FEDERAL COURT OF AUSTRALIA Orion Engineering Services (Aust) Pty Ltd v Waters [2010] FCA 226 Citation: Orion Engineering Services (Aust) Pty Ltd v Waters [2010] FCA 226 Parties: ORION ENGINEERING SERVICES (AUST) PTY LTD v DAVID CHARLES WATERS and BRUNEL AUSTRALIA HOLDINGS PTY LTD File number: NSD 237 of 2010 Judge: FOSTER J Date of judgment: 12 March 2010 Legislation: Federal Court of Australia Act 1976 (Cth), s 50 Place: Sydney Division: GENERAL DIVISION Category: NO CATCHWORDS Number of paragraphs: 17 Counsel for the Applicant: Mr DB Studdy SC Solicitor for the Applicant: Kennedys Solicitor for the First Respondent: Jackson McDonald Counsel for the Second Respondent: Mr J Clarke Solicitor for the Second Respondent: Blake Dawson IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 237 of 2010 BETWEEN: ORION ENGINEERING SERVICES (AUST) PTY LTD Applicant AND: DAVID CHARLES WATERS First Respondent BRUNEL AUSTRALIA HOLDINGS PTY LTD Second Respondent JUDGE: FOSTER J DATE OF ORDER: 12 MARCH 2010 WHERE MADE: SYDNEY UPON the applicant by its Counsel giving the following undertakings to the Court: (a) to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory orders and undertakings set out below or any continuation (with or without variation) thereof; and (b) to pay the compensation referred to in (a) to the corporation there referred to; THE COURT NOTES the following undertakings given to the Court without admissions by the second respondent by its Counsel that, on an interim and interlocutory basis (that is, until a final hearing in these proceedings), or until further order of the Court: (c) The second respondent will not use, divulge, reproduce or publish any confidential information of the applicant that may be in its possession unless required by law or in connection with these proceedings. (d) The second respondent will inform relevant employees (working in relation to the second respondent's business in Papua New Guinea) that if they have access to confidential information of the applicant, they are directed not to use or divulge that information for any purpose (whether or not for the benefit of the second respondent) unless required by law or in connection with these proceedings. (e) The second respondent will instruct relevant employees to conduct an electronic search to locate any confidential information of the applicant on the second respondent's systems. If any such information is located, that information will be quarantined. (f) The second respondent will ask relevant employees to search for (and if found, will quarantine) any confidential information of the applicant in non-electronic form in their possession. (g) The second respondent will not use the applicant's confidential information to cause or compound loss or damage to the applicant. (h) The second respondent will undertake that the second respondent will not permit the first respondent to carry out work for the second respondent, and the second respondent will not initiate electronic or other contact with the first respondent about business matters the subject of the applicant's Application for 14 days from 12 March 2010, unless the second respondent gives the applicant 48 hours' notice otherwise. (i) The second respondent will deliver up to the applicant all originals and copies of the documents attached to the emails of David Waters referred to in the affidavit of Ronald Andrew Mathieson sworn 9 March 2010, so that the only copy of those documents is held by the second respondent's legal representatives for the purposes of these proceedings. (j) The second respondent will deliver up to the applicant all originals and copies of any documents, which are the property of the applicant, so that the only copy of those documents is held by the second respondent's legal representatives for the purposes of these proceedings. (k) The second respondent will provide a statutory declaration that it has taken reasonable steps to give effect to pars (c) to (j) above. THE COURT ORDERS THAT: 1 The hearing of the Application insofar as it relates to the second respondent be adjourned to 10.30 am on Friday, 26 March 2010. 2 The second respondent grant access to all computers and any other electronic storage devices belonging to it or in its possession, custody, power or control, to a representative of Klein & Co. Computer Forensics Pty Ltd (the Brunel Computer Expert). A representative or agent of the second respondent is permitted to observe the Brunel Computer Expert when access is provided. 3 The Brunel Computer Expert be permitted to obtain a forensic image of the data contained on those computers and electronic storage devices for analysis in order to locate any information belonging to or concerning the business of the applicant. A representative or agent of the second respondent is permitted to observe the Brunel Computer Expert in this respect. 4 The forensic images so obtained be taken from the second respondent's premises by the Brunel Computer Expert for the purposes of this analysis and subject to the Undertakings by the Brunel Computer Expert set out below in Orders 7 to 9. 