Forkserve Pty Ltd v Jack
Case
•
[2000] NSWSC 1064
•17 November 2000
No judgment structure available for this case.
Reported Decision: [2001] 19 ACLC 299
New South Wales
Supreme Court
CITATION: Forkserve Pty Limited v Jack & 1 Ors [2000] NSWSC 1064 CURRENT JURISDICTION:
EquityFILE NUMBER(S): SC 1736/98 HEARING DATE(S): 15/02/00, 16/02/00, 16/05/00 JUDGMENT DATE: 17 November 2000 PARTIES :
Forkserve Pty Limited (Plaintiff)
Leon Jack (First Defendant)
Aussie Forklift Repairs Pty Limited (Second Defendant)JUDGMENT OF: Santow J
COUNSEL : J T Johnson (Plaintiff)
C Stomo (Defendants)SOLICITORS: English Kearns (Plaintiff)
Gunn Hamilton & Blay (Defendants)CATCHWORDS: RESTRAINT OF TRADE — Corporations — Employee — meaning of director or executive officer for purposes of s235 of the Corporations Law as applicable to "officer" — Duties, if any, in relation to customer list where taken with consent — Duty not to canvass customers of employer while still employed — s235 of Corporations Law — Confidentiality attaching to customer list — Business cards. LEGISLATION CITED: Corporations Law, s60; s232 CASES CITED: Barnes v Addy (1874) 9 Ch App 244
Chew v R (1992) 173 CLR 626
Commissioner of Corporate Affairs v Bracht (1988) 14 ACLR 728
Commissioner for Corporate Affairs v Green [1978] VR 505
Dalysmith Corporation (Australia) Pty Limited v Cray Personnel Pty Limited (NSWSC, Young J, 14 April 1997, unreported)
Faccenda Chicken Limited v Fowler & Ors [1987] 1 Ch 117
Green & Anor v Bestobell Industries Oty Limited (1982) 1 ACLC 1
Grove v Flavel (1986) 4 ACLC 654
Hedges v NSW Harness Racing Club Limited (1991) 5 ACSR 291
Knight v Bulic (1994) 13 ACSR 553
Mordecai v Mordecai & Ors (1988) 12 NSWLR 58
N P Generations Pty Limited T/as Leon Jack Hooker v Feneley [2000] SASC 240
On the Street v Cott (1990) 3 ACSR 54
Ormonoid Roofing and Asphalts Limited v Bitumenoids Limited (1930) 31 SRNSW 347
Peninsular Real Estate Limited v Harris (1992) 2 NZLR 216
R v Byrnes (1995) 17 ACSR 551
R v Cook; Ex parte Director of Public Prosecutions (Cth) (1996) 20 ACSR 618
Residues Treatment & Trading Co Limited v Southern Resources Limited (1989) 15 ACLR 416
Rosetex Company Pty Limited v Licata 12 ACSR 779
Southern Resources Limited v Residues Treatment and Trading Co Limited (1990) 3 ACSR 207
Sycotex Pty Limited v Baseler & Ors (1994) 13 ACSR 766
Wessex Dairies Limited v Smith [1935] 2 KB 80
Wright v Gasweld Pty Limited (1991) 22 NSWLR 317DECISION: Employee in breach of fiduciary duty only in respect of one established instance of client canvassing while employed.
17 November 2000
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITYSANTOW J
No. 1736/98
Forkserve Pty Limited
PlaintiffLeon Jack
First Defendant
Aussie Forklift Repairs Pty Limited
Second Defendant
JUDGMENTTable of ContentsPage
1 An employee held out to be a director of his employer company in the public records, though that status is in dispute, leaves that family company to set up in competition. He takes clients with him. In so doing, it is alleged that he took advantage of confidential client information in a teledex book (and business cards). Is that employee thereby in breach of any fiduciary or statutory directorial duty or of any general law obligation with respect to the claimed confidential information contained in the teledex book? If so, is any breach obviated by reason of any consent by the Plaintiff if it were given? 2 This matter involves a dispute within a family company, Forkserve Pty Limited (“the Plaintiff”) engaged in the business of servicing and repair of forklift trucks. The directors of the Plaintiff were recorded on the ASIC company searches as being Ross Robin Jack, and Sharon Gai Jack as well as Leon Jack. Leon is the son of Ross and step-son of Sharon. 3 The Plaintiff alleges it suffered loss and damage when Leon Jack the First Defendant left the Plaintiff to start his own business and company, Aussie Forklift Repairs Pty Limited (the Second Defendant), in competition with the Plaintiff. The loss and damage claimed primarily revolves around two acts. The first is the taking of a teledex book containing names of customers and suppliers of the Plaintiff and a business card folder which contained cards of representatives from various companies. The information in both items was used in the running of the business of the Plaintiff. Leon Jack took both the teledex book and the business card folder with him upon leaving the Plaintiff. The second is the movement of work from two customers of the Plaintiff, APS Chemicals Pty Limited and Pax Australia Pty Limited, to the Defendant’s business, APS Chemicals and Pax Australia becoming clients of that business. 4 These proceedings raise the following questions: 5 Question 1: What was Leon Jack’s position within Forkserve? Did he hold a position of director or ‘executive officer’, or both, such as to attract duties, obligations and liabilities under the Corporations Law and associated fiduciary duties? 6 Question 2: Is the information contained in the teledex book and/or business cards confidential? Does this information belong to the Plaintiff? Was confidential information belonging to the Plaintiff used in establishing Aussie Forklift or its business, in breach of any legal obligation? 7 Question 3: In taking and using the information contained in the teledex book and/or business cards was the First Defendant in breach of obligations owed by him as a director or executive officer of the Plaintiff to that company? In taking these items did the First Defendant engage in an unauthorised use of this information to the detriment of the Plaintiff and the benefit of the Defendants? In taking and using the information did the Defendant thereby breach s232 of the Corporations Law? 8 Question 4: Whilst still in the service of the Plaintiff did the Defendant “solicit” customers of the Plaintiff, namely APS Chemicals and/or Pax Australia? 9 Question 5: If the Defendant did so “solicit” these customers has he breached fiduciary duties owed to the Plaintiff and/or s232 of the Corporations Law? 10 Question 6: Did the Plaintiff consent to any of these acts? 11 In light of my findings, I do not need to consider any issue concerning estoppel, nor, having regard to the way the matter was argued, trespass.INTRODUCTION
INTRODUCTION
SALIENT FACTS
RELEVANT LEGISLATIONLeon Jack’s status — was he a director?
Documentation
Signing Documents
Business Cards
Director’s Meetings
Appointment
Leon Jack’s Duties
What does this evidence indicate?
Was Leon Jack an executive officer of the Plaintiff?
Conclusion
Has the Defendant breached any statutory or general law duty to the Plaintiff?
Is the information confidential?
The Teledex Book and Business Card Folder
The Teledex Book
Was the information available from other sources?
Did Forkserve consent to the taking of the teledex book?
Business Cards
Soliciting Customers?
(i) the move by APS Chemicals to Aussie ForkliftWhen did the approach occur?
(ii) the move by Pax Australia to Aussie Forklift.
Nature of the Forklift IndustryConclusion re Soliciting of Customers
Did either Defendant use material/information gained from the Plaintiff?
Did the Plaintiff consent to Leon Jack’s actions?
1. Taking of the Teledex Book
2. Soliciting Customers
What duties, if any, has Leon Jack breached?
Second Defendant
Summation of Findings
RemediesORDERS
SALIENT Facts
12 The Plaintiff, Forkserve Pty Limited ("Forkserve"), commenced business in 1981 with Ross Robin Jack ("Ross Jack") and Sharon Gai Jack ("Sharon Jack") as directors. Forkserve acts as trustee of a trading trust known as the Jack Family Trust, which trust operates a business enterprise dealing with the servicing and repair of forklift trucks in New South Wales - Ross Jack Affidavit 17/3/98, para 4; Ross Jack Affidavit 31/1/99, Annexure A. 13 The First Defendant, Leon Jack ("Leon Jack"), is the son and step son respectively of Ross Jack and Sharon Jack. Leon Jack commenced as an apprentice in the business at the age of 16 and upon finishing his four year apprenticeship was made Service Manager in 1987. As at 1 September 1988 the directors of the Plaintiff are recorded as Leon Jack, Sharon Jack and Ross Jack (Affidavit of Ross Jack 17/03/98, Annexure A), however, there is an issue as to whether or not Leon Jack was aware that he was a director. 14 In 1997 the relationship between Leon Jack and his parents started to break down when allegations were made to both Leon Jack and his wife, Alana ("Alana Jack"), that Leon Jack was being unfaithful and engaging in acts of infidelity. 15 This culminated in an argument on 2 December 1997 between Leon Jack, Ross Jack, and Sharon Jack, following which Leon Jack decided to leave the company. Leon Jack rang his wife from work and requested that she speak to an accountant in order to organise the incorporation of a company so they could commence business on their own. Alana Jack made the required arrangements and Aussie Forklift Repairs Pty Limited, the second Defendant ("Aussie Forklift"), was incorporated in its current name on 2 December 1997 with Leon Jack as the sole director. 16 Before leaving Leon Jack agreed to continue to work at the Plaintiff until 24 December 1997. 17 Forkserve commenced these proceedings by way of Summons on 18 March 1998 seeking relief arising from loss claimed to have been caused by Leon Jack leaving Forkserve and setting up Aussie Forklift in competition. 18 What follows is a chronology, agreed save where indicated; I have made one or two corrections where dates appear incorrect. This is so as to place the relevant events in their sequence, doing so by reference to the relevant affidavit material.
