Liberty Financial Pty Ltd v Scott [2005] VSC 26

Supreme Court of Victoria|2005-02-16|Before: HARPER J

PRACTICE AND PROCEDURE - Claim for alleged misuse of confidential information by former employee and his new employer - Leave granted to file a substituted statement of claim - Applications to strike out the new pleading - Whether substituted statement of claim complies with requirements laid down in earlier judgment - Whether plaintiffs have identified with sufficient particularity the alleged confidential information sought to be protected - Whether pleading embarrassing - Abuse of process - Whether permissible to identify confidential information in general terms pending application for further discovery - Ocular Sciences Ltd & Anor v Aspect Vision Care Ltd & Ors [1997] RPC 289 referred to - Computershare Ltd v Perpetual Registrars Ltd [2000] VSC 139; [2000] 1 VR 626 distinguished - Creative Brands Pty Ltd v Franklin applied.

After making uncertain progress through several jurisdictions, this litigation arrived at this Court. The uncomfortable truth is that the difficulties with which it was initially hampered remain as stubbornly present as ever.

At the heart of the plaintiffs' case is the allegation that a former employee - Mr Trevor Scott, the first defendant - took with him to his present employment with the second defendant ("Bluestone") material which rightfully belonged to the plaintiffs or one or other of them and which he had no right to remove. But, as the plaintiffs see it, they face the handicap that the defendants alone know precisely what was taken. The plaintiffs can only draw the inference, as they see it an inescapable one, that more has been taken than they presently appreciate. In the absence of complete discovery the plaintiffs are therefore unable adequately to plead their case.

The defendants take the opposite view. Only the plaintiffs know what information it is about which the claim for confidentiality is made. Until the defendants are able to similarly identify that information, they will not know what case is put against them; and until that omission is rectified they are unable to prepare their defence. Nor can they be certain about the proper field of discovery; but they maintain that, however the plaintiffs' claim is ultimately framed, more than adequate discovery has already been made.

The second plaintiff, Mr Sherman Ma, is the managing director of the first plaintiff ("Liberty"). He has from the beginning been both acutely conscious of the danger of competition, and assiduous in seeking to protect Liberty from it. He went to great pains to bind by contract his company's employees to the strictest restraints on their use of any information derived from their employment. Similar steps were taken in an attempt to ensure that third parties (such as mortgage brokers) with whom Liberty, in order to advance its business, necessarily had to deal, were similarly restrained. Despite these attempts, however, the defendants - as the plaintiffs allege - escaped the net. When Mr Scott joined Bluestone in a senior managerial position he took with him what on one reading of the statement of claim on which the plaintiffs presently seek to rely was the entirety of the information relating to Liberty's commercial activities. This he then placed at Bluestone's disposal. Thus equipped, the latter gained a springboard into a market in which Liberty had formerly enjoyed a monopoly. According to the plaintiffs, the monetary loss suffered as a consequence amounts to some $32.3m.

The plaintiffs have made several attempts to plead their case. On 30 November 2004, I published my reasons for judgment on their application for leave to file and serve a second amended statement of claim. I refused the application. Instead, I granted the plaintiffs leave to replead. This they did by a document dated 14 January 2005 and headed "Substituted Statement of Claim". This latest pleading is now itself under attack. By two separate summons dated, respectively, 4 February 2004 (sic) and 1 February 2005 the first and second defendants seek orders pursuant to Rule 23.02 of the Rules of the Supreme Court that the substituted statement of claim be struck out on the grounds that it does not disclose a cause of action, that it may prejudice, embarrass or delay the fair trial of the proceeding, and that it is otherwise an abuse of the process of the Court.

