Cape Australia Holdings Pty Ltd v Iannello [2009] FCA 709 (2 July 2009)

Last Updated: 3 July 2009

FEDERAL COURT OF AUSTRALIA

Cape Australia Holdings Pty Ltd v Iannello [2009] FCA 709

PRACTICE AND PROCEDURE – application for preliminary discovery under O 15A r 3 and O 15A r 6 of the Federal Court Rules – no evidence that the applicants were contemplating bringing a claim within the original jurisdiction of the Court – whether relief available under O 15A – whether evidence sufficient to demonstrate that there was reasonable cause to believe the applicants had a right to obtain relief.

Federal Court of Australia Act (Cth) s 50

Federal Court Rules O 15A r 3, r 6

Autodata Limited v Boyce’s Automatic Data Pty Limited [2007] FCA 1517
Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited (No 2) (2007) 163 FCR 372
Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133; (2008) 169 FCR 435
Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

CAPE AUSTRALIA HOLDINGS PTY LTD (ACN 126 824 397) and TOTAL CORROSION CONTROL PTY LTD (ACN 008 994 616) v DARREN IANNELLO
WAD 219 of 2008

SIOPIS J
2 JULY 2009
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 219 of 2008

BETWEEN:

CAPE AUSTRALIA HOLDINGS PTY LTD (ACN 126 824 397) First Applicant TOTAL CORROSION CONTROL PTY LTD (ACN 008 994 616) Second Applicant

AND:	DARREN IANNELLO Respondent

JUDGE:	SIOPIS J
DATE OF ORDER:	2 JULY 2009
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1. The applicants’ application filed on 10 October 2008 is dismissed.
2. The applicants are to pay the respondent’s costs.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 219 of 2008

BETWEEN:

CAPE AUSTRALIA HOLDINGS PTY LTD (ACN 126 824 397) First Applicant TOTAL CORROSION CONTROL PTY LTD (ACN 008 994 616) Second Applicant

AND:	DARREN IANNELLO Respondent

JUDGE:	SIOPIS J
DATE:	2 JULY 2009
PLACE:	PERTH

REASONS FOR JUDGMENT

1. The two applicants are related companies which provide industrial services to companies operating in the oil and gas and resources industries. The first applicant is the parent and controlling entity of the second applicant. Mr Stephen Murdoch is and was in June 2008, the executive director of the first applicant. Mr Iannello, the respondent, is a former employee of the second applicant, Total Corrosion Control Pty Ltd (Total). He resigned from his employment with Total on 18 June 2008.
2. The applicants seek orders that Mr Iannello give preliminary discovery of a number of categories of documents under O 15A r 3 and r 6 of the Federal Court Rules (the Rules).
3. Mr Iannello commenced employment with Total in October 2003 in the position of maintenance manager based at Total’s Kwinana office. During the period of Mr Iannello’s employment, BP Oil Refinery Pty Ltd (BP) was one of Total’s major clients. Before his departure on 18 June 2008 from Total, Mr Iannello had been exposed to the site agreement which Total had recently negotiated with BP.
4. On 21 June 2008, Mr Murdoch sent Mr Iannello a letter. In the letter, Mr Murdoch stated that he noted Mr Iannello’s assurances that he would not join a competitor or set up any business in competition with Total after his resignation. Mr Murdoch went on to remind Mr Iannello of his “confidentiality and intellectual property obligations to TCC”. The letter also stated that copies of the agreements “which you signed as part of your employment” were attached. However, those documents are not attached to the letter that was annexed to Mr Murdoch’s affidavit. The letter concluded with the following paragraph:

We naturally take our rights under these arrangements very seriously. We will not hesitate to enforce those agreements and if necessary seek appropriate injunctions from the court to restrain any anticipated breaches.

5. It appears that Mr Murdoch wrote a letter in like terms to Mr Iannello’s brother, Mark, who had also been an employee of Total, and had also resigned on the same day.
6. On 23 June 2008, a firm of solicitors, Piper Alderman, responded to Mr Murdoch’s letters of 21 June 2008, on behalf of Mr Iannello and his brother, Mark. The Piper Alderman letter stated that their clients acknowledged their obligations in relation to Total’s confidential information. The letter went on to say that their clients were examining their personal records to ensure that they were not in possession of any such confidential information and if they found any such information they would advise Total. The letter invited Total to itemise “any particular items about which you may have specific concerns”.
7. Further, Piper Alderman denied the allegation that Mr Iannello, or his brother, had given any assurance as to their post-employment business activities. The letter went on to say that:

...despite the absence of any specific post employment restraint in their contracts, we are instructed that our clients are willing to consider any reasonable concerns you have about their post-employment business activities. To that end, we invite you to write to us detailing any specific matters about which you might seek our clients’ agreement.

8. The letter also stated:

Our clients are surprised at the tenor of your letter given the recent spill and fill of positions which made it clear to our clients that their services were not highly valued by your company. Nonetheless, their offer to resolve any outstanding concerns you have remains genuine.

