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Steadfast ICT Security Pty Ltd v Peak

Steadfast ICT Security Pty Ltd v Peak

Case [2021] ACTSC 199 30 August 2021

Breach of Contract

Breach of Fiduciary Duty

Unjust Enrichment

Account of Profits

Breach of Restraint of Trade

Statutory Construction

Contract Law

Equitable Remedies

Corporate Law & Governance

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SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Steadfast ICT Security Pty Ltd v Peak
Citation:	[2021] ACTSC 199
Hearing Dates:	3 – 14 May 2021
DecisionDate:	30 August 2021
Before:	Mossop J
Decision:	See [452]
Catchwords:	EQUITY – FIDUCIARY DUTIES – Fiduciary duty to employer – where employees and former director of the plaintiff copied confidential information and transferred commercial arrangements to the fourth defendant – where steps by the employees to transfer the business were taken prior to employment ending – where fourth defendant received benefit of the plaintiff’s business – breach of first, second and third defendants’ fiduciary duties established – breach of duty to avoid conflicts established against the fifth defendant EQUITY – REMEDIES – Account of profits– whether fourth defendant was a knowing participant in first defendant’s breach of fiduciary duty – whether fourth defendant liable to account to plaintiff – liability of the fourth defendant established – director of the fourth defendant had knowledge of and cooperated in scheme to take benefit of the plaintiff’s business – account of profits ordered – fourth defendant to disgorge profits over two year period CONTRACTS – CONTRACT OF EMPLOYMENT – Breach of contracts – breach of obligation to act with honesty, care and skill established against first, second and third defendants – breach of obligations in relation to confidential information and intellectual property established against first, second and third defendants – breach of restraint of trade clause established against first defendant – restraint clause not enforceable against second and third defendants CORPORATIONS – STATUTORY DUTIES – Duties of employees and directors – where employees and former director were alleged to have breached duties owed to the plaintiff under ss 180, 181, 182 and 183 of the Corporations Act 2001 (Cth) – breaches established against the first, second, third and fifth defendants
Legislation Cited:	Corporations Act 2001 (Cth), ss 9, 180, 181, 182, 183, 1317H Supreme Court Act 1933 (ACT), s 34
Cases Cited:	Allen v Tobias (1958) 98 CLR 367 Ancient Order of Foresters in Victoria Friendly Society Ltd v Life Plan Australia Friendly Society Ltd [2018] HCA 43; 265 CLR 1 British American Tobacco Australia Services Ltd v Cowell [2002] VSCA 197; 7 VR 524 Clark v State of New South Wales [2006] NSWCA 673; 66 NSWLR 640 Consul Development Pty Ltd v DPC Estates Pty Ltd (1935) 132 CLR 373 Emeco International Pty Ltd v O’Shea [No 2] [2012] WASC 348; 225 IR 423 Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181 Koops Martin v Dean Reeves [2006] NSWSC 449 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd [2017] FCAFC 74; 250 FCR 1 Warman International Ltd v Dwyer (1995) 182 CLR 544
Texts Cited:	JD Heydon, Heydon on Contract (Lawbook, 2019)
Parties:	Steadfast ICT Security Pty Ltd ( Plaintiff) Gareth Peak ( First Defendant) Lachlan Watt ( Second Defendant) Nenad Stefanovic ( Third Defendant) Dreamtime Supply…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Steadfast ICT Security Pty Ltd v Peak [2021] ACTSC 199
Case: [2021] ACTSC 199
Decision Date

CaseChat Overview and Summary

The plaintiff, Steadfast ICT Security Pty Ltd, claimed against its former employees and director, Gareth Peak, Lachlan Watt, Nenad Stefanovic and David Glavonjic, and Dreamtime Supply Company Pty Ltd, alleging that they had breached their fiduciary duties, contracts of employment and statutory obligations. Steadfast alleged that Peak and the others had copied confidential information and transferred commercial arrangements to Dreamtime with the intention of obtaining the benefit of Steadfast's business. The defendants denied the allegations. The court found that Peak, Watt, Stefanovic and Glavonjic had breached their fiduciary, contractual and statutory obligations to Steadfast by transferring the benefit of Steadfast's business to Dreamtime. Peak's conduct was described as thoroughly dishonest and in flagrant breach of his obligations. The court found that Glavonjic, a director of Dreamtime, was aware of Peak's breach of duty. Dreamtime, as a knowing participant in the breach of fiduciary duty, was ordered to account to Steadfast for profits in the sum of $1,187,249.64. The proceedings were adjourned to permit the parties to consider the reasons and then return for directions as to the process for resolution of the remaining issues.

Orders