19 It has been alleged that the Defendants have breached fiduciary duties as well as s232 of the Corporations Law. I quote the applicable provisions below in the form applicable at the relevant time.
Relevant Legislation
Date Event Source 5/05/81 Forkserve incorporated with Ross Jack and Sharon Jack as sole shareholders and directors Affidavit of Ross Jack 17/03/98, Annexure A 1/08/83 In August 1983 Ross Jack invited into business Leon Jack aged 16 as apprentice mechanic Leon Jack "commenced employment with Forkserve as an apprentice in 1983" Affidavit of Ross Jack 17/03/98, para 8; Affidavit of Leon Jack 9/12/98, para 6 01/01/87 Sometime in 1987 Leon Jack was appointed Service Manager of Forkserve after successful completion of mechanic apprenticeship Leon Jack’s recollection is that "in late 1987, both Sharon Jack and Ross Jack gave me the title as Service Manager of their Company." Leon Jack asked Ross Jack when he would get a share of the business and Ross Jack said (when it was said being in dispute) "Leon, you don’t have enough money to buy into the business." During 1995-1997, in response to "When do I get a share of the profits of the business?" Ross Jack said "First you have to buy into the business and you don’t have enough money." Ross Jack asserts this type of conversation did not take place until after Leon Jack made director in 1988 Affidavit of Ross Jack 17/03/98, para 8; Affidavit of Leon Jack 9/12/98, paras 12-14; Affidavit of Ross Jack in reply 31/01/99, para 10 01/01/87 Sometime after appointed as Service Manager, Leon Jack requested Ross Jack to appoint him a director of the Plaintiff Affidavit of Ross Jack 17/03/98, para 10 1/09/88 Leon Jack is shown in a company search as director of Forkserve Affidavit of Ross Jack 17/03/98, Annexure A 1/10/95 In approx October or November 1995 Stuart Graham of Stuart Graham Forklift Services offers through Leon Jack to sell that business to Forkserve Affidavit of Ross Jack 22/10/98, para 29 15/12/95 There is a letter from Forkserve to Whelan, Nash & Braine describing Leon Jack as director, though he has not signed it Affidavit of Sharon Jack 29/10/98, Annexure B 18/12/95 There is an agreement between Stuart Graham Forklift Services and Forkserve signed by Leon Jack as director of Forkserve Affidavit of Ross Jack 22/10/98, Annexure A 19/12/95 As result of Leon Jack’s negotiations, Forkserve takes over Stuart Graham Forklift Services including National Starch Affidavit of Ross Jack 17/03/98, para 30 1/10/96 In October 1996, Leon Jack went on holidays with his wife in Dubbo; receives phone call from Ross Jack to effect that Blair Campbell of Pax Australia very dissatisfied and Leon Jack says will ring; Affidavit of Leon Jack 9/12/98, paras 22-25 24/10/96 Application for credit by Forkserve to Parkes Hydraulic Services signed by Leon Jack as director of Forkserve Affidavit of Ross Jack 22/10/98, Annexure B 31/12/96 In late 1996 and through 1997 Ross Jack is informed by three unnamed staff of alleged infidelity of Leon Jack and his secretary Diane Affidavit of Ross Jack 17/03/98, para 14 1/05/97 Leon Jack’s wife, Alana Jack, asks Leon Jack if he is having an affair with Diane and he denies that he is Affidavit of Leon Jack 9/12/98, paras 26-27 4/05/97 Sharon Jack informs Alana Jack she believes Leon Jack having an affair with Diane. Alana Jack confronts Leon Jack about it. Leon Jack denied affair. Affidavit of Alana Jack 9/12/98; paras 2-6 30/06/97 Alan Cassel accountant for Forkserve visits Forkserve each quarter to discuss with directors general management and accounts and Leon Jack is in attendance except last two occasions; these meetings were effectively meetings of directors being all three Affidavit of Ross Jack 17/03/98, paras 38-41 6/07/97 In approximately July 97, Martin Walls Business Development Manager had Leon Jack say to him "How do you get so many new customers? I want to know exactly how you do it." and later "Mate, I want you to give me Time Sheets that tell me every place you’ve been and everyone you’ve seen, since you’ve been here. Also you’ve got to give me copies of all your Service Agreements." ; Leon Jack denies conversation took place and says "requested information" as consequence of role as Service Manager and that he was instructed to attain such information by Ross Jack and Sharon Jack. Affidavit of Martin Walls 30/10/98, paras 3, 4, 5; Affidavit of Leon Jack 9/12/98, paras 48-50 20/11/97 Alana Jack has phone conversations with Sharon Jack and conversation with Leon Jack about alleged infidelity. Leon Jack denies infidelity; an argument commenced between Leon Jack. Ross Jack and Sharon Jack Affidavit of Alana Jack 9/12/98, paras 9-11 2/12/97 Alana Jack rung by Leon Jack who tells of another argument with Ross Jack and tells her to set up a company; she makes arrangements; Leon Jack comes home from work and tells her he stays with Forkserve until 24/12/97 Affidavit of Alana Jack 9/12/98, paras 12-14 2/12/97 Ross Jack accuses Leon Jack of talking to Sharon Jack badly for some time and says "Things have got to change" to which Leon Jack said "Well there is only one thing that can be done about that" which was to leave, and Leon Jack made it Friday week; Ross Jack (after 10 seconds out of the room) returned saying "Leave this Friday"; Leon Jack rang wife and said "Ring the accountant and arrange for a company I have to leave this Friday and I will need to start my own business" Affidavit of Leon Jack 9/12/98, paras 29-32 2/12/97 Leon Jack’s business was by a company arranged by his accountant after discussions with Ross Jack and Sharon Jack on 2 December 1997 Affidavit of Leon Jack 9/12/98, para 41 2/12/97 Ross Jack confronts Leon Jack in latter’s office re allegations of infidelity and Leon Jack says "I’m leaving" Leon Jack leaves the business premises immediately. Leon Jack denies the conversation took place. Affidavit of Ross Jack 17/03/98, paras 15-18; Affidavit of Leon Jack 9/12/98, para 35 2/12/97 Diane secretary to Leon Jack gives notice to Sharon Jack Affidavit of Ross Jack 17/03/98, paras 18-19 2/12/97 2 hours after "I’m leaving" Leon Jack returns to the business premises; he is informed of Diane’s resignation; Leon Jack agrees to stay on for a short time Affidavit of Ross Jack 17/03/98, paras 20-22 2/12/97 From 2/12/97 to 24/12/97 Leon Jack often absent for one or two hours at a time Affidavit of Ross Jack 17/03/98, paras 33-33 2/12/97 Aussie Forklift incorporated Affidavit of Ross Jack 17/03/98, Annexure F 4/12/97 Leon Jack requests from Ross Jack a letter to show earnings which was done Affidavit of Leon Jack 9/12/98, para 33, Annexure A 6/12/97 Leon Jack says to Sharon Jack that he’s opening his own business, that he’s registered the business to which Sharon Jack replies "It’s only one (1) thousand dollars I’ll give you back your thousand dollars", that he’s taken out a loan, and that he’s made up his mind Affidavit of Leon Jack 9/12/98, para 34 8/12/97 Leon Jack’s work diary contains the crossed out entry "APS Chemicals service 5 1.1 23 [?] comp Tuesday” (“comp” inferentially suggested “completed”) Affidavit of Ross Jack 17/03/98, Annexure D 8/12/97 Phone call of 1 minute between Leon Jack and APS Chemicals Affidavit of Ross Jack 17/03/98, paras 30-32, Annexure E 9/12/97 Maintenance call by Leon Jack at APS Chemicals Affidavit of Ross Jack 17/03/98, para 32, Annexure E 23/12/97 Ross Jack, Sharon Jack, Leon Jack’s step sister, Jessica, and Leon Jack attended Black Stump restaurant for a farewell lunch. There is a general denial by Leon Jack of Ross Jack’s account of their conversation in affidavit of Ross Jack 22/10/98 but it appears common ground that “some assistance was offered by [Ross Jack] regarding the possibility of hiring his forklifts” a cheaper rate (Ross Jack says “free forklifts”). Ross Jack also claims conversation occurred as set out immediately below Affidavit of Leon Jack 9/12/98, para 36; Affidavit of Ross Jack 22/10/98, para 19 23/12/97 Lunch of Leon Jack, Sharon Jack, Ross Jack’s daughter Jessica and Ross Jack at Black Stump Blacktown’ Leon Jack says "I’m going to start my own business"; Ross Jack offers assistance especially "sales leads" which (Ross says) Martin Wall, Forkserve’s sales representative, could not get because Forkserve’s charges were too expensive for smaller companies but useable by Defendant’s who could give a cheaper price Affidavit of Ross Jack 22/10/98, paras 17-21 23/12/97 During late December Ross Jack searched premises for telephone book and substantial business card folder which he has had to reconstruct, describing this as "a difficult and disruptive process" Affidavit of Ross Jack 17/03/98, para 23 24/12/97 Leon Jack decides to stay until 24 December 1998. He denies conversations in affidavit of Ross Jack 17/03/98, paras 16-22 (to the effect that Ross Jack and Sharon Jack tried to talk him out of leaving) Affidavit of Leon Jack 9/12/98, paras 35 24/12/97 Leon Jack takes small teledex document his property not Forkserve; says to Sharon Jack "there are three (3) telephone indexes. The other two (2) are in your office" Affidavit of Leon Jack 9/12/98, paras 37-38 24/12/97 Leon Jack takes his personal business card folder which was not the property of Forkserve Affidavit of Leon Jack 9/12/98, para 39 24/12/97 Leon Jack leaves Affidavit of Ross Jack 17/03/98, para 22 5/01/98 APS Chemicals (Forkserve’s biggest customer) faxes letter to Forkserve terminating relationship saying "whilst we have changed our supplier this in no way reflects on the way Forkserve Pty Limited conducted it’s business at APS Chemicals". (There is no evidence of any complaint as to work done in the past.) Affidavit of Ross Jack 17/03/98, paras 24-25; Annexure C 6/01/98 Leon Jack has phone call with Ross Jack who says, “What’s going on, I hear you’ve got APS Chemicals?” to which he replies "that’s news to me" claiming APC Chemicals said to him "they weren’t happy with Forkserve and would be making alternative arrangements." Affidavit of Leon Jack 9/12/98, para 42 6/01/98 Leon Jack receives phone call from APS Chemicals, attends their premises, carries out work, contacts Ross Jack and tells him he now has the work of APS on a trial basis. Affidavit of Leon Jack 9/12/98, paras 43-47 6/01/98 Tony McNamara of APS Chemicals advises Ross Jack that Leon Jack has set up a service company in opposition called Aussie Forklift Repairs; Leon Jack’s business card is in front of him Affidavit of Ross Jack 17/03/98, para 26 6/01/98 Ross Jack and Leon Jack first telephone conversation where Leon Jack denies he is doing work for APS Chemicals; second telephone conversation where Leon Jack says APS Chemicals approached him in the middle of December to do their work Affidavit of Ross Jack 17/03/98, paras 27-28 13/01/98 Ross Jack told by Jeff Fryer, Leon Jack’s replacement, that Pax Australia has gone to Aussie Forklift Affidavit of Ross Jack 17/03/98, para 36 16/01/98 Ross Jack meets with Wes Pembroke and Blair Campbell of Pax at their office and told that "We heard through our factory people in mid December that your son was going to work for himself" Affidavit of Ross Jack 17/03/98, para 37