9. On 21 August 2008, Mr Murdoch was advised by Ms Chapman, Total’s site administrator at the BP Oil Refinery at Kwinana, that the records she had seen, indicated that Mr Iannello had gained access to the BP Kwinana site on 20 August 2008 by using an access card issued to Mr Iannello whilst he was employed by Total.
10. On 21 August 2008, Blake Dawson, solicitors for Total, wrote to Piper Alderman stating that Mr Iannello, whilst he had been employed by Total, had access to confidential information which was protected by contract. The letter alleged that Mr Iannello was approaching Total’s clients and “attempting to lure them away” by “leveraging off” the confidential information. “Specifically”, said Blake Dawson, “TCC is aware that your clients have been making approaches to BP”.
11. Blake Dawson also stated that in the days leading up to the termination of his employment at Total, Mr Iannello had access to a new agreement between Total and BP executed in June 2008. The letter went on to say that Total was concerned that Mr Iannello was now using their confidential information in his capacity as an employee of Seat Corrosion Control (Aust) Pty Ltd (SCC) to attempt to compete with Total for services to BP. It was alleged that Mr Iannello was using confidential information belonging to Total to assist SCC break into the Western Australian market.
12. Further, Blake Dawson stated that Mr Iannello had entered the BP Kwinana Refinery facility using security cards which were registered with Total to meet with a BP employee, Mr John Newton. The letter stated that Total suspected that this was for the purpose of attempting to obtain work from BP for SCC.
13. The letter demanded that Mr Iannello was not to enter the BP Kwinana site again whilst representing that he was a Total employee and to return the security cards. The letter also demanded that Mr Iannello cease using Total’s confidential information, and that he comply with his contractual obligations. The letter concluded by saying:

TCC considers your clients’ actions represent serious attempts to damage the business of TCC. If your clients do not comply with the requirements of TCC...TCC will take whatever legal action (including any urgent application to restrain your clients’ conduct) it sees fit to protect its business and enforce the Agreements without further notice to your clients. Given your clients’ flagrant disregard for their obligations under the Agreements, TCC will seek to recover its costs of any legal action on a full indemnity basis from your clients.

14. By a letter dated 25 August 2008, Piper Alderman responded to the letter from Blake Dawson. Piper Alderman stated that Mr Iannello was not employed by SCC. Further, it was said that, in visiting the BP Kwinana site, Mr Iannello and his companion did not represent that they were Total employees and made it perfectly clear, although it was already known to BP, that they had ceased employment with Total two months earlier. The solicitors said that Mr Iannello entered the BP Kwinana site as a visitor to introduce himself and Mr Mark Iannello to the BP Kwinana staff and there had been no discussion about the Total-BP agreement. It was also said that the access cards had been returned to BP as the cards were the property of BP, although registered in the name of Total.
15. The letter also stated that their clients had previously acknowledged their obligations in respect of confidential information. It was said that at the time of their leaving Total’s employment “they took steps to ensure that all copies of what might be regarded as confidential information have been returned to [Total] both in hard and soft copy form”.
16. The Piper Alderman letter went on to say that their clients “invite you again, as contained in our letter of 23 June 2008, to itemise any particular items of confidential information and intellectual property about which your client has specific concerns”.
17. On 26 August 2008, Ms Chapman told Mr Murdoch that she had received a business card from Mr Iannello which stated that he worked as General Manager, Perth Office of Giovenco Industrial Services (Giovenco).
18. At an unspecified time, but after Mr Iannello had resigned from the employment of Total, Mr Murdoch directed that a search be undertaken of Total’s computer database. The search was undertaken by an external information technology company, Silverfern, which provided computer backup services to Total. The search undertaken by Silverfern included a search of emails sent and received during a period which included May 2008. The result of the search was provided to Mr Murdoch.
19. By reason of the contents of the letter from Blake Dawson referred to at [20] below, I infer the search was conducted and results communicated to Mr Murdoch before 3 September 2008.
20. By a letter dated 3 September 2008, Blake Dawson responded to the letter from Piper Alderman. Blake Dawson demanded that Mr Iannello return all access cards to the industrial sites of Alcoa, Kwinana Nickel Refinery and Worsley Alumina Pty Ltd. The letter went on to state:

Our client believes that your clients hold the following property of TCC:

(a) copies of contracts entered into between TCC and customers; including BP; and

(b) copies of pricing information for projects with Worsley Alumina Pty Ltd and Alcoa, along with other projects.

Please confirm whether your client holds the above mentioned property of TCC, or any other property owned by TCC that is in their custody, power or possession.

21. The Blake Dawson letter also stated that Total had undertaken searches of the computer system and discovered that Mr Iannello had deliberately deleted emails sent and received over a particular “block of time” leading up to his last days of employment with Total.
22. The letter went on to state:

This indicates to our client that your clients may have removed material that was evidence that they had breached fiduciary obligations and obligations of confidence which they owed to our client.

