J W Mailing Services Pty Ltd v Fulton

[2008] NSWSC 1421

CITATION:	J W Mailing Services Pty Ltd v Fulton & Ors [2008] NSWSC 1421
HEARING DATE(S):	12 December 2008
JUDGMENT DATE :	12 December 2008
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Interlocutory injunction granted.
CATCHWORDS:	EQUITY [34] – General principles – Fiduciary obligations – General principles – Test of fiduciary relationship – Commercial context.
CATEGORY:	Procedural and other rulings
CASES CITED:	Coco v A N Clark (Engineers) Ltd [1969] RPC 41 Gonsalves v Debreczeni (1998) 9 BPR 16,689 Hospital Products Limited v US Surgical Corporation (1984) 156 CLR 41 Reading v The King [1949] 2 KB 232 Schering Chemicals Ltd v Falkman Ltd [1982] QB 1
PARTIES:	J W Mailing Services Pty Limited (P) Ian Fulton (D1) Absolute Mail Pty Limited (D2) Standard Publishing House of Australia Pty Limited (D3)
FILE NUMBER(S):	SC 5056/08
COUNSEL:	R S Angyal SC and M J Leighton-Daly (P) J A Raine (D1-3)
SOLICITORS:	Segal & Associates (P) Hall Partners Pty Ltd (D1-3)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 12 DECEMBER 2008

5056/08 J W MAILING SERVICES PTY LIMITED v IAN FULTON & ORS

JUDGMENT

1 HIS HONOUR: In this matter the plaintiff conducts a business of providing bulk mail house services. The third defendant has conducted business as a printer but has decided to go into the bulk mail house services business. The second defendant is the company through which the third defendant intends to conduct that business. The first defendant has been appointed the managing director of the second defendant.

2 The first defendant was up till September this year the sales manager of the plaintiff. In the course of carrying out his duties as the plaintiff’s sales manager the first defendant sent a great deal of printing work of the plaintiff to the third defendant. It is apparent on the evidence that in the course of doing that work the third defendant became apprised of the identity of about 20 of the plaintiff’s clients. It regards itself as under no duty of confidentiality towards the plaintiff.

3 It is seeking through the agency of the first defendant to persuade customers to leave the plaintiff in favour of the defendants. The evidence shows that it is aware that it is much easier to establish business of this sort with existing customers than it is to obtain business by cold canvassing. It regards its own customer list is confidential.

4 The plaintiff says that on this evidence there arises a serious question to be tried that confidentiality attached to the material provided by it to the third defendant to carry out printing work, either simply through the supply of material which it regarded as confidential and which the third defendant knew that the plaintiff regarded as confidential, or through an implied term in the contractual relations between them as to the printing work, or through the existence of a confidential relationship arising out of the relationship of principal and agent between the plaintiff and the third defendant.

5 I need deal only with the first of these bases on which the plaintiff alleges that a serious question to be tried arises. In relation to that, the plaintiff relies on what was said by Megarry J (as his Lordship then was) in Coco v A N Clark (Engineers) Ltd [1969] RPC 41 at 47. His Lordship said:

“In my judgment three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene MR in the Saltman case [ Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203] on page 215, must ‘have the necessary quality of confidence about it.’ Secondly, that information must have been imparted in circumstances imparting an obligation of confidence. Thirdly, there must be an un-authorised use of that information to the detriment of the party communicating it.”

6 The principle was also stated in Schering Chemicals Ltd v Falkman Ltd [1982] QB 1 per Shaw LJ at 26 - 27:

“The first proposition contended for on behalf of Mr Elstein and Thames was that at no time was there any direct contractual connection between them and Schering from which a duty of confidentiality could derive. McNeill J, to whose judgment I would pay respectful tribute, disposed of this argument summarily but incisively in these terms:
‘I would grant the injunction against [Mr Elstein] on two grounds. First on the ground of breach of the duty of confidence arising out of the trust [Schering] placed in him, in the course of his remunerated employment advising them professionally.’
I agree with him. As I see the position, the communication in a commercial context of information which at the time is regarded by the giver and recognised by the recipient as confidential, and the nature of which has a material connection with the commercial interests of the party confiding that information, imposes on the recipient a fiduciary obligation to maintain that confidence thereafter unless the giver consents to relax it.”

See also per Templeman LJ in the same case at 36 – 37. And see the decision in this Court of Young J (as his Honour then was) in Gonsalves v Debreczeni (1998) 9 BPR 16,689.

7 Mr J Raine, of counsel for the defendants, has urged upon me that no obligation to maintain confidentiality arose in the circumstances of this case because there could not be said to be a confidential relationship between the plaintiff and any of the defendants. It was made plain, Mr Raine submitted, in Hospital Products Limited v US Surgical Corporation (1984) 156 CLR 41 that a fiduciary relationship or an obligation of confidentiality could not arise in the course of a commercial transaction conducted at arm’s length. This he says is plain from the judgment of Gibbs CJ at 70 - 72 (although his Honour at those pages quotes from a judgment of Asquith LJ in Reading v The King [1949] 2 KB 232 at 236 which appears to support the propositions cited above by Mr Angyal of Senior Counsel on behalf of the plaintiff).

8 I do not think that it is clear that a duty of confidentiality cannot arise in any circumstances in what can be characterised as a commercial context. Whilst Mr Raine’s propositions can be developed at trial, I do not find that the conclusion from them is that the plaintiff has not raised a serious question to be tried that there has been a breach of a duty of confidentiality in the present case.

9 There has really been no argument on the balance of convenience. Upon my asking Mr Raine what he put in opposition to the claim for injunctive relief he relied only on the absence of a serious question to be tried. On the basis of the submissions that I have set out, it is plain that the lack of injunctive relief is likely to permit very serious damage to the plaintiff’s business should no injunctive relief be granted.

10 I propose to grant an injunction until further order, but that is on the basis that the matter will go to the Expedition Judge’s list next Friday so that the time during which the interlocutory injunction will prevail will be as short as possible.

11 The usual order as to the costs of a plaintiff who is successful in a contested application for injunctive relief is that the plaintiff’s costs of the application for injunctive relief be the plaintiff’s costs in the proceedings and that is the order that I propose to make in this case.

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