Raindale Holdings Pty Ltd v Sigma Power Services Pty Ltd - [2025] WASC 260

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RAINDALE HOLDINGS PTY LTD -v- SIGMA POWER SERVICES PTY LTD [2025] WASC 260
CORAM:   MASTER RUSSELL
HEARD:   17 JULY 2024
DELIVERED          :   30 JUNE 2025
FILE NO/S:   CIV 2421 of 2023
BETWEEN:   RAINDALE HOLDINGS PTY LTD (ACN 099 475 911)
Plaintiff
AND
SIGMA POWER SERVICES PTY LTD (ACN 657 923 950)
Defendant

Catchwords:

Practice and procedure - Application for pre–action discovery - Whether plaintiff may have a cause of action against defendant - Potential causes of action against defendant for knowing assistance or participation in alleged breach of fiduciary duty by former employees of plaintiff or involvement in alleged breaches of statutory duty by former employees - Whether discretion to order pre–action discovery should be exercised - Rules of Supreme Court 1971 (WA) O 26A r 4 - Turns on own facts

Equity - Fiduciary duties in context of employment relationship - Equitable obligations of confidence - Whether plaintiff may have a cause of action against defendant for knowing assistance in alleged breach of fiduciary duties owed by employee - Turns on own facts

Corporations - Duties owed by employee under s 182(1) and s 183(1) Corporations Act 2001 (Cth) - Whether plaintiff may have cause of action against defendant under s 182(2) and s 183(2) Corporations Act 2001 (Cth) for being involved in former employee's alleged breach of s 182(1) and s 183(1) Corporations Act 2001 (Cth) - Turns on own facts

Legislation:

Corporations Act 2001 (Cth) s 79, s 79(c), s 182, s 182(1), s 182(2), s 183, s 183(1), s 183(2), s 1317E, s 1317H(1), s 1317H(2)
Rules of Supreme Court 1971 (WA) O 26A r 3, O 26A r 4, O 26A r 4(4)

Result:

Application for pre-action discovery dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr C Slater
Defendant	:	Mr M Holler

Solicitors:

Plaintiff	:	Morgan Alteruthemeyer Legal Group
Defendant	:	Murfett Legal Pty Ltd

Cases referred to in decision(s):

Australian Securities and Investments Commission v Adler [2002] NSWSC 171, 29
Farah Construction Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, 18
ASIC v ActiveSuper Pty Ltd (in liq) [2015] FCA 342, 29
Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266 (1987), 23
Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited (2018) 360 ALR
Anderson v Canaccord Genuity Financial Ltd [2022] NSWSC 58, 20
BJ Bearings Pty Ltd v Whitehead [2016] VSC 44
BWS v ARV [No 2] [2021] WASCA 62
Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94; 2002) 26 WAR 33
Chaffey Services Pty Ltd as trustee for Cataby Services Trust, t/a Cataby Services -v- Doble [No 4] [2023] WASC 361
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326; [2007] NSWCA 172
Downer Utilities Australia Pty Ltd v Alinta Energy Transmission (Chichester) Pty Ltd [No 2] [2023] WASC 1
Echo Tasmnaia Pty Ltd v Imperial Chmical Industries PLC [2008] FCAFC 58
Hirschberg (ATF LPH Developments Keegan Street Trust) v Jameson Moore Pty Ltd [2018] WASC 348
Kelbush Pty Ltd v Australia and New Zealand Banking Group Limited [2016] WASCA 14; [2016] 49 WAR 374
Mandrilla Laboratories v Campbell [2009] NSWSC 987, 21
McCarthy v Dolpag Pty Ltd [2000] WASCA 106
Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427
Moorgate Tobacco Co Ltd v Phillip Morris (No 2) (1984) 156 CLR 414
Morton v Nylex Ltd [2007] NSWSC 562
Native Extracts Pty Ltd v Plant Extracts Pty Ltd (No 2) [2024] FCA 106
Nottingham University v Fishel [2000] IRLR 471, 20
R v Byrnes & Hopwood (1995) 183 CLR 501, 29
Scanlan v 2-4 McCabe Pty Ltd [2023] WASCA 135
St Georges Bank Ltd v Rabo Aut Ltd [2004] FCA 1360
The New South Wales Solicitors Mutual Indemnity Fund v The Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146
Waller v Waller [2009] WASCA 61
Woolworths Ltd v Olson (2004) 184 FLR 121, 20
Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317, 24
Yorke v Lucas (1985) 158 CLR 661, 29

MASTER RUSSELL:

Overview

The plaintiff, Raindale Holdings Pty Ltd, applies for pre‑action discovery pursuant to O 26A r 4 of the Rules of the Supreme Court 1971 (WA) (RSC) against the defendant, Sigma Power Services Pty Ltd.
The plaintiff and the defendant are both in the business of supplying high voltage electrical testing and commissioning services to the commercial and mining sectors.
The defendant was incorporated on 9 March 2022. It is not disputed that the plaintiff and defendant have been competitors since at least June 2023.
The plaintiff brings the application on the basis it believes it may have a cause of action against the defendant as a party involved in breaches of duty by two of the plaintiff's former employees. The former employees are Dawood Sajjad and Usman Ali, who became directors of the defendant while still employed by the plaintiff. The plaintiff claims that the former employees used the plaintiff's confidential information in breach of their employment contracts, statutory and fiduciary duties.
The plaintiff seeks orders for pre-action discovery from the defendant to assist it in deciding whether or not to commence proceedings against the defendant, Mr Sajjad and Mr Ali. It seeks discovery of:
(a)the defendant's balance sheets and profit and loss statements from the date of its incorporation on 9 March 2022 to date; and
(b)its customer list from 9 March 2022 to date, together with the value of the services provided to its customers in the form of an income by customer report from the defendant's accounting software.
The plaintiff is not entitled to pre-action discovery from the defendant pursuant to O 26A r 4 RSC to assist it in deciding whether to commence proceedings against Mr Sajjad or Mr Ali in relation to any cause of action it may have against them as its former employees. Any entitlement to pre-action discovery is limited to the plaintiff's decision to take proceedings against the defendant as the potential party.
For the reasons that follow, the plaintiff has not demonstrated that it may have a cause of action against the defendant. As such, the application should be dismissed.

Materials relied upon

In support of its application, the plaintiff relies on written submissions filed on 29 February 2024 and an affidavit sworn by its sole director and shareholder, Craig George Greentree, on 22 November 2023 (Greentree Affidavit).
The defendant opposes the application. It relies on an outline of submissions filed on 8 April 2024 and affidavits sworn by Jason Kristyan De Silva on 16 February 2024 (First De Silva Affidavit) and on 17 July 2024 (Second De Silva Affidavit). Mr De Silva is a director of Murfett Legal Pty Ltd, the defendant's lawyers.