Despite your clients’ efforts to remove such material, our client has discovered email communications between Darren Iannello and Giovenco Industrial Services Pty Ltd (Giovenco), prior to your clients ceasing employment with TCC. Those communications vindicate our client’s suspicions concerning the conduct of your clients.

Specifically, Darren Iannello emailed Giovenco on 28 May 2008, forwarding client details and information to Giovenco, and asking Giovenco to provide quotes on work that had been referred to Darren Iannello as an employee of TCC, for the purpose of obtaining a quote from TCC.

Our client has also discovered that Darren Iannello forwarded emails to his personal email account which contained client details and confidential information concerning work that had been referred to TCC, including work for TCC’s major client, Alcoa. This indicates that your client intended to retain this information for continued future misuse. (Original emphasis.)

23. Blake Dawson also stated that they had been instructed that Mr Iannello had contacted Total’s employees in an attempt to induce them to provide him with confidential information.
24. The letter concluded by stating:

On our instructions, it is apparent that, despite your clients’ declarations of their innocence, they have engaged in a course of conduct to improperly exploit their employment relationship with TCC, in clear breach of contract and fiduciary duty.

TCC demands that your clients immediately discontinue this course of conduct and take the actions described above to return property belonging to our client. In addition, your clients are clearly liable for TCC’s losses arising out of their conduct, including in respect of the business opportunities of which TCC has been deprived.

25. By a letter dated 8 September 2008, Piper Alderman responded by denying that Mr Iannello held the documents referred to in the Blake Dawson letter. The letter stated:

In relation to emails, the fact that emails sent and received have been deleted is no indication of any removal of so called evidence as to breach of fiduciary obligations or obligations of confidence. It would not be uncommon in most employment situations that employees delete emails sent and received on a daily basis. In any event, all emails were backed up onto a server which TCC would have access to and from which TCC could easily determine the content of any deleted emails.

The only email you refer to specifically was an email to Giovenco Industrial Services Pty Ltd on 28 May 2008. That company did not exist in May 2008. Our client, Darren, believes the email referred to was in relation to TCC obtaining Giovenco Industries to perform a particular service in Sydney which TCC was not able to perform.

In relation to emails sent to Darren’s personal email account, your client will recall that, on the termination of Darren’s employment, he presented his laptop computer to a technician from Silverfern, a company which looks after TCC’s computer systems. All confidential files that were on the computer were cleaned from the laptop and transferred to the TCC server.

Once again, our clients repeat their invitation to you that if there is anything specific that you believe our clients have in their possession, please list it, they will look for it and if it is in their possession, they will return it. However at this stage their comprehensive searches of material in their possession does not reveal any of TCC’s confidential information.

26. By a letter dated 26 September 2008, Blake Dawson responded by saying that they had been instructed to apply for preliminary discovery under O 15A of the Rules.

APPLICATION FOR PRELIMINARY DISCOVERY

27. On 10 October 2008, the applicants filed an application in this Court for preliminary discovery under O 15A of the Rules. In their application, the applicants referred to O 15A r 3 and r 6. By their amended application the applicants sought preliminary discovery of the following category of documents:

(a) All emails (whether electronically or in hardcopy) of the Respondent’s former email accounts nominated as [e-mail] and [e-mail] with the applicants from 1 January 2008 to 4 August 2008;

(b) All documents recording or evidencing any communication, whether oral or written, as passing between the respondent and:

(i) Giovenco Industrial Services Pty Ltd (ACN 131 753 154) and/or Giovenco Industries Pty Ltd (ACN 000 484 248) (together the Giovenco Companies), and

(ii) all employees and agents of the Giovenco Companies

for the period between 1 January 2008 to 4 August 2008;

(c) All emails from the respondent’s private email account nominated as [e-mail], or any other email account opened, operated or otherwise controlled by the respondent during the period 1 January 2008 to 4 August 2008, limited to any emails passing between the respondent and any of the Giovenco Companies and any other person or entity with whom the respondent has had commercial dealings during such period;

(d) All documents created by and/or received by the respondent during the course of his employment with the second applicant concerning, or relating directly or indirectly to, his employment and/or the business activities of the applicants; and

(e) All documents concerning or relating, directly or indirectly, to any dealings by the respondent with any of the Giovenco Companies between the period 1 January 2008 to 4 August 2008. (Original emphasis.)

28. In support of its application, Total relied upon an affidavit affirmed by Mr Murdoch on 9 October 2008, an affidavit of Mr Jason Cowie affirmed on 9 December 2008, and a supplementary affidavit of Mr Murdoch affirmed on 9 December 2008. I note that without leave the applicants also purported to file an affidavit of Mr Andrew von Königsmark two days after the conclusion of the hearing. I have not had regard to that affidavit.
29. Mr Murdoch annexed to his first affidavit a copy of the letter of engagement of Mr Iannello by Total dated 20 October 2003, and a copy of a document bearing Mr Iannello’s signature which states:

I accept the Conditions of Employment as set out in this letter dated...2003 and also the Intellectual Assignment Agreement and Confidentiality Agreement, executed copies of which are enclosed.