20 At no stage has it been denied that between approximately August 1983 and 24 December 1997 Leon Jack was an employee of the Plaintiff sufficient to attract liability under ss232(5) and 232(6) of the Corporations Law. It also has not been denied that between 1 September 1988 and 12 January 1999 Leon Jack was recorded in ASIC company searches as a director of the Plaintiff (Affidavit Ross Jack 17/3/98 Annexure A). 21 The Plaintiff submits that the ASIC company search indicating that Leon Jack was a Director of the Plaintiff Company is prima facie evidence that he was a director applying s1274B of the Corporations Law. That is true. But it is capable of rebuttal, by showing that Leon Jack never consented to be a director, either expressly or by necessary implication from his conduct. 22 Thus as McLelland J stated in Hedges v NSW Harness Racing Club Limited (1991) 5 ACSR 291 at 293 "The status of director of a company, which involved significant statutory and fiduciary obligations, cannot be imposed on any person without his consent." Hayne JA added in Knight v Bulic (1994) 13 ACSR 553 at 560 "it may be accepted that no person may be appointed as a director unless that person consents to act. Although it may well be prudent always to obtain evidence of that consent in writing, that is not required." 23 Neither party produced to the Court a written consent. The question thus becomes did Leon Jack otherwise consent to becoming a director expressly or by necessary implication from his conduct? 24 The Plaintiff relied upon various actions and documents as in combination indicating that Leon Jack was acting as a director. I will deal with the evidence in turn.
“ Section 232(2)
An officer of a corporation shall at all times act honestly in the exercise of his or her powers and the discharge of the duties of his or her office.
Section 232(4)
In the exercise of his or her powers and the discharge of his or her duties, an officer of a corporation must exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the corporation’s circumstances
Section 232(5)
An officer or employee of a corporation, or a former officer or employee of a corporation, must not, in relevant circumstances, make improper use of information acquired by virtue of his or her position as such an officer or employee to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the corporation.
Section 232(6)
An officer or employee of a corporation must not, in relevant circumstances, make improper use of his or her position as such an officer or employee, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the corporation.”
An ‘officer’ is defined in s232(1)(a) as not only to include a director but also a secretary or executive officer of the corporation.
Leon Jack’s status — was he a director?
Documentation
25 To illustrate that Leon Jack had been acting as a director of Forkserve the Plaintiff relied upon a number of documents namely:
26 In cross examination Leon Jack was asked generally about the act of signing documents. The following exchanges occurred:
(i) Memorandum of Agreement between Forkserve Pty Limited and Stuart Graham Forklift Services Pty Limited dated 18 December 1995. (Affidavit Ross Jack 22/10/98 Annexure A)
Under this Agreement Forkserve took over the customers of Stuart Graham Forklift Services Pty Limited. Leon Jack signed this document under the title of "Director" of Forkserve Pty Limited. Leon Jack was asked about this document in cross examination to the following effect (T, 114.30 — 115. 3):
(ii) Application for Credit from Parkes Hydraulic Services Pty Limited dated 24/10/1996 (Affidavit Ross Jack 22/10/98 Annexure B)
“Q: Now, if I might show you the document at page 7 of the affidavit of Ross Robin Jack ever 22 October 1998, do you see that?
A: Yes, that’s correct.Q: That is your signature as a director of Forkserve?
A: That’s correctQ: That is you signing as a director of Forkserve regarding taking over the customers of Stewart Graham Forklift Services Pty Limited in December 1995?
A: That’s correctQ: And you knew you were signing this document as a director of Forkserve when you signed it?
Q: Did you read it before you signed it?
A: I can’t honestly say I read it as a director, but I did sign it above the word "Director", that’s correct.
A: Not - I can’t recall, to be honest. I would say I would do. This document was done up by the company’s accountant, so I do believe I would have read it, but –“
Leon Jack signed this document and in the space for "position" he wrote "Director." I note that on the same document under the request for the name, address and telephone of the "Directors/Owners" of the company, details were supplied for Ross Jack and Sharon Jack, but not for Leon Jack, despite space being provided for three names. In the appropriate spaces Leon Jack is provided as the "Sales Contact" and Sharon Jack as the "Accounts Contact". As the Plaintiff noted it appears that the writing filling out the form, and thus the details of the directors, is different to that of the signatory.
Leon Jack acknowledges that both of these documents (the Memorandum and the Application) contain his signature and that they were signed when Ross Jack and Sharon Jack were not in the office (Affidavit Leon Jack 9/12/98 para 21). Leon Jack adds
"It is my understanding that all lease agreements, credit applications, and payment of company accounts would be signed and authorised by my father and step mother." [Affidavit Leon Jack 9/12/98 para 21]
The Plaintiff concedes this was the case (Plaintiff written submissions, para 26).
(iii) Letter to Messrs. Whelan, Nash and Braine “re. Sens-a-Security Pty Limited Trading as Diamond Glaze Car Care Products ats. Forkserve Pty Limited (Affidavit Sharon Jack 29/10/98 Annexure B)
Leon Jack purports to send this letter outlining a response to a request for particulars under the signatory of "Director". This letter is unsigned, however, Leon Jack presumes there is a signed copy somewhere. (T, 134.24-.39)
(iv) Forkserve Quote to Aldex dated 3 February 1992; Forkserve Quote to Gartrell White dated 6 August 1992 . (Affidavit Ross Jack 31/1/99 Annexure D).
Leon Jack signed both of these quotes under the title "Director".
(v) Directors Report for the year ended 30 June 1996 dated 15 December 1996 (Affidavit Ross Jack 31/1/99 Annexure A).
In this document the names of the directors in office at the date of the report are listed as Ross Jack, Sharon Jack and Leon Jack and all three, including Leon Jack, have signed the document under the title of "Director". Leon Jack acknowledged signing this document. [T, 115.5-.21]. In cross examination Leon Jack also acknowledged signing a director’s report in respect of the year ended 30 June 1993 dated 16 December 1993 as well as a "Director’s Statement" dated 1 December 1993. [T, 115.23-.38].
In cross examination Leon Jack was asked whether he read these documents before he signed them to which he replied:
(vi) Bank Authority and Cheques .
“Leon Jack: Well, such a long time ago. I don’t believe I did. If they are accounts things, the accountants used to come down and put things in front of me and get me to sign them. [T, 115.47-.50]”
Signing Documents
The Plaintiff also claims that Leon Jack "signed the bank authority for the bank account of Forkserve in circumstances where he was able to sign cheques upon the account of Forkserve by himself". (Plaintiff written submissions, para 28)
27 The business card used by Leon Jack states his title as "Service Manager" (exhibit DX11; Affidavit Leon Jack 9/12/98 para 18). The Plaintiff asserts that business cards with the title "Director" were printed and used by Leon Jack [Affidavit Ross Jack 31/1/99 para 14] However, as was noted by the Defendant, no such business card has been produced. It should also be noted that no artwork for a business card showing Leon Jack with the title "Director" could be produced from the printer used by Forkserve. (Affidavit Ross Jack 31/1/98 para 14)
“Q: Do you say you don’t really pay much attention to the documents you sign?
A: Not at all times. If it is just a signature required I don’t always read the document, no. (T, 101.36-.40)”
and
Business Cards
“Q: And you accept that you were recorded on the records of the Australian Securities Commission as a director of Forkserve Pty Limited at some stage after 1988?
A: That is what the records state, but I still don’t believe I gave authority to be a director.Q: Did you ever sign documents as a director of Forkserve?
A: Yes, I did.Q :Do you say that you really didn’t pay much attention to documents you might have signed as a director of Forkserve? Is that what you are saying?
A: Not particularly. I think there is four or five documents in question some of them or one I think I knew about. The other four I just signed, not really knowing its significance.Q: Which was the one you knew about?