It is the last ground - abuse of process - that has been the subject of particular attention during the hearing of the defendants' applications. The protection of the confidentiality of sensitive commercial information, a protection that the plaintiffs seek to invoke, is an entirely legitimate commercial concern. The law is and must remain astute to give that interest proper protection. At the same time, litigation such as this can give rise to justifiable claims of abuse. The point was made by Laddie J in Ocular Sciences Ltd & Anor v Aspect Vision Care Ltd & Ors[1]:

"A claim based even in part on wide and unsupportable claims of confidentiality can be used as an instrument of oppression or harassment against a defendant. It can be used to destroy an ex-employee's ability to obtain employment or a competitor's ability to compete. The wider the claims, the longer and more expensive the litigation. The defendant is likely to feel that he has no alternative but to challenge the confidentiality of everything, even though he believes that much or most of the technology pleaded cannot [sic] reasonably be thought of as secret. Furthermore a defendant faced with a narrow claim may decide that the commercial realities point towards a tactical withdrawal. He may be able to relinquish use of the contested information yet stay in business. The possibility of doing this reduces as the width of the plaintiff's claims increases. The defendant is left no alternative but to fight on in heavy litigation, spending money on lawyers which he would much prefer to spend on building up what may be a new business. The attractions of this to a plaintiff bent on harming a competitor's business are obvious. Furthermore, the more technology put before the court, the easier it may be to obscure the issues. A competitor or ex-employee is entitled to copy non confidential material, but if the plaintiff mixes a large amount of technology together, some of which has been copied by the defendant, there is a risk that the court will jump to the conclusion that some of what was copied must have been confidential."

The same point was made by Whitford J in Reinforced Plastics Applications (Swansea) v Swansea Plastics & Engineering Co Ltd[2]:

"It is, I think, a matter of great concern in relation to confidential information cases that actions should not be brought which are no more than speculative in character. It is altogether too easy when employees leave and are employed by a rival firm to harass that rival firm upon the basis that the employees who have left the plaintiffs and joined them have taken away trade secrets of great value, and to bring an action which may involve the expenditure of an enormous amount of time and money and include disclosure of information which is going to be alleged to be confidential on either side with consequent troubles and worries. It is not really to be contemplated that proceedings of this kind should be allowed to go forward on nothing more than a speculative basis; and unless the plaintiff can show that he has some basis for a reasonable belief in his assertion that the defendants are making use of his confidential information, then the action can only be characterised as speculative and fishing, and ought not, in my judgment, to be allowed to proceed. There must be something more than a mere assertion."

In Ocular Sciences the plaintiffs claimed infringement of copyright, of a patent and of a design right as well as causes of action in breach of confidence, breach of fiduciary duty, breach of contract and conspiracy. All of this arose from a dispute involving the design, manufacture and sale of soft contact lenses. Sophisticated technology was therefore in issue. That is not this case. The present litigation concerns not technology but the exploitation in the most profitable way possible of the "non-conforming loan" market. The plaintiffs allege that they have developed, through skill and hard work, all the attributes necessary to exploit that market to the full. As part of the matrix of facts against which they put their case, they allege that they first recognised the particular need: there were in the market place potential borrowers whose custom conservative lenders did not want, but who were not well served by the only finance providers (the consumer finance companies) prepared to deal with them.

Having identified the need, Mr Ma set about determining how best to meet it. By a process of research and analysis, he developed a sophisticated range of financial "products"[3] - which, as I understand it, means sets of terms on which Liberty would be prepared to provide finance to "customers who are unable to obtain finance from traditional sources"[4] - and sophisticated techniques for determining which of those "products" would best attract borrowers whose custom would, given the terms on offer, return a profit to the lender.

It follows, however, that the information the plaintiffs seek to protect is not scientific or technological, but rather that which would enable a competitor so to structure its business as to attract to it borrowers who otherwise would place their custom with the plaintiffs. This information is important, indeed vital, if the business is to prosper. Its confidentiality is equally vital if Liberty is to maintain that position in the market which, by its lights, it has earned and should retain. Or so Liberty contends. But in one sense maintaining the confidentiality of the kind of information that Liberty seeks to protect is especially difficult. And this is true in both law and in fact. Once acquired, knowledge cannot be divested - that is, removed from one's thinking when the relevant topic comes to mind - by any act of the will. Moreover, much of Liberty's information, unlike much technological or scientific data, would be readily absorbed as general background knowledge (often referred to as "know-how") by those engaged in the relevant business or discipline. Such general background knowledge becomes so much part of one's terms of reference that one cannot escape its influence. It follows that no court or other authority can sensibly require those who know it to refrain from its use.