30. The affidavit then annexes unsigned copies of a document headed “Intellectual Property Assignment Agreement” and another document headed “Confidentiality Agreement”.
31. At para 7 of his first affidavit, Mr Murdoch deposed to the following effect:

For the reasons referred to below, the applicants seek access to the Documents because:

(a) I believe that the respondent may have documents in his possession that are owned by the applicants;

(b) Alternatively, I believe that the respondent may either know of, or have documents in his possession that are owned by the applicants, which relate to documents that have been sent to third parties (Potential Parties);

(c) In the case of sub-paragraph (a), the applicants believe that they may have a cause of action against the respondent for breach of contract, breach of fiduciary duty and/or breach of confidence;

(d) Alternatively, in the case of sub-paragraph (b), the applicants believe that they may have a cause of action against other Potential Parties for breach of contract or breach of confidence;

(e) The applicants are considering commencing legal proceedings against the respondent and other third parties but are yet to decide whether to commence those proceedings; and

(f) After making reasonable enquiries, the applicants have not been able to:

(i) obtain the Documents from the respondent; and

(ii) ascertain a description of the Potential Parties sufficient for the purposes of commencing proceedings against the Potential Parties. (Original emphasis.)

32. In later paragraphs of his first affidavit, Mr Murdoch deposed to the events which are described in [1]-[26] above, and Mr Murdoch annexed to his affidavit, the correspondence which is referred to in those paragraphs.
33. In para 13 of his first affidavit, Mr Murdoch referred to the search of the email database of Total referred to in [18] above, and said that he had exhibited “Confidential Exhibit SM–1” to his affidavit. The exhibit comprised a brown sealed envelope containing the notation “Not to be opened without further order from the Court”. Mr Murdoch said that the sealed envelope contained a bundle of emails from Mr Iannello’s email account which “contain commercially sensitive and confidential information of the applicants”.
34. At paras 14 and 15 of his first affidavit, Mr Murdoch deposed in the following terms:

Following the searches of the respondent’s former email account with the second applicant...I am concerned and believe that the respondent may have documents in his possession:

(a) that are the property of the applicants; and

(b) which may indicate potential breaches of the Agreements and give rise for an action for breach of contract of employment...breach of fiduciary duty as arising out of the respondent’s employment contract with the second applicant, and breach of confidence or other remedies.

Furthermore, I am concerned that the respondent may have spoken, or have provided documents of the second applicant, to other Potential Parties, which may give rise to separate causes of action against those Potential Parties.

