in an amount of $152,000 (including GST).
On 28 May 2012, TAG issued a tax invoice to Valeo Construction for the supply and installation of one passenger lift at 218–224 High Street, Ashburton, in an amount of $54,450 (including GST).
On 1 June 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright with drawings for the Synagogue project marked with TAG Lifts attached.
On 5 June 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright with revised drawings for the Synagogue Job attached.
On 7 June 2012, TAG Lifts signed a sub-contract work order between Behmer & Wright and TAG. The signatures were those of Hoffman and Williams. The sub-contract work order was also signed on behalf of Behmer & Wright.
On 15 June 2012, Hoffman, using his TAG email address, sent an email to Joseph Perez of ORONA confirming the drawings for the Dorcas St Job for TAG. On the same day Joseph Perez sent an email to Hoffman asking when ORONA could expect payment for the lift. On 21 June 2012, Joseph Perez sent an email to Hoffman and Williams asking for confirmation of payment for three lifts. Hoffman forwarded the email to Justine Martin on the same day.
On 18 June 2012, Behmer & Wright wrote to TAG in relation to the sub-contract work order and noted that it had made unacceptable amendments to the Scope of the Works and the Terms and Conditions. Behmer & Wright requested that the amendments “STET” be endorsed.
On 19 June 2012, Hoffman sent an email to Trenton Dalvean of Behmer & Wright outlining the delivery schedule for the lift to be installed at the Synagogue Job.
On 20 June and 26 June 2012, Amaia Elorza from ORONA sent an email to Hoffman and Williams indicating they had not received payment for the lift for the Dorcas St Job. The lift code was as follows:
EXAS11942G8.
On 27 June 2012, Tom Tziouvelis of Valeo Construction sent an email to Williams requesting confirmation on behalf of TAG on a number of matters concerning the Dorcas St Job. On the same day Williams replied to the email with confirmation that TAG would complete all of the requests made by Tziouvelis. On 28 June 2012 Tziouvelis sent an email to Williams in which he said he had received confirmation from Gardiner that there would be no delay for the lift on the Dorcas St Job.
On 16 July 2012, Olatz Recio Marzal of ORONA sent an email to Justine Martin, Hoffman and Williams requesting that the outstanding payment for two scheduled lifts be completed. The lift codes were as follows:
EXAS11942G8
EXAS11284G8Olatz Recio Marzal sent further emails on Friday 20 July, Tuesday 24 July and Thursday 26 July to Justine Martin, Hoffman and Williams requesting urgent confirmation that payment would be made. On 26 July 2012 Martin sent an email to Olatz Recio Marzal confirming the final payment to ORONA for the relevant lifts.
On 20 July 2012, Justine Martin sent an email to Tom Tziouvelis of Valeo Construction with Williams copied as a recipient in which she informed him that the lifts for the Nepean Hwy Job and High St Job were due to arrive on 24 July 2012. In the email, Martin said that she had spoken to Gardiner and Williams about the payment details and wished to confirm with Tziouvelis that payment would be made on the delivery date. This was confirmed by Tziouvelis.
On 20 July 2012, the ORONA Project Engineering Department sent an automatic generated email to Hoffman and Williams with the subject line “Next Dispatch Dates”. Hoffman forwarded the email to Justine Martin on Thursday 26 July 2012.
On 25 July 2012, Justine Martin sent an email to Tom Tziouvelis of Valeo Construction with Williams and Gardiner copied as recipients in which she attached photographs of the lifts received at the TAG factory. Martin informed Tziouvelis that the lifts were being delivered to the Valeo Construction sites.
On 26 July 2012, Justine Martin sent an email to Tom Tziouvelis with more photographs attached. In the email, Martin asked Tziouvelis to contact Gardiner to discuss “the next step”.
On 2 August 2012, TAG issued a tax invoice to Valeo Construction in relation to the High St Job for the final claim at 20% of the total contract value.
