Munters Pty Ltd v Bennett, John
[1995] FCA 1078
•20 Dec 1995
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION No 843 of 1995
BETWEEN:
MUNTERS PTY LTD
Applicant
-and-
JOHN BENNETT, PETER NEWTON FREY and
RECOM ENGINEERING PTY LTD
Respondents
Coram: Olney J
Place: Melbourne
Judgment: 20 December 1995
MINUTE OF PROPOSED ORDER
UPON the applicant by its counsel undertaking to pay to any party adversely affected by this order such compensation (if any) as this Court thinks just and in such manner as the Court directs:
AND UPON the first respondent by his counsel undertaking until the hearing and determination of the proceeding or further order to keep full and proper accounts and records of all and any participation or involvement of any kind by him in the air-conditioning industry, including of any dealings which he may have with Bry-Air (India) Pvt Ltd, Gas & Fuel Corporation of Victoria (Gascor), Recom Engineering Pty Ltd and Kirloskar Pneumatic Co Limited:
AND UPON the second and third respondents by their counsel undertaking until the hearing and the determination of the application or further order:
To keep full and proper accounts and records of all items of air cooling or air-conditioning equipment or parts purchased by either of them from:
a)Bry-Air (India) Pvt Ltd; or
b)Kirloskar Pneumatic Co Ltd;
on and after 29 November, 1995.
ii)To keep full and proper records of all sales made by either of them of air cooling or air-conditioning systems equipment or parts which consist of, or incorporate, equipment or parts purchased from, or obtained from, either of the suppliers referred to in paragraph (i) hereof on or after 29 November, 1995.
iii)To keep full and proper records of all profits derived by either of them from all of the sales referred to in paragraph (ii) hereof,
THE COURT ORDERS THAT:
The first, second and third respondents be restrained whether by themselves, their servants or agents or otherwise howsoever until the hearing and determination of the proceeding or further order from -
a)making use of any of the information described hereunder (the applicant's confidential information) namely:
i)The applicant's Tracker computer software program.
ii)The applicant's price lists.
iii)The applicant's specifications on plant and equipment.
iv)The applicant's drawings of plant and equipment.
v)The applicant's documentation relating to marketing plans (including the moisture control services marking plan).
vi)The applicant's documentation and customer listing associated with the desiccant product service.
vii)The applicant's documentation relating to or associated with the applicants five year plan (including reports and minutes of the applicant's product development committee) of which the first respondent was a member.
viii)The applicant's documentation relating to or associated with the applicant's marketing
analysis;b)publishing, communicating or causing to be published or communicated to any other person any of the applicant's confidential information;
c)destroying, parting with possession of or power or control over or defacing or changing in any manner any document containing any of the applicant's confidential information or any machine or other equipment including computers embodying or incorporating the applicant's confidential information.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION No 843 of 1995
BETWEEN:
MUNTERS PTY LTD
Applicant
-and-
JOHN BENNETT, PETER NEWTON FREY and
RECOM ENGINEERING PTY LTD
Respondents
Coram: Olney J
Place: Melbourne
Judgment: 20 December 1995
REASONS FOR JUDGMENT
The applicant manufactures and sells in Australia and New Zealand various items of airconditioning plant and equipment.
In January 1993 the first respondent (Bennett) was employed by Munters Australia Pty Ltd as a technical service technician/manager and in October 1993 was promoted to the position of regional manager of the part of the employer's business conducted in Victoria, Tasmania, South Australia and Western Australia. It is said, and this proceeding has been conducted on the basis, that in January 1994 the applicant (formerly known as Munters Seasonmakers Pty Ltd) took over the business of Munters Australia Pty Ltd. For present purposes it is assumed that at relevant times Bennett was an employee of the applicant.
Upon being promoted to the position of regional manager Bennett signed a confidentiality agreement in which he agreed, inter alia, that during and after his employment he would maintain the confidence of certain confidential information referred to in the agreement and prevent its unauthorised disclosure to or use by any other person, firm or company. The agreement did not however impose on Bennett an obligation to maintain confidence regarding any information which is generally known or available by publication, commercial use or otherwise nor was the agreement intended to prevent Bennett from using his own skill in any business in which he may be engaged after the termination of his employment.
