Liberty Financial Pty Ltd v Scott - [2004] VSC 490

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
(TRANSFERRED FROM THE FEDERAL COURT
OF AUSTRALIA, VICTORIA DISTRICT REGISTRY,
PROCEEDING NO. V1256 OF 2001)

No. 9140 of 2003

LIBERTY FINANCIAL PTY LTD (ACN 077 248 983) SHERMAN CHING MA	First Plaintiff Second Plaintiff
v
TREVOR WILLIAM SCOTT BLUESTONE GROUP PTY LTD (CAN 091 201 357) trading as BLUESTONE MORTGAGES	First Defendant Second Defendant

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16, 23, 25 AND 29 NOVEMBER 2004
DATE OF JUDGMENT:	30 NOVEMBER 2004
CASE MAY BE CITED AS:	LIBERTY FINANCIAL LTD v SCOTT & ANOR
MEDIUM NEUTRAL CITATION:	[2004] VSC 490

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Pleading – Application to further amend statement of claim – Confidential information – Allegation former employee misappropriated confidential information – Necessity to identify precisely the relevant information.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr D. Meagher QC with Mr R. Kendall QC and Mr A. Rodbard-Bean	Abbott Stillman & Wilson
For the First Defendant	Mr P. Jopling QC with Mr A. Maryniak	Allens Arthur Robinson
For the Second Defendant	Mr S. Anderson	Freehills

HIS HONOUR:

Liberty Financial Pty Ltd, ("Liberty") the first plaintiff in this proceeding, is a money lender. It claims to be the first financier in Australia to serve a specialised market: borrowers who, because they are not sufficiently credit worthy, are not of much interest to conservative lenders such as banks. Lending in this market has its risks; but if you have carefully identified these, and are astute enough, and if your lending policies are sufficiently sophisticated and flexible, there is money to be made. Indeed, Liberty claims to have developed, through skill and hard work, all the attributes necessary to exploit the market to the full. It wishes to preserve its position in it. But its very success is a reason why the competition is now fierce.

Bluestone Group Pty Ltd ("Bluestone"), the second defendant, is one of those competitors. One of its employees is the first defendant, Mr Trevor Scott. He formerly worked for Liberty in a senior managerial position. In December 1999, however, he resigned. He subsequently worked for a time with an association of finance brokers known as Australian Finance Group (Victoria) Pty Ltd; but this ended in July 2000 or thereabouts, when he commenced employment with Bluestone. He there held, as he had with Liberty, a senior managerial position. He continues to be one of Bluestone's executives.

Liberty blames Mr Scott for giving Bluestone a springboard into a market which before then belonged to Liberty alone. Guided by its managing director (the second plaintiff, Mr Sherman Ma) Liberty (as it claims) pioneered sophisticated techniques not only for the introduction of potential borrowers but also for the assessment of the risk each presented and the terms most likely to be acceptable to them and profitable to the lender. Liberty therefore answered a need that had been in part created by the very difficulty of meeting that need, and which could be met…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] VSC 490
Decision Date: 30 November 2004

CaseChat Overview and Summary

Liberty Financial Pty Limited applied to further amend its statement of claim to allege that a former employee had misappropriated confidential information. The application was resisted by Scott, who contended that the proposed amendment would be futile because it did not identify the confidential information with sufficient particularity. The court was required to determine whether the proposed amendment was permissible under the relevant rules of court and whether it was necessary to identify the confidential information precisely to avoid futility.

The court held that the amendment sought to identify the confidential information by reference to the former employee's access to it and the fact that it was "sensitive and confidential" in nature. The court found that this was insufficient to avoid the risk of futility, as it did not provide enough detail to enable the defendant to prepare a proper defence or to give the applicant a fair opportunity to establish its case. The court also noted that the nature of the confidential information in question could affect the scope of the duty of confidentiality owed by the former employee, and therefore needed to be identified with greater precision.

In light of the above, the court dismissed the application to further amend the statement of claim. The court held that the amendment was futile because it did not identify the confidential information with sufficient particularity to enable the defendant to prepare a proper defence or to give the applicant a fair opportunity to establish its case. The court also noted that the amendment was an attempt to add new causes of action after the relevant limitation period had expired, which was not permitted under the relevant rules of court.

No orders were made as the application was dismissed.

Orders