Dinte v Hales & Anor [2009] QSC 63

SUPREME COURT OF QUEENSLAND CITATION: Dinte v Hales & Anor [2009] QSC 63 PARTIES: BARON DINTE (Plaintiff) v PHILLIP HALES (First Defendant) and DARREN CAMPBELL (Second Defendant) FILE NO/S: No BS8236 of 2005 DIVISION: Trial Division PROCEEDING: Trial DELIVERED ON: 25 March 2009 DELIVERED AT: Brisbane HEARING DATE: 24, 25 November 2008 JUDGE: Philippides J ORDER: Judgment be entered for the plaintiff in the sum of $211,933. CATCHWORDS: EMPLOYMENT – defendants employed to work for plaintiff – defendants carrying on business in partnership in competition with plaintiff while working for plaintiff – whether first defendant while employed to work for plaintiff took advantage of his position to advance defendants’ partnership interests – defendants carrying on partnership after ceasing to work for plaintiff – whether plaintiff entitled to damages for loss of profit in respect of lost custom – where plaintiff’s business subsequently sold – whether value of plaintiff’s business reduced by first defendant’s conduct – whether plaintiff entitled to damages for loss of profit on sale of business Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169 (cited) Jones v Dunkel (1959) 101 CLR 298 (cited) Normalec Ltd v Britton [1983] FSR 318 (cited) Phipps v Boardman [1964] 1 WLR 993 (cited) Robb v Green [1895] 2 QB 1 (cited) Sanders v Parry (1967)1 WLR 759 (cited) Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 438 (cited) Thomas Marshall (Exports) Ltd v Guinle [1978] 3 All ER 193 -- 1 of 11 -- 2 (cited) Wessex Dairies Ltd v Smith [1935] 2 KB 80 (cited) COUNSEL: Mr C Newton for the plaintiff Mr P Hales, self-represented, for the first defendant Mr D Campbell, self-represented, for the second defendant SOLICITORS: McDonald, Balanda and Associates for the plaintiff Mr P Hales, self-represented Mr D Campbell, self-represented PHILIPPIDES J: The plaintiff’s claim [1] The plaintiff, Baron Dinte, carried on a mobile communications business on the Gold Coast from May 1989 to September 2005 under the trading name SkyComm. The business sold radios, mobile telephones and other telecommunications and electronic equipment together with related software. One of the major suppliers of product to the plaintiff was Motorola, for whom the business acted as a “premier dealer” in South-East Queensland. The plaintiff was also a director of SkyComm (Aust) Pty Ltd which was set up to supply employees to SkyComm, the employees being paid by SkyComm (Aust) Pty Ltd but engaged to work for SkyComm. [2] It was not ultimately contested that the first defendant, Phillip Hales, was contracted by SkyComm (Aust) Pty Ltd to provide services to SkyComm from 7 September 1998 until 25 May 2005, during which period he held the position of service manager. The second defendant was similarly contracted to provide services to SkyComm but as an installer for two periods; being from 6 April 2001 until 29 July 2004 and from 22 August 2004 until 13 September 2004. On about 23 June 2004, while engaged to work for SkyComm, the defendants formed a partnership and commenced a business trading under the name of “DapComm”. The partnership ceased on 31 March 2007. [3] The plaintiff alleged that the defendants conducted the DapComm partnership business in the South-East Queensland area in the same field of activity as the plaintiff’s SkyComm business and in competition with it. It was alleged that the contract entered into between the defendants and SkyComm (Aust) Pty Ltd was a contract entered into for the benefit of the plaintiff within the meaning of the term used in s 55 of the Property Law Act 1974 (PLA). It was alleged that the defendants knew of the contractual arrangement whereby SkyComm (Aust) Pty Ltd supplied staff to work for SkyComm and that, by reason of their employment, they had access to information which was confidential to the plaintiff. In particular, it was contended that, during his employment, Mr Hales had access to, and was provided with, confidential information owned by the plaintiff, including customer lists, sales data, pricing requirements and computer software relating to the service requirements of the customers, as well as details of the plaintiff’s commercial relationship with its customers. [4] It was alleged that it was an implied term of the first defendant’s contract of employment that, during the course of his employment with SkyComm, he would -- 2 of 11 -- 3 conduct himself with the utmost good faith toward the plaintiff and not intentionally conduct himself in any manner which was detrimental to the commercial interests of the plaintiff’s business. It was also contended that, during the course of his employment, the first defendant owed a duty of good faith and fidelity to the plaintiff and that, after the termination of his employment, he owed a duty not to use the commercial information obtained by reason of his employment to the detriment of the plaintiff. [5] It was alleged that, in breach of the terms of his contract of employment and/or in breach of the duty owed to the plaintiff, the first defendant, during the course of his employment with SkyComm (Aust) Pty Ltd: (a) caused the partnership to be formed with