Supreme Court New South Wales Medium Neutral Citation: Mirus Australia Pty Ltd v Gage [2017] NSWSC 1046 Hearing dates: 8 and 9 May 2017 Decision date: 11 August 2017 Jurisdiction: Equity Before: Ward CJ in Eq Decision: (1) Declare that the first defendant was in contempt of this Court by engaging in the conduct in the circumstances described in Charge 1 of the Amended Statement of Charge. (2) Order pursuant to rule 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) that [60]-[61] of the first defendant's defence filed on 12 November 2015 be repleaded in accordance with these reasons and that the following paragraphs or part paragraphs of the said defence be struck out as an abuse of process of the Court: [60(b)]; those parts of [63]-[73] in which the first defendant "otherwise denies" the allegation to which the paragraphs respond (such as [63(e)]); [64(d)-(h)]; [65(b)]; [65(c)]; [65(d)] (the words in the chapeau "in order to do so" and subparagraphs (v)-(vii)); [65(e)]; [65(f)] (the words "in order to maintain the confidentiality of the information"); [65(g)] (the words "and again attempted" through to the end of that sub-paragraph); [65(h)] (the words "in order to maintain the confidentiality of the information"); [65(i)-(j)]; [66(c)-(e)] (insofar as they are intended to apply to Mr Gage's defence); [66(f)]; [67]; [68(d)]; [69(c)-(e)]; [70(d)]; [71(d)]; [71(g)]; those parts of [72] which repeat answers to [62]-[71] that are to be struck out; [72(a)-(c)]; those parts of [73] which incorporate reference to parts of the defence that are to be struck out; those parts of [92] which repeat those parts of [65(d)-(h)] which are to be struck out; those parts of [93]-[94] which incorporate reference to paragraphs of the defence to be struck out; [103]-[104]; [107(b)] and that part of [109] of the defence insofar as those paragraphs repeat paragraphs of the defence that are to be struck out. (3) Direct the first and second defendants each to file an amended defence within 14 days, noting that the first defendant's amended defence must accord with these reasons in relation to the paragraphs or part paragraphsof the defence the subject of the order in 2 above. (4) List the matter before me at 9.30 am on 18 August 2017 for further directions as to the filing of evidence and listing of the matter for a sentencing hearing in respect of the contempt of court committed by the first defendant. (5) The first defendant to pay the plaintiff's costs of the respective notices of motion on an indemnity basis. Catchwords: CONTEMPT – criminal contempt – whether contempt can be committed if impugned conduct occurred prior to commencement of proceedings PRACTICE AND PROCEDURE – abuse of process – deliberate deletion of electronic documents and records of electronic activity after commencement of proceedings – application to strike out parts of defence Legislation Cited: Aged Care Act 1997 (Cth) Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 59, 60 Corporations Act 2001 (Cth), s 1317H Evidence Act 1995 (NSW), 140 Income Tax Assessment Act 1936 (Cth), s 263 Uniform Civil Procedure Rules 2005 (NSW), r 14.28 Cases Cited: Australian Building Construction Employees and Builders Labourers Federation v Minister of State for Industrial Relations (1982) 43 ALR 189 Australian Securities and Investments Commission v Sigalla (No 4) (2011) 80 NSWLR 113; [2011] NSWSC 62 Anderson v Hassett [2007] NSWSC 1310 Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 Arrow Nominees Inc v Blackledge [2000] EWCA Civ 200 Athens v Randwick City Council (2005) 64 NSWLR 58; [2005] NSWCA 317 Attorney-General v Butterworth [1963] 1 QB 696 Attorney-General v News Group Newspapers PLC [1989] 1 QB 110 Attorney-General v Sport Newspapers Ltd [1991] 1 WLR 1194 Attorney-General v Times Newspapers Ltd [1974] AC 273 Azzopardi v R (2001) 205 CLR 50; [2001] HCA 25 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524; [2002] VSCA 197 British Steel Corporation v Granada Television Ltd [1981] AC 1096 Clark v State of New South Wales (2006) 66 NSWLR 640; [2006] NSWSC 673 Clark v State of New South Wales [2012] NSWCA 139 Commercial Bank of Australia v Preston [1981] 2 NSWLR 554 Construction, Forestry, Mining & Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375; [2015] HCA 21 Dupas v Channel Seven Melbourne Pty Ltd [2012] VSC 486 Farahbakht v Midas Australia Pty Ltd [2006] NSWSC 1322 Fuji Xerox Australia Pty Ltd v Lee [2003] QSC 303 Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 Inghams Enterprises Pty Ltd v Timania Pty Ltd (2005) 221 ALR 823; [2005] FCAFC 155 James v Robinson (1963) 109 CLR 593 Jones v Australian Competition and Consumer Commission (2010) 189 FCR 390; [2010] FCAFC 136 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kirkpatrick v Kotsis [2004] NSWSC 1248 Lane v Registrar of the Supreme Court of New South Wales (Equity Division) (1981) 148 CLR 245; [1981] HCA 35 Mead v Mead [2007] HCA 25; (2007) 235 ALR 197 Meissner v R (1994) 184 CLR 132 Moody Kiddell & Partners Pty Ltd v Arkell [2013] FCA 1066 Ormonoid Roofing and Asphalts Ltd v Bitumenoids Ltd (1930) 31 SR (NSW) 347 Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 Palavi v Queensland Newspapers Pty Ltd (2012) 84 NSWLR 523; [2012] NSWCA 182 Raymond v Honey [1983] 1 AC 1 Registrar of the Supreme Court, Equity Division v McPherson [1980] 1 NSWLR 688 Reg v Gray [1900] 12 QB 36 RPS v R (2000) 199 CLR 620; [2000] HCA 3 R v Rogerson (1992) 174 CLR 268 Saunders v Federal Commissioner of Taxation (1988) 19 ATR 1289 Tate v Duncan-Strelec [2014] NSWSC 1125 The Prothonotary v Collins (1985) 2 NSWLR 549 Television New Zealand Ltd v Solicitor-General [1989] 1 NZLR 1 Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65 Witham v Holloway (1995) 183 CLR 525; [1995] HCA 3 X v Amalgamated Television Services Pty Ltd (No 2) (1987) 9 NSWLR 575 Young v Smith [2016] NSWSC 1051 Texts Cited: Laws of Australia at [10.11.1250] (current as at 1 September 2014) Lowe N and Sufrin B, Borrie & Lowe: The Law of Contempt (3rd ed, Butt, 1996) Category: Principal judgment Parties: Mirus Australia Pty Ltd (Plaintiff) Nicholas James Gage (First Defendant) Simon Wilson (Second Defendant) Representation: Counsel: T Brennan (Plaintiff) S Keizer (First Defendant) Solicitors: HWL Ebsworth Lawyers (Plaintiff) Marque Lawyers (First and Second Defendants) File Number(s): 2015/00261885 Publication restriction: Nil Judgment 1. HER HONOUR: Before me for hearing on 8 and 9 May 2017 were two related interlocutory applications brought by the plaintiff (Mirus Australia Pty Ltd) (Mirus) against one of its former senior employees (Mr Nicholas Gage), the first defendant. Another of its former senior employees (Mr Simon Wilson) is also a party to the proceedings (the second defendant) but the present interlocutory applications do not relate to or seek any relief in respect of him. 2. The applications in question, made by separate notices of motion each filed by Mirus on 2 August 2016, are: first, that Mr Gage be found guilty of contempt (the contempt motion) and, second, that certain parts of Mr Gage's defence be struck out as an abuse of process (the strike out motion). Both applications are founded on allegations that Mr Gage deleted from certain of his computer devices documents and other electronic files of relevance or potential relevance to the present proceedings. 3. That Mr Gage deliberately deleted from computer and electronic devices in his possession a number of documents and files at least some of which contained information confidential to Mirus cannot be (and is not now) denied, having regard to the expert evidence to which I will refer in due course and to Mr Gage's own admissions. What is in contention is when Mr Gage did so and what, if any, inference(s) should be drawn as to his intention or purpose in so doing. Mr Gage, as was his right (given that a finding of criminal contempt is sought against him), chose not to give any evidence at the hearing before me (whether to explain his actions or otherwise). However, parts of an affidavit affirmed by him earlier in the proceedings on 18 November 2016 were tendered by Mirus (ultimately without objection) as admissions by Mr Gage or otherwise to establish what it was that he had instructed his solicitors to communicate to Mirus as to his defence of the claim. 4. For the reasons that follow, I am satisfied that Mr Gage's conduct was an abuse of process of the Court and that parts of the defence filed by him should be struck out. I am not persuaded beyond reasonable doubt that the second charge of contempt has been established. However, I am satisfied that the first charge of contempt has been established beyond reasonable doubt. Accordingly, it will be necessary to set a timetable for a sentencing hearing. Background 1. Mirus provides advisory (and, it says, though this is denied by the defendants, information technology based) services specifically to operators of aged care facilities in Australia (statement of claim at [3]; defence at [3(a)]). The services it provides were described by its Counsel on the present applications as being "quite sophisticated cloud based information technology" (T 4.15). Its managing director has explained that Mirus uses a standard installation of Google Drive; that all email, calendar and file repository services are provided this way; and that Mr Gage set up this architecture (affidavit of James Edward Price sworn 3 September 2015 at [20]). Mirus' Medicare Data Capture Tool 1. The core of Mirus' business is said to be a product referred to as the Medicare Data Capture Tool (statement of claim at [9]; T 4.16), which enables Mirus "to capture Medicare Australia data" from the Medicare Online web system (statement of claim at [13]) and to update that data in Mirus' data repository on a daily basis (statement of claim at [14]). The defendants admit the allegations at [9], [13] and [14] of the statement of claim in the corresponding paragraphs of their defence. 2. Mirus alleges that the Medicare Data Capture Tool enables "almost real-time analysis of costs and revenue" for each aged care facility operated by its clients (statement of claim at [15]). The defendants deny this allegation and say that the Medicare Data Capture Tool is not used to analyse costs and revenue and does not gather costs data (defence at [15]). Mr Gage's and Mr Wilson's employment with Mirus 1. Mr Gage was a senior employee of Mirus, employed at first by a related entity (Mirus Aged Care Metrics) from 1 March 2011 to about 1 December 2012, and then by Mirus – initially in the position of "Director" and then as "Director of Technology and Innovation" (statement of claim at [22], admitted at [22] of the defence). Mirus' managing director has deposed that Mr Gage was employed for his expertise in information technology development solutions and that he was responsible for building Mirus' information technology systems and processes as part of the business' strategy to build a strong platform to underpin all business operations (affidavit of Mr Price at [26]) and that Mr Gage was responsible for "driving product innovation both in developing ideas for new products and managing the development of new products …" (affidavit of Mr Price at [27]). 2. Mr Gage resigned from his employment with Mirus on 13 July 2015 (defence at [22(e)]) and admits that his employment terminated on 7 August 2015 ([22] of the respective pleadings). 3. Mr Wilson, who as already noted is not the subject of the present applications, was employed to manage and lead Mirus' sales capability (statement of claim at [39]; admitted in the defence at [39]). His employment with Mirus also ceased on 7 August 2015. Mirus alleges that there was an agreement that Mr Wilson's employment would cease pursuant to a redundancy arrangement (statement of claim at [55]); Mr Wilson admits that Mirus terminated his employment on the basis of redundancy (defence at [55(d)]). What relevant difference there is, if any, between those two propositions is not clear but nothing turns on it for present purposes. 4. Mr Gage's contract of employment contained (as did that of Mr Wilson) a restraint clause (cl 23.1) that precluded him, without Mirus' prior written consent, from engaging directly or indirectly in a competing business within New South Wales and from solicitation of Mirus' clients and employees, in each case for a period of 3 months from the date of termination of his employment. His contract of employment also contained (as again did that of Mr Wilson) obligations in relation to Mirus' confidential information, as defined in the contract (see cll 21.1; 21.2), and provided for Mirus' ownership of all intellectual property that he developed or conceived in the course of or arising out of his employment (cl 21.3). A dispute arises in August 2015 1. The dispute between the parties arose after Mirus became aware (in August 2015) that the defendants were taking steps to set up a new business (the proposed Aged Care HQ business). Mirus' solicitors communicated with Mr Gage by letter dated 24 August 2015, asserting that Mr Gage's decision, in consort with Mr Wilson, to establish the proposed Aged Care HQ business was a breach of the non-compete obligations contained in the restraint clause. In that letter they demanded the delivery up of all of Mirus' confidential information and intellectual property in Mr Gage's possession custody or control. Legal action was expressly foreshadowed, including an application for injunctive relief, in both that letter and a further letter dated 26 August 2015 pressing for a response to the first letter of demand. Mr Gage then responded, in an unsigned letter received by Mirus on 26 August 2015, denying breach of the restraint clause. He did not, however, respond to the allegation that he was in possession of Mirus' confidential information nor did he respond to the demand for the delivery up of such information. 2. By letter dated 28 August 2015, Mirus' solicitors repeated their demand for the delivery up of confidential information, extending that to a demand that Mr Gage also deliver up all personal electronic storage devices for inspection. Further, the letter expressly put Mr Gage on notice that: … you are not to destroy, remove and/or tamper with any documents/files in your possession, custody or control that may be the subject of anticipated litigation. Non adherence may result in contempt of Court. 1. Mr Gage instructed his then solicitors (Allens Linklaters) to respond to that letter. They did so by letter dated 3 September 2015 in which it was denied that Mr Gage had breached his employment-related obligations and had misused Mirus' intellectual property or confidential information. Relevantly, the letter further conveyed Mr Gage's instructions that Mr Gage was not in possession of any property belonging to Mirus and had no confidential information or intellectual property belonging to Mirus in his possession to deliver up (apart from a small USB drive that included some Mirus-related files and personal files, which it was said he would return, and the tablet computer and mobile phone he had used while working at Mirus, which it was said standard company practice permitted departing employees to retain and which it was said contained no Mirus confidential information). 2. In the defence filed after the proceedings that had been foreshadowed were in due course commenced, Mr Gage has admitted that on particular dates he copied certain material containing confidential information within the meaning of his contract of employment into his personal Google Drive account (see, for example [64]; [69] of his defence) and that he created certain ".zip files" on about 6 August 2015 which were downloaded to his personal Google Drive account (some but not all of which he accepts contained confidential information within the meaning of his contract of employment and/or contained confidential information of Mirus) (see for example [63], [65], [68], [70] of his defence). It must be concluded from this that the information conveyed to Mirus by Mr Gage through his then solicitors in their letter of 3 September 2015 was factually incorrect to the extent that any of the downloaded information containing what is now admitted to be confidential information of Mirus remained on any of Mr Gage's electronic devices at that time. Commencement of proceedings on 7 September 2015 1. Mirus commenced proceedings on an ex parte basis on 7 September 2015, seeking and obtaining orders for short service from Hallen J in the duty list. Those orders were served by email on Mr Gage's solicitors (who had earlier acknowledged they had instructions to accept service) at approximately 12.30pm on 7 September 2015, together with a copy of the notice of motion and summons filed in Court and the sealed affidavits filed in support. Mr Gage's solicitors were advised that the proceedings had been listed before Hallen J at 2pm on 8 September 2015. Mr Gage became aware of this relatively soon after the documents were served on his solicitors. In the affidavit later affirmed by Mr Gage on 18 November 2016, Mr Gage deposed (at [14]) that he became aware by about 1pm on 7 September 2015 that the proceedings had been commenced (see [61] below). His affidavit also makes clear (at [15]) that at that stage he turned his mind to which of his electronic devices might be the subject of orders for delivery up by him (see [61] below). 2. That afternoon, purportedly in an attempt "to allay Mirus' apparent concerns", Mr Gage's solicitors indicated that the defendants would consent to certain of the relief sought in the summons, albeit with some modification. 3. Pausing here, there can thus be no doubt that by the afternoon of 7 September 2015 Mr Gage was on notice of the allegation by Mirus that he was in possession of confidential information belonging to it and as to the relief that Mirus was claiming in the proceedings. That relief included both an order for the delivery up of "all computers, media, USB storage and other electronic storage devices containing or which did contain the Confidential Information and the Intellectual Property which has been copied or backed up or subsequently deleted" (my emphasis) (see prayer 4 in the summons) and an order that, until further order of the Court, he be restrained from, inter alia, deleting or causing to be deleted the Confidential Information and the Intellectual Property on any computer or electronic storage device or cloud service account in his possession, custody or control (see prayer 3 in the summons). Moreover, he had been on notice since 28 August 2015 of Mirus' demand that he not destroy, remove and/or tamper with any documents or files in his possession that might be the subject of the anticipated litigation and had been warned that, if he did so, he might be (or at least be accused of being) in contempt of Court. Thus the significance of deleting potentially relevant material from his electronic or computer devices as at 7 September 2015 can hardly have been lost on him. The orders made by Hallen J on 8 September 2015 and the inspection regime 1. There was some negotiation between the respective solicitors as to the draft short minutes of order proposed by the defendants and then, when the matter came back before Hallen J on 8 September 2015, orders were made by consent pursuant to which the defendants were restrained until further order from certain conduct (broadly reflecting the terms of the restraint clause) (order 1(3)) and from conduct in relation to the "Confidential Information and the Intellectual Property" (orders 1(4) and (5)). The defendants were also ordered to deliver to their solicitors by 12 noon on 9 September 2015 certain identified devices (order 1(6)). (It is accepted that those devices did not identify a particular computer belonging to Mr Gage, referred to as PC05.) I set out below the terms of orders 1(4)-(6) in full. 1(4) Upon the Plaintiff, by its Senior Counsel, giving the usual undertaking as to damages, order that the defendants be restrained until further order from accessing, downloading, transferring, interfering with, disclosing, copying using, or exploiting the Confidential Information and the Intellectual Property. (5) Upon the plaintiff, by its Senior Counsel, giving the usual undertaking as to damages, order that until further order of the Court, each of the defendants be restrained from: (a) causing any steps to be taken to access, download, transfer, interfere with, or copy the Confidential Information and the Intellectual Property, including but not limited to, assisting third parties to access, download, transfer, interfere with, or copy the Confidential Information and the Intellectual Property; (b) deleting or causing to be deleted the Confidential Information and the Intellectual Property on any computer or electronic device or cloud service account in the defendants' possession, custody or control; and (c) taking any steps or causing any steps to be taken which may impede the recovery of the Confidential Information and the Intellectual Property. Orders 5(a) [sic] includes, but is not limited to, access, downloading, transferring, interfering with or copying by way of remote access to the plaintiff's servers, or by the use of cloud services or other computers or devices or media (including social media) platforms to the plaintiff's servers in which the Confidential Information and Intellectual Property is stored or assisting third parties to do the same. … (6) The defendants to deliver to their solicitors by 12 noon on 9 September 2015 in a sealed packet the following devices: (a) the first defendant's iPad, serial number DLXM K0BUFLMQ: (b) the first defendant's Samsung S5 mobile phone, IMEI number 353423060684385; (c) the second defendant's iPad, serial number DLXLH0ZHF4YF; (d) the second defendant's iPhone, serial number C39LLM6TFRC8; (e) the USB drive referred to in section 3(a) of the letter from Allens to HWL Ebsworth dated 3 September 2015; (f) the first defendant's Surface tablet; and (g) the first defendant's home laptop computer. 1. The agreed orders did not make provision for the regime by which the identified electronic devices would be delivered up for inspection by Mirus' computer experts. This was the subject of correspondence between the respective solicitors between 8 and 10 September 2015. In the course of that correspondence, Mirus' solicitors sought confirmation that the devices delivered up in accordance with his Honour's orders (referring in that regard, apparently mistakenly, to order 7) were "all the devices in your clients' possession, custody or control". That elicited a response from the defendants' solicitors that: It was not apparent to us that your proposed regime dealt with cloud-based accounts and they then indicated that the defendants "in the spirit of co-operation" would make available for inspection their respective "Dropbox" and other similar accounts. There was no reference at that stage to any other computer (relevantly, PC05) in Mr Gage's possession. 1. The inspection regime agreed between the parties on 11 September 2015 provided for Mirus' computer expert to obtain a forensic image of, and review, the devices which had been delivered up pursuant to the orders of 8 September 2015, including access to the defendants' cloud-based accounts (see cll 7-9 of the inspection regime agreement). 2. The forensic imaging process commenced at about 12.30pm on 11 September 2015 in the offices of Allens Linklaters. One of Mirus' solicitors (Ms Stuckey-Clarke) has deposed (in an affidavit sworn 2 August 2016) to a conversation (on which she was not cross-examined) with a senior associate of Allens Linklaters (Mr Ratu) in the presence of Mr Gage that afternoon in words to the following effect: Ms S-C: We need to make sure that all devices that contain Mirus Australia's confidential information and intellectual property have been delivered up. Please confirm that the devices that have been delivered up today by your clients [first and second defendants] are all the devices in their possession relevant to the proceedings? Mr R: Yes. Those are my instructions. These are the only devices with confidential information on them. Mr Gage: Yes, that's all of it. Ms S-C: Does that mean that there are no other devices at home or elsewhere which you use or store information on? Mr Gage: There are no servers at home. Mr R: The devices being imaged today are the only devices relevant to the Proceedings. 1. As it turned out, that was not correct (see [25] below), though I do not suggest that Mr Gage's solicitor was aware of this at the time. 2. Steps were then taken by Mirus' computer expert (Mr Michael Khoury of Ferrier Hodgson), who had already produced an initial report of 4 September 2015 based on his inspection of Mirus' devices, and the defendants' expert (Mr Nigel Carson of KordaMentha) to inspect the devices that had been delivered up in response to his Honour's orders. A number of reports were prepared by each, culminating in the preparation of a joint expert report which was signed on 28 April 2017. (The two experts gave evidence concurrently at the hearing before me.) 3. It became apparent during the course of the forensic inspection of one of the devices (PC04) that there was another computer on which Mirus confidential information might have been located (PC05). That led to the delivery up of that computer pursuant, as I understand it, to orders made by consent by Hallen J on 28 April 2016. 4. The defendants' 3 month contractual restraint period expired on 6 November 2015. After some opposition by Mirus, the injunction imposed by order 1(3) was discharged by consent (see the orders made by Hallen J on 28 April 2016). However, the other injunctions granted by Hallen J on 8 September 2015 remain in place. 5. Mirus' present solicitors have confirmed to Mr Gage's present solicitors (by letter dated 24 June 2016) that Mirus is pursuing a claim for damages but Mirus has filed no further evidence at this stage. Indeed, as I understand it, no further steps have been taken in the substantive proceedings since the filing on 2 August 2016 of the motions presently before me. The relevant devices 1. I have already adverted to various of the electronic devices and cloud storage accounts to which reference will be made when considering the deletions in question. For completeness, those devices and accounts are: PC01 (Mr Gage's principal work computer while at Mirus); Mr Gage's Personal Google Drive account (which is a distinct account from his Mirus Google Drive account); the Surface Pro (Mr Gage's principal working laptop computer following completion of his employment with Mirus); PC05 (Mr Gage's principal home computer, on which he had installed a "virtual" computer machine or system named "DARWIN" and another named "NEWTON"); and PC04 (Mr Gage's "old" personal home computer). Mr Gage has explained (at [88] of his 18 November 2016 affidavit) that DARWIN is a virtual server that he used for file storage. 2. Relevantly, for the purpose of explaining the basis for some of the inferences that Mirus submits should be drawn from Mr Gage's conduct, the Surface Pro did not "synchronise" with Mr Gage's personal Google Drive account but PC04 and PC05 did synchronise with that account from time to time. Whether and when the last complete synchronisation occurred between PC04 and Mr Gage's personal Google Drive account is of significance and is something on which the experts were initially in disagreement. However, this seems now to be agreed (see [30] below). 3. The computer experts (Mr Khoury and Mr Carson) are of the view that there was a synchronisation between PC04 and Mr Gage's personal Google Drive account on 17 August 2015 and that what is on PC04 under the Google Drive folder represents the state or the content of Mr Gage's personal Google Drive account as at that date. Mr Khoury now accepts that a successful synchronisation between PC04 and Mr Gage's personal Google Drive account did not occur on 8 September 2015 (since certain activities recorded in Mr Gage's personal Google Drive account between 17 August 2015 and 8 September 2015 are not reflected in the locally cached copy of files and folders on PC04) (see [65] of his report dated 31 January 2017). 