Woolworths Ltd v Olson - [2004] NSWSC 849

No judgment structure available for this case.

Reported Decision:
63 IPR 258

Supreme Court

CITATION: Woolworths Limited v Mark Konrad Olson & Anor [2004] NSWSC 849

HEARING DATE(S): 7/09/04, 8/09/04, 9/09/04, 10/09/04, 13/09/04, 14/09/04, 15/09/04, 17/09/04

JUDGMENT DATE:
22 September 2004

JURISDICTION:
Equity Division
Commercial List

JUDGMENT OF: Einstein J

DECISION: Limited relief to be given. Short minutes of order to be brought in. ; [NOTE: This is the edited text of the judgment delivered on 22 September 2004. It does not include material [the subject of a confidentiality regime imposed by Court order] which may not be published except in such manner and for such purposes as the Court specifies. (See note at end of Judgment)]

CATCHWORDS: Anton Pillar relief granted by Federal Court - Cross-vesting orders made under Jurisdiction of Courts (Cross-Vesting) Act 1987 - Litigation before Supreme Court consolidated to include joint hearing of Federal Court proceedings, proceedings before Industrial Relations Commission under section 106 of Industrial Relations Act 1996-Confidential information - Intellectual Property - Fiduciary obligations of employee - Breach of copyright - Exemplary damages - Contract of employment - Employee agrees to be bound by employers code of conduct requiring employees to declare any interest they might have that could adversely affected employer - Fraudulent intent of employee - Employee determines to accept employment with competitor and to send to home computer e-mail attachments containing highly confidential information of first employer - Conflict between duty and interest exists from moment when employee forms intention to dishonestly take and use employers confidential information for his own benefit, contrary to fiduciary and contractual obligations - Further conflict of duty and interest constituted by the preferring by employee of his own interests in failing to disclose the conflict - Summary dismissal of employee - Restraint of Trade covenants - Employee proposes as soon as permitted to take up a position with major competitor - Relief - No evidence as to any pecuniary loss suffered by employer as a result of employees breach - No evidence of profit acquired by employee - Nominal damages - Restraint provision held invalid - Not possible to read down restraint period or geographic area to give restraint a reasonable operation - Court cannot redraft restraint provision

LEGISLATION CITED: Copyright Act 1968 (Cth)
Copyright Amendment (Digital Agenda) Act 2000 (Cth)
Corporations Act 2001 (Cth)
Evidence Act 1995 (NSW)
Industrial Relations Act 1996 (NSW)
Interpretation Act 1987 (NSW)
Jurisdiction of Courts (Cross--Vesting) Act 1987 (Cth)
Restraints of Trade Act 1976 (NSW)
Trade Practices Act 1974 (Cth)

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PARTIES :
Woolworths Limited ACN 000 014 675 (Plaintiff)
Mark Konrad Olson (First Defendant)
Dianne Olson (Second Defendant)

FILE NUMBER(S): SC 50116/04

COUNSEL: Mr RM Smith SC, Mr MA Jones (Plaintiff)
Mr RM Goot SC, Mr SEJ Prince (Defendants)

SOLICITORS: Clayton Utz (Plaintiff)
Maddocks (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Wednesday 22 September 2004

50116/04 Woolworths Limited v Mark Konrad Olson & Anor

JUDGMENT

The proceedings

1 These proceedings arise out of the employment by Woolworths Limited ["Woolworths"] of Mr Mark Konrad Olson as ‘Business Manager-Rebuying 1 (Stocksmart)’ and concern their respective legal rights and liabilities in circumstances in which Woolworths purported to terminate that employment in July 2004.

2 Mr Olson contends that he had on 5 July 2004 resigned from employment with Woolworths with effect from 2 August 2004.

The contract of employment

3 Woolworths contends that the material contract of employment was dated 1 February 2003 as varied by a letter dated 7 February signed by the Chief Executive Officer of Woolworths ["the Service Agreement”].

4 Mr Olson contends that at the time in February 2004 when he was demoted by Woolworths [as a result of a breach of Woolworths: policy regarding receipt by e-mail and a failure to delete inappropriate material] a new contract ["the second contract"] came into existence displacing and replacing the Service Agreement.

Cross vesting and consolidation

5 On 9 July 2004 Woolworths commenced proceedings in the Federal Court of Australia [N 1077/2004] against Mr and Mrs Olson "the Federal Court proceedings"]. An Anton Pillar order was made on 9 July 2004.

6 On 28 July 2004 Mr Olson commenced proceedings against Woolworths before the Industrial Relations Commission of New South Wales in Court Session seeking relief under section 106 of the Industrial Relations Act1996 ["the Industrial Relations Commission proceedings" or "the section 106 proceedings"].

7 On 2 August 2004 the present proceedings were commenced by Woolworths seeking orders for the removal of the Industrial Relations Commission proceedings to the Supreme Court and for the transfer of those proceedings to the Federal Court of Australia. Subsequently by consensual orders made under the Jurisdiction of Courts (Cross-Vesting) Act 1987, both the Federal Court proceedings as well as the Industrial Relations Commission proceedings were transferred to the Supreme Court and orders were made for each of those proceedings to be consolidated with these Supreme Court proceedings.

Project Mercury

8 The heart of the dispute concerns a project ["Project Mercury"] on which Mr Olson worked and in respect of which his conduct is alleged to constitute legal wrongdoing giving rise to various causes of action. In broad terms the project which commenced in about the end of 2002 involves an attempt to redefine by use of various software systems and other steps, the Woolworths supply chain. On the evidence costs associated with that supply chain represent between 12 and 14 percent of total retail sales which in the financial year 2003 were $22 billion.

9 The project:

· involved a transformation of Woolworths' supply chain and logistics functions so as to result in the supply of products from suppliers into Woolworths' stores for sale to consumers at reduced cost;

· involved various processes, systems and procedures specifically designed and devised by Woolworths' employees to improve the supply and logistics functions and operations of Woolworths' business and reduce the costs of those functions and operations

· was and continues to be implemented by Woolworths at a cost of approximately $1 billion;

· is expected to result in savings to Woolworths of approximately two thirds of the accumulated savings attributable to a large corporate reorganisation and re-alignment project [Project Refresh] - a three phase project which commenced in 1999

10 A considerable volume of evidence was adduced by Woolworths to explain what was involved in Project Mercury. That evidence was generally not the subject of any serious challenge. Indeed Mr Olson himself gave evidence that:

· "Woolworths is embarking on an industry-changing supply chain undertaking" [Affidavit 2004 paragraph 81]

· "Mercury relies on building complex and well developed supply software packages. An example of that infrastructure is the further development of the automated store ordering system (AutoStockR). That system utilises data collected at point-of-sale. Once that data is enhanced, it will allow for future store forecast requirements, including better promotional planning information. This will also allow Woolworths to consolidate the information up the supply chain, [Confidential section of judgment. Not to be disclosed – see Court Order 22 September 2004]. This, once combined with new technology to be developed in the Transport Management and Replenishment systems, will provide Woolworths with an integrated view of requirements [Confidential section of judgment. Not to be disclosed – see Court Order 22 September 2004].

An example of the sophistication of the planned system is that Woolworths could predict how many tins of Golden circle pineapple slices will be needed by each individual store around the country in two weeks' time. This would allow for orders to be placed against Golden Circle, for delivery by either Golden Circle or Woolworths into the Brisbane DC for on-forwarding to stores via the Woolworths’ DC network.

11 Notwithstanding that close to the end of Woolworths' case, Mr Olson conceded that the subject information was properly described as ‘confidential information’, it has remained necessary, bearing in mind the manner in which the proceedings were litigated, to closely focus upon why it is that the subject materials are properly regarded as confidential information. This is because firstly, it is always necessary where relief sought is grounded upon a cause of action in terms of confidential information, to identify what it is that is confidential and why it is appropriately protected by some, and if so what particular court order. This focus is also because Mr Olson contended that understanding exactly what had been downloaded to the home computer was relevant to the fraudulent intent case-the proposition being that on examination, that which had been downloaded was simply not sufficiently detailed to permit of inappropriate use and/or to be of utility to a competitor. For those reasons the judgment treats to a real extent with the detail of Project Mercury and with the environment in which the confidential information requires to be understood. A number of the witnesses called by Woolworths treated with this subject from their separate perspectives, regularly giving similar or overlapping detail. The urgency of the hearing and the requirement to expedite the furnishing of a judgment has led to the need to repeat a deal of this material although, had more time been available, it would have been possible to considerably summarise this evidence.

12 As it is certain that an order will be necessary to limit the access to so much of this judgment as deals with highly confidential material generally treated with in closed court and subjected to the confidentiality regime, the convenient course seems to me to include a deal of the detailed evidence concerning Project Mercury in an appendix. To a certain extent witnesses who gave evidence on that topic also travelled into treating with evidence concerning Mr Olson and other matters so that what is to be found in the appendix will also include some non confidential materials. Ultimately the parties will require to identify with precision precisely which sections to be found both in the main section of the judgment as well as in the appendix, are to be the subject of a permanent confidentiality order.

The Options

13 Mr Olson had on 1 July 1999 been granted 80,000 Options to purchase shares in the capital of Woolworths of which, subject to the terms of the Executive Option Plan 1999, 60,000 were exercisable by Mr Olson on 1 July 2004 ["the Options”].

Woolworths' claims

14 It is inappropriate to repeat the record. The full pleaded case is to be found in the Contentions section of the amended statement of claim. What follows is to be regarded as no more than an overview of certain of those allegations. The Court is of course at the same time hearing the Federal Court proceedings as well as the section 106 proceedings. By and large all of the material allegations made in the Federal Court proceedings have simply been repeated in the present proceedings. It will however be necessary to deal with the allegations made in and issues arising by reason of the section 106 proceedings.

The alleged fraudulent intentions of Mr Olson

15 Woolworths alleges that on or before 30 June or 1 July 2004, Mr Olson formed a fraudulent intention, which he deliberately concealed and refrained from communicating to Woolworths. The alleged fraudulent intention was to breach the terms of the Service Agreement by:

· terminating his employment with Woolworths under the Service Agreement to accept employment with Franklins Pty Ltd ["Franklins"];

· removing, prior to termination, Woolworths' Works and Confidential Information into his own possession;

· suppressing, and concealing from, Woolworths any knowledge of:

- his proposed employment with Franklins until he had exercised the Options and had removed Woolworths' Works and Confidential Information into his own possession; and

- the above described removal of Woolworths' Works and Confidential Information; and

16 Woolworths alleges that Mr Olson breached a number of terms of the Service Agreement and breached fiduciary duties said to have been owed to it. The fiduciary duties pleaded are:

· a duty not to have a personal interest in or an inconsistent engagement with, a third party, which is in conflict with the obligations owed to Woolworths;

· a duty not to obtain an advantage from the use and/or distribution of original literary works of Woolworths' and of confidential information.