Q: Knowing either you were misrepresenting your position or that the statement that you were a director was true, is that right?
A: There was one to a hydraulic company in Parkes that asked for a signature. Forkserve at the time had a forklift on hire in Parkes and the machine broke down. They were quite unhappy with the situation, obviously, because it was in the mines. We asked a company out there to do the repairs. They needed a document signed before they would go out there by a director. I was asked to sign as a director, which I did.
A: Well, once again, I don’t - I didn’t at that stage and possibly don’t really know today, but the director as far as I was concerned was just another title, whether it be service manager, director, technician. I just didn’t believe it to be of any significance. (T, 105.26 — 106.2)
Director’s Meetings
28 The Plaintiff asserts that each quarter a meeting was held with Alan Cassel of A J Cassel & Co of Maroochydore, Queensland, Forkserve’s accountant, to discuss general management and financial accounts (T, 50.30 — 51.6). Ross Jack described these meetings as "Director’s Meetings". Ross Jack claims that Leon Jack was, except for the last two, present during these meetings. (Affidavit Ross Jack 17/3/98 paras 38-41) 29 Leon Jack claims, to the contrary, (Affidavit Leon Jack 9/12/98 para 19):
30 As noted by the Defendant no minutes of the meetings have been produced by the Plaintiff, despite Sharon Jack claiming that notes were taken by Mr Cassel. (T, 80.17-.30). Sharon Jack also states that she has signed several minutes of director’s meetings (T, 80.50-.53). Ross Jack however was uncertain as to whether or not notes were taken. In cross examination he was asked twice whether notes were taken. The first time he was asked this he stated that no notes were taken (T, 51.5-.6), the second time, however, he stated that notes were taken (T, 68.1-.3). Either way none of these notes nor other associated documentation has been produced (T, 80.39-.50). 31 The Defendant notes that (written submissions, para 28 and 29; explained by Sharon Jack T, 81.50 — 83.21)
"In the period of 1987 to 1997, whilst being with the Plaintiff Company, I have never seen any company minute books, I have never been asked to sign such a document, I have never taken part in any company meetings. I have never been shown or have knowledge of any document\s that I understand to be balance sheets or a profit and loss statement."
32 No documentation indicating that Leon Jack was in attendance, or participated in, any director’s meeting or annual general meeting has been produced by the Plaintiff. Nor was Mr Cassel called by the Plaintiff to give evidence as to the whereabouts of the documentation nor who was at any such meeting nor whether such meetings did in fact take place. 33 The Defendant submits that as a result of the Plaintiff’s failure to produce documents which are said to exist "one must assume they would not assist the Plaintiff and that it corroborates the version given by Leon Jack to the effect that no such meetings took place." (Defendants’ written submissions para 31)
"… What in fact has been produced are annual reports which have been prepared by the Accountant, Mr Cassel and were prepared in Maroochydore in the absence of Ross Jack, Sharon Jack and Leon Jack and brought by him to Sydney for signature. The Annual reports reflect a notation that they were prepared in the presence of all the parties at Maroochydore. This was clearly not true.
Sharon Jack explains this error as a mistake for which Mr Cassel has been spoken to. However, equally she has repeatedly signed documents without paying attention to them in a similar vein to that of her step-son Leon Jack who has not bothered to pay attention to the documents which he signed."
Appointment
34 Ross Jack states that shortly after Leon Jack was appointed as Service Manager Leon Jack approached him and "requested that as he had some senior management role in the business, he should be appointed a director of the Plaintiff." This was agreed to and he was appointed Director effective from 1 September 1988. (Affidavit Ross Jack 17/10/98 paras 10-11) 35 The First Defendant does not deny that a conversation to this effect took place between himself and Ross Jack, rather he states that "there is no documentation filed with the Australian Securities Commission regarding my consent to act in the capacity of Director of the Plaintiff Company." (Affidavit Leon Jack 9/12/98 para 20) 36 The First Defendant, does, however, recall a conversation between himself and Ross Jack in 1987 when Leon Jack asked his father "when will I get a share of the business?" to which Ross Jack replied "Leon, you don’t have enough money to buy into the business." (Affidavit Leon Jack 9/12/98 para 13)
Leon Jack’s Duties
37 Leon Jack accepted that his duties at Forkserve are those outlined by Ross Jack and included the supervision and allocation of work to the general work force of the business; namely the mechanics who performed the service and repair work. (Affidavit Ross Jack 17/3/98 para 9). Ross Jack also stated that Leon Jack (Affidavit Ross Jack 22/10/98 paras 23-28)
38 The Defendant contends that these duties are more akin to the duties of a Service Manager rather than a director. This is because the Defendant submits that "sole control of the Plaintiff company lay entirely with Ross Jack and Sharon Jack and at best Leon Jack was a Director in the mind of the Plaintiff only." (Defendants’ written submissions para 35)
(i) ordered all spare parts;
(ii) took all phone calls for quotes on service work and hire;
(iii) performed all the pricing for customer’s quotations;
(iv) set hourly rates for customers;
(v) set the prices for spare parts;
(vi) priced invoices for work done;
(vii) employed and dealt with all servicemen;
(viii) inspected forklifts he felt Forkserve needed to purchase, informed Ross Jack and arranged finance for these purchases;
(ix) had access to all information such as customer lists and how much each customer was earning for the Plaintiff each month; and
(x) Leon Jack would provide Ross Jack and Sharon Jack with a costing each month showing how many hours were charged and how much had been spent on spare parts, how many sick days each person had had and how much profit he calculated the Plaintiff had made for the month.What does this evidence indicate?
39 I find that Leon Jack did on a number of occasions sign documents on behalf of Forkserve under the title of Director and that he knowingly did so. 40 In relation to the business card used by Leon Jack, I consider that title on a business card is not necessarily representative of an individual’s role in a company or organisation. 41 I note the absence of evidence from Mr Cassel, the Plaintiff’s accountant, as to whether or not Director’s meetings were held, who was in attendance if they were held and whether notes or minutes were taken at any such meeting. Further, the Plaintiff was unable to produce such documentation. I am unable to conclude either way whether Leon Jack participated or not in those meetings. A finding on this aspect, however, is not necessary for my overall finding. 42 I accept that the position, or title, of Leon Jack in the Plaintiff company is ambivalent. I accept that Leon Jack never consented in writing to becoming a director of the Plaintiff company. I find however, that, even if Leon Jack did not expressly consent to act as a Director of the Plaintiff company, through his actions he represented himself to third parties as a Director. This is particularly seen in the fact that Leon Jack signed a number of documents as "Director" of Forkserve. Even if Leon Jack did not give much thought to these actions, and even if he signed the documents merely for convenience as submitted by the Defendant, Leon Jack must have been aware that he was being represented to the recipients of those documents as a director of the Plaintiff as he did knowingly sign as a director. 43 Hence Leon Jack’s position falls under the definition of "director" in s60(1)(a) of the Corporations Law, namely "a person occupying or acting in the position of director of the body, by whatever name called and whether or not validly appointed to occupy, or duly authorised to act in, the position". 44 At the very least Leon Jack can be classified as an executive officer of the Plaintiff, an issue to which I now turn.
Was Leon Jack an executive officer of the Plaintiff?
45 "Executive Officer" of a body corporate is defined in s9 of the Corporations Law as "a person who is concerned in, or takes part in, the management of the body regardless of the person’s designation and whether or not the person is a director of the body." 46 Ormiston J held in Commissioner of Corporate Affairs v Bracht (1988) 14 ACLR 728 at 734 that the concept of management includes
47 It was further held that "take part in" and "being concerned in" should be given a wide definition. Those terms include activities involving some responsibility and participation in the decision-making processes of the company but do not extend to routine clerical or administrative duties associated with management (at 734 and 735). In Sycotex Pty Limited v Baseler & Ors (1994) 13 ACSR 766 it was noted (at 782) that what is usually required is that the person have some decision making role in the company. 48 Leon Jack himself acknowledges that his role in Forkserve was, at the very least, “Service Manager” whereby he was concerned with the management of staff and involved in the pricing and general "management" side of the forklift repair business (Affidavit Leon Jack 9/12/98 para 17; T, 102.55 — 103.13). This is seen in the description of Leon Jack’s duties as outlined above. This can also be seen in the fact that, regardless of what title he had at the time, he signed documents on behalf of the company and he was actively involved in the formulation of the ‘price list’ for parts used by the Plaintiff (T, 27.43-.57; 103.5-.23). 49 The Plaintiff acknowledged that Leon Jack did not have the authority to enter into financial arrangements on behalf of Forkserve and that he had to account to Ross Jack and Sharon Jack on a monthly basis (T, 29.36-.47). Nonetheless, I find that Leon Jack was sufficiently involved in the "management" of the Plaintiff company, primarily through his policy and decision making functions in relation to the employees and the day to day running of the business of the Plaintiff company, such that he acted as an executive officer of the Plaintiff. (T, 29.9-.15; 102.5 — 103.3 and 124.28 — 125.33)
"activities which involve policy or decision making, related to the business affairs of a corporation affecting the corporation as a whole or a substantial part of that corporation to the extent that the consequences of the formation of those policies or the making of those decisions may have some significant bearing on the financial standing of the corporation or the conduct of its affairs."
Conclusion
50 This then is sufficient to attract liability under s232 of the Corporations Law as an “executive officer” is within the definition of “officer” for that purpose.
Has the Defendant breached any statutory or general law duty to the Plaintiff?
