Independent Fuels Australia Pty Ltd v Jamieson
[2002] VSC 11
•13 February 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 8861 of 2001
| INDEPENDENT FUELS AUSTRALIA PTY LTD | Plaintiff |
| v | |
| NEIL JAMIESON | Defendant |
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JUDGE: | McDonald J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6, 7, 8 February 2002 | |
DATE OF JUDGMENT: | 13 February 2002 | |
CASE MAY BE CITED AS: | Independent Fuels Australia Pty Ltd v Jamieson | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 11 | |
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Injunction: Prohibitory interlocutory injunction – serious questions to be tried whether defendant breached confidentiality agreement entered with former employer, the plaintiff – balance of convenience in favour of refusal of injunction.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R.A. Millar | Kliger Partners |
| For the Defendant | Mr P. Vickery QC | Wilson Potter Nicholson |
HIS HONOUR:
The proceedings between the plaintiff and the defendant were commenced by writ filed on 21 December 2001. By the endorsement on the writ the plaintiff claimed against the defendant, inter alia, an interlocutory and permanent injunction restraining the defendant from further breaching a “confidentiality agreement” entered into between the plaintiff and the defendant, and damages.
The plaintiff is a company within the United Petroleum Group. Its principal business is that of a wholesaler and retailer of liquefied petroleum gas (LPG) which it purchases from suppliers, such as BHP/Billiton Ltd (“BHP”) and sells either to LPG retailers or directly to consumers through outlets in the United Group. This part of its business accounts for approximately 60% of its business. The plaintiff is also involved in the wholesaling of petrol and diesel oil to retailers outside the United Group. This function of the plaintiff accounts for about 40% of its business.
In September 2000 the defendant was employed by the plaintiff as its general manager. The plaintiff had four managerial employees and two clerical staff. The plaintiff contends that because of the small number of employees each manager was well acquainted with its activities and the status of negotiations and commercially sensitive information known to the plaintiff. The plaintiff, contends that the defendant, as the general manager, had access to commercially sensitive and commercial information in the plaintiff’s possession and that he was the person primarily responsible for negotiating contracts with suppliers and customers of the plaintiff. At the time of entering into his employment and on 5 September 2000 the plaintiff entered into a “Confidentiality Agreement” with the defendant. Pursuant to that agreement the defendant agreed and undertook that during the period of the agreement “and any time thereafter” to keep confidential all confidential information (which was defined extensively by the terms of the agreement) and to not disclose any confidential information to any person except in the proper performance of his responsibilities and duties, with the prior written consent of the plaintiff as required by law. He further agreed to not use any confidential information for the benefit of any person except the plaintiff and its related entities. Further, pursuant to the terms of the agreement the defendant agreed not to induce, solicit or entice or attempt to induce, solicit or entice from the plaintiff or its related entities or to any business competing with the plaintiff or its related entities during the term of the agreement or from the date of termination of the agreement for seven cascading periods of time being from five years to six months. Further, the defendant agreed not to induce, solicit or entice from the plaintiff or its related entities or to any business competing with the plaintiff or its related entities all or part of the custom of any customer who had been a customer of the plaintiff or its related entities “during the term of the [defendant’s] agreement, during the currency of his engagement under [the] agreement”.
The defendant without providing prior notice to the plaintiff resigned his employment on 21 November 2001. He left his employment on that day.
On 21 December 2001 a summons was issued on behalf of the plaintiff against the defendant seeking an interlocutory injunction restraining the defendant until the trial and determination of the proceeding from using any confidential information acquired by him, in the course of his employment with the plaintiff, for the benefit of any person other than the plaintiff and further restraining him from inducing, soliciting or enticing from the plaintiff, any customer of the plaintiff who had been a customer of the plaintiff during the term of the defendant’s employment with it, or attempting to do so.
On 21 December 2001, upon the plaintiff giving an undertaking as to damages, interim ex parte orders were made against the defendant in favour of the plaintiff of the nature sought by the plaintiff in its summons. Such orders ran until 15 January 2002. On that day further injunctive orders were made by the Court in favour of the plaintiff in the nature of those previously made which orders were effective until 30 January 2002. In addition, on that day, it was ordered that the defendant within seven days return all property belonging to the plaintiff including but not limited to the CSR file referred to in an affidavit of Burr sworn on 14 January 2001. In that affidavit Burr had deposed that Jamieson had been engaged in negotiations with CSR on behalf of the plaintiff for the purchase of Ethanol from CSR and that he was aware that the defendant kept notes of meetings held by him with CSR but that after the defendant had left his employment with the plaintiff the file relevant to such negotiations had not been able to be located. On 30 January 2002 further injunctive orders were made against the defendant in favour of the plaintiff restraining the defendant from using confidential information and from inducing or attempting to induce or entice from the plaintiff customers of it who had been customers of the plaintiff during the defendant’s employment. Such orders ran until 6 February 2002.