We may take as an hypothetical example a Liberty executive whose task it is to design additional "products" for Liberty's use. He or she would be expected by Liberty to draw upon Sherman Ma's research as well as other information used by Mr Ma when he designed the products with which Liberty initially launched its business. When developed, the new products would ex hypothesi have features that would distinguish them from the products already in existence. It may be that when the employee came to leave Liberty for another employer, his or her task would be basically the same as before - that is, to prepare the terms upon which, depending on the characteristics of the potential borrower, the new employer would be prepared to provide finance. It would be impossible for the employee, in executing his or her duties on behalf of the new employer, to divorce himself or herself entirely from the accumulated knowledge, skill and experience acquired with Liberty. On the other hand, there may remain a field within which Liberty's information - albeit that it is not technological or scientific - could legitimately remain protected and which therefore the employee could not properly call upon in the service of the new employer.

In many instances (especially in cases such as the present) the line dividing specialised, protectable knowledge and information on the one hand from accumulated know-how on the other would be difficult to draw. The task is nevertheless central. The Court must, if disputes of the kind illustrated by the present litigation are to be resolved in accordance with law, distinguish between the two categories of knowledge. For where, as here, the net is cast widely across a commercial endeavour, both will necessarily be present. In this sense, as Mr Macaw for the second defendant submitted, it is wrong and therefore impermissible for plaintiffs in the position of Liberty and Mr Ma to allege that all the information which might bear upon Liberty's commercial activities is capable of being protected. At least some of it cannot and will not be protected because it forms part of the accumulated knowledge, skill and experience of the employee and is therefore information from which the employee cannot be divorced. This being so, the Court must determine where the line is to be drawn. But that task will in most instances be impossible unless there is to be found set out in the pleadings the actual information said to have been misused. A mere description of the information will not generally be sufficient.

There is another, albeit related, reason why particularity in pleading is, in this area, especially important. An allegation that a former employee has stolen confidential information belonging to his or her former employer is of the utmost seriousness (and in considering an allegation of this kind a civil court must bear in mind the principles enunciated in Briginshaw v Briginshaw[5]). It ought not be made on behalf of a client unless the legal practitioner is satisfied that there is an adequate foundation for it. Of course, in many cases in the past the charge has ultimately been proved.[6] In others, on the other hand, the former employees have in truth done no more than that which is positively encouraged by the law as being for the general good - they have exploited their stock of talent and experience. As often when crucial facts are hotly in dispute, the decision whether the ex-employee has or has not wrongfully breached a confidence may be very difficult to reach. If a court is to be placed in a position from which the distinction in a particular case can be properly drawn between information the confidentiality of which can be protected and information the confidentiality of which cannot, the pleadings must identify the information in question. And that identification must be in more than general terms. In at least the great majority of cases the pleading must disclose and identify the information itself. That is, the pleading must employ words that are more than merely descriptive. Those words must set out the actual information that is said to be protected, or at least point to a repository of it where it is set out with that degree of particularity.

There are additional reasons for insisting upon particularity. The plaintiffs seek, among other relief, both interlocutory and permanent injunctions "restraining the defendants ... from exploiting, publishing, communicating or in any way disclosing, or causing ... the exploitation ... of Liberty's information." No court will grant relief of this kind unless the subject matter of the injunction can be, and is, defined so that there is no room for doubt about what it is that the defendants are forbidden from doing.

The defendants are required by the Rules to file a defence. They will be embarrassed in making good this obligation if they do not know with sufficient certainty what it is that the plaintiffs allege against them. Unless the substituted statement of claim sets out the actual information about which the claim of misuse is made, the defendants will not know whether that information has the necessary quality of confidence, or was acquired by the application of Liberty's skill and effort, or has lost whatever confidentiality it might once have had, or is properly classified as forming part of Mr Scott's own qualities of skill and experience. Moreover, they will not be able to identify those documents that, by the Rules, they are required to discover.

