TEC Business Equipment Pty Limited v Grant
[2008] NSWLC 4
•15/02/2008
Local Court of New South Wales
CITATION: TEC Business Equipment Pty Limited & Anor v Grant & Anor [2008] NSWLC 4 JURISDICTION: Civil PARTIES: TEC Business Equipment Pty Limited
Camnet Australia Pty Limited
Denise Grant
Print Solutions Australia Pty LimitedFILE NUMBER: 5668/06 PLACE OF HEARING: Downing Centre DATE OF DECISION: 02/15/2008 MAGISTRATE: Magsitrate B A Lulham CATCHWORDS: Employee’s duty of good faith - use of confidential information after leaving employment LEGISLATION CITED: Corporations Act 2001 CASES CITED: Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd (1967) VR 37
Balston Limited v Headline Filters Limited [1987] FSR 330
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337.
Del Casale & Ors v Artedomus (Aust) Pty Limited (2007) NSWCA 172
E Worsley & Co Ltd v Cooper [1939] 1 All ER 290
Faccenda Chicken Ltd v Fowler & Ors (1985) 1 All ER 274
Kirchner v Grub [1909] 1 Ch 413
Lamp v Evans [1893] 1 Ch 218
Ormonoid Roofing and Asphalts Ltd v Bitumenoids Ltd and Others (1930) 31 R (NSW) 347
Printers and Finishers Ltd v Holloway [1964] 3 All ER 731
Re Irish, Irish v Irish (1888) 40 Ch D 49
Riteway Express Pty Ltd v Clayton (1987) 10 NSWLR 238
Robb v Green [1895] 2 QB 315
Stenhouse Australia Ltd v Phillips [1974] AC 391
Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1960] RPC 128
United Indigo Chemical Co Ltd v Robinson (1931) 49 RPC 178
Weldon & Co Services Pty Ltd v Harbinson [2000] NSWSC 272
Wessex Dairies Ltd v Smith [1935] All ER Rep 75
Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317TEXTS CITED: REPRESENTATION: Counsel for Plaintiffs: Mr G. Grogan
Solicitors for Plaintiffs: Harmers Workplace Lawyers
Counsel for Defendants: Mr R. GambiSolicitors for Defendants: Barwick Boitano LawyersORDERS:
SHORT SUMMARY OF DISPUTE
1 Denise Grant (hereinafter referred to as ‘Ms Grant’) was employed as a sales person by the two plaintiff companies. The business was generally known as Ricoh Rosebery and I will use that name as including both plaintiff companies. Ms Grant was employed from 17 March 2003 to on or about 6 March 2006. She commenced work with the second defendant Print Solutions Australia Pty Limited (hereinafter referred to as ‘PSA’) on 13 March 2006.
2 Both Ricoh Rosebery and PSA were businesses involved in the sale, leasing and servicing of business equipment such as photocopiers and fax machines. Whilst at Ricoh Rosebery on or about 23 February 2006 Ms Grant received an order by email from Mr Daniel Apps on behalf of Bush’s Petfoods Pty Ltd (hereinafter referred to as ‘Bush’s Petfoods’) for the purchase of the following equipment:
- 1 x Ricoh 4410L fax machine at $4,105.00 plus GST
1 x Ricoh 1515F digital copy machine at $2,930.00 plus GST
The digital copier was delivered and paid for, but the fax machine was not delivered. On 27 March 2006 after joining PSA, Ms Grant had several conversations with Mr Apps the result being that Mr Apps on behalf of Bush’s Petfoods, placed an order with PSA for the purchase of the same fax machine at the same price.
3 On or about 20 February 2006 Ms Grant presented a quotation to Mr Mark Bargallie, trading as Starr Partners, for the rental of a Ricoh colour copier. Mr Bargallie indicated he would need time to consider the quotation. On or about 4 April 2006 when she was employed by PSA, Ms Grant received a telephone call from Mr Bargallie. Subsequently, on or about the same date Mr Bargallie entered into a leasing agreement for the lease of the same or similar photocopier at the same price with PSA.
4 Ricoh Rosebery sued Ms Grant alleging the misuse of confidential information and breaches by her of a duty of good faith and fidelity to that company. Ricoh Rosebery sought damages of $20,724.01 in relation to the loss of the Bush’s Petfoods contract and $31,543.40 in relation to the loss of the Starr Partners contract totalling $52,267.41. Ricoh Rosebery joined PSA as the second defendant alleging it was liable for its employees’ actions and alleging it had also used confidential information.
5 Ms Grant denied that she had used any confidential information obtained during her employment with Ricoh Rosebery and denied any breach of any obligation of good faith and fidelity to Ricoh Rosebery.
THE CONDUCT OF THE PROCEEDINGS
6 The proceedings were conducted with much intensity and vigour. Many claims and counter claims were made particularly as to the very poor business relationship between Ricoh Rosebery and PSA. They were obviously fierce rivals with no love lost at all. Ricoh Rosebery through its witnesses Mr Petrovich and Mr Huntley, and particularly Mr Gilbert, made many accusations against PSA and its executives, including Bill Pappas, Rodney Hazelton and David Ackers. It was generally alleged that PSA deliberately poached employees of Ricoh Rosebery and specifically targeted existing clients of Ricoh Rosebery. I intend to deal with that evidence, but I believe that I will be able to do so shortly, as I formed the view that there was either no, or insufficient evidence, to establish that any of those matters in any way affected Ms Grant’s dealings with Starr Partners and with Bush’s Petfoods after she joined PSA.
THE ISSUES
7 The determination of the matter will require a consideration of the legal principles relating to an employee’s contractual duty of good faith and fidelity during employment and the restriction on the use of confidential information obtained by an employee during employment in the employee’s occupation after leaving the employment. I formed the view that the determination of the matter would require consideration of the following factual issues:
- (i) Did Ms Grant whilst employed by Ricoh Rosebery breach the implied terms of her employment to act in good faith and with fidelity to her employer?
(ii) After leaving Ricoh Rosebery and joining PSA, did Ms Grant misuse any information confidential to Ricoh Rosebery or any other valuable commercial information or disclose any such information to PSA so as to cause PSA to sell or lease equipment to Starr Partners or Bush’s Petfoods?
THE PLAINTIFFS STATEMENT OF CLAIM
8 Ricoh Rosebery brought this action against Ms Grant relying on implied terms that she owed a duty of good faith and fidelity to it whilst employed and a duty not to misuse any confidential information or valuable commercial information during her employment or upon ceasing such employment. Mr Grogan for the plaintiffs conceded that there was no written formal contract between Ms Grant and Ricoh Rosebery of any relevance (TD1 4.56). There were no restrictive covenants that affected Ms Grant’s conduct after cessation of her employment with Ricoh Rosebery.
9 The plaintiffs alleged in paragraph 10 of the Statement of Claim that Ms Grant was given access to information:
- 1. Pertaining to the plaintiffs’ contracts and financial arrangements with its clients , and
2. the plaintiffs’ pricing and product information.
The plaintiffs alleged that such information constituted confidential information.
10 The Statement of Claim alleged a duty not to misuse other valuable commercial information. At paragraph 13 of the plaintiffs Outline Submissions the ‘other valuable commercial information’ was particularised as:
- 1. In relation to Starr Partners it was Starr Partners ‘dissatisfaction with Axis Communications and that if Starr Partners could get out of that arrangement they would sign up with a new copier and facsimile provider; and
2. In relation to Bush’s Petfoods it was ‘the status of the deal at that time as the copier machine had not been delivered (so the contract had not yet been completed) as Ricoh Rosebery were waiting on a Jpeg)
11 In paragraph 21 of the Statement of Claim Ricoh Rosebery alleged that Ms Grant had acted wrongly in breach of the implied terms of the contract in that she breached her duty of good faith and fidelity in that whilst she was still employed by Ricoh Rosebery she used confidential information for the benefit of PSA and was not faithful to Ricoh Rosebery as her employer and did not put her employer’s interests above all others.
