G C Betta Homes Pty Ltd v Hewton

[1991] TASSC 129

Serial No B15/1991
List "B"

COURT:                 SUPREME COURT OF TASMANIA

CITATION:            G C Betta Homes Pty Ltd v Hewton [1991] TASSC 129; B15/1991

PARTIES:  G C BETTA HOMES PTY LTD
  v
  HEWTON

FILE NO/S:  363/1991
DELIVERED ON:  17 April 1991
JUDGMENT OF:  Cox J

Judgment Number:  B15/1991
Number of paragraphs:  6

Serial No B15/1991
List "B"
File No 363/1991

GC BETTA HOMES PTY LTD v HEWTON

REASONS FOR JUDGMENT  COX J

17 April 1991

1. The applicant company has commenced proceedings against the respondent for injunctive relief against the use of confidential information belonging to the applicant, an enquiry as to damages for breach of confidence, and further an account of all the profits made by the respondent from the use of that confidential information. It now seeks an interim injunction in the following terms:

"That the defendant be restrained until after judgment in this action or until further order from doing in the meantime whether by herself or by her servants or agents or any of them or otherwise howsoever the following acts or any of them that is to say from using the said confidential information of the plaintiff or any part thereof for any purpose other than for the purpose for which it was supplied to her or otherwise exploiting the said information and from either directly or indirectly persuading the plaintiff's hostesses from cancelling party plans and from recruiting the plaintiff's hostesses to conduct party plans for the defendant's said new business."

1. The litigation comes about in these circumstances. The applicant manufactures, distributes and markets simulated plants, trees and flowers. The method of marketing consists of employing commission agents who recruit people to act as hostesses. The hostesses hold a "party plan" in their homes. It involves inviting friends and acquaintances and neighbours to attend the home for morning or afternoon tea and to inspect the applicant's products, and the hostess endeavours to sell those products at such parties. In return, the hostess receives various commissions, and if she recruits other people to act as hostesses, she receives a free gift of one of the applicant's products. The commission agent receives a commission in addition to the commission received by the hostess. On 5 April 1988 the respondent accepted employment as a commission agent of the applicant and signed a written agreement which, among other things, dealt with the rates of commission. It contained no express undertaking as to confidentiality nor any covenant in restraint of trade. In mid–February 1991 the respondent advised the applicant that she wished to cease to work as a commission agent for it, as she was tired of working at night and week–ends doing party plans. The applicant learned that the respondent intended to open her own business employing the same methods but supplying similar goods from a source other than the applicant. The applicant thereupon terminated her engagement as a commission agent with it. The applicant has publicly advertised the fact that the respondent is no longer an agent/demonstrator for its products. The respondent has advertised her own party plan for simulated plants giving contact telephone numbers for enquirers.

Since late February 1991 twenty–two named hostesses who had been booked to hold "party plans", through which the applicant had hoped to effect sales of its products, have cancelled those plans. Nine of these ladies have told the respondent's manager that they intendto hold a "party plan" with the respondent's new business. The affidavit in support of the application concludes with this claim:

"19     The plaintiff G C Betta Homes Pty Ltd is continuing to receive cancellations of party plans at a gradually accelerating rate. This is disrupting the business of the plaintiff in that goods have been despatched to many of the hostesses who have already cancelled and goods have been despatched to other hostesses who had been recruited by Mrs Hewton and they may very well cancel at some future time and also goods are about to be despatched to hostesses recruited by Mrs Hewton. It is extremely difficult for the plaintiff to conduct its business because of the disruption and uncertainty created by the activities of Mrs Hewton."

1. Before granting an interlocutory injunction, the Court should be satisfied that the applicant has made out a prima facie case in the sense that if the evidence remains the same at the hearing, there is a probability that at the hearing he will be held entitled to relief. The degree of probability that is required would depend upon the nature of the rights the applicant asserts and the practical consequences likely to flow from the order he seeks. He must also show that the inconvenience or injury which he would be likely to suffer, if the injunction is refused, would outweigh the inconvenience or injury the respondent would suffer if it is granted (Beecham Group Ltd v Bristol Laboratories Pty Ltd (1967) 118 CLR 618). He must also show that the damage alleged is not such as to be adequately remedied by the award of damages.

1. That the courts will protect confidential information amounting to trade secrets is clear enough (Lamb v Evans [1893] 1 Ch 218; Robb v Green [1895] 2 QB 1; Littlewoods Organisation v Harris [1977] 1 WLR 1472). What is less clear is what information amounts to a trade secret. This involves a consideration of the nature of the employment, the nature of the information itself, whether the employer had stressed the confidentiality of the information to the employee and whether the relevant information could easily be isolated from other non–confidential information which was part of the same package of information (Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617). The evidence before me is, in my view, inadequate to enable me to undertake any effective consideration of these questions. Furthermore, while the duty of fidelity owed by an employee to his employer during the subsistence of the employment may render unlawful disclosure of confidential information which does not amount to a trade secret as such or which is so confidential that it requires the same protection as a trade secret the duty of a former employee in respect of information not having that quality acquired in the course of his service is not as great and does not prevent the use of such information after his employment has ceased (ibid., at p.625 and Printers and Finishers Ltd. v Holloway [1964] 3 All E.R. 731).

1. An injunction, whether in the form sought or in a modified version, having the effect of preventing the respondent from putting into effect her marketing scheme must obviously cause her damage if the applicant, as claimed, will suffer damage unless she is prevented from doing so. The quantification of her loss would, however, be likely to be speculative if she is prevented by injunction from embarking on her proposed venture whereas if she proceeds with her activities, her profits will be ascertainable and capable of being made the subject of the account sought by the applicant in its writ. There is, in my view, a better chance of doing justice to the party ultimately succeeding if no injunction is granted.

1. In all the circumstances, I exercise my discretion against granting the interim relief sought.