Verix Pty Ltd v Williams - [2021] FCA 748

FEDERAL COURT OF AUSTRALIA
Verix Pty Ltd v Williams [2021] FCA 748

File number(s): VID 1667 of 2018

Judgment of: BEACH J

Date of judgment: 2 July 2021

Catchwords: CORPORATIONS – former employee – preparatory steps to establish competitive business – duties and obligations to employer – employment contract – implied duties of good faith and fidelity – fiduciary duties – duties under ss 182 and 183 of Corporations Act 2001 (Cth) – duties of confidence – confidential information – misuse of information – copyright in data sheets and specifications – copyright infringement – accessorial liability – knowing involvement in statutory breaches – knowing assistance in breaches of fiduciary duty – actual knowledge – constructive knowledge – liability established

Legislation:
Copyright Act 1968 (Cth) ss 35, 36, 115

Corporations Act 2001 (Cth) ss 182, 183

Division: General Division

Registry: Victoria

National Practice Area: Intellectual Property

Sub-area: Copyright and Industrial Designs

Number of paragraphs: 252

Date of hearing: 21 to 25, 28 June 2021

Counsel for the Applicant: Mr M B Fleming

Solicitor for the Applicant: Gilbert + Tobin

Counsel for the First Respondent: The first respondent appeared in person

Counsel for the Second and Third Respondents: The second respondent appeared in person on behalf of himself and the third respondent

ORDERS

VID 1667 of 2018

BETWEEN:
VERIX PTY LTD (ACN 093 625 588)

Applicant

AND:
PETER WILLIAMS

First Respondent

GRANT SWANEPOEL

Second Respondent

SWANELL CORP PTY LTD (ACN 159 749 952)

Third Respondent

ORDER MADE BY:

BEACH J

DATE OF ORDER:

2 JULY 2021

THE COURT ORDERS THAT:
1.Within 14 days of the date hereof the applicant file and serve minutes of orders and short submissions dealing with consequential orders and costs.
2.Within 14 days of the receipt of such minutes and submissions the respondents file and serve responding minutes and submissions.
3.Liberty to apply.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
BEACH J:

The present proceeding concerns claims made by Verix Pty Ltd, formerly PGA Laminating Pty Ltd (PGA), against a former employee and an alleged accessory for breaches of contract, statutory duties, fiduciary and other equitable duties. Separately, there is a claim for infringement of copyright.
The present trial has proceeded on liability and non-pecuniary relief questions only.
The events giving rise to these claims commenced in July 2017 and continued into 2018. It is said that the respondents participated in a dishonest and fraudulent scheme where they sought to establish a business that would compete with PGA’s business.
PGA says that from July 2017, the first respondent, Mr Peter Williams, set out on a course of action which put him in direct conflict with his contractual obligations and his statutory and fiduciary duties. At the time, Mr Williams was employed by PGA as its business development manager, which was a senior role reflecting his tenure at PGA. He was responsible for managing PGA’s client accounts and developing new business opportunities. He ceased being an employee in mid-November 2017.
Mr Williams, together with the second respondent, Mr Grant Swanepoel and Mr Jonny Yip, are said to have engaged in a course of conduct relating to the development of a new business designed to compete with PGA, including by soliciting business from and submitting tenders to its existing clients (the competitive business). It is said that in the process, the respondents both received and used commercially sensitive information obtained by Mr Williams as a result of his employment. This information included product specifications, pricing information, and information concerning business opportunities which Mr Williams ought to have pursued on behalf of PGA.
Now the present proceeding had its genesis in an application for preliminary discovery against Mr Williams arising from PGA’s concerns that Mr Williams had misused its business information. In the course of that application, Mr Williams was ordered to and did provide PGA’s solicitors with access to a range of documents and electronic devices, including hard-copy files, a personal computer, a personal mobile phone, and Mr Williams’ and his wife’s personal email accounts.
As a result of the material produced, PGA then commenced the present proceeding against Mr Williams, Mr Swanepoel and his company, Swanell Corp Pty Ltd, Mr Yip and others. But the present trial only concerned Mr Williams, Mr Swanepoel and Swanell Corp.
Now Mr Williams and Mr Swanepoel were unrepresented at trial. Nevertheless, each of them cross-examined PGA’s witnesses at length and gave their own evidence, although frankly much of their evidence concerned peripheral issues.
The case for PGA was presented by Mr Marcus Fleming. He ran his case against litigants in person in a proportionate, fair and skilful fashion which considerably assisted my task in running the trial and formulating my solution.
For the following reasons, I have determined that PGA has succeeded on its liability case for the most part. Clearly, the conduct of the respondents cannot be said not to have involved an endeavour designed not to be in the interests of PGA where Mr Williams and Mr Swanepoel did not act in any way that was not conducive to conferring commercial advantage to their own account.
Let me begin my reasons by dealing with some of the entities and characters.
The relevant actors
I should say something first about PGA.
PGA
PGA operates a family-run business which was established in 2000 by Mr George Kavnoudias and Mrs Athena Kavnoudias. It has one manufacturing facility based in Campbellfield, Victoria. PGA provides film packaging solutions for manufacturers in various sectors of the food industry. The core products offered by PGA are custom-made rigid and semi-rigid or heavy gauge laminates used as bottom web in primary packaging for various foods including smallgoods and dairy products.
PGA’s customers are mainly food manufacturers who on-sell products to retailers such as supermarkets. Its customer base also includes thermoformers that manufacture trays and customers requiring contract-based laminating of printed films. Its customers include Don Smallgoods, Propan Smallgoods, Northside Fine Foods, Kenapak Big Dog Pet Foods (KPBD), Viper Packaging and Caspak Products. I will return to discuss some of these customers later.
PGA does not typically enter into agreements in writing with its customers. Most of its business is conducted by way of “handshake agreements” and the exchange of correspondence documenting product forecasts, purchase orders and invoices.
PGA’s main competitors in Australia include other local manufacturers of primary food packaging and importers of primary food packaging. Now due to the need to comply with industry standards, there is limited differentiation between competitor products. Accordingly, market participants seek to differentiate themselves on the basis of customer service, price and product turnaround time.
Let me say something about the PGA witnesses.
Mr George Kavnoudias is the sole director of PGA and a co-owner of PGA with his wife, Mrs Athena Kavnoudias, through his ownership of the ordinary shares in Foden Holdings Pty Ltd, which is the holding company of PGA. Mr Kavnoudias’ involvement with PGA has largely been in a supervisory capacity, but he has made the key decisions as the director of the company. Mr Kavnoudias, who gave affidavit evidence, was cross-examined by Mr Williams and Mr Swanepoel at some length in relation to the matters in his affidavit. That cross-examination was fruitless so far as I was concerned.
Mr Jeremy Kavnoudias is George and Athena Kavnoudias’ son. Prior to January 2018, he was the operations manager of PGA. In that role he was responsible for planning, directing, and coordinating all of PGA’s operations including the direction and coordination of the production, pricing, sale and distribution of products. Mr Kavnoudias was also cross-examined at length by Mr Williams and Mr Swanepoel. Again such cross-examination went nowhere. I found Mr Kavnoudias to be a careful and honest witness who had considerable commercial skill and experience.
Mr Mamoon Rahat was an IT consultant at XpressteX. From about 2016, Mr Rahat managed the IT infrastructure of PGA on behalf of XpressteX. He gave evidence about an email redirection rule that had been set up on Mr Williams’ PGA email account, which automatically forwarded emails to Mr Williams’ personal Gmail account. He gave evidence of a report he prepared in January 2018 setting out his analysis of the desktop computer used by Mr Williams whilst at PGA (the PGA desktop). Mr Rahat was cross-examined by Mr Williams, although this went nowhere.
Generally, I should say that each of these three witnesses gave reliable and forthright evidence.
Mr David Caldwell was a forensic IT consultant at Forensic IT. He provided expert evidence concerning his examination and review of various electronic devices used by Mr Williams during his employment with PGA, including the hard drive from the PGA desktop, a Microsoft Surface Pro laptop used by Mr Williams at PGA (the Surface Pro) and Mr Williams’ PGA mobile phone. Mr Caldwell was not cross-examined.
Mr Brendan McCreesh was also a consultant at Forensic IT and gave evidence about his inspection of electronic devices and email accounts produced by Mr Williams. Mr McCreesh was not cross-examined.
Mr Williams
As I have said, Mr Williams is a former employee of PGA who worked at the business between June 2000 and 17 November 2017. He is Mr George Kavnoudias’ brother-in-law, and the uncle and godfather of Mr Jeremy Kavnoudias.
Mr Williams made one brief affidavit in the proceeding. In that affidavit, save for making some general statements denying certain aspects of wrongdoing, Mr Williams did not address in any detail the substance of the allegations made by PGA.