The proceeding now before the Court is the further hearing and determination of the plaintiff’s summons issued on 21 December 2001.
In an affidavit sworn by Jim Burr, a director of the plaintiff, on 20 December 2001 he deposed that Mile Maker Pty Ltd (“Mile Maker”), a company engaged in the retailing of petrol and LPG which it conducts through service stations under the Caltex brand, for some four to five months during 1999 purchased LPG from the plaintiff. He further deposed that in the course of the year 2000 the defendant had conducted negotiations with Mile Maker for it to enter into an agreement with the plaintiff for it to supply LPG to Mile Maker. On 5 October 2001 the defendant, on behalf of the plaintiff, wrote to Mile Maker, attention Paul Andrianakos, quoting a price at which the plaintiff was prepared to sell LPG gas to Mile Maker and offering, inter alia, to provide specific LPG training for site staff on a once per annum basis. Burr deposed that at this time Mile Maker was apparently dissatisfied with the arrangement it had with its current supplier and was considering changing to the plaintiff as a supplier of LPG.
In his affidavit Burr further deposed that the supply of LPG from BHP to the plaintiff was governed by an annual contract running each calendar year which contract were renegotiated in or about December of each year. He deposed that the critical and most confidential part of the supply contract from BHP to the plaintiff was the premium charged by the supplier, BHP, above the world parity price for LPG. That premium typically would vary between US$30 and US$45 per tonne of LPG depending upon the customer and the volume of LPG to be supplied. He deposed that the defendant was well aware of the premium which BHP charged on the plaintiff’s contract with it and full commercial details and commercial arrangements and that he had full access to all company documents detailing that arrangement. Burr further deposed that it had recently come to the attention of the plaintiff that BHP was contemplating moving to direct supply arrangements with retailers rather than using wholesalers such as the plaintiff.
Further, Burr deposed that at the time of the defendant’s termination of his employment with the plaintiff on 21 November 2001 the defendant was privy to confidential information of the plaintiff including the identity of the plaintiff’s suppliers and customers, the premium payable by the plaintiff on supply of LPG by BHP, the pricing of LPG for supply to customers and matters relevant to negotiations being conducted between the plaintiff and Mile Maker.
Further in his affidavit Burr deposed that in early December 2001 he was contacted by Don Sergeant of BHP who informed him that he had been contacted by the defendant who was seeking to broker a deal on behalf of Mile Maker with BHP for it to supply Mile Maker directly thereby leaving the plaintiff outside the arrangement. Further, Burr deposed that he had been informed by one Martin Monaghan the fuel manager at 7-Eleven that he had been approached by the defendant who had suggested that he would be willing to broker an agreement between 7-Eleven and a supplier, Origin Gas. 7-Eleven is a customer of the plaintiff and was a customer of it during the period of the defendant’s employment. Burr deposed that any breach by the defendant of the Confidentiality Agreement could cause the plaintiff to suffer losses in millions of dollars and the loss of even a single contract could substantially cut into the plaintiff’s profit. He further deposed that for the reasons set out in his affidavit that the plaintiff would have little confidence in recovering from the defendant any amount ordered in favour of the plaintiff against the defendant for damage and loss suffered by the plaintiff in consequence of the defendant’s breach of the confidentiality agreement.
In an affidavit sworn by the defendant on 29 January 2002 he deposed that following the completion of an apprenticeship in plumbing and gas fitting in approximately 1971 he became a plumbing contractor in Queensland until approximately 1978 following which he had several jobs relating to the installation of gas services and that in 1989 he joined Boral Gas in Townsville as a salesperson. He deposed that thereafter he had varying positions of employment with Boral Gas and Boral Energy ceasing employment with Boral Energy in November 1999 at which time he was the sales manager, retail, for Boral Energy. The defendant has deposed that during the period from September 2000 to December 2000 he was engaged by the plaintiff to perform consulting work with it, which involved him giving advice to the plaintiff on how to expand its business. He has further deposed that from or about February 2001 he was employed by the plaintiff, on a part-time basis, as a general manager. He agreed that he ceased his employment with the plaintiff on 21 November 2001.
The defendant has deposed that before commencing consulting work with the plaintiff in September 2000 he was aware that its main business was the supply of LPG to a parent company, United Petroleum, which was its core business and that it also conducted a business as a small wholesale supplier of LPG having one major customer, namely, Liberty Oil Propriety Ltd. He deposed that he was aware and that it was known by him and known in the marketplace that the plaintiff was a wholesaler of LPG to medium to small LPG retailers. He denied that he was the person primarily responsible on behalf of the plaintiff for negotiating contracts with suppliers contending that the directors of the plaintiff, Hursch and Burr, were also involved and often operated independently of himself.
