FEDERAL COURT OF AUSTRALIA Taxi Clothing Pty Ltd v Hsien-Chuang Jeng [2014] FCA 1340 Citation: Taxi Clothing Pty Ltd v Hsien-Chuang Jeng [2014] FCA 1340 Parties: TAXI CLOTHING PTY LTD (ACN 053 679 762) v HSIEN-CHUANG JENG File number: NSD 1236 of 2014 Judge: RARES J Date of judgment: 2 December 2014 Legislation: Corporations Act 2001 (Cth) Fair Work Act 2009 (Cth) Cases cited: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 applied Samsung Electronics Co Limited v Apple Inc (2011) 217 FCR 238 applied Date of hearing: 2 December 2014 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 29 Counsel for the Applicant: Mr M Seck Solicitor for the Applicant: Coleman Greig Lawyers The Respondent: appeared for himself IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1236 of 2014 BETWEEN: TAXI CLOTHING PTY LTD (ACN 053 679 762) Applicant AND: HSIEN-CHUANG JENG Respondent JUDGE: RARES J DATE OF ORDER: 2 DECEMBER 2014 WHERE MADE: SYDNEY Upon the applicant by its counsel giving to the court the usual undertaking as to damages: THE COURT ORDERS THAT: 1. The respondent deliver to the registrar on or before 5 December 2014 all documents (including originals and hard and electronic copies) which he has obtained from the applicant and which are in his possession, custody or control, including: (a) any commercial, contractual, financial, costing or budgetary documents, or contact lists of the applicant; (b) the documents contained in the large satchel with a shoulder strap in his possession on 13 October 2014 when at the applicant's premises; (c) the documents contained in the pale green lever arch folder in his possession during the conciliation conference before Deputy President Sams of the Fair Work Commission on 18 November 2014. (together, "the Documents") 2. Until further order, the respondent by himself, his servants and agents be restrained from using, copying, forwarding, distributing or disclosing to any person, or destroying, or in any other way defacing or interfering with, all documents in his possession, custody or power, including documents in any electronic form, that he obtained from or has in his possession, custody or power as a result of his employment by the applicant, other than for the purposes of complying with these orders. 3. On or before 5 December 2014, the respondent file and serve an affidavit deposing as to the identity of each person, organisation or entity to whom any of the Documents have been disclosed, a brief description of any such document, and the name of the person, organisation or entity to whom that disclosure was made and the date of each such disclosure. 4. The matter be stood over to a date to be notified to the parties before the docket judge to prepare the matter for hearing. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1236 of 2014 BETWEEN: TAXI CLOTHING PTY LTD (ACN 053 679 762) Applicant AND: HSIEN-CHUANG JENG Respondent JUDGE: RARES J DATE: 2 DECEMBER 2014 PLACE: SYDNEY REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 These proceedings began on 26 November 2014 when the applicant, Taxi Clothing Proprietary Limited, sought from a judge of the Court leave to serve short notice the originating application and the affidavit of Michael Pilkington, sworn on 21 November 2014. Mr Pilkington was the managing director of Taxi. Background 2 The respondent, Hsien-Chuang Jeng, and his wife, Xin Li, also known as Linda Li, were employees of Taxi. Mr Jeng worked as the financial controller of Taxi's business from 1998 until the disputes between him and Taxi occurred in October 2014. 3 The originating application sought final relief. That included claims for a declaration that Mr Jeng contravened s 183 of the Corporations Act 2001 (Cth) by improperly using information obtained because of his position as an employee of Taxi to gain an advantage for himself or someone else or to cause detriment to Taxi, damages, equitable compensation and compensation pursuant to s 1317H of the Act together with a permanent injunction restraining Mr Jeng from using, copying, forwarding, distributing or disclosing to any person the documents that I shall shortly describe, or any information in them, other than for the purpose of complying with the Court's orders. 4 Taxi also sought interlocutory relief on two principal matters. First, on giving the usual undertaking as to damages and an undertaking to preserve them, it sought an order that Mr Jeng deliver up to it all documents, including originals, hard and electronic copies, which he had obtained from Taxi that were in his possession, power or control, including any commercial, contractual, financial, costing or budgetary documents or contact lists of Taxi, documents in a large satchel that had been observed to be in Mr Jeng's possession on 13 October 2014 when at a meeting he had at Taxi's premises with Mr Pilkington, and documents in a pale green lever arch folder that Mr Jeng had with him during a conciliation conference before a deputy president of the Fair Work Commission on 18 November 2014. Taxi also sought that, on the delivery up of all of those documents, Mr Jeng destroy and delete all electronic copies of them from any electronic devices that were in his possession, power or control, and that he be restrained from otherwise using or disseminating any of them or the information in them. 5 Secondly, Taxi sought an order that Mr Jeng serve on its solicitors a verified list stating the identity of any person, organisation or entity to whom any of those documents had been disclosed, a brief description of what had been disclosed to each such person, organisation or entity and when that had occurred. 