Building Careers Australia Pty Ltd v D'Limi

[2020] WASC 409

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   BUILDING CAREERS AUSTRALIA PTY LTD -v- D'LIMI [2020] WASC 409

CORAM:   MASTER SANDERSON

HEARD:   11 & 14 SEPTEMBER 2020

DELIVERED          :   15 SEPTEMBER 2020

PUBLISHED           :   13 NOVEMBER 2020

FILE NO/S:   CIV 1861 of 2020

BETWEEN:   BUILDING CAREERS AUSTRALIA PTY LTD

Plaintiff

AND

LEZLY KAYE KATHLEENA D'LIMI

First Defendant

OCEANIA NOMINEES PTY LTD AS TRUSTEE FOR THE D'LIMI FAMILY TRUST

Second Defendant

OCEANIA NOMINEES PTY LTD

Third Defendant

Catchwords:

Employment agreement - Application to restrain former employee competing with former employer - Turns on own facts

Legislation:

Nil

Result:

Limited injunction granted

Category:    B

Representation:

Counsel:

Plaintiff	:	CS Williams
First Defendant	:	M Holler
Second Defendant	:	M Holler
Third Defendant	:	M Holler

Solicitors:

Plaintiff	:	Solomon Brothers
First Defendant	:	Morgan Alteruthemeyer Legal Group
Second Defendant	:	Morgan Alteruthemeyer Legal Group
Third Defendant	:	Morgan Alteruthemeyer Legal Group

Case(s) referred to in decision(s):

Austral Ships v Clay [2018] WASC 178

Australian Broadcasting Corporation v O'Neil (2006) 227 CLR 57

Crowe Horwarth (Aust) Pty Ltd v Loone [2017] VSCA 181

Smith v Nomad Modula Building Pty Ltd [2007] WASCA 169

MASTER SANDERSON:

1. This is the plaintiff's application for interim injunctions.  Later in these reasons I will set out the precise form of orders sought by the plaintiff.  For present purposes it is enough if I say that as against the second and third defendants, the plaintiff seeks to enforce a restraint of trade agreement.  As against all of the defendants, they seek an injunction restraining the use by the defendants of the plaintiff's confidential information.  The matter first came on for hearing on 20 August 2020.  At that time I made relevantly the following order:

   2. Until further order, each of the defendants be:

   (i) required to forthwith destroy all copies of a document comprising a spreadsheet titled 'Companies' ('the Document') and any other documents or other records, constituting or recording any information derived from the Document; and

   (ii) restrained from making any use of or disclosing to any third parties the Document or any information contained within the Document.

2. The matter was then programmed through to a full hearing on 11 September 2020.  At that hearing the plaintiff relied on eight affidavits sworn by various persons.  The defendants relied on three affidavits sworn by the first defendant and three further affidavits.  From time to time in these reasons I will refer to the affidavit material.  However the plaintiff provided a statement of claim which was indorsed on the writ of summons.  It is convenient to outline its cause of action against the defendants by reference to that pleading.

3. The plaintiff carries on a business involving a recruitment of permanent and temporary employees in the construction and mining sectors in Western Australia.  The second and third defendants are the same company – for some reason the plaintiff has issued proceedings against the company in its own right and in its capacity as the trustee of the D'Limi Family Trust.  For the purpose of these reasons I will simply refer to the second and third defendants as 'Oceania'.  The first defendant was for a time an employee of the plaintiff.  She has considerable experience in the area of staff recruitment having been engaged in the field for some 20 odd years.  The first plaintiff is effectively the guiding hand of Oceania.

4. By par 4 of the statement of claim, the plaintiff pleads that on or about 28 September 2018 the plaintiff entered into an employment agreement with the first defendant (Employment Agreement).  The Employment Agreement was in writing.  The plaintiff pleads the Employment Agreement was terminated in or about October 2018.  Thereafter the plaintiff says it agreed to engage the second defendant to provide the labour of the first defendant.  There is no dispute that in fact the plaintiff did engage the second defendant.  At the heart of this dispute is the terms and conditions of that engagement.