The defendant further deposed that in October 2000 he was informed by Hursch, a director of the plaintiff that he had not been authorised to make an offer to Mile Maker and that the plaintiff would not enter into a business relationship with Mile Maker, which matter he advised Mile Maker. He has deposed that at no time did Mile Maker become a customer of the plaintiff during the period referred to in the confidentiality agreement. He denies that he has used any confidential information derived from his employment with the plaintiff in relation to an arrangement for the supply of LPG that he brokered on behalf of Mile Maker, subsequent to leaving his employ with the plaintiff, with BHP. He has deposed that such an arrangement was based upon his general knowledge of the wholesale LPG industry and not on any specific information obtained as a result of his employment with the plaintiff. He deposed that the premium charged by BHP to Mile Maker as part of the transaction brokered by him, which was the most important component of the transaction was a product of a particular series of negotiations between himself, on behalf of Mile Maker and BHP and that it was not a product of any information, confidential or otherwise, that he had gained from his consultancy or employment with the plaintiff.
As to his dealings with BHP the defendant has deposed that although in September 2001 he negotiated, on behalf of the plaintiff, a short-term contract with BHP, he has not communicated in any way to any person or entity the premium charged by BHP to the plaintiff at that or at any time. He has denied that he has been informed by BHP that it intends to supply direct to retail customers.
In support of the defendant’s defence to the claims of the plaintiff for interlocutory relief there has been also filed an affidavit by Paul Andrinarkos, the business manager of Mile Maker.
He has deposed that Mile Maker was not a customer of the plaintiff during the period from September 2000 to the end of 2001. He has deposed that although there was some inconclusive negotiations between the plaintiff and Mile Maker during early October 2001 the same did not proceed and that on 15 October 2001 he wrote a letter to the plaintiff addressed to the defendant referring to an offer made on behalf of the plaintiff to supply Mile Maker with its “auto gas needs” and stating –
“We wish to inform you that as your company’s directors are in retail competition with our retail business we were never of a mind to purchase LPG from IAF.
In addition you will recall that we informed you that we were contracted to take supply from another wholesaler.
Please make no further approaches to supply us as we do not intend to purchase product from you.”
The defendant in his affidavit deposed that he brought to the attention of Burr that letter and that Burr informed him that the letter was “not surprising”. As to the allegation by Burr that at the time that the defendant terminated his employment with the plaintiff he was aware of the identity of the plaintiff’s suppliers and customers, the defendant has deposed that during 2001 the plaintiff was supplied LPG from all three suppliers of LPG – Shell, BHP, and Exxon-Mobil – that he did not know the outcome of the negotiations and that, in any event, if anybody wished to find out who the plaintiff’s supplier or suppliers were this could be readily ascertained from a number of industry sources. As to the allegation by Burr that the defendant, at the time of the termination of his employment, was privy to confidential information of the plaintiff including the premium payable by it on the supply of LPG by BHP, the defendant deposed that at the time, that he ceased his employment with the plaintiff, he was aware of the then current year premium payable by the plaintiff on supply of LPG by the plaintiff but was not aware of the premium agreed upon between IAF and BHP for the year 2002 at the time that he ceased in his employment. He has deposed that he believes that the plaintiff, during the present year, is being supplied LPG by BHP and Exxon-Mobil but he does not know the volumes being supplied and he does not know what premium is being paid by the plaintiff on supplies of LPG to it. The defendant joined issue with and denied numerous allegations made on behalf of the plaintiff as to him being in possession of information confidential to the plaintiff.
As to the contention of Burr that he sought to broker an agreement between 7-Eleven and Origin Gas, the defendant referred to and confirmed as true and correct an affidavit sworn by Martin Monaghan the Fuels Manager for 7-Eleven.
In that affidavit Monaghan deposed that he was aware that the defendant was employed by the plaintiff through his dealings with the plaintiff and that on about 21 November 2001 he was informed by the defendant that he had left the plaintiff’s employ. He deposed that on behalf of 7-Eleven he accepted an offer made by the defendant to complete some staff safety training which was to have been provided by the plaintiff to it, as the defendant was willing to give this training despite having left his employment. Monaghan has further deposed that on about 12 December 2001 he spoke with the defendant who invited him to a mutual friend’s birthday lunch. Monaghan has deposed that during the phone call the possibility of the defendant assisting 7-Eleven with its LPG requirements was touched on, in the light of his departure from the plaintiff, but that the defendant informed him that as 7‑Eleven already had a contract with the plaintiff it would be inappropriate to discuss that issue at present, but it may be possible some time in the future. Monaghan deposed that the conversation moved on to other social matters. Monaghan deposed that at no time since the defendant had left the plaintiff’s employ had the defendant made any offer or proposal to supply 7‑Eleven with any gas products.
