Re Aligned Services Group Pty Ltd
[2021] VSC 841
•16 December 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2020 04711
IN THE MATTER of ALIGNED SERVICES GROUP PTY LTD
(ACN 625 540 570)
| KRIZMANIC INVESTMENTS PTY LTD (ACN 124 986 447) & ANOR (according to the attached Schedule) | Plaintiffs |
| - and - | |
| GREGORY FOWLER & ORS (according to the attached Schedule) | Defendants |
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JUDICIAL REGISTRAR: | Caporale JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 29 November 2021 |
DATE OF JUDGMENT: | 16 December 2021 |
CASE MAY BE CITED AS: | Re Aligned Services Group Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 841 |
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CORPORATIONS - Third party discovery – Rule 32.07 of the Supreme Court (General Civil Procedure) Rules 2015 – Third party operated by defendants - Question or issue to be determined – Confidentiality regime.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Ms C Jones | Eidelweisz Lawyers |
| For the Defendants | Mr R Moore | SLF Lawyers |
JUDICIAL REGISTRAR:
Introduction
In these reasons, the first and second plaintiffs, together with Mr Brendon Smith and Mr Ivan Krizmanic, will be referred to, collectively, as ‘the plaintiffs’. Mr Gregory Fowler and GF (Aust) Pty Ltd, the first and second defendants, will be referred to, collectively, as ‘the defendants’.
This is an oppression proceeding in which the plaintiffs seek relief in respect of oppressive conduct by the defendants in connection with the affairs of the third defendant.
By way of summons filed on 30 August 2021, the plaintiffs seek discovery from a third party, Aligned Services Pty Ltd (‘AS’). The third party is a company owned and operated by the defendants. When referred to together, the defendants and AS will be referred to as ‘the defendants/third party’.
For the reasons that follow, the orders for third party discovery sought by the plaintiffs will be made with no orders for redaction or confidentiality.
Background
The plaintiffs own and operate Citi-Con Pty Ltd (‘Citi-Con’), a commercial building company. The plaintiffs are also shareholders in PC Whitehall Pty Ltd, another construction company. Mr Krizmanic is a director of this company. The plaintiffs are also shareholders in PC Whitehall & Sons Pty Ltd and Mr Krizmanic is also a director of this company. It is not entirely clear what line of business PC Whitehall & Sons Pty Ltd is in, although it is reasonable to conclude that it is also in the building or construction business. The two companies will be referred to as the ‘Whitehall businesses’.
In early 2018 the plaintiffs and defendants agreed to start a company which would conduct business as a plumbing contractor and on 12 April 2018 the third defendant, Aligned Services Group Pty Ltd (‘ASG’), was registered. The first defendant was responsible for the day to day operations of ASG and held 50% of ASG’s shares, while Mr Smith and Mr Krizmanic held 25% each (shares were held through related entities). Profits would be shared accordingly.
Since its registration, ASG has been engaged by Citi-Con and other entities to perform plumbing work. However, ASG has not performed work for Citi-Con for some time.
None of ASG’s shareholders have ever formally received any dividend or profit distribution.
On 1 October 2018, six months after the registration of ASG (and unbeknown to the plaintiffs), AS was registered.[1] Like ASG, AS carries on business as a plumbing contractor. It is owned and operated by the defendants.
[1]The defendants dispute this and say that Mr Krizmanic knew about the registration of AS.
In the oppression proceeding, the plaintiffs claim, amongst other things, that the defendants have diverted income away from ASG to AS and/or exploited business opportunities for ASG for the benefit of Mr Fowler and AS.
It is in this context that the plaintiffs seek from AS discovery of the following documents:
(a) all contracts for the provision of commercial plumbing works entered into by AS;
(b) the financial statements and income taxation returns for the financial years ending 30 June 2019 to 30 June 2021;
(c) the general ledgers for the period October 2018 to date; and
(d) the bank statements for all bank accounts for the period October 2018 to date.
The defendants/third party oppose the third party discovery sought by the plaintiffs. If discovery is ordered, they submit it should be confined only to redacted contracts or, if ordered as sought by the plaintiffs, a confidentiality regime covering all discovered documents should be put in place.
Third party discovery
Rule 32.07 of the Supreme Court (General Civil Procedure) Rules 2015 (the ‘Rules’) provides as follows:
On the application of any party to a proceeding the Court may order that a person who is not a party and in respect of whom it appears that the person has or is likely to have or has had or is likely to have had in that person’s possession any document which relates to any question in the proceeding shall make discovery to the applicant of any such document.