the second defendant for the purposes of conducting the DapComm business in competition with the plaintiff; (b) in partnership with the second defendant, continued to conduct the DapComm business in competition with the business of the plaintiff; (c) attempted to, and did, solicit customers of the plaintiff to also become customers of the partnership; (d) attempted to, and did, sell telecommunications products acquired by the partnership to customers of the plaintiff; (e) utilised the plaintiff’s customer database and other confidential information for the benefit of the partnership; (f) utilised the resources and equipment of the plaintiff, for the purposes of conducting the DapComm business; (g) derived income to his own benefit and to the benefit of the partnership to the exclusion of the plaintiff; (h) derived benefits for the DapComm business by utilising goodwill or commercial information which was properly that of the plaintiff’s business; (i) utilised and took commercial advantage of the plaintiff’s position as a premier Motorola dealer and the benefits which accrued therefrom to his own benefit and the benefit of the partnership; (j) failed to direct his efforts to the sole benefit of the plaintiff. [6] It was alleged that the first defendant, upon termination of his employment on 25 May 2005, retained possession of or copies of certain confidential information, including lists of clients and customers of the plaintiff, along with commercially sensitive information relating to the plaintiff’s business, which information has continued to be used by the defendants for the purposes of the DapComm business. [7] Further, subsequent to the termination of the first defendant’s employment, it was alleged that the defendants: (a) continued to conduct the partnership business in competition with the plaintiff; (b) so conducted the DapComm business by utilising the initial commercial advantages that had been obtained to the partnership during the course of their employment with the first defendant; (c) have, by such conduct, during the course of the first defendant’s employment thereby derived a substantial commercial advantage over the plaintiff and other dealers, which it would otherwise not have had; -- 3 of 11 -- 4 (d) have otherwise obtained an advantage in the market place by being able to conduct business which had already been established at a minimal cost for approximately 10 months; (e) have been able to conduct the partnership business at a significant profit, or otherwise reduced potential expense, by having access to and utilising the customer database and other confidential information acquired during the course of the first defendant’s employment. [8] As against the second defendant, it was alleged that he knew, approved of, and assisted the first defendant in the impugned conduct and took the benefit of it. It was alleged that the second defendant knew that the first defendant was acting in breach of his duty of good faith and fidelity to the plaintiff, and in breach of the implied terms of his contract of employment. It is contended that, by reason of his partnership with the first defendant, the second defendant knew that the first defendant conducted himself, as alleged, for the benefit of DapComm. In particular, the second defendant knew that the partnership business was being so conducted while they were both employees of the plaintiff, and that he knew of the benefits, commercial advantages and profits that were being derived by reason of the breaches alleged and particularised above. [9] In his pleading, the plaintiff claimed against the defendants an account of profits derived by the first defendant in the period from July 2004 until his employment ceased and in the period thereafter until the sale of the business. Alternatively, damages were claimed for the loss of profit resulting from the defendants’ conduct. It was the latter relief that was pursued at trial. In addition, damages were sought in respect of alleged loss suffered by the plaintiff on the sale of the business, in that it was said that because of the defendants’ wrongful conduct the SkyComm business was sold for less than would otherwise have been the case. The defendants’ case [10] The defendants denied that they had been employed by the plaintiff and contended that their contract of employment was with SkyComm (Aust) Pty Ltd. It was disputed by the first defendant that he had any knowledge of or had been informed by SkyComm (Aust) Pty Ltd that his employment contract was for the benefit of any other party and had no knowledge of any agreement between the plaintiff and SkyComm (Aust) Pty Ltd which would fall within the meaning of s 55 of the PLA. [11] While the defendants admitted that some of the business of DapComm was conducted in fields of activity that were the same as that of the plaintiff’s business, it was contended that DapComm conducted business in a number of other fields in which the plaintiff did not conduct business. In respect of those fields, it was contended that the DapComm business: • provided a service not offered by the plaintiff’s business; • serviced customers on behalf of another Motorola dealer; • serviced customers