35. Mr Cowie is an employee of the first applicant. He deposed that in June 2008, the data on Total’s computer system was backed up on an external storage system operated by a company called Silverfern. Mr Cowie said that he had learned from inquiries of Silverfern, that Silverfern had a policy of retaining the backed up information from Total’s computer system on tapes for a period of four weeks and then deleting the information and reusing the tapes.
36. However, said Mr Murdoch in his supplementary affidavit, by happenstance Silverfern had found the backup tapes for May 2008, the month before Mr Iannello resigned.
37. Mr Iannello relied upon an affidavit sworn 30 October 2008 and a supplementary affidavit sworn 21 November 2008. Further, Mr Iannello also relied upon affidavits from Mr Frank Kua, an employee of BP, Mr John Newton, the turnaround manager of the BP Kwinana Oil Refinery, an affidavit of Ms Heide Taylor, an affidavit of Mr Paul Giovenco and an affidavit of Mr Craig Gough.
38. Mr Iannello deposed that he no longer had access to the email accounts referred to in para (a) of the application, and that the applicants had access to those emails in any event by reason of having backed up the emails to a backup server during the period of his employment. Mr Iannello also deposed that he did not have any documents falling within paras (b) (c) and (d).
39. As to the documents in para (e) – being documents which record Mr Iannello’s dealings with Giovenco - Mr Iannello said that these documents contain sensitive commercial information affecting Giovenco. I interpose to say that Mr Paul Giovenco deposed to the same effect.
40. Further, Mr Iannello said that he did not recall signing either the Intellectual Property Assignment Agreement or the Confidentiality Agreement annexed to Mr Murdoch’s first affidavit. Mr Iannello went on to note that the documents appeared to have been copied from another document and inserted into his personnel file.
41. Mr Iannello also deposed that prior to his visit to the BP Oil Refinery site on 20 August 2008, he had telephoned Mr Kua and advised him that he was now working for Giovenco and asked him if he could meet with him and Mr John Newton, the BP Oil Refinery turnaround manager, to introduce Giovenco to them. Mr Iannello said that on the day of the meeting, he advised the security personnel at the BP security gates that he was from Giovenco and was there to attend a meeting with Mr Kua and Mr Newton, and the BP security officer confirmed that Mr Kua had notified them of the intended attendance. Mr Iannello stated that he visited the BP Oil Refinery site on a visitor’s pass issued by the BP Oil Refinery and he was unaware of how he was registered within the BP system until he was notified by Blake Dawson’s letter and saw the BP Oil Refinery’s internal security extract, which reflected that he was from Total.
42. In a subsequent supplementary affidavit, Mr Iannello disclosed that he still had in his possession handwritten notes which he had, whilst still employed by Total, made in preparation for meetings with the management of the applicants. He said that, by oversight, he had not previously disclosed those notes. He annexed those notes to the affidavit.
43. The affidavits of Mr Kua and Mr Newton support Mr Iannello’s version of the events relating to the meeting that occurred at the BP site on 20 August 2008. Mr Kua said that since Mr Iannello had left Total’s employment he had not attempted to discuss with him any matter relating to past or current contractual matters involving Total and BP. Mr Newton gave evidence to the same effect.
44. Ms Heide Taylor is a former employee of Total who was engaged in human resources administration at that company. Ms Taylor deposed that in late 2005 or early 2006, she compiled a number of employment and policy documents into a manual, which became an attachment to contracts of employment entered into by Total with employees. Ms Taylor said that in 2007, she performed a review of the employment documentation. The effect of Ms Taylor’s evidence is to undermine the statement in Mr Murdoch’s affidavit that the Intellectual Property Assignment Agreement and the Confidentiality Agreement were part of Mr Iannello’s employment contract, because the documents post-date the entry into the employment contract in 2003.
45. Mr Murdoch affirmed a supplementary affidavit to which he attached two documents. The first document is headed “Intellectual Property Assignment Agreement” and the second is headed “Confidentiality Agreement”. Both these documents carried the signature of Mr Iannello. Mr Murdoch deposed that these documents had been found since affirming his first affidavit. There is disputation as to the authenticity of these documents but it is, in light of my findings, unnecessary to take this matter further. I will proceed on the basis that Mr Iannello did sign the documents annexed to the affidavit.
46. At the hearing, I opened the envelope marked “Confidential Exhibit SM-1”. The contents of the envelope comprised copies of a number of emails and other documents.
47. There was an internal email dated 15 November 2007, which does no more than refer to an attachment. I took that reference to be a reference to a letter authored by Mr Iannello to one of Total’s clients responding to that client’s expressed concerns about Total’s rates. A copy of that letter dated 16 November 2007, is also included in the envelope.
48. There is another series of emails which comprise the correspondence between Mr Iannello, whilst he was employed by Total, and Mr Carlo Giovenco and Mr Paul Giovenco in relation to obtaining a price for carrying out a fireproofing job in Sydney for a client referred to Total by Orion Safety Industries Pty Ltd (Orion Safety). It was this email correspondence which is referred to by Blake Dawson in its letter of 3 September 2008 at [22] above.
49. There is also a chain of internal emails which relate to, and set out, the contract rates for contractors to be engaged in Queensland.
50. There are also three chains of emails which include emails to Mr Iannello’s private email address.
51. One email chain contains an email from Mr Mark Iannello to Mr Iannello’s private email address and appears to attach a number of Excel computer files containing budgets and financial information. The actual information in those files is not disclosed. There is then an email from Mr Iannello’s private email address sending those files to his email address at Total.
52. The second chain of emails appears to involve the forwarding of notes of a presentation made in Bunbury to Mr Iannello’s Total email address and an email by Mr Iannello forwarding the notes to his private email address and to the internal email address of other Total employees. The emails do not contain any detail as to the content of the notes of the presentation.
53. Further, there is an email from Mr Iannello to his private email address which contains a chart setting out what appears to be the injury rate of Total and its competitors.
54. In my view, no order under s 50 of the Federal Court of Australia Act 1976 (Cth) (the Act) should be made suppressing access to these documents. The only evidence led in support of the making of that order was the assertion by Mr Murdoch that the information in the documents was confidential and commercially sensitive. However, an order under s 50 will not be made solely on the basis of the subjective assertion by the person seeking the order. There is also an objective criterion to be satisfied (Autodata Limited v Boyce’s Automotive Data Pty Limited [2007] FCA 1517). There was no evidentiary foundation laid to support an objective assessment of the confidentiality or commercial sensitivity of the documents. It was not obvious from a perusal of the documents that the information contained therein was commercially sensitive. The document disclosing the contract rates and Mr Iannello’s letter of 16 November 2007 could possibly be objectively commercially sensitive but, in the absence of any evidentiary foundation, I am unable to reach that conclusion, without engaging in speculation. In the circumstances, I am not satisfied that a suppression order under s 50 of the Act should be made in respect of the documents comprising “Confidential Exhibit SM-1”.

