Secure Logic Pty Limited v Paul William Noble (No. 3)

[2021] NSWSC 675

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Secure Logic Pty Limited v Paul William Noble (No. 3) [2021] NSWSC 675

Hearing dates:

29, 30, 31 July 2019, 1, 2, 5, 6, 7, 8, 9, 12, 13, 14 & 19 August 2019 and 15 November 2019

Date of orders:

11 June 2021

Decision date:

11 June 2021

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Parties directed to bring in short minutes of order to give effect to these reasons.

Catchwords:

CONFIDENTIAL INFORMATION – the plaintiffs are members of a group of companies providing information security services to the IT industry – the plaintiffs claim the first and third defendants each diverted and misused the plaintiffs’ confidential information – the plaintiffs seek a permanent injunction to restrain further misuse – whether the information was confidential – whether the information was misused – whether a permanent injunction should be granted against the first and third defendants in the absence of the plaintiffs seeking relief against other persons to prevent the misuse of the plaintiffs’ confidential information obtained through the first and third defendants.

PRACTICE AND PROCEDURE – judgments and orders – the plaintiffs' confidential information is transferred to the first defendant’s personal laptop and associated hard drive – the Court considers making orders for the production of the personal laptop and hard drive – first defendant destroys the personal laptop and hard drive before the orders are perfected and notified to him – what did the first defendant know of the Court’s prospective orders of the time that he destroyed the personal laptop and hard drive – whether the first defendant’s conduct was designed to frustrate the making of future Court orders for production of the personal laptop and hard drive – what inferences should be drawn about the information on the personal laptop and hard drive at the time he destroyed the hard drive.

CONTRACTS – Construction – employment contract made between the third plaintiff and the first defendant – whether the employment contract is wholly in writing – whether the full terms of a written contract bind the first defendant and the second plaintiff, a subsidiary of the first plaintiff, or whether only certain numbers recorded in the written form of contract were binding between them – whether the first defendant is entitled to a non-discretionary allowance under the employment contract.

CONSUMER LAW – MISLEADING AND DECEPTIVE CONDUCT – whether the plaintiffs/cross-defendants made representations as to the financial benefits the first defendant/cross-claimant would be likely to derive from taking employment with the plaintiffs’ group – whether the representations were made – whether they were representations as to future matters – whether they were misleading or deceptive – whether the first defendant/cross-claimant relied upon the representations and whether he suffered any loss or damage as a result.

EVIDENCE – Admission – Improperly obtained evidence – whether employer contravened Workplace Surveillance Act2005, s 19 by authorising covert surveillance of employee’s work and personal laptops – whether evidence gathered by employer from employee’s laptops was illegally obtained under Evidence Act 1995, s 138 – whether such evidence is now inadmissible – whether employer’s conduct also contravened Criminal Code Act 1995 (Cth), s 478.1 for unauthorised access of restricted data.

Legislation Cited:

Workplace Surveillance Act 2005, Part 4, Division 2, ss 3, 5, 10, 12, 16, 19, 23

Evidence Act 1995, ss 138, 138(1), 138(3), 140(2)

Criminal Code Act 1995 (Cth), s 478.1(1)

Crimes Act 1900, s 308H

Cases Cited:

Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419

Blank v Commissioner of Taxation (2016) 258 CLR 439

Briginshaw v Briginshaw (1938) 60 CLR 336

Campbell v Back-Office Investments Pty Ltd (2009) 238 CLR 304

Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1

Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39

Doherty v Allman & Dowden (1878) 3 App Cas 709

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) 110 ALR 449

Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494

Moorgate Tobacco Co Ltd v Philip Morris (No. 2) (1984) 156 CLR 414

Neilson v Overseas Projects Corp (Vic) Ltd (2005) 223 CLR 331

Orleans Investments Pty Ltd v Mindshare Communications Ltd (2009) 254 ALR 81

Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361

Robinson v Woolworths Ltd (2005) 227 ALR 353

Roderick v Washington H Soul Pattison and Company Limited (No 2) [2020] NSWSC 1224

Secure Logic Pty Limited v Paul William Noble [2019] NSWSC 991
Silverbrook Research Pty Limited v Lindley [2010] NSWCA 357

Weatherill v Bartlett [2017] NSWCA 1754

Category:

Principal judgment

Parties:

First Plaintiff/Cross-Defendant: Secure Logic Pty Limited (ACN 154 505 030)
Second Plaintiff/ Cross-Defendant: Secure Logic Technologies Pty Ltd
Third Plaintiff/ Cross-Defendant: Secure Logic Pte Ltd
Fourth Plaintiff/ Cross-Defendant: Plush Hosting Pty Ltd
First Defendant/Cross-Claimant: Paul William Noble
Second Defendant/Cross-Claimant: Peach Tree Bay Pty Limited (ACN 132 097 647)
Third Defendant/Cross-Claimant: John Russell Pankhurst

Representation:

Counsel:
Plaintiffs: M.R. Elliott SC; S. J. Hallahan
First & Second Defendants: B. DeBuse

Solicitors:
Plaintiffs: Andrew Lacey, McCabes Lawyers Pty Ltd
First & Second Defendants: John Mark Laxon, Laxon Lex Lawyers
Third Defendant: John Russell Pankhurst – in person

File Number(s):

2016/182584

Publication restriction:

No

JUDGMENT

1. The Secure Logic group of companies supplies information security services to the IT industry, to protect the integrity of their clients’ data. The plaintiffs are all members of the Secure Logic group. The first and third defendants are former employees of the Secure Logic group. The plaintiffs contend in these proceedings that the first defendant, Mr Paul Noble, and the third defendant, Mr John Pankhurst, diverted the Secure Logic group’s confidential information and they seek permanent injunctions against its potential misuse.

2. Mr Noble and Mr Pankhurst deny that they diverted or are misusing any of the Secure Logic group’s confidential information. Mr Noble cross claims against the plaintiffs for entitlements he claims are due to him under his employment contract and for misleading and deceptive conduct associated with his becoming an employee of the Secure Logic group. The plaintiffs contest his Cross-Claim and a similar one from Mr Pankhurst.

3. The first plaintiff, Secure Logic Pty Limited is the principal Australian holding company in the group (and is therefore referred to in these reasons as “SL Australia”). The second third and fourth plaintiffs are subsidiaries of SL Australia. The second plaintiff, Secure Logic Technologies Pty Limited (“SL Technologies”) holds the intellectual property of the group. The third plaintiff, Secure Logic Singapore PTE (“SL Singapore”) is incorporated in the Republic of Singapore. SL Australia acquired the fourth plaintiff, Plush Hosting Pty Ltd (“Plush Hosting”), from the third defendant, Mr Pankhurst, during the events the subject of these proceedings.

4. For convenience of reference in these reasons, unless it is necessary to distinguish among them, the four plaintiffs will be treated collectively as the Secure Logic group and referred to merely as “Secure Logic”.

5. SL Singapore employed Mr Noble between 30 June 2015 and 3 June 2016. Mr Noble discharged the duties of his employment whilst located in the Republic of Singapore between June 2015 and February 2016, when he returned to Australia. Secure Logic claims that his departure from the group some four months later was triggered by discoveries that he had misapplied its confidential information. Secure Logic commenced proceedings against him on 15 June 2016 and obtained interlocutory injunctive relief against him on 17 June 2016.

6. Secure Logic contends that Mr Noble took steps in April, May and June 2016 to download a wide range of its confidential information onto his work laptop computer and then onto his personal laptop, in order to misuse that information for his own purposes after he left the group. Secure Logic further contends: that when it commenced these proceedings, seeking relief including the return of Mr Noble’s work laptop and his personal laptop; that he wilfully destroyed his personal laptop and an associated hard drive; and that he did so with knowledge of impending orders for the return of those items, so their contents would not be submitted to forensic analysis. Secure Logic argues that the Court should infer from this act of intentional destruction that Mr Noble had wrongfully misapplied and intended to misuse the group’s confidential information.

7. Mr Noble admits to the destruction of his personal laptop and the hard drive. He claims the destruction has an innocent explanation. He denies any intent to thwart the Court’s proposed orders or that the destruction of these items evidences any intent on his part to misuse the plaintiffs’ confidential information. Moreover, Mr Noble argues that because the plaintiffs have brought no other proceedings against other persons to whom the confidential information may have been distributed, that there is now no continuing threat of potential misuse of their confidential information and as a result a permanent injunction should not be granted to give long term effect to the interlocutory relief originally granted against Mr Noble.

8. Secure Logic contends in reply that a permanent injunction should be granted. Secure Logic contends that one consequence of Mr Noble’s denial of information through the destruction of the personal laptop and hard drive was to make proceedings against any other parties both problematic and speculative.

9. Mr Noble’s Cross-Claim alleges that the Chief Executive Officer of Secure Logic, Mr Santosh Devaraj, made representations that Mr Noble would be issued with a substantial shareholding in SL Singapore, which it was represented would be worth at least $10 million in the near to medium term.

10. Mr Noble’s employment agreement created some odd forensic stances. Mr Noble undoubtedly signed an employment agreement with SL Singapore on 30 June 2015. But despite this, Mr Devaraj maintained throughout his evidence that Mr Noble had not signed any contract of service with SL Singapore, and that he always provided services to SL Singapore as an independent contractor. But this proved to be an eccentric position. Secure Logic formally admitted on the pleadings that a contract of service existed between SL Singapore and Mr Noble.

11. Mr Noble further cross claims that he has not been paid his proper entitlements under his employment contract, due to Secure Logic’s failure to fully pay his wages, to fully pay his other entitlements, and to issue to him the shares in SL Singapore to which he says the employment contract entitles him, quite apart from the representations he says were made to him.

12. In answer to Mr Noble’s Cross-Claim, the plaintiffs have offered to pay the disputed wages. But they dispute that Mr Noble has any right under his employment contract to other entitlements or to an issue of shares in SL Singapore or SL Australia.

13. On 19 May 2016 Mr Noble gave notice through his then lawyers, Carroll & O’Dea, to Secure Logic’s lawyers, McCabes Lawyers Pty Ltd (“McCabes”), that these various matters that were ultimately included in the Cross-Claim, if persisted in, would result in the repudiation of Mr Noble’s employment contract.

14. Secure Logic did not meet the demands of the 19 May 2016 letter. Carroll & O’Dea replied on 3 June 2016, purporting to accept SL Singapore’s repudiation of the employment contract and to terminate it. Whether or not Mr Noble’s allegations of SL Singapore’s breach of the employment contract are sustained, his act in terminating the employment contract on 3 June 2016 is accepted by SL Singapore as the de facto end of the employment relationship.

15. Secure Logic’s own in-house expertise in IT security adds an unusual twist to this confidential information case. When Mr Devaraj became suspicious in May 2016 that Mr Noble may be misusing Secure Logic’s confidential information he authorised other employees of Secure Logic to conduct covert surveillance of Mr Noble’s work laptop, personal laptop and a personal website which Mr Noble operated through his family company Peach Tree Bay Pty Ltd (“Peach Tree Bay”), the second defendant.