The defendant has further deposed that he did not remove from the plaintiff’s premises any material of any description belonging to the plaintiff, that he does not have in his possession any property belonging to the plaintiff including any file or 2000 and 2001 diaries or any palm organiser and that he did not remove any such property from the plaintiff and that after he left his employment with the plaintiff he has not come into possession of any such property. The defendant further deposed that he had no intention of harming the plaintiff by use of any information which he derived from his consultancy or employment with it and that given his pre-existing knowledge and experience in the industry nothing he learned from the plaintiff during that time had been of any use to him in his continuing work. He deposed that the making of the orders by the Court and overtures of the plaintiff to wholesale suppliers had caused him specific harm in his business and in his capacity to earn income. He has deposed that he has been informed by officers of BHP and Exxon-Mobil that they were each unable to enter into discussions with him with regard to the supply of LPG while there were court orders in place against him. He deposed that he informed such officers that he had not been in breach of any of his obligations to the plaintiff, however, this had not made any difference. Further, he deposed that he had been informed by an officer of BHP that the plaintiff had sent to it a copy of the “Confidentiality Agreement” with the plaintiff and that he had also been informed by an officer of Origin Energy that it had received a copy of the court orders sent to it by the solicitors for the plaintiff.
The defendant has further deposed that since leaving his employment with the plaintiff he had not received any income from work from any source although Mile Maker owed him some $15,000 for the work that he had done for it, but that he had been informed by Andrianakos that it may not pay him while the present action of the plaintiff is pending against him.
In a further affidavit sworn by Burr he has deposed that the defendant was aware of the offer made by BHP by facsimile transmission addressed to the defendant of the price offer for the year 2002 contract volumes. A copy of the facsimile was exhibited to his affidavit. He has deposed that the defendant, with him, was involved in all negotiations during the period from September to November with BHP concerning its supply of LPG.
There was further filed an affidavit sworn by Avi Silver, a director of the plaintiff, on 30 January 2002 wherein he deposed that the defendant maintained a file concerning negotiations with CSR who were proposing to supply the plaintiff with Ethanol. He has deposed that since the defendant left the plaintiff’s employment the file had been missing from the plaintiff’s premises.
In a further affidavit sworn by the defendant on 30 January 2002 he has deposed as to the part played by him in negotiations with CSR for it to supply Ethanol. He has deposed that he has no use for any of the information that he derived through his discussions with CSR and has further deposed that he did not take nor does he have in his possession any file of the plaintiff relating to the CSR matter. As to the contention made on behalf of the plaintiff that the defendant remained in possession of a “palm organiser” supplied to him by the plaintiff, he has deposed that the same was damaged, it would not work, that it was not possible to retrieve any information from it and that it has been thrown out.
After hearing submissions made on behalf of counsel for the plaintiff and defendant in this proceeding on 6 February 2002 I reserved my decision. On 7 February 2002 application was made by counsel on behalf of the defendant to reopen the defendant’s case in order that there may be received in evidence a further affidavit sworn by Paul Andrianakos on 6 February 2002 and a further affidavit sworn by the defendant on that day. That application was adjourned to 8 February 2002. On that day, after hearing further submissions, I ordered that leave be granted to the defendant to reopen his case in order to file the further affidavits of Andrianakos and the defendant sworn on 6 February 2000 and further ordered and directed that any further affidavit material to be filed by the plaintiff in answer to such further affidavits be filed and served by 4.15 pm, 11 February 2002, and that any further submissions to be made on behalf of the plaintiff were to be filed and served by that time. I further ordered that any and any further submissions to be made on behalf of the defendant were to be filed and served by 9.30 am, 12 February 2002. On 8 February I indicated that I would give my reasons for granting leave for the defendant to reopen his case at the time of giving judgment on the plaintiff’s application for interlocutory injunctive relief. I turn to that matter.
In the further affidavit of Andrianakos he has deposed that he did not recall meeting with Mason, the Sales Manager of the plaintiff, in late October 2001 as deposed to by Mason in an affidavit sworn by him on 30 January 2002. He has deposed that after sending the letter to the plaintiff as deposed to in his previous affidavit he was advised that Mason wished to speak to him, however, he instructed his staff that he did not wish to speak to Mason. He has deposed that he received a letter from the plaintiff’s solicitors to the effect that action had been taken by the plaintiff against the defendant and that subsequent to that he spoke to Mason informing him that he did not wish to speak with him again and that as far as he was concerned there were no negotiations for Mason to pursue with Mile Maker. In the affidavit of the defendant sworn on 6 February 2002 he has deposed that shortly before resigning from his employ with the plaintiff he had arranged to assist, providing LPG handling training to a group of 7-Eleven franchisees as part of his employment duties with the plaintiff which training had been arranged to take place on 22 February 2002. He deposed that he was the only person working for the plaintiff that was licensed to give such training and despite his resignation he was prepared to assist the plaintiff by providing necessary training and that he conducted such training with a number of 7-Eleven franchisee staff. He deposed that he believed that he was assisting the plaintiff in honouring its obligations to a customer as well as providing important safety training.