6 When the matter came before me yesterday, Mr Jeng indicated that he wished to put on evidence in response to Mr Pilkington's affidavit and I ordered that he do so by 10 am today. In the meantime, Taxi's solicitor, Stephen Booth, swore an affidavit as to matters that he observed when at the conciliation conference on 18 November 2014 and in Court on 1 December 2014. 7 Mr Pilkington's account of the relevant interactions that he had had with Mr Jeng and Ms Li sought to explain how matters had unfolded over and after the October 2014 long weekend. It appears that Taxi and Mr Jeng had a dispute about Mr Jeng's use of his company car. Mr Jeng was responsible for the functioning and maintenance of the computer system used for storing Taxi's electronic records, including its accounts. Taxi's printed accounting records were stored in an area within the office under Mr Jeng's control and some of those documents contained private and confidential information that included the details of Taxi's directors' personal financial affairs and financial positions relating to assets that they owned personally or in circumstances that were not those of the company. 8 At about 12.35 am on 6 October 2014, Mr Jeng sent Mr Pilkington's fellow director, Mr Yong, a text message. Mr Yong forwarded the message to Mr Pilkington. In it, Mr Jeng expressed his upset as to being deprived of his use of his company car while he was on a camping holiday. He wrote that he would give the two directors a "surprise" on Tuesday 7 October 2014. Mr Pilkington said that Mr Jeng came to the office on the evening of 6 October 2014 and gave back the keys to his office, which gave Mr Pilkington the impression that Mr Jeng had resigned, an impression that Mr Jeng later said that he did not intend to convey. 9 On 10 October 2014, Mr Jeng sent Mr Pilkington and Mr Yong a lengthy text message on their mobile phones, a copy of which is in evidence. The text message expressed Mr Jeng's disappointment and perplexity at what had happened to him and their relationship, and it expressed his view that he had not resigned. It also contained a threat that, if he were not restored to the position that he held immediately before the long weekend with all his allowances and pay, he would have no other option but to contact a variety of regulatory authorities, including the Australian Customs and Border Protection Service, the police, AUSTRAC, ASIC and the Australian Taxation Office about various alleged irregularities that Mr Jeng asserted had occurred in the conduct of the company's affairs. 10 On 13 October 2014, Mr Pilkington said that Mr Jeng attended Taxi's premises, during which they had a conversation in which Mr Jeng refused to accept Taxi's assertion that he had resigned. Mr Pilkington told him that, if he did not leave, he would call the police. During this interaction, which lasted about 90 minutes, Mr Pilkington said that he saw Mr Jeng with a large satchel with a shoulder strap. Mr Pilkington said that when Mr Jeng arrived, Mr Jeng had said, indicating the bag, "I want my job back or I will use these documents against you" and that while they were waiting for the police to arrive, Mr Jeng also said to Mr Pilkington, "I have these documents. I will give them to the police when they arrive. I've all the docs in here." 11 Mr Pilkington said that he did not see what was in the bag but, when a police sergeant arrived in response to Mr Pilkington's call to remove Mr Jeng, Mr Jeng said to the sergeant that he had "all these docs" and asked to whom he should give them. Mr Pilkington said that as Mr Jeng was leaving, Mr Jeng pulled an envelope out of the bag and said to the sergeant, "Who should I give these to?" in response to which the sergeant shook his head, waved Mr Jeng's hand away and did not take the documents. 