Mr Williams also filed written opening submissions on 21 June 2021 which I allowed to be tendered as forming part of Mr Williams’ evidence to the extent that they provided factual detail from his own personal knowledge.
I should say now that during the trial Mr Williams made little attempt to explain or contradict the extensive evidence filed by PGA demonstrating that during his employment he took steps to establish the competitive business with a view to transitioning PGA’s existing clients to the new business after his resignation, and that he did so by reference to information he obtained because of his employment at PGA.
Indeed, during the course of his cross-examination, Mr Williams conceded that he had deleted emails from his PGA email account, which was contrary to his sworn evidence that he did not delete any emails or files that related to PGA other than what was on his personal Gmail account.
Now in the course of giving evidence and in his submissions, Mr Williams suggested that he was fundamental to PGA’s business and, indeed, had some kind of ownership interest in the business. But in the way Mr Williams framed his case, these ownership propositions are not established on the evidence or an answer to PGA’s case.
Mr Williams was carefully cross-examined by Mr Fleming. He was not a reliable witness concerning the key events from July 2017 to July 2018 and his motivations for acting the way he did. That conclusion will be justified by my later commentary.
Mr Swanepoel and Swanell Corp
Mr Swanepoel was engaged by PGA through his company, Swanell Corp, as a contractor to act as PGA’s sales consultant from about March 2016. Mr Swanepoel is the sole director and shareholder of Swanell Corp, which was his corporate “alter-ego”.
Mr Swanepoel was introduced to PGA by Mr Williams in March 2016 where the scope of his engagement and remuneration structure was discussed and agreed with Mr Jeremy Kavnoudias and Mr George Kavnoudias.
As a sales consultant, Mr Swanepoel’s role was to introduce new clients to PGA and to manage the clients that he had introduced, but not to have contact with clients that he did not introduce. During his engagement by PGA, Mr Swanepoel was not for the most part authorised to have access to PGA’s confidential information.
Mr Swanepoel’s working arrangement with PGA terminated in early March 2018. I do not need to linger on either his retainer or his remuneration.
Shortly before trial, Mr Swanepoel filed an affidavit in which he discussed his dealings with PGA, Mr Williams and Mr Yip concerning the competitive business. In his affidavit, Mr Swanepoel did not deny the substance of much of his involvement. Rather, he sought to exculpate himself on the basis that he had no knowledge of any wrongdoing by Mr Williams. He emphasised his reliance on his purported knowledge of Mr Williams’ ownership interest in PGA as providing a justifiable explanation. Mr Swanepoel filed written submissions on 18 June 2021 which I also allowed to be tendered as forming part of his evidence in the proceeding to the extent that they contained factual propositions from his own personal knowledge.
I should also note that Mr Swanepoel contended at trial that as he was not subject to any restraints that would prevent him from attempting to gain business from any of PGA’s customers, he did not engage in any wrongdoing. Of course such a contention was misplaced as I will explain later.
Mr Swanepoel was also cross-examined by Mr Fleming. He was evasive in his answers and frequently sought to introduce irrelevant material during the course of cross-examination. He was not a reliable witness. Some foundation for that conclusion is provided by my later discussion.
Mr Yip, Rockman and Berconia
From PGA’s incorporation in 2000 until around early 2019, Berconia Pty Ltd was a supplier of films to PGA. Rockman (Australia) Pty Ltd is a related company to Berconia, which sells food products and plastics. Mr Yip was an employee of either Berconia or Rockman.
On 17 May 2021, the proceeding as against Mr Yip, Berconia and Rockman was dismissed upon those respondents providing various undertakings not to use PGA’s confidential information and copyright works.
Now rather than proceed in the usual fashion with a detailed chronology at this point, let me turn directly to the position of Mr Williams concerning his duties to PGA and his breaches thereof.
The duties owed by Mr Williams to PGA
The impugned conduct of Mr Williams occurred in the period after December 2016 and in particular from around July 2017, during which time Mr Williams was employed in the position of business development manager, until 17 November 2017 when his employment was terminated, and even beyond that point.
Mr Williams did not have a written agreement of employment with PGA. His role as business development manager was governed by an agreement which was partly written, partly oral and partly to be implied. The written component comprised Mr Williams’ duties as business development manager as identified in a position description document, which was provided to Mr Williams in or around December 2016 when he commenced in that role. The duties identified in that document are also broadly consistent with the duties described in a weekly reporting document maintained by Mr Williams during the course of his employment at PGA.
It is not in dispute that Mr Williams was an employee of PGA. He was paid a salary from which PGA deducted tax on a PAYG basis, he was given use of a company car, a company phone, a desk, the PGA desktop, the Surface Pro, and a corporate credit card.
Mr Williams appeared to accept that between about July 2000 and about November 2017 he worked in the business of PGA and received wages as an employee. Mr Williams also admitted that he was responsible to PGA for developing new and existing relationships with PGA’s customers so as to identify opportunities to sell PGA’s products and services.
Further, there was no doubt that Mr Williams by reason of his employment with PGA:
(a)was under an obligation during the term of his employment, and after termination of his employment, to keep confidential information provided to him by PGA;
(b)owed a duty to PGA to maintain trust and confidence with PGA and not to do anything likely to destroy or damage such a relationship of trust and confidence; and
(c)owed a duty to render faithful and loyal service to PGA and not to do anything in conflict between his interest and his duty to PGA.
These implied contractual duties of fidelity and good faith were implied by the employment relationship and the underlying fiduciary relationship.
Now there was a dispute ventilated at trial as to whether Mr Williams was at the relevant time the general manager of PGA rather than the business development manager. I will return to this later.
Let me turn to the question of fiduciary duties. There is little doubt that the employer-employee relationship is an established category of fiduciary relationship, although the scope of any fiduciary duty must be moulded to the nature of the particular relationship and the facts of the case.
As a consequence of his employment with PGA, Mr Williams owed fiduciary duties to PGA:
(a)not to place himself in a position where his interest or his duty to someone else conflicted with his duty, when acting within the scope of his employment, to act in the best interests of PGA; and
(b)not to take advantage of his position as an employee for the benefit of a person other than his employer.
Now the scope of Mr Williams’ duties is informed by the fact that at the time he engaged in the impugned conduct, he held a relatively senior position at PGA, which involved a degree of autonomy and required Mr Williams to engage directly with PGA’s clients. Moreover, in his role, Mr Williams had full access to PGA’s computer systems, emails, information about current and potential customers, and customer relationship management software. He was one of only four employees within the business who had access to all physical and electronic files containing PGA’s confidential and proprietary information.
Now there was a debate in the evidence as to whether Mr Williams was the business development manager or the general manager. Indeed, Mr Williams perceived himself to be in the latter role although in my view the evidence established that he held the former role. But this is a two-edged sword for Mr Williams. If, taking his case, his perception matched the reality, then a fortiori the existence and content of his fiduciary obligations were even more fortified in favour of PGA.
Let me make some general observations.
Generally, a fiduciary is under an obligation not to promote his personal interest by making or pursuing a gain in circumstances where there is an actual conflict, or a real or substantial possibility of a conflict, between his personal interests and those of the persons whom he is bound to protect. Senior employees are precluded from obtaining for themselves or another any property or business advantage belonging to their employer. They are not entitled to appropriate for themselves or divert to another with whom they are or may be associated a maturing business opportunity, particularly one which the employer is actively pursuing.
A fiduciary’s position inhibits him not only in respect of business opportunities that the company is actively pursuing, but also opportunities in which the company might reasonably be expected to be interested, given its current line of business. It is not necessary to show that the opportunity taken by the fiduciary is one that could have been exploited by the company. That is, the pursuit of the opportunity by the fiduciary gives rise to a possible conflict between the fiduciary’s personal interest and ongoing duty, which is unacceptable.