16. Mr Noble contends that Mr Devaraj and Secure Logic contravened the Workplace Surveillance Act 2005 (the “WS Act”), s 19 by authorising this covert surveillance and that all evidence gathered against him that is traceable to that surveillance was illegally obtained and is now not admissible in evidence against him. Secure Logic’s evidence included material that Mr Noble contended was illegally obtained. The Court reserved Mr Noble’s rights in relation to Secure Logic’s use of the allegedly illegally obtained material. The Court indicated that it would rule upon its admissibility in the final judgment. All parties accepted that this was the more convenient procedural course rather than giving a judgment on the admissibility of the material followed by a further round of submissions.

17. Mr John Pankhurst, the third defendant, was a controlling shareholder and an employee of Plush Hosting, when Secure Logic was seeking to acquire it in June/July 2015. Secure Logic claims that Mr Pankhurst also acquired its confidential information which substantially overlaps with the information alleged to have been received by Mr Noble and it seeks permanent injunctions against him as well.

18. SL Technologies owns some of Secure Logic’s intellectual property, which is sought to be protected by these proceedings. Plush Hosting also owned part of that intellectual property. By the time the proceedings were commenced, Secure Logic’s takeover of Plush Hosting was complete and Plush Hosting had become a wholly owned subsidiary company of SL Australia.

19. The proceedings were conducted over 12 days in July/August 2019, at which time the Court recorded its detailed credit findings in relation to all the witnesses. Directions for written submissions were made after the hearing. Written submissions were served and spoken to in oral submissions on 15 November 2019.

20. Mr M.R. Elliott SC and Mr S.J. Hallahan of counsel, instructed by McCabes, appeared for the plaintiffs. Mr B. DeBuse of counsel, instructed by Laxon Lex Lawyers, appeared for the first and second defendants. The third defendant, Mr J.R. Pankhurst, appeared in person. The Court was much assisted in its final analysis of the case by the detailed submissions provided by the parties to these proceedings.

21. These reasons are structured into two parts. The first is a detailed narrative of the Court’s findings and an analysis of the claims for relief in Secure Logic’s Amended Statement of Claim. The second part is a separate narrative of the Court’s findings and an analysis of the claims for relief on Mr Noble’s Cross-Claim. For convenient legal analysis, the parties’ submissions separated out the factual narrative related to the Cross-Claim from the factual narrative on the Claim. Although convenient, this has the disadvantage that it does not deal with the parties’ conduct in its historical context. Although Mr Noble engaged in breaches of confidence and conduct designed to thwart imminent orders of this Court, a proper understanding of the context shows that frustration was building in him over time in part due to a series of sub-optimal management decisions at Secure Logic. The Court has nevertheless adopted the parties’ division of the facts into two narratives to make the substantial volume of the material more manageable. In the result, there is a slight degree of overlap between the two narratives.

22. This is the Court’s third judgment in these proceedings. In the court’s first judgment the Court found that Mr Noble had waived client privilege over certain Carroll & O’Dea file notes and certain communications between Mr Noble and another lawyer advising him on 16 June 2016: Secure Logic Pty Limited v Paul William Noble [2019] NSWSC 991. Another judgment was also delivered during the hearing, dealing with a further issue of alleged waiver of client privilege: Secure Logic Pty Limited v Paul William Noble (No. 2) [2019] NSWSC 1057.

23. The Court’s observations as to the credibility of witnesses are generally made where those witnesses appear in the narratives. But observations as to the credibility of the principal actors, being Mr Devaraj, Mr Noble and Mr Pankhurst, appear immediately below.

Credibility of Parties and Witnesses

24. Mr Devaraj. Mr Devaraj was an intelligent and considered witness. He has a ready mastery of his business environment and its risks. He had good foresight of the implications of the answers that he gave to questions. He considered what he was saying before giving his answers. He was meticulous in drawing and maintaining distinctions consistent with his beliefs about the case he was advancing on behalf of Secure Logic. He gave clipped, often “yes” or “no”, answers and did not generally add unnecessary, or spontaneous, detail to his responses.

25. Mr Devaraj tended to take a precise and narrow approach in answering questions. He was reluctant to admit he had controlling power over the affairs of SL Australia. But all his conduct suggested that he did.

26. Mr Devaraj mostly presented as a detached, clinical and cool businessman who managed his enterprise with professional pride in the specialised service it offered the market. One of the few times he showed much animation in the witness box was when he was being asked about the data breach in which Mr Noble participated. He appeared to be deeply affected by the event: possibly because of its potential to damage his and Secure Logic’s professional reputation.

27. Mr Devaraj’s credibility is in part to be judged from his attitude to Mr Noble. Mr Devaraj was incapable of giving Mr Noble credit for any achievement at Secure Logic. Nor could he admit that he could be indebted to or obliged to Mr Noble in any way. This was accurate where Mr Devaraj was dealing with Mr Noble’s more exaggerated claims. But at other times his refusal to give any credit to Mr Noble’s actions seemed to be motivated by little more than his abiding distaste for Mr Noble.

28. Mr Devaraj was not prepared to acknowledge any prior friendship with Mr Noble. He found it difficult to do so. He appreciated that such an acknowledgement might assist Mr Noble’s misleading and deceptive conduct case. But that case fails for other reasons and the issue is less significant than the energy given to it by Mr Devaraj and Mr Noble. But Mr Devaraj was keen to contest it at the level of lack of friendship. In this he was demonstrably wrong. This feature of his evidence also made the Court cautious about his general reliability. Although he was a more reliable historian than Mr Noble.

29. Mr Devaraj could write charmingly engaging emails when he wanted something. But he could equally be clipped and brief when it suited him. His habitual composure masked a determined personality adept in strategic calculation. This side of Mr Devaraj is well illustrated when, in May 2016, Mr Noble came under his suspicion for breaching his obligations of confidence to Secure Logic, he quickly authorised surveillance of Mr Noble by the insertion of what is known as “key logger” software (because it tracks keyboard keystrokes for an external observer) into Mr Noble’s work laptop. Mr Devaraj was determined to hunt out irrefutable evidence of Mr Noble’s malfeasance. In doing so, he did not consider whether he or others that he was directing in this task within Secure Logic might contravene the WS Act.

30. Mr Noble. Mr Noble was ultimately an unreliable witness who was prepared to give untruthful evidence when he thought it would serve his advantage. He shaped up ready for the contest with his cross-examiner. At first he weaved nimbly ahead of his cross-examiner’s questions. But as the cross-examination wore on, his answers, especially about the destruction of his personal laptop and the hard drive hard drive, became less and less credible. Close questioning forced him to put dubious patches on parts of his story to maintain a shield of respectable coherence for it. But in the end his account became a mixed patchwork of fact intermingled with convenient untruths.

24. Mr Noble took a strategically defensive approach to his cross-examination. He often crafted his answers into calculated imprecision to give himself room to move in future cross-examination. At other times he could give what appeared to be very precise answers, yet he qualified them with words such as “at that point in time”.

25. He appeared acutely conscious of being trapped into an answer that he would later regret. He deployed a range of devices to avoid being corralled too closely by his questioner. Sometimes he stalled for time and asked questions back to deflect the questioner from his course and to gain thinking time. At other times he replied, “I don’t recall”, when the Court suspects he did recall. He sought to change definitive answers already given, to “I don’t recall”. And he would sometimes answer questions with an unexpected qualification that would avoid the question and answer being used against him.

26. But when forced into a corner, Mr Noble was often reluctant to admit the obvious, if he feared it may damage his case. He became so cautious about answering questions on one occasion that he expressed doubt about what it turned out was part of his own affidavit evidence-in-chief. By the time he gave evidence, it was clear that Mr Noble strongly disliked Mr Devaraj. This was in part due to this litigation, but it probably ultimately derived from their different personalities. It is not surprising they ultimately fell out. In contrast to cautious strategy-minded Mr Devaraj, Mr Noble revealed a more spontaneous disposition. Detailed credit findings about Mr Noble are made throughout these reasons.

27. Mr Pankhurst. Mr Pankhurst presented himself as an amiable avuncular figure who was there to help everyone. But when his conduct was questioned, he could not give a reasonable account of events that was inconsistent with the case Secure Logic was making against him. Mr Pankhurst was not a reliable witness on important contentious issues, where his self-interest was at stake.

28. Mr Pankhurst was not the author and driving force in creating a new business after leaving Secure Logic in April 2016 but, as the Court’s later findings show, he was happy to go along with what others were creating to see whether there might be any benefit for him. Mr Pankhurst was alert to easy financial opportunities that fell across his path, but he was not a builder of businesses.

29. Mr Pankhurst was accused of giving a secret commission of $10,000 to Mr Noble. The objective evidence pointing to that conclusion was strong and demanded some explanation from him. His attempts to deflect that inference were unconvincing and improbable. But like many side issues in these proceedings, it is not a matter on which the Court is required to make detailed findings.

30. In these reasons the Court makes findings of serious misconduct against Mr Noble and findings that are also critical of Mr Devaraj and Mr Pankhurst in a number of respects. Such findings raise special considerations for the Court. In its consideration, the Court has applied the principles in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] ALR 334; (1938) 12 ALJR 100; [1938] HCA 34 (“Briginshaw”) and has had regard to Evidence Act 1995, s 140(2). The Court does not lightly make findings that, on the balance of probabilities, a party to civil litigation has been guilty of serious misconduct, and the Court recognises that the strength of evidence necessary to establish such findings may vary according to the nature of what is sought: Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) 110 ALR 449; (1992) 67 ALJR 170; [1992] HCA 66 at 170 per Mason CJ, Brennan, Deane and Gaudron JJ; see also Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 and Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361.

31. The following is a narrative of the relevant history in relation to the Amended Statement of Claim. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded. For reasons of economy this narrative does not always include reference to versions of the facts that have been rejected.

Secure Logic, Mr Devaraj and Mr Noble – 2013 to 2016

Company Structures and Parties

39. Mr Devaraj incorporated SL Australia in 2008. He is and has been a director of the company since its incorporation. He is the majority shareholder of its 10,000 issued shares. Mr Devaraj caused SL Technologies to be incorporated in 2013. Mr Devaraj has been a director both of SL Australia and SL Technologies since their incorporation.

40. Throughout most of the commercial history of both SL Australia and SL Technologies, Mr Deepak Singh was the most senior manager of these two companies. Mr Singh’s private company owned shares in SL Technologies. Mr Singh was a careful witness who gave accurate evidence to the best of his recollection. He attempted to give the best evidence he could of events he witnessed. The contest between Mr Noble and Mr Devaraj seemed remote to him. He remained at Secure Logic at the time of the trial. He was loyal to Mr Devaraj and to Secure Logic but not so much that he was prepared to distort his evidence to assist them.

41. At the time of the hearing, Secure Logic had offices in Sydney, Singapore, China and Malaysia. Its companies employed some 70 staff spread throughout these various offices.