17 Woolworths further claims relief for breach of copyright in relation to certain Works [“the Works”] said to have been confidential in nature and to have contained information which was commercially sensitive and proprietary to Woolworths, also said to constitute confidential information within the meaning of the Service Agreement.

Woolworths’ claims to intellectual property in respect of Project Mercury

18 Woolworths contends that as part of [or in connection with] Project Mercury, a number of original literary works were authored by employees of Woolworths pursuant to the contract of employment, these being described as follows:

· the following electronic data files containing documents in relation to Woolworths' "Supply Chain Generic Replenishment Model", and any copies of them and any other documents containing, embodying, or substantially reproducing those documents:

· "Standard DSD 1.3.jpg";

· "Standard XD V1.3.jpg";

· "Standard Stocked V1.5.jpg";

· "Vendor Managed V1.0.jpg";

· "Standard DCM 1.5.jpg"; and

· "equisites V1.0.jpg", or, alternatively, "Requisites V1.0.jpg";

· the following electronic data files containing documents in relation to Woolworths' "Supply Chain Generic Replenishment Model", and any copies of them and any other documents containing, embodying, or substantially reproducing those documents:

· "Generic Replen Model SCRC- v1.14.doc";

· "Vendor Managed V1.0.vsd";

· "Standard XD V1.3.vsd";

· "Standard Stocked V1.5.vsd";

· "Standard DSD V1.3.vsd";

· "Standard DCM V1.5.vsd"; and

· "Requisites V1.0.vsd"; and

· the document which is a Microsoft PowerPoint Presentation entitled "Rod Presentation - Replenishment" and bears the file name "Rod Presentation.ppt", and any copies of it and any other documents containing, embodying, or substantially reproducing that document.

19 Woolworths contends that:

· it was at all material times the owner of copyright in the Works;

· each of the Works:

- was confidential in nature;

- constituted descriptions of processes, systems and procedures specifically designed and devised by Woolworths to improve the supply and logistics functions and operations of Woolworths' business;

- was therefore a trade secret; and

- contained information that was commercially sensitive and proprietary to Woolworths; and, further,

20 Woolworths’ contends that the shares were issued by it without knowledge of the above-described fraudulent intention, in reliance upon particular representations said to have been implicit and in the mistaken belief that Mr Olson was entitled to exercise the Options on 1 July 2004.

21 The representations are pleaded as arising from the circumstances of the exercise of the Options and the deliberate concealment from Woolworths of the alleged fraudulent intention to breach the terms of the Service Agreement.

22 The allegation is that Mr Olson represented to Woolworths and/or deliberately induced to Woolworths to assume that:

· he was complying with his obligations under the Service Agreement;

· he intended to comply with his obligations under the Service Agreement;

· he was complying with his fiduciary duties to Woolworths;

· he intended to comply with his fiduciary duties to Woolworths;

· he did not have the above described claimed fraudulent intention;

· he was acting honestly; and

· he intended to act honestly.

The principal issues

23 In the result the three principal issues which arise on the Woolworths’ case are:

Issue 1

Is Woolworths entitled to recover from the defendant the profits which he made when he exercised the options and on 1 July 2004 was allotted 60,000 shares in the capital of Woolworths?

Issue 2

Has Woolworths validly enforced the restraint provision in the service agreement between the parties?

Issue 3

24 Issue 1 requires a critical question of fact to be determined, namely whether prior to the allotment of shares to Mr Olson, he decided to resign his employment with Woolworths and take up employment with Franklins and take with him to Franklins whatever documents he thought might assist him in the performance of his duties at Franklins

25 Issue 2 involves whether or not Woolworths has validly invoked the restraint provision [in clause 10 of the service agreement] and whether that provision is effective in law. Without being exhaustive the essence of Mr Olson’s contention involves the propositions that once he was demoted at the end of February 2004, the service agreement was no longer binding on him and/or alternatively, if it is, it is unenforceable at general law and/or alternatively, if enforceable, is an unfair contract susceptible of variation or modification pursuant to orders to be made under section 106 of the Industrial Relations Act.

26 Issue 3 treats with whether, irrespective of whether the restraint is effective, the Court in the proper exercise of the relevant discretion, would restrain Mr Olson in respect of the use of the information and knowledge which he acquired whilst working on Project Mercury. The issue involves an assessment of the significance of Project Mercury to Woolworths and the extent of Mr Olson's involvement in that project and the knowledge which he thereby gained.

27 Woolworths seeks:

· to enforce a 6 month restraint against Mr Olson in terms of the Notice either from 30 June 2004 or 12 July 2004;

· obtain equitable relief in order to deal with the exercise on 1 July 2004 by Mr Olson of the options granted to him in June 2000 effective 1 July 1999, by an account of profits;

· obtain exemplary damages against Mr Olson for his alleged “contumelious disregard for Woolworth’s rights” in relation to the downloading to their home computer by Mr Olson or Mrs Olson, of 2 emails and a number of attachments;

· obtain additional damages pursuant to s115(4) of the Copyright Act.

Mr Olson's case

28 The case put by Mr Olson centrally seeks to provide an innocent explanation in relation to each of the relevant events. These events are summarised by him as follows:

· discussions involving Mr Olson and a potential employer, Franklins culminating in the acceptance by Mr Olson on 5 July 2004 of an offer of employment by Franklins (undisputed on the evidence);

· consideration by Mr Olson of his future employment at Woolworths following approaches from and discussions with senior management at Woolworths as recently as 30 June 2004, to restore Mr Olson to an executive role, inter alia in Project Mercury, following his demotion from an executive role in Project Mercury in February 2004 (undisputed on the evidence);

· to facilitate his consideration of his future employment within Project Mercury, the forwarding by Mr Olson to his home by email of some Project Mercury documents on 2 July 2004, his last day at work prior to taking 1 week’s leave (there being no evidence to the contrary);

· the exercise by Mr Olson of the subject Options to acquire Woolworths’ shares, he having elected to exercise those options by notice dated 21 June 2004 and having made arrangements for funding the exercise of the Options with Macquarie Bank on the recommendation of Woolworths.

29 His case is that:

· he has provided an innocent explanation in relation to all of these events.

· he was never asked prior to his employment being terminated or the institution of the proceedings, for any such explanation.

· there is no evidence before the Court that can establish fraudulent intention to the requisite standard of proof [see: Briginshaw v Briginshaw (1938) 60 CLR 336].

30 There are a number of other issues of principle raised by Mr Olson, as for example, [without being exhaustive]:

· the contention that Mr Olson was for the purposes of the Copyright Act, licensed or authorised to deal with the Works in the way that he did, the contention being that as an employee he was permitted to have access as part of his job function for work-related purposes to Woolworths' Internet or intranet and to acquire from those sources information for work-related purposes;

· the contention that as the Service Agreement was displaced by the so-called second contract, the restraint provision in the Service Agreement was no longer operative;

· the contention that if the Service Agreement prevails and the restraint provision contained in it is operative, Woolworths is not able to rely upon that provision for a number of reasons including that the restraint is void on public policy grounds.

31 Mr Olson also seeks to rely upon his section 106 Industrial Relations Act claim inter alia seeking to establish unfairness under that section arising either from the terms of the contract itself, the surrounding circumstances and/or from the manner of performance or operation of the contract.

32 The cross claim contains a number of counts including an implied and fundamental term that at all times Woolworths would maintain the trust and confidence in the employment relationship. Woolworths conduct of 12 July 2004 in seeking and executing the Anton Pillar orders, in entering the home premises without justification and in alleging the anti-competitive restraint is said to constitute a repudiation of the contract.

The Evidence

33 It is convenient to turn directly to the evidence. What follows represents the Court's findings in that regard. The seriousness of the allegations made by Woolworths warrants particular attention being given to all material parameters of Mr Olson's employment and there is a need to travel through certain background to put the recent events into context.

Commencement of employment with Woolworths and subsequent progression

34 Mr Olson commenced employment with Woolworths in June 1985. Until 12 July 2004, he worked in a series of positions, of ever increasing seniority. Woolworths accept that he was a competent and hardworking employee.

Employment with Safeway's

35 Prior to 23 June 2000 Mr Olson had worked for Safeway (for 15 years) in Victoria.

36 By April 1994 Mr Olson had achieved the status of manager.

Undertakings to protect confidential information and declarations in respect of conflicts of interest

37 Managers were required to sign undertakings to protect confidential information, and declarations that they did not have, and would inform Woolworths if they did have, any conflict of interest.

38 Declarations to this effect were signed by Mr Olson. These arrangements were formalized when Mr Olson signed the Woolworths Code of Conduct on 15 October 2003. The Code of Conduct contains at page 15 a section entitled “Conflict of Interest”. Included in that section is the requirement that:

Executive Option Plan

39 In 1999 Woolworths established a scheme known as the Executive Option Plan (“the Option Plan”) also called LTIP (Long Term Incentive Plan). In March 2000 Mr Olson was invited to participate in the Option Plan. He applied for, and obtained 80,000 options over ordinary shares in Woolworths at an exercise price of $5.11 per share. The options were to be exercised in accordance with the plan rules. They were divided into four tranches and were subject to vesting and exercise conditions. They could not be exercised (without Board consent) if the holder ceased employment before the exercise date (Rule 5.7(b)). The effect of this Rule was that the options lapsed if the employee ceased employment prior to the option becoming vested and the exercise date reached.

Move to New South Wales – June 2000

40 In June 2000 Mr Olson moved his family to New South Wales and took up the position of Business Manager – Replenishment at Woolworths Yennora premises.

Commencement of work by Woolworths to develop a supply chain strategy for the future-2001

41 In 2001 Woolworths commenced work to develop a supply chain strategy for the future. The expression “a supply chain strategy” refers to the combined processes and procedures used in the Woolworths business to acquire stock from suppliers, distribute that stock through a distribution centre (“DC”) and make the stock available on shelves for sale to consumers in Woolworths stores. The supply chain involves sophisticated and complex relationships. The object of this work was to achieve a reduction in costs associated with the supply chain [Confidential section of judgment. Not to be disclosed – see Court Order 22 September 2004]. Any reduction in those costs is estimated to increase profitability and competitive advantage.

