Testel Australia Pty Ltd v Goulding - [2022] SADC 156

District Court of South Australia
(Civil)
TESTEL AUSTRALIA PTY LTD v GOULDING & ORS
[2022] SADC 156
Judgment of her Honour Judge Thomas
20 December 2022
EQUITY - EQUITABLE REMEDIES - ACCOUNTS AND INQUIRIES - GENERALLY
EQUITY - EQUITABLE REMEDIES - EQUITABLE COMPENSATION - BREACH OF FIDUCIARY OBLIGATIONS
EMPLOYMENT LAW - TERMINATION AND BREACH OF CONTRACT - REMEDIES
The Applicant, Testel Australia Pty Ltd (Testel), employed the First Respondent, Mr Goulding, as a ‘Client Account Manager’ responsible for WA and NZ clients. He was a junior employee without a written contract and with limited responsibilities, but he had access to information about his employer’s SA clients in the computer software he used daily in his work. He left to operate a new electrical and fire equipment testing business through the Second Respondent, TestCorp Pty Ltd, he established with a friend, Mr Stephen, in competition with Testel and its franchisees.
Whilst a Testel employee, Mr Goulding had taken preparatory steps to establish the new business, many of which he admitted, including adapting some Testel operating documents. These documents were generic pro formas, already in the public domain. Testel contended these documents were used to fashion professional sophisticated process documents that enabled TestCorp to operate as a competent and reliable business immediately upon launching.
Testel further alleged Mr Goulding had secretly made notes of its client information from its computer records and used this information to solicit its clients, both during and after his employment, by preparing quotes using Testel’s client information and a template he had created from a Testel document. Mr Goulding denied he had done as alleged. His pleaded defence was the notes were in his handwriting because he had rewritten illegible notes of information gathered by Mr Stephen from ‘cold-calling’ prospective clients.
Only five Testel clients became TestCorp clients in its first financial year, earning TestCorp nominal revenue and allegedly inflicting nominal loss on Testel and its franchisees. Testel’s focus was therefore its primary remedy of an account of profits, to which it claimed an entitlement to elect before the entry of judgment and final orders.
Testel identified the ‘trading’ and ‘capital’ gains derived by Mr Goulding in breach of his fiduciary duties for which he should account to it as the wages he was paid by TestCorp ($85,377) and the price he sold his shares in TestCorp to Mr Stephen ($250,000) in March 2015. It submitted a notional 30% discount should be made on account of Mr Goulding’s efforts because he had failed to demonstrate it would be inequitable to limit the accounting otherwise. Since Mr Goulding allegedly continued to benefit from his breaches of duty through the electrical and fire equipment testing company ServiceCorp he set up after TestCorp, Testel claimed he should also disgorge $36,363 as further benefits gained in breach of duty, being 50% of the revenue ServiceCorp earned from former Testel clients.
Held:
(1) Mr Goulding breached his implied duties of fidelity and good faith and fiduciary duties owed to Testel by actively engaging in competitive business activities through TestCorp whilst its employee.
(2)    In the circumstances of this case, whilst his breaches as admitted and found were numerous, overall they were ineffectual in inflicting any significant damage on Testel or causing any substantive benefit or gain to Mr Goulding through TestCorp or ServiceCorp. It was therefore not necessary to explore the circumstances of every ‘Post-it Note’ allegedly made in breach of duty to determine liability and the appropriate equitable remedies.
(3)    The true measure of the benefit obtained by Mr Goulding in breach of duty was a modest ‘head start’ in establishing TestCorp’s business and the misappropriation of two Testel clients whose custom was already at risk, or at best terminable without notice at either client’s will.
(4)    The evidence did not show that the benefit resulting from Mr Goulding’s breaches was the entire business of TestCorp that would not have otherwise existed but for Mr Goulding’s breaches.
(5)    It was appropriate in all the circumstances to assess equitable remedies on a ‘head start’ basis by reference to contractual arrangements with the two relevant clients and the revenue earned by TestCorp from them. Mr Goulding’s liability in equity for damages is assessed as $1,226.23 (excluding GST). In the alternative, Mr Goulding should account to Testel for his breaches of duty in the amount of $3,981.00 (excluding GST).
(6)    No sufficient or reasonable connection has been proved between Mr Goulding’s breaches of duty and the establishment of ServiceCorp for Mr Goulding or ServiceCorp to have any liability to either compensate Testel for the alleged loss of revenue earned from former Testel clients or to account for any profits made from providing services to those clients.
Uniform Civil Rules 2020 (SA) r 71.1, referred to.
Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society (2018) 265 CLR 1; Briginshaw v Briginshaw (1938) 60 CLR 336 ; Cubillo v Commonwealth of Australia (No 2) (2000) 103 FCR 1; Dart Industries Inc v Decor Corporation Ltd (1993) 179 CLR 101 ; Del Casale v Artedomus (Aust) Pty Ltd (2007) 165 IR 148; Frank Music Corporation v Metro-Goldwyn-Mayer Inc (1989) 886 F (2d) 1545; Maguire v Makaronis (1997) 188 CLR 449; Manildra Laboratories Pty Ltd v Campbell [2009] NSWSC 987; My Kinda Town Ltd v Soll [1982] FSR 14; Plus One International Pty Ltd v Ching (No 3) [2020] NSWSC 1598; United States Surgical Corporation v Hospital Products International Pty Ltd (1983) 2 NSWLR 157; Warman International Ltd v Dwyer (1995) 182 CLR 544; Watson v Foxman (1995) 49 NSWLR 315; Wessex Dairies Ltd v Smith [1935] 2 KB 80; Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598; Zibara & Ors v Ultra Management (Sports) Pty Ltd (2021) 283 FCR 18, (2021) 387 ALR 48, considered.

TESTEL AUSTRALIA PTY LTD v GOULDING & ORS
[2022] SADC 156
Civil
Contents

PART A: OVERVIEW
The Issues
Conclusion
PART B: THE FACTS
Testel’s Business
Mr Goulding’s Previous Employment
Mr Goulding’s Employment by Testel
Access to Client Information
Setting up TestCorp
Control and Ownership of TestCorp
Mr Goulding’s Alleged Plan
WA Trips
Early Business Development
Mr Goulding’s Resignation
Ongoing Business Development
TestCorp Earnings
Sale of TestCorp Shares
ServiceCorp Earnings
PART C: RELEVANT LEGAL PRINCIPLES
Employment Duties
The Springboard Doctrine
The Equitable Remedy of Account
PART D : THE TRIAL EVIDENCE
The Witnesses Generally
The Applicant’s Witnesses
The First Respondent’s Witnesses
The Documentary Evidence
PART E: MR GOULDING’S BREACHES
The ‘Post-it Notes’
Correlation with TES Records
Use of the ‘Post-it Notes’
Use of Testel Operating Documents by TestCorp
PART F: APPROPRIATE REMEDIES
The Consequences of Mr Goulding’s Breaches
The Appropriate Approach to Remedy
Equitable Damages - $1,226.23
Account of Profits - $3,981.00
UnitingCare Wesley
ServiceCorp
PART G: FURTHER ORDERS
Election
Costs
ANNEXURE A - ANALYSIS OF ALLEGED ERRORS

