Digital Pulse Pty Limited v. Christopher Harris and Ors [2002] NSWSC 33

Reported Decision : 40 ACSR 487 (2002) 20 ACLC 365

New South Wales Supreme Court

CITATION : Digital Pulse Pty Limited v. Christopher Harris and Ors [2002] NSWSC 33 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50032/00 HEARING DATE(S) : 26 to 30 November, 2001 JUDGMENT DATE : 8 February 2002

Digital Pulse Pty Limited [Plaintiff] PARTIES : Christopher Harris [First Defendant] Anthony Eden [Second Defendant] Juice-D Media Pty Limited [Third Defendant] JUDGMENT OF : Palmer J

COUNSEL : Andrew Bulley [Plaintiff] Damien A. Allen [Defendants] SOLICITORS : Barker Gosling [Plaintiff] Catalyst Partners [Defendants] CATCHWORDS : EMPLOYMENT - FIDUCIARIES - CONTRACT - Breach by employees of fiduciary and contractual duties of loyalty - conflict of interest and duty - employees divert business opportunities of employer to themselves during employment - liability for damages, equitable compensation or for account of profits. - CORPORATIONS - EMPLOYEES - Fiduciary duties of employees of a corporation - duties imposed on employees of corporation under s.182(1) Corporations Act - liability of employees of corporation for fraudulent diversion of business opportunities of corporation under s.176A Crimes Act - principles discussed. - EXEMPLARY DAMAGES - Whether the law in Australia permits the award of exemplary damages for breach of fiduciary duty - principles discussed. LEGISLATION CITED : Corporations Act, 2001 - Pt.9.4B, s.180, s.182, s.184, s.185, s.1317GA, s.1317H, s.1317J Crimes Act, 1900 - s.176A - AB v South West Water Services Ltd [1993] QB 507 - Aquaculture Corporation v New Zealand Green Mussel Co Ltd [1990] 3 NZLR 299 - ASC v AS Nominees Ltd (1995) 62 FCR 504 - Bailey v Namol Pty Ltd (1994) 53 FCR 102 - Barker v Ireland & Morris (1610-11) 21 ER 136 - Barker v Shepheard (1663) 21 ER at 136 - Baskervile v Guilliams (1545-46) 21 ER 153 - Broome v Cassell & Co Ltd [1972] AC 1027 - Broome v Cassell & Co Ltd [1971] 2 QB 354 - CAC v Bracht (1988) 14 ACLR 728 - Clegge v Waberton (1577-78) 21 ER 38 - Coloca v BP (Australia) Pty Ltd [1992] 2 VR 441 - Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 - Dreyfus v Peruvian Guano Co (1889) 42 Ch.D 66 - Emblem v Myers (1860) 6 H&N 54 - Fay v Parker (1873) 16 Am.R 270 - Forkserv Pty Ltd v Pacchiarotta [2000] NSWSC 979 - Gray v Motor Accident Commission (1998) 196 CLR 1 - Green & Clara Pty Ltd v Bestobell Industries Pty Ltd (No.2) [1984] WAR 32 - Griffith v Jenkin (1579) 21 ER 40 - Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169 - Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 - Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) ATPR 43,235 - Kuddus v Chief Constable of Leicestershire [2001] 2 WLR 1789 - Lamb v. Cotogno (1987) 164 CLR 1 - Merest v Harvey (1814) 5 Taunt. 442 [128 ER 761] - Parker v McKenna (1874) LR 10 Ch.App. 96 - Peters v The Queen (1998) 192 CLR 493 CASES CITED : - Phillips v Benson (1578-79) 21 ER 108 - Phipps v Boardman [1967] 2 AC 46 - R v Scott (1990) 20 NSWLR 72 - Re Imperial Hydropathic Hotel Co; Blackpool v - Hampson (1882) 23 ChD 1 - Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378 - Robb v Green [1895] 2 QB 315 - Rookes v Barnard [1964] AC 1129 - Sacheverell v Sacheverell (1621) 21 ER 116 - Smith v Streatfeild [1913] 3 KB 764 - Spies v The Queen (2000) 201 CLR 603 - The Amiable Nancy (1818) 3 Wheat. 546 - Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 - Trend Management Ltd v Borg (1996) 40 NLWLR 500 - Uren v John Fairfax & Sons Pty Limited (1966) 117 CLR 118 - USSC v Hospital Products International Pty Ltd [1983] 2 NSWLR 157; (156 CLR 41) - Warman International Ltd v Dwyer (1995) 182 CLR 544 - Wessex Dairies Ltd v Green [1935] 2 KB 80 - Wilkes v Wood (1763) Lofft 1 [98 ER 489] - Willoughby Municipal Council v Halstead (1916) 22 CLR 352 - Woodcock v Woodcock (1576-77) 21 ER 34 - XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 - UK Law Commission Report No.247 "Aggravated, Exemplary and Restitutionary Damages" (1997) - Dobbs "Handbook on the Law of Remedies: Damages, Equity, Restitution" West (1973) 212 note 99 - Mason & Carter "Restitution Law in Australia", para.1735 - Mayne & McGregor on Damages 12th Ed (1961) - Meagher, Gummow & Lehane "Equity: Doctrines and Remedies" 3rd Ed - Story on Equity (3rd Ed) para.697 - Spry in "Principles of Equitable Remedies" 3rd Ed note 12 - Winfield & Jolowicz on Tort 15th Ed (1998) DECISION : All Defendants liable to pay damages, equitable compensation or to account for profits; exemplary damages of $10,000 awarded against each of First and Second Defendants for breach of fiduciary duty.