Process modeling - September 2001

42 By September 2001 the project had advanced to a stage where part of the work involved devising a supply chain model. This involved the procedure known as process modeling. It ultimately resulted in a plan or model which identified how each of the steps in the proposed future supply chain for particular classes of product would relate with one another.

Six models developed - by April 2002

43 By April 2002 six models had been developed. They were recorded in plans. They had been written by Mr Maier, a Woolworths employee. These may be referred to as “the 6 Process Models” or “the six plans”. These are the plans which Mr Olson sent from his Woolworths laptop to his wife’s email address on her home PC by the 7.37am email on the morning of 2 July 2004. The Process Models are the Works as defined in paragraph 10 of Woolworths’ amended statement of claim.

44 As earlier indicated it is now not disputed that the process plans contained information highly confidential to Woolworths. Nor is it disputed that the plans were brought into existence as part of Woolworths’ planning for its future supply chain. On the clear evidence the Process Models are but a small portion of the vast amount of information which Mr Olson had available to him on 2 July 2004 concerning the Project.

Resolution to embark upon a total re-engineering of the supply chain - November 2002

45 At a board meeting in November 2002 Woolworths resolved to embark upon a total re-engineering of its supply chain. This involved the rationalization of its DC’s, and the integration using computer systems of forecasting, replenishment and distribution functions. The various steps in that endeavour became known as Project Mercury. The Process Models record the elements of the Project.

Mr Olson manages the implementation of StockSMART - January 2002-July 2003

46 In the period January 2002 to July 2003 Mr Olson managed the implementation of a project known as StockSMART. It was a DC replenishment planning system. Mr Olson successfully implemented that project.

47 It was complete by March or April 2000. StockSMART inter relates with projects (particularly AutoStockR) in the Project.

Mr Olson is appointed to Mercury Program as Replenishment Program Manager - 24 June 2003

48 On 24 June 2003 Mr Olson was appointed to the Mercury Program as the Replenishment Program Manager. Replenishment was one of the activities planned to be implemented as part of the Project in August 2003.

49 Within the general category of Replenishment there were three sub-projects. These involved the project known as Tactical Long Life Flow Through and two projects relating to the use of AutoStockR.

50 The terms of the letter of appointment addressed to Mr Olson and dated 24 June 2003 welcoming him to the Mercury Program and outlining the terms and conditions of his employment [PX 2/830 et seq] as a result of his selection into that program included the following:

“ Conditions of Employment
During the course of your involvement in the Mercury Program, you will have access to information designed to allow Woolworths to maintain our competitive advantage. Please refer to your existing Executive Service Agreement to understand how your standard terms and conditions apply to your involvement on the Mercury Program.

Due to the sensitive nature of the Mercury Program, please make specific reference to:

* Confidentiality and Access (Clause 5)

* Restraint (Clause 10); and

* Intellectual Property (Clause 13.G).

…

Agreement to Changes to Terms and Conditions of Employment
During the course of your employment with the Mercury Program you will have access to information that enables Woolworths to maintain a competitive advantage. In recognising the importance of retaining you as a valuable employee and at the same time, protecting that competitive advantage it is necessary to either reinforce or alter some of the conditions of your employment.

Confidentiality
Each year we ask you to sign a confidentiality statement and the following reinforces your prior undertakings.

During the term of your employment you must:
i) not disclose to any third party any Confidential Information or trade secrets or intellectual property relating to the Company or a Related Body Corporate;
ii) not use or attempt to use any such Confidential Information or trade secrets or intellectual property in any manner which is not in the proper course of your duties and for the sole benefit of the Company or a Related Body Corporate; and
iii) use your best endeavours to maintain the secrecy of and prevent the disclosure of any such Confidential Information or trade secrets or intellectual property to third parties.

You should note that these obligations survive your employment but will cease to apply to information which comes into the public domain, other than as a breach of your obligations by you.

Intellectual Property
Intellectual Property refers to creations of the mind, ie inventions or literary and artistic works. The term includes computer programmes, databases, symbols, names, images and designs used in business. This means that during the term of your employment:

i) All intellectual property rights in any intellectual property developed or created by you in the course of your employment, whether created during business hours or not, will vest in the Company, and you will have no claim to or interest of any nature in such intellectual property.
(ii) Notwithstanding paragraph (i), to the extent necessary you assign to the Company all present and future intellectual property rights in all intellectual property developed or created by you in the course of your employment.

Restraint
In addition to reinforcing the above, we wish to add a restraint clause as follows. This works essentially so that should you resign and we feel it necessary to restrain you from working for a competitor, we will pay you for the period we wish you not to work. You should note that it would not always be necessary to invoke this clause and we will advise in writing should we deem it necessary to invoke.

(b) The written notice referred to in paragraph (a) must be followed by a cheque drawn in your favour for each month of the Restraint Period.
(c) Where written notice is given to you in accordance with paragraphs (a) and (b), you agree to be bound by the Restraint.
(d) For the avoidance of doubt, payment of the Restraint Payment is in addition to any other payment, which the Company is required to pay you.

51 Mr Olson worked as the Replenishment Program Manager on the Project from July 2003 to February 2004.

Late December 2003 - April 2004 - Rod Presentation - Replenishment

52 Ms Winn is the general manager of the Mercury Program responsible for the project. She gave evidence in relation to the material the subject of the 7.42am email entitled "Rod Presentation-Replenishment". Her evidence was that the attachment to the e-mail comprised a series of slides which were used in the course of a presentation given between late December 2003 and April 2004 to Woolworths managers about aspects of the Project. The presentation was a communications and training document which depicted the replacement and flow-through aspects of the project. It described the strategy to be adopted by Woolworths in the project including costs associated with the implementation and diagrammatic descriptions of certain features and interactions within the project. It was a PowerPoint presentation.

53 Ms Winn had been involved in and had presented the first part of the presentation entitled "Mercury-Why Bother?".

54 The remainder of the presentation had been presented by Mr Evenden. That part of the presentation showed a diagrammatic depiction of the processes and integration of a number of features and systems of the project and specifically those relevant to replenishment and flow through. By "flow through" Ms Winn referred to the process of using AutoStockR and POS information to achieve accurate forecasting and ordering such that goods delivered to the Distribution Centres, and required for delivery to supermarkets on certain day, are able to then be picked on the day that they arrive into the DC for delivery to the store. The presentation also detailed the benefits of moving towards flow through and included the determination of the flow through objectives, and the basis upon which a particular product was determined as being appropriate for flow through. Her evidence included the following:

· This Presentation was given on a number of occasions in the period late December 2003 to April 2004 to internal Woolworths groups comprised of senior business managers, business managers and assistant business managers within Buying and Marketing. The Presentation was given each time in a room called the Main Auditorium at Woolworths Yennora offices. The Presentation was used to train the Buying and Marketing teams in the objectives of the business transformations to occur with the implementation of the Project.

· To my knowledge, the Presentation was not presented to any persons other than officers of Woolworths.

· The Presentation was not provided to staff in hard copy.

· The Presentation was restricted in its access to those members of Woolworths staff who were engaged in the Project. The Presentation was only available electronically on a restricted drive. By that I mean a hard drive on the Woolworths network which can only be accessed by authorised persons.

· Mr Olson obtained a copy of this presentation due to the fact that on at least one occasion in or about February 2004 when Mr Evenden was not available to give the section of the presentation for which he was responsible, Mr Olson gave it in his place. Mr Olson would only have been able to access the Presentation due to his role in Project Mercury.

· Whilst there are some features of the Project which are specific to Woolworths, the diagrammatic description which is incorporated in the Presentation is a plain English explanation of the interaction of processes which Woolworths intends to implement through the Project. Further the Presentation contains details of business reasons and objectives associated with the Presentation.

· I have been asked to comment on whether the contents of any of this Presentation would be of any advantage to a competitor of Woolworths, and if so what that advantage would be.

· Whilst the features of the Project which are diagrammatically depicted within the Presentation are features which could be identified and implemented by an Australian competitor, the interactions are, to the best of my knowledge, unique to Woolworths. As far as I am aware, no competitor has achieved the level of planning and process development of these interactions to achieve an effective flow through process. The slides essentially detail, in a way which is easy for non-technical people to understand, the detailed process flows underlying flow-through. These detailed processes are depicted in the DCM plan which is one of the plans in the confidential exhibit “DJ2” referred to in the Affidavit of David John Jacobs sworn on 9 July 2004, a copy of which is produced and shown to me at the time of making this statement.

· If a competitor were to have access to the Presentation, it would give them an advantage by reducing the amount of time that would need to be spent in the development of the interactions which are depicted in the Presentation. The slides would assist a competitor who was wanting to develop a supply chain strategy to understand through simple diagrams the complex interaction between systems and processes being utilised by Woolworths. That assistance would be substantially enhanced in the case of a competitor who also had access to the DCM plan referred to in paragraph 26 above.

· Using the details and pictorial depictions of the Woolworths supply chain model in the Presentation (particularly in combination with the DCM plan), a competitor would be able to shortcut the development timeframe by leveraging the intellectual rigour that Woolworths has invested in the Project. It would therefore damage the "first mover" advantage that Woolworths has by being the first Australian supermarket retailer to engage in the process mapping of the interactions of a number of supply chain features to achieve effective flow through.

[Statement of Ms Winn of 29 July 2004 paragraphs 19-28]

55 Ms Winn under cross-examination gave the following evidence:

“Q. And you would agree with me, would you not, that one can obtain any number of supply chain systems from a variety of software manufacturers?
A. There's no end to end supply chain system available I believe from any manufacturer. The unique thing about - the thing that is special about this and why we regard it as important to Woolworths is the fact that it takes a number of different systems and actually very carefully, at a very detailed level works through how all of those systems interact . So it is not just one supply chain system available from one manufacturer, no. It is [how] it [is] all integrated, and that work in terms of threading together how those systems work is the part that clearly we spent a lot of time making sure it works efficiently and effectively.

Q. Yes, and importantly because it is end to end and integrated?
A. Indeed, yes.

Q. And that is what makes it so important as far as you are concerned?
A. Yes. Well - yes indeed, but every step along that way is important. So the interaction from a transport management system into our replenishment systems all - each piece of that is important in its own right but it is important as an end to end model as well .