PART A: OVERVIEW
The Issues

This proceeding concerns the obligations, both contractual and fiduciary, of an employee to his employer in circumstances where there was no written contract of employment and, whilst employed, the employee took steps to set up a new business through a company with his then close friend and later business partner and competed with his employer (and its franchisees) in providing electrical testing services. In the course of his employment, the employee allegedly made secret notes of information about clients with whom he had no dealings and copied and adapted his employer’s template documents and used them and his employer’s information to solicit his employer’s clients.
When the facts of this case are fully appreciated, it is apparent that the real controversy concerns the identification and quantification of the benefits for which the defaulting fiduciary should account to his former employer in the precise circumstances of this case.
The Applicant is the employer, Testel Pty Ltd (Testel). The First Respondent is the employee (Mr Goulding). He was employed by Testel as one of a number of ‘Client Account Managers’ between 10 March and 7 August 2012 responsible for clients based in Western Australia and New Zealand.
From the outset, Mr Goulding admitted he took many of the alleged preparatory steps to set up the new business through the Second Respondent company TestCorp Pty Ltd (TestCorp) with Mr Luke Stephen (Mr Stephen). He also admitted adapting some of Testel’s operating documents, saying they were generic pro formas that did not contain any confidential information and were already in the public domain. Although Testel accepted these documents were not confidential,[1] it contended they were used to fashion professional and sophisticated process documents that enabled TestCorp to operate as a competent and reliable business.[2]
[1] T12.24-13.3.
[2] Written Submissions of the Applicant (FDN 117) [50].
The more serious allegation and primary factual contest at trial was whether during his employment, Mr Goulding had secretly taken Testel’s client information and used that information in TestCorp’s new business to solicit Testel’s South Australian clients at the same or lower prices than Testel charged. Testel alleged Mr Goulding did this by copying onto ‘Post-It Notes’[3] client names, contact names and details, prices and volumes from its computer records and he and Mr Stephen used that information to send quotes in Mr Stephen’s name to Testel’s and other prospective clients using a template that Mr Goulding created from a Testel short form quote. TestCorp continued to send quotes to Testel’s and other prospective clients using information from the ‘Post-it Notes’ and using the template based on Testel’s short form quote after Mr Goulding had left Testel’s employment until 2014.
[3] Exhibit A5.
Mr Goulding denied in his defence that he had created the ‘Post-it Notes’ as alleged and said the ‘Post-it Notes’ were in his handwriting because he had rewritten Mr Stephen’s illegible notes of information gathered by Mr Stephen contacting prospective clients by mail, door knocking and phone to ascertain who they used and what they were currently paying for their ‘test and tag’ services.[4] At trial, Mr Goulding’s case changed and, ultimately, he gave evidence that certain writing on more than half of the ‘Post-it Notes’ was not his, but maintained his previous explanation for those ‘Post-it Notes’ in his handwriting. As to the allegations made about the preparation of the quotes addressed to Testel clients, Mr Goulding did not challenge them except in three instances.[5] At trial, Mr Goulding gave evidence that Mr Stephen used Mr Goulding’s laptop and user account to create and modify TestCorp documents, including quotes, during the day when Mr Goulding was at work at Testel.
[4] Defence – Revision 2 (FDN 58) (Defence) [9].
[5] Defence [10.20], that is for the quotes sent to three clients, Mitsubishi, Girl Guides and UnitingCare Wesley.
Due to the alleged secrecy of Mr Goulding’s conduct on Testel’s case and his denials of any wrongdoing on his case as regards the ‘Post-it Notes’, there were no witnesses called to say whether they saw Mr Goulding writing client information on ‘Post-it Notes’ from Testel’s computer records. Instead, Testel relied on Mr Stephen’s evidence that the ‘Post-it Notes’ were given to him in 2012 by Mr Goulding as leads for Testel clients he had made from its computer records to use in establishing TestCorp’s business. Mr Stephen rejected Mr Goulding’s evidence that he had rewritten illegible notes made by Mr Stephen’s contacting prospective clients and denied he ever used Mr Goulding’s laptop and user account to create or modify TestCorp documents and send quotes to Testel clients.
Testel submitted I should reject Mr Goulding as a witness of truth and accept Mr Stephen’s evidence in preference to Mr Goulding’s. Mr Goulding submitted his evidence should be accepted and Mr Stephen’s rejected as untruthful.
Given the divergence between their evidence as to the source of information on the ‘Post-it Notes’ and how they were made, it was plain that one of them or perhaps both of them were not telling the whole truth and credit was an important issue. In the course of my questioning Mr Stephen about his part in the alleged wrongdoing against Testel, he frankly admitted he gave evidence because he wanted to see Mr Goulding punished, knowing he would not be pursued by Testel for his part in any wrongdoing. He told me that Testel had signed a deed of release in his and TestCorp’s favour for his co-operation. The document was produced to Mr Goulding for the first time at trial.[6] The deed explains why despite Mr Stephen’s direct involvement in setting up TestCorp and the benefits he gained from Mr Goulding’s alleged breaches of duty, he was not sued by Testel and, at trial, the claims against TestCorp were not pursued. TestCorp was deregistered on 13 May 2018[7] and did not actively participate in the proceedings.
[6] Exhibit R23.
[7] Exhibit A3.
Unsurprisingly, given the circumstances in which the proceedings came about, Testel did not seek injunctive relief to restrain the unauthorised use of its client information and instituted this proceeding on 6 June 2017, nearly five years after Mr Goulding had left Testel’s employment.
Apart from Mr Stephen’s evidence, the case against Mr Goulding on the ‘Post-it Notes’ issue is circumstantial. Testel submitted I should find Mr Goulding made the ‘Post-it Notes’ as alleged because ”each and every” ‘Post-it Note’ relates to a Testel client (either then current or former),[8] the sheer number of ‘Post-it Notes’ and volume of client information recorded on the ‘Post-it Notes’ is “all consistent” with Testel’s records in 2012,[9] Mr Goulding had the motive and opportunity to access all of this information during his employment at Testel[10] and his explanation is implausible given the recording of minimum fees,[11] the replication of errors,[12] and dated[13] and esoteric[14] information from Testel’s computer records[15] onto the ‘Post-it Notes’.
[8] Written Submissions of the Applicant [43.3].
[9] Ibid [43.4], [44.5].
[10] Ibid [43.11].
[11] Ibid [43.5].
[12] Ibid [43.5].
[13] Ibid [43.7].
[14] Ibid [43.9].
[15] Ibid [43.6].
To prove the correlation between the information on the ‘Post-it Notes’ and in Testel’s computer records in 2012, Testel relied on extensive documentary evidence in the form of screenshots extracted from Testel’s computer records. All of the clients on the ‘Post-it Notes’ were shown to be current or former clients of Testel and, generally, whilst it was accepted that Mr Goulding had unfettered access to client information, the limits of his access were disputed on the evidence. Accordingly, the correlation between information on the ‘Post-it Notes and in Testel’s computer records was a significant evidentiary issue that occupied a considerable part of the trial and the evidence.
Ultimately, only five[16] ‘Post-it Notes’ clients became clients of TestCorp. In its first year of operation, the 2013 financial year, the total revenue Testel alleged TestCorp earned from Mr Goulding’s breaches was $36,701 (excluding GST) involving four ‘Post-it Notes’ clients and, accordingly, Testel’s claim for compensation for loss of its percentage share of the revenue lost was nominal: $7,935 (excluding GST).[17] There was no evidence presented as to the revenue earned by TestCorp from these clients or any other ‘Post-it Note’ client in subsequent years of operation and no claim formulated by Testel for lost revenue or profit for the 2014 and subsequent financial years based on TestCorp’s earnings.
[16] Testel only identified revenue earned from four ‘Post-it Notes’ clients: Written Submissions of the Applicant [60]-[61].
[17] That is, its lost percentage share of testing services revenue as franchisor being 22%: Written Submissions of the Applicant [60]-[61].
By February 2015, Mr Goulding and Mr Stephen had fallen out with one another. There were discussions about Mr Goulding buying out Mr Stephen. On 19 March 2015, Mr Stephen purchased Mr Goulding’s shares in TestCorp for a purchase price of $243,496.
A new company, ServiceCorp Pty Ltd, the Third Respondent (ServiceCorp) was established by Mr Goulding in March 2015[18] as an electrical ‘test and tag’ business. It was not financially successful, barely breaking even by its third financial year of operation, with accumulated losses of $12,403.[19] Nonetheless, Testel claimed Mr Goulding continued to benefit from the client information he had taken on the ‘Post-it Notes’ and Testel’s operating documents by continuing to use them in ServiceCorp’s business.
[18] Statement of Claim (SOC) [3A.1] and Defence [3A.1].
[19] Exhibit R10, page 87.
For the 2015 to 2020 financial years (that is, three to eight years after Mr Goulding had left his employment), Testel claimed equitable compensation for a further nominal loss of revenue earned by ServiceCorp from ‘Post-it Notes’ clients instead of Testel: $15,999.87 (excluding GST). [20]
[20] That is 22% of $72,726.72 ex GST: Written Submission of the Applicant [70]-[72] and Annexure D.
As to remedies, Testel’s primary focus at trial was its claimed entitlement to an account of both trading and capital profits allegedly derived by Mr Goulding in breach of his fiduciary duties to which it proposes to make an election before the entry of final orders.[21] Testel quantified the benefit obtained by Mr Goulding as $230,000 comprising the full value of the wages he was paid by TestCorp as ‘gains from trading’ ($85,377) and the ‘capital gain’ he made from selling his shares in TestCorp to Mr Stephen ($250,000) less a notional 30% on account of his efforts, on the basis that Mr Goulding failed to demonstrate on the evidence that it would be inequitable to limit the account in any substantial way .[22]
[21] Written Submissions of the Applicant [59].
[22] Written Submission of the Applicant [69].
In addition, Testel claimed Mr Goulding should be ordered to disgorge $36,363 as the benefit gained by his company ServiceCorp for the 2015 to 2020 financial years. This benefit was quantified by deducting a notional allowance of 50% for the cost of doing the testing work from the revenue earned by ServiceCorp from six ‘Post-it Notes’ clients ($72,727 excluding GST).[23]
[23] Ibid [73]-[77].
Testel’s claimed entitlement to an account of total profits of $266,363[24] was put on the basis that the new business would not have come into existence at all but for Mr Goulding’s conduct in founding TestCorp in breach of his duties by improperly obtaining Testel’s client information and using it and its operating documents to solicit its clients. It was submitted that Mr Goulding used the advantages he had obtained to set up business systems that enabled TestCorp to enter the market as a sophisticated operator and obtain TestCorp’s seminal client, UnitingCare Wesley[25] and he continued to benefit from using the information on the ‘Post-it Notes’ and Testel’s operating documents in 2013 and 2014 through TestCorp and in 2015 to 2020 through ServiceCorp.
[24] $230,000 + $36,363.
[25] Written Submissions of the Applicant [69.1].
Conclusion
For the reasons set out below, I have found Mr Goulding breached his implied duties of fidelity and good faith and fiduciary obligations owed to his employer Testel by actively engaging in competitive business activities through TestCorp whilst still an employee, thereby breaching both the ‘conflict rule’ and the ‘profit rule’ as expressed in by Gageler J in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society.[26] These duties included a duty of confidence that extended to the compilation of client information from Testel’s computer records even though some of that information was not confidential and was capable of being found with hard work from other publicly available sources, and prevailing market prices were common industry knowledge.
[26] (2018) 265 CLR 1 (Ancient Order of Foresters v Lifeplan) at [67]-[69].

