Sydney software firm Sky Cloud takes director to NSW Supreme Court

A legal stoush is unfolding between a Sydney cloud software developer and one of its directors over contractual disagreements.

The case relates to whether or not the employee was entitled to conduct himself on behalf of the company after he allegedly ceased to hold a directorial position.

Sky Cloud, which offers cloud-based software solutions for the real estate industry, filed proceedings in the NSW Supreme Court against Yajun Shi, a former director of the company, and his business IT Express, arguing he had used Sky Cloud’s private information and branding to mislead clients and advance his own business. Shi denies the claims.

In a statement of claim submitted to the court, Sky Cloud alleged that Shi ceased his role as a director on 10 January 2017, and that he subsequently performed work for Sky Cloud as a contractor under certain terms outlined in a contractor agreement, which began in November 2016 and ended in May 2017.

Sky Cloud alleged that during the contractor period, Shi entered into contracts with clients on behalf of Sky Cloud, acting as a director, when he was not entitled to do so. It also alleged Shi issued invoices bearing Sky Cloud branding, for payment into a bank account that he owned, to clients in order to make them think they were dealing with Sky Cloud.

In its claim, Sky Cloud also alleged Shi prepared two payroll advices for individuals who did not work at Sky Cloud, that he sent emails using a Sky Cloud signature, and that he represented himself as a Sky Cloud director to prospective clients.

The company argued because of these reasons he had breached a duty of confidence and the terms of the contractor agreement, and that up until 20 June, Shi used Sky Cloud’s confidential information to conduct his own business, IT Express, to compete with Sky Cloud.

According to the defence filed by Shi’s lawyers, Shi was not bound by such a contractors agreement, denying an official agreement ever existed.

Shi also argued he had been authorised through a verbal agreement with Sky Cloud director Jason Lo to act as a Sky Cloud director or representative from 11 January up to the time of the proceedings.

Shi's defence said IT Express was issued 20 percent of the shares of Sky Cloud in May 2016 as per an agreement between Shi and Lo. Sky Cloud argues Shi transferred or relinquished the shares on 10 January. Shi’s lawyers denied the shares were transferred or relinquished and argued that their purported removal or cancellation was invalid because it had been done without the prior knowledge of Shi or IT Express.

Shi's defence also argued that when emailing clients regarding IT Express work, he did not do so in the capacity of a Sky Cloud director, and denied that the inclusion of Sky Cloud information in the email signature constituted such representation.

Sky Cloud’s key product is a real estate development and sales management app called Presale 365. Both Sky Cloud and Shi’s IT Express claim copyright ownership of the software.

The case continues.