The defendants contend that the substituted statement of claim fails to pass the test. The plaintiffs assert to the contrary, while adding an unusual qualification. To the extent that they have not provided all the necessary particulars of misuse, they have been prevented from doing so by the inadequacy of the defendants' discovery. The plaintiffs have reason to infer (or so they assert) that Mr Scott took and misused more - perhaps much more - information than they can presently positively identify. In other words, he took and misused information which the plaintiffs cannot set out in the substituted statement of claim because they do not know what it is. Indeed, Mr Scott may have placed in Bluestone's hands, or at its disposal, every scrap of information about Liberty in existence at the time he left Liberty's employ, and for some time after that. Further discovery will, the plaintiffs suppose, confirm their belief. Further discovery, however, if it is to be made at all, is necessarily to be made against the statement of claim as it then stands.

For this reason, the substituted statement of claim contains a schedule which describes a very wide field of information. All of it is, according to the plaintiffs, confidential.[7] Since the termination of his employment with Liberty, Mr Scott has used and is continuing to use it in Bluestone's service.[8] Or at least (so the plaintiffs assert) he has used part of it in this way. The plaintiffs have identified some of the misused information. They claim that the defendants are in a position to identify it all. The plaintiffs have drawn the substituted statement of claim so as to force them to do so.

By that pleading the plaintiffs allege that from 1996 and thereafter they came into the possession of the information set out in the schedule. This document consists of some 32 pages of what the plaintiffs describe as detailed particulars of the protected material. It covers, so far as one can tell, every aspect of Liberty's commercial activities. All of the information about each aspect, according to the substantive portions of paragraphs 30 and 32 of the substituted statement of claim, has been used and is continuing to be used, wrongfully, by Mr Scott since either the termination of his employment in December 1999, or since April 2000.

The plaintiffs are here caught on the horns of a dilemma. In truth, they know that they will not be contending, at trial, that the defendants have misused all the information to which the schedule refers. They could not prove such misuse now; and they have no realistic prospect of being able to do it when the case comes on for hearing. What they have now is, if I correctly understand the way they put this aspect of their present position, a claim in two parts. They have, they contend, material sufficient to establish misuse of certain discrete elements of their confidential information. Particulars of this misuse are to be found in the particulars under paragraphs 31 and 32 of the substituted statement of claim. Secondly, they have a well-founded belief, based upon the drawing of inferences that are clearly open, that Mr Scott and Bluestone have misused other discrete elements of that information. All they now need is its identification by means of proper discovery.

The plaintiffs therefore submit that they are entitled to further discovery in order to narrow the issues at trial. But in order to compel that discovery, they must allege wider misuse than they expect to prove. So the case as presently pleaded is not the case which will be presented at the trial. On the contrary. The plaintiffs are presently concerned to put forward allegations which will be sufficiently broad to enable them to obtain an order for discovery which in turn will provide them with the evidence upon the basis of which they will plead the case they hope to present at trial. The substituted statement of claim is therefore designed to advance the plaintiffs' position at the interlocutory, rather than the final, stage of the proceeding. The plaintiffs do not intend, at trial, to prove that all the information encompassed by the schedule was Liberty's information and was confidential to it. They do not intend, at trial, to prove that Mr Scott passed all of that information to the second defendant, and that thereafter both misused the lot. Any such intention would be unrealistic. This litigation would drown in a sea of paper. Moreover, to give it effect would be to expose the very information which the plaintiffs have sought so assiduously to keep under wraps. True, some of it may no longer be confidential. But the plaintiffs themselves insist that much of it must remain a closely guarded secret.

Of course, if the schedule achieved that which is put forward as its purpose, all would be revealed anyway. This schedule does not reveal all. For example, it begins by referring to "Information relating to the market research into products, and the results of that research" without saying either what the research was or what the results were. In the absence of that information, the schedule fails to do that which it must do. It describes information without saying what that information actually is. Thus - to give a further example - every paragraph under the heading "Corporate" (which begins with paragraph 37 and ends with paragraph 45) begins either with the words "Information comprising ..." or with the words "Information concerning ...".

