80 I consider first those cases that Neill LJ mentioned.
81 In Amber Size and Chemical Company Ltd v Menzel [1913] 2 Ch 239 Astbury J restrained a former employee from using the whole or a material part of a particular secret method of manufacture, and from disclosing to any other person any information with respect thereto. It is not clear from the report what jurisdictional basis for the grant of the injunction was being invoked. Astbury J stated the relevant principles, at 244-245, to be:
"The Court will restrain an ex-servant from publishing or divulging that which has been communicated to him in confidence or under a contract by him, express or implied, not to do so: Morison v Moat 9 Hare 241, and generally from making an improper use of information obtained in the course of confidential employment: Tuck & Sons v Priester (1887) 19 QBD 629, and, further, from using to his late master's detriment information and knowledge surreptitiously obtained from him during his, the servant's, employment: Robb v Green [1895] 2 QB 1, 315."
82 There is no more specific identification of the basis on which the decision proceeds. I will consider in turn the three cases to which Astbury J referred.
83 Astbury J cites Morison v Moat (1851) 9 Hare 241; 68 ER 492 as applying when the information in question was communicated "in confidence or under a contract…". That equivocation seems to be because in Morison v Moat (1851) 9 Hare 241 at 255; 68 ER 492 at 498 Sir George Turner V-C is indifferent to where such an obligation to protect confidences comes from:
"Different grounds have indeed then assigned for the exercise of that jurisdiction. In some cases it has been referred to property, in others to contract; and in others, again, it has been treated as founded upon the trust or confidence, meaning, as I conceive, that the Court fastens the obligation on the conscience of the party, and enforces it against him in the same manner as it enforces against a party to whom a benefit is given the obligation of performing a promise on the faith of which the benefit has been conferred; but, upon whatever grounds the jurisdiction is founded, the authorities leave no doubt as to the exercise of it."
84 Tuck & Sons v Priester (1887) 19 QBD 629 decided that if a printer is engaged to make a specified number of copies of a picture that belongs to the plaintiff, in order that the plaintiff could sell those copies for his own profit, there is an implied term that the printer is not to make any other copies for his own benefit, breach of which will be restrained by injunction, regardless of any question of ownership of the copyright in the picture (at 635, 639, 646). It is therefore not an authority about contracts of employment.
85 As Astbury J acknowledged, Robb v Green [1895] 2 QB 1 related to information surreptitiously obtained while the employment was still on foot, and thus not to the continuance of any obligation of good faith after the employment had ended.
86 Thus, Amber Size does not provide clear authority for the existence of the implied term.
87 Turning now to the other cases on which Neill LJ relied, Reid & Sigrist Ltd v Moss and Mechanism Ltd (1932) 49 RPC 461 concerned the enforcement of an express obligation in a contract of employment that "All work whilst in our service to be secret and confidential and the property of the Company" (473). At 480, Luxmoore J paraphrased (without acknowledgment) the extract from Morison v Moat that I have set out above, and stated "In the present case the matter rests on express contract". Being a case concerned with an express term, it cannot be an authority about the existence of an implied term.
88 Printers & Finishers Ltd v Holloway [1964] 3 All ER 731; [1965] RPC 239 concerned an employee who had learned, while in the employ of the plaintiff, numerous practical details of a technical process called flock printing. There was every reason to believe that he would, unless restrained, make that information available to a new employer. Though it is not altogether clear from the report, it appears that the jurisdictional bases on which the injunction was sought included an allegation of breach of contract (All ER at 734; RPC at 252) (though the particular breaches identified occurred while the employment was still on foot). However, Cross J saw the jurisdiction being invoked in relation to the trade secret as being an equitable one. His Honour said, at 256-257:
"If Mr Elliott is right in thinking that there are features in his process which can fairly be regarded as trade secrets and which his employers [sic] will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employees restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds."
89 E Worsley & Co Ltd v Cooper [1939] 1 All ER 290 was a case in which relief was sought against former employees who had set up business in competition with their former employer, in the exact same line of goods. One of the bases upon which the plaintiff sought relief was (294) "that the defendants have disclosed confidential information, or have made an improper use of such confidential information in breach of duty or an implied contract." Thus, the case against them was put on the basis of both an equitable duty of confidence, and a breach of an implied contractual obligation. In the reasons for judgment, Morton J did not state on what basis he was proceeding.