12 On the first day of the hearing Mr Gambi for the defendants required the plaintiffs to specify the actions relied upon by the plaintiffs as being in breach of her duty of good faith and fidelity. Mr Grogan particularised the following conduct (TD1 5.28):
- 1. Ms Grant’s failure to keep persons such as the plaintiffs’ sales manager (Huntley) informed of any problems associated with in particular Bush’s Petfoods contract.
2. Ms Grant’s failure to inform Huntley of an inability to immediately fulfil the agreement with Bush’s Petfoods, and
3. Ms Grant therefore not being diligent with her work in relation to the fulfilment of the agreement between Ricoh Rosebery and Bush’s Petfoods.
13 In paragraph 12 of the Statement of Claim the plaintiffs pleaded that in or around July 2005 Ms Grant as an employee of Ricoh Rosebery had concluded an arrangement whereby Ricoh Rosebery contracted to supply to Bush’s Petfoods goods and services at certain prices with an on-going maintenance plan. The evidence indicated that there was no such arrangement or agreement. There was evidence of Ms Grant obtaining from Bush’s Petfoods on or about 23 February 2006 an order for the purchase of a fax machine and digital copier.
14 In paragraph 13 of the Statement of Claim Ricoh Rosebery at first pleaded an agreement on or about 20 July 2005 by which Ms Grant negotiated and concluded an agreement for Ricoh Rosebery to supply Starr Partners with certain goods. There was such an agreement, but the evidence indicated that such agreement was cancelled in or about July 2005. The plaintiffs amended the Statement of Claim on the first day of the hearing to delete ‘on or around February 2005’ and substitute ‘on or around February 2006’. The evidence subsequently established that on or around 20 February 2006 Ms Grant and Mr Huntley provided Starr Partners with a quotation for the leasing of a colour copier.
15 The plaintiffs also sought orders against Ms Grant and PSA pursuant to ss.182 and 183 of the Corporations Act 2001 Commonwealth. I do not propose to set out those provisions at this stage, but to do so if it is necessary at a later stage in the judgment.
WRITTEN SUBMISSIONS
16 I received the following written submissions:
For the plaintiffs :
Plaintiffs’ Outline of Legal Submissions - Mr David Stewart, Solicitor, 19 July 2007
Plaintiffs’ Submissions – Mr Stewart, Solicitor, 16 November 2007
For the defendant:
Defendants’ Outline Submissions – Mr R. Gambi, Counsel, 24 July 2007
Defendants’ Written Submissions – Mr R. Gambi, Counsel, 22 November 2007
Defendants’ Written Submissions in Reply – Mr R. Gambi, Counsel, 30 November 2007
17 The submissions were most detailed and very helpful. I was not able, in preparing this judgment, to go through such submissions seriatim. I shall refer to the important submissions, but I have taken all of them into account.
18 I now propose to discuss the legal principles applicable to this case. Both parties’ submissions set out excerpts from numerous cases. I propose to discuss more fully three cases and to set out some of the submissions and excerpts which I found particularly helpful.
THE LEGAL POSITION
19 I propose to consider firstly the decision in Faccenda ChickenLtd v Fowler & Ors (1985) 1 All ER 274. I propose to set out the facts and the ratio from the headnote:
- HEADNOTE
FACTS
The plaintiff company was engaged in the business of marketing fresh chickens. In 1973 it employed F as its sales manager and at his suggestion adopted a method of seeling fresh chickens from refrigerated vans which travelled through particular routes within a defined area. Each van salesman acquired sales information regarding the customers’ names and addresses, the general limits of the routes, the quantity and quality of goods sold and the prices charged. In November 1980 F left the plaintiff’s employment and subsequently set up his own business of selling fresh chickens from refrigerated vans. He conducted his business in the same area s the plaintiff, his vans operated on the same routes as the plaintiff and served the same type of customers. Five of the plaintiff’s van salesmen and three other employees left the plaintiff’s employment and joined F’s business. None of the former employees was subject to an express agreement restricting his or her services after leaving the plaintiff’s employment. The plaintiff brought an action against F and the other former employees claiming (i) damages for breach of their contracts of employment by using the plaintiff’s sales information to the disadvantage or detriment of the plaintiff and (ii) damages for conspiracy to injure the plaintiff’s goodwill and connection by abuse of confidential information.
Held – The action would be dismissed for the following reasons--
(1) Confidential information of an employer’s business acquired by an employee in the course of his service, which necessarily became part of the employee’s skill and knowledge applied in the course of the employer’s business and which was not subject to any relevant express agreement, could be used by the employee after the lawful termination of his employment for his own benefit in competition with his former employer wither where he traded as a principal making personal use of such information or where, having entered new employment, he disclosed such information to further the business of his new employer. It followed that in the absence of an express agreement restricting the use of sales information, the former employees were not in breach of their contracts by using such information to further F’s business (Wessex Dairies Ltd v Smith [1935] All ER Rep 75, Printers and Finishers Ltd v Holloway [1964] 3 All ER 731 applied; Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1960] RPC 128 considered).
20 In his judgment His Honour Goulding J stated that the information acquired by an employee in the course of his service, which is not the subject of any relevant express agreement, may fall as regards confidence into any one of three classes.
21 His Honour set out the second class as follows:
- Second, there is information which the servant must treat as confidential, either because he is expressly told it is confidential, or because from its character it obviously is so, but which once learned necessarily remains in the servant’s head and becomes part of his own skill and knowledge applied in the course of his master’s business. So long as the employment continues, he cannot otherwise use or disclose such information without infidelity and therefore breach of contract. But when he is no longer in the same service, the law allows him to use his full skill and knowledge for his own benefit in competition with his former master; and (in spite of words used obiter by Bennett J in a passage that I am about to cite) there seems to be no established distinction between the use of such information where its possessor trades as a principal, and where he enters the employment of a new master, even though the latter case involves disclosure and not mere personal use of the information. If an employer wants to protect information of this kind, he can do so by an express stipulation restraining the servant from competing with him (within reasonable limits of time and space) after the termination of his employment. An example of such information is the manufacturing process in question in United Indigo Chemical Co Ltd v Robinson (1931) 49 RPC 178 at 187, where Bennett J said:
- ‘ In those circumstances it seems to me to be almost impossible, in justice to the servant, to restrain him when he leaves his master’s employment from using--not disclosing—information which he could not help acquiring. It seems to me that to try to restrain him by injunction from using knowledge, which in that way has become his own, is to try to do something which the Court really has no power to do, or rather it has no power to enforce the injunction if one could be granted.’
- ‘First, after the employment terminates, the servant may, in the absence of special stipulation, canvass the customers of the late employer, and further he may send a circular to every customer. On the other hand, it has been held that whilst the servant is in the employment of the master he is not justified in making a list of the master’s customers, and he can be restrained, as he was in Robb v Green , from making such a list, or if he has made one, he will be ordered to give it up. But it is to be noted that in Robb v Green ([2895] 2 QB 315, [1895-9] All ER Rep 1053) the defendant was not restrained from sending out circulars to customers whose names he could remember. Another thing to be borne in mind is that although the servant is not entitled to make sue of information which he has obtained in confidence in his master’s service he is entitled to make sue of the knowledge and skill which he acquired while in that service, including knowledge and skill directly obtained from the master in teaching him his business. It follows, in my opinion, that the servant may, while in the employment of the master, be as agreeable, attentive and skilful as it is in his power to be to others with the ultimate view of obtaining the benefit of the customers’ friendly feelings when he calls upon them if and when he sets up business for himself. That is, of course, where there is no valid restrictive clause preventing him doing so.’
- ‘The defendants being free to complete with Faccenda Chicken Ltd and to solicit its customers. It is impossible in my judgment to say they must not use their own knowledge of the whereabouts and requirements of those customers, the prices they have been paying, and the routes by which they are conveniently visited.’