Relevant legal principles

Order 26A RSC provides for two types of pre-action discovery. The first is to identify a potential party whose identity is unknown (O 26A r 3). The second is to obtain discovery from a potential party whose identity has been ascertained (O26A r 4). The plaintiff in this case seeks pre‑action discovery from the defendant pursuant to O26A r 4 RSC.
There was no dispute between the parties as to the principles relating to an application for pre-action discovery under O 26A r 4 RSC. They are well established and were summarised by the Court of Appeal in Scanlan v 2-4 McCabe Pty Ltd.[1]
[1] Scanlan v 2-4 McCabe Pty Ltd [2023] WASCA 135 (Scanlan v 2-4 McCabe) [46] - [51] (Beech, Hall JJA and Lundberg J). See also Downer Utilities Australia Pty Ltd v Alinta Energy Transmission (Chichester) Pty Ltd [No 2] [2023] WASC 1 (Downer Utilities v Alinta Energy [No 2])[18] - [20], [23] - [27], [29] - [32] (Archer J); BWS v ARV [No 2] [2021] WASCA 62 [27] - [37] (Murphy, Mitchell and Vaughan JJA); Kelbush Pty Ltd v Australia and New Zealand Banking Group Limited [2016] WASCA 14; [2016] 49 WAR 374 (Kelbush v ANZ) [65] - [71], [120] - [124] (Mitchell J), [1], [7] (Martin CJ and Buss JA agreeing); BWS v ARV [No 2] [2021] WASCA 62 [27] - [37] (Murphy, Mitchell and Vaughan JJA).
In order to enliven the court's discretion to make an order under O 26A r 4 RSC, an applicant for pre-action discovery must establish each of the following threshold jurisdictional requirements:[2]
1.That it 'may have a cause of action' against the potential party.
2.That it wants to commence proceedings against the potential party.
3.That it has made 'reasonable enquiries' for the purpose of obtaining sufficient information to enable a decision to be made as to whether to commence proceedings.
4.That it has not been able to obtain sufficient information to enable such a decision to be made.
5.There are 'reasonable grounds for believing' that the potential party had, has, or is likely to have had or have, possession of documents that may assist the applicant in making the decision to commence proceedings.
[2] BWS v ARV [No 2] [29].
The first requirement, that an applicant 'may have a cause of action' against the potential party, requires the applicant to demonstrate more than mere assertion, conjecture or suspicion, but it is not necessary for the applicant to positively establish the existence of a cause of action or that it has a prima facie case. The court must be satisfied that there is evidence which demonstrates on an objective basis that all the facts necessary to give rise to a right to sue may be able to be established.[3]
[3] Kelbush v ANZ [67] - [71], referring to Waller v Waller [2009] WASCA 61 [2] - [4], [75]. See also BWS v ARV [No 2] [32] - [33].
The second requirement, that the applicant 'wants to commence proceedings against the potential party' is a subjective question.[4] It places a limitation on the extent to which an applicant can fish for information.[5] The plaintiff must establish that it wants to commence proceedings against the defendant. This requirement will not be met if the plaintiff requires the information in order to determine whether or not it wants to take or commence proceedings.[6]
[4] Hirschberg (ATF LPH Developments Keegan Street Trust) v Jameson Moore Pty Ltd [2018] WASC 348 (Hirschberg) [34] (Smith J), citing The New South Wales Solicitors Mutual Indemnity Fund v The Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146 (New South Wales Solicitors Mutual Indemnity Fund [No 2]) [16] (McLure JA, Miller JA agreeing).
[5] New South Wales Solicitors Mutual Indemnity Fund [No 2] [16].
[6] Hirschberg [35] - [36], [49], citing The New South Wales Solicitors Mutual Indemnity Fund v The Hancock Family Memorial Foundation Ltd [No 2] [2009] WASCA 146 (New South Wales Solicitors Mutual Indemnity Fund [No 2]) [16], [17].
As to the third and fourth requirements, the inquiries to be made for the purpose of obtaining sufficient information to enable a decision to be made as to whether to commence proceedings and whether the information obtained is sufficient for that purpose, are also subjective matters. Whether the inquiries made are reasonable is to be assessed objectively, as is the sufficiency of the information, by reference to the knowledge and circumstances of the particular applicant.[7]
[7] Hirschberg [34], citing New South Wales Solicitors Mutual Indemnity Fund [No 2]) [14].
In New South Wales Solicitors Mutual Indemnity Fund [No 2], McLure JA (as her Honour then was) stated '[a]s the applicant must show that it wants to commence or take proceedings, it follows that if the missing information supports its claim, proceedings would be commenced or taken'.[8]
[8] New South Wales Solicitors Mutual Indemnity Fund [No 2]) [14].
In some cases, the missing information required to enable an applicant to decide whether or not to commence proceedings may concern the extent of apprehended breaches, the availability or strength of a defence or defences to the applicant's claim or the likely quantum of damages and whether the costs and risks of taking proceedings is worthwhile.[9] Pre‑action discovery cannot be used to build up or strengthen a case an applicant has already decided to bring.[10]
[9] See Downer Utilities v Alinta Energy [No 2] [67] - [68] (referring to BJ Bearings Pty Ltd v Whitehead [2016] VSC 44 [19], [33] - [34] (Hargrave J) and [71] (referring to Morton v Nylex Ltd [2007] NSWSC 562 [33] (White J)); St Georges Bank Ltd v Rabo Australia Ltd[2004] FCA 1360 [26(f)], approved in Echo Tasmania Pty Ltd v Imperial Chemical Industries PLC [2008] FCAFC 58 [43]; Quanta Software International Pty Ltd v Computer Management Services Pty Ltd [2000] FCA 969 [33] - [34] (Sackville J)
[10] Morton v Nylex Ltd [33] and the authorities referred to.
The outcome of a successful pre-action discovery application may be that provision of the discovery by the potential defendant allows the prospective plaintiff to form the view that it should not commence substantive proceedings.[11]
[11] Scanlan v 2-4 McCabe [125].
If the threshold jurisdictional requirements are met enlivening the court's discretion, it is not to be exercised as a matter of course. The court is to consider whether the order is reasonably necessary to achieve the proper administration of justice.[12]
[12] BWS v ARV [No 2] [35], referring to McCarthy v Dolpag Pty Ltd [2000] WASCA 106 (McCarthy v Dolpag) [13]; Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94; (2002) 26 WAR 33 [82]; Kelbush v ANZ [120].
Archer J (as her Honour then was) summarised the factors relevant to the exercise of the court's discretion in Downer Utilities v Alinta Energy [No 2]:[13]
[13] Downer Utilities v Alinta Energy [No 2] [30].
The following non-exhaustive factors have been identified as relevant to the exercise of the Court's discretion:[14]
[14] The first eight factors were identified in Central Exchange v Anaconda Nickel [82] - [83] (Steytler J (as his Honour then was)) and endorsed in Kelbush v ANZ [120] (Mitchell J (as his Honour then was) Martin CJ and Buss JA agreeing). Mitchell J in Kelbush v ANZ [121] added the additional factor, numbered as the ninth factor in the list.
1.the likelihood that a cause of action of the kind suggested will be found to exist;
2.the nature and significance of that potential cause of action;
3.the likely effect, on the person against whom discovery is sought, of the making of an order of the kind contended for;
4.whether there is any other adequate means, available to the intending plaintiff, of obtaining the information which it seeks;
5.the nature and confidentiality of the documents proposed to be obtained;
6.the possible significance of the information contained within those documents to the decision whether or not to commence the contemplated proceedings;
7.whether the applicant is able to compensate the potential party for its costs of complying with the order;
8.whether there is any evidence of bad faith on the part of the applicant; and
9.the extent to which the cost and effort involved in undertaking discovery and inspection is proportionate to the likely value of the claim if successful.
The power in O 26A r 4(4) is confined to requiring discovery of documents that may assist the applicant in making the decision whether to commence or take the contemplated proceedings. Only those documents actually relevant to a cause of action which the applicant may have should be the subject of the discovery order.[15]
[15] McCarthy v Dolpag [16].