In Murray v Figge[1] a trial of a proceeding before Muirhead J in the Supreme Court of the Northern Territory had been completed and his Honour had reserved his decision. Thereafter counsel for the plaintiff appeared before his Honour informing the Court that by inadvertence he had omitted to tender answers to interrogatories sworn by the defendant and sought leave to tender this evidence. That was objected to by counsel for the defendant. His Honour granted leave, holding that a case may be reopened in the circumstances pertaining to admit the evidence sought provided that it could be admitted on conditions which ensured that no prejudice would be suffered by the other party by reason of its introduction at a late point of time and that the interests of justice so required. The present proceeding before the Court is for interlocutory relief. It was apparent that the defendant was in Court during the conduct of this proceeding and, accordingly, had counsel for the defendant sought to adduce any evidence of the nature deposed to in his affidavit, sworn on 6 February 2002, such evidence could have been led at that time. Nevertheless I was satisfied, after hearing counsel for the plaintiff, that if orders were made, of the nature that I made on 8 February 2002, any prejudice that may be otherwise suffered by the plaintiff by the admission of the affidavits of the defendant and Andrianakos would be overcome. Although there is a need for applications such as the present and trials of actions to conclude at the finish of such trials nevertheless where a party seeks to adduce further evidence subsequent to the close of the trial which can be readily received without causing prejudice to the other party, and justice dictates that such course should be followed, it is appropriate to permit the matter to be reopened to receive such evidence. Having been satisfied that in consequence of the orders that I made on 8 February 2002 that any prejudice that would be otherwise suffered by the plaintiff, if such further evidence was received, I reached the further conclusion that in the circumstances the interests of justice were served best by permitting the defendant to reopen his case to tender this further evidence to the Court. Accordingly, I granted leave for the defendant to file the two further affidavits referred to.
[1](1974) 4 ALR 612.
In response to such further affidavits there has now been sworn on 11 February 2002 a further affidavit of James Burr, a director of the plaintiff. He has deposed that the plaintiff was to provide training services to 7-Eleven with respect to the safe handling of LPG products, however, he denies that the defendant was the “only licensed person to give such training that was working for the plaintiff at the time”. He has deposed that such training could be given by any person with appropriate experience using the appropriate training package provided by the Australian LPG Association, which package comprises a video and instruction kit. He has further deposed that whereas the Victorian WorkCover Authority maintains a list of LPG trainers there is no such thing as a “licence to provide such training” and that the defendant’s name does not appear on any list of trainers maintained by WorkCover. Further, Burr has deposed that there was another employee of the plaintiff used by it to provide most of such training to the plaintiff’s customers and that he was available to provide such training to 7-Eleven at the time that the defendant left the plaintiff’s employ. Further, Burr has deposed that at times he engaged external contractors to provide such training. Further, Burr has deposed that at no time did the plaintiff request the defendant to assist in this matter and at no time did the defendant inform the plaintiff that it was his intention to provide such training nor did the defendant give the plaintiff the opportunity to arrange its own trainers to provide that training. Burr has further deposed, with respect to the defendant’s dealing with Mile Maker, that on 19 November 2001 a regular weekly meeting was held with directors and managers of the plaintiff to discuss matters including the status of discussions with potential customers and suppliers. He has deposed that although the defendant did not attend such meeting Burr provided him with a copy of the minutes of the meeting on 19 November 2001, and that at no time after providing the defendant with a copy of such minutes did the defendant raise with him or other directors of the plaintiff the fact that he had received the letter dated 15 October 2001 from Mile Maker.
In determining whether to grant an interlocutory injunction the first question to be determined is whether it has been demonstrated that there is a serious question to be tried as between the parties. If that question is answered in the affirmative the Court must determine whether the balance of convenience is in favour of the grant of the injunction or the refusal of it: Queensland v Telecom[2].
[2](1985) 59 ALJR 562 at 563.