51 The Plaintiff submits that the First Defendant breached his statutory and fiduciary duties and/or his duty of good faith in at least one of three ways namely,
52 It is long settled that during a period of employment an employee and/or a director may not solicit customers for a future time when the employment has ceased and the employee or director has established his or her own business. However, once the employment has ceased, in the absence of special stipulation, the employee may canvass the customers of the late employer and may send a circular to every customer. Further, during the course of employment an employee is not able to make or copy a list of the employer’s customers, but cannot be restrained from sending circulars to customers whose names the employee remembers. (Wessex Dairies Limited v Smith [1935] 2 KB 80; Mordecai v Mordecai & Ors (1988) 12 NSWLR 58; Ormonoid Roofing and Asphalts Limited v Bitumenoids Limited (1930) 31 SRNSW 347 at 360-361). 53 Nor is there any prohibition against a director of a company being a director of another company which competes with the first company, as long as the director does not divulge to or use for the benefit of the second company confidential information of the first company. (On the Street v Cott (1990) 3 ACSR 54 at 61) 54 The Court of Appeal held in Faccenda Chicken Limited v Fowler & Ors [1987] 1 Ch 117 at 135-136
(i) the taking of the telephone book and the business card folder;(ii) the move by APS Chemicals as a client from the Plaintiff to Aussie Forklift and
(iii) the move by Pax Australia as a client from the Plaintiff to Aussie Forklift.
55 Very recently Mullighan J of the Supreme Court of South Australia in N P Generations Pty Limited T/as L J Hooker v Feneley [2000] SASC 240 (19 July 2000) dealt with circumstances in some respects similar to those of the present case. However, there are two important differences. The first is in the fact that the employee in N P Generations did no canvassing of her former employer’s customers till after her employment ceased. That contrasts with the position here with in particular APS Chemicals. Nor was the employee a director or otherwise brought to account under s232 of the Corporations Law. In that case an employee of a real estate business had a falling out with her employers and was asked to leave the firm. Her employment ceased that same day. She took with her a diary and an address book that she had compiled and used during the course of her employment. Upon, but not before, leaving the plaintiff the defendant contacted eight former clients by telephone and sent a further 46 a circular letter informing them that she was no longer working for the plaintiff and providing her new contact details. 56 It was held that whilst the information contained in the address book could be classified as being confidential, in taking and using the address book after her employment had ceased she had not breached any duties she owed to her former employer.(para 32) The Defendant did not compile the address book for any purpose inconsistent with the faithful discharge of her duties and, as in the case at hand, this was not a case of an employee deliberately memorising information for a purpose inconsistent with the obligation to her employer. (para 25) Further, in contacting the eight customers, there was no evidence that she had actually used the address book in order to contact the former customers, or if she did use the address book that she did not otherwise know, or have other means of ascertaining, enough details about them so that she could have contacted them by those other means; for example by use of a Telephone Listing or by visiting their houses. (para 28) The address book was used as but one method of contacting them and it was not shown that her capacity to do so depended on the address book. (para 41) 57 In relation to the sending of 46 circular letters it was held that there was no reason to overturn the Magistrate’s finding at first instance that in sending the letters she was not canvassing and anyway no loss was caused. (para 38) 58 Unlike in the present case, the employee in N P Generations had ceased employment before she had any contact with her former employer’s customers, whereas in the present case the Defendant did send a circular letter to at least one of the Plaintiff’s customers prior to ceasing his employment, APS Chemicals (see later).
The principles are articulated by Tipping J in Peninsular Real Estate Limited v Harris (1992) 2 NZLR 216 at 218-219
"…that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorises such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer"
"1 In the absence of a valid restraint of trade clause a former employer cannot prevent a former employee simply from competing: see Stenhouse Australia Ltd v Phillips [1974] AC 391, 400 per Lord Wilberforce and Target Recruitment Services Ltd v Lewin (1988) 2 NZELC 95,704, 95,706 per Hillyer J. There are no doubt many other authorities for this fairly elementary proposition.
2 A former employer cannot normally therefore in such circumstances prevent a former employee from contacting or even soliciting clients or customers of the former employer: see the Stenhouse case, the Target case, Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617, SSC & B:Lintas New Zealand Ltd v Murphy (1986) 3 NZCLC 99,546 and CE Elley Ltd v Wairoa-Harrison (1987) 1 NZELC 95,620 per McGechan J who, I note, reserved his own position as regards this particular proposition.
3 An employee after ceasing his employment may not, however, use truly confidential information obtained in the course of that employment for the purpose of competing with his former employer, or indeed in any other way detrimental to his former employer's interests: see Faccenda Chicken at p625.
4 What amounts to confidential information for this purpose is not susceptible of abstract definition. It will depend on the facts of each case: see Faccenda Chicken at p626, Everyday Brushes (SI) Ltd v Burrows (Christchurch, CP 208/89, 14 July 1989, Hardie Boys J) and the CE Elley Ltd v Wairoa-Harrison case already mentioned.
5 There is now a clear trend of authority to the effect that whether one classifies the following information as confidential or not, a departing employee may not take with him customer or client lists for the purpose of using them in a competing role: see Everyday Brushes, Ambler v Lamont (1989) 4 NZCLC 64,936 at p64,938 per Thorp J and the Elley case per McGechan J.
6 Neither may a departing employee deliberately memorise such information for that purpose: see Everyday Brushes and Westminster Chemical NZ Ltd v McKinley [1973] 1 NZLR 659 per Speight J.
7 Whether the departing employee takes customer lists or not, generally he may not solicit or approach a client of his former employer in respect of a transaction current at the time of his departure: see Elley at p95,627 and Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371."
Is the information confidential?
59 The Plaintiff accepts that there is no property in a customer and, citing Ford’s Principles of Corporations Law 8th ed (at 9.200), the preferred view that there is no property in knowledge per se. (Plaintiff’s written submissions, para 39). The twofold question then becomes what type of information was taken, if any, and was that information sufficiently confidential as to attract equity’s protection? 60 In Wright v Gasweld Pty Limited (1991) 22 NSWLR 317 at 333 Kirby P categorised information in these terms:
61 At 334 Kirby P lists five considerations which it is here common ground should be taken into account when deciding whether information is confidential:
(i) Publicly available or trivial;(ii) Common to a particular trade or calling even if not publicly known;
(iii) Confidential information properly so called;
(iv) Secrets that attract equitable protection whether or not there is a contractual agreement.
62 The Defendants referred to the decision of Young J in Rosetex Company Pty Limited v Licata 12 ACSR 779 where he discusses the nature of the information acquired by an officer which may give rise to the prohibitions in s232(5) and (6). At 784 he concludes that “information” in s232(5) "means the sort of information which equity would protect by injunction if a director used it in breach of fiduciary duties. “Improper” use of that information is in much the same plight as a breach of fiduciary duty under the general law." 63 Hence similar tests are to be applied for both the common law and statutory duty. 64 Did Leon Jack, upon leaving the Plaintiff, take with him confidential information of the Plaintiff?
(a) the fact that skill and effort were expended to acquire the information;(b) the fact that the information is jealously guarded by the employer, is not readily made available to employees and could not, without considerable effort or risk, be acquired by others;
(c) the fact that it was plainly known to the employee that the material was regarded by the employer as confidential;
(d) the fact that the usages and practices of the industry support the assertion of confidentiality; and
(e) the fact that the employee in question has been permitted to share the information only by reason of his or her seniority or high responsibility within the employer’s organisation.
The Teledex Book and Business Card Folder
65 Ross Jack notes that from late December 1997 he was unable to locate a telephone book and a business card folder both of which contained "detailed customer and supplier listings relating to the business". (Affidavit Ross Jack 17/3/98 para 23) Leon Jack acknowledges that (Affidavit Leon Jack 9/12/98 para 37-39):
66 The Plaintiff submits that if the business card folder is shown to be property of Forkserve then Leon Jack was in breach of his fiduciary duty.
37 "When I left the company I took with me a small teledex document. This document has pages marked in alphabetical order and they contain the names of suppliers in the industry … This document is not a company document but my own personal document. It has been collected over the years and such names as contained in the document are available in the yellow pages and trade references in telephone books. …
39 At the time I left the company I also took with me a business card folder which contained cards of various representatives from various companies over the years. I say that this is a personal document of mine that I have collected over the years."
The Teledex Book
67 As the Defendant notes, if the Plaintiff is claiming loss from the taking of the actual teledex book itself damages to be awarded would be nominal. What is claimed, therefore, is damages based on the taking of the teledex book without consent with the information contained within it, using it for the Defendants’ competitive advantage against the Plaintiff and does so in circumstances where that information was not available from other sources. 68 The Defendant submits that when one compares the teledex book (PX1) with the Plaintiff’s customer list as of December 1997 (PX8) there is not a sufficient correlation between the two documents such as would result in a conclusion that the information contained in the teledex book constituted a customer list.(Defendants’ written submissions para 61) Rather as Leon Jack stated, the information contained in the book comprised information which Leon Jack had acquired over a period of time and included personal and regularly used numbers of both customers and suppliers of Forkserve (T, 128 — 129). 69 Whilst the document was compiled over a number of years and does contain some personal numbers I am of the opinion that the teledex book, whilst it does not contain the contact telephone numbers for everyone of the Plaintiff’s customers as recorded in PX8, does contain a large number of customer listings as well as suppliers used by the Plaintiff. Due to this I do not accept the Defendants’ submissions that there is not a sufficient correlation between PX1 and PX8 such that the former cannot be classified as a customer list. What can be said is that it is not a complete customer list. The book could be used as a customer list and, as such, should be so classified.
Was the information available from other sources?