The factual background relevant to the plaintiff's potential causes of action

Mr Greentree deposes that the plaintiff trades as Global Testing Services (GTS) and is in the business of supplying high voltage electrical testing and commissioning services to the commercial and mining sector in Australia and overseas. He says that since June 2023, the defendant has been operating in competition with the plaintiff.
The plaintiff submits, in effect, that its two former employees, Mr Ali and Mr Sajjad, set up the defendant company to operate in competition with the plaintiff while they were still employed by the plaintiff, and that they have used confidential information of the plaintiff in breach of their employment contracts, their fiduciary duties to the plaintiff as senior employees, and their statutory obligations under the Corporations Act 2001 (Cth).
Copies of Mr Ali's and Mr Sajjad's employment contracts with the plaintiff are attached to the Greentree Affidavit[16] together with copies of various extracts of data held by the Australian Securities and Investments Commission extracts.[17] The following relevant facts relied upon by the plaintiff are derived from those materials.
[16] Greentree Affidavit [21], 'CCG-12', [24], 'CCG-14'.
[17] Greentree Affidavit [7], 'CGG-2', [8], 'CGG-3', [11], 'CGG-4', [12], 'CGG-5', [13], 'CGG-6', [14], 'CGG-7', 'CGG-8', [15], 'CGG-9', [16], 'CGG-10', [17], 'CGG-11'.
Mr Ali was employed by the plaintiff as a senior project engineer from 9 April 2016 until 21 October 2022.[18] Mr Sajjad was employed by the plaintiff as an engineer from 22 July 2020 until 15 May 2022.[19] Mr Greentree deposes that Mr Sajjad was employed as a Senior Project Engineer. However, his contract of employment records his position as 'Engineer'.
[18] Greentree Affidavit [29] - [30],'CGG-14'.
[19] Greentree Affidavit [26] - [27], 'CGG-12'.
Although the clause numbers differ, the terms of Mr Ali's and Mr Sajjad's contracts of employment are to substantially the same effect. The provisions relied upon by the plaintiff are set out in the Greentree Affidavit and the plaintiff's written and oral submissions. They may be summarised as follows. Each of Mr Ali and Mr Sajjad were required:
1.To devote the whole of their time and attention to their work.[20]
[20] Contract of employment of Dawood Sajjad signed 9 July 2020, Greentree Affidavit [21], 'CGG-12' (Sajjad Employment Contract) and Contract of employment of Usman Ali signed 13 May 2022, Greentree Affidavit [24], 'CGG-14' (Ali Employment Contract), cl 4.4(d).
2.Not to engage in any activities, either during or outside of working time, which conflict with the business interests of the plaintiff.[21]
3.During and after their employment:[22]
(a)to keep secret and confidential, and not disclose or divulge to any person, entity, or organisation, any confidential information or knowledge relating to the plaintiff, its customers, employees, business or activities, and not to use such information or knowledge except for the sole benefit of the plaintiff;
(b)to use their best endeavours to prevent the publication or disclosure of any such confidential information or knowledge to or by any third parties;
(c)not to use any confidential information or knowledge in any manner which may injure or cause loss, either directly or indirectly to the plaintiff or its customers, or may be likely to do so; and
(d)not to use any confidential information or knowledge for the purpose of achieving, or seeking to achieve, personal gain.
4.During and outside work time, amongst the other things provided, not to accept a directorship of another company without the prior written consent of the plaintiff.[23]
5.For a period of 24 months (two years) after cessation of their employment, not to solicit business from, or attempt to sell, license or provide the same or similar products or services as are provided to any customer or client of GTS.[24]
[21] Sajjad Employment Contract and Ali Employment Contract, cl 4.4(f)(i).
[22] Sajjad Employment Contract cl 25.1 and Ali Employment Contract, cl 24.1.
[23] Sajjad Employment Contract cl 26.1 and Ali Employment Contract, cl 25.1.
[24] Sajjad Employment Contract cl 31.1 and Ali Employment Contract, cl 30.1.
Between 15 November 2021 and 4 May 2022, Mr Ali sent messages from his email associated with his work for the plaintiff to his personal email address. Mr Greenstone states the emails contained information that was confidential to the business of the plaintiff.[25] He does not elaborate as to what the information is or why it is stated to be confidential.
[25] Greentree Affidavit [32] - [33], 'CGG-15A' - 'CGG-15E'.

On 9 March 2022, while Mr Sajjad was still employed by the plaintiff, the defendant was incorporated with Mr Sajjad as a director and shareholder. Mr Ali became a director and shareholder of the defendant on 23 March 2022,[26] while still employed by the plaintiff.
[26] Greentree Affidavit [6], 'CGG-2', [11], 'CGG-4', [22], 'CGG-13', [23], 'CGG-14'.
Between 29 April 2022 and 21 December 2022, the sole director and shareholder of the defendant was Manan Javed Khan.[27] On 21 December 2022, after they had both ceased their employment with the plaintiff, Mr Ali and Mr Sajjad were reappointed as directors of the defendant and, from 21 December 2022 until 14 June 2023, they each held 50% of the shares in the defendant.[28]
[27] Greentree Affidavit [12], 'CCG-5'.
[28] Greentree Affidavit [13], 'CGG-6', [17], 'CGG-11'.
On 28 June 2022 and 30 August 2022, Mr Ali sent further messages from his work email to his personal email address. Mr Greenstone states that the information in the emails was confidential to the business of the plaintiff,[29] although does not say what the information is or why it is confidential.
[29] Greentree Affidavit [32] - [33], 'CGG-15F', 'CGG-15G'.
On 26 September 2022, while still employed by the plaintiff, Mr Ali sent an email to a customer of the plaintiff offering his, Mr Sajjad's and another employee of the plaintiff's services to the customer in their capacities as employees of the defendant.[30]
[30] Greentree Affidavit [34], 'CGG-16'.
In the period between 14 June 2023 and 21 June 2023:
1.Mr Sajjad's 50% shareholding in the defendant was transferred to and held by Maqsood Pty Ltd, a company associated with Mr Sajjad; and
2.Mr Ali's 50% shareholding in the defendant was transferred to and held by Al Usman Family Pty Ltd, a company associated with Mr Ali.[31]
[31] Greentree Affidavit [14] - [16], 'CGG-7' - 'CGG-10'.
On 21 June 2023, 100% of the shares in the defendant were transferred to Tasman Power Holdings Pty Ltd, which has since that date shared common directors with the defendant, being Stephen Elliott Young and Mark Gabriel Vartuli, who were appointed as directors of the defendant on 21 June 2023.[32]
[32] Greentree Affidavit [18], 'CGG-3', 'CGG-11', [19], 'CGG-8'.
Since about June 2023, the defendant has acted in competition with the plaintiff.[33] This is not disputed. Mr Greentree says he has looked at the defendant's website (although he does not say when), and says that all but one (that is five) of the customers listed are, or were, customers of the plaintiff.[34] Mr Greentree attaches to the Greentree Affidavit a spreadsheet, which he says shows the plaintiff's loss of sales in respect of those five customers in calendar years 2021 and 2022, and a net loss of $178,426 in the plaintiff's sales to those customers for the period 2021 ‑ 2023.[35]
[33] Greentree Affidavit [35].
[34] Greentree Affidavit [37] - [38], 'CGG-17'.
[35] Greentree Affidavit [40] - [42], 'CGG-18'.