Mr Goulding breaches of duty were numerous, although overall ineffectual in inflicting any significant damage on Testel or in causing any substantive benefit or gain to Mr Goulding (and Mr Stephen) through TestCorp or ServiceCorp.
First, there were his admitted breaches of copying and adapting Testel operating documents to create templates to use in TestCorp’s business, notably Testel’s short form quote. The benefit obtained from creating templates to use in TestCorp’s business by copying and adapting operating documents already in the public domain was a nominal ‘head start’ that avoided the effort of independently developing generic and largely functional documents that were available for purchase at low cost. On the evidence, it was not shown that the form of any template adapted from a Testel document played a material part in winning any client’s custom or was fundamental to the establishment of a successful business, despite Testel’s submissions to the contrary. The suggestion that the improper use of Testel’s operating documents enabled TestCorp to enter the electrical testing services market as a sophisticated operator has no evidentiary foundation and materially overstates the effect of Mr Goulding’s breaches in this regard.
Secondly, whilst I could not be satisfied that Mr Goulding copied Testel client information onto all the ‘Post-it Notes’ for the purpose of using that information to solicit Testel clients and grow TestCorp's client base, I am satisfied that he did copy some information onto some ‘Post-it Notes’ from Testel’s computer records. To determine liability and the appropriate equitable remedies, it was not necessary to explore the circumstances of every one of the 239 ‘Post-it Notes’ clients because it was the alleged successful use of the ‘Post-it Notes’ that ultimately mattered. On the evidence, although quotes were prepared for 95 of the 239 ‘Post-it Notes’ clients, only five ‘Post-it Notes’ clients became TestCorp clients. Only the circumstances of three clients were the subject of detailed evidence concerning the circumstances that led to TestCorp winning their custom by reason of Mr Goulding’s alleged breaches of duty.
For these five clients, I am not satisfied on the evidence that Mr Goulding made the corresponding ‘Post-it Notes’ as alleged. However, I am satisfied Mr Goulding breached his employment duties by directly and indirectly soliciting the custom of two of these clients whilst a Testel employee. Mr Goulding directly solicited Bianco Reinforcing by sending his cousin a TestCorp quote and order form and indirectly solicited Mitsubishi by his knowledge and participation in Mr Stephen’s conduct in preparing and sending a TestCorp quote to Mr Nietz. In doing so, Mr Goulding placed himself in a position where his personal interest in securing these two clients’ testing work for TestCorp conflicted with his duties to act in Testel’s best interests and he plainly preferred his own interests over Testel’s.
For the third and more significant of these clients, I am not satisfied on the evidence as to the circumstances surrounding the preparation of a TestCorp quote for UnitingCare Wesley that Mr Goulding engaged in any conduct in breach of his employment duties.
First, due to discrepancies between the information on the ‘Post-it Note’ and in Testel’s computer records during Mr Goulding’s employment, I am not satisfied the corresponding ‘Post-it Note’ was in fact made by Mr Goulding for Mr Stephen to use in preparing the quote that he did. Secondly, whilst I was satisfied that there is some connection between the ‘Post-it Note’ and Mr Stephen’s preparation of the quote (because the error in the client’s name on the ‘Post-it Note’ is replicated in the name of the file for the quote), I am not satisfied that the quote was ever sent and not overtaken by receipt of the client’s request for tender after Mr Goulding had left Testel’s employment. Thirdly, the evidence does not show that Mr Goulding participated in or knew about the preparation of this quote by Mr Stephen whilst he was still a Testel employee.
As regards TestCorp’s successful tender bid, I am not satisfied on the evidence that the unauthorised use of any Testel information played any material part in TestCorp winning a competitive tender to provide electrical testing services to UnitingCare Wesley, let alone was a key circumstance in its success as alleged by Testel. Nor do I accept that winning this tender and client was such a major step in getting TestCorp’s business off the ground that it would not otherwise have come into existence at all but for Mr Goulding’s alleged breaches of duty.
It is important to emphasise that I did not reach these conclusions as a result of considering each breach in isolation. I identified the impact of these breaches in the context of, and by reference to, the contribution they made to the overall effect of all Mr Goulding’s breaches as admitted and found.
As stated earlier, it was uncontentious that the overall impact on Testel of competition from TestCorp was minimal and, as Testel acknowledged from the outset, the loss allegedly suffered by reasons of Mr Goulding’s breaches of duty on its formulation based on both TestCorp and ServiceCorp revenue was nominal: $23,935.57 (excluding GST).[27]
[27] Written Submissions of the Applicant [62] and [72].
As for Testel’s claimed entitlement to an account of profits, after a precise examination of all the evidence I have concluded that the true measure of the benefit obtained by Mr Goulding in breach of his fiduciary duties was a modest ‘head start’ in establishing TestCorp’s business and the misappropriation of two Testel clients whose custom was already at risk or, at best, terminable without notice at either client’s will.
I am satisfied that when Mr Goulding engaged in this errant conduct, he already planned to leave Testel’s employment and was sufficiently committed to joining TestCorp, despite having other career opportunities that were ultimately not relevant because he did not pursue them. He unquestionably breached his employment duties in the full knowledge of the competitive advantages he was attempting to secure for his and Mr Stephen’s future benefit through TestCorp.
However, I am not satisfied on the evidence that the sole purpose of establishing TestCorp was for deriving the benefits arising from Mr Goulding’s breaches of duty and inflicting losses on Testel and its franchisees. As the evidence showed, TestCorp was the vehicle by which Mr Goulding and Mr Stephen sought to enter the electrical and fire equipment testing market generally and secure the custom of all competitors’ clients by a strategy of low pricing for apparently better-quality service. TestCorp marketed its electrical and fire equipment testing services in many ways that were not connected either sufficiently or at all to Mr Goulding’s breaches of his employment duties.
In other words, Mr Goulding’s and Mr Stephen’s efforts to grow TestCorp’s business were not solely directed at Testel and, to the extent they were and involved Mr Goulding breaching his employment duties, they were largely unsuccessful.
I am therefore not satisfied on the evidence that the overall effect of Mr Goulding’s breaches of fiduciary duty was as egregious or extensive as Testel claimed. Where I am satisfied the evidence showed Mr Goulding had acted in conflict of interest and preferred his own to Testel’s and adapted its operating documents for use in TestCorp’s business, the evidence clearly shows that the advantage gained from his errant conduct overall was limited.
Accordingly, I do not accept that the benefit resulting from Mr Goulding’s breaches was the entire business of TestCorp that would otherwise not have existed but for Mr Goulding’s breaches of duty. Nor do I accept that the appropriate remedy in all the circumstances of this case is that Mr Goulding should account to Testel for all the gains he made from the establishment of TestCorp’s business, whether in the nature of trading or capital gains as alleged by Testel.
I have assessed Mr Goulding’s liability in equity for damages as $1,226.23 (excluding GST), calculated by reference to Testel’s 22% share of the revenue for electrical testing services earned by TestCorp in its first financial year of operation for the two ‘Post-it Notes’ clients found to have converted to TestCorp as a result of Mr Goulding’s breaches. The ‘head start’ advantage should be confined to revenue earned from electrical equipment testing (and not fire equipment) for the first financial year of operation because the unfair advantage of the springboard Mr Goulding acquired by reason of his breaches of duty was not permanent and, in the case of electrical testing services, would have lasted only one testing cycle, which was generally annual.
I have assessed Testel’s alternative and primary claim for an account of profits on a ‘head start’ basis in a similar way and quantified the benefit gained by Mr Goulding’s breaches as the revenue earned by TestCorp in its first financial year of operation from the relevant clients for both electrical and fire equipment testing, and, applying a broad axe, have made a discount of 50% on account of the costs, skill and labour involved in carrying out the testing. Mr Goulding should account to Testel for his breaches of duty in the amount of $3,981.00 (excluding GST).
I am not satisfied on the evidence that any sufficient or reasonable connection has been proved in fact between Mr Goulding’s breaches of duty and the establishment in March 2015 of Mr Goulding’s subsequent business, ServiceCorp, for Mr Goulding or ServiceCorp to have any liability to either compensate Testel for the alleged loss of revenue earned by ServiceCorp from former Testel clients or to account for any profits made from providing services to those clients. The ‘Post-it-Notes’ were left behind in Mr Stephen’s possession and the ServiceCorp quote was more likely adapted from TestCorp’s master quote, not Testel’s.
PART B: THE FACTS
Many facts in this case were uncontentious due to formal admissions made by Mr Goulding in his defence[28] and agreement by his Response to Contentions[29] or because they were not challenged at trial. As stated, the central factual dispute concerned the provenance of the ‘Post-it Notes’.
[28] FDN 58.
[29] FDN 120 filed in response to the Applicant’s Contentions of Fact comprising Annexure A to the Written Submissions of the Applicant.
Testel’s Business
Testel is an established provider of electrical testing services in South Australia and interstate. Testel conducts its business by contracting with clients to provide an electrical testing service for appliances (often for occupational health and safety purposes) periodically, generally annually but sometimes more or less frequently depending on the clients’ needs. Some clients formally contract for the supply of electrical testing services for varying fixed terms, others do not and are free to change supplier as they choose from testing cycle to testing cycle.
The testing is carried out by Testel’s franchisees who ‘test and tag’ the appliances to show they have been tested and record the test results on-site in proprietary software (TES) developed by Testel to manage its dealings with franchisees and clients (that is, scheduling tests, invoicing and generating test reports and certificates of compliance) and a database containing client information (that is, the names and contact details for clients, pricing and volumes and other relevant information).
Testel prepares tenders and quotations for prospective clients to be serviced by its franchisees. When it wins electrical testing work, Testel contracts with the client and issues invoices and certificates of compliance from the test results recorded by its franchisees in carrying out the ‘test and tag’ work. Testel collects the fees invoiced to clients, retains 22% as its revenue and pays the balance to the franchisee who carried out the ‘test and tag’ work. There was no evidence as to Testel’s total revenue or its operating costs and whether its franchise fees covered its operating costs, as may be relevant to its claimed losses.
In the circumstances where the overall impact was minimal, I accept that any loss of client revenue suffered by Testel by reason of Mr Goulding’s breaches of duty would have been at the margin and Testel’s lost profit would be whatever revenue was shown to be lost.
By 2012, Testel had been operating for 12 years and had expanded to some 30 to 40 franchisees operating across Australia, with about a third in South Australia, its smallest territory.[30] In 2012, Testel had approximately 5-10% of the South Australian market for electrical ‘test and tag’. Its client base was diverse, ranging from small single site businesses to larger organisations with large and multiple sites.
[30] T222.12-223.29.
The electrical testing business is competitive, with low barriers to entry. Negligible capital is required to get started. An operator only needs a few handheld testing devices that in 2012 cost in the order of $1,500.[31] Low cost off-the-shelf electrical testing software was available in 2012.[32] The service is simple for the operator to carry out, involving the application of a testing device to an electrical appliance and if it passes, applying a tag to the appliance showing the date that it was successfully tested. The operator need not be a qualified electrician. The requisite short certificate course takes a day or two to complete and the reporting straightforward.
[31] Exhibit A1/2/42/340: price of one RCD and one PAC tester and tags.
[32] For $260: Exhibit A1/2/42/340.
In 2012, Testel offered electrical testing services for plug-in items of equipment (single or multi-phase), safety switches known as residual-current devices (RCDs), emergency and exit lights and thermal imaging of switchboards. Testel did not offer fire equipment testing in 2012.[33]
[33] This is apparent from all the Testel documents in volume 1 of Exhibit A1 and the Testel invoices dated between 2011 and 2013 in Exhibit A8 and volume 4 of Exhibit A1.
Testel’s pricing was not complex or unique to its operations. A unit rate was charged for each item of equipment tested. A minimum charge applied in some cases where fewer than a specified number of items were tested that might be increased if the client’s site was in a country area. That minimum was calculated by multiplying the minimum number of tests by the unit rate. There were also labour rates for equipment repairs, but that service and its price are not relevant here.
Testel’s pricing varied as between the clients. Some were charged the same price for all equipment tests, some different prices depending on whether the test was for plug-in equipment and RCDs or the two types of RCDs (plug-in or portable and fixed wire or mains safety switches) or for fixed wire RCDs (an integrity and push button test). Where a different price was charged for the push button test for fixed wire RCDs it was generally lower because the test was quick and simple to perform and many clients do it themselves. Tests for emergency and exit lights were generally charged at a higher unit rate and the less common test, thermal imaging of a switchboard, at a materially higher price. Generally, the more tests to be done, the lower the unit rate.
The unit rate[34] for electrical equipment tests shown on Testel’s invoices in about 2012 generally ranged between $2.00 and $3.50, with the occasional lower or higher unit rate of $1.80 and $4.25, without specifying what sort of electrical equipment had been tested.[35]
[34] This and the following prices are exclusive of GST and will be referred to consistently as excluding GST unless otherwise stated.
[35] Exhibit A1/4.
Nine years later, in December 2021, the standard rate per item shown in Testel’s computer system for plug-in equipment (single phase and multi-phase) ranged from $1.80 to $3.85,[36] for push button tests of fixed wire RCDs from $2.00 to $4.00,[37] for emergency and exit lights from $3.20 to $5.00[38] and the minimum invoice amount from $25 to $250, with an option to manually input any rate. Testel’s computer records showed that prices had varied in all ways within substantially the same range and there was no discernible trend, despite the evidence of Testel’s managing director, Mr Oszczypok, that prices had reduced over the last 20 years but nothing else had changed.[39]
[36] ExhibitA1/4/147/735.
[37] Ibid.
[38] Exhibit A1/4/147/740.
[39] T83.26-84.5; T73.2-.17.
Prevailing market rates were common knowledge within the industry and the prices agreed between a particular supplier and client were not secret and only known to those parties. For example, there was evidence of a tender website that published the contract price for routine ‘test and tag’ for a State government contract,[40] a client who gave evidence that he told Mr Goulding the price TestCorp had to beat to be competitive,[41] and another client who said he had a good indication of prevailing market prices due to the high volume of items he had requiring testing.[42] There were also a number of marketing flyers advertising competitor and TestCorp’s pricing in TestCorp’s Dropbox.[43] As a matter of commercial common sense, it is plausible some clients may have told TestCorp the price they were paying Testel to get a better price and that others may not have absent a personal connection.
[40] Exhibit R10/15/95 and R10/16/97.
[41] See [221] below.
[42] See [227] below.
[43] “allstates introductory offer”: Exhibit A6: Documents\Documents\Sales and Marketing\Competition; TestCorp “Electrician’s Offer”: Exhibit A6: Documents\Documents\Sales and Marketing\Electricians; TestCorp “sales flyer”: Documents\Documents\Sales and Marketing.
Mr Goulding’s Previous Employment
Mr Goulding had no industry experience and knew nothing of ‘test and tag’ when he started work at Testel. He believed he may have done some research in applying for and interviewing for employment with Testel. His experience was in the telecommunications industry in sales, primarily as a telemarketer.
In the 12 months prior to his employment at Testel, Mr Goulding worked for Telstra at a Business Centre as a telemarketer to existing clients. Before that job, he worked for a few weeks in sales at Telefirm, on the road visiting clients. For the previous two years, he had worked in a Telstra Call Centre.
Mr Goulding’s Employment by Testel
After a successful interview, Mr Goulding was employed as a ‘Client Account Manager’ with responsibility for Testel’s Western Australian and New Zealand clients from 10 March 2012. His shared responsibility for South Australian-based clients was disputed, as were the precise nature and scope of Mr Goulding’s duties and responsibilities as a Testel employee. The conflict between Mr Oszczypok’s evidence about the wider responsibilities of a ‘Client Account Manager’ and with Mr Goulding’s evidence that the majority of his work involved liaising with clients and franchisees to schedule testing was ultimately not relevant because the key issue was about his access to client information.[44] It was uncontroversial he had access to client information recorded in TES, the software used by all employees in Testel’s business, regardless of whether he was the responsible ‘Client Account Manager’ for a client or not.[45]
[44] Mr Oszczypok: T88.7-.30; Mr Goulding: T477.13-479.27;; T481.29-.32.
[45] SOC [5.1], Defence [5.1].
Mr Goulding’s role at Testel did not require any specific qualifications and he did not receive any substantive training to do his job.[46]
[46] T418.26-.29; T419.4-.9;T477.3-.9; T480.11-.15.
Mr Goulding was a junior employee without a written employment contract. He was not subject to any express terms as to confidentiality or any restraints of trade.
On the evidence it was apparent that despite his title, his client relationship role was limited and primarily involved scheduling testing services and liaising with franchisees by telephone for Western Australian and New Zealand clients given it was the franchisees who delivered the testing services. Mr Goulding was not involved in administration of the client contracts or invoicing or payment.[47] Mr Goulding’s role at Testel was not strategic, he was not integral to developing or marketing Testel’s business overall or in any substantive way nor trusted by Mr Oszczypok with sensitive information.[48]
[47] T246.1-.19; T481.8-.19.
[48] T248.34-251.15.

