Rosewood Advertising Pty Ltd v Hannah Marketing Pty Ltd [2000] NSWSC 1034

New South Wales Supreme Court

CITATION : Rosewood Advertising Pty Ltd v Hannah Marketing Pty Ltd [2000] NSWSC 1034 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 4064/00 HEARING DATE(S) : 12, 13 & 16 October 2000 JUDGMENT DATE : 16 October 2000

Rosewood Advertising Pty Limited (P) PARTIES : Hannah Marketing Pty Limited (D1) Harvey Pogrund (D2) JUDGMENT OF : Hamilton J

COUNSEL : M J Cohen (P) R A Dick (D1 & 2) SOLICITORS : K A Garling (P) Phillips Fox (D1 & 2) CATCHWORDS : EMPLOYMENT LAW [42] - The contract of service and rights, duties and liabilities as between employer and employee - Miscellaneous matters - Trade secrets - Information acquired during engagement - Whether information confidential - Whether information part of employee's stock of general knowledge. Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 Jones v Dunkel (1959) 101 CLR 298 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 CASES CITED : Metrans Pty Ltd v Courtney-Smith & Ors (1983) 1 IPR 185 Re Minister for Immigration and Multicultural Affairs; Ex parte Fejzullahu (2000) 74 ALJR 830 United Sterling Corporation Limited v Felton and Mannion [1974] RPC 162 Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 DECISION : Interlocutory injunction refused.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

MONDAY, 16 OCTOBER 2000

4064/00 ROSEWOOD ADVERTISING PTY LIMITED v HANNAH MARKETING PTY LIMITED & ORS.

JUDGMENT

HIS HONOUR: 1 This is an interlocutory injunction application in the following circumstances. The plaintiff conducts a business of selling discount cards. That is a business whereby the vendor sells cards to the public which entitle the bearer to a discount on the product of the customer to whose goods or services the card relates. The vendor keeps the price of the card as its reward; the benefit to the customer is the increased trade (albeit at discount prices) which it receives. 2 The first defendant is a company controlled by the second defendant. The first defendant has existed for some time and conducted some business, as I understand it, of the same nature as the plaintiff's. The volume of that business has recently greatly increased in the circumstances to which I shall come. Either the first defendant or the second defendant, it is not entirely clear on the evidence which, was engaged by the plaintiff as a manager of its business. Furthermore, the third defendant and fourth defendant were engaged by the plaintiff as under managers. I use the word "engaged" because, again, it is not entirely clear on the evidence whether the contract of engagement was a contract of service under which the second, third and fourth defendants entered into a master and servant relationship with the plaintiff, or whether the services of the first or second defendant and the third and fourth defendants were retained on the basis that they were independent contractors. That possible difference is of no consequence in the present proceedings, since the matter has been conducted by both parties on the basis that if there were a duty of confidentiality imposed upon the defendants, its content would in the circumstances be much the same as the general law duty of confidentiality which is imposed on a servant. 3 In the proceedings generally there is a considerable controversy as to whether or not the defendants or any of them entered into a written contract with the plaintiff containing clauses in restraint of trade after the termination of the agreement. The degree of controversy varies with the parties. On the present body of evidence, in the case of the third and fourth defendants, there is a denial on each of their parts that they entered into such an agreement, and there is not really any convincing evidence on the plaintiff's part that written agreements with these persons ever existed. However, there is a much greater degree of controversy in the case of the first and second defendants, because there is evidence from Mr Ross, the controller of the plaintiff, which on a fair reading could be taken to mean that he had actually seen such an agreement signed by the second defendant on behalf of either himself or the first defendant company. This is squarely denied by the second defendant, and there are other arguments which countervail the execution of such an agreement. On the other hand, there is a suggestion in evidence that some agreements were taken and shredded by the second defendant at the time of the departure of him and others from their engagement with the plaintiff. Again, none of that is of any great materiality to the present application, since the plaintiff avowedly does not make a claim for interlocutory relief based upon the existence of an agreement, but solely upon breaches or apprehended breaches of the general law duty of confidentiality said to be imposed upon the defendants. 4 The short facts of the matter are that last month the defendants, together with a number of the plaintiff's sales staff, departed from the plaintiff's service. The second, third and fourth defendants and, I gather, some other sales persons as well, are now engaged in the service of the first defendant in carrying on the same business as the plaintiff carries on. There is probably some evidence that they have actually approached customers of the plaintiff, but, again, that matters little, because their stance avowedly is that they are perfectly entitled so to do, and to use any of the information concerning which the plaintiff brings this application as they please, on the basis that they are not in any breach of any duty in so doing. The information in relation to which the plaintiff has made application is the information contained in a schedule to the summons. That information includes the identity and location of a large number of customers of the plaintiff, the name of the contact person with each customer, the number of discount cards printed, the date of the contract which the plaintiff had with the customers, the print run of the cards to be issued and the income received in the case of contracts which have been completed, or projected in the case of contracts not yet complete. The plaintiff seeks relief by way of a restraint in terms of "confidential information of the plaintiff in the defendant's possession" but, as I have already said, the actual information in respect of which the application is brought is that set out in the schedule. If I am to grant relief I shall grant it in terms more specific than by reference simply to unspecified "confidential information". 5 The real controversy in this matter is whether any of the information the subject of the application is in truth confidential. The argument proceeds by reference to the nature of the information, to the fact that certain of it has clearly been placed in the public domain by the plaintiff, to whether some more of it has been placed in the public domain by the plaintiff and to whether the plaintiff has so conducted itself and the circumstances in general are such that confidentiality attaches to the information. 6 The principles upon which interlocutory injunction applications are determined are well known. They have recently been stated by Gleeson CJ in the High Court in Re Minister for Immigration and Multicultural Affairs; Ex parte Fejzullahu (2000) 74 ALJR 830 at [7]: "The applicants must show that there is a serious question to be tried in the principal proceedings, and that the balance of convenience favours the granting of an injunction."