Borland v First 5 Minutes Pty Limited [1995] IRCA 369

C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - MISCONDUCT - Wilful. Industrial Relations Act 1988 Allen v Tobias (1958) 98 CLR 367 Gooley v Westpac Banking Corporation (unreported 3 April 1995, No. NI 102 of 1994) North v Television Corporation Ltd (1976) 11 ALR 599 Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1964] 3 All ER 413 Wessex Dairies Ltd v Smith [1935] 2 KB 80 Hirvac Ltd v Park Royal Scientific Instruments Ltd [1946] Ch 169 Sinclair v Neighbour (1966) 3 All ER 988 BORLAND v FIRST 5 MINUTES PTY LIMITED - No. NI 1203 of 1995 Before: Judicial Registrar WALKER Place: Sydney Hearing Dates: 11-12 May 1995 Judgment Date: 16 August 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N0. NI 1203 of 1995

Between: IAIN GEORGE BORLAND Applicant And: FIRST 5 MINUTES PTY LIMITED Respondent Before: Judicial Registrar WALKER Place: Sydney Hearing Dates: 11-12 May 1995 Judgment Date: 16 August 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application be dismissed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N0. NI 1203 of 1995

Between: IAIN GEORGE BORLAND Applicant And: FIRST 5 MINUTES PTY LIMITED Respondent Before: Judicial Registrar WALKER Place: Sydney Hearing Dates: 11- 12 May 1995 Judgment Date: 16 August 1995 REASONS FOR JUDGMENT The applicant in this mattercommenced employment with the respondent in about June 1992 as a probationary trainer and in approximately August 1994 was promoted to the position of senior training consultant. His duties were primarily ensuring the quality control of training modules used by trainers employed by the respondent, in conducting training sessions in fire and emergency procedures and at other times he was required to visit and observe the training sessions being presented by other trainers, and to present training sessions himself. Prior to his employment with the respondent the applicant had gained extensive experience as a security officer and manager in the security industry, especially in the field of fire and emergency procedures. He holds a Diploma in Occupational Health and Safety Management, an Advanced Certificate in Fire Technology and a Certificate in Occupational Health. He is a fellow of the Security Institute of New South Wales and a graduate member of the Institute of Fire Engineers and is presently studying towards a Diploma in Safety Science at The University of New South Wales. The applicant's employment was terminated by the General Manager of First 5 Minutes, Mr Robert Binning on 27 January 1995, two days after a meeting had been held with the applicant concerning allegations made by Mr Colquhoun, the New South Wales Manager. The meeting was held on 25 January 1995, but the applicant had walked out when he became concerned about his legal position. After he left, Mr Binning sent a letter by courier the same day to the applicant, enclosing various documents and a request that the applicant provide any material or explanation. He also indicated that he would remain in Sydney until 3.30 pm that day if the applicant wanted to contact him, however, Mr Binning did not indicate a deadline for the applicant to provide his written reply. Mr Binning's evidence was that as no reply had been received by 27 January 1995, he acted on the termination. THE TEMPLE EMANUAL MANUAL Mr Martin George Nicholl, Director of International Security Personnel (ISP), gave evidence that he had been approached by his Secretary, who attended the Temple Emanual at Chatswood and was asked by her if he knew of someone who could prepare an evacuation report for the Temple. As Mr Nicholl was a member of the Security Institute of New South Wales he approached a fellow member by the name of Patrick Flower to see if he could recommend someone for the job. Mr Flower recommended the applicant as such a person and a meeting was arranged between Mr Nicholl, Mr Flower and the applicant. Mr Nicholl gave evidence that he was under the impression that the applicant was under a sub-contractual arrangement with the respondent. The applicant had given Mr Nicholl two cards, one as a fire safety consultant from the respondent company, First 5 Minutes and his own personal card under the name of Insight Consultants. The applicant's evidence was that he was going to undertake this work during his Christmas holidays and to complete it during his leisure time at home, however, on 12 January 1995, Mr Colquhoun, the New South Wales Manager of the respondent discovered a manual while attending Dashing Printers, the printers engaged by the respondent. The front page of this manual was entitled, "Fire & Emergency Evacuation Procedures North Shore Temple Emanual, 28 Chatswood Avenue, Chatswood, Prepared by International Security Protection." Mr Colquhoun considered that this manual, "was practically identical" to a manual he had prepared for the North Shore Synagogue in September of 1994. His evidence was that he was furious and that: "The synagogue manual was on the floor in my office and I picked it up, compared them very quickly -standing up- and then walked straight into Borland's office." The evidence then was that Mr Colquhoun threw the manual on the applicant's desk. The applicant admitted that he had prepared the manual for another company but that company was not a competitor of the respondent. The