Slevin and Brown v Associated Insurance Brokers of Australia (Qld) Pty Ltd

[1996] QCA 18

IN THE COURT OF APPEAL	[1996] QCA 018
SUPREME COURT OF QUEENSLAND
Brisbane

Appeal No. 250 of 1995

Before Pincus JA

Davies JA Thomas J

[Slevin & Anor v. Associated Insurance Brokers of Australia (Qld) P/L t/a AIBA Group]

BETWEEN:

DONNA MAREE SLEVIN and

KAREN ELAINE BROWN

(Defendants) Appellants

AND:

ASSOCIATED INSURANCE BROKERS OF AUSTRALIA (QUEENSLAND) PTY LTD

trading as AIBA GROUP

(Plaintiff) Respondent

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 250 of 1995

Brisbane

[Slevin & Brown v. Associated Insurance Brokers of Australia (Qld) P/L t/a AIBA Group]

BETWEEN:

DONNA MAREE SLEVIN and

KAREN ELAINE BROWN

(Defendants) Appellants

AND:

ASSOCIATED INSURANCE BROKERS OF AUSTRALIA (QUEENSLAND) PTY. LTD. TRADING AS AIBA GROUP

(Plaintiff) Respondent

Pincus J.A. Davies J.A. Thomas J.

Judgment delivered 16/02/1996
Joint reasons of Pincus and Davies JJ.A.; separate concurring reasons of Thomas J.

APPEAL ALLOWED ONLY TO THE EXTENT OF VARYING THE ORDER OF MACKENZIE J. BY ADDING THE WORDS "OR 9 NOVEMBER 1996, WHICHEVER IS THE EARLIER" AFTER THE WORDS "UNTIL THE TRIAL OF THIS ACTION OR EARLIER ORDER" IN PARA.1, AND BY ADDING A DIRECTION THAT THE MATTER BE SPEEDILY TRIED. APPELLANTS TO PAY TO RESPONDENT'S COSTS OF THE APPEAL TO BE TAXED.

CATCHWORDS:	INJUNCTION - use of client list by former employee following termination of employment - misuse of employee's duty of good faith - serious question to be tried as to confidentiality of list - balance of convenience adequacy of damages - width of restraint - order for speedy trial.
Counsel:	Mr. G. Newton for the appellants Mr. S. S. W. Couper Q.C. for the respondent
Solicitors:	Thomson Redhead Boyd for the appellants Hunt & Hunt for the respondent

Hearing Date: 8 December 1995

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 250 of 1995

Brisbane

Before Pincus J.A. Davies J.A. Thomas J.

[Slevin & Brown v. Associated Insurance Brokers of Australia (Qld) P/L t/a AIBA Group]

BETWEEN:

DONNA MAREE SLEVIN and

KAREN ELAINE BROWN

(Defendants) Appellants

AND:

ASSOCIATED INSURANCE BROKERS OF AUSTRALIA (QUEENSLAND) PTY. LTD. TRADING AS AIBA GROUP

(Plaintiff) Respondent

JOINT REASONS FOR JUDGMENT - PINCUS AND DAVIES JJ.A.

Judgment delivered the 16th day of February 1996

This is an appeal from an order made in the Supreme Court that until the trial of the action or

earlier order the defendants by themselves, their servants or agents be restrained from:

(a) soliciting or canvassing business in respect of landlords' property protection

insurance from or negotiating or entering into insurance contracts with clients of the plaintiff

who appeared on the plaintiff's client list as at 16 October 1995;

(b) using or communicating to any third party any information contained in the plaintiff's

landlords' property protection insurance client list or any information concerning the holders

of AIBA Landlord Property Protection Insurance policies, their premiums or renewal dates.