The Rules define ‘question’ as meaning:
[A]ny question, issue or matter for determination by the Court, whether of fact or law or of fact and law, raised by the pleadings or otherwise at any stage of a proceeding by the Court, by any party or by any person not a party who has a sufficient interest.[2]
[2]Rule 1.13 of the Rules.
The principles that guide applications for third party discovery are not in dispute between the parties.
The test under r 32.07 of the Rules is essentially similar to the test for discovery between parties. It is not different to, or stricter than, the test for discovery between parties.[3]
[3]Ensee Holdings Pty Ltd v BWN Industries Pty Ltd (Supreme Court of Victoria, Batt J, 23 June 1994); Viscariello v Macks (No 6) [2010] SASC 303.
The authorities establish that any documents in the possession or power of a non‑party that would throw light on a case are relevant and material, and should be discovered even if an element of fishing is involved.[4] If such documents which relate in some way to a matter in issue are discoverable, it is sufficient if the documents would lead to a train of inquiry which would either advance a party’s own case or damage that of the adversary.[5]
[4]Hodgson v Amcor Ltd; Amcor Ltd v Barnes (2011) VR 495, [133].
[5]See for example ibid, [133]-[134]; Buckley v The Herald &Weekly Times Pty Ltd & Anor (No 5) [2010] VSC 413, [5].
It is not in dispute that an order for non-party discovery may be made in the interests of justice to resolve an issue in dispute between those who are parties to the proceeding.
Confidentiality
If an order for third party discovery is made, the defendants/third party seek orders for a confidentiality regime to be put in place over the discovered documents such that only the plaintiffs’ advisers be permitted to inspect the documents. The plaintiffs oppose such a regime.
Like the principles that guide third party discovery applications, the principles that guide whether or not to put in place a confidentiality regime over discovered documents is not in dispute between the parties.
In making such a decision, the Court must engage in a balancing exercise between the interests of the party seeking production and the interest of the party who has been compelled to discover a document or documents. In cases where a trade rival will have access to confidential information it is no answer to rely on the Harman principle.[6] As Hayne J said in Mobil Oil Australia Ltd &McDonalds Australia Ltd v Guina Developments Pty Ltd,[7] as referred to in Oswal v Carson (No 2) [2011] VSC 192 at [23]:
Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least as far as that particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in a case such as this, to impose upon that trade rival an obligation that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed.
[6]Harman v Secretary of State for the Home Department [1983] 1 AC 280 (‘Harman’).
[7]Mobil Oil Australia Ltd &McDonalds Australia Ltd v Guina Developments Pty Ltd (1995) 33 IPR 82 (‘Mobil Oil’).
The ultimate question is what is necessary for the attainment of justice in a particular case. However, as part of the balancing exercise, it must be kept in mind that orders restricting inspection of discovered documents to the lawyers can create significant difficulties. In Hawksford v Hawksford, Justice White said:
It is a strong thing to deny a party personal access to materials produced by the other side for the conduct of the proceedings…… Likewise, in preparing for the litigation, the client may have a greater appreciation than do the lawyers or accountants retained on the client’s behalf as to the significance of information in relevant documents. It can thus be unfair to withhold relevant documents from the client for fear of misuse of confidential information by them.
However, by the same token the misuse of discovered documents can be difficult to detect. In the case of a trade rival, it may be impossible for an opposite party to put out of his or her mind the information which can give him or her a competitive advantage.[8]
[8][2007] NSWSC 661, [25]–[26].
The relevant factors to be addressed are: the degree of relevance of the documents, the extent to which they are confidential, the use to which the information might be put once known, the utility and procedural fairness of imposing restrictions, and any other matter relevant to the due administration of justice.[9]
[9]IOOF Holdings Ltd v Maurice Blackburn Lawyers (No 2) [2016] VSC 594, [10]; Cargill Australia Ltd v Viterra Malt Pty Ltd [No 16] [2018] VSCA 260, [6].