42. By 2014 Secure Logic had developed into an established provider of information security services to state and federal governments and to financial and other commercial organisations. It continued to conduct that business during the period of 2014 to 2016 spanning the events the subject of these proceedings. The description below of Secure Logic’s business is commonly expressed in the present tense but describes the nature of that business in the 2014 – 2016 period.

43. Secure Logic offers services to assist public and commercial organisations to protect their information from unauthorised or accidental modification, loss, release, or impact on the safety and well-being of individuals. Secure Logic provides information and communication technology (“IT”) services to address the threat from hackers, disgruntled staff and imperfect security controls to the integrity of information held by an organisation, and thereby reduce damage to the organisation’s financial viability and reputation.

44. A principal component of Secure Logic’s business is the provision of Managed Security Services, which are known in this industry as “MSS”. Secure Logic’s MSS allows its client organisations to outsource the management of their IT infrastructure and services. Secure Logic’s MSS service involves the provision of full-time monitoring and management of clients’ IT systems in Secure Logic’s Cyber Security Operations Centre (“CSOC”) with the objective of defending clients against external and internal threats. Secure Logic’s MSS included a helpdesk and the capacity to escalate security in real time to deal with a known incident.

45. Secure Logic operates in a competitive market. Its main competitors in the provision of MSS are Verizon, Dimension Data, IBM and Telstra.

46. Secure Logic also provides professional and technical services related to IT and anti-crime and asset recovery services. Its main competitors in the provision of these professional and technical services include Deloitte, PwC, Verizon and UXC. And its main competitors in anti-crime and asset recovery services are Trustwave, Firstwave Cloud Technology (“FirstWave”) and Control Case.

47. Secure Logic has a range of Australian banks infrastructure companies and technology providers among its private clients. Its government clients include the NSW Electoral Commission (for secure platforms to host online voting in state elections), the NSW Department of Finance, Services and Innovation (to create secure IT services to be shared by all NSW agencies), the NSW Board of Studies (to protect Higher School Certificate systems and applications) and the NSW Crime Commission.

48. During the events covered by these reasons, Secure Logic’s headquarters were in Pitt Street in the Sydney CBD and its Sydney-based regional director was Mr Singh.

49. Throughout 2014, the NSW Government had engaged Peach Tree Bay to provide Mr Noble’s IT services. That year he represented the interests of the NSW Government in a major IT project, the development of a Data Centre Program (“GovDC”).

50. The NSW Department of Finance, Services and Innovation had also been an important client of SL Australia up to 2014. In 2014 Mr Devaraj and Mr Noble met when they worked together on the GovDC. Mr Devaraj is strategic in everything he does. A good relationship with Mr Noble could only help Secure Logic. Mr Devaraj courted Mr Noble’s friendship.

51. Mr Noble finished his role with the NSW GovDC program on Monday, 23 February 2015. That day he organised after work drinks. His guests included Mr Pankhurst and many staff of Secure Logic.

52. SL Singapore employed Mr Noble from 1 July 2015 to 3 June 2016. In many ways, Mr Noble was a logical fit for Secure Logic. He had worked as an IT professional during the 1990s and 2000s both giving direct IT advice and assistance and managing teams of IT employees.

53. Mr Noble worked as a Technology Consultant for NatWest Markets between February 1994 and 1997 in Hong Kong and Australia, including as the company’s Chief Information Office. The teams he managed at NatWest Markets addressed computer breakdowns and software malfunctions.

54. He moved to Dimension Data and designed IT networks for banking and other customers. He then moved to Credit Suisse as a Specialist IT Consultant, charged with setting up a disaster recovery system to operate in the event the bank’s main IT systems were disabled. He designed and operated the system for Credit Suisse. And between 2003 and 2007, Mr Noble worked for JPMorgan Chase & Co in India and the UK, generally in the role of Lead Consultant in constructing disaster recovery platforms and data centres.

55. Mr Noble decided to establish Peach Tree Bay in 2008 as a corporate vehicle to supply his IT services to clients. One of those clients was the NSW Government, to whom Peach Tree Bay provided services from 2008 to February 2015.

56. By the time Mr Noble joined Secure Logic, he had well over 20 years of experience in the IT industry at the operational and strategic level. And he had extensive industry contacts. It was not difficult to see why in the first half of 2015 Mr Devaraj became interested in Mr Noble joining Secure Logic.

57. In 2014 Mr Devaraj decided that he wanted to expand Secure Logic’s business into Singapore. He incorporated SL Singapore in 2014. Its issued share capital of 1,000 shares is held by SL Australia and SL Technologies.

58. Mr Devaraj set up a legal structure to regulate the terms on which other investors might take interests in SL Singapore. On 23 June 2014 he arranged for execution of a deed between SL Singapore and SL Australia to govern relations between shareholders in SL Singapore (“the SL Singapore shareholder deed”). Relevant terms of the SL Singapore shareholder deed are discussed later in the factual narrative relating to Mr Noble’s Cross-Claim.

The Parties Meet and Mr Noble is engaged – 2013 to June 2015

59. Mr Noble and Mr Devaraj met through their respective functions at the NSW GovDC. Mr Devaraj is strategic. He developed a relationship with Mr Noble who represented the NSW Government's interests. A good relationship with Mr Noble would help Secure Logic. Mr Devaraj courted Mr Noble's friendship. Mr Devaraj denies that now but the Court accepts that is what happened. More detailed findings about this period appear in the factual narrative in relation to Mr Noble’s Cross-Claim set out later in these reasons.

60. By February 2015, Mr Noble’s NSW government engagement was coming to an end. Mr Devaraj thought Mr Noble might become a useful part of Secure Logic so he began to entreat him to join the group. Draft employment agreements were exchanged, and meetings took place between February and June 2016. This ultimately led to Mr Noble and Mr Devaraj (on behalf of SL Singapore) signing an employment contract on 30 June 2015. Disputes about the employment contract are resolved in the later section of these reasons in the later section of these reasons dealing with Mr Noble’s Cross-Claim.

The Non-Disclosure Agreement – 30 June 2015

61. Mr Noble’s employment contract with SL Singapore commenced on 1 July 2015. The day before he signed a written Non-Disclosure Agreement (“NDA”). Its object was to protect the confidential information of SL Singapore and its related corporate entities upon the commencement of Mr Noble’s employment. The terms of the NDA became an important part of the Confidential Information contest between the parties.

62. The NDA, clause 1.1 defined “Confidential Information” in the following terms:

“1. Definition

1.1 In this Agreement:

1. ‘Confidential information’ means all information acquired by the Employee Secure Logic relating to the business affairs of Secure Logic, its related companies and clients (regardless of the form of storage or representation), including all:

1. business concepts and ideas, business planning, budgeting and marketing information;

2. all documents created by or for Secure Logic including methodologies, guidelines, procedures, scopes of work and plans;

3. information designated as confidential by Secure Logic, or otherwise imparted in circumstances of confidence to the Employee by Secure Logic; and

4. trade secrets and any other material or informational classifiable in law or equity as the confidential information of Secure Logic, its related companies and clients,

Except to the extent that such information is public knowledge or becomes public knowledge other than by breach of this Agreement.

2. ‘Notes’ means any notes, abstracts, assessments, evaluations, summaries or other material derived from, referring to, incorporating or containing any reproductions, adaptions or copies of, any Confidential information.”

63. The NDA, clause 2 creates the important operative obligations upon the employee to preserve and maintain the Confidential Information and not to misuse it:

“2 Disclosure

2.1          In consideration of the supply of Confidential Information by Secure Logic to the Employee, the Employee agrees to preserve and maintain in confidence the Confidential Information and not use the Confidential Information other than in connection with the Employee's employment by Secure Logic.

2.2          The Employee will use, and will ensure that any person to whom the Confidential Information is disclosed uses, all reasonable endeavours and precautions to protect and preserve the confidential nature of the Confidential Information.

2.3          The Employee acknowledges that the Confidential Information remains at all times the exclusive property of Secure Logic.”

64. The NDA captures documents containing material derived from Confidential Information. Clause 3 – Notes creates obligations on the employee to constrain the misuse of Confidential Information or notes by others as follows:

“3.            Notes

3.1          The Employee will not and will not allow any person to whom Confidential Information is disclosed, except for the purposes of the Employee's employment by Secure Logic, to:

3.            make any Notes;

4.            use any Confidential Information or Notes; or

5.            directly or indirectly, divulge, disclose or publish any Confidential Information or any Notes.”

65. The NDA, clause 4 obliges the employee upon request to account for a return of confidential information and notes as follows:

“4.1          The Employee will (and will procure that each person to whom Confidential Information or Notes are disclosed) immediately upon request:

6.            return all Confidential Information and Notes and all copies; and

7.            furnish to Secure Logic a certificate that it retains no Confidential Information, Notes or copies thereof.”

66. The NDA, clauses 7 and 8 provide for the post-employment operation of the agreement and for other miscellaneous matters:

“7.            Survival of agreement

7.1          The Employee's obligations pursuant to this Agreement will exist prior to, and will survive for a period of five (5) years following the termination of the Employee's employment by Secure Logic.

8.            Miscellaneous

8.1          This Agreement is for the benefit of Secure Logic and its successors and assigns.

8.2          If any provision of this Agreement is held invalid, unenforceable or illegal for any reason, this Agreement will remain otherwise in full force and effect apart from such provision which will be deemed deleted.

8.3          This Agreement is governed by and construed according to the law of the Singapore and the parties submit to the non-exclusive jurisdiction of the Courts Singapore”

67. Neither party adduced evidence that the laws of New South Wales or the laws of Singapore are different with respect to any aspect of the NDA. The case was conducted according to the precepts of the laws of New South Wales, on the presumption that in the absence of the proof of the laws of Singapore being different, they are presumed to be the same: Neilson v Overseas Projects Corp (Vic) Ltd (2005) 223 CLR 331; (2005) 221 ALR 213; (2005) 79 ALJR 1736; [2005] HCA 54 and Blank v Commissioner of Taxation (2016) 258 CLR 439; (2016) 154 ALD 12; (2016) 338 ALR 533; (2016) 91 ALJR 14; (2016) 104 ATR 41; [2016] HCA 42.

Confidentiality Terms of Mr Noble’s and Mr Pankhurst’s Employment Contracts

68. The parties contest the terms of Mr Noble’s employment contract with SL Singapore. Mr Noble contends he was employed upon the terms of a contract dated 1 July 2015 in typescript on the cover sheet, and signed by Mr Noble on 30 June 2015. Mr Noble’s account of the signing of the contract is accepted. It is recounted in more detail in the factual narrative in relation to the Cross-Claim. Only its terms relevant to Secure Logic’s breach of confidence claim are set out here.