22 Interestingly, His Honour went on to cast doubt on the so called springboard doctrine stating that:
- ‘The sphere in which it can be applied as between master and servant is considerably limited by the servant’s freedom after lawful termination of his employment to complete with his former employer and to solicit the latest customer unless of course he has been restrained by express contract from doing so.’
23 In Faccenda Chicken the departing sales manager was held entitled to make use of confidential customers’ lists which he retained in his head, and which were judged as falling within the second classification.
24 An employer may restrict the employee’s obligations regarding the use of confidential information under a restrictive covenant and it is a common practice for this to be done, particularly with respect to post employment obligations. Ms Grant was not subject to any such restrictive covenants.
WRIGHT V GASWELD PTY LTD (1991) 22 NSWLR 317
25 In this matter there was a restraint of trade agreement between the plaintiff Mr Wright, the former employee, and his employer in the following terms:
- ‘The employer shall not during the continuance of this agreement or after its determination (however caused) disclose, use or attempt to disclose or use in any manner any information obtained during the course of employment as to the identities or whereabouts of any supplier utilised by the company whether in Australia or overseas or as to the identities of any customers of the firm.’
Gasweld sold tools and other items of hardware mostly imported from Taiwan. There were numerous Taiwanese suppliers of such goods, but only three or four of them were reliable and Gasweld regarded that information as valuable. The information had been gained by trial and error over many years. His Honour Hodgson J at first instance found the information was confidential and was liable to be protected by the covenant.
26 On appeal Their Honours Kirby P and Samuels JA agreed with His Honour Judge Hodgson J. His Honour Gleeson CJ would have upheld the appeal on the basis that the identity Gasweld’s suppliers did not amount to confidential information or trade secrets. Although in the minority on the factual finding, His Honour Gleeson CJ made the following helpful comments in relation to the law:
- ‘As I have indicated I cannot accept, as a fact, the manner in which His Honour categorised the information in question. This is of critical importance, because a case such as the present involves a tension between two competing considerations of public policy. An employer is not entitled to protect himself against mere competition by a former employee, and the corollary of that is that the employee is entitled to use skill, experience and know-how acquired in the service of the former employer in legitimate competition. It is in the public interest that this should be so: Stenhouse Australia Ltd v Phillips [1974] AC 391 at 400. At the same time the law will protect trade secrets and confidential information, and will intervene to prevent their misuse. The decision of the Court of Appeal in England in Faccenda Chicken Ltd v Fowler [1987] Ch 117 illustrates the importance, when there is conflict between these two principles, of a close examination and accurate categorisation of the nature of the alleged trade secret or confidential information. It is not necessary to adopt in its apparent rigidity the three-fold classification of information accepted in that case, or to accept the passage (at 137) dealing with the capacity of an employer to take a valid covenant against use of “second category” information, in order to see the case as a valuable guide to the solution of the present problem. The very basis upon which the respondent’s case was supported in evidence and argument demonstrates that what is here sought to be restrained is the obtaining of what is seen, rightly or wrongly, as an unfair competitive step rather than the misuse of information that can properly be described in “secret” or “highly confidential”. This conclusion is reinforced by the conceptual difficulties inherent in the proposition that what is involved is “use” of the confidential information.
27 His Honour Gleeson CJ emphasised the importance of a close examination and accurate characterisation of the nature of the alleged trade secret or confidential information. That statement had particular relevance to the factual situation in this matter.
DEL CASALE & ORS v ARTEDOMUS (AUST) PTY LIMITED (2007) NSWCA 172
28 I considered this case carefully. I propose to set out the headnote as to the facts and the findings and to set out two paragraphs from the judgment of His Honour Campbell JA on the implied obligations of good faith.
29 The headnote is to the following effect:
Relevantly, the respondent sold in Australia a particularly popular type of modica stone, which it obtained from the Ragusa region in Italy and marketed under the name “Isernia”. The respondent had been the sole importer of modica stone into Australia. The source of Isernia and the fact that it was modica stone could not be easily ascertained, and the respondent made efforts to conceal this information by giving it only to a few people in the organisation, including the fist two appellants.
The first two appellants terminated their employment with the respondent company, and subsequently the first appellant in an agreement for the sale of shares in the respondent (the Agreement) contracted not to compete with it for three years and to keep confidential any “commercially sensitive information” he had learnt whilst in the employment of the respondent.
Earlier, the first appellant had set up Stone Arc, the third appellant. Both the first and second appellants then used their knowledge that Isernia was modica stone to find a supplier of modica stone to be imported and sold by Stone Arc.
The respondent claimed against the appellants, amongst other things, on the grounds of breach of confidence, breach of the Agreement, and violation of s.183 of the Corporations Act 2001 (Cth) (the Act).
The primary judge found the claim of breach of confidence made out, and made orders permanently restraining the appellants from using the confidential information, and providing for an account of profits. The appellants sought leave to appeal.
HELD (granting leave to appeal and allowing the appeal in part)
(per Hodgson JA with McColl JA agreeing)
(1) During the course of employment, confidential information is protected by an implied term of good faith in the employment contract: Robb v Green [1895] 2 QB 315.
(2) Once employment ceases, in the absence of an express contract dealing with the matter, the issue of confidentiality is generally best dealt with under the general equitable principles and not through implied terms in the employment contract.
(3) There are two classes of confidential information, one of which cannot be used by employees, and the other of which can be used, unless there is a valid contractual restraint.
- Faccenda Chicken Limited v Fowler [1987] Ch. 117;
Wright v Gasweld (1991) 22 NSWLR 317.
- E. Worsley & Co. Limited v Cooper [1939] 1 AllER 290;
Balston Limited v Headline Filters Limited [1987] FSR 330;
Wright v Gasweld (1991) 22 NSWLR 317.
(6) On the contract claim, there was no disclosure by the first appellant of the commercially sensitive information, but the conduct of the first appellant amounted to competition with the respondent, and thus he breached the Agreement.
(7) Improper use under s.183 of the Act encompasses breach of an equitable obligation. As there was no such breach here, there was no improper use of the information.
(8) The permanent injunctions were in any event excessive.
(per Campbell JA with McColl JA agreeing)
(9) An analysis under implied contractual duty of good faith would end in a test of its necessity for the effective operation of the contract of employment.
- Lamp v Evans [1893] 1 Ch 218.
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266.
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337.
Byrne v Australian Airlines Ltd (1995) 185 CLR 410.
30 The paragraphs from the judgment of His Honour Campbell JA upon which I seek to rely are as follows:
- 76. There is an implied term in any contract of employment whereby the employee
- “… shall honestly and faithfully serve his master; that he shall not abuse his confidence in matters pertaining to his service, and that he shall, by all reasonable means in his power, protect his master’s interests in respect to matters confided to him in the course of his service”: Tobb v Green [1895] 2 QB 1 at 10-11.
31 In this matter Ricoh Rosebery alleged in paragraphs 17 and 19 of the Statement of Claim that an employee, contractor or agent of PSA approached, in paragraph 17, Bush’s Petfoods and, in paragraph 19, Starr Partners. The employee could only have been Ms Grant. The allegation was not supported by the evidence which I was satisfied established that both Mr Bargallie and Mr Apps themselves made the initial contact with Ms Grant after she was dismissed from Ricoh Rosebery. There was no evidence that Ms Grant had canvassed the customers of Ricoh Rosebery after her employment was terminated.
32 I propose to apply those principles to the facts that I found after considering the evidence in the matter.
DISCUSSION OF EVIDENCE
33 I propose to review the evidence under the following general headings:
- 1. Ms Grant’s employment and dismissal by Ricoh Rosebery
2. The feud between Ricoh Rosebery and PSA
3. The Tickler Cards and Lead Sheets
- 5. Dealings with Mr Apps on behalf of Bush’s Petfoods
6. Evidence re delivery of equipment
34 Ms Grant was employed by Mr Petrovich on behalf of Ricoh Rosebery on or about 17 March 2003. She was employed as a sales person. The contract of employment was made orally. Ricoh Rosebery sold, serviced and leased Ricoh photocopiers, facsimile machines and laser printers. They were one of a number of Ricoh dealers in Sydney. I was satisfied that Ms Grant was aware of the competitive nature of that industry between the various Ricoh dealers in Sydney and with other companies such as Cannon and Panasonic.