The respondent/plaintiff is an insurance broker which, at 16 October 1995 had a client list

containing the names and addresses of about 470 real estate agents, all of whom had clients who

were landlords on whose behalf they took out, through the respondent as broker, landlord property

protection insurance policies on behalf of their landlord clients. That list also, in most cases, contained the Christian and surname of the property manager of the agent. Those policies were

designed to indemnify a landlord for loss of rent in a variety of circumstances. The agents included a

number of well-known agents such as Ray White, Raine & Horne, L. J. Hooker and The

Professionals.

The appellants/defendants were employees of the respondent. The appellant Miss Slevin

was, for about four years until 16 October 1995, manager of the relevant section of the respondent's

business. On that date she gave notice of her resignation and ceased being in the respondent's

employment. The appellant Miss Brown was an employee for approximately eleven years until

August 1994. From about 16 October 1995 the appellants began to operate an insurance broking

business in competition with the respondent. The respondent alleges that in doing so, the appellants

were using the respondent's client list in breach of the appellants' duty of confidence to it. The

respondent therefore brought an application to restrain the appellants from making use of the

customer list until the matter is resolved at trial.

The chamber Judge determined that there was a serious question to be tried on each of the

questions of whether the respondent's client list was confidential and whether the appellants took the

respondent's client list for the purpose of forming the basis of their own client list. He further

determined that the balance of convenience favoured granting the injunctions.

Several factors pointed to the confidentiality of the list. The most important of these, in our

view, was that, though it might reasonably be expected that larger agents such as those referred to

above would take out insurance of that or a similar kind, the complete list of all those who took out

insurance of that kind through the respondent and the names of property managers, in each case,

who handled the agent's business would be known only to the respondent and would plainly be of

value to a prospective competitor. Moreover its compilation is likely to have involved considerable

effort, it was not generally available to employees of the respondent and each such employee was

required to enter into a confidentiality agreement. As to the indicia of confidential information see Wright v. Gasweld Pty. Ltd. (1991) 22 N.S.W.L.R. 317 at 334 and Schindler Lifts v. Debelak

(1989) 15 I.P.R. 129 at 170-1. There was therefore adequate evidence on which the learned

primary Judge could conclude, as he did, that there was a serious question as to the confidentiality of

the list.

As to the second question, the learned Judge formed the opinion that there was "substantial

evidence to support the view that the plaintiff's list of clients was taken for the purpose of forming the

basis of the defendants' lists". In forming that opinion, the chamber Judge relied on the facts that the

appellants' list bore "remarkable similarities" to that of the respondent's, including an identical spelling

mistake which he considered was not explained satisfactorily. He also had the benefit of seeing the

cross-examination of the appellants, from which he concluded that their explanation regarding the

manner of compilation of their list from memory and supplementation from publicly available

telephone directories not to be "very convincing". Counsel for the appellants gave no compelling

reason for us to form a different conclusion.

There is no doubt that it is a misuse of an employee's duty of good faith to take a client list

for intended use after termination of the employment relationship: Robb v. Green [1895] 2 Q.B.

315 at 317 and 319; Wessex Dairies Limited v. Smith [1935] 2 K.B. 80 at 85 and 89; Schindler

Lifts v. Debelak supra at 170.

As to the balance of convenience, it was submitted for the respondent that it was at risk of

losing a substantial proportion of its business which it had taken four to five years to establish if the

injunctions were not granted. It was further submitted that damages would not be an adequate

remedy for the respondent because of a real doubt that the appellants would be able to meet a

judgment. On the other hand, it was submitted for the appellants that they would be at real risk of

going out of business entirely if the injunctions were granted and that the respondent would be

protected sufficiently by an order requiring the appellants to keep records of all accounts.

In our view the risk that, unless an injunction were granted, the respondent would be left

without an effective remedy having regard to the matters referred to above, outweighed the risk that

an injunction might put the appellants out of business. However the latter risk required consideration

of whether injunctions sufficient to protect the respondent's interests could be framed in more limited

terms than those in fact granted and the appellants were invited by this Court to suggest such terms.