I accept Mr Goulding’s evidence that he did not have any dealings with any South Australian clients.[49] His allegedly shared responsibility for this territory was not seriously challenged at trial. The only evidence of any responsibility in this territory was his designation in a report as the ‘Client Account Manager’ for Hungry Jacks.[50] That Mr Goulding was not ever this client’s ‘Client Account Manager’ was supported by the evidence of the former Maintenance Manager, Mr Beadle, who said he had never met or dealt with Mr Goulding and dealt with others at Testel.
[49] T433.6-.7; T450.38-451.6.
[50] Exhibit A1/4/987.
Mr Goulding’s usual hours of work were 8am to 5pm Monday to Friday.[51] He never stayed late,[52] did not work weekends and spent lunch times out of the office.[53] Mr Goulding did not have a key to access Testel’s office on Unley Road out of business hours.[54] He worked from Testel’s office except for his attendance at a client’s site to observe a franchisee performing the ‘test and tag’ service early on and the two sales trips he made to Perth, Western Australia in about June and July 2012.
[51] T490.17-.21.
[52] T493.5-.6.
[53] T493.15-.19.
[54] T242.17-.18.
Access to Client Information
Testel alleged in its statement of claim that Mr Goulding was employed as a ‘Client Account Manager’ in which role he had access to Testel’s computer records of the names and contact persons of Testel’s clients, the prices at which Testel provided testing services to clients, the sites at which clients required testing services and the number and nature of the devices which required testing.[55] In his defence, Mr Goulding said in answer he was employed as a ‘Client Account Manager’ for Western Australia and, in relation to paragraph 5.1, that he did have access to the information described.[56]
[55] SOC [5.1].
[56] Defence [5.1].
The Uniform Civil Rules 2020 provide that at trial a party is bound by an assertion or admission made in a pleading filed by that party.[57] So Mr Goulding is bound by the concession made in his defence that he had access to the information described in paragraph 5.1 of the statement of claim.
[57] UCR 71.1.
Testel did not specify in its pleading which computer records it was referring to or how such access was provided, and no point was taken by Mr Goulding before trial about the generality of the allegations made to which he had pleaded.
Mr Goulding used a desktop computer provided by Testel at work with two screens.[58] He left his laptop at home while he was at work. He used it when he went to Perth on the two occasions mentioned. He shared a U-shaped desk in an open plan area facing a corner of a square room, working on two screens with two ‘Client Account Managers’ several metres to his left and right and one directly behind him.[59] Mr Goulding’s back faced the entrance to their work area through which his colleagues came and went.[60] The General Manager sat behind their work area and from his desk could see Mr Goulding working.[61]
[58] T491.14-.35.
[59] T474.12-476.24.
[60] T239.8-.32
[61] T238.22-.34.
Mr Goulding gave evidence about spending the majority of his time calling clients using a computer-generated list he viewed on one of his computer screens.[62] Testel submitted he could look up any client details in TES whenever he liked and had ample opportunity to make the ‘Post-it Notes’ as alleged.[63] This, of course, begs the question as to what details were available to be seen by him in TES in 2012.
[62] T477.13-.18.
[63] Written Submissions of the Applicant [43.11].
Contrary to Testel’s submission, the evidence about Mr Goulding’s work area suggests he would have had limited opportunity to access TES information all day and look up South Australian client details whenever he liked and not be seen by any one of his work colleagues or Mr Oszczypok, who occasionally came up behind Mr Goulding and poked him.[64] His computer screens would have been visible to anyone entering the area and it would have been odd for him to be accessing the various TES screens necessary to extract pricing information for South Australian clients and writing those details on the ‘Post-it Notes’ when he was supposed to be liaising with Western Australian clients.
[64] T482.29-.30.
That said, I am satisfied that it was possible for Mr Goulding to secretly copy client information from TES, albeit practically difficult and likely to have taken a long time to do without getting caught.
In cross-examination, Mr Goulding accepted that as a ‘Client Account Manager’ he was able to look up the details for any client in TES whenever he liked.[65] It was uncontentious that this meant he could access the names and contact details for any client, not just the Western Australian and New Zealand clients for whom he was responsible. In answer to my questions about which TES screens he worked in, Mr Goulding gave evidence that he mainly worked in the ‘Company Details’ window and, from time to time, accessed information in the ‘Details 2’, ‘Decision Maker’, ‘Notes’ and ‘Billing’ windows. Whilst he said he did not ever go into the ‘Contract Details’ window and could not recall ever going into the windows for the other tabs,[66] there was no suggestion there was anything stopping him from doing so.
[65] T488.25-.30.
[66] T608.21-610.16.
As for Mr Goulding’s access to pricing information, Mr Oszczypok gave evidence in the most general of terms that Mr Goulding had access to every piece of information in TES that he did, including charge rates and historical invoices.[67] To prove what pricing information was in TES in 2012, Testel relied on screenshots taken from TES showing standardised pricing codes used to denote unit rates for the various equipment tests, minimum charges and site fees in the ‘Billing’ window for individual clients.[68] When Mr Goulding was shown in cross-examination the ‘classification code’ window, he said he did not think he had ever seen it before,[69] he did not know what the minimum invoice rate code ‘A’ meant[70] and when referred to code ‘G’ for equipment testing, he said he understood he did not have access to the pricing codes in TES.[71] Without these codes, the prices were not apparent to anyone viewing the ‘Billing’ window unless there was a manual rate specified.
[67] T90.16-.28.
[68] Exhibit A1/4/147/735-740.
[69] T563.13-.24.
[70] T564.24-565.22.
[71] T588.30-589.7.
In the course of giving evidence on this topic, Mr Goulding made the point that it would have been faster to write down the pricing code for each test for each client rather than look up the code each time and write down the price.[72] Mr Goulding’s point was validly made and demonstrated the difficulty of his copying prices onto ‘Post-it Notes’ as alleged without being seen since he would have had to continually switch screens between the client ‘Billing’ and ‘classification code’ windows for each price copied. Nonetheless, despite the difficulty I accept it was possible for Mr Goulding to secretly copy the prices Testel charged its clients.
[72] T563.25-.30.
As to Testel invoices, Mr Oszczypok gave evidence that Mr Goulding had access to historical invoices through TES[73] that were automatically generated by TES and posted by Testel’s administration staff to clients.[74] Mr Goulding’s evidence that he did not have anything to do with the payments system[75] was consistent with Mr Oszczypok’s evidence and Mr Goulding’s denial that he had seen any of the invoices he was shown in cross-examination.[76]
[73] T90.16-.28.
[74] T81.7-82.13.
[75] T481.5-.19.
[76] T586.24-.37.
There was similarly no evidence as to how Mr Goulding would have navigated to a historical client invoice in TES. Whilst I accept Mr Goulding’s evidence that he was not involved in generating client invoices as part of his duties, he must have had access to client invoices somehow to do his job, since he mentioned that one of his responsibilities was dealing with client queries, including invoicing.[77] That said, since any invoices Mr Goulding would have seen were for Western Australian or New Zealand clients because he had no dealings with South Australian clients, he would not have known pricing from invoices for these clients.
[77] T481.12-.16.
In conclusion, I am satisfied Mr Goulding had access to the names and contact details, billing details, notes and pricing for any client, including South Australian clients.
Setting up TestCorp
Whilst a Testel employee, and within a month of starting, Mr Goulding and Mr Stephen decided to establish an electrical testing business together. They were close friends, having met while working for Telstra and regularly socialised.
TestCorp was incorporated on 14 May 2012 with Mr Stephen as the sole director and shareholder.[78] Its registered office was Mr Goulding’s residential address (Atrill Avenue) where the front room was set up as an office from which it began operating alongside Mr Goulding’s flatmate, Mr Isaac Lomman, who ran a hypnosis entertainment business from there.
[78] Exhibit A3.
Mr Goulding admitted that he was involved in taking the following preparatory steps in setting up TestCorp to operate an electrical testing business in competition with Testel and its franchisees, whilst a Testel employee.[79]
[79] Defence [10].
On 2 April 2012, he registered and paid $38[80] for the domain name “testcorp.com.au”.
[80] Exhibit A1/2/42/340.
On 13 April 2012, he and Mr Stephen completed a short TAFE course to qualify for testing electrical appliances.
On 16 April 2012, with his agreement, Mr Stephen purchased a PAC tester and mixed tags for testing electrical appliances at a cost of $312.15.[81]
[81] Exhibit A1/2/42/340.
On 25 April 2012, he purchased an RCD tester and tags to be used in the electrical testing of appliances at a cost of $1043.00.[82]
[82] Ibid.
On 26 April 2012, he purchased FASTtag electrical testing management software at a cost of $259.60.[83]
[83] Ibid.
On 30 April 2012, he paid $50 for a 1300 telephone number.[84]
[84] Ibid.
On 3 May 2012, he or Mr Stephen registered the business name “TestCorp.”
On 3 May 2012, he arranged for the identity of the owner of the domain “testcorp” to be hidden on the internet domain information service “WHOIS”.
On 7 May 2012, he paid $50 for a post office box for TestCorp.[85]
[85] Ibid.
On 18 May 2012, he applied for a credit card for TestCorp and signed it as a director of the company, although he had not been appointed as one.
On about 23 May 2012, he and Mr Stephen met to formally discuss progress in establishing TestCorp’s new business.
On 23 May 2012, he purchased business cards for himself and Mr Stephen at a cost of $50.79.[86]
[86] Ibid.
On about 2 and 30 and June and 16 July 2012, he and Mr Stephen met to again to formally discuss progress in establishing TestCorp’s new business.
Control and Ownership of TestCorp
Mr Goulding was appointed as a director of TestCorp on 19 December 2012 and became an equal shareholder with Mr Stephen on 13 August 2013.[87]
[87] Exhibit A3.
Testel submitted the Court should find that Mr Goulding was a de facto director[88] and owner of TestCorp from its inception and deliberately hid his association with TestCorp.[89] Whilst Mr Goulding was closely involved in setting up TestCorp, the financial outlays were not significant and the steps he took to hide his association were consistent with him not wishing to call attention to his disloyal conduct as an employee. The 2 June TestCorp meeting agenda refers to a partnership agreement.[90] However, there is no reliable evidence about precisely what was proposed by this or what (if anything) was agreed about Mr Goulding’s participation in the business save that, clearly, he did resign from Testel and began employment at TestCorp, taking an equal wage as Mr Stephen and making no payment for the shares issued to him in August 2013. An unsigned draft ASIC Form 484[91] saved in TestCorp’s Dropbox is inconclusive as to the true state of affairs. The evidence is insufficient to conclude he was an owner or a de facto director from inception. In any event, on the facts I have found, whether he was or not does not have any bearing on the question of Mr Goulding’s liability or, importantly, the overall impact of his breaches of duty.
[88] SOC [12].
[89] Written Submissions of the Applicant [46].
[90] Exhibit A1/2/40/334.
[91] Change to company details.
Mr Goulding’s Alleged Plan
Testel submitted that the whole TestCorp enterprise was conceived by Mr Goulding and Mr Stephen as part and parcel of Mr Goulding’s plan to obtain client contact and pricing information improperly through his employment.[92] I am not satisfied there is any substance to this submission on the evidence. It is more likely that the idea of copying Testel client information onto ‘Post-it Notes’ was opportunistically conceived as a way of accelerating sales leads when Mr Stephen’s ‘cold-calling’ was not generating much luck and better fits with the timing of the later preparation of quotes for Testel clients, as discussed in detail below.[93]
[92] Written Submissions of the Applicant [51.1].
[93] See [447] and following.
As stated, Mr Goulding knew nothing of the ‘test and tag’ industry when he joined Testel. Despite the lack of induction and training he was given, he would have learned the basics quickly and conveyed how things worked to Mr Stephen, given they regularly socialised. I accept Mr Goulding’s evidence that he became dissatisfied with his remuneration, Testel’s office culture which he described as a ‘revolving door’ and his future prospects, and began looking for other opportunities, including a more remunerative position in sales with Xerox that did not eventuate. However, I find his dissatisfaction occurred in a matter of weeks and not months as Mr Goulding recollected[94] and likely coincided with his site visit to see what a franchisee did and his realisation that ‘test and tag’ was “money for jam”.[95]
[94] T421.6-.13.
[95] T421.19.
At the same time, Mr Stephen was looking for other opportunities and together they conceived the plan of setting up their own electrical and fire equipment testing business. That this was the case is demonstrated by the date of registration of the domain name for TestCorp’s website on 2 April 2012 and their both undertaking the ‘test and tag’ course on 13 April 2012, within less than a month of Mr Goulding starting his employment with Testel.
Substantial progress had been made in setting up TestCorp before there is any indication in the evidence of any alleged ‘plan’ to misappropriate Testel client information. The references appear in the agenda for the first of four formal meetings held between Mr Goulding and Mr Stephen in May, June and July 2012 at which they discussed their progress in establishing TestCorp. The first meeting was held on about 23 May 2012, according to the file properties for the agenda and an annotated version of it.[96] The references to an update by Mr Goulding on the “Current status of leads from Testel”, the giving of “examples of Testel insurance claims” and “calling Testel list” as a marketing idea all indicate a general plan to use knowledge and skills gained by Mr Goulding as an employee of Testel as a springboard for developing expertise to facilitate setting up TestCorp’s business, but no detail as to what the plan involved or its form or whether the first reference was a reference to the ‘Post-it Notes’.
[96] Exhibit A1/2/36/321 and 37/325.
Mr Stephen gave evidence that the reference to “leads from Testel” meant the ‘Post-it Notes’ he had been ‘handballed’ by Mr Goulding and the “Testel list’ referred to a client relationship management database created from the ‘Post-it Notes’. For the reasons set out below, I have rejected Mr Stephen’s evidence on this topic as unreliable.[97] Nor did I find Mr Goulding’s explanation that “leads from Testel” was a reference to their experience that Testel clients were easier to convert satisfactory either.[98] However, the agenda items and the TestCorp quotes show that they had not yet started soliciting prospective clients at this time, and there is no reliable evidence showing whether Mr Goulding had taken any client information from Testel on ‘Post-it Notes’ by this time.
[97] See [165]-[170].
[98] T774.22-775.4.
Bearing in mind Mr Goulding’s entitlement to use his knowledge and skill acquired from his employment after his employment at Testel in the absence of express covenants otherwise restraining his conduct, I am not satisfied that this evidence is sufficient to conclude there was a plan to appropriate client information from the outset of their plan to establish TestCorp.
Further, Mr Goulding had enrolled in a financial planning course before he started work at Testel[99] and it would have taken some time before he sufficiently lost interest and found himself struggling with the course to abandon his investment in it and not finish it.[100]
99 Exhibit A22.
[100] T424.13-.18.
I accept that Mr Goulding initially had other ‘irons in the fire’, as he described his various employment plans, and whilst there may have been a degree of uncertainty about following through on any plan with Mr Stephen, the evidence suggests Mr Goulding had committed to TestCorp by their second formal meeting on about 2 June 2012. The references in the agenda[101] for this meeting to a “partnership agreement” indicate an intention to follow through in setting up TestCorp, as well as Mr Stephen having begun ‘cold-calling’ prospective clients.
[101] Exhibit A1/2/40/334.
In 2012, Mr Goulding’s close cousin, Mr Aaron Goulding, was responsible for managing electrical and fire equipment testing for Bianco Reinforcing, a Testel client. Theevidence shows that Mr Aaron Goulding not only actively facilitated TestCorp winning Bianco Reinforcing’s work by telling him the prices TestCorp had to beat,[102] but he gave Mr Goulding substantive assistance in setting up TestCorp as an apparently competent provider of electrical and fire equipment testing services. Emails passing between the cousins in June and July 2012[103] show Mr Aaron Goulding giving Mr Goulding technical assistance with the requirements of the relevant Australian Standards and providing him with a copy of AS 3760. He recommended substantive changes to improve TestCorp’s website, master quote and order form, suggesting the latter be changed from an Excel document to a form filler and simplifying it, which Mr Goulding did. Mr Aaron Goulding was also instrumental in suggesting TestCorp develop expertise in fire equipment testing, which TestCorp did and began offering it as a core testing service from late July 2012, thereby materially differentiating TestCorp’s service offering from Testel’s.
[102] See [221] and following below.
[103] Exhibit A6\TestCorp 2\Clients\s.a.clients\Bianco Reinforcing\Documents\Bianco quote.
WA Trips
In his role as ‘Client Account Manager’ for Testel’s Western Australian clients, Mr Goulding went on sales trips to Perth twice, in June and July 2012. In closing submissions, Testel withdrew its earlier contentions that Mr Goulding had misused his position as its employee to solicit electrical testing work from the Western Australian Department of Finance for TestCorp.[104] Mr Goulding’s conduct on these trips became a peripheral issue, at worst reflecting on his poor work ethic as stated below.[105]
[104] Written Submissions of the Applicant, Applicant’s Contentions of Fact, Closing Address Annexure A [47]-[54].
[105] See [206] below.
Mr Goulding also gave evidence that he used his own laptop on these trips and copied Testel’s quote, client order form and service agreement for the purposes of doing Testel’s work.[106] Whilst this may well have been the case, other evidence showed that Mr Goulding had on 7 May 2012 already created a master quote template for TestCorp by copying and adapting the Testel short form quote, which he admitted in his defence.
[106] T422.30-423.7.
Early Business Development

