Akuna Capital LLC (Delaware) v Ainsley

[2018] NSWSC 680

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Akuna Capital LLC (Delaware) v Ainsley [2018] NSWSC 680
Hearing dates:	09/05/2018
Date of orders:	09 May 2018
Decision date:	09 May 2018
Jurisdiction:	Equity
Before:	McDougall J
Decision:	Dismiss application for interlocutory injunctive relief.
Catchwords:	EQUITY – application for interlocutory injunctive relief – plaintiffs seek to restrain defendant using certain documents in Fair Work proceedings – where such documents alleged to be either confidential or the property of the plaintiffs – no basis for characterising the documents as either of these – application dismissed.
Cases Cited:	Rex v Haddock (1935) Uncommon Law 24
Texts Cited:	AP Herbert, Uncommon Law, Methuen and Co Ltd, 1935
Category:	Procedural and other rulings
Parties:	Akuna Capital LLC (Delaware) (First Plaintiff) Akuna Holdings LLC (Delaware) (Second Plaintiff) Akuna Australia Pty Ltd (Third Plaintiff) Ainsley Keren Bryant (Defendant)
Representation:	Counsel: D Mahendra (Plaintiffs) B Cross (Defendant)    Solicitors: Clayton Utz (Plaintiffs)
File Number(s):	2018/133039

Judgment   (ex tempore – revised 9 may 2018)

1. HIS HONOUR: The plaintiffs are a group of companies who engage in something called proprietary trading. That is said to be a highly competitive industry in which participants rely on intellectual property to gain advantage. The plaintiffs say that their confidential information is treated with the utmost security.

2. From about 16 February 2017, the defendant (Ms Bryant) started providing services to the first and second plaintiffs. There is some dispute as to whether she provided those services as an employee or as an independent contractor. It is neither possible nor necessary to resolve that dispute on this application.

3. On 25 October 2017, the third plaintiff (the employer) was incorporated. Ms Bryant became a director.

4. On 28 February 2018, the employer and Ms Bryant entered into two written agreements. One was an employment agreement constituted by an accepted “Letter of Engagement” dated 27 February 2018. The other was a “Restrictive Covenant and Employee Intellectual Property Agreement”.

5. Ms Bryant’s employment, and presumably her appointment as a director of the employer, came to an end about a month after those agreements were signed. She has commenced proceedings in the Fair Work Commission, under provisions that I have to say are somewhat mysterious to me.

6. Apparently, if those proceedings go ahead, there will be a conciliation conference. If that does not succeed, then, subject to certain time limits, Ms Bryant has the right either to arbitrate her differences with the employer or to commence a proceeding in the Federal Court or the Federal Circuit Court.

7. The dispute of present relevance is that, as part of the documents filed in support of her application in the Fair Work Commission, Ms Bryant included copies of emails that, the plaintiffs say, are their confidential information and, in any event, their property. They seek orders requiring, in effect, that this material be extracted from the Fair Work application and returned to them. They seek other orders aimed at ensuring that Ms Bryant has no confidential information, and no property of the plaintiffs, in her possession.

8. The letter of engagement contains a clause, 13, dealing with confidential information. I set that out:

13.   Confidential Information

13.1 For the purpose of this clause 9, “Confidential Information” means all confidential information of the Company including but not limited to trade secrets, confidential know how, client lists, supplier lists, price lists, information about tenders and proposals to prospective clients, prospective client lists, information about products and services in development, business plans, marketing plans and computer software owned by or used by the Company of which the you [sic] became aware or generates (both before and after the day this letter is signed).

13.2   By accepting this letter of offer, you acknowledge and agree that you will not, during the course of your employment or thereafter, except with the consent of the Company, as required by law or in the performance of your duties, use or disclose Confidential Information.