35 Mr Petrovich said he informed Ms Grant of the details of her remuneration and commission structure and confirmed her budget and targets and allocated a geographical region in which she was to sell equipment (Aff. Exh.1 para 8).
36 Although not much turns on it, there was a dispute as to the basis on which Ms Grant was employed. Mr Petrovich insisted that she was employed on a weekly wage. Ms Grant contended that she was paid on commission earned, and whilst she received a basic amount each week, to receive that amount her commissions over a period had to exceed the weekly amount. Ms Grant’s evidence was corroborated by Mr Huntley and by Mr Gilbert. I preferred Ms Grant’s evidence to that of Mr Petrovich.
37 Mr Petrovich terminated Ms Grant’s employment on or about 6 March 2006. He complained she failed to attend work on time, arriving between 10am to 11.30am instead of 8.30am. He also complained that she disappeared for hours at a time and did not account for her whereabouts (Aff. Exh.1 paras 21-22). Mr Petrovich alleged she failed to attend regular meetings and did not provide information as to her daily activities. He stated that upon termination of her employment Ms Grant stormed out of his office slamming the door behind her and left without saying anything. He said that he had not had a direct conversation with Ms Grant since 6 March 2006.
38 Ms Grant denied the matters relied upon by Mr Petrovich. It was apparent during the evidence of both Mr Petrovich and Ms Grant that there were significant personal and family problems operating at the time. Mr Petrovich lived with Ms Grant’s sister. Both Ms Grant’s first husband Rod Haselton and second husband Greg Grant were employed at Ricoh Rosebery. Ms Grant’s brother Dion Huntley was the sales manager at Ricoh Rosebery. He left in 2004 but returned in July 2005 and continues to be employed there. He was his sister’s supervisor and gave evidence for Ricoh Rosebery in the proceedings.
39 It was not necessary for me to make findings as to why Ms Grant’s employment was terminated. Her services were terminated and clearly she left on unhappy terms and with no love lost between her and Mr Petrovich. It was not disputed that her departure was sudden and it was not suggested that she had any prior intention to leave. Ms Grant commenced employment with PSA on or about 13 March 2006.
THE FEUD BETWEEN RICOH ROSEBERY AND PSA
40 Ricoh Rosebery sought to lead evidence to establish that PSA was deliberately recruiting staff from Ricoh Rosebery and was deliberately targeting existing customers of Ricoh Rosebery. The plaintiff relied largely on the evidence of Phillip Gilbert whose affidavit sworn 26 April 2007 was tendered as Exh.13. Mr Gilbert was employed by Ricoh Rosebery from 1994 to 1997. He then worked with various photocopying companies, but spent most of his time until 2006 either with PSA or its predecessors. He was employed there when Ms Grant joined the firm in March 2006 but left shortly thereafter and after being employed for Xerox for four to six months, returned to Ricoh Rosebery as its senior sales executive. He was employed at Ricoh Rosebery at the time of swearing his affidavit and giving evidence on 25 July 2007.
41 I found Mr Gilbert’s evidence to be of very little relevance or importance. There was no claim before the court based on PSA’s general business activities. The only damages claimed arose out of Starr Partners and Bush’s Petfoods matters. It was submitted on behalf of the plaintiff that Mr Gilbert’s evidence was relevant because of the allegation that employees of Ricoh Rosebery who had left and joined PSA had taken with them cards from the tickler-box system and it was submitted that if such evidence was proved, it may lead to an inference that Ms Grant had used tickler-box cards or other confidential information to enable her to complete the sales to Starr Partners and Bush’s Petfoods. Mr Grogan for the plaintiff submitted that the evidence if accepted would lead to an inference that the second defendant countenanced and encouraged the use of Ricoh Rosebery’s tickler cards and other information, and it was for that reason that the second defendant had been joined.
42 It was significant that in his affidavit (Exh.13) consisting of 107 pages, Mr Gilbert made no reference to tickler cards or lead sheets, but when called to give evidence there was substantial evidence in relation to those matters because Mr Gilbert had found some lead sheets and tickler cards belonging to Ricoh Rosebery in a box which he had taken from PSA when he left their employment. I will deal with the tickler cards and lead sheets separately.
43 I was satisfied that sales persons from PSA generally may have used aggressive tactics. I was not satisfied that that was unusual in the photocopy and facsimile sales and service industry. There was absolutely no evidence that such aggressive tactics played any part or had any effect upon the actions of Ms Grant in relation to the Starr Partners and Bush’s Petfoods matters. Ms Grant stated that following her dismissal she approached PSA. The evidence was not challenged. There was no poaching. It was therefore in my view, largely irrelevant and of very little importance.
THE TICKLER CARDS AND LEAD SHEETS
44 It transpired from Mr Gilbert’s evidence and cross-examination that subsequent to the preparation of his affidavit sworn 26 April 2006, he came upon a box in his shed at home which contained some tickler cards and lead sheets which previously belonged to Ricoh Rosebery. He said he had collected them at PSA whilst employed there and which he had taken them when he left. I was satisfied that it was probably that “find” which led to the plaintiff introducing the considerable amount of evidence in relation to the tickler box of cards and lead sheets.
45 Mr Petrovich swore a further affidavit dated 23 July (Exh.14). He was recalled to give evidence. He said that a tickler box card for each customer or client would contain the client name, the address, the telephone number, the contract and history of the client relationship. This would include conversations and meetings with the client and what was discussed. It would also include copy and consumable volume, financial records such as monthly payments on their existing equipment, pricing and brand information and contact details. He said the tickler box cards were filed in alphabetical order and placed in the tickler box. Each sales person had access to the tickler box with clients that he or she was required to deal with as part of their duties. The system had been replaced in February 2007 with a computer system incorporating a piece of software called ‘Act’. Mr Petrovich said he had never sighted tickler box cards for Bush’s Petfoods and Starr Partners. He believed that there would have been cards. He said he had searched for the cards but was unable to locate them. He said he could not find any cards recording any prospects that Ms Grant had at Ricoh Rosebery.
46 Ms Grant gave evidence:
- (i) She was unaware whether a tickler box system was used at Ricoh Rosebery. She did not use the system herself.
(ii) She did not observe tickler box cards lying around at PSA.
(iii) She was never provided or shown any tickler box cards when she commenced work with PSA (Aff. Exh.23 par 41).
47 Ms Grant was cross-examined regarding those matters (TD3 72.15). She said she was aware of the tickler box system at Ricoh Rosebery but had not used it herself. She said (TD3 76.25) that she did not see any tickler box cards at PSA.
48 I was satisfied that Ms Grant did not take any tickler box cards with her when she left. I was satisfied that they played no part in her concluding contracts on behalf of PSA with Starr Partners and Bush’s Petfoods. Moreover, there was absolutely no evidence which would indicate that Ms Grant would have required any information said to be contained on those cards to enable her to negotiate the agreements with Starr Partners and Bush’s Petfoods after she was dismissed from Ricoh Rosebery.
DEALINGS WITH MR BARGALLIE OF STARR PARTNERS
49 The documents attached to Exh.4 and 5 indicated that Ms Grant obtained an order form from Mr Bargallie at Starr Partners for the lease of a Ricoh colour copier on 20 July 2005. The order was cancelled. The documents showed that Ricoh Rosebery was providing service to Starr Partners on its existing copying machine after that date. It would seem that Mr Huntley and Ms Grant attended upon Mr Bargallie on 20 February 2006 and put another proposal to him for the leasing of a colour copier. Mr Huntley stated that he constructed the quotation and stated that Mr Bargallie did not accept the offer made in the meeting (Aff Exh.8, paras 36 and 38).
