Industrial Rollformers Pty Ltd & Anor v Ingersoll-Rand

Background 4 The following summary, necessarily much abbreviated, will suffice to understand the application. The details can be found in the judgment of 24 April 2001 (2001) NSWCA 111. 5 The first appellant manufactured for the respondent friction bolts, a form of mining roof support, under a supply agreement. The friction bolts were known as Split Sets. The respondent provided information of various kinds to the first appellant. By cl 12 of the agreement the first appellant promised that during the currency of the agreement and for five years from its termination it would not use the respondent's confidential information otherwise than to fulfil the respondent's orders and would not disclose the confidential information to others. By cl 15 of the agreement the first appellant promised that during the currency of the agreement and for five years from its termination it would not make a mining roof support similar in design to the mining roof support covered by the agreement. 6 After some years the controllers of the first appellant established the second appellant as manufacturer of the friction bolts. For a period the second appellant supplied and invoiced the respondent directly, but then the respondent's orders were placed with the first appellant and it was invoiced by the first appellant. The second appellant continued to manufacture the friction bolts. 7 During the currency of the agreement the appellants began to manufacture their own friction bolts. The friction bolts were known as Strata Bolts. The first appellant prepared and submitted a tender to WMC Resources Ltd for the supply of friction bolts, in competition with the respondent, and was awarded the contract. The agreement was thereafter terminated as from 29 May 2000. 8 It was held at the trial that the second appellant had accepted and become bound by the terms of the agreement. Thus it was bound by the restraints in cll 12 and 15 equally with the first appellant. 9 It was held that cl 12 of the agreement was not invalid and unenforceable because an unreasonable restraint of trade, but that cl 15 of the agreement was invalid and unenforceable for that reason. However, it was held that pursuant to the Restraints of Trade Act 1976 cl 15 was valid and enforceable to the extent of the breach found, namely the manufacture by the appellants of their own friction bolts during the currency of the agreement, and that it should be read down to provide that during the term of the agreement and for nine months from its termination the appellants should not within Australia make a mining roof support similar in design to the mining roof support covered by the agreement. 10 It was held that the specifications and tolerances of the friction bolt were trade secrets and confidential to the respondent; that the first appellant had used that confidential information to manufacture the appellants' own friction bolts and in preparing and submitting the tender; and that the second appellant had used the confidential information to assist the first appellant to manufacture the appellants' own friction bolt and to assist the first appellant in preparing and submitting the tender. Each of the appellants had thereby breached cl 12 of its agreement. Apart from cl 12, it was held that by using the confidential information to manufacture their own friction bolts and to prepare and submit the tender and assist in the preparation and submission of the tender the appellants had breached equitable duties of confidence owed to the respondent not to misuse the confidential information. There had also been the breaches of cl 15 by the manufacture of the appellants' own friction bolts. 11 Relief by way of declarations and orders was granted giving effect to these conclusions. As well, an undertaking by the appellants was noted: as will appear, it was the contentious matter in the application. 12 There were wholesale challenges in the appeal to the trial judge's conclusions. With one exception, they all failed. The exception was that it was held on appeal that the second appellant had not accepted and become bound by the terms of the agreement. Thus the relief against the second appellant so far as it involved breach of its agreement should not have been granted, but the relief against the second appellant so far as it rested upon breach of the equitable duty of confidence remained.