On 11 October 2012, TAG issued a tax invoice to Valeo Construction in relation to the Dorcas St Job for the final claim at 20% of the total contract value.
On 11 October 2012, TAG issued a tax invoice to Behmer & Wright in relation to the Synagogue Job for the final 10% of total contract value.
On 13 November 2012, Tom Tziouvelis sent an email to Williams, Gardiner and Martin requesting the “Passenger lift installation compliance certificate” for the Dorcas St Job. On the same day Martin replied to the email with the requested certificate attached, signed by Williams for TAG.
On 6 December 2012, Tom Tziouvelis of Valeo Construction sent an email informing TAG that there were several issues at the Dorcas St Job that needed to be rectified urgently. On the same day Justine Martin replied to the email saying that Gardiner had been in discussions with a Valeo employee and that “TAG will be out there tomorrow to sort out”.
In December 2012, in response to a series of emails concerning a problem with Sabbath compliance at the Synagogue Job, Gardiner sent an email to a number of employees at Behmer & Wright, as well as Williams and Hoffman, in which he asserted that TAG had completed its work on the site.
On 20 December 2012, the Dorcas St owner filed with WorkSafe a “Notice of Registration” for one of the Dorcas St installation lifts. The Plant Design Number was V1103542 (a PLS design registration number).
THE CLAIM AGAINST WILLIAMS
It is appropriate to address the claims against Williams and Hoffman; I will deal with Gardiner later.
Williams was an executive director of PLS. It is unclear in the evidence as to whether he was also an employee of PLS or whether his services were contracted to PLS through his private company. I am inclined to find that the latter position applied. But on any view he was bound by various fiduciary and statutory duties owed to PLS that I will later describe.
In summary, there is little doubt that Williams:
(a)had access to confidential information of PLS concerning its customers and suppliers and the projects that I have described above;
(b)generally, used that information to assist TAG and contrary to the interests of PLS;
(c)on 1 March 2012, used his PLS email account to inform ORONA that he was starting a new lift company and that PLS staff were joining the new company;
(d)encouraged and took steps to actively divert the business and customers of PLS to TAG;
(e)was directly involved in obtaining and fulfilling for TAG the projects that had been those of PLS.
In so acting, Williams breached fiduciary duties to act in good faith, with fidelity, not to misuse the confidential information of PLS and not to take advantage of his position to obtain a benefit for himself. He also breached ss 181, 182 and 183 of the Corporations Act 2001 (Cth), the details of which I will later describe.
There is also a separate claim made by PLS against Williams for his unauthorised activities in causing:
(a)money from a PLS bank account to be paid to an insurer;
(b)other payments to be made from PLS’ funds which had not been authorised by PLS.
I will deal with this restitutionary claim later.
THE CLAIM AGAINST HOFFMAN
PLS’ claim against Hoffman involves the following elements:
(a)Hoffman was an employee of PLS (in respect of claims other than the s 181 claim).
(b)Further, Hoffman was an officer of PLS (in respect of the s 181 claim). I do not accept that assertion.
(c)Hoffman had access to confidential information of PLS in the course of his employment with PLS, including in relation to customers and suppliers.
(d)On 15 February 2012 Hoffman resigned his employment with PLS.
(e)By 1 March 2012, alternatively on an unknown date in March 2012, alternatively 19 March 2012 Hoffman commenced undertaking work for TAG.
(f)At TAG, Hoffman (together with others) used PLS’ confidential information to obtain and undertake the lost projects.
(g)PLS suffered loss by reason of Hoffman’s conduct.
As I have said, Hoffman was the sales manager at PLS. He had a very senior role within PLS. He was responsible at PLS for sourcing and securing all of the jobs to be undertaken by PLS. His role was to:
(a)manage the sales process on behalf of PLS, including to obtain new customers for PLS and to seek additional business from existing customers;
(b)meet with clients to negotiate prices and payment terms; and
(c)create quotations for customers.
Hoffman’s role continued after quotations were prepared. He dealt extensively with customers and prospective customers and was the person principally responsible for such dealings.