50 Ms Grant commenced with PSA on 13 March 2006. Exh.25 being a Rental Plan between Mark Bargallie trading as Starr Partners and PSA was signed on 4 April 2006. Ms Grant said (TD4 11.4) the order form and the Rental Plan were signed on either the same day or the next day that Mr Bargallie contacted her. I was satisfied that Mr Bargallie contacted Ms Grant on or about 4 April 2006.
51 Mr Bargallie swore an affidavit dated 13 December 2006 as follows:
- 3. I previously had dealings with the First Defendant while employed by Ricoh Rosebery.
4. In all my dealings with the First Defendant I found her to be helpful, honest and trustworthy.
5. While the First Defendant was working for Ricoh Rosebery, I met her brother Dion Huntley on one occasion. I subsequently discovered Ricoh Rosebery is a family business.
6. During the aforementioned dealings with the First Defendant, no decision was made to purchase any photocopying machine.
7. I contacted the First Defendant a few months later and she said words to the following affect:-
- D-G: “I’m not working for Ricoh Rosebery anymore but for a new company that also supplies photocopies”.
9. Subsequently, I arranged to have a meeting with the First defendant and agreed to upgrade the company’s four-year-old copier through her current employer, the Second defendant.
10. I state that I simply maintained the business relationship with the First Defendant that was already established, as opposed to dealing with the company that currently employed her. I would deal with the First Defendant regardless of who employer her.
52 Mr Bargallie gave evidence. In evidence in chief he said that Ms Grant told him (TD4 24.30):
- “A company called Camnet was going to finance that proposal, but when Denise came and said she was working for a different branch of Ricoh, she said the difference – the dollars would be the same and the difference would be with a company called Print Solutions, not Camnet.”
53 He was cross-examined in relation to the matter. The following evidence was given (T.D.4. 28.20):
- Mr Grogan:
Q. While you’re on that – do I understand Ms Grant informed you that it was another branch of Ricoh?
A. That’s correct.
Q. No another company that she was dealing with – dealing for?
A. No. That she had left the company that she’d previously worked for and was now working for a new company. I asked who the company was. She said another branch of Ricoh. In other words it was still buying and contract with Ricoh was my understanding. To me as long as the dollars were the same, it didn’t make any difference to me.
54 Mr Bargallie was asked (TD4 31.1):
- Mr Grogan:
Q. Was the fact that the deal was done with Ricoh an important factor to you?
A. Probably more that I done the deal with Denise I suppose.
His Honour:
Q. What did you say?
A. Probably more so that I done the deal with Denise. It was a matter of – I mean I’d be a sales person for twenty years and I believe my reputation precedes me – and I’ve had dealings with Denise and was happy with her service so I was just happy to deal with Denise.
55 Mr Bargallie confirmed that when Ms Grant called she was not accompanied by Mr Akers.
56 Mr Bargallie confirmed that Ms Grant did not suggest that he go back to Ricoh Rosebery or contact Mr Dion Huntley (TD4 29.57).
57 Ms Grant said (TD.3. 65.43) in cross-examination:
- Mr Grogan:
Q. Did you tell him where you were working?
A. Yes absolutely.
Q. What did you say?
A. I said greetings first. I let him know that I’d moved on.
Q. What did you say?
A. I said “I’ve left the other organisation”.
58 I now propose to discuss the evidence relating to the sale to Bush’s Petfoods.
DEALINGS WITH MR APPS ON BEHALF OF BUSH’S PETFOODS
59 Ms Grant said that she contacted Mr Apps on or about 22 February 2006 whilst at Ricoh Rosebery. She said she gave quotations over the telephone and as a result she received an email from Mr Apps on behalf of Bush’s Petfoods seeking to purchase a Ricoh fax machine for $4,105.00 plus GST and a Ricoh digital photocopier for $2,930.00 plus GST.
60 Ms Grant said she did not have a signed order form from Mr Apps, but she completed an order form (Annexure B Aff Allison King Exh.7). The order form was signed by Ms Grant but not by Mr Apps. The order form indicated a Fax Service Plan for Do and Charge and the Copier Service Plan at 1.9 cents per copy, plus GST. Ms Grant said Mr Apps had not agreed to the Service Plan in relation to the copier, and that it would be necessary for the Service Plan to be signed and negotiated on installation. She gave evidence of discussing those matters with Mr Petrovich. The digital photocopier was delivered within a couple of days and was paid for (TD4, 39.15).
61 Ms Grant gave the following evidence in her affidavit (Exh.20 paras 19 to 22):
- ‘Bush’s Petfoods Pty Ltd
19. On or around 27 March 2006, I received a telephone call from Daniel Apps of Bush’s Petfoods Pty Ltd and the following conversation transpired with words to the effect of:-
- D-A: “Hi Denise, it’s Daniel Apps from Bush’s Petfoods Pty Ltd”
D-G: “Oh hello, what can I do for you?”
D-A: “Well, I was wondering if you could tell me why the order I placed on 22 February hasn’t been delivered? It’s been over a month now!”
D-G: “Well Daniel, I’ve actually left Ricoh Rosebery but I was under the impression the delivery had already been made. I’ll chase it up for you and get back to you soon”.
- D-G: “Hi Glenda, it’s Denise Grant here. I just received a call from Daniel Apps at Bush’s Petfoods about the order he made on 22 February. Could you check the system to see if this has been delivered as yet?”
G: No, the machines haven’t been delivered yet because the directions from Peter Petrovich were that no machines are to leave the warehouse unless fully configured. The only component missing is the colour Jpeg scan card for the 4410 fax but we have to wait for that before we can deliver.”
- D-G: “Hi Daniel, it’s Denise. I just spoke with Glenda at the Ricoh Rosebery officer, she’s the sales administrator there. Apparently one of the components of the order is missing and it’s company policy not to release the order until it is complete.”
D-A: “Well they should have called me to le me know why it was delayed What part is missing?”
D-G: The colour Jpeg scan card for the 4410L fax.”
D-A: “But the fax can function without the scan card. I really need the AF1515 copier urgently.”
D-G: “I understand but Glenda can’t release only one machine when there are two machines on the purchase order.”
D-A: “That’s ridiculous. This is the first time I’ve dealt with Ricoh Rosebery and maybe it should be the last.”
D-A: “Can I get the same products from you? If so I want to cancel the order and buy from you.”
D-G: “I don’t work for Ricoh Rosebery anymore, I work for Print Solutions. The company I now work for is also a Ricoh supplier, we could possibly help.”
D-A: “I don’t really mind whatsoever, as long as I get the equipment. Whether it comes with or without a colour scan card is not a priority at the moment.”
D-G: “Okay, well I’ll check with the office to see if we have any in stock.”
62 Mr Apps was called by the defendants to give evidence. He did not provide a statement. He worked as an independent contractor to Bush’s Petfoods advising in relation to their IT structure and development. He said he received a call from Denise Grant on the very day that he was considering purchasing a fax machine and digital copying machine for Bush’s Petfoods. He had obtained quotes from other companies and he said that Ms Grant gave quotes over the phone which were comparable and he agreed to purchase the equipment through Ms Grant. He forwarded a fax to Ms Grant in the following form on 22 February 2006 (Exh.2):
- Denise, I have left a voice message for you at your desk. Could Bush’s Petfoods please purchase the following units at the agreed pricing:
1 x Ricoh 4410L at $4,105.00 plus GST. Pricing includes scan to PDF function
1 x Ricoh 1515F at $2,930.00 plus GST. Pricing includes facsimile function. Please delivery to Bush’s Petfoods Pty Ltd, 12 Williamson Road, Ingleburn.
63 Mr Apps said he did not sign an order form. He said he did not discuss the service maintenance for those two items. He said the fax machine was delivered, but that the digital copy machine was not delivered. He said he was contacted by the manager of his principal at Bush’s who wanted to know where the copier machine was. Mr Apps said T.D4 35.10):
- “He (the man from Bush’s) started kicking and screaming”.