70 Instead of being a closely guarded confidential customer list the Defendant submits the information contained in both the teledex book and the Plaintiff’s customer list constituted information widely known in the forklift industry. This is evidenced by the fact that employees, including mechanics, were not required to sign a confidentiality agreement. In addition to this it became evident that it is common for competitors within the forklift industry to know the customers of their competitors and to canvass these customers for their own business [T, 54 and 73]; see below. 71 Thus the information contained in the teledex book could, albeit at some inconvenience, be reconstructed from the Yellow Pages, at least so far as the Plaintiff was concerned. As Ross Jack testified,
72 Hence even though it was a more time consuming process then looking in the teledex book once the book had been removed from the office Ross Jack at least was able to continue the business through use of the Yellow Pages Listings. 73 A similar situation arose in Dalysmith Corporation (Australia) Pty Limited v Cray Personnel Pty Limited (NSWSC, Young J, 14 April 1997, unreported). Young J, after reviewing some of the authorities in this area, held
"Since late December I have spent a great deal of time trying to locate the names of companies, their telephone numbers and relevant contact personnel especially with regard to the purchase of spare parts. It has been a difficult and disruptive process. Often I have had to go back to square one and review Yellow Pages Listings in an effort to find relevant parts suppliers for particulars types of Forklifts in our fleet and also for the Forklifts that we currently service for our customers." [Affidavit Ross Jack 17/3/98 para 23]
74 Young J further held, importantly for the case at hand,
"Ordinarily, any knowledge of the names and addresses of an employer’s customers do not constitute confidential information, so that any memorised list of them is not protected, though of course if an employee takes a printed list from his employer, different considerations will apply." (record 16)
75 This cold canvassing could be and was used by both the Plaintiff and Defendant. Alana Jack testified she obtained customers for Aussie Forklift by sending letters to businesses she ascertained from the Yellow Pages. [T, 139.3-.37 and 142.30-.44] This is also the method Ross Jack and Sharon Jack used when Forkserve commenced trading. As stated in Ross Jack’s affidavit of 22 October 1998 they would drive around Sydney giving out business cards to factories; they would then ring these companies offering their services. They would also go through the Yellow Pages looking for appropriate businesses to whom a letter of introduction was then sent. (paras 6-9) 76 Evidence was also submitted by the Defendant that indicated that the Plaintiff did not need to access the Yellow Pages or the teledex document to ascertain the names and contact details of their customers and suppliers. During cross examination Ross Jack stated that all customer details would be recorded on the office computer system (T, 55.43 and 56.10). As a result the Plaintiff was able to access its customer list from the computer system whilst a list of suppliers could be collated manually from the invoices kept in filing cabinets in the office (T, 63.32 — 64.44) The following exchange then occurred with Ross Jack in cross-examination (T, 64.51 — 65.17):
"to my mind the information as to the persons who were accustomed to hire casual blue collar labour and the contact person in their organisation, does not fall within the category of confidential information. It is information which can readily be obtained even from cold canvassing from the telephone book though it may take a few weeks to compile." (record 17)
77 Hence I find that the information contained in the teledex book could have been reconstructed by Ross Jack from other sources such as from Ross Jack’s knowledge of his business, Yellow Pages Listings and from business records kept both electronically and manually. Inferentially, the same could be said of Leon Jack. This is still, however, a case where Leon Jack took with him a document which, as I have previously stated, can be classified as a customer list. As Young J stated in Dalysmith Corporation (supra) "of course if an employee takes a printed list from his employer different considerations will apply" (record 16). 78 Whilst this information could arguably fall into one or both of Kirby P’s first two more innocuous classifications in Wright v Gasweld, I find that the teledex book contains sufficient details of the Plaintiff’s customers to constitute a ‘modified’ customer list. As the authorities have held, even if not classified as "confidential", using the test in Wright v Gasweld an employee who takes an employer’s customer list for use in the future in competing with the Plaintiff breaches the duty the employee owes to that employer; see earlier Peninsula Real Estate Limited (supra) and in particular Tipping J’s fifth principle. Thus unless the teledex book was taken with the Plaintiff’s consent, the different considerations referred to by Young J in Dalysmith do arise in the present case. Absent such consent, they would result in a finding that Leon Jack breached duties owed by him to the Plaintiff by taking a customer list belonging to the Plaintiff. The fact that this customer list/teledex book could be reconstructed from other sources does not change the fact that a breach of duty has occurred. But it may impact upon any remedies including damage to be awarded as a consequence of such a breach. However, all of that is subject to an important caveat — did the Plaintiff consent to the taking of the teledex book? If so, there can, as conceded by the Plaintiff be no breach of fiduciary duty (Plaintiff’s written submissions, para 42) and, I would add, of statutory or general law duty insofar as the teledex book is concerned. I should add that the business card folder (see below) has not been shown to include additional confidential information to that in the teledex book.
The questioning continued (T, 66.17-.23):
“Q: It wasn’t a question of going to the yellow pages, was it?
A: For suppliers?Q: Yes?
A: NoQ: Of course, your customers were on the computer, weren’t they?
A: YesQ: You didn’t have to go to the yellow pages for them either?
A: Are we talking about when I started or –Q: No, when Leon Jack left?
A: Do I have to get - I’m sorryQ: Would you have a look to the yellow pages to find out who your customers were?
Q: No, existing ones?
A: New customers?
A: I don’t have to go to the yellow pages, not to know my customers.”
“Q: What was the necessity to go to the yellow pages then?
Q.: So just a question of convenience?
A: Because sometimes it’s busy. Where the invoices are kept, it’s not in my office. It’s not the office next door, it’s four offices away. It may be convenience.
A: Possibly, sir. “
Did Forkserve consent to the taking of the teledex book?
79 The Plaintiff contends not, citing the importance of Leon Jack attributed to the diary and teledex book, namely that Leon Jack kept them with him at all times. However, I do not consider that anything much hangs on that. 80 Upon leaving the Plaintiff Leon Jack recalls a conversation he had with Sharon Jack, a director of the Plaintiff:
81 The Plaintiff acknowledges as I have said that if it is accepted that this conversation took place, then the Court can infer that Forkserve by Sharon Jack gave its consent to Leon Jack taking the telephone book. The Plaintiff, however, asserts that Leon Jack should not be believed. (Plaintiff’s written submissions, para 41). 82 The Defendants, on the other hand, assert that the Court should believe the conversation took place (Defendants’ written submissions, para 86). They rely first on the fact that the conversation which was alleged to take place was referred to in Leon Jack’s Affidavit dated 9 December 1998 (para 38) and that at no stage has the Plaintiff denied the conversation took place in any of the affidavits filed, including the further affidavit of Ross Jack dated 31 January 1999, nor was it denied by Ross Jack or Sharon Jack in oral evidence. 83 I am satisfied that the Defendants’ evidence from Leon Jack as to the conversation with Sharon Jack should be believed. The result is that any confidential information in the teledex was not taken in breach of any statutory or general law duty to the Plaintiff.
“38 As I was leaving the company (my last day), I remember having the following conversation with Sharon Jack words to the effect:-
She said: "Are you taking the telephone index?"
I said: "Yes, there are three (3) telephone indexes. The other two (2) are in your office." (Affidavit Leon Jack 9/12/98 para 38)
Business Cards
84 In relation to the business card folder it was ascertained in re-examination of Ross Jack that the business cards included contact names and telephone numbers which were not recorded on the invoices kept by the company. (T, 68.32 — 69.1). Despite this, the Defendant submits that business cards cannot be construed as forming a record of the business or in any way be confidential information of the business as one of the major purposes of business cards is to distribute them widely to as large a number of people as possible. (Defendants’ written submissions, para 72). Even if there be some, albeit very rough, correlation between business cards and clients, that circumstance, were it demonstrated, would not convert the business cards into a confidential client list. This is more especially given the constant changing in the customer list in the forklift industry (see below). I accept that submission as correct. 85 As with the teledex book the employees of the Plaintiff were under no instructions to keep business cards and the keeping of business cards was not subject to any confidentiality agreement. Indeed Ross Jack does not know if anyone else kept business cards of the type kept by Leon Jack (T, 67.1-.2). I find that the business card folder (PX2) does not correlate with the customer list (PX8). Leon Jack did not in the circumstances breach any duty in taking the business card folder.
Soliciting Customers?
86 As I have already stated an employee, executive officer and/or director cannot be stopped from competing with his or her former employer company. Nor can a person formerly occupying that office be stopped from soliciting the former employer company’s customers, as long as the person concerned is no longer connected with that former employer company at the time of the soliciting. The question thus arises, did Leon Jack solicit customers whilst in the employment or whilst he was a director or executive officer of the Plaintiff? The Plaintiff has relied upon two incidents with which I will deal in turn.