When Hoffman left PLS in mid-February 2012, he knew the following matters:
(a)PLS had quoted on each of the lost projects;
(b)PLS’ quote had been successful in respect of each of the lost projects;
(c)Details of PLS’ quotes in respect of the lost projects (for example, the prices quoted by PLS);
(d)The status of the lost projects (that is, he knew that each of them was a project won by PLS, but in respect of which PLS had not commenced installation);
(e)The financial status of each of the lost projects (that is, whether the client had made any payment);
(f)PLS intended to fulfil the lost projects by purchasing lifts from ORONA;
(g)PLS had placed orders on ORONA for lifts in respect of the Nepean Hwy job, the High St job and the Synagogue job and that the Dorcas St job was entered into ORONA’s system as a quotation;
(h)PLS had undertaken at least 10–15 per cent of the contract works on the Synagogue job;
(i)PLS had undertaken sufficient works on each of the lost projects in order to place orders with ORONA for the lifts required to fulfil the projects (including quotations, revised quotations, drawings, revised/final drawings, generation of invoices, the obtaining of detailed information from the client);
(j)The lifts ordered by PLS for the lost projects had a place in ORONA’s production schedule;
(k)The lift numbers assigned by ORONA to the lifts ordered by PLS in order to undertake the lost projects;
(l)The date by which the client required installation of the lifts in respect of each of the lost projects; in the case of the Nepean Hwy job, Valeo Construction required installation immediately;
(m)The log-in details held by PLS for the ORONA extranet;
(n)The password to the email address “[email protected]”;
(o)The technical specifications of the lifts required by the clients for the lost projects;
(p)The drawings prepared by PLS in order to undertake the lost projects.
These items were confidential information of PLS.
In my opinion, and for the reasons discussed below, I have concluded that Hoffman misused such confidential information whilst employed at TAG.
Counsel for PLS, Mr Tyson Wodak, concedes that PLS has had difficulties in proving such misuse through direct evidence by reason of:
(a)PLS being on the outside looking in in respect of the respondents’ conduct;
(b)The respondents’ failure to make proper discovery including discovery responsive to the categories of documents sought by PLS;
(c)The fact that the Toshiba laptop taken by Hoffman from PLS was returned wiped of all PLS data;
(d)The failure of Valeo Construction to cooperate with subpoenas for production;
(e)The fact that no books and records were provided to the liquidator of TAG upon that company entering liquidation;
(f)The failure of Williams and Gardiner to appear and give evidence at trial.
PLS has relied principally on inference to make out its case. It has invited me to infer, on the evidence, that Hoffman together with the other respondents misused the confidential information identified above to:
(a)identify the lost projects as projects which, as at March 2012, had customers who were then or would shortly be in need of lifts for projects then underway, had engaged PLS to supply and install lifts for these projects and had not made any payment to PLS;
(b)make contact with the customers in respect of the lost projects;
(c)determine the price to quote at TAG in respect of the lost projects;
(d)inform clients as to the date by which the lifts required for the lost projects could be delivered;
(e)access the ORONA extranet;
(f)place orders with ORONA in respect of the lifts required to undertake the lost projects;
(g)expedite for TAG the delivery of lifts for the lost projects ahead of the time by which the lifts could have been ordered if TAG had had to start the process from scratch;
(h)use drawings prepared by PLS for the lost projects in quoting on the projects and placing orders on ORONA;
(i)access PLS email accounts even after leaving PLS and joining TAG.
I am, generally speaking, prepared to draw such inferences from the primary facts set out in these reasons. But in any event there is also direct evidence.
First, Hoffman used the lift numbers assigned by ORONA to PLS for the Nepean Hwy job and the High St job in ordering lifts from ORONA for TAG for those jobs. I can and do infer from this conduct that Hoffman was willing to use confidential information of PLS in the course of his duties for TAG.