Some of this information, if it was ever confidential, can no longer be protected. It lost that protection when the first to leave of any employee who was a repository of it left Liberty's employ and engaged in the same branch of commerce elsewhere. It was, in other words, no more than accumulated knowledge, skill and experience, albeit acquired while the individual concerned was a Liberty employee. The schedule is replete with examples. Take "[t]he identification of each segment of the non-conforming loan market".[9] This, according to paragraph 3f of the substituted statement of claim, is information that Liberty "has kept confidential ... and has not disclosed ... to its competitors or the public." If I read the schedule correctly, there are three such segments: prime, sub-prime and imprudent. This is not so much difficult to remember as impossible to forget, especially if you have spent months or years working as a senior executive of an organisation which regards information of this kind as highly confidential.

The defendants can of course plead either that this knowledge lacks the quality of confidence or, because all who come to know it must retain it as part of their background skill and experience, that its confidentiality cannot be protected. The difficulty is that it is preceded in the substituted statement of claim by the words to which I have already referred: "Information relating to the market research into products and the results of that research". What that information actually is or was is not set out. So the defendants cannot be sure that they know what the case against them really is.

These faults occur and re-occur throughout the schedule. Bluestone submits that for this reason it cannot give discovery by reference to it; but even if it could, it should not be required to do so because the schedule constitutes part of a statement of claim that is defective and ought to be struck out.

In my opinion, the substituted statement of claim is embarrassing. It does not accord with the case to be run at trial, and it fails to set out the actual information said to have been misused. The defendants, therefore, cannot plead to it. The latter difficulty is present even in relation to the information the misuse of which Liberty claims already to be able to prove. Thus, for example, the particulars under paragraph 31 refer to "information about the potential size of the non-conforming lending market in Australia". The reader searches in vain for a statement setting out what that potential size actually was.

In this context, the particulars refer to two documents. The first is an e-mail dated 2 May 2000. This cannot be understood on its own, because it was written in response to "material" containing "future discussion points". The "material" in question is, however, identified neither in the e-mail nor in the particulars. In its absence, making sense of the e-mail is impossible. I can find nothing in it about the potential size of the non-conforming loan market in Australia although it does refer to "[p]rior research [which] indicates that the market [presumably, the non-conforming loan market] may in fact be twice this estimate." There is no hint of what "this estimate" was.

The particulars also direct attention to paragraph 2 of the schedule. There is a touch of irony about this, given that the schedule is by the plaintiffs' admission less detailed than the particulars. In any event, any enlightenment lurking there is as difficult to detect as it is in the e-mail. It is no help, if one wishes to discover the potential size of the non-conforming lending market in Australia, to be told that included in Liberty's information is "[i]nformation relating to research and the results of research of the Australian market for non-conforming loans, comprising ... [t]he identification and assessment of critical matters influencing the Australian market, being ... a significant unmet demand for speciality finance as evidenced by the profitability of lenders of unsecured finance (such as Avco)".

The plaintiffs rely on Computershare Ltd v Perpetual Registrars Ltd.[10] The plaintiff in that case was, it claimed, the largest provider of share registry services in Australia. It further alleged that on 1 September 1998, it entered into an agreement to provide those services, or some of them, to the first and second defendants ( respectively "Perpetual Registrars" and "Perpetual Trustees"). The agreement contained a confidentiality clause. Some 18 months after it was entered into, Perpetual Trustees and the Australian Stock Exchange announced a joint venture with the aim of creating the "leading provider of registry and related services ... in the Australian market." The general manager of the Exchange, a Mr Christopher Hamilton, was appointed to the Perpetual Registrars' Board.