PRELIMINARY POINT

55. As a preliminary matter, Mr Iannello contended that the application should be dismissed on the basis that the causes of action which, on Mr Murdoch’s evidence, the applicants contemplated bringing, were common law causes of action and did not fall within the original jurisdiction of the Court. It was said that it was necessary for the applicants to demonstrate that at least one of the potential causes of action which they were contemplating bringing was a cause of action which fell within the original jurisdiction of the Court.
56. Counsel for Total submitted that one of the causes of action which Total was contemplating bringing was a claim for breach of the Copyright Act 1968 (Cth). However, the evidence of Mr Murdoch does not support counsel’s submission. Mr Murdoch does not refer to such a cause of action. The only causes of action identified in Mr Murdoch’s evidence were common law causes of action, namely, breach of the employment contract, breach of fiduciary duty and breach of confidence.
57. In my view, there is substance in Mr Iannello’s contention. It is implicit that there is a nexus between the relief available under O 15A and the invocation of the original jurisdiction of the Court. It follows that it is incumbent on an applicant for preliminary discovery to adduce evidence that he or she requires the relief available under O 15A to commence, or to determine whether to commence, a proceeding in this Court based on a cause of action which invokes the original jurisdiction of the Court, or at least, that a proceeding based on such a cause of action will be commenced, and that the O 15A relief is sought in respect of other causes of action or potential causes of action, comprising part of the same matter. Mr Murdoch’s evidence does not satisfy this requirement.
58. The application for preliminary discovery fails on this ground.
59. However, in the event that I am wrong on this issue, I will deal with the rest of the application.

DISCOVERY UNDER O 15A R 3

60. Order 15A r 3 concerns discovery to identify a respondent. It provides:

(1) Where an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person (in this rule called the person concerned) and it appears that some person has or is likely to have knowledge of facts, or has or is likely to have or has had or is likely to have had possession of any document or thing, tending to assist in such ascertainment, the Court may make an order under subrule (2).

(2) The Court may order that the person, and in the case of a corporation, the corporation by an appropriate officer, shall:

(a) ...

(b) make discovery to the applicant of all documents which are or have been in the person’s or its possession relating to the description of the person concerned. (Original emphasis.)

61. In his affidavit Mr Murdoch stated that the applicants were considering commencing legal proceedings against the third parties which he referred to as the “Potential Parties”. He said that he was not able to ascertain the description of the parties sufficiently for the purpose of commencing proceedings against those parties. Mr Murdoch then referred to the visit by Mr Iannello to the BP Refinery and the search of the email database, and said, at para 15 of his first affidavit, that he was concerned that Mr Iannello “may have spoken, or have provided documents of [Total], to other Potential Parties, which may give rise to separate causes of action against those Potential Parties”. Counsel for the applicants contended that the applicants did not know whether Mr Iannello had communicated confidential information to third parties. Accordingly, so it was contended, an order for preliminary discovery of the documents referred to in the notice of motion should be made under O 15A r 3.
62. In my view, the applicants have misconceived the circumstances in which O 15A r 3 applies. It is apparent from Mr Murdoch’s evidence and the applicants’ submissions that the applicants do not know whether Mr Iannello ever communicated confidential information to a third party. It is also apparent, therefore, that the applicants are not in a position where they believe that they have a cause of action against an unidentified third party, but are unable to commence the proceeding because they do not know the description of that third party.
63. The function of O 15A r 3 of the Rules is to provide a person with a means of obtaining information as to the identity of a party against whom the applicant wishes to commence a proceeding but is unable to do so because the applicant does not have sufficient information about that person’s description to issue the application commencing the proceeding in this Court (Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited (No 2) (2007) 163 FCR 372).
64. The circumstances in which O 15A r 3 operates are to be distinguished from those in which O 15A r 6 operates. Order 15A r 6 provides for preliminary discovery to be given to assist a party to determine whether to commence a proceeding on the basis that the applicant may have a right to obtain relief against an identified party. By contrast, O 15A r 3 is not addressed to the position of a person considering whether to bring a proceeding against a person on the basis that that person may have a claim for relief. The speculative element inherent in the language of O 15A r 6 is absent from the language of O 15A r 3. The ambit of O 15A r 3 is, accordingly, to that extent narrower than O 15A r 6.
65. In the circumstances, the evidence of Mr Murdoch which accepts that the applicants do not know if they have a cause of action against one or more third parties, fails to satisfy the requirements of O 15A r 3.
66. Accordingly, the applicants’ claim for relief under O 15A r 3 of the Rules is dismissed.

DISCOVERY UNDER O 15A R 6

67. The applicants also contend that they are entitled to preliminary discovery from Mr Iannello under O 15A r 6 of the Rules. Order 15A r 6 provides:

Where:

(a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;

(b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and

(c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision;

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).

