Bovogen Biologicals Pty Ltd v O'Dea

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST

S ECI 2020 01568

BOVOGEN BIOLOGICALS PTY LTD (ACN 164 150 403)	Plaintiff
v
PETER O’DEA	Defendant

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JUDGE:	Ierodiaconou AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	2 April 2020 Determined on the papers
DATE OF RULING:	2 April 2020
CASE MAY BE CITED AS:	Bovogen Biologicals Pty Ltd v O’Dea
MEDIUM NEUTRAL CITATION:	[2020] VSC 157

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EMPLOYMENT – Employment contract – Confidentiality agreement – Disclosure of confidential information – Interim injunction – Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57 applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Wheelahan	FCB Workplace Lawyers & Consultants
The Defendant represented himself

HER HONOUR:

The plaintiff employer says that the defendant employee has unlawfully disclosed its confidential information. The plaintiff seeks orders to restrain the defendant from disclosing its confidential information, delivery up of its confidential information and deletion of any electronic copies held by the defendant. The plaintiff seeks a list of third parties to whom the defendant has disclosed such information. The defendant opposes the relief sought.
Summary
For the reasons below, and subject to the plaintiff providing the usual undertaking as to damages,[1] I will make orders restraining the defendant from disclosing confidential information for a four week period. I will make orders requiring him to deliver up the plaintiff’s confidential information and delete any electronic copies that he holds. The proposed orders are discussed in more detail below. At this time, I decline to make the orders sought concerning the list of third parties.
[1]Sharp v Conroy [2020] NSWSC 271 [25] (Cavanagh J).
Contract of Employment
The written contract of employment between the parties is dated 26 October 2016 and executed by the plaintiff on 31 October 2016 (‘the employment contract’).[2]
[2]Exhibit ‘DS-1’ to the affidavit of Ms Dani Salinger, solicitor for the plaintiff, sworn on 30 March 2020 (‘Salinger affidavit’).
Clause 15 of the employment contract follows.
Protection of Bovogen Biologicals Business Interests
The Confidentiality Agreement set out in Item 8 of the Schedule must be signed by you and forms part of your contract of employment with Bovogen Biologicals.
Item 8 of the Schedule to the employment contract states ‘Confidentiality Agreement – refer to attached’.
A confidentiality agreement between the parties is dated 31 October 2016 and executed by the plaintiff on 31 October 2016 (‘the confidentiality agreement’).[3]
[3]Exhibit ‘DS-2’ to the Salinger affidavit.
Clause 3 of the confidentiality agreement follows.
3.The Receiving Party [the defendant] must;
(i)keep all Confidential Information of the Disclosing Party [the plaintiff] confidential unless strictly required otherwise by law;
(ii)limit access to those of its employees or agents reasonably requiring the Confidential Information on a strictly need to know basis for the Purpose;
(iii)not use Confidential Information in any way which would be harmful to the best interests of the Disclosing Party;
(iv)immediately notify the Disclosing Party of any disclosure required by law;
(v)not use any Confidential Information in any way other than for the Purpose or as otherwise contemplated by this Agreement without the prior written permission of the Disclosing Party;
(vi)not copy, in whole or in part, any Confidential Information without the prior written permission of the Disclosing Party; and
(vii)ensure that all employees and agents to whom Confidential Information is disclosed are legally bound under the terms and conditions of their employment agreements or otherwise to keep the Confidential Information confidential and not to use the Confidential Information except for the Purpose.
Unhelpfully, ‘Purpose’ does not appear to be defined. ‘Confidential Information’ is defined in clause 1.
1. In this Agreement :
“Confidential Information” means all unpatented inventions, ideas, know-how, concepts, trade secrets, processes, techniques, software, products and all other intellectual property, financial and business information and all other commercially valuable information of Bovogen Biologicals Pty Ltd which the company regards as confidential to it and all copies, notes and records and all related information generated by the Receiving Party based on or arising out of any such disclosure. Confidential Information excludes or as the case requires, ceases to include information which is or becomes:
(i)available to the public in documentary form at the date of its disclosure to the Receiving Party;
(ii)at the date of its disclosure to the Receiving Party, already properly in the possession of the Receiving Party in written form otherwise than by the prior confidential disclosure from the Disclosing Party;