unwilling to receive goods and services from the plaintiff’s business. [12] Furthermore, the defendants denied that they owed the plaintiff a duty of good faith and fidelity, and denied the implication of the terms contended for by the plaintiff in respect of their contracts of employment. In any event, it was disputed that the -- 4 of 11 -- 5 defendants breached those duties. The second defendant denied the allegations that he knew of and assisted the first defendant, and took the benefit of the impugned conduct. Evidence [13] The plaintiff gave evidence and evidence was also given on his behalf by Mr Gallagher of TR Corporation Pty Ltd (which purchased the plaintiff’s business), Mr Dell the Regional Manager for Motorola Australia and Mr Prier (who was employed to work for the plaintiff during the relevant period). The defendants did not give or call evidence. [14] Mr Dinte gave evidence that Mr Hales, as SkyComm’s service manager for some 18 months, was given full access to the plaintiff’s confidential internal files concerning its customer base and had access to special software that was required to be purchased from Motorola in order to sell Motorola products. Apparently, Mr Dinte was hoping that Mr Hales might eventually take over the business and had identified him as the “heir apparent”, giving him unrestricted access to information concerning the business from early 2004. In May of that year, Mr Dinte took a holiday and it seems that he largely left the running of the business to Mr Hales. [15] As mentioned, the plaintiff’s business extended to the sale of radio equipment, CB radios, the installation of such, repair of equipment and telephone systems. Whenever a system was sold, a file was created with all the information, frequencies, programming and fleet details pertaining to the customer. The Motorola premier dealership was an important part of the plaintiff’s business. The evidence of Mr Dinte was that Motorola controlled its distribution network by means of a network of premier dealers, dealers and resellers. The plaintiff purchased proprietary software from Motorola and was also given proprietary software from Motorola for programming of the equipment for the end user’s specification. I am satisfied, on the basis of the evidence of Mr Dinte and Mr Dell, that such equipment could not be sold without the Motorola software required for programming it. A competitor would be required to access that software from Motorola through an authorised Motorola source. [16] In May 2005, Mr Dinte received a call from Mr Dell who advised that there had been an unusual amount of radio transactions concerning a Motorola proprietary system by a business called DapComm. This caused Mr Dinte to conduct a business name search of DapComm which revealed that the defendants were the proprietors of that business. He also discovered that DapComm was listed online with Yellow Pages in competition with the plaintiff’s business. In addition, the mobile phone which the plaintiff had provided to Mr Hales for use in connection with SkyComm business, had been listed on the letterhead of DapComm stationery, as is apparent from documents provided on disclosure. The telephone account for the mobile phone that the plaintiff had given Mr Hales indicated that it was being used extensively to communicate with Mr Campbell, after the latter had ceased working with SkyComm. [17] The evidence revealed that, while Mr Hales was at SkyComm, and without the plaintiff’s knowledge, he sourced product for DapComm from another premier dealer, BTW Communications, that operated in Sydney. Mr Hales had come into contact with BTW because of his employment with SkyComm. Mr Dell indicated -- 5 of 11 -- 6 that BTW was under the same obligations in relation to distribution of product as other premier dealers and that Mr Hales was not an authorised dealer or reseller. The Motorola networking structure would have required him to become an authorised reseller in order to deal in Motorola products. [18] Within days of the telephone call from Mr Dell, Mr Hales handed in his resignation. Mr Dinte’s evidence was that, after Mr Hales left, a number of customer files were found to be missing. Mr Dinte gave evidence of finding Mr Hales with a number of files open in circumstances where no adequate explanation was provided for what Mr Hales was doing with the files. Liability [19] In the light of Mr Dinte’s evidence, I am satisfied that it would have been abundantly apparent to the defendants that, although they were being paid by SkyComm (Aust) Pty Ltd, they were being engaged to work for SkyComm, with SkyComm (Aust) Pty Ltd merely operating as a vehicle for the provision of services to SkyComm. In the circumstances, I can see no obstacle to the application of s 55 of the PLA. [20] In respect of the period during which the first Defendant was engaged to work for the plaintiff, particulars of the breaches alleged are that: (a) The DapComm business sold telecommunications products and systems which were the same as those sold by the plaintiff and that they were sold to the plaintiff’s customers or to persons who could have become the plaintiff’s customers had the first defendant