One Dream Enterprises Pty Ltd v Simmonds
[2019] VSC 304
•8 May 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S ECI 2019 01881
| ONE DREAM ENTERPRISES PTY LTD (ACN 145 089 005) t/as YPA ESTATE AGENTS WERRIBEE | Plaintiff |
| v | |
| MELANIE SIMMONDS TONY VERCHER JAMES RISOS | First Defendant Second Defendant Third Defendant |
---
JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 May 2019 |
DATE OF RULING: | 8 May 2019 |
CASE MAY BE CITED AS: | One Dream Enterprises Pty Ltd v Simmonds & Ors |
MEDIUM NEUTRAL CITATION: | [2019] VSC 304 |
---
INJUNCTION – Defendants previously engaged by plaintiff – Application to restrain defendants from utilising confidential information of the plaintiff – Plaintiff established an arguable case – Balance of convenience strongly in favour of dismissing application.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms E Rothschild (solicitor) | Elisa Rothschild Lawyers |
| For the Defendants | Ms S M Kelly | Gilchrist Connell Pty Ltd |
HIS HONOUR:
The plaintiff, One Dream Enterprises Pty Ltd (‘One Dream’), operates a real estate agency under the trading name YPA Estate Agents Werribee. The services which it offers include the marketing and sale of real estate and real estate management services.
Each of the defendants was previously employed by One Dream: Ms Simmonds, between 22 October 2013[1] and 25 August 2018;[2] Mr Vercher, between 7 May 2012[3] and 25 August 2018;[4] and Mr Risos, between 16 August 2016[5] and 17 October 2018.[6] Subsequent to the termination of their employment with One Dream, each of the defendants commenced employment with 500 Keys Pty Ltd (‘500 Keys’), a real estate agency trading as Hodges Werribee. This is a new business.
[1]Affidavit of James Antonio affirmed 30 April 2019, [9].
[2]Ibid [16].
[3]Ibid [8].
[4]Ibid [16].
[5]Ibid [10].
[6]Ibid [19].
It is not in dispute that during the period 17 October 2018 to 1 May 2019, One Dream has lost business to 500 Keys. That lost business comprises 14 landlords, with 36 properties under management,[7] and the sale of a property, at 33 Exploration Drive, Werribee (’33 Exploration Drive’).[8] In early 2018, One Dream had approximately 679 landlords on its rent roll.[9] The 14 landlords who have transferred their business to 500 Keys represent approximately two per cent of One Dream’s landlords as at the time 500 Keys commenced business.
[7]Ibid [42].
[8]Ibid [19]–[20].
[9]Ibid [5].
At the time of the termination of their employment, each of the defendants was employed by One Dream pursuant to a contract of employment which contained a clause dealing with the use of confidential information. That clause was cl 16 of each contract, and provided as follows:
Any trade, professional or other like information of a confidential nature gained by yourself during the course of your employment shall not, without the specific authority of One Dream Enterprises Pty Ltd. used to the detriment of One Dream Enterprises Pty. or to the advancement of a subsequent employer.
Without limiting the generality of the foregoing, all documents, records and reports, listings and information regarding landlords, tenants, vendors and purchasers will constitute confidential information and shall remain the property of One Dream Enterprises Pty Ltd.. Unless expressly authorised by One Dream Enterprises Pty Ltd, you shall not take away or copy or use any such documents, records, reports, lists or information other than in furtherance of One Dream Enterprises Pty Ltd. business [sic].
The plaintiff contends that the defendants have utilised its confidential information for the purpose of acquiring the business of the 14 landlords and the vendor of 33 Exploration Drive.
The defendants deny this. In particular, they contend that they did not utilise the plaintiff’s client data contact information for the purpose of soliciting the business of the 14 landlords and that of the vendor of 33 Exploration Drive. Rather, the defendants contend that the business has come to 500 Keys at the initiative of the landlords and the vendor of 33 Exploration Drive in the ordinary course of the operation of 500 Keys as a competing real estate agency.