5 The Brunel Computer Expert's access to the second respondent's computers and electronic storage devices be on the following conditions: (a) access shall take place at a time agreed by the parties, but no later than 19 March 2010 or such later date as is agreed by the applicant's solicitors, and shall commence at the second respondent's premises between the hours of 9.00 am and 5.00 pm on a business day. Should further time be required to complete the forensic imaging on site, the Brunel Computer Expert will discuss and agree the arrangements for this directly with the second respondent; (b) the forensic images will be returned to Sydney for the purposes of the analysis; (c) once the Brunel Computer Expert has completed the analysis, the Brunel Computer Expert will export from the forensic images, a copy of any item identified through the analysis as information belonging to, or concerning the business of, the applicant (Relevant Brunel Item); (d) the Brunel Computer Expert will provide to the second respondent a copy of all Relevant Brunel Items to allow them to be reviewed for the purpose of any claim by the second respondent that the documents are subject to privilege or are or contain confidential information of the second respondent or do not constitute information belonging to or concerning the business of the applicant; (e) the second respondent will complete its review within two business days of being provided with a copy of the Relevant Brunel Items; (f) upon completion of its review, the second respondent will identify any Relevant Brunel Items subject to a claim made by the second respondent under Order 5(d) above; (g) save for any document subject to a claim as outlined in Order 5(f) above, the Brunel Computer Expert may deliver to the applicant a copy of the Relevant Brunel Items; (h) The Brunel Computer Expert shall allow another computer expert engaged by the second respondent (the Second Brunel Computer Expert) to observe all activities undertaken by the Brunel Computer Expert in accordance with these Orders and shall answer any questions the Second Brunel Computer Expert asks of the Brunel Computer Expert in relation to those activities. 6 Any dispute about: (a) whether the applicant ought to be given a copy of a Relevant Brunel Item by the Brunel Computer Expert; or (b) whether the Brunel Computer Expert in undertaking an activity in accordance with these Orders be referred to the Court. 7 Save as expressly permitted above, the Brunel Computer Expert is not to disclose to any other party or any other person or entity whatsoever, any document or information contained in a document so copied by him or seen by him. 8 Without the leave of the Court, neither the applicant nor the Brunel Computer Expert is to use any information, document or thing obtained as a result of the inspection for the purpose of any civil or criminal proceeding, either within or outside Australia, other than in this proceeding. 9 The Brunel Computer Expert is to sign undertakings in accordance with Orders 7 and 8 above to act in conformity with the conditions set out above. 10 Costs be reserved. THE COURT: 11 GRANTS leave to the applicant to file in Court and to read and rely upon the affidavit of Jennifer Gai Bicknell, sworn on 12 March 2010. 12 GRANTS liberty to apply on short notice to all parties. 13 LISTS the matter for directions before Foster J at 2.15 pm on 16 March 2010. 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 Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 237 of 2010 BETWEEN: ORION ENGINEERING SERVICES (AUST) PTY LTD Applicant AND: DAVID CHARLES WATERS First Respondent BRUNEL AUSTRALIA HOLDINGS PTY LTD Second Respondent JUDGE: FOSTER J DATE: 12 MARCH 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant is an engineering and technical recruitment agency which provides services to the oil and gas sectors and to construction and mining projects in Australia and overseas. It is part of a large engineering services group of companies which operates globally. 2 The first respondent was, for some years, the managing director of the applicant. The first respondent's brother apparently has worked for some time for the group of companies of which the second respondent is part. The group of companies of which the second respondent is part (the Brunel Group) is a competitor of the Orion Group. 3 The applicant approached the Court on Wednesday 10 March 2010 seeking an urgent hearing of claims for interlocutory relief founded upon allegations that the first respondent had passed across to his brother, and hence to the Brunel Group, important and sensitive confidential information which is the property of the Orion Group. The first respondent has agreed to an interlocutory regime to deal with the claims for interim relief made against him. Earlier today I accepted undertakings and made orders in accordance with that agreement. 4 In an endeavour to resolve the applicant's claims against it, the second respondent has offered certain undertakings. They are contained in two documents which I will mark as Exhibit 1 and Exhibit 2 on the present application. I understand that those undertakings will be given irrespective of whether the matters presently in contest between the applicant and the second respondent are resolved for or against the second respondent. Accordingly, I note that the second respondent, by its Counsel, gives undertakings to the Court in the terms of the documents which I have marked and does so pending the final hearing of this proceeding or until further order of the Court. The applicant must give the usual undertaking as to damages in order to secure the undertakings given by the second respondent which I have just noted. 