Not surprisingly, the plaintiff was alarmed at the prospect of Mr Hamilton becoming familiar with information covered by the confidentiality clause. On 4 April 2000, it issued proceedings. Computershare's managing director filed an affidavit deposing to the facts relied upon by her company. No affidavit was filed in answer, although on 7 April the defendants and Mr Hamilton proffered undertakings by which they promised not to use the information other than for the purposes of the 1998 agreement, and not to communicate it to anyone other than the plaintiff. The expression "information" was defined in the undertakings.

An issue remained about what damage, if any, the plaintiff might have suffered before proceedings were issued. By its statement of claim, Computershare alleged that Mr Hamilton was appointed to the board of Perpetual Registrars in order to be able to obtain access to the relevant confidential information for the benefit of the exchange. It was also alleged that he would communicate that information in breach of the obligations of the defendants under the 1998 agreement, that on dates unknown to Computershare the defendants had disclosed the confidential information to the Exchange (including Mr Hamilton), that the defendants had used the confidential information for the purposes of their negotiations with the Exchange and for the purposes of the joint venture agreement, and that that agreement constituted a breach by the defendants of the terms of the 1998 agreement.

These allegations were not accompanied by particulars. It was pleaded in a statement of claim that the latter would be provided following discovery. According to the defendants, this had the result that no complete cause of action had been pleaded.

Warren J disagreed. In her opinion, the plaintiff had provided evidence, which stood unchallenged and unrebutted, of alleged wrongful use of confidential information. In order to identify the actual information used, the manner of use and the identity of the persons who had had access to it, the plaintiff was entitled to an order which, if obeyed, would or at least might answer those queries. It was, her Honour considered, in all the circumstances just and convenient to make the order that the plaintiff sought. It was significant, her Honour held, that the evidence of Computershare stood unchallenged and unrebutted: although they had had a reasonable opportunity to do so, the defendants did not take the opportunity to deny by affidavit wrongful use of the information.

In my opinion, the Computershare case can be distinguished from that presently before me. The present litigation involves a field of information far wider than that invoked in Computershare. In the present case, there is no sworn evidence of the misuse of the generality of information the subject of the litigation. At best, the plaintiffs here rely upon inferences - themselves not the subject of evidence, or at least not evidence put before me for the purposes of this hearing - which, as the plaintiffs would have it, point to the misuse of some (unidentified) information in which the plaintiffs claim confidentiality but which, as pleaded, is (at least in part) incapable of attracting such protection. In my opinion, the present case is much closer to that which was the subject of her Honour's judgment in Creative Brands Pty Ltd v Franklin[11].

In Creative Brands, the first to third defendants were previously employees of the plaintiff. One was a director. In 2000 they left that employ and established their own business. Each had previously executed confidentiality agreements with the plaintiff.

The new company quickly established itself in the relevant market. The plaintiffs alleged that this success was attributable to the wrongful use of its confidential information. Warren J nevertheless rejected its application for further discovery. At [21] she cited the observation of the Full Court of this Court in Pioneer Concrete Service Ltd v Galli[12] in which the Court stressed the importance:

"... in the present case, as in all other cases of this kind, ... that the court should be able, both to define the precise nature of the confidential information which it is sought to protect and to identify with some particularity the disclosure or use which is alleged against the defendants."

In her Honour's view, the impugned paragraphs of the relevant statement of claim suffered from the vice that is of present concern to me: the nature of the confidential information that was there the subject of the dispute was not defined at all; certainly not with sufficient specificity. In coming to this conclusion, Warren J repeated the following passage from a judgment of Scott J in Balstone Ltd v Headline Filters Ltd[13]:

"This case is, in my view, yet another example of an attempt by an employer to use the doctrine of confidential information to place fetters on the ability of ex-employees to compete ... Their experience, built up during their years of employment, naturally equips them to be dangerous competitors if and when their employment ceases. The use of confidential information restrictions in order to fetter the ability of these employees to use their skills and experience after termination of their employment to compete with their ex-employer is, in my view, potentially harmful. It would be capable of imposing a new form of servitude or serfdom ... on ... employees. It would render them unable in practice to leave their employment for want of an ability to use their skills and experience after leaving. Employers who want to impose fetters of this sort on their employees ought in my view to be expected to do so by express covenant. The reasonableness of the covenant can then be subjected to the rigorous attention to which all employee covenants in restraint of trade are subject. In the absence of an express covenant, the ability of an ex-employee to compete can be restricted by means of an implied term against the use of disclosure of trade secrets. But the case must, in my view, be a clear one. An employee does not have the chance to reject an implied term. It is formulated and imposed on him subsequently to his initial entry into employment. To fetter his freedom to compete by means of an implied term can only be justified, in my view, by a very clear case."