16 Although the appellants' notice of appeal did not seek that they be released from the undertaking, in the appeal they submitted that they should be released. The submission was fully argued, and was not accepted. 17 The contentious additional order sought in the notice of motion was that the undertaking should be varied by deleting the words "similar thereto" and substituting the words "embodying the information referred to in declaration 4", that is, the confidential specifications and tolerances. 18 It is necessary for the appellants to amend their notice of appeal, since they did not originally seek this or any other variation to their undertaking. When they had every opportunity to challenge the subsistence of the undertaking, and did so by seeking that they be released from it, I do not see why they should have leave to amend so that they can belatedly seek its variation. Particularly is that so when the application was supported by evidence of what had taken place in the interlocutory stages of the proceedings, evidence in part but not wholly gone into for the rather different challenge in the appeal and to some extent in contest. A judgment will be permitted to be reopened only in rare circumstances, generally speaking not unless the applicant can show that by accident without fault on its part it has not been heard (Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684; see also Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300). On analogous principles, the appellants should not be permitted to amend. 19 In any event, I do not think that a case for varying the undertaking has been made out. 20 The origin of the undertaking lies in an undertaking given before Simos J on 23 December 2000. The respondent had sought interlocutory relief against the appellants. The parties negotiated. The appellants gave the undertaking as part of a consent arrangement by which, amongst other things, the appellants were restrained up to and including 4 February 2000 from manufacturing mining roof supports similar in design to those covered by the agreement, save that they could manufacture mining roof supports in order to fulfil a number of existing contracts including the contracts in para 2(c) of the orders giving effect to the arrangement. The last mentioned contracts were with WMC Resources Ltd, WMC (Olympic Dam Operations) Pty Ltd and Central Norseman Gold Corporation Ltd. The undertaking was - " … not to continue to supply the mining roof supports presently known as Strata Bolts or any mining roof support similar thereto to the corporations referred to in paragraph 2(c) hereof for such period as may be ordered by the Court if the Plaintiff is ultimately successful in these proceedings in establishing that the entering into the contract referred to in paragraph 2(c) hereof was a breach of the obligations owed by the Defendants or either of them to the Plaintiff." 21 This undertaking was taken up in orders made by Hamilton J on 14 February 2000, expressed to be in force until 29 May 2000 or the determination of the proceedings at first instance whichever first occurred. The undertaking then given was part of a very similar consent arrangement, and was - " … not to continue to supply Split Sets, Strata Bolts or any friction bolts similar thereto (hereafter referred to as 'the relevant Mining Roof supports') to the corporations referred to in Order 2(c) of these Orders during the period of any permanent injunction granted by the Court if the Plaintiff is ultimately successful in these proceedings in establishing that the entering into the contract referred to in Order 2(c) of these Orders was a breach of the obligations owed by the Defendants or either of them to the Plaintiff (whether or not the supply of such relevant Mining Roof Supports is restricted by that injunction." 22 The orders, including the undertakings, were later continued, and then resulted in the undertaking noted by the trial judge: it will be recalled that the undertaking noted was expressed to be in accordance with the undertaking given by the appellants on 14 February 2000. 23 At one point in the appellants' written submissions it seemed that the appellants' complaint was that the undertaking noted by the trial judge was erroneously expressed to be in force until 28 May 2005, and that it should have been expressed to be in force until 28 February 2001. The 2005 date was five years from the termination of the agreement, see cl 12. The 2001 date was nine months from the termination of the agreement, see cl 15 as read down. As their submissions were finally put on the hearing of the application, however, the 2005 date was embraced by the appellants. The appellants submitted that an undertaking expressed to be in force until 28 May 2005 should conform to cl 12 of the agreement, the only restraint operating until that date, and so should be in that clause's terms of using confidential information rather than in clause 15's terms of similarity of mining roof support. 24 However, the Court did not frame the undertaking to conform with one or other, or any, of the provisions of the agreement, or to reflect obligations under the agreement. The parties were responsible for its terms. It was part of the arrangement by which, in return for giving the undertaking and consenting to restrictions on the manufacture of their friction bolts, the appellants were left free to manufacture friction bolts to fulfil existing contracts. That the undertaking was not tied to the restraints in cll 12 and 15 was made plain enough by the closing words of the undertaking given on 14 February 2000, by which the undertaking would remain even if any injunction did not prohibit the supply of the friction bolts. It was made even more plain by the fact that the undertaking by the second appellant bound it even if the breach of obligation was by the first appellant, and vice versa: that is, the undertaking was independent of breach of contractual obligation by the company giving it. 25 No basis was put forward for striking down the agreement between the appellants and the respondent pursuant to which the undertaking noted by the trial judge was given. No case for varying it has been made.

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