directed his efforts to the plaintiff’s interests. These customers are listed in a schedule (annexed to the Amended Further and Better Particulars of the Amended Statement of Claim) prepared by Mr Dinte using DapComm invoices, job cards and receipts and other such documents provided by the defendants on disclosure; (b) The plaintiff supplied the first defendant with a mobile phone for the purposes of use in respect of the plaintiff’s business, which the first defendant used in connection with the DapComm business; (c) The first defendant secured benefits, which were only available to the plaintiff in the plaintiff’s position as a premium Motorola dealer, by reason of his having access to and being able to order equipment only available to premium dealers. That equipment was obtained for the benefit of DapComm; (d) The first defendant had access to and utilised files and confidential commercial information in respect of the plaintiff’s clients for the DapComm business. [21] It is a matter of great significance in this case that neither defendant has chosen to give evidence or call evidence to counter the allegations made and evidence given by the plaintiff. This is a case where adverse inferences can and ought to be made as a result of that failure to give evidence: Jones v Dunkel (1959) 101 CLR 298. [22] During the period while the defendants were engaged to work for the plaintiff, the defendants owed the plaintiff a duty of good faith and fidelity: Sanders v Parry (1967)1 WLR 759; Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169. Further, the defendants were not entitled to use knowledge of opportunities or -- 6 of 11 -- 7 other advantages arising out of their employment to make a personal gain without SkyComm’s consent: Phipps v Boardman [1964] 1 WLR 993, 1010; Robb v Green [1895] 2 QB 1. [23] On the basis of the evidence before the court, I find that while working for the plaintiff, the defendants acted secretly to set up a business in competition with the plaintiff, in circumstances where Mr Hales dishonestly diverted custom to the partnership through opportunities which were made available to him by virtue of his employment with the plaintiff. Additionally, while so employed, the first defendant secured benefits for the partnership as a result of the plaintiff’s status as a premium Motorola dealer. Indeed, while still employed to work for the plaintiff, the first defendant without the plaintiff’s knowledge placed orders for the benefit of the partnership with the plaintiff’s suppliers and for the purpose of competing with the plaintiff. Such conduct breached his duties to the plaintiff: Thomas Marshall (Exports) Ltd v Guinle [1978] 3 All ER 193; Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 438; Normalec Ltd v Britton [1983] FSR 318. [24] I am satisfied on the evidence given that the first defendant, while engaged to work for the plaintiff, and in breach of his duty of implied terms of contract , canvassed existing customers of the plaintiff or businesses whose custom the plaintiff would have expected to secure: Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 438. Whether this was done during or outside of working hours, it clearly amounted to a breach of the duty of fidelity and good faith: Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169; Wessex Dairies Ltd v Smith [1935] 2 KB 80. I note that no evidence was given to support the defendants’ claim that any business transacted in competition to the plaintiff was the result of direct requests from the purchasers who were dissatisfied with the service provided by the plaintiff. But in any event, it is not to the point that the first defendant did not initiate the transactions, nor that the plaintiff’s clients expressed dissatisfaction with the service offered by SkyComm. It was the first defendant’s duty while employed to work for the plaintiff to seek custom for the plaintiff and to seek to protect the plaintiff’s interests by seeking to address any dissatisfaction. It was also the first defendant’s duty not to act to the plaintiff’s detriment, by diverting such clients to DapComm: Sanders v Parry (1967)1 WLR 759, 765. I note the first defendant’s contention that to the extent that the plaintiff did not provide services on a Saturday, DapComm did not operate in competition with SkyComm. While it is true that the plaintiff did not maintain a shop front on a Saturday, the evidence of Mr Dinte and Mr Prier was that services, nevertheless, were still provided on Saturdays when requested. I do not, therefore, accept the defendants’ contentions that, by providing services on a Saturday, they were providing services not provided by the plaintiff. [25] There was no evidence given to support the defendants’ contention that new clients of DapComm, after the termination of the first defendant’s employment with the plaintiff on 25 May 2005, were not directly approached by DapComm, but rather sought out DapComm through the Yellow Pages, customer referral or by chance encounters. I am prepared to infer on the evidence before the court that, after the first defendant ceased working for the plaintiff, he continued to pursue the commercial contacts which he had secretly