Second, Van Munnen’s evidence was that Hoffman, or another person who knew Hoffman’s account details, accessed PLS email accounts after Hoffman left PLS. I can and do infer that it was Hoffman who accessed Hoffman’s PLS emails after leaving PLS.
Third, Van Munnen’s unchallenged evidence was that:
(a)Williams removed from PLS a desktop computer owned by PLS and retained it until it was recovered by the police. Williams also removed a backup drive.
(b)It appeared that Williams had used the removed computer in conducting business for TAG.
(c)Among the emails on this PLS computer were emails between Williams and Hoffman at TAG.
Fourth, Hoffman retained after leaving PLS a Toshiba laptop computer owned by PLS which contained quotes issued by PLS. It was only returned some time later but wiped of all PLS data.
Generally, the information on these computers and drives in the possession of Williams and Hoffman was confidential to PLS and contained, among other things, all details of pending work (including costs and specifications of jobs), emails between PLS and ORONA and details of orders placed by PLS with ORONA. I can and do infer that Hoffman used confidential information on the PLS computer he retained in his possession for the benefit of TAG.
Fifth, in my view, Hoffman gave false evidence concerning a “Paul Hart”.
Initially, Hoffman gave evidence that:
(a)a person by the name of “Paul Hart” had commenced working at TAG prior to 1 March 2012;
(b)“Paul Hart” was employed in sales;
(c)“Paul Hart” had worked for Anthony Gardiner before and “he had him there”;
(d)“Paul Hart” worked for TAG;
(e)“Paul Hart” — and not Paul Hoffman — used the email address [email protected];
(f)Hoffman’s email address at TAG was “[email protected]”;
(g)“Paul Hart” may have been the Paul referred to in the email on 1 March 2012.
His evidence subsequently evolved to the position that:
(a)“Paul Hart” was not an employee of TAG when Hoffman was first employed by TAG;
(b)“Paul Hart” had not commenced with TAG until at least mid-May 2012;
(c)Until about May 2012 Hoffman was the only Paul H working at TAG.
The change in Hoffman’s evidence regarding the date on which “Paul Hart” started with TAG adversely affected his credibility.
He was unable to give any satisfactory explanation for his earlier evidence that “Paul Hart” may have been the person referred to in (and copied in to) a 1 March 2012 email as having come on board notwithstanding that “Paul Hart” did not commence with TAG until at least mid-May 2012.
Hoffman was insistent that the email address “[email protected]” was associated with “Paul Hart” and not with Hoffman. He recalled his email address at TAG as being “[email protected]”. In fact, Hoffman used each of the email addresses “[email protected]” and “[email protected]” while with TAG. There is no evidence that he used the email address “[email protected]”. In this respect the following may be observed:
(a)On 26 April 2012 an email was sent from Trenton Dalvean to “[email protected]”. “Paul–TAG” replied the same day using the email address “[email protected]” and including the email signature “Paul Hoffman Sales/Estimator”. “Paul Hart” had not yet commenced work with TAG.
(b)On 30 April 2012 an email was sent from “Paul–TAG” using the email address “[email protected]” to Trenton Dalvean. The email signature reads “Paul Hoffman Sales/Estimator”. “Paul Hart” had not yet commenced work with TAG.
(c)On 9 May 2012 an email was sent from “Paul–TAG” using the email address “[email protected]” to “[email protected]”. The email signature reads “Paul Hoffman Sales/Estimator”. The email attaches a quotation prepared by Hoffman. “Paul Hart” had not yet commenced work with TAG.
(d)On 16 May 2012 four emails were sent from “Paul–TAG” using the email address “[email protected]” to “[email protected]” and including the email signature “Paul Hoffman Sales/Estimator”. On Hoffman’s evidence it is unclear whether “Paul Hart” had yet started with TAG.
(e)On 18 May 2012 an email was sent from Inigo Perman of Orona to “[email protected]”. ‘[email protected]” responded to the email on 21 May 2012. The response includes the email footer “Paul Hoffman Sales/Estimator”. On Hoffman’s evidence it is unclear whether “Paul Hart” had yet started with TAG.