68. The first issue is whether Total has satisfied the requirement under O 15A r 6(a) that there is reasonable cause to believe that Total has or may have the right to obtain relief from Mr Iannello.
69. In the case of Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133; (2008) 169 FCR 435 at 445 (Optiver), the Full Court observed:

Senior counsel for Tibra relied upon the objective nature of the test to be satisfied. However, the requirement to be established is a reasonable cause to believe that the applicant has or may have a right to relief, not a conclusion that a prima facie case in fact exists (see Hely J in St George Bank Ltd [2004] FCA 1360; 211 ALR 147 at [26]; George v Rockett [1990] HCA 26; (1990) 170 CLR 104).

It was not incumbent upon Optiver to establish every element of the relevant causes of action, but a reasonable cause to believe that it “has or may have” the right to relief alleged. Of course, this is not to say that it is not necessary to examine the various elements of the potential cause of action that is sought to be relied upon to determine whether there is a reasonable cause to believe that each of the necessary elements exist (see Austrac Operations Pty Ltd v New South Wales [2003] ATPR 41 960 at [11]; Leighton Contractors Pty Ltd v Page Kirkland Management Pty Ltd [2006] FCA 288 at [5]; Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216; (2007) 164 FCR 450 at [44]). Nor can an application for preliminary discovery be sustained without evidence that must incline the mind towards the matter of fact in question (see Austrac [2003] ATPR 41-960 at [37]; John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [13]- [14], [17], [73]; Dartberg [2007] FCA 1216; 164 FCR 450 at [44]). (Original emphasis.)

70. As previously mentioned, Mr Murdoch has deposed that the applicants believe that they may have causes of action against Mr Iannello for breach of contract, breach of fiduciary duty and/or breach of confidence. The potential causes of action are founded upon an apprehended fear that Mr Iannello has used or disclosed, or threatens to use or disclose, confidential information which he is lawfully precluded from using or disclosing, to the detriment of the applicants.
71. This case involves a former employer contemplating the bringing of an action in respect of the activities of a former employee who has obtained employment with a competitor. In this context, the following observations of Gleeson CJ (in dissent) in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 329 – also a case involving alleged misuse of confidential information by a former employee - are pertinent in this regard:

...a case such as the present involves a tension between two competing considerations of public policy. An employer is not entitled to protect himself against mere competition by a former employee, and the corollary of that is that the employee is entitled to use skill, experience and know-how acquired in the service of the former employer in legitimate competition. It is in the public interest that this should be so: Stenhouse Australia Ltd v Phillips [1973] UKPC 1; [1974] AC 391 at 400. At the same time the law will protect trade secrets and confidential information, and will intervene to prevent their misuse. The decision of the Court of Appeal in England in Faccenda Chicken Ltd v Fowler [1987] Ch 117 illustrates the importance, when there is a conflict between these two principles, of a close examination and accurate categorisation of the nature of the alleged trade secret or confidential information.