69. Mr Noble must accept the confidentiality terms of the employment contract for which he contends. Secure Logic uses its terms (in particular, clause 1.14) in its confidential information claim against him. Clause 1.14 of the employment contract relevantly provides:

“You are not, during or after the termination of your employment, to use or to disclose to anyone (other than in the proper cause of your employment within the Company) any information of a confidential nature relating to the Company or to its business or trade secrets…

You must not, during or after your employment, accept as authorised or as your duties as an employee of the Company, reveal to any person, firm, company or organisation or otherwise make use of any of the trade secrets, secret or confidential operations, processes or dealings or any information (other than that within the public domain) concerning the organisation, business, finances, transactions or affairs of the Company (including any bespoke computer packages designed for use by the Company and any other computer information in any form whatsoever) that may come to your knowledge during your employment…

These restrictions shall cease to apply to confidential information which has come into the public domain, otherwise and as a result of any breach of this Agreement by you…

For the avoidance of doubt, this clause continues in full force and effect after the termination of your employment.”

70. These obligations reinforced and complemented the obligations that Mr Noble had agreed to under the NDA.

71. Mr Noble had introduced his friend Mr Pankhurst to Mr Devaraj a few years before 2015. Mr Devaraj had dealt with Mr Pankhurst and his company Plush Hosting in the intervening years.

72. In July 2015, Mr Pankhurst owned all the shares in Plush Hosting. At the same time as Mr Noble’s employment with SL Singapore was being discussed with Mr Devaraj, they discussed the acquisition of Plush Hosting.

70. Mr Pankhurst transferred his shares in Plush Hosting to SL Australia in July and August 2015. Secure Logic says that this occurred without Mr Pankhurst negotiating or signing any documents setting out the terms upon which that acquisition would occur. Mr Pankhurst became an employee of Plush Hosting (by then a subsidiary of SL Australia) pursuant to an employment contract he signed on 27 July 2015. Mr Pankhurst’s employment contract with Plush Hosting contained a confidentiality clause, the same as clause 1.14 as that in Mr Noble’s employment contract.

71. SL Australia acquired 60 per cent of the issued shares in Plush Hosting in late June, early July 2015. On 28 July 2015, Mr Pankhurst signed his employment contract with Plush Hosting and on 3 August 2015 Mr Noble’s family company, Sanbru Pty Ltd ("Sanbru"), acquired the remaining 40 per cent of the issued shares in Plush Hosting and Mr Pankhurst ceased to be a director.

Building the Kuala Lumpur CSOC – September 2015 to February 2016

75. Soon after Mr Noble executed his employment contract with SL Singapore, he travelled to Kuala Lumpur and commenced work to set up the CSOC, the security operations centre, there for SL Singapore. Mr Noble began to issue invoices to SL Singapore for the work he was performing for SL Singapore in Kuala Lumpur. Mr Devaraj was closely involved in directing Mr Noble to issue these invoices. But his directions to Mr Noble and their significance for Mr Noble's engagement by SL Singapore became contentious.

76. Mr Devaraj professed to be unhappy with Mr Noble’s work in Kuala Lumpur. If Mr Devaraj really was dissatisfied with Mr Noble’s work in Kuala Lumpur there is little objective evidence to support his dissatisfaction. If Mr Devaraj was disappointed with Mr Noble’s performance he did not take the steps that one might expect in such circumstances. For example, there is no evidence of Mr Devaraj setting time and quality standards for the construction of the CSOC in Singapore, setting the outcomes that were expected and then seeking to monitor Mr Noble’s conduct against these parameters. There is no reason to believe that Secure Logic does not have efficient and mature operating systems. None of them were overtly deployed to hold Mr Noble to account for his performance in Kuala Lumpur.

Mr Noble Returns to Australia – February 2015

77. Mr Noble ceased work in Kuala Lumpur and returned to work for Secure Logic in Australia in February 2016. Mr Devaraj says that he was recalled to Australia due to his substandard performance in setting up the CSOC in Kuala Lumpur. Mr Noble says that he wanted to come back to Australia due to uncertainty about the basis upon which he would be paid and the delays that had already occurred in payment to him. Findings concerning these competing explanations for Mr Noble's return to Australia are made in the narrative of facts in relation to the Cross-Claim below.

78. Apart from one brief journey back to Kuala Lumpur, Mr Noble was Sydney-based from mid-February 2016. Mr Singh had taken over developing the CSOC in Kuala Lumpur. Mr Noble had very little day-to-day work related to Secure Logic in Asia although he was an employee of SL Singapore. And in Australia he only had one or two projects to work on.

79. Mr Noble was unsure about what work he would be doing in Australia for Secure Logic and he began to feel that his future with the group was uncertain. Upon his return to Australia there does not appear to have been a single occasion where his future role with Secure Logic was formally redefined, or renegotiated. Rather the issue appeared just to drift.

80. Mr Noble handed over responsibility for the Kuala Lumpur operations to Mr Singh. He sent a handover email to Mr Singh on 10 February 2016, copied to Mr Devaraj. Under the heading “Malaysia Activities” he passed on to Mr Singh a written record of a handover meeting which had taken place between the two of them covering an immense range of ongoing activities in the Kuala Lumpur office of SL Singapore. It covered everything from contracts with Austrade, distribution of information to key stakeholders, local regulatory compliance issues, computer hardware installation and budgets, balance-sheet issues furnishings and fit out and signage. Mr Noble also covered forthcoming client presentations, business opportunities, risk issues and suggestions about focus for the weeks ahead and major events planned in the calendar for 2016. The email attempts to execute a smooth transition of operations in Kuala Lumpur to Mr Singh.

Mr Brooks Leaves Secure Logic – February 2016

81. On Monday, 22 February 2016, Mr Noble’s friend, Mr Fergus Brooks, left Secure Logic. That day Mr Brooks sent Mr Devaraj a detailed handover summary, entitled “Handover Report – Fergus Leaving”, which contained information about the principal Secure Logic clients that he managed and their revenue and pricing prospects for Secure Logic.

82. The following Friday, 26 February 2016, Mr Devaraj announced to all staff at Secure Logic that Mr Brooks had resigned. Mr Devaraj acknowledged that Mr Brooks “has played a significant role in establishing Secure Logic from a start-up to a company that has achieved enormous success” and that this was due to “all the talent and effort Fergus has demonstrated over years in multiple roles as Jack of all trade[s]”.

83. Mr Brooks gave evidence about operational issues at Secure Logic and his dealings with Mr Noble. But he had a very poor memory of events. He had had a bicycle accident about a month before the hearing and had hit his head and sought treatment for a head injury. He said that his memory had been “sketchy” since then. Wherever possible he preferred to avoid answering questions. He was not strongly committed to giving a full account of remembered facts in evidence. The Court had difficulty relying upon his version of events on any contentious issue, unless it was corroborated by other objective or credible evidence or it was in substance an admission.

84. Looking ahead, after Mr Brooks left Secure Logic, he took a position as the National Practice Leader – Cyber Risk at AON in May 2016. As he and Mr Noble were friends, they stayed in touch after he left Secure Logic. In his new role at AON, Mr Brooks considered AON either establishing or having access to a 24/7 call centre and he had discussions with personnel from FirstWave about that issue.

85. Mr Brooks was asked about his having discussions with Mr Noble about Mr Noble leaving Secure Logic and moving to FirstWave. Mr Brooks’ response to this line of questioning was “not that I remember”. But if such discussions had taken place Mr Brooks is likely to have remembered them. Their close friendship was such that it is likely that such discussions took place. Mr Noble had been a groomsmen at Mr Brooks’ wedding.

86. Mr Brooks corroborated in cross-examination one aspect of Secure Logic’s case which the Court accepts. In his general introduction to his handover report “Handover Report – Fergus Leaving”, Mr Brooks explains “I have added specific leads to the proposals I was responsible for with each account, they are all in SharePoint.” SharePoint was Secure Logic’s electronic document storage and retrieval system.

87. Mr Brooks agreed in cross-examination that his practice at Secure Logic was to put final successful proposals and contracts for which he was responsible into SharePoint and he backed up all other documents upon which he worked onto the Secure Logic G drive. Draft and incomplete proposals would be archived in a folder described as the “Fergus folder” in the G-drive. The origins and use of the ‘Fergus folder” is explained later in these reasons. Mr Brooks says such incomplete proposals were not necessarily placed in SharePoint. Final proposals and agreements would go into SharePoint and could also be found on the G drive.

88. Mr Brooks’ evidence confirmed that Mr Devaraj gave instructions for proposals when completed and successful to go into SharePoint. Whilst the theme of Mr Brooks’ affidavit was that Mr Devaraj had suggested or recommended that documents be placed on SharePoint, he accepted in cross-examination that this was a standing instruction. This evidence is corroborated by email instructions from Mr Devaraj in June 2015 instructing staff “please make sure all proposals and documents are on SharePoint”. Although this preceded Mr Noble’s employment with Secure Logic it is likely that Mr Devaraj continued to give such instructions.

89. For Mr Noble the departure of such a good friend as Mr Brooks from Secure Logic was one less tie to the organisation. That, together with Mr Pankhurst’s subsequent departure from Secure Logic, loosened whatever attachments Mr Noble had at Secure Logic. Remuneration disputes with Mr Devaraj finally drove Mr Noble away.

Payment Issues Come to the Fore – February to March 2016

90. By February/March 2016, Mr Noble claimed SL Singapore was behind in its invoice payments to him. He was becoming frustrated at the situation. Not only was Mr Noble concerned about non-payment of his invoices but he began to raise issues concerning the delivery of shares to him under his employment contract. This dispute led to growing distrust between Mr Noble and Mr Devaraj. This dispute is covered in more detail in the factual narrative in relation to the Cross-Claim.

Mr Pankhurst is Suspended – Late April 2016

91. On 22 April 2016, Mr Devaraj met with Mr Pankhurst. Mr Devaraj had come to the view that Mr Pankhurst had been disloyal to Secure Logic and confronted him with allegations of misconduct. Dissatisfied with Mr Pankhurst’s answers, Mr Devaraj placed him on suspension pending an investigation. Mr Devaraj also suspended Mr Alexi Katsamaclis, another employee of Secure Logic. The Court’s findings below deal with evidence in relation to Mr Katsamaclis.

92. On 28 April 2016 Mr Devaraj convened an officewide meeting at the Sydney office of Secure Logic. He called all staff together to advise them that Mr Pankhurst and Mr Katsamaclis had been suspended and that no one should communicate with them. The meeting was a logical consequence of their suspension.

93. Mr Devaraj especially wanted to contain the consequences of Mr Pankhurst’s apparent disloyalty. Mr Devaraj’s directions to the Secure Logic staff was clear: no one was to communicate with Mr Pankhurst or Mr Katsamaclis. The Court accepts Mr Devaraj’s evidence that he said to everyone in attendance that “Mr Pankhurst and Mr Katsamaclis were on suspension, that an investigation into their conduct was being carried out, that no one should communicate with them and any contact should be reported to their managers or [Mr Devaraj]”. Mr Devaraj knew how to make himself clear and did so on this occasion.

94. Mr Noble claims he did not get that message. Mr Noble at first denied that Mr Devaraj spoke at this meeting, saying that it was Mr Singh who conducted it. But he agrees he attended an office meeting that day in which Mr Pankhurst’s suspension was mentioned. But he says that he could recall no direction being issued not to contact Mr Pankhurst. Mr Noble claimed that after the meeting he still believed he could contact Mr Pankhurst about work matters.