Evidence given by Mr Pokorny

56 Mr Pokorny's position at Woolworths is General Manager, Merchandise Logistics and Homeshop. He has prime responsibilities in the Supermarket Division for the replenishment of the Distribution Centres (and joint responsibility with the General Manager Operations for store stock levels) and inventory management in Distribution Centres. As such he is heavily involved in work groups and various control groups that oversee the shaping and implementation of key components Project Mercury, in one aspect of a larger corporate reorganisation and re-alignment project, Project Refresh, which has been a major feature of the development of the business under the current Chief Executive Officer. Further, he is a member of the Chief Executive Officer's Mercury Steering Committee that oversees the effective alignment, implementation and realisation of the benefits of Project Mercury across the supermarket division.

57 Mr Pokorny also gave evidence [in his affidavit supplemented by evidence given in the witness box] concerning Mr Olson's role within Project Mercury. Portions of his evidence are set out in the Appendix. The evidence was as follows:

“Prior to 1 March 2004, Mr Olson was employed in the position of Program Manager Replenishment - Project Mercury, and lead a project team which was responsible for shaping Woolworths' future replenishment processes and systems focusing on the efficient movement/replenishment of stock, including all of the cost analysis associated with the Replenishment initiatives in Project Mercury.

He was [from August 2003 until his demotion] actively involved in leading and participating in working groups, project control groups and attending planning workshops which included attendance at various meetings of the Chief Executive Officer's Mercury Steering Committee.

In the role of Manager - Replenishment he controlled a team of 20 people responsible for perishable replenishment. The perishable area is one of the more challenging areas of replenishment dealing with fresh foods and short shelf life products. In that new role, Mr Olson maintained continued involvement with Project Mercury. His involvement included attendance at replenishment working party meetings (held fortnightly), the Buying and Marketing Replenishment Management meetings (held weekly) reviewing general issues but including updates and discussions on Mercury issues (most recently discussing In Bound Service Level Measurement, National Distribution Centre range management).

In this role, Mr Olson was also part of the Buying and Marketing Inventory/Replenishment Strategy team that meet quarterly to review structure, resourcing and Mercury program implementation (and Mr Olson attended the last such meeting on 2 July 2004).

Due to Mr Olson's experience gained in an earlier roles of Program Manager - Stocksmart Replenishment Systems and Program Manager Replenishment - Project Mercury, he was often called upon to make comment upon various Project Mercury replenishment related issues, such as commenting on flow through considerations in replenishment.

Mr Olson took responsibility for leading the Stock Smart project, which was a key part of improving our forecasting for distribution centre replenishment. It had a number of components to it, including the automation of the purchase orders and purchase order management

Stock Smart was a key component in enabling us to move Project Mercury forward and it enabled us to manage stocks in a more efficient manner and that was one of the key components of providing an EBIT return on the Project Mercury activity.

Evidence of Messrs Thomas, Maier and Larkin

58 It is convenient to next deal with three further of the witnesses called by Woolworths, each of whom gave significant evidence on a number of areas including the content of the subject e-mails and parameters of confidentiality. They are Messrs Thomas, Maier and Larkin. Their evidence is set out in the appendix.

Mr Olson is demoted - February 2004

59 In February 2004 Woolworths management came to learn of a number of Woolworths employees involved in transmitting and/or receiving pornographic emails on the Woolworths internal computer systems. Olson was one of the employees involved. He had received six pornographic emails in the period June 2003 to February 2004. Two of the six were classified as X-rated in that they involved explicit sexual acts involving one or multiple people. The other four were rated as R-rated on the basis that they involved explicit full frontal exposed bodies or body parts. One of the four was rated R-humorous.

60 Forty-seven Woolworths employees were involved. Those who sent X-rated material were terminated.

61 Mr Olson received X-rated material and was demoted. This occurred at a meeting on 25 February 2004. There is a dispute as to the content of the discussions on that occasion and in particular as to whether Mr Olson was told that his executive standing in the company was to be revoked. The relevance of this is that Mr Olson contends that this conversation discharged him from his service agreement (which applied to Executives) which he entered into on 1 February 2003.

62 The evidence before the Court is that Mr Olson was interviewed by Mr Brookes, Ms Singh and Mr Evenden on 25 February 2004. Each of these persons have given evidence in relation to the matter. Only Mr Olson contends that he was informed that his executive standing in the company would be revoked.

63 A standard script [Annexure F to the statement of Mr Brookes of 4 August 2004] for the individual meetings was utilised. Insofar as those who were to be demoted are concerned the standard script includes the following:

“Demotion:

· Effective date-?

· You will be moved from an Executive to Non Executive role. Your new position will be?

· Your salary will be reduced from $? to $?

· Your STIP will move from 40% to 25%

· Your car will be changed from Berlina to Executive as soon as possible

· A formal counselling record of this interview and action will be placed on your personnel file.

· Any further breaches of this policy, in whatever form, will result in your Summary Dismissal.”

64 Ms Singh gave evidence that she had a clear recollection that Mr Brookes did not say during the meeting that Mr Olson's executive standing in the company would be revoked. She was strongly tested in cross-examination on this evidence. Her evidence is accepted as reliable. Not only did she have a clear recollection of what had been said, but the simple fact was that, as she recalled the position, her understanding was that if Woolworths were to have demoted Mr Olson to a non-executive status, his salary would have reduced down to $87,000, being the entry-level to executives. In fact his salary was only reduced from $130,000 to $120,000 which left him at least three grades above the executive status entry-level [that is to say an employee would become an executive when graded at level 19].

65 Although it is true that Ms Singh had made a note in her handwritten record of the counselling session stating that "Mark was called back into Bernies office and advise (sic) that he would be demoted as per attached script" and this was not strictly accurate [because had the script been followed to the letter, Mr Olson would have been advised that he would be moved from an executive to a non-executive role], I am satisfied that on the balance of probabilities her evidence may be regarded as reliable on the issue of what in fact happened. Her evidence was consistent with that given by Mr Brookes to which I now turn.

Evidence given by Mr Brookes

66 Mr Brookes is the Chief General Manager Project Refresh phase 3. He gave evidence on a number of areas including the uniqueness of Project Mercury, the establishment of the Project Mercury Team and the circumstances of Mr Olson's demotion.

67 It is unnecessary to chronicle the detail of the evidence given by Mr Brookes concerning the discussion which took place at the meeting on 25 February 2004. The critical parameter concerns whether or not he accepts or denies the allegation that he had stated that the ‘executive’ standing in the company of Mr Olson would be revoked. He absolutely denies making any such statement. That denial and the whole of his evidence is accepted as reliable. He was asked why he was so certain that he had not indicated that Mr Olson's executives standing would be revoked, and answered relying upon the importance of the Long Term Incentive Plan [LTIP]:

“Q. And you also told him he would be moved from an executive to non executive role?
A. No, that's not right. I said to him that all other parts of his LTIP plan would remain in place and that he would be in a managerial role.

Q. You said the words "all other parts of your remuneration, including LTIP, remain in place"?
A. That's right, yes.

Q. Are you sure of that?
A. I am certain. I am certain, yes.

Q. I want to suggest to you that you didn't say that but that - sorry, I want to put to you that you didn't say that, that his LTIP would remain in place?
A. I did say that to him.

Q. And I want to put it to you that you said words to the effect of, "Your executive status with the company will be revoked"?
A. That is not true.

68 The last answer is in terms which ring very true.

69 Mr Brookes also gave evidence concerning the area of the contractual restraint to the following effect:

· “I am aware that Mr Olson signed a Service Agreement dated 1 February 2003 ("the Service Agreement"). I have signed an agreement in identical terms. I had no discussion with Mr Olson at the meeting on 25 February 2004 about the Service Agreement.

· I am aware that clause 10 of the Service Agreement provides for a restraint. The terms of that restraint extends to Australia and New Zealand.

· Woolworths' competitors conduct business operations both in Australia and New Zealand. In Australia its competitors in the supermarket industry are Coles Myer, FAL (Foodland Associated Limited), Aldi, MetCash, Franklins and many other lesser competitors throughout the whole of Australia. Coles Myer operates in every area in which Woolworths operates. FAL competes with Woolworths stores in food in northern New South Wales, Queensland and Western Australia. Aldi competes with Woolworths in New South Wales, Queensland and Victoria. MetCash competes with Woolworths in all states of Australia, except Western Australia.

· Two competitors of Woolworths' in Australia also have operations in New Zealand. Coles conducts Kmart stores in New Zealand. FAL operate three food banners (Woolworths, Countdown and Foodtown) in New Zealand.

· Woolworths' business extends beyond the supermarket industry. Woolworths owns Dick Smith Electronics in Australia and also New Zealand. Dick Smith Electronics has a number of competitors in Australia. Harvey Norman, Bond & Bond, Retrovision, Beta Stores, Big Byte and Noel Lemmings, compete with Dick Smith in New Zealand.”

[Statement of Mr Brookes 4 August 2004 paragraphs 54 – 58]

Evidence of Mr Evenden on the executive standing issue

70 Mr Evenden was not able to recall any discussion in the meeting of 30 June 2004 to the effect that Mr Olson 's executive standing in the company would be revoked or words to that effect. Effectively as I understood his evidence, it was that he could not recall one way or the other.

Mr Olson works in a demoted position - 28 February-12 July 2004

71 In the period 28 February to 12 July 2004 Mr Olson worked in his demoted position as Manager Replenishment and Perishables and Fresh Products for New South Wales at a reduced salary and not in the Project. His evidence is that his wife was angry and upset by the demotion. He gave evidence that his wife thought he had been unfairly treated and made plain that she was having a hard time understanding why he had been demoted for the particular breach. He told Mr Brookes at the end of April that his wife was very angry and upset with Woolworths and was having a hard time understanding the severity of the punishment for the crime.

72 As to his own state of mind his evidence under cross examination was that knowing what the policy was he agreed that he had been wrong and that he accepted the fact that he was being demoted and went about getting on with life.

73 His later evidence included the following in answer to a question which I asked:

Q. So you were actually based in Parramatta before the demotion?
A. Yes.

Q. And as soon as it occurred you came to where?
A. Back to the Yennora office.

74 This subject is dealt with in the judgment below where, together with a number of other topics gathered together for examination, detailed findings are given concerning what in fact had been a very real and continuing grievance of Mr Olson.

