Ecostore Company Ltd v Worth - [2017] NZHC 1480

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2017-404-000672 [2017] NZHC 1480

BETWEEN
ECOSTORE COMPANY LIMITED

Plaintiff

AND

GILLIAN HELEN WORTH Defendant

Hearing: 24 May 2017

Further submissions:
Appearances:

25 and 29 May 2017

J D McBride and L E Mannis for Plaintiff
A M Toohey for Defendant

Judgment:

29 June 2017

JUDGMENT OF GILBERT J

This judgment is delivered by me on 29 June 2017 at 4.45 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors/Counsel:
J D McBride, Barrister, Auckland
L E Mannis, Barrister, Auckland
A M Toohey, Barrister, Christchurch

ECOSTORE COMPANY LTD v WORTH [2017] NZHC 1480 [29 June 2017]

Introduction

[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.

[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 breach of copyright. These causes of action are all founded on the retention and misuse of the same confidential information.

[4] The background allegations pleaded for all three causes of action refer to the terms restricting the use of confidential information in the employment agreements. These include terms: prohibiting Ms Worth, other than in the reasonable performance of her duties to Ecostore, from removing, disclosing or using any of its intellectual property without its written consent; prohibiting Ms Worth from removing, copying or transmitting any confidential information from Ecostore’s premises without its consent unless this is in the normal course of her duties; and requiring Ms Worth to respect the confidentiality of Ecostore’s confidential information at all times during and after her employment and not to divulge it to anyone or use it for any purpose other than in connection with her employment without Ecostore’s consent.

[5] Ms Toohey initially applied for an order striking out the first cause of action for breach of confidence on the grounds that the Employment Relations Authority has exclusive jurisdiction to deal with that claim. She sought a stay of the other two causes of action,…

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 1480
Decision Date: 29 June 2017

CaseChat Overview and Summary

Ecostore Company Ltd sought an injunction, return of documents or destruction of documents, and damages or an account of profits for the retention and misuse of confidential information by Gillian Helen Worth. Ms Worth, who was previously employed by Ecostore, is now employed by Earthwise Group Ltd, a direct competitor of Ecostore. The dispute concerned the jurisdiction of the Court over the three causes of action: breach of confidence, conversion, and breach of copyright. Ms Toohey, counsel for the defendant, submitted that the Employment Relations Authority had exclusive jurisdiction over the claims because they were all founded on the employment agreement. The plaintiff, Ecostore, submitted that the Court had jurisdiction to deal with all of the claims. The Court considered the relevant provisions of the Employment Relations Act 2000 and found that the Act did not intend to extend the authority's existing jurisdiction to include claims in tort or equity. The Court held that the claims did not directly and essentially concern the employment relationship and should not be regarded as falling within the Authority's exclusive jurisdiction. The Court dismissed the application to strike out the proceeding and ordered the plaintiff to be entitled to costs on the application calculated on a category 2 band B basis.

Orders