Let me turn then to Mr Williams’ statutory duties.
Mr Williams owed statutory duties to PGA:
(a)pursuant to s 182(1) of the Corporations Act 2001 (Cth), during the term of his employment by PGA, not to improperly use his position as an employee to gain an advantage for himself or someone else or to cause detriment to PGA; and
(b)pursuant to s 183(1), during and after his employment by PGA, not to improperly use information which he obtained because he was an employee to gain an advantage for himself or someone else or to cause detriment to PGA.
Impropriety for present purposes consists of a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers, and authority of the position and the circumstances of the case. Impropriety is to be determined objectively; it does not depend upon the employee’s consciousness of impropriety.
For the purposes of s 183, “information” covers any information that a person may have acquired because of their position in the company. Moreover, that information need not be confidential. Further, the duties owed under s 183 continue after a person ceases to be an employee of the company.
Further, I should also say at this point that the accrual of an advantage or the suffering of detriment is not necessary to establish a breach of the statutory duties. It is sufficient to establish that the conduct was carried out in order to gain an advantage, not that the advantage was actually achieved.
Because the question of the misuse of confidential information looms large in the present case, I should also say something at this point about the equitable duty of confidence before I say something more concerning confidential information.
It is not in doubt that there are three essential elements of an action for breach of an equitable duty of confidence.
First, the information the subject of the claim must have the necessary attribute or quality of confidence and have been identified with specificity rather than generally or globally.
Second, the information has to be obtained or imparted in circumstances identifying or importing an obligation of confidence; this could arise by reason of the nature of the relationship between the parties or the circumstances applying to the particular occasion or context when the information was obtained or imparted.
Third, there has been or there is threatened to be an unauthorised use of that information.
Now in this context it is unnecessary that the recipient of the alleged confidential information appreciated that the circumstances imported an obligation of confidence. It is sufficient that a reasonable person would have so appreciated.
Moreover, where a party has applied skill and ingenuity to produce a compilation, equity may treat the entire compilation of information as confidential, even where some of that information is publicly available.
I should also note that a fiduciary may breach both fiduciary obligations and obligations of confidence by the same conduct where, for example, an employee takes confidential information of his employer without consent and uses it to further a scheme which is contrary to the employer’s interests. The equitable duty of confidence may also be coextensive with an implied duty of fidelity owed by an employee to his employer. Further, such equitable duties survive the termination of the employment relationship.
Confidential information
Let me at this point make some general findings concerning PGA’s confidential information.
As part of its day-to-day business, PGA and its employees created, processed and stored confidential and proprietary information in relation to its existing and potential customers and business. That information included the following categories: (a) customer contact details; (b) customers’ purchase histories; (c) pricing of PGA’s products, which varies between customers based on arrangements with PGA; (d) contracts in place with customers and third parties including suppliers and authorities; (e) internal financial records of PGA; (f) correspondence between PGA and its customers; (g) internal strategy, marketing and product development information; (h) information concerning potential target customers, including pitches, tenders and other business development activities; and (i) film and tray specifications and data sheets for customers.
As to this last category, let me make two points.
First, as to film and tray specifications, these are customised by PGA for each customer and provided to the customer in confidence as part of the contracting process. The process of determining the optimal specification for a customer requires the conduct of trials which involve significant time and expense. As Mr Jeremy Kavnoudias explained, this means that it is difficult to supply films and trays for one customer to another because the size, gauge and structure requirements will often be different.
Second, as to customer specific data sheets, these are used to confirm a customer’s decision to commit to purchasing product from PGA. Whilst there may be limitations in PGA’s ability to control further distribution of the specifications once sent to the customer, PGA does not positively authorise the distribution of such information. PGA would expend considerable effort in compiling the data sheets in the correct format and containing all of the specifications of the product to be supplied to the customer. I should also say at this point that it is no answer that some aspects of this information may have been available and could have been obtained or derived from a third party source outside PGA.
I should also at this point say something about pricing. Given the fluctuations in pricing components and cost base, there is significant commercial value in a competitor knowing what a particular supply price is at a given time, and the margins which could be sustained if this supply price changed.
Now PGA has taken steps to protect the confidentiality of the information through the maintenance of password protected computer systems and physical paper files stored in filing cabinets at the PGA office.
Employees within PGA are given access to the PGA confidential information depending on their role within the business, and on an “as needs” basis. At the relevant time, there were only four employees who had access to all physical and electronic files containing PGA confidential information, one of whom was Mr Williams.
Now in his defence, Mr Williams did not admit that PGA possessed and created information of a confidential and valuable nature pertaining to its business. He admitted that during his involvement with PGA he had access to PGA’s computer systems, files and records, but denied that PGA’s confidential information was disclosed to or otherwise accessible to him in circumstances where he knew or ought to have known that such information was confidential to PGA and that access to such information was only provided to him for the purpose of enabling him to carrying out his duties as an employee of PGA.
In the course of cross-examination, however, each of Mr Williams and Mr Swanepoel conceded that at least some information in issue in the proceeding, including information concerning PGA’s prices and volumes, was confidential to PGA.
But Mr Williams contended that PGA’s data sheets were not confidential. I reject that submission.
First, Mr Jeremy Kavnoudias gave evidence establishing that the data sheets prepared by PGA are confidential, and that they are provided to PGA’s customers in confidence. Mr Kavnoudias’ evidence was that, whilst it is possible that a customer could on-send a data sheet, PGA does not expressly authorise its customers to do that. Further, when PGA sends data sheets to its customers, it only does so in the context of PGA supplying or seeking to supply a particular customer with a particular product. The provision of a data sheet to a customer in those circumstances does not cause the data sheet to lose its quality of confidence. The provision of a data sheet to a customer on a confidential basis is vastly different to the provision of such a document to a competitor without any restrictions as to its use.
Second, PGA’s evidence is that it does not publish its data sheets, and that they are not publicly available.
Third, whilst it may be accepted that in some cases a customer may provide information relating to a product to PGA, which is then used in the preparation of a data sheet, that is not always the case. In some cases, the process of determining the optimal specification for a customer can be a costly and lengthy process. As Mr Kavnoudias observed in cross-examination:
Now, there’s a couple of different ways. A customer can provide certain specifications. We can then recommend certain specifications. So that’s where my comment, there, is saying that it could take six months, and also there’s trialling, there’s travelling, there’s customer trials on the shop floor with staff in attendance. That costs money.
Fourth, whilst it may be accepted that data sheets may comprise a compilation of information provided to PGA by a customer or supplier or other sources, this does not gainsay that there is substantial intellectual effort in the selection of specific information or data and the compilation of that information or data in a specific format to describe a particular product which PGA is supplying to a third party.
Fifth, even if some information is sourced from a customer and may perhaps be the customer’s confidential information, PGA may be bound to protect and observe such confidence in any event.
Mr Williams also contended that the product specification information, as distinct from the data sheets, comprising compilations of product specification information for PGA’s customers was not confidential. But I reject this.
First, even if the specification for a single product might be known to a party or a customer might be willing to share that information with a supplier or potential supplier, knowledge of a single product is very different to knowledge of a range of products supplied by PGA. There is substantial commercial value in the collection of that material in a single document, as it enables a competitor to target a range of clients, already knowing those clients’ product needs and other information regarding their requirements such as usage and pallet configurations.
Second, even assuming that it would be possible to obtain all such information by approaching individual clients directly, the process of gathering that information would involve substantial time and effort, and it is likely that at least some customers would refuse to provide the information or otherwise engage with the requesting party.
Mr Williams also appeared to contend that information concerning the prices and annual volumes of PGA’s products, including the pricing and volume information contained in the documents titled “DonKRC tender details 2.xlsx” (Dons spreadsheet) and “Client list.xlsx” (PGA pricing spreadsheet), was not confidential. I reject this.
First, although it may be accepted that within a particular industry there may be some level of general knowledge of indicative prices or price ranges as between competitors, that information may be inaccurate, incomplete or out-of-date, and therefore of only limited commercial value to a competitor. In any event, such general information is different from precise figures for particular products for particular customers based upon particular volumes.
Second, even if it is accepted that there is not significant variation in the pricing of raw materials and inputs into the price of a product, there are other cost components of prices, including overhead costs that are not common knowledge within the industry and would not be known by competitors. Therefore, even if a competitor might have an idea of the approximate cost base for a product, that competitor would not know precisely what those costs were let alone the ultimate price to the customer.
Third, the information that Mr Williams sent to Mr Swanepoel and Mr Yip was not merely a single price for a single product. Rather, Mr Williams forwarded schedules of PGA’s pricing and volume information. The PGA pricing spreadsheet contained a schedule with pricing and volume information for a range of products supplied by PGA to its customers. The Dons spreadsheet contained a schedule with pricing and volume information for products supplied by PGA to Don Smallgoods, as well as information regarding the prices PGA had submitted to Don Smallgoods in its current tender, for which the competitive business had also submitted a tender. In cross-examination, Mr Williams conceded that the Dons spreadsheet was not publicly available, that PGA would not have given that document to its competitors, and that a competitor would be able to use the information in that document to its advantage. Mr Swanepoel also conceded in cross-examination that the information in the Dons spreadsheet was sensitive information of PGA and that PGA would not want that information provided to him to enable him to compete with PGA in the tender to Don Smallgoods. I should say that the position is no different with the PGA pricing spreadsheet, given that it contains the same type of information for a larger range of PGA’s customers rather than just Don Smallgoods.
Fourth, there is no evidence that volume information relating to a product supplied by PGA is publicly or otherwise widely known. In evidence, Mr Williams suggested, by way of example, that such information was made available to Mr Swanepoel and Swanell Corp through their participation in the same tender to Don Smallgoods. However, that is not so. Mr Williams provided the relevant volume and pricing information to Mr Swanepoel on 27 July 2017 and 14 August 2017, prior to Mr Swanepoel receiving his invitation to participate in the tender on 15 August 2017. Further, even if Mr Swanepoel had developed some knowledge of the range of products required by Don Smallgoods, he had not worked at Don Smallgoods since 2012. Therefore that knowledge would have been out of date at the time he received this material from Mr Williams in July and August 2017.
Fifth, whilst Mr Swanepoel claimed that he did not need the information provided to him by Mr Williams, and that he could have obtained specification and price information from customers or potential customers, he conceded in cross-examination that he would not have had access to some of the information contained in the Dons spreadsheet, namely, information concerning PGA’s current tender, had Mr Williams not sent it to him.
Further, to the extent that generally speaking Mr Swanepoel made similar contentions to those of Mr Williams concerning the characterisation of confidentiality concerning PGA’s information, I would reject them for similar reasons.
Let me turn then to the principal planks of PGA’s case against Mr Williams.
Liability of Mr Williams
In my view the evidence clearly established that in and from July 2017, whilst an employee of PGA, Mr Williams began preparations together with Mr Swanepoel and Mr Yip to establish a business to provide film packaging for manufacturers in the food industry in competition with PGA, namely, what I have defined as the competitive business. By doing so, Mr Williams breached his contract of employment with PGA, breached fiduciary and statutory duties owed to PGA, misused PGA’s confidential information, and infringed PGA’s copyright.
In his defence, Mr Williams denied that he began preparations to establish the competitive business.
Now the only written evidence that Mr Williams adduced on this question was to assert that he had not conducted any business that in any way conflicted with or competed with PGA since his resignation and that he had not spoken to any client nor had he supplied any samples or quotes or approached any PGA clients to supply any similar product. But that evidence was directed at Mr Williams’ conduct since his resignation. In my view, Mr Williams has not given any substantial evidence to justify his conduct during his employment with PGA.
Mr Williams also conceded in cross-examination that his written evidence was not correct. During the trial it was not seriously disputed that Mr Williams began preparations to establish the competitive business with Mr Swanepoel and Mr Yip, including by targeting or seeking business from PGA’s customers, both during his employment with PGA and after his resignation from PGA. Mr Williams took all such steps without the knowledge of PGA.
The competitive nature of the new business, and the surreptitious manner in which Mr Williams sought to establish it, is encapsulated by an email that Mr Williams sent to Mr Swanepoel and Mr Yip on 27 July 2017 with the subject “General starting” which I should set out:
Good Afternoon Guys,
I have been thinking about how we get started with this and want to summarize what we all need to do. Please make sure you reply to my Gmail account.
Jonny,
1.I’m using your private email address. When we discussed a JV, are you thinking of you personally or with the Factory?
2.Please speak to the Factory and advise we have 2 clients that we believe can and will move quickly. Please see the attached specs. So that we understand the terminology, when we quote a gauge, we are talking about the combined including a nominal 50 um LLDPE. So a spec that reads 400 um, will be 350 um PVC or APET with a 50 um LLDPE. All jobs will be a minimum roll weight of 50 kilos. Is there any price break for larger rolls again?
3.We need to get some clarity around the pricing based on these 2 clients to start with. We will be quoting on FCL deliveries direct to the clients store, we will need to hold one months supply of each spec ongoing as a backup and a further quantity of mill rolls available to slit to any clients size in urgent cases. We can use Slit film as we know he understand the product and the tolerances.
4.We also need a price on HB laminated APET and PVC. We understand that at the moment you cannot extrusion coat HB, so lets work out a price on adhesive laminating so we can get started.
5.        We will work to a option for supplying HB PE to the factory.
6.We need to determine if Jackie in Shantou is a viable supply option for trays to our clients. This is probably my preferred option as we can get material there easily and shipping can be consolidated with other containers from the factory. I have also attached a file with a new product to be quoted. Material for this item will be HB APET.
7.When I asked last night about the volumes, I was referring to what Sealed Air has been purchasing st the peak and what it is down to now.
Grant,
1.        Speak to our mate about what we need to do to shift there work over
2.        Speak to Primo and JBS
3.Have a discussion with Sandy around the reject material we discussed and the costs of slitting from Mill Rolls in point 3 above.
Peter,
1.I will make a list of manufacturers that are using Klockner, Polyraz or Multivac materials for us to approach and hold preliminary discussions if i see fit or arrange for Grant to meet on his own.
2.        I have sent the attached baby food file to Vacupack for a local quote.
Please feel free to add anything to this list so we can move from a discussion to a supply arrangement as quickly as possible.
Peter
Attached to this email was a file labelled “usages.xlsx”, which I will discuss further later.
Mr Williams sent that email from his personal Gmail account, and asked for replies to be sent to the same address. He sent the email to Mr Yip at his personal email address, rather than his work email. He asked Mr Yip to “[p]lease speak to the Factory and advise we have 2 clients that we believe can and will move quickly”, and he attached specification documents for those clients. He asked Mr Swanepoel to “[s]peak to our mate about what we need to do to shift there [sic] work over” and “[s]peak to Primo and JBS”. Finally, Mr Williams stated that he had “sent the attached baby food file to Vacupack for a local quote”.