Discussions with Woolworths concerning return to pre-demotion activities or similar

75 At the end of April 2004, Mr Olson had discussions with Mr Brookes about Mr Olson returning to a role in the Project.

Mr Olson is approached by McKenzie Consulting

Mid May 2004 - initial approach

76 It is clear that Mr Olson commenced his discussions with McKenzie Consulting in about mid May when they approached him. He dealt with Ms MacDonald. On his evidence the initial conversation involved conversation to the following effect:

“Ms MacDonald: “One of the roles is in DC (Distribution Centre) management focussing on the effective liaison of the retailer’s business which is managed via a third party logistics provider. This requires a level of experience in the Supply Chain area and also contractual arrangements. The other role is setting up a replenishment team, process and systems to oversee and manage stock into and out of the DCs of the third party logistic provider. The timeframe for the completion of these activities is very tight. I feel that your skill set is a good match for this role.

Mr Olson: “Who is the retailer?”

Ms MacDonald: “It is Franklins. The job will be based at Rockdale near the airport. The package is around $150 K per annum but negotiable for the right person. I am interested in you meeting with some senior management from Franklins."

77 He had understood that he was being interviewed potentially about both of the roles being offered. [Transcript 298]

Detail included in Mr Olson’s CV submitted to Ms MacDonald and on to Franklins

78 This CV had described Mr Olson's experience from July 2003 up to February 2004 with Woolworths in the following terms:

· Initiated Tactical and Strategic Replenishment projects across total Supermarket business units

· Main liaison point for Buying and Marketing, Supply Chain, IT and Store Operations for all Replenishment activities.

· Set up initial Project Team structure to commence priority Replenishment projects to gain early valuable benefits and learning’s.”

[MFI P2 tab 16]

Notice of intention to exercise 60,000 options - 21 June 2004

79 On 21 June 2004 Mr Olson gave notice of his intention to exercise 60,000 options (“the third and fourth tranches”) of his option entitlement. They were exercisable (subject to vesting conditions being satisfied) on 1 July 2004 provided he remained an employee of Woolworths to that date and provided that the Board had not determined to lapse the options by reason of clause 5.11.

80 Prior to 1 July 2004 Mr Olson communicated with Macquarie by email in respect of the options and the cap and collar arrangements on 13 May 2004: PX3 pp AO1484-01487 (tab 144); 17 May 2004 PX4 pp A01559-01562 (tab 152); 21 June 2004 PX4 pp A01559-01562 (tab 152); 21 June 2004 PX4 pp A01567-1560 (tab 155); 22 June 2004 PX4 pp A01567-1560 (tab 155); 25 June 2004 PX4 pp A01571-01574; he also received communications from Woolworths on 8 June 2003: PX4 pp A01551-01553 (tab 149); 9 June 2004: PX4 pp A01554-01557

22 June 2004 - introductory meeting with Franklins

81 His evidence was that on about 22 June 2004 he met with Mr Perlov (Franklins’ Finance Director) and Mr Morgan (Franklins’ General Manager IT) in the city. This was an introductory meeting. His evidence had been that during the course of the meeting, in response to Mr Perlov asking what he had done at Woolworths, he proceeded to go through his CV positions and explain them. When he came to the role of Manager Replenishment, Perishables and Fresh, a discussion took place in words to the following effect:

“

82 Here again the courts detailed findings as to what had actually occurred in the course of the meetings with Franklins and the calls to and from McKenzie Consulting are dealt with in the judgment below where, together with a number of other topics gathered together for examination, detailed findings are given.

Further meetings with Woolworths – 23 and 30 June

83 On or about 23 and 30 June 2004 Mr Olson had discussions with Mr Brookes and Ms Singh, about further roles in the Mercury Program and on 30 June with Mr Evenden about the same topic.

The meeting of 23 June 2004

84 Mr Olson gave the following evidence with respect to this meeting:

· trading;

· electronic commerce;

· Mercury NDC program;

· Mercury replenishment; or

· Senior Business Manager (SBM) replenishment

“Trading is something I have never done before and while it’s interesting, I feel that it was not really where I want to be.

“This would be a fairly technical role and I am not really keen on this one anyway.”

The Mercury NDC (National Distribution Centre) program was broadly discussed as the current project manager on this project was about to go on maternity leave. In respect of that role, I said:

A role in the replenishment division within Mercury was discussed. In respect of that role a conversation to the following effect occurred:

We then discussed a potential SBM (Senior Business Manager) replenishment role in words to the following effect.

85 Mr Brookes accepts (with minor differences) the substance of Olson’s account [Exhibit P 10 A paras 16 – 19].

The 30 June meeting

86 It should be noted that the NDC project involved reorganizing products into particular distribution centres and managing the administration and relocation of records relating to that redistribution in Woolworths’ computer systems [transcript 216/47 – 54]. Identifying the products to be located in particular DCs had already been done [transcript 217/20].

87 It should also be noted that dock scheduling involved building a new dock scheduling system which would manage stock in and out of existing DCs so as to act as a link between the TMS, the vehicles the system is managing and the WMS [transcript 218/4 – 16]. Dock scheduling was in very early concepts stage [transcript 219/32]. In late 2003 Olson had participated in meetings about the NDC and the distribution centre and was very familiar with the concept [transcript 218/30 – 49].

88 The evidence given by Mr Olson as to what occurred during his conversation of 30 June with Mr Evenden was as follows:

Mr Evenden: “Bernie told me about your chat with him. There are three main areas where you could fit back into Mercury. They are in e-commerce (electronic commerce), the NDC (National Distribution Centre) program and the replenishment area. The e-commerce role will come into the Yennora Buying office and more than likely fall under my control."

Mr Olson: "I am not really interested in working in this field, because it's a technical role and not senior enough."

Mr Evenden: “Then there is the Mercury NDC program.”

Mr Olson: “If that is just managing the administration of the records then I am not really all that interested in it."

Mr Evenden: “The role would be more than that. The current NDC Program Manager – Geoff Thomas is currently doing 3 jobs and I am sure that he could do with some help in the NDC role. He is currently filling in for Peter Ramsay (Mercury Program Manager Supply Chain) as well as managing his own team (the Network design team) and trying to oversee the NDC program as well."

Mr Olson: “Where would I fit in the NDC program?"

Mr Evenden: “You would be involved in managing a number of aspects of the NDC role. Potentially two or three project managers would report to you. They would need to oversee the administration of the records, ensure that the construction component of the DC fitout program stayed on track and also ensure that the co-ordination and implementation of the NDC program was closely managed.”

Mr Olson: “That sounds good because it branches into a number of areas. Where will the role would be based?”

Mr Evenden: “It will be in our Strathfield office. There are also still some opportunities in the Replenishment areas.”

Mr Olson: “I can't ask to go back into the Replenishment role in my previous capacity as it would not be fair to the two people who have filled my role. If I am to go back into the replenishment area, I’d need to understand in what capacity”.
Mr Evenden: “Richard Plunkett (Replenishment program manger – Strategic development) will need some support to get some of the strategic projects off the ground. One key project we need to get under way soon will be the dock scheduling project.”

I thought that this meant I would be assisting Mr Plunkett at a project manager level for some of the up and coming projects and report through to him – that is, that the role would be at a lower level of responsibility than I had been given prior to the demotion.

89 The evidence of Mr Evenden was:

· that the conversation was to the following effect:

Mr Evenden: "There are a couple of opportunities in the Mercury Program. One of them would be a Project Management role on the NDC project. The other was a Project management role on a project called Dock Scheduling that was soon to be started”

Mr Olson: "I'd like to give them some thought."

Mr Evenden: "How have you been feeling since you've been demoted? Have you given thought to going back to Melbourne or looking outside the company?"

· that at the time that he spoke to Mr Olson on 30 June 2004:

· The Six Plans represent the final form of the replenishment model. By that I mean the project that I was working on had by March or April 2002 completed what I would describe as the feasibility stage of the Project. Part of the work involved in the Project was to prepare models recording the replenishment processes. These Six Plans recorded the final thinking as at March and April 2002 of those models.

· From about October or November 2001, I undertook work in relation to what ultimately became the replenishment modules depicted in the Six Plans. That work may be described generally as developing a replenishment model for Woolworths. The Six Plans depict that replenishment model as it applies to particular forms of replenishment.

· Before the Six Plans reached their final form Mr Dieter Maier, of Woolworths, and I undertook a substantial amount of work.

· Before undertaking the work with me which led to the development of the Six Plans, Mr. Maier had been involved in a project to develop procedures for improving distribution centre (“DC”) replenishment forecasting. The project was known as StockSmart. The First Defendant ("Mr. Olson") had also worked on the StockSmart project. It used software provided by the organization known as i2 Technologies.

· The work which Mr. Maier and I undertook involved detailed meetings with officers of Woolworths with knowledge of the areas which were relevant to the supply chain procedures and processes. It included meeting with a number of individuals who operated aspects of that process. It also involved discussing the requirements of the Woolworths business, both now and in the future, and discussing potential improvements with those officers, and technology consultants and other consultants. At some point my understanding of the planning models enabled me to draw versions of what ultimately became the Six Plans on white boards. I was then able to discuss these white board drawings of draft models with persons who were working, or providing input on the Project. That process led ultimately to drafts of the models being developed on a computer using the software program known as Visio. That is software which permits the ready construction of planning drawings of the kind which the Six Plans are examples.

· It was Mr. Maier who was principally involved in drawing what is depicted on each of the Six Plans. He drew substantially all of what is depicted on the Six Plans. I would estimate that I drew not more than 10%. I cannot now say precisely what I drew on each of the Six Plans or whether I drew anything on any one of those plans. I can say that the only persons who drew what is recorded on the Six Plans were either Mr. Maier or myself. Each of us did so, on behalf of Woolworths, in connection with the feasibility of the Project.

· Each of the Six Plans can be accurately described as a replenishment scenario. I use the noun, scenario, in that expression because the plans record the replenishment processes applicable in a given set of circumstances, namely those identified in the heading of each of the Six Plans.

The unique features of the Six Plans

· I have seen what I would describe as plans or diagrams depicting flow through replenishment process models when working overseas. I have not seen models depicting the subject matters recorded on the Six Plans in Australia. I can say that there is no supermarket operator in Australia which has executed (by which I mean put into business operation) the planning and processes recorded in the Six Plans. It may be that other operators have plans to do so. My expectation is that they probably do. Of the Six Plans, the two which are most significant are those entitled “DCM” and “XD”.

· Each of those plans is unique in my experience. Confidential Exhibit GDT2 records my reasoning for this conclusion. I have given these reasons in a Confidential Exhibit because my explanation will discuss the detail of the six plans.