Claimed causes of action against former employees

The plaintiff submits it may have causes of action against Mr Sajjad and Mr Ali for breaches of their contracts of employment, as well as for breaches of their implied and fiduciary obligations as senior employees with access to the plaintiff's confidential information:
(a)to serve the plaintiff with loyalty and fidelity;
(b)to act in good faith for the benefit of the plaintiff;
(c)not to use any information acquired in the course of their employment other than for the benefit of the plaintiff;
(d)not to engage in any business activities in competition with the plaintiff, or to its detriment; and
(e)to keep confidential information and trade secrets of the plaintiff confidential and not to divulge or misuse such information or secrets.
The plaintiff says that it may also have a cause of action against each of Mr Sajjad and Mr Ali for breach of their statutory obligations under:
(a)s 182(1) of the Corporations Act not to improperly use his position as an employee of a corporation (the plaintiff) to gain an advantage for himself or someone else, or cause detriment to the plaintiff; and
(b)s 183(1) of the Corporations Act not to improperly use information obtained because he was an employee of a corporation (the plaintiff) to gain an advantage for himself or someone else, or cause detriment to the plaintiff.
It is submitted by the plaintiff that Mr Ali and Mr Sajjad owed fiduciary and statutory duties to the plaintiff because of the roles they each held as senior employees of the plaintiff, which provided them with access to confidential information on terms that preserved that confidentiality, their roles communicating with clients of the plaintiff, their ability to affect the business of the plaintiff and the 'evident trust placed in them for their work'.

Claimed causes of action against the defendant

The plaintiff says that it may have a cause of action against the defendant for knowingly assisting and benefitting from Mr Sajjad's and Mr Ali's breaches of fiduciary duty. It says the former employees were clearly involved in the incorporation and early management of the business of the defendant and, within a short period of its incorporation, the defendant acquired clients of the plaintiff and benefited from the conduct of Mr Sajjad and Mr Ali.
The plaintiff relies upon Consul Development Pty Ltd v DPC Estates Pty Ltd,[36] in which Gibbs J stated:
… a person who knowingly participates in a breach of fiduciary duty is liable to account to the person to whom the duty was owed for any benefit he has received as a result of such participation.
[36] Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373, 397.
The plaintiff also relies on Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited,[37] in which the plurality stated, in considering the causal connection between knowing assistance and the benefit or profit received:[38]
Whether a benefit can be said to be obtained "as a result of" knowing participation in a breach of fiduciary duty by another contrary to the principles of equity is a question of causation or contribution that depends on "a precise examination of the particular facts" of the case, rather than upon attempts to refine the expression "as a result of", as that phrase has some determinate operation of its own that may be discerned and applied independently of the equitable principle of which it is a part. The equitable disgorgement principle with which we are concerned is a "prophylactic rather than a restitutionary principle". It is sufficient to show that the profit would not have been made but for dishonest wrongdoing. Further, whatever may be the position for wrongdoing that is not marked by dishonesty, a defendant cannot avoid liability to disgorge profits dishonestly made by showing that those profits might have been made honestly.
[37] Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited (2018) 360 ALR (Ancient Order of Foresters).
[38] Ancient Order of Foresters [9].
The plaintiff submits that there are sufficient facts to show that it may have a cause of action against the defendant for knowingly assisting in, and profiting from, the former employees' breaches of fiduciary duties, or making a profit from and being involved in the statutory breaches within the meaning of s 1317E(4)(b) of the Corporations Act and therefore liable within the meaning of s 1317H(1) and (2) of the Corporations Act.
It was submitted on behalf of the plaintiff, in effect, that the discovery sought is required to assist it in making a decision whether to commence proceedings against the defendant. The subject of the plaintiff's inquiry is the question of damages and the commerciality of taking proceedings in respect of its causes of action against the defendant. To that end, the plaintiff seeks discovery of the defendant's balance sheets and profit and loss statements from the date of its incorporation on 9 March 2022 to date and its customer list from 9 March 2022 to date, together with the value of the services provided to its customers in the form of an income by customer report from the defendant's accounting software.
The plaintiff relies on Ancient Order of Foresters in submitting that, where employees create a competing business in competition with their employer, the business or the owners of it may be liable to account not just for the profit derived by it from particular customers of the employer, but for all of the profit made - the full capital value of all business generated.[39] The plaintiff says it has not sought discovery of all of the defendant's financial statements. It submits that it has confined the scope of the discovery sought to only those financial statements relevant to the question of damages and the commerciality of taking proceedings.
[39] Ancient Order of Foresters [13] (Kiefel CJ, Keane and Edelman JJ), [75] (Gageler J).
The plaintiff says that the pre-action discovery sought is required to assist it to decide whether to commence proceedings against the defendant. It submits that it has established that it may have the causes of action outlined and wishes to 'investigate the commercial merit of the claims by reference to the value of the business generated from customers that once used and now do not (only) use the plaintiff.'
It was submitted on behalf of the plaintiff that the documents and information sought can only be obtained from the defendant, and the plaintiff has requested discovery from the defendant who has not provided it. The plaintiff acknowledged that, if orders are made for the pre-action discovery sought, it would be appropriate for there to be restrictions on access to the documents and information given their sensitivity and that the parties to the application are competitors.

The defendant's position in relation to the application

The defendant opposes the plaintiff's application. It says the discovery sought by the plaintiff of its financial statements and client list is invasive, particularly as the plaintiff and defendant are competitors, and unjustified. The defendant says there is no suggestion that the plaintiff's customer list has been taken and used by the plaintiff's former employees or by the defendant. It contends that the plaintiff has failed to demonstrate that it may have a cause of action against the defendant and that an order for pre-action discovery is warranted.
The defendant submits, in effect, that the court cannot be satisfied that there is evidence which demonstrates on an objective basis that all the facts necessary to give rise to a right to sue may be able to be established. It says that the former employees' alleged misuse of the plaintiff's confidential information is the foundation for the plaintiff's potential claims against the defendant in respect of its alleged knowing assistance or 'involvement' in such misuse. If there is evidence that supports such claims on an objective basis, the plaintiff would also need to satisfy the court there is evidence to support the claim that the defendant knowingly assisted, or was involved in, the alleged misuse of the confidential information.
The defendant submits that to demonstrate a potential cause of action for breaching confidentiality requires the plaintiff to identify with specificity, and not merely in general terms, the information alleged to be confidential and why it is said to be confidential.[40] It says that the plaintiff has failed to identify the specific information or knowledge said to be confidential, that it was confidential, was reasonably known to be confidential, and has been used by the former employees or the defendant in the defendant's business. Rather, to use the defendant's expression, the plaintiff jumps straight to damages and the commerciality of taking proceedings.
[40] Referring to Chaffey Services Pty Ltd as trustee for Cataby Services Trust, t/a Cataby Services v Doble[No 4] [2023] WASC 361 (Chaffey v Doble [No 4]) at [248] ‑ [250] (Tottle J) and the authorities referred to.
It says the plaintiff's evidence falls well short of what is required for the Court to be satisfied that there is evidence from the plaintiff objectively indicating to the Court, beyond mere assertion, conjecture or suspicion, that all facts necessary to give rise to a right to sue the former employees for misuse of confidential information may be able to be established. The defendant submits, in effect, that if the potential causes of action alleged against the former employees cannot be supported, the court cannot be satisfied that the threshold issue of whether the plaintiff may have a cause of action against the defendant in knowing assistance or being involved in a breach or contravention has been met.
The defendant submits that there is a lack of objective evidence and the plaintiff's contention that it may have a cause of action in knowing assistance or involvement by the defendant is no more than speculation, conjecture and suspicion by the plaintiff. The apparent basis for the suspicion or speculation is that the defendant now services some of the same customers the plaintiff once did, and there have been less sales to the plaintiff than in previous periods. The defendant says that the assertion that such losses are caused by the former employees' alleged misuse of unidentified confidential information of the plaintiff amounts to no more than conjecture.
The defendant also says that the plaintiff's application should be refused because it has not met the jurisdictional threshold of having made reasonable enquiries before bringing the application, and it may be inferred from the communications from the plaintiff's solicitors that it already has sufficient information to decide to take proceedings against the defendant, and has already made the decision to do so.
Reference was also made in the defendant's submissions to a subcontract arrangement between the plaintiff and the defendant under which the plaintiff engaged the defendant as a subcontractor to undertake work for the customers that appear on the defendant's website. This appears to have been advanced by the defendant as a defence to the plaintiff's potential claim against it. However, other than this being referred to in correspondence between the parties' solicitors, there is no evidence before the court in relation to such subcontract arrangement.