4. Mr Khoury's position is that either there was no synchronisation after 30 August 2015 between PC04 and Mr Gage's personal Google Drive account or, alternatively, there was only a partial synchronisation after 30 August 2015, which means that some files were synchronised and some files were not (see T 38). Mr Khoury accepts that what that means is that he cannot be certain as to when, after 30 August 2015, the files on the personal Google Drive account were deleted, though he is certain it did not happen before 30 August 2015 (for the reasons, as I understand them, set out at [38] below). It had clearly happened by 11 September 2015 because that is the date on which Mr Gage's personal Google Drive account was made available for inspection and the files were not located on the Google Drive account at that time. What was downloaded/copied? 1. Before considering in detail the chronology of events that occurred in relation to the deletions, it is useful to summarise the allegations Mirus makes as to the copying or exporting by Mr Gage of Mirus' confidential information (contained at [62]-[71] of the statement of claim). 2. It is alleged: that, during the course of his employment Mr Gage transferred confidential information of Mirus onto a portable storage device (a USB) ([62]); that on 17 June 2015 he copied the Medicare Data Capture Tool and an "SQL Database" into his personal Google Drive account ([63]); that on 10 July 2015 he copied confidential financial and management reports of one of its clients into his personal Google Drive account ([64]); that on 21 July 2015, he exported the contents of the Capsule CRM (client relationship management system) into his personal Google Drive account under the folder named "NickSi" and gave access thereto to Mr Wilson ([65]-[66]); that on 23 July 2014 he copied various other files to his personal Google Drive account ([68]); that on 24 July 2015 he copied Mirus' balance sheet and profit and loss statement into his personal Google Drive account ([69]); that on 29 July 2015 he copied other confidential information into his personal Google Drive account ([70]); and, finally, that on 6 August 2015 (i.e., the day before his employment with Mirus ceased) he copied other confidential material into his personal Google Drive account ([71]). 3. The download on 6 August 2015 was described by Mirus' Counsel as the downloading of the coding for all of the "back-end IP" and a number of Mirus databases, including the whole of the contents of the Mirus Client Relationship Management database (Mirus CRM database) (see T 4.43). 4. In summary, Mr Gage does not dispute having downloaded/copied that material (though he says that was done on 6 August 2015 by way of "zip files" and, in his defence, he proffers what might be described as an "innocent" explanation for so doing (see [65(f)] of the defence in relation to the CRM Zip File)). He also admits that he deleted all (or perhaps more precisely it might be said that he deleted some and attempted to delete all) of that material from his computer devices. What was not deleted was the material on PC04 because of an oversight pleaded by Mr Gage at [83(c)] of his defence – see [41] below). However, he says that not all of the material he downloaded (and by extension presumably not all the information he deleted) was confidential information. The alleged deletions 1. Mirus alleges that there were three separate instances or episodes of electronic data deletion. The Surface Pro deletions on 7 September 2015 1. First, it is alleged that on the evening of 7 September 2015 (after service of the summons and Mirus' application for interlocutory orders, including for the delivery up of the Surface Pro, as well as service of the affidavits upon which Mirus was relying and its first expert report, but before any substantive orders were made restraining the deletion of documents) Mr Gage deleted Mirus folders and files from his Surface Pro laptop by use of a Microsoft operating system application called "SDELETE" (the Surface Pro deletions). Mirus complains that as a result "much of the evidence of manipulation or use of those files by Mr Gage" has been destroyed (Mirus' written submissions at [20]). (Although Mr Gage submits that it is speculation to refer to "evidence of manipulation or use", properly understood Mirus' complaint is that it now cannot ascertain what, if any, manipulation or electronic use was made by Mr Gage of those files prior to their deletion.) The cloud storage deletions between 29 August 2015 and 11 September 2015 1. Second, it is alleged that at some time between 29 August 2015 and 11 September 2015 (i.e., at some time in a period spanning both before and after the commencement of the proceedings; and potentially after the interlocutory orders were made on 8 September 2015 though no complaint is here made of breach of those orders), Mr Gage deleted from his personal Google Drive account the electronic data contained in two folders (the "Mirus Stuff" and "NickSi" folders) (the cloud storage deletions). All of those files had been deleted from Mr Gage's personal Google Drive account by 11 September 2015, when the forensic expert took an image of that account. Mirus says that since the "Mirus Stuff" folder (and Mirus' files containing the computer coding for Mirus' programs) was downloaded from Mr Gage's personal Google Drive account to the PC05 computer on 30 August 2015, it is to be inferred that that folder and its files were deleted from Mr Gage's personal Google Drive account at some time between 30 August 2015 and 11 September 2015 (T 3). Again, the result of that deletion is that recovery of the deleted files (in whatever form they were in on Mr Gage's personal Google Drive account as at the date of deletion) has been prevented and Mirus complains that Mr Gage has thereby destroyed evidence of manipulation or use of those files by Mr Gage up to at least 30 August 2015 and possibly up to 11 September 2015. The PC05 deletions on 11 September 2015 1. Third, it is alleged that close to midnight on 11 September 2015, after his other devices had been delivered up for inspection, Mr Gage deleted electronic data from PC05 using "CCleaner" and then "Recuva" (the PC05 deletions) (for a description of those applications see [76]-[78] below). The first of those programs (CCleaner) is a program that "securely deletes" files from a computer hard drive. The second (Recuva), which was used by Mr Gage after he had run the CCleaner program and immediately after he had accessed the internet to undertake searches as to how securely to delete data, is a program the primary application of which is to scan a computer to identify previously deleted files and to allow the user securely to erase those already deleted files from the hard drive. Mirus submits that the only purpose of its use is wholly to destroy any records of a file having been on a computer; and that since, immediately before running Recuva, Mr Gage undertook internet searches about it, it is to be inferred that he well knew its purpose and intended to use it for that purpose. 2. Mirus says that the metadata recovered from PC05 is sufficient to show that Mr Gage had succeeded in moving some unidentified amounts of the data from the Mirus CRM database to cloud based applications in respect of which Mr Wilson was able (whether he did or not) to have access; and says that the running of Recuva resulted in destruction of all of the evidence of what files and data Mr Gage had in fact moved to the "cloud". Thus it is said that the running of Recuva also resulted in destruction of any evidence of manipulation or use of Mirus' files by Mr Gage up to 11 September 2015. Mr Gage's "oversight" 1. Mirus says that, in a practical sense, Mr Gage's "destruction scheme" came undone by the "oversight" pleaded by Mr Gage at [83(c)] of the defence. Paragraph 83 of the defence contains the defendants' response to the same numbered paragraph of the statement of claim in which it is alleged that, from the date of each copying or download, Mr Gage has been and but for the interlocutory injunction of the court would remain able to access each of the files the subject of the specified downloads from any computer, tablet, phone or other device connected to the internet and copy all or any of those files to any such device. The defendants have admitted that allegation but go on to say that 83 … (a) prior to the grant of the interlocutory injunction, the first defendant deleted all the files pleaded in paragraph 83 of the Statement of Claim from his personal Google Drive account; (b) the first defendant believed that doing so would result in the deletions flowing down to all synchronised devices, so that he would not be able to access any of the files through any synchronised device; and (c) due to an oversight by the first defendant, his laptop (PC04) was not properly synchronised and hence the files remained available to him through his laptop (my emphasis) 1. The result of that admitted "oversight" on Mr Gage's part is that it is now known what was on Mr Gage's personal Google Drive account on 17 August 2015, by reference to what remained on PC04 when it was inspected on or after delivery up on 11 September 2015. However, to anticipate what follows later in these reasons, Mr Gage submits that the Court cannot be satisfied beyond reasonable doubt that the SurfacePro or cloud storage deletions took place either after the making of the orders on 8 September 2015 or after the commencement of proceedings on 7 September 2015. Pausing there, what is however established from Mr Gage's own admissions in the verified defence (see [83]), is that the deletions were intentional and that Mr Gage believed that by deleting the data (which occurred before PC04 was delivered up for inspection) this would result in "the deletions flowing down to all synchronised devices", of which he must have assumed PC04 was one. Detailed chronology of events 1. At this stage it is helpful to consider in detail the evidence as to what occurred in relation to the computer coding that was downloaded by Mr Gage, separately from the evidence of events in relation to the Mirus CRM database. Coding 1. On or by 6 August 2015 (the date on which Mr Gage puts the timing of the download – see [63]-[67], [71] of the defence), which was the day before his employment with Mirus terminated, Mr Gage downloaded the coding of the Medicare Data Capture Tool to his personal Google Drive account by creating a zip file. Because there was synchronisation between Mr Gage's personal Google Drive account and PC04, that zip file was also downloaded or copied to PC04. 2. As there was no synchronisation between Mr Gage's personal Google Drive account and the Surface Pro, the file did not automatically download to the Surface Pro. On 13 August 2015, Mr Gage downloaded the coding from his personal Google Drive account (via a "TFS.zip" file) to the Surface Pro. Mr Khoury considers it most likely that the "TFS.zip" file (containing the coding) was downloaded via web browser access to the Google Drive cloud storage rather than through synchronisation since Mr Gage's personal Google Drive account was not directly synchronised with the Surface Pro (as already noted – see [29] above). Mr Khoury notes that the "TFS.zip" file was present (when PC04 was later inspected, I assume) within the local Google Drive cache on PC04 in the folder "Mirus Stuff" (see [23], Mr Khoury's 15 January 2016 report). Mr Khoury says that a folder titled "TFS" was extracted from the "TFS.zip" file at 9.54am on 13 August 2015 (see [57], Mr Khoury's 31 January 2017 report). 3. The "TFS" folder contained some 3,000 files of database and software coding (the coding for Mirus' programs, for the development of which Mirus says Mr Gage had been principally responsible and which it says was highly confidential). As already adverted to, the content of what was downloaded can be ascertained because it still resides on PC04. 4. On 14 August 2015 at 3.22pm, nine files were created in the "TFS" folder on the Surface Pro, including four output files relating to a program named "AccreditationCheck.vshost", the creation of which (according to Mr Khoury) indicates that source code relating to the "AccreditationCheck" program within the TFS folder was "compiled" (see [58]-59] of Mr Khoury's report dated 31 January 2017), or turned into a useable program. That same file of coding was later downloaded on 30 August 2015 from the Google Drive to PC05 – Mr Gage's personal desktop computer at home which was not produced for inspection until April 2016. Creation of "Mirus stuff" and "NickSi" folders on 17 August 2015 1. On 17 August 2015, Mr Gage created two folders on his personal Google Drive account: "Mirus Stuff" and "NickSi" (the latter, one might infer, being an amalgam of the first names of the two defendants). Mr Khoury describes the respective folders (at [93]-[94] and [106] of his 31 January 2017 report) and concludes that it was not possible for the "Mirus Stuff" and "NickSi" folders to have been shared from Mr Gage's Mirus Google Drive account. He explains that the local cache copy of Mr Gage's personal Google Drive account on PC04 contains the "Mirus Stuff" and "NickSi" folders created as a result of the synchronisation between that personal Google Drive account and PC04 on 17 August 2015 and says that those folders do not exist in the local cache copy of PC01 (the Mirus work computer), which was forensically preserved as at 21 August 2015 (see [94]). Pausing here, the 17 August 2015 date is significant because (as already noted) Mr Khoury accepts that this was the last date on which there was a full synchronisation between Mr Gage's personal Google Drive account and PC04. Events following communications from Mirus' solicitors 1. On 24 August 2015, Mirus' solicitors sent the first letter of demand (see [12] above), demanding the delivery up of Mirus' confidential information and foreshadowing the commencement of proceedings. (Mirus submits that, on receipt of this letter, Mr Gage knew of the scope of the likely dispute and knew that if he did not deliver up that which was demanded then that dispute would occur in this Court. Mirus further says this is clear from Mr Gage's affidavit of 18 November 2016 at [9]-[11].) 2. On 25 August 2015, after Mirus' first letter of demand was sent, a file of financial data (namely, "Ozcare Financials FY 2015.pdf") relating to one of Mirus' clients (Ozcare) was moved from one folder on Mr Gage's personal Google Drive account (namely, the "Share between Mirus Drive & Personal" folder) to the "NickSi folder" (see [76(a)], Mr Khoury's 31 January 2017 report). The "Share between Mirus Drive & Personal" folder, as I understand it, was a folder in which something downloaded from Mr Gage's work computer (that is, PC01) to his Mirus Google Drive account would then appear on his personal Google Drive account. According to Mr Khoury (at [76(a)]), the movement of the "Ozcare Financials FY 2015.pdf" file between folders shows that the former folder (the "Share between Mirus Drive & Personal" folder) was no longer the "root location" of the "Ozcare Financials FY 2015.pdf" file. Also on that date, the "Share between Mirus Drive & Personal" was placed into the "Bin", i.e., identified as "trash" (see [76(b)] of Mr Khoury's report). In other words, that share folder was then removed from Mr Gage's personal Google Drive account. 3. Mr Gage's position at that stage (as asserted by him in the unsigned letter received by Mirus on 26 August 2015) was, as repeated in the defence he later filed, that he was not seeking to compete with Mirus and that the products which he and Mr Wilson would be seeking to deliver would not be products competing with Mirus' products. 4. Mr Khoury has also identified that on 26 August 2015 (the same day Mr Gage was asserting to Mirus a lack of intention to compete with Mirus), a file from the "Mirus Stuff" folder on Mr Gage's personal Google Drive account was moved to the Aged Care HQ folder on his personal Google Drive account (see [76(c)] of the 31 January 2017 report). 5. On 28 August 2015, the third letter of demand from Mirus' solicitors was sent (see [13] above). That letter advised Mr Gage that Mirus had engaged an independent forensic information technology specialist to undertake an investigation and that the investigation had identified a large repository of Mirus' confidential information and intellectual property on Mr Gage's Dropbox account (described as files relating to management records, marketing and business plans and specific client related documents; and giving OzCare as an example). (It is submitted by Mirus that on receipt of that letter Mr Gage knew: that litigation was likely; that delivery up of all personal devices upon which any of Mirus' information had been located would be sought in those proceedings; and of the obligation not to destroy material which was potentially relevant in that foreshadowed litigation.) That letter demanded a full explanation as to why Mr Gage had established a Dropbox account (a competitor cloud service to Google Drive) and accessed it from work computers, in circumstances where it was asserted that there was no business need for him to do so, and demanded that he provide a full itemised list of all documents and files comprising Mirus' business records located on his Dropbox account. 6. At 1.51pm on 28 August 2015, Mr Gage accessed Mirus' internal Dropbox account (see [39] of Mr Khoury's 15 January 2016 report), by, it was suggested, logging in using a password that he had from his time of employment with Mirus. (Mirus says it can be inferred that this was to "see what they had on him" – T 69.) 7. Then, on 30 August 2015 (a date to which Mirus attaches some significance since it was two days after receipt by Mr Gage of the 28 August 2015 letter of demand – see [13] and [53] above), Mr Gage's user account "untrashed" the "Share between Mirus Drive & Personal" folder (see [76(d)], Mr Khoury's 31 January 2017 report). That had the effect, as I understand it, that the "Share between Mirus Drive & Personal" folder would once again appear as a folder on Mr Gage's personal Google Drive account. On the same day, Mr Gage's user account restricted access to the file named "Ozcare Financials FY 2015.pdf" contained in the "NickSi" folder and the Ozcare Financials pdf file was moved back from the "NickSi" folder to the "Share between Mirus Drive & Personal folder" ([76(e)-(f)]). (Mirus contends that this was done to make it look as if the Ozcare Financials file was on Mr Gage's personal Google Drive account from a time when he had shared it with himself while he was working at Mirus and that it had not been shared with Mr Wilson – see T 58.) 8. Mr Khoury's analysis of a keyword search on Mr Gage's devices for records containing the words "Mirus Stuff", "NickSi" or their Google document ID's (see [78] of the 31 January 2017 report) identified that on 30 August 2015 the PC05 computer had accessed the personal Google Drive account and downloaded the "Mirus Stuff" folder at 2.52pm and that the same computer accessed the "NickSi" folder approximately seven minutes later (at 2.59pm on 30 August 2015). Mr Khoury explains that in his searches of PC05 he identified "a type of artefact" commonly referred to as a "Shellbag" pertaining to a zip file named "Mirus Stuff-2015-08-29" which he says was created on 30 August 2015 at 2.52pm in the downloads folder located in the "Darwin virtual machine on PC05" (see [110] of the 31 January 2017 report). Mr Khoury notes that the file name format of the zip file is consistent with the naming convention format adopted by Google when a user downloads a folder from a Google Drive account. In other words, this suggests that the Mirus Stuff folder was accessed within Google Drive at that time. He says that analysis of that Shellbag artefact shows that the primary folder contained within the zip file was a folder named "Mirus Stuff" and says that this zip file was no longer present in the downloads folder on PC05 (when later inspected) and was therefore moved or deleted ([111]-[112]). 9. By reference to what now remains on the PC04 device, Mirus says that it can be inferred that, as at 17 August 2015, there was a file on Mr Gage's personal Google Drive titled "Mirus Stuff", which file included the Mirus CRM database and the "TFS.zip" file containing the computer coding of its programs and databases. Mirus further says that, since the "Mirus Stuff" folder was downloaded to PC05 from the personal Google Drive account on 30 August 2015, it must logically have been on the personal Google Drive account on that date (see T 9.18). 30 August 2015 is thus the earliest date that has been identified by Mirus as the possible date of the cloud storage deletions. By that stage, it must have been clear to Mr Gage from the various letters of demand that the threatened legal proceedings were now imminent and that Mirus was likely to require production of the content of his personal Google Drive account. Certainly, by that stage proceedings had been well and truly foreshadowed. The coincidence in timing of the access by PC05 to the "Mirus Stuff" and "NickSi" folders and the downloading to PC05 of the "Mirus Stuff" folder (see [56] above) is of note when it is remembered that that device was not identified as a relevant device, nor was it offered up for inspection, on 7/8 or 11 September 2015. 10. On 3 September 2015, Allens Linklaters wrote (on Mr Gage's instructions), denying any breach and conveying Mr Gage's instructions that neither the Surface Pro nor his computers or mobile phones contained any Mirus confidential information (see [14] above). 11. An examination later by Mr Khoury of the "volume shadow copy" taken by the Surface Pro at 4.19am on 4 September 2015 (i.e., the day after Mr Gage's solicitors had on his instructions denied that he had any Mirus confidential information in his possession) identified that a substantial number of files and folders relating to Mirus were present on the Surface Pro (see [17] of his 15 January 2016 report). Mr Khoury says that those files and folders are no longer on the Surface Pro but that the system artefacts left by the secure deletion process that took place on 7 September 2015 (to which I will refer shortly) indicate that those Mirus related files were subject to the secure deletion process on 7 September 2015. Events occurring on 7 September 2015 1. That brings me to the date of service of the summons and notice of motion (7 September 2015). A copy of Mr Khoury's first expert report of 4 September 2015, together with an affidavit of Mr Robert Covino, the co-founder of Mirus, sworn 7 September 2015, was also served at that time. 2. As already noted, in the affidavit affirmed by Mr Gage on 18 November 2016 he deposed (at [14]) that he became aware at around 1pm on 7 September 2015 that his solicitors had been served with court documents. He went on to say (at [15]) that: After I became aware of the 7 September Orders, it became apparent to me that the Court may make orders requiring me to deliver up any devices which may contain files or information related to Mirus. 1. Mr Gage deposed that he then identified four further devices (in addition to the Mirus USB) which he believed contained confidential files that had information that related to Mirus (those included the Surface Pro and PC04 – but not PC05) ([15]) and that he had identified them on the basis that they were devices that he had used within the preceding 12 months in respect of work he had undertaken in relation to Mirus ([16]). Relevantly, however, less than two weeks before Mr Gage admits he turned his mind to what devices might contain files or information related to Mirus, he had accessed both the "Mirus Stuff" and "NickSi" folders on his Google Drive account via PC05 and had downloaded material pertaining to the "Mirus Stuff" files to PC05 (see [56] above). 2. On 7 September 2015, Mr Gage's user account restricted access by Mr Gage himself to the Ozcare Financials file (see [76(g)] of the 31 January 2017 report), as a result of which Mr Khoury says the file would likely have been caused to be removed from Mr Gage's personal Google Drive. (Thus, by 11 September 2015, when Mr Gage's personal Google Drive was produced for imaging, the Ozcare Financials file was not present on that device.) 3. Mr Khoury's analysis of the Surface Pro (one of the devices that Mr Gage says in his affidavit (at [15]) that he had identified on 7 September 2015 as a device he might be ordered to deliver up) identified that approximately 7,000 files and folders were deleted between 6.33pm and 7.36pm on 7 September 2015 (see [25] of Mr Khoury's 20 July 2016 report; and [7(c)] of Mr Khoury's 15 January 2016 report). Mr Khoury's analysis of the volume shadow copies present on the Surface Pro showed that a folder of some 1,100 files and folders was deleted at that time, of which the term "Mirus" was located in a number of deleted folders and files (see [11]-[12], Mr Khoury's 24 February 2016 report). 4. Mr Khoury says that those deletions occurred through the use of a Microsoft operating system – the secure erasure application called SDELETE. Mr Khoury says this makes the task of recovering names and other pertinent details about the files extremely difficult and/or impossible to retrieve "since these tools are intended to destroy data in such a way as to ensure they cannot be recovered through forensic or other specialised procedures" and that the files and their contents are subsequently unrecoverable (see [25], Mr Khoury's 20 July 2016 report). Therefore, although the names of the folders and files deleted have been identified on a forensic inspection of the Surface Pro, the use of the SDELETE software has prevented the recovery of the actual files that were deleted. 5. Mr Khoury was, however, able to identify the specific times at which the SDELETE program was run within a folder to target the specific files containing Mirus' code. In particular, Mr Khoury was able to analyse the "Windows Prefetch files" relating to the SDELETE program and says that it was run from three separate locations on the Surface Pro at particular times (see [35], Mr Khoury's 31 January 2017 report; those folder locations being identified at [41] of his report). Mr Khoury identified that some of the last files accessed by the SDELETE program (by reference to the Prefetch file SDELETE.EXE-6E8F6D30.pf) were files with titles include the words "Code" and "MYAGED CAREDOWNLOADER" and "ACCREDITATION CHECK" (see [39] of the same report). 6. Later in the evening of 7 September 2015 (at 10.56pm), Mr Gage ran an internet search from the Surface Pro using the phrase "Restrict access to google drive specific devices". Mr Khoury's review of website activity on PC05 similarly identified a Microsoft Internet record showing a search result referencing the words "how to remove a document from activity view in google drive", which he says indicates that Mr Gage conducted a Google search at 11.59pm on 7 September 2015 with that query (see [79], Mr Khoury's 31 January 2017 report). Mr Khoury identified an online visit to a web page containing those words approximately 12 seconds later (see [79]-[80], 31 January report). Approximately 7 minutes later, there appears to have been a failed attempt to access the "NickSi" folder on the Surface Pro (12.06.59am on 8 September 2015 - see [78(c)], Mr Khoury's 31 January 2017 report). 7. Therefore, on the evening before and the early hours of the very day on which Mr Gage knew he was likely to be required to deliver up devices for inspection (his own solicitors having put forward a delivery up regime to allay Mirus' concerns) he was engaged in a process of seeking to conceal evidence on his computer devices of activity in relation to Mirus files on those devices. Even if (which strains credulity having regard to the overall history of what occurred) it were the case that Mr Gage had decided to delete confidential files from which he had only attempted to extract "non-confidential" material in order to maintain the confidentiality of the information (see [65] of his defence), that does not explain his obvious attempt to conceal any record of that activity. Events occurring on 8 September 2015 1. The consent orders for delivery up of computer devices (not including the PC05) were made at about 2pm on 8 September 2015. 2. There is evidence of a failed login to PC04 on the afternoon of 8 September 2015 (see Mr Carson's report of 18 November 2016 at [38], annexed to his affidavit affirmed 22 November 2016). Mr Carson reports that it appears to him that the username and password credentials stored on PC04 were no longer working. The relevance of this seems to be that Mr Carson has concluded that, by then, PC04 was no longer able to synchronise with Mr Gage's personal Google Drive account. Mr Khoury, however, was unable to confirm whether the relevant error report "directly translates to a failed login" (see [62]-[64], 31 January 2017 report). What Mr Khoury does accept (at [65] of his report) is the conclusion by Mr Carson that there is no evidence to support a contention that PC04 had synchronised with Mr Gage's personal Google Drive account on 8 September 2015 (see [37] of Mr Carson's report of 18 November 2016, noting that the "sync-log.log" corroborates the file listing that "TFS.zip" was the last recorded file downloaded at 10.05pm on 17 August 2015). 