The pleadings
In the statement of claim, the plaintiffs plead that:
(a) Mr Fowler has caused ASG to loan funds to himself and AS;
(b) as the sole director of ASG, Mr Fowler owes fiduciary and statutory duties to ASG;
(c) Mr Fowler caused and continues to cause AS to carry on a commercial plumbing business in competition with ASG without the knowledge or consent of the plaintiffs in breach of those fiduciary and statutory duties;
(d) from at least 1 July 2020 onwards, Mr Fowler has:
(i) diverted income belonging to ASG to AS; and/or
(ii) exploited business opportunities of ASG for his own benefit and/or for the benefit of AS;
(e) between April 2018 and 30 March 2021, ASG has received payments from construction companies specialising in commercial and residential developments for services provided by ASG which payments have not been recorded as trading income in the general ledgers of ASG;
(f) the defendants have caused the value of the plaintiffs’ interests in ASG to be diminished; and
(g) by the reasons listed above, the conduct of ASG’s affairs by Mr Fowler is contrary to the interests of the members as a whole and is oppressive to, unfairly prejudicial to and unfairly discriminatory against the plaintiffs.
In their defence, the defendants deny any discriminatory use of ASG funds and oppressive conduct. The defendants plead that both Mr Fowler and AS is owed money by ASG, deny that there has been a diversion of income and business away from ASG and that AS commenced trading as a commercial plumbing business in around February/March 2020 with the second plaintiff’s knowledge.
The pleadings clearly establish that the major issue between the parties is the conduct of the business of AS and whether the defendants have been operating a competitor business though AS. Although it can be stated in a number of ways and has a number of related questions – such as whether the defendants have diverted income from ASG to AS and business opportunities belonging to ASG to AS - that is the broad question for the purposes of r 32.07 of the Rules (‘the question(s) for determination’).
The evidence
The plaintiffs rely on the affidavits of Mr Smith affirmed on 30 August 2021 and Mr Krizmanic affirmed on 22 October 2021. The defendants/third party rely on the affidavit of Mr Fowler sworn on 27 September 2021. A summary of the evidence is as follows.
Plaintiffs’ evidence
The plaintiffs’ evidence is that following its incorporation, ASG performed plumbing work for Citi-Con and other unrelated entities including Atelier Projects, Xerri Group and J Hutchison Pty Ltd.
The books and records of ASG record that since its registration, ASG has received the following income:
(a) $3,254,166.00 in the financial year ending 30 June 2019;
(b) $2,721,603.00 in the financial year ending 30 June 2020; and
(c) $135,879.15 in the financial year ending 30 June 2021 (up to 31 March 2021).
ASG’s bank statements reveal that in addition to income received from Citi-Con, ASG received income from other commercial builders it has performed plumbing works for including:
(a) $62,629.56 from Atelier Projects Pty Ltd in the financial year ending 30 June 2018;
(b) $808,193.52 from Atelier Projects, Xerri Group Pty Ltd and J Hutchinson Pty Ltd in the financial year ending 30 June 2019;
(c) $191,535.44 from Atelier Projects Pty Ltd and J Hutchinson Pty Ltd in the financial year ending 30 June 2020; and
(d) $106,701.10 from K7 Hawthorn East Pty Ltd and J Hutchinson Pty Ltd in the period from 1 July 2020 to 31 March 2021.
There was a very significant drop in income received by ASG in the financial year ending 30 June 2021, with its general ledgers recording it received income of only $135,879.15, despite expenses totalling $1,065,399.58 comprised largely of wages expenses, payments to subcontractors and payments to suppliers for materials. ASG also received loan funds totalling $521,000 from AS.
ASG did not only do work for Citi-Con.
The plaintiffs only became aware of the existence of AS, and that it was conducting a commercial plumbing business similar to that being conducted by ASG, after discovery was made in the oppression proceeding.
Defendants/third party’s evidence
The defendants/third party’s evidence is that other than completing defects liability and/or remedial work in 2020, ASG ceased taking on any new commercial plumbing work from or about July 2019. The plaintiffs’ principals now carry out all their construction work through the Whitehall businesses. All Xerri site work was finished in 2018 and the last payment was made to ASG in December 2018. All Hutchinson work was completed on site by October 2019. All on site Atelier work finished in October 2019. The work for K7 Hawthorn was finished in late 2020.
AS did not commence trading until about February 2020 and accordingly there are no financial statements for the year ending 2019. AS executed only one contract in 2020. It contains a confidentiality clause which does not allow for the provision of the details of the contract to third parties except by compulsion of any law. It also entered into a scope of works (no formal contract was entered into) which contains similar confidential information.
Mr Fowler has real concerns about the plaintiffs seeing any contracts or documents that AS has signed or are related to works being carried out by AS. He believes it is not necessary for the plaintiffs to see them. Given their ownership and directorship of the Whitehall businesses, they are competitors of the companies with which AS has contracted. Those contracts contain confidential information such as pricing and timing, conditions of engagement, design issues of the buildings and payment terms.
