Plaintiff v Defendant

Supreme Court of Victoria|2015-12-09|Before: Bell J

PRACTICE AND PROCEDURE - employer claim for breach of contract of employment and confidentiality agreement by employee - no actual damages suffered by reason of alleged breaches - only nominal damages sought - application for further amendment of amended statement of claim - application made on first day of trial fixed for six months - inadequate explanation for delay - inequality of resources between plaintiff company and defendant individual - overarching obligation to ensure costs are reasonable and proportionate to complexity and importance of the issues and the amount in dispute - desirability of so ensuring when giving effect to overarching purpose of court of facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute - whether granting leave would not give effect to that desirability where only nominal damages sought - Civil Procedure Act 2010 (Vic) ss 7, 8 and 24.

2 Actrol alleges in this proceeding that Mr Coppi entered into a written employment agreement dated 16 July 2010 by which he was employed as a Territory Manager for five years, that the agreement contains an express confidentiality provision and also implied duties of loyalty, confidentiality and fidelity, as well as an implied duty not to undertake inconsistent employment, and that Mr Coppi entered into a separate confidentiality agreement, also dated 16 July 2010. These matters are admitted by Mr Coppi.

3 Actrol also alleges that, on 13 August 2014, Mr Coppi gave four weeks' notice of resignation to expire on 10 September 2014 and that Actrol placed him on 'gardening leave' (leave with pay during the resignation notice period). While this is admitted by Mr Coppi, he contends that Actrol had no lawful entitlement to place him on that leave and that, in that and other respects, it repudiated the contract of employment.

4 That is the background to the present application. I can now refer to the principal allegations made in the amended statement of claim as to Mr Coppi's conduct, which are as follows:

Since at least 2 September 2014, the defendant has been working for AHI-Carrier Australia Pty Ltd trading under the business name 'Totaline' (Totaline), an entity unrelated to the plaintiff which is a direct competitor of the plaintiff.
On various dates in 2014, the defendant sent emails from his work email address to a personal email address containing information which is confidential to the plaintiff.

Particulars

On 4 February 2014, the defendant sent two emails from his work email address to coppifamily@bigpond.com each attaching an Excel spreadsheet containing the plaintiff's sales results for the calendar years 2009, 2010, 2011, 2012 and 2013.

On 21 July 2014, the defendant sent eight emails from his work email address to coppifamily@bigpond.com. Each of these emails contained a Weekly Call Sales Report for a different branch of the plaintiff as an attachment. This Weekly Call Sales Report contained the names of the plaintiff's existing and target clients and additional confidential and commercially sensitive information including specific orders placed by particular clients and the reason particular clients were visited by the plaintiff's sales representatives.

On 8 August 2014, the defendant sent an email from his work email address to coppifamily@bigpond.com attaching a spreadsheet entitled 'Annual Leave Accrual 060814' which contained the accrued annual leave entitlements of the plaintiff's sales representatives.

On 11 August 2014, the defendant sent an email from his work email address to coppifamily@bigpond.com attaching a number of emails including an email dated 12 January 2012 containing an Excel spreadsheet dated 12 January 2012 entitled 'Customer Sales and Margin for John Coppi'.

...

On 9 September 2014, the defendant attempted to solicit one of the plaintiff's employees, Mr Robert Drew, to work at Totaline.

Particulars

On 8 September 2014, the defendant called Mr Drew and arranged to have a meeting with him on 9 September 2014. This meeting took place at approximately 8.00 am on 9 September 2014 at Red Cup Café, 1124 Whitehorse Road, Box Hill, and was attended by the defendant and Mr Drew.

The information contained in the emails referred to in paragraphs 10 and 11 above is information confidential to the plaintiff to which the obligations of the defendant under the Confidentiality Agreement apply.
The emails referred to in paragraph 10 above were sent for a purpose unrelated to the defendant's employment with the plaintiff.

5 It can be seen that the conduct alleged against Mr Coppi may be summarised as follows:

he began working for Totaline from at least 2 September 2014
he sent the specified emails containing confidential Actrol information from his work email address to his home email address for a purpose unrelated to his employment
he attempted to solicit one of Actrol's employees to work for Totaline

It is to be noted that it is not alleged that Mr Coppi misused or forwarded the emails containing the alleged confidential information to anybody, including Totaline. Allegations to that effect have been withdrawn. Presently there is no allegation that he engaged in the conduct of causing his company-issued iPhone and iPad to undergo a factory reset.