Moreover during trial, it was revealed that one of the two clients referred to by Mr Williams in the 27 July 2017 email was Don Smallgoods. At that time, Don Smallgoods was one of PGA’s biggest customers, representing approximately 50% of its total business.
Now at trial Mr Williams appeared to contend that he was entitled to take PGA confidential information and PGA copyright works to use for his own personal benefit because he had an ownership interest in PGA. I would reject this contention.
First, to the extent Mr Williams had an interest in PGA during the relevant period, it was limited to a single “L” class share in Foden Holdings Pty Ltd, PGA’s holding company. That shareholding did not confer upon him any rights other than the right to participate in any dividend declared and payable by Foden, which dividend was payable in the unfettered discretion of the director of Foden, Mr George Kavnoudias.
Second, there is no probative evidence to support the allegation in his defence that he had any ownership interest, legal or equitable, in PGA beyond his ownership of the single “L” class share in Foden. Moreover, his version of events concerning the genesis of the initials PGA went nowhere.
Third, even on Mr Williams’ case that he was a co-owner of PGA, he would not have been entitled to take and use PGA confidential information or PGA copyright works and use those materials for his own personal gain without the authorisation of PGA, and to the detriment of PGA. The PGA confidential information and PGA copyright works in this case are the property of PGA. PGA was not Mr Williams’ corporate “alter ego”. Even on his case, he was at best a co-owner of the business with George and Athena Kavnoudias, and he would not have been entitled to use the business or its information or property at his discretion without reference to either George or Athena Kavnoudias.
Fourth, in any event, Mr Williams was an employee of PGA, and as an employee he owed contractual, equitable and statutory duties to PGA, all of which required him to act in the best interests of PGA. Contrary to those duties Mr Williams took and used the PGA confidential information and PGA copyright works to further his own personal interests.
Competition for PGA’s customers
Let me at this point say something further about Mr Williams’ conduct in conflict between his duty and his interest.
In the period between August and November 2017, the evidence establishes that Mr Williams took various preparatory steps to establish the competitive business together with Mr Swanepoel and Mr Yip, including preparing a price list and validating products and samples for the competitive business to supply potential customers in competition with PGA, and obtaining quotes and pursuing supply arrangements for film packaging products and plastic trays for supply by the competitive business, including from current and former suppliers of PGA.
But Mr Williams’ conduct during this period was not limited to just those preparatory steps. The evidence also reveals that Mr Williams took steps, together with Mr Swanepoel and Mr Yip, to solicit business from existing and prospective PGA customers, with the intention of securing those customers for the competitive business to the exclusion of PGA. This conduct put Mr Williams in direct conflict with his duties and obligations to PGA.
Further, in engaging in this conduct Mr Williams used PGA’s confidential information.
Let me go through some of PGA’s customers.
In August and September 2017, Mr Williams was involved in the preparation and submission of a tender by the competitive business to Don Smallgoods, a substantial customer of PGA since 2008.
At the same time, Mr Williams was responsible for preparing and submitting PGA’s tender to Don Smallgoods, which he accepted was a secure process, as between Don Smallgoods and the entity submitting the tender.
The pricing used in the tender by the competitive business was prepared by reference to volume and pricing information to which Mr Williams had access in his role as an employee of PGA, and was designed to deliberately undercut the prices submitted by PGA in its tender to Don Smallgoods. The fact that a tender was submitted to Don Smallgoods, without PGA’s knowledge, was conceded by both Mr Williams and Mr Swanepoel at trial, although Mr Swanepoel contends that the tender was submitted by Swanell Corp. Even if this is correct, this does not absolve Mr Williams of his breaches of duties arising from this conduct, given his involvement in the tender which put him in direct conflict with his duties and obligations to his employer, PGA.
I was also taken to documents on or around 14 August 2017 passing between Mr Williams and Mr Swanepoel where Mr Williams clearly conveyed to Mr Swanepoel confidential information of PGA concerning historical data relating to Don Smallgoods and also information concerning PGA’s proposed tender to Don Smallgoods. I do not need to set out the detail. This ought not to have occurred.
Further, in October and November 2017, Mr Williams with Mr Swanepoel and Mr Yip continued to pursue Don Smallgoods as a customer for the competitive business. An email chain with the subject “Re: Sean updated” between Mr Williams and Mr Swanepoel on 2 and 3 October 2017 concerned what appear to be speaking notes for Mr Williams to present to Don Smallgoods prepared as a series of bullet points:
• I developed the Berconia laminated product 8 years ago, walked away from it for personal reasons and the fact that I couldn’t offer an import material against the PGA supply model for the reasons that I project as the benefits of local supply and how it would affect PGA clients if I was selling imported material for $3. Particularly DONS.
• Introduced Sealed air in an effort to help Berconias global objective
• Deal was they would have exclusive supply Aust & NZ ...... verbal agreement
• They will walk away from that offer to come to us because business at sealed air has halved in 4 years and because of our relationship
• Qualified supply samples will be here next week for a trial
• Amcor option not qualified, supplier was only supplying PVC not with PE - so the structure is a risk. They are not and end to end supply chain like we will be and always have been.
• We will hold mill logs for emergency and slit locally as required
• Decided over a year ago PGA model not sustainable have been looking for an exit strategy. We lost Tibaldi business Grant had brought to us and I then realised we were doomed long term. You have seen it again now as soon as a tender is run the result is imported pre sit in FCL.
• Decided after working with Grant for the last 2 years that a joint venture, me, Grant and Berconia would be the only way it worked. We all bring something to the table ........ . over 70 years combined experience.
• Supply model includes local stock holding of 6 weeks supply for all items
• We have other smaller clients transitioning as we speak, but we need a good cornerstone account and Dons is the one. I also do not want to lose the Don account I know the people and would love to continue working with you.
• We have a qualified APET product as well
• We can transition you in 60days when you are ready, I am proposing Feb 2018 we start. Phase 2 will be an APET solution where possible.
• How do we make this happen, how do we manage this with Don now, how do you sell this to Don? We need your guidance?
• The 3 cents PGA gave in tender was goodwill gesture only, same as what was offered to DJ. Simply cannot sustain an ongoing further reduction.
• Any offer from PGA once I leave will be a desperate effort to keep the work and not sustainable
[Emphasis added.]
Now the email chain shows that the speaking notes were attached to an email sent by Mr Swanepoel to Mr Williams on 2 October 2017. Mr Williams replied on 3 October 2017 stating “Excellent”.
The statements in the document that I have emphasised indicate that Mr Williams was seeking to undermine PGA’s position in its tender to Don Smallgoods, whilst Mr Williams was still an employee at PGA. Further, Mr Swanepoel knew that to be the case. I will discuss the origin and preparation of the speaking notes including the uncertainty regarding their author later.
In cross-examination, Mr Williams was asked questions about a reporting document he prepared which he said was to “maintain records that we would discuss” when Mr Williams met with Mr George Kavnoudias. The document, which was prepared in October and November 2017, included the following entries:
(a)In the worksheet titled “Week ending 13-10”: “Continue report to Sean regarding advantages of staying with PGA and what we have done for them in the last 5 years.”
(b)In the worksheet titled “Week Ending 20-oct”: “Continue report to Sean regarding advantages of staying with PGA and what we have done for them in the last 5 years.”
(c)In the worksheet titled “Week ending 27-10”: “Spoke to Sean @ Dons, second round of bidding will come out in the next few days. Process will allow for a statement to be attached to the bid to validate our proposal and give some history around our supply model. Down to 4 Bidders. PGA, Globus, Amcor and another importer. Globus cheap on PET, to [sic] expensive on PVC. Amcor the cheapest, not validated???? Other importer in excess of $3.00. No local supply currently.”
On the face of those entries, it is apparent that Mr Williams was suggesting to Mr Kavnoudias that Mr Williams was at the time trying to convince Don Smallgoods to remain a client of PGA. But the reality was that at that time Mr Williams was attempting to set up his own competing business and was involved in a tender submission on behalf of that business to Don Smallgoods, undercutting PGA on price.
Let me now say something about Northside.