95. It is difficult accept this. Mr Noble could not have failed to hear Mr Devaraj‘s instruction that he should not contact Mr Pankhurst or Mr Katsamaclis. But by then Mr Noble’s loyalty to Secure Logic had gone. He probably attended this meeting with little inclination to listen to Mr Devaraj.

96. And Mr Noble’s account of this meeting is implausible. Contrary to his account, Mr Singh was not at the meeting. And Mr Noble was ultimately uncertain in denying that Mr Devaraj was present at a meeting Mr Noble would have expected him to attend. Mr Noble repeated in cross-examination that he was “confused” about the meeting. It is likely that he knew he was at the meeting but was reluctant to admit that because of its consequences for the legitimacy of his subsequent dealings with Mr Pankhurst.

97. But even if contrary to these findings Mr Noble had not attended the meeting, he was aware of the reasons for Mr Pankhurst’s suspension. Mr Noble admitted that he was aware from about this time both that Mr Pankhurst had been suspended because of a serious breach of professional conduct and that his suspension was because he was associated with a new business. Even if, contrary to the Court’s findings, Mr Noble had not attended the meeting, he was aware of the reasons for Mr Pankhurst’s suspension. That alone should have been enough for him to realise that he should not be communicating with Mr Pankhurst about Secure Logic’s information.

Mr Noble Seeks Employment at FirstWave – Late April to Early May 2016

98. By early May 2016 Mr Noble believed that his future lay with leaving Secure Logic and taking a job with FirstWave, an international cloud computing and cyber security company with operations in Australia. In April 2016 Mr Noble had discussed with the Australian CEO of FirstWave, Mr Steve O’Brien, about the possibility of taking up a position with FirstWave as designated Chief Operating Officer – Strategic Execution. By early May Mr Noble and Mr O’Brien were exchanging communications suggesting a consensus that Mr Noble could be employed at FirstWave at a base salary of $230,000, a $50,000 bonus and participation in FirstWave’s share option plan.

99. Mr Noble’s correspondence with FirstWave reveals much about his attitude to Secure Logic at the time. In an email on 2 May Mr Noble said to Mr O’Brien that “I really am very keen to get things moving on this so that I can escape with my reputation intact from the organisation I am currently with”. On 4 May Mr Noble told Mr O’Brien by email that he was “very keen” to meet Mr Drew Kelton, the Chairman of FirstWave, to “discuss how we could work together to grow the business”. He also offered to “tee-up that meet with Fergus”, a meeting being proposed with Mr Brooks.

100. Mr Noble remained keen to go to FirstWave. But he wanted clarity as to the terms on which FirstWave proposed to engage him. In another email on 9 May, Mr Noble expressed to Mr O’Brien that he was “keen to move to FirstWave”. But in a reference to his stalled negotiations with Mr Devaraj he said to Mr O’Brien “on the face of it I’m good to go but having been caught out once I would appreciate a bit of detail around the rest of the offer”.

101. It was not incompatible with Mr Noble’s obligations to Secure Logic for him to have discussions with Mr O’Brien about taking employment at FirstWave. Secure Logic had failed to pay him causing him to want to move on. But his discussions with Mr O’Brien take on a different light when it is seen that at this time he assisted FirstWave in its dealings with AON to the probable disadvantage of Secure Logic.

102. But despite Mr Noble’s positive emails to Mr O’Brien, under cross-examination he diminished his credibility by persistently refusing to concede that he wanted to move to FirstWave in May 2016. He also had trouble conceding that his working relationship with Secure Logic had come to an end by that time, despite what he had said in his own affidavit in chief to the same effect. He tried to characterise his statements to Mr O’Brien as not genuine and part of a “negotiation”. But his email sentiments were likely to have been genuine. They expressed such keenness to go to FirstWave that they were unlikely to have been a negotiating tactic: in a negotiation, he should have been playing hard to get.

Secure Logic’s Case: Mr Noble’s May Misconduct

103. Secure Logic propounds a case that once Mr Noble decided to leave Secure Logic in early May 2016, he deliberately sought to promote his own advantage to Secure Logic’s disadvantage in four separate avenues of conduct in the first two weeks of May. Each of these avenues is analysed in more detail in the sections below. The four avenues of alleged misconduct are the following:

1. Mr Noble secretly assisted Mr Pankhurst and Mr Katsamaclis to act against Secure Logic after they had themselves been suspended for misconduct (“the Pankhurst/Katsamaclis conduct”);

2. Mr Noble secretly assisted Mr Pankhurst, whilst he was suspended by sending him Secure Logic’s recently created customer contacts list (“the JP Prospects conduct”);

3. Mr Noble copied from SL Australia’s server and onto his work laptop, and then onto his personal laptop, a substantial quantity of Secure Logic’s business records, known in these proceedings as the “Fergus Folder”, which he could then have at his disposal once he had left Secure Logic (“the Fergus Folder conduct”); and

4. In anticipation of securing employment with FirstWave, Mr Noble assisted FirstWave by introducing it to a business opportunity with AON that Mr Noble was only aware of through his employment by Secure Logic, and then helping FirstWave in its dealings with AON (“the FirstWave/AON conduct”).

104. All this alleged misconduct occurred in May 2016 until some of it was discovered and Mr Noble’s employment was terminated. The Court concludes that Secure Logic’s case of Mr Noble’s alleged May 2016 misconduct is made out and that his attempts to answer to it should not be accepted.

(1) The Pankhurst/Katsamaclis Conduct: Mr Noble’s Assistance – May 2016

105. In May 2016 Mr Noble secretly assisted Mr Pankhurst and Mr Katsamaclis to act against the interests of Secure Logic after they had been suspended from their duties at the group.

106. Events leading to the suspension of Mr Pankhurst and Mr Katsamaclis explain how Mr Noble’s subsequent assistance to them was likely to damage Secure Logic.

107. Secure Logic’s Cyber Risk Assessment Tool. In the second half of 2015 Mr Katsamaclis had responsibility at Secure Logic for developing a product called a “cyber risk assessment tool”. By about September/October 2015 the product was in an advanced state of preparation. Secure Logic’s objective with its cyber risk assessment tool was to position Secure Logic in the then-developing cyber security insurance market. By 2015 Secure Logic had become aware that both insurers and companies seeking insurance cover in Australia were becoming increasingly interested in analysing cyber risk levels: that is the probability that their IT systems may come under cyber-attack. Secure Logic’s cyber risk assessment tool was designed to take advantage of this rapidly growing marketplace.

108. As its name suggests the cyber risk assessment tool allowed an enterprise to test its cyber risk to better calibrate its insurance coverage relevant to that issue. Secure Logic proposed offering the cyber risk assessment tool online free of charge, from which it would then attract broader interest in its range of cyber security products.

109. In October and November 2015 Mr Katsamaclis and another business development manager at Secure Logic, Mr Ricky Gallagher attended symposiums and insurance industry conferences to promote the risk assessment tool. Mr Katsamaclis also gave presentations in conjunction with insurance industry representatives. Feedback from these events allowed Secure Logic to fine tune the operation of the assessment tool to the needs of the marketplace. Under the guidance of Mr Singh for technical assistance, Mr Katsamaclis and Mr Gallagher began promoting the cyber risk assessment tool to the insurance industry generally.

110. By November 2015 Mr Katsamaclis was meeting with senior insurance industry executives from Chubb Insurance Co. of Australia (“Chubb”) with a view to forming a partnership with them in the use of the assessment tool. After this meeting with Chubb, Mr Katsamaclis emailed Mr Devaraj and Mr Singh on 7 November reporting about potential partnership opportunities with Chubb in Secure Logic’s assessment tool. He gave a point by point explanation of what needed to be done to improve the assessment tool to take advantage of “opportunities for Secure Logic to work closely with Chubb worldwide as a trusted cyber partner”.

111. Mr Pankurst and Mr Katsamaclis Arouse Suspicion. As a business development manager Mr Katsamaclis was on the sales side of Secure Logic’s business, not the technical side. In November 2015 another employee of Secure Logic on the technical side, Mr Kevin Cobby, who had a role in developing the cyber risk assessment tool, alerted Mr Devaraj about what he regarded as an unusual pattern of conduct by Mr Katsamaclis. Mr Cobby reported that Mr Katsamaclis had been probing him for information, about the development of the assessment tool and who had access to its source code.

105. In January 2016, some Secure Logic clients began informing Mr Devaraj that during ordinary business hours, whilst apparently on Secure Logic’s business, Mr Katsamaclis and Mr Pankhurst were letting it be known they had developed Secure Logic’s cyber risk assessment tool and a “3Si Secure” modular suite of services. It was reported to Mr Devaraj that Mr Katsamaclis and Mr Pankhurst had said they were looking for funding to develop it further in a partnership with a Mr Nick Elsmore and a Mr Nigel Scott. Mr Elsmore is the former owner of an information security consulting company, SIFT. And Mr Scott was a friend of Mr Pankhurst in the information security industry.

106. Acting on this information, Mr Devaraj instructed Mr Anton Guzhevskiy, Secure Logic’s Managed Services Manager, to investigate the contents of the Outlook calendars of Mr Katsamaclis and Mr Pankhurst. Mr Guzhevskiy did so, and Mr Devaraj discovered that those two employees had together held regular meetings with clients, even though they were responsible for different accounts and were pursuing different leads with customers. This raised Mr Devaraj’s suspicions. During Mr Guzhevskiy’s check on Mr Katsamaclis’ Outlook calendar he saw on Mr Katsamaclis’ desk documents relating to a new cyber-security business. He brought these documents to Mr Devaraj’s attention.

107. An Investigation Commences. From this information Mr Devaraj authorised Mr Guzhevskiy to conduct a review of the emails being transmitted to and from Mr Katsamaclis’ work laptop. That review revealed the following communications that demonstrated Mr Pankhurst and Mr Katsamaclis were developing a business competing with Secure Logic’s.

108. The first was an email dated 3 April 2016 from Mr Scott to Mr Katsamaclis enclosing a draft presentation for a new unnamed enterprise providing “multi-faceted cyber risk assessment and management services”. The contents of this presentation coincided with the information given to Mr Devaraj that Mr Katsamaclis was reported as publicising the fact that he was developing a cyber risk assessment tool with Mr Scott. The email referred to previous discussions between them on the project. The draft presentation drew heavily upon many features of the cyber risk assessment tool that Secure Logic was developing. The presentation emphasised the cost and frequency of data breaches, the growth in cyber-related insurance, misconceptions resulting in businesses under insuring for cyber risk and the advantages of the cyber risk assessment tool in accurately evaluating cyber risk.