(iii)after the date of its disclosure to the Receiving Party, available in documentary form to the public from sources other than the Receiving Party;
(iv)after the date of its disclosure to the Receiving Party, properly available to the Receiving Party from a third party having no obligation of confidentiality to the Disclosing Party;
(v)demonstrated by the Receiving Party to be independently developed by an employee or agent of the Receiving Party having no knowledge of such information of the subject of the disclosure.
4.At any time upon the written request of the Disclosing Party, the Receiving Party must return to the Disclosing Party any documents originating from the Disclosing Party which embody Confidential Information and must not keep any copies in any form.
Plaintiff’s submissions
The plaintiff’s key submissions may be summarised as follows.
First, it has a strong prima facie case, indeed an overwhelming one, that the defendant has breached the confidentiality obligations imposed by the employment contract and acted contrary to his statutory obligations pursuant to s 183 of the Corporations Act 2001 (‘Corporations Act’). It relies on the affidavit of its solicitor.
Second, in respect of the balance of convenience, it can be safely inferred that the plaintiff’s competitive position will be compromised and undermined as its confidential information, including customer details, has been provided to at least one key competitor. Further, the defendant is in breach of his employment contract in respect of confidentiality obligations and all attempts to remedy the breach other than relief from the Court have been futile. On the other hand, the disadvantage that the defendant may suffer if orders are made will be limited to compliance with the terms of his employment contract. In respect of costs, the defendant seeks only that the costs of the application be reserved.
Third and relatedly, there is a strong arguable case that damages will be an inadequate remedy. The damage arising from the misuse of confidential information that the plaintiff may suffer from the defendant’s conduct is insidious, and difficult to identify, measure or quantify. This is why interlocutory injunctions are routinely made in cases of this kind.
Defendant’s submissions
The defendant’s key submissions may be summarised as follows.
First, the plaintiff has breached its contractual obligations to him. The defendant refers to a service company, New Bovogen Pty Ltd and Others. The defendant says that the plaintiff breached its contractual obligation to him in favour of New Bovogen by not disclosing its commercial service arrangement with New Bovogen and Others. He says that when he notified the plaintiff of his rights under the terms of the confidentiality agreement, it dismissed those rights and instead pursued its commercial service arrangements with New Bovogen and Others. The defendant says that under the new commercial service arrangements he has not been paid from 15 October 2019 until now.
Second, the plaintiff breached contractual obligations owed under the employment contract and confidentiality agreement. The defendant refers to his medical sick leave. He says that the plaintiff deliberately misled a WorkCover investigation in order to conceal its management failures which are revealed in warning letters issued to him jointly by the plaintiff and New Bovogen and Others.
Third, the defendant says he was deliberately injured in order to terminate his employment by bullying, discriminating, humiliating, isolating, harassing abusing and termination of his employment. He refers to an adverse action claim in the Fair Work Commission that he has served on the plaintiff and says that he will seek to add New Bovogen and Others to that claim.
Fourth, this application has no merit at all. It was the defendant who had a prima facie case on 12 November 2019 when he notified the plaintiff by email of an alleged breach of the confidentiality agreement. He has not received notification from the plaintiff. There is no case for him to answer on the claims now made by the plaintiff on the basis that the plaintiff had no case to answer on 12 November 2019.
For completeness, I observe that the defendant included a number of documents with his submissions including the confidentiality agreement, a workers’ compensation investigation report, warning letters from the plaintiff to him, email correspondence with the plaintiff, and a TAC certificate.
Analysis
The evidence in the Salinger affidavit and exhibits reveals the following.
On 28 February 2020, the defendant emailed Mr Matthew Bartlett, General Manager of Bovogen, and copied in a solicitor, Mr David Whiting of Whiting Lawyers, and Ms Matilda Marozzi an ABC journalist (‘the 28 February 2020 email’).[4]