Between the end of July and November 2017, Mr Williams together with Mr Swanepoel and Mr Yip engaged in preparatory work for the competitive business for the purposes of targeting Northside, an existing client of PGA. This work included obtaining quotes for trays and film packaging products to supply to Northside, developing pricing for the supply of such products, and testing products for supply to Northside. This work was done by reference to tray drawings for Northside products which Mr Williams provided to Mr Swanepoel and Mr Yip and by reference to PGA’s tray specifications for Northside products.
I should say that in evidence were various communications particularly in October 2017 passing between Mr Williams, Mr Swanepoel and Mr Yip concerning Northside where it would seem that PGA’s confidential information was likely to have been discussed.
Further, on 27 October 2017, Mrs Ali Iacobbe of Northside sent an email to Mr Williams at his personal Gmail account in relation to an order of small and large trays.
On 30 October 2017, Mr Williams forwarded this email to his PGA email account, and then forwarded that email to Mr Swanepoel with a covering note in which he cautioned against future direct contact between himself and Northside, stating:
Hi Grant,
Can you contact this lady about the trays and advise, best we stop communicating directly as we discussed.
…
Let her know to contact you directly. Some lady called Monique has been calling the office when she has needed to follow up on things. I will let them know to contact you only but maybe you should as well when you go there.
An email exchange between Mr Swanepoel, Mr Williams and Mr Yip indicates that the competitive business supplied film packaging products to Northside on 21 November 2017, shortly after Mr Williams resigned from PGA.
Finally, in my view the evidence also reveals that shortly before he resigned from PGA, Mr Williams sought to manipulate PGA’s pricing with Northside, thus making PGA uncompetitive, by suggesting that PGA increase its prices notwithstanding PGA’s concern that Northside might take its business elsewhere.
Mr Williams had been aware of potential pricing issues at Northside since at least 31 July 2017, but he never made PGA aware of those concerns.
On 15 November 2017, two days before his resignation, Mr Williams sent a letter to Mr Pino Iacobbe, the managing director of Northside, to inform him of the price increase.
Following Mr Williams’ resignation, Mr Jeremy Kavnoudias asked Mr Swanepoel, who remained a contractor to PGA at the time, to arrange a meeting with Northside, but Mr Swanepoel dissuaded Mr Kavnoudias from doing so. Then, on 4 January 2018, Mr Iacobbe emailed Mr Swanepoel stating:
Further to the PGA letter dated 15 November 2017 regarding a price increase, I would like to inform you that we have reviewed the market and have found alternative supply at much more competitive rates, on this basis we have decided to end our dealings with PGA at this time.
As a result of this conduct, PGA was left with no commercial alternative but to offload bespoke stock purchased for Northside to Northside at a substantial discount.
Now Mr Williams denies that he deliberately increased prices to Northside prior to leaving PGA, to make PGA’s prices less competitive, and to give himself and Mr Swanepoel and Mr Yip a competitive advantage with their own attempts to solicit business from Northside. But in my view it is likely that he did so.
Mr Williams knew about pricing issues with Northside since July 2017, but did not make Mr Jeremy Kavnoudias aware of this. The point is that he never informed Mr Kavnoudias of these issues when he first became aware of them or subsequently.
Mr Kavnoudias’ evidence, which I accept, was that Mr Williams in early November 2017 suggested that PGA increase its prices for Northside and Propan, approximately two weeks before he left PGA. Mr Williams denied that he suggested the price increases, but he accepted in cross-examination that he was a party to the conversation. Further, although Mr Williams’ evidence was that he had not decided his precise leaving date at that point, by this time he knew that he was about to leave PGA imminently, even if the precise date was not known.
It is not in dispute that Mr Williams sent the price notification letter to Northside on 15 November 2017, two days before he left PGA. It is also not in dispute that Mr Williams supplied or at least directed Mr Yip to supply sample rolls to Northside on behalf of the competitive business a week or so after he left PGA.
Given that Mr Williams was aware of pricing issues at Northside which he never communicated to PGA, was involved in discussions at PGA regarding the increase of PGA’s prices to Northside, was at the same time targeting Northside as a customer on behalf of the competitive business, and supplied sample rolls to Northside immediately after he left PGA, in my view Mr Williams did suggest to PGA that it put up its prices to Northside to make PGA’s prices less attractive as against the competitive business. I should say though that I do not attribute knowledge of such a strategy to Mr Swanepoel.
Let me now say something about Propan.
Propan is a smallgoods manufacturer which has been a customer of PGA since about 2017. Propan was one of the customers targeted by Mr Williams via the competitive business.
In my view Mr Williams also sought to manipulate PGA’s pricing with Propan, thus making PGA uncompetitive, by suggesting on 15 November 2017 that PGA increase its prices. Notice of the price increase was delivered to Propan by Mr Swanepoel on behalf of PGA.
Subsequently, at a meeting on 28 February 2018 with the managing director of Propan, PGA was informed that the product supplied by PGA had not been fit for purpose as it was not high barrier. Interestingly, Mr Williams had previously told Mr Kavnoudias in early 2017 that Propan did not want high barrier film from PGA. From late November 2017, shortly after Mr Williams resigned from PGA, the competitive business supplied sample rolls of products to Propan.
Let me now say something about other customers.
In August and September 2017, Mr Williams together with Mr Swanepoel and Mr Yip made offers to Amcor, a customer of PGA, for the supply of PVC and APET on behalf of the competitive business, in competition with PGA.
On 4 August 2017, Mr Williams received an email at his PGA email account from Mr Stewart Dodson of Amcor requesting a quote for 380um PVC / 40um LLDPE (clear). Mr Williams forwarded that email from his Gmail account to Mr Swanepoel and separately forwarded that email from his Gmail account to Mr Yip asking him to quote on that item.
On 16 and 17 August 2017, Mr Swanepoel and Mr Williams, through his Gmail account, exchanged emails in which they discussed quoting Amcor on various PVC and APET products. On 17 August 2017, Mr Williams emailed Mr Yip and Mr Swanepoel, asking Mr Yip to quote on those items. On 23 August 2017, Mr Swanepoel and Mr Williams, through his Gmail account, exchanged emails concerning proposed prices for Amcor. On 24 August 2017, Mr Swanepoel emailed Mr Dodson of Amcor with quotes for the PVC and APET products.
Further, in August and September 2017, Mr Williams attempted to divert potential sales to Zedtex, which is part of the Smith Uren group of companies. Zedtex was a client that PGA was pursuing at the time Mr Williams left PGA. It was also a customer that was being targeted by the competitive business. On 22 August 2017 Mr Williams received an email at his PGA email account from Ms Maggie Bagnall of Smith Uren, seeking a quote for various PET products. Mid-way through their email exchange, Mr Williams began communicating with Ms Bagnall via his Gmail account, and provided prices to Ms Bagnall for the supply of the requested PET products. The pricing provided to Ms Bagnall appears to have been based on a quote provided by Mr Yip, which Mr Williams requested in an email from his Gmail account on 24 August 2017, which was also sent to Mr Swanepoel.
Further, Tibaldi Smallgoods Pty Ltd is a smallgoods manufacturer and a potential PGA customer. On 6 September 2017, Mr Swanepoel, on behalf of the competitive business, made a commercial proposal for the supply of laminate materials to Tibaldi from 1 February 2018 onwards. Mr Swanepoel forwarded the email he sent to Tibaldi to Mr Williams, who responded:
Great work mate.
Cant wait till we are free to approach all the potential clients.
Now in addition to the above, the evidence reveals that during Mr Williams’ employment with PGA, the competitive business also targeted other PGA customers, including KPBD and Caspak, including by the use of PGA confidential information.
Interim summary
In summary, in my view Mr Williams misused PGA’s confidential information and acted in conflict of interest by the following activities.
First, the provision of specifications for PGA customers by Mr Williams to Mr Yip for the purpose of determining quotes for the competitive business.
Second, the provision of product specifications and pricing and volume information in the PGA pricing spreadsheet, which contained information concerning all of PGA’s customers at the time including film specifications, annual volumes, prices and revenue relating to PGA’s customers.
Third, the collation of commercially sensitive information relating to the PGA business, including potential customer leads, pricing information, product specifications, information concerning quotes and tenders, and PGA’s business activity statements and financial statements, which Mr Williams forwarded to his personal Gmail account shortly before or on the day of his resignation from PGA.
Fourth, the use of tray specifications and drawings for products supplied by PGA to Northside.
Fifth, the use of PGA and competitor pricing information for the purposes of preparing and submitting the tender to Don Smallgoods.
Sixth, the diversion of commercial opportunities from PGA to the competitive business, including by the submission of competitive tenders and quotes on behalf of the competitive business.
Further, it is also clear that Mr Williams continued to misuse PGA’s confidential information after he resigned from his employment with PGA.