109. The presentation proposed what it called a Security Services Broker Model or “SSB Model”. The SSB Model involved a security services broker service to do the following: manage a client’s cyber protection software, monitor the client’s cyber protection systems, and acquire appropriately calibrated cyber risk insurance to cover losses from probable data breaches. The SSB Model overlapped with Secure Logic’s cyber risk assessment tool but built upon the same idea and developed it further as part of the SSB Model. Importantly, both the SSB Model and Secure Logic cyber risk assessment tool were crafted to address much the same marketplace: companies that needed cyber risk insurance, and their insurers.

110. Mr Guzhevskiy discovered another email dated 3 April 2016 from Mr Scott to a Mr Steven Dujin and Mr Katsamaclis attaching a background briefing in relation to a cyber security business. Though not a document that Mr Katsamaclis had created the background briefing gave a role in the new business to Mr Katsamaclis as a business development manager. But it is to be inferred from the email, which called for further discussion, that Mr Katsamaclis was a participant in its development both before and after 3 April 2016. The background briefing also mentions a Mr Dougal Hawkes, who had recently resigned from employment at Secure Logic. The email also points to the involvement of Mr Pankhurst in the new enterprise. Of course, Mr Scott, Mr Elsmore and Mr Hawkes were free to develop this new business, but as full-time employees of Secure Logic, Mr Pankhurst and Mr Katsamaclis were not.

111. Mr Guzhevskiy discovered more. Several emails to and from Mr Katsamaclis, Mr Scott and Mr Dujin between 3 and 5 April show that Mr Katsamaclis was an active organiser of meetings for this new enterprise and was having input into its structure and his future role within it.

112. Mr Pankhurst was involved too. He is not an addressee or sender in the primary circle of emails among Mr Katsamaclis, Mr Scott, and Mr Dujin. But on 4 April Mr Katsamaclis forwards the background briefing document from Mr Scott to Mr Pankhurst, both using their personal email addresses. All subsequent correspondence among these parties that goes to Mr Pankhurst and Mr Katsamaclis uses their private email addresses, rather than their Secure Logic email addresses. It is to be inferred they did not want Secure Logic to know about these communications.

113. Mr Pankhurst’s deeper involvement in this new enterprise competing with Secure Logic is to be inferred from a range of further evidence. On 4 April Mr Katsamaclis emailed Mr Pankhurst and others about holding an “official first meeting for all those involved” at Mr Katsamaclis’ home. The proposed agenda for the meeting includes “company structure for new project”, “roadmap and roles”, “propose kickoff date”, and the “overall business model”.

114. On 8 April further emails to similar effect but with some emphasis upon investment funding, circulate among these same parties, excluding Mr Pankhurst. But Mr Pankhurst continues to receive emails, from which it may be inferred that he has, and is perceived by the others in the circle to have, a continuing interest in the development of this new enterprise. On 18 April Mr Scott emails Mr Pankhurst and Mr Katsamaclis about the sales pitch he plans to make the following day to a potential investor into the new enterprise.

115. Mr Devaraj concluded from these discoveries that Mr Katsamaclis and Mr Pankhurst, were covertly constructing a new enterprise with Mr Scott, Mr Dujin and others using Secure Logic’s cyber risk assessment tool as a launching pad to compete against Secure Logic. The close conceptual similarities evident between the new enterprise’s SSB Model and Secure Logic’s cyber risk assessment tool is a basis to infer that a combination of Mr Hawkes, Mr Katsamaclis and Mr Pankhurst and used Secure Logic’s idea to seed the development of this new enterprise in which they had a financial stake.

116. Other evidence tendered during the proceedings confirms Mr Devaraj’s conclusions in April 2016. Mr Pankhurst and others had established a business to be operated through a company called Cyber Risk Assurance Pty Ltd, a wholly owned subsidiary of Cyber Risk Assurance Group Pty Ltd. Mr Pankhurst and his wife are shareholders in Cyber Risk Assurance Group Pty Ltd.

117. An information memorandum prepared for Cyber Risk Assurance Group Pty Ltd about 12 months later in November 2017 identified the business objectives of the new enterprise. Its purpose was to promote a cyber risk assessment tool and related cyber risk assessment services. The November 2017 information memorandum described Mr Pankhurst, Mr Dujin and Mr Hawkes as the co-founders of the business.

118. The “Background to the Company” in the information memorandum links the foundation of Cyber Risk Assurance Group Pty Ltd with the April 2016 period Mr Pankhurst was at Secure Logic:

“2.12 Background of the Company

In early 2016 the Founders initiated a market review and developed a strategy to determine how best to address the cyber risk market for small to medium sized businesses (SMBs) and evaluate profitable software solutions where an existing and unfulfilled market need existed.

In late 2016, we decided on the development of a minimum viable product (MVP) for a Cyber Risk Assessment and Advisory Tool (CRAAT) to address a distinct market need that is currently not being adequately satisfied for small to medium sized business to address their cyber risks.”

126. In April 2016, whilst an employee of Plush Hosting, a Secure Logic subsidiary, Mr Pankhurst co-ordinated with Mr Dujin and others to establish the business of Cyber Risk Assurance Group Pty Ltd, centred around a cyber risk assessment tool and other related products in direct competition to Secure Logic.

127. Secure Logic Suspends Mr Pankhurst and Mr Katsamaclis. All that had come to Mr Devaraj’s attention led him to suspend Mr Pankhurst on full pay until further notice on the basis that he “may have engaged in inappropriate conduct”, whilst an investigation took place into matters that “could constitute serious misconduct”. This was done by a Secure Logic HR department letter of 28 April 2016. Another letter the same day commenced that investigation. It alleged Mr Pankhurst had used Secure Logic’s confidential information to establish a competing business in concert with the persons associated with Cyber Risk Assurance Group Pty Ltd Pty Ltd and sought frank answers to this allegation. Secure Logic also suspended Mr Katsamaclis with similar communications.

128. Mr Pankhurst’s 29 April reply to Secure Logic’s allegations admitted nothing. Further correspondence ensued. Mr Pankhurst’s final contemporaneous (10 May) reply to Secure Logic’s allegations was nothing if not a forthright denial of misconduct.

“Dear Santosh

In reply to your letter of 9th May and to reiterate my replies to your First Letter and your Second Letter, I state once again that at no time during my employment with Secure Logic did I attend meetings or have any contact with any persons for the purpose of creating a business in competition to Secure Logic.

I hereby tender my immediate resignation as your allegations and harassment are unwelcome and unwarranted. I expect to receive full pay up to and including 10th May 2016, including my full superannuation benefits. I also expect to receive my salary and entitlements for July 2015, which as you will see from your records was not paid to me. As your records will show I started working for Secure Logic on July 1st, 2015.

Regards

John Pankhurst”

129. This denial was false. It is unclear if Mr Pankhurst “attend[ed] meetings” for the purposes of creating a business in competition with Secure Logic. But it is undoubted that he had “contact with…persons” for that purpose. Mr Pankhurst did not then admit the contact and seek to give it an innocent explanation.

130. Mr Pankhurst’s Explanation Unravels. But during the hearing Mr Pankhurst had to deal with the digital evidence against him. In his opening address he began to propound an innocent explanation for his contact with the other promoters of Cyber Risk Assurance Group Pty Ltd Pty Ltd. In his opening submissions, Mr Pankhurst told the Court that in April 2016 Mr Scott was conducting market research into the creation of a cyber risk insurance agency, that would be given a right by an insurer to underwrite product and that it “had nothing to do with cyber risk tools”; Mr Pankhurst explained that he was aware of this, and had discussed it with Mr Scott, in his capacity as a business development manager at Plush Hosting. Mr Pankhurst said that he was involved because he thought there was an opportunity for Secure Logic to provide services in that area.

131. Mr Pankhurst further explained that this research into a possible cyber risk insurance agency led to Mr Scott concluding by 18 April 2016 that it was “a waste of time basically”, and not worth exploring further. He suggested this conclusion was supported by the terms of the email from Mr Scott to Mr Pankhurst and Mr Kastamaclis of 18 April that is referred to earlier in these reasons.

132. Mr Pankhurst completed his explanation by referring to his late April meeting when Mr Devaraj suspended him based on the email traffic with Mr Scott and the others. Mr Pankhurst said that he had admitted to Mr Devaraj at this meeting that he had been in discussions with Mr Scott, but that he told Mr Devaraj it was only for the limited purpose of looking into a possible cyber risk insurance agency, a purpose that had been exhausted by 18 April.

133. But Mr Pankhurst’s explanation cannot be accepted. It is inconsistent with the contemporaneous documentary evidence. The April 2016 emails do not just propose market research into a potential cyber insurance agency. The new enterprise described in these emails was offering a cyber risk assessment like Secure Logic’s. The 18 April email from Mr Scott to Mr Pankhurst does not indicate the business was going to be “a waste of time”. Rather it indicates development of the business would continue and that the task of attracting investors was in present focus.

134. Mr Pankhurst’s explanation does not account for he and Mr Katsamaclis keeping information about the new enterprise away from Secure Logic at the time. The April 2016 emails’ use of personal email addresses, and not Secure Logic email addresses, is a puzzling procedure if this new enterprise was really an opportunity for Secure Logic.

135. Moreover, the Court accepts Mr Devaraj’s evidence that at the meeting where he suspended Mr Pankhurst that Mr Pankhurst did not offer this innocent explanation to him or anyone else at Secure Logic. The Court accepts that Mr Pankhurst then “denied any involvement whatsoever”. This is consistent with the way Mr Pankhurst communicated with Secure Logic in writing at the time. If Mr Pankhurst had an innocent explanation for the April 2016 emails, it is surprising that he did not advance it immediately when he was accused. The Court does not accept his belated innocent explanation. Mr Pankhurst’s willingness to advance what must have been a falsely constructed explanation for those April 2016 emails diminished his credibility.

136. Mr Noble Assists Mr Pankhurst and Mr Katsamaclis. As soon as Mr Pankhurst was suspended, he alerted Mr Noble. On 29 April Mr Noble emailed Mr Pankhurst with a draft response to the allegations against Mr Pankhurst, adding advice as to how Mr Katsamaclis should respond to Secure Logic’s allegations against him.

137. Mr Noble wanted to cover his involvement. He instructed Mr Pankhurst to convey any advice to Mr Katsamaclis as though it had just come from Mr Pankhurst, not from Mr Noble. The 29 April email suggested a response for Mr Katsamaclis to send to Secure Logic. The draft expressly denied Secure Logic’s allegations against Mr Katsamaclis and accused Secure Logic of defamation.

138. At a general level, it was not necessarily inappropriate for Mr Noble to assist other employees of Secure Logic in managing any HR issues that they had with the company. But here Mr Noble’s assistance was of a different character: he was helping Mr Pankhurst and Mr Katsamaclis to propound a misleading response to Secure Logic’s allegations which furthered Mr Pankhurst’s and Mr Katsamaclis’ covert conduct in competition with Secure Logic and contrary to the duties they owed to Secure Logic to act in its interests.

139. But if Mr Noble truly thought that Secure Logic had wrongly accused Mr Pankhurst and Mr Katsamaclis, he could have raised the matter directly with Mr Devaraj. He did not; indicating he was not convinced Mr Pankhurst and Mr Katsamaclis were blameless.