[4]Exhibit ‘DS-4’ to the Salinger affidavit’.
The 28 February 2020 email is said to contain specific items of confidential information.[5]
[5]Salinger affidavit [17].
On 2 March 2020, the defendant emailed Mr Bartlett, Ms Julie Hartney a representative of the Department of Agriculture, Water and Environment, Ms Marozzi, Ms Alexandra Targett, solicitor at McDonald Murholme (the firm noted on the defendant’s Fair Work Commission Claim)[6] (‘the 2 March 2020 email’).[7] The 2 March 2020 email is said to contain the same confidential information as the 28 February 2020 email with the addition of specific items of confidential information.[8]
[6]Exhibit ‘DS-3’ to the Salinger affidavit.
[7]Exhibit ‘DS-5’ to the Salinger affidavit.
[8]Salinger affidavit [20].
The solicitors for the plaintiff emailed a letter on 3 March 2020 to the defendant, care of Mr Whiting. The letter required the defendant to immediately cease and desist from engaging in any further conduct that was in breach of the confidentiality agreement and from communicating with the plaintiff directly (‘the 3 March 2020 letter’).[9] The 3 March 2020 letter referred the defendant to clause 3 of the confidentiality agreement as a term of his employment.
[9]Exhibit ‘DS-6’ to the Salinger affidavit.
The 3 March 2020 letter alleged that the defendant’s conduct was:[10]
…clearly in breach of your confidentiality obligations owed to [the plaintiff] pursuant to the Contract and Confidentiality Agreement. It is clear that in sending the aforementioned emails you have brought Confidential Information into the public domain, and used such Confidential Information to Bovogen’s detriment in the understanding that Bovogen’s business arrangement with its client require the utmost confidentiality. Needless to say, you sent these emails without Bovogen’s consent nor are the emails protected disclosures or public interest disclosures.
[10]Ibid.
The 3 March 2020 letter required the defendant to give written undertakings by 4.00pm on 4 March 2020 in the form drafted by the solicitor for the plaintiff.[11] The undertakings were to (a) confirm he would act in accordance with the obligations under the employment contract, confidentiality agreement and section 183 of the Corporations Act and (b) to deliver up all Bovogen confidential information in his possession and control to the solicitor for the plaintiff.[12] The undertaking also required that, in the event confidential information had been disclosed to one or more third parties, the defendant provide a statutory declaration listing the names and addresses of those parties together with the details of the nature of confidential information given and the manner and date it was given.
[11]Ibid.
[12]Ibid.
On 19 March 2020, the defendant emailed Mr Bartlett, Ms Targett, Mr Mark Hannigan of the Department of Agriculture, Water and Environment, Commercial Director of a key competitor, and Mr Trent Hancock, principal solicitor of McDonald Murholme (‘the 19 March 2020 email’).[13] The 19 March 2020 email contained five photographs which disclosed:[14]
(a)identities of 11 customers of Bovogen;
(b)particulars of Bovogen products supplied to those customers; and
(c)confidential information about Bovogen’s export procedures.
[13]Exhibit ‘DS-7’ to the Salinger affidavit.
[14]Salinger affidavit [26].
The first and second photographs depict a whiteboard kept in a room at the plaintiff’s premises which had access restricted to six staff members including the defendant. On the whiteboard were particulars of confidential information. The third and fourth photographs depict pails of the plaintiff’s products disclosing particulars of those products. The fifth photograph depicts pallets of pails of the plaintiff’s products.[15] The defendant was not authorised to take the photographs.[16]
[15]Exhibit ‘DS-7’ to the Salinger affidavit.
[16]Salinger affidavit [32].
The solicitors for the plaintiff emailed a letter on 20 March 2020 to Mr Whiting and Mr Hancock (‘the 20 March 2020 letter’).[17] It stated that the 19 March 2020 email contained highly confidential information and was sent to a key competitor. It alleged that the defendant’s disclosures were an egregious breach of: clause 15 of the employment contract, clause 3 of the confidentiality agreement and section 183 of the Corporations Act. Further, it stated irreparable damage to the plaintiff may be caused by the disclosures.
[17]Exhibit ‘DS-8’ to the Salinger affidavit.
The 20 March 2020 letter required the defendant to provide the undertakings and extended the time for return of the signed undertakings to 4.00pm on 23 March 2020.[18]
[18]Ibid.
On 22 March 2020, Ms Targett of McDonald Murholme replied to the 20 March 2020 email indicating that McDonald Murholme did not have instructions to accept service in relation to the matters raised in the letter and to send the correspondence directly to the defendant.[19]
