Triangle Corporation Pty Ltd v Carnsew, D

No judgment structure available for this case.

TRIANGLE CORPORATION PTY LTD v. DAVID CARNSEW and CARLO BILLING
No. VG257 of 1994
FED No. 605/94
Number of pages - 3
Confidentiality
(1994) AIPC 91-099

(1994) 29 IPR 69

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
HEEREY J

CATCHWORDS

Confidentiality - former employees' duty to employer - customer lists - categories of information

Faccenda Chicken Limited v Fowler (1987) Ch 117

HEARING

MELBOURNE, 15 August 1994
#DATE 15:8:1994
#ADD 9:5:1995

Counsel for the Applicant: Mr M D Wyles

Solicitors for the Applicant: McKean and Park

Counsel for the Respondents: Mr S McCullagh

Solicitors for the Respondents: Bell McCullagh and Rowe

ORDER

The Court orders:
1. Upon the undertaking by the respondent to keep an account of

profits, the application for interlocutory injunction be

dismissed.

Order the matter be referred to the District Registrar for

mediation on a date to be fixed.

Direct the District Registrar conducting the mediation to exercise

all necessary powers of the Court set out in s.535A(1) of the Federal Court Act and under O.10 r.1(2)(g) of the Federal Court Rules. All discussions before the Registrar are to be on a without prejudice basis and costs are to be costs in the cause.

Adjourn directions hearing to 13 September 1994.

Costs reserved.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

HEEREY J The applicant seeks an injunction to restrain its former employees from using information acquired during the course of their employment. The law requires a fine line to be drawn between, on the one hand, the legitimate right to protect confidential information and, on the other hand, the right to compete in the market place. For present purposes this distinction is expounded in the decision of the English Court of Appeal in Faccenda Chicken Limited v Fowler (1987) Ch 117.

In that case the trial judge, with the subsequent endorsement of the Court of Appeal, distinguished information of three kinds. First, there is information which because of its trivial character or its easy accessibility from public sources of information cannot be regarded by reasonable persons or by the law as confidential at all. The servant is at liberty to impart it during his service or afterwards to anyone he pleases, even his master's competitor.
Secondly, there is information which a 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.
Thirdly, there are specific trade secrets so confidential that even though they may necessarily have been learned by heart, and even though the servant may have left the service, they cannot lawfully be used for anyone's benefit but the master's.
In the present case the applicant sells paper products including paper for duplicating and facsimile machines. The applicant keeps in computerised form a list of some 10,000 customers. It is common ground that when the respondents left the employ of the applicant they did not obtain access to that information. However, it is said that the respondents, and in particular Mr Carnsew, obtained access to approximately 1100 names of customers in that section of the customer list to which he had access as part of his employment. In addition, in the course of Mr Carnsew's employment he learned information such as prices and requirements of customers which had been built up in the business and which was valuable information for the purpose of obtaining orders.
Mr Carnsew was employed under a written contract of employment which included this term:

"I agree during the period of my employment or at any time thereafter not to disclose to any unauthorised person

confidential company information. I further agree not to make use of any information, process, papers or documents to which I may have access during my time with the company or any time thereafter except on behalf of the company."

As a matter of construction I think the reference to "information" where second appearing has to be read as meaning confidential information. It would be a ridiculous and uncommercial construction to read that as referring to information of any sort, however public or trivial.
So I think the term of the contract does not add to the relevant legal obligations of Mr Carnsew based on the law as expounded in the Faccenda Chicken case. The second respondent, who had no comparable written agreement, is in the same position. I note the respondents have proffered to the court an undertaking to keep an account of profits which, should this action proceed to a final hearing, would enable the calculation of any damages suffered by the applicant.
In the light of that, I am not persuaded that there is a sufficiently arguable case advanced on behalf of the applicant to warrant the substantial step of enjoining the respondents from engaging in competition with their former employer. That right to compete is one which the law is anxious is to protect. On the evidence I am not satisfied that there is an arguable case that the information which the respondents acquired in the course of their employment by the applicant went beyond that second category of information referred to in the Faccenda Chicken case. I do not doubt that it was valuable and useful information, and information which had taken some time and trouble to compile, but nevertheless it is information which the law does not restrain an employee from using once he has left his employer's business.
So upon the undertaking to keep an account of profits being proffered I will order that the application for an interlocutory injunction be dismissed.
I will, by consent of the parties, refer the matter to the District Registrar for mediation on the date to be fixed. I direct the District Registrar conducting the mediation to exercise all necessary powers of the court set out in section 35A(1) of the Federal Court Act and under order 10 rule 1 sub-rule 2(g) of the Federal Court Rules. All discussions before the District Registrar are to be on a without prejudice basis and the costs are to be costs in the cause. I will adjourn the directions hearing to 13 September.
Costs will be reserved.