9. The restrictive agreement (as I shall call it) contains a clause, 4.3, dealing with non-disclosure of confidential information as defined in cl 4.1. I set out those clauses:

4.1   Definition. During the course of employment with the Company, Employee will have access to (i) trade secrets and other non-public information relating to the Company or its related bodies corporate, which may include, but not be limited to: source code of trading applications, trading or investment strategies, methodologies and results; trading or investment systems; investment or investment instrument positions of the Company or its related bodies corporate; risk management models; revenue models; quantitative and other strategies and methodologies, procedures and techniques; business plans and strategies, pricing and other financial information; lists of investors, clients, vendors and suppliers of the Company or its related bodies corporate; any confidential information of any such investors, clients, vendors or suppliers; the source code and any non-public information or data comprising or related to the Work; and other proprietary technologies and processes and other proprietary information used by the Company or its related bodies corporate in connection with their respective businesses and/or which the Company or any of its related bodies corporate is obliged to any third party to maintain as confidential, and (ii) any information concerning the Company’s or its related bodies corporate’ investment or trading performance, including the profits and losses therefrom, return on investment and other performance or “track record” information (collectively, the “Confidential Information”). Employee acknowledges that the Confidential Information is vital, sensitive, confidential and proprietary to the Company and/or its related bodies corporate. Notwithstanding the generality of the foregoing, clause (i) of the definition of “Confidential Information” does not include any information, materials, or data that is or becomes generally available to the public other than as a result of Employee’s unauthorized direct or indirect acts.

4.3   Non-Disclosure and Use. During and after Employee’s employment with the Company, Employee shall (i) hold the Confidential Information in the strictest confidence and take all reasonable precautions to prevent the inadvertent disclosure of Confidential Information to any unauthorized individual or entity; and (ii) not disclose or otherwise use the Confidential Information in any manner or medium whatsoever, except as required to perform Employee’s duties for the Company or with the Company’s prior written consent.

10. Clause 1.9 of the restrictive agreement requires the delivery up of various specified items of property upon the termination of employment. I set out that clause:

1.9   Delivery. Upon the termination of Employee’s relationship with the Company for any reason, and/or upon the Company’s request, Employee shall promptly (i) disclose to the Company all Work, (ii) deliver to the Company all records, notes, sketches, drawings, diagrams, prototypes, memoranda, discs, tapes, DVDs, CD-ROMs, source code, and any other documentation or other tangible materials or media in Employee’s possession or control that in any way embody, comprise, incorporate, or reflect the Confidential Information (as defined below) or any Work, including all copies thereof, and any other Company property then in Employee’s possession or control (collectively, the “Records and Property”), and (iii) certify in writing to the Company and Employee has fully complied with the foregoing. In addition, Employee represents and warrants to the Company that he has (x) disclosed to the Company all Work created or developed as of the date hereof and (y) delivered to the Company all Records and Property.

11. It is the plaintiffs’ case that the information included in Ms Bryant’s application to the Fair Work Commission is confidential, and thus subject to cl 13 of the letter of engagement and cl 4.3 of the restrictive agreement. Alternatively, the plaintiffs say, it is their property, and thus subject to cl 1.9 of the restrictive agreement.

12. At issue today is whether interlocutory injunctive relief should be granted requiring, as I have said, excision of the material in question from the documents filed in support of the application to the Fair Work Commission and delivery up of all other information or property of the plaintiffs that is in Ms Bryant’s possession.

13. In my view, the application must fail, except upon a limited basis that, in the end, proved not to be controversial. There are two basic reasons for that. The first is that, in my view, the material said to be confidential comes nowhere near satisfying that adjective.

14. It is to be noted that the definition of confidential information starts by referring to the general law concept of confidential information. It then extends that to include, among other things, business plans and marketing plans.

15. The first of the documents in question talks about “high – level list ... [of] … plans”, apparently for the following four quarters. To describe that material as saying anything that would give an advantage to the plaintiffs’ competitors, or give some insight into the plaintiffs’ business processes, seems to me to be going altogether too far. If I may adapt the observations of Lord Light LCJ in Rex v Haddock [1] , it resembles the thirteenth stroke of a clock “which not only is itself discredited but casts a shade of doubt over all previous assertions”.