6 The amended statement of claim goes on to allege (para 16) that Mr Coppi breached:

(a) the express terms of the Confidentiality Agreement; and

(b) the said implied duties of:

(i) confidentiality; and

(ii) loyalty and fidelity,

of the Employment Agreement.

Actrol admits that, in respect of these alleged breaches, it has suffered no actual damage and it announced at the commencement of the trial that the only relief claimed is an award of nominal damages. The amended statement of claim does not presently plead a breach of the confidentiality agreement or employment agreement constituted by Mr Coppi engaging in the conduct of causing his company-issued iPhone and iPad to undergo a factory reset.

7 The leave further to amend now sought is to add the following paragraphs to the amended statement of claim:

9A. On 13 August 2014 the defendant caused his company-issued iPhone to undergo a factory reset, the effect of which was to permanently delete information (as defined in the Confidentiality Agreement) relating to or concerning the affairs of the plaintiff or its affiliates which was stored on the iPhone.

9B. On or before 13 August 2014 the defendant caused his company-issued iPad to undergo a factory reset, the effect of which was to permanently delete information (as defined in the Confidentiality Agreement) relating to or concerning the affairs of the plaintiff or its affiliates which was stored on the iPad.

8 By new paragraphs 9A and 9B (and an addition to existing paragraph 16) the amendments would effectively add a new cause of action to the proceeding. These amendments are opposed by Mr Coppi. By deleting paragraph 11, an existing claim would be abandoned. This amendment is not opposed.

9 To return to the facts, Mr Coppi admits that he began working for Totaline from 1 September 2014. He contends that, and Actrol disputes, that this represented an acceptance by Mr Coppi of Actrol's repudiation of the contract of employment. He admits that he forwarded the emails from his Actrol to his home email address but contends, and Actrol disputes, that this was for work-related purposes. He denies attempting to solicit one of Actrol's employees to work for Totaline.

10 It is common ground that, on the day he gave notice of resignation from his employment (13 August 2014), Mr Coppi was sent home on 'gardening leave' and required immediately to return the company car, laptop computer, iPhone and iPad that were issued to him for both his work-related and private use (there is some dispute about the extent of the permitted private use of the motor vehicle). It is also common ground that, before he returned the iPhone and iPad devices, he performed what is known as a 'factory reset'.

11 Mr Coppi says that he performed the factory reset on the two devices because he believed that there was a company practice for departing employees to do so, that is, to delete personal and private material from such devices. His evidence in this respect is said to be supported by evidence to be given by Actrol's former State Manager (Craig Bicket) and IT manager (Michael Kanizay). But, as announced in the application for further amendment of the amended statement of claim, Actrol's position is that the deletion of the information was a breach of Mr Coppi's employment contract, the confidentiality agreement that he signed and his obligations as an employee. The proposed amendments would so plead.

12 The facts upon which the proposed causes of action would be based (that a factory reset was performed on the two devices) are not new and have been referred to in affidavits and witness outlines filed and served since the commencement of the proceeding. Mr Coppi has, from the outset, maintained that he did reset both devices, and explained why. I think senior counsel for Mr Coppi has correctly submitted that Actrol has hitherto put these matters against Mr Coppi as going to his credit (that is, that he had something to hide). In relation to credit, the matters the subject of the proposed amendments have been addressed by evidence on behalf of Mr Coppi (that is, why he performed the factory reset). Actrol has not previously pleaded a cause of action, or claimed damages, on the basis of these facts.

13 Going to the procedural history of the proceeding, it was commenced by writ on 10 September 2014. Actrol filed a statement of claim on 16 December 2014 which did not mention the claim now made, although as an issue of fact it was already common ground.

14 Pleadings closed on 21 March 2015. The proceeding was fixed for trial some six months ago, on 26 May 2015, for a trial date of 25 November 2015.

