Cathedral Rock Pty Ltd v Ausmalt Pacific Traders

[1998] VSC 212

SUPREME COURT OF VICTORIA

PRACTICE COURT

Not Restricted

No. 8155 of 1998

CATHEDRAL ROCK PTY LTD	Plaintiff
v
AUSMALT PACIFIC TRADERS & ORS	Defendants

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JUDGE:	Beach J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 December 1998
DATE OF JUDGMENT:	21 December 1998
CASE MAY BE CITED AS:	Cathedral Rock Pty Ltd v. Ausmalt Pacific Traders & Ors
MEDIA NEUTRAL CITATION:	[1998] VSC 212

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INTERLOCUTORY INJUNCTION - No serious issues to be Tried - Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P.A.P. Clarke	Hicks Okaley
For the Defendant	Mr P. Riordan	Dellios West

HIS HONOUR:

1. For some years prior to the month of August 1998 Leeton Packaging Pty Ltd carried on the business of manufacturing plastic bags. Its managing director was Douglas Hobson. One of its employees, Carolyn Gay Pitts, was in charge of its accounts and accounting records. By agreement dated 21 August 1988, the plaintiff in the present proceedings, Cathedral Rock Pty Ltd, purchased certain assets of Leeton including its name and goodwill. It also contends that it purchased certain confidential information of Leeton in the form of customer pricing, specification data and documentation, and the information contained in Leeton's customer lists.

2. The first-named defendants, Ausmalt Pacific Traders Pty Ltd, has for many years carried on a number of businesses including the manufacture of certain plastic products. On 28 October 1998 its first defendant purchased from Leeton an extruder which manufactured plastic film and a bag converter which manufactures bags out of the film. Following the sale of its business and assets, what I shall refer to as "the old Leeton" ceased to trade. As I have already stated, its business name, however, remained the property of the plaintiff.

3. On 12 November 1998 Pitts entered the employ of Ausmalt as its sales manager. At about the same time Hobson entered its employ as an engineer. It is the case for the plaintiff that since that time both Hobson and Pitts have been making use of the confidential information purchased from Leeton to contact the former customers of Leeton and solicit orders from them. By this application the plaintiff seeks to restrain Ausmalt, Hobson and Pitts from making use of that information and for delivery up of the material in question to the plaintiff.

4. Having considered this matter over the weekend, I have grave reservation as to whether there is a serious issue to be tried in the proceeding. I say that for the following reasons.

(1)  In her affidavit sworn 16th December 1998 the Defendant Pitts has readily conceded that since she commenced employment with Ausmalt she has contacted former customers of Leeton with a view to soliciting their business for Ausmalt. She has sworn, however:

"I did not retain and had not retained any documents from my employment with Polythene Films or Leeton (or for that matter during the period that the plaintiff was operating at Campbellfield) and I did not deliberately memorise any information prior to leaving that employment. My knowledge of customers' names, specification and pricing of product is entirely from my experience in the employment with Leeton over seven years."

The view courts have taken of a former employee's actions in that regard were stated many years ago by Harvey C.J. in Ormonoid Roofing & Asphalts Ltd v. Bitumenoids Ltd (1930) 31 S.R. (N.S.W.) 347. At p.354 His Honour said:

"where an employee in the course of his employment and for the purposes of his employment has obtained ... particulars of customers which have become stored up in his mind as a necessary consequence of the way in which his master employed him, there is no justification in the absence of an express contract for preventing him making use of that knowledge."

See also Metrans Pty Ltd v. Courtney Smith & Ors. Vol.1, Intellectual Property Reports 185 and Gilman Engineering Ltd v. Simon Ho Shek On Vol.8 Intellectual Property Reports 313.

(2)	The defendant Pitts had no contract with Leeton which in any way prevented her making use of the knowledge she possessed.
(3)	There is no contractual relationship between the plaintiff and the defendants Pitts.
(4)	There is no direct evidence from the plaintiff that the defendant Pitts is in possession of any of the documentation which the plaintiff claims is confidential.
(5)	There is no evidence at all that the second-named defendant, Hobson, is in possession of the documentation in question or any of it nor is there any evidence that he has contacted former clients of Leeton with a view to soliciting their business for Ausmalt whilst he has been in the employ of Ausmalt.
(6)	The second-named defendant, Hobson, did never execute any written agreement with the plaintiff whereby he undertook not to be employed in the plastics industry after Leeton had been disposed of.
(7)	If the plaintiff succeeds at trial I consider it would be adequately compensated by an appropriate award of damages.

1. The plaintiff's summons filed 11 December 1998 is dismissed. I order that the plaintiff pay the first and third-named defendants' costs of the application.

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