Multi-Vendor Support Services Pty Limited v Darryl Nicke

[2005] NSWSC 443

CITATION:	Multi-Vendor Support Services Pty Limited v Darryl Nicke [2005] NSWSC 443
HEARING DATE(S):	24/3/05
JUDGMENT DATE :	24 March 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Einstein J
DECISION:	Interlocutory injunctive relief granted - See Judgment following paragraph 25

CATCHWORDS:	Practice and Procedure - Interlocutory relief - Principles
LEGISLATION CITED:	Supreme Court Act (1970) (NSW)
CASES CITED:	Appleton Papers Inc v Tomasetti Paper Pty Limited [1983] 3 NSWLR 208 American Cyanamid Co v Ethicon Ltd [1975] AC 396 Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618 Eng Mee Yong v Letchumanan [1980] AC 331 Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23 Plimpton v Schiller (1876) 4 Ch D 286 Ross v Internet Wines (2004) 60 NSWLR 436 Shercliffe v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 Stolznow v Calvert (1982) NSWLR 749
PARTIES:	Multi-Vendor Services Pty Limited (Plaintiff) Mr Darryl Nicke (Defendant)
FILE NUMBER(S):	SC 1997/05
COUNSEL:	Mr S Climpson (Plaintiff) Mr J Young (Defendant)
SOLICITORS:	Lewarne Goldsmith (Plaintiff) Wright Stell Lawyers (Defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Einstein J

Thursday 24 March 2005 ex tempore
Revised 10 May 2005

1997/05 Multi-Vendor Support Services Pty Limited v Darryl Nicke

JUDGMENT

1 There is before the court an amended summons brought by Multi-Vendor Support Services Pty Limited against Darryl Nicke. The amended summons was filed on 24 March 2005. The court marks for identification on the application for interlocutory relief [MFI P1], a draft chronology prepared by the plaintiff summarising certain of the information appearing in the affidavits upon which the plaintiff moves.

2 On the authorities there are two enquiries to be made on an application for interlocutory relief. These are, firstly, an inquiry as to whether or not the plaintiff has been able to establish a serious or prima facie case justifying, subject to balance of convenience parameters, the granting of interlocutory relief. Mr Young of counsel, who represents the defendant today, has conceded that the plaintiff’s affidavit material establishes just such a prima facie or serious case, accepting also that in terms of the evidence which is before the court, the crucial parameter concerns the balance of convenience.

3 For those reasons it is unnecessary to repeat the materials which are before the court in terms of a prima facie case, save to indicate that the strength of the prima facie case is itself a matter to be taken into consideration where the balance of convenience is to be determined. Indeed, the extent to which a plaintiff needs to prove a prima facie case has been said to be linked with the balance of convenience inquiry.

4 In approaching the interlocutory application it has seemed to me that the principles which govern the Court's approach to the question are those generally dealt with and set out in Appleton Papers Inc v Tomasetti Paper Pty Limited [1983] 3 NSWLR 208.

5 In Appleton, McLelland J pointed out the importance of recalling that the Court here deals with a discretionary power conferred on the Court in very general terms, referring to section 66(4) of the Supreme Court Act, which provides that the Court may at any stage of proceedings on terms grant an interlocutory injunction in any case in which it appears to the Court to be just or convenient so to do.

6 As McLelland J made plain at page 216 citing from the judgment of Moffitt P in Stolznow v Calvert (1982) NSWLR 749:

"While useful guidance is provided by the manner of exercise of the discretion in other cases, and by the factors considered in those cases to favour the exercise of the discretion in a particular way, each case must depend upon its own facts. It would be contrary to what I understand to be the accepted law in this country, to confine the exercise of a judicial discretion by judge made rigid formulae."

7 At page 214 McLelland J cited the full High Court decision in Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618 at 622, 623 where the Court had said that in dealing with applications for interlocutory injunctions:

"The Court addresses itself in all cases, patent as well as other, to two main enquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be held entitled to relief...the second enquiry...is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused, outweighs or is outweighed by, the injury which the defendant would suffer if an injunction were granted."