(i) the move by APS Chemicals to Aussie Forklift
87 As the Plaintiff notes, Forkserve received a letter from Barry Worton of APS Chemicals on 5 January 1998 terminating their relationship but stating "this in no way reflects on the way Forkserve Pty Limited conducted its business". (Affidavit Ross Jack 17/3/98 Annexure C). Upon receipt of this letter Ross Jack rang his contact at APS Chemicals, Tony McNamara, who confirmed the break and informed Ross Jack that Aussie Forklift the Second Defendant would be maintaining their forklift fleet. (Affidavit Ross Jack 17/3/98 para 26) 88 Ross Jack says that on 6 January 1998 he had two telephone conversations with Leon Jack. In the first conversation Ross Jack said "Leon what is going on. APS Chemicals have terminated our contract. Have you got their work?" to which Leon Jack replied "No I haven’t got them at all. I don’t know what you are talking about." In the second conversation that day Leon Jack said to Ross Jack "Yes I have got the APS Chemicals work. APS approached me in the middle of December to do their work." (Affidavit Ross Jack 17/3/98 paras 27-28) 89 Leon Jack puts forward a different version. He accepts that the first conversation with Ross Jack took place in which he denied having the APS Chemicals work. After that conversation he states that he received a call from APS Chemicals who requested he perform some repair work on a forklift. This work was carried out and subsequently APS Chemicals offered him the work on a trial basis. Leon Jack notes that he informed Ross Jack of this in their second conversation. (Affidavit Leon Jack 9/12/98 paras 42-47) 90 The Plaintiff submits that if, without Forkserve’s consent, Leon Jack accepted an offer to take the work of APS Chemicals prior to 24 December 1997, when he ceased office, then Leon Jack was in breach of his fiduciary duty. Alternatively the Plaintiff submits that even if Leon Jack did not act upon a pre-24 December invitation by APS Chemicals until after leaving the Plaintiff, if he was involved in discussions with APS Chemicals prior to 24 December 1997 and did not fully inform the Plaintiff of these discussions, then he is in breach of his duties as he was under a supervening obligation to Forkserve to inform it of the intentions of APS Chemicals in order that it could act to protect its position. (Plaintiff’s written submissions, para 43)
When did the approach occur?
91 Evidence was led that on 11 December 1997 Aussie Forklift sent a letter of introduction, including service prices, to Mr Barry Worton at APS Chemicals signed by Leon Jack as Managing Director of Aussie Forklift. Mr Worton’s name was ascertained by Alana Jack from enquires made from Yellow Pages Listings. Leon Jack sent this letter even though at the time he knew who Barry Worton was and that APS Chemicals was a substantial customer of Forkserve. (T, 98.1-.39). Leon Jack claims, however, that whilst he signed the document and other “introduction” letters he did not read the documents he was signing and was unaware that the letter had been sent to APS Chemicals. (T, 98.42-.48; 100.57 — 101.22) 92 The Defendants submit, relying upon On the Street, and on Wright v Gasweld, that the Defendant was entitled to make certain limited preparations for establishing a new business, such as starting a new company and writing letters of introduction. Whilst these cases support the proposition that a director of one company is entitled to commence a new company whilst still a director of the first company, I do not believe these cases go so far as to entitle such a director or executive officer to send letters canvassing work for the second company to customers of the first company. That this was not merely a letter of introduction is indicated by the inclusion of hourly rates and service fees (see PX3). 93 It cannot be denied that the Defendant had APS Chemicals as a customer as of 6 January 1998. It can also not be denied that a canvassing for business letter was sent by Leon Jack to APS Chemicals on 11 December 1997 whilst Leon Jack was still in the service of the Plaintiff.
(ii) the move by Pax Australia to Aussie Forklift.
94 Ross Jack states that on or about 16 January 1998 he met with representatives of Pax Australia, and that one of them said "We heard through our factory people in mid December that your son was going to work for himself." (Affidavit Ross Jack 17/3/98 para 37) 95 Leon Jack claims he did not send a letter of introduction to Pax Australia. I also note that no such letter has been produced by the Plaintiff. Pax Australia did become a customer of the Defendants. Leon Jack stated that Pax Australia rang him in early December regarding a problem they had with repairs Forkserve had carried out and that the representative from Pax then contacted him in early January 1998. (T, 98.50 — 99.36) Leon Jack stated
96 There was no evidence before me that Leon Jack solicited the work of Pax Australia before he ceased his services for the Plaintiff. I also note that there was also no evidence that he solicited work after leaving the Plaintiff. Hence any acts concerning Pax Australia could not constitute a breach of any duty owed by the Defendant to the Plaintiff.
"All I can say is before December 24 of 1997 I didn’t speak to Pax Australia regarding any of their work. They contacted me. I thought it was in January, beginning, but I could be wrong with the date. Whilst I was employed with Forkserve, that didn’t happen." (T, 112.40-.44)
Nature of the Forklift Industry
97 As the Defendant notes, the Plaintiff’s customer list was constantly changing, as Ross Jack stated in oral evidence
98 In cross examination Ross Jack described the nature of the forklift industry in the following way:
"You get changes all the time and lose clients all the time … I might pick up five customers in one week and lose two the following week, so it is up and down all the time" (T, 35.9-.17)
99 In cross examination Ross Jack described one of the employees, Martin Wall’s, role was to "canvass prospective customers". He would go to sites or approach customers ascertained from his knowledge of the industry and possibly from the Yellow Pages. (T, 30.26-.39) 100 Evidence was also lead that it was a usual practice for customers to move, for example when Forkserve hired Keith Roberts he brought with him two customers from his former employer. (T, 37.22-.30) 101 Ross Jack also acknowledged that he knew Leon Jack upon leaving the Plaintiff would be competing with the Plaintiff:
“Q: Now, there is a large number of forklift repair companies in the industry?
A: That’s rightQ: They are all competing for those customers aren’t they?
A: That’s correctQ: And in regard to your customers there would be other forklift repair companies that approach your customers?
A: That’s correctQ: They will approach you with the intention of taking the customers away from you?
Q: That’s the way the industry operates?
A: Yes
A: That’s correct. [T, 30.58 — 31.16]
102 It should also be remembered that there are many reasons why a customer may change forklift repairers besides being ‘poached’ by a competitor. For example, as Ross Jack testified, a customer may leave because of
“Q: Of course, after he [Leon Jack] left and he is going to go out on his own you knew he was going to be in competition with you?
Q: And in competition was, as you described earlier this morning, the situation where people would be attempting as other competitors do, in relation to each other’s customers?
A: Yes
A: Yes [T, 53.50-.57)
103 I note the common practice of "poaching" or "canvassing" customers from competitors within the Forklift industry. I further note Ross Jack’s concession that he was aware that once Leon Jack left the Plaintiff he would be in competition with the Plaintiff. There would be no basis for my finding that any acts engaged in by Leon Jack after he left the Plaintiff on 24 December 1997 resulted in any breach of duty owed by him to the Plaintiff, where these were not preceded by any canvassing by Leon Jack of those customers which were still employed by the Plaintiff. 104 I do find, however, that in sending the letter to APS Chemicals, prior to 24 December 1997, Leon Jack breached duties owed to the Plaintiff. This is even if Leon Jack were not aware that this letter was sent as the letter did contain his signature. Indeed I conclude on the balance of probabilities he was aware of the effect of the letter. This act amounted to ‘soliciting’ customers of the Plaintiff prior to ceasing his services with the Plaintiff.
Conclusion re Soliciting of Customers
"Different dollar values. Some buy new forklifts, trade theirs. New forklifts carry warranties. They don’t need service by my company. Different dollar values. Numerous reasons .. Cheaper rates, better rates, other companies give a better deal." [T, 36.9-.17)
Did either Defendant use material/information gained from the Plaintiff?
105 The Defendants submit that there is no evidence that Leon Jack used the teledex book or business card folder. I note the following:
106 But that cannot avail the Defendant. Thus as Green & Anor v Bestobell Industries Oty Limited (1982) 1 ACLC 1 at 4 makes clear, on a claim for an account of profits for breach of fiduciary duty, it is not necessary for the person to whom the duty is owed to establish as a fact that the fiduciary has used information or an opportunity gained in the fiduciary position. It is enough to show that, as here, the fiduciary derived a benefit by placing himself in a position where his duty and his own interest conflicted or where there was a real and sensible possibility of conflict. Leon Jack did precisely that when canvassing APS Chemicals. 107 Therefore, if the Plaintiff elects an account of profits so far as APS Chemicals is concerned, it is immaterial whether or not the Defendant actually used the information.
(i) There is no evidence that the Defendant used the teledex book to contact APS Chemicals. As Alana Jack testified she obtained the details for the letter she sent to APS Chemicals from the Yellow Pages and from calling them for contact details. [T, 96.51 — 97.3; 142.1-.44] Leon Jack appeared to have had no role in this process. [T, 139.4-.30].(ii) As Ross Jack has testified, there is an industry practice of "poaching" customers and there is a fairly high turnover rate of customers as noted above.
(iii) Coupled with the Plaintiff’s high turnover rate of customers is the evidence that, as was submitted by the Defendants, it appears that APS Chemicals remained a customer of the Plaintiff up until the "last job" dated 24 February 1999 as recorded in DX8.
(iii) Leon Jack claims he has not used the business card folder since leaving the Plaintiff. Leon Jack stated in cross examination in relation to the business card folder:
(iv) Leon Jack however, admits to having used the teledex book since leaving the Plaintiff. In cross examination he stated:
"I don’t know if I used it at all since I have taken it from Forkserve. I don’t think I have ever used it."
[T, 131.2-.3]
Q: In respect of the telephone book, you have added to that since you have left Forkserve?
A: This book, I think I would, yeah. I made a few entries since I left Forkserve.Q: You have used that book?
Q: For the purpose of the running of the business of Aussie Forklift Repairs?
A: This book, yes, I used that book, yes
A: Only for suppliers, but a lot of suppliers I have the telephone numbers up in the head, very rarely, but I do use it, yes. [T, 131.2-.32]
108 As I have already determined, that taking was consented to.
Did the Plaintiff consent to Leon Jack’s actions?