I referred above to the inferences which the plaintiff would have me draw. They are set out in the particulars under paragraph 30 of the substituted statement of claim. Assuming the factual basis for the allegations contained in those particulars, nevertheless they do not in my opinion form a proper foundation for the inferences which the plaintiffs claim are open. At best, one might conclude from them that Mr Scott was able to take to Bluestone information unattainable elsewhere, and to an extent actually did so. It does not follow that the confidentiality (if any) of that information was capable of protection by Liberty.

I bear in mind that in paragraphs 31 and 32 of the substituted statement of claim, the plaintiffs have pleaded the misuse of part of Liberty's information, that being a part the confidentiality of which was protectable. Although the pleading is deficient in that the actual information said to have been misused is not set out in full, I assume for present purposes that, at trial, the plaintiffs will be in a position to make good this part of their claim. They may ultimately succeed in greater measure. But the fact (if it be a fact) that some information has been misused does not give rise to the inference that other information - let alone other specific information, identifiable on the basis of the same inference - has likewise been misused.

I have, in considering the submissions put to me on behalf of the plaintiffs in support of their contentions about the drawing of inferences, read the judgment of Weinberg J to which I have already referred.[14] I have no quarrel with anything his Honour there said, and see no inconsistency between his judgment and mine.

In my opinion, none of the causes of action which rely upon the misuse of confidential information are pleaded in the substituted statement of claim so as to conform with the principles set out in this judgment and in the judgment delivered on 30 November last year. The result is that, to this extent, the substituted statement of claim is embarrassing and an abuse of process. To this extent, the substituted statement of claim should therefore be struck out. Indeed, the failure of the substituted statement of claim to meet the requirements of the earlier judgment strengthens the conclusion that it constitutes an abuse. In this context I note, as an example of my concern that the plaintiffs have not paid appropriate heed to what I said last November, that I then spoke of the importance of discriminating "between (on the one hand) information `which can properly be regarded as, in a general sense, [Liberty's] property, and which it would be unjust to allow [Mr Scott] to appropriate for his own purposes' and (on the other) information which forms part of Mr Scott's own endowments of skill and experience."[15] Yet by paragraph 4e of the substituted statement of claim, the plaintiffs allege that Mr Scott "was imbued with information of Liberty's business and products as set out in the schedule"; and then, in the particulars under paragraph 30, the plaintiffs assert that, because he was so imbued, it should be concluded that in the discharge of his duties as an employee of Bluestone, Mr Scott "applied that which he recalled". According to paragraph 30, the inference should therefore be drawn that he misused Liberty's confidential information.

Those who next plead the case for the plaintiffs must be astute to conform to the principles I have on two occasions now set out. The causes of action for breach of copyright and for breach of the restraint of trade clause are not open to this criticism. Given that this is so, I will hear the parties on the orders which should be made.

[2] (1979) FSR 182 at 182 [sic]

[3] "[T]ailored lending products" is the phrase used by Weinberg J in a judgment ([2002] FCA 345 at [3]) delivered on 26 March 2002 on an application by the present defendants to set aside an Anton Piller order obtained by the present plaintiffs in the Federal Court on 20 December 2001

[7] Substituted statement of claim, para. 3f

[9] Para. 1b of the schedule to the substituted statement of claim

[11] (unreported, 11 September 2001); [2001] VSC 338

[14] Liberty financial Pty Ltd v Scott [2002] FCA 345

At a glance

Court

Decision date

Before

Source

Judgment (59 paragraphs)

Parties

Cases Cited (1)