8 At page 214 McLelland J further referred to Shercliffe v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 at 736, 737, where the Court of Appeal explained the special sense in which the expression "probability" was used by the High Court in the Beecham case, and in particular had said that it did not refer either to a prediction as to the ultimate result or to a better than even chance of ultimate success. The Court said that:

"The degree of probability or likelihood of success is simply that which the Court thinks sufficient, in the particular case, to warrant preservation of the status quo."

9 As McLelland J reminds us at page 214, the Court had already stated that in that case the balance of convenience was very strongly in favour of the granting of interlocutory relief (to preserve the status quo), and accordingly the Court's statement, McLelland J believed, might be generalised by saying:

". . . that the degree of likelihood of success to be demonstrated is that which the Court thinks sufficient in the particular case to warrant consideration of where the balance of convenience lies."

10 McLelland J also cited from the Privy Council decision in Eng Mee Yong v Letchumanan [1980] AC 331 at 337 where the Privy Council had expressed the relevant principle in terms derived from the AmericanCyanamid Co v Ethicon Ltd [1975] AC 396 case as follows:

"The Court's power to grant an interlocutory injunction...is discretionary. It may be granted in all cases in which it appears to the Court to be just and convenient to do so...the guiding principle in granting an interlocutory injunction is the balance of convenience; there is no requirement that before an interlocutory injunction is granted the plaintiff should satisfy the Court that there is a `probability', a `prima facie case' or a `strong prima facie case' that if the action goes to trial he will succeed; but before any question of balance of convenience can arise the party seeking the injunction must satisfy the Court that his claim is neither frivolous nor vexatious; in other words that the evidence before the Court discloses that there is a serious question to be tried..."

11 McLelland J at page 215 expressed the view that what was said in the Eng Mee Yong case is not inconsistent in substance with what is said in the Shercliffe case notwithstanding that the form of words used in the two cases is different, and in the Eng Mee Yong case, the expressions "probability" and "prima facie case" seem to be used in somewhat different senses to those in which the same expressions are used in the Beecham case as explained in the Shercliffe case. McLelland J pointed out that it must be remembered that:

"No Court should consider itself fettered by the form of words as if it were a phrase in an Act of Parliament which must be accepted and construed as it stands."

12 McLelland J further noted that in considering the question of the "balance of convenience" as contemplated in the Eng Mee Yong case and the American Cyanamid case, the relative apparent strength of each party's case may be a relevant matter. As McLelland J pointed out this accords with what the Supreme Court of Victoria said Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23 in the following passage relating to the High Court's judgment in the Beecham Group case:

"Having regard to the fact that the High Court cited the judgment of James LJ in Plimpton v Schiller (1876) 4 Ch D 286 with approval, the reference in Beecham's case...to a probability of success should not be understood as meaning that the plaintiff must show that at trial it is more probable than not that he will succeed. Indeed the High Court made it clear that that is not the issue for the judge to determine, for, in the passage already cited the Court said `...the Court does not...give or withhold interlocutory relief upon a forecast as to the ultimate result of the case.'

Rather the High Court should be understood as referring to the degree of probability which may be high or low. No doubt the strength or weakness of the plaintiff's case will be relevant when the judge comes to the question of the balance of convenience, if he ever does."

13 At page 216 McLelland J cited Lord Diplock's judgment in American Cyanamid in terms of the power to grant interlocutory injunctions. The passage was as follows:

"My Lords, when an application for an interlocutory injunction to restrain a defendant from doing acts alleged to be in violation of the plaintiff's legal right is made upon contested facts, the decision whether or not to grant an interlocutory injunction has to be taken at a time when ex hypothesi the existence of the right or the violation of it, or both, is uncertain and will remain uncertain until final judgment is given in the action. It was to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved that the practice arose of granting him relief by way of interlocutory injunction; but since the middle of the nineteenth century this has been made subject to his undertaking to pay damages to the defendant for any loss sustained by reason of the injunction if it should be held at the trial that the plaintiff had not been entitled to restrain the defendant from doing what he was threatening to do. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff's need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff's undertaking in damages if the uncertainty were resolved in the defendant's favour at the trial."