[19]Exhibit ‘DS-9’ to the Salinger affidavit.
On 23 March 2020, Mr Whiting of Whiting Lawyers confirmed via telephone conversation with the solicitor for the plaintiff that he was not instructed in this matter.[20]
[20]Exhibit ‘DS-10’ to the Salinger affidavit.
On 23 March 2020, the solicitor for the plaintiff emailed a letter to the defendant directly (‘the 23 March letter’) noting that neither McDonald Murholme nor Whiting Lawyers were instructed to act for him in this matter.[21] It extended the time for the defendant to return the signed undertakings to 4.00pm on 24 March 2020 and attached the previous letters. It gave the defendant notice that if he did not provide the undertakings by then, it would issue proceedings.
[21]Exhibit ‘DS-11’ to the Salinger affidavit.
On 24 March 2020, the defendant sent a number of emails to the plaintiff’s solicitor.[22] He did not agree to sign the undertakings. The defendant claimed that his emails had been hacked and his computer cloned. The plaintiff’s solicitors replied later that day noting that the defendant had not denied that he sent the 19 March 2020 email and required that he sign the undertakings.[23]
[22]Exhibit ‘DS-13’ to the Salinger affidavit.
[23]Exhibit ‘DS-13’ to the Salinger affidavit.
On 26 March 2020, the plaintiff’s solicitor sent an email to the defendant attaching the proposed Court documents and instructions to commence proceedings unless the undertakings were provided. The letter gave the defendant a final opportunity to sign the undertakings.[24] The time frame was extended until Friday 27 March at 10.00am. The defendant did not sign the undertakings.
[24]Exhibit ‘DS-15’ to the Salinger affidavit.
On Monday 30 March 2020, the plaintiff filed its writ and summons.
Turning now to the principles. They are well-established.[25]
[25]See, for instance, Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57, 68-9 [19] (Gleeson CJ and Crennan J), 81-2 [65] (Gummow and Hayne JJ) (‘ABC v O’Neill’).
The first issue is whether there is a prima facie case. It is not appropriate to make final findings of fact on an interlocutory injunction.[26] Here, the evidence recited above gives rise to a strong prima facie case that the defendant has breached his employment contract and the confidentiality agreement. Specifically, the 19 March 2020 email to third parties contains information that falls within the definition of confidential information. Such disclosure is prohibited by the confidentiality agreement. The defendant does not deny the allegations that he has breached the confidentiality agreement.[27]
[26]One Dream Enterprises Pty Ltd v Simmonds [2019] VSC 304 [11] (McDonald J).
[27]Given this, it is unnecessary to address section 183 of the Corporations Act 2001 at this point.
The second issue is the balance of convenience. That is, whether the inconvenience or injury that the plaintiff would suffer if the injunction were refused is outweighed by the injury the defendant would suffer if the injunction were granted.[28] Whether or not damages are an adequate remedy must also be considered.
[28]ABC v O’Neill (2006) 227 CLR 57 68–9 [19], 81-2 [65].
Here, the balance of convenience favours granting an interim injunction. If the injunction is not granted, the plaintiff is likely to be injured in respect to the disclosure of its confidential information. It outweighs any injury to the defendant. He is being required to comply with his employment contract and the confidentiality agreement. The defendant remains in employment although on unpaid leave, having exhausted his personal (sick) leave entitlements.[29]
[29]This appears to be common ground: see Salinger affidavit [12] and the defendant’s email dated 24 March 2020, contained in Exhibit ‘DS-13’ to the Salinger affidavit, in which he states that he is technically still a full-time employee.
Given the nature of the confidential information and the strongly arguable case that it has been disclosed to at least one key competitor of the plaintiff, I accept that damages would not be an adequate remedy.
The question arises whether, given the allegations made by the defendant against the plaintiff, I should decline to order the relief sought by the plaintiff. That is, whether “where the confidence is relied upon to prevent disclosure to a third party with a real and direct interest in redressing a crime, wrong or misdeed”.[30]
[30]Integrated Global Partners Pty Ltd v Hyde [2018] VSC 45 [27] (McDonald J).
At the moment, the allegations made by the defendant are simply that. He has not filed any affidavit material. The defendant informed the plaintiff’s solicitor by email on 31 March 2020 that he had a serious fall the previous day and had been advised by a doctor to stay home for five days until the swelling subsides.[31]
[31]Exhibit ‘DS-1’ to the affidavit of Ms Dani Salinger sworn 1 April 2020.