3. Mirus argues, as I understand it, that it can be inferred that the unsuccessful attempt to gain access to PC04 on 8 September 2015 was an attempt to trigger a synchonisation process between it and the Surface Pro, since the latter did not automatically synchronise with Mr Gage's personal Google Drive account. Mirus points to what is pleaded in the defence at [83(c)] (see [41] above) and says that, had that log-in worked as Mr Gage expected it to have worked, the material which was later found on PC04 would not have been found but would instead have been deleted from PC04; and if that had occurred, none of the devices which were delivered up on 11 September 2015 would have contained any of Mirus' confidential information or intellectual property. 4. Mr Khoury identified on his analysis of internet browser records on PC04 that three Microsoft searches were undertaken later on 8 September 2015 under a user profile entitled "Nick": at 5.28pm on 8 September 2015 ("Delete files that are deleted"); at 6.34pm on 8 September 2015 ("Clear remote desktop"), and at 6.46pm on the same day ("remove remote desktop entries windows 8") (see [11], Mr Khoury's 20 October 2015 report). Mr Khoury says that the combination of keywords in the first search is likely to return websites pertaining to information on how permanently to delete files from a computer system; the other two searches are likely to return websites pertaining to information on how to delete historical records relating to remote desktop connections made on a computer running a Microsoft Windows operating system (see [12], Mr Khoury's 20 October 2015 report). (I note that those searches were conducted after orders for the delivery up of particular devices and prohibiting the deletion of, or impeding the recovery of, the confidential information on "any computer or electronic device or cloud service account" in Mr Gage's possession custody or control were made.) 5. Mr Khoury has also identified (from an analysis on the virtual machine contained within PC05 named "DARWIN") that at 5.38pm on 8 September 2015 (i.e., again, after the delivery up orders were made and, not insignificantly, after the injunction was made restraining Mr Gage from the conduct referred to at order 1(5) of the orders as set out above), the application "CCleaner" was installed on "DARWIN". At 6.30pm on 8 September 2015, PC04 connected to "DARWIN" (the virtual server within PC05) via a remote desktop connection (see [6] of Mr Khoury's 20 October 2015 report). Events occurring on 11 September 2015 and the PC05 deletions 1. Then on 11 September 2015, various of Mr Gage's devices were delivered up for inspection (including the PC04 and Surface Pro but not PC05). No Mirus "Intellectual Property" was identified as stored on Mr Gage's personal Google Drive account nor were the "Mirus Stuff" and "NickSi" files present on the personal Google Drive account. Those folders were, however, present on PC04. 2. At 11.36pm on 11 September 2015, after the forensic imaging process had commenced on the devices delivered up that day and after the conversation had taken place between Ms Stuckey-Clarke and Mr Ratu at which Mr Gage was present (referred to at [22] above), the application "CCleaner" was installed and run on PC05. 3. Mr Khoury has explained that CCleaner is commonly used for cleaning temporary files and other residual data that accumulates on a computer over time, such as temporary internet files generated by the Windows operating system. Mr Khoury accepts that one of its uses is for the purposes of optimising a computer and freeing up disk space but he says that it is also able to perform other deletion activities such as: securely wiping free space on a hard drive; securely wiping information about files and folders that have been accessed by a user; securely wiping internet browsing activitiy; and securely cleaning the Windows Registry and wiping Volume Shadow Copies (see [115]-[116] of Mr Khoury's 31 January 2017 report). 4. Then at 11.46pm on 11 September 2015, the application "Recuva" was installed and run on PC05 (see Mr Khoury's report of 20 July 2016 at [15]-[16]; [40(a)]). That had the effect of securely deleting some 9,650 records from PC05 ([40(a), Mr Khoury's 20 July 2016 report). Mr Khoury explained (at [12] of his 20 July report) that when examined in chronological order the deleted file artefacts on PC05 "demonstrated a pattern of activity consistent with a secure file erasure process performed on PC05". 5. Mr Khoury has deposed (at [117], 31 January 2017 report) that, unlike CCleaner, the Recuva application is not intended to be used as a system optimisation tool nor as a tool for removing temporary data: The primary application of Recuva is to scan a computer in order to identify previously deleted files that remain dormant in free space and are no longer visible to the end user. The Mirus CRM database 1. The relevant chronology of events in relation to the Mirus CRM database can be more briefly addressed. 2. On 15 July 2015, Mr Gage gave Mr Wilson access to share the folder "NickSi" (admitted at defence [66(b)]). On 21 July 2015, Mr Gage downloaded the Mirus CRM database to his personal Google Drive account (statement of claim at [64]-[66]; defence at [65]). Mr Khoury notes (at [16] of his 4 September 2015 report) that examination of internet browser records created by Mr Gage's computer (that is, PC01) indicate that from around 6pm on 21 July 2015 the computer was used to download records contained within the Capsule CRM database and that around the same time a Google search was undertaken for the term "add group to google contacts more than 205" ([17]; [31(d)] of the same report). 3. At 6.07pm on 21 July 2015, Mr Gage's computer (that is, PC01) was used to access an email titled "[Capsule] Your Exported Data – nick.gage@mirusaustralia.com – Mirus Australia Mail ("Exported Capsule Data")" (see [18]; [31(e)], Mr Khoury's 4 September 2015 report). That email is no longer present in Mr Gage's Mirus email account. Mr Khoury notes that immediately after the email was accessed on Mr Gage's computer a data file titled "capsule export-2015-7-21.zip" was opened on the computer and that this zip was still present on PC01 in the downloads folder and contained approximately 400,000 records relating to client contact details and over 300 job opportunity records (see [19]; [31(f)], Mr Khoury's 4 September 2015 report). 4. Mirus says that the database files, converted into comma separated value (CSV) files, were copied first to Mr Gage's personal Google Drive account and then copied from his personal Google Drive account to the Surface Pro (T 66). (In support of this contention, Mirus points to certain findings in the report of Mr Khoury of 15 January 2016 concerning the Surface Pro. Mr Khoury identified (at [16]) the names of files and folders impacted by deletion activity through examination of the volume shadow copy backups made by the operating system on Mr Gage's Surface Pro. Mr Khoury notes (at [18]) that a file titled "export-2015-07-21.zip" in the relevant downloads folder was found within the volume shadow copy.) 5. On 9 August 2015, Mr Gage ran internet searches on his Surface Pro, searching for "backupify" (at 11.49am) and "import zoho crm capsulecrm" (at 6.32pm) (see [35], Mr Khoury's 15 January 2016 report). Mr Khoury explained that "Backupify" is an internet based cloud to cloud backup application which allows users to find, restore and manage any google apps data ([36], Mr Khoury's 15 January 2016 report). 6. The contents of the zip archive file titled "capsule export-2015-07-21.zip" (namely, 5 CSV text files) were extracted to a particular folder (namely, "Downloads/capsule export-2015-07-21") on Mr Gage's Surface Pro on 9 August 2015 (see [8], Mr Khoury's 24 Februry 2016 report). Both this zip file and the particular folder containing the extracted CSV files were deleted by 7.05pm on 7 September 2015 – the time of the next volume shadow copy of the Surface Pro; see [9], Mr Khoury's 24 February 2016 report. 7. In his 15 January 2016 report, Mr Khoury describes (at [24]-[25]) the creation on 14 August 2015 of new folders and files relating to business contacts drawn from the "contacts.csv" file, which was located in the "Downloads/capsule export-2015-07-21" folder on Mr Gage's Surface Pro. Two files were created (namely, "contacts-a-m.csv" and "contacts.n-z.csv") at 12.19pm and 12.25pm on 14 August 2015, which appear to have contained the contact details of organisations commencing with the letters A to M and N to Z (see Mr Khoury's report of 15 January 2016 at [24]-[25], see also his report of 20 July 2016 at [35]). There is also evidence of a data import process that occurred at or around 12.33pm on 14 August 2015 (see Mr Khoury's report of 20 July 2016 at [19(e)], in relation to a website address "Aged Care HQ CRM"). Mirus says that the contacts csv files were created into a new Aged Care HQ Capsule (access to which was shared with Mr Wilson) (see [23]-[24] of Mr Khoury's report of 20 July 2016). 8. Mr Khoury's report dated 20 July 2016 refers to his analysis of internet records relating to the "Insightly CRM product", that being a competitor product to Capsule (the customer relationship management database that was used by Mirus) and various websites on which the Aged Care HQ Capsule CRM was then created. In that report, Mr Khoury refers (at [27]-[34]) to Powershell script files that he says show apparently unsuccessful attempts to extract records from the "contacts.csv" file but which he says demonstrate that Mr Gage was attempting to extract these Mirus CRM records into a useable format to be loaded into another application. Mr Khoury concludes (at [31]) that it is probable that any attempts made to extract client related files failed "due to the fact that the data in the "contacts.csv" file extracted from the Mirus CRM database contains a complex text field wthin each record". 9. As noted earlier, Mr Khoury examined the volume shadow copy taken of the Surface Pro at 4.19am on 4 September 2015 and identified that a substantial number of files and folders relating to Mirus were present on the Surface Pro but (by the time of inspection after the Surface Pro was produced on 11 September 2015) those files and folders were no longer present (just the system artefacts left by the secure deletion process carried out on 7 September 2015) (see [17] of the 15 January 2016 report; and Mr Khoury's reports of 24 February 2016, 31 January 2017). 10. Mr Khoury also identified an Xcopy application being run on the Surface Pro on 7 September 2015, which he says is commonly used to transfer files from a source location to a specified destination (but says he has been unable to identify the files copied or transferred using that application (see [26] of his 15 January 2016 report)). 11. Also on 7 September 2015, after Mr Gage was served with the summons and notice of motion in these proceedings (and, as he has acknowledged, after he was aware of the commencement of proceedings and that he might have to deliver up his Surface Pro), Mr Gage used the SDELETE application on the Surface Pro. Mr Khoury says that the SDELETE application specifically targeted the Capsule CRM data (see Mr Khoury's 31 January 2017 report at [35]-[45]) . 12. Mirus places weight on the fact that Mr Khoury's initial report of 4 September 2015 was served on Mr Gage, together with the affidavit of Mr Covino (executive director of Mirus) on 7 September 2015, at the time that Mr Gage was served with the summons and notice of motion. It says that it would then have been apparent to Mr Gage (who up to that stage had denied being in possession of any confidential information of Mirus) that Mr Covino had identified specific incidents of downloading of the CRM database and that the expert had identified that Mr Gage had the Mirus CRM database in his possession. Joint expert report – 28 April 2017 1. The experts were asked various questions. Their responses were recorded in the joint expert report. They may be summarised as follows. 2. There was disagreement as to question 1 (namely as to whether the Google drive activity log for shared files and folders only maintains records of files and folders shared from one user to another while they are being shared – as per [18] of Mr Carson's report of 5 April 2017). Mr Carson found that the effect of this was that, when using the Google Drive web application, there was no visible activity log relating to shared files once they were removed ([18]; [20]); and that the activity log was not useful for detecting activity of files being shared and then removed by a recipient ([21]). Mr Khoury disagreed. He maintained that activity records would remain visible within the activity log even after the files and folders are "unshared" and maintained that it was important to note that activity records relating to both the "Mirus Stuff" and "NickSi" folders were contained in Mr Gage's personal Google drive account – referring to [76] of his 31 January 2017 report – notwithstanding the absence of both the "Mirus Stuff" and "NickSi folders" from Mr Gage's personal Google Drive account. Mr Khoury said that activity log records are maintained in Google Drive irrespective of the sharing status of a file or folder. In this regard, Mr Carson accepted that a "limitation" of his findings was that he did not test the activity logs when a shared folder was added to the recipient's Google drive account. 3. The experts were, however, agreed as to the following questions: * question 2 – the conclusions reached by Mr Khoury in respect of the internet history records relating to deleting Google Drive activity logs ([79]-[80] Mr Khoury's report of 31 January 2017; see [67] above). * question 3 – as to a number of questions posed in relation to partial synchronisation (namely, that it can and does occur between a Google Drive desktop application and the Google Drive web application; that the circumstances under which it occurs are where a connection is made with valid login credentials but the connection is interrupted before the synchronisation is complete (see [33] of Mr Carson's report of 5 April 2017; [65] of Mr Khoury's report of 31 January 2017); that when a password to a Google Drive account has been changed Google Drive will no longer synchronise on computers linked to that account; and that if a synchronisation had commenced on a computer and was suddenly interrupted then no further synchronisation would occur until the issue that cause the interruption was remedied (see [35]-[36] of Mr Carson's report of 5 April 2017)); see [70] above; and * question 4 – that the folders "Mirus Stuff" and "NickSi" do not exist in Mr Gage's Mirus Google Drive account (see [83]-[85] of Mr Khoury's report of 31 January 2017); see [48] above. 1. Mr Carson did not examine (and accepted in the course of the concurrent oral evidence that he could therefore neither agree or disagree as to) the matters set out in [87]-[93] and [95]-[103] of Mr Khoury's report of 31 January 2017, leading to Mr Khoury's conclusion that it could not be said that the "Mirus Stuff" and "NickSi" folders were created or ever existed in Mr Gage's Mirus Google Drive account and therefore that it could not be said that they were shared from that account. 2. Mr Carson agreed with the explanation by Mr Khoury of the uses of CCleaner ([115]-[116] of Mr Khoury's report of 31 January 2017) but says he did not examine the matters relating to the installation of the CCleaner application on PC05 on 8 September 2015 or the downloading and subsequent deletion of the zip file "Mirus stuff" on PC05. Nor did he examine the matters in relation to the Recuva application. 3. As to the conclusion that the "TFS" folder and the "capsule export-2015-07-21" folder were individually targeted as part of the deletion process that occurred on the Surface Pro on 7 September 2015 (see [6(f)]; [32]-[46] of Mr Khoury's report of 31 January 2017); and that the SDELETE secure deletion application was not used to delete any content from a "TTA" folder on that day (see [6(g)]); [21]-[30] of that same report), again Mr Carson did not examine those questions and could not agree or disagree with Mr Khoury's conclusions. The "explanations" given by Mr Gage as to deletions 1. In his defence, Mr Gage asserts (at [65]) that the deletion of material from the Surface Pro was to maintain its confidentiality. As to the later deletion of files from PC05, the explanation that Mr Gage gave in his affidavit of 18 November 2016 for this was, in essence, that: he had delivered up a number of his personal computing devices to his lawyers on 9 September 2015; he was aware that he would not have access to any of those devices for at least 4 weeks; the only other device of which he could have sole use was PC05; he had not undertaken any optimisation to remove junk files and applications and to free up disk space on that computer between "around September 2013" and 9 September 2015; and that, as he expected he would he using PC05 as his main computer for the following weeks, on 11 September 2015 he installed two applications "to delete redundant files on the NEWTON and DARWIN devices" (those being the CCleaner and Recuva applications) and he ran those applications on 12 September 2015 as he was aware that there were a large number of files on PC05 that had been deleted using the basic deletion method or that he was no longer using and "cookies, temporary files, web browser history, cached internet files, registry files and various other unusued data" that were consuming the operating system's disk space (see [96]-[99] of his affidavit). Mirus' contentions as to the deletions Submissions as to coding 1. The submission put for Mirus in relation to the deletion of the coding information is, in summary, as follows. 2. First, that the files of Mirus' coding information were removed from its control on 6 August 2015, first being downloaded to Mr Gage's personal Google Drive account. As a result of Mr Gage's admitted deliberate destruction of files on his personal Google Drive account, Mirus says it is not possible for it to know "what, if any, modifications or use of those files as they were stored on the Google Drive" has occurred at any time since 17 August 2015 (T 65). 3. Second, Mirus says that, on 13 or 14 August 2015, Mr Gage moved that data onto his Surface Pro and that on 7 September 2015, he used the SDELETE function, specifically targeted at that data, to delete it after (and because) he knew about the commencement of these proceedings (T 65). Mirus says that one of the inferences to be drawn from the activity in relation to the Ozcare Financials file is that, by 25 August 2015, Mr Gage had focused on what conclusions would be drawn about the content of his personal Google Drive account should it be produced for inspection and that he was seeking to create a false impression of what the facts were concerning the document "Ozcare Financials" (see T 58). 4. Third, Mirus argues that Mr Gage moved that data from his personal Google Drive account to PC05 on 30 August 2015 and destroyed all record of it on PC05 by the running of Recuva at 11.46pm on 11 September 2015 (PC05 being a device that was not examined as at 11 September 2015) (see T 65). The installation and running of the CCleaner and Recuva applications on PC05 occurred late in the evening of the day that PC04 and the Surface Pro were delivered up for examination by Mirus' forensic expert; and after Mr Gage had attended at his lawyers' offices during that process and had been party to the conversation with Ms Stuckey-Clarke referred to earlier. Mirus says that an inference should be drawn, from the Stuckey-Clarke conversation to which Mr Gage was a party in the afternoon of 11 September 2015, that he then came to understand how focussed the forensic examination would be – hence the process undertaken by him later that evening. Mirus argues that the use of CCleaner combined with Recuva is significant because the only relevant purpose of Recuva is "to shred everything to do with the file" so that one can never recover anything to do with it (T 62). 5. By reference to [83(a)] of the defence, Mirus argues that the reason that CCleaner and Recuva were not run on PC04 (which, unlike PC05, was delivered up for inspection on 11 September 2015) is that Mr Gage had deleted all of the relevant files from his personal Google Drive account before the interlocutory injunction was granted on 8 September 2015 and believed that, by so doing, that would flow through to all devices which were set to synchronise with his personal Google Drive account. Since Mr Gage in his defence says it was by "oversight" that the personal laptop (PC04) had not synchronised, Mirus argues that it should be inferred that when Mr Gage produced the PC04 device for inspection on 11 September 2015 he thought there would be nothing on it. 6. Mirus says that it is also clear that, whatever the date of the Google Drive image that was found on PC04, it does not reflect any of the changes that were made on the Surface Pro (the reason being that the Surface Pro was not synchronising with Mr Gage's personal Google Drive account), but rather, the data was "downloaded to the Surface Pro on 13 August and then was manipulated on the Surface Pro until it was deleted from the Surface Pro on 7 September 2015" (T 63-64). Thus, Mirus' position is that it suffers a forensic disadvantage in that it knows that whatever was on Mr Gage's personal Google Drive account in the "Mirus Stuff" folder on 30 August 2015 was downloaded to PC05 on that date but it has no idea what that was or what was done with it between 30 August 2015 and when the Recuva program was run on 11 September 2015 "shredding everything" on PC05 (T 64). 7. As already noted, Mirus accepts that a full synchronisation could not have occurred on 8 September 2015 (which was the last time PC04 was connected to Mr Gage's personal Google drive account) and therefore that it cannot be concluded that the Mirus related files present in the PC04 local Google Drive cache were deleted from the Google Drive cloud storage service between 9.30pm on 8 September 2015 and 4.24pm on 11 September 2015 as Mr Khoury had originally thought. That said, Mr Khoury adheres to the opinion that an analysis of PC04 identifies that Mirus-related files were present within PC04's local Google Drive cache folder, the majority of which were not present onMr Gage's personal Google Drive account as at 4.24pm on 11 September 2015. 8. Mirus also points to Mr Khoury's conclusion that, for the "Mirus Stuff" and "NickSi" folders to have synchronised to PC04 on 17 August 2015, those folders would have to have resided in the first instance in Mr Gage's Mirus Google Drive account and that, based on the current and historical absence of any references to these folders in Mr Gage's Mirus Google Drive account or Mr Gage's Mirus Australia computer (namely, PC01), those folders never existed in Mr Gage's Mirus Google Drive account (see [106], Mr Khoury's 31 January 2017 report). Submissions as to the Mirus CRM database 1. As to the Mirus CRM database, Mirus says that Mr Gage attempted to manipulate those files. Mirus submits that it is clear from the description of each script that has been run that Mr Gage was seeking to extract data from the Mirus CRM database to put into a form that he might then use. It says that by 14 August 2015, Mr Gage had established a client relationship database and created an export of data about clients from the new Aged Care HQ client relationship database (see [23] of Mr Khoury's 20 July 2017 report). Reference is made in that regard to certain email communications between Mr Gage and Mr Wilson in relation to the "crm" capsule on 14 August 2015 (see annexure A to the affidavit of Mr Covino sworn 2 August 2016). 2. Counsel for Mr Gage, however, submits that what can be drawn from the evidence as to the contacts CSV files is that, rather than there being a targeted attempt to export the details of particular individuals, this appears to be an attempt globally to export the details of every single record identified (T 97). 3. Mirus points to Mr Gage's explanation in his defence (at [65]) that he was seeking only to extract non-confidential information from the material but says that this cannot now be tested because he has deleted all this material from his Surface Pro. Mirus has not been able to discern what, if anything, Mr Gage did with the contents of the Mirus CRM database on his Surface Pro laptop but it has been able to identify from some metadata left on the Surface Pro that a shared database was created from that material, to which shared database Mr Wilson was able to gain access – he having been provided with log-in credentials. The contempt motion 1. Turning then to the respective motions, the first I will deal with (and the more difficult to determine, for reasons that will shortly become apparent) is the contempt motion. 2. Mirus seeks a declaration that Mr Gage was in contempt of this Court by engaging in conduct in the circumstances described in charges 1 and 2 of the amended statement of charge and an order that he be committed to imprisonment or otherwise punished, fined and/or dealt with for such contempt. 