14 At page 216, McLelland J pointed out that it is the task of the Court on an application for an interlocutory injunction to seek to fulfil this purpose in the manner best calculated to achieve justice between the parties in the circumstances of the particular case. McLelland J pointed out that with possible exception of a passage in the Beecham Group case which deals with what are said to be special considerations arising in a patent suit in which there is a substantial issue as to the validity of the patent, which McLelland J then proceeded to consider,

". . . the decisions to which I have already referred provide authoritative guidance (not however to be interpreted as `rigid formulae') as to how this task of the Court should normally be approached, but do not deny the proposition that the ultimate task of the Court is as I have described it."

15 I have endeavoured to approach the present application for interlocutory relief applying the principles as expressed by McLelland J. The matter is put shortly by Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 2nd Edition at para 2168.

"What the plaintiff must prove is that he has a serious, not a speculative, case which has a real possibility of ultimate success and that he has property or other interests which might be jeopardised if no interlocutory relief were granted. Then it becomes a matter of seeing if, in all the circumstances of the case, the Court should nonetheless exercise its discretion by declining to issue an interlocutory injunction."

16 Likewise in Meagher, Gummow and Lehane at paragraph 217 the learned authors say:

"What is meant by saying that the Court must take into account the balance of convenience and the question of hardship is that it must consider carefully what effects the granting of an injunction will have on both parties and in particular whether to grant one would cause hardship to the defendant or to refuse one would cause hardship to the plaintiff."

17 The evidence before the court given by Mr Fraser John Clay in terms of his affidavit of 16 March 2005 and, in particular, the evidence concerning the information relating to the updated price book and other information relating to quotations said to have been contained on Mr Nicke’s laptop computer and described by Mr Clay as the “heart and soul of the business” containing, so he has deposed, critical information relating to the basis on which quotes had been made, the updated price book and all presentations made to clients in relation to the provision of the services, satisfies me that in terms of the balance of convenience that that information is likely so extremely commercially sensitive as to justify the making of the orders sought in the interlocutory relief section of the amended summons.

18 Suffice it to say that the evidence including that given by:

(1) Dr George Georgiou, an IT consultant employed by the plaintiff, set out in his affidavit of 16 March 2005, as to the recovery of a very large number of deleted Excel spreadsheet documents and e-mail folders from the laptop computer, which had been used by Mr Konda, who worked closely with the defendant;

(2) Mr Balding in his affidavit of 16 March 2005; and

(3) Mr Vredberg in his affidavit of 17 March 2005, including his evidence of having learned of contact made by the defendant to direct competitors of the plaintiff, and the evidence of the defendant’s activities generally subsequent to his having left the plaintiff, makes quite plain that, at least on an interlocutory application and in terms of weighing the respective stances on the balance of convenience, the balance of convenience heavily favours the making of the orders sought.

19 Mr Young contended that the matter of particular concern to the defendant was his claim that personal information outside of business-related information would be covered by, in particular, order 4 and also order 2 of the orders sought, and that this was a consideration, together with the defendant’s need to use the laptop, which should weigh against the orders being made or being made in the terms sought. That submission has been taken into account. It seems to me that the appropriate accommodation to be made in terms of the defendant’s anxiety about that personal information, is to include in the bracket of orders which will be made, orders which restrict access to the information to be provided pursuant to order 4 to the plaintiff’s legal advisers and to a nominated employee of the plaintiff, who will have to give to the court an undertaking not to disclose, save to the legal advisers and to the court, any personal information which may come to his attention following compliance with order 4.

20 Likewise there will need to be an undertaking given to the court by any IT computer expert consultant of the plaintiff who may be retained for the purpose of examining the materials to be produced in response to order 4. That undertaking, in like terms, will have to be an undertaking to the court not to disclose to any person, otherwise than to the employee of the plaintiff, who also has access to the information, or to the plaintiff’s lawyers or to the court, information which comes to that IT consultant, by dint of having access to information to be provided by the defendant.

21 Finally, in light of the decision of the New South Wales Court of Appeal in Ross v Internet Wines (2004) 60 NSWLR 436 it will be necessary for the terms of paragraph 4 to be subject to a proviso which will restrict the operation of the primary order in a circumstance where the defendant may seek to claim privilege against self-incrimination which would then have to be tested before the court.