applicant then refused to give the manual back to Mr Colquhoun and subsequently destroyed it. Several pages of the manual were retrieved from the printing office waste paper bin, but the rest were lost and no direct comparison could be made. In cross examination, Mr Colquhoun resiled from his assertion that the manual was an identical copy of the synagogue manual, but he was sure the applicant's version was prepared from the respondent's base and was a derivation of other manuals prepared by the respondent. It was admitted by the applicant that the manual produced by him did contain material photocopied from the respondent's materials, however, the applicant insisted that the copy found by Mr Colquhoun was only a draft produced to show the Temple Emanual. Mr Stuart Clark, the document production assistant employed by Dashing Printers filed an affidavit in these proceedings and this document was marked as exhibit 5. Under cross examination it became evident that this affidavit was inaccurate as it indicated the applicant had requested that the manual was to be printed and bound, when in fact only one copy was to be photocopied and bound. From Mr Clark's evidence it was established that the applicant had requested that the document he had given to Dashing was for binding only and that the applicant had made changes to the original draft. Mr Clark had discovered some of the amended draft pages in the garbage bin and had given these to Mr Colquhoun on the 13 January 1995. There was no evidence to establish that the cost of binding the manual had been charged to the respondent or that there was ever any more than one copy made of it. There can be no doubt however that the applicant did use some of the respondent's time and resources in the production of the manual, even though most of the work was carried out in his own time. It was also established that he did receive payment for the production of the completed manual, as was his intention from the beginning. THE TERMINATION OF EMPLOYMENT When Mr Colquhoun confronted the applicant with the Temple Emanual manual he said the applicant admitted that he had written it for another company. He then told the applicant that he had signed a Confidentiality Agreement which required him to, "not do this sort of thing." Mr Colquhoun said that the confidentiality agreement required the applicant to keep company documents, including manuals, confidential, and that any breach of this agreement was a ground for termination without notice at the respondent's discretion. He said the applicant had replied, "what confidentiality agreement?" and asked to be shown a copy. He then said he told the applicant that it was a condition of his employment that he could not undertake work for companies engaged in business in competition with the respondent and the applicant had replied that the company was not a competitor, but was engaged in a different field of work to the respondent. Mr Colquhoun responded that he did not accept that the company was not a competitor and asked the applicant if he had prepared manuals for competitors on previous occasions, the applicant, he said then refused to answer. Mr Colquhoun did not ask any further questions and then left the applicant's office. Mr Colquhoun then contacted Mr Robert Binning, the General Manager of the respondent company and informed him of the incident. Mr Colquhoun told Mr Binning: "I picked up this document and to my horror here was basically my manual with another organisation's name on a cover." Mr Binning was then transferred to the applicant to hear his side of the incident. The conversation according to Mr Binning is included in his affidavit as annexure "A" and is set out hereunder: "Mr BINNING: Iain, I have just had a rather disturbing conversation with Brian Colquhoun and would like to hear your side of the story. As I understand it, here is a document at our printers which contains material from First 5 Minutes but which has a cover bearing another organisation's name and you are connected with this. Is that correct? IAIN: Well, I was asked to do a favour for a friend and get this printed. Mr BINNING: But I understand that it contains, indeed plagiarises, the company's material. Do you understand the term plagiarise? IAIN: Yes I do, but I have not completely copied a document. Mr BINNING: Are you saying you have not copied any of our material? IAIN: There are a few pages, probably a couple, which have been copied. Mr BINNING: Are you aware of the Confidentially Agreement you signed with First 5 Minutes? IAIN: Yes Mr BINNING: Good because I have that document in front of me now. I consider you are in breach of that document. IAIN: That's your opinion. Mr BINNING: Iain, you are a senior member, indeed an executive of this company. if you wanted to do a favour for a friend or an organisation, using the company's material, don't you think you should have asked the branch manager for approval first? IAIN: Yes, now I have thought about it - I should have. Mr BINNING: And don't you think that there should have been some acknowledgment in your document to First 5 Minutes?. IAIN: Yes Mr BINNING: What is the name of the organisation on the document cover. IAIN: Oh, I don't know, it's some Hebrew word. Mr BINNING: Well read it out to me, I'm sure I can get it down. IAIN: I can't remember the word. Mr