The starting point when considering the plaintiff’s application is the fact that in the circumstances of this case it is not disputed in any material put before the Court that the defendant entered into the “Confidentiality Agreement” dated 5 September 2000. Further, it was not part of the defendant’s case, at this point of time, either advanced by material put before the Court or by submissions put to the Court on behalf of the defendant, in answer to the plaintiff’s application, that the defendant was not bound by the terms of the agreement or that the agreement was not enforceable by the plaintiff against the defendant or any reasons of fact or any reason based in law. The issues at this point of time as revealed from the material put before the Court and submissions made to the Court on behalf of each of the plaintiff and the defendant are not whether there is a serious question to be tried, namely, whether the agreement by its terms is able to be enforced by the plaintiff against the defendant and whether the balance of convenience dictates that injunctive relief should be granted to the plaintiff preventing the defendant from acting in a manner which would constitute a breach of the agreement. At this point of time, as demonstrated from the material put before the Court and submissions made on behalf of each of the plaintiff and the defendant, the issue to be determined is whether there are serious questions to be tried in that the defendant has acted in breach of the agreement entered into by him with the plaintiff and whether, if such matter is established, the balance of convenience requires that injunctive relief should be granted restraining the defendant from acting in further breach of the agreement.
It was submitted on behalf of the plaintiff that it should be concluded by the Court that in brokering the agreement between BHP and Mile Maker for the former to supply LPG direct to Mile Maker, after the defendant had terminated his employment with the plaintiff, which facts are not disputed by the defendant but conceded by counsel on his behalf, the defendant had breached the Confidentiality Agreement in that he had used information confidential to the plaintiff, as defined by the agreement, for his own gain. It was submitted on behalf of the plaintiff that the defendant had used information obtained by him in the course of his employment with the plaintiff, namely, the premium rates at the relevant time at which BHP was prepared to supply LPG at various volumes of LPG and the terms of the offer that the defendant had put to Mile Maker for the plaintiff to supply LPG that it would source from BHP. It was submitted that such matters constituted confidential information, as defined by the Confidentiality Agreement and which when used by the defendant enabled him to broker an LPG supply agreement between BHP and Mile Maker. It was submitted on behalf of the plaintiff that the fact that Andrianakos sent the letter to the plaintiff on 15 October 2001 by which Mile Maker terminated any further negotiations between it and the plaintiff for the plaintiff to supply LPG to it was of limited relevance to the proceedings. It was submitted that the use of information obtained by the defendant in the course of his employment with the plaintiff and which was confidential, namely, the terms on which BHP was prepared to supply LPG and that which was under discussion between the plaintiff and Mile Maker for the former to supply LPG to it, should cause the Court to conclude that it was the use of such confidential information, gained by the defendant in the course of his employment with the plaintiff, which was used by the defendant in breach of the Confidentiality Agreement and which enabled him to broker the LPG supply agreement between BHP and Mile Maker. It was further submitted on behalf of the plaintiff that the Court should conclude from the fact that Andrianakos wrote the aforesaid letter to the plaintiff, addressed to the defendant, and although received by the defendant it was not otherwise known to officers of the plaintiff. It was further submitted that the fact that such event occurred very shortly before the defendant resigned from his employment with the plaintiff strengthens the inference to be drawn in the circumstances of this case that in brokering the supply agreement between BHP and Mile Maker the defendant acted in breach of the Confidentiality Agreement by using confidential information, as defined by the agreement, for his benefit and advantage. It was further submitted on behalf of the plaintiff that with respect to this matter it should be concluded that notwithstanding the submissions made on behalf of the defendant, to which I shall hereafter refer, that there is a serious question to be determined at trial, namely, whether the defendant, in brokering the supply agreement between BHP and Mile Maker shortly after he terminated his employment, acted in breach of the Confidentiality Agreement by using confidential information as defined by the agreement and obtained by him in the course of his employment, for his own benefit and use. It was further submitted on behalf of the plaintiff that there also arose on the facts before the Court, at this point of time, a serious question to be determined at trial, relevant to the fact that the defendant brokered a supply agreement for BHP to supply LPG to Mile Maker subsequent to him leaving his employment with the defendant, namely, whether the defendant had used information confidential to his employer thereby breaching the common law obligation that the defendant owed to his former employer, namely, not to use such information as his own.
In Ansell Rubber Co Pty Ltd v Allard Brother Industries Pty Ltd[3] the plaintiff was a company which carried on business as the manufacturer of rubber gloves. Two of the four defendants were formerly employees of the plaintiff. The plaintiff alleged against them that, both during their employment and after it had ceased, trade secrets and confidential information gained by them from the plaintiff in the course of and by reason of their employment was used by them in an unauthorised manner thereby committing a breach of contract and a breach of confidence. It was alleged against the first defendant company and the fourth defendant, a substantial shareholder in that company, that they intended that the first defendant should make rubber gloves with the use of the trade secrets and the confidential information obtained by the two former employees of the plaintiff. Injunctive relief and other relief was sought by the plaintiff against the defendants. In considering this matter Gowans J at p. 40 drew a distinction between “information which forms part of the employee’s stock of general knowledge, skill and experience and that which should fairly be regarded as a separate part of the employee’s stock of knowledge (whether it be identifiable as ‘particular’ or ‘detailed’ or ‘special’) which a man of ordinary intelligence and honesty would regard as the property of the former employer.