The relevant threshold questions

There is no real issue in this case as to whether the plaintiff wants to commence proceedings against the defendant or as to whether there are reasonable grounds for believing that the defendant has or may have the documents or information sought. The real issues between the parties boil down to:
1.Whether the plaintiff may have a cause of action against the defendant.
2.If so, whether the plaintiff:
(a)has made reasonable enquiries for the purpose of obtaining sufficient information to enable it to decide whether to commence proceedings; and
(b)has been unable to obtain sufficient information to enable it to make the decision to commence proceedings.
I consider each of those issues in the following section of these reasons.

Whether the plaintiff may have a cause of action against the defendant

The plaintiff says it may have a cause of action against the defendant for knowing assistance or participation in equitable breaches of its former employees, and for the defendant's involvement in the employees' breaches of statutory duty. In particular, the plaintiff relies on obligations it contends were owed by each of the former employees not to disclose, use or benefit from the plaintiff's confidential information.
The plaintiff also refers to the former employees' breaches of contract, including their appointment as directors of the defendant during their employment with the plaintiff. However, although the plaintiff's solicitors' letter to the defendant dated 14 August 2023 asserts a claim against the defendant of inducing a breach of the former employees' contracts of employment, a claim of that nature has not been developed for the purpose of the pre-action discovery application.
Rather, the plaintiff relies on potential causes of action against the defendant for knowing assistance or participation in the former employees' alleged breaches of fiduciary duty, and its involvement in alleged breaches of statutory duty. It says, in essence, that the defendant should account to the plaintiff for profits it has obtained from setting up its business using the plaintiff's confidential information obtained through the plaintiff's former employees, Mr Ali and Mr Sajjad.

Knowing assistance or participation

I refer to and respectfully adopt Tottle J's summary of the requirements for a cause of action in knowing assistance in Chaffey Services Pty Ltd as trustee for Cataby Services Trust, t/a Cataby Services v Doble [No 4], which I reproduce below with the relevant footnotes.[41]
[41] Chaffey v Doble [No 4] [311] - [313].
A person who assists a fiduciary to breach his or her fiduciary duties, with knowledge of a dishonest and fraudulent design on the part of the fiduciary, is liable as though that person were the fiduciary.[42] Such a claim is commonly referred to as a claim under the second limb of Barnes v Addy.[43]
[42] Farah Construction Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, [160] (Farah Construction v Say-Dee).
[43] Barnes v Addy (1874) LR 9 Ch App 244.
The elements of a claim based on the second limb of Barnes v Addy are as follows: the existence of a fiduciary duty owed by the fiduciary; a dishonest and fraudulent design on the part of the fiduciary; assistance by the third party in that design; and knowledge on the part of the third party of the circumstances constituting that design.[44]
[44] Farah Constructiond v Say-Dee.
For the purpose of the second limb of Barnes v Addy a dishonest and fraudulent design can include not only breaches of trust but also breaches of ﬁduciary duty, but any breach of trust or breach of ﬁduciary duty relied on must be dishonest and fraudulent.[45]
[45] Farah Construction v Say-Dee [179].
In Ancient Order of Foresters, Gageler J (as his Honour then was) described a fiduciary duty as one of absolute and disinterested loyalty owed when the person in a fiduciary position has assumed a responsibility to act in the exclusive interests of the person to whom the duty is owed. His Honour stated:[46]
[67]… That duty of loyalty is imposed in equity by means of two overlapping "proscriptive obligations". Each proscriptive obligation, or "theme", is "descriptive of circumstances in which equity will regard conduct of a particular kind as unconscionable and consequently attracting equitable remedies".
[68]"The first", often referred to as the "conflict rule", "is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest." The unconscionability which attracts equitable remedies in circumstances where the conflict rule alone is invoked lies not so much in receipt by the fiduciary of the benefit or gain (over which the fiduciary need not have control) as in retention by the fiduciary of the benefit or gain which in conscience ought to be disgorged to the principal.
[69]"The second", often referred to as the "profit rule", "is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of [the] fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing [the fiduciary's] position for [the fiduciary's] personal advantage." The unconscionability which attracts equitable remedies in such circumstances lies in pursuit by the fiduciary of self‑interest, or, more precisely, in pursuit of an interest other than the exclusive interest of the principal.
(citations omitted)
[46] Ancient Order of Foresters [67] - [69].

As to conduct that will amount to knowing participation, Gageler J stated:[47]
[71] Knowing participation by a non-fiduciary in a dishonest and fraudulent breach of fiduciary duty is conduct which is regarded in equity as itself unconscionable and as attracting equitable remedies against the knowing participant of the same kind as those available against the errant fiduciary. Knowing participation in a dishonest and fraudulent breach of fiduciary duty includes knowingly assisting the fiduciary in the execution of a "dishonest and fraudulent design" on the part of the fiduciary to engage in the conduct that is in breach of fiduciary duty. The requisite element of dishonesty and fraud on the part of the fiduciary is met where the conduct which constitutes the breach transgresses ordinary standards of honest behaviour. Correspondingly, the requisite element of knowledge on the part of the participant is met where the participant has knowledge of circumstances which would indicate the fact of the dishonesty on the part of the fiduciary to an honest and reasonable person.
(citations omitted)
[47] Ancient Order of Foresters [71].
It is the dishonest or fraudulent breach of fiduciary duty which gives the character of unconscionability to the knowing participation and which exposes the knowing participant, the accessory, to equitable remedies.[48] As stated in Ancient Order of Foresters:[49]
The reference to the liability of a knowing assistant as an "accessorial" liability does no more than recognize that the assistant's liability depends upon establishing, among other things, that there has been a breach of fiduciary duty by another. …
[48] Ancient Order of Foresters [76].
[49] Ancient Order of Foresters [76] (Gageler J), quoting a passage from Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427, 457 ‑ 458 [106] (footnote omitted).
It follows that, for the plaintiff to demonstrate that it may have a cause of action in knowing assistance or participation in a breach of fiduciary duty, the plaintiff must first demonstrate that it may have a cause of action against those said to be in breach of such a duty, and that the breach was dishonest and fraudulent.