He said he contacted Ms Grant. He said he was firm that he wanted something done. He said Ms Grant said that she would phone him back. She did so and told him that the copier could not be delivered because the Jpeg was not available and the policy of the company was that the machine had to be delivered complete. He said he told Ms Grant (TD4 36.5):
“Find me something else” or “find me something I need it now.”
He said his mood was aggravated and that he was embarrassed because he had to report back to Bush’s Petfoods. He said that Ms Grant phoned him back and told him that she could arrange to have the same machine delivered the next day and he told her to go for it. The following evidence was given in chief:
Mr Gambi:
Q. In relation to the equipment that you got from Denise on this last occasion that we’re talking about, did you know which company she was representing when she sold you that equipment?
A. Not one hundred per cent. On the third conversation when she said “I can get it from an alternative supplier, or from a different location”Objection. Form. Question Rephrased
His Honour:
Q. What did you understand the position to be then?
A. What, did I understand her position – Denise’s position, yes. Well, I’m not stupid. I’d added up that she’s moved on or she had worked with a different division or they had been brought out, but I didn’t actually have a hundred per cent clarification on whether she’s moved companies or whether it had just been a change of --
Mr Gambi
- Q. The fact that she may have moved to another company, was that of any concern to you in placing the order?
A. No.
Q. When the order was placed for the equipment with Denise, did you also place an order for a service maintenance plan?
A. No.
Q. A service management plan?
A. No.
Q. It was just for the equipment only?
A. Yes.
64 In cross-examination Mr Apps said he had not heard of a company called Ricoh Rosebery.
65 Mr Apps said the purchase price details were written on a Ricoh business card. The following evidence was given (TD4 39.42):
- Mr Grogan:
Q. And you at that stage would have realised that you weren’t placing an order for Denise Grant to supply it, but the company for whom she worked?
A. No. I deal with my sales reps.
Q. But she wasn’t supplying it was she?
A. She was making the device available to me yes.
Q. Right, from the company she worked for?
A. Wherever it came from.
66 Mr Apps agreed with the following proposition (T26/07, p41,L8):
- Mr Grogan:
Q. But at no stage had she said to you “look I don’t work for Ricoh Rosebery. I don’t work for that company?
A. Not in the exact proper words.
Q. You were still relying on the dollars as agreed upon you and her?
A. Yes.
67 Mr Apps said that when Ms Grant indicated the prices to him in February he considered the price to be good as he had information from a different Ricoh supplier.
EVIDENCE RE DELIVERY OF EQUIPMENT
68 Glenda Calhoun, the employee at Ricoh Rosebery to whom Ms Grant spoke after she was contacted by Mr Bush on or about 27 March, deposed that what she said to Ms Grant was (Aff. Exh.11, para D):
- “The item is on backorder we’ll deliver it once we receive it”.
Ms Grant Calhoun said that Ms Grant also asked regarding what deals were outstanding and not delivered.
69 In cross-examination she agreed (TD2 13.5) that after an order was confirmed for the lease or sale of equipment, it was either hers or Allison King’s task to arrange for the ordering of the equipment from Ricoh Australia and to then arrange for delivery of the equipment to the client and to obtain payment. She agreed that the delivery of the fax machine was delayed because the Jpeg was not available and was on backorder (TD2 15.54). She confirmed that the company policy was that all the equipment had to go in one order and it couldn’t be delivered until the item (Jpeg) came in on backorder.
70 Mr Petrovich had given evidence on the first day of the hearing that the preference of his company was for the full order to be delivered, but said if the client required delivery urgently, they would be happy for them to write to the company and Ricoh Rosebery would then part deliver (TD1 26.20).
71 Allison Gaye King (Aff. Exh.7) provided evidence by way of affidavit. She was employed as a sales administrator at Ricoh Rosebery. Her role was to process orders once sales were made by the sales staff (para 6). She described how the equipment was ordered from Ricoh Rosebery. She described receiving the order form for Bush’s Petfoods and attached a copy as (Exh.B). The order form was signed by Ms Grant but not by Mr Apps. She said the facsimile machine was delivered on or about 2 March. She said the Jpeg was available on 11 April. She telephoned Bush’s Petfoods but was told that they did not know anything was on backorder and they had already received everything and should they phone Denise.
72 That concludes my general discussion of the evidence. I have only referred to the evidence which was relevant to the issues raised by the plaintiffs Statement of Claim. I have considered all of the evidence. I did not find the evidence of Maureen Jennif, Dion Gavin Huntley, Sanjay Maharaj and Peter Burr to be generally of any relevant persuasion in the determination of the issues between the parties.
73 I now intend to make some general comments as to the credibility of witnesses.
CREDIBILITY OF WITNESSES
74 Mr Stewart for the plaintiffs and Mr Gambi for the defendants, both attached schedules to their submissions going to issues as to the credibility of the various witnesses.
75 I formed the general view that the evidence going to the credibility of the various witnesses would not be of significant importance in my determining the issues between the parties based on the plaintiffs’ Statement of Claim. In general the important factual matters as to the dealings between Ms Grant when she was at Ricoh Rosebery with Starr Partners and Mr Apps on behalf of Bush’s Petfoods were not in dispute, nor were the significant facts in relation to her dealings, at the later stage, when employed by PSA with Starr Partners and with Mr Apps on behalf of Bush’s Petfoods. There were sufficient written documents to establish or corroborate the important dates and dealings. At the conclusion of the evidence and following submissions, much of the evidence in relation to the feud between Ricoh Rosebery and PSA, the tickler box and lead cards ceased to have any or significant relevance.
76 I did not form the view that any witness attempted to mislead the court. As is frequently the case, witnesses employed by Ricoh Rosebery or PSA generally remembered events and conversations in the manner most favourable to the party for whom they were giving evidence. That is not unusual.
77 Ms Grant was an unimpressive witness in the manner in which she gave evidence. She found it very difficult to recall and give evidence in direct speech. On several occasions she gave evidence in cross-examination based not on her knowledge, but on information she had gained from reading affidavits filed by Ricoh Rosebery. She had a poor memory as to when events occurred. She thought for instance that Mr Bargallie did not contact her until she had been at PSA for several months. In fact it was about three weeks. She thought that he had contacted her prior to that, about five months previously. In fact it was six weeks. However, when she was directed to documentary evidence which seemed to establish the dates, she readily accepted such dates. I did not gain the impression that she was dishonest or untruthful.
78 Ms Grant was not the only witness who had problems with dates. Mr Dion Huntley in his affidavit (Exh.8) at para 41 purported to give evidence of a conversation which he alleged he had with Mr Sanjay Maharaj, Ricoh Rosebery’s new representative for Ms Grant’s area, when he said:
- “I am disappointed that your sister didn’t contact me about Starr Partners. He, the client, just told me that they bought from another Ricoh company. I think it’s PSA”
Mr Huntley deposed that such conversation took place on 14 March 2006. I was satisfied that date was wrong. Ms Grant didn’t commence employment with PSA until 13 March 2006. I was satisfied that Mr Bargallie of Starr Partners did not contact Ms Grant until on or about 4 April 2006.
79 Mr Huntley gave evidence of conversations with Mr Bargallie. Whilst I was satisfied some conversations took place, they did not take place when and as alleged by Mr Huntley. There was a conflict between Mr Bargallie’s evidence and Mr Huntley’s evidence in relation to some of the conversations and as to when they took place. I preferred Mr Bargallie’s evidence. I also generally preferred Ms Grant’s evidence to that of her brother where their evidence conflicted regarding conversations, but none of the conversations were of importance in relation to the issues raised by the Statement of Claim.
80 Mr Petrovich tended to argue his case rather than answer questions directly. I have indicated matters where I considered his evidence to be incorrect. I considered he over emphasised the importance of the tickler box cards, but as indicated previously, questions of credit were not of great importance in this case.