[3](1967) VR 37.
It was submitted on behalf of the plaintiff that there was a serious question to be tried whether the information gained by the defendant, in the course of his employment with the plaintiff, at the relevant time as to the premium rate to be paid on the supply of LPG by BHP to the plaintiff and the details of negotiations that had taken place between the plaintiff and Mile Maker before the letter written by Andrianakos on 15 October 2001, was information that a man of ordinary intelligence and honesty would regard as the property of the plaintiff and whether the defendant had wrongfully used such property for his own gain and benefit.
It is to be noted that at p. 41 of his judgment Gowans J referred to and cited the decision in Printers and Finishers Ltd v Holloway[4] in which Cross J at p. 735 said:
“The mere fact that the confidential information is not embodied in a document but is carried away by the employee in his head is not of course of itself a reason against the granting of an injunction to prevent its use or disclosure by him. If the information in question can fairly be regarded as a separate part of the employee’s stock of knowledge which a man of ordinary honesty and intelligence would recognise to be the property of his old employer and not his own to do as he likes with, then the Court, if it thinks that there is a danger of the information being used or disclosed by the ex-employee to the detriment of the old employer, will do what it can to prevent that result by granting an injunction.”
[4][1964] 3 All ER 731.
As to the submissions made on behalf of the plaintiff, being relevant to the defendant brokering an LPG supply agreement between BHP and Mile Maker subsequent to him terminating his employment with the plaintiff, it was submitted on behalf of the defendant that with respect to this transaction that there was no evidence before the Court that the defendant used any confidential information when he brokered that supply agreement. Attention was drawn to the fact that the defendant, in his affidavit sworn on 29 January 2002, denied that he used any “confidential information” derived from his employment with the plaintiff in relation to brokering the agreement between BHP and Mile Maker and, further, that he deposed that the agreement between BHP and Mile Maker was unique to each company which was brokered by him based on his general knowledge of the wholesale LPG industry and not by the use of any specific information obtained in his employment with the plaintiff. Further attention was drawn to the fact that the defendant deposed that the premium charged by BHP to Mile Maker was the product of his personal negotiating experience in the industry. It was submitted that as to this aspect of the plaintiff’s claim it should be concluded, when regard was had to these matters as deposed to by the defendant, that the plaintiff had not established on the evidence that there was a serious question to be tried as to this matter.
Although at this point of time the plaintiff’s case against the defendant as to this transaction is based on inferences to be drawn from facts deposed to on behalf of the plaintiff and in particular by the deponent, Burr, notwithstanding the denials of the defendant I am satisfied that there is a serious question to be tried, namely, whether the defendant, in brokering a supply agreement between BHP and Mile Maker, used confidential information as defined by the Confidentiality Agreement for his own use and benefit and, further, whether the defendant in brokering such agreement used, for his own benefit, information which a man of ordinary intelligence and honesty would regard as the property of his former employer, the plaintiff.
It was further submitted on behalf of the plaintiff that there was a further serious question to be tried, namely, whether by the defendant contacting 7-Eleven, a customer of the plaintiff, during the period of the defendant’s employment with it, following the termination of his employment with the plaintiff and offering to provide and providing training services to staff of or franchisees of 7-Eleven, which was to be provided by the plaintiff as a condition of the contract of the plaintiff with 7-Eleven, constituted a breach of the Confidentiality Agreement. It was submitted that under this head, the serious question to be determined at trial was whether such actions of the defendant breached the agreement in that the defendant used “Confidential Information” known to him, namely, information relating to the business affairs of the plaintiff and the customer, 7-Eleven, that such services were to be provided by the plaintiff as a condition of its agreement existing with 7-Eleven. It was further submitted that there was a further serious question to be tried relevant to these actions of the defendant, namely, whether by offering and providing this training service to the staff or franchisees of 7-Eleven the defendant acted in breach of the Confidentiality Agreement by “attempting to entice” away from the plaintiff “all or part of the custom” of a “customer” of the plaintiff. It was submitted on behalf of the plaintiff that in each case the Court should conclude that these serious questions arise for determination at trial not only from the fact that the defendant offered and undertook this training service but the fact that he did not tell the plaintiff or its officers that he had offered and undertaken this service for 7-Eleven. It was submitted that such services were able to be provided by the plaintiff to 7‑Eleven other than being provided by the defendant and the failure of the defendant to inform the plaintiff and its officers of this matter leads to the conclusion that in offering and providing these services to 7-Eleven he did so with the intent to induce away from the plaintiff a customer of it, namely, 7-Eleven.