Fiduciary duty in the context of an employment relationship

In Chaffey v Doble[No 4], Tottle J considered the circumstances in which an employee may owe fiduciary duties to an employer, observing that the duties implied by the common law into the employment relationship are not to be automatically equated with fiduciary obligations.[50] His Honour referred to[51] and drew on Elias J's analysis in Nottingham University v Fishel[52] in his consideration. The following aspects of his Honour's analysis are apposite in the circumstances of this case.
[50] Chaffey v Doble [No 4] [202].
[51] Chaffey v Doble [No 4] [203] - [212].
[52] Nottingham University v Fishel [2000] IRLR 471, 483 (Elias J) cited with approval in Woolworths Ltd v Olson (2004) 184 FLR 121 and Anderson v Canaccord Genuity Financial Ltd [2022] NSWSC 58, [1839].
The existence of an employment relationship will not of itself establish the existence of a fiduciary relationship or duty.[53] As Tottle J observed in Chaffey v Doble [No 4], fiduciary duties do not operate at large. It is necessary to identify the subject matter over which the fiduciary obligations extend.[54] In an employment context, it is necessary to identify specific contractual obligations that the employee has undertaken which have placed the employee in a situation where equity imposes fiduciary duties in addition to contractual obligations.[55]
[53] Chaffey v Doble [No 4] [206] (Tottle J), citing Hospital products Ltd v United States Surgical Corporation (1984) 156 CLR 41 [68].
[54] Chaffey v Doble [No 4] [207], citing Breen v Williams (1996) 186 CLR 71, 82 (Brennan CJ).
[55] Chaffey v Doble [No 4] [209].
It will not be sufficient to say that an employee breached their fiduciary or contractual obligations simply because, during the currency of their employment, they took steps to set up a business that would, after termination of their employment, compete with the employer's business. It is necessary to look at the steps taken to see whether any of them involved a breach of obligation.[56]
[56] Manildra Laboratories v Campbell [2009] NSWSC 987 [81] - [83] (McDougall J), referred to by Tottle J in Chaffey v Doble [No 4] [210].
The factors relevant to the determination of whether an employee owes fiduciary obligations include:[57]
1.The seniority of the employee and whether the employee has managerial responsibilities. The title given to the employee's role is not determinative. It is the nature of duties entrusted to the employee that is relevant.
2.The scope of the activities the employee is required to undertake and whether the activity that is alleged to have given rise to a breach of a fiduciary duty falls within the scope of that activity.
3.The latitude afforded to the employee in discharging their duties.
4.The level of vulnerability arising from a potential misuse of power granted by the employer to the employee.
5.Whether the employment relationship demands a standard of loyalty exceeding the duty of fidelity implied at common law.
[57] Chaffey v Doble [No 4] [212], citing Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2013] FCA 1341 [230] - [232], (Foster J); Anderson v Canaccord Genuity Financial Ltd [1843]; Nottingham University v Fishel.
Having regard to those matters, it is not sufficient to assert a breach of fiduciary duty in general terms. As outlined earlier in these reasons, an applicant for pre-action discovery does not have to establish the existence of a cause of action or that it has a prima facie case.However, the court must be satisfied that there is evidence which demonstrates on an objective basis that all the facts necessary to give rise to a right to sue may be able to be established.
The starting point is to assess whether each of the employees owed a fiduciary duty. However, the plaintiff in this case has not adduced evidence of the facts supporting the potential claim for breach of a fiduciary duty.
There is no evidence as to what specific responsibilities each of the former employees had. It was submitted that it may be inferred that they held senior positions because each of their employment contract refer to their title as 'Senior Project Engineer' and that their line manager was Mr Greentree, the director and owner of the plaintiff. Only Mr Ali's employment contract refers to him as a Senior Project Engineer. Mr Sajjad's position is recorded as Engineer.
In any event, as has been observed, the title given to the employee's role is not determinative. It is the nature of duties entrusted to the employee that is relevant. It was asserted that as senior employees they had access to confidential information. However, there is no evidence of the duties entrusted to Mr Ali or Mr Sajjad, as to their responsibilities, the activities they were required to undertake, the powers or discretions they were entrusted with or obliged to exercise, or of other matters relevant to the determination of whether they owed fiduciary obligations as employees to the plaintiff.
Even where an employee is found to owe fiduciary obligations to their employee, there is no general rule that an employee who owes a fiduciary duty, and who takes steps to set up business in competition with the employer before terminating their employment, is in breach of the conflict rule.[58]

Confidentiality obligations

[58] See Chaffey v Doble [No 4] [215].

A further difficulty arises in relation to the assertion that the former employees breached their obligations in relation to confidential information of the plaintiff.
The plaintiff refers to and relies upon the former employees' contractual obligations of confidentiality, as provided in their respective employment contracts, as outlined. As observed by the defendant, the employment contracts do not define 'confidential information or knowledge'.
A contractual obligation may be imposed which requires a person to keep information confidential which extends beyond the subject matter that would otherwise be protected by an equitable duty of confidence. However, absent an express indication to the contrary, a contractual confidentiality provision will generally be construed as limited only to information which is confidential in character, and which retained the quality of confidentiality at the time of the alleged breach of confidence.[59]
[59] See Native Extracts Pty Ltd v Plant Extracts Pty Ltd (No 2) [2024] FCA 106 (Native Extracts v Plant Extracts (No 2)) [92] and the authorities referred to.
An equitable duty of confidence lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained.[60]
[60] Moorgate Tobacco Co Ltd v Phillip Morris (No 2) (1984) 156 CLR 414, 438 (Deane J, Gibbs CJ, Mason, Wilson and Dawson JJ agreeing); Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326; [2007] NSWCA 172 [101] (Campbell JA, McColl JA agreeing).
In Chaffey v Doble [No 4],[61] Tottle J referred to Corrs Pavey Whiting & Byrne v Collector of Customs (Vic),[62] in which Gummow J set out what was required to invoke equity's protection of confidential information, as follows:
It is now settled that in order to make out a case for protection in equity of allegedly confidential information, a plaintiff must satisfy certain criteria. The plaintiff: (i) must be able to identify with specificity, and not merely in global terms, that which is said to be the information in question; and must also be able to show that (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge); (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence; and (iv) there is actual or threatened misuse of that information: Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 at 215; The Commonwealth v John Fairfax and Sons Ltd (1980) 147 CLR 39 at 50-51; O'Brien v Komesaroff (1982) 150 CLR 310 at 326‑328. It may also be necessary, as Megarry J thought probably was the case (Coco v A N Clark (Engineers) Ltd [1969] RPC 41 at 48), and as Mason J (as he then was) accepted in the Fairfax decision was the case (at least for confidences reposed within government), that unauthorised use would be to the detriment of the plaintiff.
[61] Chaffey v Doble [No 4] [248].
[62] Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266 (1987); 14 FCR 434, 443.
As also observed by Tottle J in Chaffey v Doble [No 4],[63] Kirby P identified various considerations which courts have found to be relevant in determining whether information is or was confidential in Wright v Gasweld Pty Ltd.[64] They are the fact that:
(a)skill and effort was expended to acquire the information;
(b)the information is jealously guarded by the employer, it is not readily made available to employees and could not, without considerable effort and/or risk, be acquired by others;
(c)it was plainly made known to the employee that the material was regarded by the employer as confidential;
(d)the usages and practices of the industry support the assertion of confidentiality;
(e)the employee in question has been permitted to share the information only by reason of his or her seniority or high responsibility within the employer's organisation.
[63] Chaffey v Doble [No 4] [249].
[64] Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317, 334 (Kirby P).