(f)On 5 June 2012 an email was sent from “Paul–TAG” using the email address “[email protected]”. The email includes the email footer “Paul Hoffman Sales/Estimator”.
Hoffman’s evidence in respect of “Paul Hart” in my view was unreliable to say the least. I reject it. No document before me refers to a person by the name of “Paul Hart” being employed by TAG at the relevant time. Hoffman’s affidavits do not refer to the existence of “Paul Hart” or the use by “Paul Hart” of the email address “[email protected]”. If “Paul Hart” had been employed by TAG at the relevant time and evidence in relation to him was exculpatory of Hoffman then Hoffman no doubt would have referred to “Paul Hart” and to the relevant matters in his affidavits.
In my view, the involvement of “Paul Hart” in the matters the subject of this proceeding was contrived by Hoffman in an attempt to evade responsibility for his conduct at TAG from early March 2012 that involved him using PLS’ confidential information.
Hoffman’s contrived evidence in relation to “Paul Hart” demonstrates that Hoffman regarded it as in his interests to provide an explanation other than the truth regarding what occurred at TAG, demonstrates that Hoffman was eager to avoid being found to be the person who engaged in the conduct engaged in by “Paul” and “Paul H” at TAG and demonstrates Hoffman’s consciousness that emails sent to and from “[email protected]” involved the misuse of confidential information. It gives rise to a strong inference that Hoffman misused PLS’ confidential information.
Sixth, Hoffman referred to “Shane Luck” as having brought to TAG information regarding PLS. Mr Luck is a real person, but is not mentioned in either of Hoffman’s affidavits as having any involvement in the matters the subject of this proceeding. If any conduct by a Shane Luck was exculpatory of Hoffman then presumably Hoffman would have said so in his affidavits and the involvement of Mr Luck would have been put to Van Munnen in cross-examination. Neither occurred. I am not able to find that Mr Luck engaged in any relevant conduct, let alone conduct that is supportive of Hoffman’s defence.
Seventh, Hoffman gave evidence in relation to a car belonging to PLS. Initially his evidence was that he drove the car on a few occasions during the two week period after he resigned from PLS then immediately parked it at TAG’s premises.
When it was pointed out to Hoffman that on that evidence he therefore must have parked the car at TAG’s premises by early March 2012 his evidence changed; he then asserted that he had for an interim period parked it on his nature strip. The evidence on this topic supports a finding that Hoffman commenced with TAG by about 1 March 2012. Moreover, on any view it demonstrates that he was willing to change his evidence when he perceived that it suited his position.
Hoffman was eager to demonstrate that he did not start with TAG until 19 March 2012. This no doubt was to avoid being implicated in obtaining access to the ORONA extranet on or about 8 March 2012 and in Valeo Construction awarding jobs to TAG very shortly after TAG Lifts commenced operations. In my view, Hoffman is likely to have commenced undertaking work for TAG in early March 2012.
I intend to proceed on the basis that PLS claims damages only, being the profit lost to it by reason of its loss of the projects. As I have said, the wrongdoing of each of Williams, Hoffman and Gardiner caused that loss or materially contributed to it. The relevant calculations are the following.
(a) Calculation of loss and damages — Nepean Hwy Job
The calculations for loss on the Nepean Hwy Job are based on an exchange rate of 1.36 AUD to 1 EUR — this is the same exchange rate listed in the quote submitted by PLS for the job. The cost of each lift is based on the cost given in the ORONA order confirmation. This gives the following cost for each lift in Australian dollars:
Lift A: 24,690 EUR = $33,578.40
Lift B: 23,015 EUR = $31,300.40
Lift C: 22,800 EUR = $31,008.00
TOTAL: $95,886.80
The freight cost is $3,380.00, which gives a total cost of $99,266.80.