First, on 21 November 2017, Mr Williams emailed Mr Yip and Mr Swanepoel attaching a spreadsheet entitled “Sample delivery details.xlsx”, which spreadsheet identified PGA’s customers by name (Propan, Northside and Tibaldi) and by reference to film specifications used by these customers.
Second, on 28 November 2017, Mr Williams emailed Mr Swanepoel, and asked Mr Swanepoel to send him copies of data sheets for PGA customers that Mr Williams had previously sent to Mr Swanepoel, presumably before Mr Williams resigned from PGA. In his email, he said:
I want to start working on Data sheets for everyone.
I know I sent you some for Pino [(of Northside)] and Rosey [(of Propan)].
Can you send them back to me so I can use as a template.
Mr Williams subsequently prepared data sheets for use in connection with the competitive business.
Third, on 6 December 2017, Mr Swanepoel sent Mr Williams an email, forwarding copies of tray specifications from Northside. Those specifications had previously been sent by Mr Williams to Mr Swanepoel in September 2017 for use in connection with the competitive business.
More generally, I am satisfied that in the period after Mr Williams ceased his employment with PGA, he together with Mr Swanepoel and Mr Yip continued to pursue the business arrangements that were put in place before Mr Williams’ employment with PGA came to an end. This included continued efforts to solicit customers of PGA, including in particular Northside, Propan, Don Smallgoods, and Caspak.
Let me now turn to a slightly different matter.
Sale of obsolete stock
In August 2017, Mr Williams acquired substantial amounts of obsolete stock from Don Smallgoods in his capacity as an employee of PGA, and together with Mr Swanepoel utilised Slit Film Pty Ltd to process these films for resale by the competitive business.
It is clear that Mr Williams and Mr Swanepoel sought to conceal this activity from PGA. On 4 August 2017, when discussing the transportation of the stock for processing with Mr Swanepoel, Mr Williams stated in an email from his Gmail account:
Next issue is transport to collect. I am hesitant to use Leeches as their drivers are very talkative and they will tell my guys that they picked up PGA film and took it to Sandy.
Do you have a freight company we can use to pick it up?
Mr Williams later organised at least two shipments from Don Smallgoods to Slit Film using Les Chapman & Son, a transport company. In an email exchange between Mr Williams and Mr Swanepoel on 16 January 2018 after Mr Williams had left PGA concerning the product at Slit Film, Mr Williams stated, inter-alia, “You wanted me to keep away because it was sourced before I finished”. Mr Williams’ conduct deprived PGA of the opportunity to rework and on-sell the obsolete stock from Don Smallgoods, for the benefit of the competitive business.
Now Mr Williams appeared to contend that he was authorised by PGA, or that he did not need authorisation from PGA, to collect a substantial volume of obsolete stock from Don Smallgoods for use by the competitive business. But Mr Williams was not entitled to take that obsolete stock, and he deprived PGA of the opportunity to do so.
Now Mr Williams’ evidence was that a sample of stock from Don Smallgoods was delivered to PGA for the purposes of enabling PGA to evaluate the product, but that PGA was not interested in taking the balance of the stock. Mr Jeremy Kavnoudias’ evidence was that he recalled that PGA received a pallet of obsolete stock from Don Smallgoods, but did not recall anything in terms of repurposing it. But he confirmed in cross-examination that PGA did not reject the opportunity. His evidence was that PGA was never made aware of the volume of obsolete stock which was being offered to it, and that had he known that there were two semitrailer loads of obsolete stock up for offer, PGA would not have passed up that opportunity.
In cross-examination, Mr Williams claimed that he did not believe he needed authorisation from PGA to collect the obsolete stock. However, in the 4 August 2017 email to Mr Swanepoel regarding collection of the obsolete stock, Mr Williams wrote what I set out earlier.
In cross-examination, Mr Williams accepted that he did not want PGA to know that he was collecting this film from Don Smallgoods and claimed this was because he “knew it would create tension”.
I do not accept Mr Williams’ evidence that he thought he was authorised or did not need authorisation to acquire the obsolete stock from Don Smallgoods. If Mr Williams had held that belief, there would have been no reason for him to have been hesitant to use a freight company familiar with PGA to collect the stock. If Mr Williams was authorised to take the stock, it would not have created any tension between him and PGA.
In my view, by acquiring the obsolete stock from Don Smallgoods, Mr Williams took advantage of a valuable opportunity offered to him in his capacity as an employee of PGA for his own benefit, without PGA’s authorisation, and in circumstances where he knew he was not entitled to do so.
Other matters
Let me now turn to some other aspects of Mr Williams’ conduct.
First, Mr Williams had set up an email redirection rule on his PGA email account, which automatically forwarded all of Mr Williams’ PGA emails to his personal Gmail account. The creation of the forwarding rule was not authorised by PGA or known to PGA, and it was not company policy to allow company information to be redirected this way.
Now Mr Williams asserted that his email accounts were programmed by Mr Rahat of XpressteX to enable him to receive his personal Gmail emails on those computers and to forward PGA emails to his Gmail account so that he could access them remotely. Mr Rahat’s evidence was that XpressteX staff did not create, nor were they authorised to create, such a rule, and that Mr Williams created the redirection rule of his own accord. Mr Williams cross-examined Mr Rahat, but I accept Mr Rahat’s evidence on this issue.
Second, the forensic examination of Mr Williams’ home computer, a Lenovo desktop, indicated that he had downloaded emails from his PGA email account to that computer, via his personal Gmail account. Indeed, the documents relied upon by PGA in this proceeding are largely derived from files retrieved from Mr Williams’ Lenovo desktop and his personal Gmail account.
Third, in September 2016, Mr Williams purchased the Surface Pro which he used in connection with his work at PGA, and on which he could access his PGA emails and files stored on the PGA system remotely.
Now in about September 2017, Mr Williams reported to PGA that the Surface Pro had been stolen during a visit to a client’s premises, namely, Don Smallgoods. But despite that claim, the Surface Pro was later “found” and returned to PGA in December 2017 via Mr Williams’ former lawyers, without any explanation regarding its whereabouts prior to its return. The Surface Pro was returned in its original factory state with all files deleted, and PGA was unable to recover any files previously stored on the device. However, PGA was able to determine that Mr Williams last utilised Microsoft One Drive to synchronise PGA data between the PGA desktop and the Surface Pro at 4.30 pm on 17 November 2017.
Fourth, on 16 November 2017, the day before he resigned from PGA, Mr Williams entered PGA’s offices after hours, and removed unidentified items and a substantial volume of physical files from around his workstation, including documents from his desk and from the filing cabinet by his desk, which had been full of work files.
Now in his evidence Mr Williams claims that the documents he collected from PGA were, for the most part, a collection of personal documents he had accumulated over 17 years, and that he has made all of those documents available for inspection by PGA.
Now the evidence does not reveal precisely what physical documents were taken by Mr Williams on 16 November 2017. But there is evidence to suggest that in the period immediately following Mr Williams’ departure, a number of PGA’s physical files, including files containing information concerning costings for jobs, customer-related files and files containing PGA’s financial information, went missing and remain so. In cross-examination, Mr Williams maintained his evidence that he did not take those physical files, but could not provide any other explanation for them going missing. I am not able to resolve this question.
Fifth, the evidence indicates that prior to his resignation from PGA, Mr Williams deleted a significant number of emails from his PGA email account using techniques to permanently delete the data and a substantial volume of data from the PGA desktop and the PGA share drive, and from the Surface Pro.
Whilst attempts were made by PGA to recover the missing emails and files, many of the files were unrecoverable, including files from the PGA share drive.
In his written evidence, Mr Williams claimed that the files that were deleted related to his Gmail account, personal photos and music files, and that he did not delete any emails or files that related to PGA other than what was on his Gmail account. But at trial Mr Williams conceded he did delete emails from his PGA email account, contrary to his sworn evidence.
In my view it is likely that Mr Williams not only deleted emails from his PGA email account but also other files from various PGA devices.
The deletion by Mr Williams of emails and files from various PGA devices constitutes a further instance of Mr Williams contravening his various duties.
Moreover, the deletion of this data also frustrated or harmed PGA by impeding its ability to compete in the market, including during the period in which the competitive business was being pursued.
Moreover, it is also apparent that Mr Williams continued to take steps to conceal his dealings in the competitive business after PGA commenced proceedings against him.
First, from at least 5 April 2018, Mr Williams used his wife’s Hotmail account to communicate with Mr Swanepoel and Mr Yip in relation to the competitive business. Mr Williams had previously linked his Gmail account to the Hotmail account on 16 October 2017.
Second, at 7.08 am on 14 June 2018, Mr Williams emailed Mr Swanepoel from his wife’s Hotmail account stating:
Grant,
Going to get my electronic files copied this morning.
Please don’t email or text or call till i make contact this afternoon.
Later that day, one of the forensic IT consultants engaged by PGA, Mr McCreesh, conducted an inspection of Mr Williams’ Lenovo desktop, his personal mobile phone and Mr Williams’ Gmail account. I infer that it is likely that the statement “Going to get my electronic files copied this morning” was a reference to the fact that Mr Williams’ devices were going to be imaged during the inspection to be conducted by Mr McCreesh later that day, and that Mr Williams asked Mr Swanepoel not to contact him to ensure that those communications were not present on the devices during the inspection.
Third, the day before the inspection conducted by Mr McCreesh, it appears that Mr Williams attempted to recover deleted emails from his Gmail account, but received confirmation that those emails had been permanently deleted and were not recoverable. I infer that it is likely that Mr Williams’ attempted recovery was done to confirm that the emails which had been deleted from his Gmail account would not be recoverable during the inspection scheduled to take place the following day.
Copyright infringement
PGA claims that Mr Williams has infringed copyright in the following works of which it claims to be the owner of the copyright, as a result of Mr Williams’ unauthorised reproduction of those works (ss 36(1) and 115(1) of the Copyright Act 1968 (Cth)):