Mr Goulding began building a website for TestCorp in early April 2012. He first registered a domain name for TestCorp[107] and then created a Microsoft Word document to draft substantive content for the website, including summaries of the electrical testing services to be offered by TestCorp.[108] Mr Goulding continued to modify TestCorp’s website, by making changes as a result of suggestions made by his cousin Mr Aaron Goulding in emails sent on 7 June and 11 July 2012 [109] and commissioning the development of website buttons, a banner and ‘backlinks’ through Fiverr (an on-line freelance market place).[110]
[107] See [75] above.
[108] Exhibit A1/2/24/293 and A1/2/25/295. The properties show that the document was edited for a total time of 266 minutes and last modified on 26 June 2012.
[109] Exhibit A6\TestCorp 2\Clients\s.a.clients\Bianco Reinforcing\Documents\Bianco quote.
[110] Exhibit 1/2/42/340.
Throughout June 2012, Mr Goulding commissioned the production of further marketing materials for TestCorp through Fiverr: video, flyers and a Google Adwords Voucher.[111]
[111] Ibid.
There is no suggestion that Mr Goulding used any of Testel’s resources or did this business development work in Testel’s time.
Meanwhile, whilst Mr Goulding was at Testel during business hours, Mr Stephen worked part-time as a scaffolder and began working from Atrill Avenue making sales calls to prospective clients to try and get their work. Mr Goulding said Mr Stephen was ‘cold-calling’ using the phone book to contact schools, nursing homes, industrial businesses and other types that he had told him to try.[112] These calls were scripted to find out who their competitor was, their pricing and contact details.[113] Mr Goulding’s evidence to this effect was supported by scripts for telemarketing calls saved in TestCorp’s Dropbox.[114]
[112] T429.12-.38.
[113] T425.24-.28.
[114] Exhibit A6\Documents\Documents\Sales and Marketing\Cold Calling.
Mr Goulding’s and Mr Stephen’s marketing efforts were broadly focussed from early on. This was illustrated by the agendas for the various TestCorp meetings which listed various marketing initiatives they identified and their progress. The agenda for the first meeting in mid-May 2012 included the item “Marketing Ideas?” which identified Yellow Pages, Google optimization and Adwords, True Local, “Isaac’s marketing list” in addition to “Calling the Testel list” (as referred to above)[115] and a Facebook page.[116]
[115] See [81] above.
[116] Exhibit A1/2/36/322.
Mr Goulding referred in evidence to paying his flatmate, Mr Isaac Lomman, for a marketing list and Mr Stephen using it to call prospective clients.[117] Its purchase for $100 on 7 May 2012 was recorded in the Expense report listing their expenditure in setting up TestCorp.[118] This was consistent with Mr Stephen’s evidence that TestCorp had marketing lists including government organisations and schools.[119] Whilst ‘Isaac’s marketing list’ was not shown to any witness it is saved among the various marketing lists in TestCorp’s Dropbox (Exhibit A6) in a folder “Marking [sic] List” containing 11 spreadsheets and a logo signature for “Isaac Lomman, Hypnotist.” There is one enormous spreadsheet named “SA contact list.csv” containing over 250,000 rows of data for more than 125,000 prospective client contacts. Other spreadsheets in the folder are smaller sub-lists of different categories of clients such as nursing homes, private hospitals, public hospitals and schools. For each client entity, categorised by business type, there are contact details including addresses, phone and fax numbers, emails and website addresses.
[117] T520.11-.16; T544.2-.10.
[118] Exhibit A1/2/340.
[119] T301.1-.4.
Importantly, Yellow Pages and “Isaac’s marketing list” contain contact details for a significant number of the ‘Post-it Notes’ clients. The issue as to how Mr Stephen and Mr Goulding identified prospective clients to target from such enormous lists of contacts, of which 239 ultimately happened to also be Testel clients, was not explored in the evidence.
Mr Stephen’s early ‘cold-calling’ efforts were not very successful, resulting in only a handful of quotes being sent in June and July 2012, none of which were accepted. A prospective client inquiry came via TestCorp’s website from Mitsubishi, resulting in a quote being sent on 4 July 2012 and TestCorp being engaged to do the work in December 2012. Mr Stephen’s ‘cold-calling’ efforts won TestCorp’s first client, Hills Medical Centre, in mid-July 2012.[120] Mr Goulding and Mr Stephen did the electrical testing work on a weekend and TestCorp’s first invoice was rendered on 21 July 2012 whilst he was still a Testel employee.
[120] T425.9-11. See [377] below.
Mr Goulding’s Resignation
On 1 August 2012, Mr Goulding gave Testel one week’s written notice of his resignation. He told Testel’s managing director, Mr Oszczypok, that he had other interests and it was time to move on[121] but said in his resignation letter he has been offered a position in financial planning although that was not true.[122] Mr Goulding’s explanation that he did not think anyone would tell their boss the real reason they are quitting is not remarkable.[123] Instead, he left Testel to operate a competing electrical ‘test and tag’ business with Mr Stephen through TestCorp, the company they had set up whilst he was employed by Testel.
[121] T93.9-.12.
[122] Exhibit A1/2/49/364.
[123] T636.21-.29.
Ongoing Business Development
From the day of Mr Goulding’s resignation and throughout August and September 2012, on the evidence identified by Testel, TestCorp prepared and sent 49 quotes, 44 of which were for Testel clients. Mr Stephen then secured TestCorp’s second client, Girl Guides Prospect,[124] and it was invoiced on 8 August 2012. Testel alleged the quotes sent to its clients were created using the ‘Post-it Notes’ that Mr Goulding had made from Testel’s computer records for these clients, which Mr Goulding denied.
[124] See [378] and following below.
The sheer number of quotes prepared in this period to predominantly Testel clients is a compelling circumstance in support of Testel’s case, just as the disparate range of the clients quoted makes Mr Goulding’s explanation that Mr Stephen had built up a collection of ‘Post-it Notes’ for the very same clients as Testel simply implausible. However, for the reasons discussed below,[125] I am not prepared to find that Mr Goulding made “all” the ‘Post-it Notes’ or wrote all the information on them by copying client information from Testel’s computer records.
[125] See [247]-[250] below.
The circumstances surrounding the preparation of quotes prepared during Mr Goulding’s period of employment are discussed in detail below.[126]
[126] See [447] and following below.
In mid-August 2012, TestCorp was successful in a competitive tender to provide electrical testing services to UnitingCare Wesley Port Adelaide (UnitingCare Wesley). There is a ‘Post-it Note’ for this client and the TestCorp quote was created on 6 August 2102, the second-to-last day of Mr Goulding’s employment. As for the other quotes created to send to its clients, Testel alleged Mr Goulding used Testel client information on a ‘Post-it Note’ to prepare the quote and that led to UnitingCare Wesley inviting TestCorp to tender. [127]
[127] Written Submissions of the Applicant [49.1].
Winning UnitingCare Wesley as a client was an important early success for TestCorp in developing its client base and providing revenue to begin paying wages and other expenses. TestCorp invoiced UnitingCare Wesley $27,871.60 (excluding GST) in its first year of operation.[128]
[128] Exhibit A9.
However, it is overstating matters to describe it as TestCorp’s seminal client, as Testel submitted.[129] This description more accurately describes the contract TestCorp won a short time later through a public tender in late October 2012 to provide electrical testing service to the Western Australian Department of Finance Building Management and Works in the Bunbury region (BMW Bunbury). Mr Goulding had been notified of this opportunity as a result of subscribing to a tender monitoring website.[130] The price of the previous supplier was published on the WA Tenders website.[131] TestCorp won the tender for four regions but declined two of them because they were uncertain if they could manage so much work. Both Mr Goulding and Mr Stephen then went to Bunbury for six weeks to do the electrical testing work and began invoicing BMW Bunbury on 6 December 2012. In its first year of operation, TestCorp earned from this client $59,972.38 (excluding GST), 43% of its turnover that financial year and more than double the UnitingCare Wesley work.
[129] Written Submissions of the Applicant [69.1].
[130] T431.22-.26.
[131] Exhibit R10/15 and 16.
After this, TestCorp began to get quite busy and since there were only two of them doing both the testing and administration work, their marketing efforts were sporadic, as evidenced by the irregular creation dates for the TestCorp quotes prepared in late 2012 and early 2013 as identified in the evidence.[132] Of the seven prepared between October and December 2012, five were for clients that were not Testel clients, for which there are no corresponding ‘Post-it Notes’. Yet 11 of the 12 quotes prepared in January 2013 were for Testel clients with corresponding ‘Post-it Notes’. A handful of quotes was prepared in February, March and April 2013, then 24 were prepared in May 2013, predominantly for Testel clients with corresponding ‘Post-it Notes’.
[132] Exhibit A1/2 and A1/3.
TestCorp Earnings
105Of the 239 ‘Post-it Notes’ clients, the evidence shows that TestCorp provided services to only five[133] in its first year of operation, although Testel formulated its claim for equitable compensation based on TestCorp’s revenue for only four.[134] Testel claimed as equitable compensation $7,935.60 (excluding GST) for its lost 22% share of the total revenue of $36,070.93 (excluding GST) earned from these clients.[135]
[133] Despite Testel only identifying four in its Written Submissions of the Applicant [61].
[134] Testel did not identify Stair Lock International as a common client. Written Submissions of the Applicant [61].
[135] Written Submissions of the Applicant [62].
Whilst TestCorp’s total revenue increased fivefold in the 2014 financial year from a low base,[136] there was no evidence presented as to the breakdown of revenue between clients and whether TestCorp continued to win more ‘Post-it Notes’ clients. There is also no evidence as to TestCorp’s revenue in 2016, 2017 or 2018 (either in total or by client), bearing in mind it was deregistered in May 2018 and Mr Goulding ceased to be a director and shareholder of TestCorp on 20 March 2015.
[136] Exhibit A12.
Sale of TestCorp Shares
On 19 March 2015, Mr Stephen purchased Mr Goulding’s shares in TestCorp in consideration for Mr Goulding resigning as a director and ceasing to be a shareholder, Mr Goulding promising to procure the resignation of his partner Ms Hondrou as an employee, releases from Mr Goulding and Ms Hondrou and a purchase price of $243,496. The terms of their agreement were set out in a deed prepared by solicitors (the Share Purchase Deed)[137] and included a non-solicitation clause for identified clients including four of the five ‘Post-it Notes’ clients that TestCorp had won from Testel.[138] The specified period of restraint was two years after the settlement date of 15 March 2015.[139]
[137] Exhibit A1/143/651; Exhibit R10, pages 55 to 84.
[138] Bianco Reinforcing and the associated entity Bianco RBSC were not included in the client List comprising Schedule 4 for the purposes of the non-solicitation clause 7.2.
[139] And expressed in the alternative on a one year or six month ladder if a two-year restraint period was unenforceable.
Testel submitted that Mr Goulding crystallised a gain in the nature of capital by selling half his shares in TestCorp for $250,000.[140] Despite the parties’ pleadings both incorrectly referring to a purchase price of $250,000, the purchase price in the Share Purchase Deed was $243,496 and expressed as subject to the terms and conditions set out in that deed.[141] In his defence, Mr Goulding alleged the purchase price did not reflect the value of TestCorp.[142]
[140] Written Submissions of the Applicant [69.3].
[141] Exhibit A1/3/143/651, Clause 3.1.
[142] Defence [23.6].
There was no formal valuation of the business in evidence.
Bearing in mind the sale of Mr Goulding’s shares in TestCorp was subject to the other terms and conditions to which I have referred, it is an oversimplification to identify the alleged capital gain as the whole of the specified purchase price on the basis that Mr Goulding did not pay anything for the TestCorp shares issued to him in August 2013. As Mr Goulding’s defence identified, the sale transaction involved the severing of ties between all the parties to the Share Purchase Deed, including Ms Hondrou, who was not involved in any of Mr Goulding’s errant conduct.[143]
[143] Defence [23.2].
ServiceCorp Earnings
ServiceCorp’s revenue earned from ‘Post-it Notes’ clients was also not material and did not result in any identifiable and unusual loss of revenue to Testel. For the six financial years ended 2020 (that is, three to eight years after Mr Goulding had left its employment), the total revenue earned by ServiceCorp from ‘Post-it Notes’ clients was $72,726.72 (excluding GST).[144] Had that work been done by Testel and its franchisees, it claimed it would have earned franchise fees of $15,999.87 (excluding GST) over six financial years.[145]
[144] Written Submissions of the Applicant [70]-[71] and Annexure D.
[145] Ibid [72].
There is no evidence of Testel’s total revenue, operating expenses or net profit for any financial period. Nonetheless, it is reasonable to assume that as an established business with an extensive client list operating across Australia for some 12 years by 2012, [146] Testel’s revenue was significantly greater than that of TestCorp or ServiceCorp and the impact of competition from TestCorp and ServiceCorp minimal, and not at all apparent.
[146] See [44] above.
PART C: RELEVANT LEGAL PRINCIPLES
Employment Duties
Where there is a contract of employment, the parties’ obligations to one another are determined according to the terms of the contract. The terms of the employment contract and the scope of an employee’s duties are questions of fact to be determined by considering all the circumstances of the case.[147] The scope of these duties varies depending on the circumstances, including the nature of the business, the employee’s seniority, role and responsibilities, access to confidential information and the actual or potential impact of the employee’s conduct on the employer’s interests. Generally, more senior employees with increased responsibilities and greater access to confidential information, will be subject to more onerous duties than more junior employees.
[147] Plus One International Pty Ltd v Ching (No 3) [2020] NSWSC 1598 (Plus One) at [444] per Hallen J.
Ordinarily, an employee owes the employer duties of loyalty, fidelity and good faith, both as implied contractual terms and in equity. It is well established those duties include duties of confidence.[148]
[148] Plus One per Hallen J at [441] citing Blyth Chemical Limited v Bushnell (1933) 49 CLR 66 at 81 (Dixon and McTiernan JJ); Lifeplan Australia Friendly Society Ltd v Woff [(2016) 259 IR 384 at [336]-[337]per Besanko J; Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 46-48 per Megarry J.
Here, as stated, there was no written contract of employment between Mr Goulding and Testel and no allegations made in the pleadings or relied on as to the express terms of his contract of employment save for the period of his employment (10 March to 7 August 2012). His employment as a ‘Client Account Manager’ for Western Australia and New Zealand was uncontentious.[149] Despite the dispute about the precise scope of his role and responsibilities, Mr Goulding accepted he had access to certain client information and was responsible for liaising with clients and franchisees as the ‘Client Account Manager’ for Western Australia and New Zealand. He was not a senior or long-standing employee and, despite his title, it was not shown that he had any influence over client relationships in the territories for which he was responsible, let alone for South Australian clients with whom he had no dealings.
[149] Despite 10 March 2012 being a Sunday and Mr Goulding’s evidence that when he tendered his letter of resignation Mr Oszczypok told him to finish up that day: T635.22-.36.
The scope of the fiduciary duty Mr Goulding admitted he owed in addition to his contractual duties of fidelity and good faith was generally pleaded as a duty not to promote his personal interests by making or pursuing a gain in circumstances in which there was a conflict between his personal interests and those of Testel. [150] In closing submissions, Testel’s counsel characterised Testel’s claim for breach of fiduciary duty as both a breach of the ‘conflict rule’ and the ‘profit rule’ as expressed by Gageler J in Ancient Order of Foresters v Lifeplan[151] in the following terms.
[150] SOC [6], Defence [6]. The Corporations Act 2001 (Cth) duties were not ultimately pursued given this Court has no jurisdiction to make compensation orders under s1317H. Written Submissions of the Applicant [15].
[151] At [67]-[70]; Written Submissions of the Applicant [9].
The fiduciary duty that an employee has to an employer within the scope of the relationship of employment, no less than the fiduciary duty that any other person in a fiduciary position has to any other person to whom the fiduciary duty is owed within the scope of the venture or undertaking in respect of which the person in the fiduciary position has undertaken or assumed a responsibility to act in the exclusive interests of that other person, is a duty of “absolute and disinterested loyalty”. That duty of loyalty is imposed in equity by means of two overlapping “proscriptive obligations”. Each proscriptive obligation, or “theme”, is “descriptive of circumstances in which equity will regard conduct of a particular kind as unconscionable and consequently attracting equitable remedies”.
“The first”, often referred to as the “conflict rule”, “is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest”. The unconscionability which attracts equitable remedies in circumstances where the conflict rule alone is invoked lies not so much in receipt by the fiduciary of the benefit or gain (over which the fiduciary need not have control) as in retention by the fiduciary of the benefit or gain which in conscience ought to be disgorged to the principal.
“The second”, often referred to as the “profit rule”, “is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of [the] fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing [the fiduciary’s] position for [the fiduciary’s] personal advantage.” The unconscionability which attracts equitable remedies in such circumstances lies in pursuit by the fiduciary of self-interest, or, more precisely, in pursuit of an interest other than the exclusive interest of the principal.
Consistently with the objective of imposing each obligation, in neither case does the benefit or gain to the fiduciary need to be at the expense of the principal, though it may be. And in neither case does the fiduciary need to act dishonestly or fraudulently, or otherwise than in good faith, though again the fiduciary may do so. Where a fiduciary does act dishonestly and fraudulently, however, the dishonest and fraudulent character of the breach of fiduciary duty is not without consequence for the intensity of the equitable remedies available against the defaulting fiduciary. More important for present purposes is that the dishonest and fraudulent character of the conduct of the fiduciary gives rise to the potential for similar remedies to be available in equity against another person who might knowingly participate in the fiduciary’s breach.
[References omitted]

