HiTech Group Australia v Connect Recruitment Pty Limited

[2012] NSWSC 1572

Supreme Court

New South Wales

Medium Neutral Citation:	HiTech Group Australia -v- Connect Recruitment Pty Limited [2012] NSWSC 1572
Hearing dates:	16 November 2012
Decision date:	16 November 2012
Jurisdiction:	Equity Division
Before:	Windeyer AJ
Decision:	Summons dismissed with costs
Catchwords:	PRACTICE AND PROCEDURE - preliminary discovery
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Category:	Principal judgment
Parties:	HiTech Group Australia - Plaintiff Connect Recruitment Pty Limited - First Defendant Aidan Daly - Second Defendant Kieryn Cowan - Third Defendant Steven Bleakley - Fourth Defendant
Representation:	Counsel: C.H, Cassimatis - Plaintiff R. Hourigan - First and Fourth Defendants A. Daly - Second Defendant - self-represented K. Cowan - Third Defendant - self-represented Solicitors: Mitry Lawyers - Plaintiff Wilson Solicitors - First and Fourth Defendants
File Number(s):	2012/207757

EX TEMPORE Judgment

1. This is an application by the plaintiff for preliminary discovery pursuant to r 5.3 of the Uniform Civil Procedure Rules 2005 (NSW).

1. In essence, the claim is based on the following facts: The second and third defendants were employed by the plaintiff. They were, at least on the evidence on this application, employed pursuant to employment contracts. Those contracts included restraint clauses. Both of those defendants left the employment of the plaintiff and became employees of the defendant, which is a competitor of the plaintiff.

1. It is claimed that this was in breach of the restraint obligations and there is, I think, an intention to bring a claim for breach of contract and possibily a claim that those defendants have taken confidential material, not necessarily intellectual property of the plaintiff, and that this has been used to the advantage of the first defendant.

1. The other claim which the plaintiff apparently wishes to bring, if it has, as it says enough information, is a claim against the first defendant for interference with contractual relations between the plaintiff and its two former employees and in some way, against Mr Bleakley, the sole director of the first defendant, for the same tort.

1. What is sought in the Summons is an order for production of documents relating to:

(a)   the employment of the second and third defendants by the first defendant.

(b)   any employment agreement between the plaintiff and the second and third defendants.

(c)   any business introduced by the second and third defendants to the first defendant as a result of their employment by the first defendant.

1. To come within the terms of the rule, it is necessary for the plaintiff to establish that it may be entitled to a claim for relief from the Court against the particular defendant proposed to be sued, but that having made reasonable enquiries, it cannot obtain sufficient information to decide whether or not to commence those proceedings; and that the prospective defendant may have or have had possession of a document that can assist in determining whether a claim should be brought; and that inspection of that document will assist in making the decision.

1. So far as the second and third defendants are concerned, the claim which the plaintiff wishes to bring is a simple claim for breach of an employment contract and breach of a restraint clause in that contract. I do not think that there is anything further that the plaintiff needs to enable a proper decision to be made as to whether or not to commence that action. As the employment of the second and third defendants by the first defendant has now ceased, there is no basis for injunctive relief so that it would be necessary to bring a claim for damages.

1. The only purpose therefore, of the production sought in para (c) would really be to see whether or not it was worthwhile for the plaintiff to bring that claim because the solicitors for the first defendant have, in a letter, stated they are instructed that there are no documents relevant to that claim stating that no business has been introduced by the second and third defendants to the first defendant as a result of their employment which has now ceased. Either that answer is true or is not true.

1. So far as any claim for interference with contractual relations is concerned as against the first and fourth defendants, one of the claims of the plaintiff here is that Mr Bleakley, the fourth defendant, had in his possession at the time the first defendant employed the second and third defendants, a copy of the employment contract which contained the restraint clause.

1. Whether he did or not is a matter which, if these proceedings continue, might be the subject of a dispute. It is clearly the subject of dispute now because he has said that he did not have the contracts at the relevant time, although it is not disputed that he has them now, and there may be a claim for interference with contractual relations as a result of continuing conduct. The question then is whether or not firstly, the plaintiff should be entitled to preliminary discovery of the matters sought in item (c) as against the first, second and third defendants and whether or not the plaintiff is entitled to preliminary discovery against the first and fourth defendants in respect of the employment agreement.

1. In these matters, it is my view that the Court can be helped if there is some evidence from the legal advisors of the plaintiff as to what they lack to enable them to make a proper determination as to whether or not proceedings should be commenced and to explain what further information is required and why. One of the difficulties with these matters is that although the rule is there to assist prospective plaintiffs, it is not there to enable them to bring any claim before mounting proceedings to see whether they ought to be bringing a claim at all. If that were the position, then no case would start without an application for preliminary discovery.

1. One of the reasons why it is said that discovery is required against the defendants under para (a) is to see what work the second and third defendants were engaged to do by the first defendant and to see if that work would amount to a breach of the restraint clause.

1. I do not think that it could be said that information was required to enable an action to be brought. It is not really suggested, as I understand it, that there is no breach of the restraint clause, although there is some suggestion as to whether or not the second and third defendants were aware of it and properly bound by it and whether it is reasonable in the circumstances. But all of that is, I think, a question which would have to arise during the hearing. I do not think that the requirements of the Rule, so far as the second and third defendants are concerned, are made out.

1. The question then is as to whether or not the requirements of the Rule, so far as the first and fourth defendants are concerned, are made out. The evidence given today by Mr Bleakley - although of course it is not accepted by the plaintiff's witnesses - is that he did not have the employment contracts prior to them being furnished to him by the plaintiff. It seems to me that it would be quite purposeless to require him to make an affidavit of discovery which one must think would say precisely the same.

1. In all the circumstances, I have come to the conclusion that the application does not fall within the terms of the Rules and that in any event, while there is a discretion, the orders sought should not be made. I say that because I do not think that the plaintiff is not in a position to decide whether or not to bring this claim. I do appreciate the question is one of damages and whether it might be worthwhile, but the only evidence which is in exhibit 1 is that there are no documents which are sought, and I do not think at this stage that the Court should go beyond that.

1. In those circumstances, the summons is dismissed with costs. The exhibits can be returned.

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Decision last updated: 14 December 2012