Ecostore Company Limited v Worth - [2017] NZHC 2943

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-672 [2017] NZHC 2943

BETWEEN
ECOSTORE COMPANY LIMITED

Plaintiff

AND

GILLIAN HELEN WORTH Defendant

Hearing: 13 November 2017

Appearances:

J McBride for the Plaintiff
A Toohey for the Defendant

Judgment:

29 November 2017

JUDGMENT OF GORDON J

This judgment was delivered by me
on 29 November 2017 at 3.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors: Powle & Hodson Ltd, Auckland
Shauna McClelland, Christchurch

Counsel: J McBride, Auckland
A Toohey, Christchurch

ECOSTORE CO LTD v WORTH [2017] NZHC 2943 [29 November 2017]

Introduction

[1] The plaintiff (Ecostore) has applied under r 9.34 of the High Court Rules 2016 for an order for inspection of the defendant’s (Ms Worth) laptop computer.

[2] Ms Worth opposes the application in its present form but consents to an appropriate inspection order on reasonable terms.

[3] Ecostore also seeks an order for costs in relation to its application challenging Ms Worth’s claim of confidentiality in certain documents. That application was also to have been heard on 13 November 2017 but has been resolved without the need for a hearing.

[4] Ms Worth opposes the application for costs on the withdrawn application and claims costs herself against Ecostore on the basis that costs should follow the event.

Background

[5] The relationship between the parties and the background giving rise to the dispute are conveniently summarised in a judgment of Gilbert J.1 Ms Worth had applied for an order striking out all causes of action in the proceeding contending that the Employment Relations Authority had exclusive jurisdiction to determine all three claims. The application to strike out the proceeding was dismissed. The judgment records the following:

[1] Ecostore Company Ltd is an Auckland-based manufacturer and distributor of household cleaners and body-care products. It seeks to produce products that exclude toxic and unnecessary chemicals, making them safer for people and the environment. Gillian Worth, who lives in Christchurch, was employed by Ecostore as a development chemist under two short-term contracts, each lasting a little over three months, spanning the period from
9 May 2016 to 25 November 2016.

[2] There is no dispute that throughout the period of her employment, Ms Worth transferred confidential information belonging to Ecostore to her personal email account and that she retains this information. The information includes sales data, product formulations, development ingredient databases, product test results, consumer testing information and a surfactant study plan. Ms Worth is now employed in a similar capacity by Earthwise Group Ltd, a direct competitor of Ecostore based in Christchurch.

1 Ecostore Company Ltd v Worth [2017] NZHC 1480.

[3] Ecostore seeks an injunction restraining Ms Worth from using its confidential information, requiring the return or destruction of all documents containing confidential information, and damages or an account of profits for any misuse of this information. Ecostore advances three causes of action as justifying this relief, breach of confidence, conversion, and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZHC 2943
Decision Date: 29 November 2017

CaseChat Overview and Summary

Ecostore Company Ltd, an Auckland-based manufacturer and distributor of household cleaners and body-care products, brought proceedings against Gillian Worth, a former employee, for breach of confidence, conversion, and breach of copyright. The dispute arose from Ms Worth's alleged retention and misuse of Ecostore's confidential information after she left the company and began working for a competitor, Earthwise Group Ltd. Ecostore sought, among other things, an order for inspection of Ms Worth's laptop to determine whether confidential information had been misused.

The court considered whether an inspection order was justified. The court found that Ecostore's application was not a fishing expedition as it was relevant to the central issue in the proceedings. However, the court determined that a full inspection of the laptop was not necessary as most of the information Ecostore sought could be provided through ordinary discovery procedures. The court made a limited order for inspection of the laptop clone to determine how Ecostore-generated emails had been migrated to Ms Worth's laptop.

Regarding costs, Ecostore succeeded on its application for an inspection order but on a more limited basis than sought. Ms Worth, on the other hand, had more success than she anticipated. The court considered that costs should lie where they fall. The court also considered the issue of costs relating to Ecostore's application challenging the confidentiality claimed by Ms Worth over certain documents. The court found that there was fault on both sides, and as such, costs should lie where they fall.

Orders