    1. AP Herbert, Uncommon Law, Methuen and Co Ltd, 1935, 24 at 28.

16. The same may be said of the other documents. One of them says, for example, that the plaintiffs intend to approach universities to entertain employment applications from graduates. I am not sure that this employment strategy would come as an enormous surprise to any of the plaintiffs’ competitors.

17. The third document deals with the negotiation of Ms Bryant’s remuneration. Again, that does not seem to me to come anywhere near the definition of confidential information in the letter of engagement.

18. Finally, the fourth document refers to “steady progress” of certain plans. That document, which is dated in July 2017, sets out how the plaintiffs propose to extend their operations from their American base, and the role that the defendant might play in that. Again, and like all the other documents except the one dealing with remuneration, it is expressed at such a level of generality as to be totally innocuous.

19. There is however one thing of significance in the documents. The second one includes a question by Ms Bryant as to whether she was required to “sign an NDA” (a nondisclosure agreement). The reply was, “Not required unless you need our trading algorithms”. That seems to me to give a significant insight into what it is that the plaintiffs really regard as confidential. If it were shown that Ms Bryant did have access to those algorithms and was threatening to misuse them, the plaintiffs’ case for an injunction would be very strong indeed. But that has not been suggested.

20. I am conscious of course that the definition of confidential information in cl 4.1 of the restrictive agreement is wider than the definition in cl 13.1 of the letter of engagement. But nonetheless, the matters to which I have referred indicate very strongly that the risk of any serious harm to the plaintiffs, following the disclosure of the material, is at best minimal.

21. It is also to be noted that, as is common ground between the parties (for which I am grateful, because I am ignorant of the details of proceedings in the Fair Work Commission), the Fair Work proceedings themselves are confidential, and members of the public do not have access to the files. Thus, there is no risk (as there is with documents read in open court in this and other superior courts) that members of the public may gain access to the documents in question and glean from them whatever mysterious secrets, vital to the plaintiffs’ ongoing business, they may prove to contain.

22. The second basis on which the claim based on confidential information must fail is that both the letter of engagement and the restrictive agreement operate specifically and only as between the third plaintiff, the employer, and Ms Bryant. That is clear from the definition of “the company” in each of them, and from the fact that it is “the Company” – the employer – that is the counterparty. The first two plaintiffs are not parties to those agreements. However, the documents that are said to be confidential are documents that came into existence not only before the agreements in question were signed but before the employer itself came into existence. It is totally unclear to me how they could contain any confidential information of the employer.

23. Turning to the proprietary claim (that is to say, the claim based on cl 1.9 of the restrictive agreement), there is a dispute as to whether that clause is limited to “Intellectual Property” which, it appears from the heading of cl 1, was thought to be the subject matter with which that clause dealt. Although I think that the argument put on behalf of Ms Bryant is weak, it is not necessary to come to a concluded view.

24. It may very well be that cl 1.9 in particular should be construed, as its language suggests, to apply to all company property, not merely property in the nature of intellectual property. But again, the same problem arises, which is that whosever property the documents may be, they cannot be the property of a company that did not exist when they were created. There is no evidence of a course of dealing or assignment between the various plaintiffs pursuant to which whatever property may have existed in those documents was somehow conferred upon or transferred to the employer.

25. There were numerous other arguments raised. In view of the shortness of time and the fact that there are other pressing matters in the Duty List that require to be dealt with, I will not go into them. It is sufficient to say that, for the reasons I have given, the application must be dismissed save in respect of the one order sought that is now no longer contentious.

26. For those reasons, I will make orders in accordance with what at present is para 1 of the short minutes of order propounded by the plaintiffs and with what is at present order 4. I decline to make an order in accordance with paras 2 and 3.

27. The matter should be listed for directions at some convenient time.

28. I will hear counsel on the time for compliance with what are presently orders 1 and 4, but after the deletion of draft orders 2 and 3 will become 1 and 2, on the time for a directions hearing and on costs.

[Counsel addressed]

29. I reserve costs.

30. I make orders in accordance with paras 1 to 4 as amended of the short minutes of order and initialled by me and dated today’s date.

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Endnote

Amendments

16 May 2018 - Amendment to Cover Sheet

Decision last updated: 16 May 2018