Devine Real Estate Concord Pty Ltd v Agha (No 2) - [2018] NSWSC 564

Supreme Court

New South Wales

Medium Neutral Citation: Devine Real Estate Concord Pty Ltd v Agha (No 2) [2018] NSWSC 564
Hearing dates: 19 April 2018
Date of orders: 19 April 2018
Decision date: 19 April 2018
Jurisdiction: Equity - Duty List
Before: Parker J
Decision:
Consequential orders made to resolve the parties’ dispute as to the plaintiffs’ proposed short minutes of order, and finalise the form of interlocutory orders to give effect to his Honour’s first decision.
Multiple interlocutory restraints imposed on the first and second defendants to reflect the contractual, statutory, and equitable obligations that they each owe to the plaintiffs.
Catchwords:
CIVIL PROCEDURE – where plaintiffs have drafted short minutes of order to give effect to first decision – interlocutory relief – restraints – whether contractual, statutory, and equitable restraints should be imposed in the form proposed by the plaintiffs – where the defendants are former employees of the first plaintiff – contractual obligations arising under employment agreements – statutory obligations – Corporations Act 2001 (Cth), s 183 – improper use of information obtained as a director or employee to gain advantage – whether a proposed order that copies statutory language is appropriate – equitable obligations – equitable obligations of confidence - whether a proposed order that attempts to summarise equitable doctrine is impermissibly vague
CIVIL PROCEDURE – confidential information – where plaintiffs’ evidence included copies of confidential information purportedly taken from them by the defendants – where plaintiffs did not seek orders to restrict the disclosure of confidential information at the time the evidence was read or tendered – Court Suppression and Non-Publication Orders Act 2010 (NSW), s 6 – whether requirements are now met for an order restricting use of the plaintiffs’ confidential information – open justice rule – powers to bind litigants and legal practitioners in their conduct outside the courtroom in relation to their use of confidential information – express or implied obligation on defendants’ legal practitioners from time of service to restrict use of the plaintiffs’ evidence to use in the proceedings – the court is not deprived of its power to bind litigants and legal representatives due to the plaintiffs’ failure to seek an order restricting the use of confidential information when their evidence was read or tendered
Legislation Cited: Corporations Act 2001 (Cth), s 183
Court Suppression and Non-Publication Orders Act 2010 (NSW), s 6
Cases Cited: Hearne v Street (2008) 235 CLR 125
John Fairfax and Sons Limited v Police Tribunal of New South Wales (1986) 5 NSWLR 465
Rinehart v Welker [2011] NSWCA 403
Category: Consequential orders (other than Costs)
Parties: Devine Real Estate Concord Pty Limited (First Plaintiff)
Devine Real Estate Drummoyne Pty Ltd (Second Plaintiff)
Steven James Devine (Third Plaintiff)
EMC Just Holdings Pty Ltd (Fourth Plaintiff)
Wajih Agha (aka Roger Agha) (First Defendant)
Lewis Coombe (Second Defendant)
Representation:
Counsel:
V Heath (Plaintiff)
P Doyle Gray (First and Second Defendants)
Solicitors:
Jemmeson Fisher (Plaintiff)
Baybridge Lawyers (First and Second Defendants)

File Number(s): 2018/87652
Publication restriction: Nil

Judgment – EX TEMPORE

Revised and reissued 1 May 2018

The proceedings have returned to Court for the purpose of making orders reflecting the decision which I delivered on 13 April 2018 (published as [2018] NSWSC 564). The plaintiffs have formulated a set of short minutes of order which, so they contend, give effect to my decision.
The proposed orders generally follow the sequence in which I addressed the issues in my decision. The first deals with restraints to be imposed upon Mr Agha under the Concord company Shareholders' Agreement. There is no dispute as to the form of the relevant orders.
The short minutes next address the orders to be made against Mr Agha to reflect the obligations that he undertook pursuant to his employment agreement. The proposed orders, broadly speaking, are expressed in terms of the relevant restraints as they appear in the employment agreement, specifically cls 14.1 and 14.2. Those clauses provided as follows:

14.1    You agree that You will, at all times both during and after your employment with the Employer, and for all reasons:
(a)    use Confidential Information for the sole purpose of performing your Duties with the Employer;
(b)   keep confidential all Confidential Information, other than Confidential Information You are required to disclose in the course of your normal Duties, that is or has become public knowledge (other than as a result of a breach of confidentiality by you), or that You are required by law to disclose;
(c)   immediately notify the Employer of any suspected or actual unauthorised use, copying or disclosure of Confidential Information;
(d)    provide assistance reasonable requested by the Employer or in relation to any proceedings the Employer may take against any person for unauthorised use, copying or disclosure of Confidential Information.
14.2   You agree that You will not, at any time or for any reason:
(a)    use any Confidential Information to your own advantage or to the advantage of any other person, firm or company without the prior written consent of the Employer;
(b)   disclose any Confidential Information to any other person, firm or company without the prior written consent of the Employer;
(c)   use or attempt to use any Confidential Information which You may acquire in the course of your employment for any speculative purposes.