An affidavit affirmed by the defendants’ solicitor is to the effect that the majority of the landlords who have transferred business to 500 Keys have long-standing personal and/or business relationships with Ms Simmonds.[10] The affidavit deposes that Ms Simmonds has worked in the Werribee area in real estate since 1997, with the exception of a six month period.[11] Mr Vercher has worked in real estate in Werribee since 2008.[12]
[10]Affidavit of Martin Stirling affirmed 8 May 2019.
[11]Ibid [4].
[12]Ibid [10].
By summons filed 1 May 2019, One Dream makes application for:
An injunction to restrain the Defendants and each of them by themselves, their servants or agents or otherwise howsoever from using the confidential information of the Plaintiff or any part thereof for any purpose other than the purpose for which it was supplied, and requiring the Defendants to destroy or return all said confidential information in their possession.[13]
[13]Plaintiff, ‘Summons’, 1 May 2019, [1].
At the commencement of today’s hearing, Ms Rothschild, who appeared for One Dream, proposed orders which included the following:
(1) The Defendants and each of them by themselves, their servants or agents or otherwise, are restrained by injunction from using the confidential information of the Plaintiff, or from initiating contact with the landlord clients of the plaintiff as at 8 May 2019, including landlord clients of the Plaintiff in the rent roll of the Plaintiff.
(2) That by 4:00 pm on 15 May 2019, the Defendants or each of them deliver up to the Plaintiff or destroy the client management database and any copy of the rent roll or phone numbers of clients of the plaintiff that they may have in their possession.[14]
[14]Plaintiff, ‘Minutes of Proposed Orders’, 8 May 2019, [1]–[2].
Ms Kelly, who appeared for the defendants, submits that the plaintiff has not established an arguable case that any of the defendants have breached cl 16 of their employment contracts. Ms Kelly further submits that if an arguable case is established, then the balance of convenience strongly favours the rejection of the plaintiff’s application for injunctive relief.
This is an interlocutory application. As such, the Court is not in a position to make any final findings of fact. As I have indicated, there is a contest on the material which has been filed to date regarding the competing contentions of the parties.
That said, there is little direct evidence before the Court which would support a finding that, prior to the termination of their employment, the defendants downloaded information from the plaintiff’s client information database. There is no evidence of any forensic information technology investigation having being undertaken in respect of computers or mobile phones which were used by the defendants in the course of their employment. There is no evidence of any discussion between representatives of the plaintiff and any of the 14 landlords who have moved their business to 500 Keys. In particular, there is no evidence of any discussion to ascertain whether the landlords had been contacted in the first instance by any of the defendants following the termination of their employment with the plaintiff prior to them moving their business to 500 Keys.
In relation to Ms Simmonds, the only evidence concerns a voicemail message from a One Dream client, Ms Mollica in March 2019.[15] In Mr Stirling’s affidavit, he deposes that Ms Simmonds is a long-standing personal friend of Ms Mollica’s and had obtained her contact details in the course of that friendship.[16]
[15]Affidavit of James Antonio affirmed 8 May 2019, [22].
[16]Ibid [8].
The only direct evidence in respect of Mr Vercher is that set out in an affidavit of Mr Antonio, a director of the plaintiff.[17] Mr Antonio deposes as follows:
On or around 25 March 2015, the director of YPA and my business partner, Bassam Tofaili, told me that Jose Todaro, a client of YPA, had informed him that Mr Vercher had telephoned in or around September 2018 to inform him that Mr Vercher had opened his own office.
I believe that Mr Vercher has made contact with other clients of YPA.[18]
[17]Affidavit of James Antonio affirmed 30 April 2019.
[18]Ibid [39]–[40].
Mr Stirling, in his affidavit, deposes that Mr Vercher denies calling Mr Todaro in September 2018.[19] He deposes that Mr Vercher believes that, as he was not an employee of 500 Keys in September 2018, he would have had no occasion to make the telephone conversation as alleged.[20]
[19]Affidavit of Martin Stirling affirmed 8 May 2019, [13].
[20]Ibid.
The alleged unauthorised use of client information by Mr Risos relates to the transfer, by the vendor of 33 Exploration Drive, of the management of the sale of that property to Mr Risos when he left One Dream and commenced employment with 500 Keys.[21] A text message exchange between the vendor of the property and Mr Risos on 19 October 2018, that is, immediately after the cessation of his employment with One Drive, states:
[21]Affidavit of James Antonio affirmed 30 April 2019, [18]–[20].