· I have some knowledge of the supply chain model implemented in practice by the UK supermarket operator, Tesco. In late 1999/early 2000 I visited several of Tesco’s UK distribution centres and had discussions with a number of their officers responsible for distribution aspects of the business.

· Having observed the operation of the Tesco DCs I am aware that Tesco was achieving to some extent a supply chain model similar to that recorded in the DCM and XD plans forming part of the Six Plans. However I have not seen any plans similar to the Six Plans recording the Tesco supply chain model.

The utility of the Six Plans to a competitor of Woolworths

· I have been asked to comment on whether the contents of any of the Six Plans would be of any advantage to a competitor of Woolworths, and if so what that advantage would be.

· If the competitor wished to implement an integrated supply chain, particularly one which used point of sales (“POS”) sales forecasting, then my answer is clearly yes. That is because apart from a relatively minor part of the Six Plans which are peculiar to Woolworths’ business, the processes and models depicted in the Six Plans record a series of steps which any competitor wishing to achieve a supply chain model using POS sales forecasting could seek to adopt and implement; without the significant effort and expenditure which was involved in the work I undertook.

Mr Olson’s involvement in the development of the models depicted in the six plans

· In the work I did on the Project, I attended 4 or 5 meetings in which I discussed aspects of what is now recorded in the Six Plans with Mr. Olson. These discussions occurred in the context of meetings at which a number of persons were present, including myself and Mr Olson. The meetings discussed the planning for what is now recorded in the Six Plans.

· When these communications occurred, Mr Olson was Manager of the StockSmart project. StockSmart was the name given to the DC forecasting module which was being implemented. It was some time after I completed the work which I did with Mr. Maier, which led to the development of the Six Plans, that a decision was made to integrate the StockSmart project work with what became known as AutostockR. AutostockR is the name of the store forecasting and replenishment system which took, as its starting point, “real time” sales information generated by each POS within each supermarket.

Information revealed to Mr. Olson in Project Mercury

· In the communications which took place with Mr. Olson, he received documents which recorded what Woolworths was attempting to achieve in the Project, and described the integrated functions which are depicted in the Six Plans.

· Participation in, and access to, those communications would reveal what Woolworths planned to achieve an integrated supply chain model as depicted in the Six Plans. A number of features of what is depicted in the Six Plans are features which Mr. Olson would not have learnt of but for his participation in the planning which resulted in the Six Plans. I have described those features in Confidential Exhibit GDT3. “

[Statement of Mr Thomas sworn 30 July 2004 paragraphs 7-26]

6 Mr Thomas accepted under cross-examination that in order for someone to try and emulate the Woolworths supply chain in Project Mercury it would involve a massive capital undertaking. [Transcript 133]

Evidence given by Mr Maier

7 Mr Maier is a senior business analyst who in August 2001 worked on the project then known as the Supply Chain Management Capability Project [which later became known as Project Mercury]. It was he who drew the six plans recording various replenishment models.

8 He gave evidence that the plans recorded a model describing the flow of processes necessary to implement a generic forecasting, inventory planning and replenishment planning system across Woolworths' business and of the work and consultations which he had had to carry out before being in a position to draw what is recorded on each of those plans. His evidence was that at the time of developing the plans, knowledge of the detail of each of them was restricted to a limited category of Woolworths employees then working on the Project. That access was later extended to certain other Woolworths employees for comment and feedback.

9 There was an attempt to persuade him during his cross-examination to accept that there was little material detail on the subject plans- such that reading the plans would be of no use or interest to a competitor such as Franklins. Whilst he accepted that there was a limit to the extent of detail in relation to the particular topics he was taken to, his re-examination included the following:

“Q. Mr Maier, I would like you to assume the following facts: First, that Mr Olson was engaged as a senior supply chain specialist with Franklins. Second, that one of his responsibilities in that role was to assume the role of the supply chain specialist within the entire business. Third, that included in that general responsibility was a particular responsibility for designing and monitoring all logistical processes and building partnerships, both internally and externally. Just make those assumptions. Would the plans that you were asked about be of interest to such a person having those responsibilities, in your view?
A. Yes.

Q. Why is that?
A. Because they describe the concept of how Woolworths has developed or is intending to develop the replenishment in a future network that consists of RDCs and NDCs, all new concepts, so anyone understanding these plans would certainly have an advantage of that.

[Transcript 146]

Evidence given by Mr Stuart Larkin

10 Mr Larkin is a Business Systems Manager with more than 20 years experience on computer systems familiar with the business plan, plan and exercise known as Project Mercury who gave detailed evidence as to the origin and object of the Project, as to the significant features of Woolworths business, as to the work involved in the Project at various stages, as to relevant detail on particular documents, as to work involved in producing the six plans or diagrams, as to the significance of the six diagrams for Woolworths business, as to the importance of those diagrams and as to the advantages available to a competitor from access to those diagrams. This evidence included the following:

The origin and objective of the Project

· The origin of the Project was the decision to develop a supply chain strategy for Woolworths’ future requirements. By “a supply chain strategy” I mean the combined processes and procedures which are employed by the Woolworths’ business to acquire stock from suppliers, efficiently distribute the stock through Woolworths’ Distribution Centre (“DC”) and making that stock available on shelves for sale to consumers in Woolworths’ stores.

· The supply chain involves a complex and sophisticated relationship between:

(a) Warehouse capacity, procedures and management and organisation;

(b) Purchase arrangements between Woolworths and its suppliers;

(e) Sales forecasting both for stores and also forecasting supplies required for DC’s; forecasting involves mechanisms to predict for each of the products sold in a Woolworths’ store, the level of future demand in that store;

(f) Procedures for movement of stock within Woolworths’ DC’s including requirements for Warehouse Management Systems;

(g) Procedures for movement of stock within Woolworths’ stores to facilitate ease of stocking shelves, improving inventory management, including reliability;

· The Project may be described in general terms as seeking to develop systems and procedures which would efficiently integrate the means by which Woolworths forecasts, orders, warehouses, transports and handles product from the point of supply into Woolworths’ stores. The object of the Project was to modernize, integrate and make more efficient Woolworths’ supply chain process so as to reduce the cost of supply related services to Woolworths’ business, resulting in lower prices and achieving a competitive advantage in the market place.

· The complexities and importance of the Project needs to be understood in light of the Woolworths’ business.

Significant features of Woolworths’ business

· At the present time, Woolworths:

(a) operates approximately 700 supermarkets throughout Australia;

(b) depending on their size, each store stocks between 27,000 to 30,000 product lines;

(c) employs about 145,000 people;

(d) has annual turnover (gross revenues) of supermarkets over $22 B;

(f) Incurs costs associated with the supply chain represent between 12% - 14% of supermarkets sales revenue.

· A reduction in costs associated with the proposed Woolworths’ supply chain will increase profitability. I am aware of estimated saving of $400 M annually.

Work involved in the Project

· Work on the Project commenced in the latter part of 2000 and the early part of 2001. At that time Mr. Michael Luscombe who held the position, the General Manager Supply Chain for Australia, was responsible for the Project. Mr. Peter Ramsay reported to Mr. Luscombe. Mr. Ramsay held the position of Program Manager. Mr. Ramsay was engaged on a fulltime basis in developing the Project.

· When I first became involved in the planning of the Project, the plan was to identify Woolworths’ supply chain in the period 2004 – 2010. This included forecasting and examining Woolworths’ warehouse requirements, transport, and the procedures generally involved in replenishing product in stores.

· The initial stages of the development of the Project (that is the period early 2001 to September of that year) involved the establishment of a dedicated team of 20 Woolworths employees together with consulting staff provided by Accenture. The consulting services provided by the Accenture staff were services involving experts in aspects of supply chain consulting and program management. Because the planning work undertaken by this fulltime team involved planning of IT requirements, I was constantly in communication with members of the team.

· The planning undertaken by those employees at this stage involved consideration of Woolworths’ future DC requirements, warehousing procedures, including computer functionality to be used in the warehouse management systems (known as WMS), transport management systems together with related computer systems, conceptualizing the supply chain model. This involved defining (and recording in diagrammatic form) the order in which various events would occur and the particular processes which Woolworths would use in its supply chain.

· In September 2001, the planning had reached the stage where approval was granted by Woolworths’ board to commence detailed work on a number of specific projects associated with the planning of the future supply chains. These involved projects associated with:

(a) Improving delivery capability known as Delivery Flexibility into stores;

(b) The concept known as “one touch”. This involved procedures to reduce handling of products within stores, that is, handling from the point at which product is delivered to a store to when it is placed on shelves.

(c) Warehouse Management System (“WMS”). This involves defining systems to support proposed warehouse processes. There existed in 2001 various software systems of a proprietary kind supplied by US software suppliers. Work was undertaken on identifying the available software systems and planning modifications to those systems in light of Woolworths’ requirements.

(d) Warehouse capability. This involved consideration of the manner in which and processes adopted for moving product through DC’s.

(e) Transport Capability. This involves procedures to manage the transport of products from the suppliers to the DC’s and from the DC’s to the stores.

(f) Vendor capability. This involved a consideration of how Woolworths’ future planning would impact on its then arrangements with suppliers and any changes which needed to be made in that relationship and processes to give effect to Woolworths’ future planning.

(g) DC network strategy. This involved planning associated with the construction of DC’s. It involved planning as to matters such as how many stores should a DC service, where should the DC be located, what size should it be, what transport arrangements would be associated with the DC and supply to it.

· Annexed and marked “A” is an email dated 2 July 2004 from Mr. Mark Olson to the email address “DianneOlson (e-mail)” dated 2 July 2004. Included in that email is an email from a Mr. Jonathan Green dated 26 April 2002 to a variety of persons including me. Its subject matter is “Supply Chain Generic Replenishment Model”. Accompanying that email were six attachments…

· I am familiar with each of those attachments, and will refer to them as the six documents.

· I refer to Confidential Exhibit 1 to this statement. Exhibit SJL 1 includes the six diagramsplans, which were attached to the 2 July 2004 email, subject to, in the case of the Exhibit, for DCM the Exhibit contains what is recorded as version 1.4, whereas the email refers to version 1.5 and in the case of DSD, it is 1.3 in the email and in the Exhibit, it is 1.2. In the case of XD, the email refers to v 1.3 whereas the Exhibit refers to v 1.2.