The first point taken on behalf of Mr Agha arises under sub-cl 14.1(a) of the employment agreement. The short minutes propose a restraint in terms of that sub-clause. However, in my view, the sub-clause, properly understood, is one that was limited to the period during which Mr Agha was actually employed by the Concord company. Other sub-clauses of cls 14.1 and 14.2 are not necessarily so limited, but in my view an obligation to use information for the purpose of performing duties with an employer only makes sense during the period of employment. Accordingly, I do not propose to make any order reflecting the terms of cl 14.1(a).
The next point is that there is a slight variation between the form of orders proposed and the contractual obligation in cl 14.1(b). The contractual obligation is expressed in affirmative terms, ("keep confidential"). The proposed order is expressed in negative terms and would operate to prevent Mr Agha from "disclosing or failing to keep confidential" the relevant information. The point taken on behalf of Mr Agha is that the double negative of a restraint against failing to keep information confidential may not be the same as, and may be broader than the positive obligation to keep that information confidential. I see the force of this but it can be remedied by expressing the relevant injunction in mandatory, rather than in negative, form and that is what I will do.
Clause 14.1(b) contains an exception for information that has become public knowledge (other than as a result of the employee’s breach of confidentiality) or that is required to be disclosed by law. The proposed order incorporates the second exception but not the first. I see no reason why the first exception should not be included as well.
I should add that cl 14.1(b) also includes an exception for information required to be disclosed in the course of the employee’s duties but, for reasons I have already given, that exception now could have no effect. Counsel for Mr Agha pointed out that it might be necessary for him to disclose the information for example, to his own lawyers, for the purpose of obtaining advice in, and conducting the defence of, these proceedings. I agree that the orders should not be framed in such a way as to interfere with Mr Agha's defence of these proceedings. But, rather than seek to craft some form of exception, which includes the question of disclosure to lawyers (and would no doubt have to be conditional on the lawyers themselves agreeing not to disclose the information and which might need to extend beyond disclosure to lawyers in certain circumstances), I propose to insert a further qualification in the order so that it operates only otherwise than without the prior consent of the plaintiffs. What this means is that should Mr Agha find it necessary to disclose information or a class of information, he can seek the necessary consent. In the instance given by counsel I have no doubt that consent will be given, and should other unforeseen circumstances arise, they can be dealt with in the same way.
The short minutes of order also include restrictions based on the wording in cls 14.2(a), (b) and (c). Counsel for Mr Agha emphasised in his submissions the width of these restrictions and the potential for argument about what they might mean (for example, the meaning of the phrase, "speculative purposes," in cl 14.2(c)). Counsel also pointed out that because of the width of the definition of “Confidential Information”, the contractual restrictions have an extremely broad, and potentially contestable, operation.
But this does not persuade me that orders should not be made in accordance with the contractual restraints. Those restraints have been agreed to by Mr Agha. I have referred in my principal decision to the strong prima facie case against him. In my view, a provision for consent to be sought and obtained will be a sufficient protection for Mr Agha. True it is that he may need, if he wishes to continue to practise as a real estate agent, to be circumspect in his dealings with potential customers and perhaps even to ask them for information before dealing with them; but in my view, it is fitting in the circumstances that this inconvenience should fall upon him, rather than denying to the plaintiffs the full benefit of the full extent of the contractual restraints which have been voluntarily undertaken by Mr Agha, and to which they are entitled. If, Mr Agha is in genuine doubt about whether a particular venture meets the definition of "speculative purposes" then he can make an appropriately worded request to the plaintiffs' solicitors for consent, and if agreement cannot be reached, the issue can be determined by the Court.
The employment agreement also contained restraints on dealings with the Concord company's “clients” and on competition.
Counsel for Mr Agha pointed to the width of the contractual language which has been adopted in the short minutes of order. But, in my view, this is answered by the fact that the proposed orders reflecting these restraints already incorporate a requirement of prior consent. Should Mr Agha be in any genuine doubt about the scope of his obligations which cannot be cured by appropriate circumspection in dealing with customers, that can be resolved by a request for consent and, if necessary, an application to the Court.
The short minutes next contain restraints reflecting the statutory obligations imposed on Mr Agha by s 183, (1) and (2) of the Corporations Act2001 (Cth). Similar orders are proposed in relation to Mr Coombe. The orders are expressed in accordance with the wording of the Act itself. Thus, the proposed orders would restrain each of Mr Agha and Mr Coombe from "improperly using information" he obtained because he had been a director or employee of the Concord company "to gain advantage for himself or someone else or to cause detriment to [the] Concord [company]", "or being involved in such a use" of that information.
In my view, the copying of the statutory language is not appropriate in this instance. It is one thing for the Court by injunction to require a party to adhere to contractual obligations which that party is alleged to have breached or may otherwise breach. Where a contract is relied upon, the only constraint which the Court can use to secure compliance with the restraint is the making of an injunction and the implicit threat of contempt proceedings. And in this case, the contractual terms contain their own definitions, which, at least to some extent, result in restraints which are expressed with some specificity.
On the other hand, the statutory restraint is expressed in extremely broad language which uses many terms which themselves are not statutorily defined and could give rise to debate - for example, "improperly" and "information". Where the defendant is already subject to a statutory obligation, I do not think it is appropriate for the Court to make an order which is expressed as obliging the defendant to comply with the same legal obligation in the same general terms. The statutory obligation can be the source of an injunction, but I think that if that is to happen, the order itself must define the information, and the use which may be made of it, with proper precision rather than simply picking up contestable statutory generalities.
I had in mind when I made the orders that the specific client lists which the evidence shows (at least on a prima facie basis) to have been taken by Mr Agha and Mr Coombe could be the subject of an order supported by the relevant provision of the Corporations Act. But the appropriate form of order would simply be one restraining the defendant from making use of the information contained in those specific files or documents. I am prepared to make such an order if it is necessary (although I would have thought it was clearly covered in Mr Agha’s case by the wider form of orders which will be made in any event to reflect his contractual restraints).
Similar considerations apply to the final restraint which is sought against Mr Agha and Mr Coombe. It is based on the conclusion I reached in my decision that equitable obligations of confidence would apply to material which had been provided to Mr Agha and Mr Coombe in the course of their employment, to the extent it was provided on the basis that it should remain confidential, such as (at least arguably) the client lists. But the short minutes propose an order in the following terms, namely that each of Mr Agha and Mr Coombe be restrained:

[B]y himself, his servant or agents, disclosing, using or attempting to disclose or use in any manner obtained by [him] in the course of his being an employee of Concord, including any lists of Concord’s customers or properties managed or listed for sale or prospected for by Concord or financial information of or about Concord.

An order in this form gives rise to similar difficulties to the proposed order under s 183(1) and (2) of the Corporations Act. The language is broad, and necessarily so, as it is an attempt to summarise in a few words a complicated equitable doctrine developed in hundreds of cases. Thus for instance, the use of the term "confidential information” in the proposed order refers to information which the courts of equity have over time recognised as being acquired in circumstances of confidence and requiring protection. To be fully expressed, a proper definition of what is "confidential information" for the purposes of the equitable doctrine would require a monograph or a chapter in a textbook.
Again I had contemplated that orders made under this head would impose a restraint on disclosure of specific documents. I will make an order in such a form if one is thought to be required, but I will not make an order in the general form requested.
The next issue arose out of something which happened in the course of the proceedings. The plaintiffs’ evidence included, as was necessary, copies of the information which they alleged had been taken by Mr Agha and Mr Coombe and which they contended was confidential. The customer lists were one example. But orders restricting the disclosure of this information were not sought at the time the relevant affidavits were formally read and the exhibits were formally tendered.
Counsel for the defendants, with appropriate candour, accepted that had such orders been sought at the time, they would have been made as a matter of course. But his submission is that, the application not having been made, and the affidavits having been formally read and the exhibits tendered in open court, any authority to make an order now requires the Court to be satisfied that the stringent requirements of the Court Suppression and Non-Publication Orders Act2010 (NSW), s 6, are satisfied. Counsel submitted that those requirements are not satisfied because they are not justified in terms of “the requirements of the administration of justice or some other public interest for whose protection Parliament had modified the open justice rule”: see John Fairfax and Sons Limited v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476 per McHugh JA, quoted in Rinehart v Welker [2011] NSWCA 403 at [22] by Bathurst CJ and McColl JA.
I accept that if the Court is to prevent members of the public who are present in Court from disclosing information about what they have seen or heard, then the requirements of the Act must be satisfied, but I do not think this exhausts the steps the Court may take to protect confidential documents. Counsel for the defendants relied on the further statement of McHugh JA in John Fairfax and Sons v Police Tribunal (at 477) that "Courts have no general authority… to make orders binding people in their conduct outside the courtroom". In my view, this statement must be understood as referring to people as spectators, or otherwise as strangers, to the litigation. Courts have ample power to make orders binding litigants in their conduct outside the courtroom. They also have power to make orders against legal practitioners who are officers of the Court which will bind them in their conduct outside the courtroom.
From the time the evidence in question was served on the defendants' legal representatives, the defendants and their legal advisers were subject to obligations, express or implied, which restricted its use to use for the purposes of the proceedings: see Hearne v Street (2008) 235 CLR 125. I do not think the omission to seek some form of order when the evidence was tendered deprives the Court of power to impose continuing obligations on the defendants and their legal representatives in relation to the disclosure of the information, even though it has now been formally read (in the case of the affidavits) or tendered (in the case of the exhibits).
The short minutes speak of the documents in question being "treated as and kept confidential to the plaintiffs" and provide that the contents of the documents "not be published or used by the defendants except by them or their lawyers for the purposes only of the proceedings". Although the wording of this could be clearer, in substance, it amounts to an order against the defendants and their legal representatives, and in my opinion, the Court has the power to make an order in those terms. I am satisfied that the plaintiffs’ failure to seek an order protecting the confidentiality of the documents at the time that they went into evidence was an omission. Counsel for the defendants quite properly did not suggest to the contrary. Accordingly, I will make an order along the lines sought, although I will consider any variation of the wording of the order which may be proposed to make it clear that it does not apply to spectators who were present in Court and who may have heard that part of the argument in which reference was made to the name of one of the Concord company's customers. (For clarity, the order will bind the defendants and their lawyers even in relation to that customer). I will also make a direction that the file copies of the relevant affidavits and exhibits be treated as confidential and not be released without an order from a Judge of the Court.