5 The evidence before me at the moment comprises two affidavits, both of which have been read in support of the applicant's case. Part of the evidence comprises four emails and certain attachments to those emails which have been marked as confidential and made the subject of an order under s 50 of the Federal Court of Australia Act 1976 (Cth). The evidence as it stands at the moment demonstrates that the first respondent did pass across to his brother, at a time when the first respondent was a director of and employed by the applicant, very important commercially sensitive material which, I infer, is of significance to the second respondent in competing with the applicant for large engineering and technical services contracts in Papua New Guinea. As the evidence stands at the moment, the applicant has presented a strong case that the first respondent has breached the duties owed by him to the applicant and that representatives of the Brunel Group, including the first respondent's brother, knowingly participated in those breaches. 6 The matter in issue at the moment concerns whether or not I should compel the second respondent to grant to an independent computer expert nominated by the applicant access to its computers and computer system in Australia for the purpose of allowing that expert to examine those computers and the computer system in order to ascertain precisely what information has been passed across by the first respondent to the Brunel Group, when that occurred and what use within the Brunel Group has been made of that information. 7 Counsel for the second respondent resists the making of such an access order at the present time on a number of bases. He submitted that the second respondent had offered, and that both the applicant and the Court had accepted, undertakings which were more than adequate to protect the position pending a final hearing, or at least pending further consideration of the matter in the short term. He also informed me, as seems to be common ground between the applicant and the second respondent, that a Dutch company, which is part of the Brunel Group, has offered inter partes undertakings to the applicant and that those undertakings have been accepted by the applicant subject to its stated desire to press for access by an independent expert. 8 Counsel applied for a deferral of my consideration of the access matter for only a short time so that he could obtain appropriate instructions from his client and, if thought desirable, so that those instructing him could prepare and serve affidavit evidence dealing with the access claim. 9 The undertakings already given accommodate, to some extent, the needs of the applicant in the short-term. 10 In particular, the second respondent has undertaken to ask certain employees to search for and, if found, quarantine confidential information belonging to the applicant which is stored in non-electronic form which might be in their possession, custody, control or power and has undertaken to require that electronic searches be carried out. However, Counsel for the applicant has pointed out that the applicant's legitimate concerns do not merely involve a question of preventing further use of the confidential information which the applicant alleges was passed across to the first respondent's brother, but also involves a need to preserve whatever electronic record presently exists in the hands of the Brunel Group of the alleged breaches of duty. The order sought can thus be justified on the basis that it meets the applicant's needs to preserve its property and to preserve evidence which goes to the heart of its case against the second respondent. 11 I have been told from the Bar Table that there is a computer system in place in the corporate premises of the second respondent which operates Australia-wide. That system is physically housed in premises in Perth. There may, in fact, also be records, both in electronic form and paper form, in the possession, custody or control of the second respondent which are located outside Australia. 12 The position in respect of this last matter is not clear at the moment. 13 The independent expert retained by the applicant is already in Perth, I am told, dealing with the computer or computers belonging to the first respondent. 14 It seems to me that the breaches alleged against the respondents are very serious indeed and that the evidence presented, at the moment at least, strongly supports the applicant's case against both respondents. 15 I recognise, of course, that the respondents have not yet gone into evidence nor, as they would have it, have they had an opportunity to do so. I also recognise that the matter is being viewed very much on a preliminary basis at an early stage and substantially through the eyes of only one party. However, that is the way, for the time being, in which I have to look at the matter. 16 It also seems to me that, sooner or later, the exercise which the applicant urges upon the Court will have to be undertaken and that the most efficient, expeditious and cost-effective way of that occurring is to have it happen now. There does not appear to be any significant prospect of prejudice and such difficulties as may in fact arise in the future should be able to be sorted out as between the parties. 17 For these reasons, I propose to make orders in the terms of the orders claimed by the applicant, but amended to allow a representative or agent of the second respondent to observe the activities of the computer expert. I do not propose to accept all of the other amendments advanced in the draft set of orders propounded on behalf of the second respondent in the course of argument. There will be orders accordingly. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. Associate: Dated: 18 March 2010