3. In accordance with the ordinary procedure on a contempt charge, the question of guilt is to be determined as an initial matter, with a separate hearing on penalty occurring only if a finding of guilt is made (see Mead v Mead [2007] HCA 25; (2007) 235 ALR 197 at [3]). Charges of contempt in the present case 1. The two charges of contempt that remain pressed by Mirus are as follows: Charge 1 1. On 7 September 2015 the first defendant destroyed electronic files and data relating to those files: (a) for a purpose, which was a material purpose, of preventing some or all of those files and data being produced pursuant to an order of this Court and available for use as evidence in these proceedings; and further or in the alternative; (b) in circumstances where that destruction had an inherent tendency to interfere with the administration of justice. Particulars a. At about 3.00pm [sic] on 7 September 2015, Justice Hallen of this Honourable Court made orders for short service. b. At about 12.32pm on 7 September 2015 the plaintiff's summons (Summons), notice of motion and supporting affidavits were served on the first defendant by service on his then solicitor, Allens Linklaters. c. At the time of service Allens Linklaters had been instructed by the first defendant to accept service on his behalf. d. From shortly after 12.32pm on 7 September 2015 the first defendant was aware that the plaintiff sought an order that he deliver up all computers and other electronic storage devices containing or which did contain the Confidential information and the Intellectual Property of the plaintiff, as those terms were defined in the Summons. e. Between 6.33pm and 7.19 pm on 7 September 2015, the first defendant securely deleted the files listed at Annexure A from his Surface Pro Laptop together with data relating to the access to and use of those files. f. The files listed at Annexure A include Confidential information and the Intellectual Property of the plaintiff, as those terms were defined in the Summons. g. The files, and any data relating to the access and use of those files referred to in particular e. were potentially relevant to issues in these proceedings being: (i) whether the defendants, prior to commencement of the proceedings, were intending to engage in, or engaging in, a business which was competitive with the plaintiff's business; (ii) whether the first defendant had used or disclosed the plaintiff's Confidential Information and Intellectual Property or any of it; and (iii) whether by reason of the conduct of the first defendant the confidentiality of the plaintiff's Confidential Information and Intellectual Property or any of it had been destroyed or otherwise lost. h. The first defendant made the deletions referred to in particular e. knowing of each of the matters referred to in particular g. Charge 2 2. Between 29 August 2015 and 11 September 2015 the first defendant destroyed electronic files and data relating to those files: (a) for a purpose, which was a material purpose, of preventing some or all of those files and data being produced pursuant to an order of this Court and available for use as evidence in these proceedings; and further or in the alternative; (b) in circumstances where that destruction had an inherent tendency to interfere with the administration of justice. Particulars a. Until a time not known to the Plaintiff but not earlier than 30 August 2015 the first defendant stored numerous electronic files being the plaintiff's Confidential information and Intellectual Property on his Google drive cloud storage. b. The files referred to in the preceding paragraph were stored in two electronic folders created by the first defendant entitled "Mirus Stuff" and "NickSi". c. NickSi was a folder which the first defendant shared with the second defendant. d. At some time before 4.23pm on 11 September 2015 the first defendant caused or permitted the folders "Mirus Stuff" and "NickSi" and the files and data contained in those folders to be deleted from a device which synchronised with his Google drive cloud storage. e. At some time between 29 August 2015 and 4.23 pm on 11 September 2015, the first defendant caused or permitted the device referred to in particular d. to synchronise with his Google drive cloud storage so that the folders, files and data referred to in particular d were deleted from the Google drive cloud storage. f. At the time of the conduct referred to in the preceding paragraph the first defendant believed and intended that that conduct would result in deletion of the folders "Mirus Stuff" and "NickSi" and all of their contents from his Google drive cloud storage and each of his synchronised devices. g. At the time of the conduct referred to in particular e. the first defendant believed that that conduct would result in the folders "Mirus Stuff" and "NickSi" and all of their contents being deleted so that they would not be required to be produced pursuant to orders of this Court. h. The devices upon which the folders "Mirus Stuff" and "NickSi" were stored, and the content of the files within those folders as stored on each of those devices were potentially relevant to issues in these proceedings being: (i) whether the defendants, prior to commencement of the proceedings, were intending to engage in, or engaging in, a business which was competitive with the plaintiff's business; (ii) whether the first defendant had used or disclosed the plaintiff's Confidential information and Intellectual Property or any of it; and (iii) whether by reason of the conduct of the first defendant the confidentiality of the plaintiff's Confidential information and Intellectual Property or any of it had been destroyed or otherwise lost. i. The first defendant engaged in the conduct referred to at particular e. knowing each of the matters referred to in particular h. [Annexure A is not here reproduced] 1. In summary, charge 1 concerns what have been referred to above as the Surface Pro deletions; charge 2, the cloud storage deletions. 2. Mirus contends that the conduct in both charges 1 and 2 constitutes contempt because the conduct charged was an attempt to pervert the administration of justice, noting that that offence has been recognised as a form of contempt under another name (see Meissner v R (1994) 184 CLR 132 at 156 (Dawson J)). 3. Mirus emphasises in relation to both charges that Mr Gage is a skilled IT professional and that, shortly after his employment with Mirus finished, Mr Gage was looking at how he might establish a customer relationship database and had discussions with Mr Wilson as to this (from which it submits it can be inferred that Mr Gage had the purpose of making some use from the material downloaded/copied). Mirus says that findings of contempt in this case are appropriate because the conduct constituting the abuses of the Court's processes was so flagrant in its execution and extensive in its effect. General principles 1. It is common ground that the two charges of contempt that are pressed are charges of criminal contempt. Thus it is not necessary here to do more than note the traditional distinction between civil and criminal contempt, which was described in general terms in Witham v Holloway (1995) 183 CLR 525; [1995] HCA 3 (at 530) as being that: … a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either where there is a contempt in the face of the court or there is an interference with the course of justice. and also to note that, although it has been subject to criticism, the distinction between civil and criminal contempt has not been abolished (Australian Securities and Investments Commission v Sigalla (No 4) (2011) 80 NSWLR 113; [2011] NSWSC 62 at [76]). In New South Wales, the distinction is recognised by statute, such that particular appellate consequences flow from classification (see Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 at [21] (Kirby J); [132] (Hayne, Heydon and Crennan JJ)). 1. Criminal contempt involves interference with the administration of justice. The precise elements of criminal contempt vary with the nature of the contempt alleged. The law is typically expounded by reference to general categories of behaviour, though such categories are not closed. Those categories include contempt in the face of the court ("such as speaking insulting words to a judge in the discharge of his or her office, making affray or other disturbance that disrupts the business of the court, refusing to be sworn to give evidence or refusing to answer questions, interfering with witnesses, seeking to coerce or improperly influence a judge, publishing material that may interfere with a fair trial, and assisting a party to breach a court's order" – see Sigalla (No 4) at [8]) and contumacious disobedience to the court's order that exhibits defiance of the court. 2. The burden of proof rests upon the party alleging contempt of court (i.e., Mirus) to establish the charges and the parties have proceeded on the basis that each element of the charge must be proved beyond reasonable doubt (see Witham v Holloway at 534 (Brennan, Deane, Toohey, Gaudron JJ); 535 (McHugh J); though see the observations of White J (as his Honour then was) in Sigalla (No 4) at [13] and [93] as to the impact of the introduction of the Evidence Act 1995 (NSW) on the onus of proof in civil proceedings). 3. There are a number of procedural requirements to be satisfied on the hearing of a contempt charge, including that the charge be distinctly stated (see Lane v Registrar of the Supreme Court of New South Wales (Equity Division) (1981) 148 CLR 245; [1981] HCA 35 at [8]). Thus Mirus will be held to that precise formulation of the charge (see Lane at [8]). So, for example, in Construction, Forestry, Mining & Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 Lee and Finn JJ said (at [32]) that "[u]nless and until an application is allowed to alter a particularised statement of charge, the accused is entitled to insist that he or she is only required to meet the charge as made". (See also Australian Building Construction Employees and Builders Labourers Federation v Minister of State for Industrial Relations (1982) 43 ALR 189 at 206-7 per Evatt and Deane JJ and the summary of principles set out by the Full Court of the Federal Court in Inghams Enterprises Pty Ltd v Timania Pty Ltd (2005) 221 ALR 823; [2005] FCAFC 155 at [32].) 4. While proceedings for contempt "are not attended by all the procedural incidents of a criminal trial" (Farahbakht v Midas Australia Pty Ltd [2006] NSWSC 1322 at [14] (Brereton J), citing Witham v Holloway; Kirkpatrick v Kotsis [2004] NSWSC 1248 at [5]; and Athens v Randwick City Council (2005) 64 NSWLR 58; [2005] NSWCA 317), some of the safeguards applicable to criminal proceedings also apply to a civil proceeding for criminal contempt (see Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375; [2015] HCA 21 at [67] (Nettle J)). In particular, an accused contemnor has a right to silence and a privilege against self-incrimination (recognised, in obiter, in British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524; [2002] VSCA 197 at [174]). 5. As to the drawing of inferences adverse to the accused contemnor where (as is the case here) he or she chooses not to give evidence, in RPS v R (2000) 199 CLR 620; [2000] HCA 3, Gaudron ACJ, Gummow, Kirby and Hayne JJ said (at [27]-[28]): … it will seldom, if ever, be reasonable to conclude that an accused in a criminal trial would be expected to give evidence. The most that can be said in criminal matters is that there are some cases in which evidence (or an explanation) contradicting an apparently damning inference to be drawn from proven facts could come only from the accused. [my emphasis] In the absence of such evidence or explanation, the jury may more readily draw the conclusion which the prosecution seeks. As was said in Weissensteiner v The Queen: '[I]n a criminal trial, hypotheses consistent with innocence may cease to be rational or reasonable in the absence of evidence to support them when that evidence, if it exists at all, must be within the knowledge of the accused.' (emphasis added) In a criminal trial, not only is an accused person not bound to give evidence, it is for the prosecution to prove its case beyond reasonable doubt. The observations by the Court in Jones v Dunkel must not be applied in criminal cases without taking account of those considerations. [my emphasis] 1. The proposition that in proceedings for contempt of court, where the criminal standard of proof applies, there is no or little scope for a Jones v Dunkel inference ((1959) 101 CLR 298; [1959] HCA 8]) to be drawn has been affirmed in a number of cases (see Azzopardi v R (2001) 205 CLR 50; [2001] HCA 25 at [61]-[73]; Jones v Australian Competition and Consumer Commission (2010) 189 FCR 390; [2010] FCAFC 136 at [34]) (Keane CJ, Dowsett and Reeves JJ); Sigalla (No 4) at [152] (White J); Young v Smith [2016] NSWSC 1051 at [64] (Rothman J)); it being left only to cases where there are extraordinary circumstances such as those involved in Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65. 2. The present case is not one of contempt in the face of the court nor is there any allegation of contumacious disobedience with a court order. Rather, the present case is one in which the alleged contempt falls more closely within the description given in Lane of an interference with the due administration of justice. The essence of such an offence was there described by their Honours as being "action or inaction amounting to an interference with, or obstruction to, or having a tendency to interfere with or obstruct the due administration of justice, using that term in a broad sense" (Lane at 257). At 258, in Lane, their Honours said: It was submitted on behalf of the respondent that conduct otherwise lawful can amount to a contempt of court if done with a particular intention. That is correct, but the intention must be to do something likely to interfere with the course of justice. … [W]e shall use the word "intention" to cover motive as well. An intention to interfere with the administration of justice is not necessary to constitute contempt; the critical question is whether the act is likely to have that effect, but the intention with which the act was done is relevant and sometimes important. … A lawful act may constitute a contempt if done with the intention of interfering with the course of justice, but will not become a contempt simply because it was done to achieve some purpose or further some interest of the person doing it. [footnotes omitted] [my emphasis] 1. Some controversy has attended the identification of the requisite mens rea for criminal contempt. In Farahbakht, a case concerning an alleged interference with a witness prior to a trial, Brereton J reviewed the authorities (at [32]-[37]) and concluded (at [38]) that it was sufficient for the court to be satisfied that "the acts of the alleged contemnor were intentional and were calculated to interfere with the course of justice" (see also Anderson v Hassett [2007] NSWSC 1310 at [5] (Brereton J).) 2. In the present case, for Mr Gage it is emphasised (and I accept) that the mere fact that the conduct may have the effect of interfering with the course of justice is not sufficient; it is necessary that there be the necessary intention on his part to do something likely or calculated to interfere with the course of justice. Relevance as to timing of the deletions the subject of charge 2 1. There is a debate, of particular relevance in the present case in relation to charge 2, as to whether it is possible to commit contempt of court (as opposed, say, to the offence of attempting to pervert the course of justice), by conduct of the kind in which Mr Gage allegedly engaged, if the impugned conduct occurred prior to the commencement of proceedings (hence the significance of the detailed chronology of events set out earlier in these reasons). I propose to address that legal question before turning to the elements of the particular charges in the present case. 2. In James v Robinson (1963) 109 CLR 593 the High Court held that a publication which might otherwise have amounted to criminal contempt was not punishable as a contempt because at the time of publication there were no proceedings commenced in any court. There, Kitto, Taylor, Menzies and Owen JJ said the following (at 607): … the kind of contempt we are here considering cannot occur save where some proceedings have been commenced. If a publication is to constitute contempt at all it must be a contempt at the time it is made, and the person aggrieved must be aggrieved in his capacity of a party to proceedings; therefore he must be a party at that time. It would be an astonishing state of affairs if a person responsible for a publication were to be held guilty or not guilty of contempt according as proceedings should or should not be commenced thereafter. [my emphasis] 1. The conduct in that case involved the publication of articles in a newspaper that gave an account of two killings by a "wild gunman", clearly identifying an individual as the gunman and including photographs, at a time when the gunman was still at large and had not been arrested or charged. In considering whether publication of those articles could amount to contempt of court, the majority (Kitto, Taylor, Menzies, Owen JJ) said (at 602): Interference with the due administration of justice is of the essence of all contempts of court but, where the contempt consists of interference with the administration of justice generally different considerations apply from those which apply in a case where what has been said or done has only a tendency to interfere with the fair trial of a particular case. Scandalizing the court is typical of the former species and we are disposed to think that Attorney-General v. Butterworth [1963] 1 Q.B. 696] is an instance of this sort of contempt for, although to punish a witness for giving evidence in a case which has been decided would not interfere with the administration of justice in that case, such conduct would by discouraging witnesses tend to interfere with the due administration of justice in other cases. It is only with the narrower kind of contempt that we are concerned here. As was said by the Supreme Court of New South Wales in Attorney-General v. Mirror Newspapers Ltd. [[1962] S.R. (N.S.W.) 421; (1961) 79 W.N. 56] no doubt having in mind the observations of Lord Hewart C.J. in R. v. Daily Mirror; Ex parte Smith [[1927] 1 K.B. 845, at p. 847], "The phrase contempt of court as applied to the facts of this case is a little misleading. It does not refer to a contemptuous attitude to the court itself but to the mischief created by a publication tending to prejudice the position of an accused person or of the Crown in its role of prosecutor" [[1962] S.R. (N.S.W.), at p. 423; (1961) 79 W.N., at p. 57]. And since the gravamen of the offence of contempt by means of such publications is prejudice to the fair trial of issues between "parties in causes" (to use Lord Hardwicke's expression in the St. James Evening Post Case [(1742) 2 Atk. 469 [26 E.R. 683]] it has been said in innumerable cases that there is no contempt unless proceedings are pending. (my emphasis) 1. The majority held (at 607) that "in order to constitute contempt of court [a publication] must … be concerned with proceedings which are pending in a court", rejecting the suggestion that it would be sufficient if proceedings were "imminent". James v Robinson has not been followed in England and Wales (Attorney-General v News Group Newspapers PLC [1989] 1 QB 110; Watkins LJ, Mann LJ agreeing; see also Attorney-General v Sport Newspapers Ltd [1991] 1 WLR 1194, where Bingham LJ followed Attorney-General v News Group Newspapers PLC). Nor has it been followed in New Zealand (see Television New Zealand Ltd v Solicitor-General [1989] 1 NZLR 1). 2. A key distinction drawn in James v Robinson is between conduct that interferes with the administration of justice in a particular case (where, at least in relation to criminal proceedings, proceedings must be pending for contempt to apply) (the 'narrower' category of contempt) and interference with the administration of justice generally (where it is clear that contempt can occur whether or not particular proceedings are pending) (the 'broader' category of contempt). It can be difficult to determine into which category particular conduct falls. In particular, the destruction of documents prior to the commencement of proceedings does not neatly fall within the categories of conduct involved in the authorities which have previously considered this issue. It is also not clear to what extent the restriction in James v Robinson of the narrower category of contempt to pending proceedings should apply to civil as well as criminal proceedings. 3. As noted above, James v Robinson itself involved the publication of allegedly prejudicial material prior to the commencement of criminal proceedings, where it has been said that the mischief is not a contemptuous attitude to the court but prejudice to an accused person. 4. On the other hand, cases said to involve an "interference with the administration of justice generally" (the broader concept of contempt) have tended to involve interference with actual or prospective witnesses, parties or jurors, something which (unsurprisingly) is considered likely to dissuade people from participating in legal proceedings generally. 5. So, for example, in Attorney-General v Butterworth [1963] 1 QB 696 (considered by the majority in James v Robinson to be an instance of the broader category of contempt), a witness was victimised after proceedings had concluded. The Court of Appeal rejected the contention that contempt in such cases was limited to cases that were still "pending". Pearson LJ (at 728) said "such victimisation, because it tends to deter persons from giving evidence as witnesses in future proceedings, and giving that evidence frankly and fully and without fear of consequences, is an interference with the due administration of justice as a continuing process." Lord Denning MR (Pearson LJ agreeing) similarly said (at 719) "If this sort of thing could be done in a single case with impunity, the news of it would soon get round. Witnesses in other cases would be unwilling to come forward to give evidence, or, if they did come forward, they would hesitate to speak the truth, for fear of the consequences." Donovan LJ (at 723) said: The question to be decided here, as in all cases of alleged contempt of court, is whether the action complained of is calculated to interfere with the proper administration of justice. There is more than one way of so interfering. The authority of the court may be lowered by scurrilous abuse. Its effectiveness to do justice may be diminished or destroyed in a pending case by frightening intended witnesses from the witness box. After giving evidence a witness may be punished for having done so, thereby deterring potential witnesses in future cases from risking a like vengeance. I see no such difference between any of these three methods as makes the first two contempt of court, and the third not. Each is calculated to do the same thing, namely, to interfere with the proper administration of the law in courts of justice. 1. In Commercial Bank of Australia v Preston [1981] 2 NSWLR 554 Hunt J, as his Honour then was, considered whether it could be contempt of court for a prospective plaintiff in threatened proceedings to publish a pamphlet which was either intended or calculated to inhibit the prospective defendant in defending those proceedings. In considering the application of James v Robinson, his Honour said (at 565): I am satisfied that a threat made to or interference with a party to threatened litigation which is either intended to or … calculated to inhibit him in commencing, continuing or defending that litigation is within the wider or more general kind of contempt of court in relation to which the actual pendency of the proceedings is irrelevant. 1. Later, his Honour said (at 567): If the publisher's intention in publishing the pre-judgment is to inhibit a party to those threatened proceedings in commencing, continuing or defending them, or if the prejudice from the publication of the prejudgment is such that it is calculated to have that effect, then there would in my opinion be a prima facie case (in the sense used in the authorities) of contempt of court in the wider sense as I have discussed it in relation to the plaintiff's second ground of complaint. Otherwise, it would seem that the publication of a prejudicial pre-judgment of the issues or of the merits of proceedings amounts to a contempt only because it has a tendency to interfere with the fair trial of the particular case and—in accordance with the principles laid down by the High Court in relation to criminal proceedings in James v Robinson (1963) 109 CLR 593, and despite academic criticism of those principles—there can in those circumstances be a contempt only where the proceedings are at least pending. 1. In The Prothonotary v Collins (1985) 2 NSWLR 549, the Court of Appeal (Kirby P, McHugh JA; Mahoney JA dissenting) held that there was no contempt of court when an individual handed out pamphlets outside a court complex to jurors and potential jurors containing allegations of widespread corrupt police practice of "verballing" because it was not established that the conduct was likely to interfere with particular pending proceedings. 2. In relation to whether the conduct could amount to an interference with the administration of justice as a continuing process, McHugh JA, as his Honour then was, said: [T]he instant case does not fall into any of the established categories of interference with the administration of justice as a continuing process. The best known of these are scandalizing the courts of justice (R v Dunbabin; Ex parte Williams (1935) 53 CLR 434); interfering with witnesses after trial (Attorney-General v Butterworth [1963] 1 QB 696); interference with jurors or potential jurors (R v Lovelady; Ex parte Attorney-General [1982] WAR 65); interference with officers of the court (Re Barnes (1968) 87 WN (Pt 1) (NSW) 479; [1968] NSWR 697); and the publication of a jury's deliberations in some circumstances (Attorney General v New Statesman and Nation Publishing Co Ltd [1981] QB 1). I do not think that in any relevant sense the distribution of the pamphlet to a juror or potential juror, without anything else, is an interference with that person as a juror or potential juror. If the person is not engaged or likely to be empanelled in a trial where the subject matter of the pamphlet is in issue, his position is no different from any ordinary member of the public. The handing of the pamphlet to him can have no effect on the administration of justice when there is no evidence that the matters contained in the pamphlet are the subject of pending proceedings with which he is likely to be concerned. Time and again the courts have said that there can be no contempt unless proceedings are pending: see James v Robinson (1963) 109 CLR 593 at 602-607. Cases of interference with the administration of justice as a continuing process are no doubt an exception to this rule. Their rationale is different from publications which interfere with particular proceedings. They rest on the need to protect the courts and the whole administration of justice from conduct which seeks to undermine the authority of the courts and their capacity to function. But the present pamphlet does not fall within that rationale. It seeks to influence the outcome of specific issues which from time to time arise in criminal proceedings. Absent a connection with a trial or trials where one or more of those issues are pending the simple distribution of the pamphlet, even to jurors, does not in my opinion constitute a contempt (my emphasis) 1. Kirby P, as his Honour then was, did not decide this point, while Mahoney JA (dissenting) considered (at 556E) it was sufficient if there was "interference with the course of justice not because of what [the conduct] does or is apt to do in relation to a particular trial, but because of the effect which it has generally in relation to the course of justice as administered in a particular court", thus treating the case as falling within the wider category of contempt. 2. In X v Amalgamated Television Services Pty Ltd (No 2) (1987) 9 NSWLR 575, the Court of Appeal considered whether it could amount to a contempt of court to broadcast information concerning alleged conduct of a medical practitioner of a criminal nature where the practitioner was the subject of a complaint before a statutory disciplinary tribunal but not subject to any criminal proceedings. The main focus of the three separate judgments was on whether or not the law of contempt could apply to administrative proceedings of this nature, the conclusion being that they could not. 3. Mahoney JA noted (obiter) (at 605F), in relation to the application of James v Robinson: Conventionally, contempts have been divided into at least three kinds: scandalising of the court and the like; abusing the parties who are to be litigants; and prejudicing the fair trial of proceedings before the court: see Attorney-General v Times Newspapers Ltd [1974] AC 273 at 294-295 per Lord Reid. What is here in question is the third of these kinds of contempt. 1. His Honour's obiter comments (at 605G-607) appear to support the application of James v Robinson being confined to criminal proceedings, with his Honour considering that in civil cases some point must also be chosen before which contempt is not applicable. His Honour noted (at 605G) that the House of Lords in Attorney-General v Times Newspapers Ltd [1974] AC 273 (a civil case) held that the order restraining the publications in question should apply to "actions pending" and also those "imminent". Kirby P (obiter) was there "prepared to assume that the binding principle in James is limited to cases where proceedings are pending upon criminal charges" although his Honour did so "without any conviction that the High Court intended such a limitation" (at 582D). His Honour went on to note (at 582G) that: … James was concerned with a not atypical situation of newspaper reporting prior to arrest. It was written before the effects of the great proliferation of administrative tribunals was fully felt. That proliferation poses new problems for the due administration of justice in a society such as ours. In these circumstances, principles established to protect the integrity of criminal trials may not be apt for borrowing in terms, without reconsideration of their application, to the multitude of new tribunals established, such as the Investigating Committee and the Disciplinary Tribunal. 1. Samuels JA noted (at 596G) that insofar as the alleged contempt was of the "conventional kind" based on the publication having a tendency to interfere with the due course of justice in a pending case, the argument failed because no proceedings were pending (applying James v Robinson). As to whether the alleged contempt involved impermissible pressure upon litigants to civil proceedings by public statement or discussion (as per Preston), his Honour held (at 596G-597A) that the principle was inapplicable because there were no relevant "civil proceedings". 