AZPA Pty Ltd v Lalen Dogan
[2010] VSC 51
•23 February 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 10380 of 2009
| AZPA PTY LTD (ACN 137 395 003) AZPA HOLDINGS PTY LTD (ACN 106 727 084) | First Plaintiff Second Plaintiff |
| v | |
| LALEN DOGAN NUTRA INGREDIENTS PTY LTD (ACN 124 923 413) | First Defendant Second Defendant |
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JUDGE: | BYRNE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 February 2010 | |
DATE OF JUDGMENT: | 23 February 2010 | |
CASE MAY BE CITED AS: | AZPA Pty Ltd v Lalen Dogan | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 51 | |
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Practice and procedure – application for interlocutory injunction – confidential information – customer lists and customer information – first defendant former employee of plaintiffs – whether information confidential – whether first defendant threatened to disclose or use information – whether information already disclosed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B. Guzzo | Doherty & Colleagues Solicitors Pty Ltd |
| For the Defendant | Mr J.D. Mattin | N A Young & Co Solicitors |
HIS HONOUR:
This is an application brought by the first plaintiff, AZPA Pty Ltd, and the secondnamed plaintiff, AZPA Holdings Pty Ltd, against Lalen Dogan, the first defendant, and his company, Nutra Ingredients Pty Ltd, the second defendant. The application before the Court is made by summons filed on 23 December 2009 seeking interlocutory injunctions restraining the defendants from disclosing and using various pieces of information which is described as confidential information.
The circumstances of the case may be shortly stated. Mr Dogan was employed from about October 2006, probably by the secondnamed plaintiff, in their sales and marketing division and he took various positions thereafter including, according to the affidavit of Michael Mark Henain sworn 16 December 2009, supply chain manager and IT administrator. It seems that he was concerned with customer supply. In any event, Mr Dogan continued in the employ of one or other of the plaintiffs until he resigned on 12 November 2009 and he was last at the premises of the plaintiffs, it is said, on 18 November 2009.
The evidence shows that the plaintiffs, or one of them, over the years, have engaged in the importing and distribution of pharmacy and other products, including, for relevant purposes, fish oil. They purchase, I was told, fish oil from a company in Norway called GC Reiber Oils AS and sell them in Australia to various customers whose function it is to process them and then they are sold ultimately to the public. There appears to have been some difficulties in late 2008 or early 2009 with the Therapeutic Goods Agency and that seems to lie in the background of this case. This is a matter on which I have very little information. I say nothing about it other than a dispute appears to have been on foot at that time and it may, or may not, be still on foot.
In early 2009, whilst still an employee, Mr Dogan communicated with Reiber Oils the difficulties that were being encountered in Australia. The upshot of this was that he and Reiber Oils discussed the possibility of him acting in some way either as an agent or possibly a distributor, or in any event, in some way assisting Reiber Oils to market their product otherwise than through AZPA.
I expressed the view in the course of argument that, on its face, this seems to be a breach of the duty of loyalty that he owed to his employer but the matter was never fully explored and I express no concluded view about this. These negotiations however, continued through 2009 and on 21 September ‑ not 31 July but 21 September 2009 ‑ Mr Dogan became the agent of GC Reiber Oils AS in Australia as appears in the ASIC records.
By that time the discussions between Mr Dogan and Reiber Oils were well advanced and shortly after his departure, he appears to have been actively assisting Reiber Oils in its efforts to establish itself as an alternative distributor in Australia. At this time there was, as I was told, an exclusive distributorship agreement on foot between Reiber Oils and one or other of the AZPA companies. I think I have not seen that agreement but I am told that it terminates, either by notice or otherwise, on 1 April this year.
The position then is that, from at least from the middle of 2008 up to 1 April 2009, AZPA was and is entitled to be the sole distributor within Australia and possibly New Zealand. But, after 1 April this year, it will not have that right. Presumably it will be entitled to purchase product from Reiber but it will have to compete with Reiber in the local market.
On 4 January 2010 Reiber Oils distributed among customers or prospective customers in Australia and New Zealand a circular in which it announces that it will shortly be distributing generally its product in those areas, either via AZPA or directly to the customer. So what is there said, as I read it, is that Reiber, as it is entitled to do after 1 April, is proposing to compete with AZPA in this market. The circular goes on to describe Mr Dogan as, "Our newly appointed regional manager." At the date of this circular, there is no reason why Mr Dogan could not have that employment as he had ceased employment with AZPA.
The case for the injunction depends not upon any express contract of employment or any term in a contract of employment but rather upon the ordinary equitable principle which will protect the owner of confidential information who releases it for a limited purpose, for example, to an employee, from abuse by the employee of that information. This right will continue even after employment has terminated.
What is required in order to make out such a claim is that information has been disclosed to that employee in circumstances of confidence or qualified confidence, that is, it is in confidence, subject of course to the employee being able to use it for the purposes of the employment. The second requirement is that the employee proposes to, or threatens to use that information and, further, that damage is suffered accordingly.
In the present case the plaintiff alleges that the confidential information which was given to Mr Dogan is the following, and I quote from the statement of claim the passage which is picked up in the affidavit material:
Substantial information confidential to itself concerning: (a), their customers; (b), their suppliers; (c), their customers raw material requirements including order history, delivery terms, freight costs, credit terms, prices paid, capacity; (d), their customers price sensitivity to particular products; (e), refined fish oil market statistics maintained by the plaintiffs, including details of various raw pharmaceutical products suppliers, customers contract manufacturers and sponsors.
The first criticism addressed to this application on behalf of the defendants was that this is an insufficiently precise statement of the confidential information which is sought to be restrained. I agree. Although there is some evidence that information came to the possession on many of these topics, but not all, it would be not possible to formulate an order in terms consistent with that definition which would protect the interests, if there are any interests, of the plaintiffs.
Next it is said that the alleged confidential information is not in fact confidential. In the present case the breach of confidence appears to be alleged in respect of a breach in favour of Reiber. It is not suggested that Mr Dogan is going to broadcast to the wider commercial community the information which was referred to in the affidavits, but merely that he will release this information to Reiber Oils.
Two answers were made to this. The first was that this information was always disclosed to Reiber Oils, even before Reiber Oils itself became interested in participating in the Australian market. There is much to be said for that. The evidence is necessarily limited but I have been shown emails passing between AZPA and Reiber Oils which contain much of the information which is now said to be confidential to AZPA and not available to Reiber Oils.
The second answer to this aspect of the complaint is that even if the information were confidential, it is no longer relevantly confidential because this information has been disclosed, or to put it the other way, the plaintiffs has not shown that it has not been disclosed to Reiber Oils already. It seems to me on the material available to me that this is in fact the case. So the position is that the injunction would serve no purpose.
When I taxed counsel for the plaintiffs on this, his answer was that, "We don't really know" or "We think that there may be further disclosures in the future." I decline to act upon what is essentially speculation and therefore on that ground also would refuse the application for interlocutory injunction.
Further aspects of the claim also cause me to doubt the availability of the interlocutory relief and these include the confidentiality of the information which appears to be the subject of the restraint. The law draws a rather fuzzy distinction between general knowledge that an employee may acquire in the course of employment and specific information which is so specific and so personal to the employment that the courts will interfere to protect it. In this case, really all that was shown to me was the concern of the plaintiffs that the customer lists would be disclosed to Reiber. These lists have not been shown to be confidential information within the relevant definition.
For those reasons at least, I therefore decline to grant the injunctions sought. The application by summons filed on 23 December 2009 will be dismissed.
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