140. These communications do not alone prove that on 29 April Mr Noble was fully aware of the extent of Mr Pankhurst’s and Mr Katsamaclis’ conduct against Secure Logic. But Mr Devaraj had told Mr Noble at least that Mr Pankhurst had been suspended due to a serious breach of professional conduct. Mr Noble had not seen Secure Logic’s evidence grounding their suspension. He could not then make an informed judgment whether their suspensions were justified. Secure Logic criticises Mr Noble’s assistance to these two at that time. But if Mr Noble had been given and accepted an innocent explanation by Mr Pankhurst and Mr Katsamaclis it may not necessarily have been wrong of him to assist them in their dealings with Secure Logic.

141. But the real question is what Mr Noble knew about Mr Pankhurst and Mr Katsamaclis’ conduct at that time. That becomes evident from subsequent correspondence. At this stage Mr Noble’s use of private email addresses at least tends to indicate that his communications with Mr Pankhurst and Mr Katsamaclis would not have met Mr Devaraj’s approval.

142. Under cross-examination Mr Noble gave an unusual and implausible explanation for his communications with Mr Katsamaclis at this time. He said that he was concerned that Mr Devaraj was bullying staff at Secure Logic. He said Mr Katsamaclis was not trustworthy but that he was taking Mr Katsamaclis’ side to improve the way in which Secure Logic treated its staff, who were being bullied by Mr Devaraj and others.

143. That explanation is not accepted. First, it makes little sense. If Mr Noble did not trust Mr Katsamaclis, it is difficult to understand why, in the absence of Secure Logic’s evidence, he would give enough credence to Mr Katsamaclis’ story to propound a denial of Secure Logic’s claims. And an employee he did not trust is hardly the kind of person that Mr Noble would choose to use to reform Mr Devaraj’s alleged tendency to bully staff.

144. The better explanation is that by late April Mr Noble no longer felt any loyalty to Secure Logic and was prepared to assist both Mr Pankhurst and Mr Katsamaclis covertly against Secure Logic’s interests. Correspondence soon afterwards revealed Mr Noble was aware how deeply Mr Pankhurst and Mr Katsamaclis were working against Secure Logic’s interests.

(2) The JP Prospects Conduct: Mr Noble and the JP Prospects Document – 2 May

145. Mr Noble’s loyalty to Secure Logic had undoubtedly expired no later than 2 May 2016. That day Mr Noble sent an email to Mr Pankhurst attaching a client contact list of SL Australia, the so called “JP Prospects” document.

146. This overt act of disloyalty was a watershed moment. By then Mr Noble was tired of what he perceived as Secure Logic’s disloyalty to him, through its failure to pay him what he regarded as his proper entitlements. Mr Noble must have realised the end was probably coming for him soon. Mr Noble denied any such consciousness at that stage. But his denials are not credible. Mr Noble’s decision to send the JP Prospects document to Mr Pankhurst revealed that Mr Noble’s loyalty to his employer had entirely dissolved but Mr Noble did not care anymore.

147. Mr Noble tried to defend his conduct in sending out the JP Prospects document. He contested the issue at several levels. Digital evidence prevented him denying that he had sent the document out. So, in cross-examination he took the position that the document was mostly his or Mr Pankhurst’s and that Mr Devaraj had added very little to it. But that was no answer to Secure Logic’s contention that the JP Prospects document was a detailed list of potentially valuable client contacts constructed with hours of input from Mr Pankhurst, Mr Noble and Mr Devaraj whilst they were all working for Secure Logic. Sourced from the plaintiffs’ client information, produced by the plaintiffs’ employees working on the plaintiffs’ time, apparently for the plaintiffs’ purposes, it was clearly the plaintiffs’ confidential information. And Mr Noble knew that when he sent it to Mr Pankhurst.

148. Mr Noble emails Mr Pankhurst on 2 May 2016. The JP Prospects document attached to the email that Mr Noble sent Mr Pankhurst on 2 May 2016 contained a lengthy list of Secure Logic’s current and prospective clients together with their contact details. It was a valuable document for facilitating contact with these clients.

149. In early May 2016 Mr Pankhurst had an interest in Secure Logic’s customer contacts list. Having been suspended he knew that his employment by Secure Logic was about to come to an end. He was discussing with Mr Scott setting up a business similar to Secure Logic’s. Secure Logic’s customer contact list would accelerate its development. Mr Pankhurst could not advance a legitimate explanation for his interest in the list at this time. Mr Noble could not justify why he sent it to Mr Pankhurst at the time.

That if Mr Noble agreed to become an employee of a member of the Secure Logic Group Companies, and assisted with negotiations for the acquisition by that group of the fourth plaintiff, he would:

Cause a company incorporated in Singapore (the first cross-defendant) to acquire all of the shares in the Secure Logic Group companies;

cause to be issued to Mr Noble 12% of the issued capital in the first cross-defendant;

guarantee, on sale of the first cross-defendant’s total issued shareholding, a sale price of Mr Noble’s shares of a minimum of $10 million AUD;

(together the Representations)”

656. There were two aspects to the pleaded misrepresentations about the issuing of shares to Mr Noble. The first aspect is a benefit that Mr Noble would have 12% of the issued capital in SL Singapore (“the 12% representations”). The second is that on the sale of SL Singapore’s total issued shareholding, shares issued to Mr Noble would achieve a minimum sale price of $10 million (“the $10 million representations”).

657. Mr Noble further contends that the representations are as to future matters and that the cross-defendants have not discharged their onus of showing that they had reasonable grounds for making the misrepresentations. Secure Logic and Mr Devaraj each deny making the representations alleged.

658. Mr Noble also contends that with SL Singapore and Mr Devaraj as its agents, the third cross-defendant, SL Australia represented that Mr Devaraj would issue the shares contemplated by the employment contract, clause 1.6 and that SL Australia “would permit the substitution or trade of the shares [in SL Singapore] offered by [Mr Devaraj] for an equivalent number of shares in SL Australia”: Cross-Claim, [32] (“the share substitution” representations).

659. Mr Noble argues that he relied upon all these representations and thereby lost the opportunity to have them included as terms of his settled employment contract with SL Singapore.

660. The Representations. The Court accepts Mr Noble’s case that the 12% representations were made to him. But they were not made in the simple form of representation that is pleaded that he would receive 12% of SL Singapore. They must have been made in a form that was closer to the terms of the employment contract, clause 1.6.

661. As to the $10 million representations, the Court’s findings in the factual narrative show that important parts of the $10 million representations were made but they did not include any personal guarantee from Mr Devaraj.

662. And as to the share substitution representations, they are missing from the conversations that Mr Noble advances. Some conversation about this subject must have occurred but the best record of it is what is contained in the employment contract, clause 1.6.

663. Reliance. Mr Noble’s reliance case is problematic. He alleges that he relied upon Mr Devaraj’s misleading representations and as a result did not insist on including appropriate terms in his employment contract to match the representations made. Mr Noble says that his reliance upon the representations meant he lost “the opportunity” to properly document the content of the promise as part of a binding employment contract.

“On one view the written employment contract provides for the shareholding promised, but the cross-defendants have denied that it is a binding agreement. If they did not intend (and the denials now made suggest they did not intend without the insistence of Mr Noble) to provide the shareholding promised then the reliance of Mr Noble on the representations and his inducement to work and be employed by Secure Logic Singapore has caused him to lose the opportunity to insist on proper and adequate documentation of the promise in a binding written employment contract providing for a 6% to 12% percent shareholding in Secure Logic Australia.”

664. In this sense, Mr Noble’s case is something of a backup to the contract case. He submits that, if upon its proper construction the employment contract does not conform with the representations, he should have damages for the difference between what was represented to him and what was promised under the contract.

665. But that case has difficulties. Mr Noble was aware the employment contract he was signing did not reflect the representations, but he proceeded nevertheless to sign it. The Court infers that in doing so he chose not to insist on greater conformity between the employment contract and the representations made to him. The Court does not accept that he lost an opportunity “to insist on proper and adequate documentation of the promise in a binding written employment contract”.

666. Mr Noble’s case stresses his friendship with Mr Devaraj as a basis for his reliance on Mr Devaraj’s oral representations. Such a friendship existed. But that alone does not establish his reliance on either the 12% representations or the $10 million representations.

667. Mr Noble did not obtain independent legal advice before finalising his employment contract. But his own account shows that he carefully requested several specific amendments to the document before he signed it. The employment contract covers the subject matter of the 12% representations. The Court infers that he was satisfied that the draft employment contract reflected the 12% representations and he was content to sign in that form.

668. As to the $10 million representations, the employment contract nowhere mentions Mr Devaraj’s personal guarantee of a $10 million return to Mr Noble. This must have been obvious to Mr Noble upon his review of the draft. But he did not ask for the inclusion in the final form of the employment contract.

669. Mr Noble regarded Mr Devaraj’s representation of a $10 million guaranteed return to Mr Noble as an exercise in exuberant puffery. Mr Noble well appreciated that Mr Devaraj, who he had known since 2013-14, was capable of episodes of exaggerated enthusiasm foreshadowing his own future commercial successes. Mr Noble had seen this more than once in social situations. Mr Noble (and his wife Emer both) had a level-headed and cynical judgment about Mr Devaraj’s more boastful statements. Neither of them really believed much of what he said.

670. Mr Noble further submits that Mr Devaraj intended that Mr Noble rely upon the 12% representations and the $10 million representations in committing to employment with Secure Logic. He submits that Mr Noble’s reliance upon those representations is readily to be inferred from that intention and from Mr Devaraj’s communicated belief that the shares to be issued would have considerable market value. Moreover, his reliance is evidenced in his acceptance of a below-market salary, because he anticipated that part of his remuneration would be received in the form of shares.

671. But whatever Mr Devaraj’s intentions, as to the 12% representations Mr Noble saw what was in the contract and that satisfied him. And as to the $10 million representations, a strong counter inference of nil reliance arises from Mr Noble’s failure to insist on Mr Devaraj’s personal guarantee of that in the final form of signed contract.

672. As to the share substitution representations, the employment contract, clause 1.6 covers their subject matter. Clause 1.6 refers to “drag & tag along provisions” and to Mr Noble having a contractual entitlement to “trade in your allocated shares in the Company to gain equal number of shares in [SL Australia]”. The proper reliance inference concerning the share substitution representations is that, like the 12% representations, Mr Noble was prepared to rely upon what was in the contract rather than pre-contractual statements. This inference is reinforced by the disclaimer in the employment contract, at clause 1.25. Mr Noble said that he would have read clause 1.25 and that he had read the whole employment contract “very carefully”. He had refused to start work on leave for Malaysia without a contract, understanding that his “rights and entitlements, they are in the contract and nowhere else”.