5. By par 5 of the statement of claim, the plaintiff says the agreement between the plaintiff, first defendant and the second defendant was partly in writing, partly oral and partly to be inferred.  Insofar as the agreement was in writing, it was said to be constituted by an undated, unexecuted document titled 'Contractor Agreement' between the plaintiff and the second defendant.  Alternatively the terms that comprised the Employment Agreement.  I will refer to the alleged agreement between the plaintiff and second defendant as 'Agreement'.  Insofar as the Agreement was oral, it was said to be formed during the course of conversations between one Niall Conlon and the first defendant that took place during the period October 2018 to April 2019.  Insofar as the Agreement is to be inferred, the plaintiff relies on the fact that from October 2018, the second defendant rendered invoices to the plaintiff and the plaintiff paid those invoices for the provision by the second defendant of the labour of the first defendant.  It is further pleaded the plaintiff did not pay and the first defendant did not seek payment of any salary, wages or other benefits arising under the Employment Agreement.

6. The plaintiff pleads the Agreement contained certain restraints both with respect to confidential information and the use that could be made of that information and what might be called a non‑competition clause.  The plaintiff pleads those terms in this way:

   6.6 during the term of the Agreement, the second defendant was not to, and was to ensure that the first defendant did not, copy the contents of any document, computer pen drive or other tangible item which contained any:

   6.6.1 information (whether or not recorded in documentary form or computer pen drive) relating to the business methods, corporate plans, management systems, finances, maturing new business of opportunities or a search and development projects of the plaintiff;

   6.6.2 all and any information (whether or not recorded in documentary form or on computer pen drive) relating to the marketing or sales of any past, present or future product or service of the plaintiff, including without limitation sales targets and statistics, market share and pricing statistics, marketing surveys and plans, market research reports, sales techniques, prices, discounts structures, advertising and promotional material, the names, addresses, telephone numbers, contact names and identities of customers, potential customers of supplies and potential suppliers to the plaintiff and each of their business operations, their requirements of any product or service sold to a purchaser by the plaintiff and all confidential aspects of their business relationship with the plaintiff;

   6.6.3 all and any trade secrets, secret formulae, processes, inventions, designs, know-how discoveries, technical specifications and other technical information (whether or not recorded in documentary form or on computer disc or tape) relating to the creation, promotion or supply of any past, present or future product or service of the plaintiff; and

   6.6.4 any other information (whether or not recorded in documentary form or computer pen drive) which the plaintiff attaches an equivalent level of confidentiality or in respect to which the plaintiff owed an obligation of confidentiality to any third party,

   which:

   6.6.5 the second defendant should acquire at any time during the term of the Agreement but which did not form part of the second defendant’s own stock and trade or know‑how; and

   6.6.6 was not readily ascertainable to persons not connected with the plaintiff either at all or without a significant expenditure of labour, skill or money,

   (together, 'Confidential Business Information')

   6.7 the second defendant was not to, and was to ensure that the first defendant did not, at any time before or after the termination of the Agreement, induce or seek to induce by any means involving the disclosure or use of Confidential Business Information any person, firm or company with whom or which the second defendant or anyone working under the second defendant’s supervision or control dealt personally and to whom the plaintiff had provided such products or such services in one year prior to the date of termination of the Agreement ('a Customer') to cease dealing with the plaintiff or to restrict or vary the terms upon which it dealt with the plaintiff;

   6.8 the second defendant was not to, and was to ensure that the first defendant did not, during the term of the Agreement:

   6.8.1 other than for legitimate purposes of the plaintiff, directly or indirectly disclose to any person, firm or company or use any Confidential Business Information; and

   6.8.2 without the plaintiff’s prior written permission hold any position as a consultant, partner, principal or agent, have direct or indirect control or ownership (whether jointly or alone) of any shares (or any voting rights attaching to them) or debentures (other than ownership for investment purposes only of not more than 5% of the shares in any public company listed on the Australian Securities Exchange) or directly or indirectly provide any financial or technical assistance (a “Material Interest”) in or to any person, firm or company which:

   6.8.2.1 was in competition with any trades or other commercial activities of the plaintiff with which the second defendant had been concerned or involved to any material extent in any time during the two years prior to the termination of the Agreement, and which the plaintiff carried on with a view to profit or which the plaintiff at the date of termination of the Agreement carried on with a view to profit or had determined to carry on with the view to profit in the immediate foreseeable future, and in relation to which the second defendant at the date of termination of the Agreement possessed any Confidential Business Information ('a Business');

   6.8.2.2 impaired or might reasonably be thought by the plaintiff to impair the ability of the second defendant to act at all times in the best interests of the plaintiff; or

   6.8.2.3 required or might reasonably be thought by the plaintiff to require the second defendant to disclosure any Confidential Business Information in order to properly discharge the second defendant’s duties to, or to further the second defendant’s interests in, such person, firm or company.

   6.9 for a period of three years, alternatively two years, alternatively one year, alternatively six months, following the termination of the Agreement, the second defendant was not to, and was to ensure that the first defendant did not, directly or indirectly:

   6.9.1 hold any Material Interest in or to any business which was or would be wholly or partly in competition within Australia, alternatively Western Australia, with the Business;

   6.9.2 seek in any capacity whatsoever any business, orders or custom, or accept in any capacity whatsoever orders for any, and all products which were provided by the plaintiff in the ordinary course of the Business, and any all and any services of a kind which were provided by the plaintiff in the ordinary course of the Business, from any Customer;

   6.10 the second defendant was not to, and was to ensure that the first defendant did not, at any time after the date of termination of the Agreement, represent itself or permit itself to be held by any person, firm or company as being in any way connected with or interested in the plaintiff;

   6.11 the second defendant was not to, and was to ensure that the first defendant did not, at any time after the date of termination of the Agreement, disclose to any person, firm or company, or make any use of, any Confidential Business Information;

7. By par 7 of the statement of claim the plaintiff pleads that although the Employment Agreement was rescinded the engagement of the second defendant was on the terms and conditions contained in the Agreement.  I will detail the restraints contained in the Agreement below.  They do not precisely mirror the restraints in the Contractor Agreement but the differences are not significant.  What is significant is that there is no suggestion the restraints in the Agreement still apply to the first defendant.  Both parties agree the Employment Agreement between the plaintiff and the first defendant terminated in October 2018.  The restraints in the Employment Agreement would only have affected the first defendant until April 2019.  It is the confidentiality provisions of the Employment Agreement which (in the alternative) the plaintiff says apply to both the first defendant and Oceania.

8. By pars 8 through to 15 of the statement of claim the plaintiff alleges all of the defendants have breached the duty of confidentiality.  Essentially it is said the first defendant downloaded what the parties referred to as a 'data base' or 'data bases' which contained information about the plaintiff's clientele.  The plaintiff alleges the first defendant passed this information on to Oceania and in so doing breached her equitable duties.  The first defendant admits downloading a data base but says it was for legitimate business purposes and she maintains she has never misused the information.  It is worthy of note, that it was this downloaded information which I ordered the defendants to destroy in the orders I made on 24 August 2020.

9. By pars 16 and 17 of the statement of claim, the plaintiff alleges Oceania repudiated whichever of the Employment Agreement or the Agreement applied.  Although it is not clear from the pleading, it would seem the plaintiff accepts the repudiation but maintains that the restraint provisions and the confidentiality provisions continue in force.  There was an issue between the parties in this application on this question and I will deal with it in more detail below.  For present purposes, it is enough if I say the dispute centred around the question of whether or not determination of whichever agreement applied the restraint provisions contained in force.

10. The pleading concludes with the plaintiff making a series of allegations about the second defendant competing with the plaintiff in breach of restraint of trade provisions and using confidential information in breach of contract.  The claims are pleaded in a number of different ways – misleading and deceptive conduct and passing off, being two of them.  In its prayer for relief, the plaintiff seeks a range of relief including injunctions and damages.