81 I was generally impressed with the evidence of Mr Bargallie and Mr Apps. I did not consider it of great significance that there were differences between the recollections of Ms Grant and of Mr Bargallie and Mr Apps as to the words that were spoken during conversations after Ms Grant joined PSA. Mr Apps had not even prepared a witness statement. He was clearly a reluctant witness yet the general content and effect of his recollections of the conversations were the same as Ms Grant’s.
CONSIDERATION AND DETERMINATION OF ISSUES
Breach of duty of good faith and fidelity
82 I propose to deal with Ricoh Rosebery’s allegation that Ms Grant whilst she was still employed by Ricoh Rosebery was not faithful to her employer and has not put her employer’s interests above all others.
83 As previously set out, Mr Grogan, Counsel for the Plaintiffs, particularised the acts relied upon by the plaintiffs as follows:
- 1. The failure of Ms Grant to keep persons such as Mr Huntley informed of the problems associated with in particular, Bush’s Petfoods.
2. Failure to inform Mr Huntley of an inability to immediately fulfil an agreement with Bush’s Petfoods, and
3. Not being therefore diligent with her work in relation to the fulfilment of a contract an agreement between the plaintiffs and Bush’s Petfoods.
84 I will deal with the items together. The order from Mr Apps on behalf of Bush’s Petfoods was emailed on 23 February. Ms Grant was dismissed on 6 March. Ms King gave evidence (Aff. Exh.7, para 17) that she contacted Bush’s Petfoods on 24 February 2006 to confirm the order. Ms King ordered the Jpeg for the fax machine which was not in stock on 24 February. There were just five clear working days between the order of the Jpeg and Ms Grant’s dismissal. There was not one iota of evidence that Ms Grant was aware, or was required to be aware, that the Jpeg was not available. The clear evidence was that the responsibility for the ordering of the equipment from Ricoh Australia, and then for the delivery of the goods to the customer and the collection of payment was that of Allison King and/or Glenda Calhoun. It was King’s responsibility (not Ms Grant) to contact the customer to arrange for delivery (Exh.7, para 14). There was no evidence that Ms King contacted Mr Apps or Ms Grant to inform either of them of the problem with delivery. Even after Ms Grant contacted Ms Calhoun on or about 27 March making inquiries as to the reason for non-delivery, neither Ms Calhoun nor Ms King contacted Mr Apps to advise him of the delay and the reason therefore. Ms Calhoun said that she spoke to Mr Petrovich on the day that Ms Grant called regarding Ms Grant’s phone call. There was still no contact by anyone on behalf of Ricoh Rosebery with the purchaser to advise of the delay.
85 I found it extraordinary that in the face of that uncontradicted evidence Ricoh Rosebery would allege that there was some failure on Ms Grant’s part during the five working days that she remained at Ricoh Rosebery to advise Mr Huntley of the “problems associated with the contract and the inability to immediately fulfil the agreement”. The allegation in the Statement of Claim was limited to the time that Ms Grant was employed at Ricoh Rosebery.
86 I was satisfied that the first time Ms Grant became aware of the plaintiffs’ failure to deliver the equipment in a timely fashion to Bush’s Petfoods, was when she was contacted by Mr Apps on 27 March 2006. That was well after she had left Ricoh Rosebery on 6 March. I agreed with the submission made by Mr Gambi at para 62 as follows:
- “The fact that it took so long for Grant to find out about the problem is more a reflection of the plaintiffs’ failure (through Huntley, Maharaj and/or Calhoun to follow its own business practices, rather than anything for which Grant can be criticised.”
87 I would have added Ms King to the list of person who had a responsibility to ensure delivery took place and to advise the customer of any problems with delivery.
88 I was satisfied that there was no lack of diligence on Ms Grant’s part in relation to any aspect of the agreement with Bush’s Petfoods between 24 February 2006 and 6 March 2006. I was satisfied Mr Apps was entitled to feel disappointed and aggrieved at the delay in delivery and at the service received from Ricoh Rosebery after Ms Grant was dismissed.
89 Mr Stewart at paragraph 32 of his final submissions indicated a further allegation of Ms Grant’s breach of duty of good faith and fidelity as follows:
- ‘The first breaches by Ms Grant of her obligations are that whilst employed by Rich she did not, although she could and should have, assisted Starr Partners with any issue they had and followed up with Mr Bargallie.’
90 The plaintiffs’ claim on that basis must fail.
91 I was also satisfied that there was no failure to be diligent on the part of Ms Grant in relation to the contract with Mr Bargallie of Starr Partners. The evidence established that at the meeting with Mr Bargallie attended by Mr Huntley and Ms Grant on 20 February 2006, there was only talk about what Ricoh Rosebery might be able to do. A quotation was given to Mr Bargallie. The meeting ended on the basis of Mr Bargallie needing to “think about it” (TD1 88.15). Mr Bargallie did not commit to anything at that meeting (TD1 88.20).
92 Mr Huntley was Ms Grant’s sales manager in February 2006. He did not criticise Ms Grant about the way she handled the meeting with Starr Partners. He did not suggest that there was some other or better way of dealing with Starr Partners. He did not think it necessary either for himself or for him to request Ms Grant to chase up Mr Bargallie during the period from 20 February to 6 March 2006.
93 Mr Stewart in his final submissions at paragraph 33 restated the breach based on the allegation that Ms Grant failed to check on delivery and failed to check with Mr Apps that all was in order and failed to arrange for the machine to be delivered without the Jpeg. I dealt with the same allegations of breach of duty at paragraphs 82 to 88 of this judgment.
94 In paragraph 35 of the final submissions Mr Stewart submitted:
- ‘So not only were there breaches whilst Ms Grant was employed, but her very conduct in breach of her obligations then created the situation where she could obtain the business of Starr and Bush’s for Print Solutions.’
I have found on the evidence that there were no breaches by Ms Grant. I was satisfied that Mr Grant’s services were terminated without notice and there was no evidence, nor was it suggested to her that prior to the termination she had done anything to create a situation from which she could benefit if her services were terminated.
95 Mr Stewart then made submissions based on the proposition that Ms Grant had used confidential information as ‘a springboard for activities detrimental to the person whom made the confidential communication’ (Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd (1967) VR 37.
96 I was not satisfied on the facts of this matter that there was any spring boarding. I was satisfied that Ms Grant did not take any documents belonging to Ricoh Rosebery with her when she left. The information in relation to the status of the delivery to Bush’s Petfoods was information she obtained after she left and it was not, I have found, confidential information. The authorities are clear that an employee upon leaving her employment is entitled, for instance, to canvass known clients of her former employer. That clearly did not amount in those cases to spring boarding. I was not satisfied the tag should and could be attached to the conduct of Ms Grant either before or after she left Ricoh Rosebery’s employment.
THE ALLEGATION OF BREACH OF DUTY NOT TO MISUSE ANY VALUABLE COMMERCIAL INFORMATION
97 The plaintiffs in paragraph 8 of the Statement of Claim alleged that Ms Grant had a duty not to misuse valuable commercial information and alleged in paragraph 21 that she had breached such duty and had disclosed such information to the second defendant.
98 Mr Stewart, solicitor for the plaintiffs, identified the specific information at paragraph 13 of his Outline of Legal Submissions as:
- ‘For Bush’s Petfoods it was the status of the deal at that time as the copier machine had not been delivered (so the contract had not yet been complete) as Ricoh Rosebery were waiting on a Jpeg.’
99 The plaintiffs’ case on that basis apparently relied on the information which Ms Grant obtained when she contacted Ms Calhoun on or about 27 March 2006.
100 The first problem that claim was that such information was obtained after her employment was terminated.
101 The second problem was that such information could not be confidential information or trade secrets in the sense suggested by His Honour Gleeson J in Wright v Gasweld Pty Ltd. If Mr Apps had contacted Ms Calhoun on the same day, no doubt he would have been given the same information. Indeed he should have been given it without asking. The fact was that Ms Calhoun did not consider the information as confidential or valuable commercial information because she readily gave it to Ms Grant.