Hey James – Sarah Knight from 33 Exploration. Sorry I didnt get back to you yesterday. We still want to go with you, we didn’t go to YPA because it’s YPA we wanted you, because of your previous sales. We’ve sorted out our finance options. Can you come round on Monday afternoon? 4 or 4.30? Is possible.
Thanks
Sarah
If*[22]
Mr Risos responded:
Hi Sarah! Fantastic. I look forward to working with you! 4pm works well. Look forward to seeing you then. James.[23]
[22]Exhibit MFS-1 to the affidavit of Martin Stirling affirmed 8 May 2019.
[23]Ibid.
This text supports a finding that the vendor of 33 Exploration Drive transferred business to 500 Keys because of their high regard for Mr Risos’ abilities as a real estate agent, not because of any misuse, on his part, of the plaintiff’s confidential information.
In effect, the plaintiff invites the court to infer, in circumstances where 14 landlords have transferred their business to 500 Keys, that this is the product of the defendants having utilised confidential information, particularly client telephone numbers, acquired by them during the course of their employment with the plaintiff.
In this regard, I note paragraph 17 of Mr Antonio’s affidavit affirmed 30 April 2019, in which he deposes:
On or around late August 2018 after the resignation of Mr Vercher and Ms Simmonds, I became aware that Mr Vercher and Ms Simmonds had commenced employment with Hodges Werribee, a competitor in the area. I became aware of this because I saw large signage outside properties in the area that indicated that Mr Vercher and Ms Simmonds were engaging in provision of real estate services with Hodges Werribee.
It is equally likely that this signage will have been seen by at least some of the 14 landlords who have transferred their business to 500 Keys.
On the material presently before the Court, and having regard to the interlocutory nature of this proceeding, and the inability of the Court to make any final findings of fact, I am prepared to accept that the plaintiff does have an arguable case. However, on the material presently before the Court, it is not a strong arguable case.
The balance of convenience weighs strongly against the granting of the relief which is sought by the plaintiff.
First and foremost, there is the question of delay. On 26 October 2018, the plaintiff received an email from Ms Simmonds with a request for transfer of management for 13 properties from One Dream to 500 Keys.[24] Four further requests for the transfer of management of properties were received by the plaintiff between 26 October and 12 November 2018.[25]
[24]Affidavit of James Antonio affirmed 30 April 2019, [25].
[25]Ibid [27]–[30].
If the plaintiff had any basis for contending that the defendants were utilising the plaintiff’s confidential information for the purpose of acquiring this business, the plaintiff should have commenced a proceeding in November 2018 rather than waiting for a further six months.
I was informed from the Bar table by Ms Rothschild that the plaintiff calculates its loss of income from the transfer of the business of 14 landlords to 500 Keys at approximately $90,000.[26] Assuming in the plaintiff’s favour that these landlords were contacted by the defendants in breach of cl 16 of their contracts of employment, it does not follow that the plaintiff’s measure of damages is $90,000. That figure may need to be discounted, perhaps significantly, if evidence establishes that the landlords would, in any event, in due course have transferred their business to 500 Keys because of personal and/or business relationships with any of the defendants.[27]
[26]Transcript of proceeding (8 May 2019), 9.09–9.12.
[27]See AMP Services Ltd v Manning (No 2) [2007] FCA 82.
Given the conclusions set out above, it is unnecessary to address the deficiencies in the form of relief sought by the plaintiff, both in the summons filed on 1 May 2019 and in the proposed orders handed up in court this morning. Suffice to say to that I agree with Ms Kelly’s criticism of the proposed relief as being too broad, both in its failure to specify with any particularity the confidential information to be the subject of the proposed injunction, as well as the proposal to restrain the defendants from initiating contact with landlord clients of the plaintiff as at 8 May 2019 – a date in excess of six months after the termination of the defendants’ employment with the plaintiff.
The plaintiff’s application by summons filed on 1 May 2019 is dismissed.