The quotation submitted by PLS for the job provided for 36 working days based on 36 hour weeks, or a total of 259.2 hours. Labour costs to PLS were typically $64.00 per hour. Therefore the total labour cost according to the quote was $16,588.80.
However, the job required approximately 620 hours of labour (Lift A 220 hours; Lifts B and C 200 hours) at the same cost to PLS ($64.00 per hour). This adds to $39,680.00 rather than $16,588.80. The total cost of the lifts and labour for the Nepean Hwy Job was therefore $138,946.80.
In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This added to $3,090.00 for the Nepean Hwy lifts. The total cost of the job was therefore $142,036.80.
The quotation submitted by PLS to Valeo Construction for the job was $181,818.19. Therefore, the total profit to PLS for the installation of the three (3) passenger lifts would have been $39,781.39.
(b) Calculation of loss and damages — High St Job
The calculations for loss on the High St Job are based on the exchange rate of 1.38 AUD to 1 EUR — this is the same exchange rate listed in the quote submitted by PLS for the job. The cost of each lift was based on the cost given in the ORONA order confirmation. This gave the following cost for the lift in Australian dollars:
22,995 EUR = $31,733.10
The freight cost is $3,380.00, which gives a total cost of $35,113.10.
The quotation submitted by PLS for the job provided for 29 working days based on 36 hour weeks, or a total of 208.8 hours. Therefore the total labour cost according to the quote was $13,363.20 at $64.00 per hour. This brings the total cost to $48,476.30.
In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This added to $1,030 for the High St Job. The total cost of the job was therefore $49,506.30.
The quotation submitted by PLS to Valeo Construction for the job was $81,300.00. Therefore, the total profit to PLS for the installation of one (1) passenger lift would have been $31,793.70.
(c) Calculation of loss and damages — Dorcas St Job
The calculations for loss on the Dorcas St Job are based on the exchange rate of 1.34 AUD to 1 EUR — this is the same exchange rate listed in the quotes submitted by PLS for the job. The cost of the passenger lift was based on the cost given in the ORONA costing sheet. The cost of the car lift was based on the cost given in the Hidral costing sheet. This gave the following cost for each lift in Australian dollars:
Passenger: 21,727.92 EUR = $29,115.41
Car: 29,849.98 EUR = $39,998.97
The freight cost was $3,380.00, which gave a total cost of $72,494.38.
The quotation submitted by PLS for the job provided for 36 working days based on 36 hour weeks, or a total of 259.2 hours. Therefore the total labour cost according to the quote was $16,588.80 at $64.00 per hour.
However, the job would have required approximately 420 hours of labour (220 hours for Car Lift; 200 hours for Passenger Lift) at the same cost to PLS ($64.00 per hour). This adds to $26,880. The total cost of the lifts and labour for the Dorcas St Job was therefore $99,374.38.
In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This adds to $2,060.00 for the Dorcas St Job. The total cost of the job was therefore $101,434.38.
The quotation submitted by PLS to Valeo Construction for the job was a total of $164,639.00. Therefore, the total profit to PLS for the installation of one (1) passenger lift and one (1) car lift would have been $63,204.62.
(d) Calculation of loss and damages — Synagogue Job
The calculations for loss on the Synagogue Job are based on the exchange rate of 1.39 AUD to 1 EUR — this is the same exchange rate listed in the quote submitted by PLS for the job. The cost of the lift was based on the cost given in the ORONA costing sheet. This gives the following cost for each lift in Australian dollars:
15,021 .91 EUR = 20,880.45
The freight cost was $3,380.00, which gave a total cost of $24,260.45.
The quotation submitted by PLS for the job provided for 22 working days based on 36 hour weeks, or a total of 158.4 hours. Therefore the total labour cost according to the quote was $10,137.60 at $64.00 per hour.
However, the job would have required approximately 210 hours of labour at the same cost to PLS ($64.00 per hour). This adds to $13,440.00. The total costs of the lifts and labour for the Synagogue Job was therefore $37,700.45.