2. More recently in Tate v Duncan-Strelec [2014] NSWSC 1125 where material condemnatory of a successful plaintiff had been published on a website by the unsuccessful defendant after proceedings had concluded, Bergin CJ in Eq, having considered (at [105]-[139]) the authorities as to whether reprisals against a party to proceedings (as opposed to a witness who was not also a party) after the proceedings had concluded could amount to contempt and found that they could, said (at [140]): If parties, or witnesses, who bring or are brought into proceedings before Courts, whether voluntarily or by compulsion, are exposed to attack, victimisation or reprisals because they took part in or were successful in the proceedings, the erosion of confidence in and thus the integrity of the institution [of the independent judiciary] is likely. I am satisfied that the reach of the law of contempt extends to protect the administration of justice from such erosion even if the litigation in respect of which the attack, victimisation or reprisal occurs has concluded. 1. Cases involving the destruction of documents do not readily fall within the same category of conduct as either those involving the publications of potentially prejudicial material or interference with participants in proceedings of the kind considered above. 2. In British Steel Corporation v Granada Television Ltd [1981] AC 1096, Granada received leaked information belonging to British Steel Corporation. Before returning that information when demanded, Granada destroyed references in the documents to the source of the information in order to protect that source. In the course of his judgment in the Court of Appeal, Lord Denning MR said (at 1127) (obiter): I must say that I regard this tampering with the documents as a most serious matter. These documents were the property of the British Steel Corporation – beyond all question. They were the very subject of a pending action by the corporation against Granada. They were the most important evidence in the case. To destroy them – or any part of them – is just as bad as the obstruction of a witness. Just as it is a contempt of court to obstruct oral evidence – by preventing a witness from attending the hearing – see Rex v. Hall (1776) 2 Wm. Bl. 1110 so also it is a contempt of court to obstruct documentary evidence – by destroying or defacing a piece of paper- which is of importance in a pending action. 1. In Registrar of the Supreme Court, Equity Division v McPherson [1980] 1 NSWLR 688 the Court of Appeal considered the destruction of documents in anticipation of a subpoena being issued. There, again, proceedings were already on foot. Moffit P and Hope JA were careful to limit their observations to such proceeding in the light of James v Robinson saying (at [29]): Some mention finally is necessary of the submission that contempt was not open to be found in a case such as the present, where a document was destroyed before any subpoena covering it had been issued. It was argued that, if the position were not so, owners of documents would be uncertain whether they were at risk of an action for contempt in destroying their own documents. The argument is inclined to confuse an action for criminal contempt with that of proceedings for civil contempt. In the latter case, there has to be in existence at the relevant time an order (which in the case of a subpoena is an order, of course, of the Court) to produce the document, which order continues unless set aside. Civil contempt is a procedure for the enforcement of an existing order. It is not so in the case of criminal contempt. Provided the necessary elements are made out there are no policy limitations in the law of criminal contempt, except that the contempt must be found in relation to particular proceedings. A limitation, at least in respect of some classes of contempt, is that there must have been proceedings commenced: James v Robinson. In the case of interference with a witness, or with the evidence to be given by him, there is no limitation, as a matter of policy or in principle, which requires that, before contempt can be found, the person must have been then subpoenaed to give evidence. If the requisite knowledge and purpose in doing the relevant act exists, we see no reason why the destruction of a document to prevent it having to be produced in pending proceedings, any more than the intimidation of the owner of a document in relation to the production of it in pending proceedings, or the intimidation of a person in relation to his giving evidence in pending proceedings, should not be found to be contempt, simply because no subpoena had then been issued. [footnote omitted] 1. Glass JA went further, saying (at [55]): There was little resistance from counsel for the defendant to the submission that the case against [the first defendant] satisfied the requirements of principle as expressed in these general terms. But much argument fastened upon the undoubted circumstance that the document was suppressed before any subpoena requiring its production had issued. There is no doubt that, at the moment when [the first defendant] destroyed his [typed memorandum], no subpoena had been issued which in terms required its production in Court by anyone. The prosecution relies on the facts that proceedings were pending in which the document would be relevant; that a "creeping barrage" of subpoenas was being directed at PPL; that the latest had narrowly missed the document, and that the issue of a further subpoena which would catch it was known by [the first defendant] to be a distinct possibility. The defence relies on the fact that no subpoena directed to the document had issued; that there is no authority which holds that the destruction of a document amounts to contempt of court unless the subpoena has already issued and the defendant has either been served or notified of the issue, and that to convict the defendant in those circumstances would involve an extension of the law and the creation of a new crime. I cannot agree that the conviction of [the first defendant] of contempt under this charge, given the findings made, would in any way extend the boundaries of contempt by means of a judicial change in the law. It would involve no more than a conclusion of fact that [the first defendant's] conduct in destroying a document known by him to contain information relevant to proceedings due to commence in four days, and likely to be subject to a future subpoena to be issued in those proceedings, satisfied the requirements of the established criterion, both as to actus reus and mens rea. This is the conclusion to which I have come. (my emphasis) 1. This aspect of the decision was not the subject of an appeal to the High Court (Lane), and there is some dicta (at 257-258) to support it. 2. As to other matters in which complaint as to destruction or suppression of documents has arisen, I note the following. 3. In Raymond v Honey [1983] 1 AC 1, the House of Lords upheld the finding of contempt against a prison governor in circumstances where he had intercepted and stopped a prisoner's application to the High Court. In that application, the prisoner was seeking leave to apply for an order of committal against the governor for contempt in relation to his interception of letters from the prisoner to his solicitor. Lord Wilberforce (at 10) (Lord Elwyn-Jones, Lord Russell of Killowen, Lord Lowry and Lord Bridge of Harwich agreeing) noted that it was undisputed in the case that "any act done which is calculated to obstruct or interfere with the due course of justice, or the lawful process of the courts, is a contempt of court" (citing Reg v Gray [1900] 12 QB 36 at 40). His Lordship (at 12-13) found that there was power in the relevant statute to make regulations to displacing a prisoner's right of unimpeded access to a court and, therefore, "[t]he action of the appellant was clearly such as to deny, albeit temporarily, the respondent's right of access to the court and … constituted a contempt." 4. In Cowell, which in a number of respects is the closest to the present case, the Victorian Court of Appeal (Phillips, Batt and Buchanan JJA) noted the dearth of authority on whether acts before the commencement of proceedings could amount to contempt and said the following (at [173]-[175]): [I]t seems to us that there must be some balance struck between the right of any company to manage its own documents, whether by retaining them or destroying them, and the right of the litigant to have resort to the documents of the other side. The balance can be struck, we think, if it be accepted that the destruction of documents, before the commencement of litigation, may attract a sanction (other than the drawing of adverse inferences) if that conduct amounts to an attempt to pervert the course of justice or (if open) contempt of court, meaning criminal contempt (inasmuch as civil contempt comprises wilful disobedience of a court order and will ordinarily be irrelevant prior to the commencement of proceedings). Such a test seems to sit well with what has been said in the United States as well as what has been said in England. Whether contempt, even criminal contempt, is possible before any proceeding has been instituted need not be examined on this occasion. [my emphasis] … Accordingly, there being no authority directly in point, we consider that this court should state plainly that where one party alleges against the other the destruction of documents before the commencement of the proceeding to the prejudice of the party complaining, the criterion for the court's intervention (otherwise than by the drawing of adverse inferences, and particularly if the sanction sought is the striking out of the pleading) is whether that conduct of the other party amounted to an attempt to pervert the course of justice or, if open, contempt of court occurring before the litigation was on foot. [footnotes omitted] [my emphasis] 1. It should be noted that in that case it was not suggested that the conduct amounted to contempt of court nor was there any charge of attempting to pervert the course of justice. Rather, the Victorian Court of Appeal was considering whether a defence should be struck out in circumstances where documents had been destroyed in advance of reasonably anticipated proceedings. Their Honours expressly left open the question whether the conduct could have amounted to contempt. 2. Finally, I note two other cases in which the application of James v Robinson has been considered. 3. In Saunders v Federal Commissioner of Taxation (1988) 19 ATR 1289, Northrop J held that the Commissioner's use of its powers under s 263 of the Income Tax Assessment Act 1936 (Cth) could not amount to a contempt of court where the taxpayer had requested the referral of the Commissioner's decisions to the Federal Court but the referral had not yet occurred on the basis that there were no proceedings "pending" before the Federal Court and, applying James v Robinson, it was not possible to be in contempt in relation to contemplated proceedings. 4. In Dupas v Channel Seven Melbourne Pty Ltd [2012] VSC 486, the Victorian Supreme Court (Kyrou J, as his Honour then was) in obiter remarks (at [8]-[11]) distinguished James v Robinson in expressing the view that the Court's inherent jurisdiction was sufficiently broad to give effect to the fundamental public interest in ensuring a fair trial for an accused by restraining publication of material that has a real and substantial risk of prejudice to the fair trial of an accused. His Honour considered that that inherent jurisdiction was not constrained by the principles that define the commission of a contempt of court. The case involved the proposed broadcast of material said to prejudice the accused's right to a fair trial in circumstances where his appeal against conviction had been heard but a decision was pending. Conclusion from the above 1. The breadth of the finding in James v Robinson is unclear. In particular, it is not clear which types of contempt involve only a "tendency to interfere with the fair trial of a particular case" as against those involving "interference with the administration of justice generally". It is also not clear how closely James v Robinson should be confined to its facts – for example, whether it should be taken to apply only to criminal proceedings and/or to contempt involving the publication of potentially prejudicial material. 2. It could be said that the alleged conduct in the present case, in contrast to that involved in the publication of potentially prejudicial material, did (if proven) reflect a contemptuous attitude to the court insofar as or to the extent that its apparent purpose was to frustrate the ability of the court to obtain evidence relevant to anticipated proceedings. Further, it could be said that the need clearly to define and restrict the temporal scope of contempt in the publication cases arises (at least in part) from the need to balance the law of contempt with the countervailing public interest in freedom of expression, a consideration absent in the present case. 3. However, the comments made by McHugh JA in The Prothonotary v Collins appear to support a narrower view of contempts which interfere with the administration of justice as a continuing process. Also, while it has been said that interference with documents in this context is akin to obstructing a witness (see Lord Denning MR in British Steel), in my view it cannot be said that interfering with documents in a particular case is likely to have the same "chilling effect" on potential participants in proceedings generally. It is also, in my view, difficult to say that the destruction of documents is akin to cases of scandalising the court (a category of contempt where there is also no requirement that proceedings be pending). 4. While Raymond v Honey is authority for the proposition that obstructing access to the courts can amount to a contempt of court despite there being no case then pending, it is difficult to draw any broader principle from that case. The commentary in the current edition of Laws of Australia at [10.11.1250] (current as at 1 September 2014) suggests that a more orthodox ground of liability in such circumstances would be perverting or attempting to pervert the court of justice, citing Lowe N and Sufrin B, Borrie & Lowe: The Law of Contempt (3rd ed, Butt, 1996) at 448. Moreover, care must be taken in relying on English authorities, given that James v Robinson has not been followed in that jurisdiction. 5. I am not persuaded that destruction of documents prior to the commencement of anticipated proceedings necessarily involves a contempt in the broader sense considered in James v Robinson because I am not persuaded that such conduct interferes with the administration of justice as a continuing process (as opposed to interfering with justice in the particular case to which those documents are potentially of relevance). Accordingly, I consider that to find a contempt where the destruction of documents occurred prior to the commencement of anticipated proceedings would involve an extension of the law of contempt which it is not for me, in light of James v Robinson, to entertain. As will be seen, that conclusion is fatal to the second charge of contempt. Charge 1 (the Surface Pro deletions) Submissions 1. In relation to Charge 1, Mirus submits that Mr Gage ran the SDELETE application on his Surface Pro on the evening of 7 September 2015, knowing that Mirus' application for interlocutory relief was before the Court the following day, and says that this was calculated to interfere with the administration of justice by destroying evidence that Mr Gage knew was the subject of that motion. Mirus says that it had that tendency in that it destroyed Mirus' documents on his working laptop (the Surface Pro) and thereby destroyed the bulk of the evidence of his (or any) dealing with those documents on that laptop. 2. Mr Gage does not deny that he put certain information extracted from Mirus' CRM database onto his Surface Pro laptop shortly after leaving his employment nor that he subsequently deleted that material from the Surface Pro before that device was delivered up for inspection on 11 September 2015 (see defence at [65]). In his defence it is asserted that he put that information on his Surface Pro with the intention of extracting from it only the non-confidential information and that, when he failed to do this successfully, he deleted the information from his Surface Pro so as to maintain its confidentiality. 3. Mr Gage contends that Mirus has not proved beyond reasonable doubt that the Surface Pro deletions occurred on the evening of 7 September 2015 and that they were done by him for the material purpose of preventing the files from being available in the proceedings. It is contended for Mr Gage that in relation to the element of mens rea, what Mirus must prove beyond reasonable doubt is that his alleged acts were intentional and that they were calculated by him to interfere with the administration of justice (referring to Farahbakht). Determination as to charge 1 1. As to the first issue, the relevant actus reus, I am satisfied that Mirus has proved beyond reasonable doubt (by reference to the expert evidence of Mr Khoury) that the Surface Pro deletions occurred on 7 September 2015. 2. The analysis of the volume shadow copy of the Surface Pro as at 4 September 2015 shows the presence on that date of a considerable number of Mirus-related files. They had been deleted by 11 September 2015 when the Surface Pro was inspected. There is no room for doubt, on the expert evidence, that between 6.33pm and 7.19pm on 7 September 2015 the SDELETE function was run on the Surface Pro and that it specifically targeted a numbers of files which were identified on the Surface Pro by reference to Mirus. If the Mirus files had already been deleted by then, (i.e., in the period between 4 September 2015 when they were still on the Surface Pro and the commencement of proceedings on 7 September), there can have been no reason for Mr Gage to run the SDELETE application on 7 September 2015 specifically targeting those files. (To the extent that it be part of the actus reus that the documents deleted were documents potentially relevant to the litigation – and it was not clear to me from the submissions whether Mr Gage's position is that it is so necessary – I should note that I am also satisfied that the documents targeted by the SDELETE process were documents of potential relevance to the litigation, whether those documents would have supported or undermined Mirus' case.) 3. As to the requisite mens rea, there can be no reasonable doubt as to the conclusion that the deletions were intentional. As at the time the SDELETE operation was run, Mr Gage had been served with the initiating process commencing the present proceedings: he knew (and had known since 24 August 2015) that it was alleged that he was in possession of confidential information of Mirus; he knew from about 1pm that day precisely what was being alleged against him in that regard and he knew the relief that was being claimed (both interlocutory and final) in the proceedings; he knew that the matter was before the Court the following day and he had given instructions to his solicitors as to a proposal for the delivery up of certain of his electronic devices. He knew that he had downloaded onto the Surface Pro information which Mirus claimed was confidential to it (since the SDELETE function targeted Mirus information). 4. I accept that the inescapable inference is that when, between 6.33pm and 7.19pm that night, Mr Gage used SDELETE specifically to target Mirus-related files and information, he did so intentionally for the purpose of preventing that information being located on the computer the following day, when he knew that production of the Surface Pro was likely to be required. That he intended to delete the material can be inferred from the fact that he then made specific internet searches as to how to "restrict access to google drive specific devices" and how to delete activity logs of such deletions. The suggestion proffered in Mr Gage's defence (that he deleted the information in order to maintain the confidentiality of that information) is fanciful, given that the deletion occurred at a time after he had already been warned not to delete any such material and when he knew it was highly likely (not least because he had instructed his solicitors to proffer proposed minutes of orders in relation to devices of this kind) that he would have to produce the Surface Pro for inspection the following day. 5. The running of that program the very evening before it was likely that the Surface Pro would be required to be produced for inspection, and notwithstanding the very specific warning that had been given to him by Mirus as to the potential consequences of deletion of that material, is consistent only with an intention to prevent that material being made available in the context of the court proceedings then on foot. I have not, in reaching that conclusion, needed to rely upon, nor have I drawn, any adverse inference from the fact that Mr Gage did not go into the witness box to explain his actions. 6. Further, having regard to Mr Gage's admission (at [83(c)] of his defence) that it was by oversight that the deleted files remained on PC04 (due to the fact that it had, contrary to his expectations, failed to synchronise with his personal Google Drive account at the relevant time), I accept that it should be inferred that when Mr Gage produced the PC04 he did so mistakenly believing that, by his conduct, the files had already successfully been deleted and would not appear on that device. 7. I find that the contempt in charge 1 has been established beyond reasonable doubt. I note that in oral submissions it was accepted for Mr Gage that if, as articulated in the statement of charge, Mr Gage engaged in the activities which he did with the intention, or with the material purpose, of putting the documents he deleted beyond the reach of the Court or making them unavailable, then that in itself would be sufficient mens rea to constitute the charged contempt (T 113-114). I am satisfied that this has been established. Charge 2 (the cloud storage deletions) Submissions 1. As to charge 2, the period spanned by the charge covers time both before and after the commencement of the proceedings. 2. Mirus submits that the earliest date at which the cloud storage deletions could have occurred is 30 August 2015 and says that even if this (and not a later date) is the relevant date for assessing culpability for those deletions, Mr Gage must have known by that date that he was going to be in dispute with Mirus and that he was going to conduct that dispute on the basis that he did not not have any confidential information. Mirus points out that Mr Gage had received three letters of demand (dated 24, 26 and 28 August 2015) and had accessed Mirus' own internal Dropbox account on 28 August 2015 (the logical inference being, Mirus contends, that Mr Gage did so in order to ascertain what it knew about his actions or on what its complaint against him was based – since there is no other apparent reason for such conduct). 3. As at 3 September 2015, Mr Gage had also (incorrectly, as it subsequently transpired) denied, through his solicitors, that he was in possession of any Mirus confidential information. (That denial is extraordinary given that at that stage the files that were targeted by the SDELETE program must still have been present on the Surface Pro and having regard to the downloading of the coding to Mr Gage's personal Google Drive account and then to the Surface Pro. It is not necessary for present purposes to make any finding as to Mr Gage's knowledge of the falsity of that denial, though such a finding would have strengthened the conclusions I have reached as to the abuse of process that has occurred.) 4. By the time of service of the summons and the notice of motion, together with the affidavit of Mr Covino and the expert report, Mr Gage was aware not only that the Court might order him to deliver up his Surface Pro and PC04 (as acknowledged in his affidavit at [15]) but also that Mirus had obtained advice from a forensic expert and knew that he had downloaded the Mirus CRM database. Mirus argues that at this stage Mr Gage must have realised that the position that he had maintained through his solicitors (i.e., that he had no confidential information of Mirus) was untenable. 5. Mr Gage, in his affidavit of 18 November 2016, acknowledged (at [15]) that as at the afternoon of 7 September 2015 he had given consideration as to what devices might have contained confidential information that he might be required to deliver up to the Court (see [61], above) and yet, as noted earlier, he conducted internet searches designed to elicit information as to how to conceal evidence of his downloading/copying of the information (and, Mirus says, whatever was subsequently done with it). 6. It is submitted by Mirus that in those circumstances the cloud storage deletions, even if they occurred on 30 August 2015 and not after the actual commencement of the proceedings, were calculated by Mr Gage to interfere with the administration of justice by destroying evidence that he knew was relevant to proceedings that had been threatened and that he knew were imminent and which evidence he knew he might be required to produce in those proceedings. It is submitted that the destruction of those documents at that time had that tendency. Mirus argues that the conduct of Mr Gage on the evening of 11 September 2015 (after he had become aware that PC05 might have to be produced and after he was on notice of the forensic imaging process that had commenced that day) in running the CCleaner and Recuva programs is only sensibly explicable by a desire on Mr Gage's part to conceal evidence of what had occurred and to prevent that being put before the Court. It is submitted that the "innocent" explanation proffered in his defence for that conduct is wholly inconsistent with the nature of the internet searches that he ran on the evening of 11 September 2015. 7. Counsel for Mr Gage, however, argues that the Court cannot be satisfied beyond reasonable doubt that the cloud storage deletions occurred on or after the commencement of proceedings on 7 September 2015. Counsel for Mr Gage submits that there is a "very real likelihood" that the deletion happened before the commencement of proceedings (T 109.28). He argues for a finding that whatever information relating to Mirus was available on Mr Gage's Google Drive it was no longer available on a date "well before" 7 September 2015 and that, on the basis of such a finding, Mr Gage could only be found in contempt (for deleting documents before the commencement of proceedings) if the Court were to accept that such acts before the commencement of proceedings can amount to contempt as a matter of law. He submits that this case is within the narrower category of interference with, or a tendency to interfere with, the fair trial of a particular case, not with the administration of justice in general. 8. Mr Gage accepts that the offence of attempting to pervert the course of justice is in one sense "a form of contempt under another name" (Meissner at 156 ; R v Rogerson (1992) 174 CLR 268 at 303 per McHugh J) and that such an offence can be committed even in the absence of any extant judicial proceedings (Rogerson at 277 (Mason CJ)), but points out that the elements of that offence are different to those of the cognate offence of contempt and that no charge of perverting the course of justice has been brought. 9. Even if the charge of contempt is open with respect to conduct undertaken before the commencement of proceedings as a matter of law, Mr Gage argues that the Court cannot be satisfied beyond reasonable doubt (where the relevant proceedings which were the subject of Mr Gage's alleged purpose had not yet been commenced) that whatever occurred was done by Mr Gage with a material purpose of preventing some or all of those files from being produced to the Court and being available in the proceedings. It is submitted that the Court will also not be satisfied beyond reasonable doubt that Mr Gage's alleged acts were calculated by him to interfere with the administration of justice. Determination as to charge 2 1. I am not persuaded that Mirus has established beyond reasonable doubt that the cloud storage deletions occurred after the commencement of the proceedings on 7 September 2015. That is a consequence of the inability of the experts to pinpoint the date at which the last complete synchronisation between PC04 and Mr Gage's personal Google Drive account occurred (see [31] above). While I certainly could not make the finding urged upon me by Counsel for Mr Gage (that the cloud storage deletions were done "well before" the commencement of proceedings), and on the balance of probabilities I would have concluded that they occurred on or about 7 September 2015, when the Surface Pro deletions occurred, I am not persuaded beyond reasonable doubt that they (unlike the deletions made by the running of the SDELETE program on the Surface Pro) occurred on or after the commencement of proceedings 7 September 2015. 