Whitco Pty Ltd v Weavis, Nicolas

[1994] FCA 1098

IN THE FEDERAL COURT OF AUSTRALIA	)	No. QG 90 of 1994
QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	)

BETWEEN:  WHITCO PTY. LTD.

(A.C.N. 009 667 207)

Applicant

AND:  NICOLAS WEAVIS

First Respondent

AND:MARKETMAKERS (AUST.) PTY. LTD.

(A.C.N. 052 290 721)

Second Respondent

AND:HARRY DESMOND PHIPPS

Third Respondent

Coram:	Drummond J
Date:	28 September, 1994
Place:	Brisbane

REASONS FOR JUDGMENT

These proceedings have previously been before me in circumstances in which it was asserted on behalf of the first respondent that the case sought to be made against him was vaguely pleaded and such as to give rise to concern that it was a fishing case, at least in some respects. Directions were given for the refining of the applicant's case against the first respondent and other respondents, and also for formulating the case it wished to run against the proposed fourth respondent, an associate of the first respondent, and the proposed fifth respondent, a company in which the first and proposed fourth respondents are involved, so that the Court would be in a position better to decide whether or not the joinder of the proposed fourth and fifth respondents should be made.

The way the case against the proposed fourth and fifth respondents is pleaded appears from paragraphs 13 and 14 of the document which I have described as the proposed new statement of claim. The allegation essentially is that these respondents have been involved in the misuse of confidential information belonging to the applicant. There is before me an affidavit from Mr. Lipinski, who appears still to be an employee of the applicant, although he too was associated with the first respondent and the proposed fourth and fifth respondents.

It is on the basis of Mr. Lipinski's evidence that the joinder is justified and it is sought to answer the claims made today that the case intended to be made against the proposed fourth and fifth respondents is so vaguely pleaded that I should infer that it is a speculative or fishing case and refuse to join them. In essence, Mr. Lipinski creates a picture of himself, the proposed fourth respondent and the first respondent, while all were executives of the applicant and while the first respondent and proposed fourth respondent were marketing executives involved in, among other things, the development of export markets for the applicant, having a discussion about the possibility of selling window stays into Indonesia.

Mr. Lipinski's evidence indicates that what was identified as a possible market that could be developed for window stays in Indonesia was the cheaper end of the market. His evidence indicates that the applicant has long been selling high quality, expensive window stays into the top end of the market, but the discussion turned upon producing window stays of the kind that the applicant was already producing and selling in Thailand for sale into what Mr. Lipinski identifies as the cheaper end of the window stay market in Indonesia.

According to his evidence, these three people, while employed as marketing executives of the applicant, decided to set up the proposed fifth respondent as the means by which this activity could be carried on and the means by which any other business opportunities that might present themselves could also be entered into. Mr. Lipinski's evidence indicates that window stays identical to the Whitco Pty. Ltd. stay were produced at the behest of the first respondent, the proposed fourth respondent and himself, for the proposed fifth respondent, and sold into the Indonesian market as cheap window stays. It appears from what Mr. Lipinski says that the venture was not a successful one.

Mr. Lipinski, however, also indicates that this project was only able to be undertaken by the proposed fifth respondent because he converted a significant number of the applicant's springs, which are of a particular design and are an essential component in the making of all window stays, including the cheap ones here in question. No claim, however, is made in respect of this conversion, although it will be part of the evidence relied on in support of the case that the applicant wishes to make out against these three persons.

The difficulty I have with allowing joinder on the material before me is that against a background of difficulty and complaints about the speculative nature of the applicant's case, I am left in the situation where I am being asked to infer things which should readily be the subject of clear evidence. The difficulty I am in reinforces the provisional view I have that there is something in what Mr. Couper, counsel for the first respondent and the proposed fourth and fifth respondents, has to say about the speculative nature of the claim and the failure of the applicant to plead a clear cause of action against the proposed fourth and fifth respondents sufficient to justify the joinder.

The picture that Mr. Lipinski creates is of he and the first respondent and the proposed fourth respondent identifying an area, viz., the cheaper end of the window stay market in Indonesia, which on the evidence was not an area that the applicant was trading in at any relevant time. I am asked to infer, however, and my attention is drawn to descriptions of various market analysis documents and other documents in support of this submission, that the applicant did have an intention of getting into this particular segment of the market which Mr. Lipinski identifies, it seems to me, as a discrete market.

I have regard to Smith Kline & French Laboratories (Australia) Ltd. v Secretary to the Department of Community Services and Health (1992) 28 F.C.R. 291 at 304 where it is pointed out that there can be no breach of the equitable obligation of confidence unless the Court concludes that `a confidence reposed has been abused' and `that unconscientious use has been made of the information'. I am asked to complete, by inference, the outline of such a case of misuse of confidential information by the proposed fourth and fifth respondents in circumstances where the evidence does not clearly indicate that the applicant either ever had, or has now, any interest in the discrete market that Mr. Lipinski says he, the first respondent and the proposed fourth respondent sought to entrench the fifth respondent in.

Against the background of the case, I am not prepared to allow joinder on the material before me. In the absence of a foundation for concluding, either by direct evidence or clear inference, that the applicant either was in or intended to move into this particular market that I have referred to, it seems to me that there is substantial force in the submissions of Mr. Couper that, reprehensible though the conduct of the first respondent and the proposed fourth respondent may be, accepting what Mr. Lipinski says as accurate, it could nevertheless well be concluded that there was no actionable misuse of confidential information.

I certify that this and the preceding
five pages are a true copy of the
reasons for judgment herein of the
Honourable Mr. Justice Drummond.

Associate:

Date:  28 September, 1994

Counsel for the applicant:R.G. Bain Q.C.

Solicitors for the applicant:Clayton Utz

Counsel for the first respondent:S.S.W. Couper Q.C.

Solicitors for the respondents:Barker Gosling

Counsel for the proposed second

and third respondents:	S.L. Doyle
Solicitors for the proposed
second and third respondents:	Russell & Co.
Date of Hearing:28 September, 1994
Date of Judgment:	28 September, 1994

IN THE FEDERAL COURT OF AUSTRALIA	)	No. QG 90 of 1994
QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	)

BETWEEN:  WHITCO PTY. LTD.

(A.C.N. 009 667 207)

Applicant

AND:  NICOLAS WEAVIS

First Respondent

AND:MARKETMAKERS (AUST.) PTY. LTD.

(A.C.N. 052 290 721)

Second Respondent

AND:HARRY DESMOND PHIPPS

Third Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:	28 September, 1994
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

1.The notice of motion filed 18 August, 1994 for the joinder of Anna Francoise Castellano as

fourth respondent and Wintec Pty. Ltd. as fifth respondent is dismissed.

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