In addition, PLS would pay $250 per lift for customs, $200 per lift for warehouse delivery and $580 per lift for the installation of an emergency phone and engraving. This adds to $1,030 for the Synagogue Job. The total cost of the job was therefore $38,730.45.
The quotation submitted by PLS to Valeo Construction for the job was $58,352.00. Therefore, the total profit to PLS for the installation of one (1) passenger lift would have been $19,621.55.
(e) Calculation of loss and damage — Total
I have calculated the lost profit for each of the Nepean Hwy Job, the High St Job, the Dorcas St Job and the Synagogue Job.
Of course, this is not the sum that should be awarded to PLS. The claim made is principally for the lost opportunity to get the benefit flowing from the four projects, being to earn the profits as calculated above. Given that it is not certain that PLS could have obtained such profits, particularly given its financial position and the necessary support that it might have needed from Van Munnen, it is appropriate in my view to discount the various lost profits for each project reflected in the above arithmetic. Moreover, there should be a discount to reflect the fact that the counterparty may not have proceeded. Taking into account all contingencies, I would discount the Nepean Hwy Job, High St Job and Synagogue Job calculations each by 30%. I would discount the Dorcas St Job calculation by 50% as it had not progressed as far as the other projects under PLS’ auspices. Finally, for completeness I note that Hoffman submitted that there were no “executed contracts” and that no evidence from the counterparties had been called. I consider that the first point ignores the reality in relation to three of the projects. As to the second point, I have taken this into consideration, but it is not disqualifying. Hoffman made no other submissions on causation or damages.
Finally, I should say for completeness that I have put to one side the line of authority which deals with the scenario where there can be a remedy for breach of fiduciary duty against a party even though the company which has been wronged was unwilling, unlikely or unable to make the profits which the wrongdoer has made (see Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 (reporting what first appeared in [1942] 1 All ER 378) and Warman International Ltd v Dwyer (1995) 182 CLR 544). That is because in the present case an account of profits has not been pursued.
MONEY HAD AND RECEIVED CLAIM — WILLIAMS
Williams caused PLS to pay out moneys for no proper purpose and in breach of the duties he owed to PLS. PLS suffered detriment by reason of this conduct while Williams benefited from it. It would be unjust for Williams to retain the benefit of these moneys. PLS is entitled to restitution.
Throughout the period from 5 July 2009 to 14 November 2011, Williams applied moneys of PLS for his own personal benefit that were not authorised. PLS did not gain anything from these transactions. These payments were not part of Williams’ remuneration for his directorship with or services for PLS, which was separately paid.
Williams caused various payments to be made to Asteron Life Insurance. PLS was not the beneficiary of any relevant policy of insurance and there was no agreement that PLS would pay insurance premiums on behalf of staff or directors. The date and amount of each payment was as follows:
07/07/2009 $308.06
06/08/2009 $308.06
12/08/2009 $391.81
07/09/2009 $308.06
14/09/2009 $391.81
06/10/2009 $391.81
13/11/2009 $422.48
13/12/2009 $422.48
12/01/2010 $422.48
12/02/2010 $422.48
12/03/2010 $422.48
12/04/2010 $422.48
12/05/2010 $422.48
15/06/2010 $422.48
12/07/2010 $422.48
12/08/2010 $422.48
12/09/2010 $422.48
12/10/2010 $422.48
15/11/2010 $457.36
13/12/2010 $457.36
13/01/2011 $457.36
14/02/2011 $457.36
15/03/2011 $457.36
14/04/2011 $457.36
14/05/2011 $457.36
14/06/2011 $457.36
13/07/2011 $457.36
15/08/2011 $457.36
13/09/2011 $457.36
14/10/2011 $457.36
14/11/2011 $496.98
13/12/2011 $496.98
13/01/2012 $389.33TOTAL: $14,040.98.