Evidence as to monies owed
There is also evidence from the parties about other litigation between the parties and monies owed by Citi-Con to ASG (and vice versa). I do not think that this evidence is relevant to the application for third party discovery.
Submissions
The plaintiffs and the defendants/third party filed written submissions and made oral submissions at the hearing. All of those submissions have been considered in deciding the plaintiffs’ application for third party discovery.
Plaintiffs’ submissions
In summary, the plaintiffs submit that the categories of documents sought by them, being the plumbing contracts entered into by AS, together with its financial statements, income taxation returns, general ledgers and bank statements, relate squarely to question(s) for determination that arise in this proceeding.
In particular, the categories of documents are relevant to and bear upon, amongst other things:
(a) whether Mr Fowler has been operating a competitor business through AS;
(b) whether Mr Fowler has diverted income from ASG to AS;
(c) whether Mr Fowler has diverted business opportunities belonging to ASG to AS; and
(d) the fair value of the plaintiffs’ shares in ASG.
The plaintiffs submit that there can be no doubt that the documents sought relate to issues in this proceeding, or at the very least may lead to a train of inquiry which may advance the plaintiffs’ case or damage Mr Fowler’s case. Given the test for non‑party discovery pursuant to r 32.07 of the Rules is akin to and no stricter than the test for discovery between parties,[10] it ought not be a matter of controversy that the categories of documents the subject of this application should be discovered by AS - the categories mirroring the categories that ASG was ordered to produce in this proceeding.
[10]Ensee Holdings Pty Ltd v BWN Industries Pty Ltd (Supreme Court of Victoria, Batt J, 23 June 1994); Viscariello v Macks (No 6) [2010] SASC 303.
There can be no meaningful challenge to the relevance of AS source documents underlying its financial statements, being its general ledgers, bank statements and contracts.
Given the significant inconsistencies between ASG’s financial statements, general ledgers and bank statements, it is reasonable to assume that AS’ financial statements may also be inconsistent with its general ledgers and bank statements.
The source documents are highly relevant given that Mr Fowler deposes to the effect that AS does not have financial statements for the financial year ending 30 June 2019, has only entered into one plumbing contract and where in the absence of any meaningful explanation by Mr Fowler to the contrary it appears that AS may be receiving revenue belonging to ASG, while ASG meets the expenses incurred in generating that revenue. The revenue being generated that may belong to ASG is likely significant. ASG generated millions of dollars of revenue per year until the breakdown in the relationship between Mr Krizmanic, Mr Smith and Mr Fowler, at which time the revenue all but vanished. Despite this, ASG continues to incur expenses of a similar value, including weekly wages and payments to its employees and subcontractors. Therefore, a serious question arises as to whether AS is in receipt of the revenue being generated by the expenses being incurred by ASG.
In relation to the defendants/third party’s application for a confidentiality regime, the plaintiffs submit that the Court should reject Mr Fowler’s requests that any documents AS discovers be the subject of written confidentiality undertakings and that inspection be limited to the plaintiffs’ advisers only. The authorities reveal that there are limited circumstances in which the Court will, on the application of a party, determine that the implied undertaking does not provide adequate protection of confidential material.[11] The question as to whether production of documents ought be compelled only arises where there is a real risk of significant harm being caused to a party which is beyond that justified by the case.[12] The plaintiffs submit that the Court should reject Mr Fowler’s mere assertion that the documents are confidential as the information contained in the AS contracts is likely to mirror that contained in ASG contracts (which the plaintiffs were privy to). Mr Fowler has failed to depose as to any basis on which AS’ financial statements, general ledgers and bank statements could be said to be confidential.
[11]Mobil Oil (n 7).
[12]IOOF Holdings Ltd v Maurice Blackburn Lawyers (No 2) [2016] VSC 594, [8].
Defendants/third party’s submission
The defendants/third party submit that the purpose for seeking the documents is to assist with the valuation of the plaintiffs’ shares in ASG for the wider purpose of obtaining an order that Mr Fowler purchase the shares, being the substantial relief sought in the plaintiffs’ statement of claim.
It is accepted that the documents sought by the plaintiffs may be relevant for that valuation exercise. However, no orders for valuation of the shares in ASG have yet been made. This is understandable as the substantive proceeding has not been heard and determined. Orders for valuation are commonly made after the issues of oppression have been heard and determined. In that context, the defendants/third party submit that the application for third party discovery is made prematurely.