102 I was satisfied that it was not the fact that Ms Grant was given the information regarding the non-delivery by Ms Calhoun that caused her to be able to enter into the new agreement with Mr Apps on behalf of Bush’s Petfoods. It was the fact that Bush’s Petfoods, through its employees Mr Huntley, Mr Maharaj, Ms Calhoun and Ms King had not, during the period from 6 March to 11 April informed Mr Apps of any problem with delivery of the fax machine. I was satisfied that it was the inattention on and inaction of Ricoh Rosebery rather than any action on the part of Ms Grant which was the catalyst for Ms Grant being able to satisfy Mr Apps’ requirements and so arrange for the entering into of the new agreement with PSA.
103 Such finding was supported by Mr Gambi’s submission at paragraph 59 as follows:
- ‘If the plaintiffs had a binding contract with Bush’s Petfoods which Bush’s Petfoods therefore breached, the appropriate course for the plaintiffs was that they take some positive steps to enforce that binding contract. Mr Petrovich could not recall whether he authorised anyone to write to the company suggesting it had breached its agreement (TD1 34.22).
104 The second particular relied upon by Ricoh Rosebery as being specific information misused by Ms Grant relating to Starr Partners:
- “Was Starr’s dissatisfaction with Axis Communications and that if Starr could ‘get out of’ that arrangement they would sign up with a new copier and facsimile provider.”
Ms Grant gave evidence and was cross-examined at some length as to the opinion which she said that she formed during the discussion which she and Mr Huntley had with Mr Bargallie on 20 February 2006. She said that it was her belief that Mr Bargallie was dissatisfied with the arrangement which he had with Axis Communications and if Starr Partners could get out of that arrangement was a relevant factor being considered by Mr Bargallie as to whether he would lease a new colour photocopier. When Mr Bargallie gave evidence ( TD4 23.55 ) he said that whilst he was considering the offer made by Ms Grant on 26 February and thinking it over, he came to the view that the best way to get out of the problem with Axis was just to upgrade the old Ricoh laser printer for a colour photocopier through Ricoh. Mr Bargallie said ( TD4 24.5 ) that once he decided that that was the best option, he rang Denise on her mobile and told her that was what he had decided to do and could he proceed. In those circumstances the plaintiffs claim on that basis must fail. I was not satisfied that the specific information relied upon would come anywhere near the definition of confidential information or trade secrets in accordance with the principles of Wright v Gasweld Pty Ltd or Del Casale & Ors v Antedomus (Aust) Pty Limited .
105 Even if the information came within the meaning or definition of valuable commercial information, the clear undisputed evidence of Mr Bargallie was that such information played absolutely no part in his deciding to proceed with the purchase through Ms Grant and PSA.
106 The plaintiffs’ claims based on those allegations must fail.
IMPROPER USE OF CONFIDENTIAL INFORMATION
107 That left the plaintiffs’ claim based on the improper use of confidential information relying on the misuse by Ms Grant of information defined in paragraph 10 of the Statement of Claim, namely:
- 1. Information pertaining to the plaintiffs’ contracts and financial arrangements with their clients .
2. Information about the plaintiffs’ pricing and product information.
108 It was necessary as His Honour Gleeson CJ highlighted in Wright v Gasweld Pty Ltd to closely examine and accurate categorise the nature of the alleged trade secrets or confidential information.
109 It is important to bear in mind that the basis of the plaintiffs’ claim was that Ms Grant and PSA used the confidential information to complete the transactions by PSA with Starr Partners and Bush’s Petfoods.
110 In relation to the sale to Starr Partners it seemed that the plaintiffs case was that Ms Grant used her knowledge of the plaintiffs’ quotation to Starr Partners and also Ricoh Rosebery’s knowledge of its existing contract with Axis. I was not satisfied that that information amounted to confidential information or trade secrets. When Mr Bargallie contacted Ms Grant on or about 4 April he was aware of the details in relation to the proposal for the new colour copier and was clearly aware of the details of his existing agreement with Axis. That information was not confidential to Ricoh Rosebery. It was information known to Mr Bargallie. All the information which Ms Grant needed to know to propose and close an agreement on behalf of PSA was able to be supplied by Mr Bargallie. He made it clear that he wanted to deal with Ms Grant. There was some discrepancy as to Mr Bargallie’s recollection and Ms Grant’s recollection as to what was said about her no longer being with Ricoh Rosebery, but the undisputed fact was that when he came to complete the order form, Mr Bargallie knew that he was dealing with PSA and that Ms Grant was acting on its behalf. The order form he completed was with PSA.
111 There was no dispute on the evidence that Mr Bargallie contacted Ms Grant. She did not contact him even though on the authority of Wright and Faccenda Chickens she may have been entitled to do so. She was entitled to go into competition with Ricoh Rosebery.
112 The evidence was even stronger in relation to the agreement with Mr Apps on behalf of Bush’s Petfoods. The original offer by Mr Apps was to purchase the fax machine for $4,105.00 plus GST and the Ricoh digital copier for $2,930.00. The evidence clearly established that when the order was placed there was no service agreement in place. It was to be arranged later at the time of delivery.
113 Mr Apps contacted Ms Grant on 27 March 2006 and following the two or three telephone conversations agreed to purchase the fax machine and digital copier through Ms Grant on the basis that delivery could be made immediately. Ms Grant did not have to rely on any confidential information obtained by her from Ricoh Rosebery to conclude the deal. In fact Mr Apps forwarded the same short email by way of order that he had forwarded to Ricoh Rosebery. The deal was the same. It was for the purchase of the same two pieces of equipment for the same price. There was no need, nor did Ms Grant use any confidential information or trade secrets of Ricoh Rosebery in concluding the deal with Mr Apps.
114 I was therefore satisfied that the plaintiffs’ claims as pleaded, based on the alleged misuse of confidential information must fail.
115 There was much evidence as to the proprietary of Ms Grant’s action in proceeding to enter into contracts on behalf of PSA with Mr Bargallie and with Mr Apps on behalf of Bush’s Petfoods. Both men made it clear that they wanted to deal with Ms Grant. They felt loyalty to her. There were some discrepancies as to what Ms Grant alleged she said to each of them and the evidence of each of them. However, at the completion of all of the evidence I was satisfied that they were informed that she was with another company and had moved on, and by the time they signed the order form there could be no doubt that they were aware that the order form which they were signing was with PSA. In this matter Ricoh Rosebery did not plead against Ms Grant that she breached any duty of good faith and fidelity after the termination of her employment by Ricoh Rosebery on 6 March 2006.
116 In Del Casale His Honour Campbell JA stated (para 78):
- “In Faceenda Chicken Ltd v Fowler Neill CJ held that the implied term of good faith in a contract of employment operated, though in a restricted fashion, after the employment had terminated.”
117 Campbell JA went to state (para 79):
- “In my view there is room to doubt that prior authority provides strong authority for the duty of good faith continuing to operate after the termination of the employment contract.”
118 Whatever the law, breach of good faith after the employment termination was not pleaded in this matter.
119 I was not satisfied that there was any or sufficient evidence to establish that PSA independent of Ms Grant had and misused any confidential information in relation to its agreements with Starr Partners and Bush’s Petfoods. In those circumstances the plaintiffs having failed against Ms Grant must fail against PSA.
120 The plaintiffs on the factual findings I made in the claims against Ms Grant cannot succeed against either Ms Grant or PSA on the claims under the Corporations Act.
121 I make the following order:
- 1. There will be judgment in favour of the first and second defendants against the first and second plaintiffs.
122 I would propose the following order in relation to costs:
- Costs follow the event. The first and second plaintiffs are to pay the first and second defendants costs and disbursements on an ordinary basis as agreed. In default of agreement within 28 days the costs shall be assessed under the Legal Profession Act.
123 I shall hear from the parties on the question of costs.
B.A. LULHAM
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