22 In terms of para 3 of the interlocutory orders sought, the plaintiff has claimed that the precise terms of the order should be not only as sought but also, in disjunctive fashion, should follow the terms of the non-competition covenant in paras 21.2.1, 21.2.2, 21.2.3 and/or 21.2.4. The interlocutory relief to be ordered in terms of paras 2 and 3 should be orders up to and including 30 June 2005.

23 There should be a further order granting leave to the defendant to move to discharge the orders, in the event that such an application is granted, upon evidence not presently before the court. Whether or not the court, albeit that leave, if it is to be granted, will accept that there is an entitlement in the defendant to endeavour to further agitate at an interlocutory level, the matters which have been agitated today, must abide the decision of whatever duty judge the matter comes before and it should be made clear that, in what I have said, I have not intended to prejudge any such application.

24 The matter has some complexities and at the end of a difficult duty judge day, on the day before Easter, I would not wish to pre-empt the defendant from at least having an opportunity of trying to persuade another Equity judge that some other accommodation in terms of the interlocutory regime is appropriate.

25 Costs of and occasioned by and relating to the interlocutory application up to this point of time will be reserved.

I certify that paragraphs 1 - 25
are a true copy of the reasons
for judgment herein of
the Hon. Justice Einstein
given on 24 March 2005 and
revised 10 May 2005

___________________
Susan Piggott
Associate

10 May 2005

Orders made 26 April 2005

26 The orders are as follows:

1. I grant leave to the defendant to file in court an Appearance in the form which he has completed in handwriting and which I initial and date 26 April 2005. I dispense with any further requirement for the defendant to file a formal notice of appearance

2. I grant leave to the plaintiff to file in Court notice of motion in the form initialled by me and dated 26 April 2005. I order that the motion be returnable instanter. I grant leave to the plaintiff to amend the notice of motion by the substitution on the second line of paragraph 4 (b) of the words “plaintiffs” in the place of the word “defendants” and by further amending the notice of motion by adding at the end of paragraph 5 (a) the word “business”.

3. I grant leave to the plaintiff to file in Court the affidavits of Mr George Georgiou sworn 26 April 2005, Mr Dan Robert Vredberg sworn 22 April 2005 and Mr Russell John Goldsmith sworn 21 April 2005.

4. I note that the plaintiff by its counsel Mr Climpson gives to the court the usual undertaking as to damages.

5. I make orders in terms of paragraphs 4 and 5 of the notice of motion.

6A. I order that subject to the proviso in paragraph 6B, the defendant on or before Tuesday 3 May 2005, file and serve on the plaintiff an affidavit sworn by him identifying and/or listing and/or describing the matters set out in paragraph 6 (a), (b), (c) and (d) of the notice of motion.

6B. Proviso

The proviso to the order 6A is as follows:
“provided that if and to the extent that the defendant claims that compliance with order 6A insofar as it requires the defendant to identify, list or describe the matters set out in paragraph 6 (c) and (d) of the notice of motion, may tend to incriminate him and claims that he has an entitlement to have upheld a claim to privilege against self incrimination, the defendant is not required to comply with those orders but is within 7 days to file and serve an affidavit identifying that such claim is made and setting out the basis put forward for making such claim, the plaintiff thereafter to be entitled to test the claim for such privilege in court.”

7. I make orders in terms of paragraphs 8, 9, 10 and 11 of the notice of motion, noting that those orders are made ex parte.

8. I grant leave to the plaintiff to file in court a further amended summons in the form which I initial and date 26 April 2005.

9. I order that the proceedings be stood over in terms of the return date of the amended summons against Synagen Solutions Pty Limited to 30 May 2005 before the Duty Judge and for the purpose on the same occasion of the plaintiff pursuing such further or other orders as it seeks to pursue against the first defendant in the then circumstances.

10. All parties have liberty to apply on 1 day’s notice.

11. I abridge the time for service of the further amended summons to 29 April 2005.

12. I order that on or before 10 May 2005 both defendants file and serve all evidence upon which they propose to reply in answer to the orders sought by the plaintiff in the notice of motion including in answer to the orders sought by the plaintiff in the notice of motion which have not yet been made.

13. Costs of today are reserved.

14. I order that these orders be entered forthwith.