Cygnett Pty Ltd v Souris

• Jurisdiction: Australia Federal only
• Judgment Date: 07 December 2020
• Neutral Citation: [2020] FCA 1754
• Court: Federal Court
• Date: 07 December 2020

Federal Court of Australia

Cygnett Pty Ltd v Souris [2020] FCA 1754

File number(s):	VID 1275 of 2019
Judgment of:	O’CALLAGHAN J
Date of judgment:	7 December 2020
Catchwords:	PRIVILEGE – whether common interest privilege available – whether legal professional privilege waived by disclosure of legal advice to co-respondent – application dismissed
Legislation:	Corporations Act 2001 (Cth) ss 79, 181, 182, 183, 183(1), 1317H(1)
Cases cited:	Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 Bulk Materials (Coal Handling) Services Pty Ltd v Coal and Allied Operations Pty Ltd (1988) 13 NSWLR 689 Buttes Gas and Oil Co v Hammer (No 3) [1981] QB 223 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 Hamilton v New South Wales [2016] NSWSC 1213 Inlon Pty Ltd v Celli SpA [2017] NSWSC 569 Marshall v Prescott [2013] NSWCA 152 Media Ocean Ltd v Optus Mobile Pty Ltd (No 10) [2010] FCA 1348 Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275 Patrick v Capital Finance Corporation (Australasia) Pty Ltd [2004] FCA 1249; 211 ALR 272 Rank Film Distributors Ltd v ENT Ltd (1994) 4 Tas R 281 Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234 Woodings v WA Glendinning & Associates Pty Ltd [2019] WASC 54
Division:	General Division
Registry:	Victoria
National Practice Area:	Employment and Industrial Relations
Number of paragraphs:	37
Date of hearing:	24 November 2020
Counsel for the Applicant:	Mr SJ Wood AM QC with Mr D Ternovski and Ms EL Murphy
Solicitor for the Applicant:	MinterEllison
Counsel for the First Respondent:	Mr T Donaghey
Solicitor for the First Respondent:	Norton Rose Fulbright Australia
Counsel for the Second Respondent:	Mr SJ Maiden QC with Mr A McRobert
Solicitor for the Second Respondent:	McCabe Curwood

ORDERS

		VID 1275 of 2019
BETWEEN:	CYGNETT PTY LTD (ACN 106 996 114) Applicant
AND:	GEORGE SOURIS First Respondent ; TEMPO (AUST) PTY LTD (ACN 106 100 252) Second Respondent

order made by:	O'CALLAGHAN J
DATE OF ORDER:	7 December 2020

THE COURT ORDERS THAT:

1. The applicant’s application to inspect the second respondent’s discovered documents numbered TEM.001.003.0644, TEM.001.003.0704 and TEM.001.004.1844 is dismissed.

2. Costs be reserved.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

Introduction

1. This is a ruling in relation to a dispute about common interest privilege.

2. The applicant (Cygnett) is an Australian company that produces accessories for digital devices, such as power banks, chargers and cables for mobile phones and tablets.

3. The second respondent (Tempo) is a global supplier of consumer products, including consumer electronics products, such as televisions and home appliances. It supplies a range of digital accessory products sold under “private label” brands.

4. The first respondent (Mr Souris) is Cygnett’s former President of Sales – Global. He resigned in November 2019 to join Tempo.

5. Cygnett filed and served a statement of claim dated 10 December 2019 naming Mr Souris as the only respondent. By an amended statement of claim filed on 26 March 2020, Cygnett joined Tempo as a respondent. It alleges (and by their defences Mr Souris and Tempo substantially deny) in summary that:

1. From about July 2019 and until his departure from Cygnett, Mr Souris copied a large volume of Cygnett’s confidential information, including cost price lists, financials and business plans.

2. In about August 2019, Mr Souris approached Tempo and proposed that he would help Tempo develop a digital accessories business that would become a substantial competitor to Cygnett.

3. Mr Souris used Cygnett’s confidential information to prepare his “pitch” to Tempo and to develop business plans for the proposed Tempo accessories division.

4. Mr Souris also directly provided Cygnett’s confidential information to Tempo.

5. Between about September and November 2019, Mr Souris: (i) encouraged Cygnett employees to leave their employment and accept employment with Tempo; (ii) solicited Cygnett’s customers and distributors on behalf of Tempo; (iii) diverted Cygnett’s business opportunities to Tempo; and (iv) assisted Tempo to establish the Tempo accessories division.

6. Mr Souris engaged in this conduct without Cygnett’s knowledge or permission, for the purpose of assisting Tempo to establish its accessories division and to gain an advantage for himself and Tempo.

6. Cygnett alleges (and Mr Souris denies) that Mr Souris breached, among other things: (i) ss 181, 182 and 183 of the Corporations Act 2001 (Cth) (Corporations Act); (ii) his fiduciary duties owed to Cygnett; (iii) various of his duties of confidence owed to Cygnett; and (iv) his contractual duty to render faithful and loyal service to Cygnett.

7. Cygnett also alleges (and Tempo denies) that Tempo:

1. knew that Mr Souris was until 6 December 2019 an officer of Cygnett and employed by Cygnett as its President of Sales;

2. from about early September 2019: (i) knew that some or all of the information that Mr Souris disclosed to Tempo was confidential to Cygnett; (ii) used that information in establishing the Tempo accessories division; (iii) knew that Mr Souris was providing the information to Tempo for the purpose of gaining an advantage for himself and for Tempo; and (iv) encouraged, induced or permitted Mr Souris to provide Cygnett’s confidential information to Tempo;

3. from about early September 2019: (i) knew that Mr Souris was assisting Tempo for the purpose of gaining an advantage for himself and for Tempo; and (ii) encouraged, induced or permitted Mr Souris to continue assisting Tempo;

4. engaged in that conduct without Cygnett’s permission for the purpose of establishing the Tempo accessories division and in order to gain an advantage for Tempo;

5. knew that Mr Souris was improperly using information that he had obtained because he was an employee and officer of Cygnett to gain an advantage for himself and for Tempo and intentionally assisted him to do so;

6. aided, abetted, counselled, procured, induced or was otherwise knowingly concerned in, and a party to, Mr Souris’s contravention of s 183(1) of the Corporations Act, and was involved in that contravention within the meaning of s 79 of the Corporations Act;

7. knew that Mr Souris was exercising his powers and discharging his duties as an officer of Cygnett not in good faith in the best interests of Cygnett and not for a proper purpose, and intentionally assisted Mr Souris to do so;

8. aided, abetted, counselled, procured, induced or was otherwise knowingly concerned in, and a party to, Mr Souris’s contravention of s 181(1) of the Corporations Act, and was involved in that contravention within the meaning of s 79 of the Corporations Act;

9. had actual knowledge: (i) that Mr Souris owed Cygnett certain fiduciary duties; (ii) that Mr Souris was breaching those fiduciary duties; and (iii) that Mr Souris’s breaches of his fiduciary duties amounted to a dishonest and fraudulent design;

10. induced or procured Mr Souris’s breaches of his fiduciary duties and knowingly...