Ringwood (Group) Pty Ltd t/a Totally Aussie Security v Hadport Pty Ltd
[2012] QDC 118
•31 May 2012
DISTRICT COURT OF QUEENSLAND
CITATION:
Ringwood (Group) Pty Ltd t/a Totally Aussie Security v Hadport Pty Ltd & Ors [2012] QDC 118
PARTIES:
RINGWOOD (GROUP) PTY LTD t/a TOTALLY AUSSIE SECURITY
(plaintiff)
v
HADPORT PTY LTD
(first defendant)
and
ELISABETH HADLEY
(second defendant)
and
SHAYNE SELWYN ALLPORT
(third defendant)
and
SECURITY SOLUTIONS (AUSTRALASIA) PTY LTD
(fourth defendant)FILE NO:
61/2009
DIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT:
Beenleigh District Court
DELIVERED ON:
31 May 2012
DELIVERED AT:
Brisbane
HEARING DATE:
27 October, 22 December, 23 December 2011
JUDGE:
Dearden DCJ
ORDER:
Plaintiff’s claim against first, second, third and fourth defendants is dismissed.
CATCHWORDS:
Security Providers Act 1993 (Qld) s. 9(3) – defendant unlicensed – whether loss suffered – whether plaintiff operating under mistake of fact
INTELLECTUAL PROPERTY – CONFIDENTIAL INFORMATION – INFORMATION PROTECTED – whether manual constituted confidential information
INTELLECTUAL PROPERTY – CONFIDENTIAL INFORMATION – INFORMATION PROTECTED – whether prior oral, week by week contract constituted confidential information
LEGISLATION:
Security Providers Act 1993 (Qld)
Supreme Court Act 1995 (Qld)
CASES:
Belmont Finance Corp v Williams Furniture Ltd (No. 2) [1980] 1 All ER 393
Interfirm Comparison (Aust) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104; [1975] 5 ALR 527
COUNSEL:
S D Anderson for the plaintiff
S T Farrell for the first, second, third and fourth defendantsSOLICITORS:
Jeff Thomas & Associates, solicitors for the plaintiff
Shand Taylor Lawyers, solicitors for the first, second, third and fourth defendants
Introduction
The plaintiff, Ringwood (Group) Pty Ltd t/a Totally Aussie Security, makes three claims against the defendants in various combinations. The plaintiff, as against the first defendant, Hadport Pty Ltd, claims for the return of monies paid for security services provided by the first defendant. The plaintiff’s second claim is that the second defendant, Elisabeth Hadley breached her obligation of confidence (as an employee of the plaintiff) by copying and making use of information confidential to the plaintiff without authorisation, for the benefit of the second defendant, third defendant (Shayne Selwyn Allport) and fourth defendant (Security Solutions (Australasia) Pty Ltd). The plaintiff’s third claim is that the second defendant, through the fourth defendant and with the aid of the third defendant, made contact with and interfered with the contractual relationship between the plaintiff and McDonalds Browns Plains.
The plaintiff seeks the following relief:-
(a) An order that the third defendant and fourth defendant, their servants and agents be restrained from directly or indirectly using or disclosing the plaintiff’s confidential information or any part of it;
(b) An order that an account be taken of profits made by the fourth defendant from the use of the said confidential information and that the fourth defendant pay the plaintiff the amount of the profits so determined;
(c) Directions as to the manner in which those profits are to be calculated;
(d) Alternatively an order that an inquiry be held as to the loss and damage suffered by the plaintiff by reason of the defendant’s use of such information and that the defendants pay the plaintiff the amount of such loss and damage as so determined;
(e) An order that the first defendant pay to the plaintiff the sum of $57,609.50 or money that had been received with respect to the Security Providers Act claim;
(f) An order that the second, third and fourth defendants pay to the plaintiff $63,694 in equitable compensation for breach of its obligation of confidentiality to the plaintiff for interfering with the relationship between the plaintiff and McDonalds Browns Plains; and
(g) Interest pursuant to s 47 of the Supreme Court Act 1995.
Background
Robert Spreadborough is (and was at all relevant times) a director of the plaintiff, a company which provided various services, including security services, trading as Totally Aussie Security.[1] Mr Spreadborough recalls the second defendant commencing employment with the plaintiff around 2004 or 2005, although I accept that the second defendant more accurately dates the commencement of her employment back to November 2003.[2] The second defendant worked as general manager for the plaintiff, after an initial settling in period in the first six months of her employment.[3]
[1]T1-13.
[2]T2-52.
[3]T1-17.