used to benefit the partnership and to canvass custom that he had improperly diverted to DapComm during his employment for the plaintiff. -- 7 of 11 -- 8 [26] Accordingly, I find that the first defendant breached the duty of good faith and fidelity owed to the plaintiff and the implied terms of his employment. Quantum Loss of profits [27] The plaintiff’s claim for loss of profits up to the sale of the plaintiff’s business is based on Mr Dinte’s schedule which, as mentioned, was compiled using DapComm invoices, job cards and receipts, and other such documents provided by the defendants on disclosure. It detailed customers who had been provided with goods and services in competition to the plaintiff’s business during the period from 30 January 2004 until the plaintiff’s business was sold. Mr Dinte gave evidence that the customers listed on the schedule were either existing customers of the plaintiff or associated with existing customers or businesses from which the plaintiff would have expected to receive orders because of Motorola’s network and affiliation structure. Also included in the schedule were customers serviced by DapComm, in respect of which DapComm was unable to produce any proof of having purchased the equipment supplied to the customers. I also note in that regard that there was a significant stock loss sustained by the plaintiff’s business in this period which was unaccounted for. Given the documentary evidence relied upon by plaintiff, the strong inference in the absence of the defendants giving evidence is that the plaintiff’s stock had been used to meet the orders placed with DapComm. [28] The schedule identified from invoices of DapComm the sale price charged by it and the lost profit to the plaintiff, ex GST, for the period from August 2004 to the sale of the business in September 2005. The claimed loss of profits in respect of the period while Mr Hales was an employee is calculated in the schedule as being $37,298.24. The loss of profit from the time of Mr Hales’ departure until the sale of the business is calculated as $30,234.95. The total loss of profit up to the sale of the business thus amounts to $67,533.19. [29] I note that the defendants failed to disclose a number of DapComm invoices. In respect of these invoices that were not disclosed or were claimed to be missing, the approach urged on behalf of the plaintiff was that a pro rata claim should be allowed, resulting in an additional damages claim of $7,405.58. However, I do not consider that that claim ought to be allowed; I note that some of the invoices were ultimately disclosed by DapComm at trial and were revealed to relate to home entertainment services provided by DapComm, which was not an area of business of SkyComm and others were not shown to be relevant. Furthermore, some related to a client that DapComm could have been expected to obtain after Mr Hales left the plaintiff because of a family connection. [30] A submission was made on behalf of the first defendant that there should be some discount for the prospect that, had the plaintiff quoted for some of the customers serviced by DapComm, there may have been some discount offered by the plaintiff on its profit margin. I consider that prospect too speculative to take into account. In this regard, reference was made to certain statements by Mr Dinte, but his evidence was equivocal. -- 8 of 11 -- 9 [31] At the end of the day, the nature and extent of the damage that flows from the impugned conduct cannot be calculated with precision. However, I am satisfied that the plaintiff ought to be awarded damages of $67,533.19 as set out in the schedule. Damages in respect of the sale of the business [32] The plaintiff’s business was sold in September 2005 to TR Corporation, which was looking to expand. During the period from May 2005 to November 2006 TR Corporation purchased about 10 businesses. It adopted a similar approach to valuation in respect of the purchase of all of these businesses including that of the plaintiff. The standard formula used involved assessing the last three years’ trading figures up to the date of sale. From those figures an EBIT figure (earnings before interest repayable and taxes) was derived. Mr Gallagher gave evidence that generally the purchase price offered was between three and a half and four and a half times the EBIT so derived. [33] In respect of the plaintiff’s business, Mr Gallagher’s evidence was that the EBIT figures for 2003 to 2005 were: (a) 2003 - $256,000 (b) 2004 - $388,000 (c) 2005 - $148,000 [34] After discussions with the plaintiff, the figures were “normalised” to exclude any personal expenses and the like. The readjusted EBIT figures were: (a) 2003 - $301,000 (b) 2004 - $444,000 (c) 2005 - $170,000 [35] On the basis of the above figures, the average EBIT for the last three years for the plaintiff’s business was calculated as $305,000 per annum. Mr Gallagher’s evidence was that ordinarily, using the usual formula of between three and a half and four and a half times the EBIT, he would have been expecting to pay a capital sum of between $1,050,000 and $1,370,000 for the plaintiff’s business. However, because of the substantial drop in profit for the 2005 