In view of the concession made by Mr. Couper Q.C. referred to in the reasons of Thomas

J., which concession we think to be proper, we are in favour of varying the order of Mackenzie J. in

the way proposed by Thomas J. The order will therefore be set out in the reasons of Thomas J.

REASONS FOR JUDGMENT - THOMAS J

Judgment delivered 16 February 1996

The facts have been stated in the joint reasons of Davies and Pincus JJA.

The restraint on the appellants until trial places them at a greater disadvantage than would

have been the case had they simply parted company from their former employer and set themselves

up in business without taking or using any customer list or confidential property of the respondent.

For example they would have been in a position to make contact with at least the well-known real

estate agents in Queensland by using the Yellow Pages and other points of contact. The present

injunction restrains them from dealing with any clients of the respondent who appeared on the

respondent's client list, and that substantially covers all relevant real estate agents in Queensland
from whom property protection insurance business might reasonably be expected to eventuate.

It might therefore seem at first glance that the ambit of the restraint is too wide. However,

counsel for the appellant was unable to articulate any practical way in which an alternative restraint

could be formulated so that the appellants would be prevented from obtaining an advantage from

use of the confidential information which the respondent's case suggests they have misused. We are

concerned here with the form of an interlocutory injunction which is intended to preserve a situation

affecting the parties so that the least inconvenience will occur before the matter can be authoritatively

resolved. In these circumstances it is sometimes necessary that the Court make a robust order to

restrain an apparent wrong rather than make no order at all on the ground that a perfect order

cannot be formulated.

In Roger Bullivant Ltd v. Ellis [1987] ICR 464, a similar point was raised before the Court

of Appeal concerning a restraint on dealing with persons whose names appeared on a card index.

Nourse L.J. said:

"While I recognise that it would have been possible for the first defendant to contact some, perhaps many, of the people concerned without using the card index, I am far from convinced that he would have been able to contact anywhere near all of those whom he did contact . . . Having made deliberate and unlawful use of the plaintiffs' property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom, had he so chosen, he could have contacted lawfully and those whom he could not."

(pp. 474-475)

As it is not possible to frame a more limited from of restraint, it is appropriate that the wide

restraint should remain, notwithstanding that it prevents some activities that they could have

undertaken lawfully without using the confidential information. In this respect the respondent will

obtain a rather greater level of protection from competition than it would otherwise have been

entitled to.

It is therefore important that the restraint should not be permitted to operate for a period

greater than that during which the respondent's customer list would remain a valuable tool in the

hands of the appellants. In Bullivant (above) the Court recognised this, observing that it was necessary to consider how long the advantage might reasonably be expected to have lasted, and to

limit the duration of the order to that period. In that instance the Court limited the interlocutory

injunction to a maximum period of twelve months after the termination of the former employee's

employment.

In the present case Mr Couper QC, for the respondent, resisted the imposition of a time

limit, but indicated that if the Court were prepared to order a speedy trial and limit the duration of

the injunction to a maximum of twelve months, his client would have very little complaint. That

seems to be a reasonable concession given the fact that the customer list has a limited life-span and

is constantly changing. It may well be that the present litigation will be concluded within twelve

months, but that is far from certain, and it is better that both parties have an incentive to expedite the

litigation rather than only one of them. I therefore think that a twelve-month limit should be placed

upon this interlocutory injunction. When, as here, the Court is forced to give one party a wider

protection than that party is strictly entitled to it is extremely important that the Court should do all it

can to ensure that the wide restraint does not continue any longer than is reasonable.

I would therefore allow the appeal only to the extent of varying the order of Mackenzie J by

adding the words, "or 9 November 1996, whichever is the earlier" after the words, "until the trial of

this action or earlier order" in paragraph 1, and by adding a direction that the matter be tried

speedily.

Neither of these points were raised for the consideration of the learned primary Judge and

the appeal has in substance failed. I would therefore order that the appellants pay the respondent's

costs of the appeal to be taxed.