Description

Date

Peter Williams PGA employee weekly activity reports including PGA costing calculations and CRM record

10 and 16 November 2017

PGA costing calculations

16 November 2017

Letters from PGA to customers (Northside and Propan)

15 November 2017

Letters from PGA to customers or potential customers (Primo Smallgoods, McCormick Foods and Tibaldi)

13 April 2012, 9 October 2012 and 12 April 2016

PGA customer specifications

21 February 2014 and 26 November 2014

In my view the works were created by employees of PGA, such as Mr Williams and Mr Jeremy Kavnoudias. Further, during the course of cross-examination, Mr Kavnoudias said that part of PGA’s intellectual property was in the particular structure or combination of films for its specific clients and the technical data sheets.
In my view, and by reason of the statutory presumption under s 35(6), PGA is the owner of copyright in such works. And PGA did not authorise Mr Williams to copy or use any of such works outside the terms of his employment or for any purpose unconnected with the business of PGA.
Mr Williams sent the PGA copyright works from his PGA email to his personal Gmail account in the period immediately prior to him leaving PGA. These were acts of unauthorised reproduction.
There were also further unauthorised reproductions given the indiscriminate and wholesale forwarding of emails by Mr Williams from his PGA email address to his personal Gmail account. For the moment I do not need to detail these.
By reason of this conduct, Mr Williams has reproduced and so infringed PGA’s copyright in the relevant works.
Further, having regard to Mr Williams’ conduct more generally, his infringement of the PGA copyright works appears to have been flagrant within the meaning of s 115(4), making him liable to additional damages.
Conclusion
In summary and based upon my findings set out above, PGA has established its pleaded case against Mr Williams concerning:
(a)breaches of his employment agreement;
(b)breaches of his ss 182 and 183 duties;
(c)breaches of his equitable duty of confidence;
(d)breaches of his fiduciary duties in all of the manifestations that I have referred to above; and
(e)infringement of copyright.
However, in terms of Mr Williams’ breaches of his fiduciary duties, I am not satisfied that such breaches were fraudulent and dishonest. The significance of this last observation should become apparent in a moment.
Let me now turn to the case against Mr Swanepoel and Swanell Corp.
Liability of Mr Swanepoel and Swanell Corp
The claims made against Mr Swanepoel and Swanell Corp that are still left in the frame are claims of accessorial liability.
It is said that they aided or abetted or have been directly or indirectly involved or knowingly concerned in Mr Williams’ breaches of his statutory duties to PGA.
Further, it is said that they knowingly assisted in Mr Williams’ breaches of his equitable duty of confidence and his breaches of fiduciary duties.
Let me set out briefly some relevant principles.
First, in terms of the ss 182 and 183 breaches, a person is “involved” in a contravention if the person has aided, abetted, counselled or procured the contravention or has induced the contravention, or has been in any way directly or indirectly, knowingly concerned in, or party to, the contravention.
Now PGA has proved the underlying contraventions by Mr Williams. But it must prove that Mr Swanepoel and Swanell Corp knowingly participated, that is, that Mr Swanepoel had actual knowledge at the relevant time of each essential matter going to make up the contraventions. Moreover, actual knowledge may be inferred where there is a combination of suspicious circumstances and a wilful failure to make inquiry. In my view, Mr Swanepoel had such actual knowledge. Moreover, Mr Swanepoel’s state of mind is to be attributed to Swanell Corp.
Second, as to the claim of knowing assistance concerning Mr Williams’ breach of fiduciary duties, the relevant principles are not in doubt concerning the knowledge requirement.
The relevant knowledge must be established at one of the following four descending but ever expanding levels explicated by Peter Gibson J some decades ago, being: (a) actual knowledge; (b) wilfully shutting one’s eyes to the obvious; (c) wilfully or recklessly failing to make such enquiries as an honest and reasonable man would make; and (d) knowledge of circumstances that would indicate the facts to an honest man. The fifth level, being knowledge of circumstances that would put an honest and reasonable man on enquiry, is not yet part of Australian law; this lack of present acceptance is because this fifth level is perceived to disregard equity’s concern for the state of conscience of the alleged miscreant.
But to establish such knowledge is not in and of itself sufficient. The relevant breach of fiduciary duty must have a particular characterisation in terms of the conduct of the principal actor, namely, Mr Williams, which is said to have been knowingly assisted by the secondary actor, namely, Mr Swanepoel. The relevant breach of fiduciary duty must be dishonest and fraudulent. Mere breach of fiduciary duty without dishonesty and fraud is not sufficient to establish accessorial liability. Dishonesty in this context may be established by conscious impropriety including knowingly appropriating another’s property or information, whether or not the wrongdoer sees nothing wrong in his behaviour. And in terms of explaining what dishonesty is not, it may be said that an honest person:
(a)does not intentionally deceive others to their detriment;
(b)does not knowingly take others’ property; and
(c)does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of beneficiaries.
Third, as to the claim of knowing assistance in terms of a breach of an equitable duty of confidence, although the relevant cascading levels of knowledge that I have just discussed may still apply, nevertheless it is not necessary to characterise the breach in the same way as one might for a claim concerning knowing assistance in a breach of fiduciary duty.
Let me then turn to the claims.
In my view, Mr Swanepoel and Swanell Corp were involved in Mr Williams’ contraventions of ss 182 and 183, and knowingly assisted Mr Williams’ breaches of his equitable duty of confidence to PGA.
First, Mr Swanepoel was intimately involved in the establishment or attempted establishment of the competitive business. The first email exchanged between Mr Williams, Mr Swanepoel and Mr Yip on 27 July 2017 indicates that the competitive business would be set up as a joint venture between those individuals in equal one third shares. Moreover, Mr Swanepoel took an active role in the development of the competitive business.
Second, whilst Mr Williams was still an employee at PGA, Mr Swanepoel took on the “client facing” role for the competitive business. It was suggested, for example, that Mr Swanepoel’s company logo be used for the business “for the time being”. This enabled Mr Williams to conceal his involvement in the development of that business, thus facilitating his breaches of duties. Examples of this conduct disclosed in the evidence include the following.
In August 2017, Mr Swanepoel obtained quotes for various PET and PVC plastic products from a director of Sanwa Pty Ltd, a supplier to PGA. PGA believes that the contact with Sanwa was driven by Mr Swanepoel on behalf of the competitive business because Mr Williams was known to Sanwa as an employee of PGA at the time.
In September 2017, Mr Swanepoel was responsible for submitting via Swanell Corp a tender to Don Smallgoods on behalf of the competitive business, which tender had been prepared in conjunction with Mr Williams with a view to transitioning Don Smallgoods from PGA to the competitive business in early 2018. Mr Swanepoel refers to Swanell Corp’s participation in that tender in his affidavit.
In October 2017, Mr Yip arranged sample products for Mr Williams for the competitive business. On 2 October 2017, in a WhatsApp message group entitled “Secret Group”, Mr Yip stated “Peter, samples will arrive Melbourne and Sydney warehouse on 14/10/17, Debbie asked who are the samples for? Should I tell her it was for Grant instead of you?” to which Mr Williams replied, “For now yes but make sure she doesn’t talk to anyone about it”. Ms Debbie Pentland was the sales manager at Berconia and the primary contact for the PGA business.