· The six documents record the final models… resulting from work undertaken in the Project. Each document records the application of the model to a particular class or method of supply. It is necessary to explain the following terms identified in each document as follows:

Standard DSD

· DSD means direct store delivery. Within Woolworths approximately 15% of products sold in its stores are delivered by suppliers direct to stores. Those products do not go through and are not delivered to, Woolworths DC. Illustrations of such products include proprietary bread, milk, flowers and some fresh delicatessen items, including poultry, a major item. The attachment “Standard DSD” depicts the supply chain processes which will apply to those products which will continue to be supplied direct to store after the Project changes are implemented.

Standard XD

· XD means cross-dock. The expression “cross-dock” has its origins in warehousing. The concept is that a supplier will deliver stock to a warehouse. The stock, once delivered, will not be placed in reserve racks. It will be immediately incorporated in outgoing orders from the warehouse. The stock which will be supplied using the procedures identified in “Standard XD” is stock which Woolworths will not hold in inventory. It will be moved in full pallet quantities. Coca-Cola is an example of product which is subject to these processes. Cross-docking significantly increased the efficiency of a warehouse. The extent to which product is cross-docked (both by XD and DCM as later described) has a significant impact on the size of the DC. Stock which is cross docked is not stored in the warehouse. A significant increase in the volume of cross-docked stock will reduce the size (and cost) of the DC’s.

Standard Stocked

· The document identified as “Standard Stocked” depicts the supply chain processes applicable to those products which Woolworths holds inventory in its warehouses, in reserve stock locations.

Vendor managed

· This document records the processes applicable to the relatively small number of products which are managed by the vendors. Items such as greeting cards and CD’s that are managed by vendor representatives. Those representatives monitor sales within the store and replenish direct. They are “vendor managed” in the sense that it is the vendor’s representative who controls the quantities of product available for sale within each Woolworths’ store.

Standard DCM

· The acronym “DCM” means distributed case movement. The document in Confidential Exhibit SJL 1 headed “DCM” records the supply chain processes which apply to products which, when delivered to a Woolworths’ DC, are dealt with in accordance with a warehousing technique described as “Distributed Case Management”. The term “DCM” is no longer used. It is now called “Flow Through”. The document headed “DCM” recorded the supply chain procedures planned as at the date of the document to be implemented in respect of those products which, when delivered to a DC, would be delivered from the DC on the same day as they were delivered. That is, the product would not be moved into reserve stock locations within the DC. It would be delivered and then moved within the warehouse, and delivered from the warehouse on the date it was delivered. DCM is similar to XD except that XD involves whole pallets. DCM (when the plan was drawn up) did not involve whole pallets, but carton quantities of various multiples.

Requisites

· These are items which Woolworths do not sell on their own. A large component of this class is packaging and ingredients. For example, wrapping and flour used in in-store bakeries are illustrations of these products.

Work involved in producing the Six DiagramsPlans

· Part of Confidential Exhibit SJL 1, record the final results of the modeling which records the sequence of procedures applied to particular categories of product referred to in paragraph 16 above.

· Each of the six diagramsdocuments was drawn by either Mr. Noel Hoare or Mr. Dieter Maier, each of whom were employees of Woolworths. Accenture provided the services of Mr. Geoff Thomas, who is now an employee of Woolworths, but who, at the time, was a consultant. The processes and inter-relationship between processes described in the six diagramsdocuments, represent the final process flows agreed as a result of the work undertaken in the Project.

· The work involved in preparing the models recorded in the six diagramsplans was undertaken in the period from approximately September 2001, through to March or April 2002.

· Included in Confidential Exhibit SJL 1 is a document entitled “Deliverable 2.1 Generic Replenishment Model Supply Chain Replenishment Capability Project”. That document was written by Messrs. Thomas and Maier. The document describes the various processes depicted on each of the six diagramsplans.

· In the period September 2001 through to March/April 2002. Messrs. Hoare, Thomas and Maier reported to me. I saw drafts of these six diagramsplans over the period they were working on them. I was in communication with each of these gentlemen about aspects of the diagramsplans.

· By March or April the diagramsplans had been circulated to a variety of people who were responsible for areas of the business to which the diagramsplans related. Their comments were sought in relation to the diagramsplans. The email in the bottom section refers to the “Supply Chain Replenishment Capability Team”. In April 2002 that team comprised Mr. Jonathan Green, together with myself, and Messrs. Hoare, Maier and Thomas. Prior to them working on the preparation of the models, Messrs. Hoare and Maier had extensive experience in aspects of the Woolworths’ supply chain. The preparation of the six diagramsdocuments involved them using their experience and knowledge of existing supply chain arrangements and consulting with other persons within the Woolworths’ business and also consulting with Mr. Thomas, who was an expert consultant.

· During the development of the models, the six diagramsplans in draft form were accessible only to members of the Project.

· After April 2002, when the models were agreed, access to the six diagramsplans remains restricted, to my knowledge, within Woolworths. They were not shown and distributed to persons other than Woolworths’ employees or an Accenture consultant or to 12 technologiesi2 Technologies to which the model was provided to develop IT systems contemplated in the model.

The significance of the six diagramsplans for Woolworths’ business

· Not all of the steps recorded in the six diagramsplans are currently implemented in Woolworths’ business. The diagramsplans record in part changes which have been implemented to the operation of Woolworths’ business and in part changes proposed to be implemented to the business.

· The importance of the diagramsplans is that they record the sequence in which Woolworths proposes to integrate forecasting, inventory planning, transport, warehouse, vendor communication in the implementation of its business. Each of the six diagramsplans records information which was the product of significant analysis, consultation, planning and investigation by members of the Project.

The importance of the Six DiagramsPlans

· What is recorded in the diagramsplans is probably unique in the Australian supermarket industry. I say probably, because, while I have no knowledge of what diagramsplans Woolworths’ major competitors have, such as Coles for example, taking the plan headed “Stocked Items” as an illustration, I say that plan is probably unique because I doubt that any competitor of Woolworths has achieved the level of planning which is depicted in the Stocked Items plan. What the Stocked Items plan and the other five diagramsplans record is the detailed processes and the relationship between each of those processes which will be implemented in Woolworths’ business with the object of achieving what are hoped a significant reduction in costs associated with the implementation of Woolworths’ supply chain. The diagramsplans record the model to which integrates a number of steps which had previously not been integrated in Woolworths’ business.

· I am able to describe the significant changes which the diagramsplans depict in the manner in which Woolworths conducts its business, and explain why those changes are significant. In some respects, what are recorded in this plan are procedures which do not exist anywhere in the world, when these plans were prepared. I can explain those aspects of the plans.

· I have no doubt that each of the six diagramsplans are unique in the sense that they are the only detailed diagramsplans which record the manner in which Woolworths proposes to implement its supply chain.

Advantage available to a competitor from access to these diagramsplans

· I have been asked to comment on the question whether, if the six diagramsplans were available to a competitor of Woolworths, would the availability of that information provide a competitor with any, and if so, what, advantage.

· If a competitor was wishing or seeking to implement an integrated supply chain, then access to the information recorded in the diagramsplans would significantly benefit that competitor. That is because, to my knowledge, the process of planning and identifying what steps will be undertaken as part of the supply chain, and the relationship between each of the steps and the order in which they occur, requires considerable assessment and consultation with persons knowledgeable in the business and the application of expertise. That process to my knowledge, involved a period of three employees working fulltime for nearly six months.

· In addition to that advantage, the competitor would know what Woolworths’ diagramsplans were. Knowledge of those diagramsplans would itself, be an advantage to a competitor, because the competitor may not have thought about implementing a particular aspect as planned by Woolworths. To know what Woolworths was planning would assist a competitor to plan a response. “

[Statement of Mr Larkin of 28 July 2004 paragraphs 5-41]

11 Whilst under cross-examination he was asked questions concerning a supermarket operator which did not control primary or secondary transport or control any distribution centres, but wished nevertheless to have a supply chain system, and as to his understanding that such an operator could obtain a supply chain system-a software system-on the market from a number of sources in the market. He accepted this proposition.

12 [Confidential section of judgment. Not to be disclosed – see Court Order 22 September 2004 ]

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13 [Confidential section of judgment. Not to be disclosed – see Court Order 22 September 2004 ]

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Last Modified: 09/28/2004

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Woolworths Ltd v Olson [2004] NSWSC 849