As to knowledge, or 'know-how', as Professor Dal Pont explains in Law of Confidentiality:[65]
The law distinguishes 'know-how' from confidential information. In a relationship within which confidential information is (likely to be) communicated - here typically one between an employer and employee - it can safely be assumed that the employee has accumulated knowledge, skill and experience in the particular field derived, whether partly or otherwise, by reason of that relationship. But this accumulation, merely as a result of being under the auspices of a (partly) confidential relationship, is not equitable with confidential information. Accumulated knowledge, skill, talent and experience derived whether wholly or partly, from an employment relationship is qualitatively distinct from confidential information or trade secrets. The same is necessarily so regarding information brought by an employee brought from sources other than the employer, even if useful and valuable to the latter's business. Accordingly, the general law does not protect know-how even if imparted under a confidential badge. The cases nonetheless evince litigation directed to the distinction, suggestive (arguable inaccurately) of a distinction in degree, operating along a continuum. It is inherent, for instance, in the judicial observation that if confidential information cannot be easily isolated from the ordinary stock of knowledge and experience of an ex‑employee, the courts would be reluctant to come to the ex-employer's aid with an injunction.

The emails alleged to contain confidential information of the plaintiff
[65] Chaffey v Doble [No 4] [250], citing Dal Pont G E, Law of Confidentiality (2nd ed, 2015) [5.30].

The plaintiff contends that the emails sent by Mr Ali from his work email address to his personal email address contained confidential client and commercial information. Mr Greenstone does not elaborate as to the nature of the information stated to be confidential to the plaintiff. It is not sufficient to state in general terms that the documents or information are confidential or to state that documents are confidential because they are 'internal'.
Mr Greentree makes no reference to misuse of information of the plaintiff by Mr Sajjad while employed by the plaintiff.
On an objective review of the emails sent by Mr Ali and the documents attached to them, their content may be summarised as follows:
1.An exchange of emails between Mr Ali and an external Applications Engineer on 15 November 2021 in which Mr Ali was requesting assistance to access software, stating he was doing a motor test on site and needed urgent support.[66]
[66] Greentree Affidavit, 'CGG-15A'.
It is not immediately apparent that the information contained in the emails exchanged is confidential information of the plaintiff or, if so, on what basis.
2.An email dated 17 January 2022 from the plaintiff's (GTS) Workshop Manager, copied to Mr Greentree, Mr Ali and others, with a list of cable testing equipment required to improve GTSs cable testing capabilities, with a description of items of equipment and their price.[67]
[67] Greentree Affidavit, 'CGG-15B'.
It is not immediately apparent that the information contained in the emails is confidential information of the plaintiff or, if so, on what basis.
3.An email dated 29 March 2022 from GTS' electrical estimator to Mr Usman and others at GTS attaching, for information, a price list from Brandis Hire. Mr Ali forwarded this email on the same date to himself and Mr Sajjad with no message.[68]
[68] Greentree Affidavit, 'CGG-15C'.
The attached price list does not contain pricing information relating to GTS. It is a price list for Brandis Hire. There is nothing to suggest that it is confidential information of the plaintiff. It appears to contain hire rates for various items of equipment available for hire from Brandis Hire.
4.An email dated 26 April 2022 from a principal engineer of RMS Electrical Solutions attaching a brochure for advanced testing and monitoring solutions for Altanova Group. The email also includes what appears to be prices quoted for particular units for primary assets testing, protection testing, circuit breakers testing, CTs and VTs testing and batteries testing.[69]
[69] Greentree Affidavit, 'CGG-15D'.
It is not immediately apparent that the information contained in the emails are confidential information of the plaintiff or, if so, on what basis.
5.An email from Kelly Sun of GTS to Mr Ali dated 27 April 2022 attaching HSE documents,[70] including:
[70] Greentree Affidavit, 'CGG-15E'.
(a)GTS quality management manual, updated as at 29 March 2022;
(b)GTS auditing and inspection procedure, last review date 21 December 2021;
(c)GTS HSEQ and HR communication and consultation procedure, last review date 28 December 2018;
(d)GTS vision and objectives (one page undated document).
Whilst on their face, these documents appear to be documents relating to GTS' business, is not apparent the extent to which these documents are confidential information of the plaintiff, or whether they are circulated to others. For example, the auditing and inspection procedure states it applies to all GTS employees, contractors and at all GTS work site locations.
6.An email dated 28 June 2022 attaching an expression of interest document for high voltage commissioning and testing at the Clarke Creek windfarm in central Queensland (one page undated document).[71]
On its face, this does not appear to be a document containing confidential information of the plaintiff. It is a document seeking expressions of interest by Lacour Energy and Goldwind encouraging local businesses interested in providing HV testing and commissioning services for the Clarke Creek Windfarm to register an expression of interest through the ICN (Industry Capability Network) web page.
7.An email dated 30 August 2022 forwarding an email from Rukesh Dahal to Mr Ali dated 17 August 2022 which in turn forwards an email to Mr Dahal from project coordinator - IM West attaches a Downer Technical Services hire equipment price list for 2022.[72]
This does not appear to contain any confidential information of or relating to the plaintiff. It is a hire equipment price list for another entity, Downer.
[71] Greentree Affidavit, 'CGG-15F'.
[72] Greentree Affidavit, 'CGG-15G'.
Mr Greentree does not identify with any specificity what the information contained in the emails is or why it is confidential to the plaintiff or its business. The evidence adduced by the plaintiff does not demonstrate that the information has the necessary quality of confidentiality and is not common or public knowledge. Nor does it indicate that the information was received by Mr Ali in such circumstances as to import an obligation of confidence. Mr Greentree does not identify with any particularity what the alleged misuse is.

Conclusion in relation to potential cause of action against defendant for knowing assistance

As has been observed, for the plaintiff to demonstrate that it may have a cause of action against the defendant in respect of any accessorial liability, depends upon it demonstrating that it may have a cause of action in respect of a breach of fiduciary duty by the plaintiff's former employees.
The plaintiff has not demonstrated on an objective basis that all the facts necessary to give rise to a right to sue its former employees for a breach of fiduciary duty in relation to their use of confidential information, or otherwise, may be able to be established.
The evidence adduced falls short of demonstrating on an objective basis that there was a dishonest or fraudulent breach of duty on the part of the plaintiff's former employees, in which the defendant was a participant.

The potential causes of action for involvement in breach of statutory duty

The plaintiff also submits that it may have a cause of action against the defendant for its involvement in a breach of the obligations imposed on its former employees under s 182 and s 183 of the Corporations Act.
Section 182 of the Corporations Act provides that:
(1)A director, secretary, other officer or employee of a corporation must not improperly use their position to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
(2)A person who is involved in a contravention of subsection (1) contravenes this subsection.