In the 30 October 2017 email to Mr Swanepoel concerning delivery of stock to Northside, Mr Williams made the statements that I have set out earlier.
In August 2017, Mr Swanepoel, on behalf of the competitive business, made offers to Amcor, a customer of PGA, for the supply of PVC and APET.
In September 2017, Mr Swanepoel, on behalf of the competitive business, made a commercial proposal for the supply of laminate materials to Tibaldi from 1 February 2018 onwards.
In an email exchange between Mr Williams and Mr Swanepoel on 16 January 2018 after Mr Williams had left PGA concerning the misappropriated obsolete PGA stock from Don Smallgoods which was being repurposed at Slit Film, Mr Williams stated, inter-alia, “You wanted me to keep away because it was sourced before I finished”.
Third, and relatedly, it is apparent that Mr Swanepoel used Swanell Corp as a corporate vehicle to further the interests of the competitive business, including by submitting tenders to current or prospective clients of PGA such as Don Smallgoods and Tibaldi, and storing stock in its warehouse facilities.
Fourth, there were numerous examples in the evidence of Mr Swanepoel receiving from Mr Williams documents containing PGA’s commercially sensitive information for use in the competitive business, including several instances in which Mr Swanepoel asked Mr Williams directly to provide him with such materials.
Now Mr Swanepoel did not appear to deny his involvement in the various dealings with Mr Williams and Mr Yip in furtherance of the competitive business. And at trial, whilst Mr Swanepoel attempted to diminish his involvement in the competitive business, he did not deny that he participated in preparatory work in connection with a new business venture with Mr Williams and Mr Yip during the relevant period.
Now in his evidence, Mr Swanepoel made various claims concerning the extent of his knowledge of Mr Williams’ wrongdoing. He claimed that there was no reason for him to know that Mr Williams was doing anything amounting to wrongdoing, that he did not know Mr Williams was doing anything improperly, that he did not know whether information given to him by Mr Williams was confidential to PGA, that he did not know the origin of such information or who owned it, and that he did not have to ask where that information was coming from. But whilst Mr Swanepoel did not accept that he had subjective knowledge of Mr Williams’ wrongdoing, Mr Swanepoel did not deny that he knew what Mr Williams was actually doing.
But in my view Mr Swanepoel’s claims that he was not aware of Mr Williams’ wrongdoing are not plausible.
Mr Swanepoel had knowledge of the objective elements of Mr Williams’ behaviour that constituted the various breaches of duties referred to earlier. Through his work as a contractor to PGA, in which capacity he worked very closely with Mr Williams, Mr Swanepoel well knew that Mr Williams would have owed duties of fidelity and good faith to PGA and that Mr Williams was obliged to act in the interests of PGA as his employer. Consequently, Mr Swanepoel in my view knew that Mr Williams’ involvement in the establishment of the competitive business would put him in conflict with his duties to PGA, in circumstances where it was intended that the business would target existing and potential customers of PGA. He accepted in cross-examination that he knew that Mr Williams was obliged to act in PGA’s best interests. Further, Mr Swanepoel had knowledge of Mr Williams’ misuse of information he obtained from PGA because of his employment there, including the PGA confidential information.
Further, in my view the state of Mr Swanepoel’s knowledge is reinforced by the fact that he, like Mr Williams and Mr Yip, took steps to ensure that the conduct of the competitive business remained concealed from PGA.
The parties to the competitive business used their private email addresses, with Mr Swanepoel’s email being annotated with the label “Secrect Group GRANT SWANEPOEL”, and Mr Williams using his wife’s email address. They also participated in a WhatsApp group entitled “Secret Group”. Further, Mr Swanepoel took on the “client facing” role for the competitive business, to keep Mr Williams out of the limelight and to avoid raising suspicions.
Now Mr Swanepoel denies that he knew Mr Williams was doing anything amounting to wrongdoing or that he was doing anything improperly. Mr Swanepoel also denies that he knew the information provided to him by Mr Williams was PGA’s information or “whether the information given to [him] by Peter was confidential to PGA or not”, and that he “did not know the origin of information or who that information was owned by”. Mr Swanepoel’s evidence was that, to him, Mr Williams was the general manager of PGA and a part owner of the PGA business. Mr Swanepoel’s position appeared to be that because of such matters, he thought that Mr Williams was entitled to do whatever he liked with PGA’s property.
But even if Mr Swanepoel thought Mr Williams was the general manager and a part owner of PGA, he still knew or he wilfully shut his eyes to the obvious, being that Mr Williams was acting improperly and that he should not have been receiving from Mr Williams the information sent to him.
First, Mr Swanepoel knew that PGA was not solely Mr Williams’ business. Contrary to the claim in his written evidence that he was unaware of Mr George Kavnoudias’ involvement in PGA in 2017, in cross-examination Mr Swanepoel conceded that he knew from around the time he commenced working with PGA in early 2016 that Mr George Kavnoudias was part of the “management team” in the business. Even if he did not know the precise division of ownership rights in PGA, he at least knew that the business was not Mr Williams’ and his alone, and that there were “ownership situations” and “management structures in place at PGA”.
Second, Mr Swanepoel knew from July 2017 that Mr Williams wanted to leave PGA “as he was not comfortable there anymore, didn’t enjoy it as much and felt the business was not evolving to the market needs”. He knew that Mr Williams did not have unbridled power or control to do whatever he wanted with the PGA business, and that “he would have to exit that situation, and – and that exit situation meant he had to change his – his partnership arrangement there”. However, Mr Swanepoel also knew that Mr Williams did not resign from PGA in July 2017, and that he was still employed at PGA until 17 November 2017, during which time Mr Swanepoel was also working with PGA.
Third, Mr Williams assisted in the preparation of the tender submitted to Don Smallgoods on behalf of the competitive business via Swanell Corp. At that time, Mr Williams was simultaneously involved in preparing the same tender to Don Smallgoods on behalf of PGA. Mr Swanepoel knew this was the case. That tender was a secure process, as between Don Smallgoods and the party submitting a tender. Mr Swanepoel knew that Mr Williams’ involvement in the tender on behalf of the competitive business and the competing tender on behalf of PGA put Mr Williams in direct conflict with his duties to PGA.
Fourth, on 14 August 2017, the day before the tender process opened, Mr Williams sent to Mr Swanepoel the Dons spreadsheet, which contained detailed information from PGA concerning its historical volumes and prices, and its prices in its current tender to Don Smallgoods. The products listed in the Dons spreadsheet is largely co-extensive with the list of products for “Client A” – which was Don Smallgoods – contained in the schedule of product specification information labelled “usages.xlsx” that was attached to Mr Williams’ 27 July 2017 email to Mr Yip and Mr Swanepoel in which Mr Williams asked Mr Yip to provide costings on those products for the competitive business. Mr Williams sent the Dons spreadsheet to Mr Swanepoel for the purposes of the competitive business’ tender to Don Smallgoods, and that Mr Swanepoel knew that to be the case. In cross-examination, Mr Swanepoel conceded that some of the data in the Dons spreadsheet, including precise volume and pricing information, was not known to him and he would not have had access to that information if Mr Williams had not sent it to him. He knew that the information he received was commercially sensitive to PGA. And he knew that PGA would not have wanted Mr Williams to provide him with that information to enable him to compete with PGA in the tender.
Fifth, the evidence reveals that on 2 and 3 October 2017, during which period Mr Williams, Mr Swanepoel and Mr Yip discussed arranging a meeting with Don Smallgoods for the purposes of the competitive business, Mr Williams and Mr Swanepoel exchanged emails regarding a set of speaking notes or speaking points for Mr Williams in connection with securing business for the competitive business from Don Smallgoods. The form of the document in evidence, which was discovered by Mr Swanepoel and Swanell Corp, suggests that Mr Swanepoel attached a copy of those speaking notes to an email he sent to Mr Williams. Mr Williams initially claimed he prepared the document, but subsequently conceded he could not be sure about that and suggested that it could have been a collaboration. Mr Swanepoel denied preparing the document, but his responses on that question were evasive. He did, however, concede that there might have been points that he might have had input into or clarified. Whoever the true author of the document was, and in my view it is likely to have been Mr Swanepoel, the statements in the document indicate that Mr Williams was seeking to undermine PGA’s position in the tender to Don Smallgoods whilst he was still an employee at PGA. And Mr Swanepoel knew that to be the case.
Sixth, some of the customers targeted by the competitive business were existing customers of PGA, including Don Smallgoods, Northside and Propan. Mr Swanepoel knew that to be the case. To assist in developing products and arranging quotes or costings for the competitive business, Mr Williams provided detailed information to Mr Swanepoel and Mr Yip relating to those customers, including information regarding PGA’s prices and historical volumes, including the PGA pricing spreadsheet. Mr Swanepoel knew that that information came from PGA. Now although he claimed that he did not need the information in this document, he never asked Mr Williams to stop sending him this kind of information.
Seventh, as to the obsolete stock from Don Smallgoods, clearly Mr Swanepoel had some involvement with having the stock sent to and repurposed at Slit Film. In cross-examination, Mr Swanepoel claimed that he didn’t know whether Mr Williams was authorised to take the stock, and that “there was no conflict of the – with this stock and – and PGA at the time because it was obsolete”. But in the email he received from Mr Williams on 4 August 2017 Mr Williams stated what I have set out earlier.
Mr Swanepoel conceded in cross-examination that he knew that Mr Williams was sensitive about PGA becoming aware of Mr Williams collecting the stock and sending it to Slit Film, and that if Mr Williams either had authorisation or did not need authorisation to take the stock, then he would not have been sensitive of using the drivers familiar with PGA to collect the stock. In the circumstances, Mr Swanepoel knew that Mr Williams was not authorised to divert that stock to Slit Film for use by the competitive business.
Eighth, although Mr Swanepoel appeared to suggest that he only discovered what was “really going on” in June 2018, he never raised any concerns about Mr Williams’ conduct with PGA at that time or any time thereafter. Now whilst he suggested in evidence that he may have been misled by Mr Williams, I do not accept this. In my view Mr Swanepoel knew what was going on, in the sense that he knew that Mr Williams’ conduct did amount to wrongdoing.
I should make one other point. Mr Swanepoel appeared to contend that there was nothing which prevented him from approaching or attempting to gain business from any of PGA’s customers, as there were no restraints upon him doing so, contractual or otherwise. But with respect, that misses the point. The claims against Mr Swanepoel and Swanell Corp are claims of accessorial liability only, that is, that he and Swanell Corp knowingly assisted or were knowingly concerned in Mr Williams’ breaches of duties to PGA. The present case is not about legitimate competition. It is about illegitimate competition involving the receipt and use and misuse of PGA’s confidential information.
In my view, the above matters establish PGA’s claims against Mr Swanepoel of knowing involvement concerning the statutory breaches.
Further, the claim of accessorial liability against Mr Swanepoel involving the breach of an equitable duty of confidence by Mr Williams is also made out on the evidence.
And in terms of knowledge, Mr Swanepoel’s state of mind satisfies each of the four levels of knowledge, being actual knowledge, wilfully shutting one’s eyes to the obvious, wilfully or recklessly failing to make such enquiries as an honest and reasonable man would make, and knowledge of circumstances that would indicate the facts to an honest man.
But as I am not satisfied that Mr Williams’ breaches of fiduciary duties were dishonest and fraudulent, I would not find against Mr Swanepoel concerning knowing assistance relating to Mr Williams’ breaches of fiduciary duty.
Now as to the claims of accessorial liability against Swanell Corp, Mr Swanepoel’s knowledge can be attributed to Swanell Corp as Mr Swanepoel’s corporate “alter ego”.
Indeed, Mr Swanepoel did not attempt to draw any meaningful distinction between himself and his corporate vehicle, of which he is the sole director and shareholder. As Mr Swanepoel described it in his affidavit, “I am my company”. In my view, to the extent that Mr Swanepoel used Swanell Corp in the furtherance of the scheme of the competitive business, its actions were inseparable from his.
Further, Swanell Corp was not merely a passive recipient of the benefits of Mr Williams’ breaches of duties and breaches of confidence. It was a necessary corporate vehicle which enabled Mr Williams and Mr Swanepoel to implement the strategy of establishing the competitive business. The use of Swanell Corp as a vehicle for the conduct of the competitive business in the period prior to Mr Williams’ resignation from PGA enabled Mr Williams and Mr Swanepoel to advance the interests of the competitive business whilst concealing Mr Williams’ involvement in that business.
Accordingly, Swanell Corp is also liable as an accessory in the same fashion as its controller, Mr Swanepoel.
Summary
In conclusion, I have found against the respondents on liability, save and except for the claims against Mr Swanepoel and Swanell Corp concerning the claim involving knowing assistance of Mr Williams’ breaches of fiduciary duty.
I will hear further from the parties concerning the necessary orders to be made to reflect these reasons and for the further conduct of the matter.

I certify that the preceding two hundred and fifty-two (252) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Beach.
Associate:
Dated: 2 July 2021

File number(s):	VID 1667 of 2018
Judgment of:	BEACH J
Date of judgment:	2 July 2021
Catchwords:	CORPORATIONS – former employee – preparatory steps to establish competitive business – duties and obligations to employer – employment contract – implied duties of good faith and fidelity – fiduciary duties – duties under ss 182 and 183 of Corporations Act 2001 (Cth) – duties of confidence – confidential information – misuse of information – copyright in data sheets and specifications – copyright infringement – accessorial liability – knowing involvement in statutory breaches – knowing assistance in breaches of fiduciary duty – actual knowledge – constructive knowledge – liability established
Legislation:	Copyright Act 1968 (Cth) ss 35, 36, 115 Corporations Act 2001 (Cth) ss 182, 183
Division:	General Division
Registry:	Victoria
National Practice Area:	Intellectual Property
Sub-area:	Copyright and Industrial Designs
Number of paragraphs:	252
Date of hearing:	21 to 25, 28 June 2021
Counsel for the Applicant:	Mr M B Fleming
Solicitor for the Applicant:	Gilbert + Tobin
Counsel for the First Respondent:	The first respondent appeared in person
Counsel for the Second and Third Respondents:	The second respondent appeared in person on behalf of himself and the third respondent

ORDER MADE BY:	BEACH J
DATE OF ORDER:	2 JULY 2021

Description	Date
Peter Williams PGA employee weekly activity reports including PGA costing calculations and CRM record	10 and 16 November 2017
PGA costing calculations	16 November 2017
Letters from PGA to customers (Northside and Propan)	15 November 2017
Letters from PGA to customers or potential customers (Primo Smallgoods, McCormick Foods and Tibaldi)	13 April 2012, 9 October 2012 and 12 April 2016
PGA customer specifications	21 February 2014 and 26 November 2014