673. Mr Noble understood the effect of clause 1.25, which bound him as the rest of the employment contract bound SL Singapore. Clause 1.25 is in the circumstances of this case evidence of Mr Noble’s non-reliance on Mr Devaraj’s impugned pre-contractual conduct: Campbell v Back-Office Investments Pty Ltd (2009) 238 CLR 304; (2009) 257 ALR 610; (2009) 83 ALJR 903; (2009) 73 ACSR 1; [2009] HCA 25.

674. Damages. Mr Noble advances his case for damages for misrepresentation as an alternative to his claim for damages in contract for the shareholding he claims he was promised under the employment contract. Mr Noble accepts in his final submissions that he could have done no better than an enforceable written contract which adequately reflected the representations made to him. He submits that his resulting loss of a chance is an entitlement to either 6% or 12% of SL Australia and that if he is not entitled to this outcome under the employment contract, clause 1.6 then he should have the shareholding equivalent as damages for misrepresentation.

675. Mr Noble advances evidence that 6% of the shares in SL Australia should be valued at the least according to the expert Mr Mottershead in the amount of $241,656, or much more according to advice given by Morgan Stanley (Exhibit 15) about the potential for an IPO of SL Australia based on higher projected profits than Mr Mottershead had used. But considering the Court’s findings that no damages are recoverable for Mr Noble’s loss of opportunity to acquire shares in SL Australia, it is not necessary for the Court to consider the contest about the value of SL Australia’s shares.

676. But Mr Noble’s formulation of his damages claim for misleading and deceptive conduct as an alternative to his contract claim faced other difficulties. Claims for $10 million for loss of an opportunity to acquire and realise shares in SL Australia are expectation losses, which are not ordinarily recoverable for misleading and deceptive conduct: Weatherill v Bartlett [2017] NSWCA 1754, at [22]. Central to all forms of recoverable loss for misleading conduct is the sustaining of “a prejudice or disadvantage as a result of altering his or her position under the inducement of the misleading conduct”: Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; (1998) 158 ALR 333; (1998) 73 ALJR 12; (1999) ASAL 55-014; (1998) ATPR 41-665; [1998] HCA 69 at [46]. A more orthodox formulation of Mr Noble’s claim would have been for losses directly occasioned by entry into the employment contract, or for lost opportunities to deploy his skills elsewhere that was foregone by that entry.

Mr Pankhurst’s Cross-Claim

677. Mr Pankhurst’s Cross-Claim brings actions for damages for breach of contract and damages for what he describes as “defamation and harassment”. The components of the claim fail for different reasons. The relevant parts of Mr Pankhurst’s employment contract claim Paragraph [13] of Mr Pankhurst’s Cross-Claim provides as follows:

“a.    Loss of $175,000 equalling 14 months to complete my full 24 months, in damages for a premature termination, as at $150,000 gross per annum.

b.   Loss of 600 shares in Plush Hosting as the $600 compensation was never paid.

c.   Damages for defamation and harassment.

d.   Loss of any Sale Incentive Plans (SIP) from sales activity 3% for professional services and 3.5% for managed services totalling $9,900

i.   IPFX, network sale Managed Services at $3,500 * 36 *.035=$4,100

ii.   NSW Treasury Corporation, infrastructure Sale Managed Services $80,000 *.035 = $2,800

iii.   NSW Rural Fire Service, Professional Services engagement $100,000 *.03= $3,000”

678. As to (a), Mr Pankhurst’s claim for 14 months’ pay fails because, as the Court’s findings show, Secure Logic’s dismissal of him was justified. His employment was terminated for misconduct under his employment contract, clause 1.12. His employment was terminable without notice because he engaged in serious misconduct that was “wilful, deliberate or neglectful behaviour that is inconsistent with the continuation” of his employment contract; also he breached a material provision of the agreement, namely his obligation under clause 1.14. He was properly dismissed, when he was dismissed. As there was no breach of contract in his dismissal, he is not entitled to damages for lost wages for the balance of his agreed term of employment.

679. As to (b), Mr Pankhurst claims that he was not paid the $600 compensation for his transferring the 600 shares in Plush Hosting to Secure Logic. The claim seems to be on the basis that is entitled to the $1.00 per value of each of the shares being transferred. The consideration of the shares was nominal. It is not clear on the agreement made with Mr Devaraj that he would receive $1.00 per share or $1.00 for all his shares. Proof of what was paid on this account is uncertain.

680. As to (c), Mr Pankhurst did not articulate the legal basis for his claim for “harassment”. Whether it could be framed as the intentional tort of assault, or some other intentional tort causing him harm, no such case is made out. The Court has not made any finding that Mr Devaraj intended Mr Pankhurst either personal or economic harm.

681. To the extent Mr Pankhurst says he was defamed he did not articulate, except in the most general terms, the alleged defamatory matter upon which he was relying, nor did he articulate the imputations said to arise from the defamatory matter. But he complained about letters sent by Secure Logic to its customers, containing statements about him. He attached samples of those letters to his Cross-Claim.

682. Those letters contain statements that were quite capable of bearing meanings that were defamatory of Mr Pankhurst. But as the findings in these reasons show, the statements made in the letters in question that convey defamatory meanings about Mr Pankhurst and referring to his misconduct are no wider or more serious than the findings that have been made in these reasons about his actual misconduct. Truth would be a complete defence to any action for defamation based upon this material. It is not necessary to consider this cause of action any further.

683. As to (d), Mr Pankhurst’s claim for bonuses under the SIP has not been properly articulated or answered. The Court reserves it for further consideration in light of these reasons and the findings on the similar subject in relation to Mr Noble.

Conclusion and Orders

684. The Court’s findings will allow the parties to propose detailed short minutes of order disposing of all the claims for relief and calculating the correct quantum of recovery on the Cross-Claim. The Court will direct the parties to agree on short minutes of order, or to advance competing short minutes of order.

685. The Court has endeavoured to decide all the matters in dispute between these parties relevant to the determination of final relief. But if one or other party believes that any issue remains undetermined that is relevant to the grant of final relief that can be raised at the time of any contest about the final form of the orders.

686. Secure Logic has been substantially but not entirely successful. This mixed result means that the parties may wish to put submissions as to costs. And a party may seek a special costs order. The Court’s orders will provide the parties with an opportunity to put submissions as to costs.

687. Mr Noble’s conduct may have been a contempt of Court. These reasons will be referred to the Prothonotary, for the Prothonotary to consider whether any action for contempt of this Court should be taken against Mr Noble.

688. Mr Devaraj authorised some surveillance of Mr Noble on behalf of Secure Logic. The Court has found that the surveillance that took place through the 18 May conduct was in contravention of the WS Act. But the Court’s findings raise the question of whether the 23 May conduct with respect to Peach Tree Bay’s email accounts may have been an offence under Crimes Act, s 308H, or Criminal Code Act, s 478.1. The statute of limitations with respect to any prosecution under the WS Act and Crimes Act, s 308(H) (see s 308H(4)) has expired for the relevant conduct.

689. The Court cannot condone contraventions of Australian law. Whether offences have indeed occurred and whether further action is required is for others to investigate. The Court refers these reasons to the Commonwealth Attorney General for her consideration as to whether any further action should be taken against any person under Criminal Code Act, s 478.1 in respect of the 23 May conduct.

690. Accordingly, the Court makes the following orders and directions:

1. The Court directs the parties by Friday, 25 June 2021 to bring in agreed short minutes of order to give effect to these reasons, and if agreement is not possible by that date, then the parties are to provide marked up short minutes of order showing their areas of disagreement by Friday, 2 July 2021;

2. The Court directs the parties to exchange any evidence on which they wish to rely in relation to costs by Friday, 18 June 2021;

3. The Court directs the parties to file and serve concise submissions in relation to the final form of orders and costs by Friday, 25 June 2021;

4. The Court directs the parties to file and serve concise submissions in reply in relation to costs by Friday, 9 July 2021;

5. List these proceedings at 9am on Friday, 16 July 2021 for any argument in relation to the final form of orders and costs; and

6. Grant liberty to apply.

**************

Amendments

15 June 2021 - [Catchwords] – Contracts, line 2 - “third” instead of “second”

[46] – line 4 – “its” instead of “as”

[81] – line 2 – “Mr Brooks” instead of “he”

[83] – line 6 – “a” instead of “as”; “an” removed

[115] – line 5 – “was” instead of “had”

[181] – line 4 – “like” instead of “light”, “contained” instead of “contain”

[189] – line 8 – “a” between “to” and “few”, “but they” instead of “that”

[198] line 6 – “this” instead of “as”

[199] – line 2 – “helped” between “Mr Brooks” and “to”

[215] – line 4 – “acting” between “thereby” and “beyond”, “authorised” instead of “authorise”

[219] – line 2 - “for” between “inference” and “Mr Noble”

[225] – lines 1, 4 – “Peach Tree” instead of “Peachtree”

[234] – quotation – line 5 – “take" instead of "fake”

[254] – line 4 – “Mr Noble was” between “when” and “in”

[258] – lines 5,6 – “the” between “for” and “provision”, “to” after “order”

[269] – line 2 – semicolon inserted after quote

[282] – lines 1,2 – “As will be seen below,” inserted before “Mr Noble”, “John” instead of “Peter”

[283] – line 3 – “course of” inserted between “the” and “delivery”

[285] – line 8 – “instead” after “offer”, “the” before “Ferrier”

[293] – line 8 – “a” instead of “the” “from Mr Noble (see below for details)” after “email”.

[294] – line 9 – “John” inserted before “Giorgiutti”, line 11 - “on 17 June,” inserted after “3.14am”, line 12 – “Giorgiutti” instead of “Dewar Judy”

[304] – line 5 – “(see below”) after “Giorgiutti”

[312] – line 3 – “which is detailed elsewhere in these reasons” removed.

[315] – line 3 – “is” inserted after “account”

[318] – line 2 – “enable” instead of “enabled”

[319] – line 5 – “have” instead of “had”, line 6 – “have been” instead of “are being”

[326] – line 3 – “it should be inferred” after “evidence”

[333] – line 5 – “to Mr Doughman” after “email”

[340] – line 6 – “&” instead of “and”

[376] – quote – line 1 – “in” after “transferred”

[378] – “device” instead of “trick”

[383] – line 11 – “full” after “the”

[410] – lines 3 to 4 – quotation around “work surveillance device”

[432] – duplicate “of confidential record” removed

[439] – line 2 – “a” instead of “the”

[442] – last line – commas after “injunction” and “it”

[444] – “relief” after “seeking”

[475] – line 10 – “and” instead of “in” after “information”

[476] – line 1 - “Mrs” inserted after “by”, line 5 – comma after “Devaraj”

[488] – line 4 – comma after “Devaraj”

[507] – line 3 “Mrs” before “Emer”

[544] – line 7 – “SL Singapore” instead of “Plush Holdings”

[593] – line 7 – “$” before “3,200”, “SGD” instead of “SDG”

[622] – line 1 – “Devaraj’s” instead of “Noble’s”

[628] – line 3 – “%” instead of “^”

[648] – line 3 – quotation ends after “agreement”

05 October 2021 - Coversheet corrected

[22] - citation to previous judgment corrected

Decision last updated: 05 October 2021