These submissions answered on behalf of the defendant particularly by having reference to the affidavit sworn by Monaghan, the Fuels Manager for 7-Eleven, on 29 January 2002, wherein, in part, Monaghan deposed that during a conversation he had with the defendant on or about 12 December 2001 he raised the possibility of the defendant assisting 7-Eleven with its LPG requirements in the light of his departure from the plaintiff. Monaghan deposed as previously referred to that on that matter being raised by him the defendant informed him that as 7-Eleven already had a contract with the plaintiff it would be inappropriate to discuss that issue at present but it may be possible some time in the future. Further, Monaghan deposed that at no time since the defendant left the plaintiff’s employ had the defendant made any offer or proposal to supply 7-Eleven with any gas products. It was submitted on behalf of the defendant that this evidence of Monaghan refutes completely any suggestion that by the defendant offering and providing planning services to 7‑Eleven he did so with the intent to induce a customer of the plaintiff away from the plaintiff. It was further submitted on behalf of the defendant that the training undertaken by the defendant was of limited duration and there is no evidence to suggest that the defendant intends or has agreed with 7-Eleven to undertake such training in the future. I agree that no evidence of that fact is before the Court at this time. Further, it was put on behalf of the defendant that weight should be given to the facts deposed to in the affidavit of the defendant sworn on 6 February 2002 wherein he deposed that he had not been paid for nor did he expect to be paid for his services by 7-Eleven for providing the training and that he had no intention of being involved in any such arrangements with 7-Eleven again.
Having regard to these matters, I have concluded that there is a serious question to be determined at trial of the nature contended for on behalf of the plaintiff relevant to this matter. However, in so concluding I consider that the questions to be determined at trial are marginally important for on the whole this matter, to be determined at trial, does not rate as a particularly significant matter relevant to the plaintiff’s claim against the defendant and the latter’s conduct subsequent to the termination of his employment with the plaintiff. This is particularly so for at the present there does not appear from the material placed before the Court evidence which would lead to the conclusion that the plaintiff suffered any loss or damage in consequence of these actions of the plaintiff.
Having regard to my conclusion as to each of these matters, the next question to be addressed is whether the balance of convenience requires the Court to make an injunctive order of the nature sought by the plaintiff pending the hearing and determination of the proceeding instituted by the plaintiff by its writ.
As I have previously referred to this is not a case in which it is disputed that the defendant entered into the Confidentiality Agreement with the plaintiff. Nor is it a case where it is contended on behalf of the defendant that notwithstanding that there was an agreement entered into between him and the plaintiff such agreement is not able to be enforced by the plaintiff against him by reason of any particular facts or matters or by reason of any matter of law. Rather the issues raised at this time in this proceeding are that in respect of the two matters referred to, there being serious questions to be determined at trial relating to those matters, does the balance of convenience favour the grant or refusal of the interlocutory injunction now sought by the plaintiff against the defendant. In considering this matter I have regard to that deposed to on behalf of the plaintiff as to damages that may be suffered by it if the defendant in the conduct of any business by him acted in breach of the Confidentiality Agreement and his obligations at common law as a former employee of the plaintiff. I also have regard to the actions taken by the plaintiff to advise others of the terms of the Confidentiality Agreement and the orders made to date. I also take into account the effect that the making of an interlocutory order itself is likely to have on the defendant being engaged in an industry in which he has been engaged in for some time including an extensive period before being employed by the plaintiff.
On the evidence presently before the Court I am unable to conclude that at present, unless restrained in the manner sought by the plaintiff, the likelihood is that the defendant will in the future act in a manner in breach of his agreement with the plaintiff or in breach of his common law obligations causing the plaintiff to suffer loss and damage. It is apparent from the affidavits of the defendant filed in these proceedings and also from that deposed by Monaghan in his affidavit relating to the conversation that he had with the defendant on or about 12 December 2001 that the defendant is aware of the restraints imposed on him by the terms of the agreement that he entered into with the plaintiff. The common law obligation of the defendant to the plaintiff, his former employer, in the circumstances of this case, does not exceed the obligations and restrictions imposed on the defendant by the terms of the Confidentiality Agreement.
Although the injunctions sought against the defendant by the plaintiff are prohibitory in nature the conclusion that I have reached is that in the circumstances of this case the balance of convenience does not require or dictate that injunctive orders of the nature now sought by the plaintiff should be made against the defendant.
For these reasons the summons of the plaintiff against the defendant filed on 21 December 2001 is dismissed.
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