1. Taking of the Teledex Book
2. Soliciting Customers
109 As the Plaintiff acknowledges, the unchallenged evidence is that Sharon Jack knew from around 6 December 1997 that Leon Jack had registered Aussie Forklift as well as knowing that he had taken out a loan for a van (to be used in the running of Aussie Forklift). (Affidavit Leon Jack 9/12/98 para 34) 110 Leon Jack also obtained a letter of earnings from Ross Jack around 4 December 1997 which was to be used to obtain a loan to buy a van. (Affidavit Leon Jack 9/12/98 para 33) Ross Jack denied that Leon Jack told him he was buying a van but rather that the letter is the sort that Alana Jack asked for yearly, apparently in order to obtain subsidised child care. (Affidavit Ross Jack 31/1/99 para 18) 111 On 23 December 1997 Ross Jack acknowledges that Leon Jack told him that he was going to start his own business which, Ross Jack understood to mean that Leon Jack was starting his own forklift maintenance business. (Affidavit Ross Jack 22/10/98 para 18) Later that day Ross Jack, Sharon Jack, Ross Jack’s daughter Jessica and Leon Jack meet for lunch during which conversation turned to Leon Jack’s new business. During this conversation Ross Jack claims he stated (Affidavit Ross Jack 22/10/98 para 19):
112 Leon Jack denies that this conversation took place but admits that there was a general conversation in relation to his future work and that some assistance was offered by Ross Jack regarding the possibility of hiring his forklifts at a cheaper rate. (Affidavit Leon Jack 9/12/98 para 36) 113 Whilst the Plaintiff was aware prior to letters being sent to APS Chemicals that the Defendant would be competing with the Plaintiff this does not amount to consent to the Defendant sending such a letter. The above conversation, however, combined with the knowledge that the Defendant would be competing with the Plaintiff (T, 53) does amount to consent for the Defendant to approach any of the Plaintiff’s customers to try to "canvass" their work after Leon Jack’s services with the Plaintiff had ceased, though such consent would not have been necessary.
"Leon, it is very difficult as you know to start up a Forklift business on your own from scratch. What I can do to get you started, if that is what you want to do, is to give you all the leads that Martin (the Plaintiff’s sales representative, Martin Walls) does not get. I can also give you free forklifts to hire to your clients so that you can make some money on the hire. You can use our service exchange parts so that you don’t have to keep your customers waiting 2 or 3 days while their parts are repaired."
To which Leon Jack replied: "Thanks for the offer, I’ll see how we go."
What duties, if any, has Leon Jack breached?
114 A. I find that the Defendant in taking the teledex book did not breach any duty, by reason of consent, but that in contacting APS Chemicals prior to 24 December 1997 he did breach his fiduciary duties owed to the Plaintiff.
115 There is authority that s232(5) corresponds with the fiduciary duty of confidentiality which would be contravened where a director, officer or employee used information which was confidential to a company to make personal profit (Rosetex Co Pty Limited v Licata (1994) 12 ACSR 779). 116 It has been argued that a broader view of s232(5) would allow the application of the section to use of information obtained by virtue of the individual’s position, irrespective of whether that information is confidential in equity. In Grove v Flavel (1986) 4 ACLC 654 it was held that a director who used knowledge that a company had liquidity difficulties breached the provision. The Court also held (at 662) that "‘improper’ is not a term of art. It is to be understood in its commercial context to refer to conduct which is inconsistent with the ‘proper’ discharge of the duties, obligations and responsibilities of the officer concerned." 117 I find that Leon Jack was at the relevant time an officer of the Plaintiff. Leon Jack did take the teledex book and business card folder. Leon Jack did obtain these documents by virtue of his position. There is evidence that Leon Jack has used this information since leaving the Plaintiff, namely:
B. I have received no direct submissions as to if, and if so how, the Defendants breached s232 of the Corporations Law . Nonetheless I will deal with the sections in turn:(a) Section 232(2)
There is no evidence that Leon Jack did not at "all times act honestly" in the exercise of his powers and duties.(b) Section 232(4)
Likewise there is no evidence nor any submission that Leon Jack did not "exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the corporation’s circumstances."(c) Section 232(5)
In Commissioner for Corporate Affairs v Green [1978] VR 505 it was held (at 510) by McInerney J that the requirements for contravention of the then Victorian equivalent to s232(5) was to show:(i) a person was at the relevant time an officer of the corporation,
(ii) that person acquired the relevant information,
(iii) that person acquired the relevant information by virtue of that person’s position as an officer or employee of the corporation,
(iv) that person made improper use of the information
(v) that person did so in order to gain, directly or indirectly, an advantage or to cause detriment to the corporation, and
(vi) that advantage was obtained for either the officer or someone else.
118 But, given that the teledex book was taken with consent, it cannot be said that the First Defendant engaged in acts inconsistent with his fiduciary duties to the Plaintiff so as to breach s232(5).
“Q: In respect of the telephone book, you have added to that since you have left Forkserve?
A: This book, I think I would, yeah. I made a few entries since I left Forkserve.Q: You have used that book?
Q: For the purpose of the running of the business of Aussie Forklift Repairs?
A: This book, yes, I used hat book, yes
A: Only for suppliers, but a lot of suppliers I have the telephone numbers up in the head, very rarely, but I do use it, yes. [T, 131.2-.32]
(iv) Section 232(6)
119 It has been held that whilst the director’s state of mind is relevant, the accrual of an advantage or the suffering of a detriment will not be necessary to establish a breach of s182(1) [former 232(6)] see Chew v R (1992) 173 CLR 626. Therefore a director may breach the section even if the purpose is not achieved. 120 Impropriety is not limited to conscious wrongdoing. It can be established by a breach of the standards of conduct which would be expected of a person in the position of the director or officer, by a reasonable person with knowledge of the duties, powers and authority of the position and the circumstances of the case; see Residues Treatment & Trading Co Limited v Southern Resources Limited (1989) 15 ACLR 416, Southern Resources Limited v Residues Treatment and Trading Co Limited (1990) 3 ACSR 207 and R v Byrnes (1995) 17 ACSR 551. Further, in R v Cook; Ex parte Director of Public Prosecutions (Cth) (1996) 20 ACSR 618 it was held that a director who acted outside the limits of his or her authority could breach s232(6) notwithstanding any belief that this conduct was in the best interests of the corporation. 121 I find that in soliciting APS Chemicals from the Plaintiff by sending the letter prior to ceasing his services with the Plaintiff, Leon Jack has breached s232(6) even if he had no intention to gain an advantage or to cause a detriment.Second Defendant
122 As Leon Jack is the sole director of Aussie Forklift knowledge of Leon Jack’s breaches is imputed to the Second Defendant whose knowing participation in the relevant breach can therefore be imputed; Barnes v Addy (1874) 9 Ch App 244.
Summation of Findings
123 I find that:
124 The Plaintiff is yet to make an election between an account of profits and equitable compensation. Depending on the straightforwardness of the calculation, relating as it does to APS Chemicals and only any others if revealed in an accounting, no elaborate steps would be needed and the figure, or a shorthand way of getting to it, may be agreed, failing which it would ordinarily go to a Master or Referee for accounts to be taken. Indeed if the amount were small, a full accounting may not be appropriate and the amount simply determined, so that the Court is “just, quick and cheap” in accordance with the overriding purpose of the Rules.
1. The First Defendant was a director or executive officer of the Plaintiff and as such owed the Plaintiff fiduciary duties and duties under the Corporations Law .2. There was no special stipulation or restraint of trade clause in existence.
3. The First Defendant did take the teledex book, but with consent, and also the business card folder, there being no confidentiality attaching to the latter.
4. The First Defendant did send a letter to APS Chemicals on 11 December prior to ceasing his services with the Plaintiff.
5. It is not established that the First Defendant sent a letter or otherwise contacted Pax Australia prior to ceasing his services with the Plaintiff with the view to solicit or canvass its work.
6. In sending the letter to APS Chemicals and the other ‘circular’ letters the First Defendant did not make use of the items taken from the Plaintiff.
7. The First Defendant did not compose either the teledex book or business card folder for any purpose inconsistent with the faithful discharge of his duties.
8. The teledex book contains sufficient information to be classified as a customer list.
9. In taking the teledex book the First Defendant would have been in breach of fiduciary duties owed to the Plaintiff but for the Plaintiff’s consent; the result is that such consent, which I am satisfied was given, obviates any breach of fiduciary duty on that score.
10. In taking the business card folder the First Defendant was not in breach of fiduciary duties owed to the Plaintiff.
11. In contacting APS Chemicals prior to ceasing work, the First Defendant was "canvassing" customers of the Plaintiff in breach of his fiduciary duties. The same would apply to any other customers so contacted, and if an accounting would reveal others in the same category, the same consequences would apply.
12. Upon ceasing employment with the Plaintiff the First Defendant was entitled to compete with the Plaintiff and to "canvass" the Plaintiff’s customers not previously approached. Due to this the First Defendant in contacting Pax Australia was not in breach of any duty on the basis there was no prior canvassing.
13. There is no evidence that the First Defendant used the teledex book in contacting APS Chemicals.
14. The First Defendant has made use of the teledex book since leaving the Plaintiff.
15. There is no evidence nor submission that the First Defendant has breached either s232(2) or s232(4).
16. I find that the First Defendant has breached s232(6) by reason of 11 above, but has not otherwise breached s232 (see 9 above).
17. I find that any breach by the First Defendant is to be imputed to the Second Defendant following the principle outlined in Barnes v Addy (supra).
Remedies
Orders
125 I direct the parties to submit orders within five days giving effect to this judgment, with brief submissions on costs. **********
Last Modified: 11/28/2000
Cases Citing This Decision
151
Angas Law Services Pty Ltd (in liq) v Carabelas
[2005] HCA 23
Angas Law Services Pty Ltd (in liq) v Carabelas
[2005] HCA 23
Spies v The Queen
[2000] HCA 43
Cases Cited
9
Statutory Material Cited
1
Beckwith v the Queen
[1976] HCA 55
Re Seymour
[2002] TASSC 85
Re Seymour
[2002] TASSC 85