Section 183 of the Corporations Act provides that:
Use of information--directors, other officers and employees
(1)A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
(2)A person who is involved in a contravention of subsection (1) contravenes this subsection.
'Information' in s 183(1) covers any information that a person may have acquired because of their position in the company. The duty owed under s 183(1) continues after a person ceases to be an officer or employee of the company.[73]
[73] Chaffey v Doble [No 4] [232] - [233].
Impropriety (improper use) for the purposes of s 182(1) and s 183(1) involves a breach of the standards of conduct that would be expected of a person in the position of (relevantly) the employee by reasonable persons with knowledge of the duties, powers, and authority of the position and the circumstances of the case.[74]
[74] Chaffey v Doble [No 4] [234], citing R v Byrnes & Hopwood (1995) 183 CLR 501, 514 - 515 (Brennan, Deane, Toohey and Gaudron JJ).
Section 79 of the Corporations Act addresses when a person is involved in a contravention and, relevantly by s 79(c), provides that a person is involved in a contravention if that person has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention.
A person is a party to a contravention if the person is an intentional participant, the necessary intent being based on knowledge of the essential elements of the contravention.[75] In Australian Securities and Investments Commission v Adler,[76] Santow J considered the knowledge required by s 79(c) is:[77]
… knowledge not merely of some potential occurrence, constituting the offence, but of the actual events, though only the essential ones, which constitute that offence. That knowledge must embrace all essential material factual ingredients of a contravention … Knowledge may be inferred from the fact of exposure to the obvious, though that does not obviate the need for actual knowledge of the essential facts constituting the contravention.
[75] Yorke v Lucas (1985) 158 CLR 661, 670 (Mason ACJ, Wilson, Deane and Dawson JJ).
[76] Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253.
[77] Australian Securities and Investments Commission v Adler at [209].
When a company is said to be the participant, its intention and knowledge can be imputed from the intention and knowledge of the directing or governing mind and will.[78]
[78] Chaffey v Doble [No 4] [305] referring to ASIC v ActiveSuper Pty Ltd (in liq) [2015] FCA 342; (2015) 235 FCR 181, [406] (White J).
Subsections 182(1) and (2) and 183(1) and (2) are civil penalty provisions,[79] to which s 1317H applies.
[79] Corporations Act 2001 (Cth) s 1317DA, s 1317E.
Subsections 1317H(1) and (2) provide, relevantly:
1317H(1) Compensation for damages suffered.
A Court may order a person to compensate a corporation … for damage suffered by the corporation … if:
(a)the person has contravened a corporation … civil penalty provision in relation to the corporation …; and
(b)the damage resulted from the contravention.
The order must specify the amount of the compensation.
NOTE: An order may be made under this subsection whether or not a declaration of contravention has been made under s 1317E.
1317H(2) Damage includes proﬁts.
In determining the damage suffered by the corporation … for the purposes of making a compensation order, include proﬁts made by any person resulting from the contravention or the offence.
For the plaintiff to demonstrate that it may have a cause of action against the defendant in respect of its involvement in a contravention of s 182(1) or s 183(1) of the Corporations Act, the plaintiff must first demonstrate that it may have a cause of action against those said to be in breach of such duties.
These potential causes of action against the plaintiff's former employees suffer from the same difficulties as the potential cause of action against them for breach of fiduciary duty. An objective assessment as to whether the plaintiff may be able to demonstrate the facts necessary to establish there has been impropriety on the part of its former employees cannot be undertaken in an evidential vacuum as to their duties, powers and authority in their positions as employees of the plaintiff.

Has the plaintiff demonstrated on an objective basis that the facts necessary to give rise to the right to sue for the causes of action it says it may have against the defendant?

For the reasons above, I am not satisfied that the plaintiff has demonstrated on an objective basis that all the facts necessary to give rise to a right to sue the defendant for the potential causes of action advanced may be able to be established. The evidence adduced in support of the application does not take the existence of the potential causes of action beyond a mere allegation, assertion, conjecture or suspicion, in my view. As such, the threshold issue of whether the plaintiff may have a cause of action against the defendant has not been met.
Having reached this conclusion, the plaintiff's application should be dismissed, and it is not necessary for me to consider the other threshold issues raised by the defendant in opposition to the application. However, for completeness I will do so.

Whether the plaintiff has made reasonable enquiries for the purpose of obtaining sufficient information to enable it to decide whether to commence proceedings

The defendant submits that the plaintiff's application should be refused because the plaintiff has not made reasonable enquiries before bringing the application. It says that the only enquiries that have been made by the plaintiff are by letters sent to the defendant and its former employees, and the plaintiff has not engaged with the matters raised by their solicitors in response to the demands made. This includes an alleged failure on the part of the plaintiff to produce its list of customers for the defendant to 'cross‑check' against its customers.
In response, the plaintiff says it has made reasonable inquiries, and that no other entity has the requested information. The plaintiff also says that the defendant's request of the plaintiff to identify customers it has lost incorrectly assumes that the plaintiff knows which of its customers were lost to the defendant. It says that also confines the inquiry to only those customers that the plaintiff has wholly lost instead of proceeding to an investigation of all of the plaintiff's losses and all profits made by the defendant.
As the information sought by the plaintiff is information that could only be obtained from the defendant, had this threshold issue arisen for determination, it is not one that would operate to defeat the application, in my view.
Whether the appellant has been unable to obtain sufficient information to enable it to make the decision to commence proceedings
The defendant refers to the plaintiff's solicitors letter dated 14 August 2023 to the directors and secretary of the defendant,[80] in which the details of the former employees' alleged breaches were set out, demand made in relation to delivery up of all confidential information of the plaintiff, amongst other things. The letter concluding 'Rest assured that we are instructed to institute proceedings regardless of the arrangement that SPS has come to with the employees referred to above.'
[80] First De Silva Affidavit [2] - [3], 'JKD-1'.
Whilst such a statement, considered by itself, may suggest that the plaintiff has already decided to take proceedings, I note that the claims made by the plaintiff in that letter is that the defendant induced the former employees' breach of contract, statutory and common law duties and that the defendant was liable to account for any income realised as a result of 'inducting' [sic] such breach. No reference is made to knowing assistance or participation or involvement in the former employees' breaches, as advanced in the pre-action discovery application.
A letter in similar terms was sent to Mr Ali, also dated 14 August 2023,[81] which concluded with the statement 'Rest assured that we are instructed to institute proceedings regardless of the arrangement that you have come to with SPS.' That letter does not address the plaintiff's potential claims against the defendant.
[81] Second De Silva Affidavit [2] - [3], 'JKD-9'.
In a letter from the plaintiff's solicitors to the defendant's solicitors dated 1 November 2023,[82] the plaintiff's solicitors stated:
… our client remains of the view that evidence exists of breaches of contracts of employment such that would entitle them to damages if they were successful at trial. In the circumstances all that remains is for a determination of the commerciality of such a path and to that extent we have been instructed to bring an application for pre-action discovery where there is some question as to whether or not a sufficient level of damage will be able to be established.
[82] First De Silva Affidavit [9], 'JKD-3'.
This letter does not refer to the potential causes of action the subject of the application for pre-action discovery. Whilst this may be relevant to the issue of conferral and costs, in my view, it does not suggest that the plaintiff has already made its decision to take proceedings in relation to the causes of action advanced for the purpose of the application.

Conclusion and orders

For these reasons, I am not satisfied that the plaintiff has demonstrated on an objective basis that all the facts necessary to give rise to a right to sue the defendant for the potential causes of action advanced may be able to be established. In my view, the evidence adduced in support of the application does not take the existence of the potential causes of action beyond mere assertion, conjecture or suspicion.
As such, the threshold issue of whether the plaintiff may have a cause of action against the defendant has not been met, and the plaintiff's application for pre-action discovery should be, and is, dismissed. An order will be made to that effect.
I will hear from the parties in relation to the costs of the application. Subject to hearing from the parties, there does not appear to be any reason why costs should not follow the event and why the plaintiff, having been unsuccessful, should not pay the defendant's costs of the application, to be taxed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MM
Acting Associate to Master Russell
30 JUNE 2025