12 On 14 October 2014, Taxi's solicitors wrote a letter to Mr Jeng in which they referred to the events of the previous day, including the fact that Mr Jeng had a shoulder bag and a bundle of documents to which he had referred. The letter asked Mr Jeng to return any business records, including any in an electronic form, which he had in his possession, custody or control, and reminded him of his obligations under s 183(1) of the Corporations Act. 13 Mr Pilkington said that he and Mr Yong met with Mr Jeng and Ms Li on 20 October 2014, for the purposes of arranging a settlement, during which Ms Li said to Mr Pilkington, "The documents have not been sent to anyone yet". The parties then continued in settlement discussions. Mr Jeng and Ms Li subsequently commenced proceedings under the Fair Work Act 2009 (Cth) in the Commission that led to the conciliation conference on 18 November 2014 at which the deputy president certified that the proceedings had not resolved. 14 In his affidavit of 1 December 2014, Mr Booth said that, at the conciliation conference on 18 November 2014, he had observed Mr Jeng with a pale green lever arch folder, and both Mr Jeng and Ms Li had referred to documents in the folder during the conference. Mr Booth observed that when the folder was closed, it appeared to be full of documents that were about seven centimetres thick, some appearing to be A4 sized and coloured white, and others at the back of the folder being more varied in colour, having the appearance of original documents of varying sizes and colours with some being dog-eared with curled edges and some folded lengthwise in a bundle. Mr Booth said that yesterday, in Court, he observed what appeared to be the same folder that he had seen on 18 November 2014 but that it no longer appeared to contain the non-A4 white coloured pages and that its contents now appeared to be only about four centimetres in depth. 15 Mr Pilkington said also that, during the course of the conciliation conference, he observed Mr Jeng with a pale green lever arch folder that he took out of the same satchel that Mr Pilkington had observed Mr Jeng to have had on 13 October 2014. Mr Pilkington said that he also observed that the pale green level arch folder appeared to be full of documents and contained what appeared to be documents with an original look about them, of the kind described by Mr Booth. 16 However, Mr Pilkington was unable to say what, if any, documents of Taxi Mr Jeng had in his possession or which might be in the possession of Ms Li. Nonetheless, Mr Pilkington was concerned that any such documents were, or might be, relevant to the allegations that Mr Jeng or Ms Li might want to make to government authorities about Taxi. Mr Pilkington said that he was not aware of what any such allegations might be. Mr Pilkington was concerned that Taxi might not have copies of the documents in Mr Jeng's or Ms Li's possession, would be unable to respond to any regulatory inquiries concerning them and would be prejudiced in its dealings with any regulators. 17 In Mr Jeng's affidavit, he explained the origins of the dispute and, in particular, he said, "I do not possess any documents in any form and format [sic] of Taxi, as [I] was unable to access the office due to my sudden termination". 18 Notably, Mr Jeng did not contradict or discuss what Mr Pilkington said had occurred on 13 October 2014, and there is no evidence of any response by Mr Jeng to Taxi's solicitor's letter to him of 14 October 2014. There is no evidence that any documents are, in fact, missing after any search by Taxi or its employees. 19 Mr Jeng has commenced separate proceedings in the Federal Circuit Court relating to his employment position with the company, but those proceedings are not before me and I am not aware of the detail of them. Mr Jeng's submissions 20 Mr Jeng argued that he was not in possession of any documents and there was no evidence that he had, in fact, taken anything. He argued that he had made assertions during the currency of the dispute for his own protection. He contended that there were three staff who had worked under him in the accounting section of Taxi who could have looked, or searched, to see if any documents were missing and who could have given evidence, if it were the case, that some of Taxi's documents were missing. He said that he had acted as he did in order to save his job and that, to the extent that he was aware of financial or other information of Taxi, that awareness existed because he had worked for the company for 16 years and had the knowledge of its financial affairs in his head, as opposed to in any documentary form, whether as hard or electronic copies. He said that he did not have any of Taxi's trade secrets and that whatever material he had access to was already in the possession of authorities, such as the Taxation Office, which he contended was in the public domain. Consideration 21 The test applicable for the grant of an interlocutory injunction is contained in the organising principles identified in the reasons of Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at 81-82 [65], namely: 'The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd ((1968) 118 CLR 618). This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued ((1968) 118 CLR 618 at 622-623): "The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted." By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument ((1968) 118 CLR 618 at 620). With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal ((1968) 118 CLR 618 at 622): "How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks."' 22 In Samsung Electronics Co Limited v Apple Inc (2011) 217 FCR 238 at 261 [67], Dowsett, Foster and Yates JJ said that the question of whether there is a serious question or a prima facie case should not be considered in isolation from the balance of convenience and that the apparent strength of the parties' substantive cases would often be an important consideration to be weighed in the balance. 