Wiseley v PL Berry Engineering Ltd HC Hamilton CP9/01

[2001] NZHC 408

IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY CP9/01

BETWEEN: PETER CLIFFORD WISELEY
Plaintiff

AND: PL BERRY ENGINEERING LTD
First Defendant

AND: PETER LESLIE BERRY
Second Defendant

Hearing: 22 May 2001

Counsel: KG Smith (for plaintiff)
LD Miles (for defendants)

Judgment: 24 May 2001

RESERVED JUDGMENT OF HAMMOND J

INTRODUCTION

[1] This is an application for an interlocutory injunction. Mr Wiseley claims that Mr Berry and his company have unlawfully appropriated his “intellectual property” in a hydro-seeding unit.

BACKGROUND

[2] Mr Wiseley has a business in which he engages in the grass seeding of embankments, adjacent to roads and motorways. For this purpose he uses what is known as a hydro-seeding unit.

[3] Mr Berry has an engineering manufacturing business, which is conducted through his company. He has also undertaken some hydroseeding, with a unit of his own.

[4] At some time which is not specified in either the pleadings or the affidavits, Mr Wisely asked Mr Berry to make a hydro-seeding unit for him. It is common ground that Mr Berry’s interests carried out this manufacture.

[5] On or about 4 June 1999, at Mr Wiseley’s request, Mr Berry’s interests executed a written document which states as follows:

“We, PL Berry Engineering Ltd and Peter Berry jointly and severally acknowledge that on instructions received from you a hydro-seeding unit was manufactured for you according to your specifications and design. We further acknowledge that all intellectual patent and proprietary rights in the design and specifications for the unit belong to you and we undertake not to construct, replicate, manufacture or disseminate any of the rights in or to the unit without your express written authority.”

[6] Mr Wiseley claims that in August 2000 he saw a pamphlet by Mr Berry advertising a hydro-seeding unit. This (apparently) caused him to think that Mr Berry had made a hydro-seeding unit of his own, based off his model.

[7] It is said that, despite requests not to do so, Mr Berry’s interests have neglected and/or failed to comply with a request to desist from advertising his unit; to desist from using that unit; and to surrender his unit up to Mr Wiseley at a nominated address in Hamilton.

MATTERS OF PROCESS

[8] Once the application had been served, I directed that there be an opportunity for engineers on behalf of both parties to examine the respective machines. That has now been attended to. Mr Wiseley has procured affidavits which are before me from an engineer (Mr Martin) and Mr Brown (a qualified fitter and turner). Mr Brown has a company, Ralph Brown Engineering Ltd, which is involved inter alia in the manufacture and maintenance of hydraulic systems, and the design and building of heavy quarry and sand mining plant. He deposes to having had considerable experience with Mr Wiseley’s hydro-seeding unit, including attending to certain hydraulic problems and general maintenance on it.

[9] Mr Miles interests have not filed a statement of defence; they have not filed a notice of opposition to the interlocutory injunction; and they have not complied with the timetable directions I gave for affidavits prior to this hearing.

[10] Then, when the matter was called this morning, Mr Miles sought an adjournment of the application. In the particular circumstances I refused that application. Mr Miles thereupon made an application to call Mr Berry (who was present in Court) to give oral evidence. I declined that application because it would plainly cause the hearing to go off - Mr Miles had advised me from the Bar that what his client would say was that his machine was developed prior to Mr Wiseley’s machine, and that was the very reason that Mr Wiseley came to his business in the first place: to have him make a hydro-seeding unit for Mr Wiseley. Mr Smith’s interests had had no notice of this assertion; and Mr Smith would not have been able to cross-examine effectively. In my view, there were no good and sufficient grounds for such an extraordinarily late application of that character.

[11] Nevertheless, Mr Miles was entitled to be present as counsel, and to make submissions - and I allowed him to do so. Effectively therefore, the hearing of the interlocutory injunction proceeded on the footing that Mr Miles challenged the ability of Mr Wiseley to gain the relief sought, even on the basis of his own affidavits as lodged with this Court.