2. Accordingly, having regard to the conclusion I have drawn that this case falls more closely within the narrower category of contempt (namely, contempt in relation to the interference with justice in a particular case rather than with the administration of justice in general) and having regard to what was said in James v Robinson, I cannot find contempt as alleged in the second charge. 3. Had I been satisfied to the requisite standard of proof as to the actus reus, I would have had no doubt that the requisite mens rea was established for the reasons set out above in relation to the first charge. The strike-out motion 1. Turning then to the second motion brought by Mirus, this seeks an order pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) that certain paragraphs of Mr Gage's defence be struck out as an abuse of process of the Court (namely, [60]-[61]; [63]-[73]; [87]; [90]-[94]; [103]-[104]; [107] and [109], the content of which I consider in due course). Those paragraphs are identified by Mirus as being ones in which Mr Gage puts in issue questions to which the documents he has failed to produce were relevant, discoverable, and, it says, "in all likelihood significant". General principles 1. At the outset it may be noted that the ordinary civil standard of proof applies on Mirus' strike-out application and therefore (as Counsel for Mr Gage accepted) that the same difficulty in drawing an adverse inference from Mr Gage's silence does not necessarily arise. (I say "not necessarily" because the criminal contempt charges would in my opinion provide a reasonable explanation for the fact that Mr Gage chose not to give evidence on the strike-out motion that was heard at the same time.) 2. As to the cases relied upon in the context of the strike-out motion, four decisions (Clark v State of New South Wales (2006) 66 NSWLR 640; [2006] NSWSC 673; Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264; Palavi v Queensland Newspapers Pty Ltd (2012) 84 NSWLR 523; [2012] NSWCA 182; Clark v State of New South Wales [2012] NSWCA 139) are of particular relevance and the parties were broadly in agreement as to the principles to be drawn from them. 3. In the first of those decisions (Clark) the material in question (namely, a cassette and compact disc) was destroyed at a time when the proceedings had been adjourned to permit technical analysis of the tape recordings to be undertaken. Johnson J said (at [103]) that if the conduct of the destroying party may be characterised as an abuse of process, then the power of the court to stay or dismiss proceedings may be utilised in an appropriate case but emphasised that this power is to be exercised sparingly. At [104], his Honour said: Ordinarily, a party is entitled to initiate and continue proceedings with the court determining those proceedings on their merits. Where, however, a party to proceedings intentionally destroys material which is significant to the determination of the proceedings, and such destruction occurs after the proceedings have been commenced, then a clear foundation would appear to exist for the court to call in aid its power to stay or dismiss the proceedings. The court will have in mind the interests of the individual parties to the civil proceedings, but also the protection of the administration of justice and the integrity of the courts and the system of justice generally. Resolution of an application for a stay or dismissal of the proceedings will consider the question whether a fair trial may take place in the absence of the destroyed material even where an appropriate inference may be drawn adverse to the destroying party. 1. The decision of the Court of Appeal on the appeal from his Honour's decision did not overturn the statements of principle there expressed. 2. In the Palavi v Radio 2UE case, the destruction of the documents in question occurred after proceedings had commenced. Allsop P, as his Honour then was, said at [93] that the "deliberate destruction of discoverable material in knowing defiance of discovery obligations that produces the real risk of impairment to the case of the other side may lead to restrictions on what points litigants can run or to the striking out of all or parts of their claims". His Honour also referred (at [93]) to the duty under the legislative regime imposed by ss 56-60 of the Civil Procedure Act (2005) NSW on those using the courts "to act responsibly, honestly and to further the just, quick and cheap resolution of proceedings". His Honour concluded ([94]) that: Here, the fairness of the trial was put in jeopardy by the deliberate and abusive destruction of evidence central to the case rendering further proceedings unsatisfactory in that they would be unfair and unjust to the respondent. The fairness of the trial and whether it has been put at risk require an evaluation of the potential consequence of the abusive conduct and all the other circumstances. The extent of the evaluation depends on the circumstances. The trial has to be fair to both parties and the order must be just to both parties. [Footnotes omitted.] 1. In Palavi v Queensland, the issue arose where the destruction had occurred prior to the commencement of proceedings. There, Basten JA said (at [84]-[85]): At least in the case of deliberate conduct intended to pervert the course of a fair trial, to engage the power to stay proceedings permanently or to strike out a pleading (or proceedings) it is sufficient that the conduct create a real and substantial risk of achieving that effect. The effect is not to be presumed, but neither is the plaintiff to reap the benefit of uncertainty created by absence of the destroyed material. Although it may be more difficult to carry out the necessary evaluations, both of intent and tendency, in respect of conduct occurring before proceedings have commenced, the question will only arise after proceedings have commenced. Accordingly, the dicta in Cowell which suggest that such a test may be difficult to apply should be understood as referring to the evidential basis from which the relevant intention is to be inferred. The objective tendency of the conduct can be ascertained by reference to the circumstances of the proceedings which, ex hypothesi, must have commenced. Indeed, even the objective tendency must be capable of evaluation absent particular proceedings, as is necessary with respect to the crime of attempted perversion of the course of justice. Mason CJ explained in Rogerson at 278: The necessity of proving that an act has a tendency to pervert the course of justice by frustrating or deflecting a possible criminal prosecution and that the act was intended to have that effect does not require evidence that a prosecution for a particular or identifiable offence was in contemplation either by the accused or by investigating officers. 1. The reference to the difficulty of carrying out an evaluation of intent and tendency in relation to conduct before the commencement of proceedings was a reference to what was said in Cowell. There, at [172], their Honours said: The judge here was disposed to accept a 'fair trial' as constituting the relevant criterion, but when documents are destroyed before the commencement of a proceeding, that test is less than helpful. After all, what is a 'fair trial'? According to the defendant, there is a fair trial if, according to the rules of court and the obligations of the parties to the court, the court adjudicates upon the documents put in evidence and the oral testimony of the witnesses during the hearing. Of course what is a 'fair trial' must inform any test which is adopted, but it cannot stand in place of one." 1. In Cowell, their Honours went on to state (at [175]) that: Accordingly, there being no authority directly in point, we consider that this court should state plainly that where one party alleges against the other the destruction of documents before the commencement of the proceeding to the prejudice of the party complaining, the criterion for the court's intervention (otherwise than by the drawing of adverse inferences, and particularly if the sanction sought is the striking out of the pleading) is whether that conduct of the other party amounted to an attempt to pervert the course of justice or, if open, contempt of court occurring before the litigation was on foot. We say nothing about the drawing of adverse inferences because that is not raised for consideration on this appeal. Nor ... do we express any opinion at all on whether the conduct which was under challenge in this instance, and which the defendant sought to justify by reference to its document retention policy, did or did not amount to an attempt to pervert the course of justice. That it did was not the case raised and considered below and so for the purpose of this appeal it must be taken that at first instance the court was not entitled to impose any sanction on that ground. More particularly it must follow too, contrary to his Honour's conclusion, that the destruction of documents by the defendant in March-April 1998, and before, was not shown to be in breach of any rules relating to discovery in this proceeding. 1. I also note that in Fuji Xerox Australia Pty Ltd v Lee [2003] QSC 303, the defendant brought an application seeking that the plaintiff's claim be struck out or dismissed as an abuse of process or stayed permanently. These orders were sought on the alleged basis that the plaintiff destroyed critical evidence (namely, a printer) for the purpose of preventing the defendant's expert from examining that evidence and thereby deprived the defendant from establishing his counter-claim. The defendant contended that such conduct amounted to a perversion of the course of justice and/or contempt of court. Chesterman J accepted (at [8]) the submission that "if it be shown that the photocopier was destroyed in order to deprive [the defendant] of critical evidence and prevent him advancing a good arguable the [sic] case the court would intervene" but that the particular order "to achieve that end would depend on the circumstances". His Honour found (at [42]) that there was evidence that the photocopier was not destroyed for the alleged purpose, and that in any case there was some evidence that an inspection of it would not produce anything of relevance. 2. In Palavi v Queensland, Beazley JA, as her Honour then was, said (at [29]), referring to Allsop P's remarks in the 2UE case: Although Allsop P's remarks were made in the context of a failure to comply with discovery (see especially the last sentence at [94]), they incorporate the truism that fairness of proceedings is an essential integer of the administration of justice. How fairness operates in a given case depends upon all the circumstances. Its operation where a case is on foot is different from its operation where proceedings are not on foot but are in contemplation. The central tenet is that the court has ultimate control of its processes. The circumstances and manner in which it will exercise the control will depend upon the court's application of the principles that have been developed to govern the particular circumstance of the case. 1. At [55] her Honour said: As is apparent from the principles discussed, the governing rule is that in respect of relevant evidence that is destroyed prior to the commencement of proceedings, proof that the impugned conduct constituted, relevant to this case, an attempt to pervert the course of justice, may attract a sanction. The sanction to be imposed is then a matter for the exercise of judicial discretion. The sanctions range from the drawing of an adverse inference to striking out the claim, the latter sanction being one to be imposed sparingly in an appropriate case. 1. In Arrow Nominees Inc v Blackledge [2000] EWCA Civ 200, Chadwick LJ said (at [55]): Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money; and with a proper regard to the demands of other litigants upon the finite resources of the court. The court does not do justice to the other parties to the proceedings in question if it allows its process to be abused so that the real point in issue becomes subordinated to an investigation into the effect which the admittedly fraudulent conduct of one party in connection with the process of litigation has had on the fairness of the trial itself. Mirus' submissions as to the Surface Pro deletions and the PC05 deletions 1. Mirus accepts that what it must establish first is that the destroyed material was relevant and in all likelihood significant (Palavi v Radio 2UE at [77]); second, that discoverable material was deliberately destroyed (Palavi v Radio 2UE at [95]); third, that the destruction was in knowing defiance of discovery obligations (Palavi v Radio 2UE at [95]); and, finally, that the destruction of this material produces a real risk of impairment to the case Mirus might run (Palavi v Radio 2UE at [95]). 2. Mirus points out that the Surface Pro deletions and the PC05 deletions occurred after Mr Gage knew that proceedings had been commenced by Mirus by way of an application that he be ordered to produce all devices containing Mirus' confidential information. It notes that relevance does not depend upon whose case the destroyed material might support. Thus, Mirus says that even if all the destroyed files showed was that Mr Gage had done no more than passively store the files in folders that would be relevant in that that might well support Mr Gage's case; on the other hand, each act of access or use or modification by Mr Gage, if there were any, would undermine Mr Gage's case. Mirus argues that it must be inferred that Mr Gage had a purpose in taking with him, on termination of his employment, the Mirus CRM database and the coding for all of its programs. 3. As to the Mirus CRM database, Mirus notes that an issue in the proceedings is whether the proposed Aged Care HQ business was a competing business and that the evidence shows that Mr Gage used something sourced from the Mirus CRM database to create a customer relationship database for Aged Care HQ, which was to be shared with Mr Wilson. Mirus says that what was on the shared database has been destroyed and that the detail of what Mr Gage did with the Mirus CRM database was relevant and in all likelihood significant to the case Mr Gage seeks to run "in particular to the market segment Aged Care HQ would service". 4. As to the computer coding, Mirus says that any use of or access to that coding by Mr Gage was relevant to the products that Aged Care HQ might provide and to threats to the confidentiality of that coding (and says that in all likelihood it would be central to those questions). 5. Further, insofar as there remains some metadata that suggests that Mirus information may have been moved from Mr Gage's devices to the cloud, Mirus says that whether that has been done is relevant, and in all likelihood central, to any inquiry as to damage done by loss of confidentiality in Mirus' confidential information. 6. As to the requirement that there be a deliberate destruction of the relevant material, Mirus points to Mr Gage's expertise as a computer information technology professional and programmer. It again points to the fact that Mr Gage knew, from about 1pm on 7 September 2015, that an application had been made for an order that he deliver up all relevant devices and expected such an order to be made (which one would infer from the short minutes his solicitors had prepared) and that it would include the Surface Pro. 7. Mirus says that Mr Gage must have known that the 3 September 2015 denial was false and that he knew from 8 September 2015 that he had caused his lawyers to misrepresent that he had consented to delivery up of all relevant devices, knowing that PC05 was a relevant device and it had not been proposed to be delivered up. Reliance is placed on the Ms Stuckey-Clarke conversation on 11 September 2015 ([22] above) in light of which it is said that Mr Gage's explanation in his affidavit for his deletion activities later that evening must be rejected; and that his intention was to destroy records against the contingency that delivery up of the server would ultimately be required. 8. Mirus notes that the deletions from the Surface Pro made by use of the SDELETE application were specifically targeted at each of the folders on the Surface Pro in which Mirus' information was located. As to the use of the CCIeaner and Recuva applications on 11 September 2015 on PC05 (after Mr Gage had researched the use of the programs and knew that CCIeaner and Recuva would destroy the files on PC05 so that they could not be forensically recovered) Mirus says that it is to be inferred that Mr Gage deliberately ran SDELETE on the Surface Pro and Recuva on PC05 in order to destroy the files and metadata that were thereby destroyed. 9. As to the requirement that the destruction be in knowing defiance of discovery obligations, Mirus points out that Mr Gage was informed that proceedings were imminent, and of his obligations to produce in those proceedings, by the letters from Mirus' solicitors on 24 August and 28 August 2015. The letter of 28 August 2015 expressly advised Mr Gage not to destroy, remove and/or tamper with documents and files in his possession that might be the subject of anticipated litigation. Mirus again points to the instructions that Mr Gage gave his solicitors concerning the production of computer devices on 3 September 2015. It is submitted that Mr Gage had the duty prescribed by s 56(3) of the Civil Procedure Act and cannot rely upon the consequences of his own misrepresentations in the conduct of the litigation to avoid the consequences of his behaviour. 10. Mirus relies on the fact that the first deletion activity from the Surface Pro occurred on the evening of the day that Mr Gage was informed that proceedings had been commenced on 7 September 2015 and that on the following day an injunction would be sought requiring delivery up of his devices containing Mirus' information. Mirus also points to the fact that, following his deletions from the Surface Pro on 8 September 2015, Mr Gage proposed short minutes of order for the production of devices which included the Surface Pro. Mirus argues that it is to be inferred that this was because he believed that he had succeeded in deleting all relevant information from it. 11. Further, Mirus notes that by the time of the PC05 deletions, Mr Gage had attended at the forensic imaging of his other devices and knew there was an injunction in place preventing the destruction of files that he then proceeded to destroy. Mirus submits that there is an inescapable inference that Mr Gage ran the CCIeaner and Recuva programs knowing that PC05 contained discoverable material that he was likely to be required to discover and that, by running those programs, he would destroy that material. 12. Finally, as to the requirement that the deletions produce a real risk of impairment to Mirus' case, Mirus argues the defendants' access to and use of the Mirus' documents is very likely to be the only real evidence touching on those matters; and that the denial of access to that material constitutes a substantial risk to Mirus' case. It says that the impugned paragraphs of the pleaded defence concern the conduct and intentions of Mr Gage (and Mr Wilson) in the privacy of their own business. Mirus' submissions as to the cloud storage deletions 1. As to the cloud storage deletions (as to which there is doubt as to whether those occurred after the proceedings were commenced on 7 September 2015), Mirus relies on the reasoning of Beazley JA (as her Honour then was) in Palavi v Queensland (at [54] to [56]). It argues that the relevant actus reus is one that has a tendency to deflect a party from adducing evidence of the true facts (such as destruction of relevant documents) and that the relevant mens rea is the intent to pervert the course of justice by denying to the Court knowledge of the true circumstances of the case. 2. Mirus notes again that, by 30 August 2015, Mr Gage had received Mirus' solicitors letters of 24 August 2015 and 28 August 2015 (the latter specifically referring to the requirement that Mr Gage not destroy or tamper with documents or files in his possession and of the risk of contempt of court being committed by his doing so). Mirus says that on 28 August 2015 Mr Gage "hacked" into Mirus' Dropbox account. It submits that the only inference open to be drawn from this is that this was done in order to assess the probability of Mirus making good its claims concerning his dealings with documents in the Dropbox account; and that this shows that Mr Gage was squarely focussed on the prospect of legal proceedings. 3. Mirus points out that Mr Gage downloaded Mirus' coding to PC05 (a device of which Mirus says it knew nothing until its forensic expert reported on connections between that device and other devices of Mr Gage) on 30 August 2015. Mirus says that Mr Gage avoided production of it in these proceedings until 28 April 2016 and says that it should be inferred that he downloaded the coding to PC05 on 30 August 2015 with the intention of putting it beyond the reach of the production of devices which, by 30 August 2015, he expected he would be required to produce. It is submitted that the later destruction of documents on PC05 (immediately following the forensic imaging of his other devices, including PC04 on 11 September 2015), does not detract from the inference as to Mr Gage's intention in downloading files on 30 August 2015; rather, that it strengthens the inference. It is submitted that, having had the opportunity to reflect upon the data that might have become available to Mirus from his other devices, Mr Gage well knew that the production of PC05 would ultimately come to be in issue. 4. In particular, Mirus refers to the series of changes made on 30 August 2015 by Mr Gage in respect of the confidential OzCare document (namely, "Ozcare Financials FY 2015.pdf"). It is said that Mr Gage had earlier provided Mr Wilson with access to this document through sharing of the folder "NickSi" on his personal Google Drive account. Mirus says that Mr Gage withdrew that access and instead placed it in a folder on his personal Google Drive account in order to make it falsely appear that his possession of it was by reason of a sharing between his Mirus Google Drive account (from a time when he was employed by Mirus) and his personal Google Drive account. Mirus submits that it should be inferred: that Mr Gage knew that he may be required to produce his personal Google Drive account on 30 August 2015; that on and from 30 August 2015 Mr Gage expected that he may be required in proceedings that were then imminent to produce his personal Google Drive account; and that the deletions made from his personal Google Drive account some time on that or a later day were made with the intention that that production did not result in production in court proceedings of Mirus' documents. 5. Mirus submits that the destruction of the documents on Mr Gage's personal Google Drive account had the tendency to pervert the administration of public justice because they constituted the real evidence of Mr Gage's dealing with Mirus' documents on any of his devices that synchronised with his personal Google Drive account (which did not include the Surface Pro) at least up until 30 August 2015; those dealings being material to the dispute articulated in Mirus' solicitor's letter of 28 August 2015. 6. Thus it is submitted that an attempt to pervert the course of justice is shown by any deletions occurring on or after 30 August 2015. 7. It is submitted that any one of the three episodes in which deletions occurred is sufficient for the impugned paragraphs of the pleading to be struck out and that this is a proportionate response to the "deliberate and large scale destruction of evidence" by Mr Gage. 8. Mirus argues that it has suffered prejudice by those deletions in that it has been denied the opportunity to undertake forensic examinations to seek to "trace" its confidential materials from Mr Gage's various devices. It says that, as a consequence, it is left with a risk to the security of its core business assets without any practical remedy. Second, it says that the only real evidence concerning the destruction or harm to confidentiality of Mirus' core assets was destroyed by Mr Gage. Mr Gage's submissions 1. For Mr Gage, it is accepted that where the Court is satisfied that a deliberate destruction of documents occurred, whether that be in breach of a discovery order that has been made or not, and where that constitutes an abuse of process in existing proceedings, then the Court's power to make consequent orders is enlivened. (That is the conclusion to which I have come.) 2. Insofar as Mirus complains that it is at a disadvantage (because of the deletions) in determining whether the defendants had made any modifications to the computer code in the deleted files, Mr Gage argues that it is mere speculation as to whether any such modifications were made to the code and of marginal relevance to the issues in the proceedings (since any such modified code was, on Mirus' case, deleted either before or shortly after the commencement of proceedings, when the Aged Care HQ business had been in existence for less than a month and, on the defendants' case, was not yet trading). Determination of the strike out motion 1. Insofar as the destruction of potential evidence occurred before the commencement of proceedings, what must be established, on the balance of probabilities, is that there has been an attempt to pervert the course of justice. In that regard, the level of satisfaction required is that set out in s 140 of the Evidence Act, although regard should be had to what was said (at 361-362) in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34: …when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. … it is enough that the affirmative of an allegations is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfactio nof the tribunal. 1. I am satisfied to that standard that the conduct of Mr Gage amounted to an abuse of process in that it was an attempt to pervert the course of justice. He was aware of the allegations made by Mirus and that the matter was to be before the Court for the delivery up of devices on which confidential information was or had been stored. He made a false denial as to his possession of confidential information and then clearly attempted to preclude discovery of the falsity of that denial. 2. I am satisfied that all of the instances of electronic deletions were deliberate and were made with full knowledge of the requirement by Mirus that Mr Gage take no steps to delete material of the kind that he deliberately deleted. He then sought to hide his tracks, so to speak, by running the Recuva program on PC05, after already having run SDELETE on the Surface Pro and CCleaner on PC05, and after the internet searches as previously described. His explanations for what he did are redolent of a consciousness of guilt. The material was clearly of potential relevance (even if it might have supported Mr Gage's own defence). It also in my opinion has real potential to prejudice Mirus in the conduct of its case, not least in its claim for loss and damage but also in its contention that what occurred in the 3 month restraint period was a breach of contract. While Mr Gage seeks to place weight on the fact that the relevant documents have not been destroyed and are not unavailable for use in the proceedings (in the sense that the documents still exist on PC04) what has been destroyed, and cannot now be delivered up or accessed on a forensic examination of the devices, is the material that would or potentially might have shown any manipulation of the information on those devices. 