23 Because this is an interlocutory hearing, I am not dealing with all of the evidence that either side may be able to marshal in the course of the ordinary procedures of the Court to prepare for a contested final hearing. Rather, I am dealing with evidence hastily assembled by the parties to enable the Court to deal with the matter on an urgent basis. Therefore, any views I have formed and which I express in these reasons are necessarily based on what might be very incomplete evidence were the matter to be dealt with at a final hearing. I can only look at what is in evidence before me at the present time and the arguments that the parties have adduced. 24 The fact is that Mr Jeng, for a very long time, was a senior officer of a company. It can be expected that, as he said, he will have material knowledge of its operations that he has retained in his head. There is no doubt that he was able, had he wished, to have access to Taxi's records. His threats, which are disclosed in the discussions that Mr Pilkington deposed to and in the text message that Mr Jeng himself sent on 10 October 2014, suggested that he proposes to use information or documents of Taxi to cause detriment to it or to gain an advantage for himself, being the restoration at that time of his job, in contravention of s 183 of the Act. 25 In addition, Mr Jeng, as a senior employee, owed the company duties of loyalty to keep confidential any information to which he was made privy in the course of the conduct of its affairs. There is no evidence, beyond mere assertion, that any relevant defence such as unclean hands or the existence of inequity would justify the disclosure of any of the material which Mr Jeng may have taken. 26 I am satisfied that the plaintiff has established a prima facie case that Mr Jeng does have some of its significant records in his possession, custody or power or, at the very least, did so have them prior to his swearing his affidavit today. That is because, first, Mr Jeng has not contradicted the version of events that Mr Pilkington gave of what happened on 13 October 2014, secondly, there is no evidence of any reply by him to Taxi's solicitor's letter of 14 October 2014, and, thirdly, because of the observations by both Mr Pilkington and Mr Booth of the comparative difference between what was in the pale green folder at the conciliation conference before the deputy president of the Commission on 18 November 2014 and the appearance of the same folder yesterday in Court. Fourthly, Mr Jeng made assertions, according to Mr Pilkington's unanswered evidence, that he would use documents against Taxi and or its directors in some unspecified way, fifthly, his text message of 10 October 2014 contained a considerable amount of detail as to various regulatory authorities to which he threatened to divulge that material, sixthly, Ms Li made the statement on 20 October 2014, during the course of the discussion, that the documents had not been sent to anyone yet and, seventhly, Mr Jeng's denial in his affidavit about his possession of those documents is couched in the present tense. 27 In those circumstances, it seems to me that the balance of convenience weighs in favour of the grant of appropriate interlocutory relief that Mr Jeng be required to deliver up whatever documents of Taxi, in whatever format they may be, that are in his possession, custody or power and to disclose whatever of such documents that he once had that he no longer has. 28 However, I am not prepared to make the second of the interlocutory orders in the form that Taxi sought. In my opinion, given the interlocutory nature of the application and the uncertainty as to what documents there may or may not be and any possible dispute as to the ultimate entitlement to their possession, in the first instance, the documents should be produced to the Court and, subject to any proper objections, Taxi should be able to inspect them and take copies of them. At that time, it can make such application as may be appropriate for the return to it of anything that appears to be its own document and which it is not necessary to be kept safely in the Court. Conclusion 29 For these reasons, I will grant Taxi interlocutory relief in the nature that it sought, subject to the qualification I have made in respect of the second of those orders. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate: Dated: 9 December 2014