The first defendant was formed about March 2004 (as the second defendant recalls), and the second and third defendants were the directors.[4] The plaintiff paid the second defendant for her managerial services (and subsequently security provider services) through the first defendant.
[4]T2-54.
The second defendant obtained a security officer’s licence in June 2005[5] and the third defendant obtained his security officer’s licence in or around September or October 2005.[6] The first defendant was not licensed under the Security Providers Act at anytime for which the payment records from the plaintiff to the first defendant have been provided.[7]
[5]T2-56.
[6]T-58.
[7]14 January 2005 – 9 January 2009 – see Exhibit 3.
The security services of the second and third defendants, provided through the first defendant, were invoiced to clients of the plaintiff, who have never sought reimbursement.[8]
[8]T1-45.
Security Providers Act claim
The Security Providers Act 1993 s. 9(3) provides:-
“Unless a person holds the appropriate licence, the person is not entitled to any reward for carrying out the functions of a security provider.”
It is on this basis that the plaintiff seeks to recover the sum of $57,609.50 paid to the first defendant (for the provision of services by the second and third defendants) between 14 January 2005 and 9 January 2009. In the alternative, the plaintiff argues that the sum of $57,609.50 was paid by the plaintiff to the first defendant and received by the first defendant under a mistake of fact, namely that the first defendant held a licence as a security provider.
The Security Providers Act s. 9(2) provides:-
“A person must not, directly or indirectly, engage another person to carry out for reward the functions of a security provider unless the other person holds the appropriate licence. Maximum penalty –
(a) For a first offence – 500 penalty units; or
(b)For a second offence – 700 penalty units or six months’ imprisonment; or
(c)For a third or later offence – 1,000 penalty units or eighteen months’ imprisonment.”
It is clear that the plaintiff was in breach of the Security Providers Act s. 9(2) in engaging the first defendant, an unlicensed security provider, to provide the functions of a security provider. I accept the submission on behalf of the defendants that the contract between the plaintiff and the first defendant was tainted with mutual illegality.
The second defendant was director of the plaintiff from 28 July 2005 to 15 December 2008 and I accept that her acknowledgment of the fact that the first defendant was not licensed, is legally imputed to the plaintiff.[9]
[9]Belmont Finance Corp v Williams Furniture Ltd (No. 2) [1980] 1 All ER 393, per Buckley LJ at 404.
Mr Spreadborough asserted in evidence that he told the second defendant that the first defendant had to be licensed under the Security Providers Act,[10] but I accept as more credible (on the balance of probabilities) the second defendant’s evidence that she was told by Mr Spreadborough that her work as a security provider was covered under the Ringwood Group,[11] and further, that if she had been given advice that the first defendant had to be licensed, she would have licensed it.[12] The issue as to whether the first defendant was licensed was, in any event, a simple matter which Mr Spreadborough could easily have checked,[13] but did not do so.
[10]T1-18.
[11]T2-56.
[12]T2-57.
[13]T1-19.
In summary, the plaintiff has suffered no loss, despite the fact that the first defendant was not licensed at any time between 14 January 2005 and 9 January 2009; there was clearly mutual illegality by both the plaintiff and the first defendant in the payment of and receipt of the relevant monies paid for the security services of the second and third defendants; and I do not accept that the monies paid were paid under a mistake of fact that the plaintiff believed the first defendant was licensed under the Security Providers Act. The plaintiff’s claim against the first defendant, in my view, fails entirely.
Confidential information (operating manual) claim
The plaintiff claims against the second defendant that she, as an employee, took confidential information in the form of an operating manual which she provided to the fourth defendant. It is uncontroversial that a document described as “Standard Operating Procedures”[14] which on its cover page has the title “Security Solutions Australasia Pty Ltd”, but at various parts of the manual refers to “Totally Aussie Security”, “Ringwood Group Pty Ltd” and “The Australian Trading Academy Pty Ltd”, was located by Mr Spreadborough on the plaintiff’s computer system early in 2009.[15] Mr Spreadborough gave evidence that he had written a standard operating procedure manual for the plaintiff which had been constantly updated, and that manual was provided to guards working for the plaintiff.
[14]Exhibit 4.
[15]T1-31.
Critically, Mr Spreadborough gave evidence that if somebody in the security providers industry asked him for a copy of the manual for the purposes of improving the standards of their organisation, he would not have had any qualms about giving it to them, subject to the caveat that he would not do so in electronic form.[16] Mr Spreadborough effectively accepted that everything contained in the manual was common knowledge, being the standard that the security provider’s industry expected.[17]
[16] T1-65.
[17]T1-65.