In assessing the appropriate remedy, the starting point in this case is the contractual arrangements with the relevant clients. Testel’s services with each of the relevant clients who were converted was terminable at will. There was no evidence that TestCorp’s arrangements were any different, and I have concluded it was similarly at risk of not being re-engaged for the next round of periodic testing, as any electrical testing supplier would have been. There was no evidence of Testel’s contractual arrangements with these clients and limited evidence of these clients’ recurrent testing needs. Bianco Reinforcing purchased testing services from TestCorp four times in TestCorp’s first year of operation, Mitsubishi once.
The evidence shows that Bianco Reinforcing and Mitsubishi would in all likelihood not have engaged Testel again.
In these circumstances, the appropriate approach is to assess the loss to Testel and benefit gained by Mr Goulding’s breaches of duty by reference to the amount of revenue TestCorp earned from these clients for an initial period. The critical question is then what are fair and equitable limits in terms of both the duration and the nature of testing services provided. The latter means electrical versus fire equipment. It is also important to bear in mind the likely tenure of the clients in question and clients more generally, given the nature of periodic testing in the industry that was generally annually.
In all the circumstances, and in the context that what was gained by Mr Goulding’s breaches was in reality a ‘head start’ in establishing TestCorp, not an entire business that would not have otherwise existed, in my view, taking a broad axe approach, it is appropriate that this initial period be confined to the revenue earned by TestCorp from these two clients in its first year of operation: $7,962.50.[537] Any other approach in the circumstances of this case would involve remedies that would be disproportionate to the losses inflicted on Testel or the advantages gained and would unjustly enrich Testel or unduly punish Mr Goulding for his admitted and proven breaches of duty. This would carry the remedy of an account of profits to extremes and, in the words of the High Court in Warman, transform Mr Goulding’s liability for his breaches of fiduciary duty into a vehicle for the unjust enrichment of Testel.[538]
[537] Exhibit A9; Written Submissions of the Applicant [61].
[538] Ibid at [561].
Equitable Damages - $1,226.23
It is uncontentious that the claim for equitable compensation formulated by Testel was nominal. On the breaches I have found, the end result is a lesser quantum because my assessment only includes the revenue earned from Bianco Reinforcing (and its associated entity RBSC) and Mitsubishi from electrical testing and is calculated as follows based on Testel’s 22% percentage share of revenue earned by TestCorp from the two clients concerned and excluding revenue from fire equipment testing services provided to Bianco Reinforcing. I have estimated this to be approximately 30% based on the evidence as to ServiceCorp’s revenue.[539]