90 I mention also that Ormonoid Roofing & Asphalts Ltd v Bitumenoids Ltd (1930) 31 SR (NSW) 347 concerned an employee who was not subjected to any express post-employment contractual restraint, and who, in the ordinary course of his employment, had come to know details of the plaintiff's manufacturing processes. The employee, and a new employer to which he had gone, were sued, alleging that disclosure of that information would amount to "breach of trust, or… breach of an implied contract" (348). The reasons for judgment of Harvey CJ in Eq did not indicate which of those bases he was adopting.
91 Thus, the basis in specific authority for the implied duty of good faith to continue, even in attenuated form, to apply after the employment contract has ended seems thin. I turn to consider whether, as a matter of general principle, such a term exists.
92 For many terms of a contract, the termination of the contract discharges the parties from their obligations to perform the duties arising under those terms: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 469-470, 476-477. However, if parties intend that a particular term will survive termination of the contract, it can do so. Thus liquidated damages clauses (Boucaut Bay Co Ltd v The Commonwealth (1927) 40 CLR 98; Bridge v Campbell Discount Co Ltd [1962] AC 600), arbitration clauses (Heyman v Darwins Ltd [1942] AC 356), exclusion clauses (Photo Production Ltd v Securicor Transport Ltd [1980] AC 827), and restraint of trade clauses that express themselves to operate after termination of employment (Cash Orders (Amalgamated) Ltd v Haynes (1937) 37 SR (NSW) 157) can survive termination. In principle, if the parties to an employment contract intend (or, in the case of an implied term, are taken, in accordance with the same rationale that leads to the implication of the term, to have intended) some aspect of a contractual duty of good faith to survive termination of the contract, that intention can be given effect to.
93 The contract in the present case was not wholly in writing, and hence the test for implication ad hoc of terms that is contained in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282-283 is not applicable to it. A term can be implied ad hoc in a contract that is not wholly in writing
"… by reference to the imputed the intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by an established mercantile usage or professional practice or by a past course of dealings between the parties.": per Deane J, Hawkins v Clayton (1988) 164 CLR 539 at 573, adopted in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422 by Brennan CJ, Dawson and Toohey JJ.
94 Terms can also be implied by law into a contract where such an implication is a necessary incident of a class of relationship: Lister v Romford Ice & Cold Storage Co Ltd [1957] AC 555 at 576; Liverpool City Council v Irwin [1977] AC 239; Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 345-346.
95 As Gummow and McHugh JJ said in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 450:
"Many of the terms now said to be implied by law in various categories of case reflect the concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined. Hence the reference in the decisions to "necessity"."
96 An example of such a principle for implication of a term applying is that a person engaged as an agent to canvass orders is not entitled to use materials obtained in the course of the agency against the interests of the employer even when the agency is over. In Lamb v Evans [1893] 1 Ch 218 Lindley LJ said, at 226:
"Such a use is contrary to the relation which exists between principal and agent. It is contrary to the good faith of the employment, and good faith underlies the whole of the agent's obligations to his principal."
97 Lindley LJ did not differentiate between whether that obligation of good faith was one that arose as a matter of common law or equitable obligation. Bowen LJ, at 229, said:
"… there is no distinction between law and equity as regards the law of principal and agent. The common law, it is true, treats the matter from the point of view of an implied contract, and assumes that there is a promise to do that which is part of the bargain, or which can be fairly implied as part of the good faith which is necessary to make the bargain effectual. What is an implied contract or an implied promise in law? It is that promise which the law implies and authorises us to infer in order to give the transaction that effect which the parties must have intended it to have and without which it would be futile."
98 That passage was quoted with approval by Lord Esher MR in Robb v Green [1895] 2 QB 315 at 317, a case that is concerned with a contract of employment.
99 Bowen LJ, in Lamb v Evans [1893] 1 Ch 218 at 231, gives an example of "what the parties must have intended if the transaction is to have any business-like efficacy at all". His example is of a pupil who goes to a conveyancer, and takes away precedents with the intention of using them in his practice for his own profit. The pupil is entitled to do so because that was the understanding between the parties, but the pupil is not entitled to publish those precedents as a book. That conclusion is arrived at because the evident purpose of the arrangement was to enable the pupil to gain knowledge he could use later, and conveyancing documents are the sort of thing where the detail of the wording is important but not readily held in the memory in the way more general skills and principles can be.
100 Any implied contractual obligation of good faith that there might be in a contract of employment, that survives termination of the contract, would need to meet this sort of test of necessity. That is so whether it is regarded as implied by ad hoc implication, or by law as an incident of a category of contract.