15 On 27 August 2015, Actrol obtained leave from Daly AsJ to amend its statement of claim. The claim now made was not then raised or pleaded. No reason has been given as to why the present application was held back and not made at that time. I infer that it was not appreciated that the matter had not been pleaded, although it should have been. It was appreciated only after it was brought to the attention of Actrol by senior counsel for Mr Coppi just before the commencement of the trial. That, I think, prompted the present application.

16 On 21 October 2015, Actrol's solicitors signed a notice of trial in which they certified that 'pleadings are closed and it is not proposed to apply before trial for any amendment.'

17 More recently on 9 November 2015, the plaintiff's solicitors signed a call-over notice in which they certified that the matter was ready to proceed to trial and that there were 'no outstanding interlocutory issues or proposed amendments to pleadings.'

18 The parties were before Daly AsJ on 19 November 2015 on a contested application by summons filed on 13 November 2015 by Actrol for leave to withdraw admissions which were deemed to have been made because of its failure to respond within time to a notice to admit. Actrol's summons did not seek leave further to amend the amended statement of claim, and no application to do so was made to Daly AsJ.

19 Mr Coppi submits that the amendment now sought seems to be little more than a colourable attempt to lead evidence at trial which is otherwise inadmissible by reason of the credibility rule (see Evidence Act 2005 (Vic) s 102) and is part of a long history in this proceeding of Actrol grasping at successively hopeless claims, or persisting in pressing baseless claims, without evidentiary support. It is not necessary for me to determine these submissions.

20 The applicable principles were stated in Aon Risk Services Australia Ltd v Australian National University,[1] where Gummow, Hayne, Crennan, Kiefel and Bell JJ said:

The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd,[2] that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted.[3] In Bomanite Pty Ltd v Slatex Corporation Aust Pty Ltd,[4] French J said of Bowen LJ's statements in Cropper v Smith:

... That may well have been so at one time, but it is no longer true today ... Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary.

In Ketteman Lord Griffiths recognised, as did the plurality in JL Holdings, that personal litigants are likely to feel the strain more than business corporations or commercial persons.[5]...The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings.[6]

A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced.[7]

This later passage was recently cited with approval by the Court of Appeal in Angeleska v State of Victoria.[8]

21 In Aon, the High Court has made clear that case management considerations and the proper use of court resources, including the interests of litigants generally in the efficient workings of the court, are fundamental to the exercise of the discretion to allow or refuse an amendment to a pleading. The fact of substantial delay, wasted costs and the concerns of case management will be of great importance when a court considers a proposed amendment to a pleading which would result in the vacation or the delay of a trial. So, in Trevor Roller Shutter Service Pty Ltd v Crowe,[9] Warren CJ, Ashley and Nettle JJA said:

As we construe Aon, it was about the impropriety of granting a party leave to make a late amendment to a pleading, in circumstances where that party had failed to act expeditiously, and where to allow the amendment was likely to be productive of wasted costs and resources.[10]

22 The Aon principles were the basis of the judgment of Vickery J in Namberry Craft Pty Ltd v Watson[11] where his Honour listed (non-exhaustively) the following relevant considerations:

(a) Whether there will be substantial delay caused by the amendment;

(b) The extent of wasted costs that will be incurred;

(c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for whatever costs may be awarded;

(d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials;

(e) Whether the grant of the amendment will lessen public confidence in the judicial system; and

(f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.[12]

In Matthews v SPI Electricity Pty Ltd & Ors (Ruling No.6),[13] J Forrest J made this addition to that list:

(g) It is well established that an amendment will not be allowed if it is 'so obviously futile that it (would) be struck out if it appeared in an original pleading'. A court, on this type of application, will not engage in an examination of the merits of the case foreshadowed by the proposed amendment, but where that amendment introduces a patently hopeless issue for determination then its inclusion will be futile and that will be a significant, and probably decisive matter in the exercise of the court's discretion'.[14]

23 Applying these principles to the present case, I would refuse the application.

24 Actrol's application further to amend the amended statement of claim has been made at a very late stage - the first day of the trial. If the proposed amendment were to be granted, it would probably entail an adjournment of the trial, although the delay would be short. There was a dispute between the parties as to how the issue should properly be pleaded, which itself would take time to resolve, and Mr Coppi would have to be given time to plead in response, and consider the evidence necessary to meet the new claim.