[539] Written Submissions of the Applicant, Annexure D: $12,670.60 out of a total of $40,906.80 (both including GST).

Client

Excluding GST

Bianco Reinforcing & RBSC $6,978.50

Mitsubishi $984.00

Total $7,962.50

22% share $1,751.75

Less 30% for fire equipment testing $1,226.23
Account of Profits - $3,981.00

As repeatedly stated, the substantive issue in this case was Testel’s claimed entitlement to an account of both trading and capital profits allegedly derived by Mr Goulding in breach of his duties.
I have assessed Testel’s alternative and primary claim for an account of profits on a ‘head start’ basis in a similar way to Testel’s claim for equitable damages and quantified the benefit gained by Mr Goulding’s breaches as the revenue earned by TestCorp in its first full year of operation from Bianco Reinforcing (and its associated entity RBSC) and Mitsubishi for electrical and fire equipment testing.
It is appropriate to include in the assessment of profits revenue earned by TestCorp from fire equipment testing, a service that Testel did not provide in 2012, in recognition of the principle that the liability to account does not depend upon detriment to Testel and Mr Goulding must account for all the benefit acquired for his breaches of duty: that is $7,962.50 (excluding GST).[540]
[540] That is the total revenue shown in the table at [474] above.
I have applied a broad axe and made a discount of 50% on account of the costs, skill and efforts of both Mr Goulding and Mr Stephen in earning this revenue, bearing in mind the 78/22 split in favour of carrying out testing services and the inclusion of fire equipment testing, services that Testel did not offer in 2012. Accordingly, Mr Goulding should account to Testel for his breaches of duty in the rounded amount of $3,981.00 (excluding GST).
UnitingCare Wesley
As regards Mr Goulding’s and TestCorp’s dealings with UnitingCare Wesley, if I had concluded that Mr Goulding had breached his duties as alleged in that he made the relevant ‘Post-it Note’ and Mr Stephen used it to prepare a quote that was in fact sent and received by UnitingCare Wesley and that led to TestCorp finding out about the request for tender as alleged, I would have found that the loss to Testel was the chance to submit a tender bid and the resulting benefit to Mr Goulding (and Mr Stephen) through TestCorp was the benefit of the two-year outsourcing contract[541] made with UnitingCare Wesley. The full value of that contract was not proven, but in TestCorp’s first year of operations it earned revenue of $27,871.60 (excluding GST),[542] so I would double that amount to approximate the benefit of two years under contract and round it to $55,750 (excluding GST).
[541] Exhibit R10/8/28.
[542] Exhibit A9.
For the purposes of assessing equitable damages, I would have assessed Testel’s loss by applying a broad axe and discounting its chance of winning the tender by 50% and quantifying its loss by reference to the revenue earned by TestCorp under the outsourcing contract at $27,875.00 excluding GST.
To assess Testel’s entitlement to an account of profits, I would have assessed the gain or benefit to Mr Goulding through TestCorp as the full value of the outsourcing contract by reference to the revenue earned by TestCorp quantified as best can be done on the evidence at $55,750 (excluding GST). I would then have applied a broad axe and discounted that amount by 50% on account of Mr Goulding’s and Mr Stephen’s skill and effort in winning the contract and earning the revenue, bearing in mind their efforts included performance of the testing services carried out by Testel’s franchisees for 72% of the revenue billed to clients and reached the same figure as I did for equitable compensation.
That I would have reached the same result fortifies my conclusion as to the appropriate remedy in all the circumstances of this case.
It follows from my conclusions as to the appropriate equitable remedies, that I do not accept that winning this tender and UnitingCare Wesley client was such a major a step in getting TestCorp off the ground as a business that TestCorp’s business would not otherwise have come into existence at all but for Mr Goulding’s alleged breaches of duty in copying Testel client information onto a ‘Post-it Note’ to use in TestCorp’s business. It was, as Mr Goulding said, a ‘help’[543] in establishing TestCorp but not its entire foundation.
[543] T640.1-.11.
ServiceCorp
Testel claimed equitable compensation of $15,999.87,[544] calculated as 22% of the total revenue Service Corp earned for electrical testing from ‘Post-it Notes’ clients of $72,726.72[545] as identified in ServiceCorp’s bank statements as shown below.[546]
[544] Excluding GST.
[545] Also excluding GST. Written Submissions of the Applicant [70]-[72] and Annexure D.
[546] Exhibit A20.