The defendants/third party further submit that insofar as the plaintiffs submit that the documents are relevant for the purposes of determining whether Mr Fowler has diverted business opportunities, such a submission should not be accepted because the financial documents are not relevant for that exercise as all they can show is financial information or a dollar figure. AS’ contracts are arguably relevant. However, the information contained in those contracts referring to the builder’s name, pricing, timing, conditions of engagement, design issues of the building and payment terms are not relevant information in considering whether a business opportunity is being diverted. Therefore, the only order for discovery that should fairly be made is for discovery of category (a) documents with the above information redacted.
Alternatively, the defendants/third party submit that if the Court considers that all of the documents sought be discovered, the documents should be produced under a confidentiality regime. This is because Mr Smith and Mr Krizmanic are 50% shareholders of, and Mr Krizmanic a director of, the Whitehall businesses. The defendants/third party submit that Whitehall businesses are trade competitors of the companies that AS have contracted (which is not denied by Mr Smith and Mr Krizmanic) and that information concerning builders’ names, pricing, timing, conditions of engagement, design issues of the buildings and payment terms are clearly confidential to AS and its contracting party. Without a confidentiality regime, discovery will be an invasion of the third party’s (and other parties to which it contracts with) business affairs. For the purposes of using information for a valuation, it is unnecessary for Mr Smith and Mr Krizmanic to see the documents and should be limited to the plaintiffs’ lawyers and experts. The Court must engage in a balancing exercise between the interests of the party seeking production and the interests of the party who has been compelled to discover documents.
In cases where a trade rival will have access to confidential information, it is no answer to rely on the Harman principle;[13] in this matter the balance of justice weighs in favour of the confidentiality regime sought on behalf of the non-party.
[13]Harman (n 6).
Consideration
Third party discovery
After carefully considering the pleadings and all of the evidence and submission, I am of the opinion that orders for third party discovery should be made for each of the categories sought by the plaintiffs.
I think it is abundantly clear that the documents sought by the plaintiffs from AS relate to the question(s) for determination, that broad question being the conduct of the business of AS and to what extent that business has diverted business and income away from ASG. There is a clear connection between the documents sought and the question(s) for determination.
I think this is especially so when the documents are considered collectively.
In determining that question(s) (or issue), the starting point will be the contracts that AS has entered into for the provision of plumbing works. But I think more than just the bare contracts are needed, as submitted by the defendants/third party. All of the information and details in the contracts will be necessary to decide, for example, if it was a contract that ASG had the capacity to enter into and, if so, if it was diverted away from ASG in favour of AS and the extent of that diversion, including the extent of the diversion of income. A contract with no names or pricing will be of little assistance.
What follows after the contracts is also important and necessary to determine the question. This information will be contained in the other documents sought by the plaintiffs, namely AS’ financial statements, income tax returns, general ledgers and bank statements. It must be remembered that the question(s) for determination is not only if business was diverted away from ASG to AS, but income as well, including if ASG has been used to pay AS’ expenses. These documents clearly relate to that question. Post contract, they will show, for example, if the contracts have been completed and complied with, if payment has been made, expenses, income and revenue. Without these documents, it may well be impossible to determine if income has been diverted away from ASG and, if it has, how that has occurred and the extent to which it has occurred. The question(s) for determination requires a complete picture of AS and all of the documents sought by the plaintiffs relate to this question.
These documents should also be discovered in the context of the evidence that ASG ceased taking on any new commercial plumbing work from about July 2019, yet has since incurred considerable expenses despite generating very little revenue. The evidence clearly raises the question of a possible diversion of business and income (including profit) away from ASG, and these documents are clearly connected to determining this question.
Importantly, these documents may also support the defendants’ position that there has been no oppressive conduct and AG is not running a business in competition with ASG.
The documents are sought because they relate to the question(s) for determination if this matter proceeds to trial, or to narrow the issues in dispute prior to trial. They are not sought only for the preparation of a valuation. I therefore do not accept the defendants/third party’s submission that the application for third party discovery is premature.
Implicit in the reasons above is that I also do not accept the defendants/third party’s submission that if I concluded that the application was not premature, only the contracts that AS entered into should be discovered (with any necessary redaction). The documents collectively, together with the information contained in them, relate to the question(s) for determination and all of them should be discovered with no redaction.