11. It is worth pausing at this point to clarify what the plaintiff says is the contractual position.  Its starting point is that, after termination of the Employment Agreement, Oceania was employed on the terms and conditions set out in the Contractor Agreement.  I will refer to that claim as 'Contract Position A'.  As an alternative, the plaintiff says Oceania was employed on terms and conditions reflected in the Employment Agreement.  I will refer to that as 'Contract Position B'.  There is a third alternative – that is, Oceania was employed on a contractual basis that did not include the Contractor Agreement or the Employment Agreement.  That, essentially, is the position put by the defendants.  If that argument is correct then it is difficult to see how any restraint of trade would operate; such a term would have to be implied and that seems unlikely.  For the purposes of these reasons it is not really necessary for me to say anything about the third possibility.  However, for the sake of conformity I will refer to this as 'Contract Position C'. 

12. There was no dispute between the parties as to the principles that apply to applications for an interlocutory injunction.  The two enquiries are whether the plaintiff has made out a prima facie case, being the demonstration of a sufficient likelihood of success to justify in all the circumstances the preservation of the status quo pending trial and whether the balance of convenience favours the grant of the injunction.  How strong the likelihood of success needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks:  see Australian Broadcasting Corporation v O'Neil (2006) 227 CLR 57 [81] – [84]. The leading authority on restraint of trade provisions in employment contracts in Western Australia is the Court of Appeal decision in Smith v Nomad Modula Building Pty Ltd [2007] WASCA 169. The general principles in respect of restraint of trade clauses were recently recited in Austral Ships v Clay [2018] WASC 178 [56] – [66] per Smith AJ.

13. Against that background, a number of points can be highlighted.  First, the starting position is that restraints of trade will be void as contrary to public policy unless they are reasonable; reasonableness being assessed by reference to the interests of the parties concerned and by reference to the interest of the public.  Second, the validity of this restraint must be decided as at the date of contract.  Third, whether a restraint of trade is reasonable is a question of law, which depends on the true construction and legal effect of the contract.  Fourthly, the factors that are to be taken into account in determining whether a restraint of trade provision is reasonable include the nature of the employer's business, the nature of the employee's position, whether the employee has had access to confidential information of the employer, the relationship of the employee with clients and other employees of the business, the duration of the employment, the extent of the consideration provided by the employer for the restraint and the likely duration of the former employee's personal relationship with customers of the employer.

14. Before dealing with the relevant facts, I should make the point that it is not my role on an application for an interlocutory injunction to make any binding finding of fact.  What I have to determine is whether there is a serious question to be tried and whether the balance of convenience favours granting the injunction.  On that basis, the analysis which follows of the relevant surrounding circumstances should not be seen as in any way determinative of any issue.  Matters may emerge at trial which are not evident in the affidavit material.  Really the matters to be determined at trial differ significantly from the matters which are to be determined on this application.

15. There is a major difference between the parties as to whether or not the second defendant was engaged by the plaintiff under the Contract Agreement.  The circumstances under which that Contract or Agreement are alleged by the plaintiff to have been entered into are found in the affidavit of Niall Peter Conlon affirmed 14 August 2020.  Mr Conlon says:

    15.On or about October 2018, I spoke with Ms D'Limi in relation to her engagement with BCA.  During the course of that conversation, Ms D'Limi said to me words to the effect that she requested that, instead of her being employed by BCA, BCA engage her company as a contractor to provide Ms D'Limi's services to BCA.  I cannot now recall if Ms D'Limi told me the name of her company during the conversation.  I said to Ms D'Limi that I agreed to the contractor arrangement being entered into.  I also said words to the effect that the arrangement would be in line with her original employment contract, and we would have to put in place a contractor agreement in line with the employment contract.

    …

    17.Since my conversation with Ms D'Limi, BCA has received invoices from the second defendant ('Oceania') for the provision of Ms D'Limi's services to BCA.  BCA has paid the invoiced amounts to Oceania.  BCA has not made any payments to Ms O'Limi personally.

    18.In or about March 2019, I prepared a contractor agreement to formalise the arrangement between BCA and Oceania.