BINNING: Iain, I know the document is on your desk, just read it to me. IAIN: I am not prepared to give you that information Mr BINNING: After further discussion about the seriousness in which the company held this incident, and the advice to Iain Borland that the company would pursue this vigorously through our legal advisers, I asked Iain Borland to send the document or a copy, to me in the overnight bag. This he repeatedly refused to do. Following advice I instructed Brian Colquhoun to suspend Borland on pay, immediately until further notice." The applicant in his affidavit said that he told Mr Binning that he had no intention of publishing the material and had therefore not sought permission. He also noted that Mr Binning had not stated his introductory comments to their conversation in the above annexure to his affidavit. Mr Binning he said, had indicated to him that his was in jeopardy and that he would get solicitors involved and take him to court and that he would never work in the industry again and would be black listed. Because of this, the applicant said he was extremely reluctant to say too much during the conversation. On the 13 January 1995, Mr Binning said he instructed Mr Colquhoun to conduct an investigation into the incident to ascertain the nature of the applicant's relationship with ISP and the religious organisation he had prepared the manual for. He received the results of Mr Colquhoun's investigation on 20 January 1995 and on the basis of this information arranged a meeting with the applicant, for the purpose, according to Mr Binning to, "disclose all the documents that we had to Mr Borland and give him the opportunity to reply." In cross examination, the applicant's counsel, Mr Reitano put the following proposition to Mr Binning: "The purpose of the meeting was to provide Mr Borland with documents and facts that you had related to the matter and to give him an opportunity to take the information away and provide a written reply?" Mr Binning said in reply to this: "If he wanted to do so, yes." Mr Binning's record of the telephone conversation of 19 January 1995 with the applicant indicates that the purpose of the meeting was to provide the applicant with facts and documents related to the matter and that he would be given the opportunity to take this information away, and he would be required to prepare a written reply. Mr Binning's note indicates that he also told the applicant that the respondent would pursue this matter vigorously with the best legal advice and that the applicant should think seriously about his position and the costs that he would incur. The meeting took place on 25 January 1995, with the applicant, Mr Binning and Mr Colquhoun. Mr Binning commenced the meeting by making the following statement: "I have reason to believe that you have been: (a) At best using First 5 Minutes Pty Limited material for other purposes certainly not in the interest of First 5 Minutes Pty Limited; and (b) At worst, operating your own business in competition to First 5 Minutes Pty Limited. This is a very serious matter and, if correct, could result in your dismissal. I will now take you through these documents, take your time and tell me what you have to say about them." Following this statement certain documents were shown to the applicant and he was questioned about them. After the fifth document it appears that the applicant became a bit cautious about the trend of the meeting and indicated that he was going to terminate the meeting as: "... every word I say could purge me and prejudice my future in the company." Having said that, he left the room with the documents 1 to 5 in his hand and Mr Binning called him back and said: "We will stay here for an hour if you reconsider your decision and wish to ask any questions on the documents or see the other documents." A complete set of the documents was delivered to the applicant by courier on the same day, Wednesday 25 January 1995. On Friday 27 January 1995, Mr Binning decided to terminate the applicant's employment. In paragraph 35 of his affidavit, marked as exhibit 8, Mr Binning said: "My decision was made on the grounds that Mr Borland had admitted to breaching the Confidentiality Agreement and his duty of good faith to First 5 Minutes. Further, First 5 Minutes' investigations had revealed that Mr Borland had engaged in competition with First 5 Minutes by preparing a manual for ISP without First 5 Minutes' knowledge or consent. Mr Borland had failed to confirm that this was an isolated incident. Mr Borland had shown a lack of honesty and had refused to respond to First 5 Minutes' allegations of serious misconduct, either at the meeting convened for this purpose on 25 January 1995 or at any time after the meeting." THE APPLICANT'S LETTER OF 12 JANUARY 1995 After the applicant was suspended on 12 January 1995, he sent a letter to Mr Colquhoun in an attempt to explain his position. The letter is set out hereunder: "Dear Mr Colquhoun, After having had time to gather my thoughts regarding your decision to suspend me from duties until further notice, I feel compelled to write to you forthwith. Although I consider this to be of a private nature I am very concerned about the allegations in which I have been subjected too. These allegations I consider to be serious and prejudicial in my wishes to remain in the