Further, Williams made several other payments throughout the period. Each of them does not represent a payment authorised by PLS or made in payment of moneys owed by PLS to any creditor. The details of these payments are as follows:
14/07/2009 GMAC Financial Services $722.67
14/08/2009 GMAC Financial Services $722.67
23/08/2009 Purchase; Citylink $14.34
14/09/2009 GMAC Financial Services $722.67
23/09/2009 Purchase; Citylink $1.72
30/09/2009 Electrical Trade Union $133.75
02/12/2009 Dale Williams $255.00
23/12/2009 Purchase; Citylink $15.30
28/12/2009 Purchase; WBC Visa $22.80
05/01/2010 Min NAB Visa Payment $7,500.00
24/01/2010 Purchase; Citylink $53.17
23/02/2010 Purchase; Citylink $106.97
23/03/2010 Purchase; Citylink $96.71
26/03/2010 Purchase; L&H Group $142.18
28/03/2010 Purchase; WBC Visa $178.25
28/03/2010 Purchase; Telstra-Landlines $90.91
23/04/2010 Purchase; Citylink $22.00
28/04/2010 Purchase; WBC Visa $57.49
28/04/2010 Purchase; Telstra-Landlines $90.91
20/05/2010 Purchase; Telstra-Landlines $100.00
23/05/2010 Purchase; Citylink $22.40
05/06/2010 Purchase; L&H Group $347.80
08/06/2010 Purchase; L&H Group $35.79
24/06/2010 Purchase; Citylink $2.16
27/06/2010 Purchase; Telstra-Landlines $90.91
30/06/2010 Electrical Trade Union $506.00
28/07/2010 WBC Visa $63.00
18/09/2010 Purchase; L&H Group $97.32
22/10/2010 Purchase; Action Aluminium $360.13
28/11/2010 Purchase; WBC Visa $6.40
28/12/2010 Purchase; WBC Visa $376.10
20/01/2011 Purchase; AA Industrial $60.00
27/01/2011 Purchase; AA Industrial $83.25
25/03/2011 Purchase; L&H Group $32.60
25/03/2011 Purchase; L&H Group $11.25
28/03/2011 Purchase; WBC Visa $39.50
28/06/2011 Purchase; WBC Visa $827.07
21/07/2011 Purchase; WBC Visa $18.50
25/07/2011 Purchase; L&H Group $35.00
16/08/2011 Purchase; L&H Group $87.00
28/09/2011 Purchase; WBC Visa $297.77
30/10/2011 Purchase; WBC Visa $41.75TOTAL $14,491.21
Further, on 4 April 2011, Williams caused $20,000.00 of PLS’ funds to be paid directly into his wife’s (Lauren Williams) bank account. On 20 January 2012, Williams caused a further $2,200.00 of PLS’ funds to be paid directly into his wife’s bank account. On 8 February 2012, Williams again caused $2,200.00 of PLS’ funds to be paid directly into Lauren Williams’ bank account. These payments were not authorised by PLS and were not to its benefit.
On 21 February 2012 Williams caused $7,000.00 of PLS’ funds to be paid directly into the bank account of TAG. TAG was not engaged by PLS to do any work for PLS at this time.
In summary, the moneys of PLS withdrawn by Williams from PLS for Williams’ personal use or the use of TAG and not repaid was $59,932.19. An order for restitution will be made.
CONCLUSION
PLS has succeeded in its claims against Williams, Hoffman and Gardiner.
As against each of them, an award of damages, equitable compensation or a compensation order should be made in an amount reflected in these reasons.
In addition, there should be judgment against Williams for the additional liquidated sum of $59,932.19.
I will give the parties an opportunity to make submissions on the precise form of orders, any interest claims and calculations and costs.
I certify that the preceding two hundred and eighty (280) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach. Associate:
Dated: 30 September 2015
Key Legal Topics
Areas of Law
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Corporate Law & Governance
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Contract Law
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Equity
Legal Concepts
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Breach of Contract
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Misuse of Confidential Information
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Unjust Enrichment
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Restitution
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Breach of Fiduciary Duty
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