    19.On or about 10 or 11 April 2019, while attending the BCA state manager's meeting in Sydney, I handed to Ms D'Limi a copy of the contractor agreement that I had prepared.  Annexed hereto and marked 'NPC-4' is a copy of the document that I provided to Ms D'Limi.

    20.At the time that I handed to Ms D'Limi a copy of the contractor agreement that I had prepared, I said words to the effect that I would send her a soft copy of the document.  Upon review of my notes and emails, I cannot find any record of having sent to Ms D'Limi a soft copy of that document.

1. In her affidavit sworn 19 August 2020 (par 9) the first defendant denies the discussions detailed by Mr Conlon ever took place.  She says she never saw, let alone signed, a Contract or Agreement.  Of course, the first defendant accepts that Oceania provided services to the plaintiff and was paid for those services.  Clearly what she does not accept is that the terms and conditions of Oceania's engagement was as set out in the Contract or Agreement or some adaptation of the Employment Agreement.

2. The uncertainty surrounding the Contract provision provides a serious impediment to the plaintiff's application.  As I have indicated above, the starting point is to assume restraints of trade are unenforceable.  It is then necessary for the party seeking to enforce the restraint to establish in all the circumstances it is reasonable.  The necessary starting point in that enquiry is to ascertain precisely what the restraint of trade is.  When there is uncertainty as to the contractual relationship between the parties, that enquiry becomes so much more difficult.  That said, for the purposes of this application, I accept it is arguable that the parties are in a relationship which is governed by the Contract Position A or B.  Mr Conlon says he gave the Contractor Agreement to the first defendant – he has sworn to that on oath.  If that fact were established at trial, and given Oceania provided services to the plaintiff, it is arguable that the Contractor Agreement although not signed, provided the contractual arrangement between the plaintiff and Oceania.  That is, Contract Position A would be established.

3. Having reached that conclusion, it is still open to the plaintiff to argue (on this application) the terms of the Contract Position B.  If the restraints in the Contract Position A go above and beyond what is reasonable, to the point where the plaintiff does not have an arguable case, then the plaintiff can fall back on the provisions of Contract Position B.  To approach the matter otherwise would fail to extend to the plaintiff a flexibility which is consistent with the case they intend to run at trial.  The only reason reference is made in the pleading to the Contract Position B, is because the plaintiff accepts it may not be able to establish Contract Position A.  If a court were to decide the relationship was covered by the Contract Position A but the restraints were unenforceable because they were unreasonable, the plaintiff could not then say Contract Position B would apply.  To do so would be logically inconsistent.  But it is not logically inconsistent at this interlocutory injunction stage.

4. There is no doubt the plaintiff faces considerable difficulty in establishing at trial either Contract Position A or Contract Position B applies.  As to Contract Position A, the first defendant says she never received a copy of the Contractor Agreement and she was not aware of its existence.  It is difficult to see why, if Contract Position A applied, the plaintiff did not obtain a signed copy of this Agreement.  Although, no details are given in the affidavits of the efforts the plaintiff has made to locate the signed agreement there seems a real possibility one does not exist.  The outcome of this question will likely depend on the credibility of various witnesses.  The plaintiff is on shaky ground.

5. If Contract Position A does not apply, then the plaintiff must establish Contract Position B.  It is not clear why the Employment Agreement should necessarily govern the relationship between the plaintiff and Oceania.  Presumably, the plaintiff will argue the first defendant, in substituting Oceania as the employee, was agreeing on behalf of Oceania to be bound by the terms and conditions of the Employment Agreement.  There is nothing in the evidence to establish there was any discussion between representatives of the plaintiff and the first defendant which amounted to an agreement to that effect.  Once again, the plaintiff is in a difficult evidentiary position.