In October 1995 the directors of the applicant became aware that Bennett had had dealings with an Indian company Bry-Air (India) Pvt Ltd (Bry-Air) which was not engaged in business in Australia but which the applicant says is a major competitor of its parent or associated companies in Asia and Europe. It became apparent that Bry-Air was interested in enlisting Bennett as its Australian representative with a view to entering the Australian market. When challenged Bennett agreed that he had passed on some technical information to Bry-Air although Bennett claims (contrary to the applicant's assertion) that the only information he gave could have been obtained from other sources. Whatever the case may be, upon becoming aware of Bennett's dealings with Bry-Air the applicant summarily terminated his employment. It is not part of Bennett's case in this proceeding that his dismissal was other than justified in the circumstances. It was later ascertained that Bennett had also been in contact with a Malaysian company Kirloskar Pneumatic Co Ltd (Kirloskar) which was also a potential competitor of the applicant but was not then in the Australian market.
During the period of his employment with the applicant Bennett had also been involved in discussions with the second respondent (Frey) who is a director and major shareholder of the third respondent (Recom). Recom is a Western Australian company carrying on business in both WA and Victoria. It engages in the purchase, reconditioning and resale of compressors and similar equipment used in airconditioning.
Over a considerable period Bennett and Frey evolved a plan whereby they would become associated in a business which would sell Bry-Air and possibly Kirloskar products in Australia. The plan has not been put into effect. Bennett and Recom have also been engaged in seeking the support of the Gas & Fuel Corporation (Gascor) in Victoria to develop an invention which Bennett claims to be his own idea but to which the applicant claims an entitlement.
There is considerable dispute between the parties as to whether or not Bennett has disclosed any confidential information to Bry-Air, Recom, Frey or Kirloskar and further there is dispute as to whether or not the carrying out of
Bennett's plan would in fact result in the proposed new business being in direct competition with the applicant. A substantial volume of evidence has been placed before the Court by each of the parties. It is unnecessary to analyse it in any detail. There are significant questions of fact in dispute which go to the heart of the case. There is no question that there are serious questions of fact to be tried. And there are also serious questions of law which will arise depending on the ultimate findings of fact. The nature and extent of Bennett's post employment obligations to the applicant cannot be determined until the facts in relation to his conduct during his employment are established nor can any conclusion be reached as to whether or not Frey and Recom have been placed in a position whereby injunctive remedies are available to the applicant. It can be said with confidence that the material adduced justifies the conclusion that there are serious questions to be tried in respect of each of the respondents.
When the question of interim injunctive relief first came before the Court on 2 November 1995 an order was made by consent (upon the applicant giving an undertaking as to damages) in the following terms:
The first, third and fourth respondents be restrained whether by themselves, their servants or agents or otherwise howsoever until 4.15pm on 23 November 1995 or until further order from -
(a)making use of any of the information described hereunder as the applicant's confidential information ("the applicant's confidential information"):
i)The applicant's Tracker computer software program.
ii)The applicant's Price lists.
iii)The applicant's specifications on plant and equipment.
iv)The applicant's drawings of plant and equipment.
v)The applicant's documentation relating to marketing plans (including the Moisture Control Services Marketing Plan).
vi)The applicant's documentation and customer listing associated with the Desiccant Product Service.
vii)The applicant's documentation relating to or associated with the applicant's Five Year Plan (including report and minutes of the applicant's Product Development Committee) of which the first respondent was a member.
viii)The applicant's documentation relating to or associated with the applicant's Marketing Analysis;
(b)publishing, communicating or causing to be published or communicated to any other person any of the applicant's confidential information;
(c)destroying, parting with possession of or power or control over or defacing or changing in any manner any document containing any of the applicant's confidential information or any machine or other equipment including computers embodying or incorporating the applicant's confidential information.
(In this order the references to the third and fourth respondents are references to Frey and Recom respectively. A further party was originally named as a second respondent but the proceeding against that party has since been discontinued).
The matter was adjourned until 23 November 1995 and on that day the injunction was extended to 28 November 1995. The applicant's motion for interlocutory relief was argued before me on 28 November and 1 December 1995 on which day I reserved my decision and extended the interim injunction until the determination of the motion.