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CITATION:	Woolworths Limited v Mark Konrad Olson & Anor [2004] NSWSC 849
HEARING DATE(S):	7/09/04, 8/09/04, 9/09/04, 10/09/04, 13/09/04, 14/09/04, 15/09/04, 17/09/04
JUDGMENT DATE:	22 September 2004
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Limited relief to be given. Short minutes of order to be brought in. ; [NOTE: This is the edited text of the judgment delivered on 22 September 2004. It does not include material [the subject of a confidentiality regime imposed by Court order] which may not be published except in such manner and for such purposes as the Court specifies. (See note at end of Judgment)]
CATCHWORDS:	Anton Pillar relief granted by Federal Court - Cross-vesting orders made under Jurisdiction of Courts (Cross-Vesting) Act 1987 - Litigation before Supreme Court consolidated to include joint hearing of Federal Court proceedings, proceedings before Industrial Relations Commission under section 106 of Industrial Relations Act 1996-Confidential information - Intellectual Property - Fiduciary obligations of employee - Breach of copyright - Exemplary damages - Contract of employment - Employee agrees to be bound by employers code of conduct requiring employees to declare any interest they might have that could adversely affected employer - Fraudulent intent of employee - Employee determines to accept employment with competitor and to send to home computer e-mail attachments containing highly confidential information of first employer - Conflict between duty and interest exists from moment when employee forms intention to dishonestly take and use employers confidential information for his own benefit, contrary to fiduciary and contractual obligations - Further conflict of duty and interest constituted by the preferring by employee of his own interests in failing to disclose the conflict - Summary dismissal of employee - Restraint of Trade covenants - Employee proposes as soon as permitted to take up a position with major competitor - Relief - No evidence as to any pecuniary loss suffered by employer as a result of employees breach - No evidence of profit acquired by employee - Nominal damages - Restraint provision held invalid - Not possible to read down restraint period or geographic area to give restraint a reasonable operation - Court cannot redraft restraint provision
LEGISLATION CITED:	Copyright Act 1968 (Cth) Copyright Amendment (Digital Agenda) Act 2000 (Cth) Corporations Act 2001 (Cth) Evidence Act 1995 (NSW) Industrial Relations Act 1996 (NSW) Interpretation Act 1987 (NSW) Jurisdiction of Courts (Cross--Vesting) Act 1987 (Cth) Restraints of Trade Act 1976 (NSW) Trade Practices Act 1974 (Cth)
CASES CITED:	A Buckle & Son Pty Ltd v McAllister (1986) 4 NSWLR 426 Adami v Maison de Luxe Ltd (1924) 35 CLR 143 Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242 Amalgamated Mining Services Pty Ltd v Warman International Ltd (1992) 24 IPR 461 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 Angus & Coote Pty Ltd v Render (1989) 16 IPR 387 Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 ASX Operations Pty Limited v Pont Data Australia Pty Limited (No 1) (1990) 27 FCR 460 Attorney-General v Blake [1998] Ch 439 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Australasian Performing Right Association Ltd v Commonwealth Bank of Australia (1992) 40 FCR 59 Autodesk Inc & Ors v Yee & Anor (1996) 35 IPR 415 Autodesk Australia Pty Ltd v Cheung (1990) 17 IPR 69; 94 ALR 472 Bailey v Namol Pty Ltd (1994) 53 FCR 102 Barry v Incitec Ltd & Greenleaf Pty Ltd (1991) 45 IR 143 Bell v Lever Brothers Limited [1932] AC 161 Bettini v Gye (1876) 1 QBD 183 Blyth Chemicals Limited v Bushnell (1933) 49 CLR 66 Boardman v Phipps [1967] 2 AC 46 Boston Deep Sea Fishing & Ice Company v Ansell (1888) 39 Ch D 339 Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99 Briginshaw v Briginshaw (1938) 60 CLR 336 Bristol & West Building Society v Mothew [1998] Ch 1 Brown v Cunich [1994] ATPR 46-117 Bruce v AWB Ltd (2000) 100 IR 129 Buckley v Tutty (1971) 125 CLR 353 Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 Butler v Fairclough (1917) 23 CLR 78 Butt v Long (1953) 88 CLR 476 Canadian Aero Services Ltd v O'Malley (1973) 40 DLR (3d) 371 Canberra Bushrangers Baseball Team Pty Ltd v Byrne (ACTSC), Higgins J, No SC707 of 1994, 21 December 1994, unreported). Canson Enterprises Limited v Boughton & Co [1991] 3 SCR 534 Chappell & Co Ltd v Associated Radio Co of Australia Ltd [1925] VLR 350 Clouston & Co Limited v Corry [1906] AC 122 Coco v AN Clark (Engineers) Limited [1969] RPC 41 Colour Control Centre Pty Limited v Ty (1996) 39 AILR 5-085 Columbia Pictures Industries Inc & Anor v Luckins (1996) 34 IPR 506 (FCA) Comax Secure Business Services Limited v Wilson (unreported, QBD, Richard Seymour QC, 21 June 2001) Concut Pty Limited v Worrell (2000) 176 ALR 693 Consul Development Pty Limited v DPC Estates Pty Limited (1975) 132 CLR 373 Courtaulds Northern Textiles Ltd v Andrews [1979] IRLR 84 Curro and Anor v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 Dart Industries Inc v Décor Corporation Pty Limited & Anor (1993) 179 CLR 101 Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 Desmond Henry Randall v Aristocrat Leisure Limited [2004] NSWSC 411 Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 Drafting and Enforcing Post-Employment Restraints (1997) 10 AJLL 181 EFG Australia Ltd v Kennedy [1999] NSWSC 922 Elcom v Electrical Trades Union of Australia, New South Wales Branch (1983) 5 IR 267 Ernest Turner Electrical Instruments Ltd v Performing Right Society Ltd [1943] Ch 167] Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 Exxon Corporation v Exxon Insurance Consultants International Ltd [1981] 2 All ER 495 Faccenda Chicken Ltd v Fowler & Ors [1987] Ch 117 Farley v Lums (1917) 19 WALR 117 Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664 FNH Investments Pty Ltd v Sullivan [2003] FCAFC 246 Francis v South Sydney District Rugby League Football Club Ltd [2002] FCA 1306 Galipienzo v Solution 6 Holdings Limited (1998) 28 ACSR 139 Gilbert J McCaul (Aust) Pty Limited v Pitt Club Limited (1957) 59 SR (NSW) 122 Gooley v Westpac Banking Corporation (1995) 129 ALR 628 Gray v Motor Accident Commission (1998) 196 CLR 1 Guth v Loft (1939) 5 A 2d 503 SCDel Harmer v Cornelius (1858) 5 CBNS 236 Harris v Digital Pulse Pty Limited (2003) 44 ACSR 390 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 Heptonstall v Gaskin and Ors [2004] NSWSC 80 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 Hollingsworth v Commissioner of Police (No 2) (1999) 47 NSWLR 151 Home Counties Dairies Ltd v Skilton [1970] 1 All ER 1227 Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Idameneo (No 123) Pty Limited v Angel-Honnibal [2002] NSWSC 1214 Incitec Ltd v Industrial Court of New South Wales (1992) 45 IR 155 Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443 International Writing Institute Inc v Rimila Pty Ltd & Anor (1994) 30 IPR 250 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 IRAF Pty Ltd v Graham [1982] 1 NSWLR 419 Jennings v Stephens [1936] Ch 469 Johnson v Unisys Ltd [2003] 1 AC 518 Jupiter General Insurance Co Ltd v Ardeshir Bomanji Shroff [1937] 3 All ER 67 Kabushiki Kaisha Sony Computer Entertainment v Stevens & Ors (2003) 200 ALR 96 Knogo Corporation v Halligan (1984) ATPR 40-460 Kone Elevators Pty Ltd v McNay (1997) ATPR 41-564 Lakatoi Universal Pty Ltd & Walker [2000] NSWSC 113 Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 Littlewoods Organisation Ltd v Harris [1978] 1 All ER 1026 Lloyd's Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 72 ALR 643 Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 76 ALJR 246 Malik v Bank of Credit and Commerce International SA (in liq) [1997] 3 WLR 95 Mellor v Australia Broadcasting Commission [1940] AC 491 Meyrick v Stirling Bros Ltd (1899) 1 WALR 51 Mitchforce Pty Ltd v Industrial Relations Commission of New South Wales & Ors (2003) 57 NSWLR 212 MJA Scientifics International Pty Ltd & Anor v SC Johnson & Son Pty Ltd (1998) 43 IPR 275 Neary v Dean of Westminster [1999] MLR 288 New Zealand Netherlands Society v Kuys [1973] 1 WLR 1126 News Ltd v Australian Rugby League Football Ltd (1996) 64 FCR 410 Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 North v Television Corporation Ltd (1976) 11 ALR 599 Nottingham University v Fishel (QBD) [2000] ICR 1462; [2000] IRLR 471 O'Brien v Komesaroff (1982) 150 CLR 310 Ogden Industries Pty Ltd v Lucas (1968) 118 CLR 32 Orr v University of Tasmania (1957) 100 CLR 526 Orton v Melman [1981] 1 NSWLR 583 Pascoe v Federal Commissioner of Taxation (1956) 30 ALJR 402 Pedler v Richardson (Young J, Supreme Court of New South Wales, 16 October 1997, unreported) BC9705263 Pepper v Webb [1969] 1 WLR 514 Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 Petrofina (Great Britain) Ltd v Martin [1966] Ch 146 Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 PMC Holdings v Smith [2002] EWHC 1575 (QB) Polygram Records Inc & Anor v Raben Footwear Pty Ltd (1996) 35 IPR 426 Prenn v Simmonds [1971] WLR 1381 Prior v Lansdowne Press Pty Ltd [1977] VR 65 Queensland Co-operative Milling Association v Pamag Pty Ltd (1973) 133 CLR 260 R v Darling Island Stevedoring & Lighterage Co Ltd; Ex parte Halliday & Sullivan (1938) 60 CLR 601 Raben Footwear Pty Ltd v Polygram Records Inc & Anor (1997) 75 FCR 88 Ravenscroft v Herbert & New English Library Ltd [1980] RPC 193 Reading v Attorney General [1951] AC 507 Regal (Hastings) Limited v Gulliver [1967] 2 AC 134 Rentokil Pty Ltd v Lee (1995) 183 LSJS 444 Robb v Green [1895] 2 QB 1 Rouen v Ryan [2001] NSWCA 230 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 Ryan v Rouen [2000] NSWSC 468 Saltman Engineering Co Limited v Campbell Engineering Co (1948) 65 RPC 203 Sea Acres Rainforest Centre Pty Ltd v State of New South Wales (2001) 109 IR 56 Sheldrick v WT Partnership (Aust) Pty Ltd (1998) 89 IR 206 Solution 6 Holdings Ltd and Ors v Industrial Relations Commission of New South Wales and Ors (2004) 208 ALR 328 State Rail Authority v Earthline Constructions Pty Limited (O'Keefe CJ, Supreme Court of New South Wales, 14 September 1994, unreported) Stevenson v Barham (1977) 136 CLR 190 Sullivan & Anor v FNH Investments Pty Ltd t/as Palm Bay Hideaway (2003) 57 IPR 63 Talk of the Town Pty Ltd v Hagstrom (1990) 99 ALR 130 Telstra Corp Ltd v Australasian Performing Right Association Ltd (1997) 191 CLR 140 Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 Turner v Mason (1845) 14 M & W 112 Vardy v Cuthbert (1872) 3 AJR 25 Victoria University of Technology v Wilson & Ors [2004] VSC 33 Walker v Industrial Court of New South Wales & Anor (1994) 53 IR 121 Warman International Limited v Dwyer (1995) 182 CLR 544 Watson v Foxman (2000) 49 NSWLR 315 Webb v Ryleen Pty Limited (Young J, Supreme Court of New South Wales, 8 November 1994, unreported) BC9403215 Whitfeld v De Lauret & Co Ltd (1920) 29 CLR 71 Woolworths Limited ACN 000 014 675 v Mark Konrad Olson & Anor [2004] NSWSC 871 Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 Youyang Pty Limited v Minter Ellison Morris Fletcher [2003] HCA 15
PARTIES :	Woolworths Limited ACN 000 014 675 (Plaintiff) Mark Konrad Olson (First Defendant) Dianne Olson (Second Defendant)
FILE NUMBER(S):	SC 50116/04
COUNSEL:	Mr RM Smith SC, Mr MA Jones (Plaintiff) Mr RM Goot SC, Mr SEJ Prince (Defendants)
SOLICITORS:	Clayton Utz (Plaintiff) Maddocks (Defendants)