The submissions that the defendant has emailed to Chambers do not properly answer or explain the wrong alleged by the plaintiff, namely the disclosure of its confidential information to a key competitor and others.
I am conscious that the impact of COVID-19 may provide an explanation for the absence of affidavit material.
The plaintiff has not filed any affidavit material save by its solicitor.
I will make orders that this matter return in four weeks’ time. This will enable both parties to file affidavit material, should they wish to do so.
For the interim period, I will make orders restraining the defendant from disclosing confidential information, requiring he deliver up confidential information and delete any electronic copies in his possession. The plaintiff seeks that ‘confidential information’ be defined in the orders by reference to the documents referred to as Exhibits ‘DS-4’, ‘DS-5’ and ‘DS-7’ to the Salinger affidavit. The orders ought be more precise. I am satisfied that the photographs in Exhibit ‘DS-7’ fall within the definition of ‘confidential information’. As to Exhibits ‘DS-4’ and ‘DS-5’, the orders shall be confined to the substance of those documents that falls within the definition of ‘confidential information’ and is identified as such in the corresponding paragraphs of the Salinger affidavit, namely paragraphs [17] and [20]. The orders for delivery up and deletion of electronic copies of information will be similarly confined.
The plaintiff seeks a list of third parties to whom the defendant has disclosed its confidential information. I am not satisfied on the material before me, and particularly the lack of direct evidence from the plaintiff, that such an order is necessary to protect its interests at this point. Nor do its submissions directly address the basis upon which this order is sought.
Orders will be made giving both parties the opportunity to provide further submissions prior to the next return date.
Finally, the plaintiff seeks confidentiality orders concerning inspection of Exhibits ‘DS-4’, ‘DS-5’ and ‘DS-7’ to the Salinger affidavit and the corresponding paragraphs referring to those exhibits. I will make the orders in respect of those particular exhibits given the references to the plaintiff’s confidential information. Corresponding paragraphs [16], [19] and [32(e)] of the Salinger affidavit do not contain confidential information. Paragraphs [17], [20] and [33(e)] do. I will make confidentiality orders in respect of those paragraphs and give leave for a version of the Salinger affidavit to be filed with paragraphs [17], [20] and [33(e)] redacted.
The plaintiff does not press the costs of the application. I will make an order they be reserved.

[2020] VSC 157

2 April 2020