6. Having said all of that, I am satisfied that the plaintiff's position both with respect to Contract Position A and Contract Position B are arguable.  Clearly there was some form of contract between the plaintiff and Oceania.  It is just a matter of determining the terms and conditions of that contract.  When the plaintiff's difficulties in establishing the contract position are aggregated, it is clear the plaintiff has real difficulties.  But it cannot be said there is not a serious question to be tried.  Apart from anything else, to reach that conclusion it would be necessary to discount the evidence of Mr Conlon.  It would be inappropriate to take that step at an interlocutory stage.

7. That then leaves the question of whether the restraints in Contract Position A and B are unenforceable.

8. Turning to the scope of the restraints, so far as Contract Position A is concerned the pleaded restraints are found in 6.8.2, 6.9 and 6.10 of the statement of claim set out above.  It was the defendants' position these restraints on their face were too wide to be enforceable.  Paragraph 25 of the defendants' submissions is in the following terms:

   Applying those tests to clause 21.2 of the Employment Agreement the restraint is too broad and of uncertain meaning.  To be no more than adequate and not void as against public policy the restriction ought to be clear so the ex-employee knows what can and cannot be done. The restriction exceeds what is reasonably necessary for the protection of the employer in protecting its interests in the stated customer or supplier connection.  That is so because the phrase 'and with whom you had contact with' is a phrase of wide import and is in the past tense 'had'.  It is not limited to significant dealings establishing a personal connection in the past 12 months 'prior to the end of your employment' and also captures a fleeting contact by email, telephone, text, sms etc of no lasting or any importance.  A similar clause was held invalid in Russ Australia v Benny [2006] NSWSC 1118 at [30] discussed below. This is not a case of a company with a small number of customers where it could be reasonably expected that the employee would know and have a relevant customer connection with all of them. There were 16,712 entries on the 'Companies' spreadsheet with each entry for a different customer at the time the First Defendant downloaded it (See Tipper Affidavit at paragraph [24]). Further when was 'the end of your employment'? When the employment agreement was determined in October 2018 as pleaded? A later time when the replacement partly oral, partly written, partly inferred non employment agreement pleaded came to an end?

9. The plaintiff of course took the opposite view.  It maintained in all the circumstances the restraints were reasonable because they did no more than impose upon Oceania restrictions which, if not applied, could leave the plaintiff's position vulnerable.  They pointed to the fact the mining services industry is Australia‑wide and although the plaintiff operated mainly in Western Australia, the Northern Territory and South Australia, recruitment of personnel across the nation was the norm.  They pointed to the fact the first defendant was a business manager and then regional director for the plaintiff.  In that capacity the first defendant was the 'human face' of the plaintiff.  Acting through Oceania, there was a real prospect of Oceania's activities damaging the plaintiff.

10. Once again the plaintiff faces real difficulties in establishing the restraints either in Contract Position A or Contract Position B are reasonable.  They are very wide.  But although the question of whether a restraint is valid is a question of law it must be informed by a factual enquiry.  At trial it will be necessary to examine the nature of the plaintiff's business and its reach interstate.  It will be necessary to establish how regularly a recruitment agency might have contact with particular clients.  Unless and until those and other factual enquiries are made, a determination of whether or not a restraint is reasonable is not possible.  In other words, on the question of the extent of the restraint, there is a serious question to be tried.

11. That then leaves the question of whether, if the Contract between Oceania and the plaintiff has been determined, any restraint will continue to apply.  Further, there is the question of whether the Contract between the plaintiff and the second defendant had been repudiated by actions of the plaintiff and as a consequence any restraints contained in the contract would not apply.  As I indicated above, the pleaded position of the plaintiff appears to be that Oceania repudiated its Contract with the plaintiff.  That repudiation has been accepted by the plaintiff but the restraints contained in the Contract remained in place. 

12. The defendants approached this issue in a completely different way.  It is common ground between the parties that when the first defendant joined the plaintiff she entered into what was described as a 'Shareholders Deed'.  The circumstances which led to the parties entering into the Shareholders Deed and the precise terms and conditions of the Deed are not important.  However, it did contain three provisions to the following effect:

    1.Oceania would upon execution of the Deed be issued and hold 25 ordinary shares in the plaintiff;

    2.the first defendant would be appointed a director of the plaintiff upon execution of the Deed; and

    3.shareholder distributions would be generated through the engagement of the first defendant as a recruitment consultant in the business of the company and would be based upon profit generated through this engagement.