THE SUBSTANTIVE BASIS OF THE CLAIM

[12] At the outset I pressed Mr Smith as to precisely what was meant by the words “intellectual property” in the statement of claim, and in Mr Wiseley’s affidavit (which was nothing more than a replication, in sworn form, of what was said in the statement of claim). And, both the statement of claim and the affidavit in support of the application made extraordinarily broad and unparticularised claims.

[13] Mr Smith said that at one time Mr Wiseley had held a patent on some aspect of the hydro-seeding unit, but that had now “expired”. He conceded that there now was no patent, or claim of patent infringement. He also expressly said, in response to a question from me, that his client was not relying on a breach of copyright, trademark, or design rights. That is, none of the intellectual and industrial property statutes are relied upon.

[14] As to a common law claim, I asked Mr Smith what was meant by “all intellectual patent and proprietary rights in the design and specifications the unit belong (sic) to you . . .” in the acknowledgement of 4 June 1999. He agreed that the word “patent” could not possibly apply. He also agreed that there was no specification in that document at to precisely what was said to be protected.

[15] As the argument advanced, it seemed to me that Mr Smith was driven back to relying upon the doctrine of breach of confidence. Mr Smith confirmed that to be so.

BREACH OF CONFIDENCE

[16] As to that cause of action, by the mid 19th Century it was clear law that equity courts would grant injunctions on a broad principle that information obtained by reason of a confidence reposed or in the course of a confidential employment, cannot be made use of either then or at any subsequent time to the detriment of the person from whom or at whose expense it was obtained. That principle had started life as a means of protecting unpublished manuscripts in the days before modern copyright. It was gradually extended in the cases to cover any kind of marketable knowledge.

[17] For quite some period of time in the late 19th Century the equitable doctrine fell somewhat into disuse. Certainly, during that period, cases were largely argued on the basis of contract theory. However, in a landmark case in 1948, Lord Greene MR reaffirmed the existence of the equitable doctrine: Saltman v Campbell [1948] 65 RPC 203. Since that time there have been a number of reported cases in all the British Commonwealth jurisdictions as the principles relating to this head of equity jurisprudence have been articulated and refined.

[18] For present purposes the law can be summarised thus. The leading judgments have returned to the propositions asserted by the early English chancellors. The jurisdiction is based on a broad principle of good faith: “he who has received information in confidence should not take an unfair advantage of it” (Fraser v Evans [1969] 1 All ER 8, per Lord Denning MR, at pll). The doctrine does not depend upon the existence of a contract between the parties or there being property in the subject matter of the confidence. Nor does it depend upon the existence of a fiduciary relationship. It is not necessarily confined to trade secrets. Information of any kind may come within the reach of the doctrine.

[19] The doctrine has however, been judicially circumscribed in various ways. First, the information must be confidential. It must not be something which is publicly known. Second, the information must be imparted in circumstances importing an obligation of confidence. This implies some kind of dealing (not necessarily resulting in a contract) between the parties. Third, there must have been an unauthorised use of the information, possibly to the detriment of the supplier. Fourth, in some circumstances, there may be just cause for the use or disclosure of the information. This principle can be traced back to the old equity maxim that “there is no confidence in an iniquity” (Gartside v Outram (1856) 26 L.J. CH 113) but the “defence” is now a broad public interest defence.

[20] If authority is required for these general propositions I refer to Coco v AN Clark (Engineers) Ltd [1969] RPC 41; AB Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] 2 NZLR 515 (CA); and the recent decision of the Supreme Court of Canada in Cadbury Schweppes Inc. v FBI Foods (1999) 167 D.L.R. (4^th) 577.

RESOLUTION

[21] Mr Miles very properly, I think, conceded that in terms of the equitable doctrine to which I have referred, when Mr Wiseley went to Mr Berry to have him manufacture a machine he was in a relationship of confidence with him. Mr Berry could not just appropriate the features embodied in the machine, because of the relationship inter partes. If nothing else, the acknowledgement to which I have referred, reinforces the notion of that relationship.