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Decision last updated: 01 May 2018

Medium Neutral Citation:	Devine Real Estate Concord Pty Ltd v Agha (No 2) [2018] NSWSC 564
Hearing dates:	19 April 2018
Date of orders:	19 April 2018
Decision date:	19 April 2018
Jurisdiction:	Equity - Duty List
Before:	Parker J
Decision:	Consequential orders made to resolve the parties’ dispute as to the plaintiffs’ proposed short minutes of order, and finalise the form of interlocutory orders to give effect to his Honour’s first decision. Multiple interlocutory restraints imposed on the first and second defendants to reflect the contractual, statutory, and equitable obligations that they each owe to the plaintiffs.
Catchwords:	CIVIL PROCEDURE – where plaintiffs have drafted short minutes of order to give effect to first decision – interlocutory relief – restraints – whether contractual, statutory, and equitable restraints should be imposed in the form proposed by the plaintiffs – where the defendants are former employees of the first plaintiff – contractual obligations arising under employment agreements – statutory obligations – Corporations Act 2001 (Cth), s 183 – improper use of information obtained as a director or employee to gain advantage – whether a proposed order that copies statutory language is appropriate – equitable obligations – equitable obligations of confidence - whether a proposed order that attempts to summarise equitable doctrine is impermissibly vague CIVIL PROCEDURE – confidential information – where plaintiffs’ evidence included copies of confidential information purportedly taken from them by the defendants – where plaintiffs did not seek orders to restrict the disclosure of confidential information at the time the evidence was read or tendered – Court Suppression and Non-Publication Orders Act 2010 (NSW), s 6 – whether requirements are now met for an order restricting use of the plaintiffs’ confidential information – open justice rule – powers to bind litigants and legal practitioners in their conduct outside the courtroom in relation to their use of confidential information – express or implied obligation on defendants’ legal practitioners from time of service to restrict use of the plaintiffs’ evidence to use in the proceedings – the court is not deprived of its power to bind litigants and legal representatives due to the plaintiffs’ failure to seek an order restricting the use of confidential information when their evidence was read or tendered
Legislation Cited:	Corporations Act 2001 (Cth), s 183 Court Suppression and Non-Publication Orders Act 2010 (NSW), s 6
Cases Cited:	Hearne v Street (2008) 235 CLR 125 John Fairfax and Sons Limited v Police Tribunal of New South Wales (1986) 5 NSWLR 465 Rinehart v Welker [2011] NSWCA 403
Category:	Consequential orders (other than Costs)
Parties:	Devine Real Estate Concord Pty Limited (First Plaintiff) Devine Real Estate Drummoyne Pty Ltd (Second Plaintiff) Steven James Devine (Third Plaintiff) EMC Just Holdings Pty Ltd (Fourth Plaintiff) Wajih Agha (aka Roger Agha) (First Defendant) Lewis Coombe (Second Defendant)
Representation:	Counsel: V Heath (Plaintiff) P Doyle Gray (First and Second Defendants) Solicitors: Jemmeson Fisher (Plaintiff) Baybridge Lawyers (First and Second Defendants)
File Number(s):	2018/87652
Publication restriction:	Nil