Client

Excluding GST

Bianco Construction and Bianco Reinforcing $21,708.38

Bianco RBSC $6,816.89

MacMahon $2,138.75

Mitsubishi $17,580.00

Pope Packaging $454.30

SACE Board $3,828.00

Uniting Care Wesley Port Adelaide $20,200.40

Total $72,726.72

The only evidence of the circumstances in which any of these clients came to be clients of ServiceCorp was given by Mr Nietz of Mitsubishi, who said he identified ServiceCorp by another Google search for ‘test and tag’ services and then went to its web page and when he realised it was associated with Mr Goulding and Ms Hondrou, he was “more than happy to jump on board again”.[547] The first income receipt identified in ServiceCorp’s bank statement for this client was 30 November 2016, more than four years since Mr Goulding had left Testel’s employment and some 20 months after he had left TestCorp, having left the ‘Post-it Notes’ behind in Mr Stephen’s possession. Testel did not articulate how Mr Goulding continued to benefit from his breaches of duty or present any relevant evidence.
[547] T718.1-719.1.
Apart from the Bianco entities, all these clients were the subject of non-solicitation obligations in the Share Purchase Deed. Other than the ‘Post-it Notes’, there was no evidence presented by Testel connecting MacMahon, Pope Packaging and SACE Board to TestCorp. The first receipts of revenue by ServiceCorp for MacMahon and SACE Board occurred in 2018 and 2019, some five and six years after Mr Goulding had left TestCorp and, as already stated, having left the ‘Post-it Notes’ behind in Mr Stephen’s possession.
It is reasonable to infer that the Bianco entities followed Mr Goulding wherever he went because his cousin was responsible for selecting the electrical and fire equipment testing contractor.
Accordingly, I am not satisfied on the evidence that any sufficient or reasonable connection has been proved in fact between Mr Goulding’s breaches of duty and the establishment in March 2015 of Mr Goulding’s subsequent business, ServiceCorp, for Mr Goulding or ServiceCorp to have any liability to either compensate Testel for the alleged loss of revenue earned by ServiceCorp from former Testel clients or to account for any profits made from providing services to those clients.
In any event, the same conclusion follows from my determination that the true measure of the benefit or gain resulting to Mr Goulding from his breaches of duty was a modest ‘head start’ in establishing TestCorp’s business and the misappropriation of the two Testel clients whose continuing custom was already at substantial risk.
PART G: FURTHER ORDERS
Election
Testel as a successful Applicant is entitled to make an election between the inconsistent remedies of equitable compensation and an account of profits before the entry of judgment and final orders. Testel maintained this position in its closing,[548] despite having presented its case at trial on the basis that an account of profits was its primary and only substantive remedy and, as the result indicates, it is the more favourable outcome for Testel.
[548] Written Submissions of the Applicant [59].
Whilst it may seem Testel has already made an election in favour of an account of profits and there is no practical reason in doing so, I will defer the making of any final orders for five business days to give Testel an opportunity to make a formal election.
Costs
On the facts of this case as I have found them, the result of the application of established equitable principles of causation and quantification of the benefit for which Mr Goulding should account to his former employer Testel is a modest amount well below the jurisdictional minimum of this Court. Subject to any relevant offers that might inform the question of costs, I would propose to make no order as to the costs of the proceedings.
ANNEXURE A - ANALYSIS OF ALLEGED ERRORS
ASC
The ‘Post-it Note’ for this client[549] includes the name “Shane Bismore”, a telephone number “83487966” and an email address “[email protected]”. Testel submitted these are errors in TES.[550]
[549] Exhibit A5 PIN 5.1.
[550] Emphasis supplied.
The following evidence shows that there were two spellings of this contact’s surname and possibly two ‘phone’ numbers in TES during the period of Mr Goulding’s employment and it has not been shown which alternative is an error. Further, since the suggested errors came from two sources in TES (the ‘Company Details’ and ‘Decision Maker’ windows) it would be odd for anyone copying client information from TES not to notice the different spellings of the surname and contact details.
The June 2012 Spreadsheet shows the ‘Decision Maker’ as “Shane Bismore”, the name on the ‘Post-it Note’, but the cells for his ‘phone’ and email are blank and shaded. The ‘Decision Maker’ window[551] and the extract from the audit log are consistent with the June 2012 Spreadsheet.
[551] Exhibit A21.
The 2021 TES screenshot shows the ‘Principal Contact’ as “Shane Bismire”, with a phone number “(08) 8348 7866” and email address “[email protected]”. The extracts of the audit log show that on 8 December 2011 the spelling of the name of the ‘Principal Contact’ was changed from “Shane Bismore” to “Shane Bissmire” and remained as “Bissmire” during Mr Goulding’s employment in 2012. He was also the ‘Decision Maker’, but the spelling of his surname was not changed to “Bissmire” until 18 December 2012, after Mr Goulding’s employment. There are no audit log entries showing the changes that resulted in the 2021 (third) spelling of his surname and current ‘phone’ number. I do not accept that Mr Oszczypok’s explanation of the changes evident from the extracts of the audit logs establishes which of the three spellings of the surname or two ‘phone’ numbers is correct and therefore that they were all errors in 2012.[552] This could easily have been proved (as it was for another client contact).[553]
[552] T190.3;191.6.
[553] Exhibit A1/4/178/853 (Mayne Pharma).
As for the email address that Testel alleged was in TES during Mr Goulding’s employment, there is a gap in the audit log entries between 2003 and 2011 for the change to the data in the field name ‘CEMAIL’. There is also no evidence about which field name in the audit log denotes an email address for the ‘Principal Contact’ as opposed to that of the ‘Decision Maker’. Whilst I accept it is likely the ‘CEMAIL’ for “Roger Guest” would be an error if it was in TES during Mr Goulding’s employment if he was no longer the ‘Principal Contact,’ the evidence does not go far enough to show this. In my view, these anomalies are too problematic to conclude Mr Goulding copied errors from TES that would have been obvious to anyone looking at both the ‘Principal Contact’ and ‘Decision Maker’ screens.
Mayne Pharma
There are two ‘Post-it Notes’ for this client, one is a scrap of paper and the other a white ‘Post-it Note’,[554] consistent with Mr Goulding’s case that the ‘Post-it Note’ was created from rewriting information on the scrap of paper but the original note has been kept. However, such a conclusion is undermined by the lack of evidence explaining why there are two ‘phone’ numbers (not one) and four prices (not two) and some additional words on the ‘Post-it Note’ that are not on the scrap of paper. Mr Goulding’s belated change of position that much of the writing is not his would perhaps explain the difference, but it does not assist resolve the issue as to whose writing it is if not his and how that writing came to be on the ‘Post-it Note’.
[554] Exhibit A5 PIN 45.2 and PIN 45.3.
In support of its case, Testel analysed these ‘Post-it Notes’ and the TES records in Annexure B of its Written Submissions,[555]submitting that the replication of errors in TES in the spelling of the contact’s surname as “Ariek” not “Kriek”[556] is a compelling indication that Mr Goulding copied the information from TES.
[555] Pages 16 and 17.
[556] Written Submissions of the Applicant [43.6(iii)].
The 2021 TES screenshot shows that the ‘Principal Contact’ is “Marcel Kriek”,[557] who has a different ‘phone’ number[558] and email address than shown on the ‘Post-it Notes’. The extracts from the audit logs show that the correct spelling of the contact’s name[559] was not input in TES until after Mr Goulding left Testel’s employment.[560] I accept that during his employment, the contact’s name was incorrectly spelled in TES and the ‘Post-it Notes’ contain this error.
[557] Emphasis supplied.
[558] 82092666 and [email protected].
[559] Exhibit A1/4/178/853 Linked in profile.
[560] The fields for the ‘Decision Maker’ were changed on 8 October 2013 and for the ‘Principal Contact’ on 2 October 2014.
However, correlation is not causation, particularly bearing in mind that the TES records show that this contact’s name appeared in TES variously as the homophones “Marcell Creek”, “Marcel Ariek” and “Marcel Kriek”.[561]Indeed, the TES records show how easily a mistake might be made in writing down this contact’s name on hearing it in a telephone conversation, as would be the case if a ‘cold-call’ was made to the Mayne Pharma, as is Mr Goulding’s case.
[561] Exhibit A1/4/178/848-852.
Further, if Mr Goulding made either of the ‘Post-it Notes’ from information in TES, he must have overlooked the correct email address that had already been changed to “[email protected]” on 7 March 2012, before Mr Goulding’s employment. This might be explained by carelessness. More troubling is the lack of explanation as to how it was possible for Mr Goulding to copy the details for “Simon Pisoni” onto either or both ‘Post-it Notes’ because the audit log entries show him being appointed and removed as ‘Decision Maker’ before Mr Goulding’s employment.[562] No explanation has been given as to how Mr Goulding could extract data from TES that was overwritten six years before his employment and, if he could, why he would.
[562] From 8 October 2014 to 26 July 2006.
Of the four prices shown on the second ‘Post-it Note’, only the equipment rate ($2.50) in 2012 is proved by a contemporaneous Testel invoice but at a price that is more than the price in TES in December 2021 ($1.60). It is anomalous that this price decreased over 10 years but the other prices in TES did not. More anomalous are the notes made on the ‘Post-it Notes’ (“big” and “contract has been awarded to competitor”) which are perhaps inconsistent with one another but also contrary to information available from accessing the ‘Debtors’ window in TES and seeing the invoices rendered in November 2011 that Testel on relied as the reason for Mr Goulding writing “big”. Clearly, if Mr Goulding had accessed this as alleged, he would have seen that the client was still with Testel in late 2011 and, indeed, throughout 2012 as the ‘Debtors’ window shows.
Given the discrepancies between the information on the ‘Post-it Notes’ and in TES and the lack of explanation on the evidence for them, I am not satisfied that Mr Goulding copied all the information on these ‘Post-it Notes’ from TES as alleged. Nor am I able to resolve how these ‘Post-it Notes’ were created on the evidence before me.
If I am wrong and Mr Goulding did write these ‘Post-it Notes’ from information in TES, then there is no connection established on the evidence between the ‘Post-it Notes’ and the TestCorp quote prepared on 9 August 2012 addressed to “Vince”[563] (and not Marcel) that adopts an ‘across the board’ low price of $2.00 for electrical testing, adopting the pricing strategy used in the quotes prepared for Bonney Health Care[564] and UnitingCare Wesley.[565] Oddly, the TestCorp quote, the purpose for Mr Goulding copying Testel’s information in the first place, was not included in the sample set out in the second and third volumes of Exhibit A1 .
[563] Exhibit A6\Quotes\SA Quotes\Mayne Pharma\TESTCORP QUOTE – Mayne Pharma.doc.
[564] Exhibit A1/2/51/369.
[565] Exhibit A1/2/56/387.
Novita/Unibooks

The ‘Post-it Note’ for SCOSA[566] (now ‘Novita’) includes the name “Jo Minge”, the email “[email protected]” and the phone number “8223 4366”.
[566] Exhibit A5 PIN 70.1.
Another ‘Post-it Note’ records the client Unibooks[567] also records the name “Jo Minge”, the email “[email protected]” and the same phone number.
[567] Exhibit A5 PIN 85.2.
Testel submitted that this is a compelling example of an unequivocal error in TES that is replicated onto the ‘Post-it Note’.
The TES data provided in Exhibit A8 for SCOSA shows that during the entirety of Mr Goulding’s employment at Testel, the ‘Decision Maker’ was recorded as “Jo Minge” and her email was “[email protected]” (between 4 November 2010 until 22 August 2012). The TES data provided in Exhibit A8 for Unibooks has the name and email for Ms Minge from 12 October 2006 until 23 November 2012. Testel’s submission was that the email “[email protected]”, recorded in TES for the client SCOSA, was an error and that because this error was replicated onto the ‘Post-it Notes’ it proves that Mr Goulding copied the information from TES.[568]
[568] Written Submissions of the Applicant [43.6(iii)].
Mr Goulding gave evidence that the handwriting for the prices on the ‘Post-it Note’ for SCOSA was not his.[569]
[569] T752.3-.5.
Testel did not adduce any evidence to establish that Ms Minge was not, as a matter of fact, the correct contact for SCOSA as well as Unibooks in 2012. Therefore I cannot be satisfied that this was an error on TES, and because there is an error, it follows that Mr Goulding made this ‘Post-it Note’ as alleged.
Further, if the contact details for SCOSA were incorrect, as submitted by Testel, then Mr Goulding would have needed to overlook the different email address that did not match the company name when copying the information, which is implausible.
Tenix Downer
The ‘Post-it Note’ for Tenix Alliance[570] (now ‘Downer Utilities’) records the email “[email protected]”, the phone number “08 8354 8900” and two prices (2.70 and ‘min $100’).
[570] Exhibit A5 PIN 79.3.
The TES data provided in Exhibit A1[571] and Exhibit 8 shows that on 14 December 2011 the contact number for Tenix Alliance changed to “(08) 8354 8900”, and then was changed again on 18 June 2012 to “(08) 8345 8900”.
[571] Exhibit A1:4/203/948.
Testel’s written submissions include this client as an example of an error in TES’s record that is then replicated onto the ‘Post-it Note’ as the basis for the Court finding Mr Goulding made the ‘Post-it Notes’ from the information from Testel’s client database.
Testel submitted as evidence a screenshot of a Google search conducted for the number ‘8354 8900’ which shows no results relating to Tenix Alliance (or any other related company name),[572] and a screenshot of a Google search for the number “8345 8900” which includes a result for “Downer Utilities” (previously ‘Tenix Alliance’). Mr Oszczypok gave evidence that he undertook both Google searches as a way to prove that the “8354 8900” number is the incorrect contact number for the company.
In this case, I am satisfied that the replication of the error in TES on the ‘Post-it Note’ is a compelling basis for inferring that Mr Goulding copied this ‘phone’ number from TES on to the ‘Post-it Notes’.
Uniting Church
There are two ‘Post-it Notes’ for Uniting Church, one in which the client is recorded as “United Church”[573], and the other recorded as “~~United~~ Uniting Church”[574].
Both ‘Post-it Notes’ record the name of the business, the contact “Neil Slattery”, the phone number “8236 4214” and the prices “$2.55” and “$55”.
Testel submitted that the name “Neil Slattery” was an error present in TES during Mr Goulding’s employment, that was then replicated onto both ‘Post-it Notes’, and is therefore evidence that Mr Goulding made both ‘Post-it Notes’ as Testel alleged.[575]
[572] Exhibit 4/203/951.
[573] Exhibit A5 PIN 86.3.
[574] Exhibit A5 PIN 87.1.
[575] Written Submissions of the Applicant [43.6(v)].
Testel’s records show the ‘Decision Maker’ for Uniting Church was “Neil Slattery” until 5 September 2012, when it was changed to “Neil Satterley”. Testel submitted that this change was due to a correction of the misspelling of his last name.
522During his evidence-in-chief, Mr Oszczypok was taken to the TES records and asked if the name of the ‘Decision Maker’ was changed at any point according to the records. Mr Oszczypok said that on 5 September 2012, the name “Neil Slattery” changed to “Neil Satterley”, and that prior to this date anyone on the system would have seen “Slattery”. Mr Oszczypok did not explain why that change occurred or how he knew this independently from the TES records he was shown.[576]
[576] T210.3-.24.
Testel has not shown that the spelling of the ‘Decision Maker’s’ last name on TES was incorrect and therefore changed to the correct spelling. On the evidence presented, I am not satisfied that the spelling was in fact an error, and therefore, and because there is an error, it follows that Mr Goulding made this ‘Post-it Note’ as alleged.

Client	Excluding GST
Bianco Reinforcing & RBSC	$6,978.50
Mitsubishi	$984.00
Total	$7,962.50
22% share	$1,751.75
Less 30% for fire equipment testing	$1,226.23

Client	Excluding GST
Bianco Construction and Bianco Reinforcing	$21,708.38
Bianco RBSC	$6,816.89
MacMahon	$2,138.75
Mitsubishi	$17,580.00
Pope Packaging	$454.30
SACE Board	$3,828.00
Uniting Care Wesley Port Adelaide	$20,200.40
Total	$72,726.72