3. This is a clear case of abuse of process enlivening the power to strike-out parts of the defence. Appropriate relief 1. Mr Gage emphasises that what is required to be determined is whether, in light of his conduct, a fair trial will be possible (referring by way of example to Cowell at [145]-[156]). In that regard, in Arrow Nominees, Chadwick LJ said (at [55]): Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money; and with a proper regard to the demands of other litigants upon the finite resources of the court. The court does not do justice to the other parties to the proceedings in question if it allows its process to be abused so that the real point in issue becomes subordinated to an investigation into the effect which the admittedly fraudulent conduct of one party in connection with the process of litigation has had on the fairness of the trial itself. 1. In Moody Kiddell & Partners Pty Ltd v Arkell [2013] FCA 1066 at [26], where application was made to strike out an amended defence as an abuse of process (that abuse of process having been found to arise from the deliberate destruction of documents relevant to issues in dispute between the parties), Jagot J summarised the applicable principles, including that: (1) Non-compliance with an order for discovery enlivens the power to strike out the pleadings of a party (British American Tobacco at [178]). (2) The power to deny a person the right to rely on their pleading, in whole or part, is exceptional and to be exercised sparingly given the drastic nature of the remedy (Clark at [63] and [147]; see also Palavi at [93]-[95]). (3) The power exists not to punish the party in default but to ensure the proper administration of justice, in particular to ensure the capacity for a fair trial to be held (British American Tobacco at [178]). (4) The power exists whether or not the conduct of the party in default was blameworthy or delinquent (Clark at [86]), but the intention of the party in default is relevant both to a finding of abuse of process and to the drawing of inferences about the potential significance of the destroyed material to the issues in the case (Clark at [76]-[81]). (5) A fair trial does not mean one that is ideal or perfect as trials may be fair even if documents are missing (Clark at [64]). (6) The key consideration to the fairness of the trial in this context requires an assessment of the nature and extent of the prejudice to other parties by reason of the default (British American Tobacco at [178]). (7) The question of prejudice involves an assessment of the significance of the destroyed material to the proceeding even allowing for the capacity to draw adverse inferences against the party in default (Clark at [104]). (8) The remedy must be responsive and proportional to the prejudice of the non-defaulting parties (British American Tobacco at [188]). Judicial indignation at the affront to justice involved must not be given effect (Clark at [89]). 1. Counsel for Mr Gage submits (and I accept) that, even if I were to be of the view (as I am) that there will be some prejudice to Mirus by reason of the deletions, the remedy to be granted must be proportional to the prejudice suffered. He argues that what Mirus seeks is the wholesale striking out of many parts of Mr Gage's defence, many of which bear little or no relevance to the prejudice alleged to have been suffered by Mirus and that this would be disproportionate. 2. I agree that, though his conduct should not be condoned in any way, the response to Mr Gage's abuse of process must be proportionate to the prejudice that is likely to be suffered as a result of the relevant material. That requires a careful consideration of what the prejudice in question is or is likely to be, by reference to what Mirus is required to prove in order to establish the allegations it has made in the proceedings. 3. I have summarised the allegations made by Mirus against Mr Gage (see [33] above as to what it is alleged was copied), and his defence to those allegations, earlier in these reasons. In very broad terms, it is alleged that Mr Gage breached express and implied terms of his employment contract (both non-compete obligations and obligations in relation to confidential information) as well as an equitable obligation of confidence in relation to confidential information accessible by him during the course of employment; and that he also breached fiduciary and statutory duties owed to Mirus. Relevantly, the contractual obligations alleged to have been breached (leaving aside for present purposes the non-compete restraint) are the obligation to take all steps necessary to maintain the confidentiality of all the confidential information ([72]) and the obligation not to disclose it to any person other than as directed by Mirus and where required for the proper performance of his duties ([73]). 4. The conduct constituting the alleged breaches relates broadly to Mr Gage's activities in relation to the setting up of the proposed Aged Care HQ business and the alleged attempted solicitation of clients of Mirus ([61]) – relevant mainly, if not wholly, to the non-compete restraint – and the copying of Mirus confidential information and disclosure to Mr Wilson (by the sharing of access to particular files or folders so copied or downloaded) of the content of the Mirus CRM database ([62]-[71]) – relevant potentially to both the non-compete restraint and the maintenance of confidence/non-disclosure obligations. 5. That conduct (the storage of the copied files on electronic devices in his custody, possession and control ([84]), the alleged making of dishonest representations as to certain matters ([87] and [90]), the refusal to deliver up any of the confidential information ([91]), the alleged dishonest deletion of an email to prevent detection of the downloading of the Mirus CRM database ([92), being conduct alleged to have been engaged in by Mr Gage for his own benefit ([93]), and the conduct in copying the Mirus CRM database and giving access to Mr Wilson to the information in the "NickSi" folder (for his and Mr Wilson's own benefit – [65]-[66]; [94]) is relied upon for the allegation of breach of fiduciary obligations ([93]-[94]). Much of that conduct is also relied upon for the allegation of breach of statutory duties ([103-104]). 6. There is a broad allegation that the conduct of Mr Gage (and Mr Wilson) has caused Mirus loss and damage ([107]) but also allegations that it has caused a loss of revenue that would have been generated from a partnership ([108]) and has exposed Mirus to loss or damage to its business as a result of its clients being exposed to the risk of sanctions under the Aged Care Act 1997 (Cth) as a result of the disclosure of certain information to Mr Gage or Mr Wilson ([110]). 7. There is also an allegation that neither Mr Gage nor Mr Wilson would have been able to supply a product with certain specified functionality within a period of 4 years of termination of their employment without using the information downloaded; i.e., that the development by them of products with that functionality would have taken no less than 4 years ([111]). 8. The relief claimed includes damages, an account of profits, equitable compensation, statutory compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), permanent injunctions, orders for the delivery up and destruction of the confidential information, and a restraint for 4 years in respect of the use of products with the functionality specified. 9. The paragraphs of Mr Gage's defence that Mirus seeks to have struck out go to various issues: the alleged involvement of Mr Gage in a competing business during the restraint period ([60]-[61]); the copying/downloading of the material and its disclosure to Mr Wilson ([62]-[71]), miscellaneous allegations of dishonest conduct ([87], [90]-[92]); the conclusions that follow from some or all of that conduct ([72]-[73], [93]-[94]; [103]-[104]); and the loss or damage allegedly caused thereby ([107]; [109]). 10. The question to be addressed in relation to each of those parts of the pleading is how the deletion of the materials in question (and of the record of electronic activity in relation to those materials) has caused or is likely to cause Mirus prejudice, such that the striking out of the said paragraphs is a proportionate response to Mr Gage's conduct. 11. At the outset, I accept that what Mr Gage has deleted has prevented any sensible enquiry being made electronically as to what use (if any) was made of the confidential information that was downloaded by Mr Gage. There is some evidence that some of the data was "compiled" but not as to the result of that process. There is also evidence of attempts having been made to extract material from, for example, the Mirus CRM database, but the electronic attempt to download the whole of that material appears to have been unsuccessful and it is not clear what, if anything, Mr Gage may have otherwise done with the material downloaded. 12. For Mr Gage it seems to be accepted that, had the electronic deletions not occurred, the material on the relevant devices might have lead to one or more trains of inquiry as to the alleged breaches by Mr Gage (and/or Mr Wilson). However, emphasis is placed for Mr Gage on the fact that a copy of the downloaded material still exists on PC04 (by reference to which I gather it would be possible to compare what is now on the newly created Aged Care HQ database in order to draw whatever conclusions or inferences might be able to be drawn as to the genesis or development of the material on that database). Moreover, Mr Gage argues that deletion of the files from the electronic devices says nothing as to any communication between him and Mirus clients (or potential clients of the proposed new business) or as to the disclosure of Mirus confidential information to those clients. Counsel for Mr Gage emphasises that there is no evidence from the expert witness called by Mirus as to what examination of the deleted material might have shown in that regard. 13. The most obvious prejudice caused to Mirus by the electronic deletions seems to me to be the difficulty that the deletions pose as to its ability to establish allegations it has made as to the competing nature of the AgedCare HQ business as it was proposed at the relevant time; the use (if any) made in an electronic sense of the confidential information; and the loss or damage suffered as a result of Mr Gage's conduct. At the very least, the quantification of damage must now be far more difficult insofar as it is not clear precisely what use was made of the confidential information. 14. That said, insofar as the paragraphs to be struck out go to the consequences of the alleged conduct as opposed to the conduct itself (for example, that the conduct in question amounted to breach of fiduciary or statutory obligations owed by Mr Gage) or as to the actual quantification of loss or damage caused by the conduct, I have difficulty seeing how the deletion of the files/folders in question would cause such prejudice to Mirus in establishing its case that those paragraphs should be struck out. 15. With that in mind, I turn to the particular parts of the defence that Mirus seeks be struck out. Paragraphs [60] and [61] – the competing nature of the proposed AgedCare HQ business and Mr Gage's involvement in that business 1. Paragraph [60] of the defence responds to Mirus' allegation that the Aged Care HQ is a competing business within the meaning of the contracts of employment; [61] to the allegation that the defendants (here, relevantly, it is necessary only to consider the position of Mr Gage) acted in breach of the non-compete allegations by engaging in the conduct pleaded at (a)-(f) (in summary, carrying on, operating, being engaged with, being interested in and being employed by a competing business within the restraint period and (at (f)) attempting to solicit Mirus' clients within the restraint period. The particulars to [61] refer, among other things, to Aged Care HQ's Linkedin Page, website and twitter account. 2. Mr Gage denies the allegations in both paragraphs. At [60] of his defence, there is a broad denial followed by assertions as to what is a competing business within the meaning of the employment contract; as to the business activities that it is said Aged Care HQ intends to undertake; that none of those business activities are the same as, similar to or competitive with the business carried on by Mirus; and that Aged Care HQ has not at any stage during the restraint period carried on any relevant business activities. At [61] of the defence, there is another broad denial followed by a repetition of [60] and then various assertions as to what Aged Care HQ has or has not done (in effect responding to the particulars to [61] – to which, strictly, there is no need for Mr Gage to plead). 3. Mirus maintains that any access to any of Mirus' coding, and use of that coding for any purpose, would be directly material to an assessment of whether or not what Mr Gage was preparing to do was to compete by delivering the same or competitive products (the computer programs being the products). Further, it is submitted that precisely what Mr Gage did with the data in the Mirus CRM database (something that cannot now be ascertained) is directly relevant to the question whether or not this was to be a competing business because it would point to what Mr Gage was seeking to do in relation to the existing clients of Mirus. Thus Mirus presses for the striking out of [60] and [61] of the defence. 4. Counsel for Mr Gage says, in response to this, that it will not be in dispute that Mr Gage and Mr Wilson were operating the business of Aged Care HQ (to the extent that that business was operating at the relevant time) and that they were involved or engaged and interested in that business (though he notes that there may be a question as to whether they were formally employed or whether they were simply directors of the company) (see T 94). However, it is submitted for Mr Gage that the "bare" allegations at [61] of the statement of claim are not matters to which the documents which were deleted by Mr Gage are relevant in any real sense. 5. In particular, as to the allegation (at [61(f)]) (namely, that there was an attempt to solicit Mirus clients), while it is accepted for Mr Gage that, of the deleted documents, what is potentially relevant to that allegation is the Mirus CRM database, it is submitted that the deleted material does not go directly to the question whether or not there was an attempt to solicit clients within the relevant restraint period. Insofar as the prejudice identified by reference to the deletion of that material is said by Mirus to be that it is now not able to see whether Mr Gage made any changes to that database or whether he shared that database with anyone or moved it to another location, it is submitted for Mr Gage that an intention to solicit clients is not sufficient for this particular allegation; rather, what needs to be shown to make good the allegation at [61(f)] is an actual attempt to solicit one or more clients in the relevant period. It is submitted that none of the material destroyed is material evidencing an actual attempt at solicitation (such as an email or record of a telephone communication with a Mirus client) and there is no suggestion that any such communication has been destroyed. 6. Moreover, insofar as any new client database created by Mr Gage has not been destroyed (and Counsel for Mr Gage informed me that on his instructions the Aged Care HQ CRM is still located on a website or "on the cloud" and is accessible through a web address), it is submitted that that remains accessible to Mirus (say, by a request for access to that particular database) (see T 95 and 98). 7. Arguably, and Counsel for Mr Gage accepted this, if there had been evidence forensically available on Mr Gage's computer devices as to particular information from the Mirus CRM database that had been imported into a newly created Aged Care HQ database, that might at least have lead to a train of inquiry as to whether there had been an attempt to solicit clients whose details had been imported into the database, so that the deletion of that information might make it difficult or impossible to determine which (if any) clients Mr Gage might have thought it desirable to include in his new client relationship database. However, for Mr Gage it is argued that the import of Mr Khoury's evidence is that Mr Gage was attempting (ultimately unsuccessfully) to make a wholesale importation of data into the new Aged Care HQ database rather than the importation of specific individual client details. It is said that a large scale importation of all of the relevant clients' details would say little as to what Mr Gage's actual intention in relation to the clientele of the new business operation was to be (see T 98). However, there is sufficient basis for concern that the deletions by Mr Gage have deprived Mirus of potentially relevant information as to the then proposed operation of the new business such as to prejudice Mirus in its attempt to establish the allegations it makes as to the breach of the non-compete covenants. 8. In the course of oral argument on this issue, Counsel for Mirus accepted that the matters pleaded at [61](c), (d), (e), (f) and (g) of the defence (assertions by Mr Gage as to what was done with Aged Care HQ's website, LinkedIn account and Twitter account) might be seen as being in a different category to [60] of the defence and the chapeau to [61] as well as [61](a), (b) and (h) of the defence (see T 83). 9. As to the matter pleaded at [61(h)] of the defence (namely, that the defendants have not contacted any operators of aged care services since the termination of their employment with Mirus), Counsel for Mr Gage submits that this goes to the question of actual contact and that this is not an issue in respect of which the information which was deleted from Mr Gage's personal Google Drive account or from the Surface Pro is relevant or determinative. Again it is submitted that there is no suggestion that any record of an actual communication has been destroyed. 10. In my opinion, the issue as to whether the Aged Care HQ business is or was at the relevant time (i.e., during the restraint period) a competing business within the meaning of Mr Gage's employment contract is something that one would expect to be able to be determined by proof of what business activities it was engaged in, or preparing to engage in, or promoting, or preparing to promote, at the relevant time, including what steps were being taken in preparation for the launch of the business. For example, the new Aged Care HQ database would presumably shed some light on the proposed clientele and/or nature, of the business. Development of coding or programs for computer products or tools to be offered by the business would similarly shed light on that issue. 11. Deletion of the material (as manipulated or otherwise) after it was copied or downloaded from Mirus might be likely to assist but would not logically preclude a comparison, say, between the Mirus CRM database and the equivalent Aged Care HQ database, from which conclusions might be drawn as to the competing nature of the business. 12. Nor is it easy to see how evidence of what use, if any, was made to modify or adapt or copy Mirus programs would deprive Mirus of the ability to establish from the evidence of what was on the Aged Care HQ database or other Aged Care HQ programs, what it was that Aged Care HQ was proposing to do. 13. I accept that, having chosen deliberately to delete evidence that would have revealed what if any use or modification was made to the Mirus coding or programs, or from the Mirus CRM database, Mr Gage should not be permitted to deny that he made any use of the said coding or programs, but that is not what [60]-[61] of the defence in terms address. Similarly, insofar as any use/modification of Mirus information might itself be said to constitute engaging in a competing business, then Mr Gage should not be permitted to deny that (since he has by his conduct precluded Mirus' ability to establish that use/modification). Again, however, that is not what [60]-[61] of the defence directly address. 14. The broad denial by Mr Gage of [60] and [61] of the statement of claim must logically be qualified by his admission that he copied/downloaded material including Mirus confidential information. Such conduct cannot be denied and to the extent that such conduct establishes the allegations made at [60]-[61] then I accept he should not be permitted broadly to deny those allegations. However, to strike out the broad denials in those paragraphs of the defence would go beyond that which is necessary to address the prejudice which Mirus has suffered or is likely to suffer by reason of the deletions that occurred. Paragraphs [60-[61] of the defence must be re-pleaded to address that issue. 15. In my opinion, Mr Gage should not be permitted to deny the allegations that Aged Care HQ was a competing business or that, by copying or downloading or sharing access to the Mirus files or folders, he engaged or was involved in some way in a competing business, insofar as that denial is by reference to his subjective intention (or the stated intention appearing at [60(b)] of the defence) as to the business activities that Aged Care HQ intended to undertake at that relevant time, since a conclusion as to that intention may well have been informed by what, if anything, was done with the confidential material that Mr Gage downloaded but has since deleted and which is now unrecoverable. 16. Thus, while I would not strike out [60] of the defence altogether, I would strike out [60(b)] insofar as that is an assertion as to the stated intention of Mr Gage at the relevant time. Mr Gage should otherwise be permitted to put in issue the allegation that the Aged Care HQ business is a competing business within the meaning of Mr Gage's contract of employment since the question as to just what business activity, if any, was engaged in by the Aged Care HQ entity or the defendants in the relevant period can presumably be established by evidence other than simply the deleted material. 17. Similarly, as to [61], again, I have a difficulty with the broad denial in the chapeau to [61] insofar as Mr Gage cannot now be heard to deny that he engaged in conduct involving the downloading and use (the extent of which is unknown) of Mirus confidential information. That, as with [60], will require some decision in the drafting of an amended pleading to the allegation at [61]. Moreover, there will need to be a consequential amendment to deal with the striking out of [60(b)]. While, I would permit Mr Gage to put Mirus to proof of the allegations at [61(a)-(d) and (f)] of the statement of claim, to the extent that any use or modification of the confidential information would of itself be capable of amounting to engaging in a competing business (assuming the competitive nature of the business is otherwise established), then Mr Gage should not be permitted to deny that there was a use or modification of the material, having deliberately deleted the evidence of any such use or modification (or "manipulation" in the words used by Mirus). I would allow the denial at [61(e)] to stand, as that is a factual matter the proof of which is not necessarily dependent on reliance on any material that has been deleted from the computer devices. Similarly I would not strike-out the averments at [61(c)-(g)] of the defence as these appear to be factual assertions in respect of which whatever has been deleted from the computer devices would not be relevant. Paragraphs [63]-[71] – alleged breach of the confidential information obligations – allegations of copying/downloading information 1. Paragraphs [63]-[71] of the defence respond to allegations as to what Mr Gage did with Mirus' files. I have summarised those allegations earlier in these reasons. Mirus says that Mr Gage cannot put any of that in issue having destroyed all the evidence of what he did. Pausing there, acceptance of that proposition would not logically extend to the strike-out of any admissions contained in those paragraphs as to the copying of the material in question or as to any admissions as to the confidentiality of material in the copied or downloaded files, though no distinction has been drawn by Mirus in that regard. 2. As noted earlier, Mr Gage has, in his defence, admitted that he downloaded the information in question, though he says that he did it all on 6 August 2015 (see [63]). Nothing relevantly turns on the precise date on which Mr Gage downloaded all of the information in question (indeed an admission that it was all downloaded on 6 August 2015 looks rather worse for Mr Gage in the sense that it might be said to be unlikely that he would have had a legitimate basis on which to do so on the day before his employment terminated). In any event, Counsel for Mr Gage submits that this is not an issue which the deleted material can answer. I agree. Therefore, I would not strike out any of these paragraphs of the defence insofar as they contain denials as to the relevant dates of the downloading/copying or admissions as to when files were downloaded or copied. 3. In these paragraphs, Mr Gage variously goes on to admit, deny or not admit the confidentiality of the information in question (see for example [63(d)]). Since the question as to the confidential (or non-confidential) nature of the information that was downloaded or copied can be determined by reference to what was in fact downloaded or copied (not its subsequent use or modification) and that material remains accessible on PC04, there is no relevant prejudice suffered by the deletions that have occurred and hence I would not strike out those paragraphs of the defence in which Mr Gage puts in issue the confidentiality of the Mirus information that he admits having downloaded or copied. For similar reasons, there is no reason to strike out the admission at [64(b)] that Ozcare was a client of Mirus. 4. To the extent that the pleaded defence adopts the formulaic "otherwise denies", it is unclear in many instances what is left to be denied having regard to the admissions/non-admissions/denials or assertions preceding it. For example, the broad "otherwise denies" pleading at [64(h)] of the defence appears to operate such that there is a denial that files were copied to particular folders into the personal Google Drive account – which is in effect a denial of things having been done by Mr Gage the truth of which is now potentially unable to be the subject of forensic disproof. To avoid confusion I would strike out those "otherwise denies" closing sub-paragraphs (see for example [63(e)]). If something is to be denied then it should be clear from the pleading what that is. 5. The critical part of these paragraphs in which Mirus is potentially prejudiced by the deletions that have occurred is that part of the pleaded defence in which Mr Gage denies having accessed the information for any purpose other than his duties as an employee ([64(f)]) or having accessed it since the termination of his employment ([64(g)]) or having accessed it only in an attempt to extract non-confidential material and then having deleted it in order to "maintain confidentiality"(see [65(c)-(j)]. Mr Gage has deliberately deleted the electronic record of whatever was done to or with the downloaded/copied files and hence has made it difficult, if not impossible, for Mirus to test the assertions he has made in those and other paragraphs of his defence as to his use of purpose in having dowloaded the confidential material. 6. For that reason I would strike out the following paragraphs of the defence: [63(e)], [64(d)-(h)], [65(b)], [65(c)], [65(d)] (the words in the chapeau "in order to do so" and subparagraphs (v)-(vii)); [65(e)]; [65(f)] (the words "in order to maintain the confidentiality of the information"); [65(g)] (the words "and again attempted" through to the end of that sub-paragraph); [65(h)] (the words "in order to maintain the confidentiality of the information"), [65(i)-(j)], [66(c)-(e)] (insofar as they are intended, which may not be the case, to apply to Mr Gage's defence), [66(f)], [68(d)], [69(c)-(e)], [70(d)], and [71(d), (g)]. 