employment of First 5 Minutes. However I am prepared to provide you with the following information. This information should not be interpreted either in part or in full as to an admission of alleged guilt or impropriety. I was approached by an acquaintance who represents a security consultancy, known as International Security Personnel. He asked me if I could undertake a fire safety survey for a religious organisation. The survey required a full assessment of the property's fire safety system, assess and recommend methods in reducing the facilities vulnerability to an arson attack and to document other contingencies with methods on minimising their impact. The survey was undertaken when I was on holidays and has not been completed at this point in time. It would appear some comparison has been drawn with an incompleted draft document that has come into your possession with that of First 5 Minutes material. Much of the material contained in this document related to kindergarten safety, bomb threat material available from the Federal Police and AS3745. I certainly did not intend to compromise any confidentiality. However, because of these accusations and the fact I wish to resolve this matter urgently, I have destroyed the document that you had brought to my attention. If I have erred in any way or caused concern with my alleged actions, then I am deeply regretful. I can understand your concerns and assure you that I am not employed, contracted to, or connected to anybody else with providing unsolicited material belonging to First 5 Minutes. I certainly do hope that we can sort this out at this level, as I will be equally determined to pursue any avenue that would be available to me. Iain Borland." It is clear from this letter that the applicant makes no admission that he has breached the Confidentiality Agreement, his duty of good faith or that he had acted in competition with the respondent. It is also clear that he did in fact state that this was an isolated incident. THE CONFIDENTIALITY AGREEMENT On the 29 June 1992 the applicant signed a confidentiality agreement in the presence of Mr Colquhoun in the following terms: "IT IS AGREED AS FOLLOWS: 1. CONFIDENTIALITY OBLIGATIONS (a) The employee shall not, either during the continuance of his employment with the company or at any time thereafter, except in the proper course of his duties as an employee of the company, divulge to any person whomsoever and shall use his best endeavours to prevent the publication or disclosure of any trade secret or process or any information concerning the business technology or finance of the company, and/ or its associated or related companies or its or their dealings or affairs which may come to his knowledge in the course of his employment with the company or by any other means whatsoever. (b) The employee shall not, either during the continuance of his employment with the company or at any time thereafter, except in the proper course of his duties as an employee of the company, give or show to any person any books, records, manuals, written procedures, diagrams, client details, notes or other material belonging to, or pertaining to the company and/or its related companies or its or their dealings or affairs including electronically stored material which may come into his possession in the course of his employment with the company or by any other means whatsoever. Furthermore, the employee undertakes to surrender up all such material to the company forthwith on termination of employment or when requested to do so by an authorised officer of the company. 2. TERMINATION (a) The employee's employment with the company may be terminated forthwith by the company at the company's absolute discretion and without prior notice. If the employee shall, at any time, be proven guilty of any misconduct or neglect in the discharge of his obligations pursuant to clause 1 of this agreement. (b) Upon termination of the employee's contract of employment pursuant to paragraph (a) of this clause, the employee shall immediately resign from his position with the company without claim for any compensation by way of a severance or redundancy entitlement and the employee's conduct shall be construed as being wilful breach of his duties as an employee, for the purpose of any superannuation scheme of which the employee is a member." WAS THERE A BREACH OF THE CONFIDENTIALITY AGREEMENT? The applicant admitted that he had used some of the respondent's material in the preparation of the manual for the Temple Emanual and the pages found at the printers bear this out. He also said that it was his intention to produce this copy purely for the purpose of displaying it as an example of what he was to prepare at some future date for the Temple. In paragraph 19 of the applicant's affidavit (exhibit 2), he explained that given his involvement in the security industry and his membership of various professional organisations, he was well aware of the strong criticism and reprobation that plagiarism of such kind would attract both from clients, as well as those professional organisations of which he was a member. He stated further that he was aware that if he published someone else's work as his own he would destroy his creditability in the field of fire and emergency services. Despite this the applicant unfortunately destroyed the evidence.