The defendants/third party’s submission that the documents (apart, possibly, from the contracts) are not relevant for the purposes of determining whether the defendants diverted business opportunities away from ASG fails to consider the breadth of the question(s) for determination and to which all of the documents relate.
Confidentiality
Given that I have decided that all of the documents sought by the plaintiffs should be discovered, I now turn to the defendants/third party’s submission that a confidentiality regime should be ordered such that only the plaintiffs’ lawyers and experts have access to the discovered documents.
This is not a case where the plaintiffs and the third party from which discovery is sought are in competition. It is alleged by the defendants/third party that the plaintiffs and those with whom the third party contracts with are in competition. I did not understand the plaintiffs’ submission to be that in these ‘extended’ circumstances a confidentiality regime could not be ordered. I will proceed on the basis that even in these circumstances a confidentiality regime can be ordered if thought appropriate.
In any event, I do not accept the submission made by the defendants/third party that a confidentiality regime should be ordered.
It is necessary that the defendants/third party establish that the plaintiffs (in operating the Whitehall businesses) are in competition with the businesses that AS contracts with (‘the other businesses’). They have failed to do this.
I accept the plaintiffs’ submission that more than a mere assertion of competition by Mr Fowler is necessary.
At least one of the Whitehall businesses and the other businesses work in the construction industry. This alone does not establish that they are in competition with each other and are trade rivals. Although no evidence has been led, it is safe to say that the construction industry is a very large industry with many businesses participating in it and with many different parts. Not every business in that industry will be in competition with every other business in the industry.
It is incumbent on the defendants/third party to give certain particulars of the businesses that are alleged to be trade rivals so as to establish such a rivalry. They have not done this and I think the application for a confidentiality regime falls at this first hurdle.
The defendants/third party submit that the plaintiffs did not dispute that a trade rivalry and competition existed. Without knowing who AS was contracting with it would not be possible for the plaintiffs to dispute, or otherwise, the assertion of competition.
If I am wrong and Mr Fowler’s assertion is sufficient to establish that the Whitehall businesses and the other businesses are in competition, it would be necessary to consider a number of factors in the balancing exercise between the plaintiffs on the one hand and the third party and the other businesses on the other. A consideration of those factors is as follows:
(a)the documents sought by the plaintiffs from the third party are highly relevant to the question(s) for determination, including all of the information in them. Without the documents sought by the plaintiffs, it would most likely be impossible to determine the question(s);
(b)it is accepted that some information in the contracts is confidential but I do not think that the other documents sought by the plaintiffs contain confidential information;
(c)without more information about what is in the contracts and more detail about the alleged competition and trade rivalry, it is difficult to conclude to any extent the use to which the information might be put once it is known. In considering this factor, I accept the plaintiffs’ submission that no confidentiality regime was put in place over the contracts ASG entered into with other businesses. This was at a time when the Whitehall businesses were registered and Mr Smith and Mr Krizmanic would have had access to those contracts. Accepting Mr Fowler’s assertion that the Whitehall businesses are in competition with the other businesses must mean that Citi-Con was also in competition with these other businesses. Mr Smith and Mr Krizmanic would have had access to ASG contracts with no confidentiality regime. There is no evidence to suggest that Mr Smith or Mr Krizmanic have used this information inappropriately;
(d)given that the evidence is that AS has only entered into one contract (and given one quotation) in 2020, much of the information (such as pricing and timing) would most likely be now out of date; and
(e)given the question to be determined and the nature of the information in the contracts, I think it would be unfair to withhold the documents from the plaintiffs. This is a case where they would have a greater appreciation than their lawyers and experts as to the significance of the information contained in the documents, in particular the names of the other businesses and pricing. This is even more so given that the documents are sought for a wider purpose than just a valuation.
Therefore, even if the defendants/third party had established the existence of competition and trade rivalry, I think the balancing exercise would fall in the plaintiffs’ favour and no confidentiality regime would be ordered.
Orders
I will make the orders sought by the plaintiffs.
SCHEDULE OF PARTIES
| S ECI 2020 04711 | |
| BETWEEN: | |
| KRIZMANIC INVESTMENTS PTY LTD (ACN 124 986 447) | First Plaintiff |
| BS ENTERPRISES PTY LTD (ACN 155 895 533) | Second Plaintiff |
| - v - | |
| GREGORY FOWLER | First Defendant |
| GF (AUST) PTY LTD (ACN 625 491 732) | Second Defendant |
| ALIGNED SERVICES GROUP PTY LTD (ACN 625 540 570 | Third Defendant |
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