financial year, Mr Gallagher did not adopt this approach. Having made inquiries with Mr Dinte as to the drop in profit, Mr Gallagher was told that the plaintiff had had issues with a previous employee and that that employee had been selling product through his own business and taking customers away from the plaintiff’s business. After conducting a due diligence process, Mr Gallagher accepted this explanation and took the view that there had probably been, as a consequence, a reduction in the value of the business, because some customers had moved away from the SkyComm business. Consequently, the offer that was made to purchase the plaintiff’s business was based on the last year’s earnings only (ie the 2005 year) resulting in an EBIT figure of $170,000, which was multiplied by a factor of just under four (ie 3.8), yielding a purchase price of $650,000. The plaintiff sold the business for $650,000, with an additional $100,000 to be paid if the adjusted earnings of the business for the first 12 months operation exceeded $200,000. This additional amount was not paid as the target was not achieved. [36] On the basis of the evidence given by Mr Gallagher, the plaintiff’s claim for damages in respect of the sale of the business is $417,500, calculated as follows: -- 9 of 11 -- 10 Value of business using the average EBIT for 2003 - 2005 $305,000 x 3.5 = $1,067,500 less purchase price paid 650,000 $417,500 [37] There are difficulties in assessing the loss on the sale of the business in the manner urged by the plaintiff. I note that the gross trading revenues for the 2005 financial year were considerably less than the preceding year. On behalf of the first defendant, it was contended that this reduction could not simply be attributed to any conduct by the defendants in conducting the DapComm business in competition with the plaintiff’s business. Rather, a number of other factors were pointed to: (a) loss of the Telstra dealership around December 2004; (b) loss of follow on sales as a result of losing the Telstra dealership; (c) dissatisfied customers seeking services elsewhere; (d) loss of trade volume from discontinuing a Saturday service; (e) key employees leaving; (f) inflated business sale price; (g) state of the economy; (h) the plaintiff’s state of mind. [38] Of the above matters, the evidence indicates that the loss of the Telstra account may have played some role, although not a significant one, in lost earnings. There is no evidence of loss of trade volume from discontinuing a Saturday service, nor of the impact of factors in (f) and (h). However, I observe that Mr Dinte could not provide an adequate explanation of how the entirety of the diminution in sales could be attributed to the first defendant’s conduct, since that diminution far exceeded what DapComm could be shown to have attracted in terms of sales in the relevant period. I observe that Mr Dinte mentioned that an additional staff member left after Mr Hales and that he had sent a memo to staff noting a concern “about the increasing number of customers who are choosing not to do business with us”. I also observe that a matter that was mentioned as of some significance by Mr Gallagher in his assessment as to why there was a reduction in profits in the 2005 year, was the plaintiff’s failure to pick up a major contract, such as the Abi-Group contract, in the relevant period. [39] Counsel on behalf of the plaintiff acknowledged that the plaintiff’s claim ought to be discounted to reflect the fact that not all of the reduction in profitability in the 2004/5 year could be sheeted home to the conduct of the defendants, but that it should not be more than one third. [40] The assessment of this head of damage inevitably involves a degree of mathematical imprecision. In my view, the most satisfactory approach in the present case is to take the figure of $37,000 being the loss of profit relating to the 2004/5 financial year up until Mr Hales left SkyComm, and round it off to $38,000 to include additional items noted in the schedule for the month of June 2005. That amount ought to be multiplied by a factor of 3.8 to reflect the approach adopted by Mr Gallagher in reaching the purchase price paid for SkyComm. This approach results in an amount of $144,400 for loss on the sale of the business. [41] The first defendant is liable to pay damages in the amount of $211,933, being $67,533.19 plus $144,400. I consider that each of the defendants should be liable for that amount. There is no basis, given the circumstances in which the partnership -- 10 of 11 -- 11 operated, for not also holding the second defendant liable for the full amount of $211,933. He was for some period during the partnership’s operation actually working with Mr Hales for the plaintiff, was shown to be in regular communication with Mr Hales after he ceased working for the plaintiff and failed to give any evidence to counter that of the plaintiff that he was aware of Mr Hales’ conduct in breach of his duties to the plaintiff and benefited thereby. [42] I order that judgment be entered in favour of the plaintiff and against the defendants in the sum of $211,933. [43] I shall hear submissions as to costs. -- 11 of 11 --