72. It is accepted, of course, that an application for preliminary discovery permits “fishing” and does not require that the applicants for discovery adduce evidence that supports a prima facie case. Nevertheless, in my view, the considerations referred to by Gleeson CJ inform the assessment to be made of the evidence proffered by an applicant in support of satisfying the criterion of “reasonable cause to believe” in O 15A r 6(a) in cases of that nature.
73. In support of their contention that there is reasonable cause to believe that the applicants may have a right to relief on the grounds that Mr Iannello has unlawfully used or disclosed, or threatens to use or disclose confidential information, the applicants rely upon facts and circumstances deposed to by Mr Murdoch and Mr Cowie.
74. First, the applicants rely upon the evidence that Mr Iannello met with two employees of BP on 20 August 2008 and that the BP log recorded that he used an access card issued to him in his capacity as an employee of Total, to gain entry to the site. Blake Dawson’s letter stated that Total was concerned that Mr Iannello was using confidential information to compete with Total for services to BP.
75. The applicants’ evidence on this issue does not give rise to a reasonable cause to believe that Mr Iannello used or threatens to use confidential information, or may have done so, in his dealings with BP. The evidence of Mr Kua and Mr Newton establishes that before the meeting Mr Iannello made known that he was working for Giovenco and that the purpose of the meeting was to introduce Giovenco to BP. Mr Kua and Mr Newton deposed that since leaving the employment of Total, Mr Iannello has made no attempt to discuss with them any matter relating to past or current contractual matters involving BP and Total.
76. Secondly, the applicants rely upon the course of email correspondence between Mr Iannello and Giovenco whereby Mr Iannello referred a query from Orion Safety for the pricing of a fireproofing job.
77. In my view, this evidence does not give rise to a reasonable cause to believe that Mr Iannello has used or threatens to use confidential information to the detriment of the applicants. This course of email correspondence was referred to by Blake Dawson in its letter of 3 September 2008 to Mr Iannello’s solicitors, Piper Alderman. Piper Alderman responded by saying that their client’s instructions were that the job referred was one which Total could not do itself. Mr Murdoch did not in his evidence dispute the statements in Piper Alderman’s letter that the job was one which Total could not have done. Nor was there any evidence on the applicants’ practice in relation to the referral of work to other companies.
78. Further, this event occurred during the course of Mr Iannello’s employment. It is unnecessary for the applicants to obtain preliminary discovery to determine whether to commence any proceeding in respect of this conduct engaged in by Mr Iannello whilst an employee, because the emails comprise sufficient information for the applicants to determine whether to commence any claim for breach of Mr Iannello’s contract of employment in respect of that activity. This appears to be confirmed by the last paragraph of Blake Dawson’s letter referred to in [24] above.
79. Thirdly, the applicants contended that reasonable cause to believe that Mr Iannello has used or threatens to use confidential information to the detriment of the applicants, arises from the fact that Mr Iannello sent emails from his work email address to his personal email address in the weeks prior to the termination of his employment, that Mr Iannello and several other former employees of the second applicant resigned within two weeks of each other and that Mr Iannello is now working for a major competitor of the applicants.
80. The applicants rely particularly on Optiver. The applicants contended that the facts in Optiver are similar to this case, and that, as occurred in Optiver, I should draw an adverse inference against Mr Iannello on the basis of the case of Jones v Dunkel (1959) 101 CLR 298.
81. The Optiver case was also an application for preliminary discovery under O 15A involving a potential claim of misuse of confidential information by former employees.
82. In Optiver the employer, Optiver, was engaged in the arbitrage business. It was crucial to the success of the arbitrage business that the software used in the business operated at high speed. Optiver developed a software system called “F1” which operated at very high speed. In 2006, seven employees of Optiver resigned within a short time of each other and became employees of one or more companies established by a number of those former Optiver employees. The companies then started competing with Optiver in the arbitrage business under the name of Tibra. Within a relatively short period of time the Tibra software package was beating Optiver to trades. Further, Optiver found that prior to their departure, two of the employees had emailed crucial information relating to the “F1” software package, including part of the source code, to their home email addresses. Optiver brought an application for preliminary discovery under O 15A.
83. At the hearing, Optiver led evidence from a computer expert that it was unlikely that Tibra would have been able to develop software on its own, which would have achieved the speeds achieved, within the time that it did. The Full Court held that the evidence satisfied the test that there was reasonable cause to believe that Optiver may have a right to obtain relief against the former employees and the Tibra companies.
84. In my view, there are significant differences between the facts and evidentiary foundation laid in the Optiver case and the facts and evidentiary foundation laid in this case.
85. In this case, there is no evidence that since Mr Iannello’s departure from Total, there has been any adverse impact on the operations of Total’s business, nor that anything has occurred in respect of Total’s clients which might suggest that there may be an adverse impact on Total’s business. There is no evidence on which to base any inference that Mr Iannello’s departure has had any adverse impact or threatens to have any adverse impact, on Total’s business, whether through Mr Iannello’s legitimate competitive activities, or otherwise. The only evidence of post-employment conduct by Mr Iannello is in relation to the meeting with BP on 20 August 2008. That evidence supports a finding that in visiting the BP site, Mr Iannello did no more than engage in legitimate competitive conduct.
86. As to the content of the emails which were sent by Mr Iannello to his personal email address, there was no evidence as to how this information, even if, contrary to his evidence, it was still in the possession of Mr Iannello, could be used by him to damage the applicants’ business. Further, I note that none of these emails is the subject of specific complaint in Blake Dawson’s letter dated 3 September 2008, which was written after the database search, and which alleged that Mr Iannello had misused confidential information. Rather, Blake Dawson made specific complaint in relation to the email communications between Mr Iannello and Giovenco in May 2008 relating to the obtaining of a price for the fireproofing of a room.
87. By contrast, in the Optiver case there was evidence led by Optiver as to the adverse effect the Tribra software was having on Optiver’s business. Further, the confidential information allegedly misused was identified and there was expert evidence supporting a link between the potential misuse of the confidential information and the rapid development of the Tibra software.
88. As to the question of drawing a Jones v Dunkel inference, unlike the position of the employees in Optiver who did not give evidence, Mr Iannello did give evidence. He swore two affidavits. He was not cross-examined. In the circumstances, it is not appropriate to draw any Jones v Dunkel inference.
89. Whether the three aspects of the applicants’ evidence are assessed separately or collectively, the applicants’ evidence does not satisfy me that there is reasonable cause to believe that the applicants may have a right to obtain relief against Mr Iannello on the basis that he has used or threatens to use Total’s confidential information to the detriment of the applicants. In essence, the applicants’ case rises no higher than an assertion that Mr Iannello has used or threatens to use confidential information to the detriment of the applicants. That is not sufficient.
90. It follows that the applicants have failed to satisfy O 15A r 6(a) and the application is dismissed.
    

I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

Associate:

Dated: 2 July 2009

Counsel for the Applicants:	Mr RJL McCormack
Solicitor for the Applicants:	Blake Dawson
Counsel for the Respondent:	Mr CS Gough
Solicitor for the Respondent:	Minter Ellison

Date of Hearing:	15 December 2008
Date of Judgment:	2 July 2009