13. It is the defendants' position the plaintiff failed to honour the terms of the Shareholders Deed.  Without going into details, that position is arguable.  The defendants then say by letter from their solicitor to the plaintiff on 31 July 2020 the plaintiff was advised its failure to adhere to the terms of the Shareholders Deed amounted to a repudiation and the repudiation was accepted.  The defendants then go on to argue that as the Shareholders Deed was terminated, any restraints of trade as between the plaintiff and Oceania came to an end.  They rely on the decision in Crowe Horwarth (Aust) Pty Ltd v Loone [2017] VSCA 181.

14. It seems clear that whatever the effect of the Shareholders Deed, it did not in and of itself result in the engagement of Oceania.  The recitals to the Deed anticipate such engagement being on a basis which stood outside the Shareholders Deed.  Accordingly, if the actions of the plaintiff amounted to a repudiation of the Shareholders Deed and if that repudiation has been properly accepted, it says nothing about the employment relationship between the plaintiff and Oceania.  It can have no effect on what restraints might apply.  This issue was run by the defendants.  Insofar as it was said to provide a basis for concluding the plaintiff did not have an arguable case, the defendants' argument fails.

15. It is convenient at this point to turn to the restraint already imposed and sought to be continued on the defendants' use of confidential information.  The plaintiff alleged and the first defendant admitted she downloaded certain confidential information.  This had to do with the client base of the plaintiff.  In her affidavit evidence the plaintiff maintained first, the download was for a legitimate business purpose within the context of Oceania's engagement with the plaintiff.  Second, she said that having downloaded the material it had been destroyed.  The plaintiff had no direct evidence either that the defendants had misused the confidential information or that it had not been destroyed.  But they were deeply suspicious.  They could point to no valid reason for the first defendant downloading the database.

16. While there is nothing in the evidence which would cause me to doubt the direct sworn evidence of the first defendant, the legitimate concerns of the plaintiff must be acknowledged.  The database lies at the heart of their business.  To have it compromised by any party making use of the information could cause the plaintiff's business irreparable damage.  In light of the first defendant's admission she downloaded the database I think it is appropriate a restraint on use of any information in that database be maintained until trial.  Given my earlier order, any copies of the database – electronic or physical – ought by now have been destroyed.  But I am satisfied it is proper and appropriate an injunction be issued restraining use of any confidential information pending trial.

17. That then leaves the question of the balance of convenience insofar as the injunction directed at Oceania is concerned.  On balance, I am satisfied this favours Oceania.  As I have indicated above, the first defendant is the moving hand of Oceania – she is the person with the experience and the knowledge who will actually undertake the day‑to‑day business of the company.  To not injunct her but to injunct Oceania has about it an air of artificiality.  There would appear to be nothing to stop the first defendant if Oceania was restrained, from setting up another company – perhaps called Oceania Mark 2.  Perhaps the plaintiff could obtain an objection against that corporate entity.  But in the end it is restraining the plaintiff which is important and the plaintiff admits it cannot actually do that. 

18. Given the limited restraints on the first defendant (confined to use of confidential material) there seems to me to be no real point in issuing an injunction.  If the plaintiff is able to make out its case at trial then it would be entitled to an enquiry as to damages.  I understand the difficulty involved in such a step.  But if an injunction were to be granted and were the plaintiff to fail at trial, then Oceania would be entitled to an enquiry as to damages.  The inconvenience applies both ways.  On balance, I am satisfied it would be preferable for an injunction not to issue with all that might flow were the plaintiff to be ultimately successful.

19. In summary then, I am satisfied the plaintiff is entitled to an injunction to protect its confidential information.  While I am satisfied there is a serious question to be tried in relation to any restraint of trade applicable to Oceania, I am not satisfied the balance of convenience favours the grant of an injunction.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CB
Associate to Master Sanderson

13 NOVEMBER 2020