The applicant seeks by way of interlocutory relief pending the trial of the proceeding an injunction including in addition to the orders contained in the interim injunction granted on 2 November 1995 the following additional orders:
That until the hearing and determination of this proceeding or further order, the respondents, whether by themselves, their servants or agents or howsoever otherwise be restrained from associating with each other, working together or operating together in any way or manner in the business of airconditioning, both domestic and commercial.
That until the hearing and determination of this proceeding or further order, the respondents, whether by themselves, their servants or agents or howsoever otherwise be restrained from dealing with in any way:
- BRY-AIR (INDIA) PVT LTD or any company associated with it;
- KIRLOSKAR PNEUMATIC CO LTD or any company associated with it;
-GASCOR or any company or entity associated with it;
in relation to the manufacture and sale of heat recovery wheels, desiccant wheels (including structured evaporative cooling) and products made therefrom or in combination therewith.
The respondents say that they are not in possession of any of the "confidential information" referred to in the interim injunction and whilst they have never accepted that the applicant is entitled to any of the relief sought they were prepared to consent to the injunction on an interim basis and do not oppose the continuation of an injunction in the same terms pending trial.
They do however strenuously oppose the granting of any order in the form of or similar to the proposed additional paragraphs 2 and 3.
In determining where the balance of convenience lies it is appropriate to consider the overall strength of the applicant's case. Here, although there are clearly serious questions of fact and law to be tried, the evidentiary material advanced by the applicant, which in many respects is hotly contested by the respondents, is not so overwhelming as
to give rise to a conclusion that the applicant's case is so strong that it is bound to succeed. Furthermore, the relief sought in the proposed paragraphs 2 and 3 is so broad as to be likely to exceed the applicant's entitlement even if entirely successful and in practical terms if granted would mean not only inhibit the respondents in conducting a broad range of business activities not associated with the use of the claimed confidential information but in the event of them successfully resisting the applicant's case, their chances of being able to enter upon their proposed new activities would in all probability by then have been lost. Damages would not be an adequate remedy for the loss of the chance to enter into a new business venture, the degree of success of which could never be capable of accurate assessment.
In my opinion the balance of convenience lies against the granting of relief in the form sought in paragraphs 2 and 3.
The respondents have however volunteered certain undertakings.
Bennett is prepared to undertake to the Court until the hearing and determination of the application or further order to keep full and proper accounts and records of all and any participation or involvement of any kind by him in the air-conditioning industry, including of any dealings which he may have with Bry-Air, Gascor, Recom and Kirloskar.
Frey and Recom are prepared to undertake pending the trial of the proceeding -
To keep full and proper accounts and records of all items of air cooling or air conditioning equipment or parts purchased by either of them from:
a)Bry-Air (India) Pvt Ltd; or
b)Kirloskar Pneumatic Co Ltd;
on and after 29 November, 1995.
To keep full and proper records of all sales made by either of them of air cooling or air conditioning systems equipment or part which consist of, or incorporate, equipment or parts purchased from, or obtained from, either of the suppliers referred to in paragraph 1 hereof on or after 29 November 1995.
To keep full and proper records of all profits derived by either of them from all of the sales referred to in paragraph 2 hereof.
In my opinion the combination of an interlocutory injunction in the same terms as the interim injunction coupled with the respective undertakings proffered by the respondents will adequately protect the interests of the applicant pending trial of the proceeding. In these circumstances I will be prepared to accept the respondents' respective undertakings and upon those undertakings being confirmed in open Court, and upon the applicant restating its previous undertaking as to
damages I will make orders in the form of the minute of proposed order annexed to these reasons.
I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment of the Honourable Justice Olney
Associate:
Dated:
Heard: 28 November 1995, 1 December 1995
Place: Melbourne
Judgment: 20 December 1995
Appearances:
Mr S. Wilson QC and Mr B. Griffin (instructed by Cleary Ross) appeared for the applicant.
Mr G. Clarke (instructed by Goddard Elliott) appeared for the first respondent.
Mr R. Kendall (instructed by Macpherson & Kelley) appeared for the second and third respondents.
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