25 The explanation for the lateness of the application is not satisfactory. Actrol should have appreciated well before this that the amended statement of claim did not fully set out the causes of action on which it proposed to rely.

26 There is an obvious disparity of resources between the parties. Actrol is a substantial company - the wholly owned subsidiary of Reece Australia Limited. Mr Coppi is an individual and has attended court with his wife and two children. His life and that of his family has been affected personally by the proceeding. An amendment would impose added and unfair stress and financial strain upon him. In this connection I refer to what Cavanough AJA said in Atco Controls Pty Ltd v Stewart:[15]

In addition to the dollar costs of the litigation, the intangible costs need to be considered. In Aon Risk Services Aust Ltd v Australia National University the High Court was considering modern case management principles and the circumstances in which it may be appropriate to grant applications for amendment and/or adjournment in court proceedings. In that context the plurality commented that it was now generally accepted that 'justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants'.[16] Their Honours accepted that personal litigants were likely to feel the strain of litigation more than business corporations or commercial persons.[17]

Although the plurality did also acknowledge the pressures that corporations may feel in litigation,[18] there is not much to suggest that, at least relatively to Mr Coppi, Actrol is experiencing undue pressure in the present proceeding.

27 The provisions of the Civil Procedure Act 2010 (Vic) are also relevant. In the conduct of a civil proceeding, parties have overarching obligations to use reasonable endeavours to narrow (rather than widen) the issues (s 23), to ensure that costs are reasonable and proportionate to the complexity and importance of the issues and the amount in dispute (s 24) and to act promptly and minimise delay (s 25). In exercising its powers, the court must give effect to the overarching purpose of facilitating the 'just, efficient, timely and cost-effective resolution of the real issues in dispute' (s 8). In doing so, I think the court can take into account the desirability of ensuring that costs in proceedings are reasonable and proportionate to the complexity and importance of the issues and the amount in dispute, as reflected in the overarching obligation I have mentioned. This is consistent with observations made by the Court of Appeal in Yara Australia Pty Ltd v Oswal[19] where Redlich, Priest JJ and Macauley AJA stated:

The Act's purpose was to reform and modernise the laws, practice, procedure and processes relating to civil proceedings in Victorian courts. The need to ensure that costs were reasonable and proportionate was a core objective of these civil procedure reforms.[20]

28 Accordingly, in exercising the court's power to allow or refuse Actrol's application further to amend the amended statement of claim, I take into account, in particular, that in the proceeding Actrol is claiming only nominal damages. It has pointed to no particular continuing reason or relevance in maintaining the proceeding beyond the pursuit of nominal damages. It would not give effect to the desirability of ensuring that costs are reasonable and proportionate to the complexity and importance of the issues and the amount in dispute for the court to give that leave when the only relief claimed in the proceeding is nominal damages.

29 The application will be dismissed. In the absence of argument, I will reserve the question of costs.

[2] [1987] 1 AC 189, 220 ('Ketteman'), referred to in The Commonwealth v Verwayen (1990) 170 CLR 394, 464-5 (Toohey J), 482 (Gaudron J).
[3] Berowra Holdings Pty Ltd v Gordon [2006] HCA 32; (2006) 225 CLR 364, 376-7 [37] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ); GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710, 715-6 (Samuels JA); Worldwide Corporation Ltd v GPT Ltd [1998] EWCA Civ 1894 (Waller LJ).

[5] Ketteman [1987] AC 189, 220; Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, 155 (Kirby J).

[6] Aon [2009] HCA 27; (2009) 239 CLR 175, 214 [100]-[101] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[8] [2015] VSCA 140 (10 June 2015) [169] (Warren CJ, Tate JA and Ginnane AJA).

[11] [2011] VSC 136 (12 April 2011).

[13] [2012] VSC 70 (14 March 2012).

[15] [2013] VSCA 132 (25 June 2013) ('Atco Controls').

[16] Aon [2009] HCA 27; (2009) 239 CLR 175, 214 [100] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[17] Atco Controls [2013] VSCA 132 (25 June 2013) [296].

[18] Aon [2009] HCA 27; (2009) 239 CLR 175, 214 [101] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[19] Yara Australia Pty Ltd v Oswal (2013) 41 VR 302.

Evidence Act 2005(Vic)s 102)

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