[22] Where Mr Miles took his stand was that he said there is no evidence, on Mr Wiseley’s own affidavits, of a breach of that relationship of confidence. For there to have been such a breach there would have to have been evidence that Mr Berry had used Mr Wiseley’s machine as a “springboard” for activity detrimental to the person who made the confidential communication. This “springboard” notion is generally attributed to the judgment of Roxburgh J in Terrapin v Builders Supply Co (Hays) Ltd [1967] RPC 375

[23] The three distinct elements overall in the unit about which Mr Wiseley now apparently complains as having been appropriated or somehow copied are:

• A hydraulic drive auto lubricating system.

• The “hogging” system.

• The slurry pumping technology.

[24] The essence of the problem is that heretofore hydro-seeding units used premixed slurries. The essential concept in these two machines is mixing in the unit. That means there has to be a system of pumping, agitating, and circulating the liquid.

[25] The affidavits of Messrs Martin and Brown, make it clear enough that each of the two units utilises the same essential concept. Mr Martin uses the words, they “[utilise] the same principles of hogging and slurry pumping . . . ”. (Italics added). But even a cursory examination of the photographs of the three items sought to be identified do not demonstrate copying. For instance, photograph B1 shows, in Mr Wiseley’s machine, a wheel device with flanges for agitating, whereas B2 (Mr Berry’s machine) has an entirely different three pronged agitator. Agitating is in common; the two devices are not. They are quite different. Once it is appreciated that the two units are working to the same concept, but that what are said to be the three critical items are different, it is very difficult to say that this is a case of “copying” in the usual sense of that word. And it was not put to me that this is one of those rare cases in which an entire concept has been appropriated, in circumstances which may enable a Court to utilise this doctrine. (See, Fraser v Evans, (supra); and Talbot v General Television Corp [1981] RPC 1. Quite apart from anything else, the “idea” of a unit of this kind was already public.

[26] These considerations aside, in my view Mr Miles fundamental submission is made out: there is no evidence (at least in the affidavits before me) in which Mr Wiseley or the engineers depose that Mr Wiseley’s machine came first, in point of time. That is, it has not presently been demonstrated that Mr Berry’s machine is derivative of Mr Wiseley’s machine. Nor am I prepared to draw any such inference on what is in front of me. The evidence, so far as it goes - and it is woefully thin - is that both men are to some extent in the same line of business, although how far their markets overlap may be questionable. The point can be shortly put, as Mr Miles did, by saying simply that there has not, on these papers, been demonstrated a breach of the obligation of confidence between these parties.

[27] Assuming therefore Mr Wiseley to have a protectable interest, arising out of a relationship of confidence, the Court is left with a mere assertion - without more - that there has been a breach of that obligation. That really will not do for an interlocutory injunction: there must be demonstrated at least an arguable breach of the relationship. The application fails at the outset, for want of any proof on this point.

[28] Assuming there to have been a triable issue, if I had reached the question of the balance of convenience, I am inclined to think that (on these papers) that issue would also have been resolved against Mr Wiseley. His affidavits are quite inadequate to demonstrate what the impact and the loss on him of any breach is, or may be. No financial information is provided. On what I have, the parties are operating in different regions of the country. It is quite impossible, on what I have, to make any practical assessment of the impact or the granting or withholding of an injunction on these two parties.

CONCLUSION

[29] For these reasons the application for an injunction is dismissed. Mr Wiseley should be left to his remedies, if any, at trial.

[30] The proceeding is to be returned to the next Master’s List for a conference for the giving of any necessary directions to advance the proceeding to a merit trial.

[31] Mr Berry will have costs on this hearing of $1,000 together with his disbursements, if necessary as fixed by the Registrar. The allowance for costs has been reduced significantly for the failure on Mr Berry’s part to comply with the timetable directions of the Court.

Judgment accordingly.