The second defendant’s evidence is that she obtained the manual from an acquaintance,[18] then copy typed it into her home computer[19] with a view to using it at the plaintiff’s company which, according to the second defendant, did not have a standard operating procedure manual.[20] The second defendant gave evidence that she copied the manual onto a pen drive, took it the plaintiff’s premises, was unable to transfer it onto the plaintiff’s computer, so manually typed it in at the plaintiff’s premises, but did not complete it, although she subsequently changed it to retitle it “Security Solutions Australasia” around 7 January (2009).[21] The second defendant gave evidence that she did not print out or remove the manual from the plaintiff’s office, and that the fourth defendant does not use a standard operating procedure manual.[22]
[18]T2-60.
[19]T2-61.
[20]T2-62.
[21]T2-63.
[22]T2-63.
Although the second defendant’s version as to how Exhibit 4 came into existence strains credulity, there are two fundamental difficulties with the plaintiff’s claim in respect of Exhibit 4. The first is that the plaintiff’s standard operating procedures manual (if such a document exists) was not placed in evidence before the court, so there was no opportunity to examine the relationship, if any, between Exhibit 4 and the plaintiff’s standard operating procedures manual (if it exists). It is axiomatic that without such an examination, it would be impossible to identify what, if anything, was copied from the plaintiff’s manual, if in fact it exists at all.
In any event, however the contents of Exhibit 4 are not confidential;[23] would in Mr Spreadborough’s opinion have no relevance to the fourth defendant;[24] contained no trade secrets[25]; contained fundamental errors concerning the relevant law;[26] were (in Mr Spreadborough’s opinion) unprofessional,[27] and so below standard that Mr Spreadborough would not use it;[28] and were of no value to the plaintiff.[29]
[23]T1-65.
[24]T1-66.
[25]T1-67.
[26]T1-67.
[27]T1-68.
[28]T1-69.
[29]T1-70.
On the balance of probabilities, I am not satisfied that Exhibit 4 contains “confidential information”.[30]
[30]Interfirm Comparison (Aust) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104; [1975] 5 ALR 527, 540-541.
Consequently, this part of the plaintiff’s claim fails as against the second defendant.
Confidential information (McDonalds Browns Plains) claim
The plaintiff claims that the second defendant used confidential information arising from her employment; namely that McDonalds Browns Plains was a client of the plaintiff and the second defendant utilised that information to secure McDonalds Browns Plains as a client of the fourth defendant after the second defendant left the plaintiff’s employment.
It was the second defendant who secured the business of McDonalds Browns Plains for the plaintiff.[31] There was no written contract between the plaintiff and McDonalds Browns Plains.[32] The plaintiff’s services to McDonalds Browns Plains commenced on 31 December 2008[33] and terminated in March 2009.[34]
[31]T1-37.
[32]T1-37.
[33]T1-37.
[34]T1-38.
The decision to cease using the plaintiff as the security provider at McDonalds Browns Plains was a decision made by the management at McDonalds Browns Plains[35], and the arrangement for the fourth defendant to provide security services to McDonalds Browns Plains occurred when Chris Crenicean (who at the relevant time was the first assistant manager) contacted the second defendant, after the cancellation of the arrangement with the plaintiff.[36]
[35]T3-46; T3-63.
[36]T3-46; T3-63.
In my view, there was no “confidential information” obtained by the second defendant in the course of her employment with the plaintiff which led to the fourth defendant subsequently providing security services to McDonalds Browns Plains. Rather, the second defendant was known to the management of McDonalds Browns Plains (Chris Crenicean and Steve Jamieson), which is how the plaintiff came to supply services to McDonalds Browns Plains, but the decision to terminate those services and then employ the fourth defendant to provide the services came about at the initiative of the management of McDonalds Browns Plains.
In any event, I accept that the information that the plaintiff was providing security services to McDonalds Browns Plains was not “confidential” because (as is submitted on behalf of the defendants), the very presence of the plaintiff’s guards robs that fact of any confidential quality.
In addition, the contract between the plaintiff and McDonalds Browns Plains was a week by week contract, which was not in writing, and therefore could be terminated at any time. The plaintiff could have had no expectation that the contract would necessarily continue for any particular period of time whatsoever.
It follows that this aspect of the claim must also fail as against the second defendant.
Liability of third and fourth defendants
I accept that the liability of the third and fourth defendants is entirely derivative, and given the conclusions that I have reached in respect of the plaintiff’s claims against the first and/or second defendants, the plaintiff’s claims against the third and fourth defendants must also fail.
Conclusion
In respect of the plaintiff’s claims against the first, second, third and fourth defendants, the order is that the plaintiff’s claim be dismissed.
I will hear the parties on costs.
0
0
1