7. Paragraph [67] of the defence is in a different category. This is an outright denial of Mirus' allegation that, by reason of the matters pleaded at [61]-[62] of the statement of claim, Mr Gage disclosed the contents of the CRM Capsule (the Mirus CRM database) to Mr Wilson. It is difficult to see any basis on which it can be denied that the sharing of access to the CRM database (by virtue of the shared access given to the "Mirus Stuff" and/or "NickSi" folders) occurred. It may be that there is an argument that the sharing of access to an electronic folder is not disclosure for the purpose of the relevant contractual obligations but if that is what is contended by the defence that has not here been made clear. At [67] of the defence the denial is accompanied by a repetition of the matters pleaded at [65] and [66] of the defence, some of which are to be struck out. 8. I consider that, having regard to the deletion of the electronic files and folders (the result of which is that Mirus cannot determine what if any electronic use of or modification to the folders has occurred), Mr Gage should not be permitted to deny that disclosure, in the sense of sharing of access to the database, occurred. (It will be a matter for Mr Wilson, and Mr Gage if relevant, to put in issue whether there was any actual access by Mr Wilson to the database and what consequences follow if there was no such access.) Hence I would strike out [67]. Paragraphs [72] and [73] – contractual breaches by reason of the copying/downloading 1. As to [72] of the defence, this responds to the allegation that Mr Gage failed to take all steps necessary to maintain the strict confidentiality of the confidential information, that failure alleged to have been constituted by the conduct pleaded at [62]-[71]). Counsel for Mr Gage argues that the copying "is abundantly evidenced" from the information on PC04 and the files remaining on PC04 and says that the allegation of breach does not go any further than that. 2. Pausing there, however, what is pleaded at [72] of the defence goes further than a mere denial of [72] of the statement of claim. Mr Gage goes on to answer this allegation by repeating his answers to [62]-[71] of the statement of claim (some of which as noted above should be struck out) and then asserts that he has not reviewed or used any of the information since the termination of his employment with Mirus and has not disclosed/provided any of the information to any other person since then. Those assertions cannot in my opinion be made in circumstances where the evidence of what, if anything, was done with the information has been deliberately deleted. Accordingly, at least that part of [72] should be struck out. 3. As to [73] of the defence, this responds to the allegation of breach of the obligation not to disclose the confidential information to any other person except, in certain circumstances, where required for proper performance of his duties. Mr Gage points out that it is not alleged that there was any use made of that information by Mr Gage or Mr Wilson. That, however, is not to the point in circumstances where what he is here denying is breach of an obligation not to disclose the information. 4. Counsel for Mr Gage submits that the information which has been deleted from the personal Google Drive account and from the Surface Pro does not have the "important evidential value" sought to be placed on it by Mirus with respect to the particular allegations of breach of confidentiality at [72] and [73], and submits that the question as to what use was made of the material is "only of very marginal relevance at best" to these particular pleadings (see T 104). 5. Counsel for Mr Gage argues that, as pleaded, the loss and damage is that suffered by a breach of confidentiality obligations where that breach is not with respect to how the material was used but simply with respect to the fact that Mr Gage copied/disclosed it and it is submitted that this would reduce the scope of any permissible loss or damage that might be able to be claimed. That may well be so but it does not answer the difficulty that Mirus now faces in proving the allegations of loss and damage as a result of such breach. 6. It is accepted by Counsel for Mr Gage that it may be open to Mirus to run a case along the lines that, because the information was taken, the confidentiality of the security of this software has been compromised and that this has resulted in some form of loss (whether that be measured by reference to the value of the business or, for example, Mirus had to take steps subsequently to address the question of security of its confidential information). However, he submits that the quantum of that loss and what that loss or damage is does not arise from anything that Mr Gage subsequently did with the particular material. It is submitted that this is largely admitted by Mr Gage and, to the extent that it is not admitted or there is any issue about that, it can be clearly identified by reference to the material which was ultimately found on PC04, which indicated what Mr Gage actually had done. 7. I am not persuaded that deletion of evidence of whatever use (if any) has been made of the files, and any record of activity in relation thereto, would not potentially be relevant to the issue as to whether there was a failure to maintain the confidence of the relevant material or to the issue as to whether there has been disclosure of the material in breach of the contractual obligations in question. One surely fails to maintain the confidentiality of information not only by downloading or copying it but also by making use of it with or disclosing it to third parties. And in any event there is no admission by Mr Gage that he breached these obligations even if the conduct were understood to be conduct limited to the dowloading or copying of the information. Accordingly, evidence of use of the material would potentially be of relevance to the issue of breach raised in these paragraphs of the statement of claim. 8. Moreover, I am not persuaded that any evidence of use would not potentially be relevant to the allegations of loss and damage. Extent of the use of the material (say by any compilation of the material into other material proposed for use in the Aged Care HQ business) might also be relevant to the ambit of the relief to be given; as might the question of disclosure of that information (particularly in light of the potential exposure to loss of business from clients as a consequence of any unauthorised access to or disclosure of the information). 9. As already noted, [72] makes positive averments about the lack of review or use of the material that cannot now be determined from a forensic analysis of the devices in light of the deletions. At the very least [72(a)-(c)] should be struck out since they repeat allegations elsewhere struck out and make allegations as to lack of use/disclosure that cannot forensically be tested in light of the deletions. I would not strike out the opening words of [72] on the basis that it should be open to Mr Gage to argue that the conduct he has admitted does not breach his contractual obligations to take all steps necessary to maintain the strict confidentiality of the confidential information. What he should not be permitted to do is to maintain the denial of breach by reference to assertions as to, among other things, his lack of use of the material and his asserted purpose in making the deletions (see [65]). 10. As to [73], again insofar as it calls in aid matters pleaded elsewhere in the defence that I have decided should be struck out, the incorporation of reference to those paragraphs should be struck out from [73] but it should be open to Mr Gage to argue that the conduct he has admitted or, to the extent he does not admit this, any established sharing of access to Mirus confidential files by providing Mr Wilson with log-in details for access to particular folders, nevertheless does not amount to a breach of the contractual obligation not to disclose confidential information to any person other than as directed by Mirus and where required for the proper perforamnce of his duties. Therefore I would not strike out the opening words of [73] of the defence but simply the repetition in that paragraph of parts of the defence to be struck out in accordance with these reasons. 11. In other words, Mr Gage should not be permitted to deny conduct where the deleted material might have shed light on that conduct and hence should not be permitted to maintain his denials of breach by reference to assertions as to, among other things, his lack of use of the material and his asserted purpose in making the deletions (see [65]). He can, however, argue that such conduct as is pleaded against him would not constitute a breach of the said contractual obligations. Paragraphs [87], [90]-[91], [92] – allegations of dishonest conduct 1. Paragraphs [87], [90]-[91] and [92] of the statement of claim make allegations of dishonest conduct on the part of Mr Gage or (in the case of [91]) of a refusal to deliver up any of Mirus' confidential information. 2. As to [87] of the defence, this responds to (and denies) the allegation that Mr Gage dishonestly represented to Mirus (between 27 July 2015 and 7 August 2015) that he had handed back all information referred to at [86] of the statement of claim (being all information including Confidential Information and Intellectual Property the subject of a request made by Mirus that this be handed back). Mr Gage admits the representation was made but denies that the representation was dishonest and "otherwise" denies the paragraph. 3. Mirus says that in circumstances where the evidence of the information in his possession other than the Google Drive has been destroyed he ought not be permitted to put that in issue (T 84). 4. Counsel for Mr Gage accepts that the allegation at [87], which relates to the time at which Mr Gage was still employed by Mirus, is relevant both to the breach of fiduciary claim ([93]) and the breach of statutory duty claim which ([104]) (T 105). 5. Paragraph [90] of the defence responds to the allegation that Mr Gage declined (by an unsigned letter received on 26 August 2015 by Mirus) to deliver up confidential information and dishonestly represented that he maintained absolute loyalty. Mr Gage admits sending the letter, denies that in that letter he declined to deliver up confidential information, admits he stated he had absolute respect and loyalty and denies that this statement was misleading or dishonest and "otherwise" denies the allegation. 6. Paragraph [91] of the defence responds to the allegation that Mr Gage refused to deliver up any of Mirus' confidential information (by reference to the 3 September letter from his lawyers). Mr Gage admits the letter was sent, denies the refusal to deliver up, admits the statement made by his solicitors in that letter that he had no confidential information or intellectual property belonging to Mirus in his possession now and "otherwise" denies the paragraph. 7. Finally, [92] responds to the allegation that Mr Gage, on 24 July 2015, dishonestly deleted an email from his Mirus email account "for the purpose of seeking to prevent Mirus Australia from detecting the Gage Capsule CRM Export" (that being a reference to the download of the Mirus CRM database). This is denied by Mr Gage with a repetition of [65(d)-(h)] of the defence (parts of which paragraphs are to be struck out in accordance with these reasons). 8. Counsel for Mr Gage submits that the question whether Mr Gage dishonestly represented that he had handed back all information, and whether or not he had dishonestly refused to deliver up confidential information which he knew he had in his possession, can be decided entirely on the basis of the documents that remain accessible (in particular, by reference to what remains on PC04) and the various admissions which Mr Gage has made throughout the course of the defence as to what he downloaded or copied on 6 August 2015 (T 105). It is submitted that the question whether Mr Gage then, during the period between 17 August and 8 or 11 September 2015, tried to use those particular files and tried either to download contacts or compile new software from those files is irrelevant to the particular allegations made in these paragraphs. 9. In effect, the conduct denied in these paragraphs appears now largely not to be in issue (other, perhaps, than the denial of deletion of the email the subject of the allegation at [92] and what is left to be denied by the formulaic inclusion of the "otherwise denies" sub-paragraphs). 10. Broadly speaking, what appears to be denied in these paragraphs is the allegation of dishonesty, i.e., that when certain statements or representations were made they were knowingly false or (in the case of [92] that the deletion was made dishonestly for a particular purpose). There may, however, be other aspects of the allegations that Mr Gage is seeking to put in issue (such as whether the denial by his solicitors that he was in possession of any confidential information amounted to a refusal to deliver up the information that it was there asserted he did not have – see [91]). 11. The position of Mirus seems to be that, having acted deliberately (as I have concluded Mr Gage did) in making the deletions, Mr Gage cannot now be heard to say that he was not dishonest in so doing. I am not persuaded that (other than [92]) these paragraphs should be struck out. Whether there was a dishonest representation that all relevant material had been handed back to Mirus; or a dishonest representation of loyalty to Mirus; or a refusal to hand back or deliver up confidential information, are matters to which potential evidence of use of the downloaded/copied material seems not likely to be relevant. 12. Paragraph [92] of the defence is in a different position since it goes to the issue whether Mr Gage deleted the email on 24 July 2015 dishonestly and for the pleaded purpose and he has in that paragraph repeated what is asserted as to his purpose in [65(d)-(h)]. Consistently with the ruling in relation to [65(d)-(h)], I would delete the reference to those paragraphs at [92] of the defence but would permit Mr Gage to put in issue whether the deletion was dishonest. Paragraphs [93]-[94] – breach of fiduciary obligations; paragraphs [103]-[104] - breach of statutory duties 1. These paragraphs can be considered together. 2. Paragraphs [93]-[94] of the statement of claim allege that in breach of his fiduciary obligations to Mirus, Mr Gage engaged in certain conduct (that specified at [62]-[65], [68]-[71], [84], [87], [90]-[92]) for Mr Gage's own benefit (see [93]) and engaged in certain of that conduct ([65]) and the conduct specified at [66] for both Mr Gage's and Mr Wilson's benefit (see [94]). 3. Mr Gage denies the allegation at [93], repeating [60]-[71], [83], [84], [87], [90], [91] and [92] of his defence; and denies the allegation at [94], repeating the matters pleaded at [60]-[71] of his defence. 4. Paragraphs [103]-[104] allege breach of the duty imposed by s 182 of the Corporations Act not improperly to use his position as an employee to obtain an advantage for himself or someone else. Various paragraphs of the statement of claim are pleaded as the conduct on which those allegations are based. Mr Gage has denied both those paragraphs, repeating his defence at [60]-[71] (and in the case of the allegation at [104] also repeating his pleaded defence at [87]). 5. Mirus emphasises that the allegation at [94] raises the issue as to the purpose that Mr Gage had in downloading the Mirus CRM database and sharing it with Mr Wilson, namely that it was for their personal benefit. Counsel for Mirus notes that it is alleged at [66] and [67] that Mr Gage shared the information by giving access to Mr Wilson to that information. He says that what Mirus can show from the documents that are available is that access was given to Mr Wilson to something; and it can invite the inference from the series of dealings that that something included data sourced from the Mirus CRM database; but says that without the documents that have been destroyed, Mirus is not able to point to particular data sourced from its CRM database to say that has been shared with Mr Wilson, nor is it able to engage with specifics in order to prove the allegation at [94]. 6. Counsel for Mirus points to [83]-[86] as part of the background to the allegation of loss and damage; and [93] as to the allegation that Mr Gage engaged in the conduct for the purpose of using the information downloaded by him for his own benefit or for the benefit of a third party and for the purpose of his being able, if and when he so chose, to use the information downloaded by him for his own benefit or for the benefit of a third part. He submits that the destroyed documents are squarely relevant as to whether each of those downloads was for the purposes alleged at [93]. A similar issue is said to arise with respect to [103]-[104], the breach of statutory duties. 7. Insofar as the allegations at [103]-[104] require a finding as to the purpose of the alleged conduct being for Mr Gage to obtain a benefit for himself or for someone else, I accept Mirus' submission that, in circumstances where any evidence of use cannot now be established by reference to the deleted electronic data, Mirus will be prejudiced in a real sense in establishing its allegations as to the purpose for which the conduct was undertaken. I would therefore strike out [103] and [104]. As to the denial of breach of fiduciary obligations, I would permit that to stand but would strike out the references at [93]-[94] of the defence to any paragraphs of the defence to be struck out in accordance with these reasons. Paragraphs [107]; [109] – Allegations of loss and damage 1. That brings me to the allegations of loss and damage. 2. Paragraph [107] of the defence responds to the broad allegation that Mirus has suffered loss and damage by reason of the matters aforesaid. Mr Gage denies breach of any statutory, legal or equitable obligations owed to Mirus, repeats [59]-[106] of his defence and denies that Mirus has suffered loss or damage. 3. Paragraph [109] of the defence responds to the (similar) allegation that Mirus has suffered loss and damage and will continue to do so unless restrained from using or disclosing Mirus confidential information and compelled by order to deliver it up and delete it. Mr Gage simply denies the paragraph and repeats [59]-[102] of his defence. 4. Mirus says that, in circumstances where the core of the causes of action claimed is destruction of confidentiality of intellectual property and confidential information and where the evidence of what has been done with that information has been destroyed, Mr Gage ought not be permitted to put in issue that he has caused Mirus to suffer loss and damage or what damage he has caused, though Mirus accepts that it will still have to establish the quantum of that loss and damage. 5. Mirus accepts that if these paragraphs of the defence are struck out this would still leave the same allegations in relation to Mr Wilson. It says that what would then remain in issue as between Mr Gage and itself would be, first, whether the information was Mirus' intellectual property and was confidential to it and second, the quantification of the damage caused (the fact that such damage having been cause being not able to be disputed). 6. In oral argument, what was foreshadowed by Counsel for Mirus was that the quantification of the damage might be established by reference to the difference between the notional value attaching to the business on the assumption that Mr Gage had not had access to the coding (i.e., wthout the risk posed to the security of the confidential information arising from his unauthorised access to it) and the notional value of the business in circumstances where Mr Gage had accessed that information after termination of his employment (T 85). In that regard, Counsel for Mr Gage accepted that one way that damage on the breach of confidence claim might be able to be identified would be by reference to valuations of the value of the company, if the security or the confidentiality of its intellectual property has been impaired in some way but he submitted that such evidence would not be relevant to the assessment of loss or damage with respect to the claim for breach of the non-compete covenants (noting that on the defendants' case they were only in a start-up position and had not marketed the business before the injunction was granted on 8 September 2015) and that the restraint ceased on 6 November 2015 (see T 88). 7. Counsel for Mr Gage submits that, whatever else might be struck out, it should remain open to him to deny any loss and damage in relation to the alleged breach of the non-compete covenant. On that issue it is submitted that the question of any such loss lies within the knowledge of Mirus and that that none of the documents or files deleted by Mr Gage would go to that particular issue (see T 89). 8. In that regard, there are breach of confidential information cases where what is sought is the delivery up and destruction of material into which confidential information has been imported in the sense that use has been made of it to create a new product and what is sought is destruction of that new product (see, for example, Ormonoid Roofing and Asphalts Ltd v Bitumenoids Ltd (1930) 31 SR (NSW) 347, discussed in Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 43). It may be that that is what this paragraph of the pleading would contemplate and that is what is made difficult or impossible to ascertain by reason of the deletion of the material. In other words, insofar as it could be established that the new client relationship database for Aged Care HQ had been developed or contained information that was confidential information wrongfully taken by the defendants, then it is possible that there might have been an application for the destruction of that database, which might mean that the defendants would be put to the expense of having to recreate their own database without the benefit of the information obtained from Mirus. The allegations as to the period of time it would otherise have taken Mr Gage to develop a competing product appear to raise this kind of issue. That said, conclusions as to what, if anything, was used of Mirus confidential information in the development of the Aged Care HQ database or any Aged Care HQ computer product would presumably be possible to be drawn by a comparison of the material on PC04 and the newly created electronic database/files. 9. It is submitted for Mr Gage that if the defendants had attempted to contact Mirus clients by reference to a client relationship database downloaded from Mirus, those contacts would be available by means of other documents; and that insofar as what is alleged to have been destroyed is a client relationship database created by Mr Gage and subsequently shared by Mr Wilson for the purposes of the new business (i.e., not the Mirus CRM database itself but a new database established as a result of use or manipulation of the information downloaded from Mirus), that new cloud based client relationship database should remain accessible. It is submitted that there has been no suggestion that that particular client relationship database has been destroyed by Mr Gage or by Mr Wilson. 10. As to [109(a)] of the statement of claim, which alleges that loss will continue to be suffered unless the defendants are restrained from using or disclosing the confidential information, Counsel for Mr Gage points out that a restraint order was made by Hallen J on 8 September 2015 and that it remains in place. As to [109(b)] of the statement of claim which alleges that loss will continue to be suffered unless the defendants are compelled to deliver up or delete all copies of the confidential information, Counsel for Mr Gage points out that a series of orders have already been made requiring delivery up of various devices as they have become identified. It is accepted that there may be some ancillary order that Mirus might be entitled to as a form of final relief with respect to what is alleged in this subparagraph but it is submitted in this regard that the information that was deleted either on Google Drive or on the Surface Pro is "at best of only marginal relevance" to that particular issue (T 106). 11. As to Mirus' submission that, because of those deletions, it does not know whether that material has been copied elsewhere and therefore that Mirus is at a forensic disadvantage in seeking to ensure that the appropriate orders are made for delivery up and for deletion of all confidential information, Counsel for Mr Gage argues that there is no expert evidence as to what one would be able to tell from the information which was deleted (i.e., whether one would be able to ascertain from the deleted material whether or not there was copying of this particular material or whether anyone else was given access to that particular material). 12. That said, it is accepted for Mr Gage that what cannot be discerned is what Mr Gage may have done with it in terms of compiling new software or new source code, or as to precisely what information Mr Gage tried to export to the Capsule CRM database. Counsel for Mr Gage accepts that if [109] were to be struck out, that would only have the effect that, if the allegations in relation to the information being confidential were to be established, his client might be liable to an order to deliver up copies of the confidential information (T 107). 13. I would not strike out the bare denial of loss and damage at [107] or [109]. I consider that in circumstances where it will remain necessary for Mirus to establish what loss and damage has been sustained in order to quantify its claim for loss there is no purpose to be served in striking out the bare denial of loss and damages having been caused. I would, however, strike out [107(b)] and that part of [109] of the defence insofar as those paragraphs repeat paragraphs of the defence that are to be struck out in accordance with these reasons. Conclusion 1. For the reasons above I am satisfied that Mirus has established beyond reasonable doubt that Mr Gage has committed a contempt of court by the conduct set out in charge 1 and that his actions in making the various deletions from his electronic devices amounted to an abuse of process, the proportionate response to which is to strike out various parts of his defence as indicated above. 2. In circumstances where his conduct amounted both to a contempt of court and to an abuse of process I am of the view that Mr Gage should pay the costs of the present applications on an indemnity basis but otherwise I do not propose to make costs orders at this stage in respect of the proceedings to date. Orders 1. I make the following orders: 1. Declare that the first defendant was in contempt of this Court by engaging in the conduct in the circumstances described in Charge 1 of the Amended Statement of Charge. 2. Order pursuant to rule 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) that [60]-[61] of the first defendant's defence filed on 12 November 2015 be repleaded in accordance with these reasons and that the following paragraphs or part paragraphs of the said defence be struck out as an abuse of process of the Court: [60(b)]; those parts of [63]-[73] in which the first defendant "otherwise denies" the allegation to which the paragraphs respond (such as [63(e)]); [64(d)-(h)]; [65(b)]; [65(c)]; [65(d)] (the words in the chapeau "in order to do so" and subparagraphs (v)-(vii)); [65(e)]; [65(f)] (the words "in order to maintain the confidentiality of the information"); [65(g)] (the words "and again attempted" through to the end of that sub-paragraph); [65(h)] (the words "in order to maintain the confidentiality of the information"); [65(i)-(j)]; [66(c)-(e)] (insofar as they are intended to apply to Mr Gage's defence); [66(f)]; [67]; [68(d)]; [69(c)-(e)]; [70(d)]; [71(d)]; [71(g)]; those parts of [72] which repeat answers to [62]-[71] that are to be struck out; [72(a)-(c)]; those parts of [73] which incorporate reference to parts of the defence that are to be struck out; those parts of [92] which repeat those parts of [65(d)-(h)] which are to be struck out; those parts of [93]-[94] which incorporate reference to paragraphs of the defence to be struck out; [103]-[104]; [107(b)] and that part of [109] of the defence insofar as those paragraphs repeat paragraphs of the defence that are to be struck out. 3. Direct the first and second defendants each to file an amended defence within 14 days, noting that the first defendant's amended defence must accord with these reasons in relation to the paragraphs or part paragraphs of the defence the subject of the order in 2 above. 4. List the matter before me at 9.30 am on 18 August 2017 for further directions as to the filing of evidence and listing of the matter for a sentencing hearing in respect of the contempt of court committed by the first defendant. 5. The first defendant to pay the plaintiff's costs of the respective notices of motion on an indemnity basis. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 August 2017